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KBR Q2 Earnings & Revenues Beat Estimates on Solid Execution

·3 min read

KBR, Inc. KBR reported impressive second-quarter 2021 results, wherein earnings and revenues topped the Zacks Consensus Estimate. The company benefited from solid Government Solutions organic growth, strong execution across the business and the acquisition of Centauri.

Stuart Bradie, KBR President and CEO, said, "The impressive double-digit top-line growth, terrific organic growth in Government Solutions, strong adjusted EBITDA margins delivering adjusted EBITDA growth of almost 50%, superb free cash conversion, and healthy book-to-bill of 1.1x all demonstrate the unwavering focus and superb execution of our team. Importantly, we also continued to deliver outstanding safety and operational performance, and we continued to reduce uncertainty by making meaningful progress in resolving legacy matters."

Inside the Headline Numbers

Adjusted earnings of 58 cents per share surpassed the consensus estimate of 48 cents by 20.8% and increased 48.7% from 39 cents reported a year ago.

Total revenues increased 10.9% year over year to $1,536 million. The top line beat the consensus mark of $1,478 million by 3.9%.

Adjusted EBITDA increased 47.2% year over year to $156 million for the quarter driven by strong performance of the Government Solution business, the Centauri acquisition and solid project execution.

KBR, Inc. Price, Consensus and EPS Surprise

KBR, Inc. Price, Consensus and EPS Surprise
KBR, Inc. Price, Consensus and EPS Surprise

KBR, Inc. price-consensus-eps-surprise-chart | KBR, Inc. Quote

Segmental Details

Revenues in the Government Solutions segment increased 29.2% year over year to $1,231 million, with 13% organic growth. Three of the four business areas produced double-digit organic growth. However, Sustainable Technology Solutions' revenues decreased 29.4% year over year to $305 million.

Backlog

As of Jun 30, 2021, total backlog was $19.9 billion compared with $19 billion at 2020-end. Of the total backlog, Government Solutions booked $12.4 billion. Sustainable Technology Solutions segment accounted for $2.5 billion of the total backlog.

Liquidity & Cash Flow

As of Jun 30, 2021, KBR’s cash and cash equivalents were $483 million, up from $436 million at 2020-end. Long-term debt was $1,585 million at quarter-end, almost in line with $1,584 million at 2020-end.

For the first six months of 2021, cash provided by operating activities totaled $154 million, up from $150 million in the year-ago period.

2021 Guidance Updated

For 2021, the company expects total revenues in the range of $5.8-$6.2 billion and adjusted EBITDA margin of 9%. Also, it expects effective tax rate between 25% and 26%, and adjusted earnings per share in the band of $2.00-$2.20.

Meanwhile, operating cash flow is now projected in the range of $255-$295 million (up from $243-$283 million projected earlier), while adjusted operating cash flow is estimated between $300 million and $340 million (versus prior expectation of $280-$320 million).

Zacks Rank

KBR — which shares space with AECOM ACM, Jacobs Engineering Group Inc. J and Quanta Services Inc. PWR in the Zacks Engineering - R and D Services industry — currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


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