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KBR Shares Trade in the Red After Q2 Loss & Revenue Decline

Zacks Equity Research

Shares of KBR, Inc. (KBR) dipped 7.3% since the company declared its second-quarter 2014 results on Jul 31. In contrast to the Zacks Consensus Estimate of earnings of 26 cents, KBR reported a loss of 6 cents per share in the quarter. In the prior-year quarter, the company had reported earnings of 61 cents per share.


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Revenues dipped 14.9% year over year to $1,659 million, lagging the Zacks Consensus Estimate of $1,682 million. Gross profit stood at $28 million plunging from $140 million in the year-ago quarter.

The results were impacted by the continued disappointing performance of KBR’s pipe fabrication and module assembly business based in Canada.

Segment Details

Gas Monetization segment’s revenues plummeted 39.0% year over year to $362 million. The decline in revenues was primarily owing to continued low volumes in a Nigeria based gas-to-liquid (:GTL) project coupled with a liquefied natural gas (LNG) project based in Algeria.

Revenues in the Hydrocarbons segment increased 54.9% year over year to $533 million. The revenues growth came on the back of developments in the engineering, procurement and construction (:EPC) activities in ammonia, urea and ethylene projects in key regions like North America.

The Infrastructure, Government and Power (IGP.V) segment revenues declined 16.0% year over year to $315 million. The business was impacted by the reduced activity in the U.S. Government projects, especially in LogCAP IV, the LogCAP III and the Restore Iraqi Oil (RIO) contracts.

The Services segment reported a revenue decline of 29.2% year over year to $439 million. The decrease in revenues was primarily because of the losses incurred in Canada-based pipe fabrication and module assembly projects.

Other Financial Details

KBR ended the quarter with cash and cash equivalents of $969 million and shareholders’ equity of $2,339 million.

Operating cash flow in the six month period (ended Jun 30) was $20 million, a significant improvement from the prior-year period’s figure of negative $97 million. The company’s operating cash flow for the quarter came in at $37 million.

In the quarter, the company repurchased shares worth $40 million and has made dividends payouts worth $12 million. So far in the year, KBR has repurchased 3.5 million shares for about $96 million and paid $24 million for dividends.

Zacks Rank

KBR currently carries a Zacks Rank #4 (Sell). Some better-ranked stocks worth considering include The Andersons, Inc. (ANDE), Ashland Inc. (ASH) and North American Palladium Ltd. (PAL), each carrying a Zacks Rank #2 (Buy).

Read the Full Research Report on ANDE
Read the Full Research Report on KBR
Read the Full Research Report on ASH
Read the Full Research Report on PAL

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