Consistent with its continued support to Program Executive Office (“PEO”) Aviation and Utility Helicopter Project Office (“UHPO”) since 1988, KBR, Inc. KBR won a contract from the U.S. Air Force's 774th Enterprise Sourcing Squadron.
Per this five-year $156.7 million task order, KBR will offer capabilities assessment and enhancement services for the U.S. Army's Utility Helicopter 60 Variant (“UH-60V”) fleet. It will perform Reliability, Maintainability, Quality, Supportability and Interoperability (RMQSI), logistics and testing, program management and validation, prototyping, lifecycle analyses and sustainability improvement work in Huntsville, AL.
KBR received this contract under the Department of Defense Information Analysis Center's (DoD IAC) multiple-award contract (MAC) vehicle. Along with PEO Aviation, UHPO and Northrop Grumman Corporation, KBR will recommend and provide technical solutions to increase availability, improve reliability and reduce the support costs for the UH-60V.
The U.S. Army believes that the technological advancements in the new model of UH-60V helicopter, also known as the Victor, make it easy to operate. The new model includes an upgraded digital glass cockpit, a certified GPS RNAV database and advanced flight planning and mission capability.
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The stock fell 0.33% post news release on Nov 21 but outperformed the Zacks Engineering - R and D Services industry in the past six months. KBR’s shares have gained 6.8% in the said period compared with the industry’s 2% rise.
Solid Backlog Level, Upbeat Views
KBR is a leader in energy transition and has extensive experience supporting sustainable energy projects across the globe. For more than 50 years, KBR has been leading the process technology development, commercialization and plant design solutions industries. KBR’s best-in-class technologies have been designing and building end-to-end, sophisticated digitization solutions and services for clients worldwide.
These digitized technologies and solutions help companies increase efficiency and productivity, reduce costs and create opportunities to generate higher revenues and profitability. It has been driving growth by focusing on lowering carbon emissions, product diversification, energy efficiency and more sustainable technologies and solutions.
KBR’s solid backlog level of $15.77 billion (as of Sep 30, 2022) reflects its underlying strength. The company’s impressive 2021 and the first nine months of 2022 performances reflected its unwavering focus and superb business execution. Solid double digit top-line growth, strong organic growth in the Government Solutions unit and robust adjusted EBITDA growth are commendable. The impressive performance was backed by a solid contract-winning spree, strong project execution, backlog level and potential government and technology businesses.
Backed by favorable market tailwinds, good booking momentum and strong first nine months of 2022, KBR lifted strong 2022 guidance. For 2022, the company expects total revenues in the range of $6.5-$6.7 billion (versus $6.4-$6.8 billion expected earlier) and an adjusted EBITDA margin of 10%. It expects an effective tax rate between 23% and 24% (versus the earlier projections of 24% and 25%) and adjusted earnings per share in the band of $2.60-$2.65 (compared with $2.53-$2.65 expected before). Adjusted operating cash flow is projected to be $375-$400 million (versus an earlier projection of $360-$400 million).
In 2021, the company generated total revenues of $7.34 billion, an adjusted EBITDA margin of 8.5% and adjusted earnings of $2.42 per share. It had an adjusted operating cash flow of $319 million.
Zacks Rank & Key Picks
Currently, KBR carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some better-ranked stocks that warrant a look in the same industry include Atlas Technical Consultants, Inc. ATCX, Sterling Infrastructure, Inc. STRL and Altair Engineering Inc. ALTR, each carrying a Zacks Rank #2 (Buy).
Atlas Technical provides professional testing, inspection, engineering, environmental, program management and consulting services in the United States. The company’s record backlog and robust new award pipeline reflect the business’ prospects. ATCX has become one of the largest providers of mission-critical technical services for infrastructure and environmental markets in the United States.
Although ATCX’s expected earnings growth rate for 2022 is negative 11.1%, the projection moved 53.8% north in the past seven days, reflecting analysts’ optimism.
Sterling Infrastructure provides transportation, e-infrastructure and building solutions.
STRL’s expected earnings growth rate for 2022 and 2023 is 47.4% and 6.3%, respectively.
Altair Engineering provides software and cloud solutions in simulation, high-performance computing, data analytics and AI worldwide.
ALTR’s expected earnings growth rate for 2022 and 2023 is pegged at 10.6% and 21.5%, respectively.
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