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KBR Wins Support Services Contract from U.S. Navy in Bahrain

Zacks Equity Research

KBR Ltd (KBR) recently announced that its Infrastructure, Government and Power segment has received a base operating support services contract from the U.S. Navy Facilities Engineering Command in Atlantic for their Isa Air Base located in the Kingdom of Bahrain. 

The project tenure is estimated to be one base year with a four-year extendable option. The composite value of the five-year contract is approximately $113.8 million. KBR has recorded the advances for the base year in its second-quarter 2014 backlog.  

The scope of the contract requires KBR to supply integrated support services for base operations including managing and supervising the operations while complying with the environmental norms of the region. The company will be responsible for everything from managing information, galley operations, labor, materials and necessary equipments to maintaining housing, wastewater and water facilities at the base. This apart, KBR will be supervising the support vehicles for the base and the nearby sites.

In 2013, KBR had received another contract from the U.S. Army for its Logistics Civil Augmentation Program (:LOGCAP) IV in Bahrain. The contract, valued at about $53.5 million on an aggregate basis, required KBR to support the U.S. forces with its life support and logistics services.

Such contracts are critical for KBR to revive its Infrastructure, Government & Power segment, which has been witnessing weakness in the recent times. In the last reported quarter, the segment revenues had declined 18.4% year over year to $337 million primarily due to reductions in logistics, infrastructure and mineral-based projects. Moreover, in 2012, the segment had contributed as much as 24.0% of the company’s total revenues, which declined to 21.1% in 2013.

KBR is a global engineering, construction and services company and currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the sector include Altra Holdings Inc. (AIMC), Nordson Corp. (NDSN) and Twin Disc (TWIN). All three hold a Zacks Rank #2 (Buy).

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