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KBR's KBRwyle Wins Nearly $100M DoD Contract to Support F-35

Zacks Equity Research

KBR, Inc.’s KBR global government services business, KBRwyle has won two contracts from the Air Force Installation Contracting Agency to provide key support to F-35 and other air force aircraft under DoD Information Analysis Center's Defense Systems Technical Area Task multi-award contract.

These cost-plus-fixed-fee task orders are valid for a period of 42 months and the work related to the contracts will be performed at the Wright Patterson Air Force Base in Ohio.

Per the first task order, worth $41.9 million, KBRwyle will provide analysis, research and product support to the Air Force Life Cycle Management Center’s (“AFLCMC”) aeronautical systems. The company will accomplish engineering, airworthiness, system security, assurance, risk management and safety analyses for aircraft.

Markedly, the work will help AFLCMC's Engineering Directorate in delivering pioneer weapon systems for infrared countermeasures, cyber resiliency, survivability, and vulnerability analyses of the latest stealth and materials technology.

By means of the second $54.6-million defense systems task order, the company will serve AFLCMC’s Special Projects Office with detailed acquisition strategy, which includes planning, development, sustainability, cybersecurity, and engineering and business improvement process. Also, it will support Air Force’s F-35 Hybrid Product Support Integrator organization, F-35A Fleet Management Office and other new programs.

Notably, KBRwyle has been supporting Engineering Directorate since 2007. Also, it has more than 24 years of experience with the F-35 program. Over the past 40 years, the company has served more than 135 aircraft platforms as a leading system engineering and integration provider to the U.S. Air Force.

KBR’s Government Services Unit: A Bright Spot

KBR has a diversified business portfolio, which helps combat cyclicality associated with any single market. The company’s Government Services (“GS”) segment, accounting for more than 72% of the total revenues, has been performing pretty well. Presently, it is banking on the strength of the said segment to optimize growth potential.

As of Dec 31, 2018, the company’s backlog came in at $13.5 billion compared with $10.6 billion in the corresponding period of 2017. More than 80% of the total backlog represents work in the GS segment. The segment’s backlog was up 31.7% year over year. Notably, in fourth-quarter 2018, organic sales from GS business recorded 31% growth, following a 12% increase in the third quarter, and 11% uptick in both the second and first quarters of 2018. Notably, the segment recorded 78% revenue growth in 2018.



Coming to price performance, shares of KBR have gained 17.1% in the past year, outperforming its industry’s average growth of 3.1%. Contract winning spree underscores KBR's strong ability to safely and efficiently deliver projects in operating facilities.

Zacks Rank & Other Key Picks

Currently, KBR carries a Zacks Rank #2 (Buy). Other top-ranked stocks in the same space include Apergy Corporation APY, Quanta Services, Inc. PWR and AECOM ACM. While Apergy and Quanta Services sport a Zacks Rank #1 (Strong Buy), AECOM carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Apergy, Quanta Services and AECOM’s earnings for the current year are expected to increase 2.1%, 25.3% and 2.6%, respectively.

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