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KBR's Winning Spree Continues, Gets AFHE Maintenance Contract

·3 min read

KBR, Inc.’s KBR contract-winning spree continues with the latest deal win for the maintenance support and sustainment of Automated Fuel Handling Equipment (AFHE) sites globally.

The five-year contract by Defense Logistics Agency (DLA) is valued at $38 million. KBR’s scope of work includes maintenance and sustainment support and data analytics to ensure continuity of operations at 23 AFHE sites worldwide. Also, the company will carry out preventative and corrective maintenance, site support, Supervisory Control and Data Acquisition maintenance support documentation and equipment and material site support capability for DLA's Automated Fuel Systems.

Pertaining to the latest contract win, KBR's Government Solutions U.S. President Byron Bright said, “KBR leverages its expertise in Industrial Control Systems to offer more advanced productivity solutions for government and commercial customers.”

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Shares of KBR gained 1.6% during the trading session on Sep 12. Shares of this global engineering, construction and services firm have advanced 26.3% over the past year, outperforming the Zacks Engineering - R and D Services industry’s 5.5% growth.

Solid Backlog Level: A Strong Growth Driver

KBR’s solid backlog level of $15.39 billion (as of Jun 30, 2022) reflects its underlying strength, and nearly 76% of the backlog represents work in Government Solutions (GS). The company’s impressive 2021 and first-half 2022 performances demonstrated its unwavering focus and superb business execution. Solid double-digit top-line growth, strong organic growth in the GS 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, a strong first-half 2022 and more than 90% work under contract, KBR provided strong 2022 guidance. For 2022, the company expects total revenues in the range of $6.4-$6.8 billion and an adjusted EBITDA margin of 10%. Also, it expects an effective tax rate between 24% and 25% and adjusted earnings per share in the band of $2.53-$2.65. It expects adjusted operating cash flow in the range of $360-$400 million. In 2021, it 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

KBR currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Arcosa, Inc. ACA, currently sporting a Zacks Rank #1, is a manufacturer of infrastructure-related products and services, serving construction, energy and transportation markets.

ACA’s expected earnings growth rate for 2022 is 19.7%. The Zacks Consensus Estimate for current-year earnings has improved to $2.31 per share from $2.08 over the past 30 days.

United Rentals, Inc. URI, presently sporting a Zacks Rank #1, has been benefiting from a broad-based recovery of activity across its end markets served. Higher margins from rental revenues and used equipment sales are added benefits.

The Zacks Consensus Estimate for URI’s 2022 earnings rose to $31.73 per share from $31.66 in the past 30 days. The estimated figure suggests 43.8% year-over-year growth.

Gibraltar Industries, Inc. ROCK, currently carrying a Zacks Rank #2 (Buy), is benefiting from its three-pillar value creation strategy, a strong housing market and solid demand for legacy and TerraSmart businesses.

ROCK’s expected earnings growth rate for 2022 is 19.4%. The Zacks Consensus Estimate for current-year earnings has increased to $3.32 from $3.30 per share over the past 30 days.

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