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KBR's Q2 Earnings & Revenues Top Estimates, Shares Down 4.6%
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KBR, Inc. (KBR - Free Report) reported impressive results for second-quarter 2020, wherein earnings and revenues topped the Zacks Consensus Estimate, given solid margins in Government and Technology businesses.
Notably, the company announced the initiation of a portfolio transformation. KBR is shifting to a two-segment model, featuring Government Solutions (GS) and Technology Solutions (TS).
Stuart Bradie, KBR’s president and CEO, said “We continue to move upmarket into differentiated areas that provide attractive returns, consistent growth and strong cash conversion. This transformation is the culmination of a years-long shift away from high-risk and commoditized markets and toward more agile, technology driven, knowledge-based delivery."
Shares of KBR fell 4.6% on Aug 6, post its earnings release.
Inside the Headline Numbers
Adjusted earnings of 39 cents per share surpassed the consensus estimate of 36 cents by 8.3%. The reported figure, however, decreased 4.9% from 41 cents per share reported a year ago.
Total revenues also decreased 2.6% year over year to $1,385 million. The downside was due to completion or near completion of certain GS projects, low volumes on various U.S. and U.K. government contracts, as well as lower activity and progress on projects in the TS unit. These were partially offset by revenue growth in the Energy Solutions or ES business. The top line surpassed the consensus mark of $1,359 million by 2%.
Adjusted EBITDA declined 9.4% year over year to $106 million in the quarter. Adjusted EBITDA margin of 7.7% fell 50 basis points (bps) year over year.
Segmental Details
Revenues in the Government Solutions segment decreased 10.5% year over year to $925 million. The downside was due to the completion of disaster recovery work for the U.S. Air Force in 2019, lower work volume on the LogCAP IV project and reduction in revenues related to the Aspire Defence project in U.K. Nonetheless, adjusted EBITDA margin of 11.1% rose 78 bps year over year owing to robust operational performance and progress on international programs.
Technology Solutions' revenues decreased 21.5% year over year to $73 million due to higher volumes of proprietary equipment deliveries in 2019. That said, adjusted EBITDA margin grew 559 bps from the prior-year quarter to 26%, courtesy of higher license mix, strong execution cost-control measures.
Energy Solutions' revenues increased 30.7% year over year to $387 million owing to new awards and the ramp-up of existing projects along the U.S. Gulf Coast, including expansion of services in Mexico. However, adjusted EBITDA declined to 1% from the year-ago figure of 71%.
Backlog
As of Jun 30, 2020, total backlog came in at $12.59 billion compared with $14.64 billion at 2019-end. Of the total backlog, Government Solutions booked $10.52 billion. Technology Solutions and Energy Solutions segments accounted for $561 million and $1.51 billion of the total backlog, respectively.
Government and Technology units had a book-to-bill ratio of 1 and 1.5, respectively, excluding the impact of long-term PFIs. Notably, it de-booked backlog of approximately $1.2 billion associated with projects in the Energy Solutions business that will no longer be pursued.
Liquidity & Cash Flow
As of Jun 30, 2020, KBR’s cash and equivalents were $635 million, down from $712 million at 2019-end. Long-term debt was $1.07 billion versus $1.18 billion at 2019-end.
In the first six months of 2020, cash provided by operating activities totaled $150 million compared with $81 million in the comparable year-ago period. Adjusted operating cash flow was $113 million, up from $33 million a year ago.
As of Jun 30, 2020, it had $500 million available under the revolving credit facility. Moreover, the company shifted $500 million of capacity formerly available for performance letters of credit to increase the available credit facility capacity during second quarter.
2020 Guidance
KBR reaffirmed its adjusted earnings per share guidance of $1.50-$1.80. Moreover, it raised its adjusted operating cash flow guidance to $210-$250 million from $175-$225 million expected earlier.
AECOM (ACM - Free Report) reported third-quarter fiscal 2020 results, wherein earnings and revenues beat the respective Zacks Consensus Estimate. Notably, the company witnessed the seventh consecutive quarter of double-digit adjusted EBITDA growth, a near-record level of backlog and a strong balance sheet. It also raised its adjusted EBITDA guidance.
Jacobs Engineering Group Inc. (J - Free Report) reported third-quarter fiscal 2020 (ended Jun 26, 2020) results, wherein earnings and revenues beat the respective Zacks Consensus Estimate, courtesy of solid project execution. Meanwhile, the company raised its adjusted EBITDA and EPS guidance for fiscal 2020, based on improved performance so far this year.
Quanta Services Inc. (PWR - Free Report) reported impressive earnings for second-quarter 2020. Adjusted earnings not only surpassed the Zacks Consensus Estimate but also grew impressively on a year-over-year basis. Revenues, however, missed analysts’ expectation and declined from a year ago.
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Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.3% per year. These 7 were selected because of their superior potential for immediate breakout.
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KBR's Q2 Earnings & Revenues Top Estimates, Shares Down 4.6%
KBR, Inc. (KBR - Free Report) reported impressive results for second-quarter 2020, wherein earnings and revenues topped the Zacks Consensus Estimate, given solid margins in Government and Technology businesses.
Notably, the company announced the initiation of a portfolio transformation. KBR is shifting to a two-segment model, featuring Government Solutions (GS) and Technology Solutions (TS).
Stuart Bradie, KBR’s president and CEO, said “We continue to move upmarket into differentiated areas that provide attractive returns, consistent growth and strong cash conversion. This transformation is the culmination of a years-long shift away from high-risk and commoditized markets and toward more agile, technology driven, knowledge-based delivery."
Shares of KBR fell 4.6% on Aug 6, post its earnings release.
Inside the Headline Numbers
Adjusted earnings of 39 cents per share surpassed the consensus estimate of 36 cents by 8.3%. The reported figure, however, decreased 4.9% from 41 cents per share reported a year ago.
KBR, Inc. Price, Consensus and EPS Surprise
KBR, Inc. price-consensus-eps-surprise-chart | KBR, Inc. Quote
Total revenues also decreased 2.6% year over year to $1,385 million. The downside was due to completion or near completion of certain GS projects, low volumes on various U.S. and U.K. government contracts, as well as lower activity and progress on projects in the TS unit. These were partially offset by revenue growth in the Energy Solutions or ES business. The top line surpassed the consensus mark of $1,359 million by 2%.
Adjusted EBITDA declined 9.4% year over year to $106 million in the quarter. Adjusted EBITDA margin of 7.7% fell 50 basis points (bps) year over year.
Segmental Details
Revenues in the Government Solutions segment decreased 10.5% year over year to $925 million. The downside was due to the completion of disaster recovery work for the U.S. Air Force in 2019, lower work volume on the LogCAP IV project and reduction in revenues related to the Aspire Defence project in U.K. Nonetheless, adjusted EBITDA margin of 11.1% rose 78 bps year over year owing to robust operational performance and progress on international programs.
Technology Solutions' revenues decreased 21.5% year over year to $73 million due to higher volumes of proprietary equipment deliveries in 2019. That said, adjusted EBITDA margin grew 559 bps from the prior-year quarter to 26%, courtesy of higher license mix, strong execution cost-control measures.
Energy Solutions' revenues increased 30.7% year over year to $387 million owing to new awards and the ramp-up of existing projects along the U.S. Gulf Coast, including expansion of services in Mexico. However, adjusted EBITDA declined to 1% from the year-ago figure of 71%.
Backlog
As of Jun 30, 2020, total backlog came in at $12.59 billion compared with $14.64 billion at 2019-end. Of the total backlog, Government Solutions booked $10.52 billion. Technology Solutions and Energy Solutions segments accounted for $561 million and $1.51 billion of the total backlog, respectively.
Government and Technology units had a book-to-bill ratio of 1 and 1.5, respectively, excluding the impact of long-term PFIs. Notably, it de-booked backlog of approximately $1.2 billion associated with projects in the Energy Solutions business that will no longer be pursued.
Liquidity & Cash Flow
As of Jun 30, 2020, KBR’s cash and equivalents were $635 million, down from $712 million at 2019-end. Long-term debt was $1.07 billion versus $1.18 billion at 2019-end.
In the first six months of 2020, cash provided by operating activities totaled $150 million compared with $81 million in the comparable year-ago period. Adjusted operating cash flow was $113 million, up from $33 million a year ago.
As of Jun 30, 2020, it had $500 million available under the revolving credit facility. Moreover, the company shifted $500 million of capacity formerly available for performance letters of credit to increase the available credit facility capacity during second quarter.
2020 Guidance
KBR reaffirmed its adjusted earnings per share guidance of $1.50-$1.80. Moreover, it raised its adjusted operating cash flow guidance to $210-$250 million from $175-$225 million expected earlier.
Zacks Rank & Peer Releases
KBR currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
AECOM (ACM - Free Report) reported third-quarter fiscal 2020 results, wherein earnings and revenues beat the respective Zacks Consensus Estimate. Notably, the company witnessed the seventh consecutive quarter of double-digit adjusted EBITDA growth, a near-record level of backlog and a strong balance sheet. It also raised its adjusted EBITDA guidance.
Jacobs Engineering Group Inc. (J - Free Report) reported third-quarter fiscal 2020 (ended Jun 26, 2020) results, wherein earnings and revenues beat the respective Zacks Consensus Estimate, courtesy of solid project execution. Meanwhile, the company raised its adjusted EBITDA and EPS guidance for fiscal 2020, based on improved performance so far this year.
Quanta Services Inc. (PWR - Free Report) reported impressive earnings for second-quarter 2020. Adjusted earnings not only surpassed the Zacks Consensus Estimate but also grew impressively on a year-over-year basis. Revenues, however, missed analysts’ expectation and declined from a year ago.
Just Released: Zacks’ 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.3% per year. These 7 were selected because of their superior potential for immediate breakout.
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