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KBR's Government Solutions Unit Wins $974M IDIQ Contract

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KBR, Inc. (KBR - Free Report) has won an eight-year indefinite-delivery/indefinite-quantity (IDIQ) contract from the Air Force Installation Contracting Center to provide day-to-day base operational services to the U.S. Air Forces in Europe and Air Forces Africa (USAFE-AFAFRICA).

The contract has a maximum ceiling value of $974 million, and has a five-year base period and three one-year options. Per the contract, KBR will aid USAFE-AFAFRICA with program management; civil engineering; morale, welfare and recreation support; postal operations; and safety, occupational health, industrial hygiene as well as ambulance services. The scope of work also includes logistics support such as vehicle management, fuel operations and air terminal services.

The work will be performed at Moron Air Base in Spain, and both Incirlik Air Base, Izmir Air Station, Office of Defense Cooperation and Ankara Support Facility in Turkey.

KBR’s Support to U.S. Military Will Boost Performance

KBR’s Government Solutions (GS) business has been providing base operations services to the U.S. military over the past several years. In fact, the segment has been supporting defense, intelligence, space, aviation and industrial customers across the globe, combining its engineering, technical and scientific expertise with full life cycle capabilities, mission knowledge and future focused technologies.

KBR has a diversified business portfolio, which helps it combat cyclicality associated with any single market. Presently, the company has been banking on strength of the GS and Technology Solutions (TS) segments to optimize growth potential.

The GS segment — accounting for approximately 70% of total revenues — has been performing pretty well on the back of robust operational performance and progress on international programs. As of Jun 30, 2020, its total backlog came in at $12.59 billion, of which GS booked $10.52 billion and TS accounted for $561 million. GS and TS units had a book-to-bill ratio of 1 and 1.5, respectively, excluding the impact of long-term PFIs.

Shares of KBR have broadly outperformed the industry in the past month. Its shares have performed pretty well owing to the ongoing contract wins, acquisitions and robust organic growth. We believe that the recent contract will further boost KBR’s GS business.

Zacks Rank

KBR — which shares space with Fluor Corporation (FLR - Free Report) , Jacobs Engineering Group Inc. (J - Free Report) and AECOM (ACM - Free Report) in the same industry — currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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