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KBR Gets $25-Million Contract From Australian Defence Force

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KBR, Inc. (KBR - Free Report) has secured a contract to provide sustainment services for the Australian Defence Force Secure Deployed Networks. The $25-million contract includes services like supply-chain management, identity and access management, as well as technical services to enable convergence of these networks.

Per the contract, KBR will provide Information Communications Technology, engineering and logistics support for the ADF Chief Information Officer Group (“CIOG”) in Canberra, Sydney, as well as Brisbane. It will deliver technical services to sustain and uplift warfighter networks. The work under the contract, which will be performed over a span of three years, represents a new business line for KBR within CIOG, working alongside a number of industry partners.

Rob Hawketts, KBR’s Vice President, Government Solutions (GS) – Asia Pacific, said, "This win bolsters the sovereign industry capabilities of our mission IT and security solutions business and fosters growth in the Australian market through our partnership with oobe, an innovative local company that leads transformation of legacy systems to secure cloud platforms."

KBR’s Government Solution Business Bodes Well

KBR’s GS business — accounting for almost 70% of total revenues — focuses exclusively on long-term service contracts with annuity streams for the United Kingdom, Australian and U.S. governments.

Revenues in the Government Solutions segment grew 14.4% year over year to $1,074 million for fourth-quarter 2020. The upside is attributable to solid space and defense systems engineering businesses.

Through 2020, KBR expanded footprint through new project/program wins that include a five-year $539 million ceiling contract to provide high-end technical services for rapid prototyping and fielding of systems for the U.S. Air Force. Also, it secured more than $900 million in IDIQ tasking through the IAC-MAC contract that is balanced nicely across the Army, Air Force and Navy. It also received an eight-year $974-million ceiling contract to provide sustaining services to support U.S. Air Force operations in Europe.

Notably, book to bill was 1.2 for 2020 compared with 1.1 in 2019. As of Dec 31, 2020, KBR’s Government Solution business’ backlog was $12.5 billion, up from $10.96 billion at 2019-end. This provides strong visibility of top-line growth for this segment.

Shares of KBR have broadly outperformed the industry in the past six months. 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 the GS business.


Zacks Rank

KBR currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the same industry include Gates Industrial Corporation PLC (GTES - Free Report) , Howmet Aerospace Inc. (HWM - Free Report) and Altair Engineering Inc. (ALTR - Free Report) .

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Gates Industrial, a Zacks Rank #1 stock, is expected to witness 61.4% earnings growth in 2021.

Howmet Aerospace, also a Zacks Rank #1 stock, is expected to witness 18.8% earnings growth in 2021.

Altair’s earnings for 2021 are expected to increase 45.2%. It currently holds a Zacks Rank #2 (Buy).

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