Back to top

Image: Bigstock

KBR Inks 7-Year Maintenance Services Contract, Boosts Backlog

Read MoreHide Full Article

KBR, Inc. (KBR - Free Report) has secured a General Maintenance Services contract for a project of Saudi Aramco TOTAL Refining and Petrochemical Company (SATORP) in Jubail, Kingdom of Saudi Arabia.

Under this seven-year contract, which has an option for additional three years, KBR’s scope of work includes preventive, predictive, corrective, and shutdown maintenance services at the refinery. KBR will take care of the continuous improvement and sustainable asset performance while optimizing costs.

KBR has a long-term association with SATORP and has been a forerunner in the downstream industry for more than seven decades. The company has delivered many large-scale maintenance projects for some of the world's largest and technically complex downstream facilities.

Jay Ibrahim, KBR president, Sustainable Technology Solutions, added, “This contract marks the beginning of a broader and increasingly strategic journey for SATORP, and KBR is proud to deliver world-class solutions using the industry's best maintenance and reliability practices."

Proficient Use of Technology: A Boon

Strengthening the technology solutions business with its high-end, sustainability-focused industrial sector expertise and client relationships creates exciting synergy opportunities.

The Sustainable Technology Solutions segment continues to make progress on its profit growth strategy. Although the technology business’ revenues decreased 16.4% year over year for fourth-quarter 2021 due to the company’s exit from commoditized construction services in 2020, the quality of revenues is improving with much healthier margins, as envisioned by KBR when it formed this business. Gross profit for the segment improved to $56 million for the quarter from $50 million a year ago.

Zacks Investment Research
Image Source: Zacks Investment Research

Coming to share price performance, KBR shares have advanced 15.2% year to date, outperforming the Zacks Engineering - R and D Services industry’s 8% growth. Its solid prospects are backed by continuous contract wins, strong project execution, backlog level, and potential government as well as technology businesses. KBR’s solid backlog level of $14.97 billion (as of Dec 31, 2021) highlights its underlying strength.

The Zacks Consensus Estimate for the Zacks Rank #2 (Buy) company’s 2022 earnings indicates a 5% increase from 2021. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Top-Ranked Stocks From the Broader Construction Sector

Lennar Corporation (LEN - Free Report) — a Zacks Rank #2 company — is a well-known homebuilder. The company is benefiting from effective cost control and focus on making its homebuilding platform more efficient, leading to higher operating leverage.

The consensus mark for LEN’s earnings for fiscal 2022 has increased to $16.43 from $16.02 per share over the past 30 days. Lennar’s earnings for fiscal 2022 are expected to rise 15.1% year over year.

North American Construction Group Ltd. (NOA - Free Report) has been benefiting from an increased equipment fleet at the Fort Hills mine and stronger demand for mine support work and equipment rental support at the Kearl mine. Also, the completion of three haul truck rebuilds by an external maintenance program and the acquisition of the Australian component supplier DGI are helping the company drive growth. Strong operational execution and enough liquidity are adding to the bliss.

North American Construction currently carries a Zacks Rank #2. Earnings for 2022 are expected to grow 15.9%.

Fluor Corporation (FLR - Free Report) — a Zacks Rank #2 company — is gaining from the "Building a Better Future" initiative. The program focuses on enhancing the markets outside the traditional oil and gas sector, fair and balanced commercial deals, financial discipline, and high-performing business culture. It has made significant progress toward strategic goals that comprise the reduction of outstanding debt by 30% and identified ways for more than $150 million in annual cost savings.

FLR’s earnings estimates have increased to $1.34 per share from $1.12 in the past 60 days. The projected figure indicates 42.6% year-over-year growth.