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Why Is KBR (KBR) Down 10.2% Since Last Earnings Report?
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It has been about a month since the last earnings report for KBR Inc. (KBR - Free Report) . Shares have lost about 10.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is KBR due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
KBR Q3 Earnings Top but Revenues Miss Estimates, '24 Guidance Up
KBR reported mixed third-quarter fiscal 2024 results, with adjusted earnings surpassing the Zacks Consensus Estimate while revenues missed the same. The top and bottom lines increased on a year-over-year basis.
The quarter’s results were driven by the benefits realized from the LinQuest acquisition and solid contributions from both the reportable businesses, given the increased demand trends for its services. Although high costs and expenses were a trouble, leverage from the increased top line aided the uptick in the quarter.
Driven by the robust performance in its core business, KBR raised its 2024 outlook across key metrics.
Inside KBR’s Headlines
Adjusted earnings per share (EPS) of 84 cents topped the Zacks Consensus Estimate of 83 cents by 1.2% and grew 12% year over year.
Total revenues of $1.95 billion missed the consensus mark of $1.97 billion by 1.3% but rose 10% year over year. The upside was predominantly driven by $41 million in revenues associated with the LinQuest acquisition, along with growth in high-end defense engineering, classified intelligence, readiness and sustainment, and international programs within its Government Solutions (GS) business and increased revenues from technology sales, as well as engineering and professional services in its Sustainable Technology Solutions (STS) business.
Adjusted EBITDA increased 17.7% year over year to $219 million, with adjusted EBITDA margin expanding 70 basis points to 11.2%.
KBR’s Segmental & Backlog Details
Revenues in the Government Solutions or GS segment increased 11% year over year to $1.49 billion.
The GS segment’s adjusted EBITDA was $152 million, up from $133 million in the prior-year quarter. Operating income increased 14% year over year to $123 million.
Revenues in the Sustainable Technology Solutions or STS segment rose 8% year over year to $457 million.
The STS segment’s adjusted EBITDA increased to $98 million from $89 million a year ago. Operating income increased 13% year over year to $95 million.
As of Sept. 27, 2024, the total backlog (including award options of $4.215 billion) was $22.12 billion compared with $21.73 billion at 2023-end. Of the total backlog, Government Solutions contributed $18.4 billion and the Sustainable Technology Solutions segment contributed $3.8 billion.
At the end of the fiscal third quarter, the company delivered a trailing 12-month book-to-bill of 1.1x.
Liquidity & Cash Flow of KBR
As of Sept. 27, 2024, KBR’s cash and cash equivalents were $462 million, up from $304 million at 2023-end. Long-term debt was $2.56 billion at the quarter end, up from $1.8 million at 2023-end.
In the first nine months of 2024, cash provided by operating activities totaled $422 million, up from $248 million in the year-ago period. It had an adjusted free cash flow of $368 million during the same period, up from $320 million a year ago.
KBR’s Updated Fiscal 2024 Guidance
KBR now expects total revenues to be in the band of $7.5-$7.7 billion (compared with the prior expected range of $7.4-$7.7 billion). It anticipates adjusted EBITDA to be between $840 million and $870 million (compared with the prior expected range of $825-$850 million).
Adjusted EPS is now projected to be in the band of $3.20-$3.30 (compared with the prior guided range of $3.15- $3.30). Operating cash flow is still expected to be in the range of $460-$480 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision flatlined during the past month.
VGM Scores
At this time, KBR has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
KBR has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is KBR (KBR) Down 10.2% Since Last Earnings Report?
It has been about a month since the last earnings report for KBR Inc. (KBR - Free Report) . Shares have lost about 10.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is KBR due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
KBR Q3 Earnings Top but Revenues Miss Estimates, '24 Guidance Up
KBR reported mixed third-quarter fiscal 2024 results, with adjusted earnings surpassing the Zacks Consensus Estimate while revenues missed the same. The top and bottom lines increased on a year-over-year basis.
The quarter’s results were driven by the benefits realized from the LinQuest acquisition and solid contributions from both the reportable businesses, given the increased demand trends for its services. Although high costs and expenses were a trouble, leverage from the increased top line aided the uptick in the quarter.
Driven by the robust performance in its core business, KBR raised its 2024 outlook across key metrics.
Inside KBR’s Headlines
Adjusted earnings per share (EPS) of 84 cents topped the Zacks Consensus Estimate of 83 cents by 1.2% and grew 12% year over year.
Total revenues of $1.95 billion missed the consensus mark of $1.97 billion by 1.3% but rose 10% year over year. The upside was predominantly driven by $41 million in revenues associated with the LinQuest acquisition, along with growth in high-end defense engineering, classified intelligence, readiness and sustainment, and international programs within its Government Solutions (GS) business and increased revenues from technology sales, as well as engineering and professional services in its Sustainable Technology Solutions (STS) business.
Adjusted EBITDA increased 17.7% year over year to $219 million, with adjusted EBITDA margin expanding 70 basis points to 11.2%.
KBR’s Segmental & Backlog Details
Revenues in the Government Solutions or GS segment increased 11% year over year to $1.49 billion.
The GS segment’s adjusted EBITDA was $152 million, up from $133 million in the prior-year quarter. Operating income increased 14% year over year to $123 million.
Revenues in the Sustainable Technology Solutions or STS segment rose 8% year over year to $457 million.
The STS segment’s adjusted EBITDA increased to $98 million from $89 million a year ago. Operating income increased 13% year over year to $95 million.
As of Sept. 27, 2024, the total backlog (including award options of $4.215 billion) was $22.12 billion compared with $21.73 billion at 2023-end. Of the total backlog, Government Solutions contributed $18.4 billion and the Sustainable Technology Solutions segment contributed $3.8 billion.
At the end of the fiscal third quarter, the company delivered a trailing 12-month book-to-bill of 1.1x.
Liquidity & Cash Flow of KBR
As of Sept. 27, 2024, KBR’s cash and cash equivalents were $462 million, up from $304 million at 2023-end. Long-term debt was $2.56 billion at the quarter end, up from $1.8 million at 2023-end.
In the first nine months of 2024, cash provided by operating activities totaled $422 million, up from $248 million in the year-ago period. It had an adjusted free cash flow of $368 million during the same period, up from $320 million a year ago.
KBR’s Updated Fiscal 2024 Guidance
KBR now expects total revenues to be in the band of $7.5-$7.7 billion (compared with the prior expected range of $7.4-$7.7 billion). It anticipates adjusted EBITDA to be between $840 million and $870 million (compared with the prior expected range of $825-$850 million).
Adjusted EPS is now projected to be in the band of $3.20-$3.30 (compared with the prior guided range of $3.15- $3.30). Operating cash flow is still expected to be in the range of $460-$480 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision flatlined during the past month.
VGM Scores
At this time, KBR has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
KBR has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.