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KBR Secures DuPont Safety & Construction Project Contract

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KBR, Inc. (KBR - Free Report) secured a contract from DuPont Safety & Construction — a business unit of DowDuPont Specialty Products Division — to expand capacity for the manufacture of Tyvek nonwoven materials.

DuPont Safety & Construction plans to invest more than $400 million to expand capacity for the production of Tyvek nonwoven materials at its facility in Luxembourg.

Terms of Contract

KBR will be providing project management, engineering, procurement and construction management services for DuPont Safety & Construction’s third operating line at the site. The production expansion is scheduled to start in 2021.

Estimated revenues associated with this contract will be booked into backlog of unfilled orders for KBR's Hydrocarbons Services Business Segment in the second half of 2018. As of Mar 31, 2018, the company’s total backlog was $13.2 billion compared with $10.6 billion as of Dec 31, 2017. Of the total backlog, around $1.6 billion is booked under the Hydrocarbons Services segment (down 11.1% on a year-over-year basis).

In particular, backlog is expected to constantly rise in 2018 primarily owing to work in consulting areas. The company is optimistic about backlog growth in the early 2018 on the back of several opportunities.

Notably, Hydrocarbons Services revenues declined 40.1% year over year in the first quarter of 2018. Reduced activity on several projects across the sector dented the segment’s prospects. The recent contract is expected to enable the company offset the downward trend and boost revenues.

Price Performance

Over the past year, KBR’s shares have gained 18.1% against the industry’s average decline of 4%. Going forward, KBR expects broad-based growth in all the segments which is expected to reflect in the share price. Primary growth drivers include high end and differentiated government services work, strong margin performance as well as technology and consulting.


Zacks Rank & Other Stocks to Consider

KBR carries a Zacks Rank #2 (Buy). A few other top-ranked stocks in the same sector are Installed Building Products, Inc (IBP - Free Report) , PGT, Inc (PGTI - Free Report) and Patrick Industries, Inc (PATK - Free Report) . All three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Installed Building Products, PGT and Patrick Industries have a long-term earnings growth rate of 30%, 19.3% and 12.7%, respectively.

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