KBR, Inc. (KBR - Free Report) reported adjusted earnings of 34 cents per share in second-quarter 2018, beating the Zacks Consensus Estimate of 33 cents by 3%.
Notably, the company’s shares increased 3.4% at the close of market on Jul 30, following its earnings release.
However, the bottom line decreased 40% year over year from 57 cents per share a year ago.
The company’s revenues were $1,267 million, up 16% year over year. Consolidation of acquired entities in the Aspire Defence program, strong organic growth of 11% in the Government Services business segment and the acquisition of SGT resulted in double-digit growth in its top line. Also, the reported figure surpassed the consensus mark of $1,189 million.
Government Services revenues rose an impressive 59.8% year over year to $868 million. The uptrend was mainly driven by 11% organic growth in the business, along with accretive revenues from the acquisition of SGT, and consolidation of Aspire.
Also, Technology revenues recorded an increase of 2.9% year over year to $72 million. The increase was attributable to strong demand for gas monetization technologies across petrochemical, ammonia and refining markets.
However, Hydrocarbons Services revenues were down 31% year over year to $327 million.
As of Jun 30, 2018, the company’s total backlog was $13.5 billion compared with $13.2 billion on Mar 31 and $10.6 billion as of Dec 31, 2017. Of the total backlog, about $10.8 billion is booked under the Government Services segment (up 37.4% on a year-over-year basis) and around $2.1 billion under the Hydrocarbons Services segment (up 0.3% year over year). While Technology accounted for $509 million of the backlog (up 74.3% on a year-over-year basis), Non-strategic Business totaled $4 million in backlog (down 42.9%).
Major Contract Wins
In the quarter under review, KBR clinched some prestigious awards in its Government Services and Hydrocarbons Services segment. These include a $133-million task order by the U.S. Army to provide technical and engineering services to the PATRIOT missile system and $900 million IDIQ contract for providing solutions under the Department of Defense's Joint Test and Evaluation Program. Under Hydrocarbon Services, KBR received a multi-year contract to provide engineering, procurement and construction management services to a fortune 100 chemicals manufacturer in the United States and Mexico.
KBR, Inc. Price, Consensus and EPS Surprise
Liquidity & Cash Flow
As of Jun 30, 2018, KBR’s cash and equivalents were $519 million, up from $439 million at the end of 2017.
In the quarter, cash flow provided by operating activities totaled $94 million, much lower than $325 million in the year-ago quarter.
KBR increased its full-year 2018 outlook. The company currently expects adjusted earnings per share in the band of $1.45-$1.50 from $1.35-$1.45 expected earlier.
This guidance excludes legal costs associated with legacy U.S. Government contracts, and acquisition & integration-related expenses related to Aspire and SGT acquisitions. The estimated legacy legal fees exclude any future cost reimbursement from the U.S. Government.
Zacks Rank & Other Stocks to Consider
KBR currently has a Zacks Rank #2 (Buy).
Other top-ranked stocks in the Zacks Construction sector include Jacobs Engineering Group Inc. (JEC - Free Report) , Armstrong World Industries, Inc. (AWI - Free Report) and Foundation Building Materials, Inc. (FBM - Free Report) , each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Jacobs Engineering surpassed the consensus estimate on an average surprise rate of 12.34% in three of the trailing four quarters.
Foundation Building surpassed the consensus mark on an average surprise rate of 196.43% in all the trailing four quarters.
Armstrong World’s earnings per share is expected to increase 22.85% in 2018.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6% and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>