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Why Is KBR (KBR) Up 15.3% Since Last Earnings Report?
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A month has gone by since the last earnings report for KBR Inc. (KBR - Free Report) . Shares have added about 15.3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is KBR due for a pullback? 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 catalysts.
KBR, Inc. reported strong results in first-quarter 2020, with earnings and revenues beating the Zacks Consensus Estimate and improving year over year, given solid growth of the Energy Solutions business.
Stuart Bradie, president and CEO of KBR, said, "With more than 85% of our portfolio supporting mission critical government services and delivering proprietary technology solutions, our business continues to be resilient amidst the COVID-19 pandemic and energy market downturn,".
Inside the Headline Numbers
Adjusted earnings came in at 39 cents per share, beating the Zacks Consensus Estimate of 37 cents by 5.4%. The reported figure also increased 8.3% from 36 cents per share in the year-ago quarter, backed by EBITDA growth and lower interest.
Moreover, total revenues of $1.54 billion increased 14.7% year over year on the back of robust performance from the Energy Solutions segment. The top line also surpassed the consensus mark of $1.45 billion by 6.4%.
Adjusted EBITDA rose 5.7% year over year to $112 million in the quarter, backed by solid performances from both Government Solutions and Technology Solutions, reflecting continued strong execution and mix.
Segmental Details
Revenues in the Government Solutions segment decreased 2.1% year over year to $955 million. The downside was due to completion of the Tyndall disaster recovery work in mid-2019 and a slight decrease in volume on overseas contingency programs. Nonetheless, adjusted EBITDA grew 19% year over year owing to robust operational performance in the United States and internationally.
Technology Solutions' revenues decreased 4.3% year over year to $88 million due to higher volumes of proprietary equipment deliveries in 2019. That said, adjusted EBITDA grew 5% from the prior-year quarter, courtesy of a change in mix, primarily due to increased license and engineering services.
Energy Solutions' revenues increased a whopping 80.5% year over year to $491 million owing to several reimbursable EPC projects that commenced in 2019 along the U.S. Gulf Coast and expanded services on a global basis. However, adjusted EBITDA declined 61% from the year-ago quarter owing to higher volumes of low risk, reimbursable construction services.
Backlog
As of Mar 31, 2020, total backlog came in at $13.92 billion compared with $14.64 billion at 2019-end. Of the total backlog, Government Solutions booked $10.72 billion. Technology Solutions and the Energy Solutions segment accounted for $527 million and $2.68 billion of the total backlog, respectively.
Liquidity & Cash Flow
As of Mar 31, 2020, KBR’s cash and equivalents were $566 million, down from $713 million at the end of 2019. Long-term debt was $1.05 billion versus $1.18 billion at 2019-end. In April 2020, Moody's announced a rating upgrade to KBR's Senior Secured Debt (first lien credit facility) from Ba2 to Ba1 and improved its liquidity profile rating to SGL-1, the highest liquidity grade in this category. KBR's Ba3 Corporate Family Rating and outlook remain unchanged.
At the end of first-quarter 2020, adjusted operating cash flow totaled $65 million compared with $48 million in the year-ago period.
The company’s $500-million revolving credit facility remains essentially untapped. Additionally, management plans to maintain regular quarterly dividend at 10 cents per share, which reflects a 25% increase from the figure announced earlier this year.
2020 Guidance Trimmed
KBR expects adjusted earnings per share in the band of $1.50-$1.80 compared with $1.80-$1.92 expected earlier. Adjusted operating cash flows are projected in the range of $175-$225 million versus $200-$250 million expected earlier.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision. The consensus estimate has shifted 20% due to these changes.
VGM Scores
At this time, KBR has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision has been net zero. It's no surprise KBR has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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Why Is KBR (KBR) Up 15.3% Since Last Earnings Report?
A month has gone by since the last earnings report for KBR Inc. (KBR - Free Report) . Shares have added about 15.3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is KBR due for a pullback? 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 catalysts.
KBR's Q1 Earnings & Revenues Beat Estimates, Guidance Cut
KBR, Inc. reported strong results in first-quarter 2020, with earnings and revenues beating the Zacks Consensus Estimate and improving year over year, given solid growth of the Energy Solutions business.
Stuart Bradie, president and CEO of KBR, said, "With more than 85% of our portfolio supporting mission critical government services and delivering proprietary technology solutions, our business continues to be resilient amidst the COVID-19 pandemic and energy market downturn,".
Inside the Headline Numbers
Adjusted earnings came in at 39 cents per share, beating the Zacks Consensus Estimate of 37 cents by 5.4%. The reported figure also increased 8.3% from 36 cents per share in the year-ago quarter, backed by EBITDA growth and lower interest.
Moreover, total revenues of $1.54 billion increased 14.7% year over year on the back of robust performance from the Energy Solutions segment. The top line also surpassed the consensus mark of $1.45 billion by 6.4%.
Adjusted EBITDA rose 5.7% year over year to $112 million in the quarter, backed by solid performances from both Government Solutions and Technology Solutions, reflecting continued strong execution and mix.
Segmental Details
Revenues in the Government Solutions segment decreased 2.1% year over year to $955 million. The downside was due to completion of the Tyndall disaster recovery work in mid-2019 and a slight decrease in volume on overseas contingency programs. Nonetheless, adjusted EBITDA grew 19% year over year owing to robust operational performance in the United States and internationally.
Technology Solutions' revenues decreased 4.3% year over year to $88 million due to higher volumes of proprietary equipment deliveries in 2019. That said, adjusted EBITDA grew 5% from the prior-year quarter, courtesy of a change in mix, primarily due to increased license and engineering services.
Energy Solutions' revenues increased a whopping 80.5% year over year to $491 million owing to several reimbursable EPC projects that commenced in 2019 along the U.S. Gulf Coast and expanded services on a global basis. However, adjusted EBITDA declined 61% from the year-ago quarter owing to higher volumes of low risk, reimbursable construction services.
Backlog
As of Mar 31, 2020, total backlog came in at $13.92 billion compared with $14.64 billion at 2019-end. Of the total backlog, Government Solutions booked $10.72 billion. Technology Solutions and the Energy Solutions segment accounted for $527 million and $2.68 billion of the total backlog, respectively.
Liquidity & Cash Flow
As of Mar 31, 2020, KBR’s cash and equivalents were $566 million, down from $713 million at the end of 2019. Long-term debt was $1.05 billion versus $1.18 billion at 2019-end. In April 2020, Moody's announced a rating upgrade to KBR's Senior Secured Debt (first lien credit facility) from Ba2 to Ba1 and improved its liquidity profile rating to SGL-1, the highest liquidity grade in this category. KBR's Ba3 Corporate Family Rating and outlook remain unchanged.
At the end of first-quarter 2020, adjusted operating cash flow totaled $65 million compared with $48 million in the year-ago period.
The company’s $500-million revolving credit facility remains essentially untapped. Additionally, management plans to maintain regular quarterly dividend at 10 cents per share, which reflects a 25% increase from the figure announced earlier this year.
2020 Guidance Trimmed
KBR expects adjusted earnings per share in the band of $1.50-$1.80 compared with $1.80-$1.92 expected earlier. Adjusted operating cash flows are projected in the range of $175-$225 million versus $200-$250 million expected earlier.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision. The consensus estimate has shifted 20% due to these changes.
VGM Scores
At this time, KBR has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision has been net zero. It's no surprise KBR has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.