Energy, Automobile, EV, Renewable News | KBR announce third quarter 2022 financial results

KBR announce third quarter 2022 financial results

October 26, 2022

KBR, Inc. (NYSE: KBR) today announced its third quarter 2022 financial results and raised its FY 2022 financial guidance.

“The people of KBR have once again delivered a strong quarter with excellent earnings and cash flow, outstanding operational and safety performance, and exciting new contract wins,” said Stuart Bradie, President and CEO of KBR. “With awards in the quarter spanning the development of NASA’s next gen space suits to technology innovation that will increase the world’s low-carbon clean ammonia capacity, KBR continues to deliver solutions that matter.”

Bradie also attributed positive performance to favorable tailwinds stemming from areas of increasing global importance, including national security, energy security, energy transition, and climate change.

“Our clients are accelerating investment in solutions and technologies to advance their priorities related to these critical challenges, and this acceleration translated directly to the profitable growth, strong margins, and solid cash generation we report today,” Bradie said. “We have a fantastic ballast of stable, long-term programs that afford tremendous multi-year visibility as well as exciting high-growth opportunities that favor our sustainable solutions and technologies. As such, we are pleased to announce an increase in our FY 2022 earnings and cash guidance and have growing confidence in our 2025 targets.”

Summarized Third Quarter 2022 Financial Results

	Three Months Ended September 30,	Nine Months Ended September 30,
Dollars in millions, except share data	2022	2021*	2022	2021*
Revenues	$ 1,626	$ 1,843	$ 4,956	$ 4,840
Gross profit	$ 225	$ 193	$ 622	$ 568
Net income (loss) attributable to KBR	$ 74	$ 57	$ 97	$ (43)
Adjusted EBITDA¹	$ 171	$ 162	$ 511	$ 453
Earnings (loss) per share:
Diluted earnings (loss) per share	$ 0.49	$ 0.38	$ 0.65	$ (0.30)
Adjusted earnings per share¹	$ 0.65	$ 0.64	$ 2.03	$ 1.71
Cash flows:
Operating cash flows	$ 122	$ 122	$ 336	$ 276
Adjusted operating cash flows¹	$ 122	$ 122	$ 336	$ 287
Adjusted free cash flows¹	$ 102	$ 116	$ 297	$ 265
Deployable free cash flows¹	$ 102	$ 116	$ 547	$ 265

^*As adjusted for the adoption of ASU 2020-06 using the full retrospective method

Financial Highlights for the Quarter Ended September 30, 2022

Revenue of $1.6 billion in the quarter declined 12% compared to the same period in 2021 primarily attributable to the completion of work associated with the Operations Allies Welcome (OAW) program in early 2022 that commenced in 3Q’21. Excluding OAW, revenue increased ~$165 million or 11%, 8% organic, attributable to increased activity to support exercises, training and other activities in the European Command, the acquisition of Frazer-Nash in October 2021, and increased revenues in Sustainable Technology Solutions (STS) primarily from engineering and professional services and technology licensing.
For the quarter ended September 30, 2022, net income attributable to KBR increased to $74 million; diluted earnings per share increased to $0.49; adj. EBITDA¹ increased to $171 million; and adj. EBITDA¹ margins expanded to 11%.
- Government Solutions (GS) delivered excellent earnings and adj. EBITDA¹ margins of 10% in the quarter. GS earnings continue to benefit from favorable mix, strong project execution, excellent customer performance scores in challenging technical areas that reflect high client satisfaction, and core revenue growth.
- STS delivered excellent earnings and adj. EBITDA¹ margins of 20% in the quarter. STS earnings reflect strong end markets, superior technology offerings, highly sought-after engineering solutions and favorable mix. Margins were positively impacted by achievement of licensing milestones in the quarter as well as growing contributions from an LNG project.
- Outstanding operating results substantially offset the impact of the strengthening U.S. dollar across our international operations, primarily in the UK and Australia.
- Interest expense increased in the quarter primarily attributable to higher market interest rates on our variable-rate debt.
- Increasing rates were significantly mitigated by the company’s interest rate hedging program that achieves a fixed interest rate on a substantial portion of the company’s borrowings.

Recent Developments and New Business

Delivered 1.3x trailing-twelve-months book-to-bill² as of September 30, 2022, including $2.7 billion of awards and options in the quarter, as follows:

Won a technology contract for a low-carbon blue ammonia project for OCI NV in the U.S.; KBR will provide its innovative proprietary technology, basic engineering design, proprietary equipment and catalyst;
Won a technology contract for a Hydro-PRT^® plastics circularity project for GS Caltex to convert waste plastics back into raw material feedstocks to achieve total circularity;
Won a new $150+ million 5-year IAC-MAC task order to modernize, upgrade and digitize an analog DOD platform with a digital, modular open system architecture solution;
Won a contract to lead research and development for self-defending, self-recovering cyber defense concepts in support of the UK Ministry of Defence;
As part of the Axiom team, won the first task order totaling $229 million on NASA’s 10-year xEVAS program to build the next generation astronaut spacesuits to support the Artemis lunar missions; and
Xandar LLC, a KBR joint venture, won a $4.8 billion ceiling multiple-award for the National Air and Space Intelligence Center to support research and development of new and existing hardware, systems and software capabilities enabling scientific and technical intelligence production through 2033.

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