KBR Announces Strong Second Quarter 2022 Financial Results
KBR, Inc. (NYSE: KBR) today announced its second quarter 2022 financial results and updated its FY 2022 financial guidance.
“Building on strong momentum in attractive end markets, we continue to make excellent progress toward KBR’s 2025 long-term targets,” said Stuart Bradie, President and CEO of KBR. “Themes that favor our capabilities and technologies – national security, defense modernization, global energy security and climate change – continue to be at the forefront of priorities. Combined with the unwavering commitment of our team of teams to deliver on our clients’ missions, I am pleased to report that the company posted another outstanding quarter of superb safety results, earnings growth, cash generation and strategic program awards.”
Bradie also announced KBR continues to prioritize enhancing its position in attractive, differentiated end markets with high barriers to entry through a combination of investments and acquisitions.
“During the quarter, we continued to shape our portfolio and deployed capital in a strategic, accretive, balanced manner,” Bradie said. “Our acquisition of VIMA Group, a leading UK company specializing in digital transformation for clients in the defense sector, advances our growing platform of high-end consulting, engineering and advisory services in the international defense market. Furthermore, the expansion of our investment in Mura Technology, a UK-based pioneer in circular plastics recycling technology, strengthens the alliance between our companies and places KBR at the center of enabling a global plastics circular economy. We welcome our new colleagues and partners into the KBR family and are excited about the opportunities to shape the future together.”
Summarized Second Quarter 2022 Financial Results
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||
| Dollars in millions, except share data | 2022 | 2021* | 2022 | 2021* | |||
| Revenues | $ 1,616 | $ 1,536 | $ 3,330 | $ 2,997 | |||
| Gross profit | $ 201 | $ 207 | 397 | 375 | |||
| Net income (loss) attributable to KBR | $ 94 | $ (149) | $ 23 | $ (100) | |||
| Adjusted EBITDA1 | $ 186 | $ 156 | $ 340 | $ 291 | |||
| Earnings (loss) per share: | |||||||
| Diluted earnings (loss) per share | $ 0.61 | $ (1.06) | $ 0.17 | $ (0.71) | |||
| Adjusted earnings per share1 | $ 0.76 | $ 0.58 | $ 1.38 | $ 1.06 | |||
| Cash flows: | |||||||
| Operating cash flows | $ 125 | $ 104 | $ 214 | $ 154 | |||
| Adjusted operating cash flows1 | $ 125 | $ 108 | $ 214 | $ 165 | |||
| Adjusted free cash flows1 | $ 112 | $ 98 | $ 195 | $ 149 | |||
| Deployable free cash flows1 | $ 344 | $ 98 | $ 445 | $ 149 |
*As adjusted for the adoption of ASU 2020-06 using the full retrospective method
Financial highlights for the quarter ended June 30, 2022
- Revenue of $1.6 billion grew 5% compared to the same period in 2021 primarily attributable to increased activity in 2022 in the European Command related to the war in Ukraine as well as the acquisition of Frazer-Nash Consultancy in October 2021, partially offset by activity in 2021 related to our exit from Middle East contingency operations.
- KBR net income attributable to KBR, diluted earnings per share, adj. EBITDA1 and adj. EPS1 increased in line with revenue as well as the following.
- Net income attributable to KBR was $94 million and $23 million for the three- and six-month periods ended June 30, 2022, respectively, and diluted earnings per share was $0.61 and $0.17 for the three- and six-month periods ended June 30, 2022, respectively. Adj. EBITDA1 was $186 million and adj. EBITDA1 margins were 12% in Q2 2022.
- Government Solutions (GS) delivered excellent earnings and adj. EBITDA1 margins of 12% in Q2 2022.
- GS earnings continue to benefit from favorable international mix, strong project execution, excellent customer performance scores in challenging technical areas that reflect high client satisfaction, core revenue growth and favorable project closeouts.
- GS earnings were favorably impacted by the sale of selected non-core assets for which we received $42 million in proceeds and recorded $22 million in gains on assets sales that elevated margins by ~165 bps in Q2 2022.
- Sustainable Technology Solutions (STS) delivered excellent earnings and adj. EBITDA1 margins of 18% in Q2 2022.
- STS earnings reflect strong end markets, superior technology offerings, and highly sought-after engineering solutions.
- STS earnings were enhanced by the acceleration of certain project close-outs and other timing items that elevated margins by ~160 bps in Q2 2022.
- STS earnings in Q2 2021 were favorably impacted by a net favorable $16 million benefit associated with the settlement of a subcontractor dispute.
- In connection with KBR’s expanded investment in Mura Technology announced in Q2 2022 and other observable third-party transactions, we stepped up the carrying value of our original 5% investment made in 2021 to its fair market value and recorded a $16 million unrealized gain on investment. Consistent with the company’s practice, this amount has been excluded from adj. EBITDA1 and adj. EPS1.
- In connection with our announced exit from commercial activities in Russia, we recorded a predominantly non-cash, pretax charge of $12 million in Q2 2022. We have excluded the impact of this item from adj. EBITDA1 and adj. EPS1.
- In connection with settlement negotiations between KBR’s JKC joint venture and its client in 2021, KBR recorded a $193 million charge for its proportionate share of unfunded client change orders and claims in Q2 2021. In October 2021, KBR announced that JKC entered into a binding settlement agreement that resolved outstanding claims and disputes, an important de-risking event that reduced future uncertainty. Consistent with the company’s practice, this amount has been excluded from adj. EBITDA1 and adj. EPS1.
- During Q2 2022, KBR received approximately $190 million in connection with the settlement of a subcontractor matter. These proceeds are reflected in cash flows from investing activities. Read More
