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KBR's Frazer-Nash Extends Support for UK's Net Zero Drive

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Encashing the U.K. government's push for net zero, KBR, Inc. (KBR - Free Report) unveiled that it increased support for the new energy technologies, systems and processes.

Capitalizing on the progress initiated by KBR's Frazer-Nash Consultancy, the Department for Energy Security and Net Zero (DESNZ) boosted the value of the original contract, which was awarded in December 2021. This extension is a critical part of the U.K.'s £1bn Net Zero Innovation Portfolio.

This effort aligns with the nation's goal of achieving reliance on clean electricity by 2035 and attaining net-zero carbon emissions by 2050.

Frazer-Nash Consultancy will continue to offer technical support for energy generation and distribution in various areas, including hydrogen, nuclear, offshore and onshore wind, bioenergy, heat pumps, retrofit, heat distribution, biomass boilers and solar heating.

Strategic Initiatives to Boost Backlog

KBR is gaining from the rising global importance of national security, energy security, energy transition and climate change. It has been benefiting from high-end and differentiated government business work, strong margin performance, technology and consulting services.

KBR's determination to reduce emissions, diversify products, improve energy efficiency and implement more sustainable technologies and solutions have been driving its performance. The demand for the company’s technologies in ammonia for food production, olefins for non-single-use plastics and refining for product diversification and more green solutions to meet tighter environmental standards have been going strong.

KBR is working on multiple initiatives and contracts to expand its low-carbon ammonia offerings for energy transition, which is a crucial step toward global decarbonization efforts.

On Sep 26, KBR secured a blue hydrogen process technology and FEED contract from EET Hydrogen. This contract is for EET Hydrogen’s upcoming HPP2 low-carbon hydrogen facility as part of the HyNet project, the U.K.'s leading industrial decarbonization project. On Nov 9, the company secured a Front-End Engineering Design (“FEED”) contract from Fidelis New Energy for Project Fyrkat. KBT will provide engineering services to support the liquid carbon dioxide (“LCO2”) handling and storage facility, supporting Fidelis New Energy’s aim to help global decarbonization.

At the end of third-quarter 2023, the total backlog (including award options) of KBR was $21.8 billion compared with $19.76 billion at 2022-end. Of the total backlog, Government Solutions booked $12.28 billion and the Sustainable Technology Solutions segment contributed $4.98 billion.
 

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Although the stock has fallen 12.5% in the past three months compared with the Zacks Engineering - R and D Services industry’s 2.5% decline, the company is likely to benefit from increased new contracts and on-contract growth within all Government Solutions business units and rising demand for the Sustainable Technology Solutions portfolio.

Zacks Rank & Key Picks

KBR currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks from the Zacks Construction sector are:

Construction Partners, Inc. (ROAD - Free Report) sports a Zacks Rank #1 (Strong Buy). ROAD has a trailing four-quarter earnings surprise of 10.6% on average. Shares of ROAD have gained 31% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for ROAD’s 2023 sales and earnings per share (EPS) indicates gains of 19.3% and 112.2%, respectively, from the year-ago period’s levels.

EMCOR Group, Inc. (EME - Free Report) carries a Zacks Rank #1. It has a trailing four-quarter earnings surprise of 25%, on average. Shares of EME have risen 35% in the past year.

The Zacks Consensus Estimate for EME’s 2023 sales and EPS suggests growth of 11.3% and 44.2%, respectively, from the year-ago period’s levels.

TopBuild Corp. (BLD - Free Report) sports a Zacks Rank of #2 (Buy). It has a trailing four-quarter earnings surprise of 14.3%, on average. Shares of BLD have surged 96.4% in the past year.

The Zacks Consensus Estimate for BLD’s 2023 sales and EPS indicates gains of 3.8% and 13.1%, respectively, from the year-ago period’s levels.

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