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KBR (KBR) Up 0.1% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for KBR Inc. (KBR - Free Report) . Shares have added about 0.1% in that time frame, underperforming 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 Q2 Earnings Beat, Revenues Miss, Adjusted EBITDA Up
KBR reported mixed second-quarter 2024 results, with earnings surpassing the Zacks Consensus Estimate and revenues missing the same. The top and the bottom line increased on a year-over-year basis.
The company performed well across key metrics and expects this trend to continue for the rest of the year. Driven by robust performance in its core business, KBR raised its adjusted EBITDA and cash flow guidance for 2024.
Inside the Headlines
Adjusted earnings per share (EPS) of 83 cents topped the consensus estimate of 79 cents by 5.1% and grew 12% year over year.
Total revenues of $1.86 billion missed the consensus mark of $1.88 billion by 1.6% but rose 6% year over year. The upside was predominantly driven by expansion in Sustainable Technology Solutions and notable advancements within Government Solutions. The International, Defense & Intel and Science and Space sectors witnessed new contracts and on-contract growth. However, this positive trend was partially offset by a decline in Ukraine's activity in Readiness & Sustainment.
Adjusted EBITDA increased 13% year over year to $216 million in the quarter. Adjusted EBITDA margin was up 75 basis points to 11.6%.
Segmental & Backlog Details
Revenues in the Government Solutions or GS segment increased 3.3% year over year to $1.4 billion. The upside was backed by new and on-contract growth across its businesses.
Adjusted EBITDA was $145 million, up from $143 million in the prior-year quarter. However, the adjusted EBITDA margin of 10.4% fell 20 bps year over year. The segment benefited from the favorable international mix, excellent award fees and strong project execution.
Sustainable Technology Solutions' or STS revenues rose 14.2% year over year to $458 million, driven by increased demand for sustainable services and technology.
Adjusted EBITDA increased 22.5% to $98 million from a year ago. Adjusted EBITDA margin for the segment was up 150 bps year-over-year to 21.4%. The upside can be attributed to a favorable revenue mix, the achievement of certain licensing milestones, joint venture performance and increased demand.
As of Jun 28, 2024, the total backlog (including award options of $3.332 billion) was $20.1 billion compared with $21.73 billion at 2023-end. Of the total backlog, Government Solutions booked $12.89 billion. The Sustainable Technology Solutions segment contributed $3.92 billion to the total backlog.
At the end of the second quarter, the company delivered a trailing 12-month book-to-bill of 1.0x.
Liquidity & Cash Flow
As of Jun 28, 2024, KBR’s cash and cash equivalents were $414 million, up from $304 million at 2023-end. Long-term debt was $1.9 million at the second quarter of 2024-end, up from $1.8 million at 2023-end.
In the first six months of 2024, cash provided by operating activities totaled $261 million, down from $288 million in the year-ago period. It had an adjusted free cash flow of $226 million during the same period, down from $250 million a year ago.
Updated 2024 Guidance
KBR still expects total revenues in the range of $7.4-$7.7 billion and an adjusted EBITDA between $825 million and $850 million (versus $810 and $850 million of the prior expectation).
Adjusted EPS is now projected to be in the band of $3.15-$3.30 (versus $3.10 and $3.30 of the prior expectation). Operating cash flow is projected to be in the range of $460-$480 million (versus $450 million and $480 million of the prior expectation).
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
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. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. 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 these revisions indicates a downward shift. Notably, KBR has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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KBR (KBR) Up 0.1% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for KBR Inc. (KBR - Free Report) . Shares have added about 0.1% in that time frame, underperforming 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 Q2 Earnings Beat, Revenues Miss, Adjusted EBITDA Up
KBR reported mixed second-quarter 2024 results, with earnings surpassing the Zacks Consensus Estimate and revenues missing the same. The top and the bottom line increased on a year-over-year basis.
The company performed well across key metrics and expects this trend to continue for the rest of the year. Driven by robust performance in its core business, KBR raised its adjusted EBITDA and cash flow guidance for 2024.
Inside the Headlines
Adjusted earnings per share (EPS) of 83 cents topped the consensus estimate of 79 cents by 5.1% and grew 12% year over year.
Total revenues of $1.86 billion missed the consensus mark of $1.88 billion by 1.6% but rose 6% year over year. The upside was predominantly driven by expansion in Sustainable Technology Solutions and notable advancements within Government Solutions. The International, Defense & Intel and Science and Space sectors witnessed new contracts and on-contract growth. However, this positive trend was partially offset by a decline in Ukraine's activity in Readiness & Sustainment.
Adjusted EBITDA increased 13% year over year to $216 million in the quarter. Adjusted EBITDA margin was up 75 basis points to 11.6%.
Segmental & Backlog Details
Revenues in the Government Solutions or GS segment increased 3.3% year over year to $1.4 billion. The upside was backed by new and on-contract growth across its businesses.
Adjusted EBITDA was $145 million, up from $143 million in the prior-year quarter. However, the adjusted EBITDA margin of 10.4% fell 20 bps year over year. The segment benefited from the favorable international mix, excellent award fees and strong project execution.
Sustainable Technology Solutions' or STS revenues rose 14.2% year over year to $458 million, driven by increased demand for sustainable services and technology.
Adjusted EBITDA increased 22.5% to $98 million from a year ago. Adjusted EBITDA margin for the segment was up 150 bps year-over-year to 21.4%. The upside can be attributed to a favorable revenue mix, the achievement of certain licensing milestones, joint venture performance and increased demand.
As of Jun 28, 2024, the total backlog (including award options of $3.332 billion) was $20.1 billion compared with $21.73 billion at 2023-end. Of the total backlog, Government Solutions booked $12.89 billion. The Sustainable Technology Solutions segment contributed $3.92 billion to the total backlog.
At the end of the second quarter, the company delivered a trailing 12-month book-to-bill of 1.0x.
Liquidity & Cash Flow
As of Jun 28, 2024, KBR’s cash and cash equivalents were $414 million, up from $304 million at 2023-end. Long-term debt was $1.9 million at the second quarter of 2024-end, up from $1.8 million at 2023-end.
In the first six months of 2024, cash provided by operating activities totaled $261 million, down from $288 million in the year-ago period. It had an adjusted free cash flow of $226 million during the same period, down from $250 million a year ago.
Updated 2024 Guidance
KBR still expects total revenues in the range of $7.4-$7.7 billion and an adjusted EBITDA between $825 million and $850 million (versus $810 and $850 million of the prior expectation).
Adjusted EPS is now projected to be in the band of $3.15-$3.30 (versus $3.10 and $3.30 of the prior expectation). Operating cash flow is projected to be in the range of $460-$480 million (versus $450 million and $480 million of the prior expectation).
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
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. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. 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 these revisions indicates a downward shift. Notably, KBR has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.