Delivered Strong Financial Performance with Solid Bookings Momentum
Issues Fiscal Year 2025 Guidance for Revenues, Adj. EBITDA, Adj. EPS, and Operating Cash Flows
Fourth Quarter 2024 Highlights (All comparisons versus prior year period unless noted.)
— Revenues of $2.1 billion, up 23% (15% organic)
— Net income attributable to KBR of $76 million; Adjusted EBITDA2 of $228 million, up 21% with an Adjusted EBITDA2 margin of 10.7%
— Diluted EPS of $0.57; Adjusted EPS2 of $0.91, up 32%
— Bookings and options1 of $2.0 billion with 1.0x book-to-bill1
Fiscal Year 2024 Highlights (All comparisons versus prior year period unless noted.)
— Revenues of $7.7 billion, up 11% (9% organic)
— Net income attributable to KBR of $375 million; Adjusted EBITDA2 of $870 million, up 16% with an Adjusted EBITDA2 margin of 11.2%
— Diluted EPS of $2.79; Adjusted EPS2 of $3.34, up 15%
— Operating cash flows of $462 million, 103% Operating cash conversion2
— Bookings and options1 of $8.8 billion with 1.1x book-to-bill1
— Returned $297 million of value to shareholders through share repurchases and dividends
KBR, Inc. (NYSE: KBR) today announced its fourth quarter and fiscal year 2024 results.
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“KBR delivered sustained performance throughout the year culminating in a strong fourth quarter, with significant revenue and earnings growth as well as margin expansion,” said Stuart Bradie, President and CEO. “During 2024, we maintained our industry-leading safety record, met or exceeded our full year guidance, and advanced our strategy. In addition, we executed a realignment of our segments to better serve our customers and end markets, reduce costs, and open a larger pipeline of opportunities. We also expanded our capabilities with the acquisition ofLinQuest, a leading provider of advanced engineering, data analytics and digital capabilities for national security and military space missions.”
Mr. Bradie continued, “We believe our business portfolio is well aligned with the priorities of the new administration in the U.S., especially in the areas of national security and energy policy. Our unique and diverse global portfolio, which serves both commercial and government clients in mission critical and key operational functions, offers resilience given issues present in the world today. As measured from our fiscal year 2024 results, more than 60% of Adj. EBITDA contribution is from non-U.S. government customers. This positioning enables us to approach our fiscal year 2025 outlook with a high degree of confidence, with more than 75% of our projected Revenues already under contract across our global, diversified contract base.”
SummarizedFourth Quarter and Fiscal Year 2024 Consolidated Results
Fourth Quarter 2024 Consolidated Results Review (All comparisons against the fourth quarter 2023 unless noted.)
Revenueswere $2.1 billion, up 23% or $392 million, primarily driven by on-contract growth across all Government Solutions business units, contributions from the LinQuest acquisition, and growing demand in Sustainable Technology Solutions from engineering and professional services and technology licensing.
Operating income was $142 million, down 4% or $5 million, primarily due to a $26 million resolution of an outstanding contract dispute associated with a legacy U.S. government project.
Net income attributable to KBR was $76 million, up 262% or $55 million, primarily due to a $66 million non-cash chargein the prior year period related to the election of cash as the settlement method for our Convertible Notes that did not recur in the current year period.
Diluted earnings per share were$0.57, up 280% or $0.42, primarily due to higher Net income attributable to KBR noted above and lower diluted weighted average common shares outstanding in the current year period.
Adjusted EBITDA2 was $228 million, up 21% or $40 million, generally in line with the growth in Revenues. Adjusted EBITDA2 margin was 10.7%, generally in line with the prior period.
Adjusted earnings per share2 were $0.91, up 32% or $0.22, due to the increase in Adjusted EBITDA2 noted above, favorable Other non-operating income results from foreign exchange, and lower adjusted weighted average common shares outstanding; partially offset by higher interest expense.
Backlogand options as of the fiscal year end totaled $21.2 billion. Book-to-bill1 was 1.0x for the quarter and 1.1x on a trailing-twelve-months basis.
Summarized Fourth Quarter and Fiscal Year 2024 Segment Results
Fourth Quarter 2024 Segment Results Review (All comparisons against the fourth quarter 2023 unless noted.)
Government Solutions (GS) Revenues were $1,598 million, up 20% or $270 million, driven by new and on-contract growth across all business units and$140 million from the LinQuest acquisition.
Operatingincome was $91 million, down 12% or $12 million, primarily due to a $26 million resolution of an outstanding contract dispute associated with a legacy U.S. government project. Operating income margin was 5.7%.
Adjusted EBITDA2 was $150 million, up 17% or $22 million, generally in line with the growth in Revenues. Adjusted EBITDA2 margin was 9.4%, generally in line with the prior year period.
Backlog and options as of the fiscal year end totaled $17.5 billion. Book-to-bill1 was 0.9x for the quarter and 1.1x on a trailing-twelve months basis.
The following new business awards were announced:
— Awarded $187 million U.S. State Department Task Order for Medical Support Services in Iraq
— Awarded $445 million DoD Contract for Joint Mission Environment Test Capability Program
— Awarded $88 million Contract to Provide Rapid Prototyping for Naval Air Systems Command
Sustainable Technology Solutions (STS) Revenues were $524 million, up 30% or $122 million, driven by increasing demand for sustainable technologies and services.
Operatingincome was $93 million, up 15% or $12 million, generally in line with the growth in Revenues but partially offset by a $10 million non-cash charge recorded in Equity in earnings (losses) of unconsolidated affiliates in the current quarter related to foreign currency remeasurement of a contingent liability on the legacy Ichthys project. Operating income margin was 17.7%.
Adjusted EBITDA2 was $108 million, up 27% or $23 million, generally in line with the growth in Revenues. Adjusted EBITDA2 margin was 20.6%, generally in line with the prior year period.
Backlog as of the fiscal year end totaled $3.7 billion. Book-to-bill1 was 1.3x for the quarter and 1.1x on a trailing-twelve months basis.
The following new business awards were announced:
— Selected to Provide Technology Licensing and Proprietary Engineering Design for Lithium Extraction Demonstration Plant in the UK
— Awarded Contract to Support Sustainable Energy Production in Saudi Arabia
— Awarded Global Agreement with BP to Provide EPCM Services
— Awarded FEED Contract for LNG Project in Sur, Oman
— Ammonia Technology Selected by KazAzot, Kazakhstan
— Ammonia Technology Selected by AMUFERT, Angola
Balance Sheet, Cash Flow, and Capital Deployment Liquidity as of January 3, 2025, totaled approximately $1 billion, comprising $655 million in borrowing capacity under the revolving credit facility and $350 million cash on hand. Net leverage ratio as of January 3, 2025, was 2.6x.
Operating cash flows for the fiscal year were $462 million with Operating cash conversion2 of 103%. Operating cash flows in the fourth quarter and fiscal year were reduced due to a pre-funding of our 2025 pension obligation to our U.K pension plan for approximately £17 million ($21 million at exchange rate as of January 3, 2025).
During the fiscal year, KBR returned $297 million in capital to shareholders, consisting of $218 million in share repurchases and $79 million in regular dividends.
On February 20, 2025, the Board of Directors approved a 10% increase to the dividend, resulting in a quarterly dividend of $0.165 per share, or $0.66 per share annualized. The dividend is payable April 15, 2025, to shareholders of record on March 14, 2025. In addition, the Board increased the total amount authorized and available for repurchase under the share repurchase program to $750 million.
Segment Realignment To streamline and optimize our processes, we realigned our segments effective for fiscal 2025. As part of this realignment, our Government Solutions reportable segment has been renamed Mission Technology Solutions, while Sustainable Technology Solutions has retained its name. The international business contained within Government Solutions has been integrated into both Mission Technology Solutions and Sustainable Technology Solutions. The Company will begin reporting the new segment information beginning the first fiscal quarter of 2025.
Fiscal Year 2025 Guidance KBR issues the following outlook for fiscal year 2025:
The company does not provide reconciliations of Adjusted EBITDA and Adjusted EPS to the most comparable GAAP financial measures on a forward-looking basis because the company is unable to predict with reasonable certainty the ultimate outcome of legal proceedings, unusual gains and losses, and acquisition-related expenses without unreasonable effort, which could be material to the company's results computed in accordance with GAAP.
Managementhas provided the following assumptions related to fiscal year 2025 guidance:
— Adjusted weighted average common shares outstanding: ~133 million
— Depreciation & amortization: ~$165 million (includes ~$45 million purchased intangibles amortization)
— Capital expenditures: ~$50 – 65 million
— Effective tax rate: 25% – 27%
— Adjusted EPS phasing: 47% 1H / 53% 2H
Conference Call Details The company will host a conference call to discuss its fourth quarter and fiscal year 2024 results on Monday, February24, 2025, at 3:00 p.m. Central Time. The conference call will be webcast simultaneously through the Investor Relations section of KBR's website at investors.kbr.com. A replay of the webcast will be available shortly after the call on KBR's website or by telephone at +1.866.813.9403, passcode: 718317.
About KBR We deliver science, technology and engineering solutions to governments and companies around the world. KBR employs approximately 38,000 people worldwide with customers in more than 80 countries and operations in over 29 countries. KBR is proud to work with its customers across the globe to provide technology, value-added services, and long-term operations and maintenance services to ensure consistent delivery with predictable results. At KBR, We Deliver. Visit www.kbr.com
Forward-Looking Statements The statements in this press release that are not historical statements, including statements regarding our expectations for our future financial performance, effective tax rate, operating cash flows, contract revenues, award activity and backlog, program activity, our business strategy, business opportunities, interest expense, our plans for raising and deploying capital and paying dividends, are forward-looking statements within the meaning of the federal securities laws. These statements are subject to numerous risks and uncertainties, many of which are beyond the company's control that could cause actual results to differ materially from the results expressed or implied by the statements. These risks and uncertainties include, but are not limited to: uncertainty, delays or reductions in government funding, appropriations and payments, including as a result of continuing resolution funding mechanisms, government shutdowns or changing budget priorities; developments and changes in government laws, regulations and regulatory requirements and policies that may require us to pause, delay or abandon new and existing projects; changes in the priorities, focus, authority and budgets of government agencies under the new administration that may impact our existing projects and/or our ability to win new contracts; the ongoing conflict between Russia and Ukraine and volatility and continued unrest in the Middle East and the related impacts on our business; potential adverse economic and market conditions, such as interest rate and currency exchange rate fluctuations, the company's ability to manage its liquidity; the outcome of and the publicity surrounding audits and investigations by domestic and foreign government agencies and legislative bodies; potential adverse proceedings by such agencies and potential adverse results and consequences from such proceedings; changes in capital spending by the company's customers; the company's ability to obtain contracts from existing and new customers and perform under those contracts; structural changes in the industries in which the company operates; escalating costs associated with and the performance of fixed-fee projects and the company's ability to control its cost under its contracts; claims negotiations and contract disputes with the company's customers; changes in the demand for or price of oil and/or natural gas; protection of intellectual property rights; compliance with environmental laws; compliance with laws related to income taxes; unsettled political conditions, war and the effects of terrorism; foreign operations and foreign exchange rates and controls; the development and installation of financial systems; the possibility of cyber and malware attacks; increased competition for employees; the ability to successfully complete and integrate acquisitions; investment decisions by project owners; and operations of joint ventures, including joint ventures that are not controlled by the company.
The company's most recently filed Annual Report on Form 10-K, any subsequent 8-Ks, and other U.S. Securities and Exchange Commission filings discuss some of the important risk factors that the company has identified that may affect its business, results of operations and financial condition. Except as required by law, the company undertakes no obligation to revise or update publicly any forward-looking statements for any reason.
For further information, please contact:
Investors Jamie DuBray Vice President, Investor Relations 713-753-2133 Investors@kbr.com
Media Philip Ivy Vice President, Global Communications 713-753-3800 Mediarelations@kbr.com
Unaudited Non-GAAP Financial Information The following information provides reconciliations of certain non-GAAP financial measures presented in the press release to which this reconciliation is attached to the most directly comparable financial measures calculated and presented in accordance with generally accepted accounting principles (GAAP). The company has provided the non-GAAP financial information presented in the press release as information supplemental and in addition to the financial measures presented in the press release that are calculated and presented in accordance with GAAP. Such non-GAAP financial measures should not be considered superior to, as a substitute for or alternative to, and should be considered in conjunction with, the GAAP financial measures presented in the press release. The non-GAAP financial measures in the press release may differ from similar measures used by other companies.
Adjusted EBITDA We evaluate performance based on Adjusted EBITDA and Adjusted EBITDA margin. Adjusted EBITDA is defined as Net income (loss) attributable to KBR, plus Interest expense; Accretion of Convertible Notes debt discounts; Other non-operating expense (income); Provision for income taxes; Depreciation and amortization; and certain discrete items as identified by Management to be non-recurring in nature as set forth below. Adjusted EBITDA can also be defined as Operating income less Net income attributable to noncontrolling interests; plus Depreciation and amortization; and certain discrete items as identified by Management to be non-recurring in nature as set forth below. Adjusted EBITDA margin is calculated as Adjusted EBITDA divided by Revenues. Adjusted EBITDA and Adjusted EBITDA margin for each of the three- and twelve-month periods ended January 3, 2025 and December 29, 2023 are considered non-GAAP financial measures under SEC rules because Adjusted EBITDA excludes certain amounts included in the calculation of Net income (loss) attributable to KBR in accordance with GAAP for such periods. Management believes Adjusted EBITDA and Adjusted EBITDA margin afford investors a view of what management considers KBR's core performance for each of the three- and twelve-month periods ended January 3, 2025 and December 29, 2023 and also affords investors the ability to make a more informed assessment of such core performance for the comparable periods.
Adjusted EPS Adjusted earnings per share (Adjusted EPS) for each of the three- and twelve-month periods ended January 3, 2025 and December 29, 2023 is considered a non-GAAP financial measure under SEC rules because Adjusted EPS excludes certain amounts included in the Diluted EPS calculated in accordance with GAAP for such periods. The most directly comparable financial measure calculated in accordance with GAAP is Diluted EPS for the same periods. Management believes that Adjusted EPS affords investors a view of what management considers KBR's core earnings performance for each of the three- and twelve-month periods ended January 3, 2025 and December 29, 2023 and also affords investors the ability to make a more informed assessment of such core earnings performance for the comparable periods.
Adjusted Operating Cash Flows Adjusted operating cash flows, Operating cash conversion, and Adjusted operating cash conversion are considered non-GAAP financial measures under SEC rules. Adjusted operating cash flows exclude certain amounts included in the cash flows provided by operating activities calculated in accordance with GAAP. Operating cash conversion and Adjusted operating cash conversion are calculated as Operating cash flows or Adjusted operating cash flows divided by Adjusted weighted average common shares outstanding, which is then divided by Adjusted earnings per share. The most directly comparable financial measure calculated in accordance with GAAP is cash flows provided by operating activities. Management believes that Adjusted operating cash flows afford investors a view of what management considers KBR's core operating cash flow performance for each of the three- and twelve-month periods ended January 3, 2025 and December 29, 2023 and also afford investors the ability to make a more informed assessment of such core operating cash generation performance.
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SOURCE KBR, Inc.
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