Delaware | 1-33146 | 20-4536774 |
(State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
601 Jefferson Street | ||
Suite 3400 | ||
Houston, Texas 77002 | ||
(Address of principal executive offices) |
(d) | Exhibits |
KBR, Inc. press release dated April 26, 2018 titled, “KBR Announces First Quarter 2018 Financial Results.” |
KBR, INC. | ||
April 26, 2018 | /s/ Adam M. Kramer | |
Adam M. Kramer | ||
Vice President, Public Law and Corporate Secretary |
• | Strong earnings of $138 million, up 273% versus prior year |
• | GAAP EPS of $0.97; Adjusted EPS of $0.34, up 273% and 21% respectively |
• | Adjusted EPS Guidance re-affirmed at $1.35-$1.45 |
• | Recently Completed (April 2018) the Acquisitions of SGT and Carillion’s interest in Aspire Defence |
![]() | HOUSTON, Texas - April 26, 2018 - KBR, Inc. (NYSE: KBR), a global provider of differentiated, professional services and technologies across the asset and program life cycle within the government services and hydrocarbons industries today announced first quarter 2018 financial results. |
Three Months Ended March 31, | % Change | ||||||||||
Dollars in millions | 2018 | 2017 | |||||||||
Revenue | $ | 1,038 | $ | 1,106 | (6 | )% | |||||
Gross Profit | $ | 81 | $ | 82 | (1 | )% | |||||
Equity in earnings of unconsolidated affiliates | $ | 23 | $ | 9 | 156 | % | |||||
Gain on consolidation of Aspire entities | $ | 115 | $ | — | N/A | ||||||
Net income attributable to KBR | $ | 138 | — | $ | 37 | 273 | % | ||||
Adjusted EBITDA (1) | $ | 84 | $ | 77 | 9 | % | |||||
Diluted EPS | $ | 0.97 | $ | 0.26 | 273 | % | |||||
Adjusted EPS (1) | $ | 0.34 | $ | 0.28 | 21 | % | |||||
Operating cash flows | $ | (130 | ) | $ | (115 | ) | (13 | )% | |||
(1) See additional information at the end of this release regarding non-GAAP financial measures |
• | We are changing the name of the Engineering & Construction (E&C) segment to the “Hydrocarbons Services” segment (HS). This change reflects strategic shifts we have made in this business over recent years to evolve to more recurring and reimbursable engineering, consulting and industrial maintenance services, coupled our de-emphasis in engaging in fixed price EPC projects except for those that fit within our commercial discipline. |
• | We have moved the Consulting division formerly reported in the Technology and Consulting segment to the Hydrocarbons Services segment. This aligns with our focus on high technology professional services engagements across the full life cycle of projects in Hydrocarbon end markets. |
• | We were awarded a $42 million contract by the U.K. Ministry of Defence to bring into service a water purification, storage and distribution system to deliver potable water to deployed U.K. forces. |
• | We were awarded a $32 million task order to assist the U.S. Air Force in enhancing the operational capability and efficiency of air and space systems. |
• | We were awarded a $34 million task order to provide analytical and engineering weapons systems support to assist the U.S. Air Force with air traffic safety and cyber threats. |
• | We were awarded a $69 million indefinite-delivery/indefinite-quantity contract to provide engineering and technical services to the Naval Air Warfare Center Aircraft Division. |
• | We were awarded an ammonia plant contract by Toyo Engineering Corporation to provide licensing and basic engineering design services for the HURL project in Gorakhpur, India. |
• | We were awarded a license and engineering contract by ENAP Refinerias SA to utilize our ROSE solvent deasphalting technology at their refinery in Chile. |
• | We have entered into an agreement with PT Panca Amara Utama to provide our Ammonia InSite technology for their ammonia plant complex in Indonesia. |
• | We were awarded (April) a significant reimbursable pre FEED and FEED for a major petrochemicals complex in the ME. |
• | We were awarded a FEED leading to reimbursable EPC for a refinery expansion for a tier 1 customer in Texas. |
• | Government Services, serving government customers globally, including capabilities that cover the full life-cycle of defense, space, aviation and other government programs and missions from research and development, through systems engineering, test and evaluation, program management, to operations, maintenance, and field logistics |
• | Technology, including proprietary technology focused on the monetization of hydrocarbons (especially natural gas and natural gas liquids) in ethylene and petrochemicals; ammonia, nitric acid and fertilizers; oil refining and gasification |
• | Hydrocarbons Services, including onshore oil and gas; LNG (liquefaction and regasification)/GTL; oil refining; petrochemicals; chemicals; fertilizers; differentiated EPC; maintenance services (Brown & Root Industrial Services); offshore oil and gas (shallow-water, deep-water, subsea); floating solutions (FPU, FPSO, FLNG & FSRU); program management and consulting services |
Three Months Ended | |||||||
March 31, | March 31, | ||||||
2018 | 2017 | ||||||
Revenues: | |||||||
Government Services | $ | 677 | $ | 515 | |||
Technology | 62 | 66 | |||||
Hydrocarbons Services | 299 | 499 | |||||
Subtotal | 1,038 | 1,080 | |||||
Non-strategic Business | — | 26 | |||||
Total revenues | 1,038 | 1,106 | |||||
Gross profit (loss): | |||||||
Government Services | 52 | 37 | |||||
Technology | 16 | 14 | |||||
Hydrocarbons Services | 15 | 33 | |||||
Subtotal | 83 | 84 | |||||
Non-strategic Business | (2 | ) | (2 | ) | |||
Total gross profit | 81 | 82 | |||||
Equity in earnings of unconsolidated affiliates: | |||||||
Government Services | 8 | 9 | |||||
Hydrocarbons Services | 15 | — | |||||
Subtotal | 23 | 9 | |||||
Non-strategic Business | — | — | |||||
Total equity in earnings of unconsolidated affiliates | 23 | 9 | |||||
General and administrative expenses | (35 | ) | (32 | ) | |||
Acquisition and integration related costs | (3 | ) | — | ||||
Gain on disposition of assets | — | 4 | |||||
Gain on consolidation of Aspire entities | 115 | — | |||||
Operating income | 181 | 63 | |||||
Interest expense | (6 | ) | (5 | ) | |||
Other non-operating expense | (2 | ) | (7 | ) | |||
Income before income taxes and noncontrolling interests | 173 | 51 | |||||
Provision for income taxes | (34 | ) | (13 | ) | |||
Net income | 139 | 38 | |||||
Net income attributable to noncontrolling interests | (1 | ) | (1 | ) | |||
Net income attributable to KBR | $ | 138 | $ | 37 | |||
Net income attributable to KBR per share: | |||||||
Basic | $ | 0.98 | $ | 0.26 | |||
Diluted | $ | 0.97 | $ | 0.26 | |||
Basic weighted average common shares outstanding | 140 | 143 | |||||
Diluted weighted average common shares outstanding | 140 | 143 | |||||
Cash dividends declared per share | $ | 0.08 | $ | 0.08 |
March 31, | December 31, | |||||||
2018 | 2017 | |||||||
(Unaudited) | ||||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and equivalents | $ | 486 | $ | 439 | ||||
Accounts receivable, net of allowance for doubtful accounts of $12 and $12 | 861 | 510 | ||||||
Contract assets | 235 | 383 | ||||||
Other current assets | 102 | 93 | ||||||
Total current assets | 1,684 | 1,425 | ||||||
Claims and accounts receivable | 106 | 101 | ||||||
Property, plant, and equipment, net of accumulated depreciation of $336 and $329 (including net PPE of $43 and $34 owned by a variable interest entity) | 142 | 130 | ||||||
Goodwill | 1,011 | 968 | ||||||
Intangible assets, net of accumulated amortization of $128 and $122 | 478 | 239 | ||||||
Equity in and advances to unconsolidated affiliates | 566 | 387 | ||||||
Deferred income taxes | 289 | 300 | ||||||
Other assets | 130 | 124 | ||||||
Total assets | $ | 4,406 | $ | 3,674 | ||||
Liabilities and Shareholders' Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 685 | $ | 350 | ||||
Contract liabilities | 334 | 368 | ||||||
Accrued salaries, wages and benefits | 186 | 186 | ||||||
Nonrecourse project debt | 11 | 10 | ||||||
Other current liabilities | 147 | 157 | ||||||
Total current liabilities | 1,363 | 1,071 | ||||||
Pension obligations | 392 | 391 | ||||||
Employee compensation and benefits | 102 | 118 | ||||||
Income tax payable | 86 | 85 | ||||||
Deferred income taxes | 81 | 18 | ||||||
Nonrecourse project debt | 29 | 28 | ||||||
Revolving credit agreement | 540 | 470 | ||||||
Deferred income from unconsolidated affiliates | — | 101 | ||||||
Other liabilities | 182 | 171 | ||||||
Total liabilities | 2,775 | 2,453 | ||||||
KBR shareholders' equity: | ||||||||
Preferred stock | — | — | ||||||
Common stock | — | — | ||||||
Paid-in capital in excess of par | 2,094 | 2,091 | ||||||
Accumulated other comprehensive loss | (912 | ) | (921 | ) | ||||
Retained earnings | 1,148 | 877 | ||||||
Treasury stock | (818 | ) | (818 | ) | ||||
Total KBR shareholders' equity | 1,512 | 1,229 | ||||||
Noncontrolling interests | 119 | (8 | ) | |||||
Total shareholders' equity | 1,631 | 1,221 | ||||||
Total liabilities and shareholders' equity | $ | 4,406 | $ | 3,674 |
Three Months Ended | |||||||
March 31, | March 31, | ||||||
2018 | 2017 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 139 | $ | 38 | |||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||||||
Depreciation and amortization | 13 | 13 | |||||
Equity in earnings of unconsolidated affiliates | (23 | ) | (9 | ) | |||
Deferred income tax expense | 25 | 5 | |||||
Gain on consolidation of Aspire entities | (115 | ) | — | ||||
Other | 11 | 6 | |||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable, net of allowance for doubtful accounts | (171 | ) | 38 | ||||
Contract assets | (44 | ) | 4 | ||||
Accounts payable | 110 | (75 | ) | ||||
Contract liabilities | (43 | ) | (124 | ) | |||
Accrued salaries, wages and benefits | 2 | 16 | |||||
Reserve for loss on uncompleted contracts | (3 | ) | (22 | ) | |||
Payments from unconsolidated affiliates, net | 1 | 1 | |||||
Distributions of earnings from unconsolidated affiliates | 1 | 14 | |||||
Income taxes payable | 12 | 6 | |||||
Pension funding | (10 | ) | (9 | ) | |||
Retainage payable | — | — | |||||
Subcontractor advances | (1 | ) | — | ||||
Net settlement of derivative contracts | 3 | (2 | ) | ||||
Other assets and liabilities | (37 | ) | (15 | ) | |||
Total cash flows used in operating activities | (130 | ) | (115 | ) | |||
Cash flows from investing activities: | |||||||
Purchases of property, plant and equipment | (9 | ) | (3 | ) | |||
Payments for investments in equity method joint ventures | (72 | ) | — | ||||
Acquisition of businesses, net of cash acquired | — | 2 | |||||
Increase in cash due to consolidation of Aspire entities | 205 | — | |||||
Other | 1 | — | |||||
Total cash flows provided by (used in) investing activities | 125 | (1 | ) | ||||
Cash flows from financing activities: | |||||||
Payments to reacquire common stock | (2 | ) | (2 | ) | |||
Acquisition of noncontrolling interest | (6 | ) | — | ||||
Distributions to noncontrolling interests | — | (1 | ) | ||||
Payments of dividends to shareholders | (11 | ) | (12 | ) | |||
Net proceeds from issuance of common stock | — | — | |||||
Borrowings on revolving credit agreement | 70 | — | |||||
Other | — | — | |||||
Total cash flows provided by (used in) financing activities | 51 | (15 | ) | ||||
Effect of exchange rate changes on cash | 1 | 5 | |||||
Increase (decrease) in cash and equivalents | 47 | (126 | ) | ||||
Cash and equivalents at beginning of period | 439 | 536 | |||||
Cash and equivalents at end of period | $ | 486 | $ | 410 |
March 31, | December 31, | ||||||
2018 | 2017 | ||||||
Government Services | $ | 11,133 | $ | 8,355 | |||
Technology | 423 | 387 | |||||
Hydrocarbons Services | 1,596 | 1,822 | |||||
Subtotal | 13,152 | 10,564 | |||||
Non-strategic Business | 5 | 6 | |||||
Total backlog | $ | 13,157 | $ | 10,570 |
(a) | Backlog generally represents the dollar amount of revenues we expect to realize in the future as a result of performing work on contracts and our pro-rata share of work to be performed by unconsolidated joint ventures. We generally include total expected revenues in backlog when a contract is awarded under a legally binding agreement. In many instances, arrangements included in backlog are complex, nonrepetitive and may fluctuate due to the release of contracted work in phases by the customer. Additionally, nearly all contracts allow customers to terminate the agreement at any time for convenience. Where contract duration is indefinite and clients can terminate for convenience without having to compensate us for periods beyond the date of termination, projects included in backlog are limited to the estimated amount of expected revenues within the following twelve months. Certain contracts provide maximum dollar limits, with actual authorization to perform work under the contract agreed upon on a periodic basis with the customer. In these arrangements, only the amounts authorized are included in backlog. For projects where we act solely in a project management capacity, we only include the value of our services on each project in backlog. |
Three Months Ended March 31, | |||||||
Dollars in millions | 2018 | 2017 | |||||
Net Income Attributable to KBR | $ | 138 | $ | 37 | |||
Add Back: | |||||||
Interest expense | 6 | 5 | |||||
Provision for income taxes | 34 | 13 | |||||
Other non-operating expense | 2 | 7 | |||||
Depreciation and amortization | 13 | 13 | |||||
Consolidated EBITDA | $ | 193 | $ | 75 | |||
Add Back: | |||||||
Legacy legal fees | 3 | 2 | |||||
Acquisition and integration related costs | 3 | — | |||||
Gain on consolidation of Aspire entities | (115 | ) | — | ||||
Adjusted EBITDA | $ | 84 | $ | 77 |
Three Months Ended March 31, | |||||||
2018 | 2017 | ||||||
Diluted earnings per share: | |||||||
Reported EPS | $ | 0.97 | $ | 0.26 | |||
Adjustment: | |||||||
Legacy legal costs | $ | 0.01 | $ | 0.02 | |||
Acquisition and integration related costs | $ | 0.02 | $ | — | |||
Amortization related to acquisitions | $ | 0.01 | $ | — | |||
Aspire gain on consolidation | $ | (0.67 | ) | $ | — | ||
Adjusted EPS | $ | 0.34 | $ | 0.28 |
Low | High | ||||||
Diluted earnings per share: | |||||||
EPS Guidance | $ | 1.85 | $ | 1.95 | |||
Adjustments: | |||||||
Legacy Legal Fees | $ | 0.07 | $ | 0.07 | |||
Acquisition & Integration Related Expenses | $ | 0.04 | $ | 0.04 | |||
Amortization Related to Aspire Acquisition | 0.06 | 0.06 | |||||
Aspire Gain on Consolidation | $ | (0.67 | ) | $ | (0.67 | ) | |
Adjusted EPS | $ | 1.35 | $ | 1.45 |
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