Yahoo Finance KBR (KBR) Down 1.7% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for KBR Inc. (KBR). Shares have lost about 1.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is KBR due for a breakout? 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's Q1 Earnings & Revenues Beat Estimates, Backlog High
KBR, Inc. reported better-than-expected results for first-quarter 2024 (ended Mar 29), wherein earnings and revenues surpassed the Zacks Consensus Estimate.
Both earnings and revenues grew on a year-over-year basis, particularly showcasing solid performance in adjusted EBITDA and operating cash flow. Bookings during the quarter were well-aligned with end markets across energy security, national defense, human performance, and sustainability.
However, persistent inflationary pressures may necessitate a prolonged period of higher interest rates by the Federal Reserve. The convergence of these factors, along with a notable drop in consumer confidence, exerted significant downward pressure on equities.
Inside the Headlines
Adjusted earnings per share (EPS) of 77 cents topped the consensus estimate of 70 cents by 10% and grew 15% from a year ago.
Total revenues of $1.82 billion beat the consensus mark of $1.8 billion by 1.1% but grew 7% year over year. This growth was predominantly driven by expansion in Sustainable Technology Solutions and notable advancements within Government Solutions. Specifically, 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 Readiness & Sustainment, attributed to delays in Ukraine funding.
Adjusted EBITDA increased 14% year over year to $207 million in the quarter. Adjusted EBITDA margin was up 70 basis points to 11.4%.
Segmental & Backlog Details
Revenues in the Government Solutions or GS segment increased 4.4% year over year to $1.39 billion. The upside was backed by new and on-contract growth across its businesses.
Adjusted EBITDA was $140 million, up from $132 million in the prior-year quarter. Also, adjusted EBITDA margin of 10.1% grew 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 15% year over year to $432 million, driven by increased sustainable services and technology.
Adjusted EBITDA increased 15% to $94 million from a year ago. Adjusted EBITDA margin for the segment was down 10 bps to 21.8%. The growth was attributable to a favorable revenue mix, the achievement of certain licensing milestones, joint venture performance and increased demand.
As of Mar 29, 2024, the total backlog (including award options of $3.596 billion) was $20.8 billion compared with $21.73 billion at 2023-end. Of the total backlog, Government Solutions booked $12.89 billion. The Sustainable Technology Solutions segment accounted for $4.36 billion of the total backlog. At the end of the first quarter, the company delivered a trailing 12-month book-to-bill of 1.1x.
Liquidity & Cash Flow
As of Mar 29, 2024, KBR’s cash and cash equivalents were $314 million, up from $304 million at 2023-end. Long-term debt was $1.84 million at the first quarter of 2024-end, up from $1.8 million at 2023-end.
In the first quarter, cash provided by operating activities totaled $91 million, up from $35 million in the year-ago period. It had an adjusted free cash flow of $66 million, up from $16 million a year ago.
Reaffirms 2024 Guidance
KBR still expects total revenues in the range of $7.4-$7.7 billion and an adjusted EBITDA between $810 and $850 million. Adjusted EPS is still projected to be in the band of $3.10-$3.30. Operating cash flow is projected to be in the range of $450-$480 million.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.
VGM Scores
At this time, KBR has a nice Growth Score of B, a grade with the same score on the momentum front. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% 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
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, Inc. (KBR) : Free Stock Analysis Report
