Houston's KBR Posts a Strong Third Quarter: Revenue Up 5 Percent to $2.0 Billion as Its Two Companies Prepare to Launch Separately in January
Net income rose 16 percent to $133 million and the technology segment grew 26 percent, even as the government-services side shrank on NASA reductions - the last full quarter before KBR and Trinzic split.
HOUSTON - KBR, the Houston engineering and government-services company, reported a strong third quarter on Thursday as it prepares to split into two independent companies in January. Revenue was $2.0 billion, up 5 percent from a year earlier; net income attributable to KBR was $133 million, up 16 percent; adjusted EBITDA was $268 million, up 12 percent; and diluted earnings per share were $1.06, up 18 percent. Bookings and options in the quarter were $2.4 billion, and backlog and options stood at $23.1 billion at quarter's end. 'We delivered a strong third quarter, with profitable growth and solid execution across both businesses reinforcing our confidence in the full-year outlook,' President and CEO Stuart Bradie said.
The two halves of the company are moving in opposite directions, and the release says so plainly. Sustainable Technology Solutions - the energy and chemicals technology business - grew revenue 26 percent to $762 million and reached a record $5.8 billion backlog. Mission Technology Solutions, the government-services side, saw revenue fall 5 percent to $1.266 billion on anticipated reductions in NASA programs, partially offset by growth with Defense & Intelligence and International Government customers; its new awards include the re-awarded Antarctic Science and Engineering Support Contract, with an $8 billion ceiling, supporting the U.S. Antarctic Program. Operating income overall was $186 million, down 3 percent, as higher gross profit was offset by spin-off costs and higher administrative expenses.
The split is the strategic story. KBR said it hit separation milestones in the quarter, including publication of the Form 10 registration and implementation of key standalone systems, with leadership teams in place for both companies. 'KBR and Trinzic are well positioned to launch as independent companies in January,' Bradie said. The company ended the quarter with about $1.1 billion in liquidity and a net leverage ratio of 2.1x. Year to date, revenue is $5.9 billion, up 1 percent, and net income is $331 million, up 9 percent.
