• Revenue: $2.1 billion in Q4; $7.7 billion for FY 2024, representing 23% growth for the quarter and 11% for the year.
• Adjusted EBITDA: $228 million in Q4; $870 million for FY 2024, with a margin of 11.2%, up 50 basis points year over year.
• Adjusted EPS: $0.91 in Q4, up 32% year over year; $3.34 for FY 2024, up 15% from the previous year.
• Operating Cash Flow: $462 million for FY 2024, with a conversion rate of 103% to net income.
• Net Leverage: Ended 2024 with a net leverage of 2.6 times.
• Book to Bill Ratio: 1.1 times for FY 2024.
• Backlog and Options: Over $21 billion.
• Dividend Increase: 10% increase to $0.165 per annum, effective March.
• 2025 Guidance: Revenue of $8.7 billion to $9.1 billion; Adjusted EBITDA of $950 million to $990 million; Adjusted EPS of $3.71 to $3.95; Operating Cash Flow of $500 million to $550 million.

• Warning! GuruFocus has detected 3 Warning Sign with KBR.

Release Date: February 24, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• KBR Inc (NYSE:KBR) reported strong financial performance for Q4 and full year 2024, with revenues of $2.1 billion for the quarter and $7.7 billion for the year, exceeding guidance.
• The company achieved double-digit growth, with a 23% increase in Q4 and 11% for the year, driven by strong execution and operational efficiency.
• KBR Inc (NYSE:KBR) successfully expanded its portfolio with significant contract wins, including a $445 million Department of Defense contract and new ammonia projects in Angola and Kazakhstan.
• The acquisition of LinQuest has been successfully integrated, contributing approximately $400 million to 2025 revenue, and enhancing KBR's capabilities in military space and digital engineering.
• KBR Inc (NYSE:KBR) has a strong backlog and options totaling over $21 billion, with 75% of 2025 work already under contract, providing a solid foundation for future growth.

Negative Points

• The HomeSafe program, a significant growth driver, is still in the early stages of ramp-up, with negligible profit contribution expected in 2025.
• There are potential risks associated with the political and economic environment, including the possibility of a full-year continuing resolution for the US government fiscal 2025.
• Equity income performance in Q4 was lower due to non-cash adjustments and scope changes in projects, impacting the overall financial results.
• The integration of LinQuest, while successful, requires ongoing collaboration and alignment to fully realize synergies and growth potential.
• KBR Inc (NYSE:KBR) faces challenges in the timing of awards and bookings, particularly in the mission technology segment, due to potential delays in government contract decisions.

Q & A Highlights

Q: Can you provide more details on the revenue outlook for 2025, particularly regarding contributions from HomeSafe and LinQuest? A: Mark Sopp, CFO, explained that the revenue guidance of $8.7 billion to $9.1 billion represents a 15% growth at the midpoint. HomeSafe is expected to contribute $300 million to $500 million, while LinQuest is anticipated to add approximately $400 million. LinQuest is performing well, aligning with original expectations and contributing positively to KBR's capabilities.

Q: How is the success with Plaquemines LNG influencing discussions with other potential projects? A: Stuart Bradie, CEO, noted that the success of Plaquemines LNG is generating interest in the LNG market, with operators considering expansions and debottlenecking. The global demand for LNG is expected to grow, and KBR is well-positioned to capitalize on this trend, with ongoing discussions for new projects.

Q: What are the main drivers for 2025 growth, particularly in international markets? A: Stuart Bradie highlighted that international growth will be driven by increased government spending, particularly in Europe and Australia. The sustainable technology segment is also seeing growth in the Middle East and Asia, with a focus on energy security and infrastructure projects.

Q: Can you elaborate on the impact of the HomeSafe program on EBITDA margins? A: Stuart Bradie mentioned that HomeSafe is in a ramp-up phase, and while it is expected to contribute significantly to revenue, its impact on EBITDA margins in 2025 will be negligible due to the transformational nature of the program.

Q: How is the bidding process progressing in the mission technology business, and what is the outlook for bookings? A: Stuart Bradie stated that KBR has increased its bid volume significantly, with $1.5 billion in awards under protest and $17 billion awaiting decisions. The company expects a strong bookings landscape, supported by unique contract vehicles that facilitate quicker procurement and revenue generation.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.