Delivered Strong Fiscal 2023
Results
Settled Convertible Notes & Warrants
without Dilution
Annual Dividend Increase of 11%
HOUSTON, Feb. 20,
2024 /PRNewswire/ -- KBR, Inc. (NYSE: KBR) today
announced its fourth quarter and fiscal 2023 financial results and
issued its fiscal 2024 financial guidance.
"The KBR team has shown their unwavering commitment and
exceptional skills, leading to a remarkable performance this fiscal
year," said Stuart Bradie, KBR
president and CEO. "We achieved an industry leading safety record,
met or exceeded our key financial metrics and delivered a 10%
increase in backlog and options in 2023, a testament to our Team of
Teams' ability to deliver results while ensuring the well-being of
all involved."
"Furthermore, we successfully settled the remaining convertible
notes and related warrants in cash, avoiding dilution. We more
recently extended the maturity of our term loans and revolving
credit facility, fortifying our balance sheet and fueling capital
deployment optionality for 2024 and beyond."
"Lastly, we have a more defined path forward on HomeSafe and
together with our customer remain unwavering in our commitment to
harness our collective expertise and focus on innovation, with the
aim of providing an unparalleled and more sustainable moving
experience for military personnel and their families."
New Business Awards
Backlog and options as of
December 29, 2023 totaled
$21.7 billion. Delivered 1.1x
trailing-twelve-months (TTM) book-to-bill1 as of
December 29, 2023. Awarded
$1.7 billion of bookings and options
in the quarter, bringing fiscal 2023 bookings and options to
$10.5 billion.
Sustainable Technology Solutions (STS) delivered 1.1x TTM
book-to-bill1 as of December 29,
2023, including awards and achievements in the quarter as
follows:
- Awarded a Front-End Engineering Design contract by Fidelis New
Energy for Project Fyrkat, one of the first onshore liquid carbon
dioxide sequestration facilities, located at a receiving terminal
at the Port of Aalborg, Denmark.
- KBR's Purifier™ ammonia technology selected by PT Pupuk
Sriwidjaja Palembang, a subsidiary of PT Pupuk Indonesia, for a
planned ammonia plant to be built in South Sumatera Province,
Indonesia. This will be KBR's
12th ammonia plant licensed to Pupuk Indonesia.
- KBR's K-GreeN® technology selected by a consortium consisting
of Lotte Chemical, Korea National Oil Corp and Samsung Engineering
for Lotte Chemical's H2biscus green ammonia project that will
produce 800 KTA of green ammonia from hydropower in Sarawak, Malaysia.
- KBR's market-leading low-carbon blue ammonia technology
selected by Tokyo-based INPEX
Corporation and Oklahoma
City-based LSB Industries for a 1.1 million tonnes per annum
ammonia production and export project in the US Gulf Coast.
- Extended collaboration with ISU Chemical through a memorandum
of understanding. Under the terms, KBR will provide licensing,
proprietary engineering design, proprietary equipment and catalyst
for the planned 10 MTPD hydrogen production unit, employing KBR's
innovative technology, H2ACT℠, which has rapidly emerged as the
industry's leading ammonia cracking technology.
Government Solutions (GS) delivered 1.2x TTM
book-to-bill1 as of December 29,
2023, including awards and achievements in the quarter as
follows:
- Awarded two additional DEM-Shorad vehicle prototypes, on top of
the four delivered to the Army earlier this year, underscoring the
growing significance of directed energy capabilities.
- Awarded additional scope to support the development of new
energy technologies, systems, and processes as part of the UK
government's drive to net zero carbon emissions by 2050.
Frazer-Nash Consultancy, a KBR company, supports the Department for
Energy Security and Net Zero to develop its programs and to assess
and monitor the projects being delivered within its net zero
innovation portfolio.
- Awarded all three one-year options on the Preservation of the
Force and Family (POTFF) program for the continued support of the
physical, mental, social and spiritual readiness of the Special
Operations Forces and their families.
- Awarded a two-year contract extension with the Australian
Defence Force to help modernize, integrate and optimize
Australia's military capability.
KBR supports the modernization, integration and optimization of
Australia's military capability
through its unique expertise, particularly in Command and Control
and bespoke information and communication technology systems.
- Awarded 2023 Large Business Prime Contractor of the Year at
both NASA Johnson Space Center and NASA Goddard Space Flight
Center, marking a two-year winning streak at Goddard.
- Joined forces with The Henry M. Jackson Foundation for the
Advancement of Military Medicine on an important contract to
support neuroscience research for service members. This new award
focuses on those affected by traumatic brain injuries, and research
will be done in collaboration with the
Uniformed Services University (nation's only federal health
sciences university) and the University of
California San Francisco.
Summarized Fourth Quarter and Fiscal 2023 Financial
Results
|
Three Months
Ended
|
|
Year
Ended
|
|
December
29,
|
|
December
31,
|
|
December
29,
|
|
December
31,
|
Dollars in millions,
except share data
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Revenues
|
$
1,730
|
|
$
1,608
|
|
$
6,956
|
|
$
6,564
|
Operating
income
|
147
|
|
122
|
|
448
|
|
343
|
Net income (loss)
attributable to KBR
|
21
|
|
93
|
|
(265)
|
|
190
|
Adjusted
EBITDA2
|
188
|
|
157
|
|
747
|
|
668
|
Operating income margin
%
|
8.5 %
|
|
7.6 %
|
|
6.4 %
|
|
5.2 %
|
Adjusted
EBITDA2 margin %
|
10.9 %
|
|
9.8 %
|
|
10.7 %
|
|
10.2 %
|
Earnings per
share:
|
|
|
|
|
|
|
|
Diluted earnings
per share
|
0.15
|
|
0.62
|
|
(1.96)
|
|
1.26
|
Adjusted
earnings per share2
|
0.69
|
|
0.69
|
|
2.91
|
|
2.71
|
Cash
flows:
|
|
|
|
|
|
|
|
Operating cash
flows
|
83
|
|
60
|
|
331
|
|
396
|
Adjusted
operating cash flows2
|
83
|
|
88
|
|
463
|
|
424
|
Adjusted free
cash flows2
|
63
|
|
56
|
|
383
|
|
353
|
Financial Highlights for the Three Months Ended December 29, 2023
- Revenue of $1.7 billion, up 8%
(organic) on a year-over-year-basis
- Net income attributable to KBR of $21
million; Adjusted EBITDA2 of $188 million (10.9% Adjusted EBITDA2
margin)
- Diluted EPS of $0.15; Adjusted
EPS2 of $0.69
- Operating cash flows of $83
million
- Bookings and options of $1.7
billion during the quarter with 1.1x TTM
book-to-bill1
Financial Highlights for the Year Ended December 29, 2023
- Revenue of $7.0 billion, up 6%
(organic) on a year-over-year basis and 11% on an (organic)
ex-OAW2 year-over-year-basis
- Net income attributable to KBR of $(265)
million; Adjusted EBITDA2 of $747 million (10.7% Adjusted EBITDA2
margin)
- Diluted EPS of $(1.96); Adjusted
EPS2 of $2.91
- Operating cash flows of $331
million; Adjusted operating cash flows2 of
$463 million
- Bookings and options of $10.5
billion during the year to date period with 1.1x TTM
book-to-bill1
Commentary on the Three Months Ended December 29, 2023
Revenues were
$1.7 billion, up 8% (organic)
compared to 4Q'22, primarily due to new and on-contract growth
across Defense & Intel, Science & Space, and International
within Government Solutions and growing demand broadly across
Sustainable Technology Solutions.
Net income attributable to KBR was $21
million, down $72 million
compared to 4Q'22, primarily due to a non-cash charge of
$40 million recorded in connection
with the convertible notes settlement method election made in 2Q'23
and a charge of $26 million
recorded in connection with the settlement of warrants (discussed
below).
Net income attributable to KBR ex-Nonrecurring
Charges2 was $87 million,
down $6 million compared to 4Q'22,
primarily due to increases in gross profit offset by higher
interest expense, foreign exchange gains that did not recur in
2023, and higher provision for income taxes due to credits
that did not recur in 2023.
Adjusted EBITDA2 was $188
million, up 20% compared to 4Q'22, with Adjusted
EBITDA2 margins of 10.9%, up 110 bps over 4Q'22.
Diluted earnings per share were in line with the decrease in Net
income attributable to KBR. Adjusted earnings per share2
remained flat primarily because the decrease in Net income
attributable to KBR ex-Nonrecurring Charges2 was offset
by the reduction in Adjusted weighted average common shares
outstanding due to repurchases and the cash settlement of
warrants.
Operating cash flows were $83
million, up 38% compared to 4Q'22. Adjusted operating cash
flows were $83 million, down 6%
compared to 4Q'22.
Commentary on the Year Ended December
29, 2023
Revenues were $7.0
billion, up 6% (organic) compared to FY22. Revenue
ex-OAW2 (organic) increased $705
million, or 11%, due to new and on-contract growth across
all Government Solutions business units and growing demand across
Sustainable Technology Solutions.
Net income attributable to KBR was $(265)
million, down $455 million
compared to FY22, primarily due to a current year charge of
$494 million recorded in connection
with the convertible notes settlement method election made in 2Q'23
and repurchase and termination of the convertible notes, note hedge
and warrants (discussed below) and after-tax cash charge of
$132 million in connection with the
settlement of a legacy legal matter, partially offset
by non-cash charge of $137
million in equity in earnings related to the resolution of a
subcontractor dispute that did not recur in FY23.
Net income attributable to KBR ex-Nonrecurring
Charges2 was $361 million,
up $34 million compared to FY22,
primarily due to increases in gross profit and equity in earnings
from unconsolidated affiliates partially offset by increases in
selling, general and administrative expenses, interest expense,
higher provision for income taxes due to credits that did not recur
in FY23, as well as prior year gains on sale of non-core assets and
unrealized gain on other investment that did not recur in FY23.
Adjusted EBITDA2 was $747
million, up 12% compared to FY22, with Adjusted
EBITDA2 margins of 10.7%, up 56 bps.
Diluted earnings per share were in line with the decrease in Net
income attributable to KBR and the reduction in Diluted weighted
average common shares outstanding. Adjusted earnings per
share2 increased in line with Net income attributable to
KBR ex-Nonrecurring Charges2 and the reduction in
Adjusted weighted average common shares outstanding due to
repurchases and the cash settlement of warrants.
Operating cash flows were $331
million, down 16% compared to FY22 due to the after-tax cash
charge of $132 million in connection
with the settlement of a legacy legal matter. Adjusted operating
cash flows2 were $463
million, up 9% compared to FY22, primarily due to increased
Net income attributable to KBR ex-Nonrecurring
Charges2.
Capital returned to shareholders totaled $210 million during the year to date period,
consisting of $138 million in share
repurchases, inclusive of $125
million of open market repurchases and $13 million of repurchases to satisfy
requirements of equity compensation plans, and $72 million in regular dividends.
On February 19, 2024, the Board of
Directors approved an increase of our quarterly regular dividend
from $0.135 per share to $0.15 per share effective for the record date and
payment date of the next scheduled distribution on March 15, 2024 and April
15, 2024, respectively. This represents the fifth successive
year of dividend increases, representing an 11% increase from the
previous regular dividend amount.
Additionally, on February 19,
2024, the Board of Directors authorized replenishment of our
share repurchase authorization to $500 million.
Cash Settlement Method Election and Repurchase of Convertible
Notes
During 4Q'23, KBR settled the remaining convertible
notes in cash, settled the corresponding note hedge and also
entered into agreements with the option counterparties to settle
the remaining warrants in cash. These agreements resulted in the
warrants no longer qualifying for the equity scope exception under
ASC 815 Derivatives and Hedging, and as a result, the
warrants required fair value measurement between the initial
recognition date (agreement date) and settlement date for each
counterparty.
Due to the cash settlement method election, the repurchase and
settlement of the convertible notes, and the termination of the
corresponding portions of the note hedge and warrants in FY23, we
recorded a loss of $494 million, of
which $40 million was recorded in the
current quarter, in relation to the accretion of convertible notes
debt discount and $26 million was
recorded in the current quarter in connection with the cash
settlement of warrants. These amounts are not tax deductible and
have been added back to Adjusted EBITDA2 and Adjusted
EPS2. No warrants were outstanding as of December 29, 2023.
Refer to Note 22 "Cash Election and Repurchase of Convertible
Notes and Warrant Unwind Agreements" in our Form 10-K for the year
ended December 29, 2023 for further
details.
Subsequent Event
In connection with the cash
settlement of warrants in 4Q'23, the company remitted
$33 million to the final option counterparty in January 2024. In total, the company paid
$600 million (net) to retire the
$350 million principal value of
convertible notes, note hedge and corresponding warrants.
Fiscal 2024 Guidance
The table below summarizes FY24
guidance and represents our views as of February 20, 2024.
|
Fiscal 2024
Guidance
|
Revenue
|
$7.4B -
$7.7B
|
Adjusted
EBITDA
|
$810M -
$850M
|
Diluted
EPS*
|
$2.89 -
$3.09
|
Adjusted
EPS*
|
$3.10 -
$3.30
|
Operating cash
flows
|
$450M -
$480M
|
|
|
*
|
Fiscal 2024 Diluted and
Adjusted EPS guidance is calculated using a share count of
approximately 135 million.
|
The company does not provide a reconciliation of Adjusted EBITDA
to the most comparable GAAP financial measure 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.
Conference Call Details
The company will host a
conference call to discuss its fourth quarter financial results on
Tuesday, February 20, 2024, at 7:30
a.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: 497348.
About KBR
We deliver science, technology and
engineering solutions to governments and companies around the
world. KBR employs approximately 34,000 people worldwide with
customers in more than 80 countries and operations in over 30
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, our business strategy, interest expense,
and 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 policies that may
require us to pause, delay or abandon existing project; the ongoing
conflict between Russia and
Ukraine and 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;
changes in government regulations and regulatory requirements;
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; 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 Form 10-Qs and 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.
|
|
|
|
|
|
|
1
|
As used throughout this
release and consistent with our practice, book-to-bill excludes
long-term UK PFIs
|
2
|
As used throughout this
earnings release, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted
earnings per share, Adjusted operating cash flows, Adjusted free
cash flows, Revenue excluding OAW, and Net income attributable to
KBR ex-Nonrecurring Charges are non-GAAP financial measures.
See additional information at the end of this release
regarding non-GAAP financial information, including reconciliations
to the nearest GAAP measures.
|
KBR,
Inc. Consolidated Statements of Operations (In
millions, except for per share data)
(Unaudited)
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
December
29,
|
|
December
31,
|
|
December
29,
|
|
December
31,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Revenues:
|
|
|
|
|
|
|
|
Government
Solutions
|
$
1,328
|
|
$
1,256
|
|
$
5,353
|
|
$
5,320
|
Sustainable Technology
Solutions
|
402
|
|
352
|
|
1,603
|
|
1,244
|
Total
revenues
|
1,730
|
|
1,608
|
|
6,956
|
|
6,564
|
Gross
profit
|
237
|
|
206
|
|
977
|
|
828
|
Equity in earnings
(losses) of unconsolidated affiliates
|
36
|
|
23
|
|
114
|
|
(80)
|
Selling, general and
administrative expenses
|
(118)
|
|
(105)
|
|
(488)
|
|
(420)
|
Legal settlement of
legacy matter
|
—
|
|
—
|
|
(144)
|
|
—
|
Gain (loss) on
disposition of assets and investments
|
(7)
|
|
(3)
|
|
(7)
|
|
19
|
Other
|
(1)
|
|
1
|
|
(4)
|
|
(4)
|
Operating income
(loss):
|
|
|
|
|
|
|
|
Government
Solutions
|
103
|
|
90
|
|
285
|
|
441
|
Sustainable Technology
Solutions
|
81
|
|
65
|
|
324
|
|
47
|
Other
|
(37)
|
|
(33)
|
|
(161)
|
|
(145)
|
Total operating
income (loss)
|
147
|
|
122
|
|
448
|
|
343
|
Interest
expense
|
(30)
|
|
(23)
|
|
(115)
|
|
(87)
|
Unrealized gain on
other investment
|
—
|
|
—
|
|
—
|
|
16
|
Charges associated with
Convertible Notes
|
(66)
|
|
—
|
|
(494)
|
|
—
|
Other non-operating
income (expense)
|
(4)
|
|
9
|
|
(5)
|
|
12
|
Income (loss) before
income taxes
|
47
|
|
108
|
|
(166)
|
|
284
|
Provision for income
taxes
|
(26)
|
|
(13)
|
|
(95)
|
|
(92)
|
Net income
(loss)
|
21
|
|
95
|
|
(261)
|
|
192
|
Less: Net income
attributable to noncontrolling interests
|
—
|
|
2
|
|
4
|
|
2
|
Net income (loss)
attributable to KBR
|
$
21
|
|
$
93
|
|
$
(265)
|
|
$
190
|
Adjusted
EBITDA1
|
$
188
|
|
$
157
|
|
$
747
|
|
$
668
|
Diluted EPS
|
$
0.15
|
|
$
0.62
|
|
$
(1.96)
|
|
$
1.26
|
Adjusted
EPS1
|
$
0.69
|
|
$
0.69
|
|
$
2.91
|
|
$
2.71
|
Diluted weighted
average common shares outstanding
|
137
|
|
154
|
|
135
|
|
156
|
|
1 See
additional information at the end of this release regarding
non-GAAP financial information, including a reconciliation to the
nearest GAAP measure
|
KBR,
Inc. Consolidated Balance Sheets (In millions,
except share data)
|
|
|
|
December
29,
|
|
December
31,
|
|
|
2023
|
|
2022
|
|
|
(Unaudited)
|
|
|
Assets
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
304
|
|
$
389
|
Accounts receivable,
net of allowance for credit losses of $8 and $9
|
|
981
|
|
942
|
Contract
assets
|
|
177
|
|
252
|
Other current
assets
|
|
189
|
|
164
|
Total current
assets
|
|
1,651
|
|
1,747
|
Pension
Assets
|
|
—
|
|
46
|
Property, plant, and
equipment, net of accumulated depreciation of $458 and $417
(including net PPE of $36 and $22 owned by a variable interest
entity)
|
|
239
|
|
182
|
Operating lease
right-of-use assets
|
|
138
|
|
164
|
Goodwill
|
|
2,109
|
|
2,087
|
Intangible assets, net
of accumulated amortization of $382 and $332
|
|
618
|
|
645
|
Equity in and advances
to unconsolidated affiliates
|
|
206
|
|
188
|
Deferred income
taxes
|
|
239
|
|
213
|
Other assets
|
|
365
|
|
294
|
Total
assets
|
|
$
5,565
|
|
$
5,566
|
Liabilities and
Shareholders' Equity
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts
payable
|
|
$
593
|
|
$
637
|
Contract
liabilities
|
|
359
|
|
275
|
Accrued salaries, wages
and benefits
|
|
340
|
|
325
|
Current maturities of
long-term debt
|
|
31
|
|
364
|
Other current
liabilities
|
|
249
|
|
220
|
Total current
liabilities
|
|
1,572
|
|
1,821
|
Employee compensation
and benefits
|
|
120
|
|
105
|
Income tax
payable
|
|
106
|
|
117
|
Deferred income
taxes
|
|
106
|
|
92
|
Long-term
debt
|
|
1,801
|
|
1,376
|
Operating lease
liabilities
|
|
176
|
|
193
|
Other
liabilities
|
|
290
|
|
230
|
Total
liabilities
|
|
4,171
|
|
3,934
|
Commitments and
Contingencies
|
|
|
|
|
KBR shareholders'
equity:
|
|
|
|
|
Preferred stock, $0.001
par value, 50,000,000 shares authorized, none issued
|
|
—
|
|
—
|
Common stock, $0.001
par value 300,000,000 shares authorized, 181,713,586 and
180,807,960 shares issued, and 135,067,562 and 136,505,145 shares
outstanding, respectively
|
|
—
|
|
—
|
Paid-in capital in
excess of par
|
|
2,505
|
|
2,235
|
Retained
earnings
|
|
1,072
|
|
1,410
|
Treasury stock,
46,646,024 shares and 44,302,815 shares, at cost,
respectively
|
|
(1,279)
|
|
(1,143)
|
Accumulated other
comprehensive loss
|
|
(915)
|
|
(882)
|
Total KBR
shareholders' equity
|
|
1,383
|
|
1,620
|
Noncontrolling
interests
|
|
11
|
|
12
|
Total shareholders'
equity
|
|
1,394
|
|
1,632
|
Total liabilities
and shareholders' equity
|
|
$
5,565
|
|
$
5,566
|
KBR,
Inc. Consolidated Statements of Cash Flows (In
millions)Unaudited)
|
|
|
Year
Ended
|
|
December
29,
|
|
December
31,
|
|
2023
|
|
2022
|
Cash flows from
operating activities:
|
|
|
|
Net income
(loss)
|
$
(261)
|
|
$
192
|
Adjustments to
reconcile net income (loss) to net cash provided by operating
activities:
|
|
|
|
Charges associated
with Convertible Notes
|
494
|
|
—
|
Depreciation and
amortization
|
141
|
|
137
|
Equity in (earnings)
losses of unconsolidated affiliates
|
(114)
|
|
80
|
Deferred income tax
(benefit) expense
|
14
|
|
37
|
Loss (gain) on
disposition of assets
|
7
|
|
(19)
|
Unrealized gain on
other investment
|
—
|
|
(16)
|
Other
|
46
|
|
33
|
Changes in operating
assets and liabilities, net of acquired businesses:
|
|
|
|
Accounts receivable,
net of allowance for credit losses
|
(32)
|
|
455
|
Contract
assets
|
44
|
|
(30)
|
Accounts
payable
|
(49)
|
|
(376)
|
Contract
liabilities
|
82
|
|
(25)
|
Accrued salaries,
wages and benefits
|
22
|
|
16
|
Payments on operating
lease liabilities
|
(65)
|
|
(63)
|
Payments from
unconsolidated affiliates, net
|
18
|
|
14
|
Distributions of
earnings from unconsolidated affiliates
|
74
|
|
66
|
Pension
funding
|
(9)
|
|
(74)
|
Restructuring
reserve
|
(9)
|
|
(13)
|
Other assets and
liabilities
|
(72)
|
|
(18)
|
Total cash flows
provided by operating activities
|
$
331
|
|
$
396
|
Cash flows from
investing activities:
|
|
|
|
Purchases of property,
plant and equipment
|
$
(80)
|
|
$
(71)
|
Net proceeds from sale
of assets or investments
|
—
|
|
47
|
Return of (investments
in) equity method joint ventures, net
|
60
|
|
198
|
Acquisition of
businesses, net of cash acquired
|
—
|
|
(73)
|
Funding in other
investment
|
(39)
|
|
(61)
|
Other
|
(11)
|
|
(3)
|
Total cash flows
(used in) provided by investing activities
|
$
(70)
|
|
$
37
|
|
|
|
Year
Ended
|
|
December
29,
|
|
December
31,
|
|
2023
|
|
2022
|
Cash flows from
financing activities:
|
|
|
|
Borrowings on
short-term and long-term debt
|
785
|
|
58
|
Payments on short-term
and long-term debt
|
(17)
|
|
(16)
|
Payments on settlement
of warrants
|
(217)
|
|
—
|
Proceeds from the
settlement of note hedge
|
493
|
|
—
|
Payments to settle
Convertible Notes
|
(843)
|
|
—
|
Payments on revolving
credit facility
|
(340)
|
|
(158)
|
Debt issuance
costs
|
—
|
|
(6)
|
Payments of dividends
to shareholders
|
(72)
|
|
(66)
|
Net proceeds from
issuance of common stock
|
5
|
|
5
|
Payments to reacquire
common stock
|
(138)
|
|
(203)
|
Distributions to
noncontrolling interests
|
(6)
|
|
(4)
|
Other
|
(9)
|
|
(9)
|
Total cash flows
(used in) provided by financing activities
|
$
(359)
|
|
$
(399)
|
Effect of exchange rate
changes on cash
|
13
|
|
(15)
|
(Decrease) increase in
cash and cash equivalents
|
(85)
|
|
19
|
Cash and cash
equivalents at beginning of period
|
389
|
|
370
|
Cash and cash
equivalents at end of period
|
$
304
|
|
$
389
|
Supplemental
disclosure of cash flows information:
|
|
|
|
Cash paid for
interest
|
102
|
|
66
|
Cash paid for income
taxes (net of refunds)
|
52
|
|
47
|
Noncash investing
activities
|
|
|
|
Leasehold improvements
paid by landlord
|
$
9
|
|
$
6
|
Accrued but unpaid
purchases of property, plant and equipment
|
$
3
|
|
$
5
|
Noncash financing
activities
|
|
|
|
Dividends
declared
|
$
18
|
|
$
16
|
KBR,
Inc. Backlog Information (In millions)
(Unaudited)
|
|
|
December
29,
|
|
December
31,
|
|
2023
|
|
2022
|
Government
Solutions
|
$
12,790
|
|
$
11,543
|
Sustainable Technology
Solutions
|
4,545
|
|
4,012
|
Total
backlog
|
$
17,335
|
|
$
15,555
|
Award
options
|
4,397
|
|
4,203
|
Total backlog and
options
|
$
21,732
|
|
$
19,758
|
Total backlog and options at December 29,
2023 totaled $21.7 billion, up
10% compared to December 31, 2022.
Government Solutions backlog and options at December 29, 2023 totaled $17.2 billion, up $1.4
billion compared to December 31,
2022. Sustainable Technology Solutions backlog at
December 29, 2023 totaled
$4.5 billion, up $0.5 billion compared to December 31, 2022.
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.
EBITDA and Adjusted EBITDA
We evaluate performance
based on EBITDA and Adjusted EBITDA. EBITDA is defined as Net
income (loss) attributable to KBR, plus interest expense; Accretion
of Convertible Notes debt discounts; Other non-operating expense;
Provision for income taxes; and Depreciation and amortization.
Adjusted EBITDA excludes certain amounts included in EBITDA. EBITDA
and Adjusted EBITDA for each of the three- and twelve-month periods
ended December 29, 2023 and
December 31, 2022 are considered
non-GAAP financial measures under SEC rules because EBITDA and
Adjusted EBITDA exclude certain amounts included in the calculation
of net income (loss) attributable to KBR in accordance with GAAP
for such periods. Management believes EBITDA and Adjusted EBITDA
afford investors a view of what management considers KBR's core
performance for each of the three- and twelve-month periods ended
December 29, 2023 and December 31, 2022 and also affords investors the
ability to make a more informed assessment of such core performance
for the comparable periods.
|
Three Months
Ended
|
|
Year
Ended
|
|
December
29,
|
|
December
31,
|
|
December
29,
|
|
December
31,
|
Dollars in
millions
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
|
Net income
attributable to KBR
|
$
21
|
|
$
93
|
|
$
(265)
|
|
$
190
|
Adjustments
|
|
|
|
|
|
|
|
•
Interest expense
|
30
|
|
23
|
|
115
|
|
87
|
•
Accretion of Convertible Notes debt
discounts
|
40
|
|
—
|
|
282
|
|
—
|
•
Other non-operating expense
(income)
|
4
|
|
(9)
|
|
5
|
|
(12)
|
•
Provision for income taxes
|
26
|
|
13
|
|
95
|
|
92
|
•
Depreciation and amortization
|
37
|
|
38
|
|
141
|
|
137
|
EBITDA
|
$
158
|
|
$
158
|
|
$
373
|
|
$
494
|
Adjustments
|
|
|
|
|
|
|
|
•
Acquisition, integration and
restructuring
|
4
|
|
2
|
|
10
|
|
7
|
•
Ichthys commercial resolution
|
(5)
|
|
(4)
|
|
1
|
|
143
|
•
Legacy legal fees and
settlements
|
1
|
|
4
|
|
155
|
|
15
|
•
Appreciation in fair value of
investments
|
—
|
|
—
|
|
—
|
|
(16)
|
•
(Benefits) provisions related to exit
from Russian commercial projects
|
4
|
|
(3)
|
|
(4)
|
|
25
|
•
Loss on derivative bifurcation
|
—
|
|
—
|
|
104
|
|
—
|
•
Loss on debt extinguishment
|
—
|
|
—
|
|
70
|
|
—
|
•
Loss on settlement of warrants
|
26
|
|
—
|
|
38
|
|
—
|
Adjusted
EBITDA
|
$
188
|
|
$
157
|
|
$
747
|
|
$
668
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
December
29,
|
|
December
31,
|
|
December
29,
|
|
December
31,
|
Dollars in
millions
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
|
Operating
income
|
$
147
|
|
$
122
|
|
$
448
|
|
$
343
|
Adjustments
|
|
|
|
|
|
|
|
•
Net income attributable to noncontrolling
interests
|
—
|
|
(2)
|
|
(4)
|
|
(2)
|
•
Unrealized gain on other
investment
|
—
|
|
—
|
|
—
|
|
16
|
•
Depreciation and amortization
|
37
|
|
38
|
|
141
|
|
137
|
•
Loss on derivative bifurcation
|
—
|
|
—
|
|
(104)
|
|
—
|
•
Loss on debt extinguishment
|
—
|
|
—
|
|
(70)
|
|
—
|
•
Loss on settlement of warrants
|
(26)
|
|
—
|
|
(38)
|
|
—
|
EBITDA
|
$
158
|
|
$
158
|
|
$
373
|
|
$
494
|
Adjustments
|
|
|
|
|
|
|
|
•
Acquisition, integration and
restructuring
|
4
|
|
2
|
|
10
|
|
7
|
•
Ichthys commercial resolution
|
(5)
|
|
(4)
|
|
1
|
|
143
|
•
Legacy legal fees and
settlements
|
1
|
|
4
|
|
155
|
|
15
|
•
Appreciation in fair value of
investments
|
—
|
|
—
|
|
—
|
|
(16)
|
•
(Benefits) provisions related to exit
from Russian commercial projects
|
4
|
|
(3)
|
|
(4)
|
|
25
|
•
Loss on derivative bifurcation
|
—
|
|
—
|
|
104
|
|
—
|
•
Loss on debt extinguishment
|
—
|
|
—
|
|
70
|
|
—
|
•
Loss on settlement of warrants
|
26
|
|
—
|
|
38
|
|
—
|
Adjusted
EBITDA
|
$
188
|
|
$
157
|
|
$
747
|
|
$
668
|
Adjusted EPS
Adjusted earnings per share (Adjusted
EPS) for each of the three- and twelve-month periods ended
December 29, 2023 and December 31, 2022 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
December 29, 2023 and December 31, 2022 and also affords investors the
ability to make a more informed assessment of such core earnings
performance for the comparable periods.
We have calculated Adjusted EPS for each of the three- and
twelve-month periods ended December 29,
2023 and December 31, 2022 by
adjusting Diluted EPS for the items included in the table
below.
|
Three Months
Ended
|
|
Year
Ended
|
|
December
29,
|
|
December
31,
|
|
December
29,
|
|
December
31,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
|
Diluted
EPS
|
$
0.15
|
|
$
0.62
|
|
$
(1.96)
|
|
$
1.26
|
Adjustments
|
|
|
|
|
|
|
|
•
Amortization related to
acquisitions
|
0.04
|
|
0.04
|
|
0.17
|
|
0.19
|
•
Ichthys interest and commercial dispute
costs
|
(0.03)
|
|
(0.03)
|
|
0.01
|
|
1.02
|
•
Acquisition, integration and
restructuring
|
0.02
|
|
0.01
|
|
0.06
|
|
0.04
|
•
Impact of convert accounting and Diluted
EPS share count1
|
—
|
|
0.05
|
|
0.01
|
|
0.07
|
•
Legacy legal fees and
settlements
|
—
|
|
0.02
|
|
1.03
|
|
0.08
|
•
(Benefits) provisions related to exit
from Russian commercial projects
|
0.02
|
|
(0.02)
|
|
(0.03)
|
|
0.14
|
•
Charges associated with Convertible
Notes
|
0.49
|
|
—
|
|
3.62
|
|
—
|
•
Appreciation of fair value of
investments
|
—
|
|
—
|
|
—
|
|
(0.09)
|
Adjusted
EPS
|
$
0.69
|
|
$
0.69
|
|
$
2.91
|
|
$
2.71
|
Diluted weighted
average common shares outstanding
|
137
|
|
154
|
|
135
|
|
156
|
Adjusted weighted
average common shares outstanding
|
135
|
|
140
|
|
136
|
|
142
|
|
|
|
|
|
|
|
|
|
1
|
For the twelve month
period ended December 29, 2023, adjusted share count includes
anti-dilutive shares for warrants excluded from Diluted EPS share
count.
|
We have calculated the 2024 guidance for Adjusted EPS by
adjusting Diluted EPS for the items included in the table
below.
|
Fiscal 2024
Guidance
|
Diluted
EPS1 guidance
|
$2.89
|
|
$3.09
|
Adjustments
|
|
•
Amortization related to
acquisitions
|
0.15
|
•
Ichthys interest and commercial dispute
costs
|
0.02
|
•
Acquisition, integration and
restructuring
|
0.03
|
•
Legacy legal fees
|
0.01
|
Adjusted
EPS1 guidance
|
$3.10
|
|
$3.30
|
|
|
|
|
|
|
|
|
1
|
Diluted and Adjusted
Fiscal 2024 EPS guidance are calculated using a share count of
approximately 135 million.
|
Adjusted Cash Flows Provided by Operating Activities and
Adjusted Free Cash Flows
Adjusted operating cash flows and
Adjusted free cash flows 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. Adjusted free cash
flows exclude capital expenditures from Adjusted operating cash
flows. 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
and Adjusted free cash flows afford investors a view of what
management considers KBR's core operating cash flow performance and
also afford investors the ability to make a more informed
assessment of such core operating cash generation performance.
We have calculated Adjusted operating cash flows and Adjusted
free cash flows for each of the three- and twelve-month periods
ended December 29, 2023 and
December 31, 2022 by adjusting
operating cash flow provided by operating activities for items
included in the table below.
|
Three Months
Ended
|
|
Year
Ended
|
|
December
29,
|
|
December
31,
|
|
December
29,
|
|
December
31,
|
Dollars in
millions
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Cash flows provided by
operating activities
|
$
83
|
|
$
60
|
|
$
331
|
|
$
396
|
Add: Legacy legal
settlement (after tax)
|
—
|
|
—
|
|
132
|
|
—
|
Adjust: CARES Act
temporary tax repayment (relief)
|
—
|
|
28
|
|
—
|
|
28
|
Adjusted operating
cash flows
|
$
83
|
|
$
88
|
|
$
463
|
|
$
424
|
Less: Capital
expenditures
|
(20)
|
|
(32)
|
|
(80)
|
|
(71)
|
Adjusted free cash
flows
|
$
63
|
|
$
56
|
|
$
383
|
|
$
353
|
Revenue ex-OAW and Net Income Attributable to KBR
ex-Nonrecurring Charges
Revenue ex-OAW and Net income
attributable to KBR ex-Nonrecurring Charges are considered non-GAAP
financial measures under SEC rules. Revenue ex-OAW excludes amounts
related to contingency work associated with the OAW program that
was wound down and substantially completed in early FY22 from GAAP
revenue. Net income attributable to KBR ex-Nonrecurring Charges
excludes certain amounts related to charges that we believe are
special (e.g., certain legacy legal settlements) or one-time in
nature (e.g., relating to the settlement method of our Convertible
Notes and the settlement of the related warrants) from GAAP Net
income attributable to KBR. Management believes that Revenue ex-OAW
affords investors a more consistent comparison of KBR's revenue
year-over-year and, and that Net income attributable to KBR
ex-Nonrecurring Charges affords investors a view of what management
considers KBR's core Net income attributable to KBR and also
affords investors the ability to make a more informed assessment of
such core net income performance.
We have calculated Revenue ex-OAW and Net Income
Attributable to KBR ex-Nonrecurring Charges for each of the three-
and twelve-month periods ended December 29,
2023 and December 31, 2022 by
adjusting revenue and net income, respectively, for items included
in the table below.
Revenue ex-OAW
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
December
29,
|
|
December
31,
|
|
|
|
December
29,
|
|
December
31,
|
|
|
Dollars in
millions
|
2023
|
|
2022
|
|
Growth
|
|
2023
|
|
2022
|
|
Growth
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue (as
reported)
|
$
1,730
|
|
$
1,608
|
|
7.6 %
|
|
$
6,956
|
|
$
6,564
|
|
6.0 %
|
Revenue attributable to
OAW
|
—
|
|
4
|
|
|
|
—
|
|
313
|
|
|
Revenue
ex-OAW
|
$
1,730
|
|
$
1,604
|
|
7.9 %
|
|
$
6,956
|
|
$
6,251
|
|
11.3 %
|
Net Income
Attributable to KBR ex-Nonrecurring
Charges
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
December
29,
|
|
December
31,
|
|
|
|
December
29,
|
|
December
31,
|
|
|
Dollars in
millions
|
2023
|
|
2022
|
|
Growth
|
|
2023
|
|
2022
|
|
Growth
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to KBR (as reported)
|
$
21
|
|
$
93
|
|
$
(72)
|
|
$
(265)
|
|
$
190
|
|
$
(455)
|
Subcontractor
commercial dispute
|
—
|
|
—
|
|
|
|
—
|
|
137
|
|
|
Loss on derivative
bifurcation
|
—
|
|
—
|
|
|
|
104
|
|
—
|
|
|
Loss on debt
extinguishment
|
—
|
|
—
|
|
|
|
70
|
|
—
|
|
|
Loss on settlement of
warrants
|
26
|
|
—
|
|
|
|
38
|
|
—
|
|
|
Accretion of
Convertible Notes debt discount
|
40
|
|
—
|
|
|
|
282
|
|
—
|
|
|
Legacy legal settlement
(after tax)
|
—
|
|
—
|
|
|
|
132
|
|
—
|
|
|
Net income
attributable to KBR ex-Nonrecurring Charges
|
$
87
|
|
$
93
|
|
$
(6)
|
|
$
361
|
|
$
327
|
|
$
34
|
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SOURCE KBR, Inc.