Kbr, Inc 10-Q for FY2023 Q3

Kbr, Inc. (KBR)

10-Q 2023-11-02 For: 2023-09-29

Added on April 11, 2026

About this 10-Q

Kbr, Inc filed this 10-Q on November 2, 2023, covering the quarter ended September 29, 2023 (FY2023 Q3).

Headline figures

Quarter ended September 29, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $1.77B; up 8.9% from $1.63B a year earlier
Net loss: $21M; compared with net income of $74M a year earlier
Diluted EPS: -$0.16; compared with $0.49 a year earlier

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Title of each class	Trading symbol	Name of each exchange on which registered
Common Stock, $0.001 par value	KBR	New York Stock Exchange



			Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)			5
Condensed Consolidated Statements of Operations			5
Condensed Consolidated Statements of Comprehensive Income (Loss)			6
Condensed Consolidated Balance Sheets			7
Condensed Consolidated Statements of Shareholders' Equity			8
Condensed Consolidated Statements of Cash Flows			10
Notes to Condensed Consolidated Financial Statements			11
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			35
Item 3. Quantitative and Qualitative Disclosures About Market Risk			50
Item 4. Controls and Procedures			52
PART II. OTHER INFORMATION
Item 1. Legal Proceedings			53
Item 1A. Risk Factors			53
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			53
Item 5. Other Information			53
Item 6. Exhibits			54
SIGNATURES			55


Acronym						Definition

AOCL						Accumulated other comprehensive loss
ASC						Accounting Standards Codification
Aspire Defence						Aspire Defence Limited
ASU						Accounting Standards Update
BRIS						Brown & Root Industrial Services Joint Venture
C5ISR						Command, Control, Communications, Computers, Cyber, Intelligence, Surveillance and Reconnaissance
CAS						Cost Accounting Standards for U.S. government contracts
DCAA						Defense Contract Audit Agency
DCMA						Defense Contract Management Agency
DoD						Department of Defense
DOJ						U.S. Department of Justice






ESPP						Employee Stock Purchase Plan
Exchange Act						Securities Exchange Act of 1934, as amended
FAR						Federal Acquisition Regulation
FASB						Financial Accounting Standards Board
FCA						False Claims Act

FKTC						First Kuwaiti Trading Company





GS						Government Solutions




IRS						Internal Revenue Service
JKC						JKC Australia LNG, an Australian joint venture executing the Ichthys LNG Project
LIBOR						London interbank offered rate
LNG						Liquefied natural gas
MD&A						Management's Discussion and Analysis of Financial Condition and Results of Operations
MFRs						Memorandums for Record
MoD						Ministry of Defence
NCI						Noncontrolling interests
OAW						Operation Allies Welcome
PFIs						Private financed initiatives and projects
PIC						Paid-in capital in excess of par

PPE						Property, Plant and Equipment


RPA						Master Accounts Receivable Purchase Agreement

SEC						U.S. Securities and Exchange Commission
SOFR						Secured Overnight Financing Rate
SONIA						Sterling Overnight Index Average
STS						Sustainable Technology Solutions



U.K.						United Kingdom
U.S.						United States
U.S. GAAP						Accounting principles generally accepted in the United States


VIEs						Variable interest entities


	Three Months Ended				Nine Months Ended
	September 29,		September 30,		September 29,		September 30,
	2023		2022		2023		2022

Revenues	$	1,770	$	1,626	$	5,226	$	4,956
Cost of revenues	(1,526)		(1,401)		(4,486)		(4,334)
Gross profit	244		225		740		622
Equity in earnings (losses) of unconsolidated affiliates	32		5		78		(103)
Selling, general and administrative expenses	(127)		(103)		(370)		(315)

Legal settlement of legacy matter	—		—		(144)		—
Gain on disposition of assets and investments	—		—		—		22

Other	(2)		(2)		(3)		(5)

Operating income	147		125		301		221
Interest expense	(30)		(23)		(85)		(64)
Unrealized gain on other investment	—		—		—		16
Charges associated with Convertible Notes	(114)		—		(428)		—
Other non-operating income (expense)	2		(2)		(1)		3
Income (loss) before income taxes	5		100		(213)		176
Provision for income taxes	(23)		(27)		(69)		(79)
Net income (loss)	(18)		73		(282)		97
Less: Net income (loss) attributable to noncontrolling interests	3		(1)		4		—
Net income (loss) attributable to KBR	$	(21)	$	74	$	(286)	$	97
Net income (loss) attributable to KBR per share
Basic	$	(0.16)	$	0.53	$	(2.10)	$	0.69
Diluted	$	(0.16)	$	0.49	$	(2.10)	$	0.65
Basic weighted average common shares outstanding	135		139		136		139
Diluted weighted average common shares outstanding	135		156		136		156
Cash dividends declared per share	$	0.135	$	0.120	$	0.405	$	0.360


	Three Months Ended				Nine Months Ended
	September 29,		September 30,		September 29,		September 30,
	2023		2022		2023		2022
Net income (loss)	$	(18)	$	73	$	(282)	$	97
Other comprehensive income (loss):
Foreign currency translation adjustments	(34)		(60)		5		(113)
Pension and post-retirement benefits	3		6		1		18
Changes in fair value of derivatives	5		22		18		57
Other comprehensive income (loss)	(26)		(32)		24		(38)
Income tax expense:

Pension and post-retirement benefits	(3)		(1)		—		(3)
Changes in fair value of derivatives	(2)		(5)		(3)		(12)
Income tax expense	(5)		(6)		(3)		(15)
Other comprehensive income, net of tax	(31)		(38)		21		(53)
Comprehensive income (loss)	(49)		35		(261)		44
Less: Comprehensive income attributable to noncontrolling interests	3		(1)		4		—
Comprehensive income (loss) attributable to KBR	$	(52)	$	36	$	(265)	$	44


☒			Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934


☐			Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from to


	September 29,		December 31,
	2023		2022
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	348	$	389
Accounts receivable, net of allowance for credit losses of $10 and $9, respectively	1,014		942
Contract assets	207		252

Other current assets	523		164
Total current assets	2,092		1,747

Pension Assets	83		46
Property, plant, and equipment, net of accumulated depreciation of $438 and $417 (including net PPE of $34 and $22 owned by a variable interest entity), respectively	224		182
Operating lease right-of-use assets	146		164
Goodwill	2,090		2,087
Intangible assets, net of accumulated amortization of $366 and $332, respectively	618		645
Equity in and advances to unconsolidated affiliates	193		188
Deferred income taxes	190		213
Other assets	337		294
Total assets	$	5,973	$	5,566
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	687	$	637

Contract liabilities	341		275
Accrued salaries, wages and benefits	308		325
Current maturities of long-term debt	239		364

Operating lease liabilities	49		48
Other current liabilities	503		172
Total current liabilities	2,127		1,821

Employee compensation and benefits	113		105
Income tax payable	101		117
Deferred income taxes	92		92


Long-term debt	1,516		1,376
Operating lease liabilities	178		193

Other liabilities	281		230
Total liabilities	4,408		3,934
Commitments and Contingencies (Notes 6, 11 and 12)
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, 181,627,601 and 180,807,960 shares issued, and 135,002,833 and 136,505,145 shares outstanding, respectively	—		—
PIC	2,624		2,235
Retained earnings	1,069		1,410
Treasury stock, 46,624,768 shares and 44,302,815 shares, at cost, respectively	(1,278)		(1,143)
AOCL	(861)		(882)
Total KBR shareholders’ equity	1,554		1,620
Noncontrolling interests	11		12
Total shareholders’ equity	1,565		1,632
Total liabilities and shareholders’ equity	$	5,973	$	5,566


Dollars in millions	Total		PIC		Retained Earnings		Treasury Stock		AOCL		NCI
Balance at June 30, 2023	$	1,629	$	2,616	$	1,109	$	(1,280)	$	(830)	14
Share-based compensation	5		5		—		—		—		—

Common stock issued upon exercise of stock options	1		1		—		—		—		—
Dividends declared to shareholders ($0.135/share)	(19)		—		(19)		—		—		—

Issuance of ESPP shares	4		2		—		2		—		—

Distributions to noncontrolling interests	(5)		—		—		—		—		(5)

Other	(1)		—		—		—		—		(1)
Net income (loss)	(18)		—		(21)		—		—		3
Other comprehensive loss, net of tax	(31)		—		—		—		(31)		—
Balance at September 29, 2023	$	1,565	$	2,624	$	1,069	$	(1,278)	$	(861)	$	11


Dollars in millions	Total		PIC		Retained Earnings		Treasury Stock		AOCL		NCI
Balance at December 31, 2022	$	1,632	$	2,235	$	1,410	$	(1,143)	$	(882)	$	12




Share-based compensation	16		16		—		—		—		—

Common stock issued upon exercise of stock options	5		5		—		—		—		—
Dividends declared to shareholders ($0.405/share)	(55)		—		(55)		—		—		—
Repurchases of common stock	(137)		—		—		(137)		—		—
Issuance of ESPP shares	6		3		—		3		—		—

Distributions to noncontrolling interests	(6)		—		—		—		—		(6)
Convertible Notes Transactions	365		365		—		—		—		—
Other	—		—		—		(1)		—		1
Net income (loss)	(282)		—		(286)		—		—		4
Other comprehensive income, net of tax	21		—		—		—		21		—
Balance at September 29, 2023	$	1,565	$	2,624	$	1,069	$	(1,278)	$	(861)	$	11


	Three Months Ended September 29, 2023

Total by Countries/Regions Dollars in millions	Government Solutions		Sustainable Technology Solutions		Total
United States	$	805	$	129	$	934
Europe	366		65		431
Middle East	36		100		136
Australia	104		27		131

Africa	16		33		49
Asia	4		46		50
Other countries	14		25		39
Total revenue	$	1,345	$	425	$	1,770

	Three Months Ended September 30, 2022

Total by Countries/Regions Dollars in millions	Government Solutions		Sustainable Technology Solutions		Total
United States	$	785	$	120	$	905
Europe	334		67		401
Middle East	33		68		101
Australia	101		18		119

Africa	23		16		39
Asia	4		35		39
Other countries	13		9		22
Total revenue	$	1,293	$	333	$	1,626



	Nine Months Ended September 29, 2023

Total by Countries/Regions Dollars in millions	Government Solutions		Sustainable Technology Solutions		Total
United States	$	2,305	$	398	$	2,703
Europe	1,200		189		1,389
Middle East	102		278		380
Australia	311		68		379

Africa	51		73		124
Asia	12		119		131
Other countries	44		76		120
Total revenue	$	4,025	$	1,201	$	5,226

	Nine Months Ended September 30, 2022

Total by Countries/Regions Dollars in millions	Government Solutions		Sustainable Technology Solutions		Total
United States	$	2,566	$	357	$	2,923
Europe	959		153		1,112
Middle East	123		170		293
Australia	302		29		331

Africa	63		49		112
Asia	10		105		115
Other countries	41		29		70
Total revenue	$	4,064	$	892	$	4,956


	September 29, 2023
Dollars in millions	International (a)		Domestic (b)		Total
Operating cash and cash equivalents	$	137	$	85	$	222
Short-term investments (c)	6		6		12
Cash and cash equivalents held in consolidated joint ventures and Aspire Defence subcontracting entities (d)	87		27		114
Total	$	230	$	118	$	348


	December 31, 2022
Dollars in millions	International (a)		Domestic (b)		Total
Operating cash and cash equivalents	$	251	$	25	$	276
Short-term investments (c)	4		2		6
Cash and cash equivalents held in consolidated joint ventures and Aspire Defence subcontracting entities (d)	99		8		107
Total	$	354	$	35	$	389



	Nine Months Ended September 29,		Year Ended December 31,
	2023		2022
Dollars in millions
Beginning balance at January 1,	$	188	$	576


Equity in earnings (losses) of unconsolidated affiliates (a)	78		(80)
Distributions of earnings of unconsolidated affiliates (b)	(46)		(53)
Payments from unconsolidated affiliates, net	(13)		(14)
(Return of) investments in equity method investment, net (c)	(61)		(198)

Sale of equity method investment (d)(a)	—		(31)
Foreign currency translation adjustments	—		(15)
Other (e)	47		3



Ending balance	$	193	$	188


	Revolver and Term Loan A
Consolidated Net Leverage Ratio	Reference Rate (a)		Base Rate		Commitment Fee
Greater than or equal to 4.25 to 1.00	2.25	%	1.25	%	0.33	%
Less than 4.25 to 1.00 but greater than or equal to 3.25 to 1.00	2.00	%	1.00	%	0.30	%
Less than 3.25 to 1.00 but greater than or equal to 2.25 to 1.00	1.75	%	0.75	%	0.28	%
Less than 2.25 to 1.00 but greater than or equal to 1.25 to 1.00	1.50	%	0.50	%	0.25	%
Less than 1.25 to 1.00	1.25	%	0.25	%	0.23	%


Dollars in millions	Accumulated foreign currency translation adjustments		Accumulated pension liability adjustments		Changes in fair value of derivatives		Total
Balance at December 31, 2022	$	(352)	$	(568)	$	38	$	(882)
Other comprehensive income adjustments before reclassifications	5		—		29		34
Amounts reclassified from AOCL	—		1		(14)		(13)
Net other comprehensive income	5		1		15		21
Balance at September 29, 2023	$	(347)	$	(567)	$	53	$	(861)


Dollars in millions	Notional Amount at September 29, 2023		Pay Fixed Rate (Weighted Average)		Receive Variable Rate	Settlement and Termination
March 2020 Interest Rate Swaps	$	400	0.89	%	Term SOFR	Monthly through January 2027
September 2022 Interest Rate Swaps (a)	$	250	3.43	%	Term SOFR	Monthly through January 2027
March 2023 Interest Rate Swaps	$	205	3.61	%	Term SOFR	Monthly through January 2027
March 2023 Amortizing Interest Rate Swaps	£	118	3.81	%	Term SONIA	Monthly through November 2026


Consolidated Results	Three Months Ended
	September 29,		September 30,		2023 vs. 2022
Dollars in millions	2023		2022		$		%
Revenues	$	1,770	$	1,626	$	144	9	%
Cost of revenues	$	(1,526)	$	(1,401)	$	125	9	%
Gross profit	$	244	$	225	$	19	8	%
Equity in earnings of unconsolidated affiliates	$	32	$	5	$	27	n/m
Selling, general and administrative expenses	$	(127)	$	(103)	$	24	23	%




Other	$	(2)	$	(2)	$	—	—	%
Operating income	$	147	$	125	$	22	18	%
Interest expense	$	(30)	$	(23)	$	7	30	%

Charges associated with Convertible Notes	$	(114)	$	—	$	114	n/m
Other non-operating income (expense)	$	2	$	(2)	$	(4)	n/m
Income (loss) before income taxes	$	5	$	100	$	(95)	(95)	%
Provision for income taxes	$	(23)	$	(27)	$	(4)	(15)	%
Net income (loss)	$	(18)	$	73	$	(91)	n/m
Less: Net income (loss) attributable to noncontrolling interests	$	3	$	(1)	$	4	n/m
Net income (loss) attributable to KBR	$	(21)	$	74	$	(95)	n/m


Purchase Period	Total Shares Repurchased (1)	Average Price Paid per Share		Shares Repurchased as Part of Publicly Announced Plan	Dollar Value of Maximum Number of Shares that May Yet Be Purchased Under the Plan
July 1 - 31, 2023	—	$	—	—	$	326,215,513
August 1 - 30, 2023	2,863	$	61.48	—	$	326,215,513
September 1 - 29, 2023	1,381	$	61.44	—	$	326,215,513
Total	4,244	—		—	$	326,215,513


Exhibit Number						Description










*31.1						Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

*31.2						Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

**32.1						Certification Furnished Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

**32.2						Certification Furnished Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

















***101						The following financial information from this Quarterly Report on Form 10-Q of KBR, Inc. for the quarter ended September 29, 2023 formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Condensed Consolidated Statements of Operations, (ii) Condensed Consolidated Statements of Comprehensive Income, (iii) Condensed Consolidated Balance Sheets, (iv) Condensed Consolidated Statements of Shareholders’ Equity, (v) Condensed Consolidated Statements of Cash Flows, and (vi) Notes to the Condensed Consolidated Financial Statements, tagged as blocks of text

104						Cover Page Interactive Data File - formatted as Inline XBRL contained in Exhibit 101




+			Management contracts or compensatory plans or arrangements

*			Filed with this Form 10-Q

**			Furnished with this Form 10-Q

***			Interactive data files


KBR, INC.


/s/ Mark W. Sopp						/s/ Shad E. Evans
Mark W. Sopp						Shad E. Evans
Executive Vice President and Chief Financial Officer						Senior Vice President of Finance Operations and Chief Accounting Officer


/s/ Stuart J. B. Bradie
Stuart J. B. Bradie
Chief Executive Officer