Kbr, Inc 10-Q for FY2024 Q3

Kbr, Inc. (KBR)

10-Q 2024-10-23 For: 2024-09-27

Added on April 11, 2026

About this 10-Q

Kbr, Inc filed this 10-Q on October 23, 2024, covering the quarter ended September 27, 2024 (FY2024 Q3).

Headline figures

Quarter ended September 27, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $1.95B; up 10.0% from $1.77B a year earlier
Net income: $100M; compared with a net loss of $21M a year earlier
Diluted EPS: $0.75; compared with -$0.16 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			30
Item 3. Quantitative and Qualitative Disclosures About Market Risk			45
Item 4. Controls and Procedures			47
PART II. OTHER INFORMATION
Item 1. Legal Proceedings			48
Item 1A. Risk Factors			48
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			48
Item 5. Other Information			48
Item 6. Exhibits			49
SIGNATURES			50


Acronym						Definition

AOCL						Accumulated other comprehensive loss
ASC						Accounting Standards Codification
Aspire Defence						Aspire Defence Limited
ASU						Accounting Standards Update
AUKUS						The Trilateral Security Partnership between Australia, the U.K. and the U.S.

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







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


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

LNG						Liquefied natural gas
MD&A						Management's Discussion and Analysis of Financial Condition and Results of Operations

MoD						Ministry of Defence
NASA						National Aeronautics and Space Administration
NCI						Noncontrolling interests

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 27,		September 29,		September 27,		September 29,
	2024		2023		2024		2023

Revenues	$	1,947	$	1,770	$	5,620	$	5,226
Cost of revenues	(1,656)		(1,526)		(4,810)		(4,486)
Gross profit	291		244		810		740
Equity in earnings of unconsolidated affiliates	27		32		97		78
Selling, general and administrative expenses	(140)		(127)		(390)		(370)


Legal settlement of legacy matter	—		—		—		(144)


Other	(5)		(2)		3		(3)

Operating income	173		147		520		301
Interest expense	(37)		(30)		(100)		(85)

Charges associated with Convertible Notes	—		(114)		—		(428)
Other non-operating income (expense)	(2)		2		(10)		(1)
Income (loss) before income taxes	134		5		410		(213)
Provision for income taxes	(32)		(23)		(107)		(69)
Net income (loss)	102		(18)		303		(282)
Less: Net income attributable to noncontrolling interests	2		3		4		4
Net income (loss) attributable to KBR	$	100	$	(21)	$	299	$	(286)
Net income (loss) attributable to KBR per share
Basic	$	0.75	$	(0.16)	$	2.22	$	(2.10)
Diluted	$	0.75	$	(0.16)	$	2.22	$	(2.10)
Basic weighted average common shares outstanding	133		135		134		136
Diluted weighted average common shares outstanding	133		135		134		136
Cash dividends declared per share	$	0.150	$	0.135	$	0.450	$	0.405


	Three Months Ended				Nine Months Ended
	September 27,		September 29,		September 27,		September 29,
	2024		2023		2024		2023
Net income (loss)	$	102	$	(18)	$	303	$	(282)
Other comprehensive income (loss):
Foreign currency translation adjustments	47		(34)		39		5
Pension and post-retirement benefits	2		3		5		1
Changes in fair value of derivatives	(27)		5		(16)		18
Other comprehensive income (loss)	22		(26)		28		24
Income tax (expense) benefit:

Pension and post-retirement benefits	(1)		(3)		(1)		—
Changes in fair value of derivatives	5		(2)		3		(3)
Income tax (expense) benefit	4		(5)		2		(3)
Other comprehensive income (loss), net of tax	26		(31)		30		21
Comprehensive income (loss)	128		(49)		333		(261)
Less: Comprehensive income attributable to noncontrolling interests	2		3		4		4
Comprehensive income (loss) attributable to KBR	$	126	$	(52)	$	329	$	(265)


☒			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 27,		December 29,
	2024		2023
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	462	$	304
Accounts receivable, net of allowance for credit losses of $10 and $8, respectively	1,095		981
Contract assets	214		177

Other current assets	190		189
Total current assets	1,961		1,651


Property, plant, and equipment, net of accumulated depreciation of $494 and $458 (including net PPE of $50 and $36 owned by a variable interest entity), respectively	277		239
Operating lease right-of-use assets	212		138
Goodwill	2,553		2,109
Intangible assets, net of accumulated amortization of $420 and $382, respectively	885		618
Equity in and advances to unconsolidated affiliates	188		206
Deferred income taxes	200		239
Other assets	505		365
Total assets	$	6,781	$	5,565
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	737	$	593

Contract liabilities	381		359
Accrued salaries, wages and benefits	397		340
Current maturities of long-term debt	46		31


Other current liabilities	266		249
Total current liabilities	1,827		1,572

Employee compensation and benefits	128		120
Income tax payable	111		106
Deferred income taxes	84		106


Long-term debt	2,560		1,801
Operating lease liabilities	236		176

Other liabilities	321		290
Total liabilities	5,267		4,171
Commitments and Contingencies (Notes 5, 10 and 11)
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, 182,392,098 and 181,713,586 shares issued, and 133,231,050 and 135,067,562 shares outstanding, respectively	—		—
PIC	2,520		2,505
Retained earnings	1,311		1,072
Treasury stock, 49,161,048 shares and 46,646,024 shares, at cost, respectively	(1,443)		(1,279)
AOCL	(885)		(915)
Total KBR shareholders’ equity	1,503		1,383
Noncontrolling interests	11		11
Total shareholders’ equity	1,514		1,394
Total liabilities and shareholders’ equity	$	6,781	$	5,565


Dollars in millions	Total		PIC		Retained Earnings		Treasury Stock		AOCL		NCI
Balance at June 28, 2024	$	1,411	$	2,519	$	1,231	$	(1,437)	$	(911)	9
Share-based compensation	5		5		—		—		—		—

Common stock issued upon exercise of stock options	1		1		—		—		—		—
Dividends declared to shareholders ($0.150/share)	(20)		—		(20)		—		—		—
Repurchases of common stock	(9)		—		—		(9)		—		—
Issuance of ESPP shares	5		3		—		2		—		—

Acquisition of noncontrolling interests	(10)		(8)		—		—		—		(2)

Other	3		—		—		1		—		2
Net income	102		—		100		—		—		2
Other comprehensive income, net of tax	26		—		—		—		26		—
Balance at September 27, 2024	$	1,514	$	2,520	$	1,311	$	(1,443)	$	(885)	$	11


Dollars in millions	Total		PIC		Retained Earnings		Treasury Stock		AOCL		NCI
Balance at December 29, 2023	$	1,394	$	2,505	$	1,072	$	(1,279)	$	(915)	$	11
Share-based compensation	16		16		—		—		—		—

Common stock issued upon exercise of stock options	2		2		—		—		—		—
Dividends declared to shareholders ($0.450/share)	(60)		—		(60)		—		—		—
Repurchases of common stock	(167)		—		—		(167)		—		—
Issuance of ESPP shares	9		5		—		4		—		—

Acquisition of noncontrolling interests	(10)		(8)		—		—		—		(2)
Distributions to noncontrolling interests	(4)		—		—		—		—		(4)

Other	1		—		—		(1)		—		2
Net income	303		—		299		—		—		4
Other comprehensive income, net of tax	30		—		—		—		30		—
Balance at September 27, 2024	$	1,514	$	2,520	$	1,311	$	(1,443)	$	(885)	$	11



	Three Months Ended September 27, 2024						Nine Months Ended September 27, 2024

Total by Countries/Regions Dollars in millions	Government Solutions		Sustainable Technology Solutions		Total		Government Solutions		Sustainable Technology Solutions		Total
United States	$	906	$	136	$	1,042	$	2,553	$	392	$	2,945
Europe	400		68		468		1,183		211		1,394
Middle East	38		140		178		111		420		531
Australia	114		20		134		325		66		391
Africa	17		30		47		50		96		146
Asia	1		36		37		7		86		93
Other countries	14		27		41		44		76		120
Total revenue	$	1,490	$	457	$	1,947	$	4,273	$	1,347	$	5,620

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

Total by Countries/Regions Dollars in millions	Government Solutions		Sustainable Technology Solutions		Total		Government Solutions		Sustainable Technology Solutions		Total
United States	$	805	$	129	$	934	$	2,305	$	398	$	2,703
Europe	366		65		431		1,200		189		1,389
Middle East	36		100		136		102		278		380
Australia	104		27		131		311		68		379
Africa	16		33		49		51		73		124
Asia	4		46		50		12		119		131
Other countries	14		25		39		44		76		120
Total revenue	$	1,345	$	425	$	1,770	$	4,025	$	1,201	$	5,226


	September 27, 2024
Dollars in millions	International (a)		Domestic (b)		Total
Cash and cash equivalents	$	249	$	38	$	287
Short-term investments (c)	17		11		28
Cash and cash equivalents held in consolidated joint ventures and Aspire Defence subcontracting entities (d)	131		16		147
Total	$	397	$	65	$	462


	December 29, 2023
Dollars in millions	International (a)		Domestic (b)		Total
Cash and cash equivalents	$	122	$	36	$	158
Short-term investments (c)	6		8		14
Cash and cash equivalents held in consolidated joint ventures and Aspire Defence subcontracting entities (d)	111		21		132
Total	$	239	$	65	$	304



	Nine Months Ended		Year ended
	September 27,		December 29,
	2024		2023
Dollars in millions
Beginning balance	$	206	$	188
Equity in earnings of unconsolidated affiliates (a)	97		114
Distributions of earnings of unconsolidated affiliates (b)	(131)		(63)
Payments from unconsolidated affiliates, net	(5)		(18)
Return of investments in equity method investment, net (c)	(36)		(60)

Foreign currency translation adjustments	3		3
Other (d)	54		42
Ending balance	$	188	$	206


	Revolver, Term Loan A-1 and Term Loan A-3
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	%


	Term Loan A-2
Consolidated Net Leverage Ratio	Reference Rate (a)		Base Rate		Commitment Fee
Greater than or equal to 4.25 to 1.00	2.13	%	1.13	%	0.33	%
Less than 4.25 to 1.00 but greater than or equal to 3.25 to 1.00	1.88	%	0.88	%	0.30	%
Less than 3.25 to 1.00 but greater than or equal to 2.25 to 1.00	1.63	%	0.63	%	0.28	%
Less than 2.25 to 1.00 but greater than or equal to 1.25 to 1.00	1.38	%	0.38	%	0.25	%
Less than 1.25 to 1.00	1.13	%	0.13	%	0.23	%



	Nine Months Ended
	September 27,		September 29,
Dollars in millions	2024		2023
Amounts included in project estimates-at-completion at beginning of fiscal year	$	74	$	48
Net increase in project estimates	53		11


Ending balance of amounts included in project estimates-at-completion	$	127	$	59
Amounts recognized over time based on progress	$	112	$	59


Dollars in millions	Accumulated foreign currency translation adjustments		Accumulated pension liability adjustments		Changes in fair value of derivatives		Total
Balance at December 29, 2023	$	(300)	$	(644)	$	29	$	(915)
Other comprehensive income (loss) adjustments before reclassifications	39		1		5		45
Amounts reclassified from AOCL	—		3		(18)		(15)
Net other comprehensive income (loss)	39		4		(13)		30
Balance at September 27, 2024	$	(261)	$	(640)	$	16	$	(885)


Dollars in millions	Notional Amount at September 27, 2024*		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	$	350	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	£	111	3.81	%	Term SONIA	Monthly through November 2026
September 2024 Interest Rate Swaps	$	200	3.27	%	Term SOFR	Monthly through August 2027


Dollars in millions	LinQuest
Fair value of total consideration paid	$	750
Recognized amounts of identifiable assets acquired and liabilities assumed:
Cash and equivalents	11
Accounts receivable	98
Contract assets	2
Other current assets	4
Total current assets	115
Property, plant, and equipment	15
Operating lease right-of-use assets	37
Intangible assets	290
Equity in and advances to unconsolidated affiliates	1
Deferred income taxes	2
Other assets	1
Total assets	461

Accounts payable	35
Contract liabilities	7
Accrued salaries, wages and benefits	32
Other current liabilities	8
Total current liabilities	82

Operating lease liabilities	30
Other liabilities	16
Total liabilities	128

Net assets acquired	333
Goodwill	$	417


Dollars in millions	Fair Value		Weighted Average Amortization Period (in years)
Funded backlog	$	10	1
Customer relationships	280		13
Total intangible assets	$	290	13


Consolidated Results	Three Months Ended
	September 27,		September 29,		2024 vs. 2023
Dollars in millions	2024		2023		$		%
Revenues	$	1,947	$	1,770	$	177	10	%
Cost of revenues	$	(1,656)	$	(1,526)	$	130	9	%
Gross profit	$	291	$	244	$	47	19	%
Equity in earnings of unconsolidated affiliates	$	27	$	32	$	(5)	(16)	%
Selling, general and administrative expenses	$	(140)	$	(127)	$	13	10	%






Other	$	(5)	$	(2)	$	3	n/m
Operating income	$	173	$	147	$	26	18	%
Interest expense	$	(37)	$	(30)	$	7	23	%

Charges associated with Convertible Notes	$	—	$	(114)	$	(114)	(100)	%
Other non-operating income (expense)	$	(2)	$	2	$	4	n/m
Income before income taxes	$	134	$	5	$	129	n/m
Provision for income taxes	$	(32)	$	(23)	$	9	39	%
Net income (loss)	$	102	$	(18)	$	120	n/m
Less: Net income attributable to noncontrolling interests	$	2	$	3	$	(1)	(33)	%
Net income (loss) attributable to KBR	$	100	$	(21)	$	121	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



June 29, 2024 - July 26, 2024	117,066	$	64.04	117,066	$	346,019,074
July 27, 2024 - August 23, 2024	1,123	$	65.31	—	$	346,019,074
August 24, 2024 - September 27, 2024	19,114	$	64.03	—	$	346,019,074
Total	137,303	$	64.05	117,066	$	346,019,074


Exhibit Number						Description


10.1						Amendment No. 13 to the Credit Agreement, dated as of August 14, 2024, with Bank of America, N.A., as administrative agent, the lenders party thereto, the Company and each of the subsidiaries of the Company party thereto (incorporated by reference to Exhibit 10.1 to KBR’s current report on Form 8-K filed August 19, 2024; File No. 001-33146).
*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 27, 2024 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/ Alison G. Vasquez
Mark W. Sopp						Alison G. Vasquez
Executive Vice President and Chief Financial Officer						Senior Vice President and Chief Accounting Officer


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