Kbr, Inc 10-Q for FY2021 Q1

Kbr, Inc. (KBR)

10-Q 2021-04-29 For: 2021-03-31

Added on April 11, 2026

About this 10-Q

Kbr, Inc filed this 10-Q on April 29, 2021, covering the quarter ended March 31, 2021 (FY2021 Q1).

Headline figures

Quarter ended March 31, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $1.46B; down 4.9% from $1.54B a year earlier
Net income: $47M; compared with a net loss of $104M a year earlier
Diluted EPS: $0.33; compared with -$0.73 a year earlier

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



			Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Information			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			9
Notes to Condensed Consolidated Financial Statements			10
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			37
Item 3. Quantitative and Qualitative Disclosures About Market Risk			47
Item 4. Controls and Procedures			48
PART II. OTHER INFORMATION
Item 1. Legal Proceedings			49
Item 1A. Risk Factors			49
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			49
Item 6. Exhibits			50
SIGNATURES			51


Acronym						Definition

Affinity						Affinity Flying Training Services Ltd.
AOCL						Accumulated other comprehensive loss
ASBCA						Armed Services Board of Contract Appeals
ASC						Accounting Standards Codification
ASU						Accounting Standards Update




C4ISR						Command, Control, Communications, Computers, Intelligence, Surveillance and Reconnaissance
COFC						U.S. Court of Federal Claims
DCAA						Defense Contract Audit Agency
DCMA						Defense Contract Management Agency
DoD						Department of Defense
DOJ						U.S. Department of Justice


EBIC						Egypt Basic Industries Corporation

EPC						Engineering, procurement and construction

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

HETs						Heavy equipment transporters

ICC						International Chamber of Commerce

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
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
SFO						U.K. Serious Fraud Office
SMA						Scientific Management Associates (Operations) Pty Ltd
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
	March 31,
		2021		2020
Revenues		$	1,461	$	1,537
Cost of revenues		(1,293)		(1,351)
Gross profit		168		186
Equity in earnings of unconsolidated affiliates		12		1
Selling, general and administrative expenses		(89)		(97)
Acquisition and integration related costs		(1)		—
Goodwill impairment		—		(62)
Restructuring charges and asset impairments		—		(116)
(Loss) gain on disposition of assets and investments		(1)		19

Operating income (loss)		89		(69)
Interest expense		(22)		(23)
Other non-operating (expense) income		(3)		7
Income (loss) before income taxes and noncontrolling interests		64		(85)
(Provision) benefit for income taxes		(16)		1
Net income (loss)		48		(84)
Net income attributable to noncontrolling interests		(1)		(20)
Net income (loss) attributable to KBR		$	47	$	(104)
Net income (loss) attributable to KBR per share:
Basic		$	0.33	$	(0.73)
Diluted		$	0.33	$	(0.73)
Basic weighted average common shares outstanding		141		142
Diluted weighted average common shares outstanding		144		142
Cash dividends declared per share		$	0.11	$	0.10


	Three Months Ended
	March 31,
		2021		2020
Net income (loss)		$	48	$	(84)
Other comprehensive income (loss):
Foreign currency translation adjustments		7		(82)
Pension and post-retirement benefits		9		6
Changes in fair value of derivatives		19		(22)
Other comprehensive income (loss)		35		(98)
Income tax (expense) benefit:
Foreign currency translation adjustments		—		—
Pension and post-retirement benefits		(2)		(1)
Changes in fair value of derivatives		(4)		5
Income tax (expense) benefit		(6)		4
Other comprehensive income (loss), net of tax		29		(94)
Comprehensive income (loss)		77		(178)
Less: Comprehensive income attributable to noncontrolling interests		(1)		(20)
Comprehensive income (loss) attributable to KBR		$	76	$	(198)


☒			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


	March 31,		December 31,
	2021		2020
	(Unaudited)
Assets
Current assets:
Cash and equivalents	$	445	$	436
Accounts receivable, net of allowance for credit losses of $14 and $13	877		899
Contract assets	182		178

Other current assets	124		121
Total current assets	1,628		1,634
Claims and accounts receivable	31		30
Property, plant, and equipment, net of accumulated depreciation of $424 and $419 (including net PPE of $24 and $24 owned by a variable interest entity)	132		130
Operating lease right-of-use assets	147		154
Goodwill	1,761		1,761
Intangible assets, net of accumulated amortization of $246 and $228	668		683
Equity in and advances to unconsolidated affiliates	886		881
Deferred income taxes	271		297
Other assets	151		135
Total assets	$	5,675	$	5,705
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	600	$	574

Contract liabilities	299		356
Accrued salaries, wages and benefits	290		283
Nonrecourse project debt	5		5
Operating lease liabilities	43		44
Other current liabilities	182		193
Total current liabilities	1,419		1,455
Pension obligations	363		381
Employee compensation and benefits	93		110
Income tax payable	97		96
Deferred income taxes	11		26
Nonrecourse project debt	2		2

Long-term debt	1,586		1,584
Operating lease liabilities	180		186

Other liabilities	249		256
Total liabilities	4,000		4,096
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, 179,631,779 and 179,087,655 shares issued, and 141,267,027 and 140,766,052 shares outstanding, respectively	—		—
PIC	2,230		2,222
Retained earnings	1,336		1,305
Treasury stock, 38,364,752 shares and 38,321,603 shares, at cost, respectively	(866)		(864)
AOCL	(1,054)		(1,083)
Total KBR shareholders’ equity	1,646		1,580
Noncontrolling interests	29		29
Total shareholders’ equity	1,675		1,609
Total liabilities and shareholders’ equity	$	5,675	$	5,705


















Dollars in millions	Total		PIC		Retained Earnings		Treasury Stock		AOCL		NCI
Balance at December 31, 2020	$	1,609	$	2,222	$	1,305	$	(864)	$	(1,083)	$	29




Share-based compensation	4		4		—		—		—		—

Common stock issued upon exercise of stock options	4		4		—		—		—		—
Dividends declared to shareholders ($0.11/share)	(16)		—		(16)		—		—		—
Repurchases of common stock	(4)		—		—		(4)		—		—
Issuance of ESPP shares	2		—		—		2		—		—


Other	(1)		—		—		—		—		(1)
Net income	48		—		47		—		—		1
Other comprehensive income, net of tax	29		—		—		—		29		—
Balance at March 31, 2021	$	1,675	$	2,230	$	1,336	$	(866)	$	(1,054)	$	29


















Dollars in millions	Total		PIC		Retained Earnings		Treasury Stock		AOCL		NCI
Balance at December 31, 2019	$	1,853	$	2,206	$	1,437	$	(817)	$	(987)	$	14
Cumulative adjustment for the adoption of ASC 326	(3)		—		(3)		—		—		—

Adjusted balance at January 1, 2020	1,850		2,206		1,434		(817)		(987)		14

Share-based compensation	2		2		—		—		—		—

Common stock issued upon exercise of stock options	2		2		—		—		—		—
Dividends declared to shareholders ($0.10/share)	(14)		—		(14)		—		—		—
Repurchases of common stock	(4)		—		—		(4)		—		—
Issuance of ESPP shares	2		—		—		2		—		—


Other noncontrolling interests activity	(6)		—		—		—		—		(6)
Net loss	(84)		—		(104)		—		—		20
Other comprehensive loss, net of tax	(94)		—		—		—		(94)		—
Balance at March 31, 2020	$	1,654	$	2,210	$	1,316	$	(819)	$	(1,081)	$	28


	Three Months Ended March 31,
	2021		2020
Cash flows from operating activities:
Net income (loss)	$	48	$	(84)
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	38		27
Equity in earnings of unconsolidated affiliates	(12)		(1)
Deferred income tax	7		(10)
Loss (gain) on disposition of assets	1		(19)
Goodwill impairment	—		62
Asset impairments	—		64

Other	11		1

Changes in operating assets and liabilities:
Accounts receivable, net of allowance for credit losses	24		(169)
Contract assets	(3)		15

Accounts payable	33		125
Contract liabilities	(62)		(59)
Accrued salaries, wages and benefits	9		31
Payments on operating lease obligation	(15)		(15)

Payments from unconsolidated affiliates, net	7		7
Distributions of earnings from unconsolidated affiliates	8		4

Pension funding	(11)		(11)



Restructuring reserve	(7)		29
Other assets and liabilities	(26)		44

Total cash flows provided by operating activities	$	50	$	41
Cash flows from investing activities:
Purchases of property, plant and equipment	$	(6)	$	(2)

Investments in equity method joint ventures	(3)		—
Acquisition of businesses, net of cash acquired	—		(9)

Acquisition of technology license	(7)		—
Other investment	(6)		—
Total cash flows used in investing activities	$	(22)	$	(11)
Cash flows from financing activities:
Borrowings on long-term debt	—		113
Payments on short-term and long-term borrowings	(7)		(252)
Debt issuance costs	—		(3)


Payments of dividends to shareholders	(14)		(11)
Net proceeds from issuance of common stock	4		2
Payments to reacquire common stock	(4)		(4)





Payment of contingent consideration liability	(1)		—
Total cash flows used in financing activities	$	(22)	$	(155)
Effect of exchange rate changes on cash	3		(21)
Increase (decrease) in cash and equivalents	9		(146)
Cash and equivalents at beginning of period	436		712
Cash and equivalents at end of period	$	445	$	566





Noncash financing activities
Dividends declared	$	16	$	14


	Three Months Ended March 31, 2021

Total by Countries/Regions Dollars in millions	Government Solutions		Sustainable Technology Solutions		Total
United States	$	749	$	113	$	862
Middle East	133		44		177
Europe	173		44		217
Australia	77		5		82
Canada	—		—		—
Africa	19		20		39
Asia	—		51		51
Other countries	13		20		33
Total revenue	$	1,164	$	297	$	1,461

	Three Months Ended March 31, 2020

Total by Countries/Regions Dollars in millions	Government Solutions		Sustainable Technology Solutions		Total
United States	$	513	$	249	$	762
Middle East	187		64		251
Europe	190		59		249
Australia	58		29		87
Canada	—		26		26
Africa	19		23		42
Asia	—		68		68
Other countries	15		37		52
Total revenue	$	982	$	555	$	1,537


	Three Months Ended March 31, 2020

	(Unaudited)
Revenue	$	1,667
Net income attributable to KBR	$	(104)
Diluted earnings per share	$	(0.73)


	March 31, 2021
Dollars in millions	International (a)		Domestic (b)		Total
Operating cash and equivalents	$	216	$	75	$	291
Short-term investments (c)	3		—		3
Cash and equivalents held in consolidated joint ventures and Aspire Defence subcontracting entities	151		—		151
Total	$	370	$	75	$	445


	December 31, 2020
Dollars in millions	International (a)		Domestic (b)		Total
Operating cash and equivalents	$	228	$	54	$	282
Short-term investments (c)	3		—		3
Cash and equivalents held in consolidated joint ventures and Aspire Defence subcontracting entities	151		—		151
Total	$	382	$	54	$	436




Dollars in millions	March 31, 2021		March 31, 2020
Amounts included in project estimates-at-completion at January 1,	$	1,048	$	978
(Decrease) increase in project estimates	(9)		2
Approved change orders	(11)		(6)
Foreign currency effect	5		(102)
Amounts included in project estimates-at-completion at March 31,	$	1,033	$	872
Amounts recognized over time based on progress at March 31,	$	1,033	$	872


Dollars in millions	March 31, 2021		December 31, 2020
Term Loan A	$	283	$	285
Term Loan B	515		516
Convertible Senior Notes	350		350
Senior Notes	250		250
Senior Credit Facility	260		260
Unamortized debt issuance costs - Term Loan A	(3)		(4)
Unamortized debt issuance costs and discount - Term Loan B	(15)		(16)
Unamortized debt issuance costs and discount - Convertible Senior Notes	(37)		(40)
Unamortized debt issuance costs and discount - Senior Notes	(5)		(5)
Total debt	1,598		1,596
Less: current portion	12		12
Total long-term debt, net of current portion	$	1,586	$	1,584


Dollars in millions	Severance		Lease Abandonment		Other		Total Restructuring Charges		Asset Impairments		Total Restructuring Charges & Asset Impairments
Government Solutions	$	2	$	—	$	—	$	2	$	—	$	2
Sustainable Technology Solutions	29		4		6		39		49		88
Other	1		54		20		75		49		124
Total	$	32	$	58	$	26	$	116	$	98	$	214



	Three Months Ended March 31,		Year Ended December 31,
	2021		2020
Dollars in millions
Beginning balance at January 1,	$	881	$	846


Equity in earnings of unconsolidated affiliates	12		30
Distributions of earnings of unconsolidated affiliates	(8)		(38)
Advances to (payments from) unconsolidated affiliates, net	(7)		(15)
Investments (a)	3		26
Impairment of equity method investments (b)	—		(19)
Foreign currency translation adjustments	6		50
Other	(1)		1



Ending balance	$	886	$	881


	Revolver and Term Loan A
Consolidated Leverage Ratio	LIBOR Margin		Base Rate Margin		Commitment Fee
Greater than or equal to 3.25 to 1.00	2.25	%	1.25	%	0.35	%
Less than 3.25 to 1.00 but greater than or equal to 2.25 to 1.00	2.00	%	1.00	%	0.30	%
Less than 2.25 to 1.00 but greater than or equal to 1.25 to 1.00	1.75	%	0.75	%	0.25	%
Less than 1.25 to 1.00	1.50	%	0.50	%	0.20	%


Dollars in millions	Accumulated foreign currency translation adjustments		Accumulated pension liability adjustments		Changes in fair value of derivatives		Total
Balance at December 31, 2020	$	(291)	$	(764)	$	(28)	$	(1,083)
Other comprehensive income adjustments before reclassifications	6		—		12		18
Amounts reclassified from AOCL	1		7		3		11
Net other comprehensive income (loss)	7		7		15		29
Balance at March 31, 2021	$	(284)	$	(757)	$	(13)	$	(1,054)


	Three Months Ended
	March 31, 2021
		Number of Shares	Average Price per Share		Dollars in Millions


Withheld to cover shares		129,376	$	31.07	$	4


	Three Months Ended
	March 31, 2020
		Number of Shares	Average Price per Share		Dollars in Millions


Withheld to cover shares		149,124	$	25.96	$	4


	Three Months Ended March 31,
Shares in millions		2021	2020
Basic weighted average common shares outstanding		141	142
Stock options, restricted shares, and convertible debt		3	—
Diluted weighted average common shares outstanding		144	142


	Three Months Ended
	March 31,
Gains (losses) dollars in millions		2021		2020
Balance Sheet Hedges - Fair Value		$	—	$	1
Balance Sheet Position - Remeasurement		(6)		6
Net		$	(6)	$	7


Revenues	Three Months Ended March 31,
					2021 vs. 2020
Dollars in millions	2021		2020		$		%
Revenues	$	1,461	$	1,537	$	(76)	(5)	%


Goodwill Impairment, Restructuring Charges and Asset Impairments	Three Months Ended March 31,
					2021 vs. 2020
Dollars in millions	2021		2020		$		%
Goodwill impairment	$	—	$	(62)	$	62	n/m
Restructuring charges and asset impairments	$	—	$	(116)	$	116	n/m


Other Non-operating Income (loss)	Three Months Ended March 31,
					2021 vs. 2020
Dollars in millions	2021		2020		$		%
Other non-operating income (loss)	$	(3)	$	7	$	(10)	(143)	%


Provision for Income Taxes	Three Months Ended March 31,
					2021 vs. 2020
Dollars in millions	2021		2020		$		%
Income (loss) before provision for income taxes and noncontrolling interests	$	64	$	(85)	$	149	(175)	%
(Provision) benefit for income taxes	$	(16)	$	1	$	17	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
January 1 - 31, 2021	930	$	29.05	—	$	303,142,110
February 1 - 29, 2021	—	$	—	—	$	303,142,110
March 1 - 31, 2021	128,446	$	31.09	—	$	303,142,110


Exhibit Number						Description

3.1						KBR Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to KBR’s current report on Form 8-K filed June 7, 2012; File No. 001-33146)

3.2						Amended and Restated Bylaws of KBR, Inc. (incorporated by reference to Exhibit 3.2 to KBR’s annual report on Form 10-K for the year ended December 31, 2013 filed on February 27, 2014; File No. 001-33146)

4.1						First Supplemental Indenture, dated as of January 6, 2021, by and among KBR Inc., the guarantors named therein and Citibank, N.A. as trustee (incorporated by reference to Exhibit 4.1 to KBR’s Current Report on Form 8-K filed on January 6, 2021, File No. 001-33146)

*10.55+						KBR Benefit Restoration Plan, as restated effective December 31, 2008

*10.56+						KBR Benefit Restoration Plan, as restated effective December 31, 2010

*10.57+						First Amendment to KBR Benefit Restoration Plan, as restated effective December 31, 2010

*10.58+						Second Amendment to KBR Benefit Restoration Plan, as restated effective December 31, 2010

*10.59+						Form of revised Restricted Stock Unit Agreement (US Employee) pursuant to KBR, Inc. 2006 Stock and Incentive Plan

*10.60+						Form of revised Restricted Stock Unit Agreement (International Employee) pursuant to KBR, Inc. 2006 Stock and Incentive Plan

*10.61+						Form of revised Performance Stock Unit Agreement (US Employee) pursuant to KBR, Inc. 2006 Stock and Incentive Plan

*10.62+						Form of revised Performance Stock Unit Agreement (International Employee) pursuant to KBR, Inc. 2006 Stock and Incentive Plan

*10.63+						Form of Performance Award Agreement (US/International Employee Cash Only) pursuant to KBR, Inc. 2006 Stock and Incentive Plan

*10.64+						Form of Performance Award Agreement (US/International Employee Cash/Stock) pursuant to KBR, Inc. 2006 Stock and Incentive Plan

*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 March 31, 2021 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 Interim Chief Accounting Officer