Kbr, Inc 10-Q for FY2021 Q3

Kbr, Inc. (KBR)

10-Q 2021-10-28 For: 2021-09-30

Added on April 11, 2026

About this 10-Q

Kbr, Inc filed this 10-Q on October 28, 2021, covering the quarter ended September 30, 2021 (FY2021 Q3).

Headline figures

Quarter ended September 30, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $1.84B; up 33.6% from $1.38B a year earlier
Net income: $55M; up 5.8% from net income of $52M a year earlier
Diluted EPS: $0.38; up 5.6% from $0.36 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			40
Item 3. Quantitative and Qualitative Disclosures About Market Risk			56
Item 4. Controls and Procedures			57
PART II. OTHER INFORMATION
Item 1. Legal Proceedings			58
Item 1A. Risk Factors			58
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			59
Item 6. Exhibits			60
SIGNATURES			61


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
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

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				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
Revenues	$	1,843	$	1,379	$	4,840	$	4,301
Cost of revenues	(1,650)		(1,207)		(4,272)		(3,801)
Gross profit	193		172		568		500
Equity in earnings (losses) of unconsolidated affiliates	(1)		13		(175)		30
Selling, general and administrative expenses	(91)		(89)		(283)		(259)
Acquisition and integration related costs	(3)		(2)		(7)		(2)
Goodwill impairment	—		—		—		(99)
Restructuring charges and asset impairments	—		(1)		(2)		(176)
Gain on disposition of assets and investments	3		—		1		18

Operating income	101		93		102		12
Interest expense	(23)		(18)		(68)		(60)
Other non-operating income (loss)	(1)		(4)		(2)		1
Income (loss) before income taxes	77		71		32		(47)
Provision for income taxes	(19)		(19)		(75)		(24)
Net income (loss)	58		52		(43)		(71)
Less: Net income attributable to noncontrolling interests	3		—		7		20
Net income (loss) attributable to KBR	$	55	$	52	$	(50)	$	(91)
Net income (loss) attributable to KBR per share:
Basic	$	0.39	$	0.36	$	(0.36)	$	(0.64)
Diluted	$	0.38	$	0.36	$	(0.36)	$	(0.64)
Basic weighted average common shares outstanding	140		142		141		142
Diluted weighted average common shares outstanding	145		142		141		142
Cash dividends declared per share	$	0.11	$	0.10	$	0.33	$	0.30


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
Net income (loss)	$	58	$	52	$	(43)	$	(71)
Other comprehensive income (loss):
Foreign currency translation adjustments	(16)		21		(4)		(27)
Pension and post-retirement benefits	9		6		25		18
Changes in fair value of derivatives	4		4		23		(19)
Other comprehensive income (loss)	(3)		31		44		(28)
Income tax (expense) benefit:
Foreign currency translation adjustments	1		—		—		—
Pension and post-retirement benefits	(2)		(1)		(5)		(3)
Changes in fair value of derivatives	—		(1)		(5)		4
Income tax (expense) benefit	(1)		(2)		(10)		1
Other comprehensive income (loss), net of tax	(4)		29		34		(27)
Comprehensive income (loss)	54		81		(9)		(98)
Less: Comprehensive income attributable to noncontrolling interests	3		—		7		20
Comprehensive income (loss) attributable to KBR	$	51	$	81	$	(16)	$	(118)


☒			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 30,		December 31,
	2021		2020
	(Unaudited)
Assets
Current assets:
Cash and equivalents	$	550	$	436
Accounts receivable, net of allowance for credit losses of $13 and $13, respectively	1,245		899
Contract assets	227		178

Other current assets	114		121
Total current assets	2,136		1,634
Claims and accounts receivable	30		30
Property, plant, and equipment, net of accumulated depreciation of $435 and $419 (including net PPE of $21 and $24 owned by a variable interest entity), respectively	131		130
Operating lease right-of-use assets	154		154
Goodwill	1,772		1,761
Intangible assets, net of accumulated amortization of $279 and $228, respectively	635		683
Equity in and advances to unconsolidated affiliates	590		881
Deferred income taxes	237		297
Other assets	147		135
Total assets	$	5,832	$	5,705
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	964	$	574

Contract liabilities	289		356
Accrued salaries, wages and benefits	318		283
Nonrecourse project debt	—		5
Operating lease liabilities	40		44
Other current liabilities	177		193
Total current liabilities	1,788		1,455
Pension obligations	310		381
Employee compensation and benefits	104		110
Income tax payable	94		96
Deferred income taxes	13		26
Nonrecourse project debt	2		2

Long-term debt	1,578		1,584
Operating lease liabilities	189		186

Other liabilities	254		256
Total liabilities	4,332		4,096
Commitments and Contingencies (Notes 6, 13 and 14)
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, 179,908,148 and 179,087,655 shares issued, and 140,260,422 and 140,766,052 shares outstanding, respectively	—		—
PIC	2,246		2,222
Retained earnings	1,208		1,305
Treasury stock, 39,647,726 shares and 38,321,603 shares, at cost, respectively	(919)		(864)
AOCL	(1,049)		(1,083)
Total KBR shareholders’ equity	1,486		1,580
Noncontrolling interests	14		29
Total shareholders’ equity	1,500		1,609
Total liabilities and shareholders’ equity	$	5,832	$	5,705


Dollars in millions	Total		PIC		Retained Earnings		Treasury Stock		AOCL		NCI
Balance at June 30, 2021	$	1,501	$	2,240	$	1,169	$	(895)	$	(1,045)	32
Share-based compensation	4		4		—		—		—		—

Common stock issued upon exercise of stock options	1		1		—		—		—		—
Dividends declared to shareholders ($0.11/share)	(16)		—		(16)		—		—		—
Repurchases of common stock	(26)		—		—		(26)		—		—
Issuance of ESPP shares	2		1		—		1		—		—
Investments by noncontrolling interests	—		—		—		—		—		—
Distributions to noncontrolling interests	(22)		—		—		—		—		(22)
Other	2		—		—		1		—		1
Net income	58		—		55		—		—		3
Other comprehensive loss, net of tax	(4)		—		—		—		(4)		—
Balance at September 30, 2021	$	1,500	$	2,246	$	1,208	$	(919)	$	(1,049)	$	14


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	12		12		—		—		—		—

Common stock issued upon exercise of stock options	11		11		—		—		—		—
Dividends declared to shareholders ($0.33/share)	(47)		—		(47)		—		—		—
Repurchases of common stock	(58)		—		—		(58)		—		—
Issuance of ESPP shares	4		1		—		3		—		—
Investments by noncontrolling interests	—		—		—		—		—		—
Distributions to noncontrolling interests	(23)		—		—		—		—		(23)
Other	1		—		—		—		—		1
Net income (loss)	(43)		—		(50)		—		—		7
Other comprehensive income, net of tax	34		—		—		—		34		—
Balance at September 30, 2021	$	1,500	$	2,246	$	1,208	$	(919)	$	(1,049)	$	14


	Nine Months Ended September 30,
	2021		2020
Cash flows from operating activities:
Net loss	$	(43)	$	(71)
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	114		74
Equity in (earnings) losses of unconsolidated affiliates	175		(30)
Deferred income tax	38		(11)
Gain on disposition of assets	(1)		(18)
Goodwill impairment	—		99
Asset impairments	1		91

Other	39		25

Changes in operating assets and liabilities:
Accounts receivable, net of allowance for credit losses	(341)		(50)
Contract assets	(50)		49

Accounts payable	397		15
Contract liabilities	(41)		(124)
Accrued salaries, wages and benefits	41		46
Payments on operating lease obligation	(46)		(45)

Payments from unconsolidated affiliates, net	18		15
Distributions of earnings from unconsolidated affiliates	37		35

Pension funding	(35)		(33)



Restructuring reserve	(20)		31
Other assets and liabilities	(7)		147

Total cash flows provided by operating activities	$	276	$	245
Cash flows from investing activities:
Purchases of property, plant and equipment	$	(22)	$	(8)
Proceeds from disposition of assets and investments	44		1
Investments in equity method joint ventures	(13)		(22)
Acquisition of businesses, net of cash acquired	(14)		(9)

Acquisition of technology license	(7)		—
Other	(10)		—
Total cash flows used in investing activities	$	(22)	$	(38)
Cash flows from financing activities:
Borrowings on long-term debt	—		359
Payments on short-term and long-term borrowings	(25)		(270)
Debt issuance costs	—		(3)


Payments of dividends to shareholders	(45)		(40)
Net proceeds from issuance of common stock	11		3
Payments to reacquire common stock	(58)		(4)



Distributions to noncontrolling interests	(23)		(3)

Other	—		(1)
Total cash flows (used in) provided by financing activities	$	(140)	$	41
Effect of exchange rate changes on cash	—		(11)
Increase in cash and equivalents	114		237
Cash and equivalents at beginning of period	436		712
Cash and equivalents at end of period	$	550	$	949





Noncash financing activities
Dividends declared	$	15	$	14


	Three Months Ended September 30, 2021

Total by Countries/Regions Dollars in millions	Government Solutions		Sustainable Technology Solutions		Total
United States	$	1,135	$	104	$	1,239
Middle East	72		50		122
Europe	215		57		272
Australia	93		4		97
Canada	1		1		2
Africa	23		23		46
Asia	4		43		47
Other countries	12		6		18
Total revenue	$	1,555	$	288	$	1,843

	Three Months Ended September 30, 2020

Total by Countries/Regions Dollars in millions	Government Solutions		Sustainable Technology Solutions		Total
United States	$	559	$	153	$	712
Middle East	179		54		233
Europe	165		63		228
Australia	75		6		81
Canada	1		9		10
Africa	22		16		38
Asia	—		37		37
Other countries	12		28		40
Total revenue	$	1,013	$	366	$	1,379


	Nine Months Ended September 30, 2021

Total by Countries/Regions Dollars in millions	Government Solutions		Sustainable Technology Solutions		Total
United States	$	2,688	$	326	$	3,014
Middle East	348		148		496
Europe	549		162		711
Australia	260		8		268
Canada	1		2		3
Africa	61		67		128
Asia	5		145		150
Other countries	38		32		70
Total revenue	$	3,950	$	890	$	4,840

	Nine Months Ended September 30, 2020

Total by Countries/Regions Dollars in millions	Government Solutions		Sustainable Technology Solutions		Total
United States	$	1,593	$	600	$	2,193
Middle East	537		177		714
Europe	514		160		674
Australia	201		46		247
Canada	1		40		41
Africa	60		53		113
Asia	—		161		161
Other countries	42		116		158
Total revenue	$	2,948	$	1,353	$	4,301


	Three Months Ended		Nine Months Ended
	September 30, 2020		September 30, 2020
	(Unaudited)		(Unaudited)
Revenue	$	1,537	$	4,728
Net loss attributable to KBR	$	58	$	(83)
Diluted earnings per share	$	0.40	$	(0.58)


	September 30, 2021
Dollars in millions	International (a)		Domestic (b)		Total
Operating cash and equivalents	$	253	$	126	$	379
Short-term investments (c)	2		—		2
Cash and equivalents held in consolidated joint ventures and Aspire Defence subcontracting entities	169		—		169
Total	$	424	$	126	$	550


	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	September 30, 2021		September 30, 2020
Amounts included in project estimates-at-completion at January 1,	$	1,048	$	978
(Decrease) increase in project estimates	(228)		(1)
Approved change orders	(374)		(6)
Foreign currency impact	(19)		5
Amounts included in project estimates-at-completion at September 30,	$	427	$	976
Amounts recognized over time based on progress at September 30,*	$	427	$	976


Dollars in millions	Severance		Lease Abandonment		Other		Total Restructuring Charges		Asset Impairments		Total Restructuring Charges & Asset Impairments
Government Solutions	$	1	$	—	$	—	$	1	$	2	$	3
Sustainable Technology Solutions	33		3		—		36		50		86
Other	1		21		19		41		46		87
Total	$	35	$	24	$	19	$	78	$	98	$	176



	Nine Months Ended September 30,		Year Ended December 31,
	2021		2020
Dollars in millions
Beginning balance at January 1,	$	881	$	846


Equity in earnings (losses) of unconsolidated affiliates	(175)		30
Distributions of earnings of unconsolidated affiliates	(37)		(38)
Advances to (payments from) unconsolidated affiliates, net	(18)		(15)
Investments (a)	13		26
Impairment of equity method investments (b)	—		(19)
Sale of equity method investment (c)	(39)		—
Foreign currency translation adjustments	(9)		50
Other (d)	(26)		1



Ending balance	$	590	$	881


	Three Months Ended September 30,
	2021				2020
Dollars in millions	United States		Int’l		United States		Int’l
Components of net periodic pension cost (benefit)
Service cost	$	—	$	1	$	—	$	1
Interest cost	$	—	$	8	$	—	$	9
Expected return on plan assets	—		(21)		—		(15)

Amortization of prior service cost	—		—		—		—
Recognized actuarial loss	—		8		—		6
Net periodic pension cost (benefit)	$	—	$	(4)	$	—	$	1

	Nine Months Ended September 30,
	2021				2020
Dollars in millions	United States		Int’l		United States		Int’l
Components of net periodic pension cost (benefit)
Service cost	$	—	$	1	$	—	$	1
Interest cost	$	1	$	24	$	1	$	28
Expected return on plan assets	(2)		(64)		(2)		(44)

Amortization of prior service cost	—		1		—		1
Recognized actuarial loss	1		24		1		17
Net periodic pension cost (benefit)	$	—	$	(14)	$	—	$	3


	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)		—		9		3
Amounts reclassified from AOCL	2		20		9		31
Net other comprehensive income (loss)	(4)		20		18		34
Balance at September 30, 2021	$	(295)	$	(744)	$	(10)	$	(1,049)


	Three Months Ended September 30,		Nine Months Ended September 30,
Shares in millions	2021	2020	2021	2020
Basic weighted average common shares outstanding	140	142	141	142
Stock options, restricted shares, and convertible debt (a)	5	—	—	—
Diluted weighted average common shares outstanding (b)	145	142	141	142


Revenues	Three Months Ended September 30,
					2021 vs. 2020
Dollars in millions	2021		2020		$		%
Revenues	$	1,843	$	1,379	$	464	34	%


Net Income Attributable to Noncontrolling Interests	Three Months Ended September 30,
					2021 vs. 2020
Dollars in millions	2021		2020		$		%
Net income attributable to noncontrolling interests	$	3	$	—	$	3	n/m


Goodwill Impairment, Restructuring Charges and Asset Impairments	Nine Months Ended September 30,
					2021 vs. 2020
Dollars in millions	2021		2020		$		%
Goodwill impairment	$	—	$	(99)	$	99	n/m
Restructuring charges and asset impairments	$	(2)	$	(176)	$	174	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, 2021	647,173	$	38.61	647,173	$	250,299,457
August 1 - 31, 2021	1,199	$	38.09	—	$	250,299,457
September 1 - 30, 2021	2,249	$	38.67	—	$	250,299,457
Total	650,621	—		647,173	$	250,299,457


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)

*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 30, 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







*			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