Kbr, Inc 10-Q for FY2021 Q2

Kbr, Inc. (KBR)

10-Q 2021-07-29 For: 2021-06-30

Added on April 11, 2026

About this 10-Q

Kbr, Inc filed this 10-Q on July 29, 2021, covering the quarter ended June 30, 2021 (FY2021 Q2).

Headline figures

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

Revenue: $1.54B; up 10.9% from $1.39B a year earlier
Net loss: $152M; compared with a net loss of $39M a year earlier
Diluted EPS: -$1.08; compared with -$0.28 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 (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			55
Item 4. Controls and Procedures			56
PART II. OTHER INFORMATION
Item 1. Legal Proceedings			57
Item 1A. Risk Factors			57
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			57
Item 6. Exhibits			58
SIGNATURES			59


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

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				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Revenues	$	1,536	$	1,385	$	2,997	$	2,922
Cost of revenues	(1,329)		(1,243)		(2,622)		(2,594)
Gross profit	207		142		375		328
Equity in earnings (losses) of unconsolidated affiliates	(186)		16		(174)		17
Selling, general and administrative expenses	(103)		(73)		(192)		(170)
Acquisition and integration related costs	(3)		—		(4)		—
Goodwill impairment	—		(37)		—		(99)
Restructuring charges and asset impairments	(2)		(59)		(2)		(175)
(Loss) gain on disposition of assets and investments	(1)		(1)		(2)		18

Operating (loss) income	(88)		(12)		1		(81)
Interest expense	(23)		(19)		(45)		(42)
Other non-operating income (loss)	2		(2)		(1)		5
Loss before income taxes and noncontrolling interests	(109)		(33)		(45)		(118)
Provision for income taxes	(40)		(6)		(56)		(5)
Net loss	(149)		(39)		(101)		(123)
Net income attributable to noncontrolling interests	(3)		—		(4)		(20)
Net loss attributable to KBR	$	(152)	$	(39)	$	(105)	$	(143)
Net loss attributable to KBR per share:
Basic	$	(1.08)	$	(0.28)	$	(0.75)	$	(1.00)
Diluted	$	(1.08)	$	(0.28)	$	(0.75)	$	(1.00)
Basic weighted average common shares outstanding	141		142		141		142
Diluted weighted average common shares outstanding	141		142		141		142
Cash dividends declared per share	$	0.11	$	0.10	$	0.22	$	0.20


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Net loss	$	(149)	$	(39)	$	(101)	$	(123)
Other comprehensive income (loss):
Foreign currency translation adjustments	5		34		12		(48)
Pension and post-retirement benefits	7		6		16		12
Changes in fair value of derivatives	—		(1)		19		(23)
Other comprehensive income (loss)	12		39		47		(59)
Income tax (expense) benefit:
Foreign currency translation adjustments	(1)		—		(1)		—
Pension and post-retirement benefits	(1)		(1)		(3)		(2)
Changes in fair value of derivatives	(1)		—		(5)		5
Income tax (expense) benefit	(3)		(1)		(9)		3
Other comprehensive income (loss), net of tax	9		38		38		(56)
Comprehensive (loss)	(140)		(1)		(63)		(179)
Less: Comprehensive (loss) attributable to noncontrolling interests	(3)		—		(4)		(20)
Comprehensive (loss) attributable to KBR	$	(143)	$	(1)	$	(67)	$	(199)


☒			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


	June 30,		December 31,
	2021		2020
	(Unaudited)
Assets
Current assets:
Cash and equivalents	$	483	$	436
Accounts receivable, net of allowance for credit losses of $13 and $13	934		899
Contract assets	183		178

Other current assets	126		121
Total current assets	1,726		1,634
Claims and accounts receivable	30		30
Property, plant, and equipment, net of accumulated depreciation of $431 and $419 (including net PPE of $22 and $24 owned by a variable interest entity)	136		130
Operating lease right-of-use assets	161		154
Goodwill	1,763		1,761
Intangible assets, net of accumulated amortization of $265 and $228	654		683
Equity in and advances to unconsolidated affiliates	662		881
Deferred income taxes	245		297
Other assets	145		135
Total assets	$	5,522	$	5,705
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	633	$	574

Contract liabilities	278		356
Accrued salaries, wages and benefits	293		283
Nonrecourse project debt	—		5
Operating lease liabilities	41		44
Other current liabilities	198		193
Total current liabilities	1,443		1,455
Pension obligations	339		381
Employee compensation and benefits	99		110
Income tax payable	95		96
Deferred income taxes	16		26
Nonrecourse project debt	2		2

Long-term debt	1,585		1,584
Operating lease liabilities	194		186

Other liabilities	248		256
Total liabilities	4,021		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, 179,837,924 and 179,087,655 shares issued, and 140,780,015 and 140,766,052 shares outstanding, respectively	—		—
PIC	2,240		2,222
Retained earnings	1,169		1,305
Treasury stock, 39,057,909 shares and 38,321,603 shares, at cost, respectively	(895)		(864)
AOCL	(1,045)		(1,083)
Total KBR shareholders’ equity	1,469		1,580
Noncontrolling interests	32		29
Total shareholders’ equity	1,501		1,609
Total liabilities and shareholders’ equity	$	5,522	$	5,705


Dollars in millions	Total		PIC		Retained Earnings		Treasury Stock		AOCL		NCI
Balance at March 31, 2021	$	1,675	$	2,230	$	1,336	$	(866)	$	(1,054)	29
Share-based compensation	4		4		—		—		—		—

Common stock issued upon exercise of stock options	6		6		—		—		—		—
Dividends declared to shareholders ($0.11/share)	(15)		—		(15)		—		—		—
Repurchases of common stock	(28)		—		—		(28)		—		—
Issuance of ESPP shares	—		—		—		—		—		—
Investments by noncontrolling interests	—		—		—		—		—		—
Distributions to noncontrolling interests	(1)		—		—		—		—		(1)
Other	—		—		—		(1)		—		1
Net loss	(149)		—		(152)		—		—		3
Other comprehensive income, net of tax	9		—		—		—		9		—
Balance at June 30, 2021	$	1,501	$	2,240	$	1,169	$	(895)	$	(1,045)	$	32


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	8		8		—		—		—		—

Common stock issued upon exercise of stock options	10		10		—		—		—		—
Dividends declared to shareholders ($0.22/share)	(31)		—		(31)		—		—		—
Repurchases of common stock	(32)		—		—		(32)		—		—
Issuance of ESPP shares	2		—		—		2		—		—
Investments by noncontrolling interests	—		—		—		—		—		—
Distributions to noncontrolling interests	(1)		—		—		—		—		(1)
Other	(1)		—		—		(1)		—		—
Net loss	(101)		—		(105)		—		—		4
Other comprehensive income, net of tax	38		—		—		—		38		—
Balance at June 30, 2021	$	1,501	$	2,240	$	1,169	$	(895)	$	(1,045)	$	32


	Six Months Ended June 30,
	2021		2020
Cash flows from operating activities:
Net loss	$	(101)	$	(123)
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	76		48
Equity in (earnings) losses of unconsolidated affiliates	174		(17)
Deferred income tax	35		(16)
Loss (gain) on disposition of assets	2		(18)
Goodwill impairment	—		99
Asset impairments	—		90

Other	23		8

Changes in operating assets and liabilities:
Accounts receivable, net of allowance for credit losses	(29)		(40)
Contract assets	(4)		38

Accounts payable	65		23
Contract liabilities	(56)		(92)
Accrued salaries, wages and benefits	13		22
Payments on operating lease obligation	(30)		(28)

Payments from unconsolidated affiliates, net	10		7
Distributions of earnings from unconsolidated affiliates	26		15

Pension funding	(24)		(20)



Restructuring reserve	(14)		38
Other assets and liabilities	(12)		116

Total cash flows provided by operating activities	$	154	$	150
Cash flows from investing activities:
Purchases of property, plant and equipment	$	(16)	$	(4)
Proceeds from disposition of assets and investments	—		1
Investments in equity method joint ventures	(7)		(12)
Acquisition of businesses, net of cash acquired	—		(9)

Acquisition of technology license	(7)		—
Other	(8)		(1)
Total cash flows used in investing activities	$	(38)	$	(25)
Cash flows from financing activities:
Borrowings on long-term debt	—		113
Payments on short-term and long-term borrowings	(19)		(263)
Debt issuance costs	—		(3)


Payments of dividends to shareholders	(30)		(26)
Net proceeds from issuance of common stock	10		3
Payments to reacquire common stock	(32)		(4)



Distributions to noncontrolling interests	(2)		(2)

Other	(1)		(1)
Total cash flows used in financing activities	$	(74)	$	(183)
Effect of exchange rate changes on cash	5		(19)
Increase (decrease) in cash and equivalents	47		(77)
Cash and equivalents at beginning of period	436		712
Cash and equivalents at end of period	$	483	$	635





Noncash financing activities
Dividends declared	$	15	$	14


	Three Months Ended June 30, 2021

Total by Countries/Regions Dollars in millions	Government Solutions		Sustainable Technology Solutions		Total
United States	$	804	$	109	$	913
Middle East	143		54		197
Europe	161		61		222
Australia	90		—		90
Canada	—		1		1
Africa	19		24		43
Asia	1		51		52
Other countries	13		5		18
Total revenue	$	1,231	$	305	$	1,536

	Three Months Ended June 30, 2020

Total by Countries/Regions Dollars in millions	Government Solutions		Sustainable Technology Solutions		Total
United States	$	521	$	198	$	719
Middle East	171		59		230
Europe	159		38		197
Australia	68		11		79
Canada	—		5		5
Africa	19		14		33
Asia	—		56		56
Other countries	15		51		66
Total revenue	$	953	$	432	$	1,385


	Six Months Ended June 30, 2021

Total by Countries/Regions Dollars in millions	Government Solutions		Sustainable Technology Solutions		Total
United States	$	1,553	$	222	$	1,775
Middle East	276		98		374
Europe	334		105		439
Australia	167		4		171
Canada	—		1		1
Africa	38		44		82
Asia	1		102		103
Other countries	26		26		52
Total revenue	$	2,395	$	602	$	2,997

	Six Months Ended June 30, 2020

Total by Countries/Regions Dollars in millions	Government Solutions		Sustainable Technology Solutions		Total
United States	$	1,034	$	447	$	1,481
Middle East	358		123		481
Europe	349		97		446
Australia	126		40		166
Canada	—		31		31
Africa	38		37		75
Asia	—		124		124
Other countries	30		88		118
Total revenue	$	1,935	$	987	$	2,922


	Three Months Ended		Six Months Ended
	June 30, 2020		June 30, 2020
	(Unaudited)		(Unaudited)
Revenue	$	1,524	$	3,191
Net loss attributable to KBR	$	(37)	$	(141)
Diluted earnings per share	$	(0.26)	$	(0.98)


	June 30, 2021
Dollars in millions	International (a)		Domestic (b)		Total
Operating cash and equivalents	$	245	$	95	$	340
Short-term investments (c)	12		—		12
Cash and equivalents held in consolidated joint ventures and Aspire Defence subcontracting entities	131		—		131
Total	$	388	$	95	$	483


	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	June 30, 2021		June 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	(11)		(6)
Foreign currency impact	(1)		(16)
Amounts included in project estimates-at-completion at June 30,	$	808	$	955
Amounts recognized over time based on progress at June 30,	$	808	$	955


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



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


Equity in earnings (losses) of unconsolidated affiliates	(174)		30
Distributions of earnings of unconsolidated affiliates	(26)		(38)
Advances to (payments from) unconsolidated affiliates, net	(10)		(15)
Investments (a)	7		26
Impairment of equity method investments (b)	—		(19)
Foreign currency translation adjustments	(23)		50
Other	7		1



Ending balance	$	662	$	881


	Three Months Ended June 30,
	2021				2020
Dollars in millions	United States		Int’l		United States		Int’l
Components of net periodic pension cost (benefit)

Interest cost	$	1	$	8	$	—	$	9
Expected return on plan assets	(1)		(22)		(1)		(14)

Amortization of prior service cost	—		1		—		1
Recognized actuarial loss	—		8		1		5
Net periodic benefit cost (benefit)	$	—	$	(5)	$	—	$	1

	Six Months Ended June 30,
	2021				2020
Dollars in millions	United States		Int’l		United States		Int’l
Components of net periodic pension cost (benefit)

Interest cost	$	1	$	16	$	1	$	19
Expected return on plan assets	(2)		(43)		(2)		(29)

Amortization of prior service cost	—		1		—		1
Recognized actuarial loss	1		16		1		11
Net periodic pension cost (benefit)	$	—	$	(10)	$	—	$	2


	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	8		—		8		16
Amounts reclassified from AOCL	3		13		6		22
Net other comprehensive income (loss)	11		13		14		38
Balance at June 30, 2021	$	(280)	$	(751)	$	(14)	$	(1,045)


	Three Months Ended June 30,		Six Months Ended June 30,
Shares in millions	2021	2020	2021	2020
Basic weighted average common shares outstanding	141	142	141	142
Stock options, restricted shares, and convertible debt	—	—	—	—
Diluted weighted average common shares outstanding	141	142	141	142


Revenues	Three Months Ended June 30,
					2021 vs. 2020
Dollars in millions	2021		2020		$		%
Revenues	$	1,536	$	1,385	$	151	11	%


Goodwill Impairment, Restructuring Charges and Asset Impairments	Three Months Ended June 30,
					2021 vs. 2020
Dollars in millions	2021		2020		$		%
Goodwill impairment	$	—	$	(37)	$	(37)	n/m
Restructuring charges and asset impairments	$	(2)	$	(59)	$	57	n/m


Other Non-operating (Loss) Income	Three Months Ended June 30,
					2021 vs. 2020
Dollars in millions	2021		2020		$		%
Other non-operating (loss) income	$	2	$	(2)	$	4	200	%


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
April 1 - 30, 2021	767	$	31.00	—	$	303,142,110
May 1 - 31, 2021	653,876	$	41.75	643,088	$	276,784,589
June 1 - 30, 2021	38,514	$	38.56	38,196	$	275,286,485


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)

10.1+						Amended and Restated KBR, Inc. 2006 Stock and Incentive Plan, effective May 19, 2021 (incorporated by reference to Exhibit 10.1 to KBR’s current report on Form 8-K filed May 21, 2021; 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 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 Chief Accounting Officer