KBR, Inc. : KBR Announces First Quarter 2013 Results
0
04/25/2013 | 10:10pm CEST
Earnings per diluted share of $0.59
Operating income up 19% year-over-year
Operating income margin up 156 basis points year-over-year
Cash and equivalents of $904 million at March 31, 2013
2013 earnings per diluted share guidance remains $2.45 to $2.90
KBR (NYSE:KBR) announced today that first quarter 2013 net income
attributable to KBR was $88 million, or $0.59 per diluted share,
compared to net income attributable to KBR of $91 million, or $0.61 per
diluted share, in the first quarter of 2012.
Consolidated revenue in the first quarter 2013 was $1.9 billion compared
to $2.0 billion in the first quarter of 2012. Operating income in the
first quarter 2013 was $133 million compared to operating income of $112
million in the prior year first quarter.
"KBR's first quarter performance was consistent with our expectations.
We delivered $0.59 of EPS on strong project execution across all of
KBR's businesses, including on the five problem projects we discussed in
the fourth quarter where no incremental provisions were taken in the
first quarter," said Bill Utt, Chairman, President, and Chief Executive
Officer of KBR. "We continue to see strong prospects for growth across
our businesses and remain confident in our ability to successfully win
and execute new work going forward."
Business Discussion (All comparisons are first quarter 2013
versus first quarter 2012, unless otherwise noted).
Hydrocarbons Results
Hydrocarbons revenue was $947 million, down $169 million, or 15%.
Hydrocarbons job income was $180 million, up $44 million, or 32%.
Gas Monetization job income was $104 million, up $25 million, or 32%,
primarily related to continued strong execution, increased volumes at
several LNG projects, and the close out of projects nearing completion.
Oil and Gas job income was $25 million, up $2 million, or 9%,
primarily related to higher work volumes on the Shah Deniz project,
FEED work for an FPSO in Angola and engineering and design work for a
semi-submersible unit and a drilling platform. Partially offsetting
the increase was the completion or near completion of several projects.
Downstream job income was $26 million, up $12 million, or 86%,
primarily related to increased profits from an ethylene project in
Uzbekistan, a gasifier FEED in Saudi Arabia, and the KBR-AMCDE entity
in Saudi Arabia. Partially offsetting the increase was the completion
of engineering on a refinery project in Africa.
Technology job income was $25 million, up $5 million, or 25%,
primarily related to several new ammonia projects in the United
States, Bolivia, Nigeria, Indonesia, India and Hungary as well as an
ethylene project in Uzbekistan and a VCC project in Russia. Partially
offsetting the increase was the completion of ammonia projects in
Brazil and Egypt and an aniline project in China.
Infrastructure, Government and Power (IGP) Results
IGP revenue was $407 million, down $111 million, or 21%. IGP job income
was $63 million, down $12 million, or 16%.
North American Government and Logistics (NAGL) job income was $20
million, up $5 million, or 33%, primarily related to award fee and
base fee close-out items on the completed LogCAP III program in Iraq.
International Government, Defence and Support Services (IGDSS) job
income was $22 million, down $14 million, or 39%, primarily related to
lower work volumes on the Allenby & Connaught and Afghanistan ISP
projects.
Infrastructure job income was $10 million, down $5 million, or 33%,
primarily related to lower work volumes on water, transportation and
facilities projects. The decrease was partially offset by higher
activity on the Doha Expressway project in Qatar.
Power and Industrial (P&I) job income was $8 million, down $2 million,
or 20%. Higher activity on a waste-to-energy expansion project and
work performed on an emissions control EPC project was more than
offset by the substantial completion of engineering activity on a coal
gasification project and the completion of an industrial project in
Louisiana.
Minerals job income was $3 million, up $4 million, or 400%, primarily
related to charges taken on a legacy EPC project in the first quarter
of 2012 that did not recur in the first quarter of 2013.
Services Results
Services revenue was $485 million, up $137 million, or 39%. Services job
income was $31 million, up $3 million, or 11%, primarily related to
several new module fabrication and turnaround projects ramping in Canada.
Ventures Results
Ventures job income was $8 million, flat with the prior year.
Corporate
First quarter of 2013 corporate general and administrative expense was
$52 million.
First quarter of 2013 labor cost absorption expense was $15 million due
to expected under-absorption of KBR's centralized engineering resources.
Total cash used in operating activities in the first quarter of 2013 was
$93 million.
The effective tax rate for the first quarter of 2013 was approximately
23% compared to 9% for the first quarter of 2012.
During the first quarter of 2013, KBR had share repurchases of $6
million, capital expenditures of $20 million and pension contributions
of $7 million for total cash deployment of $33 million.
Full Year 2013 Guidance
2013 earnings per diluted share guidance remains $2.45 to $2.90.
Significant Achievements and Awards
KBR was awarded a three-year agreement to provide turnaround services
for Suncor Energy's refinery in Edmonton, AB, Canada. KBR will assist
with turnaround planning review, maintenance, pipe fabrication and
long-term execution plans for the Suncor Edmonton refinery.
KBR was selected by Shell Canada Energy to perform off-site
modularization and pipe fabrication using Shell Quest Carbon Capture
and Storage technologies to reduce CO2 emissions at Shell's Upgrader.
KBR will provide pipe spool fabrication and module assembly for pipe,
process, equipment and building modules as well as the fabrication of
several unique and innovative vertical modules.
KBR was selected by Subsea 7 to perform the topsides design for the
Chevron Lianzi development project in a unitized offshore zone between
the Republic of Congo and the Republic of Angola. KBR will provide
laser scanning of the entire Benguela Belize Lobito Tomboco topsides,
FEED verification, detailed engineering, procurement services, and
assistance during fabrication, installation, pre-commissioning and
commissioning phases of the project.
KBR was awarded a task order by the U.S. Army Rock Island Contracting
Command under its current Logistics Civil Augmentation Program
(LOGCAP) IV contract for U.S. forces in Sheik Isa Airbase and Riffa
Army support and Raydome. The period of performance is one base year,
plus four option years and is valued at $53.5 million. Under the task
order KBR will provide support to the U.S. forces in the Kingdom of
Bahrain. Services will include facilities maintenance, operations and
maintenance, food service, billeting, power generation, and waste
management.
KBR was selected by PT Panca Amara Utama (PAU) to provide licensing,
engineering services and proprietary equipment for a new grassroots
ammonia plant in Sulawesi, Indonesia. PAU's plan for a world scale
grassroots plant with Ammonia capacity of 2000 Metric tonnes per day,
will be built by Toyo Engineering Corporation and will be designed
using KBR's Reforming Exchanger System and Purifier Technology.
KBR was selected by PT Pupuk Sriwidjaja Palembang, to provide
licensing, engineering services and proprietary equipment for a new
2000 MTPD ammonia and 2750 MTPD urea plant located in Palembang, South
Sumatra, Indonesia. The plant will be designed using KBR's Purifier
technology, which has demonstrated higher reliability than
conventional designs and offers the lowest proven energy consumption
in the industry.
KBR was awarded a contract by Samsung Engineering Company, Ltd. to
provide a technology license, basic engineering design package, and
supply of proprietary equipment for a 1,200 MTPD ammonia fertilizer
plant in Carrasco, Bolivia. The fertilizer ammonia complex will be
designed using KBR's Purifier Technology.
KBR was awarded the Djibouti Base Operation Support Services contract
for services at Camp Lemonnier in Djibouti, Africa and Manda Bay,
Kenya, under a contract valued at $127 million. KBR will provide
services to include public safety, air operations, facility support,
vehicle maintenance, environmental services as well as supply
operations, housing, utilities, and laundry, food and recreation
services.
KBR is a global engineering, construction and services company
supporting the energy, hydrocarbons, power, industrial, civil
infrastructure, minerals, government services and commercial markets.
For more information, visit www.kbr.com.
NOTE: The statements in this press release that are not historical
statements, including statements regarding future financial performance
and backlog information, are forward-looking statements within the
meaning of the federal securities laws. These statements are subject to
numerous risks and uncertainties, many of which are beyond the company's
control, that could cause actual results to differ materially from the
results expressed or implied by the statements. These risks and
uncertainties include, but are not limited to: the outcome of and the
publicity surrounding audits and investigations by domestic and foreign
government agencies and legislative bodies; potential adverse
proceedings by such agencies and potential adverse results and
consequences from such proceedings; the scope and enforceability of the
company's indemnities from Halliburton Company; changes in capital
spending by the company's customers; the company's ability to obtain
contracts from existing and new customers and perform under those
contracts; structural changes in the industries in which the company
operates, escalating costs associated with and the performance of
fixed-fee projects and the company's ability to control its cost under
its contracts; claims negotiations and contract disputes with the
company's customers; changes in the demand for or price of oil and/or
natural gas; protection of intellectual property rights; compliance with
environmental laws; changes in government regulations and regulatory
requirements; compliance with laws related to income taxes; unsettled
political conditions, war and the effects of terrorism; foreign
operations and foreign exchange rates and controls; the development and
installation of financial systems; increased competition for employees;
the ability to successfully complete and integrate acquisitions; and
operations of joint ventures, including joint ventures that are not
controlled by the company.
KBR's Annual Report on Form 10-K dated February 20, 2013, recent Current
Reports on Forms 8-K, and other Securities and Exchange Commission
filings discuss some of the important risk factors that KBR has
identified that may affect the business, results of operations and
financial condition. KBR undertakes no obligation to revise or update
publicly any forward-looking statements for any reason.
KBR, Inc.: Condensed Consolidated Statements of Income
(Millions, except per share data) (Unaudited)
Three Months Ended
March 31,
March 31,
December 31,
2013
2012
2012
Revenue:
Hydrocarbons
$
947
$
1,116
$
943
Infrastructure, Government and Power
407
518
462
Services
485
348
441
Ventures
14
14
14
Other
6
5
6
Total revenue
1,859
2,001
1,866
Business group income (loss):
Hydrocarbons
148
105
174
Infrastructure, Government and Power
27
39
(22
)
Services
18
12
(44
)
Ventures
7
7
7
Other
-
3
35
Total business group income
200
166
150
Unallocated costs:
Labor cost absorption
(15
)
1
(22
)
General and administrative
(52
)
(55
)
(59
)
Operating income
133
112
69
Interest expense, net
(1
)
(2
)
(1
)
Foreign currency losses, net
(4
)
(1
)
(2
)
Other non-operating expense
(1
)
(2
)
(1
)
Income before income taxes and noncontrolling interests
127
107
65
Provision for income taxes
(30
)
(9
)
(13
)
Net income
97
98
52
Net income attributable to noncontrolling interests
(9
)
(7
)
(22
)
Net income attributable to KBR
$
88
$
91
$
30
Net income attributable to KBR per share:
Basic
$
0.59
$
0.61
$
0.20
Diluted
0.59
0.61
0.20
Basic weighted average shares outstanding
147
148
147
Diluted weighted average shares outstanding
148
149
148
Cash dividends declared per share
$
-
$
0.05
$
0.13
KBR, Inc.: Condensed Consolidated Balance Sheets
(Millions) (Unaudited)
March 31,
December 31,
2013
2012
Assets
Current assets:
Cash and equivalents
$
904
$
1,053
Receivables:
Accounts receivable, net of allowance for bad debts of $16 and $15
1,280
1,196
Unbilled receivables on uncompleted contracts
784
704
Total receivables
2,064
1,900
Current deferred income taxes
194
251
Other current assets
333
464
Total current assets
3,495
3,668
Property, plant and equipment, net of accumulated
depreciation of $355 and $356
390
390
Goodwill
778
779
Intangible assets, net
94
99
Equity in and advances to related companies
202
217
Noncurrent deferred tax asset
164
203
Noncurrent unbilled receivables on uncompleted contracts
294
294
Other noncurrent assets
130
117
Total assets
$
5,547
$
5,767
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable
$
766
$
756
Due to former parent, net
49
49
Advance billings on uncompleted contracts
522
536
Reserve for estimated losses on uncompleted contracts
47
56
Employee compensation and benefits
226
242
Current non-recourse project-finance debt of a variable interest
entity
9
10
Other current liabilities
404
628
Total current liabilities
2,023
2,277
Noncurrent employee compensation and benefits
471
511
Noncurrent non-recourse project-finance debt of a variable interest
entity
79
84
Other noncurrent liabilities
211
217
Noncurrent income tax payable
89
90
Noncurrent deferred tax liability
75
77
Total liabilities
2,948
3,256
KBR shareholders' equity
Preferred stock
-
-
Common stock
-
-
Paid-in-capital in excess of par
2,056
2,049
Accumulated other comprehensive loss
(611
)
(610
)
Retained earnings
1,797
1,709
Treasury stock
(610
)
(606
)
Total KBR shareholders' equity
2,632
2,542
Noncontrolling interests
(33
)
(31
)
Total shareholders' equity
2,599
2,511
Total liabilities and shareholders' equity
$
5,547
$
5,767
KBR, Inc.: Condensed Consolidated Statements of Cash Flows
(Millions) (Unaudited)
Three Months Ended
March 31,
2013
2012
Cash flows from operating activities:
Net income
$
97
$
98
Adjustments to reconcile net income to net cash used in operations:
Depreciation and amortization
15
16
Equity earnings of unconsolidated affiliates
(30
)
(37
)
Deferred income tax expense
81
25
Other
8
6
Changes in operating assets and liabilities:
Receivables
(95
)
132
Unbilled receivables on uncompleted contracts
(88
)
(148
)
Accounts payable
17
(4
)
Advanced billings on uncompleted contracts
(5
)
(181
)
Accrued employee compensation and benefits
(28
)
(29
)
Reserve for loss on uncompleted contracts
(10
)
(4
)
Repayment of advances to unconsolidated affiliates, net
-
(3
)
Distributions of earnings from unconsolidated affiliates
41
12
Other, net
(96
)
10
Total cash flows used in operating activities
(93
)
(107
)
Cash flows from investing activities:
Capital expenditures
(20
)
(16
)
Acquisition of business, net
-
(2
)
Return of capital from equity method joint ventures
-
3
Total cash flows used in investing activities
(20
)
(15
)
Cash flows from financing activities:
Payments to reacquire common stock
(6
)
(7
)
Distributions to noncontrolling interests, net
(11
)
(5
)
Payments of dividends to shareholders
-
(7
)
Net proceeds from issuance of stock
2
2
Excess tax benefits from stock-based compensation
-
2
Total cash flows used in financing activities
(15
)
(15
)
Effect of exchange rate changes on cash
(21
)
8
Decrease in cash and equivalents
(149
)
(129
)
Cash and equivalents at beginning of period
1,053
966
Cash and equivalents at end of period
$
904
$
837
KBR, Inc.: Revenue and Operating Results by Business Unit
(Millions) (Unaudited)
Three Months Ended
March 31,
March 31,
December 31,
Revenue:
2013
2012
2012
Hydrocarbons:
Gas Monetization
$
605
$
805
$
618
Oil and Gas
111
121
109
Downstream
178
141
166
Technology
53
49
50
Total Hydrocarbons
947
1,116
943
Infrastructure, Government and Power
North American Government and Logistics
159
209
187
International Government, Defence and Support Services
74
98
85
Infrastructure
51
64
58
Minerals
38
63
18
Power and Industrial
85
84
114
Total Infrastructure, Government and Power
407
518
462
Services
485
348
441
Ventures
14
14
14
Other
6
5
6
Total revenue
$
1,859
$
2,001
$
1,866
Business group income (loss):
Hydrocarbons:
Gas Monetization
$
104
$
79
$
125
Oil and Gas
25
23
25
Downstream
26
14
35
Technology
25
20
25
Total job income
180
136
210
Divisional overhead
(32
)
(31
)
(36
)
Total Hydrocarbons
148
105
174
Infrastructure, Government and Power:
North American Government and Logistics
20
15
28
International Government, Defence and Support Services
22
36
26
Infrastructure
10
15
13
Minerals
3
(1
)
(57
)
Power and Industrial
8
10
7
Total job income
63
75
17
Gain (loss) on sales of assets
-
2
(3
)
Divisional overhead
(36
)
(38
)
(36
)
Total Infrastructure, Government and Power
27
39
(22
)
Services:
Job income
31
28
(30
)
Divisional overhead
(13
)
(16
)
(14
)
Total Services
18
12
(44
)
Ventures:
Job income
8
8
8
Divisional overhead
(1
)
(1
)
(1
)
Total Ventures
7
7
7
Other:
Job income
3
4
5
Gain (loss) on sales of assets
(1
)
2
33
Divisional overhead
(2
)
(3
)
(3
)
Total Other
-
3
35
Total business group income
$
200
$
166
$
150
KBR, Inc.: Backlog Information (a)
(Millions) (Unaudited)
March 31,
December 31,
December 31,
2013
2012
2011
Hydrocarbons:
Gas Monetization
$
7,425
$
7,745
$
3,880
Oil and Gas
168
215
289
Downstream
691
740
546
Technology
392
399
258
Total Hydrocarbons
8,676
9,099
4,973
Infrastructure, Government and Power:
North American Government and Logistics
559
645
899
International Government, Defence and Support Services
891
975
1,086
Infrastructure
184
205
265
Minerals
107
131
237
Power and Industrial
793
868
777
Total Infrastructure, Government and Power
2,534
2,824
3,264
Services
2,068
2,025
1,766
Ventures
937
983
928
Total backlog (b)
$
14,215
$
14,931
$
10,931
(a)
Backlog is presented differently depending on whether the contract
is consolidated by KBR or is accounted for under the equity method
of accounting. Backlog related to consolidated projects is presented
as 100% of the expected revenue from the project. Backlog generally
includes total expected revenue in backlog when a contract is
awarded and/or the scope is definitized. Where contract duration is
indefinite, projects included in backlog are limited to the
estimated amount of expected revenue within the following twelve
months. Certain contracts provide maximum dollar limits, with actual
authorization to perform work under the contract being agreed upon
on a periodic basis with the customer. In these arrangements, only
the amounts authorized are included in backlog. For projects where
KBR acts solely in a project management capacity, KBR only includes
the management fee revenue of each project in backlog. For certain
long-term service contracts with a defined contract term, such as
those associated with privately financed projects, the amount
included in backlog is limited to five years.
Backlog related to unconsolidated joint ventures is presented as
KBR's percentage ownership of the joint venture's estimated
revenue. However, because these projects are accounted for under
the equity method, only KBR's share of future earnings from these
projects will be recorded in revenue. Our backlog for projects
related to unconsolidated joint ventures totaled $5.5 billion,
$5.8 billion and $1.7 billion at March 31, 2013, December 31,
2012, and December 31, 2011, respectively. Our backlog related to
consolidated joint ventures with noncontrolling interest totaled
$2.3 billion, $2.1 billion and $3.4 billion at March 31, 2013,
December 31, 2012, and December 31, 2011, respectively.
As of March 31, 2013, 43% of our backlog was attributable to
fixed-price contracts and 57% was attributable to cost-reimbursable
contracts. For contracts that contain both fixed-price and
cost-reimbursable components, we classify the components as either
fixed-price or cost-reimbursable according to the composition of the
contract except for smaller contracts where we characterize the
entire contract based on the predominate component.
All backlog is attributable to firm orders as of March 31, 2013,
December 31, 2012, and December 31, 2011.
(b)
Backlog attributable to unfunded government orders was $0.3 billion,
$0.2 billion and $0.4 billion as of March 31, 2013, December 31,
2012, and December 31, 2011, respectively.
KBR Zac Nagle, 713-753-5082 Vice President, Investor
Relations and Communications or Rob Kukla, Jr., 713-753-5082 Director,
Investor Relations
United Kingdom
France
Deutschland
Schweiz (DE)
