KBR Q2 Revenue Falls Short, Adjusted EPS Rises Amid Contract Delays.

KBR's Q2 FY2025 revenue missed analyst estimates by 6.2% at $1.95 bln, leading to a sharp cut in full-year sales guidance. However, margin improvement drove Adjusted EPS 10% higher and above estimates. The company maintained strong cash generation and balance sheet stability, with $217 mln in operating cash flow.

Houston, TX — KBR, Inc. (NYSE: KBR) released its second quarter fiscal 2025 results, showing a mixed performance with revenues falling short of analyst estimates. The company's second-quarter revenue totaled $1.95 billion, a 6% increase year-over-year but 6.2% below the consensus estimate of $2.07 billion [1]. Despite the revenue shortfall, KBR reported a significant margin improvement, with Adjusted EPS rising 10% to $0.91, surpassing analyst expectations of $0.83 [1].

The company's operating income for the quarter was $194 million, up 8% from the same period last year, driven by increases in gross profit and equity in earnings of unconsolidated affiliates. Net income attributable to KBR (including discontinued operations) was $73 million, down 31% from the previous year, primarily due to the HomeSafe Alliance JV contract termination [1]. However, Adjusted EBITDA2, a non-GAAP measure, rose 12% to $242 million, reflecting strong operating performance [1].

KBR's backlog and options totaled $21.6 billion as of the quarter end, with a book-to-bill ratio of 0.9x for the quarter and 1.0x on a trailing-twelve-months basis [1]. The company announced several new business awards, including a subcontract with Strategic Resources Inc to expand psychological health services and a $476 million base operations support contract in Djibouti [1].

Notably, KBR's operating cash flows from continuing operations for the quarter were $217 million, up 38% year-over-year, indicating strong cash generation and balance sheet stability [1]. The company also returned $69 million in capital to shareholders through share repurchases and dividends [1].

However, KBR revised its full-year sales guidance downward, citing contract terminations, reductions in EUCOM and logistics, and protest resolution delays [1]. The company also updated its long-term financial targets for the HomeSafe Alliance JV contract termination and fiscal year 2027 financial targets [1].

Overall, while KBR's second-quarter results were mixed, the company demonstrated resilience and adaptability in navigating a volatile landscape. The margin improvement and strong cash generation provide a positive outlook for the company's long-term prospects.

References:
[1] https://www.marketscreener.com/news/kbr-reports-second-quarter-fiscal-2025-results-ce7c5fddd989fe20