KBR's Q4 Earnings: A Strong Finish to 2024

As the calendar turned to 2025, KBR, Inc. (NYSE: KBR) wrapped up a successful fiscal year 2024 with strong fourth-quarter results. The company delivered sustained performance throughout the year, culminating in a robust fourth quarter with significant revenue and earnings growth, as well as margin expansion. Let's dive into the key highlights and what they mean for KBR's future.



Revenue Growth and Margin Expansion

KBR's Q4 revenues reached $2.1 billion, up 23% year-over-year (YoY), with 15% of that growth coming from organic sources. This impressive performance was driven by on-contract growth across all Government Solutions business units, contributions from the LinQuest acquisition, and growing demand in Sustainable Technology Solutions. The company's adjusted EBITDA2 margin expanded to 10.7% in the quarter, generally in line with the prior period, demonstrating improved operational efficiency and pricing power.

For the full year 2024, KBR's revenues were $7.7 billion, up 11% YoY, with 9% of that growth coming from organic sources. The company's adjusted EBITDA2 margin expanded to 11.2% for the full year, indicating a strong performance across the board.

Bookings and Backlog

KBR maintained strong bookings with $8.8 billion for the year, resulting in a 1.1x book-to-bill ratio. The company's backlog stands at $21.2 billion, with over 75% of projected 2025 revenues already under contract. This excellent revenue visibility provides a solid foundation for future growth.

Capital Allocation and Shareholder Returns

KBR returned $297 million to shareholders through share repurchases ($218 million) and dividends ($79 million). The Board approved a 10% dividend increase and expanded the share repurchase authorization to $750 million, signaling management's confidence in future cash flows. The company's net leverage ratio of 2.6x remains manageable, especially given the strong operating cash conversion rate of 103%.

Segment Realignment and Strategic Pivot

KBR announced a segment realignment effective for fiscal 2025, with Government Solutions being renamed to Mission Technology Solutions. This strategic pivot aims to capture higher-margin opportunities and better serve customers and end markets. The Sustainable Technology Solutions segment's impressive 20.6% EBITDA margin in Q4 validates this strategy, particularly in growth areas like sustainable technologies and services.

Integration of LinQuest and Future Growth

The integration of LinQuest, a leading provider of advanced engineering, data analytics, and digital capabilities for national security and military space missions, has enhanced KBR's capabilities in high-growth areas. This acquisition contributed $140 million to Q4 revenues, demonstrating immediate accretion. By integrating LinQuest, KBR is better equipped to capture increased defense and technology spending, positioning the company for future growth.

In conclusion, KBR's strong Q4 and fiscal year 2024 results reveal a company executing effectively on multiple fronts. With over 60% of adjusted EBITDA now coming from non-U.S. government customers, KBR has successfully diversified its revenue streams, reducing concentration risk. The company's strategic positioning, strong bookings, and excellent revenue visibility set the stage for continued success in 2025 and beyond. As KBR continues to execute on its strategic pivot and capture higher-margin opportunities, investors can expect the company to deliver sustained performance and create value for shareholders.