Tue, May 6, 4:56 PM (17 days ago)
**KBR, Inc. (KBR) Q1 2025 Financial Summary** **Financial Health and Performance:** - **Revenue:** $2,055 million, up 13% from $1,818 million in Q1 2024. - **Gross Profit:** $298 million, a 20% increase from $248 million in Q1 2024. - **Operating Income:** $195 million, up 17% from $166 million in Q1 2024. - **Net Income:** $115 million, a 22% increase from $94 million in Q1 2024. - **Earnings per Share (EPS):** $0.88, up from $0.69 in Q1 2024. **Profit Margins:** - **Gross Margin:** 14.5%, up from 13.6% in Q1 2024. - **Operating Margin:** 9.5%, up from 9.1% in Q1 2024. - **Net Margin:** 5.6%, up from 5.2% in Q1 2024. **Cash Flow:** - **Operating Cash Flow:** $98 million, up from $91 million in Q1 2024. - **Capital Expenditures:** $9 million, down from $25 million in Q1 2024. - **Free Cash Flow:** $89 million, up from $66 million in Q1 2024. **Earnings Changes:** - **Year-over-Year (YoY) Earnings Growth:** 25% increase in net income attributable to KBR. **Quarterly Performance Discussion:** - **Revenue Growth:** Driven by the acquisition of LinQuest and increased revenues from engineering and professional services. - **Operating Income Growth:** Primarily driven by growth associated with LinQuest and increased equity in earnings from services on an LNG project. - **Cash Flow:** Improved due to increases in distributions of earnings from unconsolidated affiliates and changes in accrued salaries, wages, and benefits. **Trends and Uncertainties:** - **Defense Spending:** Uncertainty continues regarding the 2026 fiscal year budget and the impacts of the new legislative and executive branch. - **Energy Transition:** Continued focus on decarbonization, carbon capture, and renewable energy solutions. - **Acquisitions:** KBR's acquisition strategy includes moving upmarket, expanding capabilities, and broadening customer sets across strategic growth vectors. **Future Operations Impact:** - **Defense Modernization:** Continued investment in defense modernization and national security space superiority. - **Sustainable Energy:** Focus on sustainable energy and industrial technology, including energy security and transition. - **Digital Asset Optimization:** Investment in digital asset modernization and optimization. **Segment Performance:** - **Mission Technology Solutions (MTS):** Revenue increased by 14% to $1,505 million, driven by the acquisition of LinQuest. - **Sustainable Technology Solutions (STS):** Revenue increased by 12% to $550 million, driven by increased revenues from engineering and professional services. **Backlog:** - **Total Backlog:** $17,290 million, with 38% expected to be executed within one year. - **Funded Backlog:** $9.0 billion, with approximately $3.3 billion of priced option periods not yet exercised by the customer. **Liquidity and Capital Resources:** - **Cash and Cash Equivalents:** $442 million, up from $350 million in Q1 2024. - **Debt:** $2,744 million, with a net leverage ratio of 2.25x as of April 4, 2025. - **Credit Facility:** $1 billion revolving credit facility, with $525 million of outstanding borrowings. **Risk Factors:** - **Government Contracts:** Dependence on government contracts and potential changes in defense spending. - **Economic Conditions:** Impact of macroeconomic conditions, including inflation and tariffs. - **Legal and Regulatory:** Ongoing legal proceedings and regulatory compliance. **Outlook:** - **Revenue Growth:** Expected to continue driven by strategic acquisitions and increased demand for sustainable technology solutions. - **Operating Income:** Anticipated to grow due to operational efficiencies and cost management. - **Cash Flow:** Expected to improve with continued focus on working capital management and strategic investments.