NYSE:KBR
KBR, INC.
A leading global engineering and construction firm specializing in complex technology solutions for the energy, chemicals, and mining industries.
Key Metrics
Investment Thesis
Bull Case
The stock appears attractive as the company demonstrates a clear turnaround trajectory with net income rebounding from significant losses in 2023 to record levels in recent years. Investors may value the company's diversified project portfolio and strong free cash flow generation of $524.0M, which supports shareholder returns through dividends and buybacks while positioning the firm for growth in renewable energy transitions.
Bear Case
Despite recent improvements, the company faces substantial leverage with long-term debt of $2.55B against total liabilities of $5.07B, creating vulnerability to rising interest rates or project financing constraints. The heavy reliance on cyclical oil and gas markets means that any sustained downturn in energy prices could rapidly erode margins, while the historical loss in 2023 suggests underlying volatility remains a concern for long-term stability.
About KBR, INC.
KBR Inc. is a global engineering, procurement, and construction (EPC) firm delivering complex technology solutions to the oil & gas, chemicals, mining, and renewable energy sectors. The company leverages its proprietary technologies and project management expertise to execute large-scale capital projects worldwide, serving clients in North America, Europe, Asia, and South America.
Analysis
Management Discussion
Recent financial performance highlights a strong recovery, with net income reaching $403.0M compared to a loss of $261.0M in 2023, driven by improved project execution and higher operating margins. Operating profit surged to $778.0M while revenue grew to $7.79B, indicating effective management of working capital changes and successful delivery of high-margin projects despite macroeconomic headwinds.
Industry Overview
The industrial engineering and construction sector is characterized by high barriers to entry due to the technical complexity of process plants and the necessity for specialized safety certifications. Market dynamics are heavily influenced by global energy transitions, with traditional refining projects facing pressure from renewable alternatives while new opportunities emerge in carbon capture, hydrogen production, and electrification technologies.
Financial Statements
Income Statement
Balance Sheet
Cash Flow
| Metric | 2022 | 2023 | 2025 | 2026 |
|---|---|---|---|---|
| Revenue | $6.56B | $6.96B | $7.74B | $7.79B |
| Cost of Revenue | $5.74B | $5.98B | $6.64B | $6.64B |
| Gross Profit | $828.0M | $977.0M | $1.10B | $1.15B |
| Operating Expenses | $485.0M | $529.0M | $441.0M | $372.0M |
| Operating Income | $343.0M | $448.0M | $662.0M | $778.0M |
| G&A | $420.0M | $488.0M | $544.0M | $578.0M |
| D&A | $137.0M | $141.0M | $156.0M | $169.0M |
| Depreciation | $40.0M | $50.0M | $56.0M | $51.0M |
| Amortization | $50.0M | $45.0M | $52.0M | $64.0M |
| Other OpEx | $65.0M | $41.0M | $-103.0M | $-206.0M |
| Non-Operating Income | $-59.0M | $-614.0M | $-151.0M | $-164.0M |
| Interest Expense | $87.0M | $115.0M | — | — |
| Pre-Tax Income | $284.0M | $-166.0M | $511.0M | $614.0M |
| Income Tax | $92.0M | $95.0M | $130.0M | $156.0M |
| Continuing Ops | $192.0M | $-261.0M | $381.0M | $458.0M |
| Discontinued Ops | $0 | $0 | $0 | $-36.0M |
| Net Income | $192.0M | $-261.0M | $381.0M | $403.0M |
| Minority Interest | $2.0M | $4.0M | $6.0M | $0 |
| Net to Common | $190.0M | $-265.0M | $375.0M | $403.0M |
| Metric | 2022 | 2023 | 2025 | 2026 |
|---|---|---|---|---|
| Current Assets | $1.75B | $1.65B | $1.87B | $2.05B |
| Cash & Equivalents | $389.0M | $304.0M | $350.0M | $500.0M |
| Other Current Assets | $1.36B | $1.35B | $1.52B | $1.55B |
| Long-Term Assets | $3.82B | $3.91B | $4.79B | $4.53B |
| Intangibles | $645.0M | $618.0M | $763.0M | $727.0M |
| Goodwill | $2.09B | $2.11B | $2.63B | $2.68B |
| Operating Leases | $164.0M | $138.0M | $203.0M | $217.0M |
| Other LT Assets | $923.0M | $1.05B | $1.19B | $912.0M |
| Total Assets | $5.57B | $5.57B | $6.66B | $6.58B |
| Current Liabilities | $1.82B | $1.57B | $1.78B | $1.69B |
| Accounts Payable | $637.0M | $593.0M | $777.0M | $712.0M |
| Current Debt | $364.0M | $31.0M | $36.0M | $49.0M |
| Current Leases | $48.0M | $48.0M | $58.0M | $56.0M |
| Deferred Revenue | $275.0M | $359.0M | $336.0M | $331.0M |
| Other Current Liab | $480.0M | $523.0M | $555.0M | $519.0M |
| Long-Term Liabilities | $2.11B | $2.60B | $3.41B | $3.38B |
| Long-Term Debt | $1.38B | $1.80B | $2.53B | $2.55B |
| LT Operating Leases | $193.0M | $176.0M | $228.0M | $236.0M |
| Other LT Liab | $427.0M | $516.0M | $531.0M | $518.0M |
| Total Liabilities | $3.93B | $4.17B | $5.20B | $5.07B |
| Shareholders' Equity | $1.63B | $1.39B | $1.47B | $1.51B |
| Paid-In Capital | $2.23B | $2.50B | $2.53B | $2.55B |
| Retained Earnings | $1.41B | $1.07B | $1.37B | $1.70B |
| AOCI | $-882.0M | $-915.0M | $-946.0M | $-928.0M |
| Treasury Stock | $1.14B | $1.28B | $1.49B | — |
| Total L&E | $5.57B | $5.57B | $6.66B | $6.58B |
| Metric | 2022 | 2023 | 2025 | 2026 |
|---|---|---|---|---|
| Net Income (CFO) | $192.0M | $-261.0M | $381.0M | $403.0M |
| Non-Cash Adjustments | $1.01B | $486.0M | $-191.0M | $283.0M |
| Working Capital Changes | $-805.0M | $106.0M | $272.0M | $-162.0M |
| Cash from Operations | $396.0M | $331.0M | $462.0M | $524.0M |
| Capital Expenditures | $71.0M | $80.0M | $77.0M | $42.0M |
| Cash from Investing | $37.0M | $-70.0M | $-776.0M | $4.0M |
| Share Buybacks | $203.0M | $138.0M | $218.0M | $329.0M |
| Dividends Paid | $66.0M | $72.0M | $79.0M | $84.0M |
| Cash from Financing | $-399.0M | $-359.0M | $374.0M | $-391.0M |
| FX Effect | $-15.0M | $13.0M | $-14.0M | $18.0M |
| Net Change in Cash | $19.0M | $-85.0M | $46.0M | $155.0M |
| Beginning Cash | $370.0M | $389.0M | $304.0M | $342.0M |
| Ending Cash | $389.0M | $304.0M | $350.0M | $500.0M |
Frequently Asked Questions
How does KBR, INC. make money?
The company operates primarily through three key segments: Engineering & Construction Services providing EPC capabilities for process plants; Technology Solutions offering proprietary technologies like KBR's Fluid Catalytic Cracking (FCC) units; and Integrated Projects delivering end-to-end project management for major industrial developments.
What are the main risks for KBR?
Significant exposure to volatile oil and gas commodity prices which directly impacts project margins; potential for cost overruns and schedule delays inherent in large-scale EPC projects; regulatory and environmental compliance risks across diverse international jurisdictions; and the transition challenges associated with shifting client demand toward renewable energy technologies.
What is KBR's competitive advantage?
KBR maintains a strong competitive moat through its deep technical expertise in complex refining and chemical processes, a diversified global project portfolio that mitigates regional economic shocks, and a robust pipeline of recurring maintenance and technology licensing revenue streams.
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Not financial advice. All content is for informational purposes only. Data may contain errors. Consult a qualified financial advisor before making investment decisions.