KBR (NYSE:KBR) announced today that fourth quarter 2011 net
income attributable to KBR was $90 million, or $0.60 per diluted
share, compared to net income attributable to KBR of $78 million,
or $0.51 per diluted share, in the fourth quarter of 2010.
Consolidated revenue in the fourth quarter was $2.1 billion
compared to $2.3 billion in the fourth quarter of 2010. Operating
income was $136 million compared to $148 million in the prior year
fourth quarter. Fourth quarter operating income, when compared to
the prior year fourth quarter, was negatively impacted by
approximately $25 million in cost and schedule issues on three
legacy projects at Roberts & Schaefer and lower profits in
Downstream, Oil and Gas, and Services.
Hydrocarbons revenue and income was $989 million and $99
million, down 7% and 14%, respectively, compared to the fourth
quarter of 2010. Infrastructure, Government, and Power (IGP)
revenue in the fourth quarter was $707 million, down $138 million
compared to the prior year fourth quarter. The fourth quarter of
2011 included an expected revenue reduction of $222 million,
compared to the prior year fourth quarter, related to reduced
activity on the LogCAP contracts. IGP income was $55 million in the
fourth quarter, up $17 million or 45%, compared to the prior year
fourth quarter. Services revenue and income in the fourth quarter
was $378 million and $15 million, down 7% and 50%, respectively,
compared to the fourth quarter of 2010.
“2011 was another solid year for KBR with consistent execution
and operating performance across our businesses. This resulted in
strong cash generation of $650 million from operations and a
year-end cash balance of almost a billion dollars,” said Bill Utt,
Chairman, President, and Chief Executive Officer of KBR. “The
strong balance sheet, execution momentum, and a robust prospect
portfolio aligns KBR for continued success in 2012 and beyond.”
Hydrocarbons Results
Gas Monetization job income was $65 million compared to job
income of $57 million in the fourth quarter of 2010. The increase
in job income was primarily related to increased profits on the
Kitimat, Ichthys, and Browse LNG projects as well as the Statoil
KEP engineering services project in Norway. Partially offsetting
this increase was lower work volumes on the Escravos GTL and Skikda
LNG projects as well as the Pearl GTL project as the project nears
completion.
Oil and Gas job income was $23 million compared to job income of
$37 million in the fourth quarter of 2010. The decrease in job
income was primarily related to the completion, or near completion,
of several projects including the CLOV floating production,
storage, and offloading (FPSO), BP Quad 204 FEED, and Jack St.
Malo. Partially offsetting this decrease was work on the BP Shah
Deniz FEED and Quad 204 detailed design. The fourth quarter of 2010
included a $7 million gain from a project close-out settlement on
an offshore FPSO project.
Downstream job income was $19 million compared to job income of
$44 million in the fourth quarter of 2010. The decrease in job
income was primarily related to the reduced work volumes on a
number of international refinery projects and a fourth quarter of
2010 contingency release on the Saudi Kayan project.
Technology job income was $22 million compared to job income of
$12 million in the fourth quarter of 2010. The increase in job
income was primarily related to the sale of proprietary equipment
for an ammonia plant in Brazil and several new ammonia and aniline
projects in Indonesia, Egypt, China, and Saudi Arabia. The fourth
quarter of 2010 included an unfavorable jury verdict on a project
dispute.
Infrastructure, Government, and Power Results
North American Government and Logistics (NAGL) job income was
$45 million compared to job income of $29 million in the fourth
quarter of 2010. The increase in job income is primarily related to
net favorable cost reserve adjustments.
International Government, Defence and Support Services (IGDSS)
job income was $50 million compared to job income of $26 million in
the fourth quarter of 2010. The increase in job income primarily
related to improved margins on the Allenby & Connaught, Namsa
Kabul, Namsa KAF, Afghanistan ISP, and CONLOG projects.
Infrastructure and Minerals (I&M) loss was $7 million
compared to job income of $15 million in the fourth quarter of
2010. The decrease in job income was primarily related to
approximately $25 million in cost and schedule issues on three
legacy projects at Roberts & Schaefer. Partially offsetting
this decrease was the ramp up of the Hope Downs 4 project in
Australia.
Power and Industrial (P&I) job income was $6 million
compared to job income of $2 million in the fourth quarter of 2010.
The increase in job income was primarily related to the ramp up and
increased activity on newly awarded waste-to-energy expansion and
coal gasification projects, increased work volumes on forest
products-related engineering contracts, and the close-out of an
activated carbon project.
Services Results
Services job income was $30 million compared to job income of
$47 million in the fourth quarter of 2010. The decrease in job
income was primarily driven by lower margins and reduced activity
in Industrial Services, the completion of several large U.S.
construction projects, and the close-out of a large project in
Canada in the prior year fourth quarter.
Ventures Results
Ventures job income was $13 million compared to job income of $9
million in the fourth quarter of 2010. The increase in job income
was primarily related to higher ammonia prices related to the EBIC
ammonia project in Egypt.
Corporate
Corporate general and administrative expense was $51 million
compared to $55 million in the prior year fourth quarter. Cost
controls and budgetary discipline are evident in all areas.
Total cash provided by operating activities in the fourth
quarter of 2011 was $338 million and was $650 million for the
twelve months of 2011, driven by overall earnings and improved
working capital management.
The effective tax rate for the fourth quarter 2011 was
approximately 19%.
During the fourth quarter of 2011, KBR had share repurchases of
$22 million, capital expenditures of $17 million, pension
contributions of $8 million, and quarterly dividend payments of $7
million.
Full Year 2012 Outlook
The KBR full year 2012 earnings per diluted share guidance is in
the $2.45 to $2.80 range.
Significant Achievements and Awards
- KBR, JGC Corporation (JGC) and Chiyoda
Corporation (Chiyoda) jointly announced that INPEX CORPORATION and
Total S.A. (the Ichthys Owners) have notified the joint venture
formed by JGC, KBR and Chiyoda, the JKC JV, that the Final
Investment Decision for the Ichthys LNG project has been achieved.
As part of this notification, the Ichthys Owners have issued a
notification of award to the JKC JV for the engineering,
procurement and construction for Ichthys LNG Project. The Ichthys
Owners and the JKC JV have executed a formal letter of award for
the initial engineering, procurement and construction activities
for the project.
- KBR was awarded a contract to upgrade
Rio Tinto’s fuel assets as part of the mining company’s investment
in power and fuel supply projects to underpin existing and future
expansion of iron ore production capacity in the Pilbara region of
Western Australia. KBR’s minerals division will provide
engineering, procurement and construction management services to
install fuel assets and storage in five locations: port facilities
at Cape Lambert and Dampier, mines at Brockman and West Angelas and
a maintenance yard located near Dampier. The infrastructure will
help provide certainty in meeting Rio Tinto’s fuel
requirements.
- KBR was awarded a contract to provide
construction services for ExxonMobil’s new synthetics lubricant
base stock facility to be built at ExxonMobil’s refinery and
chemical plant complex in Baytown, Texas. When completed in 2013,
the facility will produce ExxonMobil Chemical’s high-viscosity
SpectraSyn Elite™ metallocene PAO base stock. KBR’s scope of work
for the Baytown plant includes site work, civil, structural, pipe,
electrical, instrumentation and mechanical installation, test and
checkout services.
- KBR was awarded a contract by the U.S.
Army Corps of Engineers Philadelphia District to serve as a
contingency electrical power generation contractor in Afghanistan.
KBR will provide electrical power generation in support of U.S.
military operations at forward operating bases in Afghanistan. KBR
and the other two selected contractors will compete for task orders
under the contract which has a ceiling value of $490 million over
five years.
- KBR was awarded a hybrid
Firm-Fixed-Priced /Cost-Plus-Fixed-Fee Single Award Task Order
Contract for the United States Army Europe (USAREUR) Support
Contract. The contract is for a one-year base and four one-year
option periods for a total of five years. The maximum capacity of
the contract is estimated at $245 million over the five-year
lifespan of the contract. KBR will provide Base Operations and
Support Services to USAREUR throughout their area of responsibility
encompassing 51 countries. Work includes functions such as:
Facility Maintenance & Utility, Troop, Operational and
Construction Services. KBR is the incumbent on the existing USC
contract and has operated continuously for this client in the
Balkans since 1995.
- KBR was awarded a job order contract by
The Cooperative Purchasing Network to provide construction
management services for public entities throughout the entire state
of Texas. The one year contract offers six option years for
renewal. KBR will provide a full range of construction management
services that will vary in size and scope and will include
facilities repair, renovations and new construction for all public
entities throughout the state.
KBR is a global engineering, construction and services company
supporting the energy, hydrocarbons, government services, minerals,
civil infrastructure, power, industrial, 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 22, 2012, 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 December 31, December 31, September 30,
2011 2010 2011
Revenue: Hydrocarbons $ 989 $ 1,069 $ 1,122
Infrastructure, Government and Power 707 845 876 Services 378 408
370 Ventures 17 14 14 Other 5 6
5
Total revenue
2,096 2,342 2,387
Business group income: Hydrocarbons 99 115 89
Infrastructure, Government and Power 55 38 78 Services 15 30 15
Ventures 12 12 8 Other 3 -
3
Total business group income
184 195 193
Unallocated costs: Labor cost absorption 3 8 6
General and administrative (51 ) (55 )
(61 )
Operating income 136
148 138 Interest
expense, net (5 ) (5 ) (3 ) Foreign currency gains (loss), net (1 )
- 1 Other non-operating gains (expense) -
(1 ) 1
Income before income
taxes and noncontrolling interests 130 142 137 Benefit
(provision) for income taxes (25 ) (45
) 54
Net income 105 97 191 Net income
attributable to noncontrolling interests (15 )
(19 ) (6 )
Net income attributable to
KBR $ 90 $ 78 $ 185
Net income attributable to KBR per share: Basic $
0.60 $ 0.52 $ 1.23 Diluted 0.60 0.51 1.22 Basic weighted
average shares outstanding 149 151 150 Diluted weighted average
shares outstanding 150 152 151 Cash dividends declared per
share $ 0.05 $ - $ 0.05
KBR, Inc.: Condensed Consolidated
Statements of Income
(Millions, except per share data)
(Unaudited)
Twelve Months Ended December 31, 2011 2010
Revenue:
Hydrocarbons $ 4,258 $ 3,969 Infrastructure, Government and Power
3,328 4,299 Services 1,590 1,755 Ventures 65 55 Other
20 21
Total revenue
9,261 10,099
Business group
income: Hydrocarbons 408 400 Infrastructure, Government and
Power 266 272 Services 58 102 Ventures 42 33 Other 9
2
Total business group income
783 809
Unallocated
costs: Labor cost absorption 18 12 General and administrative
(214 ) (212 )
Operating income
587 609 Interest expense,
net (18 ) (17 ) Foreign currency gains (losses), net 3 (4 ) Other
non-operating expenses - (2 )
Income before income taxes and noncontrolling interests 572
586 Provision for income taxes (32 )
(191 )
Net income 540 395 Net income attributable to
noncontrolling interests (60 ) (68 )
Net income attributable to KBR $ 480 $
327
Net income attributable to KBR per share:
Basic $ 3.18 $ 2.08 Diluted 3.16 2.07 Basic weighted average
shares outstanding 150 156 Diluted weighted average shares
outstanding 151 157 Cash dividends declared per share $ 0.20
$ 0.15
KBR, Inc.: Condensed Consolidated Balance
Sheets
(Millions) (Unaudited)
December 31, December 31, 2011 2010
Assets Current assets: Cash and equivalents $ 966 $
786 Receivables: Accounts receivable, net 1,227 1,455 Unbilled
receivables on uncompleted contracts 435
428 Total receivables 1,662 1,883 Deferred
income taxes 297 199 Other current assets 517
394
Total current assets 3,442 3,262
Property, plant and equipment, net of accumulated depreciation of
$364 and $334 384 355
Goodwill 951 947 Intangible assets, net 113 127 Equity in and
advances to related companies 190 219 Noncurrent deferred income
taxes 128 103 Noncurrent unbilled receivables on uncompleted
contracts 313 320 Other assets 152
84
Total assets $ 5,673 $
5,417
Liabilities and Shareholders' Equity
Current liabilities: Accounts
payable $ 761 $ 921 Due to former parent, net 53 43 Obligation to
former noncontrolling interest 1 172 Advanced billings on
uncompleted contracts 626 498 Reserve from estimated losses on
uncompleted contracts 22 26 Employee compensation and benefits 226
200 Current non-recourse project-finance debt of a variable
interest entity 10 9 Other current liabilities 585
470
Total current liabilities
2,284 2,339 Noncurrent employee compensation and benefits 470 397
Noncurrent non-recourse project-finance debt of a variable interest
entity 88 92 Noncurrent obligation to former noncontrolling
interest 8 8 Other noncurrent liabilities 169 132 Noncurrent income
tax payable 141 128 Noncurrent deferred tax liability
71 117
Total liabilities
3,231 3,213
KBR shareholders'
equity Preferred stock - - Common stock - - Paid-in-capital in
excess of par 2,005 1,981 Accumulated other comprehensive loss (548
) (438 ) Retained earnings 1,607 1,157 Treasury stock
(569 ) (454 )
Total KBR shareholders' equity
2,495 2,246 Noncontrolling interests (53 )
(42 )
Total shareholders' equity 2,442
2,204
Total liabilities and
shareholders' equity $ 5,673 $ 5,417
KBR, Inc.: Condensed Consolidated
Statements of Cash Flows
(Millions) (Unaudited)
Twelve Months Ended December 31, 2011
2010
Cash flows from operating activities: Net income $ 540
$ 395 Adjustments to reconcile net income to net cash provided by
operations: Depreciation and amortization 71 62 Equity earnings of
unconsolidated affiliates (158 ) (137 ) Deferred income taxes (173
) 14 Impairment of long-lived assets - 5 Other 14 30 Changes in
operating assets and liabilities: Receivables 252 (182 ) Unbilled
receivables on uncompleted contracts (26 ) 223 Accounts payable
(110 ) (177 ) Advanced billings on uncompleted contracts 68 116
Accrued employee compensation and benefits 31 9 Reserve for loss on
uncompleted contracts (4 ) (13 ) Collection (repayment) of advances
from (to) unconsolidated affiliates, net 14 (16 ) Distribution of
earnings from unconsolidated affiliates 182 93 Other assets (28 )
33 Other liabilities (23 ) 94
Total cash flows provided by operating activities
650 549
Cash flows from
investing activities: Acquisition of business, net of cash
acquired - (299 ) Capital expenditures (83 ) (66 ) Investment in
equity method joint ventures (11 ) (12 ) Investment in licensing
arrangement - (20 ) Proceeds from sale of investments
6 -
Total cash flows used in
investing activities (88 ) (397 )
Cash flows from financing activities: Acquisition of
noncontrolling interest (178 ) - Payments to reacquire common stock
(118 ) (233 ) Distributions to noncontrolling interests, net (63 )
(91 ) Payments of dividends to shareholders (30 ) (32 ) Net
proceeds from issuance of stock 7 5 Payments on short-term and
long-term borrowings (15 ) (13 ) Excess tax benefits from
stock-based compensation 3 - Return of cash collateral on letters
of credit, net 17 28
Total cash flows used in financing activities
(377 ) (336 ) Effect of exchange rate changes on cash
(5 ) 7 Increase (decrease) in cash and equivalents 180 (177 ) Cash
increase due to consolidation of a variable interest entity
- 22 Cash and equivalents at
beginning of period 786 941
Cash and equivalents at end of period $ 966
$ 786
KBR, Inc.: Revenue and Operating Results
by Business Unit
(Millions)(Unaudited)
Three Months Ended December 31, December 31, September 30,
Revenue: 2011 2010 2011 Hydrocarbons:
Gas Monetization $ 687 $ 748 $ 831 Oil and Gas 116 131 117
Downstream 139 155 136 Technology 47
35 38 Total Hydrocarbons
989 1,069 1,122
Infrastructure, Government and Power North American
Government and Logistics 409 618 586 International Government,
Defence and Support Services 118 85 93 Infrastructure and Minerals
117 70 142 Power and Industrial 63
72 55 Total Infrastructure,
Government and Power 707 845
876 Services 378 408 370 Ventures 17 14
14 Other 5 6
5
Total revenue $ 2,096 $
2,342 $ 2,387
Business group income
(loss): Hydrocarbons: Gas Monetization $ 65 $ 57 $ 52 Oil and
Gas 23 37 27 Downstream 19 44 18 Technology 22
12 17 Total job income
129 150 114 Impairment of long-lived assets - (4 ) - Gain (loss) on
disposition of assets (1 ) (1 ) 1 Division overhead
(29 ) (30 ) (26 ) Total Hydrocarbons
99 115 89
Infrastructure, Government and Power: North American
Government and Logistics 45 29 61 International Government, Defence
and Support Services 50 26 28 Infrastructure and Minerals (7 ) 15
19 Power and Industrial 6 2
9 Total job income 94 72 117 Loss on
disposition of assets - - (1 ) Division overhead (39
) (34 ) (38 ) Total Infrastructure,
Government and Power 55 38
78 Services: Job income 30 47 31
Gain on disposition of assets 1 - - Division overhead
(16 ) (17 ) (16 ) Total Services
15 30 15
Ventures: Job income 13 9 9 Gain on disposition of assets -
3 - Division overhead (1 ) -
(1 ) Total Ventures 12
12 8 Other: Job income 4
2 5 Impairment of long-lived assets - (1 ) - Gain on disposition of
assets 1 1 - Division overhead (2 ) (2
) (2 ) Total Other 3
- 3
Total business group
income $ 184 $ 195 $ 193
KBR, Inc.: Revenue and Operating Results
by Business Unit
(Millions) (Unaudited)
Twelve Months Ended December 31,
Revenue: 2011
2010 Hydrocarbons: Gas Monetization $ 3,044 $ 2,829 Oil and
Gas 488 426 Downstream 557 584 Technology 169
130 Total Hydrocarbons 4,258
3,969 Infrastructure, Government and
Power North American Government and Logistics 2,198 3,307
International Government, Defence and Support Services 378 369
Infrastructure and Minerals 510 271 Power and Industrial
242 352 Total Infrastructure,
Government and Power 3,328 4,299
Services 1,590 1,755 Ventures 65 55 Other 20
21
Total revenue $ 9,261
$ 10,099
Business group income:
Hydrocarbons: Gas Monetization $ 257 $ 252 Oil and Gas 104 90
Downstream 77 117 Technology 75
55 Total job income 513 514 Impairment of long-lived assets
- (4 ) Gain on disposition of assets 1 - Division overhead
(106 ) (110 ) Total Hydrocarbons
408 400 Infrastructure,
Government and Power: North American Government and Logistics 212
230 International Government, Defence and Support Services 128 88
Infrastructure and Minerals 60 62 Power and Industrial
29 37 Total job income 429 417
Loss on disposition of assets (1 ) - Division overhead
(162 ) (145 ) Total Infrastructure, Government
and Power 266 272
Services: Job income 124 172 Gain (loss) on disposition of assets 1
(1 ) Division overhead (67 ) (69 )
Total Services 58 102
Ventures: Job income 45 33 Gain on disposition of assets 1 3
Division overhead (4 ) (3 ) Total
Ventures 42 33
Other: Job income 16 12 Impairment of long-lived assets - (1 ) Gain
(loss) on disposition of assets 1 (2 ) Division overhead
(8 ) (7 ) Total Other 9
2
Total business group income $
783 $ 809
KBR, Inc.
Backlog Information (Millions) (Unaudited)
December 31, September 30, December 31, 2011
2011 2010 Hydrocarbons: Gas Monetization $ 3,880 $ 4,314 $
5,509 Oil and Gas 289 285 325 Downstream 546 582 525 Technology
258 216 201 Total
Hydrocarbons 4,973 5,397
6,560 Infrastructure, Government and Power: North American
Government and Logistics 899 1,258 1,043 International Government,
Defence and Support Services 1,086 1,139 1,223 Infrastructure and
Minerals 502 559 446 Power and Industrial 777
743 177 Total Infrastructure, Government and
Power 3,264 3,699 2,889
Services 1,766 1,642 1,771 Ventures 928
939 821
Total backlog(b)
$ 10,931 $ 11,677 $ 12,041
(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 $1.7 billion, $1.7
billion and $1.7 billion at December 31, 2011, September 30, 2011,
and December 31, 2010, respectively. Our backlog related to
consolidated joint ventures with noncontrolling interest totaled
$3.2 billion, $3.6 billion and $4.2 billion at December 31, 2011,
September 30, 2011, and December 31, 2010, respectively.
As of December 31, 2011, 25% of our backlog was attributable to
fixed-price contracts and 75% 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 December 31,
2011, September 30, 2011, and December, 31, 2010.
(b) Backlog attributable to unfunded government orders was $0.4
billion, $0.4 billion and $0.1 billion as of December 31, 2011,
September 30, 2011, and December 31, 2010, respectively.
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