KBR (KBR) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue grew 6% year-over-year to $1.9B, with adjusted EBITDA up 13% to $216M and margin improving to 11.6%, driven by growth in defense, technology, and sustainable solutions.

• Net income for Q2 was $106M, a significant improvement from the prior year due to the absence of one-time charges.

• Book-to-bill ratios remain healthy: group trailing twelve-month at 1.0x, with $2B–$2.1B in bookings and 92%–92.92% of 2024 work under contract.

• Announced agreement to acquire LinQuest for $737M–$745M, expected to close in H2 2024, expanding digital, engineering, and national security capabilities and accretive to adjusted EPS.

• Realignment from three to two business units is planned to reduce complexity and drive synergies, with segment and enterprise targets for 2027 unchanged.

Financial highlights

• Adjusted EBITDA margin reached 11.5%–11.6% in Q2, reflecting strong client delivery and cost discipline.

• Q2 adjusted EPS was $0.83, up from $0.74 in Q2 2023; diluted EPS was $0.79 for Q2.

• Operating cash flow was $170M for Q2 and $261M year-to-date, with cash conversion at 121%.

• Capital returned to shareholders in H1 2024 totaled $197M, including $158M in share repurchases and $39M in dividends.

• Backlog and options as of June 28, 2024, totaled $16.8B–$20.1B.

Outlook and guidance

• Full-year 2024 guidance raised: Adjusted EBITDA $825M–$850M, Adjusted EPS $3.15–$3.30, operating cash flow $460M–$480M, and revenue $7.4B–$7.7B.

• Guidance does not include LinQuest contribution until deal closes.

• Backlog remains robust, with 38% expected to be executed within one year.