KBR (KBR) Q4 2023 earnings summary

Executive summary

• FY23 revenue was $6.956B, up 6% reported and 11% excluding OAW; adjusted EBITDA rose 12% to $747M, with a 10.7% margin, up 56 bps.

• Backlog and options grew 10% to $21.7B; FY23 bookings and options totaled $10.5B, with 1.1x TTM book-to-bill.

• FY23 reported net loss was $265M; adjusted net income was $361M.

• More than 75% of FY24 work was under contract, supporting guidance for adjusted EBITDA and adjusted EPS growth.

Financial highlights

• Q4 revenue was $1.730B, up 8% YoY; adjusted EBITDA rose 20% to $188M, with margin up to 10.9% from 9.8%.

• Q4 adjusted EPS was $0.69, unchanged YoY; adjusted free cash flow was $63M, up 13%.

• FY23 adjusted EPS was $2.91 versus $2.71; diluted EPS was a loss of $1.96 versus $1.26.

• FY23 operating cash flow was $331M, down 16%; adjusted operating cash flow was $463M, up 9%, and adjusted free cash flow was $383M.

• FY23 adjusted operating cash flow conversion was 117%, versus 110% in FY22; adjusted free cash flow conversion was 97%, versus 92%.

Outlook and guidance

• FY24 guidance: revenue $7.4B–$7.7B, adjusted EBITDA $810M–$850M, adjusted EPS $3.10–$3.30, and operating cash flow $450M–$480M.

• Guidance assumes a 25%–27% effective tax rate, ~135M adjusted diluted shares, ~$130M below-the-line expenses, and adjusted EPS phasing of 45%/55%.

• FY24 guidance excludes capital deployment except repurchases to mitigate annual share-count creep; HomeSafe guidance includes $125M–$175M revenue and nominal profit.

• Adjusted EBITDA growth is expected to progress toward the $925M 2025 target.