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    KBR (KBR)

    KBR Q4 2024: Guides FY25 revenue $8.7–9.1B, boosted by $400M LinQuest

    Reported on May 14, 2025 (After Market Close)
    Pre-Earnings Price$50.17Last close (Feb 24, 2025)
    Post-Earnings Price$51.10Open (Feb 25, 2025)
    Price Change
    $0.93(+1.85%)

    What went well

    • LinQuest Integration and Revenue Contribution: The integration of LinQuest is progressing very well, contributing an expected incremental revenue of around $600 million per year, which bolsters overall revenue growth.
    • HomeSafe Program Ramp-Up: The HomeSafe program is demonstrating strong momentum with operations ramping up to approximately 300 moves per day and an expanded supply chain, reinforcing its role as a long-term transformational program.
    • Robust Order Book and Bid Pipeline: With 75% of work under contract and a bid pipeline of approximately $17 billion, the backlog provides strong visibility for future revenue in government and mission-critical sectors.

    What went wrong

    • Dependency on new contracts: The 2025 revenue outlook hinges on strong performance from HomeSafe (contributing roughly 5 percentage points of growth) and LinQuest (adding about $400 million to revenue). Any delays or underperformance in these areas could challenge the revenue forecast.
    • Integration risks: The successful contribution of LinQuest is highly dependent on smooth integration. Any hurdles in merging cultures or operations could impact revenue and margins negatively.
    • Execution uncertainty: Achieving the ambitious revenue guidance of $8.7–$9.1 billion requires flawless execution. Any setbacks in scaling operations, particularly for newly acquired projects, could undermine growth prospects.

    Q&A Summary

    1. Revenue Guidance
      Q: LinQuest contribution in '25?
      A: Management explained that the $8.7–$9.1 billion revenue guidance includes an inorganic addition of about $400 million from LinQuest—roughly $600 million per year—demonstrating smooth integration and clear regional expectations.

    2. Growth Drivers
      Q: What drives 2025 growth?
      A: They emphasized that growth will stem from a balanced mix of programs, including the HomeSafe ramp, strong international defense contracts, and double-digit sustainable tech, aligning with long-term secular trends.

    3. Bid Pipeline
      Q: Status of bid awards?
      A: Management noted a robust bid pipeline with approximately $17 billion awaiting awards and nearly $1.5 billion under protest, all supporting a strong book-to-bill ratio as they move into 2025.

    4. Capital Deployment
      Q: Plans for capital allocation?
      A: They are focused on disciplined capital use, increasing the share buyback authorization to $750 million while leveraging strong cash flows to aim for net leverage below 2.5x.

    5. HomeSafe Ramp
      Q: Details on HomeSafe ramp?
      A: Management described the HomeSafe program as ramping up sequentially—with domestic moves reaching around 300 daily and a 400% increase in January—but noted its profit impact will be minimal in this early phase.

    6. LOGCAP Impact
      Q: How will LOGCAP perform?
      A: They expect LOGCAP to generate about $200–$300 million in revenue with only a modest impact on margins due to its single-digit profitability.

    7. Equity Income
      Q: Why did equity income drop?
      A: A minor $10 million reduction resulted from a remeasurement on a contingent liability (Victus) and an adjustment on the Plaquemines project—non-cash items that do not reflect overall business strength.

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