AP, Forbes.com, July 30, 2009
HOUSTON -- Engineering and construction company KBR Inc. posted second-quarter earnings that topped Wall Street expectations as revenue rose on work in its energy and power projects and contracts in Iraq.
Net income of $67 million, or 42 cents per share, was up 40 percent from $48 million, or 28 cents per share, in the same quarter last year.
Revenue of $3.1 billion for the quarter ended June 30 rose 17 percent from $2.66 billion in the same quarter in 2008.
Analysts surveyed by Thomson Reuters expected KBR, a former Halliburton subsidiary, to earn 41 cents per share on revenue of $2.9 billion.
Income for the Houston-based company's engineering, procurement, construction and related services business rose to $65 million from $39 million in the quarter due to various liquefied natural gas, offshore energy and engineering projects.
KBR booked income in its government and infrastructure business of $80 million in the quarter, up from $63 million in the year-ago period, including work in Iraq and other military and public works projects.
And income from KBR's services business - North American construction and Canadian and other international operations - increased to $29 million from $17 million.
Backlog at the end of the quarter was $12.3 billion with "no material project cancellations" during the period, the company said. That's down slightly from $12.8 billion in the first quarter.
Bill Utt, chairman, president, and CEO, said KBR's markets are showing "positive indicators toward projects moving forward over the next few years."
Utt told analysts on a conference call that KBR will not protest the outcome of two awards to other engineering and construction companies for U.S. Army work in Afghanistan. DynCorp International Inc. and Fluor Corp. were awarded a combined $3 billion contract earlier this month for support services to U.S. troops.
Barclay's Capital analyst Andrew Kaplowitz said investors have already priced in the loss of the contracts for KBR stock. However, investors are getting more interested in KBR the closer the company gets to large projects such as the development of the Gorgon gas fields off Australia, he said.
Meanwhile, KBR faces investigations over accusations that, with military officials, it failed to protect a Green Beret who was electrocuted while showering in his barracks in Iraq. It also faces allegations about the safety of an Iraqi water treatment plant it rebuilt and, with Halliburton, faces lawsuits claiming health hazards from open-air pits used to burn refuse in Iraq and Afghanistan.
KBR says it's reviewing the charges and Halliburton insists it was improperly named and expects to be dismissed from the case.
Kaplowitz said the lawsuits and investigations are "more background noise right now."
"Sometimes, it will get a little louder and sometimes it will get a little softer," he said.
Shares rose 78 cents, or 4 percent, to close $20.37.