KBR Gets $52 Million Contract Extension From Marine Corps
Zacks Investment Research | Jan 21, 2019 09:47PM ET
KBR, Inc. (NYSE:KBR) has received a six-month contract extension, valued at $52 million, for global government services business, KBRwyle, to provide prepositioning and logistics support services to U.S. Marine Corps’ (“USMC”) Blount Island Command.
Per the deal, KBRwyle will acquire, maintain, and preposition equipment as well as other essential supplies in Jacksonville, FL. Also, it will provide logistics services to support preservation and packaging, shipping and receiving, as well as maintenance throughout the United States.
In addition to Florida, KBRwyle will support prepositioned stock in Kuwait and Norway, as well as aboard 12 Navy ships in the Indian and Pacific Oceans.
Being a leading provider of prepositioned stock to the USMC and U.S. Army, KBRwyle has been providing a full range of logistics services across the world for more than 35 years. Notably, its Government Services (“GS”) segment, which accounts for nearly 73% of the total revenues, has been performing pretty well.
In the first nine months of 2018, its GS segment revenues rose an impressive 56.3% year over year to $2.5 billion. Also, the segment’s backlog as of Sep 30, 2018 increased 34.9% on a year-over-year basis. The improvements were backed by strong organic revenue growth in logistics and engineering business, along with revenue contribution from the acquired businesses.
Majority of the government services contracts are long-term reimbursable annuity-type contracts that have significantly lower risks than other projects. The company believes that its low-risk projects will help in margin expansion and de-risking of business considerably. In fact, in the first nine months of 2018, gross margin in the GS segment grew 140 basis points to 8.2%.
Meanwhile, shares of KBR have increased 25.9% over a month, outperforming its Zacks Investment Research
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