Q1 2011 Earnings Call
April 28, 2011 9:00 am ET
Susan Carter - Chief Financial Officer and Executive Vice President
William Utt - Chairman, Chief Executive Officer and President
Unknown Executive -
Rob Kukla - Director of Investor Relations
Bryce Humphrey - BB&T Capital Markets
Tahira Afzal - KeyBanc Capital Markets Inc.
Robert Connors - Stifel, Nicolaus & Co., Inc.
John Rogers - D.A. Davidson & Co.
Andy Kaplowitz - Barclays Capital
Martin Malloy - Johnson Rice & Company, L.L.C.
Jamie Cook - Crédit Suisse AG
Joseph Ritchie - Goldman Sachs Group Inc.
Will Gabrielski - Gleacher & Company, Inc.
Steven Fisher - UBS Investment Bank
Previous Statements by KBR
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Good day, and welcome to the KBR First Quarter 2011 Earnings Call hosted by KBR. This call is being recorded. [Operator Instructions] For opening remarks and introductions, I'd like to turn the call over to Mr. Rob Kukla, Director of Investor Relations. Please go ahead, sir.
Thanks, Jason. Good morning, and welcome to KBR's first quarter 2011 earnings conference call. Today's call is also being webcast and a replay will be available on KBR's website for 7 days. The press release announcing the first quarter results is also available on KBR's website.
Joining me today are Bill Utt, Chairman, President and Chief Executive Officer; and Sue Carter, Executive Vice President and Chief Financial Officer. In today's call, Bill will provide opening remarks and business outlook. Sue will address KBR's operating performance, financial position, backlog and other financial items. We will welcome questions after we complete our prepared remarks.
Before turning the call over to Bill, I would like to remind our audience that today's comments may include forward-looking statements reflecting KBR's views about future events and their potential impact on performance. These matters involve risks and uncertainties that could impact operations and financial results and cause our actual results to differ from our forward-looking statements. These risks are discussed in KBR's Form 10-K for the year ended December 31, 2010, KBR's quarterly reports on forms 10-Q and KBR's current reports on Form 8-K.
Now I'll turn the call over to Mr. Bill Utt. Bill?
Thanks, Rob, and good morning, everyone. Overall, I continue to be pleased with KBR's financial performance this quarter. KBR's first quarter net revenue was in line with our expectations and is up 7% year-over-year when excluding LogCAP revenue. Operating income for the quarter is up 45% on a year-over-year basis. KBR's earnings per diluted share were $0.69, which when one excludes the benefit of discrete tax items, was up 86% year-over-year and 4% from the prior quarter. KBR's job income backlog increased 4% compared to the prior quarter while revenue backlog was flat. Compared to the prior year first quarter, DoD income backlog is up 8% despite a revenue backlog decline of 10%. As KBR continues to work off the lower margin projects in our backlog, we continue to be successful in replacing this backlog with higher margin projects.
Now let me move on to a discussion on KBR's discrete markets and business units. KBR continues to execute on its market-leading position in LNG with 5 major LNG projects at various stages of activity. The total expected capital spend on these 5 projects is approximately $46 billion. The impacts, Ichthys and Pluto 2 FEEDs are now complete and we expect FIDs for both projects during the fourth quarter of 2011.
We remain actively engaged in pre-FEED activities, pre-FID activities on both projects and are currently in open book tender discussions on the impacts project, as well as providing a free FID services on the Pluto development.
FEED activities for the Kitimat LNG facility are underway and KBR is also providing free FID site construction management services. The FEED should be complete by year-end and the owner expects to take a final investment decision in the first quarter of 2012. Earlier this year, KBR announced the FEED award for the Browse LNG project. The FEED work remains on target for completion in mid-2012, in line with Woodside's original timeframe to correspond with the mid-2012 FID. Finally, KBR is exclusively engaged on some early work on a potential fourth train at the Gorgon project. We anticipate formalizing pre-FEED work to commence in the very near term.
For KBR's refining and downstream markets, we continue to execute a best-in-class project portfolio. KBR's detailed engineering work on the Yanbu project for utilities, interconnecting systems and terminal packages is nearing completion. And the nucleus of KBR's PMC team will shortly move to the site, while other KBR personnel are presently deployed in the EPC contractors offices.
KBR is also providing EPCM services on the BP Husky Toledo refining project. This project is scheduled for completion in late summer 2012. On the Ras Tanura integrated refinery and petrochemical project, FEED work on 3 of the 5 multi-packaged process envelopes are now complete with the remaining envelopes on schedule for completion later this year. In anticipation of FID, KBR is continuing our coordinating PMC activity starting pre-EPC support activity on the completed FEED envelopes, planning for the KBR personnel ramp up in Kingdom and reviewing the project's utilities and all site's requirements.
For the Lobito refinery project in Angola, KBR continues to perform early-stage EPCM work in preparation for the project's expected FID in the second half of 2011. KBR is also working on the design for the physical site, as well as for the consolidation of multiple living camps.
For the Jazan refinery project, KBR's ongoing FEED and PMC activities for the 400,000-barrel-per-day project, include the development of the process design, layout, integration and optimization of the facility, development of equipment and material specifications, preparation of EPC bid packages and development of a cost assessment for the construction of the facility.