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» KBR's CEO Discusses Q4 2011 Results - Earnings Call Transcript
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» KBR's CEO Discusses Q3 2011 Results - Earnings Call Transcript
This call will include forward-looking statements that involve risks and uncertainties that may cause KBR's results to differ materially from management's current expectations. We encourage you to review our Safe Harbor statement containing the earnings release published last night, as well as KBR's most recent SEC filings for more complete description.Now I'll turn the call over to Bill. Bill? William P. Utt Thanks, Zach, and good morning, everyone. During today's call, I'd like to cover 3 main areas. First, I'll walk through the key takeaways relative to our first quarter performance. Second, I'll provide you with an update of our key prospects so you can track some of the major opportunities we're pursuing. And third, I'll discuss in detail, some of the significant market trends and dynamics we're seeing at the present time. KBR delivered $0.61 in the quarter. This overall operating performance was consistent with our expectations and our guidance, and we continue to believe we'll deliver progressively stronger performance in Q2 through Q4. There were a number of areas of strength in the quarter. Excluding all GAAP, revenues was up 5% year-over-year reflecting the underlying growth in our other businesses. At the consolidated level, job income margins and business group margins were both improved with particular strength in Gas Monetization and International Government, Defense and Support Services. Our Technology business continue to deliver strong performance with double-digit job income growth in the quarter. We are very pleased with the ramp up of our Saudi JV KBR-AMCDE. KBR-AMCDE provides in-kingdom technical engineering and production capabilities through local utilization of KBR's world-class engineering tools and work processes. While not a large contributor to the first quarter, KBR-AMCDE booked 400,000 man-hours in Q1 and is on a flightpath ahead of our initial expectations. KBR's backlog also increased significantly with revenue backlog and job income backlog up 44% and 40% respectively, as the JKC joint venture Ichthys LNG project contract was booked in the backlog. For the quarter, KBR booked $5.6 billion for the Ichthys LNG project, about $100 million less than we indicated on our fourth quarter call, largely due to currency fluctuations.
The first quarter of 2012 saw 2 significant points of inflection in KBR's revenue backlog. First, Q1 was the first increase in KBR's revenue backlog since the fourth quarter of 2009. Second, this was KBR's first increase in revenue backlog to be worked off over the next 12 months since last year's first quarter. And we ended the quarter with a strong balance sheet with $837 million in cash and equivalents.As you've noted from our press release, our Minerals business unit took first quarter charges that were primarily the result of further increases in cost estimates on one of the legacy Roberts & Schaefer projects. While we're clearly disappointed with the additional charges, we did enter performance testing for this project in Q1, and are therefore confident we have put this particular issue behind us. With respect to the other 2 minerals projects we discussed on the fourth quarter call, they are largely progressing as expected with no additional charges that were taken on either project in the first quarter. One of these projects is to be completed during the third quarter. We continue to believe we have strong risk management processes in place for this business and as a result, the ongoing and future projects will continue to receive the double regard in discipline necessary to drive strong operating performance. One other notable area I wanted to touch on for the quarter is our effective tax rate, which came in highly favorable at about 9% versus our operating tax rate of 27%. Sue will address the tax rate further in her prepared remarks. Now I'd like to provide an update on the major prospects we're pursuing. For the Kitimat LNG project, the open book EPC tendering process is continuing along with pre-FID site construction activities. We anticipate the open book tendering to be completed during the second quarter of 2012 with an FID following sometime in the second half of 2012. For the Browse LNG project, we are continuing with the EPC bidding process and plan to have our bids turned over to the customer in mid-2012. For the Gorgon LNG fourth train project, pre-FEED activities continue, and we expect a transition into FEED by the end of 2012. For the Anadarko LNG project in Mozambique, the FEED tendering process is underway. We anticipate FEED awards to be announced by mid-2012. Read the rest of this transcript for free on seekingalpha.com