2. KBR Inc. (NYSE:KBR)
Market Cap as of October 22: $9.44 billion
Number of Hedge Fund Holders: 56
KBR Inc. (NYSE:KBR) operates in the fields of science, technology, and engineering, working in various markets including aerospace, defense, industrial, and intelligence. It is a global engineering, construction, and services company with two primary businesses, government solutions and sustainable technology solutions.
It has been actively expanding its capabilities through acquisitions and strategic partnerships. In Q2 2024, it announced an agreement to acquire LinQuest, an engineering and data analytics company, to bolster its ability to deliver advanced technological solutions. The company recently achieved a significant milestone with the selection of its proprietary ROSE technology by Zhejiang Petroleum for its largest unit in China. It also secured contracts in Brazil, established training centers in Iraq, extended support for programs in Australia, and expanded supply in Europe.
The company is a pioneer in the green ammonia market with 10 projects underway, including a groundbreaking venture in India. Although blue ammonia is currently more widespread due to its lower cost, its technology is at the forefront of both blue and green ammonia production. The company’s technology is being utilized in the world’s only two blue ammonia projects that have received final investment decisions.
Q2 2024 revenue increased by 5.82% year-over-year to $1.86 billion driven by segment growths. Government revenue grew by 3%, driven by growth in international defense and intelligence (up 11%) and science and space (up 5%). Funding delays related to the Ukraine conflict impacted readiness and sustainment activities, leading to a decline in this segment. Employee engagement reached a record high of 70%, up 10% this year.
The company offers sustainable and net-zero solutions, including consulting, integrated solutions, petrochemicals, clean fuel technologies, modular solutions, hydro-PRT, AI, data management, cybersecurity, defense modernization, advisory, nuclear energy, and asset management. KBR Inc. (NYSE:KBR) holds a unique position in the industry and is set for growth.
Cove Street Capital Small Cap Value Fund stated the following regarding KBR, Inc. (NYSE:KBR) in its Q2 2024 investor letter:
“On the plus side, KBR, Inc. (NYSE:KBR) has been a strong performer so far YTD on the back of an investor day in the second quarter that highlighted the success of the last four-year plan (2020-2023) before laying out ambitious but credible targets for the next 4 years (2024- 2027). Since 2020, KBR has pivoted their commercial business away from high-risk EPC projects to a more differentiated IP-first consulting approach that now sees 20% EBIT margins and contributes 40% of their overall profitability. KBR has cleaned up their balance sheet by settling convertible notes and warrants and now sits at a healthy 2x net leverage. With the upcoming ramp of a $20B government services contract with the U.S. army, the company is well positioned to generate cash and return value to shareholders.”
