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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended June 30, 2022
OR
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from             to
Commission File Number: 001-33146
 
 
kbr-20220630_g1.jpg
KBR, Inc.
(Exact name of registrant as specified in its charter)
Delaware 20-4536774
(State of incorporation)
 
(I.R.S. Employer Identification No.)
601 Jefferson Street, Suite 3400HoustonTexas77002
(Address of principal executive offices)(Zip Code)

(713) 753-2000
(Registrant's telephone number including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading symbolName of each exchange on which registered
Common Stock, $0.001 par value KBRNew York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large Accelerated FilerAccelerated filer
Non-accelerated filer
 (Do not check if a smaller reporting company)
Smaller reporting company
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes      No  

As of July 21, 2022, there were 139,043,581 shares of KBR, Inc. Common Stock, par value $0.001 per share, outstanding.






TABLE OF CONTENTS
 


2



Forward-Looking and Cautionary Statements

This Quarterly Report on Form 10-Q contains certain statements that are, or may be deemed to be, "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act, as amended. The Private Securities Litigation Reform Act of 1995 provides safe harbor provisions for forward-looking information. Some of the statements contained in this Quarterly Report on Form 10-Q are forward-looking statements. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. The words "believe," "may," "estimate," "continue," "anticipate," "intend," "plan," "expect" and similar expressions are intended to identify forward-looking statements. Forward-looking statements include information concerning our possible or assumed future financial performance and results of operations.

We have based these statements on our assumptions and analyses in light of our experience and perception of historical trends, current conditions, expected future developments and other factors we believe are appropriate in the circumstances. Forward-looking statements by their nature involve substantial risks and uncertainties that could significantly affect expected results, and actual future results could differ materially from those described in such statements. While it is not possible to identify all factors, factors that could cause actual future results to differ materially include the risks and uncertainties disclosed in our latest Form 10-K and any subsequent Forms 10-Q and 8-K.

Many of these factors are beyond our ability to control or predict. Any of these factors, or a combination of these factors, could materially and adversely affect our future financial condition or results of operations and the ultimate accuracy of the forward-looking statements. These forward-looking statements are not guarantees of our future performance, and our actual results and future developments may differ materially and adversely from those projected in the forward-looking statements. We caution against putting undue reliance on forward-looking statements or projecting any future results based on such statements or on present or prior earnings levels. In addition, each forward-looking statement speaks only as of the date of the particular statement, and we undertake no obligation to publicly update or revise any forward-looking statement.

3



Glossary of Terms
The following frequently used terms, abbreviations or acronyms are commonly used in our Quarterly Reports on Form 10-Q as defined below:
AcronymDefinition
AffinityAffinity Flying Training Services Ltd.
AOCLAccumulated other comprehensive loss
ASBCAArmed Services Board of Contract Appeals
ASCAccounting Standards Codification
ASUAccounting Standards Update
BBSYBank Bill Swap Bid Rate
C4ISRCommand, Control, Communications, Computers, Intelligence, Surveillance and Reconnaissance
COFCU.S. Court of Federal Claims
DCAADefense Contract Audit Agency
DCMADefense Contract Management Agency
DoDDepartment of Defense
DOJU.S. Department of Justice
EBICEgypt Basic Industries Corporation
EPCEngineering, procurement and construction
ESPPEmployee Stock Purchase Plan
Exchange ActSecurities Exchange Act of 1934, as amended
FARFederal Acquisition Regulation
FASBFinancial Accounting Standards Board
FCAFalse Claims Act
FKTCFirst Kuwaiti Trading Company
GSGovernment Solutions
HETsHeavy equipment transporters
ICCInternational Chamber of Commerce
JKCJKC Australia LNG, an Australian joint venture executing the Ichthys LNG Project
LIBORLondon interbank offered rate
LNGLiquefied natural gas
MD&AManagement's Discussion and Analysis of Financial Condition and Results of Operations
MFRsMemorandums for Record
MoDMinistry of Defence
NCINoncontrolling interests
OAWOperation Allies Welcome
PFIsPrivate financed initiatives and projects
PICPaid-in capital in excess of par
PPEProperty, Plant and Equipment
RPAMaster Accounts Receivable Purchase Agreement
SECU.S. Securities and Exchange Commission
SONIASterling Overnight Index Average
STSSustainable Technology Solutions
U.K.United Kingdom
U.S.United States
U.S. GAAPAccounting principles generally accepted in the United States
VIEsVariable interest entities
4



PART I. FINANCIAL INFORMATION

Item 1. Financial Information

KBR, Inc.
Condensed Consolidated Statements of Operations
(In millions, except for per share data)
(Unaudited)

Three Months EndedSix Months Ended
June 30,June 30,
 2022
2021 (1)
2022
2021 (1)
Revenues$1,616 $1,536 $3,330 $2,997 
Cost of revenues(1,415)(1,329)(2,933)(2,622)
Gross profit201 207 397 375 
Equity in earnings (losses) of unconsolidated affiliates10 (186)(108)(174)
Selling, general and administrative expenses (105)(103)(212)(192)
Acquisition and integration related costs (3)(1)(4)
Gain (loss) on disposition of assets and investments22 (1)22 (2)
Other(1)(2)(2)(2)
Operating income (loss)127 (88)96 1 
Interest expense(21)(20)(41)(39)
Unrealized gain on cost method investment16  16  
Other non-operating income (expense)5 2 5 (1)
Income (loss) before income taxes127 (106)76 (39)
Provision for income taxes(33)(40)(52)(57)
Net income (loss)94 (146)24 (96)
Less: Net income attributable to noncontrolling interests 3 1 4 
Net income (loss) attributable to KBR$94 $(149)$23 $(100)
Net income (loss) attributable to KBR per share
Basic$0.68 $(1.06)$0.17 $(0.71)
Diluted$0.61 $(1.06)$0.17 $(0.71)
Basic weighted average common shares outstanding139 141 139 141 
Diluted weighted average common shares outstanding156 141 156 141 
Cash dividends declared per share$0.12 $0.11 $0.24 $0.22 
(1) As adjusted for the adoption of ASU 2020-06 using the full retrospective method.
See accompanying notes to condensed consolidated financial statements.
5




KBR, Inc.
Condensed Consolidated Statements of Comprehensive Income (Loss)
(In millions)
(Unaudited)

 Three Months EndedSix Months Ended
June 30,June 30,
2022
2021 (1)
2022
2021 (1)
Net income (loss)$94 $(146)$24 $(96)
Other comprehensive income (loss):
Foreign currency translation adjustments
(34)5 (53)12 
Pension and post-retirement benefits
6 7 12 16 
Changes in fair value of derivatives
11  35 19 
Other comprehensive income (loss) (17)12 (6)47 
Income tax expense:
Foreign currency translation adjustments
 (1) (1)
Pension and post-retirement benefits
(1)(1)(2)(3)
Changes in fair value of derivatives
(2)(1)(7)(5)
Income tax expense(3)(3)(9)(9)
Other comprehensive income (loss), net of tax(20)9 (15)38 
Comprehensive income (loss)74 (137)9 (58)
Less: Comprehensive income attributable to noncontrolling interests 3 1 4 
Comprehensive income (loss) attributable to KBR$74 $(140)$8 $(62)
(1) As adjusted for the adoption of ASU 2020-06 using the full retrospective method.
See accompanying notes to condensed consolidated financial statements.
6



KBR, Inc.
Condensed Consolidated Balance Sheets
(In millions, except share data)
 June 30,
December 31, (1)
 20222021
(Unaudited)
Assets
Current assets:
Cash and cash equivalents$516 $370 
Accounts receivable, net of allowance for credit losses of $11 and $13, respectively
1,033 1,411 
Contract assets208 224 
Other current assets125 147 
Total current assets1,882 2,152 
Claims and accounts receivable30 30 
Property, plant, and equipment, net of accumulated depreciation of $420 and $431 (including net PPE of $16 and $19 owned by a variable interest entity), respectively
135 136 
Operating lease right-of-use assets150 158 
Goodwill2,025 2,060 
Intangible assets, net of accumulated amortization of $308 and $291, respectively
656 708 
Equity in and advances to unconsolidated affiliates199 576 
Deferred income taxes202 231 
Other assets239 153 
Total assets$5,518 $6,204 
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable$647 $1,026 
Contract liabilities337 313 
Accrued salaries, wages and benefits296 317 
Operating lease liabilities44 41 
Other current liabilities168 178 
Total current liabilities1,492 1,875 
Pension obligations38 88 
Employee compensation and benefits97 111 
Income tax payable93 95 
Deferred income taxes72 70 
Long-term debt1,746 1,875 
Operating lease liabilities179 188 
Other liabilities205 219 
Total liabilities3,922 4,521 
Commitments and Contingencies (Notes 6, 12 and 13)
KBR shareholders’ equity:
Preferred stock, $0.001 par value, 50,000,000 shares authorized, none issued
  
Common stock, $0.001 par value 300,000,000 shares authorized, 180,701,942 and 179,983,586 shares issued, and 139,042,581 and 139,786,136 shares outstanding, respectively
  
PIC2,222 2,206 
Retained earnings1,276 1,287 
Treasury stock, 41,659,361 shares and 40,197,450 shares, at cost, respectively
(1,016)(943)
AOCL(896)(881)
Total KBR shareholders’ equity1,586 1,669 
Noncontrolling interests10 14 
Total shareholders’ equity1,596 1,683 
Total liabilities and shareholders’ equity$5,518 $6,204 
(1) As adjusted for the adoption of ASU 2020-06 using the full retrospective method.
See accompanying notes to condensed consolidated financial statements.
7



KBR, Inc.
Condensed Consolidated Statements of Shareholders' Equity
(In millions, except for per share data)
(Unaudited)
Dollars in millionsTotalPICRetained
Earnings
Treasury
Stock
AOCLNCI
Balance at March 31, 2022$1,578 $2,216 $1,200 $(976)$(876)14 
Share-based compensation5 5 — — — — 
Common stock issued upon exercise of stock options1 1 — — — — 
Dividends declared to shareholders ($0.12/share)
(17)— (17)— — — 
Repurchases of common stock(41)— — (41)— — 
Issuance of ESPP shares  —  — — 
Distributions to noncontrolling interests(2)— — — — (2)
Other(2)— (1)1 — (2)
Net income94 — 94 — — — 
Other comprehensive loss, net of tax(20)— — — (20)— 
Balance at June 30, 2022$1,596 $2,222 $1,276 $(1,016)$(896)$10 
Dollars in millionsTotalPICRetained
Earnings
Treasury
Stock
AOCLNCI
Balance at December 31, 2021$1,701 $2,251 $1,260 $(943)$(881)$14 
Cumulative adjustment for the adoption of ASU 2020-06(18)(45)27 — — — 
Adjusted balance at January 1, 20221,683 2,206 1,287 (943)(881)14 
Share-based compensation10 10 — — — — 
Common stock issued upon exercise of stock options5 5 — — — — 
Dividends declared to shareholders ($0.24/share)
(34)— (34)— — — 
Repurchases of common stock(74)— — (74)— — 
Issuance of ESPP shares1 1 —  — — 
Distributions to noncontrolling interests(2)— — — — (2)
Other(2)—  1 — (3)
Net income24 — 23 — — 1 
Other comprehensive income, net of tax(15)— — — (15)— 
Balance at June 30, 2022$1,596 $2,222 $1,276 $(1,016)$(896)$10 
8



Dollars in millionsTotalPICRetained
Earnings
Treasury
Stock
AOCLNCI
Balance at March 31, 2021$1,675 $2,230 $1,336 $(866)$(1,054)$29 
Cumulative adjustment for the adoption of ASU 2020-06(25)(45)20 — — — 
Adjusted balance at April 1, 20211,650 2,185 1,356 (866)(1,054)29 
Share-based compensation4 4 — — — — 
Common stock issued upon exercise of stock options6 6 — — — — 
Dividends declared to shareholders ($0.11/share)
(15)— (15)— — — 
Repurchases of common stock(28)— — (28)— — 
Issuance of ESPP shares— — — — — — 
Investments by noncontrolling interests— — — — — — 
Distributions to noncontrolling interests(1)— — — — (1)
Other— — — (1)— 1 
Net income(146)— (149)— — 3 
Other comprehensive income, net of tax9 — — — 9 — 
Balance at June 30, 2021$1,479 $2,195 $1,192 $(895)$(1,045)$32 
Dollars in millionsTotalPICRetained
Earnings
Treasury
Stock
AOCLNCI
Balance at December 31, 2020$1,609 $2,222 $1,305 $(864)$(1,083)$29 
Cumulative adjustment for the adoption of ASU 2020-06(27)(45)18 — — — 
Adjusted balance at January 1, 20211,582 2,177 1,323 (864)(1,083)29 
Share-based compensation8 8 — — — — 
Common stock issued upon exercise of stock options10 10 — — — — 
Dividends declared to shareholders ($0.22/share)
(31)— (31)— — — 
Repurchases of common stock(32)— — (32)— — 
Issuance of ESPP shares2 — — 2 — — 
Distributions to noncontrolling interests(1)— — — — (1)
Other (1)— — (1)—  
Net income(96)— (100)— — 4 
Other comprehensive loss, net of tax38 — — — 38 — 
Balance at June 30, 2021$1,479 $2,195 $1,192 $(895)$(1,045)$32 
See accompanying notes to condensed consolidated financial statements.


9



KBR, Inc.
Condensed Consolidated Statements of Cash Flows
(In millions)
(Unaudited)
Six Months Ended June 30,
 2022
2021 (1)
Cash flows from operating activities:
Net income (loss)$24 $(96)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization66 76 
Equity in losses of unconsolidated affiliates108 174 
Deferred income tax 33 36 
(Gain) loss on disposition of assets(22)2 
Unrealized gain on cost method investment(16) 
Other15 17 
Changes in operating assets and liabilities:
Accounts receivable, net of allowance for credit losses361 (29)
Contract assets15 (4)
Accounts payable(366)65 
Contract liabilities36 (56)
Accrued salaries, wages and benefits(17)13 
Payments on operating lease obligation(29)(30)
Payments from unconsolidated affiliates, net8 10 
Distributions of earnings from unconsolidated affiliates43 26 
Pension funding(22)(24)
Restructuring reserve(7)(14)
Other assets and liabilities(16)(12)
Total cash flows provided by operating activities$214 $154 
Cash flows from investing activities:
Purchases of property, plant and equipment $(19)$(16)
Return of (investments in) equity method joint ventures, net189 (7)
Investment in cost method investment(61)(7)
Proceeds from sale of assets or investments60  
Acquisition of technology license (7)
Other  (1)
Total cash flows provided by (used in) investing activities$169 $(38)
Cash flows from financing activities:
Payments on short-term and long-term debt(8)(12)
Payments on revolving credit facility(97) 
Payments of dividends to shareholders(32)(30)
Net proceeds from issuance of common stock5 10 
Payments to reacquire common stock(74)(32)
Other(9)(10)
Total cash flows used in financing activities$(215)$(74)
Effect of exchange rate changes on cash(22)