KBR Wins Seat On DLA's Automated Fuel Systems Contract

KBR, Inc. (NYSE:KBR) has secured a seat on an indefinite-delivery, indefinite-quantity contract from the U.S. Defense Logistics Agency (“DLA”) to provide automated fuel systems installation services.

Per the $124 million multi-award contract, KBR — which has been designing and constructing project installations of automated fuel systems across the world for more than 12 years — can bid on firm-fixed-price task orders for providing the services. The company will provide engineering and services for the procurement and installation of automated fuel systems, and other fuel facility related systems and equipment.

Precisely, KBR will supply all personnel, equipment, materials, supervision, and other non-personnel services to design and install automated fuel handling equipment, as well as related systems. With this contract, which has one base year plus four option years, the company will be able to normalize equipment and systems at DoD fuel facilities worldwide.

Continuous Contract Wins: A Boon for Government Business

Notably, shares of KBR have gained 64.4% year to date, broadly outperforming the industry’s 25.8% growth. The solid performance was backed by robust contribution from Government Solutions and Technology businesses, courtesy of ongoing growth in its overseas logistics and mission support programs. Notably, KBR’s Government Solutions unit, accounting for more than 72% of total revenues, has been securing contracts and performing pretty well. The contract winning spree underscores KBR's proven ability to safely and efficiently deliver projects in operating facilities.

Earlier this month, the company received a $45.9-million task order from Naval Air Systems Command's Logistics and Maintenance Information Systems and Technology Division to provide logistics information technology services.

In June, KBR won a contract from NASA to provide launch range operations support at the agency's Wallops Flight Facility in Wallops Island, VA. The contract, which spans for five years, is valued at $200 million.

The company’s Government Solutions segment recorded 44% revenue growth in first-quarter 2019. It also recorded organic revenue growth of 22% during the same time period, following a 31% increase in fourth-quarter 2018.

The unit has the potential to generate higher revenues in the near term, as is evident from its backlog of $10.8 billion (as of Mar 31, 2019).

Zacks Rank & Key Picks

Currently, KBR carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the same space include Altair Engineering Inc. (NASDAQ:ALTR) , Jacobs Engineering Group Inc. (NYSE:JEC) and Quanta Services, Inc. (NYSE:PWR) . While Altair Engineering sports a Zacks Rank #1 (Strong Buy), Jacobs and Quanta Services carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Altair Engineering’s 2019 earnings are expected to grow 53.7%.

Jacobs has a three-five year EPS growth rate of 12%.

Quanta Services’ earnings for the current year are anticipated to increase 29.5%.

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