KBR says renamed readiness and sustainment business is less reliant on OCO funding

KBR executives said today they have renamed the company's logistics business to readiness and sustainment to reflect its repositioning toward base budget funding.

In a call with analysts today, Stuart Bradie, KBR's chief executive, said the unit's Overseas Contingency Operations-funded work in the Middle East has declined and has been "largely replaced with increasing work on [U.S. Northern Command], which is focused on supporting training and readiness and sustainment."

The new name of readiness and sustainment, Bradie said, "better reflect[s] what it actually does today."

Mark Sopp, KBR's chief financial officer, said during the same call KBR recorded $600 million in Middle East OCO sales in 2019 and $450 million in 2020. In 2021, he said, the company is anticipating just $200 million in sales in this area.

"An important takeaway is the magnitude of contingency work being replaced by more core, recurring, less-volatile defense, intel and space work has taken place," he said.

Meanwhile, KBR said today sales in the most recent quarter in its government solutions unit, which includes the readiness and sustainment division, totaled nearly $1.1 billion, up 14% from the same three-month period a year earlier. The business recorded quarterly profit of $113 million, down 4% from the prior year.

In 2020, KBR's government solutions business reported sales of $3.9 billion, essentially flat from 2019. For the year, the unit recorded profit of $483 million, up 12% from 2019.