KBR, Inc. (NYSE: KBR) reported Q1 EPS of $0.39, $0.03 better than the analyst estimate of $0.36. Revenue for the quarter came in at $1.54 billion versus the consensus estimate of $1.46 billion.

"I am pleased to announce the company's first quarter 2020 financial results," said Stuart Bradie, President and CEO of KBR. "With more than 85% of our portfolio supporting mission critical government services and delivering proprietary technology solutions, our business continues to be resilient amidst the COVID-19 pandemic and energy market downturn," Bradie said.

Today, the company continues to maintain a healthy liquidity profile and produced strong free cash flow in the first quarter 2020. Our $500 million revolving credit facility remains essentially untapped, and based on expected free cash flow for the year, we do not plan to draw on this source of funds for operating purposes in 2020. Additionally, management plans to maintain its regular quarterly dividend at $0.10 per share, reflecting the 25% increase announced earlier this year.

"We produced excellent cash flow in the quarter and core operating results were in line with our expectations. Strong liquidity combined with our ability to generate healthy free cash flow in the current environment is an indicator of the long-term sustainability and durability of our company," Bradie said.

Operational Update

"During these unprecedented times, our primary focus continues to be the health, safety and wellbeing of our people," Bradie continued. "With operations in China and South Korea, we took the threat of coronavirus seriously early. In January we stood up our global crisis management team, began planning for various scenarios, tested our business resilience plans and IT infrastructure and started transitioning our people to telework arrangements. Today over 90% of our office personnel are successfully working from home," continued Bradie. "Operationally, we remain laser focused on serving our clients. With a significant majority of our portfolio supporting mission critical operations for the U.S., U.K. and Australian governments, our people swiftly and deftly mobilized to ensure continuity of service," Bradie continued.

Government Solutions delivered 1.3x book-to-bill (BTB), excluding the workoff of PFIs, defending its largest recompete of 2020 and achieving BTB of greater than 1x in each of its three major service lines. "Our Government Solutions customers across the world have been hugely supportive, and the vast majority of our government work continues on pace with our 2020 expectations. Our clients have worked closely with us as we transitioned and have gone to great lengths to support business as usual during unusual times," said Bradie.

In February, the company acquired certain contracts from SMA in Australia under which we will deliver technical training, curriculum development, technical documentation, and data analysis to the Royal Australian Navy. Our Government Solutions Australia team has been successful in leveraging our highly specialized, technology-enabled capabilities as the Australian Department of Defence modernizes and renews its platforms. The addition of these contracts providing white-collar, professional services is highly strategic as it further expands our footprint in this growing market.

The Technology business continues to benefit from strong 2019 backlog. As expected, bookings in the first quarter were lower due to COVID-19 and have been further impacted with the disruptions in the energy market. We have begun to see activity in this sector picking up and expect a modest but temporary dip in performance in this business. Our long-term outlook remains strong.

Looking Forward

"We believe our preparedness for COVID-19 has enabled continuity of service to our customers and stakeholders, the resilience of our Government and Technology Solutions businesses and our actions to better position our Energy business will enable continued delivery of predictable, stable and sound financial results. We are proud of our employees' unwavering commitment, focus and agility and are confident of our team's ability to deliver during this tumultuous time," Bradie concluded.

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