KBR: A Strictly Cash Business (KBR)

October 31, 2008 by Douglas A. McIntyre

Kbr_logoKBR Inc. (NYSE:KBR) reported third quarter earnings before the market opened today. The company posted EPS of $0.44 on revenue of $3 billion, virtually on target with analysts’ estimates of $0.43 EPS and revenue of $2.97 billion. Despite having earnings that were not a disappointment like so many other companies, that is not even the most interesting thing about KBR’s announcement.

KBR has no real long-term debt. Zero. Zip. Nada. That’s pretty unusualfor a company that makes about $10 billion a year in revenue. How dothey do that in today’s environment? Cash flow from operations totaled$1 million (that’s right, just $1 million), while the company paid $498million in cash for acquisitions and $27 million in cash for capitalexpenditures. KBR also spent $196 million in cash in a stock buyback.All told, the company burned $751 million in cash during the thirdquarter, and has $1.11 billion left in the bank.

KBR’s stock closed yesterday at $14.07, more than 68% off its 52-week high.  Shares are also indicated up about 2% pre-market.

Paul Ausick
October 31, 2008