KBR President & CEO Comments on LOGCAP Future

Stuart Bradie, KBR President & Chief Executive Officer made some remarks about LOGCAP performance in a recent earnings conference call.

With recent events, there is, of course, an uptick across both our Defense & Intel business. We can’t really talk too much about this work and our Readiness & Sustainment business, where we support both the U.S. and the European commands for LOGCAP and the various prepositioning missions for equipment. It is, of course, too early to tell the extent of a longer-term enduring mission but clearly, the U.S. and NATO have an increasingly important role to play over the longer term given the recent Russian aggression. Internationally, the outlook is similar with heightened activity across all our key sectors.

Organically. And I think that’s very telling and aligned with our sort of long-range target. So we’re very pleased with that. And I mean that business, the R&S business, is obviously benefiting from — no one likes to benefit from difficult situations but the fact of the matter is economically, we’ve got an uptick in activity, both in the Defense & Intel business that we can’t talk too much about.

But obviously, in the R&S business, from the work we’re doing on LOGCAP, both in the U.S. and in, obviously, European Command, where there’s a lot of activity. And we also run, as you are aware, many of you are aware, the prepositioned stock contracts in the U.S. to get equipment ready for deployment. And there’s an uptick in activity there, as you would expect as well. So we don’t know how that’s going to play out through the course of the year. I mean certainly, we don’t see any short-term change in that. But is there going to be a longer-term enduring mission as NATO really starts to become — one thing that’s really happened here is that NATO is back, isn’t it?

I mean I think, under the previous administration, there was a lot of challenges around NATO. But certainly now, the importance of NATO and the relationship across the allies is front and center. So will there be an enduring mission? A betting person would probably say, yes, probably. What scale that is, what it looks like, we don’t know. But certainly, there’s been quite a bit of uptick in activity around that as we previously said and as you would expect.

QUESTION:
Just what is your expectation for the LOGCAP programs this year in terms of revenue year-over-year? Because you mentioned the 100 extra million of bookings and related to Poland. But I’m just curious like what is — if we aggregated it all, sort of what is European Command incrementally year-to-year? And how does that compare to all-in LOGCAP year-to-year?

Mark Sopp, KBR EVP and Chief Financial Officer:

Even with the uptick in EUCOM, given what is happening in that theater, we may not achieve the level of revenues we had in 2020 from the collective LOGCAP which demonstrates how we’ve repivoted our business to other areas so successfully through all the things we’ve talked about. So the decay days of the Iraq contribution, we won’t get there. This is ex-OAW, of course which was very special.

But the Command continues to be — it’s basically ramped up and fairly steady, absent extraordinary events which can always happen but that’s steady where you’d expect it to be. European Command is, of course, having some increased activity today and it’s very difficult to predict how big and how long that will last. It’s fairly modest through year-to-date. It’s not a major game changer like OAW was or some of our past LOGCAP activities but it’s vitally important to the mission as is always the case and they’re doing a great job supporting there.