KBR, Inc. KBR has inked a deal with Johnson Matthey (JM) to license a groundbreaking ammonia-methanol co-production process. Notably, this co-production process will combine KBR's proprietary PURIFIER ammonia process and JM's methanol process.
Encouragingly, the new plant will be able to reduce their capital expenditures (CAPEX) and lower operating expenses (OPEX). Synergies from the deal will aid KBR and JM in optimizing CAPEX and OPEX while maintaining safety, flexibility, as well as reliability.
KBR’s Technology Solutions’ president, Doug Kelly said "KBR's ammonia technology is known for its lowest energy consumption resulting in reduced carbon footprint, highest reliability and safety and outstanding financial performance."
Need for the Technology
Together, methanol and ammonia are essential for continued energy and fuels transition to a greener world. Primarily, ammonia is used to produce urea for fertilizers. Methanol, together with ammonia’s derivative products, is used to make formaldehyde, acrylic plastic, synthetic fabrics, adhesives, paints, and other products in pharmaceuticals as well as agrichemicals.
The new process will provide a comprehensive solution to customers, with enhanced asset optimization, cost savings and reduced environmental impact.
KBR's Integrated & Innovative Solutions Bode Well
KBR has been delivering innovative and reliable process technologies over the past several years. It has licensed, engineered or constructed more than 244 ammonia plants throughout the world since 1960. Importantly, JM has also been delivering leading technology and catalysts to the methanol industry, as well as licensed more than 100 grassroots methanol plants over the past 45 years.
KBR has a diversified business portfolio, which helps it combat cyclicality associated with any single market. Presently, the company has been banking on strength of the Government Solutions (GS) and Technology Solutions (TS) segments to optimize growth potential. Its TS segment has been delivering various technologies to help refinery and petrochemical plants offer optimum production, as well as lower operating costs over the past several years.
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Shares of KBR have outperformed the industry in the past one month. Its shares have performed pretty well owing to the ongoing contract wins, acquisitions and robust organic growth. As of Jun 30, 2020, its total backlog came in at $12.59 billion, of which GS booked $10.52 billion and TS accounted for $561 million. Government and Technology units had a book-to-bill ratio of 1 and 1.5 as of the same date, respectively, excluding the impact of long-term PFIs.
We believe that the recent contract wins will further boost KBR’s performance. Moreover, its recent agreement with Arlington Capital Partners to acquire Centauri, LLC — a leading independent provider of high-end space, directed energy and other advanced technology solutions — will boost revenues, given attractive and growing federal sectors aligned with DoD and intelligence priorities that benefit from bipartisan support.
Zacks Rank
KBR — which shares space with Fluor Corporation FLR, Jacobs Engineering Group Inc. J and AECOM ACM in the same industry — currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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