KBR Wins Contract Extension For Qatar's Expressway Program

Houston-based technology, engineering, procurement and construction company KBR, Inc. (NYSE:KBR) has secured a contract extension with Qatar's Expressway Program, and will continue its role as a program management consultant for the project for the next three years.

The extension, awarded by Qatar's Public Works Authority's (Ashghal) program management contractor, is valued at over $185 million.This revenue was included in the first quarter 2016 backlog of unfilled orders for KBR's Government Services Business.

What the Contract Entails

Under the contract, KBR will deliver full program management expertise on the project, which intends to build new east-west and north-south links across the country. KBR won the initial award for the project in 2010, and since then, the program has developed into one of the largest transport infrastructure programs across the world.

The expressway includes strategic and well-coordinated road networks that link important regions across the country, including airports, ports, industrial areas, business, residential and tourism districts.In addition to increasing road capacity to cater to future demand, the project will support the expanding social and economic development of the country.

KBR’s responsibilities as program manager will include overseeing supervision consultants, construction contractors and design consultants for both new roads and road network upgrades.

The contract expands KBR’s footprint in the Gulf region.

KBR, Poised for Growth

KBR’s Government Services business has been performing strongly, with revenues soaring 35.5% year over year in the last reported quarter. Solid performance of the base operating contracts and task orders supporting the U.S. Military have been adding to the momentum of the unit.

Furthermore, KBR recently expanded its government services capabilities and service offerings by acquiring California-based Wyle Inc., a provider of specialized engineering and other services. The deal will deepen KBR’s relationships with U.S. government clients and expand its footprint in the space. Moreover, over the long term, Wyle is set to unlock synergistic opportunities in markets where KBR can combine its large-scale logistics and project management capabilities with Wyle's expert technical capabilities.

The deal is in sync with KBR’s strategy of expanding and directing its government services capabilities and service offerings into more lucrative, complementary market segments. These high growth markets are more specialized, and generate long-term annuity type revenues with superior differentiation and higher margins.

Such deals will propel strong growth in KBR’s Government Services business and will likely boost its operations significantly.

KBR currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader industrial products sector include Eaton Corporation plc (NYSE:ETN) , Powell Industries, Inc. (NASDAQ:POWL) and ESCO Technologies Inc. (NYSE:ESE) , each holding a Zacks Rank #2 (Buy).