KBR‘s (NYSE: KBR) move to purchase U.S. government engineering and technical services contractor Wyle Laboratories for $570 million aims to add a pipeline of domestic research-and-development services to federal agencies as a complement to work carried out overseas, KBR CEO Stuart Bradie told investors Monday.
Bradie said a majority of KBR’s government services revenue is based at international locations in support of defense and other federal agencies, while more than half of Wyle’s contracts are for R&D, test and evaluation services.
“We wanted to expand our government services into high-end technical areas and gain access to new sources of U.S. government funding, ” Bradie said.
“We’ll have two very different sources of revenue to de-risk the government side of our business. There’s good visibility in the government side because of lengths in procurement cycles and we can see what’s down the tunnel 12-to-24 months out.”
Wyle’s revenue also includes professional support services and health-related studies for agencies, according to investor slides from KBR.
KBR recorded $663 million in 2015 revenue for its government services segment and Wyle’s full-year sales totaled $836 million.
Nearly 80 percent of Wyle’s 3, 800 employees hold security clearances and support what Bradie called “high-value contracts” with agencies in the U.S., a component of the deal he said contributes an increased “customer intimacy” to KBR in the federal market.
“There’s often strong technical element you have to demonstrate and program management or logistical expertise you have to bring to bear, ” Bradie said.
Shares in KBR were down 6 cents — or 0.42 percent — to $14.21 as of 12:56 p.m. Eastern time.