KBR, Inc. Aktienkurs
Vergleich mit Peer Group
📊 Peer Group
📈 Was ist das?
Die Peer Group sind die Unternehmen mit dem ähnlichsten Geschäftsmodell. Sie dienen als Vergleichsmaßstab, um eine Aktie einzuordnen.
🧮 Wie wird sie ausgewählt?
Nach Ähnlichkeit des Geschäftsmodells, also Unternehmen aus derselben Branche, mit vergleichbaren Produkten und einer ähnlichen Kundengruppe. Nur so vergleichst du Äpfel mit Äpfeln.
🏛️ Wofür ist sie wichtig?
Ob eine Aktie günstig oder teuer ist, lässt sich am ehesten im Vergleich beurteilen. Ein KGV von 18 oder ein EV/FCF von 20 wirkt je nach Maßstab günstig oder teuer. Die Peer Group liefert dabei den treffsichersten Maßstab: Unternehmen mit ähnlichem Geschäftsmodell, die denselben Bedingungen unterliegen.
🎯 Was bedeutet das für Anleger?
Liegt eine Kennzahl unter dem Peer-Durchschnitt, ist die Aktie relativ günstiger bewertet, über dem Durchschnitt entsprechend teurer. Ein Abschlag zur Peer Group kann eine Chance sein, aber auch einen Grund haben (zum Beispiel geringeres Wachstum). Der Vergleich ist ein Startpunkt, kein Urteil.
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📘 Marktkapitalisierung
📈 Was ist das?
Die Marktkapitalisierung zeigt, wie viel ein Unternehmen laut Börse aktuell wert ist.
🧮 Wie wird es berechnet?
🏛️ Wofür ist es wichtig?
Sie hilft Unternehmen in Größenklassen (Large, Mid, Small Cap) einzuordnen und gibt Hinweise auf Marktmacht und Stabilität.
🧮 Berechnung
🎯 Was bedeutet das für Anleger?
- Große Unternehmen gelten als stabiler, zahlen oft Dividenden, wachsen aber langsamer.
- Kleine Firmen können stärker wachsen, sind aber schwankungsanfälliger.
- Die Marktkapitalisierung ist ein guter Indikator für Unternehmensgröße, aber kein Maß für Unter- oder Überbewertung.
📘 Enterprise Value (Unternehmenswert)
📈 Was ist das?
Der Enterprise Value (EV) zeigt, was ein Unternehmen tatsächlich kostet, wenn man es komplett übernehmen würde – inklusive Schulden und abzüglich Cash.
🧮 Wie wird es berechnet?
(= Marktkapitalisierung + Nettoverschuldung)
🏛️ Wofür ist es wichtig?
Der EV ist eine realistischere Bewertungsbasis als die Marktkapitalisierung, da er die Kapitalstruktur berücksichtigt. Er ist Grundlage für Kennzahlen wie EV/FCF oder EV/Sales.
🧮 Berechnung
🎯 Was bedeutet das für Anleger?
- Der Enterprise Value zeigt, was ein Unternehmen tatsächlich wert ist – unabhängig davon, wie es finanziert ist.
- Er ist besonders wichtig für professionelle Investoren, da er eine objektivere Grundlage für Bewertungsvergleiche bietet als die Marktkapitalisierung allein.
- Ein Unternehmen mit hoher Verschuldung erscheint im EV teurer, eines mit viel Cash günstiger – auch wenn sie an der Börse gleich viel wert sind.
📘 Nettoverschuldung
📈 Was ist das?
Die Nettoverschuldung zeigt, wie viele Schulden nach Abzug des verfügbaren Cashs tatsächlich verbleiben.
🧮 Wie wird es berechnet?
🏛️ Wofür ist es wichtig?
Sie zeigt, wie stark ein Unternehmen von Fremdkapital abhängig ist – und wie gut es in der Lage ist, seine Schulden kurzfristig zu bedienen.
🧮 Berechnung
🎯 Was bedeutet das für Anleger?
- Eine niedrige oder negative Nettoverschuldung bedeutet hohe finanzielle Stabilität.
- Unternehmen mit viel Cash und geringer Verschuldung sind besser gerüstet für Krisen.
- Eine hohe Nettoverschuldung erhöht das Risiko – besonders bei steigenden Zinsen oder konjunkturellen Schwächen.
📘 Cash
📈 Was ist das?
Der Cashbestand zeigt, wie viele liquide Mittel einem Unternehmen sofort zur Verfügung stehen.
🧮 Wie wird es berechnet?
🏛️ Wofür ist es wichtig?
Er gibt Auskunft über die finanzielle Flexibilität: Ein hoher Cashbestand ermöglicht Investitionen, Rückkäufe oder Krisenresistenz.
🧮 Berechnung
🎯 Was bedeutet das für Anleger?
- Ein hoher Cashbestand zeigt finanzielle Stärke und Handlungsspielraum.
- Cash kann für Investitionen, Schuldentilgung oder Aktienrückkäufe genutzt werden.
- Allerdings: Zu viel ungenutztes Kapital kann auch auf mangelnde Investitionsideen hinweisen.
📘 Anzahl ausstehender Aktien
📈 Was ist das?
Die Anzahl ausstehender Aktien gibt an, wie viele Aktien eines Unternehmens aktuell im Umlauf sind und von Investoren gehalten werden.
🧮 Wie wird es berechnet?
🏛️ Wofür ist es wichtig?
Sie ist die Grundlage für viele Kennzahlen wie Gewinn je Aktie (EPS), Marktkapitalisierung oder KGV.
🧮 Berechnung
🎯 Was bedeutet das für Anleger?
- Je weniger Aktien im Umlauf sind, desto höher fällt z. B. der Gewinn je Aktie aus – wichtig für Bewertung und Dividendenrendite.
- Aktienrückkäufe verringern die Anzahl ausstehender Aktien – und steigern den Wert je Aktie.
- Kapitalerhöhungen haben den gegenteiligen Effekt: mehr Aktien → Verwässerung der bestehenden Anteile.
📘 Kurs-Gewinn-Verhältnis (KGV)
📈 Was ist das?
Das KGV zeigt, wie oft der Gewinn pro Aktie im aktuellen Aktienkurs enthalten ist – also wie „teuer“ eine Aktie im Verhältnis zum Gewinn ist.
🧮 Wie wird es berechnet?
🏛️ Wofür ist es wichtig?
Das KGV gehört zu den bekanntesten Bewertungskennzahlen. Es hilft Anlegern einzuschätzen, ob eine Aktie im Vergleich zu ihrem Gewinn eher günstig oder teuer erscheint.
🧮 Berechnung
📊 KGV (TTM) = bezogen auf den Gewinn der letzten 12 Monate (Trailing Twelve Months):🎯 Was bedeutet das für Anleger?
- Ein niedriges KGV kann auf eine günstige Bewertung hindeuten – oder auf Probleme im Geschäftsmodell.
- Ein hohes KGV kann Wachstumserwartungen widerspiegeln – oder eine überbewertete Aktie.
📘 Kurs-Umsatz-Verhältnis (KUV)
📈 Was ist das?
Das KUV zeigt, wie viel Anleger für 1 € Umsatz eines Unternehmens zahlen – unabhängig vom Gewinn.
🧮 Wie wird es berechnet?
🏛️ Wofür ist es wichtig?
Das KUV ist besonders bei wachstumsstarken oder noch nicht profitablen Unternehmen hilfreich. Es zeigt, wie hoch der Umsatz an der Börse bewertet wird.
🧮 Berechnung
Marktkapitalisierung = 4,35 Mrd. $ | Umsatz (TTM) = 7,72 Mrd. $
Marktkapitalisierung = 4,35 Mrd. $ | Umsatz erwartet = 8,61 Mrd. $
🎯 Was bedeutet das für Anleger?
- Ein niedriges KUV kann auf Unterbewertung hindeuten – oder auf schwache Margen.
- Ein hohes KUV kann hohe Erwartungen widerspiegeln – oder übermäßigen Optimismus.
- Besonders sinnvoll bei Wachstumsunternehmen, bei denen der Gewinn oder Free Cashflow (noch) keine Aussagekraft hat.
📘 Unternehmenswert zu Umsatz (EV/Sales)
📈 Was ist das?
EV/Sales zeigt, wie viel Anleger für 1 € Umsatz eines Unternehmens zahlen, wenn man auch Schulden und Cash berücksichtigt – es ist eine kapitalstrukturbereinigte Version des KUV.
🧮 Wie wird es berechnet?
🏛️ Wofür ist es wichtig?
Diese Kennzahl eignet sich besonders für den Vergleich von Unternehmen mit unterschiedlicher Verschuldung – sie zeigt, wie teuer ein Unternehmen tatsächlich im Verhältnis zum Umsatz ist.
🧮 Berechnung
Enterprise Value = 6,59 Mrd. $ | Umsatz (TTM) = 7,72 Mrd. $
Enterprise Value = 6,59 Mrd. $ | Umsatz erwartet = 8,61 Mrd. $
🎯 Was bedeutet das für Anleger?
- EV/Sales ist neutral gegenüber der Kapitalstruktur und eignet sich gut für Unternehmensvergleiche.
- Ein niedriges Verhältnis kann auf eine günstig bewertete Aktie hindeuten – ein hohes Verhältnis auf hohe Erwartungen oder Überbewertung.
- Besonders nützlich bei wachstumsstarken, noch nicht profitablen Firmen.
📘 Unternehmenswert zu Free Cashflow (EV/FCF)
📈 Was ist das?
EV/FCF zeigt, wie viele Jahre es dauern würde, bis ein Unternehmen seinen Unternehmenswert durch freien Cashflow „zurückverdient”.
🧮 Wie wird es berechnet?
🏛️ Wofür ist es wichtig?
Diese Kennzahl hilft, Unternehmen auf Basis ihrer tatsächlichen Cash-Erträge zu bewerten – unabhängig von Bilanzierungsregeln oder buchhalterischem Gewinn.
🧮 Berechnung
🎯 Was bedeutet das für Anleger?
- Ein niedriges EV/FCF deutet auf eine günstige Bewertung bei starker Cashgenerierung hin.
- Ein hohes EV/FCF kann entweder auf Optimismus oder auf temporär schwachen Cashflow hindeuten.
- Besonders hilfreich bei reifen, profitablen Unternehmen mit stabilen Cashflows.
📘 Kurs-Buchwert-Verhältnis (KBV)
📈 Was ist das?
Das KBV zeigt, wie hoch der Marktwert eines Unternehmens im Verhältnis zu seinem bilanziellen Eigenkapital ist.
🧮 Wie wird es berechnet?
🏛️ Wofür ist es wichtig?
Das KBV ist besonders bei Substanzwerten (z. B. Banken, Industrie) relevant. Es hilft Anlegern zu erkennen, ob ein Unternehmen unter oder über seinem buchhalterischen Vermögen bewertet ist.
🧮 Berechnung
🎯 Was bedeutet das für Anleger?
- Ein KBV unter 1 kann auf Unterbewertung oder schwache Rentabilität hindeuten.
- Ein KBV über 1 zeigt, dass der Markt dem Unternehmen Mehrwert über den Buchwert hinaus zuschreibt (z. B. Marken, Patente, Wachstum).
- Das KBV eignet sich besonders gut für Unternehmen mit stabilen, materiellen Vermögenswerten.
📘 Dividende je Aktie
📈 Was ist das?
Die Dividende je Aktie zeigt, wie viel Geld ein Unternehmen pro Aktie an seine Aktionäre ausschüttet – typischerweise jährlich oder quartalsweise.
🧮 Wie wird es berechnet?
🏛️ Wofür ist es wichtig?
Sie ist die absolute Größe der Auszahlung je Aktie – wichtig für alle, die regelmäßige Erträge suchen oder Dividendenstrategien verfolgen.
🧮 Berechnung
🎯 Was bedeutet das für Anleger?
- Eine stabile oder wachsende Dividende je Aktie ist oft ein Zeichen für ein solides Geschäftsmodell.
- Die Dividende je Aktie allein sagt aber nichts über die Rendite – dafür ist auch der Aktienkurs relevant (→ Dividendenrendite).
- Langfristig steigende Dividenden sind oft ein sehr gutes Merkmal (z. B. Dividenden-Aristokraten).
📘 Dividendenrendite
📈 Was ist das?
Die Dividendenrendite zeigt, wie hoch die Dividende eines Unternehmens im Verhältnis zum Aktienkurs ist.
🧮 Wie wird es berechnet?
🏛️ Wofür ist es wichtig?
Sie hilft dabei, Dividendenaktien vergleichbar zu machen – unabhängig vom absoluten Auszahlungsbetrag.
🧮 Berechnung
🎯 Was bedeutet das für Anleger?
- Eine stabile Dividendenrendite kann auf verlässliche Ausschüttungen hinweisen.
- Ein Vergleich der 1J- und 5J-Rendite hilft zu erkennen, ob das Dividendenwachstum mit dem Kurswachstum Schritt hält.
- Eine niedrige Rendite ist nicht zwingend negativ – sie kann auf starkes Kurswachstum hindeuten.
📘 Dividendenwachstum
📈 Was ist das?
Das Dividendenwachstum zeigt, wie stark ein Unternehmen seine Dividende je Aktie über die Zeit gesteigert hat.
🧮 Wie wird es berechnet?
5J: durchschnittliche jährliche Wachstumsrate (CAGR)
🏛️ Wofür ist es wichtig?
Stetig steigende Dividenden gelten als Zeichen für finanzielle Stärke und Aktionärsorientierung – besonders interessant für langfristige Investoren.
🧮 Berechnung
🎯 Was bedeutet das für Anleger?
- Ein stabiles Dividendenwachstum ist ein Zeichen nachhaltiger Ertragskraft.
- Ein hohes Dividendenwachstum kann ein erheblicher Hebel deiner Rendite sein:
- Wenn ein Unternehmen z. B. 1 € Dividende zahlt und diese über 5 Jahre jährlich um 15 % erhöht, bekommst du im 5. Jahr bereits 2 € je Aktie – doppelt so viel wie zu Beginn!
📘 Ausschüttungsquote (Payout)
📈 Was ist das?
Die Ausschüttungsquote zeigt, wie viel Prozent des Unternehmensgewinns (pro Aktie) als Dividende an die Aktionäre ausgeschüttet wird.
🧮 Wie wird es berechnet?
🏛️ Wofür ist es wichtig?
Die Quote hilft einzuschätzen, ob eine Dividende auf Dauer tragfähig ist – besonders im Verhältnis zum erzielten Gewinn.
🧮 Berechnung
🎯 Was bedeutet das für Anleger?
- Eine niedrige Ausschüttungsquote bedeutet: Das Unternehmen behält einen größeren Teil des Gewinns für Investitionen – typisch für Wachstumsunternehmen.
- Eine moderate Quote (z. B. 25–50 %) steht oft für ein gesundes Gleichgewicht zwischen Ausschüttung und Zukunftsinvestitionen.
- Hohe Ausschüttungsquoten können attraktiv wirken, sind aber riskanter, wenn die Gewinne schwanken oder sinken.
📘 Dividendensteigerungen in Folge (Erhöhungen)
📈 Was ist das?
Diese Kennzahl zeigt, wie viele Jahre in Folge ein Unternehmen seine Dividende pro Aktie erhöht hat – ohne Kürzung oder Aussetzung.
🧮 Wie wird es berechnet?
🏛️ Wofür ist es wichtig?
Ein langer Track Record kontinuierlicher Erhöhungen spricht für Verlässlichkeit, solide Finanzen und aktionärsfreundliche Unternehmenspolitik.
🎯 Was bedeutet das für Anleger?
- Ein langer Zeitraum mit Dividendensteigerungen stärkt das Vertrauen – besonders in Krisenzeiten.
- Solche Unternehmen gelten als verlässlich und planbar für Einkommensinvestoren.
- Je länger die Serie, desto stärker das Commitment gegenüber den Aktionären.
📘 Umsatz
📈 Was ist das?
Der Umsatz zeigt, wie viel ein Unternehmen insgesamt mit seinen Produkten und Dienstleistungen verdient – also den Bruttoerlös vor Abzug von Kosten.
🧮 Wie wird es berechnet?
🏛️ Wofür ist es wichtig?
Der Umsatz ist eine der zentralen Kennzahlen zur Einschätzung der Unternehmensgröße, Marktstellung und Wachstumskraft.
🧮 Berechnung
🎯 Was bedeutet das für Anleger?
- Ein wachsender Umsatz zeigt eine steigende Nachfrage und kann ein guter Frühindikator für Gewinnsteigerungen sein.
- Vergleiche von aktuellem und erwartetem Umsatz geben Hinweise auf das Marktumfeld und Analystenerwartungen.
- Wichtig: Starker Umsatz allein genügt nicht – auch Margen und Profitabilität zählen.
📘 EBITDA
📈 Was ist das?
EBITDA steht für „Earnings Before Interest, Taxes, Depreciation and Amortization“ – also Gewinn vor Zinsen, Steuern und Abschreibungen. Es zeigt das operative Ergebnis eines Unternehmens, bereinigt um bilanztechnische und finanzierungsbedingte Effekte.
🧮 Wie wird es berechnet?
🏛️ Wofür ist es wichtig?
EBITDA ist eine verbreitete Kennzahl zur Beurteilung der operativen Leistungsfähigkeit – insbesondere bei kapitalintensiven Unternehmen oder im internationalen Vergleich.
🧮 Berechnung
🎯 Was bedeutet das für Anleger?
- Ein hohes oder wachsendes EBITDA spricht für starke operative Erträge – unabhängig von Bilanzierung oder Steuerlast.
- EBITDA ist besonders nützlich, um Unternehmen branchenübergreifend zu vergleichen.
- Wichtig: EBITDA ist keine offizielle Gewinnkennzahl – Abschreibungen und Finanzierungskosten werden ausgeklammert.
📘 EBIT
📈 Was ist das?
EBIT steht für „Earnings Before Interest and Taxes“ – also Gewinn vor Zinsen und Steuern. Es zeigt das operative Ergebnis eines Unternehmens nach Abschreibungen, aber vor Finanzierungs- und Steueraufwand.
🧮 Wie wird es berechnet?
🏛️ Wofür ist es wichtig?
EBIT ist eine zentrale Kennzahl zur Beurteilung der Profitabilität aus dem Kerngeschäft – unabhängig von Kapitalstruktur oder Steuersystem.
🧮 Berechnung
🎯 Was bedeutet das für Anleger?
- Ein hohes EBIT deutet auf ein profitables Kerngeschäft hin – vor Zinslasten oder steuerlichen Effekten.
- Es erlaubt objektivere Vergleiche zwischen Unternehmen mit unterschiedlicher Finanzierung.
- Im Vergleich mit EBITDA zeigt EBIT bereits den Einfluss von Abschreibungen auf das operative Ergebnis.
📘 Nettogewinn
📈 Was ist das?
Der Nettogewinn ist der verbleibende Jahresüberschuss (oder -fehlbetrag) eines Unternehmens – nach Abzug aller Kosten, Steuern, Zinsen und Abschreibungen
🧮 Wie wird es berechnet?
🏛️ Wofür ist es wichtig?
Der Nettogewinn ist die zentrale Erfolgskennzahl – er zeigt, wie profitabel ein Unternehmen nach allen Kosten tatsächlich arbeitet.
🧮 Berechnung
🎯 Was bedeutet das für Anleger?
- Ein steigender Nettogewinn zeigt, dass das Unternehmen effizient wirtschaftet – trotz aller Kosten.
- Die Entwicklung des Gewinns beeinflusst z. B. direkt das KGV und weitere Kennzahlen.
- Im Zeitverlauf lässt sich ablesen, wie stabil und profitabel ein Geschäftsmodell wirklich ist.
📘 Free Cashflow (FCF)
📈 Was ist das?
Der Free Cashflow gibt Aufschluss über die echte finanzielle Stärke eines Unternehmens – unabhängig von Bilanzierungsregeln. Er zeigt, wie viel Spielraum für Dividenden, Aktienrückkäufe oder Schuldenabbau besteht.
🧮 Wie wird es berechnet?
🏛️ Wofür ist es wichtig?
FCF reflects a company’s real financial strength – regardless of accounting profits. It shows how much flexibility a company has for dividends, share buybacks, or debt reduction.
🧮 Berechnung
🎯 Was bedeutet das für Anleger?
- Ein hoher Free Cashflow bedeutet, dass ein Unternehmen echte Finanzkraft besitzt – unabhängig vom bilanzierten Gewinn.
- Er ist oft die solideste Grundlage für nachhaltige Dividenden und Aktienrückkäufe.
- Sinkender FCF kann ein Warnsignal sein – auch wenn der Gewinn stabil aussieht.
📘 Umsatzwachstum
📈 Was ist das?
Das Umsatzwachstum zeigt, wie stark sich die Erlöse eines Unternehmens im Vergleich zum Vorjahr verändert haben – tatsächlich (TTM) und auf Prognosebasis (erwartet).
🧮 Wie wird es berechnet?
Erwartet = (Umsatz erwartet ÷ Umsatz Vorjahr − 1) × 100
Erwartetes Wachstum basiert auf Analystenschätzungen für das laufende Geschäftsjahr.
🏛️ Wofür ist es wichtig?
Ein wachsender Umsatz ist ein zentrales Signal für steigende Nachfrage, Geschäftsausweitung und Marktanteilsgewinne – besonders bei Wachstumsunternehmen.
🧮 Berechnung
🎯 Was bedeutet das für Anleger?
- Wachstum ist der Motor langfristiger Wertsteigerung – besonders bei Technologie- und Wachstumsaktien.
- Wichtig ist nicht nur das aktuelle Wachstum, sondern auch dessen Nachhaltigkeit.
- Prognosen zeigen, ob Analysten weiteres Potenzial erwarten – oder eine Verlangsamung.
📘 EBITDA-Wachstum
📈 Was ist das?
Das EBITDA-Wachstum zeigt, wie stark das operative Ergebnis eines Unternehmens vor Zinsen, Steuern und Abschreibungen im Vergleich zum Vorjahr gestiegen oder gesunken ist.
🧮 Wie wird es berechnet?
Erwartet = (erwartetes EBITDA ÷ EBITDA Vorjahr − 1) × 100
Erwartetes Wachstum basiert auf Analystenschätzungen für das laufende Geschäftsjahr.
🏛️ Wofür ist es wichtig?
Ein steigendes EBITDA ist ein Zeichen für verbesserte operative Ertragskraft – unabhängig von Finanzierungsstruktur oder Abschreibungen.
🧮 Berechnung
🎯 Was bedeutet das für Anleger?
- Starkes EBITDA-Wachstum signalisiert operative Effizienz und Skalierung – besonders relevant in Wachstumsphasen.
- EBITDA-Wachstum ist ein Frühindikator für Margen- und Gewinnentwicklung – sollte aber stets im Zusammenhang mit Umsatz und EBIT betrachtet werden.
📘 EBIT Wachstum
📈 Was ist das?
Das EBIT-Wachstum zeigt, wie stark das operative Ergebnis eines Unternehmens (nach Abschreibungen, aber vor Zinsen und Steuern) im Vergleich zum Vorjahr gewachsen ist.
🧮 Wie wird es berechnet?
Erwartet = (erwartetes EBIT ÷ EBIT Vorjahr − 1) × 100
Erwartetes Wachstum basiert auf Analystenschätzungen für das laufende Geschäftsjahr.
🏛️ Wofür ist es wichtig?
Das EBIT-Wachstum ist ein direkter Indikator für die wirtschaftliche Entwicklung des operativen Geschäfts – unter Berücksichtigung der Kapitalintensität (Abschreibungen).
🧮 Berechnung
🎯 Was bedeutet das für Anleger?
- Steigendes EBIT signalisiert wachsende operative Rentabilität – auch unter Berücksichtigung von Abschreibungen.
- Das EBIT-Wachstum ist ein wichtiges Maß zur Beurteilung von Geschäftsmodellen mit hohen Investitionskosten.
- Im Zusammenspiel mit Umsatz- und EBITDA-Wachstum ergibt sich ein umfassendes Bild zur operativen Entwicklung.
📘 Nettogewinn-Wachstum
📈 Was ist das?
Das Nettogewinn-Wachstum zeigt, wie stark der Jahresüberschuss eines Unternehmens gegenüber dem Vorjahr gestiegen oder gesunken ist – sowohl tatsächlich (TTM) als auch auf Basis von Prognosen (erwartet).
🧮 Wie wird es berechnet?
Erwartet = (erwarteter Nettogewinn ÷ Nettogewinn Vorjahr − 1) × 100
Der erwartete Wert basiert auf Analystenschätzungen für das laufende Geschäftsjahr.
🏛️ Wofür ist es wichtig?
Der Gewinn ist die entscheidende Ergebnisgröße für ein Unternehmen. Ein wachsender Nettogewinn deutet auf steigende Effizienz, stabile Kostenkontrolle und nachhaltige Ertragskraft hin.
🧮 Berechnung
🎯 Was bedeutet das für Anleger?
- Wachsender Nettogewinn stärkt die Bewertung, Dividendenfähigkeit und Kursfantasie.
- Stagnierender oder rückläufiger Gewinn trotz Umsatzwachstum kann auf Margendruck hinweisen.
📘 Free Cashflow-Wachstum
📈 Was ist das?
Das Free-Cashflow-Wachstum zeigt, wie sich der freie Mittelzufluss eines Unternehmens im Vergleich zum Vorjahr verändert hat – also der Betrag, der nach allen operativen Ausgaben und Investitionen übrig bleibt.
🧮 Wie wird es berechnet?
🏛️ Wofür ist es wichtig?
Free Cashflow ist der echte, verfügbare Geldzufluss. Wachstum in diesem Bereich ist ein Zeichen für finanzielle Stärke und steigende Flexibilität bei Dividenden, Rückkäufen oder Investitionen.
🧮 Berechnung
🎯 Was bedeutet das für Anleger?
- Sinkender Free Cashflow kann auf steigende Investitionen, höhere Kosten oder stagnierende operative Erträge hindeuten.
- Besonders bei Dividendenwerten ist das FCF-Wachstum wichtig – denn Dividenden werden letztlich aus dem verfügbaren Cash gezahlt.
- Ein negativer Trend sollte genauer analysiert werden – er ist nicht zwangsläufig schlecht, aber potenziell ein Warnsignal.
📘 Bruttomarge
📈 Was ist das?
Die Bruttomarge zeigt, wie viel vom Umsatz nach Abzug der direkten Herstellungskosten (Material, Produktion) als Bruttogewinn übrig bleibt – also der „Rohgewinn“ eines Unternehmens.
🧮 Wie wird es berechnet?
Auch: Bruttomarge = Bruttogewinn ÷ Umsatz × 100
🏛️ Wofür ist es wichtig?
Die Bruttomarge gibt Aufschluss über die Profitabilität eines Produkts oder Geschäftsmodells vor Fixkosten, Steuern und Zinsen. Sie zeigt, wie effizient ein Unternehmen produzieren oder einkaufen kann.
🧮 Berechnung
🎯 Was bedeutet das für Anleger?
- Eine hohe Bruttomarge deutet auf starke Preissetzungsmacht und effiziente Herstellung hin.
- Sinkende Bruttomargen können auf Kostensteigerungen oder Preisdruck hindeuten.
- Besonders im Vergleich zu Wettbewerbern liefert die Bruttomarge wertvolle Einblicke in die Geschäftsqualität.
📘 EBITDA-Marge
📈 Was ist das?
Die EBITDA-Marge zeigt, wie viel vom Umsatz als operativer Gewinn vor Zinsen, Steuern und Abschreibungen (EBITDA) übrig bleibt. Sie misst die operative Effizienz – ohne Verzerrungen durch Finanzierung oder Buchwerte.
🧮 Wie wird es berechnet?
🏛️ Wofür ist es wichtig?
Die EBITDA-Marge hilft zu verstehen, wie viel operativer Gewinn ein Unternehmen aus jedem Euro Umsatz erzielt – unabhängig von Kapitalstruktur oder steuerlichem Umfeld.
🧮 Berechnung
🎯 Was bedeutet das für Anleger?
- Eine hohe EBITDA-Marge zeigt starke operative Ertragskraft – unabhängig von Bilanzierungseffekten.
- Die Marge ermöglicht gute Vergleiche zwischen Unternehmen und Branchen.
- Ein stabiler oder wachsender Wert kann auf effiziente Kostenkontrolle und Skalierbarkeit hindeuten.
📘 EBIT-Marge
📈 Was ist das?
Die EBIT-Marge zeigt, wie viel Prozent des Umsatzes als operativer Gewinn nach Abschreibungen, aber vor Zinsen und Steuern übrig bleiben.
🧮 Wie wird es berechnet?
🏛️ Wofür ist es wichtig?
Die EBIT-Marge misst die operative Ertragskraft eines Unternehmens unter Berücksichtigung der Kapitalintensität (z. B. Maschinen, Anlagen). Sie eignet sich gut zum Vergleich von Geschäftsmodellen mit unterschiedlich hohen Abschreibungen.
🧮 Berechnung
🎯 Was bedeutet das für Anleger?
- Eine hohe EBIT-Marge zeigt, dass ein Unternehmen auch nach Abschreibungen effizient arbeitet.
- Sie ist besonders relevant in kapitalintensiven Branchen.
- Langfristig stabile oder steigende Margen sind ein Zeichen wirtschaftlicher Stärke und Preissetzungsmacht.
📘 Nettomarge
📈 Was ist das?
Die Nettomarge zeigt, wie viel vom Umsatz am Ende als „Reingewinn“ übrig bleibt – also nach Abzug aller Kosten, Zinsen, Steuern und Abschreibungen.
🧮 Wie wird es berechnet?
🏛️ Wofür ist es wichtig?
Die Nettomarge gibt an, wie effizient ein Unternehmen über alle Stufen hinweg wirtschaftet. Sie zeigt, wie viel Gewinn tatsächlich je Euro Umsatz übrig bleibt.
🧮 Berechnung
🎯 Was bedeutet das für Anleger?
- Eine hohe Nettomarge zeigt, dass ein Unternehmen nicht nur operativ stark ist, sondern auch seine Finanzierung und Steuerbelastung im Griff hat.
- Vergleiche mit Wettbewerbern geben Einblicke in die wirtschaftliche Qualität.
- Sinkende Nettomargen trotz Umsatzwachstum können ein Warnsignal sein – etwa für steigende Kosten oder sinkende Effizienz.
📘 Free Cashflow Marge
📈 Was ist das?
Die Free-Cashflow-Marge zeigt, wie viel vom Umsatz nach Abzug aller operativen Ausgaben und Investitionen tatsächlich als freier Mittelzufluss übrig bleibt.
🧮 Wie wird es berechnet?
🏛️ Wofür ist es wichtig?
Diese Marge misst die echte Liquidität, die ein Unternehmen erwirtschaftet – unabhängig von Bilanzierungsregeln oder Abschreibungen. Sie ist besonders relevant für Dividenden, Rückkäufe und Investitionen.
🧮 Berechnung
🎯 Was bedeutet das für Anleger?
- Eine hohe Free-Cashflow-Marge zeigt, dass ein Unternehmen nachhaltig liquide Mittel erwirtschaftet.
- Sie ist ein starkes Signal für finanzielle Stabilität und Ausschüttungspotenzial.
- Wichtig ist der langfristige Trend – sinkende Werte können auf steigende Investitionen oder rückläufige operative Effizienz hindeuten.
📘 Eigenkapitalquote
📈 Was ist das?
Die Eigenkapitalquote zeigt, wie hoch der Anteil des Eigenkapitals an der Bilanzsumme eines Unternehmens ist – also wie stark es sich aus eigenen Mitteln finanziert.
🧮 Wie wird es berechnet?
🏛️ Wofür ist es wichtig?
Eine hohe Eigenkapitalquote steht für finanzielle Stabilität, Krisenfestigkeit und gute Bonität. Sie ist besonders relevant bei der Beurteilung der Verschuldung.
🧮 Berechnung
🎯 Was bedeutet das für Anleger?
- Eine hohe Eigenkapitalquote signalisiert finanzielle Stabilität – besonders in Krisenzeiten.
- Ein niedriger Wert kann auf ein höheres Risiko oder eine aggressive Verschuldung hinweisen.
- Wichtig: Die Eigenkapitalquote sollte immer gemeinsam mit der Eigenkapitalrendite betrachtet werden. Nur so lässt sich beurteilen, ob ein Unternehmen nicht nur solide, sondern auch effizient wirtschaftet.
📘 Eigenkapitalrendite (ROE)
📈 Was ist das?
Die Eigenkapitalrendite zeigt, wie effizient ein Unternehmen mit dem Kapital seiner Aktionäre arbeitet – also wie viel Gewinn es pro Euro Eigenkapital erwirtschaftet.
🧮 Wie wird es berechnet?
🏛️ Wofür ist es wichtig?
Die Eigenkapitalrendite ist eine zentrale Rentabilitätskennzahl. Sie hilft Anlegern zu erkennen, ob das Unternehmen eine attraktive Verzinsung auf das eingesetzte Eigenkapital erwirtschaftet.
🧮 Berechnung
🎯 Was bedeutet das für Anleger?
- Eine hohe Eigenkapitalrendite spricht für ein starkes, effizientes Geschäftsmodell.
- Besonders interessant ist sie bei kapitalintensiven Firmen oder solchen mit hoher Eigenkapitalquote.
- Wichtig: Ein sehr hoher ROE kann auch auf hohe Schulden hinweisen – daher sollte sie immer im Kontext mit der Eigenkapitalquote betrachtet werden.
📘 Return on Capital Employed (ROCE)
📈 Was ist das?
ROCE misst die Gesamtrentabilität eines Unternehmens – also wie effizient es das eingesetzte Kapital (Eigen- und Fremdkapital) zur Gewinnerzielung nutzt.
🧮 Wie wird es berechnet?
Das eingesetzte Kapital ist das gesamte betriebsnotwendige Kapital, unabhängig von der Finanzierungsquelle.
🏛️ Wofür ist es wichtig?
ROCE eignet sich besonders gut für den Vergleich unterschiedlich finanzierter Unternehmen. Es zeigt, wie effektiv ein Unternehmen Kapital investiert – unabhängig von der Kapitalstruktur.
🧮 Berechnung
🎯 Was bedeutet das für Anleger?
- Ein hoher ROCE zeigt, dass ein Unternehmen sein Kapital effizient einsetzt – unabhängig davon, ob es durch Eigen- oder Fremdkapital finanziert ist.
- Je höher der ROCE im Vergleich zu ähnlichen Unternehmen, desto mehr Wert schafft das Unternehmen mit seinem investierten Kapital.
- Besonders wichtig ist der ROCE bei Firmen mit hohen Investitionen – z. B. in Industrie, Energie oder Infrastruktur.
📘 Return on Invested Capital (ROIC)
📈 Was ist das?
ROIC zeigt, wie effizient ein Unternehmen das Kapital investiert, das langfristig im operativen Geschäft gebunden ist – unabhängig davon, ob es aus Eigen- oder Fremdkapital stammt.
🧮 Wie wird es berechnet?
- NOPAT = „Net Operating Profit After Taxes“
- Investiertes Kapital = operatives Vermögen abzüglich nicht-verzinster Schulden
🏛️ Wofür ist es wichtig?
ROIC ist eine der präzisesten Kennzahlen zur Bewertung der Kapitalrendite – besonders im Vergleich zur Eigenkapitalrendite, weil es Verzerrungen durch Schulden vermeidet. Er zeigt, ob ein Unternehmen Mehrwert für alle Kapitalgeber schafft.
🧮 Berechnung
🎯 Was bedeutet das für Anleger?
- Ein hoher ROIC zeigt, wie gut ein Unternehmen mit dem tatsächlich investierten (betriebsnotwendigen) Kapital wirtschaftet.
- Im Unterschied zu ROCE wird nur Kapital betrachtet, das wirklich zur Finanzierung operativer Aktivitäten dient – und verzinst werden muss.
- Besonders hilfreich, um die Kapitalrendite von Unternehmen mit viel „überschüssigem“ Kapital oder zinsfreien Verbindlichkeiten realistisch zu vergleichen.
📘 Verschuldungsgrad (Leverage Ratio)
📈 Was ist das?
Der Verschuldungsgrad zeigt, wie stark ein Unternehmen durch verzinsliche Schulden (z. B. Kredite und Anleihen) im Verhältnis zum Eigenkapital finanziert ist.
🧮 Wie wird es berechnet?
🏛️ Wofür ist es wichtig?
Die Kennzahl hilft, das finanzielle Risiko und die Abhängigkeit von Fremdkapital zu beurteilen. Ein hoher Verschuldungsgrad kann die Eigenkapitalrendite steigern – birgt aber auch erhöhte Risiken bei Zinsanstiegen oder Liquiditätsengpässen.
🧮 Berechnung
🎯 Was bedeutet das für Anleger?
- Ein niedriger Verschuldungsgrad steht für finanzielle Stabilität und Unabhängigkeit.
- Ein hoher Wert kann auf erhöhte Risiken hinweisen – insbesondere bei schwankenden Zinsen oder konjunkturellen Schwächen.
- Wichtig: Immer im Kontext zur Branche und Kapitalintensität bewerten.
📘 Ergebnis je Aktie (EPS)
📈 Was ist das?
Das Ergebnis je Aktie (EPS) zeigt, wie viel Gewinn auf eine einzelne Aktie entfällt – und ist eine der wichtigsten Kennzahlen zur Bewertung von Unternehmen.
🧮 Wie wird es berechnet?
Die verwässerte Aktienanzahl berücksichtigt auch potenzielle neue Aktien, etwa durch Optionen, Wandelanleihen oder andere Umtauschrechte.
🏛️ Wofür ist es wichtig?
EPS bildet die Basis für viele Bewertungskennzahlen wie KGV, PEG oder Payout Ratio. Es macht den Gewinn für Aktionäre vergleichbar – unabhängig von der Unternehmensgröße.
🧮 Berechnung
🎯 Was bedeutet das für Anleger?
- EPS hilft, die Profitabilität pro Aktie zu erfassen – und ist besonders wichtig im Zeitvergleich oder im Vergleich mit Analystenschätzungen.
- Steigendes EPS kann ein Zeichen für stabiles Wachstum oder Aktienrückkäufe sein.
- Wichtig: Verwende verwässertes EPS für realistische Bewertungen – besonders bei stark aktienbasierten Vergütungssystemen.
📘 Free Cashflow je Aktie (FCF je Aktie)
📈 Was ist das?
Der Free Cashflow je Aktie zeigt, wie viel freier Mittelzufluss einem Unternehmen pro Aktie zur Verfügung steht – nach Investitionen, aber vor Dividenden oder Schuldentilgung.
🧮 Wie wird es berechnet?
🏛️ Wofür ist es wichtig?
Der FCF je Aktie zeigt, wie viel liquide Mittel pro Aktie tatsächlich im Unternehmen verbleiben – wichtig für Dividenden, Aktienrückkäufe oder Schuldentilgung. Im Gegensatz zum Gewinn ist er schwerer manipulierbar und daher besonders aussagekräftig.
🧮 Berechnung
🎯 Was bedeutet das für Anleger?
- Ein hoher Free Cashflow je Aktie ist ein Zeichen für hohe finanzielle Flexibilität.
- Er zeigt, wie viel Kapital ein Unternehmen effektiv einsetzen oder ausschütten kann.
- Besonders relevant für dividendenstarke Unternehmen oder solche mit starker Kapitalrendite.
📘 Short Interest
📈 Was ist das?
Short Interest zeigt, wie viele Aktien eines Unternehmens aktuell leerverkauft wurden – also von Investoren geliehen und verkauft, in der Erwartung fallender Kurse.
🧮 Wie wird es berechnet?
Der Wert zeigt den Anteil der Aktien, der aktuell auf fallende Kurse spekuliert wird.
🏛️ Wofür ist es wichtig?
Short Interest dient als Stimmungsindikator: Ein hoher Wert deutet auf Skepsis oder negative Erwartungen gegenüber dem Unternehmen hin – kann aber auch zu einem „Short Squeeze“ führen, wenn der Kurs plötzlich steigt.
🧮 Berechnung
🎯 Was bedeutet das für Anleger?
- Ein niedriger Short Interest deutet auf Vertrauen in das Unternehmen hin.
- Ein hoher Wert kann ein Warnsignal sein – oder eine Chance, wenn sich die Stimmung dreht.
- Besonders spannend in volatilen Märkten oder vor wichtigen Quartalszahlen.
📘 Employees
📈 Was ist das?
Die Mitarbeiteranzahl zeigt, wie viele Personen ein Unternehmen weltweit beschäftigt – ein Indikator für Größe, Struktur und Geschäftsmodell.
🧮 Wie wird es berechnet?
🏛️ Wofür ist es wichtig?
Sie hilft bei der Einschätzung von Skaleneffekten, Effizienz und Personalkosten. Zusammen mit Umsatz und Gewinn lassen sich Kennzahlen wie Produktivität je Mitarbeiter ableiten.
🧮 Berechnung
🎯 Was bedeutet das für Anleger?
- Viele Mitarbeiter bedeuten große operative Komplexität – aber auch hohes Umsatzpotenzial.
- Produktivität je Mitarbeiter ist ein wichtiger Indikator für Effizienz.
- Besonders spannend bei stark wachsenden Tech- oder Industrieunternehmen.
📘 Umsatz je Mitarbeiter
📈 Was ist das?
Der Umsatz je Mitarbeiter zeigt, wie viel Erlös ein Unternehmen durchschnittlich pro Beschäftigtem erwirtschaftet – eine Kennzahl für Effizienz und Produktivität.
🧮 Wie wird es berechnet?
Die Mitarbeiterzahl stammt in der Regel aus dem letzten verfügbaren Jahresbericht.
🏛️ Wofür ist es wichtig?
Diese Kennzahl hilft, Geschäftsmodelle zu vergleichen – insbesondere zwischen arbeitsintensiven und technologiegetriebenen Unternehmen. Ein hoher Wert deutet auf Automatisierung, Effizienz oder hohen Wertschöpfungsanteil hin.
🧮 Berechnung
🎯 Was bedeutet das für Anleger?
- Ein hoher Umsatz je Mitarbeiter spricht für ein skalierbares und margenstarkes Geschäftsmodell.
- Ein niedriger Wert kann auf arbeitsintensive Prozesse oder geringere Wertschöpfung hinweisen.
- Besonders hilfreich beim Vergleich von Tech- vs. Industrieunternehmen.
KBR, Inc. Aktie Analyse
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Analystenmeinungen
13 Analysten haben eine KBR, Inc. Prognose abgegeben:
KBR, Inc. Events
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KBR, Inc. — Q2 2026 Earnings Call
1. Management Discussion
Hello, everyone. Thank you for joining us, and welcome to KBR's Second Quarter 2026 Earnings Call. [Operator Instructions] I will now hand the conference over to Rachael Goldwait, Head of Investor Relations. Rachael, go ahead.
Thank you, and good morning. Welcome to KBR's Second Quarter 2026 Earnings Call. Joining me today are Stuart Bradie, President and CEO; and Shad Evans, Executive Vice President and CFO. Stuart and Shad will cover highlights from the quarter, and then we'll open the line for your questions.
Today's earnings presentation is available on the Investor Relations section of our website at kbr.com. As outlined on Slide 2, today's discussion includes forward-looking statements and certain non-GAAP financial measures. Additional information, including reconciliations to the nearest GAAP measures can be found in the presentation appendix.
With that, I'll turn the call over to Stuart.
Thanks, Rachel, and good morning, everyone. I will pick up on Slide 4. Before we get into the meat of the presentation, I wanted to briefly highlight 2025 Sustainability and Corporate Responsibility Report, which we published a few weeks ago. This is our fifth year as we report, and it reflects an important part of how KBR operates. Sustainability, safety and responsible delivery are embedded in how we manage risk, develop our people and, of course, deliver to customers. This year's report highlights record safety performance, continued progress against the environmental commitment, and 35% of revenues focused on sustainability.
As we move toward operating as 2 companies, that operating discipline will remain an important part of the culture and the value proposition of both businesses.
On to Slide 5. Today, we will focus on 4 key messages. First, we delivered a strong first half with the results packing slightly ahead of our planned cadence. Second, we have strong visibility across both the businesses, supported by record backlog in STS and significant awarded work in MTS that has yet to be reflected in backlog. Third, our separation remains firmly on track, with transaction, leadership and day 1 readiness milestones continuing to advance. And finally, we are reaffirming our 2026 guidance and remain focused on execution cash generation, disciplined capital allocation and of course, a successful separation.
Moving to Slide 6. This slide highlights our progress against the 4 strategic pillars that continue to guide KBR. Our focus on operational excellence and capital deployment here and then discuss growth and differentiated solutions on the next 2 slides.
On operational excellence, we continue to execute for our customers while standing up 2 stand-alone companies, very important. Importantly, that work has not distracted us from delivering for our customers, growing the business or executed against our financial commitments. We continue to win in the market with backlog across both businesses and deliver solid performance with year-to-date adjusted EBITDA margin of 13%, 1-3%, keeping us on track for another strong year.
At the same time, we're taking actions ahead of separation to reduce incremental stand-alone costs and mitigate dis-synergies. Across both businesses, we are simplifying organizational structures, driving productivity and increasing accountability so that each company enters 2027 with a leaner cost base and stronger margin potential. For SpinCo, the priority is establishing a stand-alone public company while maintaining competitive rates and preserving our position across both cost plus and fixed price opportunities.
Our objective remains great neutrality, and we continue to make good progress towards that goal. For new KBR, we're building a lean, scalable organization that can support future growth while maintaining strong margins and disciplined cost management.
Next, on capital deployment. We continue to allocate capital in a disciplined manner, investing roughly $190 million in the first half to strengthen the portfolio while also returning an additional $71 million to shareholders through dividends and share repurchases, bringing total capital deployed to $261 million.
We remain focused on maintaining the flexibility needed to support separation, invest in growth and pursue attractive value creation opportunities. In short, we are executing the strategy, preparing both companies for a successful separation and positioning each business to create greater value as a focused stand-alone company.
With that as a backdrop, let's move to Slide 7 and discuss the STS business. The demand trends we discussed last quarter continued to strengthen during the second quarter reinforcing our confidence in the long-term out for sustainable tech. Demand remains broad-based across energy security, food security and sustainability focused investments, supported by both new project activity and long-standing customer relations by. Those market dynamics continue to translate into strong commercial results.
Second quarter book-to-bill was 1.5x, and trailing 12-month book-to-bill was 1.3x. And backlog ended the quarter at a record $5.5 billion, and that is up 40%, 4-0% year-over-year. In addition, our near-term pipeline now exceeds $6 billion excluding large reimbursable LNG EPC opportunities, which grew the number significantly. Importantly, work already under contract represents approximately 80% of a 2026 revenue guidance midpoint.
We're also seeing an increasing mix of OpEx-related work. Approximately 34% of year-to-date bookings were tied to OpEx-based contracts with activity across both the Middle East and the Americas through. These contracts are generally longer in duration and further enhance the durability, visibility and resilience of the business. We remain encouraged by the level of OpEx-related opportunities we've included the pipeline.
The Middle East remains a significant growth driver, where first half bookings exceeded $900 million across oil, gas, NGL and energy infrastructure project. We are also seeing encouraging momentum across our technology portfolio, including our first commercial pure license awards and continued demand for our market-leading ammonia technologies, including the recent Pampa Energia Award in the Americas. More broadly, many of these opportunities build on relationships that begin with technology largely studies or engineering services and ultimately expand into larger project execution or aftermarket scopes, creating additional revenue opportunities while improving long-term visibility.
Taken together, we believe STS remains well positioned for continued growth and provides strong visibility into future revenue and earnings.
On to Slide 8. Turning to MTS. We continue to see strong demand across our defense systems modernization base and global mission operations businesses. Our strategy remains focused on combining trusted mission expertise, customer intimacy and differentiated technology solutions to address some of our customers' most critical priorities. That demand is supported by strong visibility into future performance. Approximately 94% of our full year revenue guidance is already under contract. We have roughly $10.4 billion awaiting award, and we expect more than $25 billion of bid volume in 2026, and that's up approximately 50% year-over-year, with significant submissions in the second half.
Second quarter book-to-bill was 0.8x, with a trailing 12-month ratio of 1.0x. Importantly, those metrics do not yet reflect approximately $10.6 billion of awarded work currently under protest, including the National Science Foundation Antarctica award, the Department of State Award in Iraq and the classified Paycom Logistics Award. As a result, we believe reported backlog and book-to-bill do not fully reflect the level of awarded work and future revenue visibility in the business today. While the timing of protest resolutions were made outside our control, these are awarded programs supporting enduring customer priorities.
More broadly, our success continues to be driven by the mission expertise and customer relationships we've built over decades. The National Science Foundation Antarctica Award is a really good example. While NSF was a new customer for KBR, the award reflects several years of engagement, mission understanding and demonstrated technical capability highlighting the differentiated approach that continues to create opportunities across the portfolio.
We are also increasingly embedding software AI and digital capabilities into missions we already support, helping customers modernize operations, improve decision-making and deliver faster outcome. We also see opportunities to support emerging priorities such as Golden Dome, where KBR already supports customers across many parts of the broader mission environment. In short, demand remains healthy across our global market. Visibility remains strong, and our differentiated capabilities continue to support long-term growth. As we prepare to launch this business as a stand-alone company, we are also taking an important step in establishing its identity in the market.
Now let me turn to Slide 9 and introduce the new name for the MTS spin-off. Trinzic. The name is inspired by the word intrinsic and reflects essential built-in capabilities and deep, deep expertise. Trinzic harnesses the power of technology to support governments and allies across national security and. We work at the frontier of what is technically possible, bringing new capabilities to the systems the world depends on, and giving customers the confidence to add. The tagline for Trinzic, the bold connected. And I think this captures the essence of the business.
Trinzic design solutions hold up when there is no margin for error and in environments where critical systems must perform. Just as importantly, Trinzic gives us the opportunity to tell the story of how this business has evolved. While our foundation remains our deep expertise in trusted performance, today's Trinzic is increasingly defined by the way it connects people, technology and critical systems with speed, precision and rigor. We believe the brand better reflects both the company we are today and where we are headed next. Very exciting. It also reflects a culture built around collaboration, accountability and delivering results.
As we've discussed on today's call, this business is entering its next chapter with strong customer relationships, differentiated capabilities, global reach and significant growth opportunities ahead. We believe Trinzic reflects both our heritage and our exciting future, bringing intrinsic value and advantage to customers.
On to Slide 10. We continue to execute well against our separation plan and remain on track to complete the spin on a target date of January 4, 2027. On transaction readiness, we continue to make progress across key regulatory and transaction milestones. We submitted our final private letter ruling request to the IRS in June, and expect a final ruling in September. We also continue through the SEC review process for the Form 10 with a public filing expected ahead of our next earnings call.
Operationally, the work is shifting, planning to execution, IT systems, contract and bifurcation, procurement separation, corporate budgeting and organizational design are all progressing against plan. Corporate employees have been aligned to their future organizations and the teams focused on filling the remaining critical roles, so both companies are ready to operate effectively from day 1.
We are also building out the Trinzic leadership team. Michael LaRoche will join as CEO in September, bringing nearly 30 years of experience across defense, intelligence, space, fiber and government services. joined as CFO designate earlier this month, with deep experience across financed capital markets, M&A and investor engagement. The majority of the Trinzic leadership team is now firmly in place, and the Boards for both companies are taking shape as we assemble the skills necessary and the experience needed to support each company's standable strategy.
Looking ahead, we're excited to host Investor Days in New York for both new KBR and Trinzic, where we will outline the stand-alone strategies, the financial framework and the long-term priorities for each business. Overall, I'm pleased to report that separation is progressing well. The leadership foundation is taking shape, and we have strong visibility into the key milestones required to successfully launch both companies.
With that, I'll hand over to Shad.
Thanks, Stuart. I'll pick up on Slide 12 with our consolidated second quarter results. Revenues for the quarter were approximately $2 billion, up $32 million or 2% from prior year. As a reminder, this was the final quarter lapping elevated contingency activity in 2025. Excluding that work, revenue increased by approximately $91 million or roughly 5%, driven by continued ramp-up on recently awarded projects across both segments.
Adjusted EBITDA increased $16 million to $258 million, with adjusted EBITDA margins expanding approximately 60 basis points to 13%. Performance was driven by strong project execution, favorable portfolio mix and disciplined cost management across the business.
Adjusted EPS increased $0.08 to $0.99, driven by strong operating performance, lower below-the-line expenses and lower diluted share count resulting from our repurchase activity.
Turning to cash flow. First half adjusted operating cash flow was $183 million, representing adjusted OCF conversion of approximately 74%. As expected, second quarter cash flow reflected collections timing in STS, Middle East. Collections have started to normalize in July, and our full year outlook remains unchanged.
Overall, we are pleased with the first half performance. We delivered profitable growth, expanded margins and continued to see healthy momentum across both segments as we enter the second half of the year.
Turning to Slide 13. I'll walk through segment performance. Beginning with Sustainable Technology Solutions. Revenue increased $60 million or 10% year-over-year to $676 million, driven by continued ramp-up of projects awarded over the past 12 months, with particular strong growth in the Middle East, Latin America, Asia and Australia. Revenue also increased 8% sequentially, reinforcing our confidence in delivering mid-teens revenue growth for the full year as product activity accelerates in the second half. Adjusted EBITDA was $123 million, down $11 million from the prior year due to project mix.
This quarter included a higher proportion of equipment procurement activity, which carries margins at the lower end of the framework we outlined last quarter. This impact was partially offset by strong project execution and continued healthy demand across the portfolio. Adjusted EBITDA margin was 18.2%, while adjusted EBITDA margin, excluding LNG JV earnings was approximately 13%. Importantly, year-to-date adjusted EBITDA margins, excluding LNG JV earnings remain approximately 14.5%, demonstrating the underlying earnings power of the business and keeping us on track to achieve our full year outlook of mid-teens, excluding LNG JV earnings.
Turning to Mission Tech, revenues were $1.3 billion, down $28 million from prior year. Excluding UCom contingency activity, revenues increased approximately $31 million or 2%, reflecting strong activity in Australia and the U.K., partially offset by project completions in the U.S. Adjusted EBITDA increased $22 million to $158 million, with margins expanding roughly 190 basis points to 12.1%. Performance benefited from favorable mix disciplined cost management and benefited from contract closeouts. Year-to-date margins of 11.4% remained modestly ahead of our full year outlook.
Overall, we were pleased with the segment performance during the quarter. Both businesses continue to execute well, deliver profitable growth and maintain strong momentum as we move through the back half of the year.
Turning to capital allocation on Slide 14. Net leverage ended the quarter at approximately 2.3 trailing adjusted EBITDA, flat sequentially and comfortably below our 2.5 target. As working capital normalizes and cash generation strengthens in the second half, we expect leverage to continue trending downward through year-end. We also maintained a disciplined approach to capital allocation, repurchasing approximately $25 million of shares during the quarter while preserving ample liquidity.
As we prepare for separation, we remain focused on positioning both companies with capital structures and financial flexibility needed to execute their growth strategies and create long-term shareholder value. Overall, we are confident in the strength of our balance sheet, our capital allocation framework and the readiness for both businesses as we move towards separation.
On to Slide 15. Today, we're reaffirming our full year guidance across revenue, adjusted EBITDA, adjusted EPS and adjusted operating cash flow. The business continues to perform in line with our expectations, supported by strong execution, a healthy demand environment and strong revenue visibility. Approximately 89% of our expected revenue for the year is already in hand, including 80% for STS and 94% in MTS. Given our first half performance and the strength of our backlog, we remain confident in our ability to deliver on our full year outlook.
With that, I'll pass it back to Stuart.
Thanks, Shad. And to wrap up on Slide 16, there are 4 key takeaways from the quarter. First, we continue to execute at a high level across both businesses.
First half results demonstrate the strength of the portfolio, profitable growth, margin expansion and solid momentum heading into the back half of the year. Second, demand remains healthy and visibility remains strong. Across both businesses, we are supported by substantial backlog, significant awarded work and a healthy pipeline, giving us confidence in both our near-term outlook and our longer-term growth opportunities.
Third, confidence in the separation continues to build. Transaction milestones are progressing as planned, operational readiness is advancing, and we're increasingly shifting from planning to execution as we prepare for day 1. And finally, we're positioning new KBR and Trinzic as 2 focused, highly differentiated companies with strong market positions. Disciplined operating models and a clear path to long-term value creation for our shareholders.
With that, I'll hand it back to the operator, who will open the call for questions.
[Operator Instructions] Your first question comes from the line of Mariana Perez Mora with Bank of America.
2. Question Answer
So my first question is you mentioned, Trinzic is out there, new name, everything is on track, even a strong management team designated. Now you mentioned about like the financial structure and the financial capability for both these businesses to be able to pursue their goals? How should we think about that broadly?
I mean we are setting both businesses on the right path, Mariana. You'll have seen the book-to-bill, particularly in STS, very strong. And obviously, the awards when you link in what's under protest and MTS, I think both businesses heading very strongly towards the year-end with momentum as they look to separate.
I guess the whole piece around where the businesses are looking to operate is being derisked as we progress towards the spin date. So that operational readiness was mentioned in the prepared remarks is key there, and we continue to progress on all fronts.
In terms of capital structure going forward, we are very clear that both would have normative sort of leverage ratios for their businesses, given where our balance sheet sits today, I think you can translate that quite clearly. And we've communicated that historically. And pleasingly, both on a year-to-date basis are performing at the margins levels we expected. And our commitment was that we would not distract the core business while we said about the sort of spin separation process, which in truth is a heavy lift.
So we had a dedicated team focused on doing that, and we've made significant progress in both currents, not just with the spin, but actually delivering on the commitment not to distract the business and I think the underlying performance represents that. But of course, we've got Investor Days, our Capital Market Day is coming up in November. That will really be the time where we, I guess, set out our stall in terms of, I guess, the investment thesis for both businesses, which will be different and suitable for the stand-alone business case. That makes sense.
Great. And then on STS or the new carrier, how should we think -- should we think about the volatility of the margins in terms of -- on a quarterly basis, going forward, especially as you have like more, I don't know, pass-through materials in a quarter or CapEx versus OpEx mix? How should we think about that volatility going forward and the trend from the mid-teens, I don't know, 3, 5 years from now?
Yes. I think we'll get into the longer-term margin profile during Investor Day, but what I'll say, Mariana, as it relates to 2026 is the full year margin outlook for STS remains unchanged. And the quarterly variability that you see in the P&L this quarter is normal, right? It reflects the sort of project mix, particularly the procurement content that moves through the STS segment in a very normative way. We've seen that pattern very clearly historically, and this quarter is no different. But I'll also say as importantly, this year, the year-to-date margin performance ex LNG equity and earnings is 14.5% which again is consistent with our expectations and puts us in a wonderful position to deliver on the full year commitments in STS.
Your next question comes from the line of Ian Zaffino with Oppenheimer.
This is Isaac on for Ian. My first is just on STS. As far as the awards in the first half of the year, maybe you could talk a little bit about geographic mix and maybe specific to the Middle East awards, maybe how that has trended compared to expectations. And if you're still seeing maybe any customer uncertainty with oil and gas customers at all.
Yes, good question. And we're seeing quite a sort of global mix in our award cadence. I think last quarter, we saw significant awards in the Middle East, and we touched on that last quarter. This quarter, if you -- if you look at the slide, you'll see 54% of the awards were actually in the Americas this quarter. And that's across a range of technology sales, and we announced the Pampa award in Argentina. And obviously, we've got ongoing work in Mexico again in LNG, but also in the services business as well as the asset services business. So a good mix there with the Middle East coming in somewhere around sort of 25%, 26%.
So again, good continued momentum in the Middle East. But it's very much a global business. We've talked about this many times, and that's why we lay out the -- where we've won the work, and it will vary quarter to -- quarter-to-quarter. In terms of your question on the Middle East itself, we've seen, although there's increased, I guess, activity in and around the Middle East as it relates to the war, we haven't seen any disruption to our ongoing work. We did say that in Q1.
I think people probably were looking at that as to how can that be, but we continue to continue to deliver for our customers through that period and all our personnel are in place and continue to do the work and our customers, really, really appreciated that through Q1. And certainly, that is the case as we head through the second quarter into Q3. So no real disruption there. The one anomaly, and we did mention this last quarter is in these times of volatility like that, you do get slower payments, and we are seeing signs of recovery there as we entered into the end of the quarter. But of course, we're now entering another period of volatility. So there may be some disruption to cash. But overall, in terms of revenue and EBITDA performance and the customers are paying eventually, and so we expect to catch up as we progress. So in terms of the full year outlook, that's why we've maintained guidance in cash because we do expect for that to come back to a normative level. So no real disruption really is the message.
Okay. Understood. And just as a quick follow-up., as far as preparing the 2 businesses ahead of the spin that you talked about simplifying the cost structure. Maybe if you could just give a brief overview of what there is left to do ahead of the spin? And then if you are able to provide any details as far as potential run rate savings of those kind of cost actions or anything like that?
So we touched on this a little bit in prepared remarks, but as I said before, we're making good progress on stand-alone costs across both businesses. And obviously, we're not waiting until separation to address this. We're well ahead of the game. So the actions we're taking today, including some of which you saw in the earnings around real estate rationalization, this quarter, and you'll see that in the quarter through the lease impairments. We continue to simplify our footprint and position both companies for day 1. So overall, we're feeling really good about where that's tracking.
For Trinzic, the objective is rate neutrality. So we're designing the company really to fit within the cost structure that's already embedded in our rates today. And that's really important not only from a cost-plus perspective but also to ensure we remain highly competitive on fixed price opportunities as the business transitions to a stand-alone company. So real good progress there. And that's really been our core principle of our planning from the start, and we've made significant moves within Trinzic towards that goal.
On the new KBR side, we continue to build a fit-for-purpose organization. And what does that mean? It means reducing complexity, simplifying how we operate, building strong digital backbone that drives greater efficiency across the business, and we really do see meaningful opportunities to operate more effectively as a focused stand-alone company. So -- as we mentioned last quarter, we'll have more to say about both companies' cost structures, their operating models and the path forward at our upcoming Investor Days. But sitting here today, really encouraged by the progress we're making and remain confident in the approach we're taking.
Your next question comes from the line of Tobey Sommer with Truist Securities.
It's Henry on for Toby here. Just to start with on the guidance and maybe looking to the second half on the margin side, you get iteration implies a pretty meaningful step down in margins from the first half. Can you just kind of remind us and walk through the puts and takes there and kind of any potential upside to where guidance is now?
Yes. So first, I'll say, Henry, we're really encouraged by the first half performance and believe it really reinforces our confidence in the full year outlook. As we said in the prepared remarks, our visibility remains really strong. with the work under contract in NAND, both for STS and MTS. That said, we're only halfway through the year. And so while we're tracking ahead of plan, on awards, we still believe that the 12.4% aggregate margin for the full year puts us in a solid position to deliver across the board on our EBITDA and EPS commitments.
And so again, while we're tracking a bit ahead of plan, there's still quite a bit ahead of us in terms of awards, program activity, execution milestones and of course, the Washington dynamics that need to play out over the balance of the year. So given that and probably getting to perhaps the intent of the question, that's why we're reaffirming rather than taking an alternative approach today.
Got you. Understood. And then switching to the STS side. I know you had some good announcements in that business recently. But could you just maybe frame up kind of those from a financial perspective with the planned roll-off of next year and kind of how you're working to bridge that gap going into 2027?
Sure. First, we're not looking for a single project to replace Plaquemines. We've talked about that before, and that's not how we manage the business. What gives us confidence are the leading indicators, and they are clear for all to see. The quarter-to-date book-to-bill was 1.5. But importantly, our trailing 12-month book-to-bill is 1.3. So our backlog is roughly up 40% year-over-year. That's a big number. And our 2-year pipeline has grown about $6 billion, and that excludes obviously any large LNG reimbursable EPC opportunities, as I said in the prepared remarks. So -- but just as importantly, the end markets we serve continue to be very strong, very global. -- and we're seeing demand driven by energy security. No surprise there. Food security as it relates to ammonia and urea and fertilizer and resilience in an increasingly complex world. And so -- we're also seeing a number of awards in and around Europe and Asia, in particular, around sustainability-focused solutions.
So again, a good set of opportunities in that realm. So -- while Plaquemines will naturally wind down over time, as we said before, it does go through the first half of '27. We feel good about the growth outlook for STS because it's being supported by a broad set of opportunities, not a single project. And obviously, we've got Investor Day coming up, where we'll give you more detail and give you a deeper dive into that. But yes, we're feeling pretty good about how we're addressing the challenge of backfilling Plaquemines.
The next question comes from Jerry Revich with Wells Fargo.
This is Andrew on for Jerry Revich. Just wanted to ask maybe you discussed adding more than a couple of thousand employees for the recent awards last quarter. Any update on how many are onboarded, how quickly they're becoming billable and what the revenue runway for some of these Middle East ramp should contribute exiting the year?
Yes. So we -- you're quite right. We announced, I think, over 1,000 people or so joining in at numbers well above that. Today and they're onboarded and working for us in the Middle East right now. So we've made great progress and been able to staff up the projects that we secured earlier in the year. You know that STS revenue growth for the year is in the mid-teens, and that ramp-up supports that growth. And so both of those numbers align well. and we continue to be confident of our outlook for the full year.
Appreciate that. And you also flagged potential cash flow volatility from the Middle East. Can you quantify if that actually occurred and the actual impact and whether that's timing or structural and give us a recovery cadence through the year-end?
Yes. So again, as Stuart mentioned, we did flag the expected cash performance being largely timing from Middle East payments due to the conflict. But as he said, we have seen conditions improve as we exited the quarter. And as a result, we do view this purely as a timing issue rather than a change in the underlying cash generation profile of the business. And again, to be determined as and when this complex will be resolved, that our view is that the full year cash flow from a guidance perspective remains unchanged.
Your next question comes from the line of Adam Bubes with Goldman Sachs.
This is Anuj on behalf of Adam. So quickly I wanted to ask that on the MTA segment, margins were up 12% in this quarter. So can you pass out what in the portfolio is driving the strong execution? And also, I think in the past, you have framed MTS margins to be roughly around 10% or more on those lines level. Is that still the right way for us to think about the run rate?
So as we've demonstrated before, favorable contract closeouts are really a normal part of managing a large and complex global portfolio. So the resolution this quarter was really consistent with our expectations, and reflects the disciplined contract management, customer engagement and risk management practices that are embedded across really both segments. As I said in my prepared remarks, margins in MTS are running a bit higher this year at about 11% on a year-to-date basis, which is ahead of our planned outlook. But we still believe that the long-term 10-plus percent margin targets that we've given are an appropriate way to model this business, at least through the end of the year.
Got it. And on the recently awarded $8 billion Antarctic Science project, how should we think about the annual revenue run rate, the margins? And what's the RAM profile like in the early years?
Yes. So it's $8 billion over 20 years. And -- it will ramp up over the first couple of years. I think we don't know until we get into the meat of this in terms of the run rates, I guess, the best guide is to look back at what the incumbent is running at. and that's somewhere around -- I mean, that's quite a range looking at depending on the years about $150 million to $300 million, depending on the particular year.
As I say, we can't give a guide on that until we are officially on the job, and we start to see that. And the incumbent sort of run rates are probably the best way to do it. And yes, as I say, that's the sort of range that they're running at.
Your next question comes from the line of Michael Dudas with Vertical Research Partners.
So pretty encouraging on the progress on the spin moving forward. Maybe step back, Stuart, looking at the new KBR after the spin is complete. What have you found in doing the assessment of the business model about where the company is positioned? Or it was part of the company together and its stand-alone opportunities is -- is there -- on the OpEx front, are you encouraged about some of those opportunities there? And is there any emerging technologies or opportunities within the portfolio that might be starting to get more visibility over the next couple of years relative to the core, certainly, the ammonia stuff and some of your own hydrocarbon technologies that you're well known for.
Thanks, Mike. It's a big question. We probably -- we don't have enough time to talk about all of it on this call. I'll touch on a few areas. I mean, we've got obviously, emerging tech that we're very excited about that we'll talk about how we are good at actually acquiring that at fairly low multiples and then commercializing it over time, and we'll give you some examples of that. In November at the Capital Markets Day. So that's an exciting, I think, growth opportunity. We're very excited across both businesses and what we're doing for AI.
We actually see AI creating genuine customer demand. As it relates to STS, we're probably most excited about combining our engineering expertise with physics-based AI really to drive market-leading operational performance. And initially, we're test casing that on our licensed ammonia plants and now have 2 customers running that for us, and we'll be able to give you an update again at Investor Day about how that can impact KBR going forward and really position us obvious at the operations and maintenance portfolio that has different commercial advantage.
And I think the last piece that we're quite excited about is the broader-based opportunity in the markets where we are very good at going in early and the geographical expansion and the relationship base that we have really creates quite high buyers to entry. And again, we'll touch on that as we get to Investor Day. So I think having a more focused management team who wake up every day thinking about this will really drive significant opportunity for the business.
We're delivering well today, and we're increasing backlog and the pipeline is super, super strong. and our reputation in the market for delivery, which I'm really proud of all of our people do an amazing job every single day across both businesses. And so I think that will create tangible opportunity, an increasing momentum as we head into '27. So all up, I think that's probably enough for today on that, Mike, if you don't mind. And I think you can tell we're excited about the potential growth drivers and the potential of margin enhancement over time.
No, Stuart. We are looking forward to November 11, I guess, estimate STS. Okay. And just a quick follow-up. Maybe you can -- if it's something to call out on the -- I think you mentioned $6 billion in pipeline for STS. Any thing to call out there that we should look at or think about it maybe a quick update on plastics recycling and how those projects are going?
So on the pipeline itself, it's very much similar to the way that we performed, I think, over the last 2 quarters. It will be a mix of in Europe, a mix of CapEx and OpEx in the Middle East and CapEx in Americas and Australia. And the CapEx embrace is obviously technology sales and proprietary equipment that are associated with that given the nature of that business. So it will be -- it won't be in 1 region, it will be broad-based. And so it's -- I don't -- I can't really go into specifics on the pipeline, but we're -- our conversion rates remain very high, and our positioning and our thought processes about where we actually bid and who we bid to because of our differentiation or our ability to win really are sort of bearing fruit.
So I'm very, very upbeat about the quality of earnings associated with that pipeline. And we -- again, we'll see that progress into next quarter as we expect because of the scale of the pipeline. In terms of plastics recycling, they continue to make pretty reasonable progress. It's slower than anyone really wanted in Mura, in England. They've got their final technical solution in terms of being able to run the plant continuously and that goes on stream nourish actually.
So we should be able to give an update in Q3 earnings as to the progress there. And they've got a project pipeline that's quite exciting that looks at potentials in and around Europe and in Asia, and those are moving along quite nicely. And again, we'll give an update on the whole Mura situation as we get to Investor Day. I think that's a good part of our technology development story and certain investment in ventures.
We have reached the end of the Q&A session. I will now turn the call back to Stuart Bradie for closing remarks.
Thank you very much. So a few final thoughts just to close. So when we announced our intention to separate the company, we truly believe KBR contained 2 very high-quality businesses that could create value as focused stand-alone companies than they could together. And as we move through the separation process, that conviction has only strengthened. In Sustainable Technology Solutions, as you've heard today and can see, we're seeing strong demand. We're a record backlog and there's growing visibility supported by long-term investments in energy security, food security and sustainability.
In Mission Tech, again, the demand remains strong. Our visibility continues to build and opportunities across national security and space remain compelling. Today's introduction of the Trinzic brand very exciting, is an important milestone. And together with the leadership team that have been brought together that really marks the beginning of an exciting new chapter for the business. We're excited about the opportunity for Trinzic. It really gives them the opportunity to tell the story of what the business has become today and how it is bringing together people, technology and critical systems to help our customers move forward with confidence.
Both organizations are entering this next chapter from a position of strength with significant revenue visibility, strong market position and clear path to long-term growth and just as important with amazing group of people in both organizations. As we approach separation, we're more confident than ever in the opportunities ahead for both new KBR and Trinzic and in the value each company can create as a focused stand-alone business. So thank you for your continued support, and thank you for your interest in KBR today.
This concludes today's call. Thank you for attending. You may now disconnect.
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KBR, Inc. — Q2 2026 Earnings Call
KBR, Inc. — Q2 2026 Earnings Call
Starkes erstes Halbjahr, Guidance bestätigt; Trennung in zwei Firmen bleibt auf Kurs, STS-Backlog rekordhoch, kurzfristiges Cash‑Timing aus dem Nahen Osten.
📊 Quartal auf einen Blick
- Umsatz: Ca. $2,0 Mrd. (+2% YoY; ex. Einmaleffekten ~+5%)
- Adj. EBITDA: $258 Mio. (+$16 Mio.; Marge 13,0%, +60 Basispunkte)
- Adj. EPS: $0,99 (+$0,08)
- Backlog STS: $5,5 Mrd., +40% YoY; STS Q2 Book‑to‑Bill 1,5x
- Cash & Hebel: H1 adjusted OCF $183 Mio. (OCF‑Conversion ~74%); Net-Leverage ~2,3x
🎯 Was das Management sagt
- Trennung: Spin auf Zieltermin 4. Jan. 2027; tägliche Operationalisierung läuft, Führungsteams für beide Firmen werden aufgebaut.
- STS‑Wachstum: Starkes, globales Pipeline‑Momentum (ca. $6 Mrd. Pipeline ex. großer LNG‑EPCs), mehr OpEx‑basierte Aufträge erhöhen Sichtbarkeit und Resilienz.
- Disziplin & Technologie: Disziplinierte Kapitalallokation, Kostensenkungen vorab zur Minimierung Dis‑Synergien; stärkere Einbindung von Software/AI in Angebote.
🔭 Ausblick & Guidance
- Guidance: Volljährig bestätigt für Umsatz, Adj. EBITDA, Adj. EPS und adjusted OCF; ~89% des Jahresumsatzes bereits vertraglich abgesichert (80% STS, 94% MTS).
- Margenrahmen: Management nennt eine konsolidierte Zielmarge von ~12,4% für 2026; STS soll Full‑Year mid‑teens Umsatzwachstum liefern.
- Risiken & Meilensteine: Cash‑Timing im Nahen Osten und mehrere noch laufende Proteste bei Großaufträgen beeinflussen Timing; IRS‑Ruling im Sept. und Form‑10 vor nächstem Call als Trennungs‑Katalysatoren.
❓ Fragen der Analysten
- Kapitalstruktur: Nachfrage nach künftiger Verschuldung und finanzieller Flexibilität beider Stand‑alone‑Firmen; Management sagt normative Hebelverhältnisse an und mehr Details bei Capital Markets/Investor Days.
- STS‑Margen & Backfill: Analysten fragten nach Quartals‑Volatilität (Beschaffungsanteil vs. Dienstleistungen) und Plan zum Ersatz des Plaquemines‑Roll‑offs; Management verweist auf breites Auftragsfundament und hohe Conversion‑Raten.
- Cash‑Timing & Proteste: Diskussion über verzögerte Zahlungen aus dem Nahen Osten (zeitlich bedingt) und mehrere MTS‑Awards unter Protest; Management sieht dies primär als Timing‑/Prozess‑Risiko, nicht als strukturelles Problem.
⚡ Bottom Line
- Fazit: Operativ starkes H1 mit steigenden Margen, rekorder Backlog in STS und hoher Vertragsdeckung in MTS; die Bestätigung der Guidance plus klarer Trennungsplan stärken die Value‑Story. Anleger sollten kurzfristig Cash‑Timing aus dem Nahen Osten, die Auflösung von Protesten und die Investor/Capital Markets‑Events (Nov.) als nächste Katalysatoren beobachten.
KBR, Inc. — Q1 2026 Earnings Call
1. Management Discussion
Welcome, everyone. The KBR's First Quarter 2026 Earnings Call Conference will begin shortly.
Hello, everyone, and thank you for joining the KBR's First Quarter 2026 Earnings Conference Call. My name is Gabriel, and I will be coordinating your call today. [Operator Instructions] I will now hand over to your host, Rachael Goldwait, Head of Investor Relations. Please go ahead.
Thank you, and good morning. Welcome to KBR's First Quarter 2026 Earnings Call. Joining me today are Stuart Bradie, President and CEO; and Chad Evans, Executive Vice President and CFO. Stuart and Chad will cover highlights from the quarter, and then we'll open the line for your questions.
Today's earnings presentation is available on the Investors section of our website at kbr.com. This discussion includes forward-looking statements reflecting KBR's views about future events and their potential impact on performance as outlined on Slide 2. These matters involve risks and uncertainties that could cause actual results to differ materially from these forward-looking statements as discussed in our most recent Form 10-K available on our website.
This discussion also includes non-GAAP financial measures that the company believes to be useful metrics for investors. A reconciliation of these non-GAAP measures to the nearest GAAP measure is included at the end of our earnings presentation.
I will now turn the call over to Stuart.
Thank you, Rachel, and good morning, everyone. I'll pick up on Slide 4. Now before we get into the results, I wanted to share a brief 0 harm moment on staying connected especially in challenging times. At KBR, zero harm starts with keeping our people informed and supported even when they're hard to reach, whether they're on a remote site, a project location or in an office.
The focus on reaching the unreachable is what led to the launch of the KBR Pulse app. Pulse was not built in response to a crisis. It actually came out of a global employee Hackathon where our teams identified a better way to stay connected across our diverse and distributed workforce. It is employee-driven, built by our people for our people, and it provides easy access to viewers, safety updates and company resources wherever work happens.
When the conflict in the Middle East escalated, Pulse quickly became a critical channel for sharing timely updates on guidance. Most importantly, it helped us stay closely connected with our teams in the region and all of our people have remained safe, supportive and informed. Pulse helps us reach employees who are not sitting at desks and reinforces our ability to act as one team, even in the most challenging environments. It is a practical example of how listening to our people and then investing in the right digital tools strengthens our zero-harm culture and supports resilience when it most matters.
On to Slide 5. Today's call will cover these key topics. Firstly, I'm pleased to report that we started the year well, demonstrating disciplined execution and resilient operators. Secondly, we continue to see demand in our core markets with clear pipeline visibility. Third, we're advancing our planned spin transactions more than that later and thus, sharpening our strategic focus.
And finally, we are reaffirming our 2026 guidance and remain committed to execution, margin discipline and strong cash generation. Moving to Slide 6, where I'll start by covering the STS business. Over the last few quarters, we've seen customer priorities move toward energy security, reliable supply and resilient infrastructure. A more complex geopolitical environment is reinforcing these trends and shaping both capital spending and services demand across our end markets.
With that context, I want to provide a bit of color on where we're winning work today and how those wins align to our strategy and how that sets up the near-term pipeline on the next slide. For the third consecutive quarter, STS delivered book-to-bill ex LNG well above 1.0. Demand continues to be anchored in energy security, downstream reliability and long-duration asset services with a balanced mix of capital projects and recurring services work, supporting growth and improving backlog visibility.
In energy security and transition, customers are prioritizing execution certainty across upstream, downstream and gas infrastructure. This quarter, highlights include project management services for the Zales South refinery in Libya, integrated field management services at the Magino oilfield in Iraq and a long-term general maintenance contract at Sator in Saudi Arabia. These wins reflect continued investment in mission-critical assets where reliability really matters.
In Critical Materials and circularity, we are winning life cycle orientated work that extends asset life and improved performance. During the quarter, we secured a long-term catalyst supply agreement supporting Indorama's ammonia operations alongside optimization work across chemicals and materials assets. In Infrastructure and Transport, we continue to pursue selective program and project management opportunities, including water infrastructure work in the Middle East and sustained activity in Australia across rail, water and defense adjacent infrastructure.
Overall, our bookings reflect a capital-linked engineering and project foundation with selective layering of recurring operations and maintenance services. This deepens our customer relationships and extends our role across the asset life cycle and, of course, improves backlog visibility. We're also adding digital capabilities where they strengthen our role with the customers. Our partnership with Applied Computing supports data-driven and AI-enabled solutions that are expected to connect project execution to maintenance and operations while staying disciplined within our capital light model.
To put this in context with some key metrics, STS first quarter book-to-bill ex LNG was 1.2x, with a trailing 12-month book-to-bill of 1.2x. Backlog ended the quarter at approximately $4.7 billion, and that is up 9% year-over-year. [indiscernible] pipeline, again, excluding LNG, is more than $5 billion was roughly 80% from repeat customers. And work under contract today now covers approximately 67% of our 2026 revenue guidance, which is a good place to be at this time of the year.
The momentum we're seeing in bookings is consistent with the pipeline outlook, which brings me to Slide 7. This matrix shows where near-term pipeline activity is clustering by market and region. It's directional, not a forecast of timing, size or conversion. Stepping back, the pattern reflects 2 core dynamics. First, we are seeing broader distribution of critical programs rather than reliance on single large awards.
Second, customers are advancing work through early engineering and phased scopes, reflecting disciplined progression across project life cycles. From there, 5 themes explain how demand is showing up across regions. First, energy security and resilience in the Middle East. Customers continue to prioritize reliability, redundancy and throughput expansion across critical infrastructure.
Recent geopolitical conflict is reinforcing these priorities with increasing emphasis on resilience alongside restoration and rebuilding efforts were needed. Importantly, we have not seen any material change in capital spending priorities as customers continue to fund essential programs already underway. These tend to move as multiyear programs that award engineering work early, supporting a steady and visible near-term opportunity set. With a strong local throughprint and established relationships, KBR remains well positioned to support customers across the region, particularly as they navigate evolving conditions.
Second, resource security within critical minerals and circularity across the Middle East, Africa and parts of the Americas. Governments and producers remain focused on maintaining and expanding supply of essential inputs particularly ammonia. This includes continued demand for licensed ammonia technology and proprietary solutions with customers increasingly engaged early with engineering-led scopes, again supporting durable near-term booking opportunities.
Thirdly, pragmatic transition activity in Europe. Near-term transition demand remains largely engineering-driven including design, permitting and modularization across key transition value chains. We are seeing particular demand in areas such as sustainable aviation deal alongside policy-driven feasibility and pre-FEED studies as customers assess options and navigate regulatory frameworks.
Fourth, energy security and critical materials across the Americas. Customers are pursuing targeted programs that strengthen energy exports, improve reliability and, of course, support domestic supply chains, particularly across LNG adjacent infrastructure and processing and separation assets tied to critical materials.
And finally, Infrastructure and Transport in Australia. Near-term opportunities remain concentrated in government-funded transport, defense and enabling infrastructure programs with a strong emphasis on alliances, framework [indiscernible] and stage delivery models. Work is predominantly engineering, PMC and early works rather than full greenfield execution, which supports recurring capital light bookings and reflects customers' focus on resilience, capacity expansion and program continuity.
Overall, the Matrix reinforces the STS bookings, a near-term pipeline are diversified and concentrated in stage programmatic work aligned with resilience and resource security priorities. And this plays directly to our engineering-led, capital-light model and repeat customer relationships.
Now on to Slide 8 for the mission tech business. As we've discussed over the last few quarters, awards are not flowing at historical levels. In this environment, our focus remains on what we can control, increasing both the volume and quality of our bid activity, expanding access to IDIQ vehicles and continuing to position the business for future awards. While several larger opportunities remain pending, and, in some cases, under protest, we continue to win work that aligns with our core capabilities and the government's most enduring priorities.
Recent mission tech wins reflect a consistent set of strengths. We are buying digital engineering and analytics to help accelerate time lines, leverage AI and data-driven insights to support higher confidence decisions, and delivering trusted execution in mission-critical environments. In space and national security, we won new work supporting the U.S. space force, applying digital engineering and analytics to help accelerate the development and deployment of next-generation space capabilities.
We also secured a new role, providing direct data and analytical support to senior defense leaders focused on translating complex data into actionable insight for critical decisions. On the civilian side, we were awarded a recompete with the Department of Transportation's, [indiscernible] Center extending a long-standing partnership focused on using AI, analytics and systems engineering to modernize transportation and improve safety.
And lastly, we secured contract extension under the Army's LOGCAP program, reinforcing KBR's role supporting the U.S. military with mission-critical logistics and sustainment in complex operating environments.
Before moving on, I wanted to briefly address what we're seeing at NASA. KBR has supported NASA emissions for more than 60 years. And recently, the administrator has indicated an interest in in-sourcing certain core workforce competencies. If implemented, these changes would affect the mix of work across some programs and that impact is reflected in our 2016 outlook, which Chad will discuss in more detail as we walk through the guidance.
Importantly, KBR continues to support NASA in areas with deep mission experience, independent technical expertise and operational continuity are essential. We are very proud of our team's contribution to the ARTEMIS 2 mission and have a decades long service to the agency. As you'll hear from Chad, these emission tech dynamics are being offset by strength in sustainable tech, so the impact is primarily mix as we reaffirm our full year guidance.
Stepping back and looking across the portfolio, recent wins reinforce where MTS is differentiated. We operate in mission-critical environments that demand speed, technical debt and trusted execution with digital and data capabilities playing an increasingly central role in mission success. So to put this in context with some key metrics, MTS' first quarter book-to-bill was 1.0 with trailing 12 months book-to-bill of 1.0. Backlog and options ended the quarter at $18.5 billion, with 39% of that funded, excluding the PFIs.
Bids and waiting award totaled $16 billion and work under contract now covers approximately 91% of our '26 revenue guidance. And we continue to make progress towards our bid volume goal of $25 billion in 2026 with significant submissions expected in the next 2 quarters.
With that, I'll turn to Slide 9 and our near-term pipeline opportunities. This slide provides a directional view of where we see the MTS near-term pipeline forming across markets and customer sets. It is not intended to indicate precise timing, size or conversion, but rather to highlight where demand is clustering based on our current visibility. We see 2 core dynamics shaping the pipeline. First, customers are prioritizing a more selective set of enduring machine-critical programs with long-term relevance and funding durability, a trend evident across U.S. and allied defense markets, including Australia.
Second, we are increasingly valuing partners who can integrate across the [indiscernible] and translate software and data-driven architectures, into operational capability at speed. Those dynamics translate into several clear demand themes across the portfolio. First, national security space and space mission operations with programs award technical debt and integrated delivery from digital engineering through operations. This includes long-standing work supporting the U.S. space forces, military satellite communications mission on related space architecture.
Second, integrated air and missile defense, including counter U.S. and directed energy. Here, customers are prioritizing layered, scalable solutions that reduce cost per engagement. Our role centers on integrating new capabilities into existing architectures, so customers can field solutions faster and, of course, more affordably. Third, connected balance pace and Decision advantage as customers invest to compress decision cycles by linking senses to decisions at the edge. We are supporting architecture and integration efforts aligned with JADC2 objectives, including work related to the Air Force bottle network.
Finally, we continue to see durable demand in readies sustainment and deployed mission support, including Allied life cycle programs. These missions place a premium on reliability, scale and end-to-end accountability, and we're increasingly applying AI-enabled tools, including through our partnership with tag-up AI to help improve sustainment workflows and readiness outcomes. Across these areas, the common thread is customers prioritizing speed, integration and measurable mission outcomes, areas where MTS is positioned to deliver.
On to Slide 10 and an update on the spin. Next, I'll provide an update on the tax rate spin of MGS, which remains central to our strategy and to sharpen focus and, of course, create long-term shareholder value. The strategic rationale for the separation remains unchanged. This spend reflects the culmination of a decade-long portfolio transformation and will result in 2 independent pure-play companies with clear strategic focus, distinct investment profiles and dedicated leadership aligned to their end markets.
As part of this process, we evaluated all strategic alternatives and concluded that a spin is the right path to unlock value and position both businesses for long-term success. We are executing on this path while ensuring the separation is completed in a way that protects continuity, minimizes risk and positions both companies for success from day 1. We continue to believe a quarter end spend is the most practical approach both operationally and financially. And given the scope and complexity of separation, a fourth quarter time line provides additional runway to address these complexities. As a result, we are working toward an effective spin date of January 4, 2027, so the first business day of fiscal '27.
On the regulatory front, we have confidentially resubmitted our Form 10 including the fiscal 2025 audited carve-out financials. We expect continued confidential refinement through the SEC review process before transitioning to a public filing, which we currently anticipate in September. In parallel, we're advancing the IRS private letter ruling process to support a tax-free transaction. From a leadership standpoint, we are now well advanced on talent migration. The MTS CEO set is in its final stages, with Board interviews plan for later this month. And the CFO process is expected to follow shortly thereafter.
At the same time, additional leadership and functional appointments are beginning to be announced across both organizations, helping to build clarity and momentum. Operational separation continues to progress. We have completed the IT standup project plan and are now executing against it, supporting coordinated separation across systems, processes and controls. And in parallel, teams are advancing real estate and legal entity rationalization to position both companies to operate independently at close.
Looking ahead, we plan to host 2 Investor Days in the second week of November. These events will outline the stand-alone strategy, operating models and long-term priorities for both the STS and MTS businesses ahead of the transaction close. Overall, the dedicated spin transaction team remains fully engaged across all work streams and coordination across the organization continues to build reinforcing our confidence in execution.
With that, I'll turn it over to Shad.
Thanks, Stuart. I'll pick up on Slide 12 with the consolidated first quarter results. We started the year with solid momentum despite a challenging backdrop. Revenues declined $95 million year-over-year, driven primarily by the planned reduction in EUCOM contingency, as outlined on our last call. Excluding EUCOM, revenues were largely consistent with prior year, and we did not experience any material impact from the Middle East conflict during the quarter. Despite lower revenue, adjusted EBITDA increased by $3 million year-over-year. supported by strong program execution and favorable mix across the portfolio. As a result, adjusted EBITDA margin expanded to 13.1%, up from 12.3% last year. .
Adjusted EPS was $0.96, down $0.05 year-over-year, primarily due to higher financing expenses from unconsolidated joint ventures. This was partially offset by lower average shares outstanding following open market repurchases throughout 2025. Cash flow was a key highlight for the quarter. Adjusted operating cash flow totaled $119 million, up $28 million year-over-year, reflecting strong DSO performance and resulting in 98% adjusted OCF conversion. Overall, the quarter reflects disciplined execution, margin resilience and strong cash generation, even as revenues were impacted by known and anticipated program dynamics.
On to Slide 13 for segment performance. Results this quarter demonstrated solid execution and performance was in line with expectations across both sustainable tech and mission tech. Starting with sustainable tax revenues were down $10 million year-over-year, primarily reflecting new awards that are still ramping and have not yet contributed meaningfully to revenue. Adjusted EBITDA increased by $2 million year-over-year with margins expanding approximately 70 basis points to 21.9%, driven by equity and earnings contributions from an LNG project.
Excluding this project, underlying margins in the business were 16.1%. Turning to Mission Tech. Revenues were down $85 million year-over-year, driven primarily by the planned reduction in EUCOM contingency work. Excluding EUCOM, Mission Tech revenues were in line with prior year with the growth in the U.S. and Australian defense programs, offset by the combination of award delays, protest activity and funding restrictions at NASA. Adjusted EBITDA was essentially flat year-over-year, declining $1 million, while margins expanded to 10.6%.
Margin performance reflected the roll-off of lower EUCOM work continued disciplined execution and increasing mix of higher-value offerings. Overall, segment results reflected solid execution, expected mix dynamics and continued focus on disciplined margin management across both businesses.
Turning to Slide 14. As we committed last quarter, this slide breaks out the underlying sustainable tech margin structure separating the LNG project and showing how the broader portfolio is positioned as that project rolls off and our JV footprint expands over time. As you see on the left, you can see the margin tiering across the STS portfolio. Higher margins are driven by technology licensing and differentiated engineering while international OpEx services, PCM and proprietary equipment fit in the middle. At the lower end is domestic maintenance, which we primarily access through our recurring JV structure, including breast, allowing us to participate with appropriately managed risks and returns.
As shown on the right, that mix supports a 20%-plus weighted STS margin profile in 2026 driven by technology, engineering and JV participation. Over the last several years, growth in our services business has outpaced technology sales, resulting in margins of approximately 15% with the LNG project adding an incremental 500 basis points. Importantly, the backfill of this LNG project is portfolio based rather than a 1-for-1 replacement. As that project rolls off, growth in higher margin and more recurring streams, particularly technology licenses and JV OpEx work support a more durable margin profile over time.
Overall, this slide reinforces the STS margins are structural, supported by deliberate portfolio shaping, disciplined program selection and contract structures that align risk and return.
With that, let me turn to Slide 15. As mentioned earlier, cash generation was strong in the quarter. particularly given the fact that the first quarter is typically a low cash flow period for us. That performance reflects disciplined execution and the underlying cash generative nature of the portfolio. Net leverage increased modestly following our investment in Bris to fund the SWAT acquisition, ending the quarter at approximately 2.3x trailing adjusted EBITDA that remains comfortably below our stated ceiling of 2.5x and maintaining that leverage discipline remains a key guardrail for us. More importantly, our approach to capital allocation remains balanced and disciplined. We continue to invest for growth, return capital to shareholders, maintain prudent leverage and incorporate the expected cash outflows associated with executing the spin-off transaction.
Overall, our strong cash generation provides flexibility across these priorities and supports disciplined capital deployment going forward. On to Slide 16 and full year guidance. Today, we are reaffirming our full year guidance and range across all metrics. Within that framework, we're operating in an environment where the range of potential outcomes is wider than normal for our government services portfolio. Geopolitics and policy shifts across the U.S. and Australia can create both opportunity and funding risk and those factors are influencing how demand flows across the portfolio.
Building on Stuart's comments, the dynamics we're seeing are reflected primarily in segment mix rather than a change in our full year outlook. In Mission Tech, we expect revenue to be flat to modestly down year-over-year, largely reflecting unresolved protests in the first half that delayed anticipated ramp activity. Those impacts particularly related to the MIS contract are timing driven. And we feel good about the underlying award and the transition profile as regional disruptions get resolved. In addition, given the uncertainty around potential program level changes at NASA relating to the workforce directive Stuart referenced earlier, we have incorporated a modest second half decline, assuming those changes are implemented.
These impacts are more than offset by strong performance in sustainable tech, where we now expect to deliver mid-teens year-over-year revenue growth. driven by award momentum and elevated service demand. Taken together, this results in revenue phasing of approximately 47% in the first half and 53% in the second half, reflecting a relatively stable mission tech run rate and second half growth in sustainable Tech as customer activity normalizes and recent wins ramped, particularly in regions impacted by the Middle East disruptions.
Importantly, there are no changes to our adjusted EBITDA, adjusted EPS or adjusted operating cash flow guidance. However, we may see some volatility in adjusted operating cash flow during the second quarter as the Middle East conflict is resolved. Our underlying assumptions remain consistent with what we outlined on our last call with today's puts and takes reflected in segment mix rather than a change in our overall outlook.
With that, I'll pass it back to Stuart.
Thank you, Shad. On to Slide 17 to wrap up. There are 4 key takeaways from the quarter. Firstly, we delivered a solid start to the year with disciplined execution, resilient operations and continued margin and cash focus. Second, demand in our core markets remains durable, and we have clear visibility, work under contract today now covers approximately 67% and of our 2026 revenue guidance in STS and 91% in MTS.
Third, we continue to advance our planned spin transaction with key milestones progressing as we prepare for a targeted distribution on January 4, 2027. And finally, we are reaffirming our 26th guidance ranges, and we remain committed to execution, margin discipline and strong cash generation. We appreciate your continued interest and support, and we look forward to updating you on our progress throughout the year.
With that, I'll turn it back to the operator for Q&A. Thank you.
[Operator Instructions] Our first question is from Adam Bubes from Goldman Sachs.
2. Question Answer
Margins in the quarter, I think, 13.1%, appears modestly ahead of your expectations, and it's above the full year guide. I recognize that equity income can drive some quarter-to-quarter margin noise. But can you just help us parse out what came in better than expected on the margin line this quarter? And anything we should keep in mind when thinking about the trajectory of margins and equity income through the balance of the year? .
Yes. So I'll take that one, Adam. Again, as you point out, margins remain in line with our long-term targets with 10% plus for MTS and took a 20% for STS through 2026. We do expect continued contributions from the LNG project to continue into early '27. And we'll be kicking off our 2027 budgeting process here shortly, which will, of course, have the stand-alone costs for corporate structures and margin expectations for both businesses that we really look forward to highlighting in Investor Day in November.
And then can you just help us think about the Brown & Root equity income contribution on a run rate basis following the SWOT acquisition? And maybe can you talk about the magnitude of the M&A pipeline for Brown & Root, what's your vision for that piece of the business in the medium term?
Sure. I'll take the first one, and then Stuart can cover the M&A piece. So as you'll see on our website, in the fact sheet, the recurring joint venture contributions generated approximately $18 million of EBITDA in the quarter, and we expect that contribution to tick up modestly as the year progresses. Strong year-to-date bookings really begin to ramp in that portfolio, and that will provide incremental volume in the back half of the year.
And on the M&A pipeline, we continue to not sit in our hands. We continue to look at opportunities that will take us both into new geographies and into all reasonably adjacent industries. And I guess more to come on that as we look forward, there's plenty of opportunity. We need to be very disciplined in the way we look at that, both from margin accretion and fit and obviously, values and culture perspective, but certainly more on the table to look at as we go through the year.
Our next question is from Andrew Kaplowitz from Citi.
This is [indiscernible] on behalf of Andy Kaplowitz. I guess first question will start off with just on the margins on SCS margins, like I appreciate the call out on margin XLN this quarter. But could you help us think about the underlying margin profile ex LNG and the margin trajectory going forward or over time? And as compared to your long-term framework and you're like 20% plus margin as well. .
So as promised, we gave more transparency into the buildup of the margin profile within SDS and contribution that comes from the lock project in equity and earnings, and hopefully, that's been useful. In the quarter, ex that project, we made 16.1%. I think that was in Shad's prepared remarks, -- and so the circa 15% that we put in that slide generally is the mark for the base business as we look forward and ex that LNG project. .
Now that could change over time if we do win something with that sort of commercial construct, but hopefully, that gives you a good indicator of how this business performs. And we've got in file just to add to that, we there are margin expansion opportunities on mix, particularly around technology, where you can see in that breakdown where the margins in that business are well in excess of 20% in truth. And the more we do in licensing. And I guess, they're sort of initial sort of engineering, the better for margins. And the timing of that is difficult to predict. So you get some [indiscernible] -- and the more we grow the operational OpEx side of the business under brisk, which is obviously part of our strategic push. Obviously, that comes through equity and earnings, and you'll see that growing stronger as the year progresses, which again is good for margins.
Got it. That's helpful. So underlying margin ex LNG still see creeping up over time to that 20%-plus range.
Well, 15 going upwards, I would say.
Our next question is from Jerry Revich from Wells Fargo.
Yes. I wanted to ask on NASA. Can you just talk about what the ebbs and flows look like from a booking standpoint, there's been volatility between the President's request and Congress reinstatement of funding. Can you just talk about how that has impacted timing, if at all, for you folks and what we should be looking for in terms of booking and activity levels over the remainder of the year?
Yes. The main comment, Jerry, on NASA related to the new administrators push for greater in-sourcing. So effectively moving people who are on contractor staff back on to government payroll that is being discussed and being looked at today, and we think that may or may not happen over the next little while, but certainly, if it does, it will be gradual. But we did call that out in the call. That's a recent event in the quarter. In terms of the scale of that to KBR, it's 50 million, 60 million or so through the course of this year that happened today. So it will be a lesser impact than that likely. So that's really the discussion there in terms of the broader impact to NASA budgets, we're not seeing any real issue there in terms of what's happening in terms of the levels of service and the commitment to funding that we've experienced over the last little while. So that feels pretty steady at the moment.
And separately, can I ask on STS just to unpack the prepared remarks, it sounds like you folks feel pretty good about the ability to backfill to replace the LNG project. Can we just expand on that conversation? How much visibility do you have on replacing that project in the earnings power of STS '27 versus '26 and then you had really favorable project closeout performance in the quarter, which was great to see. Can you just help us quantify that and help us understand in '26 are we trend line level of closeouts, higher or lower, just to give us context as we start to think about the bridge into '27?
Jenny, you've followed us for quite a long time now. You know that we are prudent as we look at project accounting, we don't want to surprise to the downside. So we manage that carefully and prudently. So there are always ongoing favorable project. There was a so nothing unusual there. And I'm sure that will continue into the foreseeable future as long as we continue our current practice, which we will do. .
In terms of bookings momentum, third quarter in a row of very strong bookings for STS, 1 point, well over 1.2 and across that spectrum with a significant pipeline of opportunities that gives us really good confidence about continued momentum in that bookings profile and the growth that comes with it effectively. We are ramping up new awards as we announced those awards in late last year and early this year, and those projects are ramping up right now. In fact, with new risk people coming on to KBR's books in over a couple of thousand people [indiscernible]. And so we're starting to see really strong cadence there.
We started this quarter pretty well. We're only a month in or so, but it's been a solid start to this quarter also and the pipeline of opportunities, we tried to give you color as to where that activity is in the slides and the different mix of drivers that are driving those awards, and we expect to see that to continue to -- it's a global operation with a very strong footprint in areas where there's a strong commitment to funding and project development driven by whether it be energy security, food security, energy transition or what's happening in critical infrastructure in minerals. So again, we're feeling pretty good about that and feeling very confident in terms of the ongoing performance of the STS business.
Our next question is from Ian Zaffino from Openheimer.
Great. Would you guys be able to give us a little bit more color on kind of the Middle East bookings. How is that going? What's kind of the current environment? And I guess if we kind of stick on that a little bit with on the MTS side. How do we think about maybe the U.S. reducing NATO exposure or the troop movement. Would that be somewhat of an impact to you guys? Or how do you think about that as well?
Okay. So let me start with the Middle East and STS mainly because I was there last week for a visit and went to Saudi and Bahrain and into Abu Dhabi and Dubai to visit our folks and all the key customers there. I have to say I was really uplifted with that visit think the resiliency and just the commitment was absolutely amazing. I think the customers really appreciated that we have performed all through this volatility and management, we're actively supporting and doing the right thing for our people, but they were doing the right thing for their customers. We have seen no slowdown in activity. Our ambition and our desire to staff up work that we won in Saudi continues without really interruption, similarly in what's happening in Qatar and the Abu Dhabi businesses continue to grow as does Dubai in terms of what they are doing.
So really all up a really positive visit with strong award cadence and ongoing performance. So there's obviously richness and being on the ground and with the sort of delivery reputation and the capability set that we have locally as well as being able to support that internationally [indiscernible] as well as we look to support those customers as they look to do restoration and repairs and really sort of look at their long-term strategy of lessons lent through the war, if you like, in terms of things like protection of critical areas that some of the the sales track were very targeted in critical areas like operations rooms and things like that and how we can provide more resilience or sparing into existing facilities, but also looking at whether there should be additional export routes and things like that, so that they're not so handcuffed as they are today.
So I think lots to do there and very positive about the outlook in the Middle East. Turning to your sort of last question on what's happening with the activity in Europe and recently all over the press about reduction in Germany, I think there's 2 pieces just to put in context. I think that it's about 5% of the overall strength in Europe is that number. And I think some of that may well have been encapsulated in some of the planned drawdowns already. We're not expecting any material impacts to our business as a [indiscernible].
Okay. And then just as a follow-up, as far as timing, what was kind of the -- it looks like it's a little bit behind schedule. What was driving that? And maybe any other color you could give us as far as -- because I know in the past, you talked about giving us more detail at the Investor Day, but that now seems to be delayed a little bit. So how are you thinking about delivering maybe that information to us maybe at the same time that you had thought even though there's not an Investor Day? And maybe any other type of color you would think about delays with the spin, et cetera.
Yes, I'll give you a little bit of color there. We've made good progress with the regulatory piece in the spin -- the discussions with the SEC and IRS have been highly constructive. And so we're feeling good about that. And I gave an update on how we're doing with people and sort of people transitions and obviously bringing the new CEO in, et cetera. So I'll try to cover all that in the prepared remarks. So that is progressing very well.
We were targeting around like Q3 for the spin originally. So I think October and when we started to look at this when you think about accounting, if you think about benefits and salary adjustments, et cetera, it makes it so much more sensible and logical to do this at the beginning of a fiscal year when all that lines up. And also in truth, it also builds in a little bit of float into the schedule as we work through IT complexities and things like that, that I've never seen an IT project finish on time anywhere really.
I don't know if anyone has -- so having a little bit of flow in there means that we mitigate any risk of being able to operate as 2 independent entities with [indiscernible] systems and things. So nothing more sinister than that. And obviously, by moving that date it makes more sense to hold the Investor Days closer to the actual spin, so the data is more relevant in Pim's top of mind, if you like, as they're looking to separate and then when you kind of work back from that or everything else lines up in terms of the public filings and things like that.
So again, nothing sinister. We committed to giving more color as we've gone through the year as we've done in this earnings call in truth about the breakdown of STS and how that operates and the performance associated with that. And we'll continue to build on that as we go forward. So it does not [indiscernible] between now and Investor Day. We won't tell you everything or we point the tubing Investor Day, but we will give you more color as the year progresses and I commit to doing it.
[Operator Instructions] Our next question is from Mariana Perez Mora from the Bank of America.
So my first one is a detailed one, and then I'll follow up with more of an end-market growth one. On the first one, could you please measure how large was the close out at STS?
So on the closeout piece, as Stuart covered, these are pretty recurring items in the business, as you know, Mariana. And so it would it probably wouldn't be appropriate for us to detail the specific counterparty or nature of the reserve release, but what I'll say is we're really pleased to reach a resolution in the quarter, which was consistent with our expectations.
Okay. And then when we think about all these like moving pieces, right, in both markets, the pipeline, but then like the joint ventures you are having the opportunities in the Middle East and everything on STS. And on the other side, MTS also having opportunities but also headwinds from NASA and the European Command involvement. How should we think about like next couple of years or 3 years growth trajectory.
That really is an Investor Day question, I think, Mariana, and I'm not trying to. But I would say that from an STS perspective, where we're positioned, I commented earlier on the pipeline and the lack of concentration risk in terms of the global nature of that business and the drivers and market drivers that are driving that sort of those global opportunities. So I think you can see from that, that there will be a change in thought processes around food security just given what the impact has been from the Middle East, I think similarly in energy security also, and we're well positioned to take advantage and help our customers think that through.
In terms of MTS very much focused on quality of earnings and positioning the business where we feel the funding is going to flow opposite the priorities of today and tomorrow. And I think you'll have seen that coming through in the awards, particularly on data and digital and AI solutioning that really helps speak to mission data analysis to help sort of decision-making and really that sort of impact to mission that is really at the front of the agenda of the Trump administration.
So -- we're seeing that across space force, [indiscernible] Defense, connected battlefield, electronic warfare, et cetera. So -- and also our probably our most best-performing business in the last quarter in that sense has been in the intelligence side of what we do, including space intelligence. So I think that's going to be the key thematics that are going to endure over the next couple of years unless the sort of presidential funding request for a substantial increase in defense spending. I think that those are the areas where you're going to see the greatest demand. And I believe KBR is very well positioned and have been positioning in that area for some time. This is nothing new. We've talked about it many times and the Lyncus acquisition, et cetera, kind of doubled down on that strategic positioning.
So we feel pretty good about the growth opportunities over time. I mean, part of the rationale of the spin is exactly that to get focused in on these growth areas with 100% leadership focus and making sure that we're building capability as things evolve and also able to deploy capital in a very focused way. So I guess more to come on the actual targets. But over the medium term, we're feeling really good about both businesses and their prospects.
Perfect. And I have one more because -- sorry, -- you mentioned in the prepared remarks, you were doing like this, like separation works already like is progressing? And just mentioned MTS has really strong like high growth businesses and verticals. As you do this exercise, are you open to [indiscernible] sell some like parts of the business or that's going to be an effort that will be done whenever MTS is a standalone cost.
I mean you can never say never if someone comes over the hill, if you like, and makes an offer, we would have to look at that from a shareholder value perspective as we do with any offer across the KBR portfolio or KBR as a whole or whatever, we would look at shareholder value is the north star in that review. But as we sort of said about the positioning of this business where it is today, in our minds, unless something does happen from that field, which we'll be open to, but right now, we are heading towards the businesses as they are today separately.
Our next question is from Tobey Sommer from Truist.
I wanted to ask a question on STS with the war and elevated petrochemical prices, how are -- what are you hearing from customers? And how are they planning anybody -- are they planning for prices to remain high and therefore, get into development? Does the impact direct physical impact of the war, facilitate a better medium or long-term outlook for KBR in the region? If you could speak to those questions, that would be great.
So from a petrochemical perspective and really an oil price perspective, I think that's -- these are moments in time, I think, Tobey. Ultimately, the fuller market dynamics are in a normal trading environment would be similar to what they were pre-war. So I don't think there's going to be a massive expansion in petrochemicals or anything as a consequence. The asset base that's there will be in the case of the Middle East, if it's damaged and any that will be repaired. And if it's not, it will be, I guess, the the asset while the pricing is high, which obviously leads to greater maintenance services and things which fits our strategy very nicely.
In terms of the broader Middle East, their stated objectives over time will be far more driven to I guess, security of supply and making sure they've learned a lot of lessons, as I covered earlier as a consequence of the war. But at the meantime, doubling down on things like [indiscernible] security and doubling down on really gas is really the main driver in the development cycle in the Middle East for the next little while rather than petrochemicals per se. So -- and I think we're very well positioned in all of those areas to assist and to add value to our customers with an increasing focus on digital and AI solutioning, and we covered a bit of that in the scripted remarks as well as the how we're moving firmly in that direction. So we're feeling good about the long-term opportunity or even medium-term opportunities in the Middle East, but more broadly from a global perspective and STS to be fair.
And then if I could ask you to expand a little bit on NASA, what elements of your exposure there are growing and see strong demand signals and then maybe a little bit more granularity on where the weakness is within the portfolio, either a functional or some other basis? .
I mean the primary -- I mean, certainly, with the success of the [indiscernible] 2 machine, which we are very proud of. Our people were instrumental in the success of that mission. So really human space flight is where we're seeing where the activity is. And as you know, we're firmly engaged in across that spectrum, and we've talked about that many, many times. I won't go into it again. So that's the key element for us, and we expect that to continue. And as we move on to Artemis 3 are putting boots in the ground, that's obviously something we'll be heavily engaged in. So across both what we do technically and from a human health performance perspective. So -- that's probably the best way to answer that.
The softness, if you like, when it comes down to the uncertainty on these people moves that we covered earlier, it really only affects one main contract of ours that's an industry-wide directive not targeted in any way at one particular company. It's changing or evolving strategic move by NASA that's still got to play out in truth. And as I say, it really only impacts one element of our contractual base. So reasonably contained but in the spirit of transparency, just calling it out as we move through the course of this year. So really, that's [indiscernible] in space light is the key thematic and we are every engaged in that area.
Our next question is from Steven Fisher from UBS.
Congrats on managing a tricky environment. Just Stuart or Shad related to the guidance. I think in the past, you've been prudent or cautious to raise guidance in the first quarter. But with the solid start, are you perhaps kind of trending above midpoint and leaning towards upper end? Or do you think this year, there's sort of just too many uncertainties going on with some of the things you mentioned in NASA and the Middle East and the separation to kind of call any directional trend at the moment? .
Doing well in the quarter and being above consensus is a good start, I think, to the year, Steve, and not just one metric across all metrics, of course, is terrific. Our bookings are really solid, as we described, and we're feeling good about the year ahead. But as as is normal, we are not known for raising guidance in Q1, and we've proven that again today. But you're quite right. I mean, let's face it, if you just step back and think about the world at large, there are still significant volatility and to get out over your skis right now, would not generally be viewed positively. We don't think by market nor is it prudent for us to do so. So just bear with us, I think.
Fair enough. And then on the STS side, just in terms of kind of pace of progress and status of projects that could potentially move forward into something more materially. I guess, I'm curious to what extent you have, say, completed engineering on some bigger projects that are really just kind of pending FID. Or are we still sort of embedded in sort of very early stages of projects? And if you are towards the latter stages, what are the conditions you think that are needed to kind of move ahead on some of these projects? .
So we try to be very choosy about what we get engaged in, making sure there's -- it doesn't always work out as you know, but trying to be very considered about where we point our reserve base and the chance of that project actually going forward. Today, we're engaged in front-end designs for the LNG projects. We're engaged in [indiscernible] commitment, I think, beyond some of your conceptual early sort of estimate it to sort of put good money into making that definition a bit tighter. So we feel that those projects have lags.
And then on the broader pipeline itself, it's engaged, I believe, with a level of maturity in terms of our understanding of the need for those projects to go ahead and the drivers to do so and the funding flow that will support them. So in terms of the pipeline that we've put forward, we feel pretty good about the the enduring nature of the STS performance as a consequence. That's probably the best way to describe it, Steve. So we're not sort of betting the farm on early concepts or early engagements, thinking some huge project is going to come as a consequence of someone's good idea. We're actually basing our positivity and outlook on maturing projects across the globe, as I said before, with these energy and food security sort of drivers that ultimately, we believe will come into fundamental revenue generation for KBR.
We currently have no further questions. So I will hand back to Stuart for closing remarks. .
Okay. Thank you very much. And -- so a few final thoughts, I guess. You've heard today, our strategy and priorities are clear and some good questions around the dynamics there, we're operating in markets where our capabilities are highly relevant. I think our customer relationships are really deep and that really plays to our advantage. And our model is really designed to deliver disciplined execution across a range of operating environments, and that drives the resilience of what we do. And I think you're seeing that coming through in the numbers.
Across sustainable tech, durable demand tied to energy security, resource efficiency, and resilient infrastructure and their engineering led, technology-led, capital-light approach and growing mix of recurring services and other key thematic continue to support backlog visibility, strong margin performance and resilience and cash generation.
In Mission Tech, the near-term award environment remains uneven, [indiscernible] describe it. the underlying mission priorities we support, we do believe, however, are enduring, had a good question on that during the call. And we remain focused on increasing our bid volume and importantly, the quality of earnings associated with that bid volume and really expanding access through contract vehicles and positioning the business to convert opportunities as funding and award activity normalizes and the recent executive order looking at more fixed price within the government environment is something we really welcome. We've got a strong commercial acumen through KBR, and that plays well to our strengths.
And importantly, none of this will happen without our people. I want to thank our employees across KBR for their amazing resilience and commitment. Nothing more so than the Middle East recently, and particularly as they continue to deliver for our customers in complex and of course, in some cases, really challenging environments. The focus on safety is paramount, and they deliver a focus on execution excellence and teamwork is central to our performance and a key part of our culture.
And finally, we continue to execute the planned separation of the 2 businesses with discipline and real intent and the spin is designed as we've said, to sharpen strategic focus, aligning each company with its end markets and ultimately position both organizations to pursue their long-term objectives with quality and accountability. So thank you again for your time. Thank you for your continued interest in KBR, and we look forward to speaking with many of you soon. Thank you.
Thank you, Stuart. This concludes today's KBR's First Quarter 2026 Earnings Conference Call. Thank you for joining. You may now disconnect your lines.
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KBR, Inc. — Q1 2026 Earnings Call
KBR, Inc. — Q4 2025 Earnings Call
1. Management Discussion
Good morning, and good afternoon, everyone. Well, thank you for joining us for KBR's Fourth Quarter and Full Year 2025 Earnings Conference Call. My name is Drew, and I'll be the operator on the call today. During the call after the prepared remarks, we'll have a Q&A session. [Operator Instructions]. With that, it's my pleasure to hand over to Rachel Goldway, Head of Investor Relations, to begin. Please go ahead when you're ready.
Thank you. Good morning, and welcome to KBR's Third Quarter Fiscal 2025 Earnings Call. Joining me are Stuart Bradie, President and Chief Executive Officer; and Shad Evans, Executive Vice President and Chief Financial Officer. Stuart and Shad will provide highlights from the quarter and full year and then open the call for your questions.
Today's earnings presentation is available on the Investors section of our website at kbr.com. This discussion includes forward-looking statements reflecting KBR's views about future events and their potential impact on performance as outlined on Slide 2. These matters involve risks and uncertainties and that could cause actual results to differ materially from these forward-looking statements as discussed in [indiscernible] recent Form 10-K available on our website. This discussion also includes non-GAAP financial measures that the company believes to be useful metrics for investors. A reconciliation of these non-GAAP measures to the nearest GAAP measures is included at the end of our earnings presentation. I will now turn the call over to Stuart.
Thank you, Rachel, and good morning, everyone. I will pick up on Slide 4. As we always do at KBR, I want to start with a brief zero-harm moment. In 2025, we delivered industry-leading safety performance with our TRIR reaching an all-time low of 0.033 and zero-harm days reaching an all-time high at 96%. These results really reflect strong discipline and accountability across our operations. More importantly, we speak to the culture we've built inside KBR.
We focused on creating an environment where people look out for one another and we are safety and well-being are part of how we operate every single day. That culture is especially important as we move through the spin and that underpins the execution and results will walk through today.
On to Slide 5. Today's call will cover the profit. First, I'll start with how we delivered our strategy in 2025. From there, I'll touch on why we see improving momentum and visibility as we move into 2026 and across both segments, including how the quality of our earnings continues to improve. It's really important. I'll provide an update on the spin itself. And finally, Shad will walk through our financial performance for the year and, of course, our guidance for 2026.
On to Slide 6, Our Strategy. So as we enter the year, I want to start with a simple message. We executed our strategy in 2025 despite a very challenging award environment across both segments. We stayed disciplined, focused on what we can control and made meaningful progress across each of our strategic pillars.
Firstly, Thrive and Expand. In sustainable tech, we continue to expand globally with particular momentum in the global side. We have heard us say that before. We also made deliberate progress doing our OpEx-facing businesses both organically and inorganically. And this, of course, reduces our exposure to CapEx cycles. The Smart acquisition within our Brown & Root joint venture, [ Breeze ], which closed in January was a key milestone more than doubling the EBITDA of that business.
In Mission Tech, we continue to leverage contract vehicles, including recent Air Force and Space Force awards, which you have seen while expanding internationally and strengthening our presence in Washington, and that's the deep engagement with both the administration and the Pentagon. Second, to deliver innovation. Innovation remains central to our strategy. In Sustainable Tech, we launched Insight 3.0 this quarter through a new venture with applied enhancing operational performance across KBR licensed ammonia plants using physics-based AI.
We also continue to advance Mura and other technologies as a long-term growth platform. In Mission Tech, our focus on deepening customer relationships and advancing our technology road map is paying off. Recognition as a top 10 Australian defense contractor, the Nova Excellence Award from NASA and the recent Golden Dome Shield seat all reflect this progress. Post Linquist, the establishment of a new Chief Technology Officer role and our digital design labs are strengthening our position as a true capability partner. Thirdly, drive operational excellence. Operational execution was a clear strength in 2025.
We expanded margins by more than 100 basis points. and generated operating cash flow with a conversion rate of 110%, delivering over $30 million in cost savings and expect this margin and cash performance momentum to continue into 2026. And finally, deploy capital perspectively. We delivered $413 million in capital to shareholders in the year, and that's the highest in the last decade, successfully integrated Linquist, and delevered the balance sheet within a year. As we prepare for the spin, we remain highly disciplined, ensuring both companies are positioned with appropriate capital structures from day 1.
With that context, let's come to the segment performance starting with sustainable tech on Slide 7. 2025 is a challenging year for sustainable tech, marked by a sharp decline in petrochemicals CapEx and a pause in MediGreen projects as customers shifted their focus towards affordability and energy security.
Now despite this backdrop, [indiscernible] remarkably resilient. Margins held up well in the first half of the year, and our teams responded really quickly pivoting towards the global South LNG ammonia and OpEx-driven markets where demand fundamentals remain strong. That pivot clearly showed up in the results. We delivered strong book-to-bill in [indiscernible] to anchor that outlook Fourth quarter book-to-bill was 1.6x, with a trailing 12-month book-to-bill of 1.2x.
Backlog ended the year at $4.2 billion and that's up 5% year-over-year and up more than 20% excluding Bakken LNG. Our near-term pipeline, excluding LNG, is approximately $5 billion with about 80% from repeat customers showing the relationships that we have developed over time and work under contract covers roughly 63% of our 2026 guidance. putting us above normative levels for this business going into the year.
With that, let's turn to Mission Tech and on to Slide 8. Mission Tech also faced a challenging environment, as you're well aware, in including award delays, we just contingency activity and for us, particularly in Europe and the impact of the government shutdown. Despite those headwinds, MTS performed well. revenue held up year-over-year, margins improved and cash performance was excellent. And this reflects a disciplined execution approach and the quality of the underlying portfolio.
Strategically, we continue to move up market. Activity expanded with the U.S. Space Force and Air Force for [ Tesla ], validating the inquest acquisition. We secured positions on key multiple of work track vehicles and defended several important recompetes, including HHPC and [indiscernible]. While we did lose the Cosmos we compete in 2025, this was at the lower end of margin returns within the portfolio.
Importantly, there are no material recompete revenues expected in '26 suggesting new term incomplete risk. Internationally, as we stand out, particularly Australia, with approximately $800 million in defense award contracts and high single-digit year-over-year revenue growth. While contingency activity declined in certain areas, the border defense and intelligence portfolio performed well, particularly in missile defense, naval air, digital engineering and in R&D. Cross-business synergy bids are becoming increasingly important, and we have several opportunities in the pipeline that reflect a similar integrated cross-business approach.
Looking ahead, the full year 2026 Defense Appropriations Act has been enacted. On MPS, we believe, is well aligned with this funding. We expect award cadence to improve, particularly in the second half of the year, supported by strong bid volume and contract and vehicle leverage. To anchor that outlook, the trailing 12 months to build was 1.0. Backlog and auction ended the year at $19.1 billion and that's up 15% year-over-year with 40% funded excluding PFIs.
[indiscernible] are waiting awards totaled $17 billion with 80% of that number representing new business. We expect to bid more than $25 billion in 2026, and that will be up double digits year-over-year. Finally, work under contract already covers approximately 82% of our '26 guidance with minimal recompete exposure. On to Slide 9. Next, I'll provide an update on our transaction, which remains an important part of our strategy to sharpen focus and drive long-term value creation for shareholders as you're well aware. Preparations continue to progress in line with our plan, and our targeted distribution is anticipated in the second half of 2026.
From a readiness standpoint, we're making steady tangible progress. [ Carve-out ] audits and pro forma financial statements are underway to support the Form 10 process. As committed, we made our initial confidential filing in late December and we currently expect to file an amendment incorporating full year audited '25 financials in March '26. A similar time line is progressing for the private letter remote. So all on track.
We are also continuing to refine the transaction perimeter to ensure operational clarity and strong stand-alone positioning for both companies. And as part of that effort, we have decided to move the Frazer-Nash consultancy business and the U.K. Civil Nuclear project portfolio into sustainable tech. We have provided a supplemental financial information sheet for modeling purposes, and this is accessible via the QR code. And this change has no material impact to our long-term segment growth margins. As discussed previously, CEO and CFO recruitment efforts are underway.
And in the interim, I have appointed Mark Sopp as Interim Spin Senior leveraging his role as spin transitioning lead. And this positions Mark to effectively serve in the capacity while the search for [indiscernible] continues. These efforts, along with early branding initiatives support the future stand-alone companies are progressing in parallel with the broader separation work streams. Importantly, a dedicated spin transaction team continues to drive execution across the organization, really helping to minimize disruption to day-to-day operations momentaneous momentum. And I think you can see that in the delivery of the '25 bottom line results.
The level of internal engagement and coordination continues to build, which gives us confidence and our ability to execute the transaction effectively. We'll continue to keep you updated, of course, as we progress. And with that, I'll turn it over to Shad.
Thanks, Stuart, and thank you to everyone for joining us today. I'm excited to step into the CFO role, an important time for KBR. Mark Sopp built a strong finance organization and a disciplined foundation and I'm grateful for his leadership and the opportunity to build on that work. Looking ahead, my focus is straightforward: deliver on our financial commitments, support the financing and investor milestones associated with the spin and maintain a disciplined financial structure that advances our strategy. With that, let's turn to the fourth quarter results on Slide 11. Revenues were $1.85 billion, down $223 million year-over-year. primarily reflected award timing in MTS and reductions in EUCOM contingency scope.
More importantly, profitability and execution were strong. Adjusted EBITDA increased $12 million and margins were 12.6%, up 190 basis points, driven by disciplined program execution and favorable mix with Com volumes declined from lower margin work. Adjusted EPS was $0.99, up $0.09 year-over-year, reflecting the stronger adjusted EBITDA performance and lower share count following open market repurchases.
Turning to Slide 12 and our full year results. Revenues were approximately $7.8 billion, up modestly year-over-year despite the market volatility. We delivered strong performance in defense and intelligence programs supported by the Linguist acquisition. Continued momentum in Australia aligned with its defense priorities and sustained demand in STS across our engineering, professional services and technology offerings. Adjusted EBITDA increased $100 million. and full year margins were 12.4%, up more than 100 basis points year-over-year.
As Stuart mentioned, this performance reflects prioritizing high-margin growth, disciplined program execution, and continued delivery on cost savings initiatives across the business. Adjusted EPS was $3.93, up $0.60 versus prior year and supported by the increase in adjusted EBITDA and share repurchases. Partially offset by higher interest expense and higher income taxes due to international mix in our underlying rate. That same dynamic is reflected in our 2026 ETR guidance, which I'll cover in a moment. Cash was a key highlight.
Operating cash flow was $557 million, representing 110% conversion to adjusted net income. We exited the year with strong liquidity heading into 2026. Overall, revenues and adjusted EBITDA was in our ranges for the year, and adjusted EPS and operating cash flow exceeded the top end of our guided ranges. Turning to Slide 13. I'll focus on a few financial proof points that support the progress Stuart just outlined in sustainable tech. As discussed earlier, the market environment shifted materially in 2025.
From a financial standpoint, FTS offset those headwinds through mix, geographical expansion and increased exposure to OpEx-oriented and structurally stronger demand areas. That operating discipline is clearly showing up in the quality burn. Adjusted EBITDA has grown 16% since 20.3%, outpacing revenue growth and reflecting improved mix and cost execution. While margins were modestly elevated in 2025, a we are on pace to meet our long-term margin target of 20% plus in 2027.
This performance was delivered alongside strong cash conversion of more than 80% and a trailing 12-month book-to-bill of 1.2 providing good visibility as we enter 2020. Lastly, due to the recurring nature of risk and alignment with our OpEx strategy, we plan to update our adjusted EBITDA calculation beginning in 2026 and to reflect our share of unconsolidated JV operating income. Previously, risk and other unconsolidated JVs were reflected through JV net income. This change improves transparency and aligns EBITDA with how we manage the business. Prior periods will not be recapped as the impact is not material.
Turning to Slide 14. I'll focus on the financial implications of the mission tech progress Stuart just outlined. From a financial perspective, the portfolio continues to move towards higher quality of earnings, driven by mix improvements, disciplined program selection and favorable contract structures aligned to the most durable and well-funded national security priorities. Through 2023, the integration of Linguist, strong international execution and a more selective business development approach has supported mid-single-digit revenue growth while improving margin quality.
Importantly, that improvement has been driven by commercial acumen and contract discipline. Including a greater focus on fixed price and technically differentiated work, not volume. Even with near-term headwinds from award timing and protest activity, the team remained highly selective in bids and recompetes, prioritizing returns and contract terms over scale. That discipline is showing up and sustained margin performance and a robust pipeline. Against that backdrop, the business is preparing to an improving economics, solid visibility and strong alignment to long-term national security demand.
Turning to Slide 15. Capital allocation and balance sheet discipline remains key strengths. In 2025, we returned a record $413 million to shareholders through buybacks and dividends. and we ended the year with net leverage of 2.2x. That reflects both strong cash generation and disciplined deployment. Looking ahead to 2026, our priorities remain unchanged. We're committed to maintaining an attractive and stable dividend through the spin transaction. And to that end, our board approved an annual dividend of $0.66 per share or $0.165 per quarter for 2026.
We also continue to invest selectively where returns are compelling. In January, we invested approximately $115 million to fund our proportionate share of the Swat OpEx acquisition within Brent, a strategic transaction that enhances resilience to CapEx cycles and supports our OpEx expansion. As we execute this investment and absorb typical first quarter cash uses, including incentive payments, leverage may trend up modestly in the first half of the year before coming back down below the targeted 2.5 level as cash builds throughout the year.
Ahead of respective Investor Days, which we plan to conduct before the spin, each segment will assess its capital deployment priorities based on its stand-alone profile. I'll now turn to Slide 16. Our fiscal 2026 guidance. We're providing full year outlook for consolidated company to establish a clear baseman, the stand-alone outlooks to be updated for progress towards the planned spin in the second half of 2026. With that in mind, for fiscal 2026, we are guiding revenues in the range of $7.9 billion to $8.36 billion.
Adjusted EBITDA of $980 million to $1.04 billion, adjusted EPS of $3.87 to 4.22 and adjusted operating cash flow of $560 million to $600 million. At the midpoint, this implies approximately 4% year-over-year growth across all key metrics. We expect transition costs related to the spend to be approximately $140 million to $180 million. inclusive of onetime IT capital costs. To ensure transparency around ongoing performance, we will introduce an adjusted operating cash flow and an adjusted free cash flow metric in 2026 and that add-back spin-related cash outflows, allowing investors to better assess the poor cash generating capabilities of the business.
From a modeling perspective, the guide assumes low double-digit growth in STS at our normative long-term margins of 20% plus, MTS is expected to grow at low single digits, also at a normative margin of 10% plus, which we expect to continue to improve over time. Capital expenditures are expected to be in the range of $40 million to $50 million for the year. Our projected effective tax rate is 26% to 28%, higher than the current year. And as I mentioned earlier, primarily reflecting a greater mix of work in the Global South. Estimated adjusted share count was $127 million, which is exactly where we exited 2024. We expect revenues and adjusted EPS to be weighted approximately 46% for the first half and 54% to the second half of the year.
For modeling purposes, we expect Q1 be largely in line with Q4 '25. And on a recast basis, we anticipate moderate sequential growth in MPS as EUCOM has at its base activity levels and partially offset by seasonal sequential declines in FTS. As a reminder, we will be comping against elevated EUCOM contingency in the first 2 quarters of' '26, which is roughly $60 million to $70 million per quarter. Our guidance includes key assumptions that are worth highlighting given the current political and economic environment. First, we assume the resolution of outstanding protests in the first half of the year with award cadence and Mission Tech improving as the year progresses.
Second, we assume that all material programs we currently support remain in place. Should that change materially, we will force updates as appropriate. Third, we assume modest improvement in interest rates in the second half of the year and stable foreign exchange rates relative to current levels. In closing, our 2026 guidance reflects a disciplined view of the current environment. We entered the year with solid work under contract, strong growth momentum and a highly committed global team. And with that, I'll turn it back to Stuart.
Thanks, Shad. I'm on Slide 17 with some key takeaways. And I'll close with 4 key messages. First, we executed with discipline in a challenging environment. Despite pressure across awards and funding. We delivered results in line with our updated guidance. We expanded margins and generated strong cash and returned that cash at record levels to shareholders. That performance under pressure reflects the strength of our operating model and the quality of the people inside KBR, our teams.
Second, both segment exit 2025 with improving momentum and, of course, visibility. In Sustainable tech, the portfolio is better aligned to structurally stronger demand by the Mission Tech margin discipline, pipeline strength and funding visibility position the business well as a war cadence improves into 2026. Third, the quality and the durability of our earnings continues to improve. Across the portfolio, we are being more selective. We're continually moving up market and leaning into innovation and digital differentiation.
Our focus is really driving better mix, more resilient margins and stronger cash generation over time. And finally, our spin-off prep is advancing as planned. We are making steady progress on separation readiness, capital structure planning and leadership and operational clarity all with the goal of creating two focused well-positioned stand-alone companies and of course, delivering long-term value for our shareholders. With that, I'll turn it over to the operator to open the call for Q&A. Thank you.
[Operator Instructions]. Our first question today comes from Tobey Sommer from Truist.
2. Question Answer
I was wondering if you could describe to us what the pipeline in STS is for sizable projects with Plaquemines closing out probably next year? Just to give us a sense for how we may be able to fill that hole and even grow?
Thanks, Tobey, not an unexpected question. In terms of the book-to-bill in Q3 and Q4, I think you've seen the performance has been impressive across the spectrum. That includes technology and obviously, the broader capability set in the Middle East, and that's coming through and particularly in the OpEx area, which we feel is strategic growth avenue we want to get after due to its -- due to the long-term contract nature of that giving sort of visibility into earnings over time. We've started this year in Q1 very strongly again in bookings in STS.
So again, I think directionally, that's a very positive thing to see and obviously to disclose today. In terms of the broader pipeline, it's -- we've got a global business, as you're well aware, we see significant opportunity across the globe and across our capability set, and that includes ammonia and technology. It includes the broader technology set. I talked a little bit about Mura in my prepared remarks also. They are now running well. They've come through the 72-hour test products on spec and have actually sold that product already. So we'll see that ramp up through the course, and they've got a number of projects in their pipeline as well, which both as an investor and executor and technology provider, we will take advantage of.
In the broader LNG area, which is one aspect of a business, it's not their business. I would say that we've got obviously work going on in the body. We've got Coastal Bend front-end design also ongoing. And we've got a number of others that we can't tell you about today, unfortunately that we're looking at as we move through this year. I think the other key takeaway here is that many have looked at the equity and earnings line and see that really as just Plaquemine coming through.
We talked a few quarters ago about the importance we felt [ Brisk ] would be delivering in that area over time. They've really sort of outperformed as we headed into the end of this year and have a very strong book-to-bill themselves. And then with the addition of swap, we're obviously more than doubling that EBITDA contribution, which is why we're going to be showing you that more transparently going forward. And that all comes through the equity and earnings line that we'll start to hopefully get people thinking a little bit differently about the quality of earnings and the longevity of that earnings coming through the equity and earnings line. So hopefully, that gives you a rounded view of that.
It does. If I may ask my follow-up on the MTS side, backlog in options growth pretty substantial in the mid-teens and as well as the sizable awaiting award category. Maybe you could give us some color as to the drivers of the 15% growth in backlog as well as the more exciting areas where you've got bids awaiting award.
Yes. Thanks, Toby. Obviously, we've announced a number of wins. We talked a little bit about HHPC and Jabu, which come through with a number of year options in them, which helps in that arena. And more recently and very excitingly, the sort of Space force and Air Force awards in the sort of higher-end digital area. Starting to see some momentum around that. But just the broad portfolio internationally has been terrific as you -- as we talked about again in the prepared remarks. So that's really the story coming into the end of this year.
As we look out into next year, obviously, we've got the work that's under protest. I know had talked about that in his prepared remarks. And that's quite exciting because it takes us to new customers as well in terms of broadening our reach and really the work we're doing in Missile Defense, the work we're doing with spacer, et cetera. And obviously, the award of the Shield IDIQ really positioned us well for workflows under the sort of Golden Dome program also. And we're really seeing tangible wins in that arena as we've press released already. So that sets us up nicely for the future.
But I am also excited about what's happening internationally, and it's a piece of our business that everyone sort of doesn't really talk about enough with Australia growing significantly, continually moving up market with an enormous backlog given its successful wins last year. And really the U.K. as well with increased defense spending happening across, not just in the U.K., but the broader Europe arena really positions us well going into 2016 and actually well beyond, of course, so I think that, again, gives you a sort of overall picture.
We're very excited about the Defense and Intel portfolio in the U.S., the work on the protest is a lot of that in the R&R segment. Of course, and then we obviously have the international portfolio that's performing extremely well and that we reiterate at better margins just because of its commercial nature.
Our next question comes from Mariana Perez Mora from Bank of America.
Good morning, everyone. So my first question is [indiscernible]. And I think we -- and all the investment community will welcome more clarity on the EBITDA and the contribution from the joint venture. But like -- in the meantime, how should we think about Plaquemines for how long it's going to contribute at these levels? How should we think about Lake Charles or at least like energy transfer passing and canceling that project and the impact to that contribution. And if we think 3 years from now, what are the opportunities you guys have to maintain that level of contribution from joint ventures.
That's a good strategic question, probably one best answer more fulsomely at the Investor Day, Mariana. But ultimately, as we said before, the contribution from Plaquemines will run consistently through this year and into early next year. The increased focus on what we're doing around Bris and the addition of SWOT and we're looking at, obviously, more organic and inorganic growth in that arena to build out that portfolio, and we'll talk about that more as we get through the rest of the year. And that bit of the business is performing really, really well.
And so that will be an increasing part of that equity and earnings contribution, which is why we want to be more transparent around it to give investors more confidence on the continued equity and earnings performance. But also it's on top line growth. And top line growth and the associated EBITDA generation coming from that portfolio. And I think the book-to-bill of 1.6, again, really demonstrates the momentum that we're having, particularly in the global South, but ultimately, across the portfolio, and really sort of delivering, I guess, confidence of future earnings. And that's why we are confident on the sort of double-digit growth on the revenue line for SDS going forward. So I think, again, more to come on that at Investor Day, we'll get more into sort of the granular details there. But strategically, that's where we're heading.
And my follow-up on MPS. You talked about Australia. You have been discussing that for a couple of quarters, how strong it is. And now you talk about the U.K. How is the award environment in the U.K. in general going? Like what is your book-to-bill? How meaningful are the opportunities in the near term? And what are the expectations for growth there?
Yes, good question. 25% was a slow award cadence in the U.K. due to the typical defense reviews and in U.S. peak appropriations and really sort of pointing pounds in this case to where the spend is going to be. That process is now behind us, and we can see clear spend priorities going into '26, which is why we're feeling pretty good about where we are and where we're positioned in the U.K. Again, more to come and we'll get more granular in the Investor Day. But I think directionally, you can sense that we've come through what is a flat year in the U.K. and now moving into a growth cycle within our portfolio.
Our next question comes from Ian Zaffino from Oppenheimer.
Thank you very much. question would also be on MCS. Can you maybe give us the kind of the components of the guidance there? I imagine potentially very nicely up above kind of the guidance what should we expect maybe for readiness and sustainment. And any other kind of color you could give us on that
Yes, quite right. Defense and Intel is up, as Shad talked about. Sciences Space is down due to pressure on NASA budgets, as you would expect. So that's contained within the guide. And then we've got and the protests are more aligned to RNS as we look through the course of the year. So assuming that they are successful, we will grow RNS nicely as well as the international portfolio we talked about. And it's also worth saying that. But as I've said in my prepared remarks, we did lose some of our recompetes, which were at the lower end of our margin performance.
But in terms of the guide, although many -- well, not many, -- some of them are under protest, a couple of round of protest. We have not assumed that we will be successful in those protests in the guide. So we've taken a fairly firm view that if we were successful, that would be upside.
Okay. And then you made a comment about doing M&A. How should we think about that? Is this something that's going to wait till end in pre-spin, I don't want to jump the gun on the Investor Day, but how do you think about separating these businesses? Is it going to be 100%. Are you thinking 80% just to get our arms around how you're thinking about capital allocation pre and then also push it?
Yes. No. Thanks. So our statements that we made when we announced the spin still hold, just in terms of the leverage, the net leverage we're expecting to come out of those businesses is circa 2% on STS and circa 3 on MTS, which is well within market norms. We might be a little bit north of south of that, but we're not going to be far away. So those are good numbers to work from today. In terms of we've got some firepower of course, as we go through the year to achieve those leverages. And if we find accretive M&A.
We don't want to stand still and I think we've proven that with the acquisition of SWAT to really advance our strategy and the sort of long recurring cycle of OpEx type contracts, and we'll be looking to expand in areas of strategic importance. But we won't get out over our skis. We won't really [indiscernible] unless there's some significant transformational thing in the middle of a spin, which would be highly unusual. But ultimately, these will be fairly modest but accretive and strategic acquisitions. We don't want to stand still in this period as we've proven through the SWAT acquisition, which is a highly accretive deal for us.
Yes. And maybe just to build on that, Ian, on deployment. -- the year typically begins, as you know, with several funded cash commitments around annual incentive and dividends. And this year, we'll also be incurring some spin-related transition costs as well. And so when you combine those with the strategic investment that Stuart said at the outset with the normal capital expenditures, they effectively consume a lot of the free cash flow in the first part of the year. So as the year progresses, we'll, of course, continue to assess opportunities to deploy NSS cash, obviously, in the most effective banner and close consultation with on board. But our focus really, as we said all along, is making sure we're setting both of these businesses up with really strong balance sheet out of the gate.
Our next question comes from Jerry Revich from Wells Fargo.
This is Kevin Herick on for Jerry. Just had a question on SCS. Would it be possible if you could rank order the growth outlook by end market in 2026?
I think that really is one for Investor Day. We're -- we've got -- we've said this before, several avenues of growth. We're expanding our footprint in Iraq. We announced major Windstar recently. We're expanding our footprint in Saudi Arabia across -- both in different areas of the market. We, of course, have picked up the coastal and LNG feed and the body front-end design and LNG. Technology continues to perform. It's difficult to give you a point estimate in that right now. because of just of timing.
But I would say that the way the portfolio performs, that double-digit growth is the way to think about it at the consolidated level. and we'll be, obviously, as a stand-alone SDS business, we'll be digging into this in more detail when we get to Investor Day.
Got it. Understood. And then on the Mission Solutions piece, on COM cadence, does fourth quarter represent the run rate in activity? Or should we expect a step down in.
Yes, Kevin, it does. And so I'll just remind you though that the first and second quarters of '26 a bit of a tough comp, $60 million to $70 million is what I'll call, elevated levels. has that been through down and is now at its steady run rate coming in '26.
Our next question comes from Adam Bubes from Goldman Sachs.
In MTS, margins for the full year 2025, I think were 10.4%. And it sounds like mix is improving there. So can you just expand on the puts and takes on the margin outlook for MTS embedded in the 2026 guide?
Yes. So happy to take that, Adam. Despite some of the macro headwinds that Stuart pointed out, I think operational performance throughout '25 is really strong. And as you said, resulted in a 10.4% margin which again is in line with our long-term expectations for this business. And really, I think, reflective of the profit first business development mindset within that organization. While we do hope to improve margins over time as we continue to see mix of that business move towards more fixed-price work, but we've not assumed any uplift in '26. And so it's flat sequentially from the 2025 run rates.
Got it. Understood. And then you've talked a little bit about today the increasing mix of recurring OpEx and digital solutions. Is there any way to contextualize what percent of revenues today is OpEx driven? And where you think that can head over time?
So again, I think we obviously not an Investor Day there. Sorry, I keep saying that, but obviously, that's firmly on our minds. But that's part of the reason we are sort of showing more transparency around that OpEx business in Brit. We do have an OpEx-facing business that we own 100% in the international arena, and we'll bring that all together when we meet later in the year for that Investor Day to show you just the opportunity there. We'll describe some of the long-term nature of those contracts. We'll give you an overall margin profile of that particular area and certainly within a range and what the outlook is.
But we're excited about that strategically. We do think that assets across the world, of course, have increased significantly over this last decade. But the level of digital solutioning and thinking through how you can help your customer keep the plant up or make it more efficient and do predictive and analytics that support that is exciting, and we're right in the middle of all that. So I do think it's a SSA, there's going to be more volume of business in this area. And obviously, it's -- the demand is increasing, and we feel we're very well placed over time to take advantage of that.
And I think investors, I think the strategic upside of that is that the contracts are longer term in nature. There's greater visibility of earnings and cash across that book of business. So that's directionally where we're heading, but more to come again in Investor Day.
Our next question comes from the line of Sangita Jain from KeyBanc Capital Market.
Great. Thank you. Good morning, Stuart and Shad. If I can ask two questions on NPS. My first one is, are you still exploring a sale of that segment. Can you speak to the process if you are a best in an option as you look towards the split?
I mean, you know I can't answer that question. So it's I mean we are committed to shareholder value. We've said that many times it's 100% truth. We're going through this spin process to prove that out and demonstrate that. We're open to approaches, we're open to anything that will enhance shareholder value. That's all I can really say at this point.
Understood. And then on the MPS awards in protest, can you provide a bit of detail on how many awards you're projecting? And if any of them are outsized versus the others and also the timing that you're anticipating on those resolutions.
Yes. These are fairly in the public domain. The Mission Iraq award stock $1 billion. And that's with the State Department, then we have a classified program called KTA that's in the similar ZIP code. And then there's some -- we did get one out of protest in our favor, which was the prepositioned stock in Europe, so that's now running through the numbers. And that's the key ones at the moment. And obviously, we are protesting the Kosmos loss and the Del loss as we speak. So -- but again, I would reiterate those are not in our numbers the latter to. So that's kind of where we're at today.
Our final question comes from Andy Kaplowitz from Citigroup.
Good morning, everyone. Stuart, can you talk a little bit more maybe about impacts of AI on KBR. I think you mentioned briefly in prepared remarks. But how do we think about the mix between software and services in MTS? I mean you mentioned digital and sort of the growth there. I think there's quite a few security and regulatory barriers that should protect your business versus AI, but maybe you could elaborate on how you think about AI's impact on KBR's businesses.
Yes. We talked a little bit about this before, I think, in last quarter that I think there's a number of companies that create AI departments, et cetera. And I think they probably spent a lot of money with a lot of gain. We've been very disciplined around how we approach this, and we very much look at use case solutions that actually drive an ROI. We've got a number of activities inside MTS that are funded by government, as you would expect, as we look at that from an R&D perspective, and that hangs off the back of our digital engineering labs that we pressed recently and talked a little bit in the prepared remarks, which are gaining good traction because of that speak to market of R&D projects, et cetera, as you would expect.
More in the STS world, again, looking very strongly use cases around accelerating engineering. Making sure there's checks and balances within that engineering that avoids human errors, speed up progress. But at the same time, looking at how we operate facilities across the world or our customers operate facilities and using particularly digital twins and applying AI and machine learning to really sort of draw data and get trending over time to know what good looks like and make sure that operators can intercede at the appropriate time or the maintenance crews get in to see at the appropriate time.
So it's -- it's a multifaceted approach, but ultimately is driven by use case ROI, and we put quite a bit of front-end effort into that, Andy, rather than just saying AI is good and just running at it. We've been quite disciplined. And that's on the front of office. I think in the back of office, increasing use of bots to drive efficiency and decrease human error keep our SG&A in check or reduce it, in fact, over time. We're rolling out Microsoft dynamics across the STS portfolio, which is really the forefront of a digitalized ERP because our project controls, which gives us all the project data hangs off that, and we can look at things real time and start to make real-time decisions on commercial execution.
And we've also got digital procurement hanging off the back of that and with a similar upside. And so I think that's all digital project execution philosophy underpinned by really a very modern initial digitally enabled ERP is going to stand as a really good stead as we come out of the spin. So I think it's multifaceted, is front of office driven by use case. It was back of office, again, driven by use case, but obviously, with different drivers.
And so you just mentioned it, but like when I looked at the release for STS margin, you had mentioned ERP. And so we always think about sort of the ERP implementation as I guess, a risk factor, but you got over 20% margins again for '26. So how do you think about STS margins are they kind of going to be consistent here over the next few quarters? And do you expect improvement in '26 versus '25.
Yes. quite right on the ERP. It's typically a risk. Our teams have done a fantastic job. We've rolled out dynamics just to be fully transparent. We did a pilot in Singapore. It went well. We rolled it out in Australia, added more functionality went back to Singapore increased their functionality rolled out in India rolled out in the U.K. And now we're looking at how we roll copper out in the U.S., and then we'll move to the Middle East. So I think we've proven that we can roll this out without blowing it out, which is always the risk of hats off our teams and sort of managing the execution and the implementation.
In terms of margins across STS, I think we'll just stick with our statement. I know that it's 20-plus percent across the portfolio. And as you've seen, we have done as we are prudent in how we account for things. And as we close out projects, you will get ups in certain months. But I think over the over the piece of the portfolio performance is 20-plus percent. And I think that's a good measure to stick with.
With that, we have no further questions in the queue. So I'll hand back over to Stuart Bradie for some closing remarks.
Thank you. Thank you very much. So just a few final thoughts. I think as we discussed on the call, 2025 started off as challenging a year as we've seen in many. But I think it really underscores the strength of the KBR portfolio. Our geographical reach being truly global and understanding each of the countries and the different drivers as a real plus a very diversified customer base. And that really drove a lot of a true lack of concentration risk and being agile, both in terms of how we do our business and our business model, that gives both Mission Tech and Sustainable Tech resilience.
And I think that came through in the -- particularly in the bottom line and the cash performance through the course of the year. So despite external noise, we did execute on our strategy and we did so with discipline, and that's really about our people. The quality of our people and the commitment of our people is unbelievable in my hats off to them. And so while we face revenue headwinds, margins did expand, cash was strong and that really, really reinforces the underlying health of the product portfolio.
So as we run into '26, we've got a solid foundation in both businesses, strong work under contract and as we discussed on the cost on pipeline. So I think we're really well positioned in both businesses as we head towards the spin and as we enter 2026. So thank you again for joining today's call. I would welcome Shad and Rachel officially to the team in this forum, and obviously, we'll be talking soon. So thank you very much.
Thank you. That concludes today's call. You may now disconnect your lines. Thank you for joining.
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KBR, Inc. — Q4 2025 Earnings Call
KBR, Inc. — Q3 2025 Earnings Call
1. Management Discussion
Good morning. Thank you for attending today's KBR's Third Quarter 2025 Earnings Conference Call. My name is Megan, and I'll be your moderator today. [Operator Instructions] I would now like to pass the conference over to Jamie DuBray, VP of Investor Relations. Please go ahead.
Thank you. Good morning, and welcome to KBR's Third Quarter Fiscal 2025 Earnings Call. Joining me are Stuart Bradie, President and Chief Executive Officer; and Mark Sopp, Executive Vice President and Chief Financial Officer. Stuart and Mark will provide highlights from the quarter and then open the call for your questions. Today's earnings presentation is available on the Investors section of our website at kbr.com.
This discussion includes forward-looking statements reflecting KBR's views about future events and their potential impact on performance as outlined on Slide 2. These matters involve risks and uncertainties that could cause actual results to differ significantly from these forward-looking statements as discussed in our most recent Form 10-K available on our website.
These discussion also includes non-GAAP financial measures that the company believes to be useful metrics for investors. A reconciliation of these non-GAAP measures to the nearest GAAP measure is included at the end of our earnings presentation.
I will now turn the call over to Stuart.
Thanks, Jamie, and good morning, everyone. I will pick up on Slide 4. As with all meetings at KBR, we begin today with a brief Zero Harm moment. Last week, we published our 2024 sustainability report, and I would like to highlight several key achievements from this most recent publication.
We are pleased to report an industry-leading health, safety security incident rate and over 93% zero harm days. Additionally, 38% of KBR's fiscal 2024 revenue equivalent to $2.9 billion was allocated towards sustainability initiatives, marking an increase from the $2.5 billion in the previous year. Furthermore, KBR has established and approved science-based near-term targets that align with our net zero objectives. These accomplishments distinguish KBR within our industry. For the third consecutive year, we have been awarded MSCI's top AAA rating, and we recently received a B- rating from ISS, ESG Corporate. This is a recognized prime rating and at the top of our peer group. These highlights represent only a portion of our progress, and I encourage you to review the full sustainability report, which is available on our website via the QR code.
Now on to Slide 5. Let me start today with revenue. Revenue was flat in the quarter year-on-year and up 5% year-to-date from the prior year. While we are really encouraged by a strong book-to-bill of 1.4x for the quarter, this was back-end weighted with little conversion to revenue in Q3. In MTS, as you know, we have significant contracts awarded to us, which are still under protest and conversion remains uncertain with the government shutdown environment.
In STS, we faced several headwinds in the first half of the year. LNG project development was delayed by prior administration decisions, oversupply in petrochemicals led to multiple project cancellations and delays. Middle East unrest caused temporary pauses and new tariffs delayed investment. Additionally, a market shift towards energy affordability resulted in most of our green technology prospects being postponed or canceled. With that in mind, however, the STS business has proven remarkably resilient.
We have replaced the revenue reductions caused by the above headwinds with geographical expansion. We talked about the Middle East and countries like Iraq last quarter, and we've really doubled down in better markets like LNG, ammonia for fertilizer, energy affordability and circularity. STS book-to-bill in Q3 was pleasing. But as I said a moment ago, this was back-end weighted, and Mark will discuss the short-term impact of this in a moment.
The recent bookings, we think, show a shift in momentum, which we expect to continue in Q4, setting us up nicely heading into 2026. Importantly, we focused on what we can control. We delivered excellent bottom line performance in Q3 across all metrics. Adjusted EBITDA margins were up more than 100 basis points year-on-year at 12.4%, delivering an adjusted EBITDA of $240 million, up 10%. This is from a combination of delivery excellence, strong commercial management and prudent cost control. This translated into an adjusted EPS of $1.02, an increase of 21% year-over-year.
Now cash, really important. Cash was the standout in the quarter with conversion over 130% year-to-date, generating operating cash of $198 million in the quarter and $506 million year-to-date. And this takes us into a guided range for the full year, a terrific performance.
Thirdly, our book-to-bill in the quarter in both segments was solid, and we continue to be well positioned in key markets with a robust pipeline of opportunities awaiting award. In addition, we have several new wins in areas of strategic importance, more on this in a moment. In such volatile times, the quality of the work under contract and the pipeline are clear indicators of future earnings potential and thus worth more detail.
Fourth, we'll remind you that circa 40% of KBR's group revenue and over 60%, 6-0 percent, of adjusted EBITDA has 0 exposure to the U.S. government spending budgets and of course, risk related to the shutdown. Within MTS U.S., the majority of our portfolio, as we've discussed many times, is comprised of mission essential operational work, many of which are well-funded multiyear programs. This provides short-term resilience to the government shutdown, and Mark will provide additional details in the outlook.
Fifth, we returned more than $120 million in capital to shareholders this quarter while managing leverage responsibly. Finally, work to progress the spin-off is on track, which I'll discuss in more detail later.
On to Slide 6 and some new contract wins. We were pleased to announce a number of new contract wins during the third quarter, a few of which I will highlight. Let me start with MTS. We were awarded a $2.5 billion ceiling value base period contract, plus another $1 billion in option value to support astronaut health and human performance during space missions. This achievement represents our largest recompete this year. Human performance and space remains a key strategic area for NASA over the medium term as demonstrated by the significantly higher ceiling value awarded to us. Our booking value for this contract, to be clear, was below $1 billion, which is more consistent with the current run rate.
MTS also secured several strategic contracts with the Air Force Research Laboratory, utilizing our expertise in cybersecurity, trusted microelectronics, electronic warfare, digital forensics and sensing. These technological solutions are used to enhance situational awareness and therefore, strengthen decision-making for our military customers, really important stuff.
MTS was also recently awarded a contract for the U.S. Space Force to deploy our groundbreaking collaborative digital engineering ecosystem called Integration Accelerator to enhance Space Force decision-making and accelerate capability deployment. The design implementation for collaborative environment or DICE, together with Integration Accelerator will focus on establishing a state-of-the-art testing and training environment for the U.S. Space Force at its national headquarters.
Moving to STS. We continue to be a strategic partner for [ Basra ] Oil Company and have extended our current contract 2 more years to continue to perform engineering, procurement and construction management services for the Majnoon oil field in Iraq, and that's one of the country's most strategic assets.
STS was also awarded a contract by the Abu Dhabi Transmission Company called [indiscernible] for program management consultancy services to manage the overall execution of the power and water transmission networks across multiple locations in the UAE to enable data center expansion.
STS was also awarded a front-end engineering design contract for Kuwait oil company. That's for their heavy oil program, another strategic energy security project for the nation. Last but not least, STS was awarded the FEED contract for the [indiscernible] onshore LNG project in Indonesia. This is a complex project, which has critical significance to national energy security and demonstrates KBR's long-standing track record in excellence in LNG.
The book-to-bill for the group in the quarter was 1.4x with a trailing 12 months of 1.0x. Backlog and options now stand at more than $23 billion, and this value represents a 13 -- 13% increase since prior year-end and is the highest backlog and option value in KBR's recent history. And I think this clearly provides for the growth capacity contemplated in our long-term view.
On to Slide 7. Next, I'll update you on our pipeline and award trends in both segments. Currently, MTS has $18 billion in bids pending award with over 75% representing new business opportunities. Some contracts such as HHPC have recently been awarded, while new proposals have also been submitted and are awaiting decisions. Although the government contract environment did show some signs of improvement in Q3, the shutdown has brought decisions to a halt, so more delays should be expected.
In addition to the $18 billion, there are now $3 billion in contracts awarded to KBR as the winning bidder that remain under protest, and that's an increase of 50%, 5-0, from the previous quarter. The major addition was a classified program in [indiscernible], which is now included in this category.
Overall, this year, both the amount bid and the amount won have increased compared to the previous year's levels at this time. While short-term conversion has been a challenge, matters under our control to grow backlog, options and pipeline have progressed well, and we remain confident in our strategic positioning moving forward.
MTS itself delivered a 1.4x book-to-bill in the quarter and ended with $19.7 billion in backlog and options, and that's an increase of almost $2 billion versus the prior quarter. STS delivered a 1.2x book-to-bill, excluding LNG, in the quarter and ended with $3.7 billion in backlog. We currently have over $5 billion in our near-term bid pipeline, and that excludes major LNG. This is up from the second quarter when we reported $4.5 billion. This is a 20% increase for our base business.
You will also recall last quarter, we saw an anticipated circa $1.5 billion in awards expected to be approved during the second half of the year. In this quarter, we secured over $800 million in bookings, which I believe demonstrate the value of the STS global business model, our deep customer relationships and our laser focus on delivering value-add solutions to solve our customers' challenges.
With that, I'll pass it over to Mark. Mark?
Thank you, Stuart, and good morning, everyone. I'll pick up on Slide 9 and our Q3 performance highlights. Revenues in the quarter, as you heard from Stuart, were $1.9 billion, flat versus the prior year and up 5% on a year-to-date basis for the reasons Stuart covered earlier.
Adjusted EBITDA was quite healthy at $240 million, up 10%, with margins at 12.4%, an increase of over 100 basis points versus the prior year. This contribution came from both segments with STS particularly strong. Adjusted EPS was $1.02 in the quarter, up 21%, driven by the growth in adjusted EBITDA performance as well as the benefits from buybacks we've made over the last year.
Year-to-date, operating cash flow was $506 million, an increase of 24% from the prior year and a conversion rate of more than 130% against net income. This bumped up quite a bit in Q3. As Stuart mentioned earlier, strong cash performance was attributable to successful DSO reduction measures in both segments.
I'll also add, we received about $80 million in investing cash flows from the turnover of private equity partners in our Brown & Root Industrial Services joint venture. While it's certainly good to add this to our treasury at this time, we do expect to fund new investments in this space with our new partner in the relatively short term. This will further expand our reach into the OpEx side of the STS business, which is perfectly aligned with our strategy of increasing exposure to recurring revenue streams in that area.
Now I'll move on to Slide 10 and our segment performance. Starting with MTS, revenues of $1.4 billion were flat versus the prior year. Breaking that down by business unit, Defense and Intelligence generated growth of 14%, with contribution from the international side and also LinQuest. That business, LinQuest, as you'll recall, has added increased volume in military space and digital modernization with quite of that work being in the classified category.
Readiness and Sustainment was down 22%, primarily due to Department of War strategic shifts, including customer reductions in the [indiscernible] in the European Command Theater and preposition stock programs. We discussed both of those developments last quarter.
After this quarter end, the APS2 preposition program has come out of protest and in our favor, but the notice to proceed is hung up due to the shutdown. This will represent a future booking once that condition reverses. Importantly, revenue for RNS was flat sequentially. So other than any shutdown effects, we think we have cycled out of the areas that the Department of War is deemphasizing and have meaningful growth opportunities in protest and in the pipeline.
Science & Space was down 5%, while we did have the HHPC recompete win, which was terrific, there's really been a lack of new award activity outside of that. And there's an overall funding and decision delays in NASA overall in recent months. It's been a tough year at the agency, but we're certainly hopeful of more visibility and stability in the coming months as they navigate through the '26 budget process in Congress and once the shutdown lifts. Adjusted EBITDA for MTS was $143 million, commensurate with the revenue level with margins at a little over 10%.
Now I'll move on to STS. Revenues of $525 million in Q3 were down about 1% due to back-end weighted awards in the quarter. Positively, though, adjusted EBITDA came in at $123 million, up 13%. Adjusted EBITDA margins were 23.5% roughly, reflecting continued strong contribution from the Plaquemines LNG project coming through in equity and earnings, offset by heavier proprietary equipment mix, which adds to the installed base, but also has lower than normative margins.
We advanced more milestones on the Plaquemines project than originally planned in Q3, and that bumped up our profit recognition this quarter, but we do expect Q4 to look more normative as the rate we had in the first half of this year.
On to Slide 11 for the balance sheet and capital matters. We had really good outcomes in the quarter. Stuart covered those earlier, highlighted by the strong cash flow. We continue to delever now down to a net leverage ratio of 2.2x. While doing that, we have deployed over $300 million for buybacks so far this year, and that certainly was continued in Q3. This amounts to 4.5% of outstanding shares removed over the course of this year. Dividends add another $60 million in capital returned to shareholders as well on a year-to-date basis. And you'll also note that we have returned to normalized CapEx below 0.5% of revenue.
So with that, let me shift to our outlook for the balance of the year on to Slide 12. First, let me start by addressing our near-term outlook in light of the government shutdown. As Stuart mentioned earlier, our diversified international portfolio reduces concentration risk relative to the U.S. government.
For our U.S. government contracting business, as Stuart said earlier, most of our work is deemed essential. And furthermore, we have good stability in our funded backlog. Specifically, U.S. funded backlog was $2 billion at the end of Q3, which is over 5 months of our current revenue run rate. This is slightly up from Q2. With these factors, we have seen no material impacts from the shutdown in October and are confident we can navigate through November with minimal impact to revenue. The main areas impacted by the shutdown to KBR are the further slowdown of new awards as well as the resolution of protests outstanding.
As earlier stated, we now have $3 billion in awards, which we have won but cannot book or start until the protest clears. The shutdown does mean the conversion of these awards to revenue will be even further delayed, which modestly lowers our outlook for MTS in the fourth quarter.
Now moving on to STS. As Stuart mentioned earlier, STS experienced a number of headwinds so far in 2025. These delays have caused conversion challenges, which impacted our revenue growth outlook for the year. With some awards coming in late Q3, we have good visibility to modestly improved revenues in Q3 to Q4, but still short of what we had planned for the year.
So with all of that, we are updating our revenue guidance today for 2025 to a range of $7.75 billion to $7.85 billion for the year with an updated midpoint of $7.8 billion flat. We are reaffirming profit metrics due to the strong year-to-date performance. Adjusted EBITDA remains within the range of $960 million to $980 million. We're also reconfirming the corresponding adjusted EPS guidance of $3.78 to $3.88.
We're also keeping operating cash flow in the same $500 million to $550 million range. Given our year-to-date cash flow was $506 million, we have effectively delivered 96% of the guide at midpoint already. With STS, the international government cash streams have been unchanged and some payments are still being made actually on the U.S. government side. So we're confident we can manage working capital effectively to achieve operating cash flow neutrality through year-end with our underlying assumptions. Speaking of that, our guidance is based on the assumption that the government shutdown is resolved in November. Other key assumptions in our guidance are unchanged, including tax, CapEx and interest expense.
With that, I'll turn it back to Stuart to wrap it up.
Thank you very much, Mark. Before the key takeaways, I will give you an update on the spin-off, which was previously announced on September 24. We are spinning off our Mission Technologies segment, which I will refer to as SpinCo for now until a new name is announced later. New KBR will comprise the Sustainable Technology Solutions business. Our intent is to pursue this as a tax-free spin and upon completion of which KBR and its shareholders will benefit from ownership in 2 pure-play public companies with enhanced strategic focus, operational independence and financial flexibility.
Of course, the transaction will be subject to final approval by KBR's Board of Directors and other customary conditions. The expected benefits of the spin-off include enhanced strategic and management focus, organizational agility and streamlined decision-making, increased end market focus, prioritized commercial resources and sharpened go-to-market approach, greater capital allocation flexibility to support strategic imperatives, including potential future M&A transactions directed at each separate business. And there will be distinct and compelling investment profiles for each.
Now on to Slide 14 and a status update. The spin-off will take place in 3 phases. Number one, advanced preparation; number two, public filing and execution; and number three, post distribution. KBR is targeting completion of the spin-off by mid- to late 2026. And in order to meet this date, we are broadly aiming for the time line shown. Of course, schedules are subject to change, and we'll be communicating with our investment community along the way as things progress.
Today, spin-off preparations are advancing according to plan. Presently, we are conducting audits of historical carved-out financial statements and preparation of the pro forma financials, while also laying the groundwork for the Form 10. Additionally, recruitment processes for the CEO and CFO positions for SpinCo are progressing alongside preliminary work on naming and branding strategies. We have been very deliberate to set up a separate project team in order to minimize disruption to our operations and allow our teams to focus on their core business.
Now on to Slide 15 and some key takeaways from today. First, revenue was flat year-on-year, but in line with expectations given the slower award environment and the step down in MTS [indiscernible] work communicated earlier.
Second, we delivered strong bottom line performance with adjusted EBITDA of $240 million, and that's up 10%. And we also generated an adjusted EBITDA margin of 12.4%, up more than 100 basis points year-over-year, really, really pleasing. Adjusted EPS was up 21% and the standout for the quarter being operating and free cash flow.
Third, book-to-bill in the quarter in both segments was strong, aggregating to 1.4x. And we continue to be well positioned in key markets and have a robust pipeline of opportunities awaiting award. Work under contract or backlog increased, which together with the pipeline are strong indicators of future growth and earnings potential.
Next, we are highlighting our resilience and operational focus due to the fact that over 60% of adjusted EBITDA has 0 exposure to the U.S. government spending budgets, and we have seen no material impacts from the shutdown through today. We continued with our disciplined capital allocation, returning over $360 million to shareholders year-to-date. And finally, our spin-off is progressing nicely.
With that, I'll pass it back to the operator, who will open the call for Q&A.
[Operator Instructions] Our first question will go to the line of Andy Kaplowitz with Citigroup.
2. Question Answer
Stuart or Mark, can you give more color into how you're thinking initially about STS going into '26? I know you mentioned you have to kind of replace these energy transition type projects and you're doing that. And obviously, you have continued good EBITDA performance. I think you said, Stuart, that you think STS should remain in your growth algorithm. But do you have visibility to still grow that business in that sort of 11% to 15% range in '26? And where does that come from at this point?
Thanks, Andy. Good question and not unexpected given the revenue performance during the course of the year for the matters we discussed in the prepared remarks. The book-to-bill in Q3 and the expected book-to-bill in Q4 with, as Mark said, the modest revenue pickup between Q3 and Q4 gives us pretty good insight, and I think good momentum heading into 2026. We are going through our budget cycle right now. In fact, as we head towards the end of the year, and we've got good line of sight for continued momentum in that business aligned with our stated 2027 CAGRs, which if you work that backwards from '23 to '27, we need double-digit growth in STS, and we're still committing and aligned with that target.
Got it. And then maybe just a similar question in the outlook for MTS. Obviously, you mentioned defense and intel up 14%, which is offsetting some of the other pieces of the business. As I think about sort of going into '26, can you keep up that kind of strength in that business along with international and it helps offset if readiness and sustainment, for instance, or NASA is still weaker? How do you think about the interplay of the different pieces of the business, Stuart?
Yes. Again, very good question. And as you rightly state, it is an interplay. There's pressure on the science and space budgets because of what's around NASA. But of course, there's increased spending, and we've covered off how we sit on programs like Golden Dome, just where we think increased spending in Space Force and sort of the connected battlefield and what we're doing sort of being able to enhance command and control decisions with our software development sort of technology, et cetera. So very well placed in the defense and intel part of the portfolio.
And I would say that RNS, with a number of things that we have secured that are under protest, is well positioned coming off a reasonably low base with the reduction in the UCO work this year is well positioned to grow into next year. And when you combine that with what's happening in international in the U.K., they've come through the defense review and they're going through the process in November, maybe into early December on what you would call appropriations, but just how they're going to spend their money, and we've done the analysis of where we think those priority spends are and our capability set in [indiscernible] and our defense business in the U.K. is very well positioned to really sort of react to that. And as we've said many times, our Australia business continues to outperform, growing double digits.
So when you lay that all out and you put the puts and takes and you think about delays with this continued environment for protests that delay awards and things like that, we're pretty confident that we can actually achieve the sort of growth that we stated in the ranges that we've put out for that business in the past. And it may well be -- we probably at the lower end of that as we go into next year, but those decisions have not been made yet. But certainly, we are progressing towards that sort of outcome, and we're confident we can continue to grow the business coming out of the shutdown.
Our next question will go to the line of Augie Smith with D.A. Davidson.
This is Augie Smith on for Brent Thielman. So just first, you guys touched on it briefly, but could you provide a little bit more in-depth on your thoughts in regards to NASA exposure and proposed budget cuts, specifically in consideration of the impact for MTS the rest of this year and then potentially into 2026?
For the rest of this year, it was very little impact, particularly under the shutdown environment where things just continue as is. We do have one particular contract that's deemed nonessential, but it's not material to our numbers. So I'm not expecting too much change for the rest of this year.
As we head into next year, we've got an unclear picture, I would say, Mark, as we've got the presidential push for a reduction in the science area. We've got congressional budgets holding at the current level and where that all sit and shakes out is difficult to assess. I would say that in the NASA environment, it's the lower margin piece of our work. So from the bottom line perspective, it's probably less material. In terms of looking forward, we've got about less than 25% of our portfolio, maybe even less exposed to the science area.
And I think there's going to be increased investment in the human space performance piece of that as we look at [indiscernible] 3 going back to the moon and [indiscernible] 4, whether that's across what we're doing in human health performance or what we're doing in the broader Johnson and the Space program, et cetera. So there'll be some puts and takes. And I guess, more color, we'll be able to describe more color on that in year-end earnings. But certainly through the course of this year, I don't expect too much disruption. And certainly, I stick by my comments I made in my earlier remarks about the overall portfolio and the puts and takes allowing us to grow overall in line with our stated targets.
Okay. And then if I could just squeeze one more in. Within STS, could you guys touch on how active you guys see opportunities in LNG, if you have any advanced discussions there or just what you're seeing with potential other LNG terminal projects moving forward?
Yes. I'll touch on a few there. I mean LNG is a really sort of topic at the moment, as you can expect. I'll start with [indiscernible]. I mean, our work continues to progress well. As we stated before, we see equity and earnings running all the way through at the sort of current levels through '26 and into early '27. In fact, VG themselves have announced that they've got approval to bring in gas to the second block. So Phase 2, if you like, of Plaquemines. But that's not the -- really it's not a hard stop for us because we've got a lot of completions and commissioning and work to do through the course of this year and early into '27. So that's aligned with our previous statements.
On Lake Charles, I'll take you back to the -- there's been some press statements about certainly the delay in FID decisions into Q1 next year. But some press had said that was related to increased cost. That is not correct. They had said very clearly in the Q2 call, and I can confirm that the [indiscernible] pricing and overall cost, including the impact of tariffs is bang on expectation, and that has not changed. So in terms of ET, and I think you should really listen into their call, which I believe is next week, November 5, and they will give you an update of their thinking and the current progress on the project. So that's where that sits.
We announced that we had been awarded the front-end design for [indiscernible], which is a very, very large project in Indonesia, and that work has kicked off. And we continue to do work supporting Oman LNG. We're doing the PMC work in [indiscernible] LNG in Abu Dhabi. And we've got a number of opportunities that we're looking at in the U.S. in addition to Lake Charles and Plaquemines. So it's a very active global market for KBR and one we're bullish on.
Our next question will go to the line of Michael Dudas with Vertical Research Partners.
First, maybe following on the STS business, maybe, Stuart, away from LNG, when you talk about that $5 billion in pipeline that's visible and some really strong activity maybe for the end of this year into next. What are some of the other areas that are bringing a focus given some of the dynamics and shifts in what client desires are because of green and affordability and how that can play into visibility, maybe especially in some of your key ammonia and also maybe even an update on the [indiscernible] opportunities and ramp-ups?
Yes, quite right. Michael, we were quite specific to exclude LNG from that just because of the scale, just to show you the progress we're making outside of LNG in the business. So I picked up on. Increasing that sort of backlog by the opportunity set by 20%, I think, is indicative as was the book-to-bill in the quarter. And we expect that book-to-bill and that to progress similarly in Q4.
So what are we seeing? We're seeing increased activity, as we said, across the Middle East, and we had a number of wins I touched on, whether it be in Kuwait or Iraq. And we see those national agendas being pushed hard, and we're very well placed to take advantage of those. And I expect more announcements in those arenas to come forward over the course of the next couple of quarters. So I think international expansion and following the money around national agendas is key, and we'll continue to do that. And that's more about energy security as a thematic.
When I look across -- we talked a little bit about LNG, of course, which is very positive. Ammonia continues to be a very active market for us, and we've got a number of sort of near and medium-term pursuits, and we expect that to continue. And as you rightly state, that's more around traditional ammonia as it pertains to fertilizers rather than hydrogen. I think that's also been pushed to the right a bit as the affordability and economics have come into play. But that continues to be a very attractive market for us.
And on [indiscernible], the current situation is we continue to progress similar to next quarter, replacing particularly valves that ultimately have sort of eroded, if you like, under the high-pressure, high-temperature environment but with certain feedstocks that have made the progress in commissioning a bit slower than we had hoped for. I do not expect those plants to be up and running until Q1 at the moment, certainly the one in Wilton.
But outside of that, there's nothing sinister or any sort of big red flags. I think it's first-of-a-kind technology start-up issues. And these are not unexpected. We did hope for a Q4 startup, but if it slips to Q1, so be it. I mean these are long-term plays for us. And if that picks up, then terrific going into next year. And it should present us a super opportunity once the facilities are up and running. There's not a month that goes by without potential investors in plants across the world coming to visit the site and they're just waiting to make sure that we've got an operating manual we can hand over that with a set of equipment specs that actually avoids a typical lease commissioning challenges for the next plant.
So as you would expect. So it's quite an active portfolio. Team is working hard. I think the resilience in the business has been demonstrated by the way that we've managed to pivot to the well-funded pieces of work in the industry and in the markets geographically across the world. So hats off to the team. But yes, quite excited about the future.
Excellent. And maybe just a quick follow-up. When you cite the protest levels, again, I know difficult to predict, but going into like when do you get the sense of the cadence? Is there certain projects further along or have to get started and how that could break to maybe get that conversion to show up in '26 or in a better level?
Yes. I think we certainly -- I think we're all aware that the government shutdown precludes those protests being resolved and the award being worked. Even the protest that has been resolved, we can't get them to give us a start work order because there's -- we're not able to do that under this environment. So there will be pickups, the [indiscernible] in Europe that has come out of protest in our favor will add about $160 million or so to backlog, and we'll book that once we get the work order. And as we look forward, the confidential or classified opportunity into [indiscernible], we expect if the government does come out of shutdown to that to be awarded before or the protest to be resolved before the end of the year.
It's likely that the big piece of work in Iraq will be resolved in Q1. So if that does happen, and there's a question mark over that just on timing and how quickly it gets to the top of the priority list to resolve these matters, it will have a significant upside into next year. But if it delays, obviously, the longer it delays, the less of the impact. But we should be able to give you a very much clearer picture at year-end. But it's a good fact pattern. It's $3 billion under protest that we've won and resolution of that would certainly give strong momentum in the STS segment going into '26 and into '27 for that matter.
Our next question will go to the line of Tobey Sommer with Truist.
Could you tell us if you've -- since announcing the spin, received any interest from outside parties in acquiring either of the businesses?
Tobey, you know I can't answer that question. I'm sorry. I cannot answer that question. The thing that we have announced is going well in terms of under [indiscernible] is progressing as expected and on track. It is typical, I would say, that once you announce such things that you do get inbounds, but we are not at liberty to discuss them in any way, shape or form, I'm sorry.
Okay. Have you given any more thought to the appropriate comparables for valuation purposes versus the stand-alone businesses in terms of existing public companies that trade at multiples that you think are matched more businesses?
Yes. So when I look at MTS, I think the market, we've got -- well, let me put it this way. We have an amazing opportunity to rebrand that business, shake off perceptions of the past. There's still -- when I talk to people even in Wall Street that perhaps don't know us so well, they still think of, I guess, [indiscernible] KBR back in history and don't understand the transformative journey we've been on to position the company in the areas of D&I and science and space and internationally as well as sort of digitalize our platform around readiness and sustainment. So I think there's an amazing opportunity to relaunch the image of the company and tell the story as it is today, not what it was yesterday. So we're quite excited about that.
I mean the margin of the business, I mean, it's progressively grown over time, and we expect that to continue as part of the investment thesis as we go forward. And so I mean, you know the typical peers in the government services realm. I don't have to go over those. But we're certainly a more quality business than people are probably appreciating today. So there's an amazing opportunity, and we're very excited about that opportunity to sort of reinvigorate the market around what will be a new brand and a compelling story of an investment thesis that sits around it.
And we're working hard on the strategy to support that for Investor Day right now. And we just had a session on it this week, in fact, and it was -- yes, you could tell the room was very upbeat. So that was good.
On the sustainable tech side, it's a very similar story. And we've talked about this last time around. There are no real comps that do what we do that are publicly traded. Lummus is rumored to be coming to market via an IPO, but I'm not privy to the timing of that or whether now is a good time or not to do that. So that would be a really good comp if that did happen before we expand MTS.
But as Mark went through last time, as we looked at companies that were -- had energy enablers that had exposure to professional services, the way that we do or technologies the way we do with the same sort of growth and margin profiles as we are projecting to companies like [indiscernible] and Jacobs to some extent, et cetera. So we talked that through, I think, last quarter. Happy to sit down with you in a separate session and talk through that logic. We've obviously got anchors, Goldman, who are supporting us on this transaction who laid out those comps and the trading expectations that are surround those. So that's where we are in that journey. And I think to admire the business for its metrics because there is no direct peer unless Lummus really goes to market before we do, we get there.
I'll just add, Tobey, since the door open a little bit here, Stuart mentioned the branding opportunity and the perception change is possible through this transaction. We view that as applying to both STS and MTS. But also, that's more than that, a lot has changed in the world this year, and we're using this opportunity to make both of our businesses better in the months ahead, leading up to what will be to Investor Days, hopefully in the spring. We're talking about on the MTS side, in particular, we've got rich history in Houston. We'll keep quite a bit of operations there. We serve Johnson there that kind of started all the way back when, but we're going to really increase our Washington presence and our intended impact relative to our customers there. That's a mixture of the Pentagon, of course, and the executive branch.
And so we're really going to increase our resourcing there and our focus, not only in branding, but really articulating the story of how we can help customers be more successful in the changing environment that they're facing. And so a lot of investment is going to go into our impact for business development from an engagement with customer perspective. And so we're building that into the plan. And there are similar improvements that are going to be built into the STS story as well. So we're excited to not only rebrand, if you will, but to tell a different story when it's our time to do so out there in a few months.
Our next question will go to the line of Mariana Perez Mora with Bank of America.
So first, I'd like to dig a little bit deeper on STS. And I was surprised about the margins when you exclude the contribution from the unconsolidated equity in earnings. It was low double digits versus mid-teens range that you usually have. Like how should we think about those margins going forward?
I think it's -- Mariana, good question. It's timing. Mark talked in his prepared remarks that in this particular quarter, we saw a lot of proprietary equipment come through the revenue line. And as we've discussed previously, the way we sell technology is we sell the license fee, the basic engineering and then the proprietary equipment and the combined overall margins are in line with our typical expectations, but the lower margin piece of that is the proprietary equipment, and there was more that came through in the quarter. And we've seen that in the past. We've talked about that to the market in previous quarters where we've seen margins double up or double down as a consequence.
So some quarters, we get very high margins as a consequence of having more of the licensing. But so it's a blended margin over time. So again, nothing sinister there. That is just the timing, but the strength of the portfolio overall delivered, I guess, very attractive margins overall for STS, and we talked about the contribution from Plaquemines, but the contribution from Brown & Root was up markedly as well, and that comes through the equity and lines, which is a sustaining piece of our portfolio. So I think it's -- yes, that's the answer.
So it's still the mid-teens is sustainable near term or like midterm target?
[indiscernible] It's just timing.
And then you mentioned that you expected Plaquemines to continue to contribute until like getting into '27. Is this new $70 million a quarter run rate, the new normal? Or it's more like average year-to-date?
Yes, I also addressed that in my remarks. So we did have a spike in Q3 due to milestone progression, which we're quite proud of and pleased and the customer happy on that front. But if you go back to the first half of this year and you take an average of those 2 quarters, that is the quarterly pace that we expect by and large in 2026 with some spillover into '27. We'll probably have some volatility with that as milestones as they time as often does in this type of business. But for the year, take that pace as a run rate as a good proxy for now.
Right. How should we think about those onetimes or achieving those milestones and recognizing them in the P&L versus the cash flow impact?
They're very well connected to cash. This is [indiscernible] and we will not extract cash out of the joint venture ahead. And so I think as we realize the profit, we will extract the cash and the customer is paying as well in that regard. So cash conversion should be similar for next year, if that's the question.
Great. And then on STS backlog, you guys have been executing on the backlog, and it has come down from like the $4 billion to $5 billion range to like now like in the, I don't know, high 3s. How should we think about the timing on the $5 billion that you mentioned in the prepared remarks that you have in the bid pipeline and how that should impact backlog?
Yes. Near term is over the next 6 to 8 months. It's not like the government procurement pipeline, you can see for quite a ways off, and you can see it coming down the funnel. Obviously, STS is a very different market. And so that's why we talk about near-term backlog. If we looked at long-term backlog, the number would be so big that you wouldn't believe it and rightfully so because some of these projects go away or whatever. So it's far better that we concentrate on what's real. And what's real for us is that sort of $5 billion or so in near-term backlog, which is 6 to 8 months. And as I said before, that excludes things like Lake Charles and those sort of big one-timers that would obviously distort the picture.
Great. And last one, switching gears a little bit to mission technologies and national security. Could you give us -- would you mind giving us some color on how are things going in Australia and the U.K. as you -- because you mentioned like international strength, how is the pipeline of opportunities there? And if they are like moving in line with the speed -- expected speed?
Yes. Very good question. I don't think we spent enough time talking about our international portfolio. It continues to perform in the aggregate in the mid-teens in terms of margin. So it's very attractive. Talk about Australia first, they came through the defense review probably 18 months ago. They are growing nicely. I think we talked last quarter about them going up double digits. Their pipeline remains really strong. They're very well positioned. They're very well thought of as well. Our brand recognition there is really, really good. are very much part of the fabric of the Australian defense market and the Australian infrastructure and STS market for that matter. So we continue to see good potential upside in the Australian market, and that's pretty clear, and we've been very consistent on that. Mark, any more on Australia?
That's the fastest-growing part of the business. It's a little more than 10% sequentially. And -- well, year-over-year, actually, now they see that and sequentially for that matter. So Nick and the team are doing a fabulous job there with the military customer. You asked about the U.K. We talked about changes in government, changes in policy, a little bit slower in that market. Team is doing the best they can with the opportunities they have. And so they're trying to up the bids and -- they have similar sort of conversion issues that we've had in the States, but we're certainly optimistic for the longer term on that being a strong contributor at better margins than the U.S. for sure. So it's a very important market for us to continue to do well.
And I think there's -- as Europe continues or starts to spend more discretionary in the defense sector, we'll start to really think about other opportunities in that broader market beyond U.K. as very carefully and selectively, but certainly, that's the right area for spend for the next several years. And so we have a developing strategy to tap that as best we can.
Yes. And we've got -- just to give you some sort of near-term benchmarks again sequentially, that's up double digits. The U.K., Europe piece is doing extremely well sequentially now that the dust has settled in the way the U.K. defense has come through. So very optimistic about the increasing demand for our services in that environment.
Our last question goes to the line of Sangita Jain with KeyBanc Capital Markets.
With no response, I will close the line. We have no further questions, apologies. Go ahead, Stuart, with your closing remarks.
Yes. Thanks, Megan. So in closing, very excited about the future. We talked quite -- we're quite animated about the excitement around the strategic thesis for both businesses and the opportunity it presents. I think the book-to-bill that we've posted this quarter and the bottom line metrics underpin where our focus is, and that's certainly coming through in the results. Cash being a standout, which is very timely as we discussed. And we do remain very excited about the path for both companies, both New KBR and SpinCo, and we're confident in our ability to continue creating value for our shareholders as we progress towards executing the spin.
So thank you very much for your time today, and I look forward to talking to you one-on-one or whatever after the call. Thank you.
Thank you. That concludes today's earnings conference call. Thank you for your participation, and enjoy the rest of your day.
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KBR, Inc. — Q3 2025 Earnings Call
KBR, Inc. — Special Call - KBR, Inc.
1. Management Discussion
Hello, everyone, and welcome to KBR's Special Investor Webcast.
My name is Lydia, and I'll be your operator today. [Operator Instructions] I'll now hand you over to your host, Jamie DuBray, Vice President of Investor Relations at KBR to begin. Please go ahead.
Thank you. Good morning, and welcome to KBR's Special Investor Webcast.
Joining me today are Stuart Bradie, President and Chief Executive Officer; and Mark Sopp, Executive Vice President and Chief Financial Officer. Stuart and Mark will discuss today's announcement regarding our strategic intent to spin off Mission Technology Solutions in support of unlocking meaningful value creation.
Please note that we will not be answering any questions related to 2025 financial performance at this time.
Today's presentation is available on the Investors section of our website at kbr.com. This discussion includes forward-looking statements reflecting KBR's views about future events and their potential impact on performance as outlined on Slide 2. These matters involve risks and uncertainties that could cause actual results to differ significantly from these forward-looking statements as discussed in our most recent Form 10-K and other filings available on our website. This discussion also includes non-GAAP financial measures that the company believes to be useful metrics for investors.
I will now turn the call over to Stuart.
Thank you, Jamie. Good morning, and thank you for joining. I will start on Slide 3.
As you may have seen from our press release today, we are announcing our strategic intent to spin off our Mission Technology Solutions segment into a stand-alone publicly traded company. This is the culmination of a multiyear strategic transformation, whereby we have deliberately created 2 strong businesses that have innovation, science, technology and digital engineering as differentiated capabilities. Upon completion of the spin-off, the result will be 2 independent pure-play public companies positioned to unlock meaningful shareholder value creation.
New KBR will comprise what today is our Sustainable Technology Solutions segment, or STS, and SpinCo will comprise what is today our Mission Technology Solutions segment or MTS. Both companies will benefit from dedicated focus and independent financial flexibility. And importantly, this transaction is intended to be tax-free to KBR and its shareholders. And from a timing perspective, it is expected to be completed mid to late 2026.
On to Slide 4. The decision announced today builds on a decade-long portfolio transformation to simplify KBR and convert into a resilient technology and engineering solutions provider aligned to strong secular growth trends. This has really helped to derisk the company and has supported stable, predictable earnings growth and associated strong free cash flow over time.
Let me provide some background as our history is relevant to our future. In 2015, we began transforming our legacy Government Services business. We have since continued to scale our high-end technology services portfolio, both organically and as you're well aware, inorganically across the globe, including the strategic acquisition of LinQuest in 2024. The acquisitions we made over this time are now fully integrated and performing really well.
In 2020, we reshaped STS. Having made the decision to exit lump-sum turnkey a few years prior, we set about exiting commoditized services, including direct construction and really focusing on expanding our IP-protected technology portfolio and leveraging our higher-end engineering and project delivery capability, again, globally across energy security, energy transition and critical infrastructure. You may recall, in early January of this year, we announced a segment realignment, which was the final major step of preparing our business for today's announcement.
The results of our decade-long transformation are clear, as revenue has grown from around circa $5 billion to $8 billion over that period. Margins have almost doubled from a bit over 6% to a little under 12% in the same period. And impressively, adjusted EBITDA has grown by over 180% in the same period with commensurate increases in adjusted EPS and operating cash.
Now I think this clearly demonstrates our consistent focus on continually moving upmarket and, of course, reaping the commercial benefits of doing so. We drove the portfolio mix towards higher growth, higher-margin businesses, divesting non-core assets while acquiring and integrating 13 businesses and realizing meaningful synergies over that period. We also fostered a cultural shift to a high-performing values-led ethos, attracting and retaining industry-leading talent with an unwavering focus on delivering excellence to our customers.
Our people are our most valuable asset and are at the heart of everything we do, and I've said that often. And I wish to take this moment to recognize our incredible people, circa 37,000 strong around the world for their dedication and making this a reality. That said, we are not an organization that stands still and the next logical step in our portfolio transformation to unlock incremental value is to enable these 2 businesses to operate and be owned independently, which will, of course, be achieved via the spin of MTS.
This is a nice segue on to Slide 5. Our team has successfully built 2 leading businesses with the necessary scale and strong financial profile to enable us to take this next exciting step. We expect this will unlock further value creation and growth opportunities for both MTS and our remaining STS business, and we see meaningful strategic benefits. First, the spin is expected to enable enhanced strategic and management focus at each stand-alone entity. New KBR and SpinCo will each build on a strong existing foundation with a focused Board and management team, aligned incentives and increased end market focus.
Second, the spin is expected to enable greater organizational agility by streamlining decision-making and driving increased accountability while also enabling fit-for-purpose operating models.
Third, the spin is expected to better align our capabilities and importantly, our talent to our customer needs and the goal of increased end market focus, prioritized commercial resources and sharpened go-to-market approaches. We anticipate even greater customer intimacy, which is critically important in today's fast-moving environment.
Fourth, each business will have greater flexibility to optimize its capital structure and capital allocation policies to best support their respective growth objectives and investment opportunities, including, of course, potential M&A.
And finally, new KBR and SpinCo will have distinct investment profiles that we believe will be compelling, allowing each company the opportunity to better align their unique value proposition with a natural shareholder base.
To that end, it is anticipated that the spin will enable new KBR with attractive growth and margin performance and low capital intensity to be compared to a more relevant group of peers with similar attributes. And the same will apply, of course, to SpinCo.
On to Slide 6 for a review of the new KBR and SpinCo businesses. We are creating 2 scaled independent pure-play public companies with leading positions in the respective categories, distinct competitive advantages and compelling long-term secular growth trends. Today, KBR is a highly regarded and trusted global brand. A new KBR comprising our STS segment is expected to continue to be a leader in IP-protected process and circular technologies and services, enabling greater energy security, energy transition, circularity and critical infrastructure across the asset life cycle.
In the trailing 12 months ending July 4, 2025, our fiscal second quarter end, the STS segment had reported revenue of $2.2 billion, strong segment adjusted EBITDA margins of around 22%, which excludes corporate and anticipated stand-alone costs and a robust backlog of $3.7 billion. SpinCo, comprising MTS, is expected to continue to be a leading pure-play global Government Solutions provider with an upmarket portfolio aligned to high-demand national security and space priorities with growing budgets. The business is well positioned to continue to capture growth with backlog and options totaling $17.8 billion. In the trailing 12 months ending July 4, 2025, the MTS segment had reported revenue of $5.8 billion and adjusted EBITDA margins of around 10%, again, excluding corporate and anticipated stand-alone costs.
On to Slide 7. Over the next few slides, I will touch on both businesses at a high level, highlighting some key points. There will be a dedicated Investor Day for each of the businesses near to completion of the spin-off, where we will, of course, provide a far deeper dive.
So first, new KBR, a portfolio of trusted, proven IP-protected technologies. It's a global business, a very global business, and it has significant and established presence in key geographies underpinned by a trusted and respected brand. It offers attractive margins, strategic discipline and strong commercial acumen with low capital intensity, very attractive attributes. It is increasingly aligned with our customer OpEx and importantly, CapEx revenue cycles and operates close to customers all around the world with proximity and access serving as meaningful success factors given national agendas vary for energy security and transition.
Over the past several months, we've enhanced our digital delivery and operational platforms, and we look forward to sharing more of this in the future Investor Day. New KBR will continue to offer a good balance of adjusted EBITDA mix and geographical spread, as shown in the pie chart. As a stand-alone business with $2.2 billion of revenue, double-digit historical growth, all organic and attractive margins, it is expected that new KBR will offer a best-in-class financial profile.
Importantly, this business is a low capital intensity given its focus on licensing its process technologies and asset-light solutions. It is not a catalyst manufacturing business. With CapEx accounting for less than 1% of sales, it produces strong free cash flow and high conversion rates. New KBR will emerge as an independent company with a strong track record of successful risk-adjusted international and domestic joint ventures, including Brown & Root Industrial Services, which was formed in 2015 to unlock further profitable growth opportunities.
On to Slide 8. Now we have outlined new KBR's capabilities set across its 2 business platforms, sustainable solutions and sustainable technologies. We are a subject matter experts and offer a unique full life cycle customer value proposition to blue-chip customer base globally. We are proud of the relationships we've built, which includes Aramco, BP, Energy Transfer and Venture Global to name but a few. In short, new KBR is a solutions provider to a diversified energy, chemicals, circularity and critical infrastructure customer base.
On to Slide 9 and an overview of SpinCo. SpinCo today is a very different company to the legacy KBR Government Services business pre 2015. In 2015, Readiness & Sustainment made up close to 100% of the revenue. And this has grown substantially, but now makes up only 25% as we strategically added deep domain expertise across the Defense, Intel and Space domains. The pie charts on the right depict the business and geographical mix. SpinCo is a global business, really important point, with a portfolio of mission-critical, technically-enabled capabilities aligned to national security priorities and at a time when defense budgets are increasing around the world.
This business benefits from a bedrock of long-duration, very sizable contracts that support future earnings and cash generation. With the historical strategic push, both organically and through acquisition into higher-end solutions in areas like digital interoperability, model-based engineering, connected battle space and military space, SpinCo is very well positioned for both growth and margin expansion over time.
On to Slide 10. Here, we are highlighting SpinCo's high-level capabilities and some of our key customers. Our diverse portfolio is balanced across Defense & Intel, Science & Space, and Readiness & Sustainment capabilities, which support our customers' most challenging missions. In the U.S., we are a go-to partner for long-tenured customers, including the DoD, the Navy, Air Force, Army, NASA and the NRO and overseas, the Ministries of Defense in the U.K. and Australia and more.
On to Slide 11. In connection with the decision to spin off MTS, I'm really excited to announce a few executive leadership updates. Post spin, I will remain in my current position at new KBR. Beyond the decade-long transformation of KBR, we have been preparing and working towards today for over a year. We want to ensure the successful execution of this transaction. And to this end, Mark Sopp, our current CFO, will be transitioning into a new role overseeing the spin-off of MTS.
Mark has been an absolutely outstanding CFO, a colleague and a friend and has been absolutely instrumental in transforming KBR. He has my and frankly, all at KBR's thanks. For the spin, he also has the relevant experience having successfully executed a spin in his prior role before coming to KBR. And Mark is ideally suited to lead the spin to completion and to ensure that 2 strong, capable and well-positioned stand-alone public companies emerge.
Additionally, I'm also pleased to announce that Shad Evans will transition into the new KBR CFO role effective January 5, 2026 and post spin will remain the CFO at new KBR. Shad has held a number of senior roles at KBR, including the CFO of STS and Chief Accounting Officer and is a standing member of the executive leadership team in his current role as SVP of Financial Operations. I have worked closely with Shad over the past 5-plus years, and I'm really confident he will help us strengthen our business and execute our priorities. Congratulations to both Mark and Shad. We have also engaged a leading executive search firm to help identify CEO and CFO candidates to lead SpinCo, and we will, of course, share updates at the appropriate time.
And finally, on to Slide 13 and to sum up. The proposed spin-off is intended to be tax-free to KBR and its shareholders. We expect the transaction to be completed by mid- to late 2026, and the transaction is subject to review and final approval of KBR's Board of Directors, the filing and effectiveness of a Form 10 registration statement to be filed with the SEC relating to SpinCo and other customary conditions. We will provide you with updates as we work toward completing the separation, and we will maintain our continued commitment to our customers, our employees, our partners and shareholders as we enter this next super exciting phase of our portfolio transformation. We are very excited about the underlying strength in both businesses, and that is a key point, both businesses and are ready to take the next step and further unlock the potential of our portfolio.
And now we will open the line for questions. Thank you.
[Operator Instructions] Our first question today comes from Tobey Sommer with Truist.
2. Question Answer
I was wondering if you could give us your perspective of the consolidation of the international business into the 2 STS and MTS and how that's gone over the last several quarters and whether there will be any changes or have you sort of made the right decisions in terms of fit at the time?
Thanks, Tobey. We, of course, were very deliberate in that action to enable 2 more stand-alone entities that we have today to enable what we announced today. The separation and putting the component parts into the relevant elements of STS and MTS has gone extremely well. Both the business models and the synergies that have been realized as a consequence have shown through, and that's now bedded down and working very nicely. So we're very pleased with that decision, and it certainly shows the forethought towards the decision that we're announcing today, and I'm pleased to say that, that is -- has gone really well.
And if I could ask a follow-up, what comparables do you think are best suited in competitors when you look at the new KBR, what sort of firms do you have in mind?
Good question. I would say that there really STS has limited perfect public comps given its unique business model with sort of asset-light, as we said on the call, IP-protected process technologies and circular services that obviously generate leading margins and strong cash flow. And so the comps that I would point you to are businesses that have the same financial attributes. I mean, typically, we are compared with companies like Lummus and Honeywell's UOP business, but that's very much contained within the broader business base, as you know. But our business uniquely combines attractive features of energy security and energy transition enablers, best-in-class engineering design and, of course, complex project delivery.
But I would point out, Tobey, on that question, I want to be clear that the recent transactions with Ecovyst and Johnson Matthey are not comps for STS. They are very much catalyst business, more asset heavy. They are manufacturers, and we've got a very different business mix and profile, as you're aware. We're very much serving diverse end markets aligned to secular growth trends that we've discussed previously with extremely limited CapEx. So very, very different businesses than those types of businesses.
Last one for me. You said you hired a search firm to look for leadership of MTS. When did that process begin?
Recently. Until we go public, it's difficult to really sort of do that with full throttle in earnest. We typically do what others would do and try to do that in a confidential sort of no names basis. So that process has started and now it can amp up now this news is out.
Our next question comes from Mariana Perez Mora with Bank of America.
So my first question is more strategically, right? A couple of years ago, you did an Investor Day that was focused all about this like 1 KBR synergies. And I do understand the synergies, and we have discussed the valuation of like how the sum of the parts was naturally unlocked for the 2 companies separate, but you always said there was like operational synergies that was the beauty of having these 2 business together. What happened to that? And why now is different?
It's very different, Mariana, because, I guess, the piece of the glue that created the synergies we discussed at Investor Day were contained within what was our international government business. which we, of course, decided to, I guess, expand and reduce complexity and move the relevant entities and capabilities into STS and MTS in January of this year. So that was what has changed from that Investor Day to where we are today.
And then when I think about long-term growth and profitability of these 2 business units, how should we think about that in the next like 3 to 5 years or like at least the 3 years that we were talking before, especially for, I'll say, like MTS with this like changed government environment and like some good things like getting not cap extended, but others that is more challenging to get like U.S. Transport Command contract. And then on STS, how we think about that, like both like growth going forward and details about like what is there because this has been more of a 1, 2 line type of business as a stand-alone company, if we will see like different like segments? And last one is, what is the profitability that you expect to see a couple of years from now?
That's a lot of questions in one question, Mariana.
Sorry. I started with growth, and it was like I want to know everything about growth and markets going forward.
We want to know everything. Yes. I mean today, we're not providing any statements around -- beyond we reaffirmed guidance in the press release for this year. We're not discussing future long-term targets on this call. Of course, there will be stand-alone Investor Days for both RemainCo and SpinCo later in this process where we will do a deeper dive. I think it's worth saying without mentioning numbers that we have seen on the MTS side during the course of this quarter, a little bit later than expected, but certainly, you'll have seen a number of announcements of recent awards, which shows in our view that we're well positioned opposite government priorities. And that's not just in the U.S., that's internationally as well and similarly, in the STS business. So we feel that the businesses are building solid backlog to -- for them to continue to perform well, and we'll give updates on numbers and targets as we progress through this process.
Great. And last one from me. I'm making like many, many questions, why did you choose to go for a spin-off versus selling this business to someone else, especially in an industry where M&A and consolidation and this like scale and scope strategy for Government Services has played out so well.
So we've always taken a really sort of proactive view of portfolio transformation, and I hope that came through in the prepared remarks is how we've transformed KBR over time. And we've been continually assessing our portfolio and the decision today builds on really a decade-long transformation. We've really looked at a number of different ways to increase shareholder value and our assessment through that process, which has been ongoing for some time, again, as you're all aware, today's announcement was the result of that analysis. And I'd reiterate that this will be tax-free to KBR shareholders, which I'm sure everyone is pleased to hear, and all the things that we do going forward will ensure that we maintain that tax-free status. So this is not a sudden a decision. This is a decision that's been contemplated over time. There's been a lot of work associated with this.
[Operator Instructions] Our next question comes from Andy Kaplowitz with Citi.
This is Natalia, on behalf of Andy Kaplowitz. I guess the first question I'd like to ask is if you can quantify the expected level of stranded or stand-alone costs post spin? And how should we think about those as largely like near-term transition expenses or ongoing structural overhead?
Natalia, this is Mark. There will be some transaction expenses that we will incur over time, of course, as is standard with this sort of thing, and we'll give -- as time progresses, starting with our Q3 earnings report to the extent we have an outlook for the near term, we'll provide there and '26 will be the bulk of the transaction-related expenses that we'll quantify and enumerate for everybody.
Relative to stranded costs, we're going to work very hard to minimize those, of course. There are some dis-synergies that come with 2 separate companies. There's a pretty well-trodden path in determining those and instantiating those in the 2 different businesses. But we intend to engineer an outcome that delivers a financial profile that is attractive to both companies together with an attractive capital structure that we are committed to deliver here. We're not going to overlever the SpinCo or anything like that. We're going to have a responsible capital structure for both.
And so we expect that both businesses will remain cost competitive through the transaction, reflecting those stranded costs, and we expect to have margin profiles to the earlier question that are consistent with what we now experience. We will, of course, have some cost-cutting opportunities that we'll pursue as we always do. And having done this before, I'm very confident that the cost competitiveness part and the increased focus and the bespoke cost structure designs of both will enable that outcome.
Got it. That's helpful. And just to follow up on that, like what are the key buckets of the stand-alone stranded costs that you anticipate? And like how do you -- how quickly do you expect to offset them through either cost takeout or revenue synergies?
Well, the buckets are you have 2 Board of Directors and 2 C-suites and things like that. You'll probably have some incremental IT infrastructure spend on both and governance costs to some degrees. But that's kind of the pecking order of those categories. And we've already are down the path of -- and I'll talk about this in a moment, but putting together teams that design that and optimize that, that are really bespoke to the 2 businesses as they operate in different markets and have different dynamics in their end markets today that we will be designing to.
Yes. I think it's worth also saying that these businesses have operated for several months as 2 pretty much stand-alone entities, which I think really helps with figuring out the level of stranded costs as we go forward. And I do think the organizational design around the corporate structures around them, there's a forcing function to allow us to make sure that these are fit for purpose, which really I think will -- we will make sure that we're not overburdened on either side as a consequence of the organizational design.
And just further to that point, STS and MTS as 2 separate segments have been operating pretty much autonomously in their own right for a long time. We did a reorganization about a year ago, but even before that, you're talking about ERP systems that are fit for purpose for both of those businesses are well in place today. The overhead support and the G&A support are separated today and are aligned to those business objectives and market conditions. So there's not a lot of dissection that we have to do here to enable the separation out in 9, 12 months.
Got it. That's super helpful. And if I could just squeeze in one more question, right? You previously talked about synergies to keep the business together. But how do you think about the potential dis-synergies? And maybe more specifically, just given the inherent lumpiness of your projects and backlog, how do you intend to manage or smooth out that inherent lumpiness across the portfolio of the 2 sub-entities that are not smaller?
First, I'll say there are not any significant share contracts between the 2 today. So there is not an overt dis-synergy of breaking any one program apart. So with the reorganization that Stuart mentioned earlier, the portfolios of each are distinct and run separately. And so there's not that need of any breakage.
I mean it's -- I mean, we have thousands of contracts across each business, across the globe with, I guess, different sort of market drivers in each sort of geographical area that helps us really sort of grow consistently over time. And I think we have proven that. We're not overexposed to one contract or another. And that served us very well as to how we position the businesses and both have these attributes over the past several years, and that's been done very deliberately to mitigate cycle risk. And so we're not concerned about being overexposed or having concentration risk in terms of one project or one jurisdiction or one customer or one funding stream.
A critical part of the timing of this decision is achieving scale and diversification within each business. And so we've been very measured and patient to deliver while the answer and the setting about it today because of the deliberate globalization of both businesses, the diversification within multiple market streams. You've got OpEx, CapEx mix on the STS side. You've got domestic, international and multiple lines within MTS. And so both have scale, both have diversification to the question relative to any concentration risk.
And we have a follow-up question from Tobey Sommer with Truist.
Conceptually, when it comes to leverage, how do you think about the distribution and differences of new KBR in terms of its ability to appropriately sustain certain kinds of leverage as well as SpinCo. We have public company comp group that's a little bit more visible for SpinCo, so we can look at averages there. But STS, as you mentioned in the comparable discussion, not quite as clear.
Tobey, Mark here. What I would say is, we've got quite some time to until the separation or the spin-off itself. And so what we do between now and then relative to capital deployment can change what I'm about to say by some measure, but I don't think a lot. But by its nature, the MTS business can withstand a little bit more leverage than the STS business due to the duration of long-term government contracts that you're well aware of. And so think about leverage that the 3 handle is sort of the zone we would look target relative to that business, and that's consistent with peers you would see.
And on the STS side, think about a 2 handle number ballpark, which is a business that has great diversity and global reach and things we mentioned earlier, but it does have some shorter visibility compared to MTS. And with that, a capital structure that is a little bit more conservative. So that's how we would initially allocate the capital structures today. Again, that can move a little bit between now and spin date. And we consider both of those attractive capital structures in a separate company instance.
We have no further questions. So I'll pass you back over to Stuart Bradie for any closing remarks.
Thank you. Thank you again. I know this was done at short notice. So thank you for making time, and thank you for your interest in KBR. We do look forward to successfully executing on our proposed spin and speaking with you next month when we announce our fiscal third quarter results. And of course, we'll update you along the way as this process evolves. And before I finish, I'd quite like to hand over to Mark just to say a few words really relating to his new role.
Mark?
Well, great, Stuart. Thanks for the opportunity. Thanks, everyone, for joining us this morning on short notice.
First, I'll say it's been an enormous honor and privilege to be the CFO of this company for the past 8.5 years. This is a really great place to work, and it's been a lot of fun and it's been a lot of hard work. And I will say that KBR is very different today than it was 8.5 years ago, and it's been a great honor to be part of the change that has taken place here in such a positive way.
I'll also say that it's really exciting for me to have Shad Evans as my successor here. I've worked with Shad a long time even before KBR, and I'm enormously confident that he is going to be a brilliant CFO for new KBR going forward and the existing KBR until the spin-off date. And so I think you're going to find that he is very sharp and he has all the intangibles to make the great CFO, and that's going to be fun to see from -- for everybody really.
And so with that confidence, I will say that for the spin-off itself, I've had the experience of doing this before. Our General Counsel, Sonia Galindo, sitting right here with me, has done this before, and so we have some experience on the team. And what we know is that a separate team that is -- that has been constructed already will be focused on the transaction itself, a very professional team that will have and does have already work streams for all the elements that you would expect to make this transaction successful from legal to tax to accounting, everything like that, as well as taking care of our people in this process.
What's really important to us, besides delivering a successful transaction, is to make sure our business leaders stay focused on running the business at hand. That is priority one. We have customers to serve. We have missions to serve with all of our customer sets, and we're going to be very focused on continuing our success there. Meanwhile, the transaction has a timetable that is normative. And what I really look forward to the most is when we have Investor Days for both SpinCo, MTS and for new KBR STS, we're going to present to you 2 very compelling investment thesis that are going to be different. They're going to be focused on the end markets they serve, and I think you're going to be really excited about it.
No. Thank you. Perfect, Mark. So with that, I think that concludes today. Thank you again for listening, and I'm sure we'll talk again in the near future. Thank you.
This concludes our call today. Thank you very much for joining. You may now disconnect your lines.
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KBR, Inc. — Special Call - KBR, Inc.
Finanzdaten von KBR, Inc.
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Forschungs- und Entwicklungskosten
Die Forschungs- und Entwicklungskosten (engl. research & development costs, kurz R&D) geben Auskunft darüber, wie viel das Unternehmen in die Forschung und die Entwicklung seiner Produkte investiert. Vor allem prozentual vom Umsatz und im Vergleich zu direkten Wettbewerbern sind die Kosten interessant.
EBITDA
Das EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) ist der Gewinn des Unternehmens vor Zinsen, Steuern und Abschreibungen. Berechnet man den prozentualen Anteil vom Umsatz, spricht man von der EBITDA-Marge.
Abschreibungen
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EBIT (Operatives Ergebnis)
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der EBIT-Marge.
Nettogewinn
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Nettogewinn einfach erklärtaktien.guide Premium
| Jul '26 |
+/-
%
|
||
| Umsatz | 7.723 7.723 |
4 %
4 %
100 %
|
|
| - Direkte Kosten | 6.605 6.605 |
4 %
4 %
86 %
|
|
| Bruttoertrag | 1.118 1.118 |
5 %
5 %
14 %
|
|
| - Vertriebs- und Verwaltungskosten | 568 568 |
3 %
3 %
7 %
|
|
| - Forschungs- und Entwicklungskosten | - - |
-
-
|
|
| EBITDA | 711 711 |
5 %
5 %
9 %
|
|
| - Abschreibungen | 166 166 |
3 %
3 %
2 %
|
|
| EBIT (Operatives Ergebnis) EBIT | 545 545 |
5 %
5 %
7 %
|
|
| Nettogewinn | 424 424 |
16 %
16 %
5 %
|
|
Angaben in Millionen USD.
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Firmenprofil
KBR, Inc. beschäftigt sich mit der Bereitstellung differenzierter professioneller Dienstleistungen und Technologien über den gesamten Lebenszyklus von Anlagen und Programmen in den Bereichen Regierungsdienste und Kohlenwasserstoffindustrie. Sie ist in den folgenden Segmenten tätig: Regierungslösungen, Technologielösungen, Energielösungen, nicht-strategische Geschäfte und andere. Das Segment Government Solutions bietet umfassende Unterstützungslösungen für den gesamten Lebenszyklus von Verteidigungs-, Raumfahrt-, Luftfahrt- und anderen Programmen und Missionen für militärische und andere Regierungsbehörden. Das Segment Technology Solutions vereint die firmeneigenen Technologien, Ausrüstungen und Katalysatorlieferungen von KBR und die damit verbundenen wissensbasierten Dienstleistungen zu einem globalen Geschäft für Raffination, Petrochemie, anorganische und Spezialchemikalien sowie Vergasung, Synthesegas, Ammoniak, Salpetersäure und Düngemittel. Das Segment Energy Solutions bietet Lösungen für den gesamten Lebenszyklus von Kohlenwasserstoffen in den vorgelagerten, mittleren und nachgelagerten Kohlenwasserstoffmärkten an. Das nicht-strategische Geschäftssegment repräsentiert die Betriebe oder Aktivitäten, die das Unternehmen nach Abschluss bestehender Verträge aufzugeben beabsichtigt. Das Segment Sonstiges umfasst Unternehmensaufwendungen und allgemeine und administrative Aufwendungen, die nicht den oben genannten Geschäftssegmenten zugeordnet sind. Das Unternehmen wurde am 21. März 2006 gegründet und hat seinen Hauptsitz in Houston, TX.
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| Hauptsitz | USA |
| CEO | Mr. Bradie |
| Mitarbeiter | 36.000 |
| Gegründet | 2006 |
| Webseite | www.kbr.com |


