KBR, Inc. announced its second quarter fiscal 2025 results.

“As we reflect on our solid financial performance this quarter, I am proud of our team's unwavering dedication to delivering results that matter. Through disciplined cost management and operational excellence, we have achieved double-digit growth in both earnings and EPS, while expanding margins and maintaining robust cash flow. Even as we navigate a volatile landscape and encounter decision delays across the sector, our confidence in KBR’s strategic direction and growth opportunities remains steadfast. Our ability to adapt, combined with multiple pathways for expansion—especially in key defense markets—positions us for continued success. We are focused on building long-term shareholder value, staying resilient in the face of uncertainty, and updating our guidance and targets as we look toward a promising future.”

Summarized second quarter fiscal 2025 consolidated results

Three Months Ended

Six Months Ended

July 4,

June 28,

July 4,

June 28,

Dollars in millions, except share data

2025

2024

2025

2024

Revenues

$

1,952

$

1,847

$

3,970

$

3,665

Operating income

194

180

396

346

Net income attributable to KBR (including discontinued operations)

73

106

189

199

Net income (loss) attributable to KBR from continuing operations

105

106

225

199

Adjusted EBITDA2

242

216

490

423

Operating income margin

9.9

%

9.7

%

10.0

%

9.4

%

Adjusted EBITDA2 margin

12.4

%

11.7

%

12.3

%

11.5

%

Earnings per share:

Diluted earnings per share attributable to KBR (including discontinued operations)

0.56

0.79

1.44

1.47

Diluted earnings per share from continuing operations

0.81

0.79

1.71

1.47

Adjusted earnings per share2

0.91

0.83

1.91

1.59

Cash flows:

Operating cash flows from continuing operations

217

157

308

256

Return of capital to shareholders:

Payments to repurchase common stock

48

97

204

158

Payments of dividends to shareholders

21

21

41

39

July 4,

January 3,

2025

2025

Leverage:

Net debt3

2,234

2,252

TTM Adjusted EBITDA2

935

868

Net leverage

2.4x

2.6x

Second quarter fiscal 2025 consolidated results review
(All comparisons against the second quarter fiscal 2024 unless noted.)

Results herein are reported on a continuing operations basis, unless otherwise noted. The results of HomeSafe Alliance (“HomeSafe”) are presented as discontinued operations due to the contract termination and subsequent wind down of the joint venture. Unless otherwise noted, all comparisons to the prior year’s results have been adjusted to present HomeSafe as discontinued operations. Refer to Note 17 "Discontinued Operations" in our Form 10-Q for the quarter ended July 4, 2025 for further details.

Revenues were $2.0 billion, up 6% or $105 million, primarily driven by growth in Defense & Intel, fueled by the LinQuest acquisition.

Operating income was $194 million, up 8% or $14 million, primarily due to increases in Gross profit and Equity in earnings of unconsolidated affiliates due to strong project execution on an LNG project, partially offset by increases in Selling, general and administrative expenses.

Net income attributable to KBR (including loss from discontinued operations) was $73 million, down 31% or $33 million, primarily related to the HomeSafe contract termination.

Net income attributable to KBR from continuing operations was $105 million, down 1% or 1 million, due to the increase in Operating income noted above, offset by higher below the line expenses.

Diluted earnings per share attributable to KBR (including loss from discontinued operations) were $0.56, down 29% or $0.23, in line with decreased Net income attributable to KBR (including loss from discontinued operations) noted above.

Diluted earnings per share from continuing operations were $0.81, up 3% or $0.02, in line with Net income from continuing operations noted above and lower diluted weighted average common shares outstanding due to open market share repurchases.

Adjusted EBITDA2 was $242 million, up 12% or $26 million, primarily due to the increase in Operating income noted above. Adjusted EBITDA2 margin was 12.4%, up from the prior year due to strong operating performance in the current year period.

Adjusted earnings per share2 were $0.91, up 10% or $0.08, due to the increase in Adjusted EBITDA2 noted above and lower adjusted weighted average common shares outstanding due to open market share repurchases, partially offset by higher below the line expenses.

Backlog and options as of the quarter end totaled $21.6 billion. Book-to-bill1 was 0.9x for the quarter and 1.0x on a trailing-twelve-months basis.

Summarized second quarter fiscal 2025 segment results

Three Months Ended

Six Months Ended

July 4,

June 28,

July 4,

June 28,

Dollars in millions, Backlog in billions

2025

2024

2025

2024

Revenues

$

1,952

$

1,847

$

3,970

$

3,665

Mission Technology Solutions

1,412

1,316

2,880

2,641

Sustainable Technology Solutions

540

531

1,090

1,024

Adjusted EBITDA2

242

216

490

423

Mission Technology Solutions

141

133

291

264

Sustainable Technology Solutions

129

110

253

213

Corporate

(28

)

(27

)

(54

)

(54

)

Adjusted EBITDA2 margin

12.4

%

11.7

%

12.3

%

11.5

%

Mission Technology Solutions

10.0

%

10.1

%

10.1

%

10.0

%

Sustainable Technology Solutions

23.9

%

20.7

%

23.2

%

20.8

%

July 4,

January 3,

2025

2025

Backlog

16,697

16,605

Mission Technology Solutions

12,972

12,642

Sustainable Technology Solutions

3,725

3,963

Backlog and options

21,570

20,580

Mission Technology Solutions

17,845

16,617

Sustainable Technology Solutions

3,725

3,963

Second quarter fiscal 2025 segment results review
(All comparisons against the second quarter fiscal 2024 unless noted.)

Mission Technology Solutions (MTS)
Revenues were $1,412 million, up 7% or $96 million, driven by growth in Defense & Intel, fueled by the LinQuest acquisition.

Operating income was $110 million, down 3% or $3 million, primarily due to increases in Selling, general and administrative expenses, which offset increases in Gross profit. Operating income margin was 7.8%.

Adjusted EBITDA2 was $141 million, up 6% or $8 million, generally in line with growth in Revenues. Adjusted EBITDA2 margin was 10.0%, in line with the prior year period.

Backlog and options as of the quarter end totaled $17.8 billion. Book-to-bill1 was 1.0x for the quarter and 0.9x on a trailing-twelve months basis.

The following new business awards were announced:

Awarded subcontract with Strategic Resources Inc to expand psychological health services to aid Army resilience training

Awarded $476 million base operations support contract in Djibouti

Awarded multiple strategic contracts in support of the Air Force Research Laboratory

Awarded LOGCAP V contract extension through 2030 for EUCOM and NORTHCOM

Sustainable Technology Solutions (STS)
Revenues were $540 million, up 2% or $9 million, driven by increasing demand for sustainable technologies and services.

Operating income was $123 million, up 16% or $17 million, primarily due to increases in Gross profit and Equity in earnings of unconsolidated affiliates due to strong project execution on an LNG project. Operating income margin was 22.8%.

Adjusted EBITDA2 was $129 million, up 17% or $19 million, primarily due to higher Operating income noted above. Adjusted EBITDA2 margin was 23.9%, up from the prior year due to strong operating performance in the current year period.

Backlog as of the quarter end totaled $3.7 billion. Book-to-bill1 was 0.7x for the quarter and 1.0x on a trailing-twelve months basis.

The following new business awards were announced:

Awarded combined technology and services for a large ammonia and urea complex

Awarded FEED contract for KEPPT’s fertilizer facility in Iraq

KBR SOCAR JV selected by BP for energy security projects in Azerbaijan

Mitsubishi Chemical and ENEOS announced opening of plastics recycling plant, using KBR’s licensed Hydro-PRT® technology

Balance Sheet, Cash Flow, and Capital Deployment
Liquidity as of July 4, 2025, totaled approximately $1,008 million, comprising $605 million in borrowing capacity under the revolving credit facility and $403 million cash and cash equivalents. Net leverage ratio as of July 4, 2025, was 2.4x.

Operating cash flows from continuing operations for the quarter were $217 million, up 38% or $60 million, with Operating cash conversion2 of 185%.

During the second quarter, KBR returned $69 million in capital to shareholders, consisting of $48 million in share repurchases (including withhold to cover shares) and $21 million in regular dividends.

Revising fiscal year 2025 guidance
KBR is revising the previously provided outlook for the HomeSafe Alliance JV contract termination, reductions in EUCOM and logistics, and protest resolution delays.

Updated Fiscal Year
2025 Guidance

Prior Fiscal Year
2025 Guidance

Revenues

$7.9B - $8.1B

$8.7B - $9.1B

Adjusted EBITDA

$960M - $980M

$950M - $990M

Adjusted EPS

$3.78 - $3.88

$3.71 - $3.95

Operating cash flows

$500M - $550M

$500M - $550M

The company does not provide reconciliations of Adjusted EBITDA and Adjusted EPS to the most comparable GAAP financial measures on a forward-looking basis because the company is unable to predict with reasonable certainty the ultimate outcome of legal proceedings, unusual gains and losses, and acquisition-related expenses without unreasonable effort, which could be material to the company’s results computed in accordance with GAAP.

Updating fiscal year 2027 financial targets
KBR is updating its long-term financial targets for the HomeSafe Alliance JV contract termination.

Updated Fiscal Year
2027 Targets

Prior Fiscal Year
2027 Targets

Revenues

$9.0B+

$11.5B+

MTS Revenues CAGR

5% - 8%

11% - 15%

STS Revenue CAGR

11% - 15%

11% - 15%

Adjusted EBITDA

$1.15B+

$1.15B+

Adjusted EBITDA margin

11%+

10% - 11%

MTS Adjusted EBITDA margin

10%+

9% - 10%

STS Adjusted EBITDA margin

20%+

~20%

Operating cash flows

$650M+

$700M+

2024-2027 Cumulative deployable free cash

~$2.0B

~$2.0B

CAGR reflects 2023A-2027E.
OCF target reflects 27% effective tax rate and interest rates consistent with 2025.
Cumulative deployable free cash reflects 2024A-2027E cumulative OCF less capital expenditures of 0.5% to 0.75% of annual revenues.

The company does not provide a reconciliation of Adj. EBITDA to the most comparable GAAP financial measure on a forward-looking basis because the company is unable to predict with reasonable certainty the ultimate outcome of legal proceedings, unusual gains and losses, and acquisition-related expenses without unreasonable effort, which could be material to the company’s results computed in accordance with GAAP.