KBR, Inc. Q4 2025 Earnings Call Summary

KBR, Inc. Q4 2025 Earnings Call Summary Moby Intelligence Fri, February 27, 2026 at 5:33 AM GMT+8 3 min read In this article:

KBR +0.45%

KBR, Inc. Q4 2025 Earnings Call Summary - Moby

Strategic Execution and Performance Attribution

• Management attributed 2025 resilience to a deliberate pivot toward the Global South and OpEx-driven markets, offsetting a sharp decline in petrochemical CapEx and green project pauses.

• Operational excellence initiatives delivered over $30 million in cost savings and expanded margins by more than 100 basis points despite a challenging award environment.

• The Sustainable Tech segment successfully mitigated market shifts by focusing on LNG, ammonia, and engineering services where demand fundamentals remained robust.

• Mission Tech performance was sustained by moving upmarket into higher-end digital engineering and R&D, despite headwinds from government award delays and reduced contingency activity.

• The acquisition of SWAT within the Brown & Root joint venture was highlighted as a key milestone that more than doubled the EBITDA of that business unit.

• Management emphasized that the quality of earnings is improving through a more selective business development approach that prioritizes high-margin, technically differentiated work over scale.

• While international expansion in Australia provided growth, the U.K. experienced a flat year in 2025 due to defense reviews; however, both regions are positioned for improved momentum and a growth cycle heading into 2026.

2026 Outlook and Strategic Assumptions

• The 2026 guidance framework assumes the resolution of outstanding contract protests in the first half of the year and an improved award cadence in the second half.

• Management expects Sustainable Tech to deliver low double-digit revenue growth, supported by a book-to-bill ratio of 1.6x in the fourth quarter of 2025.

• Mission Tech is projected to grow at low single digits, with 82% of 2026 guidance already covered by work under contract and minimal recompete exposure.

• The financial outlook assumes modest interest rate improvements in the second half of 2026 and stable foreign exchange rates relative to current levels.

• Guidance incorporates a higher effective tax rate of 26% to 28% due to a greater mix of international work, specifically within the Global South.

Strategic Realignment and Risk Factors

• KBR is refining its spin-off perimeter by moving the Frazer Nash Consultancy and U.K. Civil Nuclear portfolio into Sustainable Tech for better operational alignment.

• The company will introduce adjusted operating and free cash flow metrics in 2026 to exclude an estimated $140 million to $180 million in one-time spin transition costs.

• Management flagged that while Hydro-PRT recycling faced commissioning challenges, the technology is now operating continuously with a ramp-up expected through 2026.

• Beginning in 2026, the adjusted EBITDA calculation will be updated to include the share of unconsolidated JV operating income to improve transparency of the OpEx strategy.

Story Continues

Q&A Session Highlights

Backfill strategy for Plaquemines LNG project roll-off

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here.

• Management expects the Plaquemines contribution to remain consistent through 2025 and into early 2026, with future earnings confidence supported by double-digit revenue growth in STS and increased EBITDA generation from the SWAT portfolio.

• The pipeline for Sustainable Tech includes approximately $5 billion in near-term opportunities, excluding LNG, with 80% coming from repeat customers.

Impact of AI and digital solutions on operational efficiency

• KBR is focusing on specific 'use case' ROI for AI, such as physics-based AI for ammonia plant performance and digital twins for predictive maintenance.

• Internal efficiency is being driven by rolling out a digitally enabled ERP (Microsoft Dynamics) across the STS portfolio to enhance project controls and support real-time commercial execution.

Status of Mission Tech contract protests and recompetes

• The 2026 guide excludes potential upside from the $1 billion Mission Iraq and K2A protests, treating them as unconfirmed revenue.

• Management noted that recent recompete losses, such as COSMOS, were at the lower end of the portfolio's margin profile, allowing for a better overall margin mix moving forward.

Capital allocation and M&A strategy ahead of the spin

• KBR intends to maintain a disciplined balance sheet with target net leverage of 2.0x for Sustainable Tech and 3.0x for Mission Tech at the time of separation.

• While focused on the spin, the company will remain open to 'modest but accretive' strategic M&A that advances the OpEx-facing services strategy.

One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here.

Terms and Privacy Policy Privacy Dashboard More Info