KBR · KBR, Inc.

KBR's Q1 fiscal 2026 results showed resilience despite a 5% revenue decline to $1.9 billion, primarily from expected EUCOM contingency runoff in Mission Technology Solutions (MTS), where revenues fell 6% to $1.3 billion amid U.S. Defense declines and NASA funding restrictions, offset by Australian growth. Sustainable Technology Solutions (STS) revenues dipped 2% to $627 million from U.S. project completions but saw Middle East ramp-up. Operating income dropped 11% to $180 million with margin contraction to 9.4%, reflecting lower volumes and mix, though Adjusted EBITDA rose 1% to $251 million with margin expansion to 13.1%, aided by equity earnings and cost controls. MTS Adjusted EBITDA was flat at $138 million (10.6% margin), STS up 1% to $137 million (21.9% margin). CEO Stuart Bradie highlighted disciplined execution, durable demand, and progress on MTS spin-off announced September 24, 2025, to create two pure-play companies enhancing focus and value. Book-to-bill was 1.1x overall (1.0x MTS, 1.2x STS), backlog steady at $23.2 billion including options. New awards included $200M US DOT AI-IT, $95M US Space Force, $510M CAPE/JDS IDIQ, $449M LOGCAP mods in MTS; Libya refinery, Saudi Aramco/SATORP maintenance, Indorama catalyst, Iraq/Basra field, Petro Rabigh in STS. Strategic moves: investment in Applied Computing for AI, Brown & Root JV acquired SWAT. Cash flow strengthened with operating cash up 21% to $110M (adjusted $119M), liquidity $1.0B, net leverage 2.3x. Capital return $25M via $21M dividends, $4M repurchases. Guidance reaffirmed for FY2026, signaling confidence pre-spin.