Adam Eaves

Adam Eaves from Goldman Sachs asked about the Mission Technology Solutions (MTS) margin outlook, specifically the puts and takes embedded in the 2026 guidance, given the 10.4% full-year margin in 2025 and improving mix. He also inquired about the current percentage of KBR's revenues that are OpEx-driven and the potential for that to grow over time, particularly with the increasing mix of recurring OpEx and digital solutions.

Answer

CFO Shad Evans confirmed that MTS's 10.4% margin in 2025 was strong and in line with long-term expectations, reflecting a "profit-first" business development mindset. He stated that while KBR hopes to improve margins over time with a shift towards more fixed-price work, no uplift is assumed in the 2026 guide, expecting flat sequential margins from 2025 run rates. President and CEO Stuart Bradie indicated that more details on the OpEx-driven revenue percentage and growth potential would be provided at the Investor Day, highlighting the strategic importance of longer-term contracts, greater visibility of earnings, and increasing demand for digital solutions as assets age.

Adam Eaves inquired about contextualizing the increasing mix of recurring OpEx and digital solutions within KBR's businesses, specifically asking what percentage of revenues is currently OpEx driven and where that figure is expected to trend over time.

Answer

Stuart Bradie (President and Chief Executive Officer, KBR) deferred detailed figures to the upcoming Investor Day but expressed strategic excitement about the OpEx-facing businesses, including BRIS and international operations. He highlighted the longer-term nature of these contracts, which provide greater visibility of earnings and cash. Bradie noted the increasing demand for digital solutions in aging assets globally, positioning KBR well to capitalize on this trend and enhance the durability of its earnings.