Executive Summary

Source documents for Q2 2026 (8‑K 2.02 earnings press release and earnings call transcript) were not found after comprehensive search; therefore, this recap anchors on S&P Global consensus for Q2 2026 and the most recent available company disclosures (Q1 and Q2 2025) to frame trajectory and investor watch items .
Consensus for Q2 2026 implies revenue of ~$1.98B*, EBITDA of ~$243M*, and EPS of ~$0.98*, broadly in line with KBR’s recent run-rate and margin profile, with EPS above Q2 2025 adjusted EPS of $0.91 .
FY2025 guidance was lowered on revenue and refined on profits at Q2 2025 due to HomeSafe termination, EUCOM/logistics reductions, and extended protest delays; profit and cash outlooks were maintained, highlighting resilience of core businesses .
Key catalysts to monitor into Q2 2026: resolution of ~$2B awards under protest, award cadence tied to US defense budget reconciliation, and continued strong JV contributions in LNG within STS .

What Went Well and What Went Wrong

What Went Well
- Margin and cash discipline: Adjusted EBITDA margin improved to 12.4% in Q2 2025; operating cash conversion reached 185% .
- STS execution: STS Adjusted EBITDA rose 17% in Q2 2025 with 23.9% margin, driven by LNG JV performance and project execution .
- Defense positioning: Management highlighted alignment to US national security priorities and accelerating digital/AI capabilities; “we have line of sight to the first ever $1 trillion defense budget… incremental $150B” .
What Went Wrong
- Revenue headwinds: FY2025 revenue guidance cut by $0.8B–$1.0B due to HomeSafe termination, EUCOM/logistics reductions, and protest delays .
- Protest timing risk: ~$2B of contracts remained under extended protest, removing expected 2H contribution and shifting opportunities to 2026 .
- HomeSafe discontinued: Discontinued operations weighed on GAAP EPS in Q2 2025 ($0.56 diluted, including discontinued ops) and created cash outflows tied to wind-down .

Financial Results

Note: Q2 2026 actuals unavailable; table compares latest actuals and S&P Global consensus.

Metric	Q1 2025	Q2 2025	Q2 2026E
Revenue ($USD Billions)	$2.055	$1.952	$1.9836*
Adjusted EBITDA ($USD Millions)	$243	$242	$243.0*
Adjusted EPS ($USD)	$0.98	$0.91	—
Diluted EPS (GAAP) ($USD)	$0.88	$0.56	—
Primary EPS Consensus Mean ($USD)	—	—	$0.9827*

S&P Global disclaimer: Values with asterisks (*) are retrieved from S&P Global.

Segment breakdown (latest actuals)

Segment Metric	Q1 2025	Q2 2025
MTS Revenue ($USD Millions)	$1,505	$1,412
STS Revenue ($USD Millions)	$550	$540
MTS Adjusted EBITDA ($USD Millions)	$145	$141
STS Adjusted EBITDA ($USD Millions)	$124	$129
MTS Adjusted EBITDA Margin (%)	9.6%	10.0%
STS Adjusted EBITDA Margin (%)	22.5%	23.9%

Key KPIs

KPI	Q1 2025	Q2 2025
Backlog & Options ($USD Billions)	$20.5	$21.6
Book-to-Bill (Quarter)	1.0x	0.9x
Operating Cash Flows ($USD Millions)	$98	$217
Operating Cash Conversion (%)	76%	185%
Net Leverage (x)	2.6x	2.4x
Share Repurchases ($USD Millions)	$156	$48
Dividends Paid ($USD Millions)	$20	$21

Guidance Changes

FY2025 guidance (updated at Q2 2025)

Metric	Period	Previous Guidance	Current Guidance	Change
Revenues	FY 2025	$8.7B–$9.1B	$7.9B–$8.1B	Lowered
Adjusted EBITDA	FY 2025	$950M–$990M	$960M–$980M	Narrowed/raised midpoint
Adjusted EPS	FY 2025	$3.71–$3.95	$3.78–$3.88	Narrowed/raised low end
Operating Cash Flows	FY 2025	$500M–$550M	$500M–$550M	Maintained

FY2027 targets (updated at Q2 2025)

Metric	Updated FY2027	Prior FY2027	Notes
Revenues	$9.0B+	$11.5B+	Removes HomeSafe
Adjusted EBITDA	$1.15B+	$1.15B+	Unchanged
Adjusted EBITDA Margin	11%+	10%–11%	Higher margin mix
MTS Adj. EBITDA Margin	10%+	9%–10%	Improved
STS Adj. EBITDA Margin	20%+	~20%	Slightly higher
Operating Cash Flows	$650M+	$700M+	Lower without HomeSafe DSOs
2024–2027 Deployable Free Cash	~$2.0B	~$2.0B	Unchanged

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 2025)	Previous Mentions (Q2 2025)	Current Period (Q2 2026)	Trend
US defense budget & reconciliation	Early look; pipeline ~$17B bids, protests ~$1.8–$2.0B	“Line of sight” to $1T defense budget, +$150B incremental; focus on RDT&E, O&M	Not available	Funding tailwinds; contracting office capacity delays
Awards under protest	Expect resolution into 2H25	~$2B still under protest; removed $250M revenue from FY25 guide	Not available	Persistent timing risk
STS LNG JV contributions	Strong Plaquemines; Brown & Root ~$1.4B revs	Equity earnings expected stable into 2026	Not available	Stable margin driver
HomeSafe JV	Ramp and rising customer satisfaction	Termination; discontinued ops; profit outlook unchanged	Not available	De-risked guidance; cash tail
International defense (UK/Australia)	Long-term contracts; attractive margins	Australia up ~10%; UK planning priorities	Not available	Positive momentum
NASA funding	Limited exposure to science cuts	Reconciliation/appropriators aim near FY25 levels; core operations supported	Not available	Stabilizing

Management Commentary

“We have line of sight to the first ever $1 trillion defense budget… incremental ~$150 billion in spending for national security priorities” — Stuart Bradie, CEO .
“We are updating our revenue guidance… removing $400M related to HomeSafe, $250M for EUCOM/logistics, and $250M for protest delays… importantly, no change to Adjusted EBITDA or Adjusted EPS outlook” — Mark Sopp, CFO .
“Adjusted EBITDA was $242 million, up 12%, with margins at 12.4%… STS margin strength driven by unconsolidated joint ventures, particularly LNG” — Mark Sopp, CFO .

Q&A Highlights

Award cadence and protests: Management expects award activity to pick up as reconciliation funding flows, but was cautious on bookings conversion timing due to contracting office capacity constraints .
MTS targets bridge: Achievability hinges on pipeline conversion, protest resolution, and stability in NASA and international defense markets (UK/Australia) .
STS outlook: Strong JV performance and diversified pipeline across LNG, ammonia, and infrastructure support sustained margins and earnings contributions into 2026 .

Estimates Context

Q2 2026 S&P Global consensus: Revenue ~$1.9836B*, Primary EPS ~$0.9827*, EBITDA ~$243.0M*; this implies a quarter broadly consistent with recent performance (Q2 2025 revenue $1.952B, Adjusted EBITDA $242M, Adjusted EPS $0.91) .
Without Q2 2026 company disclosures, estimate revisions will likely hinge on: protest outcomes, EUCOM/logistics trajectory, and award timing under reconciliation-driven defense priorities .

S&P Global disclaimer: Values marked with asterisks (*) are retrieved from S&P Global.

Key Takeaways for Investors

Core profitability appears resilient: Despite FY2025 revenue headwinds, management maintained Adjusted EBITDA and EPS guidance, underscoring margin and cash discipline .
Defense budget reconciliation is a key upside lever: Award cadence and protest resolutions are pivotal for MTS growth into 2026; monitor contracting office throughput .
STS remains a high-quality earnings engine: Stable JV equity earnings and strong execution sustain mid‑20s margins, supporting overall mix quality .
HomeSafe removal de-risks long-term targets: FY2027 revenue target reset to $9B+, with margin targets raised; watch working capital normalization effects on cash .
Near-term trading lens: In absence of Q2 2026 prints, consensus implies continuity; stock reaction should pivot on news flow for protest outcomes, award wins, and any updated guidance.
Medium-term thesis: Balanced portfolio with multiple growth pathways (defense RDT&E/O&M, international defense, LNG/energy security) plus disciplined capital allocation (buybacks/dividends) .

Search note: No Q2 2026 8‑K 2.02 press release, earnings call transcript, or related press releases were found in our document tools for KBR after scanning 2026 date windows; the recap uses Q1/Q2 2025 disclosures and S&P Global Q2 2026 consensus to inform trajectory .

KBR, INC. (KBR)·Q2 2026 Earnings Summary