Executive Summary

Primary-source Q4 2025 earnings materials (8‑K 2.02 and call transcript) were not available in the corpus; KBR’s last reported quarter was Q3 2025 on Oct 30, 2025, which included a revenue guidance trim for FY25 while reaffirming profit and cash flow targets; the MTS spin-off remains on track for mid-to-late 2026 .
Q3 delivered resilient profitability: adjusted EBITDA margin held at 12.4% with adjusted EPS up 21% YoY, underpinned by strong equity earnings from LNG and cost control; book-to-bill was 1.4x and backlog plus options reached $23.4B .
Segment mix/cash: STS margins remained above 23% on LNG equity contributions; operating cash flow stayed robust and net leverage fell to 2.2x; capital returns remained active via buybacks/dividends .
Q4 2025 period press releases (non-earnings) highlight continued STS momentum (Iraq oil/gas detailed engineering for TotalEnergies/ENKA) and Brown & Root JV M&A to scale OpEx services—potential medium-term revenue/cash catalysts .

What Went Well and What Went Wrong

What Went Well
- Profit resilience despite flat revenue: adjusted EBITDA rose 10% YoY with 12.4% margin; adjusted EPS rose 21% YoY; management emphasized “enhanced margins” from cost management and delivery excellence .
- Strong orders/backlog: Q3 book-to-bill 1.4x; backlog plus options reached $23.4B, providing forward visibility; CEO: “book-to-bill…1.4x… highest backlog and option value in KBR’s recent history” .
- STS quality of earnings: STS adjusted EBITDA margin >23% aided by LNG JV equity earnings; CFO noted Plaquemines LNG milestones supported a quarterly profit “spike,” with normalization expected thereafter .
What Went Wrong
- Award conversion delays: slower award cadence and bids under protest (management cited ~$3B of awards won but under protest), plus U.S. government shutdown delaying conversions; revenue outlook trimmed accordingly .
- MTS headwinds within mix: EUCOM reductions in Readiness & Sustainment, and NASA funding restrictions weighed on MTS revenue (flat YoY) .
- STS revenue softness: delays in new awards drove a modest revenue decline (-1% YoY in Q3), though profitability remained strong .

Financial Results

Recent quarterly financials (documented; Q4 2025 earnings not available)

Metric	Q2 2025	Q3 2025
Revenue ($USD Billions)	$1.952	$1.931
Diluted EPS – Continuing Ops ($)	$0.81	$0.91
Adjusted EPS ($)	$0.91	$1.02
Adjusted EBITDA ($USD Millions)	$242	$240
Adjusted EBITDA Margin %	12.4%	12.4%
Operating Income Margin %	9.9%	9.9%
YoY Revenue Growth	+6%	-0%
YoY Adjusted EPS Growth	+10%	+21%

Segment performance

Segment Metric	Q2 2025	Q3 2025
MTS Revenues ($USD Millions)	$1,412	$1,406
STS Revenues ($USD Millions)	$540	$525
MTS Adjusted EBITDA ($USD Millions)	$141	$143
STS Adjusted EBITDA ($USD Millions)	$129	$123
MTS Adjusted EBITDA Margin %	10.0%	10.2%
STS Adjusted EBITDA Margin %	23.9%	23.4%

Operating KPIs

KPI	Q2 2025	Q3 2025
Book-to-Bill (x)	0.9x (TTM 1.0x)	1.4x
Backlog + Options ($USD Billions)	$21.6	$23.4
Operating Cash Flow ($USD Millions)	$217	$198
Net Leverage (x)	2.4x	2.2x
Share Repurchases ($USD Millions)	$48	$100
Dividends Paid ($USD Millions)	$21	$22

Guidance Changes

FY 2025 guidance (updated in Q3 vs Q2)

Metric	Period	Previous Guidance	Current Guidance	Change
Revenues	FY 2025	$7.9B – $8.1B	$7.75B – $7.85B	Lowered
Adjusted EBITDA	FY 2025	$960M – $980M	$960M – $980M	Maintained
Adjusted EPS	FY 2025	$3.78 – $3.88	$3.78 – $3.88	Maintained
Operating Cash Flows	FY 2025	$500M – $550M	$500M – $550M	Maintained

Context (management): Revenue guide lowered due to slower award pace, shutdown-driven protest resolution delays; profit and cash maintained on strong year-to-date performance .

Earnings Call Themes & Trends

(“Previous Mentions” = Q2 2025; “Prior Quarter” = Q3 2025; “Current Period” = Q4 2025 primary earnings materials not available in corpus)

Topic	Previous Mentions (Q2 2025)	Prior Quarter (Q3 2025)	Current Period
Award conversion/protests	~$2B awards under extended protest; conversion assumptions shifted to 2026	Protests under shutdown increased to ~$3B; APS‑2 out of protest but NTP delayed; conversion pushed	Pending update when Q4 filings/transcript are available
U.S. gov’t shutdown exposure	Most work essential; funded backlog stable; profit/cash guide unchanged	Minimal near-term impact to revenue; delays in new awards/clearance of protests	Pending
STS LNG equity earnings	Stable H2 vs H1 pace into 2026 expected	Q3 milestone “spike”; normalize to H1 run-rate; cash tightly linked to earnings	Pending
NASA funding	Uncertain outlook; exposure lower-margin	Limited near-term impact; mixed signals across budget process	Pending
International defense (UK/AUS/EU)	Growing opportunities; AUKUS; mid-teens margins	Australia fastest-growing; UK/Europe sequential improvement; strategy to tap EU spend	Pending
MTS spin-off	Strategic optionality; segment focus	Spin-off on track; three phases; targeting mid–late 2026	Pending

Note: We searched for Q4 2025 KBR “8‑K 2.02” and “earnings-call-transcript” in the 2026 Q1 window; no such documents were found in the corpus (searched 2026‑01‑01 to 2026‑03‑31).

Management Commentary

CEO framing (Q3): “Adjusted EBITDA margins were up more than 100 basis points year-on-year at 12.4%… Adjusted EPS of $1.02, an increase of 21%… Cash was the standout in the quarter” .
Portfolio resilience: “60% of Adjusted EBITDA coming from non‑U.S. government customers” supports stability through a temporary U.S. government shutdown .
Orders/pipeline: “Backlog plus options now stand at more than $23 billion… highest… in KBR’s recent history,” with $18B MTS bids pending and $3B awards under protest .
Spin-off: “We are spinning off our Mission Technologies segment… targeting completion by mid‑to‑late 2026… two pure‑play public companies” .
STS LNG cadence: “We advanced more milestones on the Plaquemines project than originally planned in Q3… expect Q4 to look more normative as the rate we had in the first half” .

Q&A Highlights

STS growth durability into 2026: Management reiterated confidence in sustaining STS growth within long‑term CAGRs despite H1 delays (re-acceleration via late Q3 bookings and expected Q4) .
MTS outlook: Defense & Intel strength offsets R&S/NASA softness; protests resolution and international (UK/AUS) underpin 2026 growth at lower end of range; sequential UK/Europe improvement cited .
NASA exposure: Limited bottom‑line sensitivity; funding path remains unclear, but human spaceflight/human performance work remains a priority .
LNG pipeline: Plaquemines earnings sustained into 2026/early 2027; active global pipeline (Indonesia Abadi FEED; Oman/UAE programs; additional U.S. opportunities) .

Estimates Context

Wall Street consensus (S&P Global) for Q4 2025 EPS and revenue could not be retrieved due to provider request limits at the time of analysis. We will update the estimates comparison once access is available.

Other Relevant Q4 2025 Press Releases (non-earnings)

STS: Selected by ENKA to provide detailed engineering design for TotalEnergies’ AGUP2 in Iraq (Basra), following FEED; supports Iraq energy capacity/flare reduction goals .
OpEx scaling: Brown & Root Industrial Services JV signed a definitive agreement to acquire Specialty Welding and Turnarounds (SWAT), enhancing turnaround/cooling tower/catalyst services breadth and OpEx exposure .

Key Takeaways for Investors

Profitability intact despite revenue headwinds: margin discipline and LNG JV equity earnings supported Q3 EPS/margin outperformance, while FY25 profit/cash guidance was reaffirmed even as revenue guidance was trimmed .
Backlog momentum strong: 1.4x book‑to‑bill and $23.4B backlog+options improve 2026 visibility; protests/shutdown timing remains the near‑term swing factor for conversion .
STS quality mix: Mid‑20s margins and sustained LNG equity earnings underpin cash generation; non‑earnings Q4 wins (Iraq AGUP2) reinforce international expansion .
MTS spin-off progressing: Separation targets mid–late 2026 and could unlock valuation through focused profiles (MTS vs. STS) and capital allocation flexibility .
Cash and balance sheet: Strong OCF and deleveraging (2.2x net leverage) support continued buybacks/dividends while funding growth .
Watch items: Resolution of ~$3B protested awards; NASA funding outcomes; U.S. gov’t shutdown timing; LNG milestone cadence normalization; UK/EU/AUS defense budget execution .

Sources:

Q3 2025 press release and 8‑K: consolidated/segment results, guidance, backlog, cash and leverage .
Q3 2025 earnings call transcript: award conversion, protests, shutdown exposure, LNG cadence, spin-off status, UK/AUS/Europe outlook .
Q2 2025 press release and 8‑K: prior-quarter comps and prior guidance .
Q4 2025 (period) non-earnings press releases: Iraq AGUP2 detailed engineering (STS) ; Brown & Root JV acquisition of SWAT .

KBR, INC. (KBR)·Q4 2025 Earnings Summary