KBR, INC.
For the period ended Apr 3, 2026. Filed May 5, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Apr 3, 2026 · Filed May 5, 2026
KBR$37.17-2.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-10-03; filed 2025-10-30.
0001357615-25-000066
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-04-03; filed 2026-05-05.
0001357615-26-000141
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 127 previous paragraphs and 111 current paragraphs.
69 unchanged; 31 reworded; 9 added; 20 removed; 7 previous and 2 current paragraphs rearranged.
Tables are not compared: 7 previous and 5 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (9)
Current report
On February 3, 2026, the Consolidated Appropriations Act of 2026 was passed, which finalized defense appropriations for fiscal year 2026. This legislation provides for $839 billion in discretionary defense spending. In December 2025, the National Defense Authorization Act ("NDAA") was signed into law. The NDAA authorizes programs, projects and policies to be carried out with funds appropriated by Congress as part of the annual budgetary process. The NDAA supports up to approximately $901 billion in fiscal year 2026 funding for national defense. Additionally, the approved fiscal year 2026 budget for NASA is $24 billion. Additionally, current and future funding requirements related to the ongoing conflict in the Middle East have impacted our customers' budgets and spending priorities.
Current report
Long-range commercial market fundamentals are supported by global population growth, expanding global development and an acceleration of demand for energy transition, renewable energy sources and climate related solutions. The globe is in search of the solution to the energy trilemma, the balance between energy affordability, ensuring energy security and achieving environmental sustainability. The global energy shortage experienced in recent years and geopolitical disruptions of energy flows from key producing regions further highlighted the need for affordable and reliable fuel sources, supporting continued strong structural demand growth. Energy security concerns have been heightened in response to various conflicts around the world, which has caused countries to evaluate their investment strategy in energy markets. Countries are pursuing increases to their investments in diverse geographical areas and energy sources to ensure grid stability.
Current report
MTS operating income decreased by $2 million, or 2%, to $111 million for the three months ended April 3, 2026, compared to $113 million for the three months ended April 4, 2025. The decrease in operating income was primarily driven by the item discussed above and increased selling, general and administrative expenses.
Current report
STS revenues were materially consistent for each of the three months ended April 3, 2026 and April 4, 2025, decreasing by $10 million, or 2%, to $627 million for the three months ended April 3, 2026, compared to $637 million for the three months ended April 4, 2025.
Current report
STS operating income decreased by $14 million, or 11%, to $113 million for the three months ended April 3, 2026, compared to $127 million for the three months ended April 4, 2025. The decrease in operating income is primarily due to changes in licensing mix, offset by a favorable closeout in the three months ended April 3, 2026 and increased equity in earnings from services on an LNG project.
Current report
Corporate
Current report
Corporate operating loss increased by $6 million, or 16%, to $44 million for the three months ended April 3, 2026, compared to $38 million for the three months ended April 4, 2025. The increase in operating loss was primarily due to increased selling, general and administrative expenses related to the Planned Spin-Off.
Current report
Investing Activities - continuing operations. Cash used in investing activities totaled $188 million for the three months ended April 3, 2026 primarily due to an investment within the BRIS joint venture for $115 million associated with BRIS closing on an agreement to acquire a welding and turnaround services provider. Additionally, we had purchases of available-for-sale debt securities of $49 million, purchases of other investments of $13 million and capital expenditures of $12 million. See Note 6. "Equity Method Investments and Variable Interest Entities" to our condensed consolidated financial statements for further discussion on the investment in equity method investment to BRIS and Note 15. "Fair Value of Financial Instruments and Risk Management" to our condensed consolidated financial statements for further discussion on the available-for-sale debt securities. Cash used in investing activities totaled $3 million for the three months ended April 4, 2025, primarily related to capital expenditures.
Current report
We anticipate that, in connection with and prior to the completion of the Planned Spin-Off, the Mission Technology Solutions business will make a cash distribution to KBR using proceeds received from its anticipated financing transactions to be undertaken as part of its transition to an independent, publicly traded company. We intend to use the cash distributed to KBR by the Mission Technology Solutions business to reduce our level of indebtedness.
Removed paragraphs (20)
Previous report
The U.S. government has not yet enacted an annual budget for fiscal year 2026. On October 1, 2025 the U.S. government entered into a shutdown because Congress was unable to pass legislation providing appropriations authority for the government to continue to operate. As of October 30, 2025, the U.S. government shutdown remains in effect. Subsequent to the U.S. government shutdown starting on October 1, 2025, we have experienced delays in collection of payments and contract awards. Our results of operations, financial position and cash flows may be impacted in the future based on the length of the U.S. government shutdown.
Previous report
MTS revenues were $1,406 million in both the three months ended October 3, 2025 and the three months ended September 27, 2024. In the three months ended October 3, 2025, there were decreases in revenue due to reduced activity within the European command, offset by increases in defense and intel programs associated with the acquisition of LinQuest, which we acquired on August 30, 2024. The three months ended September 27, 2024 include one month of LinQuest revenue activity compared to the three months ended October 3, 2025 which include three months of LinQuest revenue activity.
Previous report
MTS operating income was $114 million in both the three months ended October 3, 2025 and the three months ended September 27, 2024. See above for items discussed that also impacted operating income in the three months ended October 3, 2025.
Previous report
STS revenues decreased by $6 million, or 1%, to $525 million in the three months ended October 3, 2025 compared to $531 million in the three months ended September 27, 2024. The decrease in revenue is driven by a reduction in services related to the completion of projects.
Previous report
STS operating income increased by $14 million, or 13%, to $118 million in the three months ended October 3, 2025 compared to $104 million in the three months ended September 27, 2024. The increase was primarily driven by increased equity in earnings from services on an LNG project, offset by increased selling, general and administrative expenses incurred related to the implementation of a new enterprise resource planning system and the items discussed above.
Previous report
Results of Operations
Previous report
Nine months ended October 3, 2025 compared to the nine months ended September 27, 2024
Previous report
n/m - not meaningful
Previous report
Revenues. The increase in overall revenue of $299 million, or 5%, to $5,901 million for the nine months ended October 3, 2025 is due to increases in defense and intel programs associated with the acquisition of LinQuest in our MTS business and increased revenues from engineering and professional services in our STS segment, offset by decreases in revenue due to reduced activity within the European command in our MTS segment.
Previous report
Gross profit. The increase in overall gross profit of $52 million, or 6%, was primarily driven by items increasing revenues discussed above.
Previous report
Selling, general and administrative expenses. Selling, general and administrative expenses in the nine months ended October 3, 2025 were $45 million higher, a 12% increase compared to the nine months ended September 27, 2024, which was primarily driven by additional expenses incurred to support the growth in both our MTS and STS business segments and expenses incurred related to the implementation of a new enterprise resource planning system.
Previous report
Interest expense. The increase in interest expense was primarily driven by increased outstanding average debt principal from the nine months ended September 27, 2024 to the nine months ended October 3, 2025.
Previous report
Mission Technology Solutions
Previous report
MTS operating income increased by $12 million, or 4%, to $345 million for the nine months ended October 3, 2025, compared to $333 million for the nine months ended September 27, 2024. The increase in operating income was primarily driven by the growth associated with LinQuest. The increase was offset by a $6 million gain related to the sale of our investment interest in a joint venture during the nine months ended September 27, 2024 that did not recur during the nine months ended October 3, 2025.
Previous report
Sustainable Technology Solutions
Previous report
STS revenues increased by $60 million, or 4%, to $1,615 million for the nine months ended October 3, 2025, compared to $1,555 million for the nine months ended September 27, 2024. This increase is primarily driven by increased revenues from engineering and professional services.
Previous report
STS operating income increased by $55 million, or 18%, to $360 million for the nine months ended October 3, 2025, compared to $305 million for the nine months ended September 27, 2024. The increase in operating income is primarily due to increased equity in earnings from services on an LNG project and the items discussed above, offset by increased selling, general and administrative expenses related to growth in the business and expenses incurred related to the implementation of a new enterprise resource planning system.
Previous report
Investing Activities - continuing operations. Cash provided by investing activities totaled $47 million for the nine months ended October 3, 2025 primarily due to a return of equity method investment from BRIS of $82 million. This was offset by $24 million of capital expenditures and $13 million related to the acquisition of Infrastar Limited. See Note 6 "Equity Method Investments and Variable Interest Entities" to our condensed consolidated financial statements for further discussion on the return of equity method investment from BRIS.
Previous report
Cash used in investing activities totaled $733 million for the nine months ended September 27, 2024 and was primarily related to the acquisition of LinQuest, net of cash acquired of $739 million, capital expenditures of $36 million and funding in other investment of $5 million. This was offset by a return of equity method investment from JKC of approximately $36 million related to our proportionate share of a tax refund. Additionally, we received $6 million from the sale of our investment interest in a joint venture within our MTS segment.
Previous report
Cash provided by financing activities totaled $475 million for the nine months ended September 27, 2024 and was primarily related to $343 million in borrowings on our Revolver and $574 million in borrowings associated with Amendment No. 11 and No. 13 to our Credit Agreement. These increases were offset by $81 million of principal payments related to our Senior Credit Facility, $63 million in payments on the Revolver, $154 million for the repurchase of common stock under our share repurchase program and $13 million for the repurchase of common stock under our "withhold to cover" program. Cash used in financing activities also included $33 million payment for the settlement of warrants, $59 million of dividend payments to common shareholders, $18 million in debt issuance costs associated with Amendment No. 11, No. 12 and No. 13 to our Credit Agreement for our Senior Credit Facility and $10 million for the acquisition of a noncontrolling interest.
Reworded paragraphs (31)
Previous wording
HomeSafe, a joint venture with Tier One Relocation, informed us on June 18, 2025, that U.S. Transportation Command unexpectedly terminated HomeSafe's role in the Global Household Goods Contract. KBR owns a 72% interest in HomeSafe. As of October 3, 2025 substantially all of HomeSafe operations, including run-off operations, have ceased. The financial results and financial position of HomeSafe are presented as discontinued operations in the condensed consolidated statements of operations, condensed consolidated balance sheets and condensed consolidated statements of cash flows for all periods presented. See Note 17 "Discontinued Operations" to our condensed consolidated financial statements in Part 1, Item 1 of this Quarterly Report on Form 10-Q for more information. Unless otherwise indicated, any reference to statements of operations items in this "Management's Discussion and Analysis of Financial Condition and Results of Operations" refers to results from continuing operations.
Current wording
HomeSafe, a joint venture with Tier One Relocation, informed us on June 18, 2025, that U.S. Transportation Command unexpectedly terminated HomeSafe's role in the Global Household Goods Contract. KBR owns a 72% interest in HomeSafe. As of April 3, 2026 all of HomeSafe operations, including run-off operations, have ceased. The financial results and financial position of HomeSafe are presented as discontinued operations in the condensed consolidated statements of operations, condensed consolidated balance sheets and condensed consolidated statements of cash flows for all periods presented. See Note 17. "Discontinued Operations" to our condensed consolidated financial statements in Part 1, Item 1 of this Quarterly Report on Form 10-Q for more information. Unless otherwise indicated, any reference to statements of operations items in this "Management's Discussion and Analysis of Financial Condition and Results of Operations" refers to results from continuing operations.
Previous wording
Key customers include U.S. DoD agencies such as the U.S. Army, Navy, Air Force, Space Force, Missile Defense Agency, National Geospatial-Intelligence Agency, National Reconnaissance Office and other intelligence agencies; U.S. civilian agencies such as NASA, U.S. Geological Survey and National Oceanic and Atmospheric Administration; the U.K. MoD, other U.K. Crown Services; the Royal Australian Air Force, Navy and Army; and other national governments; and a wide range of commercial and industrial companies.
Current wording
Key customers include U.S. DoW agencies such as the U.S. Army, Navy, Air Force, Space Force, Missile Defense Agency, National Geospatial-Intelligence Agency, National Reconnaissance Office and other intelligence agencies; U.S. civilian agencies such as NASA, U.S. Geological Survey and National Oceanic and Atmospheric Administration; the U.K. MoD and other U.K. Crown Services; the Royal Australian Air Force, Navy and Army; other national governments; and a wide range of commercial and industrial companies.
Previous wording
Uncertainty continues to exist regarding the 2026 fiscal year budget and the impacts that the new legislative and executive branch will have on the final 2026 fiscal year budget. The Administration published its fiscal year 2026 budget request in June 2025. The budget request includes $848 billion in the base budget (discretionary) funding and $113 billion in reconciliation (mandatory) funding. The reconciliation bill H.R. 1 passed the Senate and House, and was signed by the President on July 4, 2025. The bill provides more than $150 billion in mandatory funding (inclusive of the $113 billion) for DoD available until September 30, 2029. We anticipate the federal budget will continue to be subject to debate and compromise shaped by, among other things, the new Administration and Congress, efficiency initiatives by the Department of Government Efficiency ("DOGE"), the global security environment, inflationary pressures including tariffs and macroeconomic conditions. Thus far, the directives of the administration and actions of the DOGE have resulted in federal government staff reductions and hiring freezes and may result in delays in contract awards.
Current wording
On April 3, 2026, the Administration provided a proposed fiscal 2027 budget for the U.S. Government which includes approximately $2.2 trillion in base discretionary spending, $1.5 trillion related to defense spending and $0.7 trillion for non-defense spending. The proposed defense spending is 44% higher than the enacted fiscal 2026 defense spending when including mandatory funding. We anticipate the federal budget will continue to be subject to debate and compromise shaped by, among other things, the Administration and Congress, efficiency initiatives, the global security environment, inflationary pressures including tariffs and macroeconomic conditions. Thus far, the Administration's directives have resulted in federal government staff reductions and hiring freezes and may result in delays in contract awards.
Previous wording
Internationally, our government work is performed primarily for the U.K. MoD and the Australian Department of Defence. In June 2025, leaders of the North Atlantic Treaty Organization ("NATO") agreed to invest 5% of their countries' GDP on defense and security-related spending by 2035. Additionally, in June 2025, the Strategic Defence Review was completed in the U.K. with plans to increase defense spending to 2.50% of GDP by 2027 and additional increases in following years to reach defense spending of 3.00% of GDP. Recognizing the importance of strong defense and the role the U.K. plays across the globe, the U.K. has prioritized investment in military research and investment in key areas to advance and develop capabilities around artificial intelligence, cyber security and space superiority. The Australian government continues to invest in defense spending, with particular focus on enhancing regional security, modernizing defense capabilities, strengthening cyber defenses and promoting broader economic stability. In March 2025, the Australian Minister for Defence announced that the Australian defense budget is expected to increase over the next four years.
Current wording
Internationally, our government work is performed primarily for the U.K. MoD and the Australian Department of Defence. In June 2025, leaders of the North Atlantic Treaty Organization ("NATO") agreed to invest 5% of their countries' gross domestic product ("GDP") on defense and security-related spending by 2035. In June 2025, the Strategic Defence Review was completed in the U.K. with plans to increase defense spending to 2.50% of GDP by 2027 and additional increases in following years to reach defense spending of 3.00% of GDP. In 2026, the U.K. Prime Minister reiterated his goal to continue to increase U.K defense spending in future years. The Australian government continues to invest in defense spending, with particular focus on enhancing regional security, modernizing defense capabilities, strengthening cyber defenses and promoting broader economic stability. In April 2026, the Australian Minister for Defence announced that the Australian defense budget will increase to 3.00% of GDP by 2033.
Previous wording
Long-range commercial market fundamentals are supported by global population growth, expanding global development and an acceleration of demand for energy transition, renewable energy sources and climate related solutions. The globe is in search of the solution to the energy trilemma, the balance between energy affordability, ensuring energy security and achieving environmental sustainability. While we have not had any material impact to our cost structure or ability to operate, we are monitoring the evolving macroeconomic environment due to ongoing tariffs including how those tariffs and any inflationary pressure may impact investment decisions from our core client base. Clients are prioritizing their efforts to solve the energy trilemma by investing in digital solutions to optimize operations, increase end-product flexibility and energy efficiency, reduce unplanned downtime and minimize environmental footprint. As the global focus on energy security intensifies and companies continue to commit to near-term carbon neutrality and longer-range net-zero carbon emissions, we expect spending to continue in areas such as decarbonization; carbon capture, utilization and sequestration; biofuels; and circular economy. Further, leading companies across the world are proactively evaluating clean energy alternatives, including hydrogen and green ammonia, which complements KBR's proprietary process technologies, solutions and capabilities. We expect climate protection, energy security and energy transition to continue to be areas of priority and investment as many countries, including the U.S., look to boost their economies and invest in a cleaner, more secure future.
Current wording
As the global focus on energy security intensifies and companies continue to commit to near-term carbon neutrality and longer-range net-zero carbon emissions, we expect spending to continue in areas such as decarbonization; carbon capture, utilization and sequestration; biofuels; and circular economy. Clients are prioritizing their efforts to solve the energy trilemma by investing in digital solutions to optimize operations, increase end-product flexibility and energy efficiency and reduce unplanned downtime. Further, leading companies across the world are proactively evaluating clean energy alternatives, including hydrogen and green ammonia, which complements KBR's proprietary process technologies, solutions and capabilities. We expect energy security and energy transition to continue to be areas of priority and investment as many countries, including the U.S., look to boost their economies and invest in a more secure future. While we have not had any material impact to our cost structure or ability to operate, we are monitoring the evolving macroeconomic environment due to ongoing tariffs and the Middle East conflicts including how those tariffs, any inflationary pressure and supply chain disruptions may impact investment decisions from our core client base.
Previous wording
See additional information on our business segments in Note 2 "Business Segment Information" to our condensed consolidated financial statements. Included in Mission Technology Solutions is the business of LinQuest Corporation ("LinQuest"), an engineering, data analytics and digital integration company acquired on August 30, 2024 and Infrastar Limited acquired on May 17, 2025. See Note 16 "Acquisitions" to our condensed consolidated financial statements for additional information on these acquisitions.
Current wording
See additional information on our business segments in Note 2. "Business Segment Information" to our condensed consolidated financial statements.
Previous wording
In September 2025, we announced our intention to spin off our Mission Technology Solutions business into a separate, U.S. publicly-traded company. The planned spin-off is intended to be tax-free to us and our shareholders for U.S. federal income tax purposes and targeting completion by mid-to-late 2026. The spin-off will be subject to final approval by our Board of Directors and other customary conditions, including receipt of a favorable opinion of legal counsel and/or a private letter ruling from the U.S. Internal Revenue Service with respect to the tax treatment of the transaction for U.S. federal income tax purposes, the effectiveness of a registration statement on Form 10 filed with the SEC, satisfactory completion of financing, and other regulatory approvals. Because the intended transaction is a spin-off, the Mission Technology Solutions business is not classified as held for sale and will be reported as continuing operations.
Current wording
In September 2025, we announced our intention to spin off our Mission Technology Solutions business into a separate, U.S. publicly-traded company. The Planned Spin-Off is intended to be tax-free to us and our shareholders for U.S. federal income tax purposes and targeting completion on January 4, 2027, which is the first business day of fiscal 2027. The spin-off will be subject to final approval by our Board of Directors and other customary conditions, including receipt of a favorable opinion of legal counsel and/or a private letter ruling from the U.S. Internal Revenue Service with respect to the tax treatment of the transaction for U.S. federal income tax purposes, the effectiveness of a registration statement on Form 10 filed with the SEC, satisfactory completion of financing and other regulatory approvals. Because the intended transaction is a spin-off, the Mission Technology Solutions business is not classified as held for sale and will be reported as continuing operations.
Previous wording
Revenues. The decrease in overall revenue of $6 million to $1,931 million for the three months ended October 3, 2025 from $1,937 million for the three months ended September 27, 2024 is due to reduced activity within the European command in our MTS segment and a reduction in services related to the completion of projects in our STS segment, offset by increases in defense and intel programs associated with the acquisition of LinQuest in our MTS segment.
Current wording
Revenues. The decrease in overall revenue of $95 million, or 5%, to $1,923 million for the three months ended April 3, 2026 from $2,018 million for the three months ended April 4, 2025 is primarily due to reduced contingent activity within the European command in our MTS segment.
Previous wording
Gross profit. The decrease in overall gross profit of $20 million, or 7%, was primarily driven by items decreasing revenues discussed above.
Current wording
Gross profit. The decrease in overall gross profit of $35 million, or 12%, was primarily driven by items decreasing revenues discussed above and changes in licensing mix within our STS segment.
Previous wording
Equity in earnings of unconsolidated affiliates. Equity in earnings of unconsolidated affiliates increased by $43 million, or 159%, to $70 million in earnings for the three months ended October 3, 2025, compared to $27 million in earnings for the three months ended September 27, 2024. The increase is primarily attributed to equity in earnings from services on an LNG project within our STS segment.
Current wording
Equity in earnings of unconsolidated affiliates. Equity in earnings of unconsolidated affiliates increased by $9 million, or 21%, to $51 million in earnings for the three months ended April 3, 2026, compared to $42 million in earnings for the three months ended April 4, 2025. The increase is primarily attributed to equity in earnings from services on an LNG project within our STS segment.
Previous wording
Selling, general and administrative expenses. Selling, general and administrative expenses in the three months ended October 3, 2025 were $9 million higher, a 6% increase compared to the three months ended September 27, 2024, which was primarily driven by additional expenses incurred related to the implementation of a new enterprise resource planning system.
Current wording
Selling, general and administrative expenses. Selling, general and administrative expenses in the three months ended April 3, 2026 were $7 million lower, a 5% decrease compared to the three months ended April 4, 2025, which was primarily driven by a favorable closeout in the first quarter of 2026. This was offset by increased expenses incurred related to the Planned Spin-Off.
Previous wording
Interest expense. The increase in interest expense was primarily driven by increased average outstanding debt principal from the three months ended September 27, 2024 to the three months ended October 3, 2025.
Current wording
Interest expense. The decrease in interest expense was primarily driven by decreases in the U.S. federal reserve funds rate from the three months ended April 4, 2025 to the three months ended April 3, 2026.
Previous wording
Provision for income taxes. The provision for income taxes for income from continuing operations for the three months ended October 3, 2025 and September 27, 2024 reflects a 22% tax rate and 24% tax rate, respectively. The effective tax rate of 22% for the three months ended October 3, 2025, as compared to the U.S. statutory rate of 21%, was affected by the rate differential on our foreign earnings and the impact of state and local taxes in the U.S, offset by the resolution reached with tax authorities. See Note 9 "Income Taxes" to our condensed consolidated financial statements for further discussion on this tax resolution. The effective tax rate of 24% for the three months ended September 27, 2024, as compared to the U.S. statutory rate of 21%, was primarily affected by the rate differential on our foreign earnings and the impact of state and local taxes in the U.S.
Current wording
Provision for income taxes. The provision for income taxes for income from continuing operations for the three months ended April 3, 2026 and April 4, 2025 reflects a 28% tax rate and a 26% tax rate, respectively. The effective tax rate of 28% for the three months ended April 3, 2026, as compared to the U.S. statutory rate of 21%, was affected by the rate differential on our foreign earnings, the impact of state and local taxes in the U.S. and discrete activity for the quarter. The effective tax rate of 26% for the three months ended April 4, 2025, as compared to the U.S. statutory rate of 21%, was primarily affected by the rate differential on our foreign earnings and the impact of state and local taxes in the U.S. See Note 9. "Income Taxes" to our condensed consolidated financial statements for further discussion on income taxes.
Previous wording
Net income (loss) from discontinued operations, net of tax. Net income (loss) from discontinued operations, net of tax, was $(55) million and $1 million during the nine months ended October 3, 2025 and September 27, 2024, respectively, due to the disposal of HomeSafe.
Current wording
Net loss from discontinued operations, net of tax. Net loss from discontinued operations, net of tax, was $2 million and $6 million during the three months ended April 3, 2026 and April 4, 2025, respectively, due to the disposal of HomeSafe.
Previous wording
Net income (loss) attributable to noncontrolling interests included in discontinued operations. Net income (loss) attributable to noncontrolling interests included in discontinued operations was $(18) million and $1 million during the nine months ended October 3, 2025 and September 27, 2024, respectively, due to the disposal of HomeSafe.
Current wording
Net loss attributable to noncontrolling interests included in discontinued operations. Net loss attributable to noncontrolling interests included in discontinued operations was $1 million and $2 million during the three months ended April 3, 2026 and April 4, 2025, respectively, due to the disposal of HomeSafe.
Previous wording
MTS revenues increased by $239 million, or 6%, to $4,286 million for the nine months ended October 3, 2025, compared to $4,047 million for the nine months ended September 27, 2024. The increase in revenue is primarily due to increases in defense and intel programs associated with the acquisition of LinQuest, offset by decreases in revenue due to reduced activity within the European command. On August 30, 2024, we acquired LinQuest.
Current wording
MTS revenues decreased by $85 million, or 6%, to $1,296 million for the three months ended April 3, 2026, compared to $1,381 million for the three months ended April 4, 2025. The decrease in revenue is primarily due to reduced contingent activity within the European command in our MTS segment.
Previous wording
We have included in the table below our proportionate share of unconsolidated joint ventures' estimated backlog. As these projects are accounted for under the equity method, only our share of future earnings from these projects will be recorded in our results of operations. Our proportionate share of backlog for projects related to unconsolidated joint ventures totaled $2.8 billion at October 3, 2025 and January 3, 2025.
Current wording
We have included in the table below our proportionate share of unconsolidated joint ventures' estimated backlog. As these projects are accounted for under the equity method, only our share of future earnings from these projects will be recorded in our results of operations. Our proportionate share of backlog for projects related to unconsolidated joint ventures totaled $2.9 billion and $2.8 billion at April 3, 2026 and January 2, 2026, respectively.
Previous wording
The following table summarizes our backlog by business segment as of October 3, 2025, and January 3, 2025, respectively. The disposal of HomeSafe met the requirements to be reported as discontinued operations. Backlog as of October 3, 2025 and January 3, 2025 does not include any amounts related to HomeSafe.
Current wording
The following table summarizes our backlog by business segment as of April 3, 2026, and January 2, 2026, respectively.
Previous wording
We estimate that as of October 3, 2025, 35% of our backlog will be executed within one year. Of this amount, we estimate that 89% will be recognized in revenues on our condensed consolidated statement of operations and 11% will be recorded by our unconsolidated joint ventures. As of October 3, 2025, $141 million of our backlog relates to active contracts that are in a loss position.
Current wording
We estimate that as of April 3, 2026, 37% of our backlog will be executed within one year. Of this amount, we estimate that 81% will be recognized in revenues on our condensed consolidated statements of operations and 19% will be recorded by our unconsolidated joint ventures. As of April 3, 2026, $98 million of our backlog relates to active contracts that are in a loss position.
Previous wording
As of October 3, 2025, 15% of our backlog was attributable to fixed-price contracts, 39% was attributable to PFIs, 28% was attributable to cost-reimbursable contracts and 18% was attributable to time-and-materials contracts. For contracts that contain fixed-price, cost-reimbursable and time-and-materials components, we classify the individual components as either fixed-price, cost-reimbursable or time-and-materials according to the composition of the contract; however, for smaller contracts, we characterize the entire contract based on the predominant component. As of October 3, 2025, $9.5 billionof our MTS backlog was currently funded by our customers.
Current wording
As of April 3, 2026, 14% of our backlog was attributable to fixed-price contracts, 39% was attributable to PFIs, 23% was attributable to cost-reimbursable contracts and 24% was attributable to time-and-materials contracts. PFI arrangements are predominantly fixed‑price in nature, and therefore the PFI portion of backlog primarily reflects fixed‑price contractual structures. For contracts that contain fixed-price, cost-reimbursable and time-and-materials components, we classify the individual components as either fixed-price, cost-reimbursable or time-and-materials according to the composition of the contract; however, for smaller contracts, we characterize the entire contract based on the predominant component. As of April 3, 2026, $9.0 billionof our MTS backlog was currently funded by our customers. Excluding PFIs, 39% of our MTS backlog is currently funded by our customers. As of April 3, 2026, we had approximately $5.9 billion of priced option periods not yet exercised by the customer for U.S. government contracts that are not included in the backlog amounts presented above.
Previous wording
The difference between backlog of $17.1 billion and the remaining performance obligations as defined by ASC 606 of$13.5 billion is primarily due to our proportionate share of backlog related to unconsolidated joint ventures which is not included in our remaining performance obligations. See Note 3 "Revenue" to our condensed consolidated financial statements for discussion of the remaining performance obligations.
Current wording
The difference between backlog of $17.3 billion and the remaining performance obligations as defined by ASC Topic 606, Revenue from Contracts with Customers, of$13.6 billion is primarily due to our proportionate share of backlog related to unconsolidated joint ventures which is not included in our remaining performance obligations. See Note 3. "Revenue" to our condensed consolidated financial statements for discussion of the remaining performance obligations.
Previous wording
Cash and cash equivalents totaled $539 million at October 3, 2025, and $342 million at January 3, 2025, and consisted of the following:
Current wording
Cash and cash equivalents totaled $380 million at April 3, 2026, and $500 million at January 2, 2026, and consisted of the following:
Previous wording
Our cash balances are held in numerous accounts throughout the world to fund our global activities, including acquisitions, joint ventures and other business partnerships. Domestic cash relates to cash balances held by U.S. entities and is largely used to support project activities of those businesses as well as general corporate needs such as the payment of dividends to shareholders, repayment of debt and potential repurchases of our outstanding common stock. Additionally, domestic cash and cash equivalents includes $16 million and $12 million held by our wholly owned captive insurance company as of October 3, 2025 and January 3, 2025, respectively, which is generally not available to KBR to support its other operations.
Current wording
Our cash balances are held in numerous accounts throughout the world to fund our global activities, including acquisitions, joint ventures and other business partnerships. Domestic cash relates to cash balances held by U.S. entities and is largely used to support project activities of those businesses as well as general corporate needs such as the payment of dividends to shareholders, repayment of debt and potential repurchases of our outstanding common stock. Additionally, domestic cash and cash equivalents includes $10 million and $15 million held by our wholly owned captive insurance company as of April 3, 2026 and January 2, 2026, respectively, which is generally not available to KBR to support its other operations.
Previous wording
Our international cash balances may be available for general corporate purposes but are subject to local restrictions, such as capital adequacy requirements and maintaining sufficient cash balances to support our U.K. pension plan and other obligations incurred in the normal course of business by those foreign entities. Repatriations of our undistributed foreign earnings are generally free of U.S. tax but may incur withholding and/or state taxes. We consider our future non-U.S. cash needs as 1) our anticipated foreign working capital requirements, including funding of our U.K. pension plan, 2) the expected growth opportunities across all geographical markets and 3) our plans to invest in strategic growth opportunities, which may include acquisitions, joint ventures and other business partnerships around the world, including whether foreign earnings are permanently reinvested. If management were to completely remove the indefinite investment assertion on all foreign subsidiaries, the exposure to local withholding taxes would be less than $9 million.
Current wording
Our international cash balances may be available for general corporate purposes but are subject to local restrictions, such as capital adequacy requirements and maintaining sufficient cash balances to support our U.K. pension plan and other obligations incurred in the normal course of business by those foreign entities. Repatriations of our undistributed foreign earnings are generally free of U.S. tax but may incur withholding and/or state taxes. We consider our future non-U.S. cash needs as 1) our anticipated foreign working capital requirements, including funding of our U.K. pension plan, 2) the expected growth opportunities across all geographical markets and 3) our plans to invest in strategic growth opportunities, which may include acquisitions, joint ventures and other business partnerships around the world, including whether foreign earnings are permanently reinvested. If management were to completely remove the indefinite investment assertion on all foreign subsidiaries, the exposure to local withholding taxes would be less than $10 million.
Previous wording
Operating Activities - continuing operations. Cash provided by operations totaled $506 million and $409 million for the nine months ended October 3, 2025 and September 27, 2024, respectively, as compared to net income from continuing operations of $345 million and $302 million for the nine months ended October 3, 2025 and September 27, 2024, respectively. Cash flows from operating activities result primarily from earnings and are affected by changes in operating assets and liabilities, which consist primarily of working capital balances for projects. Working capital levels vary from year to year and are primarily affected by our volume of work. These levels are also impacted by the mix, stage of completion and commercial terms of projects. Working capital requirements also vary by project depending on the type of client and location throughout the world.
Current wording
Operating Activities - continuing operations. Cash provided by operations totaled $110 million and $91 million for the three months ended April 3, 2026 and April 4, 2025, respectively, as compared to net income from continuing operations of $103 million and $121 million for the three months ended April 3, 2026 and April 4, 2025, respectively. Cash flows from operating activities result primarily from earnings and are affected by changes in operating assets and liabilities, which consist primarily of working capital balances for projects. Working capital levels vary from year to year and are primarily affected by our volume of work. These levels are also impacted by the mix, stage of completion and commercial terms of projects. Working capital requirements also vary by project depending on the type of client and location throughout the world.
Previous wording
During the nine months ended October 3, 2025, cash flows increased primarily due to the resolution of an outstanding unapproved change order within our Mission Technology Solutions segment. Additionally, there were increases in distributions of earnings from unconsolidated affiliates and decreases in pension funding that resulted in additional operating cash flows. These increases were offset primarily by changes in the primary components of our working capital. The primary components of our working capital accounts are accounts receivable, contract assets, accounts payable and contract liabilities. These components are impacted by the size and changes in the mix of our cost-reimbursable and time-and-materials projects versus fixed price projects, and as a result, fluctuations in these components are not uncommon in our business.
Current wording
During the three months ended April 3, 2026, cash flows increased primarily due to changes in the primary components of our working capital. The primary components of our working capital accounts are accounts receivable, contract assets, accounts payable and contract liabilities. These components are impacted by the size and changes in the mix of our cost-reimbursable and time-and-materials projects versus fixed price projects, and as a result, fluctuations in these components are not uncommon in our business. These increases were offset by decreases in distributions of earnings from unconsolidated affiliates.
Previous wording
Financing Activities - continuing operations. Cash used in financing activities totaled $350 million for the nine months ended October 3, 2025. The primary uses of cash in financing activities were $505 million in payments on the Revolver, $20 million in payments on our Term Loan A, $7 million in payments on our Term Loan B, $298 million for the repurchase of common stock under our share repurchase program, $6 million for the repurchase of common stock under our "withhold to cover" program and $63 million of dividend payments to common shareholders. These decreases were offset by $555 million in borrowings on our Revolver.
Current wording
Financing Activities - continuing operations. Cash used in financing activities totaled $43 million for the three months ended April 3, 2026. The primary uses of cash in financing activities were $141 million in payments on the Revolver, $21 million of dividend payments to common shareholders, $9 million in payments on our Term Loan A, $3 million in payments on our Term Loan B and $4 million for the repurchase of common stock under our "withhold to cover" program. These decreases were offset by $141 million in borrowings on our Revolver.
Previous wording
Cash flows from discontinued operations. Cash flows from discontinued operations are associated with the disposal of HomeSafe. Cash used in operations totaled $31 million for the nine months ended October 3, 2025 and cash provided by operations totaled $13 million for the nine months ended September 27, 2024. Changes in HomeSafe's working capital accounts were the primary components of operating cash flows for the nine months ended October 3, 2025 and September 27, 2024. Cash used in investing activities totaled $12 million and $18 million for the nine months ended October 3, 2025 and September 27, 2024, respectively, which is related to capital expenditures. Cash provided by financing activities totaled $10 million for the nine months ended October 3, 2025 due to investments from the noncontrolling interest partner. See Note 17 "Discontinued Operations" for additional information.
Current wording
Cash flows from discontinued operations. Cash flows from discontinued operations are associated with the disposal of HomeSafe. Cash provided by (used in) operations totaled $(2) million and $7 million for the three months ended April 3, 2026 and April 4, 2025, respectively. Changes in HomeSafe's working capital accounts were the primary components of operating cash flows for the three months ended April 3, 2026 and April 4, 2025. Cash used in investing activities totaled $6 million for the three months ended April 4, 2025 which is related to capital expenditures. See Note 17. "Discontinued Operations" to our condensed consolidated financial statements for additional information.
Previous wording
U.K. pension obligation. We have recognized on our condensed consolidated balance sheets a funding surplus of $126 million (calculated as the difference between the fair value of plan assets and the projected benefit obligation as of October 3, 2025) for our frozen U.K. defined benefit pension plan. The funding requirements for our U.K. pension plan are determined based on the U.K. Pensions Act 1995. Annual minimum funding requirements are based on a binding agreement with the Trustee of the U.K. pension plan that is negotiated on a triennial basis. This schedule of contributions will be reviewed by the Trustee and KBR no later than 15 months after the effective date of each actuarial valuation, due every three years. In 2024, the
Current wording
U.K. pension obligation. We have recognized on our condensed consolidated balance sheets a funding surplus of $95 million (calculated as the difference between the fair value of plan assets and the projected benefit obligations as of April 3, 2026) for our frozen U.K. defined benefit pension plan. The funding requirements for our U.K. pension plan are determined based on the U.K. Pensions Act 1995. Annual minimum funding requirements are based on a binding agreement with the Trustee of the U.K. pension plan that is negotiated on a triennial basis. This schedule of contributions will be reviewed by the Trustee and KBR no later than 15 months after the effective date of each actuarial valuation, due every three years. In 2024, the Trustee of the U.K. defined benefit pension plan commenced the triennial actuarial valuation of the plan which was finalized during the year ended January 2, 2026. At this time, we do not anticipate contributing additional funding to this plan at least until the next triennial valuation occurs. In the future, pension funding may increase or decrease depending on changes in the levels of interest rates, pension plan asset return performance and other factors. A significant increase in our funding requirements for the U.K. pension plan could result in a material adverse impact on our financial position.
Previous wording
In certain limited circumstances, we enter into financial guarantees in the ordinary course of business, with financial institutions and other credit grantors, which generally obligate us to make payment in the event of a default by the borrower. These arrangements generally require the borrower to pledge collateral to support the fulfillment of the borrower’s obligation. We account for both financial and performance guarantees at fair value at issuance in accordance with ASC 460-10 Guarantees and, as of October 3, 2025, we had no material guarantees of the work or obligations of third parties recorded.
Current wording
In certain limited circumstances, we enter into financial guarantees in the ordinary course of business, with financial institutions and other credit grantors, which generally obligate us to make payment in the event of a default by the borrower. These arrangements generally require the borrower to pledge collateral to support the fulfillment of the borrower’s obligation. We account for both financial and performance guarantees at fair value at issuance in accordance with ASC Subtopic 460-10, Guarantees, and, as of April 3, 2026, we had no material guarantees of the work or obligations of third parties recorded.
Previous wording
As of October 3, 2025, we had a $1 billion committed line of credit on the Revolver under our Senior Credit Facility and $489 million of bilateral and uncommitted lines of credit. As of October 3, 2025, with respect to our Revolver, we had $395 million of outstanding borrowings. We also have $14 million of outstanding letters of credit on our Senior Credit Facility. With respect to our $489 million of bilateral and uncommitted lines of credit, we had utilized $266 million for letters of credit as of October 3, 2025. The total remaining capacity of these committed and uncommitted lines of credit was approximately $814 million as of October 3, 2025, all of which can be used toward issuing letters of credit. Information relating to our letters of credit is described in Note 8 "Debt and Other Credit Facilities" to our condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q and the information discussed therein is incorporated by reference into this Part I, Item 2. Other than discussed in this Quarterly Report on Form 10-Q, we have not engaged in any material off-balance sheet financing arrangements through special purpose entities.
Current wording
As of April 3, 2026, we had a $1 billion committed line of credit on the Revolver under our Senior Credit Facility and $488 million of bilateral and uncommitted lines of credit. As of April 3, 2026, with respect to our Revolver, we had $395 million of outstanding borrowings. We also have $17 million of outstanding letters of credit on our Senior Credit Facility. With respect to our $488 million of bilateral and uncommitted lines of credit, we utilized $288 million for letters of credit as of April 3, 2026. The total remaining capacity of these committed and uncommitted lines of credit was approximately $788 million as of
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
Cash used in financing activities totaled $6 million for the three months ended April 4, 2025. The primary uses of cash in financing activities were $150 million for the repurchase of common stock under our share repurchase program, $6 million for the repurchase of common stock under our "withhold to cover" program, $95 million in payments on the Revolver and $20 million of dividend payments to common shareholders. These decreases were offset by $275 million in borrowings on our Revolver.
Current report — wording carried from elsewhere
April 3, 2026, all of which can be used toward issuing letters of credit. Information relating to our letters of credit is described in Note 8. "Debt and Other Credit Facilities" to our condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q and the information discussed therein is incorporated by reference into this Part I, Item 2. Other than discussed in this Quarterly Report on Form 10-Q, we have not engaged in any material off-balance sheet financing arrangements through special purpose entities.
Rearranged previous paragraphs (7)
Previous report — wording carried elsewhere
Net loss from discontinued operations, net of tax. Net loss from discontinued operations, net of tax, was $1 million during the three months ended October 3, 2025 due to the disposal of HomeSafe. No similar net loss from discontinued operations, net of tax, was recognized during the three months ended September 27, 2024.
Previous report — wording carried elsewhere
The information below is an analysis of our consolidated results for the nine months ended October 3, 2025 compared to the nine months ended September 27, 2024. See Results of Operations by Business Segment below for additional information describing the performance of each of our reportable segments.
Previous report — wording carried elsewhere
Equity in earnings of unconsolidated affiliates. Equity in earnings of unconsolidated affiliates increased by $66 million, or 68%, to $163 million in earnings for the nine months ended October 3, 2025, compared to $97 million in earnings for the nine months ended September 27, 2024. The increase is primarily attributed to equity in earnings from services on an LNG project within our STS segment.
Previous report — wording carried elsewhere
Provision for income taxes. The provision for income taxes for income from continuing operations for the nine months ended October 3, 2025 and September 27, 2024 reflects a 25% tax rate and a 26% tax rate, respectively. The effective tax rate of 25% for the nine months ended October 3, 2025, as compared to the U.S. statutory rate of 21%, was affected by the rate differential on our foreign earnings and the impact of state and local taxes in the U.S, offset by the resolution reached with tax authorities. See Note 9 "Income Taxes" to our condensed consolidated financial statements for further discussion on this tax resolution. The effective tax rate of 26% for the nine months ended September 27, 2024, as compared to the U.S. statutory rate of 21%, was primarily affected by the rate differential on our foreign earnings and the impact of state and local taxes in the U.S.
Previous report — wording carried elsewhere
Results of Operations by Business Segment
Previous report — wording carried elsewhere
As of October 3, 2025, we had approximately $6.2 billion of priced option periods not yet exercised by the customer for U.S. government contracts that are not included in the backlog amounts presented above.
Previous report — wording carried elsewhere
Trustee of the U.K. defined benefit pension plan commenced the triennial actuarial valuation of the plan which was finalized during the nine months ended October 3, 2025. At this time, we do not anticipate contributing additional funding to this plan at least until the next triennial valuation occurs. In the future, pension funding may increase or decrease depending on changes in the levels of interest rates, pension plan asset return performance and other factors. A significant increase in our funding requirements for the U.K. pension plan could result in a material adverse impact on our financial position.