KBR reported $1.9 billion in revenue during the third quarter of fiscal year 2025 and recorded $4.2 billion in Q3 bookings and options with a book-to-bill of 1.4x on a trailing 12-month basis.
In an earnings release published Thursday, the Houston-based engineering contractor said Q3 net income was $115 million and adjusted earnings before interest, taxes, depreciation and amortization, or adjusted EBITDA2, was $240 million during the quarter.
For the quarter, KBR posted diluted earnings per share of $0.90 and adjusted EPS2 of $1.02.
The company returned to shareholders a total of $122 million in capital through regular dividends and share repurchases.
KBR Mission Technologies Solutions Segment’s Q3 Financial Results
KBR’s Mission Technologies Solutions, or MTS, business segment reported $1.4 billion in Q3 revenues, flat to the prior-year period, and posted $143 million in Q2 adjusted EBITDA2, up 1 percent from the year-ago quarter.
MTS, formerly KBR’s government solutions segment, emerged as part of a business realignment effort the company announced in January to streamline operations and advance its strategic direction.
The segment recorded $114 million in Q3 operating income and ended the quarter with a total backlog and options of $19.7 billion, with 1.4x book-to-bill for the quarter.
Meanwhile, adjusted EBITDA margin was 10.2 percent during the quarter.
New awards booked by the business segment during the quarter include a $2.5 billion contract with NASA to support astronaut health, occupational health and research; three task orders with the Air Force Research Laboratory under the Innovative Cyber/Infrastructure Threat Assessment Environment Common Operating Picture for Event Response Situation Awareness contract; and a $99 million contract with the U.S. Space Force for the Design Implementation for Collaborative Environment.
CFO Mark Sopp on MTS Segment’s Financial Performance
At an earnings call Thursday, Mark Sopp, executive vice president and chief financial officer of KBR, discussed the financial performance of the company’s MTS business segment.
“Breaking that down by business unit, Defense and Intelligence generated growth of 14% with contribution from the international side and also LinQuest. That business, LinQuest, as you’ll recall, has added increased volume in military space and digital modernization with quite of that work being in the classified category,” Sopp, a three-time Wash100 awardee, told analysts.
In September 2024, KBR closed its $737 million purchase of LinQuest to expand its engineering, data analytics and digital integration capabilities for the Department of Defense and Intelligence Community agencies.
“Readiness and sustainment was down 22%, primarily due to Department of War strategic shifts, including customer reductions in the OPTEMPO in the European Command Theater and prepositioned stock programs. … Science & Space was down 5%, while we did have the HHPC recompete win, which was terrific, there’s really been a lack of new award activity outside of that and there’s been overall funding and decision delays in NASA overall in recent months,” the CFO noted.
Sopp said the company’s U.S. government contracting business remains largely resilient, noting that most of KBR’s work with federal agencies is deemed essential. He added that the segment continues to demonstrate strong stability in its funded backlog, providing a solid foundation of ongoing work and revenue visibility despite the government shutdown.
“Specifically, U.S. funded backlog was $2 billion at the end of Q3, which is over 5 months of our current revenue run rate. This is slightly up from Q2. With these factors, we have seen no material impacts from the shutdown in October and are confident we can navigate through November with minimal impact to revenue,” the KBR executive explained.
CEO Stuart Bradie on MTS Spinoff Plan
During the call, KBR President and CEO Stuart Bradie provided an update on spinoff plans for the MTS business segment.
In September, the company announced plans to spin off MTS and form two independent, public companies with distinct products and services. The move is expected to be completed by mid-to-late 2026 through a tax-free transaction, subject to final approval by KBR’s board and other customary closing conditions.
“Today, spin-off preparations are advancing according to plan. Presently, we are conducting audits of historical carved-out financial statements and preparation of the pro forma financials, while also laying the groundwork for the Form 10,” Bradie told analysts.
“Additionally, recruitment processes for the CEO and CFO positions for SpinCo are progressing alongside preliminary work on naming and branding strategies. We have been very deliberate to set up a separate project team in order to minimize disruption to our operations and allow our teams to focus on their core business,” the chief executive added.
