KBR

Image source: The Motley Fool. Thursday, July 30, 2026 at 8:30 a.m. ET Head of Investor Relations - Rachael Goldwait President and Chief Executive Officer - Stuart Bradie Executive Vice President and Chief Financial Officer - Shad Evans CEO designate - Michael LaRouche CFO designate - Nick Veasey Operator: Hello, everyone. Thank you for joining us, and welcome to KBR's Second Quarter 2026 Earnings Call. After today's prepared remarks, we will host a question and answer session. [Operator Instructions] I will now hand the conference over to Rachael Goldwait, Head of Investor Relations. Rachael, go ahead. Rachael Goldwait: Thank you, and good morning. Welcome to KBR's Second Quarter 2026 Earnings Call. Joining me today are Stuart Bradie, President and CEO; and Shad Evans, Executive Vice President and CFO. Stuart and Shad will cover highlights from the quarter, and then we'll open the line for your questions. Today's earnings presentation is available on the Investor Relations section of our website at kbr.com. As outlined on Slide 2, today's discussion includes forward-looking statements and certain non-GAAP financial measures. Additional information, including reconciliations to the nearest GAAP measures can be found in the presentation appendix. With that, I'll turn the call over to Stuart. Stuart Bradie: Thanks, Rachael, and good morning, everyone. I will pick up on Slide 4. Before we get into the meat of the presentation, I wanted to briefly highlight 2025 Sustainability and Corporate Responsibility report, which we published a few weeks ago. This is our fifth year issuing a report, and it reflects an important part of how KBR operates. Sustainability, safety and responsible delivery are embedded in how we manage risk, develop our people and, of course, deliver for our customers. This year's report highlights record safety performance, continued progress against our environmental commitment, and 35% of revenues focused on sustainability. As we move toward operating as 2 companies, that operating discipline will remain an important part of the culture and the value proposition of both businesses. On to Slide 5. Today, we will focus on 4 key messages. First, we delivered a strong first half with the results tracking slightly ahead of our planned cadence. Second, we have strong visibility across both businesses, supported by record backlog in STS and significant awarded work in MTS that has yet to be reflected in backlog. Third, our planned separation remains firmly on track, with transaction, leadership and Day 1 readiness milestones continuing to advance. And finally, we are reaffirming our 2026 guidance and remain focused on execution cash generation, disciplined capital allocation and of course, a successful separation. Moving to Slide 6. This slide highlights our progress against the 4 strategic pillars that continue to guide KBR. Our focus on operational excellence and capital deployment here and then discuss growth and differentiated solutions on the next 2 slides. On operational excellence, we continue to execute for our customers while standing up 2 stand-alone companies, very important. Importantly, that work has not distracted us from delivering for our customers, growing the business or executed against our financial commitments. We continue to win in the market, build backlog across both businesses and deliver solid performance with year-to-date adjusted EBITDA margin of 13%, 1-3 percent, keeping us on track for another strong year. At the same time, we're taking actions ahead of separation to reduce incremental stand-alone costs and mitigate dis-synergies. Across both businesses, we are simplifying organizational structures, driving productivity and increasing accountability so that each company enters 2027 with a leaner cost base and stronger margin potential. For SpinCo, the priority is establishing a stand-alone public company while maintaining competitive rates and preserving our position across both cost plus and fixed price opportunities. Our objective remains rate neutrality, and we continue to make good progress towards that goal. For New KBR, we're building a lean, scalable organization that can support future growth while maintaining strong margins and disciplined cost management. Next, on capital deployment. We continue to allocate capital in a disciplined manner, investing roughly $190 million in the first half to strengthen the portfolio while also returning an additional $71 million to shareholders through dividends and share repurchases, bringing total capital deployed to $261 million. We remain focused on maintaining the flexibility needed to support separation, invest in growth and pursue attractive value creation opportunities. In short, we are executing the strategy, preparing both companies for a successful separation and positioning each business to create greater value as a focused stand-alone company. With that as a backdrop, let's move to Slide 7 and discuss the STS business. The demand trends we discussed last quarter continued to strengthen during the second quarter reinforcing our confidence in the long-term outlook for Sustainable Tech. Demand remains broad-based across energy security, food security and sustainability focused investments, supported by both new project activity and long-standing customer relations very important. Those market dynamics continue to translate into strong commercial results. Second quarter book-to-bill was 1.5x, and trailing 12-month book-to-bill was 1.3x. And backlog ended the quarter at a record $5.5 billion, and that is up 40%, 4-0 percent, year-over-year. In addition, our near-term pipeline now exceeds $6 billion, excluding large reimbursable LNG EPC opportunities, which grew the number significantly. Importantly, work already under contract represents approximately 80% of our 2026 revenue guidance midpoint. We're also seeing an increasing mix of OpEx-related work. Approximately 34% of year-to-date bookings were tied to OpEx-based contracts with activity across both the Middle East and the Americas through Brown & Root. These contracts are generally longer in duration and further enhance the durability, visibility and resilience of the business. We remain encouraged by the level of OpEx-related opportunities moving through the pipeline. The Middle East remains a significant growth driver, where first half bookings exceeded $900 million across oil, gas, NGL and energy infrastructure projects. We are also seeing encouraging momentum across our technology portfolio, including our first commercial PureSAF license awards and continued demand for our market-leading ammonia technologies, including the recent Pampa Energia award in the Americas. More broadly, many of these opportunities build on relationships that begin with technology licensing, studies or engineering services and ultimately expand into larger project execution or aftermarket scopes, creating additional revenue opportunities while improving long-term visibility. Taken together, we believe STS remains well positioned for continued growth and provides strong visibility into future revenue and earnings. On to Slide 8. Turning to MTS. We continue to see strong demand across our Defense Systems Modernization, Space and Global Mission Operations businesses. Our strategy remains focused on combining trusted mission expertise, customer intimacy and differentiated technology solutions to address some of our customers' most critical priorities. That demand is supported by strong visibility into future performance. Approximately 94% of our full year revenue guidance is already under contract. We have roughly $10.4 billion awaiting award, and we expect more than $25 billion of bid volume in 2026, and that's up approximately 50% year-over-year, with significant submissions in the second half. Second quarter book-to-bill was 0.8x, with a trailing 12-month ratio of 1.0x. Importantly, those metrics do not yet reflect approximately $10.6 billion of awarded work currently under protest, including the National Science Foundation Antarctica award, the Department of State award in Iraq and the classified Paycom Logistics award. As a result, we believe reported backlog and book-to-bill do not fully reflect the level of awarded work and future revenue visibility in the business today. While the timing of protest resolutions remain outside our control, these are awarded programs supporting enduring customer priorities. More broadly, our success continues to be driven by the mission expertise and customer relationships we've built over decades. The National Science Foundation Antarctica award is a really good example. While NSF was a new customer for KBR, the award reflects several years of engagement, mission understanding and demonstrated technical capability highlighting the differentiated approach that continues to create opportunities across the portfolio. We are also increasingly embedding software AI and digital capabilities into missions we already support, helping customers modernize operations, improve decision-making and deliver faster outcome. We also see opportunities to support emerging priorities such as Golden Dome, where KBR already supports customers across many parts of the broader mission environment. In short, demand remains healthy across our global market. Visibility remains strong, and our differentiated capabilities continue to support long-term growth. As we prepare to launch this business as a stand-alone company, we are also taking an important step in establishing its identity in the market. Now let me turn to Slide 9 and introduce the new name for the MTS spin-off. Trinzic. The name is inspired by the word intrinsic and reflects essential built-in capabilities and deep, deep expertise. Trinzic harnesses the power of technology to support governments, partners and allies across national security and space. We work at the frontier of what is technically possible, bringing new capabilities to the systems the world depends on, and giving customers the confidence to act. The tagline for Trinzic, the bold, connected. And I think this captures the essence of the business. Trinzic design solutions that hold up when there is no margin for error and in environments where critical systems must perform. Just as importantly, Trinzic gives us the opportunity to tell the story of how this business has evolved. While our foundation remains our deep expertise in trusted performance, today's Trinzic is increasingly defined by the way it connects people, technology and critical systems with speed, precision and rigor. We believe the brand better reflects both the company we are today and where we are headed next, very exciting. It also reflects a culture built around collaboration, accountability and delivering results. As we've discussed on today's call, this business is entering its next chapter with strong customer relationships, differentiated capabilities, global reach and significant growth opportunities ahead. We believe Trinzic reflects both our heritage and our exciting future, bringing intrinsic value and advantage to customers. On to Slide 10. We continue to execute well against our separation plan and remain on track to complete the spin on a target date of January 4, 2027. On transaction readiness, we continue to make progress across key regulatory and transaction milestones. We submitted our final private letter ruling request to the IRS in June, and expect a final ruling in September. We also continue through the SEC review process for the Form 10 with a public filing expected ahead of our next earnings call. Operationally, the work is shifting from planning to execution, IT systems, contract bifurcation, procurement separation, corporate budgeting and organizational design are all progressing against plan. Corporate employees have been aligned to their future organizations and the teams are focused on filling the remaining critical roles, so both companies are ready to operate effectively from Day 1. We are also building out the Trinzic leadership team. Michael LaRouche will join as CEO designate in September, bringing nearly 30 years of experience across defense, intelligence, space, cyber and government services. Nick Veasey joined as CFO designate earlier this month, with deep experience across finance, capital markets, M&A and investor engagement. The majority of the Trinzic leadership team is now firmly in place, and the boards for both companies are taking shape as we assemble the skills necessary and the experience needed to support each company's stand-alone strategy. Looking ahead, we're excited to host Investor Days in New York for both New KBR and Trinzic, where we will outline the stand-alone strategies, the financial framework and the long-term priorities for each business. Overall, I'm pleased to report the separation is progressing well. The leadership foundation is taking shape, and we have strong visibility into the key milestones required to successfully launch both companies. With that, I'll hand over to Shad. Shad Evans: Thanks, Stuart. I'll pick up on Slide 12 with our consolidated second quarter results. Revenues for the quarter were approximately $2 billion, up $32 million or 2% from prior year. As a reminder, this was the final quarter lapping elevated EUCOM contingency activity in 2025. Excluding that work, revenue increased by approximately $91 million or roughly 5%, driven by continued ramp-up on recently awarded projects across both segments. Adjusted EBITDA increased $16 million to $258 million, with adjusted EBITDA margins expanding approximately 60 basis points to 13%. Performance was driven by strong project execution, favorable portfolio mix and disciplined cost management across the business. Adjusted EPS increased $0.08 to $0.99, driven by strong operating performance, lower below-the-line expenses and lower diluted share count resulting from our repurchase activity. Turning to cash flow. First half adjusted operating cash flow was $183 million, representing adjusted OCF conversion of approximately 74%. As expected, second quarter cash flow reflected collections timing in STS, Middle East. Collections have started to normalize in July, and our full year outlook remains unchanged. Overall, we are pleased with the first half performance. We delivered profitable growth, expanded margins and continued to see healthy momentum across both segments as we enter the second half of the year. Turning to Slide 13. I'll walk through segment performance. Beginning with Sustainable Technology Solutions. Revenue increased $60 million or 10% year-over-year to $676 million, driven by continued ramp-up of projects awarded over the past 12 months, with particularly strong growth in the Middle East, Latin America, Asia and Australia. Revenue also increased 8% sequentially, reinforcing our confidence in delivering mid-teens revenue growth for the full year as project activity accelerates in the second half. Adjusted EBITDA was $123 million, down $11 million from the prior year due to project mix. This quarter included a higher proportion of equipment procurement activity, which carries margins at the lower end of the framework we outlined last quarter. This impact was partially offset by strong project execution and continued healthy demand across the portfolio. Adjusted EBITDA margin was 18.2%, while adjusted EBITDA margin, excluding LNG JV earnings was approximately 13%. Importantly, year-to-date adjusted EBITDA margins, excluding LNG JV earnings remained approximately 14.5%, demonstrating the underlying earnings power of the business and keeping us on track to achieve our full year outlook of mid-teens, excluding LNG JV earnings. Turning to Mission Tech. Revenues were $1.3 billion, down $28 million from prior year. Excluding EUCOM contingency activity, revenues increased approximately $31 million or 2%, reflecting strong activity in Australia and the U.K., partially offset by project completions in the U.S. Adjusted EBITDA increased $22 million to $158 million, with margins expanding roughly 190 basis points to 12.1%. Performance benefited from favorable mix, disciplined cost management, and benefited from contract closeouts. Year-to-date margins of 11.4% remained modestly ahead of our full year outlook. Overall, we were pleased with the segment performance during the quarter. Both businesses continue to execute well, deliver profitable growth and maintain strong momentum as we move through the back half of the year. Turning to capital allocation on Slide 14. Net leverage ended the quarter at approximately 2.3x trailing adjusted EBITDA, flat sequentially and comfortably below our 2.5x target. As working capital normalizes and cash generation strengthens in the second half, we expect leverage to continue trending downward through year-end. We also maintained a disciplined approach to capital allocation, repurchasing approximately $25 million of shares during the quarter while preserving ample liquidity. As we prepare for separation, we remain focused on positioning both companies with capital structures and financial flexibility needed to execute their growth strategies and create long-term shareholder value. Overall, we are confident in the strength of our balance sheet, our capital allocation framework and the readiness for both businesses as we move towards separation. On to Slide 15. Today, we're reaffirming our full year guidance across revenue, adjusted EBITDA, adjusted EPS and adjusted operating cash flow. The business continues to perform in line with our expectations, supported by strong execution, a healthy demand environment and strong revenue visibility. Approximately 89% of our expected revenue for the year is already in hand, including 80% for STS and 94% in MTS. Given our first half performance and the strength of our backlog, we remain confident in our ability to deliver on our full year outlook. With that, I'll pass it back to Stuart. Stuart Bradie: Thanks, Shad. And to wrap up on Slide 16, there are 4 key takeaways from the quarter. First, we continue to execute at a high level across both businesses. First half results demonstrate the strength of the portfolio, profitable growth, margin expansion and solid momentum heading into the back half of the year. Second, demand remains healthy and visibility remains strong. Across both businesses, we are supported by substantial backlog, significant awarded work and a healthy pipeline, giving us confidence in both our near-term outlook and our longer-term growth opportunities. Third, confidence in the separation continues to build. Transaction milestones are progressing as planned. Operational readiness is advancing, and we're increasingly shifting from planning to execution as we prepare for Day 1. And finally, we're positioning New KBR and Trinzic as 2 focused, highly differentiated companies with strong market positions, disciplined operating models and a clear path to long-term value creation for our shareholders. With that, I'll hand it back to the operator, who will open the call for questions. Operator: [Operator Instructions] Your first question comes from the line of Mariana Perez Mora with Bank of America. Mariana Perez Mora: So my first question is you mentioned, Trinzic is out there new name, everything is on track, even a strong management team designated. Now you mentioned about like the financial structure and the financial capability for both these businesses to be able to pursue their goals? How should we think about that broadly? Stuart Bradie: I mean we are setting both businesses on the right path, Mariana. You'll have seen the book-to-bill, particularly in STS, very strong, and obviously, awards when you link in what's under protest in MTS, I think both businesses heading very strongly towards the year-end with momentum as they look to separate. I guess the whole piece around where the businesses are looking to operate is being derisked as we progress towards the spin date. So that operational readiness was mentioned in the prepared remarks is key there, and we continue to progress on all fronts. In terms of capital structure going forward, we are very clear that both would have normative sort of leverage ratios for their businesses, given where our balance sheet sits today, I think you can translate that quite clearly. And we've communicated that historically. And pleasingly, both on a year-to-date basis are performing at the margin levels we expected. And our commitment was that we would not distract the core business while we set about the sort of spin separation process, which in truth is a heavy lift. So we had a dedicated team focused on doing that. And we've made significant progress in both counts, not just with the spin, but actually delivering on the commitment not to distract the business and I think the underlying performance represents that. But of course, we've got Investor Days, our Capital Market Day is coming up in November. That will really be the time where we, I guess, set out our stall in terms of, I guess, the investment thesis for both businesses, which will be different and suitable for the stand-alone business case, if that makes sense. Mariana Perez Mora: Great. And then on STS or the New KBR, how should we -- should we think about the volatility of the margins in terms of -- on a quarterly basis, going forward, especially as you have like more, I don't know, pass-through materials in a quarter or CapEx versus OpEx mix? How should we think about that volatility going forward and the trend from the mid-teens, I don't know, 3, 5 years from now? Shad Evans: Yes. I think we'll get into the longer-term margin profile during Investor Day, but what I'll say, Mariana, as it relates to 2026 is the full year margin outlook for STS remains unchanged. The quarterly variability that you see in the P&L this quarter is normal, right? It reflects the sort of project mix, particularly the procurement content that moves through the STS segment in a very normative way. We've seen that pattern very clearly historically, and this quarter is no different. But I'll also say as importantly, this year, the year-to-date margin performance ex LNG equity and earnings is 14.5%, which again is consistent with our expectations and puts us in a wonderful position to deliver on the full year commitments in STS. Operator: Your next question comes from the line of Ian Zaffino with Oppenheimer. Isaac Sellhausen: This is Isaac Sellhausen on for Ian. My first is just on STS. As far as the awards in the first half of the year, maybe you could talk a little bit about geographic mix, maybe specific to the Middle East awards, maybe how that has trended compared to expectations. And if you're still seeing maybe any customer uncertainty with oil and gas customers at all? Stuart Bradie: Yes, good question. And we're seeing quite a sort of global mix in our award cadence. I think last quarter, we saw significant awards in the Middle East, and we touched on that last quarter. This quarter, if you -- if you look at the slides, you'll see 54% of the awards were actually in the Americas this quarter. And that's across a range of technology sales, and we announced the Pampa award in Argentina. And obviously, we've got ongoing work in Mexico again in LNG, but also in the services business as well as the asset services business. So a good mix there with the Middle East coming in somewhere around the sort of 25%, 26%. So again, good continued momentum in the Middle East. But it's very much a global business. We've talked about this many times, and that's why we lay out the -- where we've won the work, and it will vary quarter to -- quarter-to-quarter. In terms of your question on the Middle East itself, we've seen, although there's increased, I guess, activity in and around the Middle East as it relates to the war, we haven't seen any disruption to our ongoing work. We did say that in Q1. I think people probably were looking at that as how can that be, but we continue to deliver for our customers through that period and all our personnel are in place and continue to do the work and our customers, really, really appreciated that through Q1. And certainly, that is the case as we head through the second quarter into Q3. So no real disruption there. The one anomaly, and we did mention this last quarter is in these times of volatility like that, you do get slower payments, and we were seeing signs of recovery there as we entered into the end of the quarter. But of course, we're now entering another period of volatility. So there may be some disruption to cash. But overall, in terms of revenue and EBITDA performance and the customers are paying eventually, and so we expect to catch up as we progress. So in terms of the full year outlook, that's why we've maintained guidance in cash because we do expect that to come back to a normative level. So no real disruption really is the message. Isaac Sellhausen: Understood. And then just as a quick follow-up, as far as preparing the 2 businesses ahead of the spin, I think you talked about simplifying the cost structure. Maybe if you could just give a brief overview of what there is left to do ahead of the spin? And then if you are able to provide any details as far as potential run rate savings of those kind of cost actions or anything like that? Stuart Bradie: So we touched on this a little bit in prepared remarks, but as I said before, we're making good progress on stand-alone costs across both businesses. And obviously, we're not waiting until separation to address this. We're well ahead of the game. So the actions we're taking today, including some of which you saw in the earnings around real estate rationalization, this quarter, and you'll see that in the quarter through the lease impairments. We continue to simplify our footprint and position both companies for Day 1. So overall, we're feeling really good about where that's tracking. For Trinzic, the objective is rate neutrality. So we're designing the company really to fit within the cost structure that's already embedded in our rates today. And that's really important not only from a cost-plus perspective but also to ensure we remain highly competitive on fixed price opportunities as the business transitions to a stand-alone company. So real good progress there. And that's really been our core principle of our planning from the start, and we've made significant moves within Trinzic towards that goal. On the New KBR side, we continue to build a fit-for-purpose organization. And what does that mean? It means reducing complexity, simplifying how we operate, building strong digital backbone that drives greater efficiency across the business, and we really do see meaningful opportunities to operate more effectively as a focused stand-alone company. So -- as we mentioned last quarter, we'll have more to say about both companies' cost structures, their operating models and the path forward at our upcoming Investor Days. But sitting here today, really encouraged by the progress we're making and remain confident in the approach we're taking. Operator: Your next question comes from the line of Tobey Sommer with Truist Securities. Henry Roberts: It's Henry on for Tobey here. Just to start with on the guidance and maybe looking into the second half on the margin side. Your guidance reiteration implies a pretty meaningful step down in margins from the first half. Can you just kind of remind us and walk through the puts and takes there and kind of any potential upside to where guidance is now? Shad Evans: Yes. So first, I'll say, Henry, we're really encouraged by the first half performance and believe it really reinforces our confidence in the full year outlook. As we said in the prepared remarks, our visibility remains really strong with the work under contract in hand, both for STS and MTS. That said, we're only halfway through the year. And so while we're tracking ahead of plan, on awards, we still believe that the 12.4% aggregate margin for the full year puts us in a solid position to deliver across the board on our EBITDA and EPS commitments. And so again, while we're tracking a bit ahead of plan, there's still quite a bit ahead of us in terms of awards, program activity, execution milestones and of course, the Washington dynamics that need to play out over the balance of the year. So given that, probably getting to perhaps the intent of the question, that's why we're reaffirming rather than taking an alternative approach today. Henry Roberts: Got you. Understood. And then switching to the STS side. I know you had some good announcements in that business recently. But could you just maybe frame up kind of those from a financial perspective with the planned roll-off of Plaquemines next year and kind of how you're working to bridge that gap going into 2027? Stuart Bradie: Sure. First, we're not looking for a single project to replace Plaquemines. We've talked about that before, and that's not how we manage the business. What gives us confidence are the leading indicators, and they are clear for all to see. The quarter-to-date book-to-bill was 1.5x. But importantly, our trailing 12-month book-to-bill is 1.3x. So our backlog is roughly up 40% year-over-year. That's a big number. And our 2-year pipeline has grown about $6 billion, and that excludes obviously any large LNG reimbursable EPC opportunities, as I said in the prepared remarks. So -- but just as importantly, the end markets we serve continue to be very strong, very global. And we're seeing demand driven by energy security, no surprise there. Food security as it relates to ammonia and urea and fertilizer and resilience in an increasingly complex world. And so -- we're also seeing a number of awards in and around Europe and Asia, in particular, around sustainability-focused solutions. So again, a good set of opportunities in that realm. So -- while Plaquemines will naturally wind down over time, as we've said before, it does go through the first half of '27. We feel good about the growth outlook for STS because it's being supported by a broad set of opportunities, not a single project. And obviously, we've got Investor Day coming up, where we'll give you more detail and give you a deeper dive into that. But yes, we're feeling pretty good about how we're addressing that -- the challenge of backfilling Plaquemines. Operator: The next question comes from Jerry Revich with Wells Fargo. Andrew Azzi: This is Andrew Azzi on for Jerry Revich. Just wanted to ask maybe you discussed adding more than a couple of thousand employees for the recent awards last quarter. Any update on how many are onboarded, how quickly they're becoming billable and what the revenue runway for some of these Middle East ramp should contribute exiting the year? Stuart Bradie: Yes. So we -- you're quite right. We announced, I think, over 1,000 people or so joining and that number is well above that. Today and they're onboarded and working for us in the Middle East right now. So we've made great progress in being able to staff up the projects that we secured earlier in the year. You know that STS revenue growth for the year is in the mid-teens, and that ramp-up supports that growth. And so both of those numbers align well. and we continue to be confident of our outlook for the full year. . Andrew Azzi: Appreciate that. And you also flagged potential cash flow volatility from the Middle East. Can you quantify if that actually occurred and the actual impact and whether that's timing or structural and give us a recovery cadence through the year-end? Shad Evans: Yes. So again, as Stuart mentioned, we did flag the expected cash performance being largely timing from Middle East payments in -- due to the conflict. But as he said, we have seen conditions improve as we exited the quarter. And as a result, we do view this purely as a timing issue rather than a change in the underlying cash generation profile of the business. And again, to be determined as and when this conflict will be resolved, but our view is that the full year cash flow from a guidance perspective remains unchanged. Operator: Your next question comes from the line of Adam Bubes with Goldman Sachs. Anuj Khandelwal: This is Anuj on behalf of Adam. So quickly I wanted to ask that on the MTS segment, margins were up 12% in this quarter. So can you parse out what in the portfolio is driving the strong execution? And also, I think in the past, you have framed MTS margins to be roughly around 10% or more on those lines level. Is that still the right way for us to think about the run rate? Shad Evans: So as we've demonstrated before, favorable contract closeouts are really a normal part of managing a large and complex global portfolio. So the resolution this quarter was really consistent with our expectations, and reflects the disciplined contract management, customer engagement and risk management practices that are embedded across really both segments. As I said in my prepared remarks, margins in MTS are running a bit higher this year at about 11% on a year-to-date basis, which is ahead of our planned outlook. But we still believe that the long-term 10-plus percent margin targets that we've given are an appropriate way to model this business, at least through the end of the year. Anuj Khandelwal: Got it. And on the recently awarded $8 billion Antarctic Science project, how should we think about the annual revenue run rate, the margins? And what's the ramp profile like in the early years? Stuart Bradie: Yes. So it's $8 billion over 20 years. And -- it will ramp up over the first couple of years. I think we don't know until we get into the meat of this in terms of the run rates, I guess, the best guide is to look back at what the incumbent is running at. and that's somewhere around -- I mean, it's quite a range looking -- depending on the year about $150 million to $300 million, depending on the particular year. As I say, we can't give a guide on that until we are officially on the job, and we start to see that. And the incumbent sort of run rates are probably the best way to do it. And yes, as I say, that's the sort of range that they're running at. Operator: Your next question comes from the line of Michael Dudas with Vertical Research Partners. Michael Dudas: So encouraging on the progress on the spin moving forward. Maybe step back, Stuart, looking at the New KBR after the spin is complete, what have you found in doing the assessment of the business model about where the company is positioned when it was part of the company together and its stand-alone opportunities. Is -- is there -- on the OpEx front, are you encouraged about some of those opportunities there? And is there any emerging technologies or opportunities within the portfolio that might be starting to get more visibility over the next couple of years relative to the core, certainly, the ammonia stuff and some of your own hydrocarbon technologies that you're well known for? Stuart Bradie: Thanks, Mike. It's a big question. We probably -- we don't have enough time to talk about all of it on this call. I'll touch on a few areas. I mean, we've got obviously, emerging tech that we're very excited about that we'll talk about how we are good at actually acquiring that at fairly low multiples and then commercializing it over time, and we'll give you some examples of that in November at the Capital Markets Day. So that's an exciting, I think, growth opportunity. We're very excited across both businesses and what we're doing for AI. We actually see AI creating genuine customer demand as it relates to STS. We're probably most excited about combining our engineering expertise with physics-based AI really to drive market-leading operational performance. And initially, we're test casing that on our licensed ammonia plants and now have 2 customers running that for us, and we'll be able to give you an update again at Investor Day about how that can impact KBR going forward and really position us opposite operations and maintenance portfolio that has different commercial advantage. And I think the last piece that we're quite excited about is the broader-based opportunity in the markets where we are very good at going in early and the geographical expansion and the relationship base that we have really creates quite high barriers to entry. And again, we'll touch on that as we get to Investor Day. So I think having a more focused management team who wake up every day thinking about this will really drive significant opportunity for the business. We're delivering well today, and we're increasing backlog and the pipeline is super, super strong. And our reputation in the market for delivery, which I'm really proud of, our people do an amazing job every single day across both businesses. And so I think that will create tangible opportunity, and increasing momentum as we head into '27. So all up, I think that's probably enough for today on that, Mike, if you don't mind. And I think you can tell we're excited about the potential growth drivers and the potential of margin enhancement over time. Michael Dudas: That was good. We are looking forward to November 11, I guess. Stuart Bradie: Yes. Michael Dudas: Okay. And just a quick follow-up. Maybe you can -- maybe there's something to call out on the -- I think you mentioned $6 billion in pipeline for STS. Anything to call out there that we should look at or think about it? Maybe a quick update on plastics recycling and how those projects are going? Stuart Bradie: So on the pipeline itself, it's very much similar to the way that we've performed, I think, over the last 2 quarters. It will be a mix of CapEx in Europe, a mix of CapEx and OpEx in the Middle East and CapEx in Americas and Australia. And the CapEx embraces obviously technology sales and proprietary equipment that are associated with that given the nature of that business. So it will be -- it won't be in one region, it will be broad-based. And so it's -- I don't -- I can't really go into specifics on the pipeline, but we're -- our conversion rates remain very high, and our positioning and our thought processes about where we actually bid and who we bid to because of our differentiation or our ability to win really are sort of bearing fruit. So I'm very, very upbeat about the quality of earnings associated with that pipeline. And we -- again, we'll see that progress into next quarter as we expect because of the scale of the pipeline. In terms of plastics recycling, they continue to make pretty reasonable progress. It's slower than anyone really wanted in Mura -- in Teesside in England. They've got their final technical solution in terms of being able to run the plant continuously and that goes on stream [ now-ish ] actually. So we should be able to give an update in Q3 earnings as to the progress there. And they've got a project pipeline that's quite exciting that looks at potentials in and around Europe and in Asia, and those are moving along quite nicely. And again, we'll give an update on the whole Mura situation as we get to Investor Day. I think that's a good part of our technology development story and our sort of investment in ventures. Operator: We have reached the end of the Q&A session. I will now turn the call back to Stuart Bradie for closing remarks. Stuart Bradie: Thank you very much. So a few final thoughts just to close. So when we announced our intention to separate the company, we truly believe KBR contained 2 very high-quality businesses that could create value as focused stand-alone companies than they could together. And as we've moved through the separation process, that conviction has only strengthened. In Sustainable Technology Solutions, as you've heard today and can see, we're seeing strong demand. We're a record backlog and there's growing visibility supported by long-term investments in energy security, food security and sustainability. In Mission Tech, again, the demand remains strong. Our visibility continues to build and opportunities across national security and space remain compelling. Today's introduction of the Trinzic brand very exciting, is an important milestone. And together with the leadership team that have been brought together that really marks the beginning of an exciting new chapter for the business. We're excited about the opportunity for Trinzic. It really gives them the opportunity to tell the story of what the business has become today and how it is bringing together people, technology and critical systems to help our customers move forward with confidence. Both organizations are entering this next chapter from a position of strength with significant revenue visibility, strong market position and clear path to long-term growth and just as important with amazing group of people in both organizations. As we approach separation, we're more confident than ever in the opportunities ahead for both New KBR and Trinzic and in the value each company can create as a focused stand-alone business. So thank you for your continued support, and thank you for your interest in KBR today. Operator: This concludes today's call. Thank you for attending. You may now disconnect. 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Image source: The Motley Fool. Thursday, July 30, 2026 at 8:30 a.m. ET Head of Investor Relations - Rachael Goldwait President and Chief Executive Officer - Stuart Bradie Executive Vice President and Chief Financial Officer - Shad Evans CEO designate - Michael LaRouche CFO designate - Nick Veasey Operator: Hello, everyone. Thank you for joining us, and welcome to KBR's Second Quarter 2026 Earnings Call. After today's prepared remarks, we will host a question and answer session. [Operator Instructions] I will now hand the conference over to Rachael Goldwait, Head of Investor Relations. Rachael, go ahead. Rachael Goldwait: Thank you, and good morning. Welcome to KBR's Second Quarter 2026 Earnings Call. Joining me today are Stuart Bradie, President and CEO; and Shad Evans, Executive Vice President and CFO. Stuart and Shad will cover highlights from the quarter, and then we'll open the line for your questions. Today's earnings presentation is available on the Investor Relations section of our website at kbr.com. As outlined on Slide 2, today's discussion includes forward-looking statements and certain non-GAAP financial measures. Additional information, including reconciliations to the nearest GAAP measures can be found in the presentation appendix. With that, I'll turn the call over to Stuart. Stuart Bradie: Thanks, Rachael, and good morning, everyone. I will pick up on Slide 4. Before we get into the meat of the presentation, I wanted to briefly highlight 2025 Sustainability and Corporate Responsibility report, which we published a few weeks ago. This is our fifth year issuing a report, and it reflects an important part of how KBR operates. Sustainability, safety and responsible delivery are embedded in how we manage risk, develop our people and, of course, deliver for our customers. This year's report highlights record safety performance, continued progress against our environmental commitment, and 35% of revenues focused on sustainability. As we move toward operating as 2 companies, that operating discipline will remain an important part of the culture and the value proposition of both businesses. On to Slide 5. Today, we will focus on 4 key messages. First, we delivered a strong first half with the results tracking slightly ahead of our planned cadence. Second, we have strong visibility across both businesses, supported by record backlog in STS and significant awarded work in MTS that has yet to be reflected in backlog. Third, our planned separation remains firmly on track, with transaction, leadership and Day 1 readiness milestones continuing to advance. And finally, we are reaffirming our 2026 guidance and remain focused on execution cash generation, disciplined capital allocation and of course, a successful separation. Moving to Slide 6. This slide highlights our progress against the 4 strategic pillars that continue to guide KBR. Our focus on operational excellence and capital deployment here and then discuss growth and differentiated solutions on the next 2 slides. On operational excellence, we continue to execute for our customers while standing up 2 stand-alone companies, very important. Importantly, that work has not distracted us from delivering for our customers, growing the business or executed against our financial commitments. We continue to win in the market, build backlog across both businesses and deliver solid performance with year-to-date adjusted EBITDA margin of 13%, 1-3 percent, keeping us on track for another strong year. At the same time, we're taking actions ahead of separation to reduce incremental stand-alone costs and mitigate dis-synergies. Across both businesses, we are simplifying organizational structures, driving productivity and increasing accountability so that each company enters 2027 with a leaner cost base and stronger margin potential. For SpinCo, the priority is establishing a stand-alone public company while maintaining competitive rates and preserving our position across both cost plus and fixed price opportunities. Our objective remains rate neutrality, and we continue to make good progress towards that goal. For New KBR, we're building a lean, scalable organization that can support future growth while maintaining strong margins and disciplined cost management. Next, on capital deployment. We continue to allocate capital in a disciplined manner, investing roughly $190 million in the first half to strengthen the portfolio while also returning an additional $71 million to shareholders through dividends and share repurchases, bringing total capital deployed to $261 million. We remain focused on maintaining the flexibility needed to support separation, invest in growth and pursue attractive value creation opportunities. In short, we are executing the strategy, preparing both companies for a successful separation and positioning each business to create greater value as a focused stand-alone company. With that as a backdrop, let's move to Slide 7 and discuss the STS business. The demand trends we discussed last quarter continued to strengthen during the second quarter reinforcing our confidence in the long-term outlook for Sustainable Tech. Demand remains broad-based across energy security, food security and sustainability focused investments, supported by both new project activity and long-standing customer relations very important. Those market dynamics continue to translate into strong commercial results. Second quarter book-to-bill was 1.5x, and trailing 12-month book-to-bill was 1.3x. And backlog ended the quarter at a record $5.5 billion, and that is up 40%, 4-0 percent, year-over-year. In addition, our near-term pipeline now exceeds $6 billion, excluding large reimbursable LNG EPC opportunities, which grew the number significantly. Importantly, work already under contract represents approximately 80% of our 2026 revenue guidance midpoint. We're also seeing an increasing mix of OpEx-related work. Approximately 34% of year-to-date bookings were tied to OpEx-based contracts with activity across both the Middle East and the Americas through Brown & Root. These contracts are generally longer in duration and further enhance the durability, visibility and resilience of the business. We remain encouraged by the level of OpEx-related opportunities moving through the pipeline. The Middle East remains a significant growth driver, where first half bookings exceeded $900 million across oil, gas, NGL and energy infrastructure projects. We are also seeing encouraging momentum across our technology portfolio, including our first commercial PureSAF license awards and continued demand for our market-leading ammonia technologies, including the recent Pampa Energia award in the Americas. More broadly, many of these opportunities build on relationships that begin with technology licensing, studies or engineering services and ultimately expand into larger project execution or aftermarket scopes, creating additional revenue opportunities while improving long-term visibility. Taken together, we believe STS remains well positioned for continued growth and provides strong visibility into future revenue and earnings. On to Slide 8. Turning to MTS. We continue to see strong demand across our Defense Systems Modernization, Space and Global Mission Operations businesses. Our strategy remains focused on combining trusted mission expertise, customer intimacy and differentiated technology solutions to address some of our customers' most critical priorities. That demand is supported by strong visibility into future performance. Approximately 94% of our full year revenue guidance is already under contract. We have roughly $10.4 billion awaiting award, and we expect more than $25 billion of bid volume in 2026, and that's up approximately 50% year-over-year, with significant submissions in the second half. Second quarter book-to-bill was 0.8x, with a trailing 12-month ratio of 1.0x. Importantly, those metrics do not yet reflect approximately $10.6 billion of awarded work currently under protest, including the National Science Foundation Antarctica award, the Department of State award in Iraq and the classified Paycom Logistics award. As a result, we believe reported backlog and book-to-bill do not fully reflect the level of awarded work and future revenue visibility in the business today. While the timing of protest resolutions remain outside our control, these are awarded programs supporting enduring customer priorities. More broadly, our success continues to be driven by the mission expertise and customer relationships we've built over decades. The National Science Foundation Antarctica award is a really good example. While NSF was a new customer for KBR, the award reflects several years of engagement, mission understanding and demonstrated technical capability highlighting the differentiated approach that continues to create opportunities across the portfolio. We are also increasingly embedding software AI and digital capabilities into missions we already support, helping customers modernize operations, improve decision-making and deliver faster outcome. We also see opportunities to support emerging priorities such as Golden Dome, where KBR already supports customers across many parts of the broader mission environment. In short, demand remains healthy across our global market. Visibility remains strong, and our differentiated capabilities continue to support long-term growth. As we prepare to launch this business as a stand-alone company, we are also taking an important step in establishing its identity in the market. Now let me turn to Slide 9 and introduce the new name for the MTS spin-off. Trinzic. The name is inspired by the word intrinsic and reflects essential built-in capabilities and deep, deep expertise. Trinzic harnesses the power of technology to support governments, partners and allies across national security and space. We work at the frontier of what is technically possible, bringing new capabilities to the systems the world depends on, and giving customers the confidence to act. The tagline for Trinzic, the bold, connected. And I think this captures the essence of the business. Trinzic design solutions that hold up when there is no margin for error and in environments where critical systems must perform. Just as importantly, Trinzic gives us the opportunity to tell the story of how this business has evolved. While our foundation remains our deep expertise in trusted performance, today's Trinzic is increasingly defined by the way it connects people, technology and critical systems with speed, precision and rigor. We believe the brand better reflects both the company we are today and where we are headed next, very exciting. It also reflects a culture built around collaboration, accountability and delivering results. As we've discussed on today's call, this business is entering its next chapter with strong customer relationships, differentiated capabilities, global reach and significant growth opportunities ahead. We believe Trinzic reflects both our heritage and our exciting future, bringing intrinsic value and advantage to customers. On to Slide 10. We continue to execute well against our separation plan and remain on track to complete the spin on a target date of January 4, 2027. On transaction readiness, we continue to make progress across key regulatory and transaction milestones. We submitted our final private letter ruling request to the IRS in June, and expect a final ruling in September. We also continue through the SEC review process for the Form 10 with a public filing expected ahead of our next earnings call. Operationally, the work is shifting from planning to execution, IT systems, contract bifurcation, procurement separation, corporate budgeting and organizational design are all progressing against plan. Corporate employees have been aligned to their future organizations and the teams are focused on filling the remaining critical roles, so both companies are ready to operate effectively from Day 1. We are also building out the Trinzic leadership team. Michael LaRouche will join as CEO designate in September, bringing nearly 30 years of experience across defense, intelligence, space, cyber and government services. Nick Veasey joined as CFO designate earlier this month, with deep experience across finance, capital markets, M&A and investor engagement. The majority of the Trinzic leadership team is now firmly in place, and the boards for both companies are taking shape as we assemble the skills necessary and the experience needed to support each company's stand-alone strategy. Looking ahead, we're excited to host Investor Days in New York for both New KBR and Trinzic, where we will outline the stand-alone strategies, the financial framework and the long-term priorities for each business. Overall, I'm pleased to report the separation is progressing well. The leadership foundation is taking shape, and we have strong visibility into the key milestones required to successfully launch both companies. With that, I'll hand over to Shad. Shad Evans: Thanks, Stuart. I'll pick up on Slide 12 with our consolidated second quarter results. Revenues for the quarter were approximately $2 billion, up $32 million or 2% from prior year. As a reminder, this was the final quarter lapping elevated EUCOM contingency activity in 2025. Excluding that work, revenue increased by approximately $91 million or roughly 5%, driven by continued ramp-up on recently awarded projects across both segments. Adjusted EBITDA increased $16 million to $258 million, with adjusted EBITDA margins expanding approximately 60 basis points to 13%. Performance was driven by strong project execution, favorable portfolio mix and disciplined cost management across the business. Adjusted EPS increased $0.08 to $0.99, driven by strong operating performance, lower below-the-line expenses and lower diluted share count resulting from our repurchase activity. Turning to cash flow. First half adjusted operating cash flow was $183 million, representing adjusted OCF conversion of approximately 74%. As expected, second quarter cash flow reflected collections timing in STS, Middle East. Collections have started to normalize in July, and our full year outlook remains unchanged. Overall, we are pleased with the first half performance. We delivered profitable growth, expanded margins and continued to see healthy momentum across both segments as we enter the second half of the year. Turning to Slide 13. I'll walk through segment performance. Beginning with Sustainable Technology Solutions. Revenue increased $60 million or 10% year-over-year to $676 million, driven by continued ramp-up of projects awarded over the past 12 months, with particularly strong growth in the Middle East, Latin America, Asia and Australia. Revenue also increased 8% sequentially, reinforcing our confidence in delivering mid-teens revenue growth for the full year as project activity accelerates in the second half. Adjusted EBITDA was $123 million, down $11 million from the prior year due to project mix. This quarter included a higher proportion of equipment procurement activity, which carries margins at the lower end of the framework we outlined last quarter. This impact was partially offset by strong project execution and continued healthy demand across the portfolio. Adjusted EBITDA margin was 18.2%, while adjusted EBITDA margin, excluding LNG JV earnings was approximately 13%. Importantly, year-to-date adjusted EBITDA margins, excluding LNG JV earnings remained approximately 14.5%, demonstrating the underlying earnings power of the business and keeping us on track to achieve our full year outlook of mid-teens, excluding LNG JV earnings. Turning to Mission Tech. Revenues were $1.3 billion, down $28 million from prior year. Excluding EUCOM contingency activity, revenues increased approximately $31 million or 2%, reflecting strong activity in Australia and the U.K., partially offset by project completions in the U.S. Adjusted EBITDA increased $22 million to $158 million, with margins expanding roughly 190 basis points to 12.1%. Performance benefited from favorable mix, disciplined cost management, and benefited from contract closeouts. Year-to-date margins of 11.4% remained modestly ahead of our full year outlook. Overall, we were pleased with the segment performance during the quarter. Both businesses continue to execute well, deliver profitable growth and maintain strong momentum as we move through the back half of the year. Turning to capital allocation on Slide 14. Net leverage ended the quarter at approximately 2.3x trailing adjusted EBITDA, flat sequentially and comfortably below our 2.5x target. As working capital normalizes and cash generation strengthens in the second half, we expect leverage to continue trending downward through year-end. We also maintained a disciplined approach to capital allocation, repurchasing approximately $25 million of shares during the quarter while preserving ample liquidity. As we prepare for separation, we remain focused on positioning both companies with capital structures and financial flexibility needed to execute their growth strategies and create long-term shareholder value. Overall, we are confident in the strength of our balance sheet, our capital allocation framework and the readiness for both businesses as we move towards separation. On to Slide 15. Today, we're reaffirming our full year guidance across revenue, adjusted EBITDA, adjusted EPS and adjusted operating cash flow. The business continues to perform in line with our expectations, supported by strong execution, a healthy demand environment and strong revenue visibility. Approximately 89% of our expected revenue for the year is already in hand, including 80% for STS and 94% in MTS. Given our first half performance and the strength of our backlog, we remain confident in our ability to deliver on our full year outlook. With that, I'll pass it back to Stuart. Stuart Bradie: Thanks, Shad. And to wrap up on Slide 16, there are 4 key takeaways from the quarter. First, we continue to execute at a high level across both businesses. First half results demonstrate the strength of the portfolio, profitable growth, margin expansion and solid momentum heading into the back half of the year. Second, demand remains healthy and visibility remains strong. Across both businesses, we are supported by substantial backlog, significant awarded work and a healthy pipeline, giving us confidence in both our near-term outlook and our longer-term growth opportunities. Third, confidence in the separation continues to build. Transaction milestones are progressing as planned. Operational readiness is advancing, and we're increasingly shifting from planning to execution as we prepare for Day 1. And finally, we're positioning New KBR and Trinzic as 2 focused, highly differentiated companies with strong market positions, disciplined operating models and a clear path to long-term value creation for our shareholders. With that, I'll hand it back to the operator, who will open the call for questions. Operator: [Operator Instructions] Your first question comes from the line of Mariana Perez Mora with Bank of America. Mariana Perez Mora: So my first question is you mentioned, Trinzic is out there new name, everything is on track, even a strong management team designated. Now you mentioned about like the financial structure and the financial capability for both these businesses to be able to pursue their goals? How should we think about that broadly? Stuart Bradie: I mean we are setting both businesses on the right path, Mariana. You'll have seen the book-to-bill, particularly in STS, very strong, and obviously, awards when you link in what's under protest in MTS, I think both businesses heading very strongly towards the year-end with momentum as they look to separate. I guess the whole piece around where the businesses are looking to operate is being derisked as we progress towards the spin date. So that operational readiness was mentioned in the prepared remarks is key there, and we continue to progress on all fronts. In terms of capital structure going forward, we are very clear that both would have normative sort of leverage ratios for their businesses, given where our balance sheet sits today, I think you can translate that quite clearly. And we've communicated that historically. And pleasingly, both on a year-to-date basis are performing at the margin levels we expected. And our commitment was that we would not distract the core business while we set about the sort of spin separation process, which in truth is a heavy lift. So we had a dedicated team focused on doing that. And we've made significant progress in both counts, not just with the spin, but actually delivering on the commitment not to distract the business and I think the underlying performance represents that. But of course, we've got Investor Days, our Capital Market Day is coming up in November. That will really be the time where we, I guess, set out our stall in terms of, I guess, the investment thesis for both businesses, which will be different and suitable for the stand-alone business case, if that makes sense. Mariana Perez Mora: Great. And then on STS or the New KBR, how should we -- should we think about the volatility of the margins in terms of -- on a quarterly basis, going forward, especially as you have like more, I don't know, pass-through materials in a quarter or CapEx versus OpEx mix? How should we think about that volatility going forward and the trend from the mid-teens, I don't know, 3, 5 years from now? Shad Evans: Yes. I think we'll get into the longer-term margin profile during Investor Day, but what I'll say, Mariana, as it relates to 2026 is the full year margin outlook for STS remains unchanged. The quarterly variability that you see in the P&L this quarter is normal, right? It reflects the sort of project mix, particularly the procurement content that moves through the STS segment in a very normative way. We've seen that pattern very clearly historically, and this quarter is no different. But I'll also say as importantly, this year, the year-to-date margin performance ex LNG equity and earnings is 14.5%, which again is consistent with our expectations and puts us in a wonderful position to deliver on the full year commitments in STS. Operator: Your next question comes from the line of Ian Zaffino with Oppenheimer. Isaac Sellhausen: This is Isaac Sellhausen on for Ian. My first is just on STS. As far as the awards in the first half of the year, maybe you could talk a little bit about geographic mix, maybe specific to the Middle East awards, maybe how that has trended compared to expectations. And if you're still seeing maybe any customer uncertainty with oil and gas customers at all? Stuart Bradie: Yes, good question. And we're seeing quite a sort of global mix in our award cadence. I think last quarter, we saw significant awards in the Middle East, and we touched on that last quarter. This quarter, if you -- if you look at the slides, you'll see 54% of the awards were actually in the Americas this quarter. And that's across a range of technology sales, and we announced the Pampa award in Argentina. And obviously, we've got ongoing work in Mexico again in LNG, but also in the services business as well as the asset services business. So a good mix there with the Middle East coming in somewhere around the sort of 25%, 26%. So again, good continued momentum in the Middle East. But it's very much a global business. We've talked about this many times, and that's why we lay out the -- where we've won the work, and it will vary quarter to -- quarter-to-quarter. In terms of your question on the Middle East itself, we've seen, although there's increased, I guess, activity in and around the Middle East as it relates to the war, we haven't seen any disruption to our ongoing work. We did say that in Q1. I think people probably were looking at that as how can that be, but we continue to deliver for our customers through that period and all our personnel are in place and continue to do the work and our customers, really, really appreciated that through Q1. And certainly, that is the case as we head through the second quarter into Q3. So no real disruption there. The one anomaly, and we did mention this last quarter is in these times of volatility like that, you do get slower payments, and we were seeing signs of recovery there as we entered into the end of the quarter. But of course, we're now entering another period of volatility. So there may be some disruption to cash. But overall, in terms of revenue and EBITDA performance and the customers are paying eventually, and so we expect to catch up as we progress. So in terms of the full year outlook, that's why we've maintained guidance in cash because we do expect that to come back to a normative level. So no real disruption really is the message. Isaac Sellhausen: Understood. And then just as a quick follow-up, as far as preparing the 2 businesses ahead of the spin, I think you talked about simplifying the cost structure. Maybe if you could just give a brief overview of what there is left to do ahead of the spin? And then if you are able to provide any details as far as potential run rate savings of those kind of cost actions or anything like that? Stuart Bradie: So we touched on this a little bit in prepared remarks, but as I said before, we're making good progress on stand-alone costs across both businesses. And obviously, we're not waiting until separation to address this. We're well ahead of the game. So the actions we're taking today, including some of which you saw in the earnings around real estate rationalization, this quarter, and you'll see that in the quarter through the lease impairments. We continue to simplify our footprint and position both companies for Day 1. So overall, we're feeling really good about where that's tracking. For Trinzic, the objective is rate neutrality. So we're designing the company really to fit within the cost structure that's already embedded in our rates today. And that's really important not only from a cost-plus perspective but also to ensure we remain highly competitive on fixed price opportunities as the business transitions to a stand-alone company. So real good progress there. And that's really been our core principle of our planning from the start, and we've made significant moves within Trinzic towards that goal. On the New KBR side, we continue to build a fit-for-purpose organization. And what does that mean? It means reducing complexity, simplifying how we operate, building strong digital backbone that drives greater efficiency across the business, and we really do see meaningful opportunities to operate more effectively as a focused stand-alone company. So -- as we mentioned last quarter, we'll have more to say about both companies' cost structures, their operating models and the path forward at our upcoming Investor Days. But sitting here today, really encouraged by the progress we're making and remain confident in the approach we're taking. Operator: Your next question comes from the line of Tobey Sommer with Truist Securities. Henry Roberts: It's Henry on for Tobey here. Just to start with on the guidance and maybe looking into the second half on the margin side. Your guidance reiteration implies a pretty meaningful step down in margins from the first half. Can you just kind of remind us and walk through the puts and takes there and kind of any potential upside to where guidance is now? Shad Evans: Yes. So first, I'll say, Henry, we're really encouraged by the first half performance and believe it really reinforces our confidence in the full year outlook. As we said in the prepared remarks, our visibility remains really strong with the work under contract in hand, both for STS and MTS. That said, we're only halfway through the year. And so while we're tracking ahead of plan, on awards, we still believe that the 12.4% aggregate margin for the full year puts us in a solid position to deliver across the board on our EBITDA and EPS commitments. And so again, while we're tracking a bit ahead of plan, there's still quite a bit ahead of us in terms of awards, program activity, execution milestones and of course, the Washington dynamics that need to play out over the balance of the year. So given that, probably getting to perhaps the intent of the question, that's why we're reaffirming rather than taking an alternative approach today. Henry Roberts: Got you. Understood. And then switching to the STS side. I know you had some good announcements in that business recently. But could you just maybe frame up kind of those from a financial perspective with the planned roll-off of Plaquemines next year and kind of how you're working to bridge that gap going into 2027? Stuart Bradie: Sure. First, we're not looking for a single project to replace Plaquemines. We've talked about that before, and that's not how we manage the business. What gives us confidence are the leading indicators, and they are clear for all to see. The quarter-to-date book-to-bill was 1.5x. But importantly, our trailing 12-month book-to-bill is 1.3x. So our backlog is roughly up 40% year-over-year. That's a big number. And our 2-year pipeline has grown about $6 billion, and that excludes obviously any large LNG reimbursable EPC opportunities, as I said in the prepared remarks. So -- but just as importantly, the end markets we serve continue to be very strong, very global. And we're seeing demand driven by energy security, no surprise there. Food security as it relates to ammonia and urea and fertilizer and resilience in an increasingly complex world. And so -- we're also seeing a number of awards in and around Europe and Asia, in particular, around sustainability-focused solutions. So again, a good set of opportunities in that realm. So -- while Plaquemines will naturally wind down over time, as we've said before, it does go through the first half of '27. We feel good about the growth outlook for STS because it's being supported by a broad set of opportunities, not a single project. And obviously, we've got Investor Day coming up, where we'll give you more detail and give you a deeper dive into that. But yes, we're feeling pretty good about how we're addressing that -- the challenge of backfilling Plaquemines. Operator: The next question comes from Jerry Revich with Wells Fargo. Andrew Azzi: This is Andrew Azzi on for Jerry Revich. Just wanted to ask maybe you discussed adding more than a couple of thousand employees for the recent awards last quarter. Any update on how many are onboarded, how quickly they're becoming billable and what the revenue runway for some of these Middle East ramp should contribute exiting the year? Stuart Bradie: Yes. So we -- you're quite right. We announced, I think, over 1,000 people or so joining and that number is well above that. Today and they're onboarded and working for us in the Middle East right now. So we've made great progress in being able to staff up the projects that we secured earlier in the year. You know that STS revenue growth for the year is in the mid-teens, and that ramp-up supports that growth. And so both of those numbers align well. and we continue to be confident of our outlook for the full year. . Andrew Azzi: Appreciate that. And you also flagged potential cash flow volatility from the Middle East. Can you quantify if that actually occurred and the actual impact and whether that's timing or structural and give us a recovery cadence through the year-end? Shad Evans: Yes. So again, as Stuart mentioned, we did flag the expected cash performance being largely timing from Middle East payments in -- due to the conflict. But as he said, we have seen conditions improve as we exited the quarter. And as a result, we do view this purely as a timing issue rather than a change in the underlying cash generation profile of the business. And again, to be determined as and when this conflict will be resolved, but our view is that the full year cash flow from a guidance perspective remains unchanged. Operator: Your next question comes from the line of Adam Bubes with Goldman Sachs. Anuj Khandelwal: This is Anuj on behalf of Adam. So quickly I wanted to ask that on the MTS segment, margins were up 12% in this quarter. So can you parse out what in the portfolio is driving the strong execution? And also, I think in the past, you have framed MTS margins to be roughly around 10% or more on those lines level. Is that still the right way for us to think about the run rate? Shad Evans: So as we've demonstrated before, favorable contract closeouts are really a normal part of managing a large and complex global portfolio. So the resolution this quarter was really consistent with our expectations, and reflects the disciplined contract management, customer engagement and risk management practices that are embedded across really both segments. As I said in my prepared remarks, margins in MTS are running a bit higher this year at about 11% on a year-to-date basis, which is ahead of our planned outlook. But we still believe that the long-term 10-plus percent margin targets that we've given are an appropriate way to model this business, at least through the end of the year. Anuj Khandelwal: Got it. And on the recently awarded $8 billion Antarctic Science project, how should we think about the annual revenue run rate, the margins? And what's the ramp profile like in the early years? Stuart Bradie: Yes. So it's $8 billion over 20 years. And -- it will ramp up over the first couple of years. I think we don't know until we get into the meat of this in terms of the run rates, I guess, the best guide is to look back at what the incumbent is running at. and that's somewhere around -- I mean, it's quite a range looking -- depending on the year about $150 million to $300 million, depending on the particular year. As I say, we can't give a guide on that until we are officially on the job, and we start to see that. And the incumbent sort of run rates are probably the best way to do it. And yes, as I say, that's the sort of range that they're running at. Operator: Your next question comes from the line of Michael Dudas with Vertical Research Partners. Michael Dudas: So encouraging on the progress on the spin moving forward. Maybe step back, Stuart, looking at the New KBR after the spin is complete, what have you found in doing the assessment of the business model about where the company is positioned when it was part of the company together and its stand-alone opportunities. Is -- is there -- on the OpEx front, are you encouraged about some of those opportunities there? And is there any emerging technologies or opportunities within the portfolio that might be starting to get more visibility over the next couple of years relative to the core, certainly, the ammonia stuff and some of your own hydrocarbon technologies that you're well known for? Stuart Bradie: Thanks, Mike. It's a big question. We probably -- we don't have enough time to talk about all of it on this call. I'll touch on a few areas. I mean, we've got obviously, emerging tech that we're very excited about that we'll talk about how we are good at actually acquiring that at fairly low multiples and then commercializing it over time, and we'll give you some examples of that in November at the Capital Markets Day. So that's an exciting, I think, growth opportunity. We're very excited across both businesses and what we're doing for AI. We actually see AI creating genuine customer demand as it relates to STS. We're probably most excited about combining our engineering expertise with physics-based AI really to drive market-leading operational performance. And initially, we're test casing that on our licensed ammonia plants and now have 2 customers running that for us, and we'll be able to give you an update again at Investor Day about how that can impact KBR going forward and really position us opposite operations and maintenance portfolio that has different commercial advantage. And I think the last piece that we're quite excited about is the broader-based opportunity in the markets where we are very good at going in early and the geographical expansion and the relationship base that we have really creates quite high barriers to entry. And again, we'll touch on that as we get to Investor Day. So I think having a more focused management team who wake up every day thinking about this will really drive significant opportunity for the business. We're delivering well today, and we're increasing backlog and the pipeline is super, super strong. And our reputation in the market for delivery, which I'm really proud of, our people do an amazing job every single day across both businesses. And so I think that will create tangible opportunity, and increasing momentum as we head into '27. So all up, I think that's probably enough for today on that, Mike, if you don't mind. And I think you can tell we're excited about the potential growth drivers and the potential of margin enhancement over time. Michael Dudas: That was good. We are looking forward to November 11, I guess. Stuart Bradie: Yes. Michael Dudas: Okay. And just a quick follow-up. Maybe you can -- maybe there's something to call out on the -- I think you mentioned $6 billion in pipeline for STS. Anything to call out there that we should look at or think about it? Maybe a quick update on plastics recycling and how those projects are going? Stuart Bradie: So on the pipeline itself, it's very much similar to the way that we've performed, I think, over the last 2 quarters. It will be a mix of CapEx in Europe, a mix of CapEx and OpEx in the Middle East and CapEx in Americas and Australia. And the CapEx embraces obviously technology sales and proprietary equipment that are associated with that given the nature of that business. So it will be -- it won't be in one region, it will be broad-based. And so it's -- I don't -- I can't really go into specifics on the pipeline, but we're -- our conversion rates remain very high, and our positioning and our thought processes about where we actually bid and who we bid to because of our differentiation or our ability to win really are sort of bearing fruit. So I'm very, very upbeat about the quality of earnings associated with that pipeline. And we -- again, we'll see that progress into next quarter as we expect because of the scale of the pipeline. In terms of plastics recycling, they continue to make pretty reasonable progress. It's slower than anyone really wanted in Mura -- in Teesside in England. They've got their final technical solution in terms of being able to run the plant continuously and that goes on stream [ now-ish ] actually. So we should be able to give an update in Q3 earnings as to the progress there. And they've got a project pipeline that's quite exciting that looks at potentials in and around Europe and in Asia, and those are moving along quite nicely. And again, we'll give an update on the whole Mura situation as we get to Investor Day. I think that's a good part of our technology development story and our sort of investment in ventures. Operator: We have reached the end of the Q&A session. I will now turn the call back to Stuart Bradie for closing remarks. Stuart Bradie: Thank you very much. So a few final thoughts just to close. So when we announced our intention to separate the company, we truly believe KBR contained 2 very high-quality businesses that could create value as focused stand-alone companies than they could together. And as we've moved through the separation process, that conviction has only strengthened. In Sustainable Technology Solutions, as you've heard today and can see, we're seeing strong demand. We're a record backlog and there's growing visibility supported by long-term investments in energy security, food security and sustainability. In Mission Tech, again, the demand remains strong. Our visibility continues to build and opportunities across national security and space remain compelling. Today's introduction of the Trinzic brand very exciting, is an important milestone. And together with the leadership team that have been brought together that really marks the beginning of an exciting new chapter for the business. We're excited about the opportunity for Trinzic. It really gives them the opportunity to tell the story of what the business has become today and how it is bringing together people, technology and critical systems to help our customers move forward with confidence. Both organizations are entering this next chapter from a position of strength with significant revenue visibility, strong market position and clear path to long-term growth and just as important with amazing group of people in both organizations. As we approach separation, we're more confident than ever in the opportunities ahead for both New KBR and Trinzic and in the value each company can create as a focused stand-alone business. So thank you for your continued support, and thank you for your interest in KBR today. Operator: This concludes today's call. Thank you for attending. You may now disconnect. 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While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has positions in and recommends KBR. The Motley Fool has a disclosure policy. KBR (KBR) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

Interested in KBR, Inc.? Here are five stocks we like better. KBR reported solid second-quarter results, with revenue rising 2% to approximately $2 billion, adjusted EBITDA increasing to $258 million and adjusted EPS reaching $0.99. The company reaffirmed its full-year guidance, citing profitable growth, margin expansion and improving project activity. STS revenue grew 10% to $676 million, while backlog reached a record $5.5 billion and book-to-bill was 1.5 times. Despite lower quarterly EBITDA from project mix, management maintained its outlook for mid-teens revenue growth and margins. KBR is advancing the planned January 4, 2027, spinoff of Mission Technology Solutions under the Trinzic name. Separation preparations are progressing, with IRS and SEC reviews underway and investor days planned for November. 5 Spin-Off Stocks That Could Reward Patient Investors in 2026 KBR (NYSE:KBR) reported second-quarter 2026 revenue of approximately $2 billion, up 2% from the prior-year period, while adjusted EBITDA rose $16 million to $258 million and adjusted EPS increased $0.08 to $0.99. The company said first-half results were tracking slightly ahead of its planned cadence and reaffirmed its full-year guidance for revenue, adjusted EBITDA, adjusted EPS and adjusted operating cash flow. President and CEO Stuart Bradie said the company continued to execute while preparing to separate into two standalone businesses. The planned spinoff of its Mission Technology Solutions business, which will be named Trinzic, remains targeted for Jan. 4, 2027. → Why SK hynix Could Be the Best AI Chip Stock to Buy Now Intuitive Machines Keeps Space Exploration Ambitions Alive “We delivered profitable growth, expanded margins, and continued to see healthy momentum across both segments as we enter the second half of the year,” Chief Financial Officer Shad Evans said. Second-quarter revenue increased $32 million year over year. Excluding elevated EUCOM contingency activity in 2025, revenue rose approximately $91 million, or roughly 5%, driven by the ramp-up of recently awarded projects across both business segments. → Microsoft Just Flipped the AI Spending Narrative Overnight Construction Stocks and Construction ETFs to Buy for 2020 Adjusted EBITDA margin expanded about 60 basis points to 13%, which the company attributed to project execution, portfolio mix and cost management. Adjusted EPS benefited from operating performance, lower below-the-line expenses and a lower diluted share count following repurchases. First-half adjusted operating cash flow was $183 million, representing adjusted operating cash-flow conversion of about 74%. Evans said second-quarter cash flow reflected the timing of collections in the Middle East within the Sustainable Technology Solutions, or STS, segment. Collections began to normalize in July, and management maintained its full-year cash-flow outlook. → Carrier Earnings Could Send the Stock to a New All-Time High Net leverage ended the quarter at approximately 2.3 times trailing adjusted EBITDA, flat from the prior quarter and below the company’s 2.5-times target. During the first half, KBR invested roughly $190 million to strengthen its portfolio and returned $71 million to shareholders through dividends and repurchases. The company repurchased about $25 million of stock during the second quarter. STS revenue increased 10% year over year to $676 million, supported by projects awarded over the prior 12 months and growth in the Middle East, Latin America, Asia and Australia. Revenue also rose 8% sequentially. Management said the performance supports its expectation for mid-teens STS revenue growth for the full year. STS adjusted EBITDA declined $11 million from a year earlier to $123 million, as the quarter included a larger proportion of lower-margin equipment procurement activity. Adjusted EBITDA margin was 18.2%; excluding LNG joint-venture earnings, the margin was approximately 13%. Year-to-date adjusted EBITDA margin excluding LNG joint-venture earnings was approximately 14.5%, which Evans said keeps the business on track for its full-year mid-teens margin outlook on that basis. The segment’s second-quarter book-to-bill ratio was 1.5 times, and its trailing 12-month ratio was 1.3 times. Backlog reached a record $5.5 billion, up 40% year over year, while its near-term pipeline exceeded $6 billion excluding large reimbursable LNG EPC opportunities. Work already under contract represents about 80% of the midpoint of STS’s 2026 revenue guidance, according to the company. Bradie said about 34% of year-to-date STS bookings were tied to operating-expenditure-based contracts, including work in the Middle East and the Americas through Brown & Root. First-half bookings in the Middle East exceeded $900 million across oil, gas, natural-gas-liquids and energy-infrastructure projects. The company also cited its first commercial PureSAF license awards and continuing demand for ammonia technology, including a recent Pampa Energía award in the Americas. Bradie said the company is not depending on a single project to replace the eventual roll-off of Plaquemines, which he said continues through the first half of 2027. Mission Technology Solutions, or MTS, reported revenue of $1.3 billion, down $28 million from the prior year. Excluding EUCOM contingency activity, however, segment revenue rose about $31 million, or 2%, driven by activity in Australia and the U.K., partly offset by U.S. project completions. MTS adjusted EBITDA increased $22 million to $158 million, while margin expanded roughly 190 basis points to 12.1%. The results benefited from favorable mix, cost management and contract closeouts. Year-to-date margins were 11.4%, ahead of the company’s full-year outlook. Evans said the company continues to view a long-term margin target of more than 10% as appropriate for the business through year-end. MTS had a second-quarter book-to-bill ratio of 0.8 times and a trailing 12-month ratio of 1.0 times. Management said those figures exclude approximately $1.6 billion of awarded work that remains under protest, including contracts related to National Science Foundation Antarctica operations, Department of State work in Iraq and classified PACOM logistics. About 94% of MTS’s full-year revenue guidance is already under contract, KBR said. The business also has roughly $10.4 billion awaiting award and expects more than $25 billion of bid volume during 2026, up about 50% year over year. KBR introduced Trinzic as the name for the MTS spinoff. Bradie said the business will focus on supporting governments, partners and allies across national security and space through technology, mission expertise and connected systems. Michael LaRouche is expected to join as Trinzic’s CEO-designate in September, while Nick Visi joined as CFO-designate earlier in the month. The company said it submitted its final private-letter-ruling request to the IRS in June and expects a final ruling in September. KBR also continues through the SEC’s review of its Form 10 and expects a public filing before its next earnings call. Operational work including IT systems, contract bifurcation, procurement separation, corporate budgeting and organizational design is progressing, management said. The company has assigned corporate employees to their future organizations and is filling remaining critical roles. Bradie said KBR is taking actions before the separation to reduce standalone costs and mitigate dissynergies, including organizational simplification, productivity initiatives and real-estate rationalization. The company plans to host investor days for new KBR and Trinzic in New York in November to discuss each business’s standalone strategy, financial framework and priorities. KBR, Inc is a global engineering, procurement, construction and services (EPC&S) company headquartered in Houston, Texas. The firm delivers integrated solutions and technologies across the full project lifecycle for customers in the energy, government, industrial and infrastructure sectors. Its offerings span feasibility studies, front-end engineering design, detailed design, procurement, fabrication, construction, commissioning and operations support. The company is organized into business segments that include Energy Solutions, which focuses on oil and gas processing, liquefied natural gas (LNG) facilities and petrochemical plants; Government Solutions, providing logistics, sustainment, training and mission support for defense, intelligence and civilian agencies; and Sustainable Technology, delivering chemical process technologies, water treatment and lower-carbon fuels expertise. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "KBR Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for July 2026.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Management attributes strong first-half performance to operational discipline and project execution tracking slightly ahead of planned cadence across both segments. Sustainable Technology Solutions (STS) achieved record backlog of $5.5 billion, driven by global demand for energy security, food security, and sustainability-focused investments. Mission Tech (MTS) performance is characterized by high visibility, with 94% of full-year revenue under contract, despite reported book-to-bill metrics being temporarily suppressed by $10.6 billion in awarded work currently under protest. The company is actively simplifying organizational structures and driving productivity to mitigate potential dis-synergies and ensure both entities enter 2027 with leaner cost bases. Strategic positioning for 'New KBR' focuses on a scalable digital backbone, while the 'Trinzic' spin-off aims for rate neutrality to maintain competitiveness in cost-plus and fixed-price government contracts. Operational excellence remains a priority to ensure that the heavy lift of the separation process does not distract from delivering on existing customer commitments and financial targets. The planned separation remains on track for a target completion date of January 4, 2027, with a final IRS private letter ruling expected in September 2026. Management reaffirmed 2026 full-year guidance, assuming that current Middle East payment volatility is a timing issue that will normalize by year-end. STS revenue is projected to grow in the mid-teens for the full year, supported by a $6 billion near-term pipeline that excludes large reimbursable LNG EPC opportunities. Future margin expansion in STS is expected to be driven by an increasing mix of OpEx-related work and the integration of physics-based AI into licensed technology offerings. Capital allocation strategy prioritizes maintaining flexibility for the separation while continuing disciplined share repurchases and investments in emerging technology ventures. Introduced 'Trinzic' as the new brand for the MTS spin-off, intended to reflect essential mission expertise and modern digital capabilities in national security and space. Recorded lease impairments during the quarter as part of a proactive real estate rationalization strategy to simplify the corporate footprint ahead of Day 1 readiness. Identified $10.6 billion of awarded work under protest, including major contracts with the National Science Foundation and Department of State, which represents a significant but currently unrecognized backlog component. Acknowledged slower payment cycles in the Middle East due to regional volatility, though management emphasized this has not disrupted physical project delivery or personnel safety. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management stated both businesses will be established with normative leverage ratios suitable for their specific industries, utilizing the strength of the current balance sheet. Confirmed that dedicated teams are focused on 'operational readiness' to ensure the spin-off does not distract from core business performance. Attributed Q2 margin fluctuations to normal project mix, specifically a higher proportion of lower-margin equipment procurement activity. Reiterated that year-to-date margins of 14.5% (excluding LNG JV earnings) keep the segment on track for its mid-teens full-year outlook. Management clarified they are not looking for a single 'mega-project' replacement, but rather relying on a 40% year-over-year increase in total backlog. The Plaquemines project is expected to continue contributing through the first half of 2027, providing a multi-year bridge for new awards to ramp up. Confirmed that over 1,000 new employees have been successfully onboarded and are currently billable, supporting the projected mid-teens revenue growth. Stated that the ability to staff up quickly in the Middle East has been a key driver in meeting accelerated project schedules.

Second Quarter Fiscal 2026 Results(All comparisons against the second quarter fiscal 2025 unless noted.) Revenues of $2.0 billion, up 2% Net income attributable to KBR of $96 million, up 32%; Operating income of $172 million, down 11% with an Operating income margin of 8.7% Adjusted EBITDA2 of $258 million, up 7% with an Adjusted EBITDA2 margin of 13.0% Diluted EPS attributable to KBR of $0.75, up 34% Adjusted EPS2 of $0.99, up 9% Bookings and options1 of $1.8 billion with 1.1x book-to-bill1 Second Quarter YTD Fiscal 2026 Results(All comparisons against the second quarter YTD fiscal 2025 unless noted.) Revenues of $3.9 billion, down 2% due to expected EUCOM contingency runoff Net income attributable to KBR of $198 million, up 5%; Operating income of $352 million, down 11% with an Operating income margin of 9.0% Adjusted EBITDA2 of $509 million, up 4% with an Adjusted EBITDA2 margin of 13.0% Diluted EPS attributable to KBR of $1.55, up 8% Adjusted EPS2 of $1.95, up 2% Bookings and options1 of $3.7 billion with 1.1x book-to-bill1 HOUSTON, July 30, 2026 (GLOBE NEWSWIRE) -- KBR, Inc. (NYSE: KBR) today announced its second quarter fiscal 2026 results. “We delivered a strong first half while continuing to position both businesses for long-term success as we advance toward separation,” said Stuart Bradie, President and Chief Executive Officer. “Demand remains healthy across our core markets, supported by strong customer relationships, disciplined execution and growing visibility into future performance. In STS, we delivered another strong quarter of bookings, driving record backlog levels and reinforcing the durability of demand across our portfolio. In MTS, customer demand remains strong, and awarded work under protest continues to provide visibility beyond reported backlog. As we prepare for separation, we are taking actions to simplify our cost structure, improve efficiency and position both companies to compete more effectively as focused, standalone businesses. We remain confident in the opportunities ahead and our ability to create long-term value for shareholders.” 1 As used throughout this release, book-to-bill and bookings and options exclude long-term UK PFIs. In the prior quarter, these metrics also excluded the Plaquemines LNG project.2 As used throughout this earnings release, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted earnings per share, Adjusted operating cash flow, and Adjusted operating cash conversion are non-GAAP financial measures. All non-GAAP financial measures reflect results from continuing operations. See additional information at the end of this release regarding non-GAAP financial information, including reconciliations to the nearest GAAP measures Summarized Second Quarter Fiscal 2026 Consolidated Results Second Quarter Fiscal 2026 Consolidated Results Review(All comparisons against the second quarter fiscal 2025 unless noted.) Revenues were $2.0 billion, up 2% or $32 million. Growth was driven by the continued ramp-up of recently awarded projects within Sustainable Technology Solutions, as well as growth in Mission Technology Solutions across International Government Clients. Within U.S. Government Defense and Intelligence Clients, reported revenues declined year over year due to the expected runoff of EUCOM contingency-related activity; excluding EUCOM runoff, revenues increased year over year. Operating income was $172 million, down 11% or $22 million, as higher gross profit was more than offset by one-time spin-off costs and other charges associated with the planned separation. Net income attributable to KBR was $96 million, up 32% or $23 million, reflecting higher gross profit, lower selling, general and administrative expenses, lower interest expense and the absence of prior-year losses from discontinued operations associated with the HomeSafe contract termination, partially offset by one-time spin-off costs and other charges related to the planned separation. Diluted earnings per share attributable to KBR were $0.75, up 34% or $0.19, in line with increased net income attributable to KBR noted above and lower diluted weighted average common shares outstanding due to open market share repurchases. Adjusted EBITDA2 was $258 million, up 7% or $16 million, reflecting strong project execution, including unconsolidated JVs, favorable portfolio mix and continued cost discipline across the enterprise. Adjusted EBITDA2 margin was 13.0%. Adjusted earnings per share2 were $0.99, up 9% or $0.08, due to the increase in adjusted EBITDA2 noted above, lower below-the-line expenses and lower adjusted weighted average common shares outstanding due to open market share repurchases. Backlog and options as of the quarter end totaled $23.0 billion. Book-to-bill1 was 1.1x for the quarter. Summarized Second Quarter Fiscal 2026 Segment Results Second Quarter Fiscal 2026 Segment Results Review(All comparisons against the second quarter fiscal 2025 unless noted.) Mission Technology Solutions (MTS)Revenues were $1.3 billion, down 2% or $28 million. Continued expansion within International Government Clients, particularly in Australia and the United Kingdom, was more than offset by lower EUCOM contingency-related activity and reduced activity within U.S. Government Federal Civilian Clients. Within U.S. Government Defense and Intelligence Clients, reported revenues declined year over year due to the expected runoff of EUCOM contingency-related activity; excluding EUCOM runoff, revenues increased year over year. Operating income was $116 million, up 7% or $8 million, driven by favorable portfolio mix, partially offset by one-time spin-off costs and other charges associated with the planned separation. Operating income margin was 8.9%. Adjusted EBITDA2 was $158 million, up 16% or $22 million, reflecting favorable portfolio mix, disciplined cost management and benefits from contract closeouts. Adjusted EBITDA2 margin was 12.1%. Backlog and options as of the quarter end totaled $17.5 billion. Book-to-bill1 was 0.8x for the quarter. Reported backlog and book-to-bill do not reflect approximately $10.6 billion of awarded work currently under protest, including the National Science Foundation Antarctica contract, which we expect will provide additional backlog visibility as the protests conclude. The following new business awards were announced: Awarded the $8 billion ceiling Antarctic Science and Engineering Support Contract (ASESC), a single-award IDIQ contract for the U.S. National Science Foundation, to support U.S. Antarctic Program stations and research camps over a 20-year period of performance. This award is not yet recorded in backlog or book-to-bill. Awarded a $95 million cost-plus-fixed-fee contract to provide Digital Engineering and Enterprise Decision Support capabilities for the U.S. Space Force at Kirtland Air Force Base over a five-year period of performance. Awarded a position on the $866 million ceiling Advisory Support and Technical Requirement Administration (ASTRA) multiple-award IDIQ contract to provide advisory and technical services for the U.S. Air Force, Department of War and intelligence community over five years. Sustainable Technology Solutions (STS)Revenues were $676 million, up 10% or $60 million, driven by continued execution of previously awarded work and ramp-up of newer project awards, particularly in the Middle East and Latin America, with additional growth in Australia and Asia, partially offset by U.S. projects nearing completion. Operating income was $103 million, down 18% or $22 million, reflecting the timing and mix of work executed during the quarter, including a higher contribution from equipment procurement activity, while underlying project execution and demand trends remained strong. Operating income margin was 15.2%. Adjusted EBITDA2 was $123 million, down 8% or $11 million. The smaller decline relative to operating income primarily reflects higher unconsolidated joint venture adjusted EBITDA contributions during the quarter. Adjusted EBITDA2 margin was 18.2%. Backlog as of the quarter end reached a record $5.5 billion. Book-to-bill1 was 1.5x for the quarter. The following new business awards were announced: KBR’s Purifier® ammonia technology selected for Pampa Energía’s new ammonia-urea complex in Bahía Blanca, Argentina, which is expected to be the largest single-train ammonia plant in Latin America. KBR’s PureSAF® technology selected by NorSAF for a planned 100,000 ton/year SAF and e-SAF facility in Latvia, expected to be the largest sustainable aviation fuel production plant in Northern Europe. Selected to provide technology licensing and front-end engineering design services using KBR’s PureSAF® technology for Keppel and Aster’s proposed sustainable aviation fuel plant on Singapore’s Jurong Island. Selected by Power2X to provide project management consultancy services for its Rotterdam eFuels project, one of Europe's largest sustainable aviation fuel initiatives, expected to produce more than 250,000 tons of e-SAF annually. Balance Sheet, Cash Flow, and Capital DeploymentLiquidity as of July 3, 2026, totaled approximately $0.9 billion, comprising $625 million in borrowing capacity under the revolving credit facility and $312 million in cash and cash equivalents. Net leverage ratio as of July 3, 2026, was 2.3x. Operating cash flows from continuing operations for the quarter were $50 million, down 77% or $167 million. Adjusted operating cash flows2 for the quarter were $64 million, down 71% or $153 million. During the second quarter, KBR returned $46 million in capital to shareholders, consisting of $25 million in share repurchases and $21 million in regular dividends. Reaffirming Fiscal 2026 GuidanceKBR reaffirms the following full‑year fiscal 2026 outlook for the consolidated company and plans to update standalone outlooks in connection with the planned spin transaction. The company does not provide reconciliations of Adjusted EBITDA, Adjusted EPS, and Adjusted operating cash flows to the most comparable GAAP financial measures on a forward-looking basis because the company is unable to predict with reasonable certainty the ultimate outcome of legal proceedings, unusual gains and losses, and acquisition-related expenses without unreasonable effort, which could be material to the company’s results computed in accordance with GAAP. Planned Spin-Off of Mission Technology SolutionsOn September 24, 2025, KBR announced its intention to spin-off its Mission Technology Solutions segment into a separate, U.S. publicly traded company. We continue to believe that the formation of two independent companies with distinct business profiles will better position both companies to deliver long-term profitable growth and value for customers, employees, and shareholders. Upon completion, KBR and its shareholders are expected to benefit from ownership in two pure‑play public companies with enhanced strategic and management focus, prioritized commercial resources, operational independence, and financial flexibility to support strategic imperatives. KBR continues to advance key separation workstreams, including leadership, governance, operating model and branding activities for the future Mission Technology Solutions company. On June 25, 2026, KBR announced the appointments of Michael LaRouche as President and Chief Executive Officer-designate and Nicholas Veasey as Executive Vice President and Chief Financial Officer-designate of the planned spin-off entity. On July 30, 2026, KBR unveiled Trinzic as the future standalone company, introducing its new corporate brand and identity as it prepares to become an independent public company. The planned spin‑off is intended to be tax‑free to KBR and its shareholders for U.S. federal income tax purposes and is targeting completion on January 4, 2027, which is the first business day of fiscal 2027, subject to final approval by KBR’s Board of Directors and other customary conditions. Additional details regarding the spin-off transaction are available on the Investor Relations section of KBR's website at investors.kbr.com/news-and-events/spin-off-information. Conference Call DetailsThe company will host a conference call to discuss its second quarter fiscal 2026 results on Thursday, July 30, 2026, at 7:30 a.m. Central Time. The conference call will be webcast simultaneously through the Investor Relations section of KBR’s website at investors.kbr.com. A replay of the webcast will be available shortly after the call on KBR’s website via the webcast link here: https://events.q4inc.com/attendee/815377675. About KBRWe deliver science, technology and engineering solutions to governments and companies around the world. KBR employs approximately 37,000 people worldwide with customers in more than 85 countries and operations in over 28 countries. KBR is proud to work with its customers across the globe to provide technology, value-added services, and long-term operations and maintenance services to ensure consistent delivery with predictable results. At KBR, We Deliver. Visit www.kbr.com 1 As used throughout this release, book-to-bill and bookings and options exclude long-term UK PFIs. In the prior quarter, these metrics also excluded the Plaquemines LNG project.2 As used throughout this earnings release, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted earnings per share, Adjusted operating cash flows, and Adjusted operating cash conversion are non-GAAP financial measures. All non-GAAP financial measures reflect results from continuing operations. See additional information at the end of this release regarding non-GAAP financial information, including reconciliations to the nearest GAAP measures. Trailing-twelve months (TTM) Adjusted EBITDA.3 Net debt refers to total gross debt before unamortized debt issuance costs and discounts, less cash and cash equivalents. Forward-Looking StatementsThe statements in this press release that are not historical statements, including statements regarding our expectations for our future financial performance, effective tax rate, operating cash flows, contract revenues, award activity and backlog, program activity, our business strategy, business opportunities, interest expense, our plans for raising and deploying capital and paying dividends, and our planned spin-off of the Mission Technology Solutions business, including the anticipated timing, benefits and tax treatment of the spin-off transaction, are forward-looking statements within the meaning of the federal securities laws. These statements are subject to numerous risks and uncertainties, many of which are beyond the company’s control that could cause actual results to differ materially from the results expressed or implied by the statements. These risks and uncertainties include, but are not limited to: uncertainty, delays or reductions in government funding, appropriations and payments, including as a result of continuing resolution funding mechanisms, government shutdowns or changing budget priorities; developments and changes in government laws, regulations and regulatory requirements and policies that may require us to pause, delay or abandon new and existing projects; changes in the priorities, focus, authority and budgets of government agencies under the current administration that may impact our existing projects and/or our ability to win new contracts; the ongoing conflict between Russia and Ukraine and global volatility and continued unrest, including in the Middle East, and the related impacts on our business; potential adverse economic and market conditions, such as interest rate and currency exchange rate fluctuations, or ongoing uncertainty related to impacts of newly imposed U.S. tariffs and any additional responsive non-U.S. tariffs or other changes in trade policy, including impact tariffs could have on customer spend; the company’s ability to manage its liquidity; delays, cancellations or reversals of contract awards due to bid protests or legal challenges; the potential adverse outcome of and the publicity surrounding audits and investigations by domestic and foreign government agencies and legislative bodies; changes in capital spending by the company’s customers; the company’s ability to obtain contracts from existing and new customers and perform under those contracts; structural changes in the industries in which the company operates; escalating costs associated with and the performance of fixed-fee projects and the company’s ability to control its cost under its contracts; claims negotiations and contract disputes with the company’s customers; changes in the demand for or price of oil and/or natural gas; protection of intellectual property rights; compliance with environmental laws; compliance with laws related to income taxes; unsettled political conditions, war and the effects of terrorism; foreign operations and foreign exchange rates and controls; the development and installation of financial systems; the possibility of cyber and malware attacks; increased competition for employees; the ability to successfully complete and integrate acquisitions; the company's proposed spin-off; investment decisions by project owners; and operations of joint ventures, including joint ventures that are not controlled by the company. The company's most recently filed Annual Report on Form 10-K, any subsequent Form 10-Qs and 8-Ks, and other U.S. Securities and Exchange Commission (SEC) filings discuss some of the important risk factors that the company has identified that may affect its business, results of operations and financial condition. Except as required by law, the company undertakes no obligation to revise or update publicly any forward-looking statements for any reason. For further information, please contact: 1 See additional information at the end of this release regarding non-GAAP financial information, including a reconciliation to the nearest GAAP measure Unaudited Non-GAAP Financial InformationThe following information provides reconciliations of certain non-GAAP financial measures presented in the press release to which this reconciliation is attached to the most directly comparable financial measures calculated and presented in accordance with generally accepted accounting principles (GAAP). The company has provided the non-GAAP financial information presented in the press release as information supplemental and in addition to the financial measures presented in the press release that are calculated and presented in accordance with GAAP. Such non-GAAP financial measures should not be considered superior to, as a substitute for or alternative to, and should be considered in conjunction with, the GAAP financial measures presented in the press release. The non-GAAP financial measures in the press release may differ from similar measures used by other companies. Adjusted EBITDAWe evaluate performance based on Adjusted EBITDA and Adjusted EBITDA margin. Adjusted EBITDA is defined as Net income (loss) attributable to KBR, plus Net (income) loss from discontinued operations, net of tax; less Net income (loss) attributable to noncontrolling interest included in discontinued operations; less Interest expense; Other non-operating expense (income); Provision for income taxes; Depreciation and amortization (D&A); and certain discrete items as identified by Management to be non-recurring in nature as set forth below. Adjusted EBITDA can also be defined as Operating income less Net income attributable to noncontrolling interests from continuing operations; plus D&A; and certain discrete items as identified by Management to be non-recurring in nature as set forth below. Adjusted EBITDA margin is calculated as Adjusted EBITDA divided by Revenues. Adjusted EBITDA and Adjusted EBITDA margin for each of the three- and six-month periods ended July 3, 2026 and July 4, 2025 are considered non-GAAP financial measures under SEC rules because Adjusted EBITDA excludes certain amounts included in the calculation of Net income (loss) attributable to KBR in accordance with GAAP for such periods. Management believes Adjusted EBITDA and Adjusted EBITDA margin afford investors a view of what management considers KBR's core performance for each of the three- and six-month periods ended July 3, 2026 and July 4, 2025 and also affords investors the ability to make a more informed assessment of such core performance for the comparable periods. (1) Beginning with the three months ended April 3, 2026, Adjusted EBITDA was revised to include add-backs associated with KBR's share of unconsolidated JV interest, taxes, depreciation, amortization and acquisition costs on a prospective basis. Management concluded that retrospective application would not provide additional meaningful information to investors and therefore did not recast historical non‑GAAP results. The estimated impact to fiscal 2025 margins was approximately 20 basis points. Adjusted EPS Adjusted earnings per share (Adjusted EPS) for each of the three- and six-month periods ended July 3, 2026 and July 4, 2025 is considered a non-GAAP financial measure under SEC rules because Adjusted EPS excludes certain amounts included in the Diluted EPS calculated in accordance with GAAP for such periods. The most directly comparable financial measure calculated in accordance with GAAP is Diluted EPS for the same periods. Management believes that Adjusted EPS affords investors a view of what management considers KBR's core earnings performance for each of the three- and six-month periods ended July 3, 2026 and July 4, 2025 and also affords investors the ability to make a more informed assessment of such core earnings performance for the comparable periods. Adjusted Operating Cash Flows and Adjusted Operating Cash ConversionAdjusted operating cash flows and Adjusted operating cash conversion are considered non-GAAP financial measures under SEC rules. Adjusted operating cash flows exclude certain amounts included in the cash flows provided by operating activities calculated in accordance with GAAP. Adjusted operating cash conversion is calculated as Adjusted operating cash flows divided by Adjusted weighted average common shares outstanding, which is then divided by Adjusted earnings per share. Management believes that Adjusted operating cash flows and adjusted operating cash conversion afford investors a view of what management considers KBR's core operating cash flow performance for each of the three- and six-month periods ended July 3, 2026 and July 4, 2025 and also afford investors the ability to make a more informed assessment of such core operating cash generation performance.

KBR Inc. (KBR) came out with quarterly earnings of $0.99 per share, beating the Zacks Consensus Estimate of $0.92 per share. This compares to earnings of $0.91 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +7.61%. A quarter ago, it was expected that this the engineering, construction company would post earnings of $0.92 per share when it actually produced earnings of $0.96, delivering a surprise of +4.35%. Over the last four quarters, the company has surpassed consensus EPS estimates four times. KBR, which belongs to the Zacks Engineering - R and D Services industry, posted revenues of $1.98 billion for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 5.27%. This compares to year-ago revenues of $1.95 billion. The company has topped consensus revenue estimates two times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. KBR shares have lost about 10.6% since the beginning of the year versus the S&P 500's gain of 6.9%. While KBR has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for KBR was favorable. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #2 (Buy) for the stock. So, the shares are expected to outperform the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $1.04 on $2.12 billion in revenues for the coming quarter and $4.00 on $8.13 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Engineering - R and D Services is currently in the top 33% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Another stock from the same industry, VSE (VSEC), has yet to report results for the quarter ended June 2026. The results are expected to be released on August 5. This supply and logistics company is expected to post quarterly earnings of $0.93 per share in its upcoming report, which represents a year-over-year change of -4.1%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. VSE's revenues are expected to be $422.49 million, up 55.3% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report KBR, Inc. (KBR) : Free Stock Analysis Report VSE Corporation (VSEC) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Heading into the upcoming earnings cycle, the construction sector of the United States is sitting in the middle of elevated infrastructure and public construction demand and housing market softness. Robust AI and data center investment, rising power demand, grid modernization, government programs, energy transition and electrification trends are boosting public construction demand. Conversely, elevated mortgage rates and weak consumer sentiment are muting housing demand.Amid this mixed market backdrop, key construction firms, including KBR, Inc. KBR, CRH plc CRH, SPX Technologies, Inc. SPXC and EMCOR Group, Inc. EME, are set to provide crucial insights into demand trends, pricing discipline and backlog visibility.Considering a broader view of the Construction sector, per the latest Earnings Trends report (as of July 22), 17.6% of the sector’s companies out of the reported 81 S&P 500 members had released their earnings. Having the sector’s market capitalization of 12%, these companies, in total, reported a 20.4% decline in the bottom line, with the top line tumbling 3.9%. Of the companies that have reported, 100% beat on earnings, while 66.7% topped the revenue estimates. Per the recent Earnings Trends report, the construction sector’s earnings are expected to tumble 3.4% year over year in the second quarter compared with a 4.7% decline in the prior quarter. Conversely, revenues are anticipated to increase 4.8% compared with 5.8% growth in the first quarter of 2026. The United States is witnessing a boost from increased infrastructure spending through several federal initiatives, which are proving incremental for companies engaging in public construction and engineering projects, resulting in a growing backlog. Increasing AI adoption, data center projects, power-related investments, grid modernization and energy, alongside defense and national security projects, are creating long-term opportunities across the geography and beyond.Companies like KBR, EMCOR and CRH get to enjoy the direct benefits from these favorable market tailwinds. Demand for HVAC, cooling, energy-efficiency solutions and specialized industrial equipment mainly supports SPX Technologies' growth.Per the recent construction spending report of May 2026 by the U.S. Census Bureau, public construction spending was 0.3% up year over year and 0.5% up month over month. Within this bracket, construction spending on healthcare, transportation, highway and street, and conservation and development was notably up from May 2025 by 4.9%, 3%, 2.9% and 16.1%, respectively. Despite the public infrastructure construction boom, the broader sector’s prospects are pulled back by the ongoing housing market softness. Per Freddie Mac, the 30-year mortgage rate moved up from 6.46% as of the week ending on April 2 to 6.49% as of the week ending on June 25. Amid the heightened geopolitical tensions and increasing inflation, homebuyers in the country stayed demotivated from owning a new house.As of the June 2026 new residential sales report by the U.S. Census Bureau and the U.S. Department of Housing and Urban Development, new single-family house sales were 5.6% down from June 2025, but were up 1.6% from May 2026. Single-family housing starts in June 2026 were 3.2% below the June 2025 value.Public construction boost is majorly benefiting SPX Technologies given its elaborate exposure to public infrastructure, data-center, industrial and replacement/retrofit demand. However, softness in private residential construction is likely to be a partial offset to its business growth. Amid a bundle of stocks, to identify one with the potential to beat earnings estimates, the following Zacks methodology can be exercised. The Zacks model suggests that a company needs to have the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — to increase the odds of an earnings beat. You can uncover the best stocks before they’re reported with our Earnings ESP Filter. You can see the complete list of today’s Zacks Rank #1 stocks here.Here are four stocks that are set to report their second-quarter 2026 earnings on July 30.KBR: This Texas-based engineering, construction and services firm has an Earnings ESP of +8.70% and a Zacks Rank of 2. KBR reported better-than-expected earnings in each of the trailing four quarters, the average surprise being 4.8%.The Zacks Consensus Estimate for KBR’s second-quarter 2026 revenues and EPS is pegged at $1.88 billion and 92 cents, representing a decline of 3.5% and growth of 1.1%, respectively, from the year-ago figures. KBR, Inc. price-eps-surprise | KBR, Inc. Quote SPX Technologies: This North Carolina-based industrial technology company has an Earnings ESP of +1.35% and a Zacks Rank of 2. SPXC reported better-than-expected earnings in each of the trailing four quarters, the average surprise being 9.7%. The Zacks Consensus Estimate for SPXC’s second-quarter 2026 revenues and EPS is pegged at $635.6 million and $1.85, indicating growth of 15.1% and 12.1%, respectively, from the year-ago figures. (read more: SPX Technologies to Report Q2 Earnings: What's in Store for the Stock?) SPX Technologies, Inc. price-eps-surprise | SPX Technologies, Inc. Quote EMCOR: This Connecticut-based construction company has an Earnings ESP of 0.00% and a Zacks Rank of 2. EMCOR reported better-than-expected earnings in three of the trailing four quarters and missed on the remaining occasion, the average surprise being 10.4%. The Zacks Consensus Estimate for EME’s second-quarter 2026 revenues and EPS is pegged at $4.73 billion and $7.23, indicating growth of 9.9% and 7.6%, respectively, from the year-ago figures. (read more: Here's What Investors Must Know Ahead of EMCOR's Q2 Earnings) EMCOR Group, Inc. price-eps-surprise | EMCOR Group, Inc. Quote CRH: This global provider of building materials and solutions has an Earnings ESP of +4.08% and a Zacks Rank of 3. CRH reported better-than-expected earnings in two of the trailing four quarters, met on one occasion and missed on the remaining one, the average surprise being 0.7%.The Zacks Consensus Estimate for CRH’s second-quarter 2026 revenues and EPS is pegged at $10.72 billion and $1.96, implying improvements of 5.1% and 1%, respectively, from the year-ago figures. (read more: CRH to Report Q2 Earnings: What's in Store for the Stock?) CRH PLC price-eps-surprise | CRH PLC Quote Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report KBR, Inc. (KBR) : Free Stock Analysis Report EMCOR Group, Inc. (EME) : Free Stock Analysis Report SPX Technologies, Inc. (SPXC) : Free Stock Analysis Report CRH PLC (CRH) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Government and sustainable technology solutions company KBR (NYSE:KBR) will be reporting results this Thursday before the bell. Here’s what you need to know. KBR beat analysts’ revenue expectations last quarter, reporting revenues of $1.92 billion, down 4.7% year on year. It was an exceptional quarter for the company, with a solid beat of analysts’ EBITDA estimates and full-year EBITDA guidance exceeding analysts’ expectations. Is KBR a buy or sell going into earnings? Read our full analysis here, it’s free for active Edge members. This quarter, the market is expecting KBR’s revenue to decline 1.9% year on year, a reversal from the 5.7% increase it recorded in the same quarter last year. Analysts covering the company have generally reconfirmed their estimates over the last 30 days, suggesting they anticipate the business will stay the course heading into earnings. KBR has missed Wall Street’s revenue estimates multiple times over the last two years. Looking at KBR’s peers in the defense contractors segment, some have already reported their Q2 results, giving us a hint as to what we can expect. RTX delivered year-on-year revenue growth of 14.5%, beating analysts’ expectations by 7.8%, and Lockheed Martin reported revenues up 10.5%, topping estimates by 3.8%. RTX traded up 9.2% following the results while Lockheed Martin was also up 13.3%. Read our full analysis of RTX’s results here and Lockheed Martin’s results here. Over the last year or so, investors' attention has moved from one major market theme to the next, spanning AI disruption and surging infrastructure investment to geopolitical tensions, interest rates, and the health of the broader economy. While some of the defense contractors stocks have shown solid performance in this choppy environment, the group has generally underperformed, with share prices down 3.3% on average over the last month. KBR is up 10.4% during the same time and is heading into earnings with an average analyst price target of $45.86 (compared to the current share price of $37.23). WHILE YOU’RE HERE: The Next Palantir? One satellite company captures images of every point on Earth. Every single day. The Pentagon wants it. Hedge funds are using it to beat earnings. You’ve probably never heard of it. This is what the early days of Palantir looked like before it became a giant. Same playbook. Different technology. If you missed Palantir, you need to see this. Claim The Stock Ticker for Free HERE.

The U.S. construction sector is expected to report a mixed set of second-quarter 2026 results, reflecting diverging trends across residential, non-residential and infrastructure markets. While AI-driven data center construction, transportation projects and public infrastructure spending likely continued to support engineering and civil contractors, homebuilders and certain commercial construction companies probably faced persistent demand pressures from elevated mortgage rates, affordability challenges and higher construction costs. At the same time, tariffs, labor shortages and project execution risks remained important variables influencing profitability.With the help of the Zacks Stock Screener, some of the companies under the broader Zacks Construction sector, including CRH Plc CRH, KBR, Inc. KBR, Owens Corning OC, SPX Technologies, Inc. SPXC, Amentum Holdings, Inc. AMTM, are poised to beat on earnings this reporting cycle.Per the latest Earnings Trends report, the second-quarter earnings season has so far seen releases from approximately 17.6% of the companies on the S&P 500 Index. Of these, the Construction sector's total earnings declined 20.4% year over year, while revenues fell 3.9%. Despite the weaker overall performance, 100% of the companies beat earnings per share (EPS) estimates and 66.7% exceeded revenue expectations. Infrastructure-oriented contractors are expected to have delivered another healthy quarter, supported by continued execution of federally funded highway, bridge, water and aviation projects. Demand also remained robust from utility, energy and grid modernization investments. Engineering and heavy civil companies likely benefited from a large backlog, providing strong revenue visibility despite macroeconomic uncertainty.Private investment in AI infrastructure remained another major growth catalyst. Construction activity tied to hyperscale data centers, power infrastructure and advanced manufacturing facilities likely supported companies with exposure to mission-critical projects. Although semiconductor and certain reshoring-related projects moderated compared with their earlier peak, AI-related spending continued to offset part of that weakness. Residential construction probably remained the weakest area of the sector during the quarter. High mortgage rates, elevated home prices and affordability constraints likely weighed on buyer demand, forcing homebuilders to continue offering incentives to stimulate sales. While demographic demand remained supportive over the long term, near-term operating conditions were challenging. Single-family housing starts and building permits weakened further during the quarter, suggesting softer construction activity. Builders also continued balancing production with inventory levels rather than pursuing aggressive expansion, which likely restrained revenue growth across many residential-focused companies. Commercial construction trends likely varied considerably by end market. Data centers, healthcare facilities, public buildings and education projects probably remained relatively resilient, supported by strong project pipelines and long-duration contracts. Conversely, office construction continued to face structural weakness, while several manufacturing and warehouse projects progressed more cautiously amid higher financing costs and evolving capital-spending priorities. Industrial construction also reflected mixed trends, as reshoring investments remained selective and some factory projects were delayed because of rising costs. Warehouse construction showed signs of recovery after an extended slowdown, though developers remained disciplined. Profitability across the sector is expected to have remained uneven. Contractors with specialized capabilities, disciplined bidding strategies and favorable contract structures likely preserved margins through pricing actions and efficient project execution. Companies benefiting from higher-margin data center and infrastructure work may have reported continued margin resilience. However, rising labor expenses, tariffs on construction materials, supply-chain disruptions and equipment procurement costs likely continued to pressure project economics. Homebuilders probably experienced additional margin compression from elevated incentives and higher input costs, while commercial contractors with fixed-price contracts may also have encountered cost inflation challenges. Per the latest Earnings Trends report, construction sector earnings are expected to decline 3.4% for the second quarter from a year ago. This indicates a narrower decrease from the first quarter of 2026’s 4.7% decline. Revenues, however, are projected to grow 4.8%, suggesting a decline from 5.8% growth registered in the preceding quarter.Second-quarter 2026 earnings are expected to underscore a construction industry increasingly divided between resilient infrastructure and technology-driven projects on one hand, and a still-challenging residential and traditional commercial environment on the other. Companies with diversified end-market exposure, strong execution capabilities and sizable backlogs are likely to remain the sector's best performers in the current environment. Picking the right stock could be difficult unless one knows the proper method. To make the task simple, we rely on the Zacks methodology, combining a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) and a positive Earnings ESP.Our proprietary methodology, Earnings ESP, shows the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate. Research shows that for stocks with this combination of the Zacks Rank and ESP, chances of a positive earnings surprise are as high as 70%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter. For investors willing to adopt this strategy, we have highlighted five construction stocks that may stand out this earnings season.CRH — a global provider of building materials and solutions serving infrastructure, non-residential, and residential construction — topped earnings estimates in two of the trailing four quarters, met in one and missed on another occasion, with the average surprise being 0.7%.CRH is likely to beat expectations when it reports second-quarter 2026 results on July 30, 2026, before the opening bell. This Zacks Rank #3 company has an Earnings ESP of +4.08%. You can see the complete list of today’s Zacks #1 Rank stocks here.The Zacks Consensus Estimate for CRH’s second-quarter EPS is pegged at $1.96, representing 1% growth from the year-ago reported figure. CRH PLC price-eps-surprise | CRH PLC Quote KBR — a global engineering, construction and services firm serving the global energy and international government services markets — topped earnings estimates in all the trailing four quarters, with the average surprise being 4.8%.KBR is likely to beat expectations when it reports second-quarter 2025 results on July 30, before the opening bell. This Zacks Rank #3 company has an Earnings ESP of +8.70%.The Zacks Consensus Estimate for KBR’s second-quarter EPS is pegged at 92 cents, representing growth of 1.1% from the year-ago reported figure on a 3.5% revenue decline. KBR, Inc. price-eps-surprise | KBR, Inc. Quote Owens Corning — A branded building products leader with market-leading roofing, insulation and door businesses serving residential markets across North America and Europe — topped earnings estimates in three of the trailing four quarters, with the average being 3.8%.Owens Corning is likely to beat expectations when it reports second-quarter 2026 results on Aug. 5, 2026, before market open. This Zacks Rank #3 company has an Earnings ESP of +1.66%.The Zacks Consensus Estimate for Owens Corning’s second-quarter EPS is pegged at $3.06, representing a decline of 27.3% from a year ago. Owens Corning Inc price-eps-surprise | Owens Corning Inc Quote SPX Technologies — supplies engineered HVAC, detection and measurement solutions across North America and international markets — topped earnings estimates in all the trailing four quarters, with the average surprise being 9.7%.SPX Technologies is likely to beat expectations when it reports second-quarter 2026 results on July 30, 2026, before market open. This Zacks Rank #2 company has an Earnings ESP of +1.35%.The Zacks Consensus Estimate for SPX Technologies’ second-quarter EPS is pegged at $1.85, representing growth of 12.1% from a year ago on 15.1% higher revenues. SPX Technologies, Inc. price-eps-surprise | SPX Technologies, Inc. Quote Amentum — provides engineering and technology solutions in the United States and internationally — topped earnings estimates in all the trailing four quarters, with the average surprise being 4%.Amentum is likely to beat expectations when it reports third-quarter fiscal 2026 results on Aug. 11, 2026, before market open. This Zacks Rank #2 company has an Earnings ESP of +3.18%.The Zacks Consensus Estimate for Amentum’s fiscal third-quarter EPS is pegged at 63 cents, representing growth of 12.5% from a year ago on 1% higher revenues. Amentum Holdings, Inc. price-eps-surprise | Amentum Holdings, Inc. Quote Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report KBR, Inc. (KBR) : Free Stock Analysis Report Owens Corning Inc (OC) : Free Stock Analysis Report SPX Technologies, Inc. (SPXC) : Free Stock Analysis Report CRH PLC (CRH) : Free Stock Analysis Report Amentum Holdings, Inc. (AMTM) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research