Key Highlights

  • Adjusted EPS of USD 1.12 beat the consensus estimate of USD 1.00 and rose 10% from a year earlier.
  • Revenue of USD 2.03 billion grew 5% yearly but sat slightly below the consensus estimate of USD 2.04 billion.
  • Adjusted EBITDA increased USD 28 million to USD 268 million, lifting the Margin 80 basis points to 13.2%.
  • Sustainable Technology Revenue jumped 26% to USD 762 million, while Backlog in that Business reached a record USD 5.8 billion.

KBR, Inc. (NYSE:KBR) reported third quarter 2026 adjusted Earnings Per Share of USD 1.12, ahead of the consensus estimate of USD 1.00, while GAAP diluted EPS attributable to the company was USD 1.06 versus USD 0.90 a year earlier. Revenue of USD 2,028 million rose from USD 1,931 million but came in slightly below the consensus estimate of USD 2.04 billion. Net Income attributable to KBR was USD 133 million compared with USD 115 million, and Operating Income was USD 186 million after USD 24 million of spin-off costs and other charges.

Segment Results Show Diverging Trends

In Sustainable Technology Solutions, revenue rose USD 157 million to USD 762 million and adjusted EBITDA increased 15% to USD 147 million. The margin of 19.3% compared with 21.2% a year earlier because of a larger liquefied Natural Gas joint venture contribution in the prior period. Excluding that venture, the margin was 13.9%, up 80 basis points from the prior quarter. Book to bill was 1.3x, and backlog stands more than 50% above a year ago.

Mission Technology Solutions revenue fell 5% to about USD 1.27 billion as NASA programs wound down through insourcing, partly offset by defense, intelligence and international government growth. Even so, adjusted EBITDA rose 5% to USD 145 million and the margin widened 110 basis points to 11.5%, helped by joint venture contributions, mix and earlier timing of favorable closeouts. Chief Executive Officer Stuart Bradie said reported book to bill of 0.6x reflected removal of remaining NASA contract value from backlog.

Guidance and Cash Flow Caveats

The company reaffirmed full year 2026 guidance on all metrics. Management described an outlook built on flat to modestly lower sequential Mission Technology revenue and continued low double digit sequential growth in Sustainable Technology, with a mid teens full year revenue growth outlook for the latter. The chief financial officer said year to date adjusted Operating Cash Flow was USD 371 million, a 95% conversion rate, with cash flow weighted toward the fourth quarter.

Collection delays in the Middle East could shift roughly USD 25 million to USD 50 million of cash beyond year end, though management said it still sits within the full year cash flow range. Net Leverage was 2.1x against a 2.5x target, and the company paid USD 21 million in dividends. The underlying tax rate stays within the guided 26% to 28% range after a USD 15 million interest income item tied to a discrete tax benefit was excluded from adjusted EPS.

Separation Milestones and Data Points Ahead

The planned spin-off of the Mission Technology business as Trinzic targets completion on January 4, 2027. Investor Days for both companies are scheduled about two weeks after the call, the Trinzic Debt offering is slated to launch in mid November, and the two boards are due to be announced in coming weeks. A private letter ruling on tax-free treatment continues to progress.

Other figures to follow include liquefied natural gas contributions of about USD 115 million through the third quarter against a further USD 25 million to USD 35 million in the fourth quarter, with a step down in 2027. Submitted proposals total USD 9.9 billion, and with awards under protest represent USD 20.5 billion of opportunity outside backlog.