Press Release

Wire Release Strong earnings, with Net Income of $77 million (EPS of $0.54) and Revenue growth of 8% Operating cash flow of $325 million; PEMEX cash settlement and improved working capital management EPS guidance for 2017 increased to a range of $1.25-$1.45 (excluding legacy legal fees of $9 million) Operating cash flow guidance increased to a range of $120 million to $200 million.

HOUSTON, Texas - August 2, 2017 - KBR, Inc. (NYSE: KBR), a global provider of differentiated, professional services and technologies across the asset and program life cycle within the government services and hydrocarbons industries today announced second quarter 2017 financial results.

Consolidated revenue in the second quarter of 2017 was $1.1 billion compared to $1.0 billion in the second quarter of 2016. Net income attributable to KBR was $77 million or $0.54 per diluted share ($0.57 per diluted share excluding $4 million in pre-tax U.S. Government legacy legal fees) in the second quarter of 2017 compared to net income of $47 million or $0.32 per diluted share ($0.35 per diluted share excluding pre-tax U.S. Government legacy legal fees of $4 million) in the second quarter of 2016.

Revenue in the second quarter increased from the same period a year ago driven by the acquisitions in the Government Services segment and expansion of existing contracts with the U.S. Military. The revenue increases were partially offset by lower activity on various projects in our Engineering and Construction segment and the completion of the final EPC power project within our Non-strategic Business segment.

Net income attributable to KBR reflects good performance across all segments in addition to the $35 million gain associated with the PEMEX settlement recognized in the quarter.

KBR finalized and completed the settlement of the EPC 1 litigation with PEMEX Exploraci—n y Producci—n (PEP). The settlement provided for a cash payment of $435 million for costs and fees owed for work on the construction project and dismissals of all litigation.Ê Settlement of this matter was a driver to the positive cash performance in the quarter.

"We achieved strong earnings driven by good performance across all of our business segments, the expansion of existing military contracts, our Government Services acquisitions, and final settlement of a commercial dispute with PEMEX," said Stuart Bradie, President and Chief Executive Office of KBR, Inc. "Improving results in our E&C segment are the result of continued strong execution performance as well as progress made on our strategy to lessen reliance on large projects and focus on winning multiple smaller, more recurring and predictable services work."

"We continue to experience improved and more consistent profit momentum and cash generation as a result of our strategy to position KBR as a global leader in differentiated professional services and project delivery, positioning the company for strong long-term growth with less risk and increased financial flexibility.Ê Our focus on cash has allowed us to strategically allocate capital this quarter," Bradie continued.
Segment Business Results (All comparisons are second quarter 2017 versus second quarter 2016 unless otherwise noted.)

Government Services (GS) Results

GS revenue was $543 million, an increase of $314 million compared to the second quarter of 2016.Ê The increase was primarily due to the acquisitions of Wyle and HTSI (converted into KTS) in the third quarter of 2016, as well as continued expansion of task orders on existing U.S. Government contracts including LogCAP IV and other base operational support services (BOSS) contracts in support of the U.S. military.

GS gross profit was $37 million (6.8% of revenues), a decrease of $4 million from the second quarter of 2016, due to the non-recurring favorable $33 million settlement with the U.S. government related to the sodium dichromate case in the prior year. This decrease was partially offset by the contributions from the acquisitions discussed above and expansions of task orders on existing U.S. government contracts.
Equity in earnings of unconsolidated affiliates was $18 million, an increase of $8 million from the the prior year, due to favorable adjustments this quarter associated with the U.K. Ministry of Defense project and the U.K. Military Flying Training System (UKMFTS) project.

Technology & Consulting (T&C) Results

T&C revenue was $82 million, a decrease of $16 million compared to the second quarter of 2016, due primarily to a lower volume of proprietary equipment sales partially offset by higher license revenues and by new consulting contracts from upstream projects.

T&C gross profit was $17 million (20.7% of revenues), up $2 million from the second quarter of 2016, due to improved mix of licenses in the second quarter of 2017 and cost reductions implemented in 2016.

Engineering & Construction (E&C) Results

E&C revenue was $462 million, a decrease of $159 million from the second quarter of 2016, primarily due to reduced activity on several projects across the sector. These decreases were partially offset by projects ramping up from new awards in the second half of 2016, including a construction project in Canada.

E&C gross profit was $55 million (11.9% of revenues), an increase of $20 million compared to the second quarter of 2016. This was largely attributable to the favorable settlement of the PEMEX litigation resulting in $35 million of gross profits this quarter.

Equity in earnings of unconsolidated affiliates was $14 million, a decrease of $9 million from the prior year predominantly due to lower activity on an Australian joint venture as well as our offshore maintenance joint venture in Mexico.

Non-strategic Business (NSB) Results

NSB revenue was $7 million, a decrease of $54 million from the prior year, primarily due to completion of EPC power projects as we exit this business.

NSB gross loss was $1 million, improved by $16 million compared to the second quarter of 2016, as charges for cost increases for subcontractor productivity and delays in the second quarter of 2016 did not recur in 2017.

Cash Flow and Liquidity

Cash flow from operating activities was $325 million, an increase of $316 million compared to the second quarter of 2016. The increase was driven by the cash settlement with PEP and improved focus on working capital management. We received $435 million from PEP, of which $91 million was used to pay related Mexican income taxes, $180 million was used to repay a portion of the borrowings under our Credit Agreement, and $50 million was used to repurchase shares under our stock repurchase authorization.Ê A portion of the remainder was used to fund working capital requirements for several EPC contracts nearing completion within our E&C and NSB business segments. Cash and equivalents at June 30, 2017 totaled $491 million, including $184 million of domestic U.S. cash. As of June 30, 2017, our $1 billion revolving credit agreement had an outstanding balance of $470 million.

New Business Awards

Notable new awards during the second quarter of 2017 included:
Government ServicesWe were awarded a three-year follow-on task order by the U.S. Army to provide systems engineering and integration, project management support, and Foreign Military Sales (FMS) for missile defense systems for the Department of Defense (DoD). KBRwyle will assist in integrating the PATRIOT Missile Defense system with the Missile Defense Agency's Ballistic Missile Defense System and the Army's Integrated Air and Missile Defense system. We were awarded a three-year task order to provide programmatic support to the U.S. Army's Program Executive Office (PEO) for Aviation. KBRwyle will research, analyze, and develop deliverables for PEO Aviation's Cargo Helicopter and Fixed Wing Project Management Offices and also provide technical support for the Army's fixed wing aircraft and Chinook Helicopter. We were awarded an engineering services contract by NASA to support more than 20 NASA exploration missions. This is a five-year, single award indefinite-delivery/indefinite quantity (IDIQ) contract, will provide ground systems and operations support to various NASA missions managed by Space Science Mission Operations and Earth Science Mission Operations at NASA's Goddard Space Flight Center in Greenbelt, Maryland.

Technology and Consulting

We were awarded Operator Training Simulator (OTS) and Reliability Based Maintenance (RBM) services contracts by JSC EuroChem Northwest for their ammonia plant under construction in Kingisepp, Russia. KBR will provide turnkey delivery of the OTS and RBM solutions and services for the plant using KBR's highly efficient Purifier Ammonia technology.

Engineering and Construction

We were awarded a Front-End Engineering Design (FEED) and project management services contract for Oman Liquefied Natural Gas LLC (Oman LNG) in Qalhat, Oman. Oman LNG operates three liquefaction trains with total nameplate capacity of 10.4 million tonnes per annum (mtpa). We were awarded a program alliance contract by the Victorian Government for railroad crossing removal projects in Victoria, Australia.Ê KBR will remove two railroad crossings in an integrated alliance with John Holland, Metro Trains and the Level Crossing Removal Authority.Ê KBR will be providing engineering and design services for the crossing removals and associated works.

KBR backlog decreased from $10.6 billion as of March 31, 2017 to $10.3 billion as of June 30, 2017, with project work-off exceeding new awards/adjustments in our E&C and T&C business segments. Backlog in the GS business segment increased $180 million from March 31, 2017.

Outlook

We are increasing the company's full year 2017 fully diluted adjusted earnings per share guidance to a range of $1.25 to $1.45 per share from the previous range of $1.10 to $1.40. Our guidance of earnings per share is on an adjusted EPS basis, which excludes legacy legal costs for U.S. Government contracts. These costs are estimated to be approximately $9 million, or $0.07 per fully diluted share in 2017. The estimated legacy legal costs do not assume any cost reimbursement from the U.S. Government that could occur in the future.Ê Our estimated effective tax rate for 2017 is estimated to be from 23% to 25%. Our expected EBITDA range for 2017, which is on the same basis as the EPS guidance, is $300-$350 million. Our guidance for operating cash flows is increased to a range of $120 million to $200 million for 2017, up from previous guidance of $100 million to $200 million.

About KBR Inc.
KBR is a global provider of differentiated professional services and technologies across the asset and program life cycle within the Government Services and Hydrocarbons sectors. KBR employs over 34,000 people worldwide (including our joint ventures), with customers in more than 80 countries, and operations in 40 countries, across three synergistic global businesses:Government Services, serving government customers globally, including capabilities that cover the full life-cycle of defense, space, aviation and other government programs and missions from research and development, through systems engineering, test and evaluation, program management, to operations, maintenance, and field logisticsTechnology & Consulting, including proprietary technology focused on the monetization of hydrocarbons (especially natural gas and natural gas liquids) in ethylene and petrochemicals; ammonia, nitric acid and fertilizers; oil refining; gasification; oil and gas consulting; integrity management; naval architecture and proprietary hulls; and downstream consultingEngineering & Construction, including onshore oil and gas; LNG (liquefaction and regasification)/GTL; oil refining; petrochemicals; chemicals; fertilizers; differentiated EPC; maintenance services (Brown & Root Industrial Services); offshore oil and gas (shallow-water, deep-water, subsea); floating solutions (FPU, FPSO, FLNG & FSRU) and program management.

KBR is proud to work with its customers across the globe to provide technology, value-added services, integrated EPC delivery and long term operations and maintenance services to ensure consistent delivery with predictable results. At KBR, We Deliver.

Visitwww.kbr.com.

Forward Looking Statement

The statements in this press release that are not historical statements, including statements regarding future financial performance, 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: the outcome of and the publicity surrounding audits and investigations by domestic and foreign government agencies and legislative bodies; potential adverse proceedings by such agencies and potential adverse results and consequences from such proceedings; the scope and enforceability of the company's indemnities from its former parent; 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; changes in government regulations and regulatory requirements; 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; increased competition for employees; the ability to successfully complete and integrate acquisitions; and operations of joint ventures, including joint ventures that are not controlled by the company.

KBR'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 filings discuss some of the important risk factors that KBR has identified that may affect the business, results of operations and financial condition. Except as required by law, KBR undertakes no obligation to revise or update publicly any forward-looking statements for any reason.For further information, please contact:

Investors

Nelson Rowe
Senior Vice President, Investor Relations
713-753-5082
Investors@kbr.com

Media

Brenna Hapes
External Global Communications
713-753-3800
Mediarelations@kbr.com


KBR, Inc.: Consolidated Statements of Operations
(In millions, except for per share data)
(Unaudited)



Three Months Ended

June 30,2017

2016
Revenues:

Government Services
$543