Press Release

Delivers Excellent Progress Toward 2025 Long-Term Targets

• Outstanding earnings delivering quarterly net income attributable to KBR of $94 million; diluted EPS of $0.61; adj. EPS1 of $0.76, an increase of 31% over 2021; and 12% adj. EBITDA1 margins
• Expanding flexibility with robust quarterly operating cash flow of $125M; added an additional $232M of deployable free cash in the quarter
• Growing platform of long-term, strategic programs; 2.1x book-to-bill2
• Advancing strategic deployment with expanded investment in Mura Technology and acquisition of VIMA Group

HOUSTON, TX - August 2, 2022- KBR, Inc. (NYSE: KBR) today announced its second quarter 2022 financial results and updated its FY 2022 financial guidance.

“Building on strong momentum in attractive end markets, we continue to make excellent progress toward KBR’s 2025 long-term targets,” said Stuart Bradie, President and CEO of KBR. “Themes that favor our capabilities and technologies - national security, defense modernization, global energy security and climate change - continue to be at the forefront of priorities. Combined with the unwavering commitment of our team of teams to deliver on our clients’ missions, I am pleased to report that the company posted another outstanding quarter of superb safety results, earnings growth, cash generation and strategic program awards.”

Bradie also announced KBR continues to prioritize enhancing its position in attractive, differentiated end markets with high barriers to entry through a combination of investments and acquisitions.

“During the quarter, we continued to shape our portfolio and deployed capital in a strategic, accretive, balanced manner,” Bradie said. “Our acquisition of VIMA Group, a leading UK company specializing in digital transformation for clients in the defense sector, advances our growing platform of high-end consulting, engineering and advisory services in the international defense market. Furthermore, the expansion of our investment in Mura Technology, a UK-based pioneer in circular plastics recycling technology, strengthens the alliance between our companies and places KBR at the center of enabling a global plastics circular economy. We welcome our new colleagues and partners into the KBR family and are excited about the opportunities to shape the future together.”

Summarized Second Quarter 2022 Financial Results

^*As adjusted for the adoption of ASU 2020-06 using the full retrospective method

Financial highlights for the quarter ended June 30, 2022

• Revenue of $1.6 billion grew 5% compared to the same period in 2021 primarily attributable to increased activity in 2022 in the European Command related to the war in Ukraine as well as the acquisition of Frazer-Nash Consultancy in October 2021, partially offset by activity in 2021 related to our exit from Middle East contingency operations.
• KBR net income attributable to KBR, diluted earnings per share, adj. EBITDA1 and adj. EPS1 increased in line with revenue as well as the following.
  • Net income attributable to KBR was $94 million and $23 million for the three- and six-month periods ended June 30, 2022, respectively, and diluted earnings per share was $0.61 and $0.17 for the three- and six-month periods ended June 30, 2022, respectively. Adj. EBITDA1 was $186 million and adj. EBITDA1 margins were 12% in Q2 2022.
  • Government Solutions (GS) delivered excellent earnings and adj. EBITDA1 margins of 12% in Q2 2022.
    • GS earnings continue to benefit from favorable international mix, strong project execution, excellent customer performance scores in challenging technical areas that reflect high client satisfaction, core revenue growth and favorable project closeouts.
    • GS earnings were favorably impacted by the sale of selected non-core assets for which we received $42 million in proceeds and recorded $22 million in gains on assets sales that elevated margins by ~165 bps in Q2 2022.
  • Sustainable Technology Solutions (STS) delivered excellent earnings and adj. EBITDA1 margins of 18% in Q2 2022.
    • STS earnings reflect strong end markets, superior technology offerings, and highly sought-after engineering solutions.
    • STS earnings were enhanced by the acceleration of certain project close-outs and other timing items that elevated margins by ~160 bps in Q2 2022.
    • STS earnings in Q2 2021 were favorably impacted by a net favorable $16 million benefit associated with the settlement of a subcontractor dispute.
  • In connection with KBR's expanded investment in Mura Technology announced in Q2 2022 and other observable third-party transactions, we stepped up the carrying value of our original 5% investment made in 2021 to its fair market value and recorded a $16 million unrealized gain on investment. Consistent with the company's practice, this amount has been excluded from adj. EBITDA1 and adj. EPS1.
  • In connection with our announced exit from commercial activities in Russia, we recorded a predominantly non-cash, pretax charge of $12 million in Q2 2022. We have excluded the impact of this item from adj. EBITDA1 and adj. EPS1.
  • In connection with settlement negotiations between KBR's JKC joint venture and its client in 2021, KBR recorded a $193 million charge for its proportionate share of unfunded client change orders and claims in Q2 2021. In October 2021, KBR announced that JKC entered into a binding settlement agreement that resolved outstanding claims and disputes, an important de-risking event that reduced future uncertainty. Consistent with the company's practice, this amount has been excluded from adj. EBITDA1 and adj. EPS1.
  • During Q2 2022, KBR received approximately $190 million in connection with the settlement of a subcontractor matter. These proceeds are reflected in cash flows from investing activities.

Recent Developments and New Business

In the quarter ended June 30, 2022, the company delivered book-to-bill2 of 2.1x and recorded $2.9 billion of awards and options, including the following:

• A new $69 million ceiling, five-year best value takeaway to provide research and development for airborne manned reconnaissance aircraft intelligence, surveillance, reconnaissance, and targeting systems for Naval Surface Warfare Center Crane; services include systems engineering, technology improvements, integration, test & evaluation, and training.
• A $95 million, five-year expanded recompete win to develop tools to manage maintenance data, monitor trends, and conduct prognostic analysis using DEVSECOPS to improve readiness of naval aircraft. This award is double the predecessor contract.
• A $1.5 billion award that represents KBR's proportionate share of its non-majority joint venture KZJV's notice to proceed with Phase 1 of Plaquemines LNG for Venture Global LNG, inclusive of KBR services to be provided to KZJV. KZJV will integrate highly modularized, owner-furnished equipment for the 13.33 million tonnes per annum nameplate facility. KBR's role in the joint venture is project management, engineering, program integration and interface management, and commissioning support under an innovative commercial structure that enhances overall program alignment between KZJV and its client. Consistent with our backlog policy, we have recorded our proportionate share of KZJV's estimated backlog into KBR's backlog. As this project is predominantly accounted for as an equity method investment, our proportionate share of the joint venture's future earnings will be recorded in Equity in earnings of unconsolidated affiliates.
• As announced in Q1 2022, a $640 million ceiling Ground Systems and Mission Operations contract to support more than 10 NASA exploration missions, including continued efforts on the James Webb Space Telescope, Lunar Reconnaissance Orbiter and Earth Observing System. KBR will provide systems engineering, launch and early orbit support, flight operations, and flight dynamics support to various NASA missions managed by Space Science Mission Operations and Earth Science Mission Operations at NASA's Goddard Space Flight Center. This highly strategic and technical win represents KBR's largest recompete in 2022.

Capital Deployment

KBR continues to employ a balanced approach to capital allocation, which includes investments that facilitate sustainable, long-term growth and prudent return of capital to shareholders. In the quarter ended June  30, 2022, the company generated $344 million of deployable free cash, which included strong quarterly operating cash flows, planned capital expenditures, and the receipt of proceeds from the sale of non-core assets and subcontractor settlements.

• Today, the company completed its acquisition of VIMA Group, a leading UK digital transformation company serving defense clients, for an agreed-upon purchase price of approximately $73 million funded from cash on hand, subject to certain working capital and other closing adjustments, $5 million of deferred consideration and potential additional cash payments aggregating up to approximately $12 million, contingent upon the achievement of certain performance targets. VIMA Group delivers solutions across a number of large-scale, high-priority digital transformation programs to support its clients in ensuring availability of effective digital and information technology as guided by the UK's Digital Strategy for Defence. VIMA Group is a trusted advisor and a top five supplier to Defence Digital and Navy Digital – both organizations within the UK Ministry of Defence with a number of highly strategic, fast-growing programs.  The VIMA Group acquisition is KBR's third acquisition announced in the UK over the past year and enhances the company's platform of high-end consulting, engineering and advisory services in this growing defense market.  In July 2021, KBR acquired Harmonic Ltd and in October 2021, Frazer-Nash Consultancy.
• In June 2022, we announced an expansion of our investment in Mura Technology, a UK-based pioneer in circular plastics recycling technology. This investment builds on an alliance KBR and Mura entered into in early 2021 whereby KBR became the exclusive licensing partner for Mura’s innovative, proprietary, closed-loop plastics recycling technology powered by super critical water.  Not only does this incremental investment increase KBR's potential ownership percentage in Mura from ~5% to ~18.5%, but it also expands the suite of professional services KBR will deliver to Mura-led projects (e.g., advisory, engineering, project management services).
• In the first half of 2022, KBR returned capital to shareholders through the repurchase of $74 million of its common shares, inclusive of share repurchases to satisfy requirements of equity compensation plans and paid $32 million in shareholder dividends.

FY 2022 Guidance

KBR combines deep mission understanding, market-leading expertise and technology, and unwavering operational focus to deliver solutions that help solve our clients’ most complex issues. Our 2022 financial guidance is underpinned by favorable market tailwinds, good bookings momentum, a strong first half, and work under contract of over 90% to deliver our 2022 results.

KBR updates its FY 2022 guidance as follows:

• Consolidated revenue: $6.4 billion to $6.8 billion;
• Adjusted EBITDA1 margin: ~10%;
• Effective tax rate: 24% to 25%;
• GAAP earnings per share (EPS): $1.09 to $1.21 (updated) and adjusted EPS1: $2.53 to $2.65;
  • Increasing GAAP EPS guidance to reflect the impact of the appreciation in fair value of our investment in Mura Technology of $16 million, $0.09 per share.  Consistent with the company's practice, this amount has been excluded from adj. EPS;
  • Decreasing GAAP EPS guidance to reflect the impact of a $12 million charge recorded in Q2 2022 associated with our announced exit from commercial activities in Russia; and
• GAAP operating cash flow (OCF): $330 million to $370 million; adjusted OCF1: $360 million to $400 million.

Conference Call Details

The company will host a conference call to discuss its second quarter 2022 financial results and updated guidance on Tuesday, August 2, 2022, at 7:30 a.m. Central Daylight 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 or by telephone at +1.929.458.6194, passcode: 662918.

About KBR

We deliver science, technology and engineering solutions to governments and companies around the world. KBR employs approximately 28,000 people worldwide with customers in more than 80 countries and operations in 34 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

Forward-Looking Statements

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 ongoing conflict between Russia and Ukraine and the related impacts on our business as we wind down our business operations in Russia; the significant adverse impacts on economic and market conditions of the COVID-19 pandemic and the company's ability to respond to the resulting challenges and business disruption; the recent dislocation of the global energy market; the company's ability to manage its liquidity; 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; 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; the possibility of cyber and malware attacks; 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.

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 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:

Investors
Alison Vasquez
Vice President, Investor Relations
713-753-5082
Investors@kbr.com

Media
Philip Ivy
Vice President, Global Communications
713-753-3800
Mediarelations@kbr.com