Press Release

Wire Release

HOUSTON, TX Ð April 29, 2016 Ð KBR, Inc. (NYSE: KBR), a global technology, engineering, procurement and construction company serving the hydrocarbons and government services industries, today announced solid first quarter 2016 financial results.

Net income attributable to KBR was $42 million or $0.30 per diluted share ($0.34 per diluted share excluding $6 million in legacy legal fees), in the first quarter of 2016 compared to net income of $44 million or $0.30 per diluted share ($0.33 per diluted share excluding $5 million in legacy legal fees), in the first quarter of 2015. Consolidated revenue in the first quarter of 2016 was $1.0 billion compared to $1.4 billion in the first quarter of 2015 ($1.2 billion excluding 1Q15 revenues of businesses divested or deconsolidated during 2015).

"Our first quarter 2016 consolidated results reflect continued solid operational performance and progress towards achieving the strategic objectives we previously outlined. We are on track to achieve the year-end 2016 targets for at least $200 million in annual cost savings and to-date the company has identified and actioned more than $180 million of the savings target," said Stuart Bradie, President and Chief Executive Officer of KBR, Inc.

"KBR's portfolio of businesses is an important platform supporting our strategy in 2016 and beyond. At a time when our hydrocarbons markets are challenged, our Government Services business continues to show strength and we are evolving our business to leverage our core capabilities in large scale logistics and project management services. We are focusing on growing our differentiated government services through additions to our technical knowhow and support services to intelligence agencies. Our U.K. Government support services and international base operating support contracts along with new task orders for the U.S. Military continue to perform well. In the first quarter we and a partner were awarded the £500 million U.K. Ministry of Defence Military Flight Training Systems (MFTS) contract which will extend over 18 years, and we continue in sole source negotiations with the U.K. MoD on the major Army 2020 rebasing project which we expect to move forward in 2016.ÊDuring the quarter, we successfully closed out the remaining U.S. Government audits related to invoices from the Iraq War well within our previously established allowances. Finally, we continued our balanced capital allocation policy by adding bolt on acquisitions in technology, making a modest investment in the JV partnership on the MFTS contract in the U.K., and continued paying a competitive yielding dividend. Our strong balance sheet continues to provide confidence to our clients and optionality in challenging markets," Bradie said.

Business Discussion (All comparisons are first quarter 2016 versus first quarter 2015 unless otherwise noted.)

Technology & Consulting (T&C) Results
Technology & Consulting gross profit was $17 million, down $2 million from the prior year while revenue increased by $25 million to $97 million. The strong sales reflect an increase in the proportion of proprietary equipment sales which carry lower margins than technology license sales and approximately $10 million in new revenues from our acquisition. The company continues to expect long-term T&C margin percentages in the low twenties.

In the first quarter, the company completed the acquisition of a number of Chematur technology subsidiaries for $25 million in cash. These acquisitions complement the existing technology business which should benefit from opportunities for syngas, refining and olefins projects including new builds and revamps to improve efficiencies of existing facilities. The smaller upstream consulting portion of the T&C business remains challenged from low oil prices. Going forward, we plan to continue to seek additional technology focused acquisitions.

Engineering & Construction (E&C) Results
Engineering & Construction gross profit was $29 million, down $26 million from the prior year. The reduction in gross profit primarily reflects significantly reduced activities on a major LNG project in Australia as it moves towards completion. Changes in estimates on other projects had a net negative $4 million pre-tax impact in the quarter.

Revenue was $606 million, a decrease of $371 million primarily related to the deconsolidation of KBR's Americas Industrial Services business which had revenues of $126 million in 1Q15, lower revenue on an LNG project as the project moves towards completion, and reduced activity on a number of other projects.
Equity in earnings of unconsolidated affiliates was $18 million, down $3 million, and primarily reflects joint ventures for offshore maintenance in Mexico and another LNG project in Australia.

Government Services (GS) Results
Government Services gross profit was $21 million, an increase of $25 million, while revenue was $210 million, an increase of $55 million from the prior year. The increase in gross profit was driven by strong performance on the company's base operating contracts and task orders supporting the U.S. Military and from the successful signing of a change order for a program management project in the Middle East. The company also incurred approximately $6 million in legal fees in 1Q16 relating to the legacy LogCap III and RIO contracts.

Equity in earnings of unconsolidated affiliates was $11 million, down $3 million, primarily driven by a 1Q15 increase in the inception-to-date margin recognized on a construction project for the U.K. MoD that did not recur in 1Q16. Equity in earnings reflects continued strong performance on joint venture annuity type contracts in the U.K.

During the first quarter, KBR and its joint venture partner were awarded a major £500 million U.K. MoD Fixed Wing Training procurement, operations and maintenance contract. As part of the JV agreement KBR contributed $14 million in cash to the JV. This project will be accounted for as equity in earnings over the 18-year term.

Looking forward, KBR remains well placed in sole source negotiations on the U.K. MoD's large scale Army 2020 rebasing contract, which is the latest phase of an existing contract already being executed by KBR and its partners. We expect a client decision later this year. KBR also expects continued growth in both the company's international base operating support services and in task orders supporting the U.S. Military in 2016. Additionally, the company closed out the final audits related to the company's LogCAP III billings through 2011 which effectively covered the majority of the Iraq War billings to the U.S. Government. Lastly, we continued to make progress towards resolving the outstanding legal issues from the legacy LogCAP III and RIO contracts.

Non-Strategic Business (NSB) Results
Non-Strategic Business gross profit was $1 million in the quarter driven by good performance on the company's portfolio of power projects. Revenue was $83 million, down $149 million, primarily related to the sale of the Building Group business unit in 2Q15 which had revenues of approximately $74 million in 1Q15 and from reduced activities on two recently completed power projects. The remaining power project is scheduled for completion in 2017.

Strategic Actions Update
During the first quarter, the company incurred $2 million in pre-tax restructuring costs and recorded a $4 million pre-tax gain primarily related to the disposition of certain assets related to the Infrastructure business sale in 4Q15. The company continues to rebalance its business portfolio to focus on International Government Services and Global Hydrocarbons.

Guidance
The company reiterates its full year 2016 fully diluted earnings per share guidance of between $1.20 and $1.45 per share, excluding legal costs associated with legacy U.S. Government contracts. KBR expects these legal costs to be approximately $15 million, or $0.11 per fully diluted share in 2016. The estimated legacy legal fees do not assume any cost reimbursement from the U.S. Government that could occur in the future.

About KBR, Inc.
KBR, Inc.is a global technology, engineering, procurement and construction company serving the hydrocarbons and government services industries, employing approximately 22,000 people worldwide with customers in more than 70 countries and operations in 40 countries across three distinct global businesses:Technology & Consulting, including proprietary technology in refining, ethylene, ammonia and fertilizers, and gasification; and niche consulting and know-how through subsidiaries Granherne, Energo and GVAEngineering & Construction, including Offshore Oil & Gas; Onshore Oil & Gas; LNG/GTL; Refining; Petrochemicals; Chemicals; differentiated EPC, and Industrial ServicesGovernment Services, including program management and long-term annuity contracts
KBR is proud to work with its customers across the globe to provide technology, value-added consulting services, integrated EPC delivery and Long Term Industrial Services to ensure consistent project 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 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 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
Zac Nagle
Vice President, Investor Relations
713-753-5082
[email protected]

Media
Marit Babin Stout
Director, Global Communications & Government Relations
713-753-3800
[email protected]

KBR, Inc.: Consolidated Statements of Income

(Millions, except per share data) (Unaudited)
ÊÊÊÊThree Months EndedÊÊMarch 31,ÊÊMarch 31,ÊÊ2016ÊÊ2015ÊÊÊÊÊÊÊÊÊ Revenues:ÊÊÊÊÊÊÊTechnology & Consulting$97ÊÊ$72ÊEngineering & ConstructionÊ606ÊÊÊ977ÊGovernmentÊServicesÊ210ÊÊÊ155ÊÊSubtotalÊ913ÊÊÊ1,204ÊNon-strategicÊBusinessÊ83ÊÊÊ232Ê TotalÊrevenuesÊ996ÊÊÊ1,436Ê GrossÊprofit (loss):ÊÊÊÊÊÊÊTechnology & ConsultingÊ17ÊÊÊ19ÊEngineering & ConstructionÊ29ÊÊÊ55ÊGovernmentÊServicesÊ21ÊÊÊ(4)ÊSubtotalÊ67ÊÊÊ70ÊNon-strategicÊBusinessÊ1ÊÊÊ-Ê TotalÊgross profitÊ68ÊÊÊ70Ê EquityÊin earnings of unconsolidated affiliates:ÊÊÊÊÊÊÊTechnology & ConsultingÊ-ÊÊÊ-ÊEngineering & ConstructionÊ18ÊÊÊ21ÊGovernmentÊServicesÊ11