Press Release

Delivers Excellent Progress Toward 2025 Long-Term Targets

• Outstanding earnings delivering quarterly net income attributable to KBR of $74 million; $171 million adj. EBITDA1, 11% adj. EBITDA1 margins; diluted EPS of $0.49 and adj. EPS1 of $0.65
• Expanding capital base with robust quarterly operating cash flow of $122 million; 111% free cash conversion
• Growing platform of long-term, strategic programs; $2.7 billion of bookings and options in the quarter
• Raising FY 2022 earnings and operating cash flow guidance

HOUSTON, TX - October 26, 2022 - KBR, Inc. (NYSE: KBR) today announced its third quarter 2022 financial results and raised its FY 2022 financial guidance.

"The people of KBR have once again delivered a strong quarter with excellent earnings and cash flow, outstanding operational and safety performance, and exciting new contract wins," said Stuart Bradie, President and CEO of KBR. "With awards in the quarter spanning the development of NASA's next gen space suits to technology innovation that will increase the world's low-carbon clean ammonia capacity, KBR continues to deliver solutions that matter."

Bradie also attributed positive performance to favorable tailwinds stemming from areas of increasing global importance, including national security, energy security, energy transition, and climate change.

"Our clients are accelerating investment in solutions and technologies to advance their priorities related to these critical challenges, and this acceleration translated directly to the profitable growth, strong margins, and solid cash generation we report today," Bradie said. "We have a fantastic ballast of stable, long-term programs that afford tremendous multi-year visibility as well as exciting high-growth opportunities that favor our sustainable solutions and technologies.  As such, we are pleased to announce an increase in our FY 2022 earnings and cash guidance and have growing confidence in our 2025 targets."

Summarized Third Quarter 2022 Financial Results

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

Financial Highlights for the Quarter Ended September 30, 2022

• Revenue of $1.6 billion in the quarter declined 12% compared to the same period in 2021 primarily attributable to the completion of work associated with the Operations Allies Welcome (OAW) program in early 2022 that commenced in 3Q'21. Excluding OAW, revenue increased ~$165 million or 11%, 8% organic, attributable to increased activity to support exercises, training and other activities in the European Command, the acquisition of Frazer-Nash in October 2021, and increased revenues in Sustainable Technology Solutions (STS) primarily from engineering and professional services and technology licensing.
• For the quarter ended September 30, 2022, net income attributable to KBR increased to $74 million; diluted earnings per share increased to $0.49; adj. EBITDA1 increased to $171 million; and adj. EBITDA1 margins expanded to 11%.
  • Government Solutions (GS) delivered excellent earnings and adj. EBITDA1 margins of 10% in the quarter. GS earnings continue to benefit from favorable mix, strong project execution, excellent customer performance scores in challenging technical areas that reflect high client satisfaction, and core revenue growth.
  • STS delivered excellent earnings and adj. EBITDA1 margins of 20% in the quarter. STS earnings reflect strong end markets, superior technology offerings, highly sought-after engineering solutions and favorable mix. Margins were positively impacted by achievement of licensing milestones in the quarter as well as growing contributions from an LNG project.
  • Outstanding operating results substantially offset the impact of the strengthening U.S. dollar across our international operations, primarily in the UK and Australia.
  • Interest expense increased in the quarter primarily attributable to higher market interest rates on our variable-rate debt.
  • Increasing rates were significantly mitigated by the company's interest rate hedging program that achieves a fixed interest rate on a substantial portion of the company's borrowings.

Recent Developments and New Business

Delivered 1.3x trailing-twelve-months book-to-bill2 as of September 30, 2022, including $2.7 billion of awards and options in the quarter, as follows:

• Won a technology contract for a low-carbon blue ammonia project for OCI NV in the U.S.; KBR will provide its innovative proprietary technology, basic engineering design, proprietary equipment and catalyst;
• Won a technology contract for a Hydro-PRT® plastics circularity project for GS Caltex to convert waste plastics back into raw material feedstocks to achieve total circularity;
• Won a new $150+ million 5-year IAC-MAC task order to modernize, upgrade and digitize an analog DOD platform with a digital, modular open system architecture solution;
• Won a contract to lead research and development for self-defending, self-recovering cyber defense concepts in support of the UK Ministry of Defence;
• As part of the Axiom team, won the first task order totaling $229 million on NASA’s 10-year xEVAS program to build the next generation astronaut spacesuits to support the Artemis lunar missions; and
• Xandar LLC, a KBR joint venture, won a $4.8 billion ceiling multiple-award for the National Air and Space Intelligence Center to support research and development of new and existing hardware, systems and software capabilities enabling scientific and technical intelligence production through 2033.

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 September 30, 2022, the company generated $122 million of operating cash flows.

• In the quarter ended September 30, 2022, KBR returned capital to shareholders through the repurchase of $50 million of its common shares, inclusive of share repurchases to satisfy requirements of equity compensation plans, and paid $17 million in shareholder dividends.
• The company replenished and increased the ceiling of its share repurchase authorization to $500 million.
• In August 2022, the company completed its acquisition of VIMA Group, a leading UK digital transformation company serving defense clients, for an agreed-upon purchase price of $82 million (cash paid at closing of $75 million). VIMA Group supports clients by delivering solutions across a number of large-scale, high-priority digital transformation programs that ensure 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.

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, strong year-to-date results through September 30, 2022, and potential favorable discrete tax benefits in fourth quarter 2022. KBR updates and/or increases its FY 2022 guidance as follows:

• Consolidated revenue: $6.5 billion to $6.7 billion (narrowed)
• Adjusted EBITDA1 margin: ~10%
• Effective tax rate: 23% to 24% (lowered)
• GAAP earnings per share (EPS): $1.11 to $1.16 (updated); adjusted EPS1: $2.60 to $2.65 (raised midpoint);
• GAAP operating cash flow (OCF): $345 million to $370 million (raised midpoint); adjusted OCF1: $375 million to $400 million (raised midpoint)

Conference Call Details

The company will host a conference call to discuss its third quarter 2022 financial results and updated guidance on Wednesday, October 26, 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: 379276.

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
Jamie DuBray
Vice President, Investor Relations
713-753-2133
[email protected]

Media
Philip Ivy
Vice President, Global Communications
713-753-3800
[email protected]