KBR Reports Third Quarter Fiscal 2026 Results
KBR, INC. (KBR) filed an SEC Form 8-K — Results of Operations and Financial Condition. Exhibit 99.1 KBR Reports Third Quarter Fiscal 2026 Results Third Quarter Fiscal 2026 Results (All comparisons against the third quarter fiscal 2025 unless noted.) • Revenues of $2.0 billion, up 5% • Net income attributable to KBR of $133 million, up 16%; Operating income of $186
How this was made
The 30-second read
Why it matters
The earnings beat and reaffirmed operational performance provide a catalyst for short‑term buying, while upcoming separation costs could temper longer‑term upside.
Market read
KBR's earnings beat and growth metrics are likely to drive a short‑term rally, with the separation narrative adding a longer‑term strategic angle.
What to watch
Higher spin‑off costs related to the upcoming separation may pressure margins in future quarters.
KBR Reports Third Quarter Fiscal 2026 Results
Third-quarter revenue, net income, diluted EPS and Adjusted EBITDA increased, led by Sustainable Technology Solutions, while operating income declined as spin-off costs and higher selling, general and administrative expenses more than offset higher gross profit. The company reaffirmed full-year fiscal 2026 guidance.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Three months ended October 2, 2026 total revenuesGAAP | $2.03B | – | up 5% or $97 million |
| Nine months ended October 2, 2026 total revenuesGAAP | $5.93B | – | up 1% |
| Three months ended October 2, 2026 gross profitGAAP | $301M | – | – |
| Nine months ended October 2, 2026 gross profitGAAP | $859M | – | – |
| Three months ended October 2, 2026 operating incomeGAAP | $186M | – | down 3% or $5 million |
| Nine months ended October 2, 2026 operating incomeGAAP | $538M | – | down 8% |
| Three months ended October 2, 2026 operating income marginGAAP | 9.2% | – | – |
| Nine months ended October 2, 2026 operating income marginGAAP | 9.1% | – | – |
| Three months ended October 2, 2026 net income attributable to KBRGAAP | $133M | – | up 16% or $18 million |
| Nine months ended October 2, 2026 net income attributable to KBRGAAP | $331M | – | up 9% |
| Three months ended October 2, 2026 diluted earnings per share attributable to KBRGAAP | $1.06 | – | up 18% or $0.16 |
| Nine months ended October 2, 2026 diluted earnings per share attributable to KBRGAAP | $2.60 | – | up 12% |
| Three months ended October 2, 2026 diluted earnings per share from continuing operationsGAAP | $1.03 | – | – |
| Nine months ended October 2, 2026 diluted earnings per share from continuing operationsGAAP | $2.57 | – | – |
| Three months ended October 2, 2026 Adjusted EBITDAnon-GAAP | $268M | – | up 12% or $28 million |
| Nine months ended October 2, 2026 Adjusted EBITDAnon-GAAP | $777M | – | up 6% |
| Three months ended October 2, 2026 Adjusted EBITDA marginnon-GAAP | 13.2% | – | – |
| Nine months ended October 2, 2026 Adjusted EBITDA marginnon-GAAP | 13.1% | – | – |
| Three months ended October 2, 2026 Adjusted EPSnon-GAAP | $1.12 | – | up 10% or $0.10 |
| Nine months ended October 2, 2026 Adjusted EPSnon-GAAP | $3.06 | – | up 4% |
| Three months ended October 2, 2026 operating cash flows from continuing operationsGAAP | $171M | – | down 14% or $27 million |
| Nine months ended October 2, 2026 operating cash flows from continuing operationsGAAP | $331M | – | – |
| Three months ended October 2, 2026 Adjusted operating cash flowsnon-GAAP | $188M | – | down 5% or $10 million |
| Nine months ended October 2, 2026 Adjusted operating cash flowsnon-GAAP | $371M | – | – |
| Three months ended October 2, 2026 Adjusted operating cash conversionnon-GAAP | 133% | – | – |
| Nine months ended October 2, 2026 Adjusted operating cash conversionnon-GAAP | 95% | – | – |
| Third quarter fiscal 2026 bookings and optionsother | $2.4B | – | – |
| Third quarter fiscal 2026 book-to-billother | 0.9x | – | – |
| Nine months ended October 2, 2026 bookings and optionsother | $6.1B | – | – |
| Nine months ended October 2, 2026 book-to-billother | 1.0x | – | – |
| October 2, 2026 backlogother | $17.72B | – | – |
| October 2, 2026 backlog and optionsother | $23.12B | – | – |
| October 2, 2026 net debtother | $2.12B | – | – |
| October 2, 2026 TTM Adjusted EBITDAnon-GAAP | $1.01B | – | – |
| October 2, 2026 net leveragenon-GAAP | 2.1x | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Mission Technology SolutionsLower U.S. Government Federal Civilian customer volumes associated with anticipated NASA headwinds, partially offset by growth across Defense & Intelligence and International Government customers. | $1.27B | – | down 5% or $60 million |
| Sustainable Technology SolutionsConversion of strong bookings secured over the past several quarters into revenue growth. | $762M | – | up 26% or $157 million |
Fiscal Year 2026 Guidance outlook
- Revenue$7.90B - $8.36B
- NoteAdjusted EBITDA $980M - $1,040M
- NoteAdjusted EPS $3.87 - $4.22
- NoteAdjusted operating cash flows $560M - $600M
Capital returns
- Three months ended October 2, 2026: Payments to repurchase common stock were $0 million.
- Three months ended October 2, 2026: Payments of dividends to shareholders were $21 million.
- Nine months ended October 2, 2026: Payments to repurchase common stock were $29 million.
- Nine months ended October 2, 2026: Payments of dividends to shareholders were $63 million.
What drove it
- Higher revenue reflected strong execution of engineering and professional services projects within Sustainable Technology Solutions.
- Adjusted EBITDA growth reflected strong execution across both business segments, contributions from unconsolidated joint ventures, favorable portfolio mix and lower corporate costs.
- MTS operating income rose on higher equity in earnings from unconsolidated joint ventures, favorable portfolio mix and strong project execution.
- STS Adjusted EBITDA rose on strong project execution and favorable portfolio mix.
- MTS re-awarded the $8 billion ceiling Antarctic Science and Engineering Support Contract, which is not yet reflected in backlog or book-to-bill.
Concerns
- Operating income declined as increased spin-off costs, higher selling, general and administrative expenses and lower equity in earnings from unconsolidated joint ventures more than offset higher gross profit.
- MTS revenue declined due to anticipated NASA headwinds, and MTS quarterly book-to-bill was 0.6x, or 0.8x excluding the NASA insourcing debooking.
- Third-quarter operating cash flows from continuing operations declined 14% or $27 million, while nine-month operating cash flows from continuing operations were $331 million versus $506 million.
- The planned MTS spin-off remains subject to final approval by KBR's Board of Directors and other customary conditions, including effectiveness of the Form 10 registration statement.
What to watch
- Fiscal Year 2026 Guidance of $7.90B - $8.36B in revenues, $980M - $1,040M in Adjusted EBITDA, $3.87 - $4.22 in Adjusted EPS and $560M - $600M in Adjusted operating cash flows.
- MTS NASA program volumes and the effect of the NASA insourcing debooking on book-to-bill.
- Conversion of STS backlog, which reached a record $5.8 billion, into revenue and profitability.
- Completion of the MTS spin-off, targeted for January 4, 2027.
- KBR and Trinzic Investor Day events in New York City on November 11, 2026 and November 12, 2026, respectively.
Balance sheet and cash flow
- Liquidity as of October 2, 2026 totaled approximately $1.1 billion, comprising $625 million in borrowing capacity under the revolving credit facility and $439 million in cash and cash equivalents.
- Cash and cash equivalents were $439 million as of October 2, 2026, compared with $500 million as of January 2, 2026.
- Current maturities of long-term debt were $554 million and long-term debt was $1,987 million as of October 2, 2026.
- Net debt was $2,118 million as of October 2, 2026, and net leverage was 2.1x.
- Nine-month cash flows provided by operating activities from continuing operations were $331 million; purchases of property, plant and equipment were $(36) million.
Analysis
KBR reported third-quarter revenue of $2,028 million, up 5% or $97 million, and net income attributable to KBR of $133 million, up 16% or $18 million. Diluted earnings per share attributable to KBR increased 18% or $0.16 to $1.06. Adjusted EBITDA rose 12% or $28 million to $268 million, and its margin expanded to 13.2% from 12.4%. The earnings increase reflected strong operating performance, lower interest expense and a lower effective tax rate driven by interest income associated with a discrete tax benefit.
Revenue mix was led by Sustainable Technology Solutions, where revenue rose 26% or $157 million to $762 million as prior bookings converted into revenue. STS Adjusted EBITDA grew 15% or $19 million to $147 million, although its Adjusted EBITDA margin was 19.3% versus 21.2%. Mission Technology Solutions revenue fell 5% or $60 million to $1,266 million because of anticipated NASA-related Federal Civilian volume reductions. MTS nevertheless increased operating income 2% or $2 million to $115 million and Adjusted EBITDA 5% or $7 million to $145 million through joint-venture earnings, portfolio mix and project execution.
Reported operating income declined 3% or $5 million to $186 million, and operating income margin declined to 9.2% from 9.9%. Higher gross profit from revenue growth was more than offset by planned-separation costs, higher selling, general and administrative expenses, and lower equity in earnings from unconsolidated joint ventures. Spin-off costs and other charges were $24 million in the quarter, compared with $4 million in the prior-year quarter. Nine-month operating income was $538 million, down 8%, while nine-month Adjusted EBITDA increased 6% to $777 million.
Cash generation was lower. Operating cash flows from continuing operations were $171 million in the quarter, down 14% or $27 million, while adjusted operating cash flows were $188 million, down 5% or $10 million. KBR ended the period with $439 million in cash and cash equivalents, approximately $1.1 billion of liquidity, $2,118 million of net debt and net leverage of 2.1x. It returned $21 million through regular dividends during the quarter and made no common-stock repurchases in the quarter.
Backlog and options totaled $23,122 million at quarter end, with $17,294 million at MTS and $5,828 million at STS. Quarterly book-to-bill was 0.9x, or 1.0x excluding the NASA insourcing debooking. KBR reaffirmed fiscal 2026 guidance. The planned MTS separation, under which MTS will become Trinzic, is targeted for January 4, 2027, subject to board approval and other customary conditions.
Management, verbatim
We delivered a strong third quarter, with profitable growth and solid execution across both businesses reinforcing our confidence in the full-year outlook.
Stuart Bradie, President and Chief Executive Officer
We also achieved important separation milestones during the quarter, including publication of the Form 10 and the successful implementation of key standalone systems and infrastructure.
Stuart Bradie, President and Chief Executive Officer
With leadership teams in place, strong customer demand across both businesses and Investor Days approaching, KBR and Trinzic are well positioned to launch as independent companies in January.
Stuart Bradie, President and Chief Executive Officer
Not in the filing
stated, not guessed- Free cash flow was not reported.
- Gross margin was not reported.
- Third-quarter and nine-month effective tax rates were not reported.
- Quarter-over-quarter comparisons were not reported for the financial metrics.
- Prior-period guidance was not provided.
- Forward guidance for gross margin, operating expenses and tax rate was not provided.
- Forward GAAP reconciliations for Adjusted EBITDA, Adjusted EPS and Adjusted operating cash flows were not provided.
Written by an AI language model from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure is checked against the filing text, and a metric the filing does not print, or whose value, prior period and change do not add up, is dropped from the metrics. The model can still misread a table, in the metrics or in the text, so check a number in the filing before you rely on it. Consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.
Background
KBR announced its third‑quarter fiscal 2026 results via an SEC Form 8‑K, highlighting revenue growth, earnings beat, and progress on its planned separation into two independent companies.
Ticker impact
KBR reported Q3 fiscal 2026 results with revenue up 5% to $2.0 B, net income up 16% to $133 M and EPS up 18% to $1.06.
likely modest upside as the market prices in the earnings beat and revenue growth
The release shows higher-than-expected earnings and margin expansion, which typically supports the stock price in the short term.
Market effects
Strengthens the engineering and professional services sector outlook, especially for firms with government contracts.
Positive for U.S. industrial and defense‑related equities.
Limited to investors tracking U.S. industrials; no broader macro impact.
Counterpoint
If the market had already priced in the earnings beat, the stock could face a short‑term pull‑back.
Key entities
- ExecutiveStuart Bradie
President and CEO of KBR who commented on the results and separation progress.
