← Back

KBR: KBR's Solid Q2 Performance and Growth Prospects

KBR reported revenues of $2 billion in Q2, up 6% year-over-year, driven by growth across both segments. Adjusted EBITDA was $242 million, up 12%, with margins at 12.4%. Adjusted EPS was $0.91, up 10%, beating estimates of $0.88. Year-to-date operating cash flow was $308 million, up 20%. The company's financial performance was solid, with a balanced and resilient business portfolio offering multiple pathways to growth.

KBR

USD 42.89

0.7%

A-Score: 4.8/10

Publication date: July 31, 2025

Full Report

Author: Analystock.ai

📋 Highlights
  • Revenue Growth Delivered $2 billion in Q2 revenues, up 6% year-over-year, driven by growth across both segments.
  • Adjusted EBITDA Performance Reported $242 million in adjusted EBITDA, a 12% increase, with margins expanding to 12.4%.
  • Contract Wins Secured a $476 million contract in Djibouti and multiple strategic contracts with the Air Force Research Lab.
  • Record Pipeline Bids and pipeline reached $19 billion in the MTS segment, with 72% representing new business opportunities.
  • Long-Term Targets Aims for $9 billion plus in 2027 revenues, with a compounded annual growth rate of 5%-8% for MTS and 11%-15% for STS.

Financial Highlights and Guidance

The company updated its revenue guidance for 2025 to $7.9 billion to $8.1 billion, with a midpoint of $8 billion. The revision is due to the removal of $400 million from HomeSafe, $250 million from European command work supporting Ukraine, and $250 million from delays in Protest Resolution. KBR's long-term targets for 2027 include revenue of $9 billion plus, with a compounded annual growth rate of 5% to 8% for MTS and 11% to 15% for STS.

Growth Strategy and Prospects

KBR's growth strategy focuses on expanding in key markets through delivery and innovation, achieving leading margins, and deploying capital back to shareholders. The Middle East remains a core geography for growth, with 20% growth in the region on a trailing 12-month basis. The company is well-positioned to capitalize on increased defense spending, particularly in National Security priorities, with an incremental $150 billion in spending.

Valuation and Estimates

According to analysts, KBR's valuation is reasonable, with a P/E Ratio of 12.67 and a P/S Ratio of 0.75. The stock offers a Dividend Yield of 1.35% and a Free Cash Flow Yield of 7.44%. With a strong outlook for 2026-2027, driven by RDT&E and O&M funding, and growth in international business with higher margins, analysts estimate next year's revenue growth at 10.6%.

Management's View and Outlook

Executives discussed KBR's recent performance and future prospects, citing a strong outlook for 2026-2027. The third quarter historically has been strong, and the expectation is that momentum will carry into the fourth quarter with the reconciliation of the Reconciliation Act. Cautious conversion outlook for this year was due to changes in government, particularly in contracting offices, with several departures.

Segment Performance and Innovation

KBR's pipeline and bids awaiting award are at record levels, with $19 billion in bids pending in the Mission Technology and Solutions (MTS) segment, 72% representing new business. The company developed a digital test environment for the Air Force's collaborative combat aircraft program, reducing development time from decades to a few years.

KBR's A-Score