KBR, INC. (KBR) Business

Item 1. Business

Company Overview

KBR, Inc., a Delaware corporation ("KBR" or, the "Company"), delivers science, technology, engineering and logistics support solutions to the U.S. federal government, allied nations and commercial clients around the world. Drawing from its culture of innovation and mission focus, KBR creates sustainable value by combining deep domain expertise with its full-life cycle capabilities to help clients meet their most pressing challenges. Our capabilities and offerings include the following:

•Leading national security and defense systems engineering; rapid prototyping; test and evaluation; aerospace acquisition support; data analytics and systems and platform integration; and sustainment engineering;

•Operational expertise in areas such as space domain awareness; C5ISR; human spaceflight and satellite operations; integrated supply chain and logistics; and military aviation support;

•Advanced digital, artificial intelligence, machine learning and information operations solutions in areas such as cyber analytics and cybersecurity; space and air dominance; connected battlespace; national security intelligence; data analytics; mission planning systems; virtual/augmented reality and technical training; and artificial intelligence and machine learning;

•Scientific research such as quantum science and computing; health and human performance; materials science; life science research; and earth sciences

•Engineering and project management solutions to advance energy security, sustainable decarbonization; energy transition and asset optimization; proprietary, sustainability-focused process licensing; energy transition and security advisory services; and digitally-enabled asset optimization solutions; and

•Professional advisory services across the defense, renewable energy and critical infrastructure sectors;

KBR's strategic growth vectors include:

•Defense modernization;

•National security space superiority;

•Health and human performance;

•Sustainable energy and industrial technology;

•High-end defense engineering;

•Energy security and energy transition; and

•Digital asset modernization and optimization.

Our Business

Our people make the difference. We leverage dynamic teams that combine deep mission understanding, market-leading technical expertise and an unwavering operational focus to deliver solutions to solve our clients’ most complex issues. In the fiscal year ended January 2, 2026 ("fiscal 2025"), KBR’s operating model continued to shift toward agile, technology-driven, solutions-oriented delivery and was streamlined to increase strategic focus and to move upmarket into differentiated areas that we believe will provide attractive returns and consistent growth with favorable cash conversion.

Our key areas of strategic focus are as follows:

•National Security and Defense. KBR delivers full life cycle support solutions to defense, intelligence, space, aviation and other programs and missions to military and other government agencies primarily in the U.S., U.K. and Australia under long-term programs with key technical, scientific or mission-specific differentiation. KBR's full-spectrum, digitally enabled services span research and development, advanced prototyping, acquisition support, systems engineering, systems assurance and technology, C5ISR, cyber analytics, cybersecurity, space domain awareness, test and evaluation, data analytics and integration, systems integration and program management, global supply chain management, digital transformation, and operations readiness and support. Key customers include U.S. Department of War agencies such as the U.S. Army, Navy, Air Force, Space Force, Missile Defense Agency, National Geospatial-Intelligence Agency, National Reconnaissance Office and other intelligence agencies; U.S. civilian agencies such as NASA, U.S. Geological Survey and National Oceanic and Atmospheric Administration; the U.K. Ministry of Defence, other U.K. Crown Services; the Royal Australian Air Force, Navy and Army; and other national governments; and a wide range of commercial and industrial companies. Areas of long-term strategic focus include defense modernization, space superiority, and health and human performance.

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•Sustainable Energy and Industrial Technologies. We design and bring to market patented, proprietary process technology which we license to enable safe, energy efficient, and cost competitive production of energy and special chemical products to meet growing global consumer demand. With our proprietary technology, we also offer proprietary equipment, integration services, and catalysts that enable our clients to convert their raw material to valuable end products. We market high-end advisory and consulting services focused on broad-based energy transition and net-zero carbon emission solutions; high-end engineering, design and program management centered around energy security, decarbonization, energy efficiency, environmental impact and asset optimization; and digitally enabled operating and monitoring solutions. Key customers include governments and commercial and industrial companies. Areas of long-term strategic focus include sustainable technology solutions, energy transition, energy security and technology-led asset optimization.

Our deployment priorities are to fund organic growth, maintain responsible leverage, maintain an attractive dividend, make strategic, accretive acquisitions and repurchase shares. Our acquisition thesis is centered around moving upmarket, expanding capabilities and broadening customer sets across strategic growth vectors. KBR also develops and prioritizes investment in technologies that are disruptive, innovative and sustainability and safety-focused. These technologies and engineering solutions enable clients to achieve a safer, more secure and more sustainable global future.

Competitive Advantages

We operate in global markets with customers who demand innovation, technical and domain expertise and digitally enabled, technology-led sustainable solutions. We seek to differentiate ourselves in areas in which we believe we have a competitive advantage. These include:

•Our People

◦Distinctive mission-focused and inclusive team ethos and culture, which we refer to as “ONE KBR”.

◦Internationally recognized subject matter experts with deep domain knowledge.

◦Employee base that includes individuals with high-level security clearance.

•Sustainability Leadership

◦Our Zero Harm philosophy includes ten key areas of sustainability focus across our company.

◦Safe and responsible operations are essential, and our Zero Harm culture prioritizes the safety and security of our people as well as the active management of our environmental impact.

◦We have a dedicated global Sustainability Committee made up of leaders from across key corporate and business functions, and the chair of that committee reports quarterly to the Board of Directors.

◦We have achieved carbon neutrality annually since 2019 and have established net-zero carbon ambition.

◦As an industry sustainability leader, we have invested and will continue to invest in the development of disruptive, innovative clean energy solutions and special chemicals that promote a cleaner, greener future and a sustainable world.

◦As a world leader in ammonia technology, we are a leading hydrogen energy enabler, with a fully developed, proprietary, end-to-end green ammonia solution, K-GreeNTM.

◦We are the exclusive licensor of Hydro-PRTTM, a cutting-edge, scalable technology that utilizes supercritical steam to convert a wide range of single-use and other plastics into virgin-grade feedstocks used to produce new plastics, delivering a truly circular economy.

•Technical Excellence and Digital Solutions

◦High-end differentiated capabilities spanning government and commercial missions, including data analytics and integration, model-based systems engineering, smart asset optimization, and more.

◦Portfolio of over 85 innovative, sustainable, proprietary process technologies, expertise and solutions.

◦Innovative, advanced digital capabilities to improve operations, reliability and environmental impact, including artificial intelligence and machine learning.

◦Virtual and augmented reality visualizations in controlled environments that provide greater perspective and insights and more comprehensive training.

•Customer Relationships

◦Customer missions and objectives placed at the center of our planning and delivery model.

◦Decades of enduring relationships with government and commercial client base.

•Financial Strength

◦Diverse portfolio of multi-year, mission-critical programs creating stability and resilience.

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◦Low capital intensity business model generating favorable operating cash flows.

◦Strong liquidity with ample capacity for growth.

Our Business Segments

We provide a wide range of professional services, and the management of our business is heavily focused on major projects or programs within each of our reportable segments. At any given time, government programs and joint ventures represent a substantial part of our operations.

Our business is organized into two core business segments and one non-core business segment as follows:

Core business segments

•Mission Technology Solutions

•Sustainable Technology Solutions

Non-core business segment

•Corporate

Our business segments are described below.

Mission Technology Solutions. Our Mission Technology Solutions business segment provides full life-cycle support solutions to defense, intelligence, space, aviation and other programs and missions for military and other government agencies primarily in the U.S., U.K. and Australia. KBR's full-spectrum solutions span research and development, advanced prototyping, acquisition support, systems engineering, C5ISR, cyber analytics, space domain awareness, test and evaluation, data analytics and integration, systems integration and program management, global supply chain management, operations readiness and support and professional advisory services across the defense, energy security and transition and critical infrastructure sectors. Included in Mission Technology Solutions is the business of LinQuest Corporation ("LinQuest"), an engineering, data analytics and digital integration company acquired in fiscal 2024 and Infrastar Limited acquired in fiscal 2025. See Note 4. "Acquisitions" to our consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K for additional information on these acquisitions. Additionally, the disposal of HomeSafe is reported as discontinued operations and HomeSafe's operations are excluded from Mission Technology Solutions results reflected within our consolidated financial statements. See Note 21. “Discontinued Operations” to our consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K for additional information regarding the HomeSafe disposal.

Sustainable Technology Solutions. Our Sustainable Technology Solutions business segment is anchored by our portfolio of over 85 innovative, proprietary, sustainability-focused process technologies that reduce emissions, increase efficiency and/or accelerate and enable energy transition across the industrial base in four primary verticals: ammonia/syngas, chemical/petrochemicals, clean refining and circular process/circular economy solutions. STS also provides highly synergistic services including advisory and consulting focused on energy security, broad-based energy transition and net-zero carbon emission solutions, high-end engineering, design and program management centered around decarbonization, energy efficiency, environmental impact and asset optimization, as well as our digitally-enabled operating and monitoring solutions. Through early planning and scope definition, advanced technologies and facility life-cycle optimization, our STS business segment works closely with customers to provide what we believe is the optimal approach to maximize their return on investment.

Corporate. Our non-core segment includes corporate expenses and selling, general and administrative expenses not allocated to the business segments above.

To streamline and optimize our processes, we realigned our segments effective for the year ended January 2, 2026. As part of this realignment, our Government Solutions reportable segment has been renamed Mission Technology Solutions while Sustainable Technology Solutions has retained its name. The international business contained within Government Solutions has been integrated into both Mission Technology Solutions and Sustainable Technology Solutions. All information in this Annual Report on Form 10-K is presented in accordance with the realigned reportable segments and all prior period information was recast to reflect the realigned reportable segments. Effective for fiscal year 2026, a portion of a business unit within our Mission Technology Solutions segment will become part of our Sustainable Technology Solutions segment. We will begin reporting new segment information due to this change beginning the first fiscal quarter of 2026.

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Mission Technology Solutions Spin-off

In September 2025, we announced our intention to spin off our Mission Technology Solutions business into a separate, U.S. publicly-traded company (the "Planned Spin-Off"). The Planned Spin-Off is intended to be tax-free to us and our shareholders for U.S. federal income tax purposes and targeting completion in the second half of the fiscal year ended January 1, 2027 ("fiscal 2026"). The spin-off will be subject to final approval by our Board of Directors and other customary conditions, including receipt of a favorable opinion of legal counsel and/or a private letter ruling from the U.S. Internal Revenue Service with respect to the tax treatment of the transaction for U.S. federal income tax purposes, the effectiveness of a registration statement on Form 10 filed with the SEC, satisfactory completion of financing and other regulatory approvals. Because the intended transaction is a spin-off, the Mission Technology Solutions business is not classified as held for sale and will be reported as continuing operations.

Significant Customers

We provide services and technology to a diverse customer base, including domestic and foreign governments and commercial and industrial companies.

We generate significant revenues within our MTS business segment from key U.S. government customers including U.S. DoW agencies such as the U.S. Army, Navy, Air Force, Space Force, Missile Defense Agency, National Geospatial-Intelligence Agency, National Reconnaissance Office and other intelligence agencies; U.S. civilian agencies such as NASA, U.S. Geological Survey and National Oceanic and Atmospheric Administration; and from the U.K government. No other customers represented 10% or more of consolidated revenues in any of the periods presented. The following table summarizes our revenues from contracts with U.S. and U.K. government agencies for which we are the prime contractor, as well as for those contracts in which we are a subcontractor and the ultimate customer is a U.S. or U.K. government agency, respectively.