KBR reaffirms guidance as record $23.2B backlog offsets EUCOM runoff

KBR (NYSE:KBR) reported a resilient start to fiscal 2026, leveraging a record-high backlog to navigate a temporary decline in revenue as large-scale contingency work in Europe begins to wind down.

The Houston-based engineering and government services firm reported first-quarter revenue of $1.923 billion, a 5% decrease year-over-year.

The decline was largely anticipated, driven by the runoff of EUCOM contingency scope and funding restrictions at NASA.

However, profitability remained stable; the company delivered adjusted EBITDA of $251 million, a 1% increase, with margins expanding to 13.1% thanks to a more favorable mix of high-value services.

Net income attributable to KBR was $102 million, or $0.80 per diluted share.

On an adjusted basis, earnings per share came in at $0.96, surpassing Wall Street’s consensus estimate of $0.92.

The company also saw a sharp 31% jump in adjusted operating cash flows, which reached $119 million for the quarter.

A key highlight was the company’s commercial momentum.

KBR ended the quarter with a total backlog and options of $23.2 billion, maintaining a healthy book-to-bill ratio of 1.1x.

Significant wins during the quarter included IT and systems engineering support for the U.S. Department of Transportation and expanded mission support for NASA's Artemis II.

Meanwhile, the company reaffirmed its intent to spin off its Mission Technology Solutions (MTS) segment into an independent, publicly traded company.

The transaction is currently targeted for completion on January 4, 2027.

Following the separation, "New KBR" will focus on the high-margin Sustainable Technology Solutions (STS) segment, while "SpinCo" (MTS) will operate as a pure-play government services provider.

Looking ahead, KBR reaffirmed its full-year 2026 guidance, projecting revenue between $7.9 billion and $8.36 billion and adjusted EPS in the range of $3.87 to $4.22.