KBR’s second quarter results drew a positive market response despite revenue falling short of Wall Street’s expectations. Management attributed the quarter’s performance to disciplined cost control and improved execution in both its Mission & Technology Solutions (MTS) and Sustainable Technology Solutions (STS) segments. CEO Stuart Bradie noted that adjusted EBITDA margins expanded, driven by strong project delivery and the company’s asset-light operating model. The company also highlighted progress in expanding its bid pipeline and cited robust demand in core government and energy markets.
Is now the time to buy KBR? Find out in our full research report (it’s free).
KBR (KBR) Q2 CY2025 Highlights:
- Revenue: $1.95 billion vs analyst estimates of $2.09 billion (5.2% year-on-year growth, 6.8% miss)
- Adjusted EPS: $0.91 vs analyst estimates of $0.88 (3% beat)
- Adjusted EBITDA: $242 million vs analyst estimates of $230 million (12.4% margin, 5.2% beat)
- The company dropped its revenue guidance for the full year to $8 billion at the midpoint from $8.9 billion, a 10.1% decrease
- Management reiterated its full-year Adjusted EPS guidance of $3.83 at the midpoint
- EBITDA guidance for the full year is $970 million at the midpoint, in line with analyst expectations
- Operating Margin: 9.9%, in line with the same quarter last year
- Backlog: $16.7 billion at quarter end, in line with the same quarter last year
- Market Capitalization: $6.42 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From KBR’s Q2 Earnings Call
- Tobey O'Brien Sommer (Truist): Asked about the risks and assumptions in setting long-term targets. CEO Stuart Bradie emphasized the importance of pipeline conversion and geopolitical stability, while noting long-term targets are set at the conservative end of growth ranges.
- Tobey O'Brien Sommer (Truist): Followed up on whether the HomeSafe contract loss would affect KBR’s ability to win future government work. Bradie said, “We don’t foresee any impact,” highlighting strong customer relationships and daily engagement.
- Michael Stephan Dudas (Vertical Research): Inquired about the “new normal” in Sustainable Technology and how shifting geopolitical and energy trends impact revenue targets. Bradie discussed market volatility and confidence in resuming project award cadence as conditions stabilize.
- Brent Edward Thielman (D.A. Davidson): Asked if bookings in the second half would be stronger absent protest delays. Bradie and CFO Mark Sopp said award cadence should pick up as budgets are finalized, but timing remains uncertain due to contracting office staffing shortages.
- Brent Edward Thielman (D.A. Davidson): Requested specifics on what is needed to achieve 2027 targets. Bradie cited growing international demand, higher-margin projects, and successful pipeline conversion as key to meeting long-term goals.
Catalysts in Upcoming Quarters
Looking ahead, the StockStory team will monitor (1) whether delayed government contracts clear protest backlogs and are awarded, (2) the pace and profitability of new project wins in international and Middle East markets, and (3) progress in expanding the digital engineering and joint venture business models. Execution on these fronts will be critical to achieving full-year and long-term guidance.
KBR currently trades at $49.79, up from $45.53 just before the earnings. At this price, is it a buy or sell? Find out in our full research report (it’s free).
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