KBR Q1 2025 slides: double-digit growth across all metrics, margins expand

Introduction & Market Context

KBR, Inc. (NYSE:KBR) released its first quarter 2025 results on May 6, 2025, reporting strong performance with double-digit growth across all key financial metrics. The engineering and government services contractor saw its stock rise in premarket trading, up 2.02% to $52.61, building on momentum from its strong Q4 2024 results.

The company demonstrated resilience amid market uncertainties, highlighting minimal exposure to tariffs and government efficiency initiatives while maintaining a diversified revenue base across defense, government, and commercial sectors.

Quarterly Performance Highlights

KBR reported impressive financial results for Q1 2025, with significant year-over-year improvements across all key metrics. Revenue increased by 13% to $2.1 billion, while adjusted EBITDA grew by 17% to $243 million, representing an 11.8% margin – a 40 basis point improvement over the prior year.

As shown in the following chart detailing KBR’s Q1 2025 financial performance:

Adjusted earnings per share showed particularly strong growth, increasing 27% year-over-year to $0.98. Operating cash flow also improved by 8% compared to Q1 2024, demonstrating the company’s ability to convert earnings into cash.

"We delivered strong financial performance while executing our growth strategy," noted Stuart Bradie, President and CEO, highlighting the company’s continued momentum following its strong finish to 2024.

Segment Analysis

KBR’s growth was broad-based across its two main business segments. The Mission Tech segment, which primarily serves government and defense clients, saw revenues increase by 14% and adjusted EBITDA grow by 11% year-over-year. The Sustainable Tech segment, focused on energy transition and commercial clients, delivered 12% revenue growth and an impressive 20% increase in adjusted EBITDA.

The following slide illustrates the performance of both segments:

The company’s diversified revenue streams provide significant business resilience. As shown in the following breakdown of KBR’s revenue by customer type, the company maintains a balanced portfolio across U.S. government defense and intelligence, federal civilian, international government, and commercial clients:

This diversification helps insulate KBR from potential disruptions in any single market segment, with management noting they have "minimal exposure" to tariffs and are "well-positioned in the global energy market."

Strategic Initiatives & New Contracts

KBR continued to build its backlog, reporting $20.5 billion in backlog and options with a trailing twelve-month book-to-bill ratio of 1.1x. The company secured several significant new contracts during the quarter, including:

• $970 million ceiling for Digital Engineering
• $176 million for Space Technology Research
• $85 million for Airfield Repair Kits
• $229 million for lifecycle research
• Global agreement with BP (NYSE:BP)
• Strategic agreement with TerraPower for Small Modular Reactors (SMRs)

The following slide highlights these contract wins and strategic updates:

A notable win was the $176 million ASTRO (Advanced Space Technology Research and Optimization) contract with the Air Force Research Laboratory in Maui, Hawaii. This seven-year contract leverages KBR’s expertise in optical imaging capabilities and space domain awareness.

Balance Sheet & Capital Allocation

KBR maintained a disciplined approach to capital allocation while continuing to invest in growth. The company reported net debt of $2,326 million, representing a leverage ratio of 2.6x TTM adjusted EBITDA.

The following slide details KBR’s balance sheet position and capital allocation priorities:

During the quarter, KBR generated $98 million in operating cash flow and $89 million in free cash flow after $9 million in capital expenditures. The company returned significant capital to shareholders, with $156 million in share repurchases and $20 million in dividends. KBR has $600 million remaining in its share repurchase authorization.

Forward Outlook

KBR reaffirmed its full-year 2025 guidance, projecting:

• Revenues of $8.7-$9.1 billion
• Adjusted EBITDA of $950-$990 million
• Adjusted EPS of $3.71-$3.95
• Operating cash flow of $500-$550 million

The following slide presents the company’s detailed guidance:

This guidance aligns with the projections provided in the previous quarter, reflecting management’s confidence in the company’s growth trajectory. The midpoint of the revenue guidance represents approximately 15% growth compared to 2024, building on the momentum from Q1 results.

"We are executing our growth strategy through project execution and new contracts," stated Mark Sopp, EVP and CFO, during the presentation. The company highlighted its progress on key initiatives including the HomeSafe program and continued delivery of milestones for the Plaquemines LNG project.

KBR’s key takeaways from the quarter reinforce its strong positioning for continued growth:

With its diversified business model, strong backlog, and continued execution on strategic initiatives, KBR appears well-positioned to deliver on its 2025 financial targets despite broader market uncertainties.

Full presentation:

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