KBR Inc. (NYSE: KBR) reported higher third-quarter 2026 revenue, adjusted EBITDA and adjusted earnings as rapid growth in Sustainable Technology Solutions offset expected NASA-related pressure in Mission Technology Solutions. The company reaffirmed its full-year outlook and said preparations for the planned separation of the two businesses remain on track for an expected Jan. 4, 2027 closing.
Revenue increased $97 million, or 5%, from a year earlier. Adjusted EBITDA rose 12% to $268 million, lifting the adjusted EBITDA margin to 13.2% from 12.4%. Adjusted earnings per share increased 10% to $1.12, supported by operating performance, lower below-the-line expenses and a reduced share count following repurchases.
On a GAAP basis, net income attributable to KBR was $133 million, compared with $115 million in the prior-year quarter. Diluted EPS increased to $1.06 from $0.90.
Sustainable Tech growth offsets Mission Tech pressure
Sustainable Technology Solutions revenue rose $157 million, or 26%, as bookings secured in recent quarters converted into project activity. Revenue also increased 13% sequentially, supporting management’s confidence in its mid-teens full-year growth outlook for the segment.
The unit’s adjusted EBITDA increased 15% to $147 million. Its reported margin declined to 19.3% from 21.2% because of a lower contribution from an LNG joint venture. Excluding that contribution, the margin expanded to 13.9% from 13.1%, reflecting portfolio mix, project execution, unconsolidated joint-venture contributions and project closeouts. The segment’s year-to-date margin of 11.4% was above its full-year outlook due to favorable closeouts.
Sustainable Tech ended the quarter with a record $5.8 billion backlog, up 51% year over year, and a quarterly book-to-bill ratio of 1.3 times. KBR also identified a near-term pipeline of more than $6 billion, excluding mega-projects, and said repeat customers accounted for about 80% of activity. Recent awards covered ammonia projects in Europe and Saudi Arabia, infrastructure work in Texas and sustainable aviation fuel technology in Kazakhstan.
Mission Technology Solutions revenue fell $60 million, or 5%, reflecting expected NASA-related headwinds, partly offset by growth among Defense and Intelligence and international government customers. Adjusted EBITDA nevertheless rose 5% to $145 million, while the margin expanded to 11.5% from 10.4%.
Mission Tech had $17.3 billion of backlog and options at quarter-end. Its quarterly book-to-bill ratio was 0.8 times excluding long-term U.K. private finance initiatives and a NASA insourcing debooking. Including that debooking, quarterly book-to-bill was 0.6 times and the trailing-12-month ratio was 0.7 times. The company also reported $9.9 billion of opportunities awaiting award and $10.6 billion of wins under protest.
Cash flow and full-year outlook
Year-to-date operating cash flow was $331 million, while adjusted operating cash flow totaled $371 million and represented 95% conversion relative to adjusted EPS. KBR said collections improved during the quarter, although the 2026 collection profile remains more weighted toward the back end of the year than in 2025.
The company reaffirmed its fiscal 2026 guidance for revenue of $7.90 billion to $8.36 billion, adjusted EBITDA of $980 million to $1.04 billion, adjusted EPS of $3.87 to $4.22 and adjusted operating cash flow of $560 million to $600 million. Its assumptions include capital expenditures of about $40 million to $50 million, an effective tax rate of 26% to 28% and an adjusted diluted share count of approximately 127 million.
KBR ended the quarter with net debt of $2.12 billion and a net-debt-to-trailing-12-month-adjusted-EBITDA ratio of 2.1 times. Through the first nine months, it spent $29 million on share repurchases and $63 million on dividends, with $402 million remaining under its repurchase authorization.
The planned separation is intended to be tax-free to KBR and its shareholders for U.S. federal income tax purposes. The company said the transaction is designed to give both businesses greater strategic focus, organizational flexibility and capital-allocation independence, though historical segment adjusted EBITDA excludes corporate allocations and potential standalone-company costs.
KBR cautioned that its outlook and separation timetable remain subject to risks including government funding delays or reductions, changing agency priorities, contract protests, project execution and fixed-fee cost pressures, geopolitical volatility, tariffs, currency and interest-rate movements, customer capital spending and the company’s ability to complete the proposed spin-off.
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