KBR (KBR) investor relations material

Strategic rationale and transaction overview

• Announced intent to spin off Mission Technology Solutions (MTS) into a standalone, tax-free public company, creating two independent pure-play entities: New KBR (Sustainable Technology Solutions, STS) and SpinCo (MTS), with completion targeted for mid to late 2026, subject to board and regulatory approvals.

• The move follows a decade-long transformation, shifting from legacy government services to high-end technology and engineering solutions, with revenue growing from $5B to $8B and margins nearly doubling.

• Both businesses have operated as largely standalone entities for several months, facilitating a smooth separation and minimizing stranded costs.

• Both entities will be positioned with strong balance sheets, capital allocation flexibility, and distinct investment profiles.

• The transaction is subject to board approval, regulatory clearances, and favorable tax rulings.

Business profiles and financial highlights

• New KBR (STS) focuses on IP-protected process and circular technologies for energy transition, with $2.2B in trailing 12-month revenue, ~22% EBITDA margins, and a $3.7B backlog.

• SpinCo (MTS) is a global government solutions provider with $5.8B in trailing 12-month revenue, ~10% EBITDA margins, and a $17.8B backlog and options, aligned with national security and space priorities.

• Both companies are positioned for growth, with New KBR targeting energy security, transition, and infrastructure, and SpinCo focused on mission-critical solutions for defense, intelligence, and space.

• Each business will have tailored capital structures: SpinCo can support higher leverage (targeting ~3x), while New KBR will maintain a more conservative profile (~2x).

• Both companies are expected to retain KBR’s values-driven culture and proven execution approach.

Strategic, operational, and financial benefits

• Separation enables enhanced management focus, organizational agility, and fit-for-purpose operating models for each entity, with dedicated boards and streamlined decision-making.

• Both companies will have greater flexibility in capital allocation, supporting growth and potential M&A.

• No significant shared contracts exist between the two, reducing dis-synergy risk; both have diversified portfolios to mitigate concentration risk.

• Pure play status enables better peer comparison and investor clarity.

• Shifted away from commoditized services and lump sum turnkey contracts, focusing on higher-margin, lower-risk business.