KBR (KBR) TD Cowen 46th Annual Aerospace & Defense Conference 2025 summary

Market environment and business positioning

• 35%-40% of EBITDA comes from U.S. federal government contracts, mainly in national security and NASA, with strong alignment to current administration priorities.

• Portfolio is focused on space superiority, missile defense, digital warfare, and cybersecurity, supported by recent acquisitions like Centauri and LinQuest.

• International defense outlook is positive, especially in the UK and Australia, with collaboration on AUKUS and INDOPACOM initiatives.

• Commercial energy business is seeing increased activity post-LNG export ban lift, with robust demand for gray, blue, and green energy solutions.

• Administration's support for energy security and decarbonization is driving growth in both traditional and cleaner energy projects.

Key program and project updates

• HomeSafe program is digitizing military moves, improving user experience, but faces ramp-up and supply chain challenges; profit margins expected to be sub-norm during ramp.

• Plaquemines LNG project is ahead of schedule, with production ramping up through 2025 and ongoing financial impact into 2026.

• Lake Charles LNG project, in JV with Technip Energies, is likely to reach FID in Q3/Q4, with significant ramp in 2026.

• Saudi Aramco Liquid to Chemicals (LTC) project continues as planned, with KBR as overall PMC and owner's engineer; Middle East business is growing at a strong rate.

• Plastics recycling technology with Mura is operational, with demonstration plants in the UK, Japan, and South Korea; commercial impact expected from 2026 onward.

Financial and strategic outlook

• LNG demand expected to outpace supply through 2030 and beyond, with Asia as a key growth market.

• Backlog for major projects like Plaquemines will decline as work completes, but new projects like Lake Charles are expected to offset.

• LinQuest acquisition is delivering strong organic growth and recently secured a nearly $1B IDIQ contract with Space Force.

• Bid pipeline for U.S. government business has increased by 50% in 2024, with collaborative opportunities between legacy and acquired businesses.

• No current slowdown in government contract awards, but risk exists due to administration transition and continuing resolutions.