10-Q 1 kbr-20240329.htm 10-Q kbr-20240329
false00013576151/32024Q1400013576152023-12-302024-03-2900013576152024-04-17xbrli:sharesiso4217:USD00013576152023-01-012023-03-31iso4217:USDxbrli:shares00013576152024-03-2900013576152023-12-290001357615us-gaap:VariableInterestEntityPrimaryBeneficiaryMember2024-03-290001357615us-gaap:VariableInterestEntityPrimaryBeneficiaryMember2023-12-290001357615us-gaap:AdditionalPaidInCapitalMember2023-12-290001357615us-gaap:RetainedEarningsMember2023-12-290001357615us-gaap:TreasuryStockCommonMember2023-12-290001357615us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-12-290001357615us-gaap:NoncontrollingInterestMember2023-12-290001357615us-gaap:AdditionalPaidInCapitalMember2023-12-302024-03-290001357615us-gaap:RetainedEarningsMember2023-12-302024-03-290001357615us-gaap:TreasuryStockCommonMember2023-12-302024-03-290001357615us-gaap:NoncontrollingInterestMember2023-12-302024-03-290001357615us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-12-302024-03-290001357615us-gaap:AdditionalPaidInCapitalMember2024-03-290001357615us-gaap:RetainedEarningsMember2024-03-290001357615us-gaap:TreasuryStockCommonMember2024-03-290001357615us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-03-290001357615us-gaap:NoncontrollingInterestMember2024-03-2900013576152022-12-310001357615us-gaap:AdditionalPaidInCapitalMember2022-12-310001357615us-gaap:RetainedEarningsMember2022-12-310001357615us-gaap:TreasuryStockCommonMember2022-12-310001357615us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-12-310001357615us-gaap:NoncontrollingInterestMember2022-12-310001357615us-gaap:AdditionalPaidInCapitalMember2023-01-012023-03-310001357615us-gaap:RetainedEarningsMember2023-01-012023-03-310001357615us-gaap:TreasuryStockCommonMember2023-01-012023-03-310001357615us-gaap:NoncontrollingInterestMember2023-01-012023-03-310001357615us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-01-012023-03-3100013576152023-03-310001357615us-gaap:AdditionalPaidInCapitalMember2023-03-310001357615us-gaap:RetainedEarningsMember2023-03-310001357615us-gaap:TreasuryStockCommonMember2023-03-310001357615us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-03-310001357615us-gaap:NoncontrollingInterestMember2023-03-31kbr:segment0001357615kbr:SustainableTechnologySolutionsMember2024-03-29kbr:process_technology0001357615kbr:SustainableTechnologySolutionsMember2023-12-302024-03-29kbr:vertical0001357615kbr:GovernmentSolutionsMember2023-12-302024-03-290001357615kbr:GovernmentSolutionsMember2023-01-012023-03-310001357615kbr:SustainableTechnologySolutionsMember2023-01-012023-03-310001357615us-gaap:AllOtherSegmentsMember2023-12-302024-03-290001357615us-gaap:AllOtherSegmentsMember2023-01-012023-03-310001357615kbr:ScienceAndSpaceMemberkbr:GovernmentSolutionsMember2023-12-302024-03-290001357615kbr:ScienceAndSpaceMemberkbr:GovernmentSolutionsMember2023-01-012023-03-310001357615kbr:DefenseAndIntelMemberkbr:GovernmentSolutionsMember2023-12-302024-03-290001357615kbr:DefenseAndIntelMemberkbr:GovernmentSolutionsMember2023-01-012023-03-310001357615kbr:GovernmentSolutionsMemberkbr:ReadinessAndSustainmentMember2023-12-302024-03-290001357615kbr:GovernmentSolutionsMemberkbr:ReadinessAndSustainmentMember2023-01-012023-03-310001357615kbr:GovernmentSolutionsMemberkbr:InternationalMember2023-12-302024-03-290001357615kbr:GovernmentSolutionsMemberkbr:InternationalMember2023-01-012023-03-310001357615country:USkbr:GovernmentSolutionsMember2023-12-302024-03-290001357615country:USkbr:SustainableTechnologySolutionsMember2023-12-302024-03-290001357615country:US2023-12-302024-03-290001357615kbr:GovernmentSolutionsMembersrt:EuropeMember2023-12-302024-03-290001357615srt:EuropeMemberkbr:SustainableTechnologySolutionsMember2023-12-302024-03-290001357615srt:EuropeMember2023-12-302024-03-290001357615kbr:GovernmentSolutionsMemberus-gaap:MiddleEastMember2023-12-302024-03-290001357615kbr:SustainableTechnologySolutionsMemberus-gaap:MiddleEastMember2023-12-302024-03-290001357615us-gaap:MiddleEastMember2023-12-302024-03-290001357615country:AUkbr:GovernmentSolutionsMember2023-12-302024-03-290001357615country:AUkbr:SustainableTechnologySolutionsMember2023-12-302024-03-290001357615country:AU2023-12-302024-03-290001357615kbr:GovernmentSolutionsMembersrt:AfricaMember2023-12-302024-03-290001357615kbr:SustainableTechnologySolutionsMembersrt:AfricaMember2023-12-302024-03-290001357615srt:AfricaMember2023-12-302024-03-290001357615srt:AsiaMemberkbr:GovernmentSolutionsMember2023-12-302024-03-290001357615srt:AsiaMemberkbr:SustainableTechnologySolutionsMember2023-12-302024-03-290001357615srt:AsiaMember2023-12-302024-03-290001357615kbr:GovernmentSolutionsMemberkbr:OtherCountriesMember2023-12-302024-03-290001357615kbr:OtherCountriesMemberkbr:SustainableTechnologySolutionsMember2023-12-302024-03-290001357615kbr:OtherCountriesMember2023-12-302024-03-290001357615country:USkbr:GovernmentSolutionsMember2023-01-012023-03-310001357615country:USkbr:SustainableTechnologySolutionsMember2023-01-012023-03-310001357615country:US2023-01-012023-03-310001357615kbr:GovernmentSolutionsMembersrt:EuropeMember2023-01-012023-03-310001357615srt:EuropeMemberkbr:SustainableTechnologySolutionsMember2023-01-012023-03-310001357615srt:EuropeMember2023-01-012023-03-310001357615kbr:GovernmentSolutionsMemberus-gaap:MiddleEastMember2023-01-012023-03-310001357615kbr:SustainableTechnologySolutionsMemberus-gaap:MiddleEastMember2023-01-012023-03-310001357615us-gaap:MiddleEastMember2023-01-012023-03-310001357615country:AUkbr:GovernmentSolutionsMember2023-01-012023-03-310001357615country:AUkbr:SustainableTechnologySolutionsMember2023-01-012023-03-310001357615country:AU2023-01-012023-03-310001357615kbr:GovernmentSolutionsMembersrt:AfricaMember2023-01-012023-03-310001357615kbr:SustainableTechnologySolutionsMembersrt:AfricaMember2023-01-012023-03-310001357615srt:AfricaMember2023-01-012023-03-310001357615srt:AsiaMemberkbr:GovernmentSolutionsMember2023-01-012023-03-310001357615srt:AsiaMemberkbr:SustainableTechnologySolutionsMember2023-01-012023-03-310001357615srt:AsiaMember2023-01-012023-03-310001357615kbr:GovernmentSolutionsMemberkbr:OtherCountriesMember2023-01-012023-03-310001357615kbr:OtherCountriesMemberkbr:SustainableTechnologySolutionsMember2023-01-012023-03-310001357615kbr:OtherCountriesMember2023-01-012023-03-310001357615kbr:CostReimbursableMemberkbr:GovernmentSolutionsMember2023-12-302024-03-290001357615kbr:CostReimbursableMemberkbr:SustainableTechnologySolutionsMember2023-12-302024-03-290001357615kbr:CostReimbursableMember2023-12-302024-03-290001357615us-gaap:TimeAndMaterialsContractMemberkbr:GovernmentSolutionsMember2023-12-302024-03-290001357615us-gaap:TimeAndMaterialsContractMemberkbr:SustainableTechnologySolutionsMember2023-12-302024-03-290001357615us-gaap:TimeAndMaterialsContractMember2023-12-302024-03-290001357615kbr:GovernmentSolutionsMemberus-gaap:FixedPriceContractMember2023-12-302024-03-290001357615us-gaap:FixedPriceContractMemberkbr:SustainableTechnologySolutionsMember2023-12-302024-03-290001357615us-gaap:FixedPriceContractMember2023-12-302024-03-290001357615kbr:CostReimbursableMemberkbr:GovernmentSolutionsMember2023-01-012023-03-310001357615kbr:CostReimbursableMemberkbr:SustainableTechnologySolutionsMember2023-01-012023-03-310001357615kbr:CostReimbursableMember2023-01-012023-03-310001357615us-gaap:TimeAndMaterialsContractMemberkbr:GovernmentSolutionsMember2023-01-012023-03-310001357615us-gaap:TimeAndMaterialsContractMemberkbr:SustainableTechnologySolutionsMember2023-01-012023-03-310001357615us-gaap:TimeAndMaterialsContractMember2023-01-012023-03-310001357615kbr:GovernmentSolutionsMemberus-gaap:FixedPriceContractMember2023-01-012023-03-310001357615us-gaap:FixedPriceContractMemberkbr:SustainableTechnologySolutionsMember2023-01-012023-03-310001357615us-gaap:FixedPriceContractMember2023-01-012023-03-3100013576152024-03-302024-03-29xbrli:pure00013576152025-03-292024-03-2900013576152029-03-312024-03-290001357615kbr:RetainageMember2024-03-290001357615kbr:RetainageMember2023-12-290001357615us-gaap:TradeAccountsReceivableMember2024-03-290001357615us-gaap:TradeAccountsReceivableMember2023-12-290001357615kbr:InternationalMemberus-gaap:CashMember2024-03-290001357615kbr:DomesticMemberus-gaap:CashMember2024-03-290001357615us-gaap:CashMember2024-03-290001357615us-gaap:BankTimeDepositsMemberkbr:InternationalMember2024-03-290001357615us-gaap:BankTimeDepositsMemberkbr:DomesticMember2024-03-290001357615us-gaap:BankTimeDepositsMember2024-03-290001357615kbr:CashHeldinJointVentureAndSubcontractingEntitiesMemberkbr:InternationalMember2024-03-290001357615kbr:CashHeldinJointVentureAndSubcontractingEntitiesMemberkbr:DomesticMember2024-03-290001357615kbr:CashHeldinJointVentureAndSubcontractingEntitiesMember2024-03-290001357615kbr:InternationalMember2024-03-290001357615kbr:DomesticMember2024-03-290001357615kbr:InternationalMemberus-gaap:CashMember2023-12-290001357615kbr:DomesticMemberus-gaap:CashMember2023-12-290001357615us-gaap:CashMember2023-12-290001357615us-gaap:BankTimeDepositsMemberkbr:InternationalMember2023-12-290001357615us-gaap:BankTimeDepositsMemberkbr:DomesticMember2023-12-290001357615us-gaap:BankTimeDepositsMember2023-12-290001357615kbr:CashHeldinJointVentureAndSubcontractingEntitiesMemberkbr:InternationalMember2023-12-290001357615kbr:CashHeldinJointVentureAndSubcontractingEntitiesMemberkbr:DomesticMember2023-12-290001357615kbr:CashHeldinJointVentureAndSubcontractingEntitiesMember2023-12-290001357615kbr:InternationalMember2023-12-290001357615kbr:DomesticMember2023-12-290001357615us-gaap:ShortTermInvestmentsMemberkbr:AspireDefenceProjectMember2024-03-290001357615us-gaap:ShortTermInvestmentsMemberkbr:AspireDefenceProjectMember2023-12-290001357615us-gaap:EquityMethodInvestmentsMember2023-12-290001357615us-gaap:EquityMethodInvestmentsMember2022-12-310001357615us-gaap:EquityMethodInvestmentsMember2023-12-302024-03-290001357615us-gaap:EquityMethodInvestmentsMember2023-01-012023-12-290001357615us-gaap:EquityMethodInvestmentsMember2024-03-290001357615us-gaap:EquityMethodInvestmentsMemberkbr:SubcontractorSettlementAgreementMember2023-12-302024-03-290001357615us-gaap:EquityMethodInvestmentsMemberkbr:SubcontractorSettlementAgreementMember2023-01-012023-12-290001357615us-gaap:EquityMethodInvestmentsMemberkbr:SubcontractorSettlementAgreementMember2023-01-012023-03-310001357615us-gaap:CorporateJointVentureMember2023-12-302024-03-290001357615us-gaap:CorporateJointVentureMember2023-01-012023-03-310001357615us-gaap:CorporateJointVentureMember2024-03-290001357615us-gaap:CorporateJointVentureMember2023-12-290001357615country:USus-gaap:PensionPlansDefinedBenefitMember2023-12-302024-03-29kbr:plan0001357615us-gaap:PensionPlansDefinedBenefitMembercountry:GB2023-12-302024-03-290001357615country:DEus-gaap:PensionPlansDefinedBenefitMember2023-12-302024-03-290001357615us-gaap:PensionPlansDefinedBenefitMembercountry:GB2023-01-012023-03-310001357615us-gaap:PensionPlansDefinedBenefitMembercountry:GB2024-03-290001357615us-gaap:SecuredDebtMemberkbr:DelayedDrawTermLoanAMember2024-03-290001357615us-gaap:SecuredDebtMemberkbr:DelayedDrawTermLoanAMember2023-12-290001357615kbr:DelayedDrawTermLoanBMemberus-gaap:SecuredDebtMember2024-03-290001357615kbr:DelayedDrawTermLoanBMemberus-gaap:SecuredDebtMember2023-12-290001357615us-gaap:SeniorNotesMember2024-03-290001357615us-gaap:SeniorNotesMember2023-12-290001357615us-gaap:LineOfCreditMemberus-gaap:RevolvingCreditFacilityMember2024-03-290001357615us-gaap:LineOfCreditMemberus-gaap:RevolvingCreditFacilityMember2023-12-290001357615us-gaap:LineOfCreditMemberus-gaap:RevolvingCreditFacilityMember2018-04-250001357615kbr:DelayedDrawTermLoanBMemberus-gaap:RevolvingCreditFacilityMemberus-gaap:SecuredDebtMember2024-01-190001357615kbr:DelayedDrawTermLoanBMemberus-gaap:SecuredDebtMember2024-01-192024-01-190001357615us-gaap:LineOfCreditMemberus-gaap:RevolvingCreditFacilityMember2024-01-192024-01-190001357615us-gaap:SecuredDebtMemberkbr:DelayedDrawTermLoanAMember2023-12-302024-03-290001357615us-gaap:LineOfCreditMemberus-gaap:RevolvingCreditFacilityMember2024-02-070001357615us-gaap:LineOfCreditMemberus-gaap:RevolvingCreditFacilityMember2023-12-302024-03-290001357615kbr:ConsolidatedLeverageRatioGreaterThanOr425To100Memberkbr:SecuredOvernightFinancingRateSOFRMemberkbr:LineofCreditandSecuredDebtMember2024-02-072024-02-070001357615kbr:ConsolidatedLeverageRatioGreaterThanOr425To100Memberus-gaap:BaseRateMemberkbr:LineofCreditandSecuredDebtMember2024-02-072024-02-070001357615kbr:ConsolidatedLeverageRatioGreaterThanOr425To100Member2024-02-072024-02-070001357615kbr:ConsolidatedLeverageRatioLessThan425To100ButGreaterThanOrEqualTo325To100Memberkbr:SecuredOvernightFinancingRateSOFRMemberkbr:LineofCreditandSecuredDebtMember2024-02-072024-02-070001357615us-gaap:BaseRateMemberkbr:ConsolidatedLeverageRatioLessThan425To100ButGreaterThanOrEqualTo325To100Memberkbr:LineofCreditandSecuredDebtMember2024-02-072024-02-070001357615kbr:ConsolidatedLeverageRatioLessThan425To100ButGreaterThanOrEqualTo325To100Member2024-02-072024-02-070001357615kbr:ConsolidatedLeverageRatioLessThan325To100ButGreaterThanOrEqualTo225To100Memberkbr:SecuredOvernightFinancingRateSOFRMemberkbr:LineofCreditandSecuredDebtMember2024-02-072024-02-070001357615us-gaap:BaseRateMemberkbr:ConsolidatedLeverageRatioLessThan325To100ButGreaterThanOrEqualTo225To100Memberkbr:LineofCreditandSecuredDebtMember2024-02-072024-02-070001357615kbr:ConsolidatedLeverageRatioLessThan325To100ButGreaterThanOrEqualTo225To100Member2024-02-072024-02-070001357615kbr:ConsolidatedLeverageRatioLessThan225To100ButGreaterThanToEqualTo125To100Memberkbr:SecuredOvernightFinancingRateSOFRMemberkbr:LineofCreditandSecuredDebtMember2024-02-072024-02-070001357615us-gaap:BaseRateMemberkbr:ConsolidatedLeverageRatioLessThan225To100ButGreaterThanToEqualTo125To100Memberkbr:LineofCreditandSecuredDebtMember2024-02-072024-02-070001357615kbr:ConsolidatedLeverageRatioLessThan225To100ButGreaterThanToEqualTo125To100Member2024-02-072024-02-070001357615kbr:ConsolidatedLeverageRatioLessThan125To100Memberkbr:SecuredOvernightFinancingRateSOFRMemberkbr:LineofCreditandSecuredDebtMember2024-02-072024-02-070001357615kbr:ConsolidatedLeverageRatioLessThan125To100Memberus-gaap:BaseRateMemberkbr:LineofCreditandSecuredDebtMember2024-02-072024-02-070001357615kbr:ConsolidatedLeverageRatioLessThan125To100Member2024-02-072024-02-070001357615kbr:LineofCreditandSecuredDebtMemberkbr:SecuredOvernightFinancingRateSOFRMember2024-02-072024-02-070001357615kbr:SterlingOvernightIndexAverageSONIAMemberkbr:LineofCreditandSecuredDebtMember2024-02-072024-02-070001357615kbr:ConsolidatedLeverageRatioGreaterThanOrEqualTo2.00To1.00Memberus-gaap:SecuredDebtMemberkbr:SecuredOvernightFinancingRateSOFRMember2024-02-072024-02-070001357615us-gaap:BaseRateMemberkbr:ConsolidatedLeverageRatioGreaterThanOrEqualTo2.00To1.00Memberus-gaap:SecuredDebtMember2024-02-072024-02-070001357615kbr:ConsolidatedLeverageRatioLessThan2.00To1.00Memberus-gaap:SecuredDebtMemberkbr:SecuredOvernightFinancingRateSOFRMember2024-02-072024-02-070001357615kbr:ConsolidatedLeverageRatioLessThan2.00To1.00Memberus-gaap:BaseRateMemberus-gaap:SecuredDebtMember2024-02-072024-02-070001357615kbr:DebtInstrumentPaymentTermOneMemberus-gaap:SecuredDebtMemberkbr:DelayedDrawTermLoanAMember2024-01-190001357615us-gaap:SecuredDebtMemberkbr:DebtInstrumentPaymentTermTwoMemberkbr:DelayedDrawTermLoanAMember2024-01-190001357615kbr:DelayedDrawTermLoanBMemberkbr:DebtInstrumentPaymentTermThreeMemberus-gaap:SecuredDebtMember2020-06-300001357615srt:MaximumMemberus-gaap:SecuredDebtMemberkbr:DelayedDrawTermLoanAMember2024-01-190001357615us-gaap:SecuredDebtMemberkbr:DelayedDrawTermLoanAMember2024-01-190001357615kbr:NotesDue2028Memberus-gaap:SeniorNotesMember2020-09-300001357615us-gaap:DebtInstrumentRedemptionPeriodThreeMemberkbr:NotesDue2028Memberus-gaap:SeniorNotesMember2020-09-302020-09-300001357615us-gaap:LineOfCreditMemberkbr:CommittedLineOfCreditMemberMemberus-gaap:LetterOfCreditMember2024-03-290001357615us-gaap:LineOfCreditMemberkbr:UncommittedLineOfCreditMemberus-gaap:LetterOfCreditMember2024-03-290001357615us-gaap:LineOfCreditMemberus-gaap:LetterOfCreditMember2024-03-290001357615kbr:LettersOfCreditSuretyBondsAndBankGuaranteesMember2024-03-290001357615kbr:ReserveForPotentiallyDisallowableCostsIncurredUnderGovernmentContractsMember2024-03-290001357615kbr:ReserveForPotentiallyDisallowableCostsIncurredUnderGovernmentContractsMember2023-12-290001357615kbr:FirstKuwaitiTradingCompanyArbitrationMember2023-06-122023-06-120001357615kbr:FirstKuwaitiTradingCompanyArbitrationMemberus-gaap:SettledLitigationMember2023-09-222023-09-220001357615kbr:FirstKuwaitiTradingCompanyArbitrationMember2022-03-012022-03-310001357615us-gaap:AccumulatedTranslationAdjustmentMember2023-12-290001357615us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2023-12-290001357615us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2023-12-290001357615us-gaap:AccumulatedTranslationAdjustmentMember2023-12-302024-03-290001357615us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2023-12-302024-03-290001357615us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2023-12-302024-03-290001357615us-gaap:AccumulatedTranslationAdjustmentMember2024-03-290001357615us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2024-03-290001357615us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2024-03-290001357615us-gaap:AccumulatedTranslationAdjustmentMember2022-12-310001357615us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2022-12-310001357615us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2022-12-310001357615us-gaap:AccumulatedTranslationAdjustmentMember2023-01-012023-03-310001357615us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2023-01-012023-03-310001357615us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2023-01-012023-03-310001357615us-gaap:AccumulatedTranslationAdjustmentMember2023-03-310001357615us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2023-03-310001357615us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2023-03-310001357615us-gaap:AccumulatedTranslationAdjustmentMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2023-12-302024-03-290001357615us-gaap:AccumulatedTranslationAdjustmentMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2023-01-012023-03-310001357615us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMemberus-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2023-12-302024-03-290001357615us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMemberus-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2023-01-012023-03-310001357615us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMemberus-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2023-12-302024-03-290001357615us-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMemberus-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2023-01-012023-03-3100013576152024-02-190001357615kbr:ShareRepurchaseProgramTwentyFourteenMember2023-12-302024-03-290001357615kbr:ShareRepurchaseProgramTwentyFourteenMember2023-01-012023-03-310001357615us-gaap:StockCompensationPlanMember2023-12-302024-03-290001357615us-gaap:WarrantMember2023-01-012023-03-310001357615us-gaap:StockCompensationPlanMember2023-01-012023-03-310001357615us-gaap:SecuredDebtMemberkbr:DelayedDrawTermLoanAMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2024-03-290001357615us-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:SecuredDebtMemberkbr:DelayedDrawTermLoanAMember2024-03-290001357615us-gaap:SecuredDebtMemberkbr:DelayedDrawTermLoanAMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2023-12-290001357615us-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:SecuredDebtMemberkbr:DelayedDrawTermLoanAMember2023-12-290001357615kbr:DelayedDrawTermLoanBMemberus-gaap:SecuredDebtMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2024-03-290001357615kbr:DelayedDrawTermLoanBMemberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:SecuredDebtMember2024-03-290001357615kbr:DelayedDrawTermLoanBMemberus-gaap:SecuredDebtMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2023-12-290001357615kbr:DelayedDrawTermLoanBMemberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:SecuredDebtMember2023-12-290001357615us-gaap:SeniorNotesMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2024-03-290001357615us-gaap:SeniorNotesMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2024-03-290001357615us-gaap:SeniorNotesMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2023-12-290001357615us-gaap:SeniorNotesMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2023-12-290001357615us-gaap:LineOfCreditMemberus-gaap:RevolvingCreditFacilityMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2024-03-290001357615us-gaap:LineOfCreditMemberus-gaap:RevolvingCreditFacilityMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2024-03-290001357615us-gaap:LineOfCreditMemberus-gaap:RevolvingCreditFacilityMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2023-12-290001357615us-gaap:LineOfCreditMemberus-gaap:RevolvingCreditFacilityMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2023-12-290001357615us-gaap:CarryingReportedAmountFairValueDisclosureMember2024-03-290001357615us-gaap:EstimateOfFairValueFairValueDisclosureMember2024-03-290001357615us-gaap:CarryingReportedAmountFairValueDisclosureMember2023-12-290001357615us-gaap:EstimateOfFairValueFairValueDisclosureMember2023-12-290001357615kbr:BalanceSheetHedgeMember2024-03-290001357615us-gaap:CashFlowHedgingMember2024-03-290001357615kbr:March2020InterestRateSwapMember2024-03-290001357615kbr:September2022InterestRateSwapMember2024-03-290001357615kbr:March2023InterestRateSwapMember2024-03-290001357615kbr:March2023AmortizingInterestRateSwapsMember2024-03-29iso4217:GBP0001357615us-gaap:InterestRateSwapMember2024-03-290001357615us-gaap:OtherCurrentAssetsMemberus-gaap:InterestRateSwapMember2024-03-290001357615us-gaap:InterestRateSwapMemberus-gaap:OtherNoncurrentAssetsMember2024-03-290001357615us-gaap:InterestRateSwapMember2023-12-302024-03-290001357615us-gaap:InterestRateSwapMember2023-12-290001357615us-gaap:OtherCurrentAssetsMemberus-gaap:InterestRateSwapMember2023-12-290001357615us-gaap:InterestRateSwapMemberus-gaap:OtherNoncurrentAssetsMember2023-12-290001357615us-gaap:OtherLiabilitiesMemberus-gaap:InterestRateSwapMember2023-12-290001357615us-gaap:InterestRateSwapMember2023-01-012023-12-290001357615kbr:MuraTechnologyMember2023-12-302024-03-290001357615kbr:MuraTechnologyMember2024-03-290001357615kbr:MuraTechnologyMember2023-12-29


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended March 29, 2024
OR
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from             to
Commission File Number: 001-33146
 
 
kbrlogofinal2019a04.jpg
KBR, Inc.
(Exact name of registrant as specified in its charter)
Delaware 20-4536774
(State of incorporation)
 
(I.R.S. Employer Identification No.)
601 Jefferson Street, Suite 3400HoustonTexas77002
(Address of principal executive offices)(Zip Code)

(713) 753-2000
(Registrant's telephone number including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading symbolName of each exchange on which registered
Common Stock, $0.001 par value KBRNew York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large Accelerated FilerAccelerated filer
Non-accelerated filer
 (Do not check if a smaller reporting company)
Smaller reporting company
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes      No  

As of April 17, 2024, there were 134,275,641 shares of KBR, Inc. Common Stock, par value $0.001 per share, outstanding.






TABLE OF CONTENTS
 


2



Forward-Looking and Cautionary Statements

This Quarterly Report on Form 10-Q contains certain statements that are, or may be deemed to be, "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act, as amended. The Private Securities Litigation Reform Act of 1995 provides safe harbor provisions for forward-looking information. Some of the statements contained in this Quarterly Report on Form 10-Q are forward-looking statements. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. The words "believe," "may," "estimate," "continue," "anticipate," "intend," "plan," "expect" and similar expressions are intended to identify forward-looking statements. Forward-looking statements include information concerning our possible or assumed future financial performance and results of operations.

We have based these statements on our assumptions and analyses in light of our experience and perception of historical trends, current conditions, expected future developments and other factors we believe are appropriate in the circumstances. Forward-looking statements by their nature involve substantial risks and uncertainties that could significantly affect expected results, and actual future results could differ materially from those described in such statements. While it is not possible to identify all factors, factors that could cause actual future results to differ materially include the risks and uncertainties disclosed in our latest Form 10-K and any subsequent Forms 10-Q and 8-K.

Many of these factors are beyond our ability to control or predict. Any of these factors, or a combination of these factors, could materially and adversely affect our future financial condition or results of operations and the ultimate accuracy of the forward-looking statements. These forward-looking statements are not guarantees of our future performance, and our actual results and future developments may differ materially and adversely from those projected in the forward-looking statements. We caution against putting undue reliance on forward-looking statements or projecting any future results based on such statements or on present or prior earnings levels. In addition, each forward-looking statement speaks only as of the date of the particular statement, and we undertake no obligation to publicly update or revise any forward-looking statement.

3



Glossary of Terms
The following frequently used terms, abbreviations or acronyms are commonly used in our Quarterly Reports on Form 10-Q as defined below:
AcronymDefinition
AOCLAccumulated other comprehensive loss
ASCAccounting Standards Codification
Aspire DefenceAspire Defence Limited
ASUAccounting Standards Update
AUKUS
The Trilateral Security Partnership between Australia, the U.K. and the U.S.
BRISBrown & Root Industrial Services Joint Venture
C5ISRCommand, Control, Communications, Computers, Cyber, Intelligence, Surveillance and Reconnaissance
CASCost Accounting Standards for U.S. government contracts
DCAADefense Contract Audit Agency
DCMADefense Contract Management Agency
DoDDepartment of Defense
ESPPEmployee Stock Purchase Plan
Exchange ActSecurities Exchange Act of 1934, as amended
FARFederal Acquisition Regulation
FASBFinancial Accounting Standards Board
FKTCFirst Kuwaiti Trading Company
GSGovernment Solutions
IRSInternal Revenue Service
JKCJKC Australia LNG, an Australian joint venture executing the Ichthys LNG Project
LIBORLondon interbank offered rate
LNGLiquefied natural gas
MD&AManagement's Discussion and Analysis of Financial Condition and Results of Operations
MoDMinistry of Defence
NASANational Aeronautics and Space Administration
NCINoncontrolling interests
OAWOperation Allies Welcome
PFIsPrivate financed initiatives and projects
PICPaid-in capital in excess of par
PPEProperty, Plant and Equipment
RPAMaster Accounts Receivable Purchase Agreement
SECU.S. Securities and Exchange Commission
SOFRSecured Overnight Financing Rate
SONIASterling Overnight Index Average
STSSustainable Technology Solutions
U.K.United Kingdom
U.S.United States
U.S. GAAPAccounting principles generally accepted in the United States
VIEsVariable interest entities
4



PART I. FINANCIAL INFORMATION

Item 1. Financial Information

KBR, Inc.
Condensed Consolidated Statements of Operations
(In millions, except for per share data)
(Unaudited)

Three Months Ended
March 29,March 31,
 20242023
Revenues$1,818 $1,703 
Cost of revenues(1,570)(1,458)
Gross profit248 245 
Equity in earnings of unconsolidated affiliates
30 23 
Selling, general and administrative expenses (121)(124)
Gain on disposition of assets and investments6  
Other3  
Operating income166 144 
Interest expense(31)(26)
Other non-operating expense
(6)(2)
Income before income taxes
129 116 
Provision for income taxes(35)(30)
Net income94 86 
Less: Net income attributable to noncontrolling interests
1  
Net income attributable to KBR$93 $86 
Net income attributable to KBR per share
Basic$0.69 $0.62 
Diluted$0.69 $0.56 
Basic weighted average common shares outstanding135 137 
Diluted weighted average common shares outstanding135 154 
Cash dividends declared per share$0.150 $0.135 
See accompanying notes to condensed consolidated financial statements.
5




KBR, Inc.
Condensed Consolidated Statements of Comprehensive Income (Loss)
(In millions)
(Unaudited)

 Three Months Ended
March 29,March 31,
20242023
Net income$94 $86 
Other comprehensive income (loss):
Foreign currency translation adjustments
(8)15 
Pension and post-retirement benefits
2  
Changes in fair value of derivatives
11 (10)
Other comprehensive income
5 5 
Income tax expense:
Changes in fair value of derivatives
(2)2 
Income tax (expense) benefit
(2)2 
Other comprehensive income, net of tax3 7 
Comprehensive income
97 93 
Less: Comprehensive income attributable to noncontrolling interests1  
Comprehensive income attributable to KBR
$96 $93 
See accompanying notes to condensed consolidated financial statements.
6



KBR, Inc.
Condensed Consolidated Balance Sheets
(In millions, except share data)
 March 29,December 29,
 20242023
(Unaudited)
Assets
Current assets:
Cash and cash equivalents$314 $304 
Accounts receivable, net of allowance for credit losses of $8 and $8, respectively
1,007 981 
Contract assets202 177 
Other current assets211 189 
Total current assets1,734 1,651 
Property, plant, and equipment, net of accumulated depreciation of $462 and $458 (including net PPE of $41 and $36 owned by a variable interest entity), respectively
247 239 
Operating lease right-of-use assets140 138 
Goodwill2,110 2,109 
Intangible assets, net of accumulated amortization of $388 and $382, respectively
605 618 
Equity in and advances to unconsolidated affiliates178 206 
Deferred income taxes205 239 
Other assets404 365 
Total assets$5,623 $5,565 
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable$669 $593 
Contract liabilities348 359 
Accrued salaries, wages and benefits301 340 
Current maturities of long-term debt22 31 
Other current liabilities239 249 
Total current liabilities1,579 1,572 
Employee compensation and benefits111 120 
Income tax payable106 106 
Deferred income taxes81 106 
Long-term debt1,842 1,801 
Operating lease liabilities175 176 
Other liabilities310 290 
Total liabilities4,204 4,171 
Commitments and Contingencies (Notes 5, 10 and 11)
KBR shareholders’ equity:
Preferred stock, $0.001 par value, 50,000,000 shares authorized, none issued
  
Common stock, $0.001 par value 300,000,000 shares authorized, 182,233,362 and 181,713,586 shares issued, and 134,651,351 and 135,067,562 shares outstanding, respectively
  
PIC2,514 2,505 
Retained earnings1,145 1,072 
Treasury stock, 47,582,011 shares and 46,646,024 shares, at cost, respectively
(1,339)(1,279)
AOCL(912)(915)
Total KBR shareholders’ equity1,408 1,383 
Noncontrolling interests11 11 
Total shareholders’ equity1,419 1,394 
Total liabilities and shareholders’ equity$5,623 $5,565 
See accompanying notes to condensed consolidated financial statements.
7



KBR, Inc.
Condensed Consolidated Statements of Shareholders' Equity
(In millions, except for per share data)
(Unaudited)
Dollars in millionsTotalPICRetained
Earnings
Treasury
Stock
AOCLNCI
Balance at December 29, 2023$1,394 $2,505 $1,072 $(1,279)$(915)$11 
Share-based compensation6 6 — — — — 
Common stock issued upon exercise of stock options1 1 — — — — 
Dividends declared to shareholders ($0.150/share)
(20)— (20)— — — 
Repurchases of common stock(61)— — (61)— — 
Issuance of ESPP shares4 2 — 2 — — 
Other(2)— — (1)— (1)
Net income
94 — 93 — — 1 
Other comprehensive income, net of tax3 — — — 3 — 
Balance at March 29, 2024$1,419 $2,514 $1,145 $(1,339)$(912)$11 
Dollars in millionsTotalPICRetained
Earnings
Treasury
Stock
AOCLNCI
Balance at December 31, 2022$1,632 $2,235 $1,410 $(1,143)$(882)$12 
Share-based compensation6 6 — — — — 
Common stock issued upon exercise of stock options2 2 — — — — 
Dividends declared to shareholders ($0.135/share)
(18)— (18)— — — 
Repurchases of common stock(61)— — (61)— — 
Issuance of ESPP shares2 1 — 1 — — 
Distributions to noncontrolling interests(1)— — — — (1)
Other 2 — — — — 2 
Net income86 — 86 — — — 
Other comprehensive income, net of tax
7 — — — 7 — 
Balance at March 31, 2023$1,657 $2,244 $1,478 $(1,203)$(875)$13 
See accompanying notes to condensed consolidated financial statements.


8



KBR, Inc.
Condensed Consolidated Statements of Cash Flows
(In millions)
(Unaudited)
Three Months Ended
March 29,March 31,
 20242023
Cash flows from operating activities:
Net income
$94 $86 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization36 36 
Equity in earnings of unconsolidated affiliates
(30)(23)
Deferred income tax 11 14 
Gain on disposition of assets(6) 
Other9 10 
Changes in operating assets and liabilities:
Accounts receivable, net of allowance for credit losses(30)(130)
Contract assets(26)(7)
Accounts payable78 110 
Contract liabilities(8)6 
Accrued salaries, wages and benefits(35)(36)
Payments on operating lease obligation(16)(17)
Payments from unconsolidated affiliates, net 6 
Distributions of earnings from unconsolidated affiliates43 24 
Pension funding(7)(4)
Other assets and liabilities(22)(40)
Total cash flows provided by operating activities$91 $35 
Cash flows from investing activities:
Purchases of property, plant and equipment $(25)$(19)
Proceeds from sale of assets or investments6  
Return of (investments in) equity method joint ventures, net29 61 
Other 1  
Total cash flows provided by investing activities$11 $42 
Cash flows from financing activities:
Borrowings on long-term debt24  
Borrowings on Revolver
93  
Payments on short-term and long-term debt(75)(4)
Payments on settlement of warrants(33) 
Debt issuance costs(16) 
Payments of dividends to shareholders(18)(16)
Payments to reacquire common stock(61)(61)
Other(5)27 
Total cash flows used in financing activities$(91)$(54)
Effect of exchange rate changes on cash(1)4 
Increase in cash and cash equivalents10 27 
Cash and cash equivalents at beginning of period304 389 
Cash and cash equivalents at end of period$314 $416 
Supplemental disclosure of cash flows information:
Noncash financing activities
Dividends declared$20 $18 
See accompanying notes to condensed consolidated financial statements.
9



KBR, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)

Note 1. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements were prepared using generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and Regulation S-X. Accordingly, these financial statements do not include all information or notes required by generally accepted accounting principles for annual financial statements and should be read together with our 2023 Annual Report on Form 10-K.

The condensed consolidated financial statements include all normal and recurring adjustments necessary to present fairly our financial position as of March 29, 2024, the results of our operations for the three months ended March 29, 2024 and March 31, 2023, respectively, and our cash flows for the three months ended March 29, 2024 and March 31, 2023, respectively. Our significant accounting policies are detailed in "Note 1. Significant Accounting Policies" of our 2023 Annual Report on Form 10-K. The Company's fiscal year ends on the Friday closest to December 31. The three months ended March 29, 2024 and March 31, 2023 contained 91 days and 90 days, respectively.

We have evaluated all events and transactions occurring after the balance sheet date but before the financial statements were issued and have included the appropriate disclosures.
Principles of Consolidation

The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. GAAP and include the accounts of KBR, Inc. and the subsidiaries it controls, including VIEs where it is the primary beneficiary (collectively, the "Company," "KBR", "we", "us" or "our"). We account for investments over which we have significant influence, but not a controlling financial interest, using the equity method of accounting. See Note 6 "Equity Method Investments and Variable Interest Entities" to our condensed consolidated financial statements for further discussion of our equity investments and VIEs. All material intercompany balances and transactions are eliminated in consolidation.

Note 2. Business Segment Information

We provide a wide range of professional services and the management of our business is heavily focused on major projects or programs within each of our reportable segments. At any given time, government programs and joint ventures represent a substantial part of our operations. We are organized into two core business segments, Government Solutions and Sustainable Technology Solutions and one non-core business segment as described below:
Government Solutions. Our Government Solutions business segment provides full life-cycle support solutions to defense, intelligence, space, aviation and other programs and missions for military and other government agencies primarily in the U.S., U.K. and Australia. KBR's services cover the full spectrum spanning research and development, advanced prototyping, acquisition support, systems engineering, C5ISR, cyber analytics, space domain awareness, test and evaluation, systems integration and program management, global supply chain management, operations readiness and support and professional advisory services across the defense, renewable energy and critical infrastructure sectors.

Sustainable Technology Solutions. Our Sustainable Technology Solutions business segment is anchored by our portfolio of over 80 innovative, proprietary, sustainability-focused process technologies that accelerate and enable energy transition across the industrial base in four primary verticals: ammonia/syngas, chemical/petrochemicals, clean refining and circular process/circular economy solutions. STS also provides highly synergistic services including advisory and consulting focused on broad-based energy transition and net-zero carbon emission solutions, high-end engineering, design and program management centered around decarbonization, energy efficiency, environmental impact and asset optimization, as well as our digitally-enabled operating and monitoring solutions. Through early planning and scope definition, advanced technologies and facility life-cycle optimization, our STS business segment works closely with customers to provide what we believe is the optimal approach to maximize their return on investment.
Other. Our non-core Other segment includes corporate expenses and selling, general and administrative expenses not allocated to the business segments above.
10



Operations by Reportable Segment
Three Months Ended
March 29,March 31,
20242023
Dollars in millions
Revenues:
Government Solutions$1,386 $1,328 
Sustainable Technology Solutions432 375 
     Total revenues$1,818 $1,703 
Operating income (loss):
Government Solutions$115 $102 
Sustainable Technology Solutions86 82 
Other(35)(40)
     Total operating income$166 $144 

Note 3. Revenue

Disaggregated Revenue

We disaggregate our revenue from customers by business unit, geographic destination and contract type for each of our segments as we believe it best depicts how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors.

Revenue by business unit and reportable segment was as follows:
Three Months Ended
March 29,March 31,
Dollars in millions20242023
Government Solutions
     Science & Space$298 $279 
     Defense & Intel411 363 
     Readiness & Sustainment356 405 
     International321 281 
Total Government Solutions1,386 1,328 
Sustainable Technology Solutions432 375 
Total revenue$1,818 $1,703 

Government Solutions revenue earned from key U.S. government customers includes U.S. DoD agencies and NASA, and is reported as Science & Space, Defense & Intel and Readiness & Sustainment. Government Solutions revenue earned from non-U.S. government customers primarily includes the U.K. MoD and the Australian Defence Force and is reported as International.








11



Revenue by geographic destination was as follows:
Three Months Ended March 29, 2024
Total by Countries/Regions
Dollars in millions
Government SolutionsSustainable Technology SolutionsTotal
     United States$818 $127 $945 
Europe396 72 468 
     Middle East40 125 165 
     Australia98 23 121 
     Africa17 33 50 
     Asia4 27 31 
     Other countries13 25 38 
Total revenue$1,386 $432 $1,818 
Three Months Ended March 31, 2023
Total by Countries/Regions
Dollars in millions
Government SolutionsSustainable Technology SolutionsTotal
     United States$718 $131 $849 
Europe447 58 505 
     Middle East26 87 113 
     Australia101 18 119 
     Africa19 18 37 
     Asia3 38 41 
     Other countries14 25 39 
Total revenue$1,328 $375 $1,703 

Many of our contracts contain cost reimbursable, time-and-materials and fixed price components. We define contract type based on the component that represents the majority of the contract. Revenue by contract type was as follows:    
Three Months Ended March 29, 2024
Dollars in millionsGovernment SolutionsSustainable Technology SolutionsTotal
     Cost Reimbursable$844 $ $844 
     Time-and-Materials245 263 508 
     Fixed Price297 169 466 
Total revenue$1,386 $432 $1,818 
Three Months Ended March 31, 2023
Dollars in millionsGovernment SolutionsSustainable Technology SolutionsTotal
     Cost Reimbursable$815 $ $815 
     Time-and-Materials263 233 496 
     Fixed Price250 142 392 
Total revenue$1,328 $375 $1,703 




12



Performance Obligations and Contract Liabilities

Changes in estimates are recognized on a cumulative catch-up basis in the current period associated with performance obligations satisfied in a prior period due to the release of a constrained milestone, modification in contract price or scope or a change in the likelihood of a contingency being resolved.

On March 29, 2024, we had $12.9 billion of transaction price allocated to remaining performance obligations. We expect to recognize approximately 38% of our remaining performance obligations as revenue within one year, 36% in years two through five and 26% thereafter. Revenue associated with our remaining performance obligations to be recognized beyond one year includes performance obligations primarily related to the Aspire Defence project, which has contract terms extending through 2041. Remaining performance obligations do not include variable consideration that was determined to be constrained as of March 29, 2024.

We recognized revenue of $174 million and $126 million for the three months ended March 29, 2024 and March 31, 2023, respectively, which was previously included in the contract liability balance at the beginning of each period.

Accounts Receivable    
March 29,December 29,
Dollars in millions20242023
     Unbilled$544 $519 
     Trade & other463 462 
Accounts receivable$1,007 $981 

13



Note 4. Cash and Cash Equivalents

We consider all highly liquid investments with an original maturity of three months or less to be cash equivalents. Cash and cash equivalents include cash balances held by our wholly owned subsidiaries as well as cash held by joint ventures that we consolidate. Joint venture and the Aspire project cash balances are limited to specific project activities and are not available for other projects, new acquisitions and joint ventures, general cash needs or distribution to us without approval of the board of directors of the respective entities. The cash and cash equivalents held in consolidated joint ventures and the Aspire project are expected to be used for their respective project costs and distributions of earnings.

The components of our cash and cash equivalents balance are as follows:
 March 29, 2024
Dollars in millionsInternational (a)Domestic (b)Total
Operating cash and cash equivalents$178 $1 $179 
Short-term investments (c)$4 $8 $12 
Cash and cash equivalents held in consolidated joint ventures and Aspire Defence subcontracting entities (d)$115 $8 $123 
Total$297 $17 $314 

 December 29, 2023
Dollars in millionsInternational (a)Domestic (b)Total
Operating cash and cash equivalents$122 $36 $158 
Short-term investments (c)6 8 14 
Cash and cash equivalents held in consolidated joint ventures and Aspire Defence subcontracting entities (d)111 21 132 
Total$239 $65 $304 
(a)Includes deposits held by non-U.S. entities with operating accounts that constitute offshore cash for tax purposes.
(b)Includes U.S. dollar and foreign currency deposits held in U.S. entities with operating accounts that constitute onshore cash for tax purposes but may reside either in the U.S. or in a foreign country.
(c)Includes time deposits, money market funds and other highly liquid short-term investments.
(d)Includes short-term investments held by Aspire Defence subcontracting entities for $85 million and $83 million as of March 29, 2024 and December 29, 2023, respectively.

Note 5. Unapproved Change Orders and Claims Against Clients and Estimated Recoveries of Claims Against Suppliers and Subcontractors

The amounts of unapproved change orders and claims against clients and estimated recoveries of claims against suppliers and subcontractors included in determining the profit or loss on contracts are as follows:
Three Months Ended
March 29,March 31,
Dollars in millions20242023
Amounts included in project estimates-at-completion at beginning of fiscal year
$74 $48 
Net increase (decrease) in project estimates41 13 
Ending balance$115 $61 

The balance as of March 29, 2024 primarily relates to projects in our Government Solutions segment.

14



Changes in Project-related Estimates

There are many factors that may affect the accuracy of our cost estimates and ultimately our future profitability. These include, but are not limited to, the availability and costs of resources (such as labor, materials and equipment), productivity, weather and ongoing resolution of legacy projects and legal matters, including any new or ongoing disputes with our business partners and others in our supply chain. We generally realize both lower and higher than expected margins on projects in any given period. We recognize revisions of revenues and costs in the period in which the revisions are known. This may result in the recognition of costs before the recognition of related revenue recovery, if any.


Note 6. Equity Method Investments and Variable Interest Entities

We conduct some of our operations through joint ventures, which operate through partnerships, corporations and undivided interests and other business forms and are principally accounted for using the equity method of accounting. Additionally, the majority of our joint ventures are VIEs.

The following table presents a rollforward of our equity in and advances to unconsolidated affiliates:
Three Months EndedYear ended
March 29,December 29,
20242023
Dollars in millions
Beginning balance$206 $188 
Equity in earnings of unconsolidated affiliates (a)
30 114 
Distributions of earnings of unconsolidated affiliates (b)(66)(63)
Payments from unconsolidated affiliates, net (18)
(Return of) investments in equity method investment, net (c)(29)(60)
Foreign currency translation adjustments(1)3 
Other (d)38 42 
Ending balance$178 $206 
(a)The equity in earnings of unconsolidated affiliates in 2024 and 2023 is related to normal activities within our other joint ventures.
(b)In the normal course of business, our joint ventures will declare a distribution in the current quarter that is not paid until the subsequent quarter. As such, the distributions declared during the current quarter may not agree to the distributions of earnings from unconsolidated affiliates on our condensed consolidated statements of cash flows.
(c)For the three months ended March 29, 2024, we received a return of investment from JKC of approximately $29 million related to our proportionate share of a tax refund. During the year ended December 29, 2023, we received a return of investment from JKC of approximately $61 million related to the second payment received from the Subcontractor Settlement Agreement.
(d)During the three months ended March 29, 2024, Other included the reclassification of the net liability position of $38 million related to joint ventures within our STS business segment. During the year ended December 29, 2023, Other included the reclassification of the net liability position of $47 million related to a joint venture within our STS business segment.

Related Party Transactions

We often provide engineering, construction management and other subcontractor services to our unconsolidated joint ventures, and our revenues include amounts related to these services. For the three months ended March 29, 2024 and March 31, 2023, our revenues included $173 million and $124 million, respectively, related to the services we provided primarily to the Aspire Defence Limited joint venture within our GS business segment and a joint venture within our STS business segment.

15



Amounts included in our condensed consolidated balance sheets related to services we provided to our unconsolidated joint ventures as of March 29, 2024, and December 29, 2023 are as follows:
 March 29,December 29,
Dollars in millions20242023
Accounts receivable, net of allowance for credit losses $97 $103 
Contract liabilities$89 $89 

Note 7. Retirement Benefits

We have two frozen defined benefit pension plans in the U.S., one frozen and one active plan in the U.K. and one frozen plan in Germany. The components of net periodic pension benefit related to the frozen U.K. pension for the three months ended March 29, 2024 and March 31, 2023, respectively, were as follows:

 Three Months Ended
March 29,March 31,
Dollars in millions20242023
Components of net periodic pension benefit
Interest cost$15 $15 
Expected return on plan assets(28)(25)
Recognized actuarial loss1  
Net periodic pension benefit$(12)$(10)

For the three months ended March 29, 2024, we have contributed approximately $7 million of the $39 million we expect to contribute to our U.K. pension plan in 2024.

Note 8. Debt and Other Credit Facilities

Our outstanding debt consisted of the following at the dates indicated:
Dollars in millionsMarch 29, 2024December 29, 2023
Term Loan A$499 $595 
Term Loan B1,000 501 
Senior Notes250 250 
Revolver143 505 
Unamortized debt issuance costs and discounts(28)(19)
Total debt1,864 1,832 
Less: current portion22 31 
Total long-term debt, net of current portion$1,842 $1,801 

Senior Credit Facility

Our existing Credit Agreement, dated as of April 25, 2018, as amended ("Credit Agreement"), consists of a $1 billion revolving credit facility (the "Revolver"), a Term Loan A ("Term Loan A") with debt tranches denominated in U.S. dollars and British pound sterling and a Term Loan B ("Term Loan B" and together with the Revolver and Term Loan A, the "Senior Credit Facility").

We entered into Amendment No.11 to our Credit Agreement on January 19, 2024. This amendment provides for an incremental Term Loan B facility in an aggregate principal amount of $1 billion and extends the Term Loan B maturity date to January 2031. We borrowed the full $1 billion principal amount available under this loan. We received $24 million in cash proceeds from this borrowing to pay accrued interest and financing fees, $501 million was applied to the outstanding principal
16



under the Term Loan B facility and the remaining $475 million was applied to the outstanding principal under the Revolver. In addition, Amendment No.11 reduced the interest rate margin applicable to Term Loan B.

We entered into Amendment No.12 to our Credit Agreement on February 7, 2024. This amendment consolidated the USD denominated Term A-1, Term A-2 and Term A-4 loan facilities under our Credit Agreement into the amended USD denominated Term A-1 loan facility and continued the GBP denominated Term A-3 loan facility outstanding at December 29, 2023. In 2024, $76 million in cash was paid on the outstanding Term Loan A principal and accrued interest and $20 million was applied to the Term Loan A principal through a borrowing on our Revolver. Additionally, this amendment extended the maturity date of the $1 billion Revolver, amended Term A-1 loan facility and Term A-3 loan facility to February 2029.

We had cash borrowings of $93 million on our Revolver that occurred during the three months ended March 29, 2024. The interest rates with respect to the Revolver, Term Loan A and Term Loan B are based on, at our option, the applicable adjusted reference rate plus an additional margin or base rate plus additional margin. Additionally, there is a commitment fee applicable to available amounts under the Revolver.

The details of the applicable margins and commitment fees under the amended Revolver and Term Loan A are based on our consolidated net leverage ratio as follows:
Revolver and Term Loan A
Consolidated Net Leverage RatioReference Rate (a)Base RateCommitment Fee
Greater than or equal to 4.25 to 1.002.25 %1.25 %0.33 %
Less than 4.25 to 1.00 but greater than or equal to 3.25 to 1.002.00 %1.00 %0.30 %
Less than 3.25 to 1.00 but greater than or equal to 2.25 to 1.001.75 %0.75 %0.28 %
Less than 2.25 to 1.00 but greater than or equal to 1.25 to 1.001.50 %0.50 %0.25 %
Less than 1.25 to 1.001.25 %0.25 %0.23 %
(a)The reference rate for the Revolver and the U.S. dollar tranches of Term Loan A is SOFR plus 10 bps Credit Spread Adjustment and the British pound sterling tranche is SONIA plus 12 bps Credit Spread Adjustment.

The details of the applicable margins under the amended Term Loan B are based on our consolidated net leverage ratio as follows:
Consolidated Net Leverage RatioReference Rate (a)Base Rate
Greater than or equal to 2.00 to 1.002.25 %1.25 %
Less than 2.00 to 1.002.00 %1.00 %
(a)The reference rate for the Term Loan B is SOFR.

Term Loan A provides for quarterly principal payments of 0.625% of the aggregate principal amount that commenced with the fiscal quarter ended March 31, 2022, increasing to 1.25% starting with the quarter ending April 3, 2026. Term Loan B provides for quarterly principal payments of 0.25% of the initial aggregate principal amounts that commenced with the fiscal quarter ended June 30, 2020. Term Loan A and the Revolver mature in February 2029 and Term Loan B matures in January 2031.

The Senior Credit Facility contains financial covenants of a maximum consolidated net leverage ratio and a consolidated interest coverage ratio (as such terms are defined in the Senior Credit Facility). Our consolidated net leverage ratio as of the last day of any fiscal quarter may not exceed 4.25 to 1 in 2023, reducing to 4.00 to 1 in 2024 and thereafter. Our consolidated interest coverage ratio may not be less than 3.00 to 1 as of the last day of any fiscal quarter. As of March 29, 2024, we were in compliance with our financial covenants related to our debt agreements.

17



Senior Notes

On September 30, 2020, we issued and sold $250 million aggregate principal amount of 4.750% Senior Notes due 2028 (the "Senior Notes") pursuant to an indenture among us, the guarantors party thereto and Citibank, N.A., as trustee. The Senior Notes are senior unsecured obligations and are fully and unconditionally guaranteed by each of our existing and future domestic subsidiaries that guarantee our obligations under the Senior Credit Facility and certain other indebtedness. Interest is payable semi-annually in arrears on March 30 and September 30 of each year, beginning on March 30, 2021, and the principal is due on September 30, 2028.

On or after September 30, 2023, we may redeem all or part of the Senior Notes at our option, at the redemption prices set forth in the Senior Notes, plus accrued and unpaid interest, if any, to (but not including) the redemption date. If we undergo a change of control, we may be required to make an offer to holders of the Senior Notes to repurchase all of the Senior Notes at a purchase price equal to 101% of the principal amount thereof, plus accrued and unpaid interest.

Letters of credit, surety bonds and guarantees

In connection with certain projects, we are required to provide letters of credit, surety bonds or guarantees to our customers in the ordinary course of business as credit support for contractual performance guarantees, advanced payments received from customers and future funding commitments. As of March 29, 2024, we had $1 billion in a committed line of credit on the Revolver under our Senior Credit Facility and $395 million of bilateral and uncommitted lines of credit. As of March 29, 2024, with respect to our Revolver, we had $143 million of outstanding borrowings. We also have $14 million of outstanding letters of credit on our Senior Credit Facility. With respect to our $395 million of bilateral and uncommitted lines of credit, we utilized $291 million for letters of credit as of March 29, 2024. The total remaining capacity of these committed and uncommitted lines of credit was approximately $947 million, of which up to approximately $791 million can be used toward issuing letters of credit. Of the letters of credit outstanding under the Senior Credit Facility, none have expiry dates beyond the maturity date of the Senior Credit Facility. Of the total letters of credit outstanding under our bilateral facilities, $84 million relate to our joint venture operations where the letters of credit are posted using our capacity to support our pro-rata share of obligations under various contracts executed by joint ventures of which we are a member.

Note 9. Income Taxes

The effective tax rate was approximately 27% and 26% for the three months ended March 29, 2024 and March 31, 2023, respectively. The effective tax rate for the three months ended March 29, 2024 and March 31, 2023 as compared to the U.S. statutory rate of 21%, was primarily affected by the rate differential on our foreign earnings and the impact of state and local taxes in the U.S.

The valuation allowance for deferred tax assets as of March 29, 2024 and December 29, 2023 was $148 million. The remaining valuation allowance is primarily related to foreign tax credit carryforwards and foreign and state net operating loss carryforwards that, in the judgment of management, do not meet the more likely than not realization threshold. The ultimate realization of deferred tax assets is dependent on the generation of future taxable income, in the appropriate character and source, during the periods in which those temporary differences become deductible or within the remaining carryforward period. Management considers the scheduled reversal of deferred tax liabilities (including the impact of available carryback and carryforward periods), projected future taxable income and tax-planning strategies in making this assessment.
The utilization of the unreserved foreign tax credit carryforwards is based on our ability to generate income from foreign sources of approximately $210 million prior to their expiration. The utilization of other net deferred tax assets, excluding those associated with indefinite-lived intangible assets, is based on our ability to generate U.S. forecasted taxable income of approximately $957 million. Changes in our forecasted taxable income, in the appropriate character and source, as well as jurisdiction, could affect the ultimate realization of deferred tax assets.

The provision for uncertain tax positions included in other liabilities and deferred income taxes on our condensed consolidated balance sheets as of March 29, 2024 and December 29, 2023 was $73 million and $74 million, respectively.

18



Note 10. Commitments and Contingencies

We are a party to litigation and other proceedings that arise in the ordinary course of our business. These types of matters could result in fines, penalties, cost reimbursements or contributions, compensatory or treble damages or non-monetary sanctions or relief. We believe the probability is remote that the outcome of any individual matter, including the matters described below, will have a material adverse effect on the corporation as a whole, notwithstanding that the unfavorable resolution of any matter may have a material effect on our net earnings and cash flows in any particular reporting period. Among the factors that we consider in this assessment are the nature of existing legal proceedings and claims, the asserted or possible damages or loss contingency (if estimable), the progress of the case, existing law and precedent, the opinions or views of legal counsel and other advisers, our experience in similar cases and the experience of other companies, the facts available to us at the time of assessment and how we intend to respond to the proceeding or claim. Our assessment of these factors may change over time as individual proceedings or claims progress.

Although we cannot predict the outcome of legal or other proceedings with certainty, when it is probable that a loss will be incurred and the amount is reasonably estimable, U.S. GAAP requires us to accrue an estimate of the probable loss or range of loss. In the event a loss is probable, but the probable loss is not reasonably estimable, we are required to make a statement that such an estimate cannot be made. We follow a thorough process in which we seek to estimate the reasonably possible loss or range of loss, and only if we are unable to make such an estimate do we conclude and disclose that an estimate cannot be made. Accordingly, unless otherwise indicated below in our discussion, a reasonably possible loss or range of loss associated with any individual contingency cannot be estimated. There have been no substantive developments or changes to existing claims.

Note 11. U.S. Government Matters

We provide services to various U.S. governmental agencies, including the U.S. DoD, NASA and the Department of State. The negotiation, administration and settlement of our contracts are subject to audit by the DCAA. The DCAA serves in an advisory role to the DCMA, which is responsible for the administration of the majority of our contracts. The scope of these audits includes, among other things, the validity of direct and indirect incurred costs, provisional approval of annual billing rates, approval of annual overhead rates, compliance with the FAR and CAS, compliance with certain unique contract clauses and audits of certain aspects of our internal control systems. Based on the information received to date, we do not believe any completed or ongoing government audits will have a material adverse impact on our results of operations, financial position or cash flows. The U.S. government also retains the right to pursue various remedies under any of these contracts which could result in challenges to expenditures, suspension of payments, fines and suspensions or debarment from future business with the U.S. government.

We accrued for probable and reasonably estimable unallowable costs associated with open government matters related to our GS business in the amounts of $45 million as of March 29, 2024 and $45 million as of December 29, 2023, which are recorded in other liabilities on our condensed consolidated balance sheets.

Legacy U.S. Government Matters

Between 2002 and 2011, we provided significant support to the U.S. Army and other U.S. government agencies in support of the war in Iraq under the LogCAP III contract. We have been closing out the LogCAP III contract since 2011, and we expect the contract closeout process to continue for at least another year. As a result of our work under LogCAP III, there are claims and disputes pending between us and the U.S. government that need to be resolved in order to close the contract. The contract closeout process includes administratively closing the individual task orders issued under the contract. We continue to work with the U.S. government to resolve the issues to close the remaining task orders, which includes ongoing litigation of third-party vendor disputes. We also have matters related to ongoing litigation or investigations involving U.S. government contracts. We anticipate billing additional labor, vendor resolution and litigation costs as we resolve the open matters in the future.

First Kuwaiti Trading Company arbitration. In April 2008, FKTC, one of our LogCAP III subcontractors providing housing containers, filed for arbitration with the American Arbitration Association for several claims under various LogCAP III subcontracts. After a series of arbitration proceedings and related litigation between KBR and the U.S. government, the panel heard the final claims and we received an award on July 27, 2022. FKTC filed a motion for correction of the award asking the tribunal to change its findings. The tribunal denied FKTC's motion in an order issued on October 20, 2022. On January 5, 2023, FKTC filed a motion to vacate the arbitral award in the Eastern District of Virginia Federal District Court. KBR filed its response on February 2, 2023. On March 22, 2023, both parties presented oral arguments. On May 12, 2023, the District Court issued its order denying FKTC’s motion to vacate the arbitration award and confirming the award. On June 12, 2023, the parties
19



submitted their briefs in support of their calculations of the final award amount. KBR sought to confirm the net award of $16 million in KBR’s favor plus post-judgment interest. FKTC sought to offset amounts awarded to KBR with amounts FKTC claimed it was owed based on unpaid principal and post award interest on the awards issued in its favor in the prior arbitration proceedings, totaling $70 million. KBR disagreed with FKTC’s interest claim and calculation. On September 22, 2023, the Court issued a decision finding the net amount due in favor of KBR from FKTC is $8 million. FKTC has appealed this ruling. In addition, in March 2022, FKTC filed a civil action in Kuwait civil court against KBR seeking $100 million in damages. This action is duplicative of the claims decided in arbitration. In September 2022, we filed a motion to dismiss this action for lack of jurisdiction due to the arbitration agreement between KBR and FKTC. On December 7, 2023, the Kuwait Court of Cassation issued a ruling ordering KBR to pay an immaterial provisional damage award and requiring FKTC to refile its case in the Court of First Instance for adjudication. Based on our assessment of existing law and precedent, the opinions or views of legal counsel and the facts available to us, no amounts were accrued as of March 29, 2024.
20



Note 12. Accumulated Other Comprehensive Loss

Changes in AOCL, net of tax, by component
Dollars in millionsAccumulated foreign currency translation adjustmentsAccumulated pension liability adjustmentsChanges in fair value of derivativesTotal
Balance at December 29, 2023$(300)$(644)$29 $(915)
   Other comprehensive income (loss) adjustments before reclassifications
(8)1 14 7 
    Amounts reclassified from AOCL
 1 (5)(4)
Net other comprehensive income (loss)
(8)2 9 3 
Balance at March 29, 2024$(308)$(642)$38 $(912)

Dollars in millionsAccumulated foreign currency translation adjustmentsAccumulated pension liability adjustmentsChanges in fair value of derivativesTotal
Balance at December 31, 2022$(352)$(568)$38 $(882)
   Other comprehensive income (loss) adjustments before reclassifications29  (5)24 
    Amounts reclassified from AOCL
(14) (3)(17)
Net other comprehensive income (loss)15  (8)7 
Balance at March 31, 2023$(337)$(568)$30 $(875)

Reclassifications out of AOCL, net of tax, by component
Three Months Ended
March 29,March 31,
Dollars in millions20242023Affected line item on the Condensed Consolidated Statements of Operations
Accumulated foreign currency adjustments
    Reclassification of foreign currency adjustments$ $14 Net income attributable to noncontrolling interests and Gain on disposition of assets and investments
Net accumulated foreign currency
$ $14 Net of tax
Accumulated pension liability adjustments
  Recognized actuarial loss$(1)$ See (a) below
Net pension and post-retirement benefits
$(1)$ Net of tax
Changes in fair value for derivatives
   Foreign currency hedge and interest rate swap settlements
$7 $4 Other non-operating expense
Tax expense
(2)(1)Provision for income taxes
Net changes in fair value of derivatives
$5 $3 Net of tax
(a)This item is included in the computation of net periodic pension cost. See Note 7 "Retirement Benefits" to our condensed consolidated financial statements for further discussion.
21




Note 13. Share Repurchases

Authorized Share Repurchase Program

        On February 25, 2014, the Board of Directors authorized a plan to repurchase our outstanding shares of common stock, which replaced and terminated the August 26, 2011 share repurchase program. On February 19, 2024, the Board of Directors authorized $174 million of additional share repurchases to be added to the prior authorizations, which returned the total amount authorized and available for repurchase under the share repurchase program to $500 million. As of March 29, 2024, $450 million remains available for repurchase under this authorization. The authorization does not obligate us to acquire any particular number of shares of common stock and may be commenced, suspended or discontinued without prior notice. The share repurchases are intended to be funded through our current and future cash flows and the authorization does not have an expiration date.

Withheld to Cover Program

We have in place a "withhold to cover" program, which allows us to withhold common shares from employees in connection with the settlement of income tax and related benefit withholding obligations arising from the issuance of share-based equity awards under the KBR, Inc. 2006 Stock and Incentive Plan.

The table below presents information on our share repurchases activity under these programs:
Three Months Ended
March 29, 2024
Number of SharesAverage Price per ShareDollars in Millions
Repurchases under the authorized share repurchase program826,797 $60.45 $50 
Withhold to cover shares189,942 $59.14 $11 
Total1,016,739 $60.21 $61 
Three Months Ended
March 31, 2023
Number of SharesAverage Price per ShareDollars in Millions
Repurchases under the authorized share repurchase program934,935 $53.46 $50 
Withhold to cover shares203,233 $53.62 $11 
Total1,138,168 $53.49 $61 

22



Note 14. Income per Share    

Basic income per share is based upon the weighted average number of common shares outstanding during the period. Dilutive income per share includes additional common shares that would have been outstanding if potential common shares with a dilutive effect had been issued using the if-converted method for Convertible Debt and the treasury stock method for all other instruments.

A summary of the basic and diluted net income per share calculations is as follows:
 Three Months Ended
March 29,March 31,
Shares in millions20242023
Net income attributable to KBR:
Net Income attributable to KBR
$93 $86 
Less earnings allocable to participating securities$ $(1)
Basic net income attributable to KBR
$93 $85 
Reversal of Convertible Debt interest expense$ $2 
Diluted net income attributable to KBR
$93 $87 
Weighted average common shares outstanding:
Basic weighted average common shares outstanding135 137 
Convertible Debt 14 
Warrants 3 
Diluted weighted average common shares outstanding135 154 
Net income attributable to KBR per share:
Basic$0.69 $0.62 
Diluted$0.69 $0.56 
The Convertible Debt and Warrants outstanding in 2023 had dilutive effects to our basic net income attributable to KBR per share. For the three months ended March 29, 2024, the diluted net income attributable to KBR per share calculation excluded the following weighted-average potential common shares because their inclusion would have been anti-dilutive: 0.3 million related to our stock options and restricted stock awards. For the three months ended March 31, 2023, the diluted net income attributable to KBR per share calculation excluded the following weighted-average potential common shares because their inclusion would have been anti-dilutive: 10.5 million related to the Warrant Transactions and 0.4 million related to our stock options and restricted stock awards.

Note 15. Fair Value of Financial Instruments and Risk Management

Fair value measurements. The fair value of an asset or liability is the price that would be received to sell an asset or transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. We utilize a fair value hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value and defines three levels of inputs that may be used to measure fair value. Level 1 inputs are quoted prices in active markets for identical assets or liabilities. Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets, quoted prices in markets that are not active, inputs other than quoted prices that are observable for the asset or liability or inputs derived from observable market data. Level 3 inputs are unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets or liabilities.

The carrying amount of cash and cash equivalents, accounts receivable and accounts payable, as reflected in the condensed consolidated balance sheets, approximates fair value due to the short-term maturities of these financial instruments. The carrying values and estimated fair values of our financial instruments that are not required to be recorded at fair value in our condensed consolidated balance sheets are provided in the following table.
23




March 29, 2024December 29, 2023
Dollars in millionsCarrying ValueFair ValueCarrying ValueFair Value
Liabilities (including current maturities):
Term Loan A
Level 2$499 $499 $595 $595 
Term Loan B
Level 21,000 1,003 501 503 
Senior Notes
Level 2250 230 250 231 
RevolverLevel 2143 143 505 505 
Derivative Liability - WarrantsLevel 2  33 33 

The carrying value of the debt instruments listed above exclude debt issuance costs for the respective instrument. See Note 8 "Debt and Other Credit Facilities" for the debt issuance costs of our debt instruments and further discussion of our term loans, Senior Notes and Revolver. We paid the outstanding warrant derivative liability at December 29, 2023 of $33 million in 2024.

The following disclosures for foreign currency risk and interest rate risk includes the fair value hierarchy levels for our assets and liabilities that are measured at fair value on a recurring basis.

Foreign currency risk. We conduct business globally in numerous currencies and are therefore exposed to foreign currency fluctuations. We may use derivative instruments to reduce the volatility of earnings and cash flows associated with changes in foreign currency exchange rates. We do not use derivative instruments for speculative trading purposes. We generally utilize foreign exchange forwards and currency option contracts to hedge exposures associated with forecasted future cash flows and to hedge exposures present on our balance sheet.

As of March 29, 2024, the gross notional value of our foreign currency exchange forwards and option contracts used to hedge balance sheet exposures was $39 million, all of which had durations of 15 days or less. We also had approximately $1 million (gross notional value) of cash flow hedges which had durations of 3 months or less. The cash flow hedges are related to the British pound.

The fair value of our balance sheet hedges and cash flow hedges are included in other current assets and other assets on our condensed consolidated balance sheets at March 29, 2024, and December 29, 2023. The fair values of these derivatives are considered Level 2 under ASC 820, Fair Value Measurement, as they are based on quoted prices directly observable in active markets.
The following table summarizes the recognized changes in fair value of our balance sheet hedges offset by remeasurement of balance sheet positions. These amounts are recognized in our condensed consolidated statements of operations for the periods presented. The net of our changes in fair value of hedges and the remeasurement of our assets and liabilities is included in other non-operating expense on our condensed consolidated statements of operations.
Three Months Ended
March 29,March 31,
Dollars in millions20242023
Balance Sheet Hedges - Fair Value$(1)$ 
Balance Sheet Position - Remeasurement1 (2)
Net gain (loss)$ $(2)

24



Interest rate risk. We use interest rate swaps to reduce interest rate risk and to manage net interest expense by converting a portion of our variable rate debt under our Senior Credit Facility into fixed-rate debt. Our portfolio of interest rate swaps consists of the following:

Dollars in millionsNotional Amount at March 29, 2024Pay Fixed Rate (Weighted Average)Receive Variable RateSettlement and Termination
March 2020 Interest Rate Swaps$400 0.89 %Term SOFRMonthly through January 2027
September 2022 Interest Rate Swaps$350 3.43 %Term SOFRMonthly through January 2027
March 2023 Interest Rate Swaps$205 3.61 %Term SOFRMonthly through January 2027
March 2023 Amortizing Interest Rate Swaps£114 3.81 %Term SONIAMonthly through November 2026

Our interest rate swaps are reported at fair value using Level 2 inputs. The fair value of the interest rate swaps at March 29, 2024 was a $48 million asset, of which $25 million is included in other current assets and $23 million is included in other assets. The unrealized net gain on these interest rate swaps was $48 million and is included in AOCL as of March 29, 2024. The fair value of the interest rate swaps at December 29, 2023, was a $36 million net asset, of which $24 million is included in other current assets, $18 million is included in other assets and $6 million is included in other liabilities. The unrealized net gains on these interest rate swaps was $36 million and is included in AOCL as of December 29, 2023.

Sales of Receivables. From time to time, we sell certain receivables to unrelated third-party financial institutions under various accounts receivable monetization programs. One such program is with MUFG Bank, Ltd. (“MUFG”) under a Master Accounts Receivable Purchase Agreement (the “RPA”), which provides the sale to MUFG of certain of our designated eligible receivables, with a significant portion of such receivables being owed by the U.S. government. During the three months ended March 29, 2024, we derecognized $755 million of accounts receivables from the balance sheet under these agreements, of which certain receivables totaling $746 million were sold under the MUFG RPA. The fair value of the sold receivables approximated their book value due to their short-term nature. The fees incurred are presented in other non-operating expense on the condensed consolidated statements of operations.

Activity for third-party financial institutions consisted of the following:
Three Months Ended
Dollars in millionsMarch 29, 2024March 31, 2023
Beginning balance$135 $134 
Sale of receivables755 703 
Settlement of receivables(756)(714)
Cash collected, not yet remitted(8)(2)
Outstanding balances sold to financial institutions$126 $121 

Other Investments. Other investments include investments in equity securities of privately held companies without readily determinable fair values and are included in other assets on our condensed consolidated balance sheets. These investments are accounted for under the measurement alternative, provided that KBR does not have the ability to exercise significant influence or control over the investees. KBR's aggregate investment in Mura Technology ("Mura") is approximately 17%. The carrying value of our investment in Mura was $127 million at March 29, 2024. The carrying value of our investment in Mura was $128 million at December 29, 2023.

Note 16. Recent Accounting Pronouncements

New accounting pronouncements requiring implementation in future periods are discussed below.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. ASU 2023-07 requires disclosure of significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items to reconcile to segment profit or loss, and the title and position of the entity’s CODM. The amendments in this update also expand the interim segment disclosure requirements. ASU 2023-07 will be
25



effective for our 2024 fiscal year and for interim periods starting in our first quarter of fiscal year 2025. We expect this ASU to only impact our disclosures with no impacts to our results of operations, cash flows and financial condition.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The ASU requires that an entity disclose specific categories in the effective tax rate reconciliation as well as provide additional information for reconciling items that meet a quantitative threshold. Further, the ASU requires certain disclosures of state versus federal income tax expense and taxes paid. The amendments in this ASU are required to be adopted for fiscal years beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued. We expect this ASU to only impact our disclosures with no impacts to our results of operations, cash flows and financial condition.

In March 2024, the U.S. Securities and Exchange Commission ("SEC") adopted the final rule under SEC Release No. 33-11275, The Enhancement and Standardization of Climate-Related Disclosures for Investors. This rule would require registrants to disclose certain climate-related information in registration statements and annual reports. In April 2024, the SEC issued a stay of the final rules pending a judicial review of the validity of the rules by the Eighth Circuit Court of Appeals. We are currently evaluating the final rule to determine its impact on our disclosures.
26



Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Introduction

The purpose of MD&A is to disclose material changes in our financial condition since the most recent fiscal year-end and results of operations during the current fiscal period as compared to the corresponding period of the preceding fiscal year. The MD&A should be read in conjunction with the condensed consolidated financial statements, accompanying notes and our 2023 Annual Report on Form 10-K.

Overview
KBR, Inc., a Delaware corporation ("KBR"), delivers science, technology, engineering and logistics support solutions to governments and companies around the world. Drawing from its rich 100-year history and culture of innovation and mission focus, KBR creates sustainable value by combining deep domain expertise with its full life cycle capabilities to help clients meet their most pressing challenges. Our capabilities and offerings include the following:

Scientific research such as quantum science and computing; health and human performance; materials science; life science research; and earth sciences;
Defense systems engineering such as rapid prototyping; test and evaluation; aerospace acquisition support; systems and platform integration; and sustainment engineering;
Operational support such as space domain awareness; C5ISR; human spaceflight and satellite operations; integrated supply chain and logistics; and military aviation support;
Information operations such as cyber analytics and cybersecurity; data analytics; mission planning systems; virtual/augmented reality and technical training; and artificial intelligence and machine learning;
Professional advisory services across the defense, renewable energy and critical infrastructure sectors; and
Sustainable decarbonization solutions that accelerate and enable energy transition and climate change solutions such as proprietary, sustainability-focused process licensing; advisory services focused on energy transition; high-end engineering, design and management program offerings; and digitally-enabled asset optimization solutions.

KBR's strategic growth vectors include:
Defense modernization;
Space superiority;
Health and human performance;
Sustainable technology;
High-end engineering;
Energy transition and security; and
Technology-led asset optimization

Key customers include U.S. DoD agencies such as the U.S. Army, U.S. Navy and U.S. Air Force, Missile Defense Agency, National Geospatial-Intelligence Agency, National Reconnaissance Office and other intelligence agencies; U.S. civilian agencies such as NASA, U.S. Geological Survey and National Oceanic and Atmospheric Administration; the U.K. MoD, London Metropolitan Police, and other U.K. Crown Services; the Royal Australian Air Force, Navy and Army; other national governments; and a wide range of commercial and industrial companies.

Our deployment priorities are to fund organic growth, maintain responsible leverage, maintain an attractive dividend, make strategic, accretive acquisitions and repurchase shares. As demonstrated by our acquisitions of Frazer Nash Consultancy Limited, VIMA Group and others in the past few years, our acquisition thesis is centered around moving upmarket, expanding capabilities and broadening customer sets across strategic growth vectors. KBR also develops and prioritizes investment in technologies that are disruptive, innovative and sustainability- and safety-focused. These technologies and engineering solutions enable clients to achieve a cleaner, greener, more energy efficient global future.







27



Business Environment and Trends

Government Outlook

In March 2024, the U.S. government finalized the fiscal 2024 budget. The U.S. government's fiscal 2024 budget was operating under a continuing resolution funding measure from the start of the 2024 U.S. government fiscal year through the passage date of the spending bills in March 2024. Discretionary spending includes approximately $825 billion in defense spending and approximately $703 billion in non-defense discretionary spending. Additionally, the approved 2024 NASA budget is $25 billion. In April 2024, a $61 billion Ukraine Security Assistance supplemental funding bill was enacted to provide ongoing assistance and equipment to the military and national security forces of Ukraine and other forces or groups engaged in resisting Russian aggression against Ukraine.

In March 2024, President Biden provided his proposed fiscal 2025 budget, which includes $1.6 trillion in discretionary spending, $895 billion related to defense spending and $734 billion for non-defense spending. The requested discretionary spending amounts are consistent with the fiscal 2024 budget. The Fiscal Responsibility Act of 2023 imposed statutory caps on discretionary funding in 2025 that restrict increases within the discretionary budget. This Fiscal Responsibility Act also enacted limits on discretionary funding for the years 2026 through 2029. The proposed fiscal 2025 budget continues to allocate funding to important initiatives from previous year fiscal budgets, including funding to deter aggression in the Indo-Pacific and funding for certain AUKUS-related items. The effect of President Biden's proposed fiscal 2025 budget on individual programs or KBR cannot be predicted at this time. We anticipate the federal budget will continue to be subject to debate and compromise shaped by, among other things, heightened political tensions, the global security environment, inflationary pressures and macroeconomic conditions. The result may be shifting funding priorities, which could have material impacts on defense spending broadly and our programs.

Internationally, our Government Solutions work is performed primarily for the U.K. MoD and the Australian Department of Defence. In March 2024, the U.K. government announced the defense budget, with the defense budget remaining consistent with the defense budget from the prior fiscal year. In March 2023, the U.K. government announced its intent to increase its defense budget by £11 billion over the next five years, increasing the defense budget to 2.25% of GDP by 2025. Recognizing the importance of strong defense and the role the U.K. plays across the globe, the U.K. has prioritized investment in military research and investment in key areas to advance and develop capabilities around artificial intelligence, cyber security and space superiority. It is expected the next general election in the United Kingdom will occur in 2024 (and no later than January 28, 2025). The effect of the next general election in the United Kingdom on KBR or our individual programs cannot be predicted at this time. The Australian government continues to invest in defense spending, with particular focus on enhancing regional security, modernizing defense capabilities, strengthening cyber defenses and promoting broader economic stability. The fiscal year budget for Australia for the 2023 - 2024 financial year was finalized, with the Australian government increasing defense spending by 5% to AUD 51.0 billion, or approximately 2.00% of GDP.

With defense and civil budgets driven in part by political instability, military conflicts, aging platforms and infrastructure and the need for technology advances, we expect continued opportunities to provide solutions and technologies to mission critical work aligned with our customers’ and our nation’s critical priorities.

Sustainable Technology Outlook

Long-range commercial market fundamentals are supported by global population growth, expanding global development and an acceleration of demand for energy transition, renewable energy sources and climate change solutions. The globe is in search of the solution to the energy trilemma, the balance between energy affordability, ensuring energy security and achieving environmental sustainability. Clients are prioritizing their efforts to solve the energy trilemma by investing in digital solutions to optimize operations, increase end-product flexibility and energy efficiency, reduce unplanned downtime and minimize environmental footprint. As the global focus on energy security intensifies and companies continue to commit to near-term carbon neutrality and longer-range net-zero carbon emissions, we expect spending to continue in areas such as decarbonization; carbon capture, utilization and sequestration; biofuels; and circular economy. Further, leading companies across the world are proactively evaluating clean energy alternatives, including hydrogen and green ammonia, which complements KBR's proprietary process technologies, solutions and capabilities. We expect climate change and energy transition to continue to be areas of priority and investment as many countries, including the U.S., look to boost their economies and invest in a cleaner future.

    Our Business

KBR's business is organized into two core and one non-core business segments as follows:
28




Core business segments
• Government Solutions
• Sustainable Technology Solutions

Non-core business segment
• Other

See additional information on our business segments in Note 2 "Business Segment Information" to our condensed consolidated financial statements.