Q2 2026 KBR Inc Earnings Call

July 30, 2026

Speaker #1: Today's prepared remarks: we will host a question-and-answer session. If you would like to ask a question, please press *1 to raise your hand. To withdraw your question, press *1 again.

Operator: After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Rachael Goldwait, Head of Investor Relations. Rachael, go ahead.

Speaker #1: I will now hand the conference over to Rachael Goldwait. Head of Investor Relations. Rachael, go

Speaker #2: Thank you, and good morning. Welcome to KBR's second quarter 2026 earnings call. Joining me today are Stuart Bradie, President and CEO, and Shad Evans, Executive Vice President and CFO.

Rachael Goldwait: Thank you. Good morning. Welcome to KBR's Q2 2026 earnings call. Joining me today are Stuart Bradie, President and CEO, and Shad Evans, Executive Vice President and CFO. Stuart and Shad will cover highlights from the quarter. Then we'll open the line for your questions. Today's earnings presentation is available on the investor relations section of our website at kbr.com. As outlined on slide two, today's discussion includes forward-looking statements and certain non-GAAP financial measures. Additional information, including reconciliations to the nearest GAAP measures, can be found in the presentation appendix. With that, I'll turn the call over to Stuart.

Rachael Goldwait: Thank you. Good morning. Welcome to KBR's Q2 2026 earnings call. Joining me today are Stuart Bradie, President and CEO, and Shad Evans, Executive Vice President and CFO. Stuart and Shad will cover highlights from the quarter. Then we'll open the line for your questions. Today's earnings presentation is available on the investor relations section of our website at kbr.com. As outlined on slide two, today's discussion includes forward-looking statements and certain Non-GAAP financial measures. Additional information, including reconciliations to the nearest GAAP measures, can be found in the presentation appendix. With that, I'll turn the call over to Stuart.

Speaker #2: Stuart and Shad will cover highlights from the quarter, and then we'll open the line for your questions. Today's earnings presentation is available on the Investor Relations section of our website at kbr.com.

Speaker #2: As outlined on slide 2, today's discussion includes forward-looking statement and certain non-GAAP financial measures. Additional information, including reconciliations to the nearest GAAP measures, can be found in the presentation appendix.

Speaker #2: With that, I'll turn the call over to Stuart.

Speaker #3: Thanks, Rachael. And good morning, everyone. I will pick up on slide 4. Now, before we get into the meat of the presentation, I wanted to briefly highlight a 2025 sustainability and corporate responsibility report.

Stuart Bradie: Thanks, Rachael. Good morning, everyone. I will pick up on slide four. Now, before we get into the meat of the presentation, I wanted to briefly highlight our 2025 Sustainability and Corporate Responsibility Report, which we published a few weeks ago. This is our fifth year issuing the report. It reflects an important part of how KBR operates. Sustainability, safety, and responsible delivery are embedded in how we manage risk, develop our people, of course, deliver for our customers. This year's report highlights record safety performance, continued progress against our environmental commitment, 35% of revenues focused on sustainability. As we move toward operating as two companies, that operating discipline will remain an important part of the culture and the value proposition of both businesses. On to slide five. Today, we will focus on four key messages.

Speaker #3: Which we published a few weeks ago. This is our 5th year issuing report, and it reflects an important part of how KBR operates. Sustainability, safety, and responsible delivery are embedded in how we manage people, and, of course, deliver for our customers.

Speaker #1: Hello everyone. Thank you for joining us, and welcome to KBR's second quarter 2026 earnings call. After today's prepared remarks, we will host a question-and-answer session.

Speaker #1: If you would like to ask a question, please press *1 to raise your hand. To withdraw your question, press *1 again. I will now hand the conference over to Rachel Goldweit.

Speaker #3: This year's report highlights record safety performance. Continued progress against our environmental commitment, and 35% of revenues focused on sustainability. As we move toward operating as two companies, that operating discipline will remain, and important part of the culture and the value proposition of both businesses.

Speaker #1: Head of Investor Relations. Rachel, go ahead.

Speaker #2: Thank you, and good morning. Welcome to KBR's second quarter 2026 earnings call. Joining me today are Stuart Bradie, President and CEO, and Chad Evans, Executive Vice President and CFO.

Speaker #3: On to slide 5. Today, we will focus on 4 key messages. First, we delivered a strong first half with a result tracking slightly ahead, of our planned cadence.

Speaker #2: Stuart and Chad will cover highlights from the quarter, and then we'll open the line for your questions. Today's earnings presentation is available on the Investor Relations section of our website at kbr.com.

Stuart Bradie: First, we delivered a strong H1 with the results tracking slightly ahead of our planned cadence. Second, we have strong visibility across both the businesses, supported by record backlog in STS and significant awarded work in MTS that has yet to be reflected in backlog. Third, our planned separation remains firmly on track, with transaction, leadership, and day one readiness milestones continuing to advance. Finally, we are reaffirming our 2026 guidance and remain focused on execution, cash generation, disciplined capital allocation, of course, a successful separation. Moving to slide six. This slide highlights our progress against the four strategic pillars that continue to guide KBR. I'll focus on operational excellence and capital deployment here. Then discuss growth and differentiated solutions on the next two slides. On operational excellence, we continue to execute for our customers while standing up two standalone companies. Very important.

Speaker #3: Second, we have strong visibility across both the businesses, supported by record backlog in SDF, and significant awarded work in MTF that has yet to be reflected in backlog.

Speaker #2: As outlined on slide 2, today's discussion includes forward-looking statements, and certain non-GAAP financial measures. Additional information, including reconciliations to the nearest GAAP measures, can be found in the presentation appendix.

Speaker #2: With that, I'll turn the call over to Stuart.

Speaker #3: Third, our planned separation remains firmly on track. With transaction, leadership, and day-one readiness milestones, continuing to advance. And finally, we are reaffirming our 2026 guidance and remain focused on execution, cash generation, disciplined capital allocation, and, of course, a successful separation.

Speaker #3: Thanks, Rachel. And good morning, everyone. I will pick up on slide 4. Before we get into the meat of the presentation, I wanted to briefly highlight a 2025 report.

Speaker #3: Which we published a few weeks ago. This is our 5th year issuing the report, and it reflects an important part of how KBR operates.

Speaker #3: Sustainability, safety, and responsible delivery are embedded in how we manage risk, develop our people, and, of course, deliver for our customers. This year's report highlights record safety performance.

Speaker #3: Moving to slide 6. This slide highlights our progress against the 4 strategic pillars that continue to guide KBR. Our focus on operational excellence and capital deployment here and then discuss growth and differentiated solutions on the next 2 slides.

Speaker #3: Continued progress against our environmental commitment, and 35% of revenues focused on sustainability. As we move toward operating as two companies, that operating discipline will remain, and important part of the culture and the value businesses.

Speaker #3: On operational excellence, we continue to execute for our customers while standing up to standalone companies. Very important. Importantly, that work has not distracted us from delivering for our customers, growing the business, or executing against a financial commitment.

Stuart Bradie: Importantly, that work has not distracted us from delivering for our customers, growing the business, or executing against our financial commitments. We continue to win in the market, build backlog across both businesses, and deliver solid performance, with year-to-date adjusted EBITDA margin of 13%, keeping us on track for another strong year. At the same time, we are taking actions ahead of separation to reduce incremental standalone costs and mitigate dis-synergies. Across both businesses, we are simplifying organizational structures, driving productivity, and increasing accountability so that each company enters 2027 with a leaner cost base and stronger margin potential. For SpinCo, the priority is establishing a standalone public company while maintaining competitive rates and preserving our position across both cost-plus and fixed-price opportunities. Our objective remains rate neutrality, and we continue to make good progress towards that goal.

Speaker #3: On to slide 5. Today, we will focus on 4 key messages. First, we delivered a strong first half with a result tracking slightly ahead, of our planned cadence.

Speaker #3: We continue to win in the market, build backlog across both businesses, and deliver solid performance. With year-to-date adjusted EBITDA margin of 13%, 13%, keeping us on track for another strong year.

Speaker #3: Second, we have strong visibility across both the businesses, supported by record backlog in SDF, and significant awarded work in MTF that has yet to be reflected in backlog.

Speaker #3: At the same time, we're chasing actions ahead of separation to reduce incremental standalone costs. And mitigate dissynergies. Across both businesses, we are simplifying organizational structures, driving productivity, and increasing accountability so that each company enters 2027 with a leaner cost base and stronger margin potential.

Speaker #3: For Spinco, the priority is establishing a standalone public company while maintaining competitive rates and preserving our position across both cost-plus and fixed-price opportunities. Our objective remains rate neutrality and we continue to make good progress toward that goal.

Speaker #3: For new KBR, we're building a lean, scalable organization that can support future growth while maintaining strong margins and disciplined cost management. Next, on capital deployment.

Stuart Bradie: For new KBR, we're building a lean, scalable organization that can support future growth while maintaining strong margins and disciplined cost management. Next, on capital deployment. We continue to allocate capital in a disciplined manner, investing roughly $190 million in the H1 to strengthen the portfolio while also returning an additional $71 million to shareholders through dividends and share repurchases, bringing total capital deployed to $261 million. We remain focused on maintaining the flexibility needed to support separation, invest in growth, and pursue attractive value creation opportunities. In short, we're executing the strategy, preparing both companies for a successful separation and positioning each business to create greater value as a focused standalone company. With that as a backdrop, let's move to slide seven and discuss the STS business.

Speaker #3: We continue to allocate capital in a disciplined manner, investing roughly $190 million in the first half to strengthen the portfolio while also returning an additional $71 million to shareholders through dividends and share repurchases.

Speaker #3: We continue to win in the market, build backlog across both businesses, and deliver solid performance. With a year-to-date adjusted EBITDA margin of 13%, we remain on track for another strong year.

Speaker #3: Bringing total capital deployed to $261 million. We remain focused on maintaining the flexibility needed to support separation: invest in growth and pursue attractive value creation opportunities.

Speaker #3: At the same time, we're taking actions ahead of separation to reduce incremental standalone costs. And mitigate dissynergies. Across both businesses, we are simplifying organizational structures, driving productivity, and increasing accountability so that each company enters 2027 with a leaner cost base and stronger margin potential.

Speaker #3: In short, we're executing the strategy, preparing both companies for a successful separation and positioning each business to create greater value as a focused standalone company.

Speaker #3: With that as a backdrop, let's move to slide 7 and discuss the SDF business. The demand trends we discussed last quarter continue to strengthen during the second quarter, reinforcing our confidence in the long-term outlook for sustainable tech.

Stuart Bradie: The demand trends we discussed last quarter continued to strengthen during the Q2, reinforcing our confidence in the long-term outlook for sustainable tech. Demand remains broad-based across energy security, food security, and sustainability-focused investments, supported by both new project activity and long-standing customer relations, very important. Those market dynamics continue to translate into strong commercial results. Q2 book-to-bill was 1.5 times, and trailing 12 months book-to-bill was 1.3 times. Backlog ended the quarter at a record $5.5 billion, and that is up 40% year-over-year. In addition, our near-term pipeline now exceeds $6 billion, excluding large reimbursable LNG EPC opportunities, which grew the numbers significantly. Importantly, work already under contract represents approximately 80% of our 2026 revenue guidance midpoint. We're also seeing an increasing mix of OpEx-related work.

Speaker #3: For Spinco, the priority is company while maintaining competitive rates and preserving our position across both cost-plus and fixed-price opportunities. Our objective remains rate neutrality, and we continue to make good progress toward that goal.

Speaker #3: Demand remains broad-based across energy security, food security, and sustainability-focused investments. Supported by both new project activity and long-standing important. Those market dynamics continue to translate into strong commercial results.

Speaker #3: For new KBR, we're building a lean, scalable organization that can support future growth while maintaining strong margins and disciplined cost management. Next, on capital deployment.

Speaker #3: Second quarter book-to-bill was $1.5 times. And trailing 12-month book-to-bill was $1.3 times. And backlog end of the quarter had a record 5.5 billion dollars and that is up 40%, 40% year over year.

Speaker #3: In addition, our near-term pipeline now exceeds $6 billion excluding large reimbursable LNG EPC opportunities, which skew the numbers significantly. Importantly, work already under contract represents approximately 80% of a 2026 revenue guidance midpoint.

Speaker #3: Bringing total capital deployed to $261 million. We remain focused on maintaining the flexibility needed to support separation, invest in growth, and pursue attractive value creation opportunities.

Speaker #3: In short, we're executing the strategy, preparing both companies for a successful separation and positioning each business to create greater value as a focused standalone company.

Speaker #3: We're also seeing an increasing mix of OPEC-related work. Approximately 34% of year-to-date bookings were tied to OPEC-based contracts. With activity across both the Middle East and the Americas through Brandenburg.

Stuart Bradie: Approximately 34% of year-to-date bookings were tied to OpEx-based contracts, with activity across both the Middle East and the Americas through Brown & Root. These contracts are generally longer in duration and further enhance the durability, visibility, and resilience of the business. We remain encouraged by the level of OpEx-related opportunities moving through the pipeline. The Middle East remains a significant growth driver, where H1 bookings exceeded $900 million across oil, gas, NGL, and energy infrastructure projects. We are also seeing encouraging momentum across our technology portfolio, including our first commercial PureSAF license awards and continued demand for our market-leading ammonia technologies, including the recent Pampa Energía award in the Americas. More broadly, many of these opportunities build on relationships that begin with technology licensing, studies, or engineering services, and ultimately expand into larger project execution or aftermarket scopes, creating additional revenue opportunities while improving long-term visibility.

Speaker #3: These contracts are generally longer in duration and further enhance the durability visibility and resilience of the business. We remain encouraged by the level of OPEC-related opportunities we've included in the pipeline.

Speaker #3: Demand remains broad-based across energy security, food security, and sustainability-focused investments. Supported by both new project activity and long-standing customer relations. Very important. Those market dynamics continue to translate into strong commercial results.

Speaker #3: The Middle East remains a significant growth driver. We're first-half bookings exceeded $900 million. Across oil, gas, NGL, and energy infrastructure projects. We are also seeing encouraging momentum across our technology portfolio including our first commercial pure SAF license awards and continued demand for our market-leading ammonia technologies including the recent TAMPA Energy Award in the Americas.

Speaker #3: Second quarter book-to-bill was 1.5 times, and trailing 12-month book-to-bill was 1.3 times. Backlog at the end of the quarter was a record $5.5 billion, up 40% year over year.

Speaker #3: More broadly, many of these opportunities build on relationships that begin with technology, licensing, studies, or engineering services and ultimately expand into larger project execution or aftermarket schools.

Speaker #3: Creating additional revenue opportunities while improving long-term visibility. Taking together, we believe SDF remains well-positioned for continued growth and provides strong visibility into future revenue and earnings.

Stuart Bradie: Taken together, we believe STS remains well-positioned for continued growth and provides strong visibility into future revenue and earnings. On to slide eight. Turning to MTS, we continue to see strong demand across our defense systems modernization base and global mission operations businesses. Our strategy remains focused on combining trusted mission expertise, customer intimacy, and differentiated technology solutions to address some of our customers' most critical priorities. That demand is supported by strong visibility into future performance. Approximately 94% of our full year revenue guidance is already under contract. We have roughly $10.4 billion awaiting award, and we expect more than $25 billion of bid volume in 2026, and that's up approximately 50% year over year, with significant submissions in the H2. Q2 book-to-bill was 0.8 times with a trailing 12 months ratio of 1.0 times.

Stuart Bradie: Taken together, we believe STS remains well-positioned for continued growth and provides strong visibility into future revenue and earnings. On to slide eight. Turning to MTS, we continue to see strong demand across our defense systems modernization base and global mission operations businesses. Our strategy remains focused on combining trusted mission expertise, customer intimacy, and differentiated technology solutions to address some of our customers' most critical priorities. That demand is supported by strong visibility into future performance. Approximately 94% of our full year revenue guidance is already under contract. We have roughly $10.4 billion awaiting award, and we expect more than $25 billion of bid volume in 2026, and that's up approximately 50% year-over-year, with significant submissions in the H2. Q2 book-to-bill was 0.8 times with a trailing 12 months ratio of 1.0 times.

Speaker #3: We're also seeing an increasing mix of OPEC-related work. Approximately 34% of year-to-date bookings were tied to OPEC-based contracts, with activity across both the Middle East and the Americas through Brandenburg.

Speaker #3: On to slide 8. Turning to MTS, we continue to see strong demand across our defense systems modernization base and global mission operations businesses. Our strategy remains focused on combining trusted mission expertise customer intimacy and differentiated technology solutions to address some of our customers' most critical priorities.

Speaker #3: These contracts are generally longer in duration, and further enhance the durability and visibility and resilience of the business. We remain encouraged by the level of OPEC-related opportunities, moving through the pipeline.

Speaker #3: That demand is supported by strong visibility into future performance. Approximately 94% of our full-year revenue guidance is already under contract. We have roughly 10.4 billion dollars awaiting award and we expect more than 25 billion dollars of bid volume in 2026.

Speaker #3: The Middle East remains a significant growth driver, where first-half bookings exceeded $900 million. Across oil, gas, NGL, and energy infrastructure projects, we are also seeing encouraging momentum across our technology portfolio, including our first commercial pure SAF license awards and continued demand for our market-leading ammonia technologies including the recent TAMPA Energy Award in the Americas.

Speaker #3: And that's up approximately 50% year over year with significant submissions in the second half. Second quarter book-to-bill was 0.8 times with a trailing 12-month ratio of $1.0 times.

Speaker #3: More broadly, many of these opportunities build on relationships that begin with technology, livelihood, studies, or engineering services, and ultimately expand into larger project execution or aftermarket scopes.

Stuart Bradie: Importantly, those metrics do not yet reflect approximately $10.6 billion of awarded work currently under protest, including the National Science Foundation Antarctica award, the Department of State award in Iraq, and the classified PACOM Logistics award. As a result, we believe reported backlog and book-to-bill do not fully reflect the level of awarded work and future revenue visibility in the business today. While the timing of protest resolutions remain outside our control, these are awarded programs supporting enduring customer priorities. More broadly, our success continues to be driven by the mission expertise and customer relationships we've built over decades. The National Science Foundation Antarctica award is a really good example. While NSF was a new customer for KBR, the award reflects several years of engagement, mission understanding, and demonstrated technical capability, highlighting the differentiated approach that continues to create opportunities across the portfolio.

Speaker #3: Importantly, those metrics do not yet reflect approximately 10.6 billion dollars of awarded work currently under protest including the national science foundation and tactical award.

Speaker #3: The Department of State award in Iraq and the classified PACOM logistics award. As a result, we believe reported backlog and book-to-bill do not fully reflect the level of awarded work and future revenue visibility in the business today.

Speaker #3: On to slide 8. Turning to MTS, we continue to see strong demand across our defense systems, modernization, base, and global mission operations businesses. Our strategy remains focused on combining trusted mission expertise customer intimacy and differentiated technology solutions to address some of our customers' most critical priorities.

Speaker #3: While the timing of protest resolutions remained outside our control, these are awarded programs supporting enduring customer priorities. More broadly, our success continues to be driven by the mission expertise and customer relationships we've built over decades.

Speaker #3: The national science foundation and tactical award is a really good example. While NSF was a new customer for KBR, the award reflects several years of engagement, mission understanding, and demonstrated technical capability highlighting the differentiated approach that continues to create opportunities across the portfolio.

Speaker #3: That demand is supported by strong visibility into future performance. Approximately 94% of our full-year revenue guidance is already under contract. We have roughly 10.4 billion dollars awaiting award, and we expect more than 25 billion dollars of bid volume in 2026.

Speaker #3: We are also increasingly embedding software AI and digital capabilities into missions we already support, helping customers modernize operations improve decision-making and deliver faster outcomes.

Stuart Bradie: We are also increasingly embedding software, AI, and digital capabilities into missions we already support, helping customers modernize operations, improve decision-making, and deliver faster outcomes. We also see opportunities to support emerging priorities such as Golden Dome, where KBR already supports customers across many parts of the broader mission environment. In short, demand remains healthy across our global markets. Visibility remains strong, and our differentiated capabilities continue to support long-term growth. As we prepare to launch this business as a standalone company, we're also taking an important step in establishing its identity in the market. Now, let me turn to slide nine and introduce the new name for the MTS spin-off, Trinzic. The name is inspired by the word intrinsic and reflects essential built-in capabilities and deep expertise. Trinzic harnesses the power of technology to support governments, partners, and allies across national security and space.

Speaker #3: And that's up approximately 50% year over year, with significant submissions in the second half. Second quarter book-to-bill was 0.8 times, with a trailing 12-month ratio of 1.0 times.

Speaker #3: We also see opportunities to support emerging priorities such as Golden Dome where KBR already supports customers across many parts of the broader mission environment.

Speaker #3: Importantly, those metrics do not yet reflect approximately 10.6 billion dollars of awarded work currently under protest, including the National Science Foundation and TATCA Award, the Department of State Award in Iraq, and the classified PACOM Logistics Award.

Speaker #3: In short, demand remains healthy across our global market. Visibility remains strong and our differentiated capabilities continue to support long-term growth. As we prepare to launch this business as a standalone company, we're also taking an important step in establishing its identity in the market.

Speaker #3: As a result, we believe reported backlog and book-to-bill do not fully reflect the level of awarded work, and future revenue visibility in the business today.

Speaker #3: Now let me turn to slide 9 and introduce the new name for the MTS spin-off. Trinsic. The name is inspired by the word intrinsic and reflects essential built-in capabilities and deep, deep expertise.

Speaker #3: The National Science Foundation and TATCA Award is a really good example. While NSF was a new customer for KBR, the award reflects several years of engagement, mission understanding, and demonstrated technical capability highlighting the differentiated approach that continues to create opportunities across the portfolio.

Speaker #3: Trinsic harnesses the power of technology to support governments, partners, and allies across national security and space. We work at the frontier of what is technically possible bringing new capabilities to the systems the world depends on and giving customers the confidence to act.

Stuart Bradie: We work at the frontier of what is technically possible, bringing new capabilities to the systems the world depends on and giving customers the confidence to act. The tagline for Trinzic is "The Bold Connected," and I think this captures the essence of the business. Trinzic designs solutions that hold up when there's no margin for error and in environments where critical systems must perform. Just as importantly, Trinzic gives us the opportunity to tell the story of how this business has evolved. While our foundation remains our deep expertise in trusted performance, today's Trinzic is increasingly defined by the way it connects people, technology, and critical systems with speed, precision, and rigor. We believe the brand better reflects both the company we are today and where we are headed next. Very exciting. It also reflects a culture built around collaboration, accountability, and delivering results.

Speaker #3: The tagline for Trinsic is the bold connected. And I think this captures the essence of the business. Trinsic designs solutions that hold up when there is no margin for error and an environments with critical systems must perform.

Speaker #3: We are also increasingly embedding software AI and digital capabilities into missions we already support, helping customers modernize operations, improve decision-making, and deliver faster outcomes.

Speaker #3: We also see opportunities to support emerging priorities such as Golden Dome where KBR already supports customers across many paths of the broader mission environment.

Speaker #3: Just as importantly, Trinsic gives us the opportunity to tell the story of how this business has evolved. While our foundation remains our deep expertise and trusted performance, today's Trinsic is increasingly defined by the way it connects people, technology, and critical systems with speed, precision, and rigor.

Speaker #3: In short, demand remains healthy across our global market. Visibility remains strong, and our differentiated capabilities continue to support long-term growth. As we prepare to launch this business as a standalone company, we're also taking an important step in establishing its identity in the market.

Speaker #3: We believe the brand better reflects both the company we are today and where we are headed next. Very exciting. It also reflects a culture, built around collaboration, accountability, and delivering results.

Speaker #3: Now, let me turn to slide 9 and introduce the new name for the MTS spin-off. Trinsic. The name is inspired by the word "intrinsic" and reflects essential built-in capabilities and deep, deep expertise.

Speaker #3: As we've discussed on today's call, this business is entering its next chapter with strong customer relationships, differentiated capabilities, global reach, and significant growth opportunities ahead.

Stuart Bradie: As we've discussed on today's call, this business is entering its next chapter with strong customer relationships, differentiated capabilities, global reach, and significant growth opportunities ahead. We believe Trinzic reflects both our heritage and our exciting future, bringing intrinsic value and advantage to customers. On to slide 10. We continue to execute well against our separation plan and remain on track to complete the spin on a target date of 4 January 2027. On transaction readiness, we continue to make progress across key regulatory and transaction milestones. We submitted our final private letter ruling request to the IRS in June and expect a final ruling in September. We also continue through the SEC review process for the Form 10, with a public filing expected ahead of our next earning call. Operationally, the work is shifting from planning to execution.

Speaker #3: Trinsic harnesses the power of technology to support governments, partners, and allies across national security and space. We work at the frontier of what is technically possible, bringing new capabilities to the systems, the world depends on, and giving customers the confidence to act.

Speaker #3: We believe Trinsic reflects both our heritage and our exciting future. Bringing intrinsic value and advantage to customers. On to slide 10. We continue to execute well against our separation plan and remain on track to complete the spin on a target date of January the 4th, 2027.

Speaker #3: The tagline for Trinsic is "the bold, connected." And I think this captures the essence of the business. Trinsic designs solutions that hold up when there is no margin for error, and an environments with critical systems must perform.

Speaker #3: On transaction readiness, we continue to make progress across key regulatory and transaction milestones. We submitted our final private letter ruling request to the IRS in June.

Speaker #3: And expect a final ruling in September. We also continue through the SEC review process for the Form 10 with a public filing expected ahead of our next earning call.

Speaker #3: Operationally, the work is shifting from planning to execution. IT systems, contract bifurcation, procurement separation, corporate budgeting, and organizational design are all progressing against plan.

Stuart Bradie: IT systems, contract bifurcation, procurement separation, corporate budgeting, and organizational design are all progressing against plan. Corporate employees have been aligned to their future organizations, and the teams are focused on filling the remaining critical roles so both companies are ready to operate effectively from day one. We're also building out the Trinzic leadership team. Michael LaRouche will join as CEO-Designate in September, bringing nearly 30 years of experience across defense, intelligence, space, cyber, and government services. Nick Veasey joined as CFO-Designate earlier this month with deep experience across finance, capital markets, M&A, and investor engagement. The majority of the Trinzic leadership team is now firmly in place, and the boards for both companies are taking shape as we assemble the skills necessary and the experience needed to support each company's standalone strategy.

Speaker #3: Corporate employees have been aligned to the future organizations and the teams focused on filling the remaining critical roles so both companies are ready to operate effectively from day one.

Speaker #3: We're also building out the Trinsic leadership team. Michael LaRoche will join as CEO designate in September, bringing nearly 30 years of experience across defense intelligence space, cyber, and government services.

Speaker #3: Nick Veasey joined as CFO designate earlier this month with deep experience across finance, capital markets, M&A, and investor Trinsic leadership team is now firmly in place.

Speaker #3: And the boards for both companies are taking shape as we assemble the skills necessary and the experience needed to support each company's standalone strategy.

Speaker #3: On transaction readiness, we continue to make progress across key regulatory and transaction milestones, we submitted our final private letter ruling request to the IRS in June, and expect a final ruling in September.

Speaker #3: Looking ahead, we're excited to host the rest of the days in New York for both new KBR and Trinsic. Where we will outline the standalone strategies the financial framework and the long-term priorities for each business.

Stuart Bradie: Looking ahead, we're excited to host Investor Days in New York for both new KBR and Trinzic, where we will outline the standalone strategies, the financial framework, and the long-term priorities for each business. Overall, I'm pleased to report the separation is progressing well, the leadership foundation is taking shape, and we have strong visibility into the key milestones required to successfully launch both companies. With that, I'll hand over to Shad.

Speaker #3: We also continue through the SEC review process for the Form 10, with a public filing expected ahead of our next earnings call. Operationally, the work is shifting from planning to execution.

Speaker #3: Overall, I'm pleased to report the separation is progressing well. The leadership foundation is taking shape and we have strong visibility into the key milestones required to successfully launch both companies.

Speaker #3: IT systems, contract bifurcation, procurement separation, corporate budgeting, and organizational design are all progressing against plan. Corporate employees have been aligned to the future organizations, and the teams are focused on filling the remaining critical roles so both companies are ready to operate effectively from day one.

Speaker #3: With that, I'll hand over to Shad.

Speaker #1: Thanks, Stuart. I'll pick up on slide 12 with our consolidated second quarter results. Revenues for the quarter were approximately $2 billion. Up $32 million or 2% from prior year.

Shad Evans: Thanks, Stuart. I'll pick up on slide 12 with our consolidated Q2 results. Revenues for the quarter were approximately $2 billion, up $32 million or 2% from prior year. As a reminder, this was the final Q lapping elevated UCOM contingency activity in 2025. Excluding that work, revenue increased by approximately $91 million or roughly 5%, driven by continued ramp-up on recently awarded projects across both segments. Adjusted EBITDA increased $16 million to $258 million, with adjusted EBITDA margins expanding approximately 60 basis points to 13%. Performance was driven by strong project execution, favorable portfolio mix, and disciplined cost management across the business. Adjusted EPS increased $0.08 to $0.99, driven by strong operating performance, lower below-the-line expenses, and lower diluted share count resulting from our repurchase activity. Turning to cash flow, H1 adjusted operating cash flow was $183 million, representing adjusted OCF conversion of approximately 74%.

Shad Evans: Thanks, Stuart. I'll pick up on slide 12 with our consolidated Q2 results. Revenues for the quarter were approximately $2 billion, up $32 million or 2% from prior year. As a reminder, this was the final Q lapping elevated UCOM contingency activity in 2025. Excluding that work, revenue increased by approximately $91 million or roughly 5%, driven by continued ramp-up on recently awarded projects across both segments. Adjusted EBITDA increased $16 to 258 million, with adjusted EBITDA margins expanding approximately 60 basis points to 13%. Performance was driven by strong project execution, favorable portfolio mix, and disciplined cost management across the business. Adjusted EPS increased $0.08 to 0.99, driven by strong operating performance, lower below-the-line expenses, and lower diluted share count resulting from our repurchase activity. Turning to cash flow, H1 adjusted operating cash flow was $183 million, representing adjusted OCF conversion of approximately 74%.

Speaker #1: As a reminder, this was the final quarter lapping elevated UCOM contingency activity in 2025. Excluding that work, revenue increased by approximately $91 million or roughly 5% driven by continued ramp-up on recently awarded projects across both segments.

Speaker #3: We're also building out the Trinsic leadership team. Michael LaRoche will join as CEO designate in September, bringing nearly 30 years of experience across defense, intelligence, space, cyber, and government services.

Speaker #3: Nick Veasey joined as CFO designate earlier this month, with deep experience across finance, capital markets, M&A, and investor engagement. The majority of the Trinsic leadership team is now firmly in place.

Speaker #1: Adjusted EBITDA increased $16 million to $258 million. With adjusted EBITDA margins expanding approximately 60 basis points to 13%. Performance was driven by strong project execution, favorable portfolio mix, and disciplined cost management across the business.

Speaker #3: And the boards for both companies are taking shape as we assemble the skills necessary and the experience needed to support each company's standalone strategy.

Speaker #1: Adjusted EPS increased 8 cents to $99 cents driven by strong operating performance, lower below-the-line expenses, and lower diluted share count resulting from our repurchase activity.

Speaker #3: Looking ahead, we're excited to host the rest of the days in New York for both new KBR and Trinsic, where we will outline the standalone strategies the financial framework, and the long-term priorities for each business.

Speaker #1: Turning to cash flow, first half adjusted operating cash flow was $183 million. Representing adjusted OCF conversion of approximately $74%. As expected, second quarter cash flow reflected collections timing in STS, Middle East.

Speaker #3: Overall, I'm pleased to report the separation is progressing well, the leadership foundation is taking shape, and we have strong visibility into the key milestones required to successfully launch both companies.

Shad Evans: As expected, Q2 cash flow reflected collections timing in STS, Middle East. Collections have started to normalize in July, and our full-year outlook remains unchanged. Overall, we are pleased with the H1 performance. We delivered profitable growth, expanded margins, and continued to see healthy momentum across both segments as we enter the H2 of the year. Turning to slide 13, I will walk through segment performance. Beginning with Sustainable Technology Solutions. Revenue increased $60 million or 10% year-over-year to $676 million, driven by continued ramp-up of projects awarded over the past 12 months, with particularly strong growth in the Middle East, Latin America, Asia, and Australia. Revenue also increased 8% sequentially, reinforcing our confidence in delivering mid-teens revenue growth for the full year as project activity accelerates in the H2.

Speaker #1: Collections have started to normalize in July and our full year outlook remains unchanged. Overall, we are pleased with the first half performance. We delivered profitable growth, expanded margins, and continued to see healthy momentum across both segments as we enter the second half of the year.

Speaker #3: With that, I'll hand over to Chad.

Speaker #1: Thanks, Stuart. I'll pick up on slide 12 with our consolidated second-quarter results. Revenues for the quarter were approximately $2 billion, up $32 million, or 2% from the prior year.

Speaker #1: Turning to slide 13, I'll walk through segment performance. Beginning with sustainable technology solutions. Revenue increased $60 million or 10% year over year to $676 million.

Speaker #1: As a reminder, this was the final quarter lapping elevated UConn contingency activity in 2025. Excluding that work, revenue increased by approximately $91 million or roughly 5%, driven by continued ramp-up on recently awarded projects across both segments.

Speaker #1: Driven by continued ramp-up of projects awarded over the past 12 months, with particularly strong growth in the Middle East, Latin America, Asia, and Australia.

Speaker #1: Adjusted EBITDA increased $16 million, to $258 million, with adjusted EBITDA margins expanding approximately 60 basis points to 13%. Performance was driven by strong project execution, favorable portfolio mix, and disciplined cost management across the business.

Speaker #1: Revenue also increased 8% sequentially reinforcing our confidence in delivering mid-teens revenue growth for the full year as project activity accelerates in the second half.

Speaker #1: Adjusted EBITDA was $123 million down $11 million from the prior year due to project mix. This quarter included a higher portion of equipment procurement activity which carries margins at the lower end of the framework we outlined last quarter.

Shad Evans: Adjusted EBITDA was $123 million, down $11 million from the prior year due to project mix. This quarter included a higher portion of equipment procurement activity, which carries margins at the lower end of the framework we outlined last quarter. This impact was partially offset by strong project execution and continued healthy demand across the portfolio. Adjusted EBITDA margin was 18.2%, while adjusted EBITDA margin excluding LNG JV earnings was approximately 13%. Importantly, year-to-date adjusted EBITDA margins excluding LNG JV earnings remain approximately 14.5%, demonstrating the underlying earnings power of the business and keeping us on track to achieve our full-year outlook of mid-teens, excluding LNG JV earnings. Turning to Mission Tech, revenues were $1.3 billion, down $28 million from prior year. Excluding UCOM contingency activity, revenues increased approximately $31 million or 2%, reflecting strong activity in Australia and the UK, partially offset by project completions in the US.

Speaker #1: Adjusted EPS increased $0.08, to $0.99, driven by strong operating performance, lower below-the-line expenses, and a lower diluted share count resulting from our repurchase activity.

Speaker #1: This impact was partially offset by strong project execution and continued healthy demand across the portfolio. Adjusted EBITDA margin was $18.2% while adjusted EBITDA margin excluding LNGJV earnings was approximately 13%.

Speaker #1: Turning to cash flow, first-half adjusted operating cash flow was $183 million, representing adjusted OCF conversion of approximately 74%. As expected, second-quarter cash flow reflected collections timing in STS and the Middle East.

Speaker #1: Importantly, year-to-date adjusted EBITDA margins excluding LNGJV earnings remain approximately 14.5%. Demonstrating the underlying earnings power of the business and keeping us on track to achieve our full year outlook of mid-teens excluding LNGJV earnings.

Speaker #1: Collections have started to normalize in July and our full-year outlook remains unchanged. Overall, we are pleased with the first half performance. We delivered profitable growth, expanded margins, and continued to see healthy momentum across both segments as we enter the second half of the year.

Speaker #1: Turning to mission tech, revenues were $1.3 billion down $28 million from prior year. Excluding UCOM contingency activity, revenues increased approximately $31 million or 2% reflecting strong activity in Australia, and the UK partially offset by project completions in the US.

Speaker #1: Turning to slide 13, I'll walk through segment performance. Beginning with sustainable technology solutions. Revenue increased $60 million, or 10%, year over year, to $676 million.

Speaker #1: Adjusted EBITDA increased $22 million to $158 million with margins expanding roughly 190 basis points to 12.1%. Performance benefited from favorable mix disciplined cost management and benefited from contract closeouts.

Shad Evans: Adjusted EBITDA increased $22 million to $158 million, with margins expanding roughly 190 basis points, 12.1%. Performance benefited from favorable mix, disciplined cost management, and benefited from contract closeouts. Year-to-date margins of 11.4% remain modestly ahead of our full-year outlook. Overall, we were pleased with the segment performance during the quarter. Both businesses continue to execute well, deliver profitable growth, and maintain strong momentum as we move through the H2 of the year. Turning to capital allocation on slide 14. Net leverage ended the quarter at approximately 2.3x trailing Adjusted EBITDA, flat sequentially and comfortably below our 2.5x target. As working capital normalizes and cash generation strengthens in the H2, we expect leverage to continue trending downward through year-end. We also maintained a disciplined approach to capital allocation, repurchasing approximately $25 million of shares during the quarter while preserving ample liquidity.

Shad Evans: Adjusted EBITDA increased $22 to 158 million, with margins expanding roughly 190 basis points, 12.1%. Performance benefited from favorable mix, disciplined cost management, and benefited from contract closeouts. Year-to-date margins of 11.4% remain modestly ahead of our full-year outlook. Overall, we were pleased with the segment performance during the quarter. Both businesses continue to execute well, deliver profitable growth, and maintain strong momentum as we move through the H2 of the year. Turning to capital allocation on slide 14. Net leverage ended the quarter at approximately 2.3x trailing Adjusted EBITDA, flat sequentially and comfortably below our 2.5x target. As working capital normalizes and cash generation strengthens in the H2, we expect leverage to continue trending downward through year-end. We also maintained a disciplined approach to capital allocation, repurchasing approximately $25 million of shares during the quarter while preserving ample liquidity.

Speaker #1: Driven by continued ramp-up of projects awarded over the past 12 months, with particularly strong growth in the Middle East, Latin America, Asia, and Australia.

Speaker #1: Revenue also increased 8% sequentially, reinforcing our confidence in delivering mid-teens revenue growth for the full year as project activity accelerates in the second half.

Speaker #1: Year-to-date margins of $11.4% remain modestly ahead of our full year outlook. Overall, we were pleased with the segment performance during the quarter. Both businesses continued to execute well deliver profitable growth and maintain strong momentum as we move through the back half of the year.

Speaker #1: Adjusted EBITDA was $123 million, down $11 million from the prior year due to project mix. This quarter included a higher proportion of equipment procurement activity, which carries margins at the lower end of the framework we outlined last quarter.

Speaker #1: Turning to capital allocation on slide 14. Net leverage ended the quarter at approximately $2.3 trailing adjusted EBITDA. Flat sequentially and comfortably below our $2.5 target.

Speaker #1: This impact was partially offset by strong project execution and continued healthy demand across the portfolio. Adjusted EBITDA margin was 18.2%, while adjusted EBITDA margin excluding LNGJV earnings was approximately 13%.

Speaker #1: As a working capital normalizes and cash generation strengthens in the second half, we expect leverage to continue trending downward through year end. We also maintained a disciplined approach to capital allocation.

Speaker #1: Importantly, year-to-date adjusted EBITDA margins, excluding LNG JV earnings, remain approximately 14.5%. This demonstrates the underlying earnings power of the business and keeps us on track to achieve our full-year outlook of mid-teens, excluding LNG JV earnings.

Speaker #1: Repurchasing approximately $25 million of shares during the quarter while preserving ample liquidity. As we prepare for separation, we remain focused on positioning both companies with capital structures and financial flexibility needed to execute their growth strategies and create long-term shareholder value.

Shad Evans: As we prepare for separation, we remain focused on positioning both companies with capital structures and financial flexibility needed to execute their growth strategies and create long-term shareholder value. Overall, we're confident in the strength of our balance sheet, our capital allocation framework, and the readiness for both businesses as we move towards separation. On to slide 15. Today, we're reaffirming our full-year guidance across revenue, Adjusted EBITDA, Adjusted EPS, and adjusted operating cash flow. The business continues to perform in line with our expectations, supported by strong execution, a healthy demand environment, and strong revenue visibility. Approximately 89% of our expected revenue for the year is already enhanced, including 80% for STS and 94% in MTS. Given our H1 performance and the strength of our backlog, we remain confident in our ability to deliver on our full-year outlook. With that, I'll pass it back to Stuart.

Speaker #1: Turning to Mission Tech, revenues were $1.3 billion, down $28 million from the prior year. Excluding UConn contingency activity, revenues increased approximately $31 million, or 2%, reflecting strong activity in Australia and the UK, partially offset by project completions in the US.

Speaker #1: Overall, we're confident in the strength of our balance sheet our capital allocation framework and the readiness for both businesses as we move towards separation.

Speaker #1: Adjusted EBITDA increased $22 million, to $158 million, with margins expanding roughly 190 basis points, 12.1%. Performance benefited from favorable mix, disciplined cost management, and benefited from contract closeouts.

Speaker #1: On to slide 15. Today we're reaffirming our full year guidance across revenue, adjusted EBITDA, adjusted EPS, and adjusted operating cash flow. The business continues to perform in line with our expectations.

Speaker #1: Supported by strong execution, a healthy demand environment, and strong revenue visibility. Approximately $89% of our expected revenue for the year is already enhanced. Including 80% for STS and 94% in MTS.

Speaker #1: Year-to-date margins of $11.4% remain modestly ahead of our full-year outlook. Overall, we were pleased with the segment performance during the quarter. Both businesses continued to execute well, deliver profitable growth, and maintain strong momentum as we move through the back half of the year.

Speaker #1: Given our first half performance, and the strength of our backlog, we remain confident in our ability to deliver on our full year outlook. With that, I'll pass it back to Stuart.

Speaker #1: Turning to capital allocation on slide 14. Net leverage ended the quarter at approximately $2.3, trailing adjusted EBITDA. Flat sequentially and comfortably below our $2.5 target.

Speaker #2: Thanks, Shad. And to wrap up on slide 16, there are four key takeaways from the quarter. First, we continue to execute at a high level across both businesses.

Stuart Bradie: Thanks, Shad. To wrap up on slide 16, there are four key takeaways from the quarter. First, we've continued to execute at a high level across both businesses. H1 results demonstrate the strength of the portfolio, profitable growth, margin expansion, and solid momentum heading into the back H2 of the year. Second, demand remains healthy and visibility remains strong. Across both businesses, we're supported by substantial backlog, significant awarded work, and a healthy pipeline, giving us confidence in both our near-term outlook and our longer-term growth opportunities. Third, confidence in the separation continues to build. Transaction milestones are progressing as planned, operational readiness is advancing, and we're increasingly shifting from planning to execution as we prepare for day one.

Speaker #1: As a working capital normalizes and cash generation strengthens in the second half, we expect leverage to continue trending downward through year-end. We also maintained a disciplined approach to capital allocation.

Speaker #2: First half results demonstrate the strength of the portfolio profitable growth, margin expansion, and solid momentum heading into the back half of the year. Second, demand remains healthy and visibility remains strong.

Speaker #1: Repurchasing approximately $25 million of shares during the quarter, while preserving ample liquidity. As we prepare for separation, we remain focused on positioning both companies with capital structures and financial flexibility needed to execute their growth strategies and create long-term shareholder value.

Speaker #2: Across both businesses, we're supported by substantial backlog, significant awarded work, and a healthy pipeline giving us confidence in both our near-term outlook and our longer-term growth opportunities.

Speaker #1: Overall, we're confident in the strength of our balance sheet, our capital allocation framework, and the readiness for both businesses as we move towards separation.

Speaker #2: Third, confidence in the separation continues to build. Transaction milestones are progressing as planned, operational readiness is advancing, and we're increasingly shifting from planning to execution as we prepare for day one.

Speaker #1: On to slide 15. Today, we're reaffirming our full-year guidance across revenue, adjusted EBITDA, adjusted EPS, and adjusted operating cash flow. The business continues to perform in line with our expectations.

Speaker #2: And finally, we're positioning new KBR and Trinsic as two focus highly differentiated companies with strong market positions. Disciplined operating models and a clear path to long-term value creation for our shareholders.

Stuart Bradie: Finally, we're positioning new KBR and Trinzic as two focused, highly differentiated companies with strong market positions, disciplined operating models, and a clear path to long-term value creation for our shareholders. With that, I'll hand it back to the operator who will open the call for questions.

Speaker #2: With that, I'll hand it back to the operator who will open the call for questions.

Speaker #1: Given our first half performance, and the strength of our backlog, we remain confident in our ability to deliver on our full-year outlook. With that, I'll pass it back to Stuart.

Speaker #3: We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one to raise your hand.

Operator: We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Mariana Perez Mora with Bank of America. Mariana, your line is open. Please go ahead.

Speaker #2: Thanks, Sean. And to wrap up on slide 16, there are four key takeaways from the quarter. First, we continue to execute at a high level across both businesses.

Speaker #3: To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality.

Speaker #2: First half results demonstrate the strength of the portfolio, profitable growth, margin expansion, and solid momentum heading into the back half of the year. Second, demand remains healthy and visibility remains strong.

Speaker #3: If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Mariana Perez Mora, with Bank of America.

Speaker #2: Across both businesses, we're supported by substantial backlog, significant awarded work, and a healthy pipeline. Giving us confidence in both our near-term outlook and our longer-term growth opportunities.

Speaker #3: Mariana, your line is open. Please go ahead.

Speaker #4: Good morning, everyone.

Mariana Perez Mora: Good morning, everyone.

Speaker #5: Morning.

Stuart Bradie: Morning.

Speaker #6: Hi, Mariana.

Stuart Bradie: Hi, Mariana.

Speaker #4: So my first question is you mentioned Trinsic is out there. New name, everything is on track, even a strong management team designated. Now you mentioned about like this financial structure and the financial capability for both these businesses to be able to pursue their goals.

Mariana Perez Mora: My first question is, you mentioned Trinzic is out there, new name, everything is on track, even a strong management team designated. Now, you mentioned about this financial structure and the financial capability for both these businesses to be able to pursue their goals. How should we think about that broadly?

Speaker #4: How should we think about that broadly?

Speaker #2: And finally, we're positioning new KBR and Trinsic as two focused, highly differentiated companies with strong market positions. Disciplined operating models and a clear path to long-term value creation for our shareholders.

Speaker #5: I mean, we are setting both businesses on the right path, Mariana. We have seen the book to bill, particularly in SDS, very strong and obviously the awards when you link in what's under protest and MTS, I think both businesses heading very strongly towards the year end with momentum.

Stuart Bradie: We're setting both businesses on the right path, Mariana. You'll have seen the book-to-bill, particularly in STS, very strong and obviously the awards, when you link in what's under protest in MTS, I think both businesses heading very strongly towards the year-end with momentum as they look to separate. I guess the whole piece around where the businesses are looking to operate is being de-risked as we progress towards the spin date. That operational readiness was mentioned in the prepared remarks is key there, and we continue to progress on all fronts. In terms of capital structure going forward, we're very clear that both would have normative sort of leverage ratios for their businesses. Given where our balance sheet sits today, I think you can translate that quite clearly, and we've communicated that historically.

Speaker #2: With that, I'll hand it back to the operator, who will open the call for questions.

Speaker #3: We will now begin the question-and-answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star 1 to raise your hand.

Speaker #5: As they look to separate, I guess the whole piece around where the businesses are looking to operate is being de-risked as we progress towards the spin date.

Speaker #3: To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality.

Speaker #5: So that operational readiness, I was mentioned in the prepared remarks, is key there and we continue to progress on all fronts. In terms of capital structure, going forward, we're very clear that both would have normative sort of leverage ratios for their businesses.

Speaker #3: Mariana, your line is open. Please go ahead.

Speaker #5: Given where our balance sheet sits today, I think you can translate that quite clearly and we've communicated that historically. And pleasingly, both on a year-to-date basis are performing at the margins levels we expected and our commitment was that we would not distract the core business while we set about the sort of spin separation process, which in truth is a heavy lift.

Speaker #4: Good morning, everyone.

Speaker #5: Morning.

Speaker #6: Hi, Mariana.

Stuart Bradie: Pleasingly, both on a year-to-date basis, are performing at the margins levels we expected, and our commitment was that we would not distract the core business while we set about the spin separation process, which in truth is a heavy lift. We had a dedicated team focused on doing that, and we've made significant progress in both counts, not just for the spin, but actually delivering on the commitment not to distract the business. I think the underlying performance represents that. Of course, we've got investor days, our capital market days coming up in November. That will really be the time where we set out our stall in terms of the investment thesis for both businesses, which will be different and suitable for the standalone business case. That makes sense.

Speaker #4: So my first question is, you mentioned Trinsic is out there. New name, everything is on track, even a strong management team designated. Now, you mentioned about this financial structure and the financial capability for both these businesses to be able to pursue their goals.

Speaker #5: So we had a dedicated team focused on doing that and we've made significant progress in both counts, not just with the spin, but actually delivering on the commitment not to distract the business.

Speaker #4: How should we think about that broadly?

Speaker #5: And I think the underlying performance represents that. But of course, we've got investor days, our capital market days coming up in November. That will really be the time where we set out our stall in terms of, I guess, the investment thesis for both businesses, which will be different.

Speaker #5: I mean, we're setting both businesses on the right path, Mariana. You've seen the book-to-bill, particularly in SDS—very strong. And obviously, the awards, when you link in what's under protest in MTS—I think both businesses are heading very strongly towards year-end with momentum.

Speaker #5: And suitable for the standalone business case. That makes sense.

Speaker #4: Great. Thank you. And then on SDS or the new KBR, how should we think about the volatility of the margins in terms of on a quarterly basis going forward, especially as you have like more, I don't know, pass-through materials in a quarter or capex versus opex mix?

Mariana Perez Mora: Great. Thank you. On STS or the new KBR, how should we think about the volatility of the margins in terms of on a quarterly basis going forward, especially as you have more, I don't know, pass-through materials in a quarter or CapEx versus OpEx mix. How should we think about that volatility going forward and the trend from the mid-teens, I don't know, three, five years from now?

Speaker #5: As they look to separate, I guess the whole piece around where the businesses are looking to operate is being de-risked as we progress towards the spin date.

Speaker #5: So that operational readiness, I was mentioned in the prepared remarks, is key there. And we continue to progress on all fronts. In terms of capital structure, going forward, we're very clear that both would have normative sort of leverage ratios for their businesses.

Speaker #4: How should we think about that volatility going forward and the trend from the mid-teens? I don't know, three, five years from now.

Speaker #5: Yeah, I think we'll get into the longer-term margin profile during investor day, but what I'll say, Mariana, as it relates to 2026 is the full year margin outlook for SDS remains unchanged.

Shad Evans: Yeah. I think we'll get into the longer-term margin profile during Investor Day. What I'll say, Mariana, as it relates to 2026, is the full-year margin outlook for STS remains unchanged. The quarterly variability that you see in the P&L this quarter is normal. It reflects the sort of project mix, particularly the procurement content that moves through the STS segment in a very normative way. We've seen that pattern very clearly historically, and this quarter is no different. I also say, as importantly, this year, the year-to-date margin performance, ex LNG equity and earnings, is 14.5%, which again, is consistent with our expectations and puts us in a wonderful position to deliver on the full-year commitments in STS.

Speaker #5: Given where our balance sheet sits today, I think you can translate that quite clearly. And we've communicated that historically. And pleasingly, both on a year-to-date basis are performing at the margins levels we expected.

Speaker #5: The quarterly variability that you see in the P&L this quarter is normal, right? It reflects the sort of project mix, particularly the procurement content that moves through the SDS segment in a very normative way.

Speaker #5: And our commitment was that we would not distract the core business while we set about the sort of spin separation process, which, in truth, is a heavy lift.

Speaker #5: We've seen that pattern very clearly historically and this quarter is no different. But also say is importantly, this year, the year-to-date margin performance ex L&G equity and earnings is 14 and a half percent, which again is consistent with our expectations and puts us in a wonderful position to deliver on the full year commitments in SDS.

Speaker #5: So we had a dedicated team focused on doing that. And we've made significant progress in both counts, not just with the spin, but actually delivering on the commitment not to distract the business.

Speaker #3: Your next question comes from the line of Ian Zaffino with Oppenheimer. Ian, your line is open. You may now go ahead.

Operator: Your next question comes from the line of Ian Zaffino with Oppenheimer. Ian, your line is open. You may now go ahead.

Speaker #5: And suitable for the standalone business case. That makes sense.

Speaker #1: Hey, good morning. This is Isaac Salas in Odd for Ian. Thanks for taking the questions. My first is just on STS. As far as the awards, you know, in the first half of the year, maybe you could talk a little bit about geographic mix.

Isaac Sellhausen: Hey, good morning. This is Isaac Sellhausen on for Ian. Thanks for taking the questions. My first is just on STS. As far as the awards in the H1 of the year, maybe you can talk a little bit about geographic mix, and maybe specific to the Middle East awards, maybe how that has trended compared to expectations, and if you're still seeing maybe any customer uncertainty with oil and gas customers at all. Thanks.

Speaker #4: Great. Thank you. And then on SDS or the new KBR, how should we think about the volatility of the margins in terms of on a quarterly basis going forward, especially as you have more, I don't know, pass-through materials in a quarter or capex versus opex mix?

Speaker #1: It may be specific to the Middle East awards. Maybe how that has trended compared to expectations and if you're still seeing maybe any customer uncertainty with oil and gas customers at all.

Speaker #4: How should we think about that volatility going forward and the trend from the mid-teens? I don't know, three, five years from now.

Speaker #1: Thanks.

Speaker #5: Yeah, good question. And we're seeing quite a sort of global mix in our award cadence. I think last quarter we saw a significant awards in the Middle East and we touched on that last quarter.

Stuart Bradie: Yeah, good question. We are seeing quite a sort of global mix in our award cadence. I think last quarter, we saw significant awards in the Middle East, and we touched on that last quarter. This quarter, if you look at the slides, you will see 54% of the awards were actually in the Americas this quarter. That is across a range of technology sales, and we announced the Pampa award in Argentina. Obviously, we have got ongoing work in Mexico, again in LNG, but also in the services business as well as the asset services business. So a good mix there with the Middle East coming in somewhere around the sort of 25% to 26%. Again, good continued momentum in the Middle East. It is very much a global business.

Speaker #5: Yeah, I think we'll get into the longer-term margin profile during investor day. But what I'll say, Mariana, as it relates to 2026, is the full-year margin outlook for SDS remains unchanged.

Speaker #5: This quarter, if you look at the slides, you'll see 54% of the awards were actually in the Americas. This quarter. And that's across a range of technology sales and we announced the Pampa Award in Argentina and obviously we've got ongoing work in Mexico again in L&G, but also in the services business as well as the asset services business.

Speaker #5: We've seen that pattern very clearly historically. And this quarter is no different. But I'll also say it's importantly that this year, the year-to-date margin performance ex L&G Equity and Earnings is 14.5%, which, again, is consistent with our expectations and puts us in a wonderful position to deliver on the full-year commitments in SDS.

Speaker #5: So a good mix there with the Middle East coming in somewhere around the sort of 25, 26%. So again, good continued momentum in the Middle East.

Speaker #5: But it's very much a global business. We've talked about this many times. And that's why we lay out the where we've won the work and it will vary quarter to work, quarter to quarter.

Stuart Bradie: We have talked about this many times. That is why we lay out where we have won the work. It will vary quarter to quarter. In terms of your question on the Middle East itself, we have seen, although there is increased, I guess, activity in and around the Middle East as it relates to the war, we have not seen any disruption to our ongoing work. We did say that in Q1. I think people probably were looking at that as to how can that be, we continued to deliver for our customers through that period. All our personnel are in place and continued to do the work. Our customers really appreciated that through Q1. Certainly that is the case as we head through Q2 into Q3. No real disruption there.

Speaker #3: Your next question comes from the line of Ian Zaffino with Oppenheimer. Ian, your line is open. You may now go ahead.

Speaker #5: In terms of your question, on the Middle East itself, we've seen although there's increased, I guess, activity in and around the Middle East as it relates to the war, we haven't seen any disruption to our ongoing work.

Speaker #1: Hey, good morning. This is Isaac Salas in for Ian. Thanks for taking the questions. My first is just on SDS. As far as the awards in the first half of the year, maybe you could talk a little bit about the geographic mix.

Speaker #5: We did say that in Q1, I think people probably were looking at that as to how can that be, but we continued to continue deliver for our customers through that period and all our personnel are in place and continue to do the work in our customers really, really appreciated that through Q1 and certainly that is the case as we head through the second quarter into Q3.

Speaker #1: Thanks.

Speaker #5: Yeah, good question. And we're seeing quite a sort of global mix in our award cadence. I think last quarter, we saw a significant awards in the Middle East, and we touched on that last quarter.

Speaker #5: So no real disruption there. The one anomaly and we did mention this last quarter is in these times of volatility like that, you do get slower payments and we were seeing signs of recovery there as we entered into the end of the quarter.

Stuart Bradie: The one anomaly, and we did mention this last quarter, is in these times of volatility like that, you do get slower payments, and we were seeing signs of recovery there as we entered into the end of the quarter. Of course, we are now entering another period of volatility, there may be some disruption to cash. Overall, in terms of revenue and EBITDA performance, the customers are paying eventually. We expect to catch up as we progress. In terms of the full-year outlook, that is why we have maintained guidance in cash, because we do expect for that to come back to normative levels. No real disruption really is the message.

Speaker #5: But of course, we're now entering another period of volatility. So there may be some disruption to cash, but overall in terms of revenue and EBITDA performance, and the customers are paying eventually and so we expect to catch up as we progress.

Speaker #5: And obviously, we've got ongoing work in Mexico again and L&G, but also in the services business as well as the asset services business. So a good mix there with the Middle East coming in somewhere around the sort of 25, 26%.

Speaker #5: So in terms of the full year outlook, that is why we've maintained guidance in cash because we do expect for that to come back to normative levels.

Speaker #5: So again, good continued momentum in the Middle East. But it's very much a global business. We've talked about this many times. And that's why we lay out the where we've won the work.

Speaker #5: So no real disruption really is the message.

Speaker #5: And it will vary quarter to work, quarter to quarter. In terms of your question, on the Middle East itself, we've seen although there's increased, I guess, activity in and around the Middle East as it relates to the war, we haven't seen any disruption to our ongoing work.

Speaker #1: Okay, understood. Thanks for that. And then just as a quick follow-up, as far as preparing the two businesses ahead of the spin, that you talked about simplifying the cost structure, maybe if you could just give a brief overview of what there is left to do ahead of the spin and then if you are able to provide any details as far as potential run rate savings of those kind of cost actions or anything like that.

Isaac Sellhausen: Okay, understood. Thanks for that. Just as a quick follow-up, as far as preparing the two businesses ahead of the spin, I think you talked about simplifying the cost structure. Maybe if you could just give a brief overview of what there is left to do ahead of the spin. If you are able to provide any details as far as potential run rate savings of those kind of cost actions or anything like that. Thanks.

Speaker #5: We did say that in Q1. I think people probably were looking at that as to how can that be. But we continued to continue for a deliver for our customers through that period.

Speaker #1: Thanks.

Speaker #5: So we touched on this a little bit in prepared remarks, but as I said before, we're making good progress on standalone costs across both businesses.

Stuart Bradie: We touched on this a little bit in prepared remarks, as I said before, we're making good progress on standalone costs across both businesses. Obviously we're not waiting until separation to address this. We're well ahead of the game. The actions we're taking today, including some of which you saw in the earnings around real estate rationalization this quarter. You'll see that in the quarter through the lease impairments. We continue to simplify our footprint and position both companies for day one. Overall, we're feeling really good about where that's tracking. For Trinzic, the objective is rate neutrality. We're designing the company really to fit within the cost structure that's already embedded in our rates today.

Speaker #5: And all our personnel are in place and continue to do the work in our customers really, really appreciated that through Q1. And certainly, that is the case as we head through this second quarter into Q3.

Speaker #5: And obviously we're not waiting until separation to address this. We're well ahead of the game. So the actions were taken today including some of which you saw in the earnings around real estate rationalization.

Speaker #5: So no real disruption there. The one anomaly, and we did mention this last quarter, is in these times of volatility like that, you do get slower payments.

Speaker #5: This quarter, and you'll see that in the quarter through the lease impairments. We continue to simplify our footprint and position both companies for day one.

Speaker #5: And we were seeing signs of recovery there as we entered into the end of the quarter. But of course, we're now entering another period of volatility.

Speaker #5: So overall, we're feeling really good about where that's tracking. For Trinsic, the objective is rate neutrality. So we're designing the company really to fit within the cost structure that's already embedded in our rates today.

Speaker #5: So, there may be some disruption to cash, but overall, in terms of revenue and EBITDA performance, the customers are paying eventually, and so we expect to catch up as we progress.

Speaker #5: So in terms of the full-year outlook, that is why we've maintained guidance in cash because we do expect for that to come back to normative levels.

Speaker #5: And that's really important not only from a cost plus perspective, but also to ensure we remain highly competitive on fixed price opportunities as the business transitions to a standalone company.

Stuart Bradie: That's really important, not only from a cost-plus perspective, but also to ensure we remain highly competitive on fixed price opportunities as the business transitions to a standalone company. Real good progress there. That's really been our core principle of our planning from the start. We've made significant moves within Trinzic towards that goal. On the new KBR side, we continue to build a fit-for-purpose organization. What does that mean? It means reducing complexity, simplifying how we operate, building strong digital backbone that drives greater efficiency across the business. We really do see meaningful opportunities to operate more effectively as a focused standalone company. As we mentioned last quarter, we'll have more to say about both companies' cost structures, their operating models, and the path forward at our upcoming Investor Days.

Speaker #5: So no real disruption really is the message.

Speaker #5: So real good progress there. And that's really been our core principle of our planning from the start. And we've made significant moves within Trinsic towards that goal.

Speaker #5: On the new KBR side, we continue to build a fit for purpose organization. And what does that mean? It means reducing complexity, simplifying how we operate, building strong digital backbone that drives greater efficiency across the business.

Speaker #5: And we really do see meaningful opportunities to operate more effectively as a focused standalone company. So as we mentioned last quarter, we'll have more to say about both companies' cost structures, their operating models and the path forward that are upcoming investor days.

Speaker #1: Thanks.

Speaker #5: So we touched on this a little bit and prepared remarks, but as I said before, we're making good progress on standalone costs across both businesses.

Speaker #5: And obviously, we're not waiting until separation to address this. We're well ahead of the game. So the actions were taken today including some of which you saw in the earnings around real estate rationalization.

Speaker #5: But sitting here today, really encouraged by the progress we're making and remain confident in the approach we're taking.

Stuart Bradie: Sitting here today, really encouraged by the progress we're making and remain confident in the approach we're taking.

Speaker #3: Your next question comes from the line of Toby Sommer with Truth Security. Toby, your line is now open. Please go ahead.

Operator: Your next question comes from the line of Tobey Sommer with Truist Securities. Tobey, your line is now open. Please go ahead.

Speaker #5: This quarter, and you'll see that in the quarter through the lease impairments. We continue to simplify our footprint and position both companies for day one.

Speaker #1: Hi, hi everybody. It's Henry on for Toby here. Just to start with on the guidance and really looking to the second half on the margin side.

[Company Representative] (Truist Securities): Hi, everybody. It's Henry on for Tobey here. To start with on the guidance and really looking to the H2 on the margin side. Your guidance reiteration implies a pretty meaningful step down in margins from the H1. Can you just kind of remind us and walk through the puts and takes there and kind of any potential upside to where guidance is now?

Speaker #1: You're going through iteration implies a pretty meaningful step down in margins from the first half. Can you just kind of remind us and walk through the puts and takes there and kind of any potential upside to our guidance is now?

Speaker #5: And that's really important, not only from a cost-plus perspective, but also to ensure we remain highly competitive on fixed-price opportunities as the business transitions to a standalone company.

Speaker #2: Yeah, so first I'll say Henry, we're really encouraged by the first half performance and believe it really reinforces our confidence in the full year outlook.

Shad Evans: Yeah. First I'll say, Henry, we're really encouraged by the H1 performance and believe it really reinforces our confidence in the full-year outlook. As we said in the prepared remarks, our visibility remains really strong with the work under contract in hand, both for STS and MTS. That said, we're only halfway through the year, and while we're tracking ahead of plan on awards, we still believe that the 12.4% aggregate margin for the full year puts us in a solid position to deliver across the board on our EBITDA and EPS commitments. Again, while we're tracking a bit ahead of plan, there's still quite a bit ahead of us in terms of awards, program activity, execution milestones, and of course, the Washington dynamics that need to play out over the balance of the year.

Speaker #5: It's a real good progress there. And that's really been our core principle of our planning from the start. And we've made significant moves within Trinsic towards that goal.

Speaker #2: As we said in the prepared remarks, our visibility remains really strong with the work under contract in hand, both for STS and MTS. That's that we're only halfway through the year and so while we're tracking ahead of plan on awards, we still believe that the 12.4% aggregate margin for the full year puts us in a solid position to deliver across the board on our EBITDA and EPS commitments.

Speaker #5: On the new KBR side, we continue to build a fit-for-purpose organization. And what does that mean? It means reducing complexity, simplifying how we operate, building strong digital backbone that drives greater efficiency across the business.

Speaker #2: And so again, while we're tracking a bit ahead of plan, there's still quite a bit ahead of us in terms of awards, program activity, execution milestones, and of course the Washington dynamics that need to play out over the balance of the year.

Speaker #5: But sitting here today, really encouraged by the progress we're making and remain confident in the approach we're taking.

Speaker #2: So given that, probably getting to perhaps the intent of the question, that's why we're reaffirming rather than taking an alternative approach today.

Shad Evans: Given that, and probably getting to perhaps the intent of the question, that's why we're reaffirming rather than taking an alternative approach today.

Speaker #4: Your next question comes from the line of Toby Summer with Truist Securities. Toby, your line is now open. Please go ahead.

Speaker #1: That's understood. Thank you. Thank you for that. And then switching to the STS side, you have some good announcements in that business recently, but could you just maybe frame up kind of those from a financial perspective with the planned rolloff of Plaquemids next year and kind of how you're working to bridge that gap going into 2027?

[Company Representative] (Truist Securities): Got you. Understood. Thank you. Thank you for that. Then switching to the STS side. You've had some good announcements in that business recently, but could you just maybe frame up kind of those from a financial perspective with the planned roll-off of Plaquemines next year and kind of how you're working to bridge that gap going into 2027? Thank you.

Speaker #1: Hi, hi everybody. It's Henry on for Toby here. Just to start with on the guidance, and maybe looking to the second half on the margin side, your venture iteration implies a pretty meaningful step down in margins from the first half.

Speaker #1: Thank you.

Speaker #5: Sure. First, we're not looking for a single project to replace Plaquemids. We've talked about that before, and that's not how we manage the business.

Stuart Bradie: Sure. First, we're not looking for a single project to replace Plaquemines. We've talked about that before, and that's not how we manage the business. What gives us confidence are the leading indicators, and they're clear for all to see. Quarter to date, book-to-bill was 1.5. Importantly, our trailing 12-month book-to-bill is 1.3. Our backlog is roughly up 40% year over year. That's a big number. Our two-year pipeline has grown about $6 billion, and that excludes obviously any large LNG reimbursable EPC opportunities, as I said in the prepared remarks. Just as importantly, the end markets we serve continue to be very strong, very global. We're seeing demand driven by energy security, no surprise there. Food security as it relates to ammonia, urea, and fertilizer, and resilience in an increasingly complex world.

Stuart Bradie: Sure. First, we're not looking for a single project to replace Plaquemines. We've talked about that before, and that's not how we manage the business. What gives us confidence are the leading indicators, and they're clear for all to see. Quarter to date, book-to-bill was 1.5. Importantly, our trailing 12-month book-to-bill is 1.3. Our backlog is roughly up 40% year-over-year. That's a big number. Our two-year pipeline has grown about $6 billion, and that excludes obviously any large LNG reimbursable EPC opportunities, as I said in the prepared remarks. Just as importantly, the end markets we serve continue to be very strong, very global. We're seeing demand driven by energy security, no surprise there. Food security as it relates to ammonia, urea, and fertilizer, and resilience in an increasingly complex world.

Speaker #1: Can you just kind of remind us and walk through the puts and takes there and kind of any potential upside to our guidance as now?

Speaker #5: What gives us confidence are the leading indicators and they're clear for all to see. The quarter to date book to bill was 1.5. But importantly, our trailing 12-month book to bill is 1.3.

Speaker #2: Yeah. So first, I'll say, Henry, we're really encouraged by the first half performance and believe it really reinforces our confidence in the full-year outlook.

Speaker #2: As we said in the prepared remarks, our visibility remains really strong with the work under contract in hand, both for STS and MTS. That said, we're only halfway through the year.

Speaker #5: So backlog is roughly up 40% year over year. That's a big number. And our two-year pipeline has grown about 6 billion and that excludes obviously any large LNG reimbursable EBC opportunities, as I said in the prepared remarks.

Speaker #2: And so while we're tracking ahead of plan on the wards, we still believe that the 12.4% aggregate margin for the full year puts us in a solid position to deliver across the board on our EBITDA and EPS commitments.

Speaker #5: So but just as importantly, the end markets we serve continue to be very strong, very global. And we're seeing demand driven by energy security.

Speaker #5: No surprise there. Food security as it relates to ammonia and urea and fertilizer. And resilience and increasingly complex worlds. And so we're also seeing a number of awards in and around Europe and Asia in particular around sustainability focused solutions.

Speaker #2: And so, again, while we're tracking a bit ahead of plan, there's still quite a bit ahead of us in terms of awards, program activity, execution milestones, and, of course, the Washington dynamics that need to play out over the balance of the year.

Stuart Bradie: We're also seeing a number of awards in and around Europe and Asia in particular, around sustainability-focused solutions. Again, a good set of opportunities in that realm. While Plaquemines will naturally wind down over time, as we said before, it does go through the H1 of 2027. We feel good about the growth outlook for STS because it's being supported by a broad set of opportunities, not a single project. Obviously we've got Investor Day coming up where we'll give you more detail and give you a deeper dive into that. Yeah, we're feeling pretty good about how we're addressing the challenge of backfilling Plaquemines. Thank you.

Speaker #2: So given that, probably getting to perhaps the intent of the question, that's why we're reaffirming rather than taking an alternative approach today.

Speaker #5: So again, a good set of opportunities in that realm. So while Plaquemids will naturally wind down over time, as we said before, it does go through the first half of '27.

Speaker #1: Gotcha. Understood. Thank you. Thank you for that. And then switching to the STS side, we've had some good announcements in that business recently. But could you just maybe frame up kind of those from a financial perspective with the planned rolloff of Plaquemades next year and kind of how you're working to bridge that gap going you.

Speaker #5: We feel good about the growth outlook for STS. Because it's being supported by a broad set of opportunities. Not a single project. And obviously we've got investor day coming up where we'll give you more detail and give you a deeper dive into that.

Speaker #5: Sure. First, we're not looking for a single project to replace Plaquemades. We've talked about that before, and that's not how we manage the business.

Speaker #5: But yeah, we're feeling pretty good about how we're addressing that challenge of backfilling Plaquemids. Thank you.

Speaker #3: The next question comes from Jerry Revich with Wells Fargo. Jerry, your line is now open. Please go ahead.

Speaker #5: What gives us confidence are the leading indicators and they're out clear for all to see. The quarter to date book to bill was 1.5.

Operator: The next question comes from Jerry Revich with Wells Fargo. Jerry, your line is now open. Please go ahead.

Speaker #1: Hi, good morning everyone. This is Andrew Azion for Jerry Revich. Just wanted to ask maybe you discussed adding more than a couple thousand employees for the recent awards last quarter.

Andrew Azzi: Hi. Good morning, everyone. This is Andrew Azzi for Jerry Revich. Just wanted to ask maybe, you discussed adding more than a couple thousand employees for the recent awards last quarter. Any update on how many are onboarded, how quickly they're becoming billable, and what the revenue runway for some of these Middle East ramp should contribute exiting the year?

Speaker #5: But importantly, our trailing 12-month book to bill is 1.3. So backlog is roughly up 40% year over year. That's a big number. And our two-year pipeline has grown about 6 billion.

Speaker #1: Any update on how many are onboarded, how quickly they're becoming billable and what the revenue runway for some of these Middle East ramp should contribute exiting the year?

Speaker #5: And that excludes, obviously, any large L&D reimbursable EBC opportunities, as I said in the prepared remarks. But just as importantly, the end markets we serve continue to be very strong, very global.

Speaker #5: And we're seeing demand driven by energy security, no surprise there. Food security, as it relates to ammonia and urea and fertilizer, and resilience and increasingly complex worlds.

Speaker #5: Yeah, so you're quite right. We announced, I think, over a thousand people or so joining. And that number is well above that today. And they're onboarded and working for us in the Middle East right now.

Stuart Bradie: Yeah. You're quite right. We announced, I think, over 1,000 people or so joining, and that number's well above that today, and they're onboarded and working for us in the Middle East right now. We've made great progress and been able to staff up the projects that we secured earlier in the year. You know that STS revenue growth for the year is in the mid-teens, and that ramp-up supports that growth. Both of those numbers align well, and we continue to be confident of our outlook for the full year.

Speaker #5: And so we're also seeing a number of awards in and around Europe and Asia in particular around sustainability-focused solutions. So again, a good set of opportunities in that realm.

Speaker #5: So we've made great progress and been able to staff up the projects. That we secured earlier in the year. You know that STS revenue growth for the year is in the mid-teens.

Speaker #5: So while Plaquemades will naturally wind down over time, as we said before, it does go through the first half of '27. We feel good about the growth outlook for SDS.

Speaker #5: And that ramp-up supports that growth. And so both of those numbers align well. And we continue to be confident of our outlook for the full year.

Speaker #5: Because it's being supported by a broad set of opportunities. Not a single project. And obviously, we've got investor day coming up where we'll give you more detail and give you a deeper dive into that.

Speaker #1: Appreciate that. And you also flagged potential cash flow volatility from the Middle East. Can you quantify if that actually occurred in the actual impact and whether that's timing or structural and give us a recovery cadence through the year end?

Andrew Azzi: Appreciate that. You also flagged potential cash flow volatility from the Middle East. Can you quantify if that actually occurred and the actual impact and whether that's timing or structural and give us a recovery cadence through the year-end?

Speaker #5: But yeah, we're feeling pretty good about how we're addressing that, the challenge of backfilling Plaquemades. Thank you.

Speaker #4: The next question comes from Jerry Revich with Wells Fargo. Jerry, your line is now open. Please go ahead.

Shad Evans: Yeah. Again, as Stuart mentioned, we did flag the expected cash performance being largely timing from Middle East payments due to the conflict. As he said, we have seen conditions improve as we exited the quarter. As a result, we do view this purely as a timing issue rather than a change in the underlying cash generation profile of the business. Again, to be determined as and when this conflict will be resolved, but our view is that the full-year cash flow from a guidance perspective remains unchanged.

Speaker #2: Yeah, so again, as Stuart mentioned, we did flag the expected cash performance being largely timing from Middle East payments in due to the conflict.

Speaker #1: Hi, good morning, everyone. This is Andrew Ozion for Jerry Revich. Just wanted to ask maybe you discussed adding more than a couple thousand employees for the recent awards last quarter.

Speaker #2: But as he said, we have seen conditions improve as we exited the quarter. And as a result, we do view this purely as a timing issue rather than a change in the underlying cash generation profile of the business.

Speaker #1: Any update on how many are onboarded, how quickly they're becoming billable, and what the revenue runway for some of these Middle East ramp should contribute exiting the year?

Speaker #2: And again, to be determined as and when this conflict will be resolved, that our view is that the full year cash flow from a guidance perspective remains unchanged.

Speaker #5: Yeah. So you're quite right. We announced, I think, over 1,000 people or so joining. And that number is well above that today. And they're onboarded and working for us in the Middle East right now.

Speaker #3: Your next question comes from the line of Adam Boots with Goldman Sachs. Adam, your line is now open. Please go ahead.

Operator: Your next question comes from the line of Adam Bubes with Goldman Sachs. Adam, your line is now open. Please go ahead.

Speaker #5: So we've made great progress and been able to staff up the projects that we secured earlier in the year. You know that SDS revenue growth for the year is in the mid-teens.

Speaker #4: Hi, good morning. This is Andrew on behalf of Adam. So quickly wanted to ask that on the MTS segment margins were up 12% in this quarter.

[Company Representative] (Goldman Sachs): Hi. Good morning. This is Anuj on behalf of Adam. Quickly wanted to ask that on the MTS segment, margins were up 12% in this quarter. Can you pass out what in the portfolio is driving the strong execution? Also, I think in the past you have framed MTS margins to be roughly around 10% or more on those lines level. Is that still the right way for us to think about the run rate? Thank you.

Speaker #4: So can you pass out what in the portfolio is driving the strong execution and also I think in the past you have framed MTS margins to be roughly around 10% or more on those lines level.

Speaker #5: And that ramp-up supports that growth. And so both of those numbers to be confident of our outlook for the full year.

Speaker #4: Is that still the right way for us to think about the run rate? Thank you.

Speaker #2: So as we've demonstrated before, favorable contract closeouts are really a normal part of managing a large and complex global portfolio. So the resolution this quarter was really consistent with our expectations.

Shad Evans: As we've demonstrated before, favorable contract closeouts are really a normal part of managing a large and complex global portfolio. The resolution this quarter was really consistent with our expectations and reflects the disciplined contract management, customer engagement, and risk management practices that are embedded across really both segments. As I said in my prepared remarks, margins in MTS are running a bit higher this year at about 11% on a year-to-date basis, which is ahead of our planned outlook. We still believe that the long-term 10-plus percent margin targets that we've given are an appropriate way to model this business at least through the end of the year.

Speaker #1: Appreciate that. And you also flagged potential cash flow volatility from the Middle East. Can you quantify if that actually occurred, and what the actual impact was?

Speaker #2: And reflects the disciplined contract management, customer engagement, and risk management practices that are embedded across really both segments. As I said in my prepared remarks, margins to an MTS are running a bit higher this year at about 11% on a year-to-date basis, which is ahead of our planned outlook.

Speaker #1: And whether that's timing or structural, can you give us a recovery cadence through year-end?

Speaker #5: Yeah. So again, as

Speaker #2: Stuart mentioned, we did flag the expected cash performance being largely timing from Middle East payments in due to the conflict. But as he said, we have seen conditions improve as we exited the quarter.

Speaker #2: But we still believe that the long-term 10 plus percent margin targets that we've given are an appropriate way to model this business, at least through the end of the year.

Speaker #2: And as a result, we do view this purely as a timing issue rather than a change in the underlying cash generation profile of the business.

Speaker #4: Got it. And on the recently awarded 8 billion and tactics science project, how should we think about the annual revenue run rate, the margins, and what's the RAM profile like in the early years?

[Company Representative] (Goldman Sachs): Got it. On the recently awarded $8 billion Antarctic Science project, how should we think about the annual revenue run rate, the margins, and what's the ramp profile like in the early years?

Speaker #2: And again, to be determined as and when this conflict will be resolved, that our view is that the full-year cash flow from a guidance perspective remains unchanged.

Speaker #5: Yeah, so it's 8 billion over 20 years. And it will ramp up over the first couple of years. I think we don't know until we get into the meat of this in terms of the run rates.

Stuart Bradie: Yeah. It's $8 billion over 20 years, and it will ramp up over the first couple of years. I think we don't know until we get into the meat of this in terms of the run rates. I guess the best guide is to look back at what the incumbent is running at, and that's somewhere around, it's quite a range, depending on the years, but $150 to 300 million, depending on the particular year. As I say, we can't give a guide on that until we are officially on the job and we start to see that. The incumbents' run rates are probably the best way to do it. Yeah, as I say, that's the sort of range that they're running at.

Speaker #4: Your next question comes from the line of Adam Boots with Goldman Sachs. Adam, your line is now open. Please go ahead.

Speaker #6: Hi, good morning. This is Andrew on behalf of Adam. So quickly wanted to ask that on the MTS segment margins were up 12% in this quarter.

Speaker #5: I guess the best guide is to look back at what the incumbent is running at. And that's somewhere around, oh, I mean, that's quite a range.

Speaker #6: So can you pass out what in the portfolio is driving the strong execution? And also, I think in the past you have framed MTS margins to be roughly around 10% or more on those lines level.

Speaker #5: They're looking depending on the years, but 150 to 300 million. Depending on the particular year. As I say, we can't give a guide on that until we are officially on the job and we start to see that.

Speaker #6: Is that still the right way for us to think about the run rate? Thank you.

Speaker #5: And the incumbents are a run rates are probably the best way to do it. And yeah, as I say, that's the sort of range that they're running at.

Speaker #3: Your next question comes from the line of Michael Gundas with Vertical Research Partners. Michael, your line is now open. You may please go ahead.

Operator: Your next question comes from the line of Michael Dudas with Vertical Research Partners. Michael, your line is now open. You may please go ahead.

Speaker #6: Good morning, Rachel, Shad. Stuart.

Michael Dudas: Good morning, Rachael, Shad, Stuart.

Speaker #5: Hey, Mike.

Stuart Bradie: Hey, Mike.

Speaker #2: But we still believe that the long-term 10-plus percent margin targets that we've given are an appropriate way to model this business, at least through the end of the year.

Speaker #6: Hi Mike. Hey, so we're encouraging on the progress on the spin moving forward. Maybe step back, Stuart, looking at the new KBR after the spin is complete.

Shad Evans: Hi, Mike.

Michael Dudas: Hey. Encouraging on the progress on the spin moving forward. Maybe step back, Stuart, looking at the new KBR after the spin is complete, what have you found in doing the assessment of the business model about where the company is positioned, where it was part of the company together and its standalone opportunities? On the OpEx front, are you encouraged about some of those opportunities there, and is there any emerging technologies or opportunities within the portfolio that might be starting to get more visibility over the next couple of years relative to the core, certainly the ammonia stuff and some of your own hydrocarbon technologies that you're well-known for?

Speaker #6: Got it. And on the recently awarded $8 billion and tactics science project, how should we think about the annual revenue run rate, the margins, and what's the RAM profile like in the early years?

Speaker #6: What have you found in doing the assessment of the business model about where the company is, positioned or was part of the company together, and its standalone opportunities is there on the opex front or encouraged about some of those opportunities there?

Speaker #5: Yeah. So it's $8 billion over 20 years. And it will ramp up over the first couple of years. I think we don't know until we get into the meat of this in terms of the run rates.

Speaker #6: And is there any emerging technologies or opportunities within the portfolio that might be starting to get more visibility over the next couple of years relative to the core?

Speaker #5: I guess the best guide is to look back at what the incumbent is running at. And that's somewhere around, oh, I mean, it's quite a range.

Speaker #6: Certainly the ammonia stuff and some of your own hydrocarbon technologies that you're well known for.

Speaker #5: They're looking depending on the years, about $150 to $300 million. Depending on the particular year. As I say, we can't give a guide on that until we are officially on the job and we start to see that.

Speaker #5: Thanks, Mike. That's a big question with probably our we don't have enough time to talk about all of it on this call. I'll touch on a few areas.

Stuart Bradie: Thanks, Mike. It's a big question. We don't have enough time to talk about all of it on this call. I'll touch on a few areas. We've got, obviously, emerging tech that we're very excited about that we'll talk about how we are good at actually acquiring that at fairly low multiples and then commercializing it over time, and we'll give you some examples of that in November at the Capital Markets Day. That's an exciting, I think, growth opportunity. We're very excited across both businesses and what we're doing for AI. We actually see AI creating genuine customer demand. As it relates to STS, we're probably most excited about combining our engineering expertise with physics-based AI, really to drive market-leading operational performance. Initially, we're test-casing that on our licensed ammonia plants and now have two customers running that for us.

Speaker #5: And the incumbents are a run rates are probably the best way to do it. And yeah, as I say, that's the sort of range that they're running at.

Speaker #5: I mean, we've got obviously emerging tech that we're very excited about that we'll talk about how we are good at actually acquiring that at a fairly low multiples and then commercializing it over time.

Speaker #4: Your next question comes from the line of Michael Dundas with Vertical Research Partners. Michael, your line is now open. You may please go ahead.

Speaker #5: And we'll give you some examples of that in November at the capital markets day. So that's an exciting, I think, growth opportunity. We're very excited across both businesses and what we're doing for AI.

Speaker #1: Good morning, Rachel, Chad, Stuart.

Speaker #5: Hey, Mike.

Speaker #7: Hi, Michael.

Speaker #5: We actually see AI creating genuine customer demand. As it relates to SDS, we're probably most excited about combining our engineering expertise with physics-based AI.

Speaker #1: Hey, so I'm encouraging on the progress on the spin moving forward. Maybe step back, Stuart, looking at the new KBR after the spin is complete.

Speaker #5: Really to drive market-leading operational performance and initially we're test casing that on our licensed ammonia plants and now have two customers running that for us.

Speaker #1: What have you found in doing the assessment of the business model about where the company is, positioned or was part of the company together, and its standalone opportunities?

Speaker #5: And we'll be able to give you an update again at investor day about how that can impact KBR going forward. And really position us opposite that operations and maintenance portfolio that has different commercial advantage.

Stuart Bradie: We'll be able to give you an update again at Investor Day about how that can impact KBR going forward and really position us opposite that operations and maintenance portfolio that has different commercial advantage. I think the last piece, and that we're quite excited about, is the broader-based opportunity in the markets where we are very good at going in early. The geographical expansion, and the relationship base that we have, really creates quite high barriers to entry. Again, we'll touch on that as we get to Investor Day. I think having a more focused management team who wake up every day thinking about this, will really drive significant opportunity for the business. We're delivering well today, and we're increasing backlog, and the pipeline is super strong. Our reputation in the market for delivery, which I'm really proud of.

Speaker #1: Is there on the opex front, are you encouraged about some of those opportunities there? And is there any emerging technologies or opportunities within the portfolio that might be starting to get more visibility over the next couple of years relative to the core?

Speaker #5: And I think the last piece that we're quite excited about is the broader based opportunity in the markets where we are very good at going in early.

Speaker #1: Certainly the ammonia stuff and some of your own hydrocarbon technologies that you're well known for.

Speaker #5: And the geographical expansion and the relationship base that we have really creates quite high buyers to enter in. Again, we'll touch on that as we get to investor day.

Speaker #5: Thanks, Mike. That's a big question with probably we don't have enough time to talk about all of it on this call. I'll touch on a few areas.

Speaker #5: So I think having a more focused management team who wake up every day thinking about this will really drive significant opportunity for the business.

Speaker #5: I mean, we've got, obviously, emerging tech that we're very excited about, and we'll talk about how we are good at actually acquiring that at fairly low multiples and then commercializing it over time.

Speaker #5: We're delivering well today. And we're increasing backlog and the pipeline is super, super strong. And our reputation in the market for delivery which I'm really proud of our people do an amazing job every single day across both businesses.

Speaker #5: And we'll give you some examples of that in November at the Capital Markets Day. So that's an exciting, I think, growth opportunity. We're very excited across both businesses and what we're doing for AI.

Stuart Bradie: Our people do an amazing job every single day across both businesses. I think that will create tangible opportunity and increasing momentum as we head into 2027. All up, I think that's probably enough for today on that, Mike, if you don't mind. I think you can tell we're excited about the potential growth drivers and the potential of margin enhancement over time.

Speaker #5: And so I think that will create tangible opportunity and increasing momentum as we head into 27. So all up, I think that's probably enough for today on that, Mike, if you don't mind.

Speaker #5: We actually see AI creating genuine customer demand. As it relates to SDS, we're probably most excited about combining our engineering expertise with physics-based AI.

Speaker #5: And but I think you can tell we're excited about the potential growth drivers and the potential of margin enhancement over time.

Speaker #5: Really to drive market-leading operational performance and initially we're test casing that on our licensed ammonia plants and now have two customers running that for us.

Michael Dudas: No, Stuart, we are looking forward to 11 November, I guess.

Speaker #6: No, Stuart, we are looking forward to November 11th, I guess. Just quick follow-up. And if it's something to call out on, I think you mentioned 6 billion in pipeline for STS.

Speaker #5: And we're able to give you an update again at investor day about how that can impact KBR going forward. And really position us opposite that operations and maintenance portfolio that has different commercial advantage.

Stuart Bradie: Yeah

Michael Dudas: the STS day. Just a quick follow-up. If there's something to call out, I think you mentioned $6 billion in pipeline for STS.

Stuart Bradie: Yeah.

Speaker #6: Anything to call out there that we should look at or think about? And maybe a quick update on plastics recycling and how those projects are going.

Michael Dudas: Anything to call out there that we should look at or think about? Maybe a quick update on plastics recycling and how those projects are going.

Speaker #5: And I think the last piece that we're quite excited about is the broader-based opportunity in the markets where we are very good at going in early.

Speaker #5: So on the pipeline itself, it's very much similar to the way that we've performed, I think, over the last two quarters. It'll be a mix of capex and in Europe, a mix of capex and opex in the Middle East.

Stuart Bradie: On the pipeline itself, it's very much similar to the way that we've performed, I think, over the last 2 quarters. It'll be a mix of CapEx in Europe, a mix of CapEx and OpEx in the Middle East, and CapEx in Americas and Australia. The CapEx embrace is obviously technology sales and proprietary equipment that are associated with that, given the nature of that business. It won't be in one region, it'll be broad based. I can't really go into specifics on the pipeline, but our conversion rates remain very high and our positioning, our thought processes about where we actually bid and who we bid to, and because of our differentiation or our ability to win really are sort of bearing fruit. I'm very upbeat about the quality of our earnings associated with that pipeline.

Speaker #5: And the geographical expansion and the relationship base that we have really creates quite high buyers to enter in. Again, we'll touch on that as we get to investor day.

Speaker #5: So I think having a more focused management team, who wake up every day thinking about this, will really drive significant opportunity for the business.

Speaker #5: And capex in America's and Australia. And the capex embraces obviously technology sales and proprietary equipment that are associated with that given the nature of that business.

Speaker #5: We're delivering well today. And we're increasing backlog and the pipeline is super, super strong. And our reputation in the market for delivery, which I'm really proud of, our people do an amazing job every single day across both businesses.

Speaker #5: So it'll be it won't be in one region. It'll be broad-based. And so it's I don't really I can't really go into specifics on the pipeline.

Speaker #5: But we're our conversion rates remain very high. And our positioning and our thought processes about where we actually bid and who we bid to because of our differentiation or our ability to win really are sort of bearing fruit.

Speaker #5: And so I think that will create tangible opportunity and increasing momentum as we head into '27. So all up, I think that's probably enough for today on that, Mike, if you don't mind.

Speaker #5: And I think you can tell we're excited about the potential growth drivers and the potential of margin enhancement over time.

Speaker #5: So I'm very, very upbeat about the quality of earnings associated with that pipeline. And into next quarter as we expect because of the skill of the pipeline.

Stuart Bradie: We'll see that progress into next quarter, as we expect because of the scale of the pipeline. In terms of plastics recycling, they continue to make pretty reasonable progress. It's slower than anyone really wanted in Mura in Teesside in England. They've got their final technical solution in terms of being able to run the plant continuously. That goes on stream now-ish, actually. We should be able to give an update in Q3 earnings as to the progress there. They've got a project pipeline that's quite exciting that looks at potentials in and around Europe, and in Asia. Those are moving along quite nicely. We, again, will give an update on the whole Mura situation as we get to Investor Day. I think it's a good part of our technology development story and our investment in ventures.

Speaker #1: No, Stuart, we are looking forward to November 11th, I guess. Just quick follow-up. Maybe if there's something to call out on the I think you mentioned $6 billion in pipeline for SDS.

Speaker #5: In terms of plastics recycling, they continue to make pretty reasonable progress. It's slower than anyone really wanted in Mura in Teesside in England. They've got their final technical solution in terms of being able to run the plant continuously.

Speaker #1: Anything to call out there that we should look at or think about? And maybe a quick update on plastics recycling and how those projects are going.

Speaker #5: And that goes on stream nourish actually. So we should be able to give an update in Q3 earnings as to the progress there. And they've got a project pipeline that's quite exciting that looks at potentials in and around Europe.

Speaker #5: And capex in America's and Australia. And the capex embraces obviously technology sales and proprietary equipment that are associated with that, given the nature of that business.

Speaker #5: And in Asia. And those are moving along quite nicely. And again, we'll give an update on the whole Mura situation as we get to investor day.

Speaker #5: I think it's a good part of our technology development story and certain investment and ventures.

Speaker #5: So it'll be it won't be in one region. It'll be broad-based. And so it's I don't really I can't really go into specifics on the pipeline.

Speaker #1: We have reached the end of the Q&A session. I will now turn the call back to Stuart Brady for closing remarks.

Operator: We have reached the end of the Q&A session. I will now turn the call back to Stuart Bradie for closing remarks.

Speaker #5: But we're our conversion rates remain very high. And our positioning and our thought process is about where we actually bid and who we bid to.

Speaker #5: Thank you very much. So a few final thoughts just to close. So when we announced our intention to separate the company, we truly believe KBR contained two very high-quality businesses that could create value as focused standalone companies than they could together.

Stuart Bradie: Thank you very much. A few final thoughts just to close. When we announced our intention to separate the company, we truly believe KBR contained two very high-quality businesses that could create value as focused standalone companies, than they could together. As we've moved through the separation process, that conviction has only strengthened. In Sustainable Technology Solutions, as you've heard today and can see, we're seeing strong demand, we're at record backlog, and there's growing visibility supported by long-term investments in energy security, food security, and sustainability. In Mission Tech, again, the demand remains strong, visibility continues to build, and opportunities across national security and space remain compelling. Today's introduction of the Trinzic brand, very exciting, is an important milestone, together with the leadership team that have been brought together, really marks the beginning of an exciting new chapter for the business.

Speaker #5: And because of our differentiation or our ability to win really a sort of bearing fruit. So I'm very, very upbeat about the quality of earnings associated with that pipeline.

Speaker #5: And again, we'll see that progress into next quarter, as we expect, because of the scale of the pipeline. In terms of plastics recycling, they continue to make pretty reasonable progress.

Speaker #5: And as we've moved through the separation process, that conviction has only strengthened. And sustainable technology solutions as you've heard today and can see we're seeing strong demand.

Speaker #5: It's slower than anyone really wanted in Mura in Teesside in England. They've got their final technical solution in terms of being able to run the plant continuously.

Speaker #5: We're at record backlog. And there's growing visibility supported by long-term investments in energy security, food security, and sustainability. Admission tech, again, the demand remains strong.

Speaker #5: And that goes on stream now-ish, actually. So we should be able to give an update in Q3 earnings as to the progress there. And they've got a project pipeline that's quite exciting that looks at potentials in and around Europe.

Speaker #5: Visibility continues to build and opportunities across national security and space remain compelling. Today's introduction of the trinsic brand, very exciting. It is an important milestone.

Speaker #5: And together with the leadership team, there have been brought together that really marks the beginning of an exciting new chapter for the business. We're excited about the opportunity for trinsic really gives them the opportunity to tell the story of what the business has become today and how it is bringing together people, technology, and critical systems to help our customers move forward with confidence.

Speaker #5: And in Asia. And those are moving along quite nicely. And again, we'll give an update on the whole Mura situation as we get to investor day.

Stuart Bradie: We're excited about the opportunity for Trinzic. It really gives them the opportunity to tell the story of what the business has become today and how it is bringing together people, technology, and critical systems to help our customers move forward with confidence. Both organizations are entering this next chapter from a position of strength with significant revenue visibility, strong market position, and clear path to long-term growth, and just as important, with amazing group of people in both organizations. As we approach separation, we're more confident than ever in the opportunities ahead for both new KBR and Trinzic, and in the value each company can create as a focused standalone business. Thank you for your continued support, thank you for your interest in KBR today.

Speaker #5: I think it's a good part of our technology development story and sort of investment and ventures.

Speaker #2: We have reached the end of the Q&A session. I will now turn the call back to Stuart Bradie for closing remarks.

Speaker #5: Both organizations are entering this next chapter from a position of strength with significant revenue visibility, strong market position, and clear paths to long-term growth.

Speaker #5: And just as important with amazing group of people in both organizations. As we approach separation, we're more confident than ever in the opportunities ahead for both new KBR and trinsic.

Speaker #5: And in the value each company can create as a focused standalone business. So thank you for your continued support. And thank you for your interest in KBR today.

Speaker #5: And as we've moved through the separation process, that conviction has only strengthened. In sustainable technology solutions, as you've heard today and can see, we're seeing strong demand.

Operator: This concludes today's call. Thank you for attending. You may now disconnect.

Speaker #5: We're at record backlog. And there's growing visibility supported by long-term investments in energy security, food security, and sustainability. In mission tech, again, the demand remains strong.

Speaker #5: Visibility continues to build and opportunities across national security and space remain compelling. Today's introduction of the Trinsic brand, very exciting. It is an important milestone.

Speaker #5: And together with the leadership team, there have been brought together that really marks the beginning of an exciting new chapter for the business. We're excited about the opportunity for Trinsic really gives them the opportunity to tell the story of what the business has become today and how it is bringing together people, technology, and critical systems to help our customers move forward with confidence.

Speaker #5: Both organizations are entering this next chapter from a position of strength with significant revenue visibility, strong market position, and clear paths to long-term growth.

Speaker #5: And just as important, with amazing group of people in both organizations. As we approach separation, we're more confident than ever in the opportunities ahead for both new KBR and Trinsic.

Speaker #5: And in the value each company can create as a focused standalone business. So thank you for your continued support. And thank you for your interest in KBR today.

Q2 2026 KBR Inc Earnings Call

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