KBR, Inc.

Hello and thank you for joining us on KBR's fourth quarter and full year 2025 earnings conference call. The call will be starting in approximately two minutes time. During today's call, we will have a Q&A session. If you'd like to register a question during that time, please press star followed by one on your telephone keypad and to withdraw your question is star followed by two. Thank you. Thank you. Thank you. Good morning and good afternoon, everyone. Well, thank you for joining us for KBR's fourth quarter and full year 2025 earnings conference call. My name is Drew and I'll be the operator on the call today. During the call, after the prepared remarks, we'll have a Q&A session. If you would like to ask a question during that time, please press star followed by one on your telephone keypad. And to withdraw your question, it's star followed by two. And as a reminder, we ask that you ask one question and one follow-up. With that, it's my pleasure to hand over to Rachel Goldway, Head of Investor Relations, to begin. Please go ahead when you're ready.

Rachel Goldway, Chief Financial Officer. Stuart and Shad will provide highlights from the quarter in full year and then open the call for your questions. Today's earnings presentation is available on the investor section of our website at KBR.com. This discussion includes forward-looking statements reflecting KBR's views about future events and their potential impact on performance, as outlined on slide two. These matters involve risks and uncertainties that could cause actual results to differ materially from these forward-looking statements, as discussed in the most recent Form 10-K available on our website. This discussion also includes non-GAAP financial measures that the company believes to be useful metrics for investors. The reconciliation of these non-GAAP measures to the nearest GAAP measure is included at the end of our earnings presentation. I will now turn the call over to Stuart.

Thank you, Rachel, and good morning, everyone. I will pick up on slide four. As we always do at KBR, I want to start with a brief zero-harm moment. In 2025, we delivered industry-leading safety performance with our TRIR reaching an all-time low of 0.033 and zero harm days reaching an all-time high at 96%. These results really reflect strong discipline and accountability across our operations. More importantly, we speak to the culture we've built inside KBR. We focus on creating an environment where people look out for one another, and where safety and wellbeing are part of how we operate every single day. That culture is especially important as we move through the spin, and it underpins the execution and results we'll walk through today. On to slide five. Today's call will cover these key topics. First, I'll start with how we delivered our strategy in 2025. From there, I'll touch on why we see improving momentum and visibility as we move into 2026 across both segments, including how the quality of our earnings continues to improve. That's really important. I'll provide an update on the spin itself. And finally, Chad will walk through our financial performance for the year and, of course, our guidance for 2026. On to slide six. and strategy. So as we enter the year, I want to start with a simple message. We executed our strategy in 2025, despite a very challenging award environment across both segments. We stayed disciplined, focused on what we can control, and made meaningful progress across each of our strategic pillars. Firstly, thrive and expand. In sustainable tech, we continue to expand globally, with particular momentum in the global south. And you've heard us say that before. We also made deliberate progress in growing our OPEX-facing businesses, both organically and inorganically. And this, of course, reduces our exposure to CAPEX cycles. The SWOT acquisition within our ground and group job venture, Briss, which closed in January, was a key milestone, more than doubling the EBITDA of that business. In Mission Tech, we continue to leverage contract vehicles, including recent Air Force and Space Force awards, which you'll have seen, while expanding internationally and strengthening our presence in Washington. And that's to deepen engagement with both the administration and the Pentagon. Second, to deliver innovation. Innovation remains central to our strategy. In sustainable tech, We launched Insight 3.0 this quarter through a new venture with Applied, enhancing operational performance across KBI-licensed ammonia plants using physics-based AI. We also continue to advance Mura and other technologies as a long-term growth platform. In Mission Tech, our focus on deepening customer relationships and advancing our technology roadmap is paying off. Recognition as a top 10 Australian defence contractor, the Novart Excellence Award from NASA, and the recent Golden Dome Shield seat all reflect this progress. Post-Linqvist, the establishment of a new Chief Technology Officer role and our digital design labs are strengthening our position as a true capability partner. Thirdly, Thrive Operational Excellence. Operational execution was a clear strength in 2025. We expanded margins by more than 100 basis points and generated operating cash flow with a conversion rate of 110%, delivering over $30 million in cost savings and expect this margin and cash performance momentum to continue into 2026. And finally, deploy capital effectively. We delivered $413 million in capital to shareholders in a year, and that's the highest in the last decade. Successfully integrated Lindquist and de-leveled the balance sheet within a year. As we prepare for the spin, we remain highly disciplined, ensuring both companies are positioned with appropriate capital structures from day one. With that context, let's come to our segment performance, starting with sustainable tech on slide seven. 2025 was a challenging year for sustainable tech, marked by a sharp decline in petrochemicals capex and a pause in many green projects as customers shifted their focus towards affordability and energy security. Now, despite this backdrop, SDS proved remarkably resilient. Margins held up well in the first half of the year, and our teams responded really quickly pivoting towards the Global South, LNG, ammonia, and OPEX-driven markets where demand fundamentals remain strong. That pivot clearly showed up in the results. We delivered strong book-to-bill in both the third and fourth quarters and exited the year with solid work under contract for 2026. Geographically, the Global South was a major source of strength, with winds across Iraq, Saudi Arabia, Kuwait, and Singapore. At LNG, we secured both the Abadi and Coastal Bend front-end engineering design contracts, reinforcing our front-end positioning. And in ammonia, awards were truly global, reflecting the durability of our technology portfolio. We also continue to advance emerging technologies, including lithium extraction, and in hydro PRT recycling, After ongoing commissioning challenges, I'm pleased to report they are now operating continuously producing on-spec product with ramp up expected through 2026. Now, as we look ahead, our growth opportunities in 2026 are directly aligned with these same themes. To anchor that outlook, fourth quarter book to bill was 1.6 times. with a trailing 12 months put to bill of 1.2x. Backlog ended the year at $4.2 billion, and that's up 5% year over year, and up more than 20% excluding Blackman's LNG. Our near-term pipeline, excluding LNG, is approximately $5 billion, with about 80% from repeat customers showing the relationships that we have developed over time. And work under contract covers roughly 63% of our 2026 guidance, putting us above normative levels for this business going into the year. With that, let's turn to Mission Tech and on to slide eight. Mission Tech also faced a challenging environment, as you're well aware, in 25, including award delays, reduced contingency activity for us, particularly in Europe, and the impact of the government shutdown. Despite those headwinds, MTS performed well. Revenue held up year over year, margins improved, and cash performance was excellent. And this reflects a disciplined execution approach and the quality of the underlying portfolio. Strategically, we continued to move upmarket. Activity expanded with the U.S. Space Force and Air Force Research Lab, validating the Lindquist acquisition. We secured positions on key multiple award vehicles and defended several important re-competes, including HHPC and Djibouti. While we did lose the COSMOS re-compete in 2025, this was at the lower end of margin returns within the portfolio. Importantly, there are no material re-compete revenues expected in 26. reducing near-term pre-compete risk. Internationally, I will stand out, particularly Australia, with approximately $800 million in defense award contracts and high single-digit year-over-year revenue growth. While contingency activity declined in certain areas, the border defense and intelligence portfolio performed well, particularly in missile defense, naval air, digital engineering, and in R&D. Cross-business synergy bids are becoming increasingly important, and we have several opportunities in the pipeline that reflect a similar integrated cross-business approach. Looking ahead, the full year 2026 Defense Appropriations Act has been enacted, and MTS, we believe, is well aligned with this funding. We expect award cadence to improve, particularly in the second half of the year, supported by strong bid volume and contract vehicle leverage. To anchor that outlook, the trailing 1,000 months to bill was 1.0. Backlog and options ended the year at $19.1 billion, and that's up 15% year over year, with 40% funded, excluding PFIs. Bids are weighing awards, total $17 billion, with 80 percent of that number representing new business. We expect to bid more than $25 billion in 2026, and that will be up double digits year over year. Finally, work under contract already covers approximately 82 percent of our 26 guidance with minimal pre-compete exposure. On to slide nine. Next, I'll provide an update on the spinoff transaction. which remains an important part of our strategy to sharpen focus and drive long-term value creation for shareholders, as you're well aware. Preparations continue to progress in line with our plan, and our targeted distribution is anticipated in the second half of 2026. From a readiness standpoint, we're making steady, tangible progress. Audits and pro forma financial statements are underway to support the Form 10 process. As committed, we made our initial confidential filing in late December and we're currently expect to file an amendment incorporating full year audited 25 financials in March 26. A similar timeline is progressing for the private letter memo with the IRS. So all on track. We're also continuing to refine the transaction perimeter to ensure operational clarity and strong standalone positioning for both companies. And as part of that effort, we have decided to move the Fraser Nash consultancy business and the UK civil nuclear project portfolio into sustainable tech. We have provided a supplemental financial information sheet for modeling purposes, and this is accessible via the QR code. And this change has no material impact to our long term segment growth CAGRs or margins. As discussed previously, CEO and CFO recruitment efforts are underway. And in the interim, I have appointed Mark Salt as interim spin CEO, leveraging his role as spin transitioning lead. And this positions Mark to effectively serve in a capacity while the search for a permanent CEO continues. These efforts, along with early branding initiatives, support the future standalone companies are progressing in parallel. the product separation work streams importantly a dedicated spin transaction team continues to drive execution across the organization really helping to minimize destruction to day-to-day operations while maintaining momentum and i think you can see that in the delivery of the 25 bottom line results the level of internal engagement and coordination continues to build which gives us confidence and our ability to execute the transaction effectively. We'll continue to keep you updated, of course, as we progress. And with that, I'll turn it over to Sha.