KBR Adjusts FY25 Revenue Forecast, Earnings Outlook Down; Revenue Projected $7.9-$8.1B, EPS at $3.81; Financial Health Analysis Reveals Mixed Picture

KBR has adjusted its FY25 revenue forecast to $7.9-8.1 billion, down from $8.7-9.1 billion. The company's earnings per share (EPS) consensus stands at $3.81. KBR's revenue growth over the past year was 13.7%, with a three-year growth rate of 3.5% and a five-year growth rate of 7%. The operating margin is 7.08%, while the net margin is 4.99%. The gross margin is 14.45%, indicating room for improvement in cost management.

KBR (NYSE: KBR) has revised its fiscal year 2025 (FY25) revenue forecast downward to $7.9 billion to $8.1 billion, a significant reduction from the previously projected $8.7 billion to $9.1 billion. The company's earnings per share (EPS) consensus stands at $3.81. KBR's revenue growth over the past year was 13.7%, with a three-year growth rate of 3.5% and a five-year growth rate of 7%. The operating margin is 7.08%, while the net margin is 4.99%. The gross margin is 14.45%, indicating room for improvement in cost management.

The downward revision in revenue guidance is primarily due to the termination of the HomeSafe Alliance JV contract and other factors. KBR's backlog remains strong at $21.6 billion, with Mission Technology Solutions contributing $17.8 billion and Sustainable Technology Solutions adding $3.7 billion. Despite the solid quarterly performance, the company significantly revised its FY2025 guidance downward, primarily due to the HomeSafe contract termination, which is now reported as discontinued operations.

KBR's Q2 2025 results demonstrate resilient operational execution despite headwinds. Revenue grew 6% year-over-year to $2.0 billion, while Adjusted EBITDA increased 12% to $242 million with a margin expansion to 12.4%. Adjusted EPS rose 10% to $0.91. The company's performance shows a tale of two segments: Mission Technology Solutions (MTS) grew revenue by 7% to $1.41 billion, driven by the LinQuest acquisition bolstering the Defense & Intel business. Meanwhile, Sustainable Technology Solutions (STS) delivered modest 2% revenue growth but impressive margin expansion, with Adjusted EBITDA margin reaching 23.9% versus 20.7% last year, fueled by strong LNG project execution.

Despite the solid quarterly performance, KBR significantly revised its FY2025 guidance downward, primarily due to the HomeSafe contract termination, which is now reported as discontinued operations. Revenue guidance was cut from $8.7-9.1 billion to $7.9-8.1 billion, while maintaining similar Adjusted EBITDA targets of $960-980 million. Long-term targets for FY2027 were also adjusted, with revenue expectations reduced from $11.5B+ to $9.0B+ and MTS revenue CAGR slashed from 11-15% to 5-8%. However, the company maintained its Adjusted EBITDA target of $1.15B+ and actually increased margin targets, suggesting confidence in operational efficiency despite top-line challenges.

The company's book-to-bill ratio of 0.9x for the quarter (1.0x TTM) and healthy backlog of $21.6 billion provide reasonable visibility. Cash generation remains strong with quarterly operating cash flow of $217 million, up 38% year-over-year, supporting $69 million in shareholder returns through dividends and share repurchases. The net leverage ratio improved slightly to 2.4x from 2.6x at the beginning of the year, reflecting disciplined balance sheet management.

While the HomeSafe contract termination creates a near-term growth obstacle, KBR's focus on higher-margin business and operational excellence positions it to weather current challenges while maintaining profitability targets.

References:
[1] https://www.stocktitan.net/news/KBR/kbr-reports-second-quarter-fiscal-2025-e9iq3kcd23fk.html