KBR(KBR) - 2025 Q4 - Annual Report

Business Strategy and Growth - KBR's operating model has shifted towards agile, technology-driven, solutions-oriented delivery, aiming for attractive returns and consistent growth with favorable cash conversion[25]. - Key strategic focus areas include National Security and Defense, Sustainable Energy and Industrial Technologies, and advanced digital solutions such as artificial intelligence and machine learning[26][27]. - KBR's acquisition strategy focuses on moving upmarket, expanding capabilities, and broadening customer sets across strategic growth vectors[27]. - The company plans to report new segment information starting in the first fiscal quarter of 2025 following a realignment of business segments[35]. - The company acquired LinQuest Corporation in fiscal 2024, enhancing capabilities in advanced technology solutions for defense and space missions[32]. Sustainability and Environmental Initiatives - KBR has achieved carbon neutrality annually since 2019 and has established a net-zero carbon ambition, positioning itself as an industry sustainability leader[29]. - The company has a portfolio of over 85 innovative, sustainable, proprietary process technologies aimed at promoting a cleaner, greener future[29]. - The Sustainable Technology Solutions segment includes over 85 proprietary technologies aimed at reducing emissions and accelerating energy transition[33]. - The company launched its Sustainable Aviation Fuel technology (PureSAF) in 2023 to enhance decarbonization efforts in the aviation sector[58]. - The company has developed proprietary technologies for converting natural gas to ammonia and for transforming waste plastics into commercial raw materials[58]. Financial Performance and Revenue - Government Solutions segment generated $4,382 million in revenue, accounting for 57$674 million, representing 9% of consolidated revenues for the same period[40]. - Backlog of unfulfilled orders was estimated at $17,264 million as of January 3, 2025, with approximately 40$3 million for fiscal 2024, a net loss of $6 million for fiscal 2023, and a net gain of$4 million for fiscal 2022 in other non-operating income (expense) on consolidated statements of operations[292]. Operational Excellence and Capabilities - The company emphasizes operational expertise in areas such as C5ISR, cyber analytics, and military aviation support, catering primarily to U.S. and allied government agencies[26]. - KBR's competitive advantages include a distinctive team ethos, technical excellence, and strong customer relationships, which are essential for delivering mission-focused solutions[29]. - The company leverages advanced digital capabilities to improve operations, reliability, and environmental impact, including the use of virtual and augmented reality for training[29]. - Joint ventures include Aspire Defence Limited and Affinity, enhancing service delivery and risk diversification[41][43]. - The company operates under various contract types, including fixed-price and cost-reimbursable contracts, impacting revenue recognition and risk management[53][56]. Workforce and Talent Management - The company employs approximately 38,000 people across over 29 countries, with an additional 10,000 employees in unconsolidated joint ventures[65]. - In fiscal 2024, the company hired over 8,600 employees to support strategic growth targets[84]. - The employee participation rate in the People’s Perspective survey increased by 10% in fiscal 2024, with a significant majority reporting that KBR is a great place to work[81]. - The company’s Talent Calibration conversations covered over 5,000 employees, leading to individual career plans and enhanced succession planning[79]. - The company’s Global Leadership Development Program is expanding to develop future executive leaders through strategic thinking and executive skills training[78]. - The company has implemented a comprehensive Talent Acquisition strategy, resulting in improved process consistency and enhanced hiring capabilities[83]. Financial Position and Risk Management - Strong liquidity position allows for growth opportunities despite market fluctuations and procurement challenges[37][57]. - As of January 3, 2025, the company had $345 million of borrowings under the Revolver and$1,999 million outstanding under the term loan portions of the Senior Credit Facility[293]. - The company entered into additional interest rate swap agreements during fiscal 2024, with a notional amount of $400 million at a fixed rate of 0.89$350 million at a fixed rate of 3.43%[294]. - The fair value of the interest rate swaps at January 3, 2025, was a $37 million net asset, with$19 million included in other current assets and $18 million in other assets[294]. - The company had fixed rate debt aggregating$1,543 million and variable rate debt aggregating $1,051 million as of January 3, 2025[295]. - The weighted average interest rate for fiscal 2024 was 5.52$5 million in the next twelve months[295]. Safety and Health Performance - The total recordable incident rate for health and safety performance was 0.050, indicating industry-leading safety performance[72].