Key Takeaways KBR plans a tax-free spin-off of its MTS segment by mid-to-late 2026, forming two pure-play firms.New KBR will focus on energy transition, proprietary tech, and strong free cash flow generation.SpinCo will target national security and space tech, leveraging long-term contracts and strong demand.KBR, Inc. (KBR) has announced a tax-free spin-off of its Mission Technology Solutions (MTS) segment, which is expected to be complete by mid-to-late 2026.Upon the final approval of its board of director ...

Summary of KBR's Special Investor Webcast Company Overview - **Company**: KBR, Inc. - **Segments**: KBR is planning to spin off its Mission Technology Solutions (MTS) segment, creating two independent public companies: New KBR (Sustainable Technology Solutions segment) and SpinCo (Mission Technology Solutions segment) [2][4][10]. Key Points and Arguments 1. **Strategic Spin-off Announcement**: KBR announced its intent to spin off the MTS segment to unlock shareholder value, resulting in two independent companies with focused management and financial flexibility [4][5]. 2. **Tax-Free Transaction**: The spin-off is expected to be tax-free for KBR and its shareholders, with completion anticipated in mid to late 2026 [5][18]. 3. **Historical Transformation**: KBR has undergone a decade-long transformation, increasing revenue from approximately $5 billion to $8 billion, and margins nearly doubling from over 6% to under 12% [6][7]. 4. **Financial Performance**: Adjusted EBITDA has grown by over 180% during the transformation, with significant increases in adjusted EPS and operating cash flow [7]. 5. **Independent Business Models**: Post-spin, New KBR will focus on sustainable technology solutions, while SpinCo will concentrate on government solutions, both benefiting from dedicated management and strategic focus [8][10]. 6. **Market Positioning**: New KBR is expected to lead in IP-protected technologies, while SpinCo will focus on national security and space priorities, with a backlog of $17.8 billion [11][15]. 7. **Financial Metrics**: For the trailing 12 months ending July 4, 2025, New KBR reported revenue of $2.2 billion with adjusted EBITDA margins around 22%, while SpinCo reported revenue of $5.8 billion with adjusted EBITDA margins around 10% [11][12]. 8. **Leadership Changes**: Mark Sopp will oversee the spin-off of MTS, while Shad Evans will become the CFO of New KBR post-spin [16][17]. Additional Important Content 1. **Organizational Agility**: The spin-off is expected to enhance organizational agility, streamline decision-making, and improve accountability [9]. 2. **Customer Focus**: Each company will have the flexibility to optimize its capital structure and align its capabilities with customer needs, enhancing customer intimacy [9][10]. 3. **Cost Structure Management**: KBR aims to minimize stranded costs post-spin, with a focus on maintaining cost-competitiveness and attractive financial profiles for both companies [36][37]. 4. **Market Diversification**: Both businesses have been designed to mitigate cycle risk through diversification across multiple market streams and geographical areas [43][44]. 5. **Future Investor Days**: Dedicated investor days will be held for both New KBR and SpinCo to provide deeper insights into their operations and growth strategies [12][55]. This summary encapsulates the key aspects of KBR's strategic direction, financial performance, and future outlook as discussed in the investor webcast.

Spin-off Announcement - KBR plans to spin off its Mission Technology Solutions (MTS) segment to create two independent, pure-play public companies: "New KBR" comprising Sustainable Technology Solutions (STS) and "SpinCo" comprising MTS [1, 7] - The transaction is intended to be tax-free to KBR and its shareholders and is expected to close in mid-to-late 2026 [7, 33] Portfolio Transformation - The spin-off is the culmination of a decade-long portfolio transformation to focus on differentiated and innovative science, technology, and engineering solutions [7, 9, 10] - KBR has acquired 13 businesses and divested 4 non-core businesses, exiting commoditized services and shifting away from lump sum turnkey-type contracts [13] New KBR (STS) - New KBR, comprising STS, has TTM Q2'25 revenues of $2.2 billion and an adjusted EBITDA margin of approximately 22% [15, 20] - STS backlog for Q2'25 is $3.7 billion [15] SpinCo (MTS) - SpinCo, comprising MTS, has TTM Q2'25 revenues of $5.8 billion and an adjusted EBITDA margin of approximately 10% [16, 27] - MTS backlog and options for Q2'25 is $17.8 billion [16] Financial Performance - KBR's adjusted EBITDA has grown by 180% from $334 million in 2015 to $935 million in TTM Q2'25 [11]

Core Viewpoint - KBR, Inc. plans to pursue a tax-free spin-off of its Mission Technology Solutions (MTS) segment, aiming to create two independent public companies with enhanced strategic focus and operational independence [1][2][11]. Strategic Rationale and Benefits - The spin-off is expected to position both New KBR and SpinCo for long-term profitable growth and value creation, leveraging their distinct product and service offerings [2][5]. - KBR's transformation over the past decade has established it as a leading provider of innovative science, technology, and engineering solutions [2][6]. - Post-spin, both companies will retain KBR's values-driven culture and focus on delivering customer value [2][4]. New KBR (Sustainable Technology Solutions - "STS") - New KBR will focus on sustainable technology solutions, delivering proprietary technologies that reduce emissions and enhance energy efficiency [3][4]. - The company will leverage over 85 process technologies across various markets, including ammonia/syngas and clean refining [4][6]. SpinCo (Mission Technology Solutions - "MTS") - SpinCo will serve as a leader in government services, focusing on national security and space priorities, benefiting from increasing budgets [7][8]. - The company is expected to maintain a capital-light model with diversified, long-duration contracts, ensuring predictable cash flow and a robust backlog [8]. Executive Leadership Updates - KBR has engaged a search firm to identify executive candidates for SpinCo, with Mark Sopp transitioning to oversee the spin-off process [9][10]. - Shad Evans has been appointed as KBR's Chief Financial Officer, effective January 5, 2026, and will assume the CFO role for New KBR post-spin [14]. Transaction Details - The spin-off is targeted for completion by mid-to-late 2026 and is intended to be tax-free for KBR and its shareholders [11][12]. - The transaction will require final approval from KBR's Board of Directors and other customary conditions [11]. Fiscal Year 2025 Outlook - KBR reaffirms its previously issued fiscal year 2025 outlook, indicating stability in its financial projections [12].