SEPTEMBER 2016 -...

1Investor Presentation | KBR

S E P T E M B E R

Investor Presentation2 0 1 6

2 Investor Presentation | KBR

Forward-Looking Statements

This presentation contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements include statements regarding our plans, objectives, goals, strategies, future events, future financial performance and backlog information and other information that is not historical information. When used in this presentation, the words “estimates,” “expects,” “anticipates,” “projects,” “plans,” “intends,” “believes,” “forecasts” or future or conditional verbs such as “will,” “should,” “could,” or “may,” and variations of such words or similar expressions are intended to identify forward-looking statements. All forward-looking statements are based upon our current expectations and various assumptions. Our expectations, beliefs, and projections are expressed in good faith, and we believe there is a reasonable basis for them. However, there can be no assurance that management’s expectations, beliefs, and projections will be achieved.

There are numerous risks and uncertainties, many of which are beyond our control, that could cause actual results to differ materially from the forward-looking statements contained in this presentation. These risks and uncertainties include, but are not limited to: current or future economic conditions; our ability to obtain and perform under contracts from existing and new customers, including the U.S. Government; exposure to cost overruns, operating cost inflation and potential liability claims and contract disputes; access to trained engineers and other skilled workers; risks relating to operating through joint ventures and partnerships; risks inherent in doing business internationally; potential tax liabilities; maritime risks; changes in the demand for our services and increased competition; protection of intellectual property rights; risks associated with possible future acquisitions; risks related to our information technology systems; impairment of goodwill and/or intangible assets; reduction or reversal of previously recorded revenues; risks relating to audits and investigations, including by governments; compliance with laws and regulations, and changes thereto, including those relating to the environment, trade, exports and bribery; our creditworthiness and ability to comply with the financial covenants in our credit agreement; and other risk factors discussed in our most recently filed Form 10-K, any subsequent Form 10-Qs and 8-Ks, and other Securities and Exchange Commission filings.

All forward-looking statements attributable to us, or persons acting on our behalf, apply only as of the date made and are expressly qualified in their entirety by the cautionary statements in this presentation. Except as required by law, we undertake no obligation to revise or update forward-looking statements to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events.

This presentation refers to the financial measure “EBITDA,” which is not calculated in accordance with generally accepted accounting principles in the U.S. (“GAAP”). A reconciliation of the non-GAAP financial measure EBITDA to the most directly comparable GAAP financial measure has been provided in the Appendix to this presentation. Glen Lyon FPSO, North Sea


Company Overview

KBR is a global provider of differentiated, professional services and technology across the asset and program life cycle within the hydrocarbons and government services industries.

■■ $5+ billion in services revenue via three business segments:

- Technology & Consulting

- Engineering & Construction

- Government Services■■ Small and large/mega-project delivery capability■■ Global footprint serving clients in over 80 countries■■ Over 24,000 highly-skilled employees (many with security

clearances)■■ Industry-leading commitment to employee safety■■ Financially sound

6 Investor Presentation | KBR 7Investor Presentation | KBR

TRANSFORMATIONTRANSFORMATION

A Balanced Portfolio Share of 2016 Pro Forma RevenueIn 2016, KBR made two strategic acquisitions to expand our Government Services capabilities: Wyle Inc. (closed in July 2016) and Honeywell Technology Solutions, Inc. (“HTSI” expected to close by October 2016).

High proportion of earnings driven by smaller, recurring and annuity-type contracts across all business segments

KBR ExclWyle, HTSI

E&C, Other

Govt Services

T&C

20%

69%

11%

KBR InclWyle, HTSI

(annualized)

Govt Services

T&C

E&C, Other

41%

51%

8%

40+ Countries (operations)

24,000+

Employees

80+ Countries (customers)

Whether it’s providing the technology and consulting know-how to develop our customers’ valuable assets; designing and constructing the infrastructure and facilities to develop energy resources in some of the world’s more remote and challenging locations; or providing highly-specialized services and mission support for men and women of their countries’ armed forces and governmental agencies, our clients depend on KBR because they know We Deliver.

The World’s Contractor We Deliver…The KBR Way


REfining

AmmoniA fERtilizERs

olEfins

offshoRE tEchnologiEs

AutomAtion & PRocEss

tEchnologiEs

chEmicAls

coAl gAsificAtion

Every day, reliable, innovative, commercially proven KBR technology solutions improve productivity and help owners meet their goals around the globe.

From onshore to offshore, KBR is a leader in technology solutions. We have been creating innovative technology for petroleum refining and petrochemical processing since 1919, and building plants based on those technologies for almost as long.

Our licensed technologies, whether full units or key equipment, can be found in thousands of installations around the world. Our proprietary equipment is engineered to perform, underpinning our continued commitment to performance and quality for refining, coal gasification, petrochemicals, ammonia, syngas and fertilizers.

Our unique partnerships, joint ventures and alliances create a strong technology portfolio with industry leading technology providers such as Shell Global Solutions, BP, ExxonMobil Chemical, SK Innovation, Southern Company, Neste Jacobs, Mitsubishi Chemicals, Chiyoda, JNC, Showa Denko, Versalis, KRICT and Exelus. In addition, our portfolio includes our technology subsidiaries GVA, Plinke, Weatherly and KBR Ecoplanning.

RevenueGross Profit

YTD Jun 2015 YTD Jun 2016

$152M

$40M

$193M

$31M

TECHNOLOGY &CONSULTING

■■ Broad range of technologies and solutions from wellhead to specialty chemicals

■■ Low risk, high-margin business with pull-through opportunities for E&C segment via early customer engagement

■■ Smaller projects executed globally with limited liability

■■ Target gross profit margins: low 20s% EBIC, Ain Sukhna, Egypt


A global leader in EPC for the hydrocarbons industry, KBR’s primarly gas-facing solutions span the entire hydrocarbons value chain – from wellhead to the production of fuels specialty chemicals and fertilizers.

KBR is one of the world’s largest and most diverse providers of engineering, procurement, construction, commissioning and start-up services to the hydrocarbons industry.

From building the first offshore platform in 1947, to revolutionizing fertilizer production in the 1960s through the creation of a new ammonia process, to pioneering the Liquefied Natural Gas (LNG) industry and designing and constructing one-third of the world’s LNG production, KBR is a leader, providing the technology to commercialize clients’ valuable resources and the plants, facilities and infrastructure to support it.

KBR has worked with hundreds of clients in industrial, commercial, dynamic and complex institutional settings to maintain the integrity and optimize the performance of their valuable assets. KBR provides comprehensive maintenance and industrial services under the Brown & Root brand across the US, Europe and the Middle East supported by over 1,500 technical, engineering and professional employees. These contracts are typically low risk, longer term and funded through Opex budgets.

offshoREPEtRochEmicAls

liquEfiEd nAtuRAl gAs (lng) & gAs-to-liquids (gtl) AmmoniA PlAnts

REfining fAcilitiEs

Revenue Gross Profit & Equity in Earnings


$1,930M

$1,235M

$168M $110M

ENGINEERING &CONSTRUCTION

■■ Focus on exceptional project delivery through key fundamentals: safety, good execution, technical know-how, strong risk and financial management

■■ Target gross profit margins including equity in earnings: upper single digits %

Skikda LNG, Algeria


KBR’s highly-specialized engineering services and mission and logistics support solutions provide full life-cycle support and leading edge, custom services that drive mission success for governmental agencies in the US, UK and Australia.

Our customers face some of the most challenging projects and programs worldwide and in outer space. KBR is a trusted partner, helping them take on these challenges. Through technical expertise and embedded teams, KBR provides solutions that range from providing fully-integrated lifecycle mission support and human health and performance monitoring to NASA’s space program and providing programmatic support the to the US Army Black Hawk and Lakota helicopter fleets; to mobilizing within 72 hours for the UK’s Ebola response in Sierra Leone and delivering bases in the remotest regions of Afghanistan and Iraq; to cost-effective management of air ships for the Royal Australian Navy; to integrating all mobile communication services for emergency services in the UK; or delivering the world’s largest transport infrastructure program, the Qatar Expressway, we are ready to take on whatever and wherever our customers need us.

dEfEnsE & sEcuRity PRogRAms

EnginEERing, PRocuREmEnt & constRuction

fAcility & EquiPmEnt AssEt mAnAgEmEnt

AERosPAcE

EmERgEncy REsPonsE & logistics PRogRAms

PRojEct & PRogRAm mAnAgEmEnt

sciEncE tEchnologyAnd EnginEERing

tRAining

WEAPons systEmEnginEERing

RevenueGross ProfitGross Profit & Equity in Earnings

$313M

$22M

($5M)


$62M$83M

GOVERNMENTSERVICES

■■ With two recent acquisitions, KBR’s GS business is expected to execute ~$2.5 billion worth of contracts annually in a growing market

■■ Majority of contracts are cost reimbursable with no deliverable, no liabilities, no warranty exposure and low risk profile

■■ Target gross profit margins including equity in earnings: low teens % (excluding certain identified legacy US government contract issues)


GOVERNMENTSERVICES

In July 2016, KBR acquired Wyle, Inc., and the newly formed KBRWyle spans the full spectrum of government mission requirements including research and development, testing, engineering, logistics, deployed operations, and life-cycle sustainment.

In August 2016, KBR announced the aquisition of Honeywell Technology Solutions, Inc. (HTSI), a leading professional, technical and mission support services organization providing an array of mission-critical services and customized solutions throughout the world primarily to U.S. government agencies.

These acquisitions provide the following benefits to KBR’s existing Government Services franchise:

■■ Provides immediate scale and credibility and moves KBR towards technology-driven services with greater differentiation and margins

■■ Improves overall risk profile through lower risk, long-term annuity type revenue streams

■■ Opens up new funding sources (RDT&E and O&M vs OCO Funds)

■■ Expands offering across the Armed Forces, classified work and other government agencies while growing existing global capabilities

■■ Expected to deliver almost $300 million in revenue synergies to KBR’s government business by 2021

■■ US Federal Budget environment is significant, stable and growing: FY16 showed $25 billion increase in defense and discretionary spending; $15 billion increase in FY17

KBR GS Americas KBRwyle HTSI

Customer Expansion & Diversification


Ongoing Ongoing Ongoing

Re-focus Growth Strategy

Restructure & Streamline �Operating Segments

Reduce �Costs & Achieve Margin �Targets

Expand B&R Industrial Services Model Globally

Broaden Technology Portfolio / EPC Pull-Through

Expand Government Services Offering

Continue Balanced Capital Allocation Strategy

KBR Executing on Strategy Balanced Capital Allocation Strategy

■■ Focus on working capital / cash flow■■ Selective non-capital intensive expansions

underway (Middle East and Australia)■■ Divested / exiting under-performing businesses

(EPC power)

■■ Areas of focus:

- Hydrocarbon technologies

- High-end government services

- Industrial services■■ Strategic geographical expansion■■ Long-term / predictable earnings ■■ Moving to a more efficient capital structure

■■ Current dividend is $0.08/share ~2.2% p.a.■■ Highest-yielding dividend among U.S. peers■■ Returned $309M to shareholders via dividends

since 2007 spin

■■ $208M remaining under $350M share repurchase program

■■ $795M in share repurchases completed since 2007 spin

■■ Continue to make repurchase decisions on an opportunistic basis

Invest in Ongoing Business & Organic Growth Pay Dividends

Make Strategic Acquisitions Buyback Shares

Shareholder Options: Business Options:

■■ Solid foundation for earnings growth – ability to grow bottom line even during periods with challenging market conditions

■■ Disciplined management team with track record of delivering on commitments

■■ $200 million cost savings plan achieved with reductions identified and actioned and additional reductions underway


Financial Highlights

FINANCIALS

First Half 2016 Highlights

($ in millions, except EPS)Jun 30, 2016

Mar 31, 2016

New Awards $ 331 $ 792 Backlog of Unfilled Orders $ 11,032 $ 12,019

Revenues $ 1,009 $ 996 Gross Profit $ 74 $ 68 Equity in Earnings $ 33 $ 29 Gross Profit & Equity in Earnings $ 107 $ 97 General & Administrative Expenses ($34) ($34)Restructuring Charges ($12) ($2)Gain on Disposition of Assets $ 2 $ 4 Provision for Income Taxes ($23) ($15)Net income attributable to KBR $ 47 $ 42

EPS (diluted) $ 0.32 $ 0.30 EBITDA $ 80 $ 67

Quarter Ending


2016: Key Balance Sheet Highlights

Cash Balance at June 30, 2016 $804M

Wyle Purchase Price (Cash Paid) on July 1, 2016*

$(200)M

Cash Balance Post-Wyle Transaction $604M

Debt: Revolver Usage to Fund Wyle and HTSI Purchase Prices*

$700M

Long-term financing process underway in connection with the $400M Wyle borrowing and expected to be completed by year-end 2016

* Purchase prices exclude any transaction costs and other deal adjustments

■■ Higher proportion of earnings driven by high end, professional services from Government Services and Technology & Consulting. Moving towards greater balance between Hydrocarbons and Government Services revenues

■■ Full-year impact of expected 2016 U.K. Army 2020 contract award (booking expected to be $500+ million)

■■ In Hydrocarbons markets, focus on industrial / maintenance services, debottlenecking and revamping existing LNG, ammonia and petrochemicals facilities, as well as ethylene opportunities

■■ Expect lower E&C margins offset by larger impact from cost reductions (full-year impact and fully implemented cost actions)

■■ Expanding capabilities and executing on growth plans in Middle East (hydrocarbons) and Americas (government services)

■■ Added additional earnings power with long-term and stable earnings streams via announced acquisitions with potential to do more

KEY BALANCE SHEET

OUTLOOK FOR 2017

Shah Deniz Terminal, Azerbaijan


Conclusion ■■ Focused business strategy: global provider of high end, differentiated, professional services and technologies serving the hydrocarbons and government services industries with strong synergies between segments

■■ Differentiated offerings covering entire life cycle of projects via specialized consulting, proprietary technologies and strong global engineering / technical expertise

■■ Reducing risk profile via reimbursable annuity-type professional / technical services for government clients

■■ Global presence with a competitive cost structure

■■ Balanced capital allocation strategy and efficient capital structure

ZERO HARM – 24/7: Courage to Care

At KBR, Zero Harm means a culture in which we make safety conscious decisions that are governed by personal values. We make a personal choice to work safely and to look out for each other in a true interdependent culture. A Zero Harm culture embraces the courage to care through intervention and engagement in safety related conversations with our peers.

All incidents are intolerable, and there is a desire and commitment to make sure we do everything in our power to avoid any situation that could put our employees, subcontractors or clients at risk of being hurt. At KBR, we are striving to create a culture in which everyone truly realizes that an injury incident is not a statistic but rather a person who was negatively affected by a shortcoming within our organizational system, to which we all contribute.

Trusted Around the World to Deliver Safe, Sustainable Solutions

24/7All-day every-day approach to safety

courage to careThe genuine willingness to intervene

zero harmGenuine belief that zero is achievable and a mindset intolerant of incidents

CONCLUSION ZERO HARM


AppendixEBITDA Reconciliation: GAAP to Non-GAAP

($ in millions)Jun 30,

2016Mar 31,

2016

Net income attributable to KBR $ 47 $ 42

Add back: Interest expense $ 0 $ 1 Provision for income taxes $ 23 $15 Depreciation & amortization $ 10 $ 9

EBITDA $ 80 $ 67

Quarter Ending

APPENDIX

Note: EBITDA is defined as earnings before interest income / expense, income taxes, depreciation and amortization


Contact us Notes:

KBR Headquarters601 Jefferson StreetHouston, Texas 77002, USA +1 713 753-2000

Lynn NazarethVice President, Investor Relations601 Jefferson StreetHouston, Texas 77002, USA +1 713 753-5082+1 866 380-7721

www.kbr.com investors.kbr.com

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