KBR

None of the serious warning signs we check for were found. 1 thing worth knowing.

We look for five warning signs: doubt it can keep going, weak checks on its own accounts, a notice that its past accounts can't be relied on, a change of auditor, and one customer bringing in a big share of sales. We don't check lawsuits, investigations or debt yet.

We checked the auditor's report, internal controls, restatement notices, auditor changes and big customers in the 10-K filed 26 Feb 2026, plus the 10-Q filed 30 Jul 2026 and 4 later 8-Ks.

• One big customer

  Worth knowing

  One customer brings in a big share of sales: 57% last year. Losing that customer would hurt.

  “Revenues from the U.S. government represented 57% of our total consolidated revenues for fiscal 2025.”

  From the 10-K filed 26 February 2026, Item 1A. Risk Factors. Read it in the filing

Cheap for a reason is the question the numbers cannot answer.

Whether the price already reflects the risks is what the deep dive is for.

• We are subject to risks related to our plan to spin off our Mission Technology Solutions business into a standalone, publicly traded company.

  Could happen

  On September 24, 2025, we announced our intent to spin off our Mission Technology Solutions business to create a separate, U.S. publicly-traded company (the "Planned Spin-Off"). The Planned Spin-Off is intended to be tax-free to us and our shareholders for U.S. federal income tax purposes and targeting completion in the second half of fiscal 2026. The Planned Spin-Off will be subject to final approval by our Board of Directors and other customary conditions, including receipt of a favorable opinion of legal counsel and/or a private letter ruling from the U.S. Internal Revenue Service with respect to the tax treatment of the transaction for U.S. federal income tax purposes, the effectiveness of a registration statement on Form 10 filed with the SEC, satisfactory completion of financing, and other regulatory approvals. We cannot assure you that we will be able to satisfy the necessary conditions or that we will successfully complete the anticipated separation in our preferred structure, on the anticipated timeline or at all. Unanticipated developments, including possible delays in obtaining various tax rulings or regulatory approvals, uncertainty or declines in the financial markets or other adverse market conditions, changes in our cash requirements, challenges in establishing the new company’s organizational structure, infrastructure or processes, or adverse business performance could delay or prevent the proposed separation or cause the proposed separation to occur on terms or conditions that are less favorable and/or different than expected, including without limitation, the failure to qualify as tax-free to our shareholders (which could result in significant income tax liabilities to us and/or our shareholders), and the inability of the spun-off company to incur sufficient indebtedness to allow for a distribution to us of proceeds concurrently with the consummation of the Planned Spin-Off. Expenses incurred to accomplish the proposed separation may be significantly higher than what we currently anticipate. Executing the proposed separation also requires significant time and attention from management, which could distract them from other tasks in operating our business. Even if the transaction is completed, we may not realize some or all of the anticipated benefits from the separation and we cannot assure you that the separation will yield greater benefits to KBR and its shareholders than if such transaction had not occurred. Any of these factors could negatively impact our business, financial condition, results of operations, cash flows, and the price of our common stock. Additionally, following the proposed separation, the combined value of the common stock of the two publicly-traded companies may not be equal to or greater than what the value of our common stock would have been had the separation not occurred.

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• Following the Planned Spin-Off, we and the spun-off Mission Technology Solutions business may face stranded costs, loss of economies of scale, and higher operating expenses than currently anticipated, which could materially adversely affect our profitability.

  Could happen

  The two companies may also lose purchasing power and negotiating leverage with suppliers, service providers, and other vendors. Economies of scale in areas such as insurance coverage, employee benefits, technology licenses, real estate, and professional services fees may be diminished. In addition, we may be unable to find suitable alternatives for services that the spun-off entity temporarily provides to us pursuant to transition agreements, or such alternative services may be more expensive. There is also a risk that certain costs currently treated as variable may become fixed at the standalone entity level, reducing our operational flexibility. While management has developed estimates of the costs to operate as independent companies, actual costs may significantly exceed these projections due to factors that cannot be fully anticipated prior to spin-off.

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• Following the Planned Spin-Off, we and the spun-off Mission Technology Solutions business may face stranded costs, loss of economies of scale, and higher operating expenses than currently anticipated, which could materially adversely affect our profitability.

  Could happen

  Following the Planned Spin-Off, we will be a smaller, less diversified company than we were prior to the Planned Spin-Off, which could make us more vulnerable to factors impacting our performance, such as changing market conditions and market volatility. As integrated parts of a larger organization, both businesses currently benefit from shared corporate functions, including finance, legal, human resources, information technology, procurement, and other administrative services. Following the Planned Spin-Off, each company will need to replicate these functions independently or secure them from third-party providers, likely at a higher combined cost than the current shared service model.

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• Our failure to comply with the laws and regulations governing OCIs could lead to penalties, including termination of one or more of our U.S. government contracts.

  Could happen

  Many of our U.S. government contracts contain OCI clauses that may limit our ability to compete for or perform certain other contracts or other types of services for particular customers. OCI arises when we engage in activities that may make us unable to render impartial assistance or advice to the U.S. government, impair our objectivity in performing contract work, or provide us with an unfair competitive advantage. Existing OCI, and any OCI that may develop, could, if not mitigated to the satisfaction of the customer, preclude our competition for or performance on a significant project or contract, which could limit our opportunities. Further, we occasionally hire former government employees who may be subject to certain representation or non-disclosure obligations. These representation restrictions may, if not honored, result in disqualification from competition or loss of contract, and the violation of such obligations could result in criminal liability for the former government employee. These former government employees may also have had access to competitively sensitive or commercially usable information that, if not properly firewalled, could result in allegations of unfair competition and, if such findings are made, loss of contract award.

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• Our operations may be significantly disrupted during and following the Planned Spin-Off process, and we will be dependent on the spun-off entity’s performance under various transition agreements, the failure of which could materially harm our business.

  Could happen

  The process of spinning off integrated business operations is highly complex and involves the disentanglement of shared systems, processes, contracts, and infrastructure that have developed over many years. In connection with the Planned Spin-Off, we and the spun-off entity may enter into various agreements that provide for the performance of certain services or provision of goods by each company for the benefit of the other, for example, a transition services agreement, a tax matters agreement, an employee matters agreement, and other related agreements. Performance under these agreements or other related conditions outside of our control could materially affect our operations and future financial results.

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