4Q 2016 & Fiscal Year 2016 Financial Results. February 24, 2017

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1 4Q 2016 & Fiscal Year 2016 Financial Results February 24, 2017 Stuart Bradie President and Chief Executive Officer Mark Sopp Executive Vice President (Incoming CFO) Brian Ferraioli Chief Financial Officer (Retiring) Lynn Nazareth Vice President, Investor Relations

2 Forward-Looking Statements This presentation contains forward-looking statements regarding our plans, objectives, goals, strategies, future events, future financial performance and backlog information and other information that is not historical. 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. Such statements are based upon our current expectations and various assumptions, which are made in good faith, and we believe there is a reasonable basis for them. However, because forward-looking statements relate to the future, they are subject to inherent risks, uncertainties and other factors that are difficult to predict and which could cause actual results to differ materially from the forward-looking statements contained in this presentation. Additional information about potential risk factors that could affect our business and financial results is included in our Form 10-K filed on February 24, We caution you not to place undue reliance on the forward-looking statements included in this presentation, which speak only as of the date hereof. We disclaim any intent or obligation, except as required by law, to revise or update this information to reflect new information or future events or circumstances. This presentation contains the financial measure EBITDA, which is not calculated in accordance with 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.

3 Stuart Bradie Chief Executive Officer

4 Safety: Moving Towards Zero Harm SAFETY On February 23, 2017, KBR employees from across the globe came together to celebrate Zero Harm Day which represents an opportunity for each project site and office to recognize the improvements in our safety performance, acknowledge employees and reemphasize the importance of KBR s interdependent safety culture. Total Recordable Incident Rate (TRIR) Performance: KBR IOGP Top Q IOGP Average KBR is focused on an industry-leading commitment to employee safety Over the last three years, KBR has achieved a 47% decrease in TRIR and a 24% increase in Zero Harm Days IOGP = International Association of Oil & Gas Producers Note: Final IOGP 2016 results will not be available until mid

5 FY 2016 HIGHLIGHTS Pivot to Global Professional Services FY 2016: Transformation of KBR Completed strategic acquisitions in key focus areas: Differentiated Government Services, Technology, E&C Industrial Services (O&M) Continued expansion of heritage Government Services business in the U.S. Significant wins in the U.K. GS business: Army 2020 and U.K. MFTS (~$1B at award for 17+ year contracts) Steady earnings results in the T&C segment Maintaining core competency in LNG via existing Australian LNG projects and new wins on pre-feed and FEED studies Growing business in Middle East (engineering services & industrial services) and Australia (infrastructure services) Almost 37,000 employees globally, approximately 15,000 added since

6 FY 2016 HIGHLIGHTS Significantly Lower Risk Profile As Legacy Projects Are Almost Complete FY 2016: Reducing Portfolio Risk Working off loss projects: no other major domestic contracts remaining with significant lump sum EPC risk Strengthened risk management and bidding processes in place to safeguard brand, profitability and strategy Advanced discussions to settle our legal claim against PEP Settlement of major legal matters Favorable ruling and reimbursement of legal fees on sodium dichromate Settlement of electrocution case Favorable rulings on qui tams Insurance reimbursement received and agreement reached on future legal cost funding on Burn Pit matter All audits related to significant performance years on LogCAP III are closed and settled Pending resolution of the SEC investigation and class action lawsuits related to the 2013 restatement Resolution of a number of global commercial issues and disputes 6

7 Government Services Outlook: Strong Growth GOVERNMENT SERVICES Outlook: Strong Growth Growth expected in U.S. defense spending, strong expansion opportunities for the U.K. MoD and through continued privatization / outsourcing in the U.K., and growing opportunity pipeline leveraging KBRwyle capabilities for Australian MoD Significant synergy opportunities >$300 million through new KBRwyle brand Ability to access three key U.S. government funding sources a plus: OCO, RDT&E and O&M Full-life cycle support solutions provides enhanced growth opportunities Organic growth supplied by booked work with no major recompetes in 2017 Target Gross Profit Margins Including Equity In Earnings: Upper-Single Digits % To Lower-Double Digits % Majority of earnings either cost reimbursable or services under PFI contracts Long-term contracts (average: 5-7 years with certain major contracts 15+ years) 7

8 Government Services Outlook: Strong Growth TECHNOLOGY & CONSULTING Outlook: Steady to Growing Large and growing installed base of ammonia, petrochemical and refining facilities globally continue to provide increasing revamp opportunities Expanding portfolio of proprietary technologies as well as monetization of partners technologies leveraging strong engineering and technical know-how Best-in-class global sales force with technical capabilities in both downstream and upstream sectors of hydrocarbons market Downstream projects: mix of brownfield and greenfield opportunities Target Gross Profit Margins: Low-Twenties % On Average; Can Fluctuate Based On Portfolio Mix (License vs Engineering Services vs Proprietary Equipment) Upstream consulting sector gaining positive momentum in 2017 Large portfolio of smaller, global, low risk, highly differentiated contracts with ability to pull-through other KBR capabilities 8

9 Government Services Outlook: Strong Growth ENGINEERING & CONSTRUCTION Outlook: Growth in OpEx & Positioned for CapEx Recovery Continued focus on and expansion expected in global industrial services market O&M, small cap projects, turnarounds and revamping particularly in Middle East, North America and Asia ($600-$800M business for KBR in 2017) Key wins and growing opportunity pipeline in Asia Pacific region on Australian infrastructure services and Asian downstream projects including LNG Strong engagement with customers on North American downstream and LNG opportunities through concept/pre-feed/feed studies Backlog growth expected in the latter half of 2017 Target Gross Profit Margins Including Equity In Earnings: Mid-to-High Single Digits % Growing proportion of earnings from services, cost reimbursable and long-term contracts: 65% of yearend E&C backlog is cost reimbursable work with a majority of the remainder coming from small-cap projects 9

10 Brian Ferraioli Chief Financial Officer

11 RESULTS Consolidated Results: 4Q16 & FY16 ($ in millions, except EPS) 4Q 2016 FY 2016 Bookings $ 1,216 $ 2,964 Backlog of Unfilled Orders $ 10,938 $ 10,938 Revenues $ 1,190 $ 4,268 Gross Profit $ 6 $ 112 Equity in Earnings $ 10 $ 91 Gross Profit & Equity in Earnings $ 16 $ 203 General & Administrative Expenses ($32) ($143) Restructuring Charges ($18) ($39) Gain on Disposition of Assets $ 1 $ 7 Benefit (Provision) for Income Taxes ($57) ($84) Non-controlling Interest ($1) ($10) Net Income Attributable to KBR ($87) ($61) EBITDA* ($10) $ 75 EPS (diluted) ($0.61) ($0.43) Operating Cash Flow $ 53 $ 61 *Consolidated EBITDA reconciliation provided in the Appendix 4Q16 revenues reflect a full quarter s impact of the two GS acquisitions and the expansion of heritage U.S government contracts. Gross profit in 4Q16 includes $94M in charges primarily related to higher forecast costs to complete an E&C downstream EPC project in N. America which was impacted by significant weather delays and lower than previously forecast productivity. Equity in earnings was below the typical volume expected due primarily to a reduction in the percentage of completion estimated on an LNG project joint venture in Australia which extends profit recognition further into Restructuring charges taken during the quarter include impairments to leases and leasehold improvements $(12)M to consolidate majority of personnel in Houston into a single facility U.S. project losses without benefit of tax relief caused the unusually high ETR in 4Q16 (198%) income taxes reflect taxes on foreign income. Operating cash flow was positive in 4Q16. 11

12 Mark Sopp Executive Vice President

13 2017 PRIORITIES CFO Transition and Guiding Principles 2017 Forward Expectations Foundation for 2017 Performance Expectations: Revenue o FY 2016 reflected stronger Government Services growth, both organic and through acquisitions, and steady T&C revenue offsetting challenging E&C market conditions o Improving market fundamentals in both Government Services and Hydrocarbons o Strong backlog to revenue coverage (70%+), low re-competes Profitability o Cost reductions enable competitive bidding/stable margins Operating Cash Flow o Outflows from loss contracts o Potential PEP settlement offsets Capital Structure/Liquidity Maintain dividend, working capital focus, longer-term financing options Beyond 2017 Capital allocation strategy to be disclosed at upcoming Investor Day 13

14 2017 GUIDANCE EPS range $ $1.40, excluding legacy legal fees Reflects organic growth for GS, T&C and OpEx projects in E&C, contraction in CapEx projects in E&C, and target margins for all segments Includes $22M, or $0.15 EPS, in amortization Estimate for legacy legal fees is $9M or $0.07 EPS Upper end of guidance includes projected impact from potential settlement with PEP EBITDA range: $300M-$350M Effective Tax Rate: ~27% >70% Of Earnings Already In Backlog 14

15 YEAR-END BACKLOG Significantly Lower Risk Profile Backlog by Business Segment Backlog by Contract Type Govt Services T&C E&C, Other Cost Reimbursable, PFI & Services Contracts Lump Sum Contracts (GS, T&C) Low Risk 65% of E&C Backlog is Cost Reimbursable Contracts Lump Sum Contracts, E&C Total KBR Backlog At 12/31/16: $10.9B Majority of KBR backlog is currently either long-term, reimbursable, service or PFI contracts with a lower risk profile and predictable cash flows 15

16 BACKLOG Economic Value of Backlog Growth: YE 2015 v YE 2016 GS backlog particularly for the U.S. government contracts does not include option years or expected / historical volumes under task orders, and thus work ultimately realized may significantly exceed the booked amount currently estimated to be $1.9B in additional unrecognized backlog Lower GBP-USD Fx rates reduced the value of overall KBR backlog in FY2016 by $1.1B 16

17 CONCLUSION Transformation Of KBR Is Almost Complete 2016 Was a Pivotal Year Working towards completing the transition to: global provider of highend, differentiated, professional services and technologies Well positioned for growth in both Government Services & Hydrocarbons sectors through long-term services contracts Significantly lower risk profile as legacy projects complete Cost structure that is efficient and scalable Strong operational focus to bid, execute and deliver strong earnings growth More predictable earnings from highlevel of secured backlog Stronger free cash flow beyond 2017 and attendant capital deployment options 17

18 Join Us For Investor Day Friday, May 12 at the New York Stock Exchange We Deliver Copyright KBR February 24, 2017

19 APPENDIX

20 NON-GAAP RECONCILIATION Consolidated EBITDA Reconciliation ($ in millions) 4Q 2016 FY 2016 Net Income Attributable To KBR ($87) ($61) Add Back: Interest Expense (Income) $ 6 $ 7 Provision for Income Taxes $ 57 $ 84 Depreciation & Amortization $ 14 $ 45 Consolidated EBITDA ($10) $ 75 Note: EBITDA is defined as earnings before interest income / expense, income taxes, depreciation and amortization