KBR to Acquire Centauri · 2020. 8. 19. · The future, designed and delivered. Stuart Bradie –President and Chief Executive Officer Byron Bright –President, Government Solutions

The future, designed and delivered.The future, designed and delivered.Stuart Bradie – President and Chief Executive OfficerByron Bright – President, Government SolutionsMark Sopp – Executive Vice President and Chief Financial Officer Alison Vasquez – Vice President, Investor Relations

KBR to Acquire CentauriA Highly Strategic, Accretive Acquisition

August 19, 2020

©2020 KBR Inc. All Rights Reserved.

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. These risks and uncertainties include, but are not limited to: the significant adverse impacts on economic and market conditionsof the COVID-19 pandemic; the company’s ability to respond to the challenges and business disruption presented by the COVID-19 pandemic; the recent dislocation of the global energy market; the company’s ability to realize cost savings and efficiencies relating to the streamlining of its Energy Solutions business; the company’s ability to manage its liquidity; the company’s ability to continue to generate anticipated levels of revenue, profits and cash flow from operations during the COVID-19 pandemic and any resulting economic downturn; the outcome of and the publicity surrounding audits and investigations by domestic and foreign government agencies and legislative bodies; potential adverse proceedings by such agencies and potential adverse results and consequences from such proceedings; the scope and enforceability of the company’s indemnities from its former parent; changes in capital spending by the company’s customers, including as a result of the COVID-19 pandemic; the company’s ability to obtain contracts from existing and new customers and perform under those contracts; structural changes in the industries in which the company operates; escalating costs associated with and the performance of fixed-fee projects and the company’s ability to control its cost under its contracts; claims negotiations and contract disputes with the company’s customers; changes in the demand for or price of oil and/or natural gas; protection of intellectual property rights; compliance with environmental laws; changes in government regulations and regulatory requirements; compliance with laws related to income taxes; unsettled political conditions, war and the effects of terrorism; foreign operations and foreign exchange rates and controls; the development and installation of financial systems; increased competition for employees; the ability to successfully complete and integrate acquisitions; and operations of joint ventures, including joint ventures that are not controlled by the company. 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, 2020 and any subsequent Forms 10-Q and 8-K.

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 terms “Adjusted EBITDA” and “Adjusted EPS” which are not calculated in accordance with U.S. GAAP. EBITDA is defined as Net income attributable to KBR, plus interest expense, net; provision for income taxes; other non-operating expense (income); and depreciation and amortization. Adjusted EBITDA excludes certain amounts included in EBITDA. Adjusted earnings per share (Adjusted EPS) is considered a non-GAAP financial measure under SEC rules because Adjusted EPS excludes certain amounts included in the diluted earnings per share calculated in accordance with GAAP for such periods.

Forward-Looking Statements

Proud history, bright future. 3

©2020 KBR Inc. All Rights Reserved.©2020 KBR Inc. All Rights Reserved.

Highly strategic, complementary, accretive acquisition

▪ Accelerating growth and building long-term value across strategic growth vectors

▪ Centauri – Strategic, high end, accretive

▪ Bolsters KBR’s leadership in space superiority –military/intel, civil (NASA) and commercial

▪ Delivers immediate scale and franchise position in markets critical to national security with strong bipartisan support

▪ Delivers synergies across space, intel, missile defense and cyber

▪ Operates in programs with high barriers to entry

▪ Strong cultural fit

▪ Attractive returns and earnings; high cash efficiency



Accelerating growth and building long-term value across strategic vectors

Defense Modernization

Sustainable Technology

Human PerformanceSpace Exploitation



Centauri | A Highly Strategic, Complementary Acquisition

▪ Accelerates KBR’s leadership position in space superiority – civil, commercial, military/intel

▪ Aligns with KBR’s strategic growth vectors of space exploitation and defense modernization

▪ Achieves immediate scale across space, intel, missile defense, and cyber

▪ Broadens and deepens customer set; minimal portfolio overlap

▪ Moves KBR upmarket in classified domains; highly technical, cleared workforce

▪ Operates in programs with high barriers to entry

▪ Centauri track record of double-digit growth and visibility

Why Centauri? Why Now?▪ Strong bipartisan support for investment to

sustain and advance critical national security interests across space, cyber, missile defense and intelligence

▪ Recent favorable trends in M&A valuations

▪ Delivers immediate accretion, while preserving responsible leverage and ample liquidity

International

Engineering

Logistics

Centauri

Pro Forma GS Revenue

Balance across defense, space, intelligence and

international markets

Space & Mission Soln

REVENUE BY CAPABILITY REVENUE BY CLIENT



Centauri | At a Glance

$700M+FY2021E REVENUE

$1B+BACKLOG & OPTIONS

~80%WIN RATE

~10%EBITDA MARGIN

~1,750EMPLOYEES

~75%TS / SCI+ CLEARANCES

Other

Department of Defense

Intelligence Community

Space Superiority & Missile Defense

Space & ISR Engineering

Intel, Electronic Warfare & Cyber

SPACE SUPERIORITY

SPACE DOMAINAWARENESS

MISSILE DEFENSE CYBER & INTEL

DIRECTED ENERGY

Compelling Growth

Opportunities



Centauri | Leading Technology & Expertise Enabling End-to-End Space Solutions

Space Domain Awareness

Orbital Threats

US Space Asset

Tracking & Cataloging Space Objects

Foreign SpaceObject

DataInformation

Communications + Intelligence, Surveillance, Reconnaissance & Targeting (ISR&T)

Space Superiority & Missile Defense

Ground Based Sensors Response InfrastructureCommunications & Ground Infrastructure

C2 & Space DomainAwareness

Identify Monitor

CharacterizeExploit

Assess

Situational Awareness

ActionableInformation

Space-BasedDirected Energy

Space Sensor forMissile Warning & Tracking

Foreign MissileLaunch

US MissileInterceptor



Centauri | Franchise Position at the Center of Space Superiority

Multi-INT

Priority-INT

SIGINT

GEOINT

Multi-INT

ActivityBased

Intelligence

PriorityIntelligence

MASINT &Radar

Signatures

Space Superiority

SIGINT - Signals IntelligenceGEOINT - Geospatial IntelligenceMASINT - Measurement and Signature Intelligence



Centauri | Deep Expertise across Critical DOD Priorities

A high growth, high margin, high barriers to entry platform aligned with DOD priorities

▪ Tactical 50kw DE solution with multi-billion-dollar production upside

Directed Energy

▪ 140+ FTE NASIC team focused on evaluating foreign space and long-range weapons technology

Missile Defense

▪ Utilizes proprietary space object characterization algorithms to determine identity and intent of enemy space assets

Artificial Intelligence / Machine Learning

▪ Strong history of utilizing ground and space-based sensors to inform mission management and C2

Command, Control and Communications

▪ 1 of 2 contractors with a presence within all NRO flying SPOs

Space Offense and Defense

▪ Key developer of high-performance, IP-protected quantum computing technology to support analysis of space data

Quantum Science and Computing

▪ IP-protected position in verifying RF, digital and analog circuitry

Microelectronics

▪ National experts in positioning, navigation & timing (PNT) and navigational warfare

▪ IP-protected offensive cyber technologiesCyber Security

▪ Leading expertise in computational fluid dynamics and advanced materials rapid prototyping

Hypersonics



Centauri | Expanding KBR’s Platform for Growth

Platform for Growth

Space domain awareness, military space and intel

&Franchise civil space player; emerging commercial space

Scale and balance across the dynamic space frontier

Trusted microelectronics and electronic warfare capabilities; offensive and defensive cyber

&Cyber range expertise,

vulnerability assessments, and electronic security solutions

Scale across cyber and complementary capabilities

Long-term, trusted client relationships

&Broad portfolio of flexible IDIQ

vehicles accessible across a wide range of new customers

Enabling expanded customer access to flexible IDIQ contract

vehicles

Classified facilities & networks, access to TS-SCI billets,

proprietary IP&

Increased scale, significant pipeline of opportunities, broad systems engineering capabilities

Enhanced synergy win rates



Centauri | Transaction Overview

EV Multiple ~11x 2021 Adjusted EBITDA

Purchase Price ~$800 million, net of tax benefits

Leverage 2.5x Net Leverage, with ample liquidity

Funding ~$300 million cash, $500 million borrowings

Business Structure

Centauri will become part of the Government Solutions segment

TimelineExpected close late-2020 upon customary regulatory approvals



Accelerates growth in strategic vectors

Attractive returns and earnings

High cash efficiency

❑ Expands KBR “upmarket” into new, adjacent vectors with highly differentiated capabilities

❑ Minimal overlap

❑ Adds >$700 million of annualized revenue in 2021

❑ >15% CAGR 2020-2024

❑ Low recompetes in 2021 and 2022

❑ Adjusted 2021 EPS accretion $0.25-$0.30 with >80% of 2021 secured

❑ Expands KBR GS EBITDA margin to double digits

❑ Adds >$70 million of adjusted EBITDA in 2021

❑ IRR >15%

❑ ~100%+ cash conversion of net income to operating cash flow

❑ Capital-light business model aligns with KBR

Centauri | Provides Near- and Long-Term Value

IN SUMMARY

✓ Accelerating strategic priorities opposite national security and defense modernization priorities

✓ Expanded high-end capabilities and broadened, deepened customer relationships – great fit

✓ Shared values, mission focus, cultural priorities

✓ Attractive accretion, CAGR, margin expansion and cash generation

✓ Accelerating growth (1+1>2) and building long-term value

Performance-based

Cost reimbursable



KBR | At a Glance (pro forma with Centauri)

Business Description KBR ensures mission and project success for customers globally with capabilities supporting defense, intelligence, space, aviation and industrial.

KBR creates sustainable value and drives innovation by combining engineering, technical and scientific expertise with its full life cycle capabilities, mission knowledge and future-focused technologies, from research and development, test and evaluation, and systems engineering to program management, operations, maintenance and field logistics. Known for excelling in complex and extreme environments, KBR is trusted to help our clients meet their most pressing challenges today and into the future.

Core Capabilities SCIENTIFIC RESEARCH ▪ Quantum Science and Computing▪ Health and Human Performance ▪ Life Science Research ▪ Directed Energy▪ Earth Sciences ▪ Robotic Space Systems▪ Materials Science

OPERATIONS▪ Command, Control and Communications▪ Space Domain Awareness▪ Human Spaceflight and Satellite Ops ▪ Integrated Supply Chain and Logistics ▪ Technical Training Services ▪ Military Aviation Support ▪ Equipment Maintenance ▪ Portfolio Management

ENGINEERING SERVICES ▪ Systems & Sustainment Engineering▪ Systems and Platform Integration ▪ Test and Evaluation ▪ Aerospace Acquisition Support ▪ Rapid Prototyping▪ Consulting Services ▪ Analysis of Alternatives

TECHNOLOGY▪ Sustainable IP ▪ Advisory Services – Energy Transition▪ Digital Asset Optimization

INFORMATION OPERATIONS ▪ Data Analytics ▪ Offensive and Defensive Space and Cyber ▪ Mission Planning Systems ▪ AI and Machine Learning▪ Assured Microelectronics

Key Factors

Competitive Differentiators

▪ Deep domain expertise in technical disciplines, creating highly defensible market positions▪ Proven and disruptive sustainable IP and digital solutions▪ Solid base of contracts providing stability to pursue future growth opportunities ▪ Global franchise positions with marquee, long-term customers ▪ Experienced management team and highly cleared employee base ▪ Top-tier organic revenue growth with significant cash flow generation

Revenue Profile

LINES OF BUSINESS MAJOR CUSTOMERS CONTRACT TYPE

~9%Adj. EBITDA

MARGIN

NASA & Fed Civ

Intel; undisclosed

Intl Defense

Industrial U.S. DoD

~$6B2021(E)

REVENUE

30,000EMPLOYEES

$16.5BBACKLOG &

OPTIONS6/30/2020

Engineering

Space & Mission Soln.

LogisticsInternational

Centauri

Technology

AppendicesDOING THE RIGHT THING FOR THE PLANET, OUR PEOPLE AND OUR COMMUNITIES WHILE PURSUING BUSINESS GROWTH

Q&A

Documents

KBR to Acquire Centauri · 2020. 8. 19. · The future, designed and delivered. Stuart Bradie –President and Chief Executive Officer Byron Bright –President, Government Solutions