KBR (KBR) risk factors, FY2025 10-K

Risks Related to Operations of Our Business

1. 01We depend on U.S. and foreign government agencies as our primary customers in our MTS business segment and, if our reputation or relationships with these agencies were to be harmed, it could adversely impact our financial performanceNew
2. 02Our results of operations and cash flows depend on the award of new contracts and the timing of the performance of existing contracts28% rewritten
3. 03Following contract award, we may also encounter significant expense, delay, contract modifications or even contract lossNew
4. 04Ongoing international conflicts, and other geopolitical conditions, may adversely affect our business and results of operations
5. 05Uncertainty over global tariffs, or the financial impact of tariffs, may negatively impact our business and results of operationsNew
6. 06If there are any successful intellectual property infringement proceedings against us, our competitive position could be adversely impactedNew
7. 07We may not properly leverage or appropriately invest in technology advancements, which could diminish any sustainable competitive advantage in our service offerings resulting in the potential loss of market share and profits
8. 08We may use artificial intelligence, machine learning, data science and similar technologies in our business, and challenges with properly managing such technologies could result in reputational harm, competitive harm and legal liability, and adversely affect our business, financial condition and results of operations71% rewritten
9. 09successfully than us, which could impair our ability to compete effectively and adversely affect our business, financial condition and results of operationsNew
10. 10The nature of our business exposes us to potential liability claims and contract disputes that may exceed or be excluded from existing insurance coverage
11. 11Dependence on third-party subcontractors, suppliers and equipment manufacturers could adversely affect our financial performance on contracts
12. 12Employee, agent or partner misconduct, or our overall failure to comply with laws or regulations, could weaken our ability to win contracts, which could result in reduced revenues and profitsNew
13. 13We depend on our teaming arrangements and relationships with other contractors and subcontractors. If we are not able to maintain these relationships, or if these parties fail to satisfy their obligations to us or the customer, our business, financial condition and results of operations could be adversely affectedNew
14. 14We use estimates in recognizing revenues, and if we make changes to estimates used in recognizing revenues, our profitability may be adversely affected
15. 15We conduct a portion of our operations through joint ventures and partnerships, exposing us to risks and uncertainties, many of which are outside of our control
16. 16The nature of our contracts, particularly those that are fixed-price, subjects us to risks associated with cost overruns, operating cost inflation and potential claims for liquidated damages
17. 17Our backlog of unfilled orders is subject to unexpected adjustments and cancellations and, therefore, may not be a reliable indicator of our future revenues or earnings21% rewritten
18. 18We have made and may continue to make business combinations as a part of our business strategy, which may present certain risks and uncertainties
19. 19International and political events may adversely affect our operations
20. 20Internal or external cybersecurity or privacy breaches, or systems and information technology interruption or failure could adversely impact our ability to operate or expose us to significant financial losses and reputational harm70% rewritten
21. 21Additionally, we work with the defense industrial base industry and the U.S., U.K. and Australian governments to gather and share threat intelligence and promote increased awareness and enhanced protections against cybersecurity threatsNew
22. 22An impairment of all or part of our goodwill or our intangible assets could have a material adverse impact on our net earnings and net worth21% rewritten
23. 23Our actual results could differ from the estimates and assumptions used to prepare our financial statements21% rewritten
24. 24Global pandemics, epidemics, outbreaks of infectious diseases or public health crises have disrupted our business and could have a material adverse effect on our future results of operations and financial performance
25. 25We ship a significant amount of cargo using seagoing vessels, exposing us to certain maritime risks

Risks Related to the Planned Spin-Off of Mission Technology Solutions

1. 26We are subject to risks related to our plan to spin off our Mission Technology Solutions business into a standalone, publicly traded companyNew
2. 27Following 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 profitabilityNew
3. 28Our 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 businessNew

Risks Related to Our Industry

1. 29Our profitability and cash flow may vary based on the mix of our contracts and programs, our performance and our ability to control costs
2. 30The U.S. government may issue or revise existing rules, regulations and directives, adopt new contract rules and regulations or revise its procurement practices in a manner adverse to us at any time38% rewritten
3. 31Heightened competition could impact our ability to obtain contracts which could reduce our market share and profits
4. 32Several of our contracts with the U.S. government are classified or subject to other security restrictions, which may limit investor insight into portions of our business
5. 33Demand for our services provided under government contracts is directly affected by spending by our customers
6. 34Fluctuations in commodity prices and outlook may affect our customers’ investment decisions which may result in existing project cancellations or delays or changes in the timing and funding of new awards

Risks Related to Financial Conditions and Markets

1. 35Current or future economic conditions, including recession or inflation, in credit markets may negatively affect the ability to operate our business, finance working capital, implement our acquisition strategy and access our cash and short-term investments
2. 36We may be unable to obtain new contract awards if we are unable to provide our customers with letters of credit, surety bonds or other credit enhancements
3. 37Our Senior Credit Facility imposes restrictions that limit our operating flexibility and may result in additional expenses, and such facility may not be available if financial covenants are violated or if an event of default occurs
4. 38Our indebtedness and the associated covenants could materially adversely affect our ability to obtain additional financing, including for acquisitions and capital expenditures, limit our flexibility to manage our business, prevent us from fulfilling our financial obligations and restrict our use of capital
5. 39We may be required to contribute additional cash to meet any unfunded benefit obligations associated with our defined benefit plans
6. 40We are subject to foreign currency exchange risks that could adversely affect our results of operations and our ability to reinvest earnings from operations. Our ability to mitigate our foreign exchange risk through hedging transactions may be limited

Risks Related to Our Common Stock

1. 41If we need to sell or issue additional shares of common stock to refinance existing debt or to finance future acquisitions or operations, our existing shareholder ownership could be diluted
2. 42Provisions in our charter documents, Delaware law and our Senior Credit Facility may inhibit a takeover or impact operational control that could adversely affect the value of our common stock
3. 43We may change our dividend policy in the future46% rewritten

Risks Related to Regulations, Compliance and Litigation

1. 44We could be adversely impacted if we fail to comply with international export and domestic laws, which are rigorously enforced by the U.S. government
2. 45Our effective tax rate and tax positions may vary
3. 46Our business and operations expose us to numerous legal and regulatory requirements, and any violation of these requirements could harm our businessNew
4. 47Our 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 contractsNew
5. 48Investigations, audits, claims, disputes, enforcement actions, litigation, arbitration, or other legal proceedings could require us to pay potentially large damage awards or penalties and could be costly to defend, which would adversely affect our cash balances and profitability, and could damage our reputationNew

Risks Related to Climate

1. 49There are rapidly evolving views from stakeholders, such as investors, customers and current and future employees, with respect to global climate risks and the related emphasis on sustainability practices, which could affect our business
2. 50Climate risks and related environmental issues could have a material adverse impact on our business, financial condition and results of operations
3. 51We may be unable to achieve our sustainability commitments and targets which could result in the loss of investors and customers and damage to our reputation