D.A. Davidson 17 th Annual Diversified Industrials & Services Conference. September 2018

Transcription

1 D.A. Davidson 17 th Annual Diversified Industrials & Services Conference September 2018

2 DISCLAIMER 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 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. 2

3 Business Overview KBR At A Glance 1H 2018 Revenue 1H 2018 GP+EE (1) HS 27% HS 29% Tech 6% $2.3 B $244 M GS 67% Tech 15% GS 56% 40+ Countries 34,000+ People Government Services Technology Hydrocarbons Services serving government customers globally, capabilities that cover the full lifecycle of defense, space, aviation and other government programs and missions proprietary technology and solutions primarily focused on the monetization of gas in ethylene and petrochemicals; ammonia, nitric acid and fertilizers; oil refining and gasification serving blue chip oil and gas clients globally, with full lifecycle solutions of capital projects, O&M services, maintenance, program management and consulting services across onshore oil and gas, LNG/GTL, oil refining, petrochemicals, chemicals and fertilizers (1) Percentages exclude NSB. 3

4 KBR Differentiators Leading service provider to the space community, supporting mission control, astronaut life science, and operations support. Designed and constructed one-third of the world s LNG production. PFIs with the UK MOD provide stable, predictable profit and cash flow with contracts that extend through Our proprietary technologies cater to growing demand for cleaner fuels and consumer products in an everchanging market. 4 Attractive Domestic and International Mix Enduring Customer Base Industry-leading Safety Record Life-cycle Professional Services Disciplined Project Delivery Technical Differentiation

5 GS Overview Growing Business, Greater Balance 2018 Government Services Revenue Profile (1) International 34% 15% OCO Industry leading double digit organic growth in 1H 2018 Healthy pipeline of bids and pursuits with continued tailwinds in domestic and international government spending budgets 14% O&M DoD Well-balanced government services portfolio across domestic and international funding sources 22% 15% Expanded technical and professional sustaining services NASA & Other US RDT&E Integration of strategic acquisitions is on track $3.7B 2018 forecast revenue (1) Upper single % GP+EE margin Highly technical and professional services across multiple customers, diverse and recurring funding streams, primarily through long-term reimbursable contracts that span the procurement lifecycle 1. Revenue includes KBR share of unconsolidated JVs; 2017 pro forma revenues, includes Aspire and SGT in the International and NASA buckets, respectively. 5

6 Technology Overview Strong Business, Strong Margins 2018 Technology Revenue Profile Proprietary Equipment Catalyst 27% 9% $0.3B 2018 forecast revenue Mid 20s % GP margin 64% License & Engineering Global business providing technologies, equipment, catalyst supply and knowledge-based services Strong demand for petrochemical technologies in feedstock advantaged territories (i.e. North America, Russia & Middle East) and in high growth consumer markets (China & India) Increasing demand for niche refining technologies with changing maritime fuel specifications and regulations ~35 technologies in the portfolio covering refining, petrochemicals, specialty chemicals, gasification, ammonia and fertilizer markets Technology delivers growth and balance in earnings at relatively low risk with potential for selective HS pull-through 6

7 HS Overview Well Positioned for CapEx Recovery 2018 Hydrocarbons Services Revenue Profile (1) Other 14% 10% Upstream One of the world s largest and most comprehensive providers of professional services and projects to the hydrocarbons industry Robust pipeline of opportunities as mid-term LNG supply / demand rebalance drives a recovery in LNG bidding and front end engineering; oil price stability signals possible inflection point 34% Complete maintenance and industrial services through the Brown & Root brand Downstream 42% LNG Diverse customer base Tier 1s Predominantly gas facing including a leading position in Olefins, Ammonia, LNG, Petrochemicals & Chemicals $2.3B 2018 forecast revenue (1) Mid to upper single % GP+EE margin Growing base business, breakout growth opportunities represent significant upside potential forecast revenues; includes KBR share of unconsolidated JVs. 7

8 Financial Overview 2018 Earnings Guidance 2018 Guidance Increased Adjusted EPS guidance in 2Q2018 Good market fundamentals across the hydrocarbons and government sectors Adjusted EPS (1) Excludes Estimated Legacy Legal fees $0.07 Acquisition & Integration related expense $0.05 Amortization related to Aspire acquisition $0.07 Aspire gain on consolidation ($0.67) $ $1.50 Healthy backlog of lower risk projects allow greater selectivity on new projects Effective Tax Rate 22% - 24% Operating Cash Flow $125M - $175M (1) See Appendix for reconciliation from GAAP 8

9 Thank you 9