D.A. Davidson Ninth Annual Engineering & Construction Conference

Transcription

1 D.A. Davidson Ninth Annual Engineering & Construction Conference Bill Utt Chairman, President and CEO Sue Carter - Senior Vice President and CFO September 28, 2010 Page 1 of 16

2 Forward Looking Statements This presentation contains forward-looking statements. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements include statements about the benefits of the split-off, the discussions of KBR s business strategies and KBR s expectations concerning future operations, profitability, liquidity and capital resources. You can generally identify forwardlooking statements by terminology such as anticipate, believe, continue, could, estimate, expect, forecast, goal, intend, may, objective, plan, potential, predict, projection, should or other similar words. These statements relate to future events or future financial performance and involve known and unknown risks, uncertainties and other factors that may cause actual results, levels of activity, performance or achievements to differ materially from those in the future that are implied by these forward-looking statements. Many of these factors cannot be controlled or predicted. These risks and other factors include those described under Risk Factors in KBR s Annual Report on Form 10-K dated February 25, 2010, Forms 10-Q, recent Current Reports on Forms 8-K, and other Securities and Exchange Commission filings. Those factors, among others, could cause KBR s actual results and performance to differ materially from the results and performance projected in, or implied by, the forward-looking statements. As you read and consider this presentation, you should carefully understand that the forward-looking statements are not guarantees of performance or results. KBR cautions you that assumptions, beliefs, expectations, intentions and projections about future events may and often do vary materially from actual results. Therefore, KBR cannot assure you that actual results will not differ materially from those expressed or implied by forward-looking statements. The forward-looking statements included in this presentation are made only as of the date of this document. New risks and uncertainties arise from time to time, and KBR cannot predict those events or their impact. KBR assumes no obligation to update any forward-looking statements after the date of this presentation as a result of new information, future events or developments, except as required by the federal securities laws. Page 2 of 16

3 KBR A Leading Global E&C Provider» Revenue: Full Year $12.1 Billion; 2009 Fortune 500 Company #193 Full Year $11.6 Billion; Fortune 500 Company #234» Backlog: June 30, $12.4 Billion (79% reimbursable / 21% fixed-price)* June 30, $12.3 Billion (79% reimbursable / 21% fixed-price)*» Headquarters in Houston, Texas» 100+ years of operating history» ~42,000 employees; 45+ countries» Extensive service capabilities: Engineering, procurement, construction, commissioning, and startup (EPC-CS) to global hydrocarbons, power, industrial, minerals, and infrastructure customers Defense, logistics, and contingency support for defense services * For contracts that contain both fixed-price and cost-reimbursable components, KBR classifies the components as either fixed-price or costreimbursable according to the composition of the contract, except for smaller contracts that are characterized on the predominate component. Page 3 of 16

4 KBR Operates in 45 Countries Houston Edmonton Calgary Wilmington Arlington Birmingham Monterrey MMM Raleigh / Charlotte Atlanta Gothenburg Greenford Moscow Leatherhead Atyrau Baku Algiers Baghdad Cairo Kuwait City Dhahran Dubai Abu Dhabi Lagos Angola China New Delhi Singapore Jakarta Brisbane Johannesburg Perth Adelaide Sydney Canberra Melbourne Page 4 of 16

5 Gas Monetization LNG remains robust Skikda LNG progressing well Gorgon LNG execution is strong Pluto 2 and 3 FID expected mid-2011 Inpex Ichthys FID expected 2 nd half of 2011 Browse LNG Basis of Design Improving Gas Monetization margins Tangguh/Yemen LNG projects complete; negotiating final close out on Tangguh Escravos GTL and Skikda LNG will have reducing impact over the next year Double-digit margins not unrealistic over time Page 5 of 16

6 Oil & Gas Capturing opportunities FEEDs being converted to detailed engineering, design, and implementation Strong level of global offshore activity with several excellent opportunities in Caspian and West Africa over next 18 months Expand service offerings from engineering to project execution Energo Engineering acquisition Expands KBR s offshore capabilities in areas of integrity management and advanced structural engineering Page 6 of 16

7 Downstream Saudi Arabia projects progressing well FEED activities continue on Ras Tanura Integrated project Yanbu EPC packages awarded KBR staffing up EPC project offices in support of Aramco GES Plus initiative African refinery projects moving forward Lobito project negotiations for first phases for EPCm continue PetroSA FEED expected to commence later this year Page 7 of 16

8 North America Government & Defense LogCAP Updates and Outlook Expect 2011 revenue at approximately second half of 2010 levels Once troop level at 50,000 levels, expect our staffing to remain reasonable consistent through end of 2011 Received $60 million in prior period award fees during second quarter of 2010 Positive breakthroughs on DCAA and other legacy LogCAP issues Life After LogCAP Replacing LogCAP work by diversifying customer base, building on logistical expertise, and expanding geographically New customers including NATO, Air Force Civil Engineering Agency, National Reconnaissance Office Turkey and Spain base operations award by U.S. Air Force Page 8 of 16

9 Infrastructure, Government, and Power International Government & Defense Continued support for U.K. Ministry of Defence and NATO in Afghanistan; newly acquired NATO contract ramped up Building on U.K. based logistics and life support and consultancy and training capabilities in Australia to expand services within the Asia-Pacific region Infrastructure & Minerals Slow ramp up for infrastructure spending in the U.S., Australia, and the U.K. Middle East infrastructure activity improving based on stabilized oil price Minerals markets strengthening; recent Hope Downs 4 EPCm award Power & Industrial Demand for new electric generating capacity still lagging Industrial markets experiencing strong volume of early stage prospects Page 9 of 16

10 Services U.S. construction markets Continued moderate activity for small to midsize capital projects Only now seeing the beginnings of a return of larger construction projects Increasing activity in Alberta oil sands region Strong Building Group activity this year with sanctioned projects moving forward Industrial Services Large DuPont construction, maintenance and services project began mobilized earlier this year Turnaround activity picking up Page 10 of 16

11 KBR Financials and Backlog Page 11 of 16

12 Creating a More Profitable Backlog 155 Performance Index Less impact from legacy projects Less impact from LogCAP project Success from risk focus on new projects Pursuit of selective projects Job Income Backlog Revenue Backlog Page 12 of 16

13 Risk Profile of Backlog 72% 80% 82% 79% 43% 12/31/06 12/31/07 12/31/08 12/31/09 6/30/10 Backlog as of Date Reported Future Reimbursable Backlog Fixed-price Backlog Improved Risk Profile Over Time Page 13 of 16

14 Effective Cash Deployment Full Year 2010 Outlook Operating Requirements June 30, 2010 ($ millions) Cash and Cash Equivalents $1,235 Joint Venture Cash $267 Operating / Discretionary Cash $968 Dividends $32 M Capex with ERP $70 - $80 M Share Repurchase* Up to $220 M Pension Contribution $30 - $40 M Acquisitions $36 M -?? Effective and Thoughtful Cash Deployment in 2010 *Assumes 10 million shares repurchased pursuant to authorization at an average purchase share price of $22 per share Page 14 of 16

15 Working Capital Management Focused on reducing general business accounts receivable Managing accounts payable Resolution of unbilled receivables on uncompleted contracts Collecting on past disputes (EPC 1) Government Business As LogCAP work declines, less working capital requirements Diligently working to resolve disputed withhold amounts Award fees Page 15 of 16

16 KBR Investment Thesis KBR is a growth company across a broad based and diverse series of businesses Optimism for acceleration in new orders around growth opportunities across markets Ample opportunities to replace declining LogCAP work Strong balance sheet with emphasis on cash management Patience, prudence, and thoughtfulness in managing KBR s cash balances Page 16 of 16

17 We Deliver