Credit Suisse 2008 Engineering and Environmental Services Conference. Bill Utt Chairman, President, and CEO

Transcription

1 Credit Suisse 2008 Engineering and Environmental Services Conference Bill Utt Chairman, President, and CEO June 5, 2008

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 forward-looking 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 26, 2008, final prospectus for its exchange offer dated March 27, 2007, 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.

3 KBR: A Leading Global Engineering & Construction Provider FY 2007 Revenue: $8.7 Billion; EPS $1.79 (diluted) 89% International / 11% Domestic Downstream Backlog at 3/31/08: $13.4 Billion 76% cost-reimbursable / 24% fixed-price * Headquarters in Houston, Texas 100+ years of operating history ~52,000 employees (~5,000 engineers) 45+ countries Extensive service capabilities: Engineering, procurement, construction, commissioning and start-up (EPC-CS) to global oil, gas, petrochemical, and infrastructure customers Defense, logistics, and contingency support for defense services Government & Infrastructure Services Technology Upstream Ventures * For contracts that contain both fixed-price and cost-reimbursable components, KBR classifies the components as either fixed-price or cost-reimbursable according to the composition of the contract, except for smaller contracts that are characterized on the predominate component. 1

4 Upstream Business Unit Strategic Growth Opportunities Maintain and expand gas monetization leadership Expand Onshore/Offshore oil and gas opportunities Leverage consulting expertise Continue to enhance engineering and technical capabilities to meet expected future market growth Key Projects Pearl GTL Escravos GTL Yemen LNG Tangguh LNG Skikda LNG Kashagan work North Rankin 2 Pazflor FPSO Topsides Pluto Production Platform Backlog ($ billions) $7.0 $6.0 $5.0 $4.0 $3.0 $2.0 $1.0 $- + 65% Q106 Q107 Q108 2

5 Government & Infrastructure Business Unit Strategic Growth Opportunities Leverage capabilities and proven track record to capture more design and construction work for federal, state, and local governments Portfolio diversification among defense services and non-defense branches of the U.S. Government Key Projects LogCAP III LogCAP IV (Awarded) Allenby & Connaught CENTCOM CONLOG Hope Downs DES Scottish Water International geographic diversification among defense services Backlog ($ billions) $6.0 $5.0 $4.0 $3.0 $2.0 $ % + 122% -14% + 2% $- Q106 Q107 Q108 Other Government & Infrastructure Middle East Operations 3

6 Services Business Unit Strategic Growth Opportunities Grow domestic construction capability through organic growth and acquisitions Expand industrial services product offerings and geographic footprint Expand and capture Canadian Oil Sands opportunities Leverage existing Canadian fabrication capabilities to broaden scope of work supplied on KBR projects Key Projects Scotford Upgrader Expansion North West Upgrader projects Bassell chemical plants Texas Instruments Campuses project Air Products Hydrogen facility MMM Vessels business Backlog ($ millions) $900 $800 $700 $600 $500 $400 $300 $200 $100 $ % Q106 Q107 Q108 4

7 Downstream Business Unit Strategic Growth Opportunities Continue leadership in Program Management Consultancy (PMC) Capitalize on growing end markets Leverage in-house and third party technology for expanded opportunities Emerging market focus Key Projects Ras Tanura Integrated Project Yanbu Export Refinery Saudi Kayan Ethylene/Olefins facility EBIC Ammonia plant MAN Ferrostaal AC Ammonia plant $600 Backlog ($ millions) $500 $400 $300 $200 $100-42% $- Q106 Q107 Q108 5

8 Technology Business Unit Strategic Growth Opportunities Leverage intellectual property assets Increase pull-through opportunities based on technology Capitalize on licensing opportunities Continue to invest in research and development Key Projects SUPERFLEX - Sasol SA KAAP - MAN Ferrostaal Ammonia plant SCORE - Lanzhou China plant Ningbo Wanhua Polyurethanes Company aniline plant $120 Backlog ($ millions) $100 $80 $60 $40 $20 + 9% $- Q106 Q107 Q108 6

9 Ventures Business Unit Strategic Growth Opportunities Invest capital and development expertise for pullthrough service opportunities Make/manage equity investments on a stand-alone basis Investment accountability independent of services provided Key Projects Aspire Defence Allenby & Connaught investment EBIC Ammonia project investment Alice Springs-Darwin railway project investment Various road projects investments Reduce portfolio merchant risk profile $800 Backlog ($ millions) $700 $600 $500 $400 $300 $200 $100 $- + 17% Q106 Q107 Q108 7

10 KBR Investment Thesis Go To Contractor Best-in-Class Risk Awareness Improving Financial Performance Focus on Safety Strategic Uses of Cash 8

11 Go To Contractor Skikda LNG; Tangguh LNG; Yemen LNG; EBIC Ammonia Project EPC / EPCm Yanbu Export Refinery; Pearl GTL; Ras Tanura; Multiple LNG Projects; FEED Logistics LogCAP III & IV; CONCAP; CONLOG; AFCAP; CENTCOM; EXECUTION Ras Tanura; Pearl GTL; Kashagan PMC Technology Design / Consulting North Rankin 2; Pluto Offshore Platform; Pazflor FPSO Topsides; Trans Caspian Oil & Gas Study ROSE ; SUPERFLEX ; SCORE ; KAAP ; TRIG 9

12 Best-in-Class Risk Awareness Identification Analysis Commercial Risk Measurement Pricing Technical Risk Management Legal Risk Reporting 10

13 Improving Financial Performance Recurring Business Unit Income* KBR Total Backlog $13.4B $168M $10.7B + 25% $117M + 10% $129M + 30% $8.0B + 34% 6.7% 5.7% 6.4% Q106 Q107 Q108 Q106 Q107 Q108 Recurring Business Unit Incom e* Percentages in boxes represent Recurring Business Unit Income Margins KBR Backlog * See Appendix for GAAP reconciliation 11

14 Focus on Safety Incident Rate YTD 2008 Total Recordable Incident Rate Recordable Incident Rate 0.19 (Shaded Areas Represent LogCAP III Portion) Construction Industry Institute Rates 2006 CII Recordable Rate CII Lost Time Rate Total Lost Time Incident Rate Lost Time Incident Rate 12

15 Balance Sheet Supports Growth Opportunities Strategic Uses of Cash Opportunistic Acquisitions Equity Investments in Projects Technology Investments / Acquisitions KBR Cash at 3/31/08 Return Capital to Shareholders ($ in millions) Total Cash & Equivalents 1,927 Cash Associated with JVs 358 Advanced Payment on a KBR Project* 231 LogCAP III Working Capital Requirements ~300 Operating Cash Requirements ~100 Discretionary Cash 938 Announced Acquisition of BE&K, Inc. ~550 * Advanced payments associated with a contract being executed by a wholly-owned subsidiary of KBR. 13

16 Investment Highlights Global Market Leader Compelling Growth Opportunities Stringent Risk Management Best-in-Class Technical Expertise Improving Financial Profile Blue-Chip Client Base Strong Management Team Balanced Project Portfolio 14

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18 Appendix - GAAP Reconciliation Q106 Q107 Q108 Total Business Unit Revenue $ 2,056 $ 2,027 $ 2,519 Total Recurring Business Unit Income $ 117 $ 129 $ 168 Items included in Business Unit Income Government & Infrastructure Barracuda Additional Charge (15) - - Skopje Embassy Provision - (1) (12) Upstream Brown&Root-Condor SPA Impairment - (20) - Pemex Arbitration Gain Ventures ASD Impairment (26) - - Total Items included in Business Unit Income (41) (21) 39 Total Business Unit Income (GAAP) $ 76 $ 108 $ 207