Credit Suisse 2010 Engineering & Construction Conference

Transcription

1 Credit Suisse 2010 Engineering & Construction Conference Bill Utt Chairman, President and CEO Sue Carter - Senior Vice President and CFO June 3, 2010

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.

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: March 31, $13.3 Billion (81% reimbursable / 19% fixed-price)* March 31, $12.8 Billion (78% reimbursable / 22% fixed-price)*» Headquarters in Houston, Texas» 100+ years of operating history» ~51,000 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. 1

4 KBR Operates in 45 Countries Gothenburg Edmonton Greenford Moscow Leatherhead Calgary Wilmington Atyrau Arlington Baku Raleigh / Charlotte Algiers Baghdad Houston Atlanta Cairo Kuwait City Birmingham Monterrey Dhahran Dubai MMM Abu Dhabi Lagos Angola China New Delhi Singapore Jakarta Brisbane Johannesburg Perth Adelaide Sydney Canberra Melbourne 2

5 Gas Monetization LNG remains robust Skikda LNG progressing well Gorgon LNG execution is strong Pluto 2 and 3 FEED progressing Inpex Ichthys FEED work continues Browse LNG Basis of Design award Improving Gas Monetization margins Tangguh/Yemen LNG projects complete with expected change orders Escravos GTL and Skikda LNG will have reducing impact over the next year Double-digit margins not unrealistic over time 3

6 Oil & Gas Capturing opportunities Expect to convert FEEDs to detailed engineering, design, and implementation during 2010 Iraq infrastructure opportunities 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 Recent Energo Engineering acquisition Expands KBR s offshore capabilities in areas of integrity management and advanced structural engineering 4

7 Downstream Saudi Arabia projects progressing well FEED activities continue on Ras Tanura Integrated project Yanbu EPC packages currently being evaluated by customer Believe pull-out by Aramco partner may delay construction by only one month African refinery projects moving forward Lobito project first phases of EPCm expected to move forward during first half of 2010 PetroSA FEED expected to commence later this year 5

8 North America Government & Defense LogCAP Updates and Outlook CTP LogCAP IV Award and Basic Life Support services in Iraq to be continued under LogCAP III Bahrain LogCAP IV Award Received $60 million in prior period award fees Continue to expect 2010 revenue decline of approximately 50% from 2009 levels 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 6

9 Infrastructure, Government, and Power International Government & Defense Continued support for U.K. Ministry of Defence and NATO in Afghanistan 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 Continued strengthening markets for transportation, water, infrastructure, and facilities Minerals markets strengthening Power & Industrial Experiencing a higher level of proposal activity Expect an increased level of awards on gas-fired plants and environmental projects in second half of

10 Services U.S. construction markets Renewed activity for small to mid-size capital projects Not yet seeing a return of larger construction projects Increased activity in Alberta oil sands region Strong Building Group activity over past several quarters with sanctioned projects moving forward Industrial Services DuPont construction, maintenance and services project began mobilizing in first quarter of 2010 Turnaround activity picking up 8

11 KBR Financials and Backlog

12 KBR s Backlog Creating a more profitable backlog portfolio Working off lower margin Escravos GTL, LogCAP, and Skikda LNG (reimbursable component) Adding higher value services to backlog Engineering and technical services Project and construction management What grows backlog? Gorgon LNG, Solid Waste Authority, Progress Energy, PNG LNG, DuPont, Suncor Turnaround, Shaybah NGL, Yanbu utilities, Boeing Dreamliner, numerous Upstream FEEDs, Building Group awards In 2009, approximately 60% of added backlog generated from current project scope growth 10

13 Strong Balance Supports Functional Options March 31, 2010 ($ in millions) Cash and Cash Equivalents $ 908 Cash Associated with Joint Ventures 264 Discretionary Cash $ 644 Stable cash balance which will grow upon receipt of EPC 1 arbitration and LogCAP award fees. KBR intends to use discipline and balance in putting cash to work. 11

14 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 12

15 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 13

16 We Deliver