D.A. Davidson s Tenth Annual Engineering & Construction Conference

Transcription

1 D.A. Davidson s Tenth Annual Engineering & Construction Conference Bill Utt Chairman, President and CEO Sue Carter - Executive Vice President and CFO September 20, 2011 Page 1 of 19

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 24, 2011, 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 19

3 KBR A Leading Global E&C Provider» Revenue: Full Year $10.1 Billion; Fortune 500 Company #242 Full Year $12.1 Billion; Fortune 500 Company #193» Backlog: June 30, $12.0 Billion (76% reimbursable / 24% fixed-price)* June 30, $12.4 Billion (79% reimbursable / 21% fixed-price)*» Headquarters in Houston, Texas» 100+ years of operating history» ~35,000 employees; 65+ countries» Extensive service capabilities: KBR is a global engineering, construction, and services company supporting the energy, hydrocarbons, government services, minerals, civil infrastructure, power, industrial, and commercial markets. * 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 19

4 KBR s Global Footprint Houston Edmonton Calgary Wilmington Arlington Birmingham Monterrey MMM Raleigh / Charlotte Atlanta Gothenburg Greenford Moscow Leatherhead Frankfurt Atyrau Baku Algiers Baghdad Kuwait City Dhahran Dubai Abu Dhabi Lagos Angola Beijing New Delhi Singapore Jakarta Rio De Janeiro Brisbane Buenos Aires Johannesburg Perth Adelaide Sydney Canberra Melbourne Page 4 of 19

5 Hydrocarbons Market-leading position on 6 major LNG projects Ichthys FID expected fourth quarter of 2011 Kitimat FEED expected completion end of 2011 with FID in first half 2012 Pluto Expansion pre-fid services continuing Browse expected FEED completion for mid FID Gorgon 4 pre-feed finalized Anadarko Mozambique LNG pre-feed awarded Current large projects portfolio Skikda LNG approximately 80% complete Gorgon LNG execution is strong Page 5 of 19

6 Hydrocarbons Oil & Gas FEEDs being converted to detailed engineering, design, and implementation GOM: Big Foot; Jack & St. Malo North Sea: Quad West of Shetlands; South Arne West Africa: CLOV; Caspian: Chirag; Shah Deniz 2; Kashagan Western Australia: GDF SUEZ Bonaparte; Brazil: 8 Petrobras FPSOs; Strong level of global offshore activity Caspian and West Africa over next 18 months; Opened new offices in Kazakhstan and Angola Seeking to expand service offerings from engineering to project execution Page 6 of 19

7 Downstream Lobito 200,000 barrels-per-day refinery project FEED complete; working under EPCm bridging agreement Saudi Arabia projects progressing well Yanbu Export Refinery project - KBR s PMC team moving to site Ras Tanura Integrated project FEED completion and FID expected later this year Jazan Refinery FEED and PMC underway Aramco GES Plus awarded first work in 3Q11 North America BP/Husky Toledo refinery EPCm services 60% complete KiOR Inc. Biomass-to-Renewable crude facility awarded Page 7 of 19

8 Technology KBR develops new technologies that reduce cost while improving efficiency and safety. This allows KBR to offer customers unsurpassed value through a suite of technologies, including: Ammonia: Purifier ; Purifierplus ; KAAP ; KAAPplus Refining: Veba Combi-Cracking (VCC); ROSE ; FCC Coal Gasification: Transport Gasifier (TRIG ) Olefins: SCORE ; SUPERFLEX ; ACO Synthesis Gas: SMR; KRES Organic Chemicals: Aniline; KBR-Phenol; NExOCTANE Carbon Capture and Storage: Pre and Post-Combustion Capture; CO 2 Compression & Sequestration Page 8 of 19

9 North America Government & Defense LogCAP Updates and Outlook Expected 2011 revenue between $1.6 to $1.8 billion Assuming current 50,000 troop levels until the back half of 2011, with substantial ramp down by end of 2011 LogCAP III modified to cost-plus-fixed-fee Expect final award fee under LogCAP contract during third quarter of 2011 Awarded LogCAP IV contract for base life-support activities in Iraq for U.S. Department of State Other NAG&D Prospects Awarded by U.S. Central Commands for designbuild and construction projects for a $3.8 billion Multiple Award Task Order Contract (MATOC) Maintenance support and construction activities at U.S. military installations Short-listed on the $2.5 billion National Sciences Foundation Antarctica project Page 9 of 19

10 Infrastructure, Government, and Power Power & Industrial $450 million KBR award for Palm Beach Solid Waste Authority new stateof-the-art waste to energy facility Ramp-up in North America capital investment: up 10-15% year-over-year Infrastructure & Minerals Middle East infrastructure activity improving based on stabilized oil price; Doha Express Way award Minerals markets strengthening; Hope Downs 4 EPCm award and Roberts & Schaefer opportunities KBR awarded numerous Australian infrastructure projects in 2011 International Government & Defense Continued support for U.K. Ministry of Defence and NATO in Afghanistan; newly acquired NATO contract ramped up U.K. s Foreign and Commonwealth Office award Building on U.K. based logistics and life support and consultancy and training capabilities in Australia to expand services within the Asia-Pacific region Page 10 of 19

11 Services U.S. construction markets Now seeing the beginnings of a return of larger construction projects Chevron s Base Oil expansion project award Southern Company s Plant Scherer project award Increasing activity in Alberta oil sands region Building Group benefitting from strong sales activity in 2010; seven on-going major hospital projects Industrial Services Large DuPont construction, maintenance and services project has grown to 21 projects across three separate service product lines Increased turnaround work in Canada Page 11 of 19

12 KBR Financials and Backlog Page 12 of 19

13 Second Quarter 2011 Earnings Summary Revenue up 5% year-over-year excluding LogCAP revenue Operating income of $169 million, up 17% compared to the first quarter of 2011 Earnings per diluted share of $0.65 compared to $0.66 for second quarter of 2011 Cash flows from operating activities of $223 million for first six months of 2011; Cash and equivalents of $712 million on June 30, 2011 $2.4 billion of new work added to backlog during second quarter of 2011 Page 13 of 19

14 Strengthening Backlog Contributing to Margins 13.0% 12.0% 2011* 11.0% 2010 Job Income Margin 10.0% 9.0% % 7.0% % $8,000 $9,000 $10,000 $11,000 $12,000 $13,000 Revenue (in millions) *Note: Annualized based on First Six Months of 2011 Actual Reported financials from Form 10-Q dated July 27, 2011 Page 14 of 19

15 Strengthening Backlog Contributing to Margins 7.0% 2011* 6.0% 2010 Operating Income Margin 5.0% 4.0% 3.0% % % $8,000 $9,000 $10,000 $11,000 $12,000 $13,000 Revenue (in millions) *Note: Annualized based on First Six Months of 2011 Actual Reported financials from Form 10-Q dated July 27, 2011 Page 15 of 19

16 KBR s Backlog Methodology For long-term contracts, the amount included in backlog is limited to five years Only projects for actual awards where work scope is definitized are added to backlog IDIQ / MATOC style contracts are only added to backlog when awarded or definitized For projects where KBR acts solely in a project management capacity, only the PMC revenue is placed in backlog No owner-provided equipment and/or materials in KBR backlog Page 16 of 19

17 Cash Generation & Cash Deployment $549M $319M 2010 Business Cash Generation $941M Acquisitions & Licensing Arrangements $265M Share Repurchases & Dividends $120M CAPEX; Other Investing & Financing Activities $223M 6 Months 2011 Business Cash Generation $786M $164M MWKL $786M Acquisition $52M Share Repurchases & Dividends* $81M CAPEX; Other Investing & Financing Activities $712M 12/31/09 12/31/10 *Note: Share repurchase does not include the 10 million share repurchase announced on August 8, /30/11 Page 17 of 19

18 Working Capital Management Focused on balance sheet Cash neutral or greater on projects Balanced receivables and payables Process efficiencies Collecting on past disputes (EPC 1) Diligently working to resolve disputed withhold amounts Page 18 of 19

19 KBR Investment Thesis KBR is a catalyst driven growth company across a broad based and diverse series of businesses Optimism for acceleration in new orders around growth opportunities across markets Strong balance sheet with emphasis on cash management Patience, prudence, and thoughtfulness in managing KBR s cash balances Page 19 of 19

20 We Deliver