Credit Suisse Engineering & Environmental Services Conference

Transcription

1 Credit Suisse Engineering & Environmental Services Conference Bill Utt Chairman, President, and CEO Cedric Burgher Senior Vice President and CFO June 2007

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 forwardlooking statements. Many of these factors cannot be controlled or predicted. These risks and other factors include those described under Risk Factors in KBR s Registration Statement on Form S-4 filed with the U.S. Securities and Exchange Commission on March 2, 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. 1

3 KBR: A Leading Global Engineering & Construction Service Provider $12.0 Billion Backlog at 3/31/07 Backlog Headquarters: Houston, TX FY2006 Revenue: $9.6 Billion Ventures, 5% Other E&C, 11% Other G&I, 33% Operating History: 100+ years Employees: 56,000+ G&I-Middle East, 21% E&C-Gas Monetization, 29% Engineers: 4,000+ Countries: 45+ Three Operating Segments: Revenue Energy & Chemicals (E&C) $11,906 $8,863 $1,870 $1,955 $10,146 $2,170 $9,633 $1,987 Government & Infrastructure (G&I) Ventures $7,454 Extensive Service Capabilities: $3,604 $3,136 E&C Gas Monetization $2,274 $1,706 $253 $223 $304 $5,966 $5,262 $1,486 $898 * * * * G&I Middle East Other E&C Other G&I 2 Engineering, procurement, construction, commissioning and start-up (EPC-CS) to the global oil & gas and petrochemical industries Defense, logistics, contingency support and infrastructure-related services * Not adjusted for Ventures segment breakout

4 Investment Highlights Global market leader in oil and gas (including LNG/GTL) engineering, construction and defense services Compelling long-term growth opportunities in energy, petrochemicals, defense and infrastructure Best-in-class technical expertise across business lines Diverse, blue-chip client base Balanced project portfolio Focus on risk management and risk adjusted returns Improving financial performance and strong balance sheet 3

5 Strategic Initiatives Improve risk/return profile and achieve Best-in-Class Risk Awareness in project pursuits Grow the North American industrial services and construction business to historic levels Supplement existing LNG/GTL sales activities by building on legacy refining and petrochemicals expertise Build on LogCAP III and Allenby & Connaught positions to grow Government services business Leverage our leading technology portfolio Continue to focus on overhead reductions Improve balance sheet efficiency through strategic deployment of excess cash 4

6 KBR s Global Footprint: Well Positioned for Growth Key Growth Drivers Arlington Greenford Leatherhead Energy Supply / Demand Imbalance Houston Monterrey Dubai LNG and GTL Business Characteristics Jakarta Global - Comprehensive expertise coupled with local presence Large - Multi-billion dollar projects Complex - Increasingly in remote locations; Multi-year projects Singapore Key Locations Energy & Chemicals ( Denotes High-Value Engineering Center ( HVEC )) Government & Infrastructure Region With Considerable KBR Activity 5 Numerous Offices Refining and Petrochemical Capacity Geographically Remote Energy Resources Homeland Security Troop Support

7 Energy & Chemicals

8 E&C Services Addressing the Full Facility Lifecycle Hydrocarbon Resources Resource Planning Project Definition Execute Operate & Maintain Monetized Resources Feasibility Studies Alternative Evaluations Conceptual Studies Safety & Environmental Assessments Technology Packages Front-end Engineering Design Optimization (1) EPC-CS Cost Estimates (1) EPC-CS (2) EPCm Program and Project Management Modifications Mature Facility Optimization & Management Life Extensions and Rebuilds (1) Engineering, Procurement, Construction, Facility Commissioning and Start-up. (2) Engineering, Procurement and Construction Management. 7

9 KBR: The Leading LNG Contractor (Billion cubic meters) Worldwide Natural Gas Demand Gas Monetization Investment Projected Capital Investment Through 2020 ($ in billions) +31% Growth 3,245 3,643 Total: $250 billion $200 2,784 $ E 2015E Source: International Energy Agency (IEA). GTL Source: Cambridge Energy Research Associates (CERA). LNG KBR Plays a Critical Role Throughout the LNG Value Chain Exploration Production Liquefaction Shipping Storage Regas Distribution / Pipelines 8

10 Broad Energy & Chemicals Expertise KBR Capabilities Market Opportunity OIL & GAS Onshore production facilities Pipelines Offshore fixed platforms / FPSOs / SEMIs Global Oil and Gas Demand (Million tons of oil equivalent) 6,242 2,302 3, % Growth 9,444 3,869 5, year history 2004 Oil Gas 2030 PETRO- CHEMICALS / SYNGAS Petrochemical facilities 800+ petrochemical projects completed Syngas licensor for 200+ ammonia plants ~30% of global greenfield ethylene capacity since 1986 Ethylene Capacity (Thousands of metric tons) 122, % Growth 154, ROW Middle East REFINING EMERGING MARKETS 50+ greenfield refineries completed Brownfield projects Retrofits Upgraders 200+ hydroprocessing, fluid catalytic cracking and clean fuel projects Developing new technologies Coal gasification CO 2 sequestration Sasol SUPERFLEX (high yield propylene technology) Source: International Energy Agency (IEA) and SRI Consulting. Global Oil Refining Capacity (Million barrels per day) 84 Global Coal Production (Million tons) , % Growth +59% Growth 8,

11 Major Awards Drive Significant Backlog Growth BP Tangguh LNG (Indonesia) Yemen LNG (Yemen) E&C Backlog ($ in millions) 2004 to Q107 CAGR Total E&C: 37% Gas Monetization: 151% $2,000MM Scope of Service: EPC-CS Orlando Coal Gasifier (USA) $2,400MM Scope of Service: EPC-CS Pearl GTL (Qatar) $5,437 $1,511 $5,713 $1,700 $4,799 $1,132 $275 $130 $150 $350MM (TIC) Scope of Service: Technology & EP Yanbu Export Refinery (Saudi Arabia) $1,000MM Scope of Service: FEED, PMC & EPCm Saudi Kayan Olefins Project (Saudi Arabia) $2,349 $1,462 $3,651 $3,883 $3,517 $444 $443 $110MM Scope of Service: FEED & PMC $190MM Scope of Service: EPCm * * * Q107 E&C Gas Monetization E&C Offshore E&C Other Note: Dollar figures reflect total contract value and do not necessarily reflect revenue attributable to KBR. Project location noted in parentheses. * Not adjusted for Ventures segment breakout 10

12 Government & Infrastructure

13 World s Largest Government Services Provider Key Business Drivers Overseas Force Sustainment A Stable Half Trillion Dollar Market U.S. / U.K. Defense Expenditures ($ in billions) $607 $544 $74 $70 CAGR: 8.6% $677 $696 $76 $76 $474 $533 $601 $620 U.K. MoD Outsourcing DoD MoD Source: DoD Comptroller website MoD - U.K. MoD website. Shift to Flexible Deployment Growing Outsourcing Trend With Growing Outsourcing Component DoD O&M Spending ($ in billions) $213 $188 CAGR: 8.9% $240 $ Source: DoD Comptroller website. 12

14 LogCAP III Unmatched Military Support Experience COUNTRIES 8 MANAGED WORKFORCE 50,000+ MEALS SERVED 600MM (1) 1ST CONTINGENCY CONTRACT 1994 BOOTS ON GROUND 200,000+ TRUCK MILES 303MM (2) Ice Rations & Water Equipment/Tools/Supplies Fuel (Packaged & Bulk) Construction Material Ammo Repair Parts Joint Distribution Center Forward Re-Distribution Point Maintenance Org./Direct Operations & Maintenance Fuel Water Billeting Laundry Latrines Showers Fire Fighting Pest Control Ice Distribution Waste Removal Mail Distribution Power Generation Operation & Maintenance Movement Control Heating, Ventilation & A/C Maintenance/Recovery Moral, Welfare & Recreation Material Handling Equipment Dining Facilities Admin. Center Line Haul (Bulk Fuel/HET/Flatbeds) 13 (1) (2) Since Since Corps Logistics Support Services LOGISTICS SUPPORT Theater Transport Mission BASE CAMP SUPPORT

15 G&I New Project Awards Diversifying Backlog Allenby & Connaught AFCAP III G&I Backlog ($ in millions) $7,803 $16.5B (1) Construction and O&M $820MM (2) Contingency Logistics $5,152 $3,066 $6,536 $2,543 DHS Nationwide Contingency Response USAREUR Support Balkans $4,743 $1,732 $2,139 $1,079 $1,220 $883 $2,128 $1,305 $3,658 $2,773 $1,708 $390MM (2) Contingency Logistics $1.25B (2) Operations & Maintenance * * * Q107 G&I Other G&I DML G&I Middle East (1) Reflects contract value over 35 years; current backlog reflects only 5 years. (2) Estimated value of Indefinite Quantity Contract. (1) Estimated * Not value adjusted of Indefinite for Ventures Quantity segment Contract breakout 14

16 Ventures

17 Ventures New business unit created to provide independent assessment and accountability for project investments Makes and manages equity investments on a stand-alone basis No longer participating in project equity investments that would expose us to merchant risk. EBIC 2006 Heavy Equipment Transport (HET) 2001 Allenby & Connaught

18 Financial Overview

19 KBR Revenue & Backlog ($ in millions) $11,906 Revenue ($ in millions) Backlog $13,516 $11,963 $10,146 $9,633 $2,246 $2,251 $10,589 $7, * 2005* 2006* Q106 Q107 G&I E&C Ventures 2004* 2005* 2006* Q107 G&I E&C Ventures 2006 Revenue by Geography 3/31/2007 Backlog by Contract Type ($ in billions) Other $2.6 U.S. $1.4 Fixed Price $4.3B 27% 14% 36% 12% 47% 64% U.K. $1.1 * Not adjusted for Ventures segment breakout Iraq / Kuwait $ Cost- Reimbursable $7.7B

20 Items Impacting Historical Results Key Items Impacting Results Adjusted Operating Income Less Minority Interest ($ in millions) $485 Nigeria GTL Project and offshore project losses $ % Write-downs on government and infrastructure projects and BRC $ % 3.8% 3.6% Restructuring charge and gains on sale of assets / investments 1.8% 2004 $ Q107 Adj. Operating Income Less Minority Interest Adj. Operating Income Margin GAAP Operating Income ($ in millions) Q107 Total ($357) $455 $246 $62 %Margin (3.0%) 4.5% 2.6% 2.8% Note: A reconciliation to reported operating income is provided in the Appendix of this presentation. 19

21 Balance Sheet Supports Growth Opportunities Unlevered capital structure Significant liquidity to pursue prospects and drive continued growth 3/31/07 ($ in millions) Available Cash 817 Cash Associated with JVs 470 Total Cash and Cash Equivalents 1,287 Current Maturities on Long-Term Debt 15 Long-Term Debt 1 Total Debt 16 Strategic Uses of Cash Opportunistic Acquisitions Technology Investments/Acquisitions Equity Investments in Projects Return Capital to Shareholders Minority Interest 28 Shareholders' Equity 1,817 Total Capitalization 1,861 Total Debt / Total Capitalization 0.9% 20

22 Investment Highlights Global Market Leader Compelling E&C Growth Opportunities Strong Management Team Best-in-Class Technical Expertise Improving Financial Profile Blue-Chip Client Base Stringent Risk Management Balanced Project Portfolio 21

23 Appendix

24 Financial Reconciliation ($ in millions) Q107 Reported Revenue $11,906 $10,146 $9,633 $2,251 ( ) Barracuda-Caratinga & Belanak Projects Adjusted Revenue $11,661 $10,050 $9,605 $2,251 Reported Operating Income ($357) $455 $246 $62 % Margin (3.0%) 4.5% 2.6% 2.8% Losses on Barracuda-Caratinga FPSO Projects $407 $8 $19 Losses on Belanak FPSO Project 29 Charge Related to Escravos, Nigeria GTL Project 157 Charge Related to the Brown & Root-Condor Spa JV 20 Write-down on Infrastructure and Government Projects (1) 94 Restructuring Charge 40 5 Impairment on Equity Investments 68 Gain on Sale & Cash Distribution From Dulles Greenway Toll Road (96) Other Gains on Sales of Assets (25) Total $570 ($113) $249 $20 Adjusted Operating Income $213 $342 $495 $82 % Margin 1.8% 3.4% 5.2% 3.6% Minority Interest (25) (41) (10) (10) Adj. Operating Income Less Minority Interest $188 $301 $485 $72 % Margin 1.6% 3.0% 5.0% 3.2% (1) Includes write-down of infrastructure projects in Europe and Africa and a government project in Afghanistan. 23

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