2012 Goldman Sachs Global Industrials Conference

Transcription

1 2012 Goldman Sachs Global Industrials Conference Sue Carter Executive Vice President and CFO Roy Oelking Group President, Hydrocarbons Zac Nagle Vice President, Investor Relations & Communications November 13, 2012

2 Forward Looking Statements 2 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 22, 2012, 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. Note: All statements reflected on this presentation are as of KBR s 3Q12 earnings conference call on October 25, 2012

3 KBR A Leading Global E&C Provider Revenue: Full Year $9.3 Billion Backlog: September 30, $14.8 Billion Headquarters in Houston, Texas ~27,000 employees; 70+ countries KBR is a global engineering, construction, and services company supporting the energy, hydrocarbons, government services, minerals, civil infrastructure, power, industrial, and commercial markets. 3

4 KBR s Global Footprint Edmonton Ontario Calgary Chicago Salt Lake City Charlotte Raleigh Birmingham Wilmington Arlington Atlanta Monterrey Houston Mobile MMM Leatherhead Gothenburg Greenford Frankfurt Algiers Baku Baghdad Dammam Dhahran Moscow Atyrau Kuwait City Doha Dubai Abu Dhabi New Delhi Beijing Lagos Luanda Singapore Jakarta Rio De Janeiro Buenos Aires Johannesburg Perth Brisbane Adelaide Sydney Canberra Melbourne 4

5 KBR s Three Business Groups 5 Gas Monetization LNG FLNG GTL Oil & Gas Offshore Onshore Pipelines Downstream Refining Petrochemicals Biofuels Fertilizers Technology Refining Petrochemicals Syngas Coal Gasification Hydrocarbons Infrastructure, Government & Power N.A. Government & Logistics (NAGL) U.S. Federal Government Department of Defense International Government, Defence & Support Services (IGDSS) U.K. Ministry of Defence Middle East Asia Pacific (APAC) Infrastructure Transportation Water Facilities Minerals Coal, Iron Ore Base Metals Material Handling Power & Industrial Power Pulp & Paper Industrial Manufacturing Construction Refining Chemicals Oil & Gas Power Services Canada Operations Oil Sands Mining Gas Treating Building Group Life Sciences and Education Government Buildings Healthcare General Industrial & Aerospace Food & Beverage Industrial Services Refining & Chemicals Oil & Gas Power Pulp and Paper

6 3Q12 Review - KBR Revenue, excluding LogCAP, up 2% year-over-year Job income margins of 15.6% compared to 11.6% year-over-year On an adjusted Non-GAAP basis*, earnings per diluted share of $0.65 compared to $0.62 year-over-year Backlog of $14.8 billion compared to $11.7 billion year-over-year FY12 earnings per diluted share guidance unchanged at $2.60 to $2.80, excluding the impairment charge* * See GAAP to Adjusted Non-GAAP Reconciliation Tables at the end of this presentation 6 Note: All statements reflected on this slide are as of KBR s 3Q12 earnings conference call on October 25, 2012

7 Operating Highlights Continued strength in operating performance Strong project execution Robust pipeline of project opportunities currently involved in 19 Hydrocarbon studies, pre-feeds and FEEDs, each with significant contract dollar potential for KBR Maintaining focus on corporate cost controls and support function execution 7

8 Hydrocarbons Gas Monetization and Oil & Gas Current Gas Mon Projects Progressing Gorgon LNG Trains 1-3 Skikda LNG Escravos GTL Ichthys LNG EPC Expanding Share of Wallet for Oil & Gas Pursuing EPC projects SARB project ZADCO project Shah Deniz project 8 Good Investment of LNG pre-feeds and FEEDs Gorgon Train 4 Pre-FEED with expected FEED transition Browse EPC bids submitted Mozambique FEED tenders submitted Kitimat open book tendering process Pluto Expansion Trains Tanzania pre-feed U.S. Gulf Coast pre-feed with FEED option 1 additional global pre-feed (TBA) Opportunities in GTL in the U.S. FLNG Opportunities FLNG Studies for Hoegh LNG Australia Israel GDF SUEZ Bonaparte Oil & Gas Geographically FEED award for FPSO topsides and hull in Angola Activity recovering in U.S. Gulf of Mexico Caspian Region North Sea Australia Brazil (GVA)

9 Hydrocarbons Downstream and Technology 9 U.S. Shale Gas Opportunities Awarded design, construction and technology for ethylene furnace for INEOS Awarded FEED for fertilizer complex for Ohio Valley Resources Awarded Purifier technology package for Iowa Fertilizer Company Tracking 12 different ammonia projects in U.S. Middle East Remains Robust for Downstream KBR-AMCDE joint venture Sadara Petrochemical Complex PMC Jazan Refinery FEED substantially complete with EPC packages out for bid KBR awarded FEED for Gasifier unit Ethylene Project in Uzbekistan Recently awarded ~ $120 million technology and EPC support contract Utilizes KBR s SCORE technology Growth in Technology Continue to see strong bookings and significant revenue and job income growth Technology Inroads in China & India Doubled headcounts in offices during 2011 in Beijing, China and Delhi, India Strong suite of technologies Advanced Catalytic Olefins (ACO ) Veba Combi-Cracker (VCC) Transport Gasifier (TRIG ) Selective Cracking Optimum Recovery (SCORE ) Ammonia Technology (Purifier ) Residuum Oil Supercritical Extraction (ROSE )

10 Services Canada Operations Strong across variety of markets: Turnarounds / maintenance Module fabrication Construction projects in Alberta Oil Sands Gas processing projects in Western Canada Client camp support Booked approximately $750 million in backlog in 2Q12 from: Module fabrication work Turnaround work Gas processing work Proposals outstanding in excess of $1 billion Building Group Strong multi-family residential and manufacturing construction $301 million booked into backlog last two quarters Healthcare and higher education spending remains slow U.S. Construction Prospect list growing Currently have approximately $3 billion in identified pursuits through end of 2013 Industrial Services Steady and consistent performance Promising opportunities in Middle East 10

11 Infrastructure, Government & Power North American Government & Logistics Strong bids outstanding with diverse base U.S. Army, Navy, and Air Force Army Corps of Engineers Department of State Field camp support Awarded EAGLE program by U.S. Army Material Command Awarding of projects progressing slowly International Government, Defence & Support Services Diversification strategy from contingency operations Non-military clients Training (military & non-military) Expeditionary life support services Back office services Equipment facilitation Infrastructure Stable, strong market in Australia Expanded opportunities in Middle East market (Qatar & Saudi Arabia) More optimism in U.S. Minerals New management team headquartered in Australia Several early-stage studies in progress for large capital projects Currently working on several projects for Rio Tinto Global mining companies examining capital expenditures Power & Industrial Air quality & combined cycle opportunities still strong Anticipate significant capital expenditures over next several years Several large bids outstanding expected to be awarded in next 9 months 11

12 12 KBR Financials and Backlog

13 3Q12 Review - KBR Revenue, excluding LogCAP, up 2% year-over-year Job income margins of 15.6% compared to 11.6% year-over-year On an adjusted Non-GAAP basis*, earnings per diluted share of $0.65 compared to $0.62 year-over-year Backlog of $14.8 billion compared to $11.7 billion year-over-year Corporate G&A of $56 million compared to $61 million year-over-year Cash and equivalents of $846 million compared to $690 million year-over-year FY12 earnings per diluted share guidance unchanged at $2.60 to $2.80, excluding the impairment charge* * See GAAP to Adjusted Non-GAAP Reconciliation Tables at the end of this presentation Note: All statements reflected on this slide are as of KBR s 3Q12 earnings conference call on October 25,

14 Backlog Performance Index /30/2012 Revenue Backlog Job Income Backlog Continued focus on job income backlog: Up 34% from December 31, 2011 Up 104% since December 31,

15 Job Income Margins Improving 13.8% 12.0% 11.2% First Nine Months 2010 First Nine Months 2011 First Nine Months

16 Tax Rate Improvement Over Time 80% 70% 60% Tax Percentage 50% 40% 30% 20% 10% 0% Nine Months 2012 Effective Tax Rate Effective Tax Rate Excluding Discrete Items Note: Nine Months 2012 ETR includes the 3Q12 $178 million goodwill impairment 16

17 Strong Corporate G&A Cost Control $240 $230 $220 Corporate G&A $ in Millions $210 $200 $190 $180 $170 $160 $ Guidance* *Note: ERP spending guidance reflective of $20-$25 million as provided in April 2012 ERP Spend 17

18 Investment Thesis Fundamentally strong, global growth company with diverse portfolio of businesses Multiple platforms for acceleration of new orders across global end markets; strategically placing bets on a number of large opportunities through pre-feeds and FEEDs Driving higher job income and job income margins in the P&L and backlog Strong focus on corporate G&A cost control and tax planning Patience, prudence and discipline in managing KBR s businesses 18

19 GAAP to Non-GAAP Reconciliation Tables The presentation of non-gaap measures is intended to enhance the usefulness of financial information by providing measures which KBR management uses internally to evaluate our performance on a comparable basis. Presented below are reconciliations of the reported GAAP results to the non-gaap measures. 19

20 Reconciliation Tables Reconciliation of EPS Adjusted for Non-cash Goodwill Impairment in 2012 and Discrete Tax Benefits in 2011 (Millions, except per share data) (Unaudited) Three Months Ended September 30, Adjusted net income attributable to KBR reconciliation: Net income attributable to KBR as reported $ (81) $ 185 Impairment of goodwill - excluded from income Less: Discrete tax benefits associated with Barracuda-Caratinga project and reduction of deferred tax liabilities associated with an unconsolidated joint venture in Australia - excluded from income - (92) Adjusted net income attributable to KBR Adjusted diluted weighted average common shares outstanding reconciliation: Reported diluted weighted average common shares outstanding Adjustment for dilutive stock options and shares 1 - Adjusted diluted weighted average common shares outstanding Adjusted diluted earnings per common shares reconciliation: Diluted EPS as reported $ (0.55) $ 1.22 EPS impact of impairment of goodwill - excluded from income Less: Discrete tax benefits associated with Barracuda-Caratinga project and reduction of deferred tax liabilities associated with an unconsolidated joint venture in Australia - excluded from income - (0.60) Adjusted diluted EPS

21 Reconciliation Tables Reconciliation of EPS Adjusted for Non-cash Goodwill Impairment in 2012 and Discrete Tax Benefits in 2011 (Millions, except per share data) (Unaudited) Nine Months Ended September 30, Adjusted net income attributable to KBR reconciliation: Net income attributable to KBR as reported $ 114 $ 390 Impairment of goodwill - excluded from income Less: Discrete tax benefits associated with Barracuda-Caratinga project and reduction of deferred tax liabilities associated with an unconsolidated joint venture in Australia - excluded from income - (92) Adjusted net income attributable to KBR Adjusted diluted weighted average common shares outstanding reconciliation: Reported diluted weighted average common shares outstanding Adjustment for dilutive stock options and shares - - Adjusted diluted weighted average common shares outstanding Adjusted diluted earnings per common shares reconciliation: Diluted EPS as reported $ 0.76 $ 2.55 EPS impact of impairment of goodwill - excluded from income Less: Discrete tax benefits associated with Barracuda-Caratinga project and reduction of deferred tax liabilities associated with an unconsolidated joint venture in Australia - excluded from income - (0.60) Adjusted diluted EPS

22 Reconciliation Tables 22 Reconciliation of Effective Tax Rate as Calculated to Adjusted Effective Tax Rate Excluding Non-cash Goodwill Impairment (Millions, except per share data) (Unaudited) Three Months Ended September 30, 2012 Numerator for effective tax rate for GAAP and adjusted effective tax rate: Provision for income taxes as reported $ 45 Adjusted income (loss) before income taxes and noncontrolling interests reconciliation (denominator for effective tax rate reconciliation): Income (loss) before income taxes and noncontrolling interests as reported $ (15) Impairment of goodwill excluded from income before income taxes and noncontrolling interests 178 Adjusted income before income taxes and noncontrolling interests 163 Effective tax rate calculation: Provision for income taxes as reported $ 45 Income (loss) before income taxes and noncontrolling interests as reported (15) Calculated effective income tax rate -300% Adjusted effective tax rate calculation: Provision for income taxes as reported $ 45 Adjusted income before income taxes and noncontrolling interest - excluding impairment of goodwill 163 Calculated adjusted effective income tax rate 28% Calculated difference between effective tax rate and adjusted effective tax rate: Effective tax rate impact of excluding impairment of goodwill from income before income taxes and noncontrolling interests 328%

23 Proud History