Download - Credit Suisse 2013 Conference Handouts.ppt
2013 Credit Suisse Engineering & Construction Conference
June 6, 2013Bill Utt – Chairman, President and CEOSue Carter – Executive Vice President and CFOZac Nagle – Vice President, Investor Relations & Communications
Forward Looking StatementsThis 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 20, 2013, 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 1Q13 earnings conference call on April 26, 2013
2
KBR – A Leading Global E&C Provider
Revenue: Full Year 2012 - $7.9 Billion
Backlog: March 31, 2013 - $14.2 Billion
Headquarters in Houston, Texas
~27,000 employees; 70+ countries
KBR is a global engineering, construction, and services company supporting the energy, hydrocarbons, power, industrial, civil infrastructure, minerals, government services and commercial markets.
3
KBR’s Global Footprint
4
Edmonton
Calgary
WilmingtonArlington
RaleighCharlotte
AtlantaHouston
Birmingham
MMM
Rio De Janeiro
Monterrey
Buenos Aires
GothenburgGreenford
Leatherhead Frankfurt
Algiers
MoscowAtyrau
BakuBaghdad
Kuwait City
DubaiAbu Dhabi
Dhahran
Lagos
Luanda
Johannesburg
New Delhi
Beijing
SingaporeJakarta
PerthAdelaide
MelbourneCanberra
SydneyBrisbane
Ontario
ChicagoSalt Lake City
DohaDammam Mobile
KBR’s Three Business Groups
LNG FLNG GTL
Gas Monetization
Offshore Onshore Pipelines
Oil & Gas
Refining Petrochemicals Biofuels Fertilizers
Downstream
Refining Petrochemicals Syngas Coal Gasification
Technology
5
Infrastructure, Government & Power Services
Infrastructure Transportation Water Facilities
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)
Power & Industrial Power Pulp & Paper Industrial Manufacturing
Minerals Coal, Iron Ore Base Metals Material Handling
Construction Refining Chemicals Oil & Gas Power
Industrial Services Refining & Chemicals Oil & Gas Power Pulp and Paper
Canada Operations Oil Sands Mining Gas Treating
Building Group Life Sciences and Education Government Buildings Healthcare General Industrial & Aerospace Food & Beverage
Hydrocarbons
Revenue at $1.9 billion, down 7% year-over-year
Operating Income of $133 million, up 19% year-over-year
Earnings per diluted share of $0.59 compared to $0.61 year-over-year
Backlog of $14.2 billion compared to $15.8 billion year-over-year
1Q13 Review - KBR
6
Note: All statements reflected on this slide are as of KBR’s 1Q13 earnings conference call on April 26, 2013
7
Hydrocarbons – Gas Monetization and Oil & Gas
Current Gas Mon Projects Progressing Gorgon LNG Trains 1-3 Skikda LNG Escravos GTL Ichthys LNG EPC
Good Investment of LNG pre-FEEDs and FEEDs Gorgon Train 4 Pre-FEED with expected FEED
transition Kitimat FEED Tanzania pre-FEED Recently awarded Petronas LNG FEED
Opportunities in GTL in the U.S.
Expanding Share of Wallet for Oil & Gas Expansion opportunities at Shah Deniz 2 project in
Caspian for EPCm for both onshore and offshore
FLNG Opportunities FLNG Study for Hoegh LNG GDF SUEZ Bonaparte
Oil & Gas Geographically FEED for FPSO topsides and hull in Angola Recently awarded topsides design for Chevron
Lianzi development Activity recovering in U.S. Gulf of Mexico Caspian Region North Sea Australia Brazil (GVA)
8
Hydrocarbons – Downstream and TechnologyU.S. Shale Gas Opportunities KBR last week signed an EPC contract for an
ammonia plant in excess of $250 million to be constructed in North America
Recently awarded ~$600 million Dyno Nobel ammonia EPC and technology project in Louisiana
Recently awarded ~$100 million for EPC for two new ethylene furnaces using KBR’s SCORE™ technology
Working on FEED for fertilizer complex for Ohio Valley Resources
Design, construction and technology for ethylene furnace for INEOS
Middle East Remains Robust for Downstream KBR-AMCDE joint venture increasing work volumes Sadara Petrochemical Complex PMC Yanbu Export Refinery Jazan Refinery FEED for Gasifier unit
Ethylene Project in Uzbekistan ~ $120 million technology and EPC support contract Utilizes KBR’s SCORE™ technology
Growth in Technology Continue to see strong bookings across portfolio of
technologies, including ammonia, VCC, and ethylene
20% job income growth year-over-year
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™)
9
ServicesCanada 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 $1 billion in backlog in 2012 from: Module fabrication work Turnaround work Gas processing work
Recently awarded: 3-year turnaround services contract for Suncor
Energy’s refinery in Edmonton, AB, Canada Off-site modularization and pipe fabrication for
Shell Canada’s Quest Carbon Capture and Storage project
Industrial Services Steady and consistent performance Successful expansion into Saudi Arabia with
SATORP to provide maintenance services at its Jubail refinery over the next seven years
Building Group Challenging by stabilizing business environment Project awards grew 50% in 2012 compared to 2011 Stronger multi-family residential and industrial
manufacturing markets Healthcare spending remains slow
U.S. Construction 3 Gulf Coast projects execution consistent with
project provisions in fourth quarter 2012 Bidding only reimbursable work for construction only
projects
10
Infrastructure, Government & PowerNorth American Government & Logistics Slower award environment due to government budget
uncertainties and sequestration Awarded $127 million contract for Djibouti Base
Operations Services Awarded $54 million LogCAP IV task order for
services to U.S. forces in Kingdom of Bahrain EAGLE program by U.S. Army Material Command Diverse portfolio of pursuits (U.S. Army, Navy, and Air
Force, Army Corps of Engineers, Department of State)
International Government, Defence & Support Services Recently awarded contract by the London Mayor’s
Office for Policing and Crime to provide facilities management integrator services
Diversification strategy from contingency operations Training (military and non-military) Expeditionary life support services Back office services Equipment facilitation
Power & Industrial Air quality & combined cycle opportunities still strong Recently awarded EPC for $460 million Ghent
Baghouse project for Kentucky Utilities Currently have 2 multi-$100-million projects out for
bid Anticipate bidding two additional multi-$100-million
later in 2013
Infrastructure Expanded opportunities in Middle East market
(Qatar, Saudi Arabia, Oman, UAE and Iraq) Slower spending for government-sponsored projects
in Australia and the United States
Minerals Challenged environment relative to new
opportunities Several early-stage studies in progress for large
capital projects Currently working on several projects for Rio Tinto
11
Well Positioned for North AmericaLNG and GTL Opportunities British Columbia, Canada
Kitimat FEED Recently awarded Petronas LNG FEED In discussions on another potential LNG project
United States Selectively evaluating 5-6 LNG export terminals Potentially 2 GTL projects in the Gulf Coast
area KBR’s experience on 2 of the 3 world-class GTL
facilities positions KBR well (Pearl GTL and Escravos GTL)
Technology Awards & Opportunities 3 ammonia Purifier™ technology awards over the past
year Tracking approximately 12 ammonia/urea prospects Tracking approximately 8 ethylene prospects
Downstream Awards & Opportunities KBR last week signed an EPC contract for an
ammonia plant in excess of $250 million to be constructed in North America
Recently awarded ~$600 million Dyno Nobel ammonia EPC and technology project in Louisiana
Working on FEED for fertilizer complex for Ohio Valley Resources
Recently awarded ~$100 million EPC contract for two new ethylene furnaces using KBR’s SCORE™ technology
Design, construction and technology for ethylene furnace for INEOS in Texas
Four ammonia-related EPC and three ethylene-related EPC prospects potentially in 2013
Several refining and biofuel prospects in 2013
Power Awards & Opportunities Recently awarded EPC for $460 million Ghent
Baghouse project for Kentucky Utilities Currently have 2 multi-$100-million projects out for bid Anticipate bidding two additional multi-$100-million
later in 2013
Revenue at $1.9 billion, down 7% year-over-year
Job income margins of 15.3% compared to 12.5% year-over-year
Operating income of $133 million, up 19% year-over-year
Corporate G&A of $52 million compared to $55 million year-over-year
Earnings per diluted share of $0.59 compared to $0.61 year-over-year
Cash and equivalents of $904 million compared to $837 million year-over-year
Backlog of $14.2 billion compared to $15.8 billion year-over-year
FY13 earnings per diluted share guidance unchanged at $2.45 to $2.90
1Q13 Review - KBR
13
Note: All statements reflected on this slide are as of KBR’s 1Q13 earnings conference call on April 26, 2013
Backlog
14
Continued focus on job income backlog:
Down 4% from December 31, 2012
Up 100% since December 31, 2006
80
90
100
110
120
130
140
150
160
170
180
190
200
210
220
2006 2007 2008 2009 2010 2011 2012 3/31/2013
Perf
orm
ance
Inde
x
Revenue Backlog Job Income Backlog
Job Income Margins Improving
15
First Quarter 2011 First Quarter 2012 First Quarter 2013
15.3%
12.0% 12.5%
Strong Corporate G&A Cost Control
16
ERP Spend*Note: 2013 Guidance reflects mid-point of corporate G&A guidance of $230 million to $250 million, which includes between $30 million to $40 million expected ERP spending (midpoint of $35 million used for graph)
$150
$160
$170
$180
$190
$200
$210
$220
$230
$240
$250
2007 2008 2009 2010 2011 2012 2013 Guidance*
Cor
pora
te G
&A
$ in
Mill
ions
Investment Thesis
Fundamentally strong, global growth company with diverse portfolio of businesses
Well positioned for growing opportunities in North America
Multiple platforms for acceleration of new orders across global end markets; strategically placing bets on a number of large opportunities through 15 active 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
17