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Nasdaq: FWLT
Presented by: Ankit Chadha, Ellen Yang, Ken Chen & Nicu-Mihai Achihaei
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Agenda
Introduction Investment Thesis Company Breakdown Catalysts/Key Drivers Competitors Risks Valuation Question and Answer
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Company History
Formed in 1927 out of Power Specialty Company and Wheeler Condenser & Engineering Company
Incorporated in Canton of Zug, Switzerland of as 2008
Headquartered in Clinton, New Jersey
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Business Overview
Global engineering and construction contractor and power equipment supplier
Operates through two segments Global Engineering and Construction (E&C) Global Power Group (GPG)
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Investment Thesis
Proprietary technology Expansion into emerging markets (by geography and
sector) Hedged against rising input prices
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Global E&C
Designs and constructs leading-edge processing facilities Industries serviced include oil refining, power
generation, chemical/petrochemical, and pharmaceuticals Services include Consulting Design and Engineering Project management and control Procurement Construction/Commissioning and Start-up Operations and Maintenance
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Example E&C Project
Power generation upgradeESSO Sriracha Refinery, Thailand
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What is Flow-Through?
Two primary types of contracts: Cost-Reimbursable Contracts Fixed-Rate Contracts
Specialized Fixed-Rate Contract: Lump-sum Turnkey
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Flow-Through’s Impact on Top Line
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
2006 2007 2008 2009E 2010E 2011E
Flow-ThroughScope Revenue
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% of E&C Contracts by Type
83%
17%
Reimbursable
Fixed-Rate
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Delayed Coking
FWLT licenses “Selective Yield Delayed Coking” (SYDEC) to customers
One of the leading technologies in refinery residue upgrading
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Global Power Group
Offers full range of steam generator equipment, aftermarket products, and services to the power, industrial, and waste-to-energy sectors Leader in carbon reduction and fuel-flexible
combustion technology and the development of solutions to address carbon reduction
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% of GPG Contracts by Type
53%32%
15%
Fixed-RateLSTKReimbursable
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Products and Services
Circulating Fluid-Bed Steam Generators (CFB)
Pulverized Coal (PC) Steam Generator
Industrial Steam Generators
Auxiliary Equipment and Aftermarket Services
CFB for Lagisza, Poland Project
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Revolutionary New Advances
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What are the Advantages?
Circulating Fluid-Bed (CFB) steam generator with Flexi-Burn technology
Benefits Low emissions Fuel flexibility
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Revenue Generation
Sales, installation, and servicing of generators Maintains two noncontrolling equity interests Waste-to-energy project and wind farm project in
Italy Refinery/electric power generation project in Chile
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Global E&C and GPGRepresentative Clients
State-owned and multinational oil and gas companies Major petrochemical, chemical, and
pharmaceutical companies National and independent electric power
generation companies Government agencies
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Operating Revenue by Industry (2008)
Power Generation24%
Power Plant Operation and Maintenance
2%
Pharmaceutical1%
Oil and Gas28%
Chemical/Petrochemical22%
Oil Refining23%
Environmental0%
Other (net)0%
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Catalysts and Key Drivers - Global E&C
Unique Technologies Strengthening Macro-economic conditions Timing of Client Investment Long Term Energy Demand
Bio Kinetics Inc. (Feb 2008)
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Catalysts and Key Drivers – GPG
• New Technologies –Environmentally Friendly
• Power Plant Price Inflation• Entry into New
Geographic Markets
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Recent Contracts
10/13/09: Saudi Arabia: Expansion of an industrial wastewater
treatment plant 7/23/09: Australia: Power generation and water
treatment facilities 4/1/09: India 20 year agreement with BGR Boilers
Limited Pulverized coal steam generators to be
sold in India Multiple contracts within next five
years.
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Current Backlog
Asia43%
Europe22%
Middle East11%
Americas18%
Australasia6%
Global E&C Scope
Asia7%
Europe44%
Middle East5%
North America
33%
South America
11%
Global Power Scope
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Competitive Landscape
Profitability 13 weeks ending 2009-06-30 FWLT Fluor Jacobs IndustriesGross Profit Margin 16.8% 6.0% 13.7%Pre-tax Profit Margin 11.8% 5.3% 5.5%Net Profit Margin 9.3% 3.2% 3.5%Return on Equity 22.2% 5.8% 3.7%Return on Assets 4.1% 2.5% 2.2%
Valuation FY 10Price to Sales 0.9 0.4 0.5Price to Earnings 11.1 11.8 13.5Price to Book 1.5 1.30 1.27Price to Cash Flow 10.5 8.7 17.4
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Risks
Fixed Price Contracts Cyclical Greenhouse Copenhagen
Conference Dec 2009
ForEx Asbestos Claims
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Wrap-up
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Q&A
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Appendix Slides: Asbestos
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Appendix Slides: Asbestos
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Appendix Slides: Asbestos