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Credit Suisse 2008Engineering and Environmental
Services Conference
June 5, 2008
Bill Utt – Chairman, President, and CEO
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 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 26, 2008, final prospectus for its exchange offer dated March 27, 2007, 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.
KBR: A Leading Global Engineering & Construction Provider
Upstream
Downstream
Technology
Services
Government &Infrastructure
Ventures
1
FY 2007 Revenue: $8.7 Billion; EPS $1.79 (diluted)
89% International / 11% Domestic
Backlog at 3/31/08: $13.4 Billion
76% cost-reimbursable / 24% fixed-price *
Headquarters in Houston, Texas
100+ years of operating history
~52,000 employees (~5,000 engineers)
45+ countries
Extensive service capabilities:
Engineering, procurement, construction, commissioning and start-up (EPC-CS) to global oil, gas, petrochemical, and infrastructure customers
Defense, logistics, and contingency support for defense services
* For contracts that contain both fixed-price and cost-reimbursable components, KBR classifies the components as eitherfixed-price or cost-reimbursable according to the composition of the contract, except for smaller contracts that are characterized on the predominate component.
$-
$1.0
$2.0
$3.0
$4.0
$5.0
$6.0
$7.0
Q106 Q107 Q108
Back
log
($ b
illio
ns)
Upstream Business Unit
2
Strategic Growth OpportunitiesMaintain and expand gas monetization leadership
Expand Onshore/Offshore oil and gas opportunities
Leverage consulting expertise
Continue to enhance engineering and technical capabilities to meet expected future market growth
+ 65%
Key ProjectsPearl GTLEscravos GTL Yemen LNGTangguh LNGSkikda LNG Kashagan workNorth Rankin 2Pazflor FPSO TopsidesPluto Production Platform
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$1.0
$2.0
$3.0
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$6.0
Q106 Q107 Q108
Bac
klog
($ b
illio
ns)
Other Government & Infrastructure Middle East Operations
Government & Infrastructure Business Unit
3
Key ProjectsLogCAP III LogCAP IV (Awarded)Allenby & ConnaughtCENTCOMCONLOG Hope Downs DESScottish Water
Strategic Growth OpportunitiesLeverage capabilities and proven track record to capture more design and construction work for federal, state, and local governments
Portfolio diversification among defense services and non-defense branches of the U.S. Government
International geographic diversification among defense services
+ 122%+ 2%
+ 181%
- 14%
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$600
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$800
$900
Q106 Q107 Q108
Bac
klog
($ m
illio
ns)
+ 208%
Services Business Unit
4
Strategic Growth OpportunitiesGrow domestic construction capability through organic growth and acquisitions
Expand industrial services product offerings and geographic footprint
Expand and capture Canadian Oil Sands opportunities
Leverage existing Canadian fabrication capabilities to broaden scope of work supplied on KBR projects
Key ProjectsScotford Upgrader Expansion North West Upgrader projectsBassell chemical plantsTexas Instruments Campuses project Air Products Hydrogen facilityMMM Vessels business
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Q106 Q107 Q108
Back
log
($ m
illio
ns)
Downstream Business UnitStrategic Growth Opportunities
Continue leadership in Program Management Consultancy (PMC)
Capitalize on growing end markets
Leverage in-house and third party technology for expanded opportunities
Emerging market focus
5
Key ProjectsRas Tanura Integrated Project Yanbu Export RefinerySaudi Kayan Ethylene/Olefins facilityEBIC Ammonia plantMAN Ferrostaal AC Ammonia plant
- 42%
Technology Business UnitStrategic Growth Opportunities
Leverage intellectual property assets
Increase pull-through opportunities based on technology
Capitalize on licensing opportunities
Continue to invest in research and development
6
$-
$20
$40
$60
$80
$100
$120
Q106 Q107 Q108
Back
log
($ m
illio
ns)
+ 9%
Key ProjectsSUPERFLEX™ - Sasol SA KAAP™ - MAN Ferrostaal Ammonia plantSCORE™ - Lanzhou China plantNingbo Wanhua Polyurethanes Company aniline plant
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$700
$800
Q106 Q107 Q108
Bac
klog
($ m
illio
ns)
Ventures Business UnitStrategic Growth Opportunities
Invest capital and development expertise for pull-through service opportunities
Make/manage equity investments on a stand-alone basis
Investment accountability independent of services provided
Reduce portfolio merchant risk profile
7
Key ProjectsAspire Defence – Allenby & Connaught investment EBIC Ammonia project investmentAlice Springs-Darwin railway project investmentVarious road projects investments
+ 17%
KBR Investment Thesis
8
“Go To” Contractor
“Best-in-Class” Risk Awareness
Improving Financial Performance
Focus on Safety
Strategic Uses of Cash
“Go To” Contractor
9PM
C
FEED
EPC / EPCm
Logistics
Technology
Desi
gn /
Cons
ultin
g
EXECUTION
Yanbu Export Refinery;
Pearl GTL; Ras Tanura;
Multiple LNG Projects;
Skikda LNG; Tangguh LNG;
Yemen LNG; EBIC Ammonia Project
Ras Tanura; Pearl GTL;
Kashagan
ROSE™; SUPERFLEX™;
SCORE™; KAAP™; TRIG™
LogCAP III & IV;
CONCAP; CONLOG;
AFCAP; CENTCOM;
North Rankin 2;
Pluto Offshore Platform;
Pazflor FPSO Topsides;
Trans Caspian Oil & Gas Study
“Best-in-Class” Risk Awareness
10
Commercial Risk
Technical Risk
Legal Risk
Identification
Analysis
Measurement
Pricing
Management
Reporting
Improving Financial Performance
11
Recurring Business Unit Income* KBR Total Backlog
$8.0B
KBR Backlog
Q106 Q107 Q108 Q106 Q107 Q108
$10.7B
$13.4B
$117M$129M
$168M
Recurring Business Unit Income*
5.7%6.4%
6.7%
Percentages in boxes represent Recurring Business Unit Income Margins
* See Appendix for GAAP reconciliation
+ 10%
+ 30%
+ 34%
+ 25%
0.000.100.200.300.400.500.600.700.800.901.00
2006 2007 YTD 2008
Inci
dent
Rat
e
Recordable Incident Rate Lost Time Incident Rate
Focus on Safety
12
0.83
0.53
0.190.15
0.41
0.24
Total Recordable Incident Rate Total Lost Time Incident Rate(Shaded Areas Represent LogCAP III Portion)
Construction Industry Institute Rates2006 CII Recordable Rate 0.562006 CII Lost Time Rate 0.22
KBR Cash at 3/31/08 ($ in millions)
Total Cash & Equivalents 1,927 Cash Associated with JVs 358 Advanced Payment on a KBR Project* 231 LogCAP III Working Capital Requirements ~300Operating Cash Requirements ~100
Discretionary Cash 938
Announced Acquisition of BE&K, Inc. ~550
Strategic Uses of Cash
Balance Sheet Supports Growth Opportunities
Return Capital to Shareholders
Opportunistic Acquisitions
Equity Investments in Projects
Technology Investments / Acquisitions
13
* Advanced payments associated with a contract being executed by a wholly-owned subsidiary of KBR.
Investment Highlights
Global Market Leader
Best-in-ClassTechnical Expertise
Strong Management
Team
Blue-ChipClient Base
Improving Financial
Profile
Stringent Risk Management
Compelling Growth
Opportunities
Balanced Project Portfolio
14
Appendix - GAAP Reconciliation
Q106 Q107 Q108Total Business Unit Revenue 2,056$ 2,027$ 2,519$
Total Recurring Business Unit Income 117$ 129$ 168$
Items included in Business Unit IncomeGovernment & Infrastructure
Barracuda Additional Charge (15) - - Skopje Embassy Provision - (1) (12)
UpstreamBrown&Root-Condor SPA Impairment - (20) - Pemex Arbitration Gain - - 51
VenturesASD Impairment (26) - -
Total Items included in Business Unit Income (41) (21) 39
Total Business Unit Income (GAAP) 76$ 108$ 207$