D.A. Davidson 12 th Annual Engineering & Construction Conference - - PowerPoint PPT Presentation

D.A. Davidson 12th Annual Engineering & Construction Conference

September 11, 2013

Sue Carter – Executive Vice President and CFO Ivor Harrington – Group President, Gas Monetization Zac Nagle – Vice President, Investor Relations & Communications

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 20, 2013, Forms 10-Q, recent Current Reports on Forms 8-K, and other Securities and Exchange Commission filings. Those factors, among

• thers, 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 financial statements reflected in this presentation are as of KBR’s 2Q13 earnings conference call on July 26, 2013

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KBR – A Leading Global E&C Provider

• Revenue: Full Year 2012 - $7.9 Billion
• Backlog: June 30, 2013 - $13.8 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.

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KBR’s Global Footprint

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

KBR’s Four Business Groups

• LNG
• FLNG
• GTL

Gas Monetization

• Offshore
• Onshore
• Pipelines
• FLNG

Oil & Gas

• Refining
• Petrochemicals
• Biofuels
• Fertilizers

Downstream

• Refining
• Petrochemicals
• Syngas
• Coal Gasification

Technology

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Infrastructure, Government & Power Services

N.A. Government & Logistics Infrastructure

• Transportation
• Water / Wastewater
• Facilities
• U.S. Federal Government
• Department of Defense

International Government, Defence & Support Services

• 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 Gas Monetization

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Gas Monetization

Current Gas Mon Projects Progressing Well

• Gorgon LNG Trains 1-3
• Skikda LNG
• Escravos GTL
• Ichthys LNG

Strong Pipeline of LNG Projects and Prospects

• Gorgon Train 4 Pre-FEED with expected FEED

transition, then EPCm

• Kitimat FEED and EPC
• Tanzania pre-FEED
• Recently awarded Petronas LNG FEED and EPC bid
• Bid preparation for Tangguh Train 3 FEED and EPC bid

Opportunity for GTL in the U.S.

• Active discussions with a customer and believe the

project could reach FEED in 2013

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Hydrocarbons

U.S. Shale Gas Opportunities

• Awarded an EPC contract for an ammonia plant in

excess of $250 million to be constructed in North America

• Awarded ~$600 million Dyno Nobel ammonia EPC

and technology project in Louisiana

• Awarded ~$100 million for EPC for two new

ethylene furnaces using KBR’s SCORE™ technology

• Awarded FEED for high-density polyethylene project

for INEOS

• 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

Growth in Technology

• Continue to see strong bookings across portfolio of

technologies, including ammonia, VCC, and ethylene

• 47% job income growth in 2Q13, year-over-year
• Doubled headcount 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™)

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

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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
• Steam-assisted gravity drainage (SAGD)
• Booked approximately $1 billion in backlog in 2012
• 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

• Job income up 137% in 2Q13 versus year-ago

period

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 but stabilizing business environment
• Project awards grew 50% in 2012 compared to 2011
• Stronger multi-family residential and industrial

manufacturing markets

U.S. Construction

• 3 Gulf Coast projects’ execution consistent with

project provisions taken in fourth quarter 2012

• Bidding only reimbursable work for construction only

projects

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Infrastructure, Government & Power

North American Government & Logistics

• Slower award environment due to government budget

uncertainties and sequestration

• Awarded $134 million contract for land-based missile

defense facilities in Romania

• Awarded $127 million contract for Djibouti Base

Operations Services

• 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

• Additional opportunities to expand services to other

Metro London and U.K. policing departments

• 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
• Awarded EPC for $460 million Ghent Baghouse

project for Kentucky Utilities

• Currently have several multi-$100 million projects out

for bid or anticipate bidding 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

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Well Positioned for North America

LNG and GTL Opportunities

• British Columbia, Canada
• Kitimat FEED and EPC
• Recently awarded Petronas LNG FEED and EPC

bid

• In discussions on another potential LNG project
• United States
• Active discussions on GTL projects; advanced

discussion with one customer on a proposed GTL facility that could reach FEED in 2013

• KBR’s experience on 2 of the 3 world-class GTL

facilities positions KBR well (Pearl GTL and Escravos GTL)

• Advanced discussions on one pending LNG EPC
• Maintaining dialogues with other LNG developers

Technology Awards & Opportunities

• 3 ammonia Purifier™ technology awards over the past

year

• Tracking approximately 10 ammonia/urea prospects
• Tracking approximately 5 ethylene prospects

Downstream Awards & Opportunities

• Awarded an EPC contract for an ammonia plant in

excess of $250 million to be constructed in North America

• Awarded ~$600 million Dyno Nobel ammonia EPC and

technology project in Louisiana

• Working on FEED for fertilizer complex for Ohio Valley

Resources

• 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

• Awarded EPC for $460 million Ghent Baghouse project

for Kentucky Utilities

• Currently have several multi-$100 million projects out

for bid or anticipate bidding in 2013

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KBR Financials and Backlog

• Revenue at $2.0 billion, down 3% ,year-over-year
• Job income margins of 14.7% compared to 13.1%, year-over-year
• Business Group income of $203 million, up 9%, year-over-year
• Operating income of $123 million, down 5%, year-over-year
• Corporate G&A of $63 million compared to $52 million, year-over-year
• Earnings per diluted share of $0.61 compared to $0.70, year-over-year
• Cash and equivalents of $800 million compared to $824 million, year-over-year
• Backlog of $13.8 billion compared to $15.2 billion, year-over-year
• Backlog book-to-bill of 1.1x in 2Q13 (excluding $611 million negative FX impact)
• FY13 earnings per diluted share guidance revised to $2.55 to $2.90 (from $2.45 to $2.90)

2Q13 Earnings Review - KBR

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Backlog

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Continued focus on job income backlog:

• Down 11% from December 31, 2012
• Up 87% 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 6/30/2013 Revenue Backlog Job Income Backlog

Performance Index

Job Income Margins Improving

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First Six Months 2011 First Six Months 2012 First Six Months 2013

15.0% 12.2% 12.8%

Strong Corporate G&A Cost Control

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ERP Spend

*Note: For illustrative purposes, 2013 Guidance reflects mid-point of corporate G&A guidance of $230 million to $240 million, which includes $40 million expected ERP spend (per 2Q13 guidance update to ERP spend expected at top end

• f guidance range of $30 million to $40 million )

$150 $160 $170 $180 $190 $200 $210 $220 $230 $240 $250 2007 2008 2009 2010 2011 2012 2013 Guidance* Corporate G&A $ in Millions

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

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Proud History