D.A. Davidson Eighth Annual E&C Conference

Transcription

1 D.A. Davidson Eighth Annual E&C Conference Bill Utt Chairman, President, and CEO September 17, 2009

2 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 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 25, 2009, 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.

3 KBR A Leading Global E&C Provider» Revenue: Full Year $11.6 Billion; 2008 Fortune 500 Company #234 First Half $6.3 Billion vs. First Half $5.2 Billion» Backlog: 12/31/08 - $14.1 Billion (80% reimbursable / 20% fixed-price); June 30, $12.3 Billion (79% reimbursable / 21% fixed-price)*» Headquarters in Houston, Texas» 100+ years of operating history» ~57,000 employees; 45+ countries» Extensive service capabilities: Engineering, procurement, construction, commissioning, and startup (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 either fixed-price or cost-reimbursable according to the composition of the contract, except for smaller contracts that are characterized on the predominate component. 1

4 Our Aspiration: To be the world s premier engineering, construction and services company Mission To safely deliver any project, any time, in any environment for the benefit of our customers, shareholders, employees and the communities we serve. Values Uncompromising commitment to Health, Safety and Environment An open relationship with our employees based on mutual trust, respect and success Transparency, Accountability and Discipline in our business Best in class Risk Awareness Integrity in all we do Financial Responsibility to our stakeholders 2

5 KBR Operates in 45 Countries Gothenburg Edmonton Calgary Leatherhead Greenford Moscow Atyrau Houston Monterrey MMM Arlington Algiers Baku Cairo Dhahran Baghdad Kuwait City Dubai China Lagos Abu Dhabi Singapore Angola Jakarta Brisbane Johannesburg Perth Adelaide Sydney Canberra Melbourne 3

6 Hydrocarbons Gas Monetization Oil & Gas Downstream Technology

7 Gas Monetization Solid Market Gas Monetization provides pre-feasibility, front-end engineering and design (FEED), and engineering, procurement, and construction (EPC) and construction management (EPCm) services for large, complex liquefied natural gas and gas-to-liquids projects. KBR Current Portfolio EPCm Gorgon LNG; Skikda LNG; Pearl GTL EPC Tangguh LNG; Yemen LNG; Escravos GTL FEED Inpex Ichthys LNG Solid Market and Opportunities Pluto Train 2 Segas Train 2 5

8 Gas Monetization Gorgon LNG Gorgon LNG Project Details Kellogg Joint Venture Group (KJVG) KBR led with 30% JV interest AUD $2.7 billion EPCm services for KJVG (app. US $2.3 billion) Three 5 MTPA LNG trains (modular construction strategy) Gas processing and treatment facilities Product storage and offloading Complete off-sites, utilities, and accommodations KBR to perform approximately 50% of project services, engineering, procurement, construction management, fabrication oversight, etc. Reimbursable with incentives Utilizes several fabrication yards across South East Asia and Australia Implementation of World Class Quarantine plan for environmental sensitive area 6

9 Oil and Gas Growing Opportunities Oil and Gas provides field development, feasibility, and detailed engineering and design services for onshore and offshore production facilities and pipelines. KBR Current Portfolio North Rankin 2 Platform BP Chirag Oil Project Chevron Jack/St. Malo Chevron Lianzi Pazflor FPSO Topsides BP Quad 204 / West of Shetlands Global Project Opportunities Caspian, Asia Pacific, GOM, West Africa, North Sea, offshore Brazil Granherne / GVA Consultancy 7

10 Downstream From Prospects to Projects Downstream serves clients in the petrochemical, refining, coal gasification, and syngas markets, executing EPC projects and providing program management consultancy throughout the world. KBR Current Portfolio and Prospects Ras Tanura Integrated Project Yanbu Export Refinery PetroSA Coega Refinery FEED Sonangol Lobito Refinery FEED 8

11 Technology A KBR Differentiator KBR Technology Business Segment offers highly efficient, proprietary, and differentiated process technologies, some of which are the most efficient, value-added solutions available in the market for the coal monetization, petrochemical, refining and syngas markets. KBR Technology Portfolio KAAPplus - Ammonia SUPERFLEX - Olefins ROSE - Refining SCORE - Ethylene TRIG - Coal Gasification Various Fluid Catalytic Cracking processes 9

12 Government, Defense & Infrastructure U.S. Government and Defense International Government and Defense Global Infrastructure

13 U.S. Government & Defense Building on Experience U.S. Government & Defense delivers on-demand support services, life sustainment services, and defense support infrastructure across the full military mission cycle and project program cycle for a diverse client base. LogCAP III & IV Current LogCAP III status LogCAP IV transition status Positive Trends On Litigation Building on Experience AFRICAP logistics, engineering and life support services in Africa AFCAP LogCAP type work in Kuwait for U.S. Air Force National Science Foundation logistics support program in Antarctica 11

14 International Government & Defense International Government & Defense provides support and life sustainment services, and defense support infrastructure for Non- U.S. clients across the globe. KBR Current Portfolio Allenby & Connaught Australian Defence construction projects CONLOG and TDA Market Opportunities U.K. MoD Afghanistan infrastructure projects U.K. MoD integrated fuel supplies management program Australian Defence Force program and construction management Outsourced military support and training in friendly Gulf region 12

15 Global Infrastructure Design/Build Expertise Global Infrastructure serves diverse civil infrastructure markets, including recreational and commercial developments, transportation, waste and water treatment, and minerals throughout the world. KBR Current Portfolio Qatar-Bahrain Causeway Palm Island Yas Island Water projects Australian infrastructure Global road projects 13

16 Power, Industrial and Commercial

17 Power, Industrial and Commercial Power Increased bidding activity Progress Energy Carolinas, Inc. Solid Waste Authority of Palm Beach Other projects in Georgia and Texas Industrial and Commercial Red River Activated Carbon plant Facility operations and maintenance Education and healthcare reasonably stable Canadian Operations 15

18 KBR Corporate

19 KBR Strong Revenue Growth $6.3B Most business units reported improved revenue in first six months of 2009 compared to 2008: $4.2B + 24% $5.2B + 22% Services up 388% Downstream up 18% Upstream up 17% Technology up 2% G&I down 3% Six Months Ended June 30, BE&K acquisition was the main contributor within the Services business unit 17

20 KBR Improving Job Income and Margins $539M First quarter 2008 included $51 million gain on a favorable arbitration award $457M + 18% $348M + 31% Job income growing with revenue Margin improvement 8% 9% 9% Six Months Ended June 30, * Note Percentages represent job income margins 18 Benefits from better profitable projects under new management Zero or lower margin legacy projects completed or nearing completion Enhanced focus on risk management and execution

21 KBR Quality of Earnings Potential disallowed costs for U.S. contracts for Middle East work Charges on Skopje Embassy in Macedonia in (multiple quarters) FY 2007 Impairment charges on BRC joint venture in Algeria Gain on sale of BRC joint venture in Algeria Lease restructuring U.K. Road project settlement Charges on Skopje Embassy in Macedonia (multiple quarters) PEMEX arbitration awards 8% 9% 9% Unfavorable jury verdict from ASCO litigation (partially reversed) FY 2008 LNG reduction in profits on timing of change orders (later resolved) FCPA charges First Half 2009 Increased costs on EBIC project due to equipment failure Unfavorable arbitration decision related to the In Amenas project 19

22 Solid Backlog & Portfolio Risk Profile $12.6B -2% $12.3B No material project cancellations; $9.6B + 31% Second quarter 2009 impacted by LogCAP III task order extension timing and usual project work-off Improved portfolio mix* (cost reimbursable to fix priced) Q209 79% / 21%; respectively Q208 76% / 24%; respectively Quarter Ended June 30, Q207 71% / 29%; respectively 20

23 Prudent Financial Management & Focus Returning Cash to Shareholders Share repurchase program - $217 million since August 2008 Quarterly dividend approximately $32 million per year Balance Sheet Strength for Growth Strong cash position - $1.1 billion as of June 2009 Debt free Bonding capacity capabilities Continued Focus on Cost Saving Initiatives Scaling back costs through out organization Lowered FY 2009 G&A currently expect approximately $230 million for FY09 21

24 We Deliver