D.A. Davidson Engineering & Construction Conference September 21, 2006

Transcription

1 D.A. Davidson Engineering & Construction Conference September 21, 2006

2 Forward-Looking Statements & Regulation G Disclosure Any statements in this presentation which express a belief, expectation or intention, as well as those which are not historical facts, are forward-looking and are protected under the safe harbor of the Private Securities Litigation Reform Act. They involve a number of risks and uncertainties, which may cause the Company s actual results to differ materially from such forwardlooking statements. These risks and uncertainties include factors detailed in the Company s filings with the Securities and Exchange Commission, including its Form 10-K & Form 10-Q and on the Company s website under the heading Forward-Looking Statements. During today s presentation, we will use certain financial measures which are considered non-gaap, such as EBITDA and Net Debt. As required by the SEC Regulation G, a reconciliation of these measures to their most comparable GAAP measures is available on our website at in the Investor Relations section under Regulation G Disclosures. 2

3 Corporate Profile Headquarters: Baton Rouge, Louisiana Founded: 1987 Initial Public Offering: 1993 Energy & Chemical (E&C) 28% 9 Months Revenue by Segment ($3.6 billion)* $996M Fabrication, Manufacturing & Distribution 5% $1,700M $708M 18% Maintenance 20% NYSE Symbol: SGR Shares Outstanding: 80.4 million Employees: 22,000 Locations: 145 domestic 33 international Website: Energy & Chemical (E&C) 49% Backlog by Segment ($8.1 billion)* $3.9B Environmental & Infrastructure (E&I) 47% Fabrication, Manufacturing & Distribution 3% $1.2B $2.7B Maintenance 15% Environmental & Infrastructure (E&I) 33% *As of 05/31/06. 3

4 Shaw Overview Full service provider of engineering, design, procurement, and construction services Well positioned for strengthening core end markets Energy (fossil-fueled power projects) Chemicals (ethylene technology, deep catalytic cracking (DCC), clean fuels) Strong nuclear presence in maintenance and construction, plus strategic alliances with Westinghouse and utility companies in rapidly developing nuclear market Capitalizing on leading position in Federal Depts of Defense, Energy, Homeland Security and Environmental markets Strong portfolio of cost-plus and negotiated fixed-price contract structures Complementary areas of expertise deliver multiple solutions through single source Successful track record of strategic acquisitions 4

5 Business Strategy Leverage Our Core Areas of Expertise to Pursue Growth Opportunities in Our Primary End Markets Utilize Technology and Intellectual Property Pursue Strategic Acquisitions Maintain a Diversified Revenue Base Maintain Focus on Cost-Plus and Negotiated Fixed- Contract Structures Maintain Significant Liquidity and a Flexible Capital Structure Capitalize on Opportunities for Cross-Selling 5

6 Shaw A Market Leader Rank Category 1 Chemical/Soil Remediation 2 Solid Waste 2 Transmission Lines & Cables 3 Fossil Fuel 3 Transmission & Distribution 4 Hazardous Waste 2 Power 13 Refineries & Petrochemical Plants 8 Dams & Reservoirs 9 Petroleum 12 Chemical Plants Rank Category 4 Fossil Fuel 2 Nuclear Plants 7 Site Assessment & Compliance 4 Power 20 Pipelines 14 Hazardous Waste 7 Refineries & Petrochemical Plants 7 Chemical & Soil Remediation 9 Petroleum 12 Solid Waste Rank Category 4 Construction/Remediation 3 Hazardous Waste 10 Nuclear Waste 10 Environmental Science Firms by Client 10 Federal Sources: Engineering News-Record October 2005 issue, May 2006 issue (Top 400), and July 2006 issue (top 500). 6

7 Leveraging Key Strengths Strengths Extensive energy market capabilities Global chemicals technologies and expertise Opportunities Price arbitrage among fossil fuels, driving increased coal demand Federal clean air requirements Global nuclear renaissance Middle East and Far East chemicals production facilities Federal services capabilities Maintenance expertise Emergency Response Department of Defense Military Housing Privatization Expanding federal agency budgets (DOE) Increasing trends towards outsourcing and single source service providers Vertical integration Full service provider to customers worldwide Ability to cross-sell services Enhanced project management capabilities 7

8 Attractive Energy Market Opportunities Market Opportunities Coal-Fired Plant Emissions Retrofits ($ in billions) $ Cumulative (Source: McIlvaine & Shaw) Source: EIA (2006). $5.3 $8.4 $7.1 Electricity Generation by Fuel, 2004 and 2030 (billion kilowatt hours) 4,000 3,000 2,000 1,000 0 Coal $2.4 60% increase Natural Gas $ % increase 8 Clean Air Act Standards SO 2 (FGD / Scrubbers) NOx(SCRs) Key Drivers Mercury emissions Estimated $12 billion in FGD scrubber retrofits remaining Estimated $8 billion in Mercury emissions controls projects Estimated $50 billion investments in new coal power generation 2005 Energy Bill initiatives Transmission and distribution improvements remains a significant opportunity Near-term power shortage in highly populated constrained areas gas-fired generation will be part of solution

9 Shaw E&C - Energy Energy EPC Backlog $2.2 Billion* 27% Services Engineering and design, procurement and construction New, restart and retrofit capabilities Coal-fired Nuclear Gas-fired Hydro-electric and alternative fuels Project and construction management Modularization Transmission & distribution services Management consulting and feasibility studies Significant Customers Cleco PPL Duke Energy Xcel Energy Astoria Energy Dominion PacifiCorp Mirant *As of 05/31/06. Reflects energy portion of E&C segment backlog. 9

10 Significant Chemicals Market Opportunities Market Opportunities Increasing Ethylene Capacity Ethylene Capacity (thousands of metric tons) 122,771 Source: SRI Consulting. ($ in billions) 130, , ,443 Federal Clean Fuels Initiatives $ , % 9.4% 9.9% 10.7% 12.9% Middle East ROW Key Drivers Middle East production capacity expected to double over the next 5 years Significant availability of large, low-cost gas reserves Asia Pacific (China) ethylene demand driven by economic development / downstream product demand Proprietary technology in the production of ethylene and for the deep catalytic cracking process Federal requirements to reduce sulfur emissions levels in gasoline and diesel fuels $8.0 $9.0 $14.0 Legislation affects virtually every refinery and most terminals in U.S. Low-Sulfur Gasoline $6.0 Ultra-Low-Sulfur Diesel Total Investment Requirements apply to imported, as well, creating incremental international opportunity Source: EIA. 10

11 Shaw E&C - Chemicals Chemicals Backlog: $1.7 Billion* 21% Services Engineering and design, procurement and construction Project and construction management Proprietary technology Ethylene: supplier of 35% of world s incremental ethylene production capacity since 1995 Deep Catalytic Cracking (DCC) Other refining and petrochemical technologies Cumene Ethylbenzene Styrene Propylene Butene Consulting and feasibility studies Significant Customers SHARQ (SABIC / Sumitomo Chemical) Valero Marathon Petroleum Vietross PMC QAPCO SABIC *As of 05/31/06. Reflects chemicals portion of E&C segment backlog. 11

12 Nuclear Renaissance The existing nuclear infrastructure cannot support the growing demand for nuclear power generation Aging Existing Nuclear Infrastructure Worldwide Number of Units Years Existing infrastructure is aged and requires significant maintenance spending More stringent safety requirements Renewal of existing operating licenses Performance upgrades for cost efficiency Global nuclear renaissance is underway 68+% domestic acceptance of nuclear power versus only 46% in 1995 China has announced plans for 4 reactors at 2 sites Province of Ontario announced $3.6 billion restart of 3 mothballed units Safer reactor designs and stronger regulation Sustained increases in fossil fuel prices Increased environmental constraints limiting fossil-fuel generating capacity Approximately 20 new U.S. reactor COL applications in progress Source: NEI 12

13 Shaw Nuclear Services Full service engineering, design, procurement and construction Configuration management Licensing support and safety analysis Major component replacement Operating plant services Maintenance & modifications services Significant Customers Tennessee Valley Authority Taiwan Power Co. Korea Power Engineering Co. Entergy Exelon Ontario Power Generation PSEG Nuclear Duke Energy SCANA Decontamination & decommissioning services Environmental services Spent fuel dry storage Nuclear backlog $1 billion 13

14 Shaw Maintenance Maintenance Backlog: $1.2 Billion* 15% Services Over 60 clients at over 140 sites in the U.S. and abroad Total plant maintenance Full service plant engineering Turnaround/outage All craft disciplines Average approximately 11,000 active craft database Largest nuclear maintenance contractor in the U.S. with the record for the shortest nuclear refueling outage Provide maintenance to approximately 40% of the nuclear plants in the U.S. Significant Customers Tennessee Valley Authority (Nuclear) Entergy (Nuclear) Exelon (Nuclear) OxyChem Albemarle Union Tank Car Manufacturing Air Products Pemex Valero *As of 05/31/06. 14

15 Shaw Fabrication & Manufacturing Services Leading provider of piping solutions for power plants and process facilities worldwide Manufacturer of industry s most advanced induction and cold bending technology Industry leader in the supply of cold and induction bends Leading manufacturer of pipe fittings and master distributor of pipe flanges and fittings Significant Customers Bechtel Jacobs Alstom Fluor Hitachi General Electric JGC Corporation F&M Backlog: $275 Million* Industry leader in fabricated structural steel products and duct work for power, petrochemical and other industries Largest supplier of fabricated piping systems in the U.S. *As of 05/31/06. Certified by ASME to perform all activities required for construction of ASME nuclear components including piping systems at nuclear generating facilities 15

16 Shaw Environmental & Infrastructure E&I Backlog: $2.7 Billion* 33% Services Emergency response Infrastructure planning, engineering and maintenance Facilities management and other O&M services to military bases Environmental consulting and engineering Toxic waste remediation and lifecycle management of solid waste Vulnerability assessment and biological agent detection and response Isolation and removal of hazardous waste Federal housing and utility privatization Significant Customers U.S. Dept. of Defense U.S. Environmental Protection Agency U.S. Dept. of Energy South Florida Water Management ExxonMobil U.S. Dept. of Homeland Security (FEMA) *As of 05/31/06. 16

17 2006 Highlights 4Q - Shaw Awarded $60 million Engineering, Procurement, and Construction Contract by Huntsman to Repair Olefins Manufacturing Facility in Texas 4Q - Shaw Awarded Global Contingency Construction ID/IQ Contract by the U.S. Navy 4Q - Shaw Awarded ID/IQ FEMA Individual Assistance with $250 million ceiling for 2006 and 2007 Technical Assistance Contract 4Q - Shaw Awarded $900 million Engineering, Procurement, and Construction Scrubber Contract by Mirant 4Q Award Heavy engineering Repair and Construction ID/IQ contract by US Air Force Shaw Awarded Engineering, Procurement, and Construction Contract by Dominion for scrubber retrofit Joined Westinghouse in Supporting Duke and SCANA Licensing Process for New Nuclear Power Units Increased Credit Facility to $750 Million Awarded up to $100 Million Contract from U.S. Army Corps of Engineers for Hurricane Katrina Recovery and Rebuilding Efforts Awarded up to $950 Million Contract with FEMA for Hurricane Katrina Recovery and Rebuilding Shaw Awarded Engineering, Procurement, and Construction Contract for Dow/Kuwait Petrochemical Plant Shaw Awarded Engineering, Procurement, and Construction Contract for New 750 MW Coal-Fired Power Plant by Xcel Energy Shaw Signs Letter of Intent with SABIC for High Density Polyethylene Plant in Saudi Arabia Shaw and Westinghouse Selected to Support Nuclear Power Fleet Expansion in South Carolina Shaw Joint Venture Awarded $192 Million Remediation Contract From Department of Energy Shaw Awarded Additional Nuclear Plant Maintenance Contracts with PSEG and TXU. 17

18 Financial Overview

19 Highly Visible Backlog with Significant New Opportunities Historical Revenues ($ in billions) Backlog Conversion (Total Backlog: $8.1 billion)* $3.1 $3.3 $3.1 $3.3 $3.6 Next 12 months 47% $3.8B $1.8B $2.5B months 31% Greater than 24 months 22% $ mos Targeted Future Projects (1) Coal-fired power plants Coal-fired plant emissions retrofit projects Middle East ethylene projects Gulf Coast restoration projects Nuclear power plants *As of 05/31/06. (1) Not included in backlog as of 05/31/06. 19

20 Accelerating New Business Awards Historical Backlog Recent Major Contract Wins ($ in billions) $900 Million EPC flue gas desulphurization and mercury emissions controls for Mirant $5.6 $5.8 $6.7 $6.9 $7.6 $8.1 $600 million EPC flue gas desulphurization for PPL Montour & Brunner Island $900 million EPC contract with SHARQ for new ethylene plant in Saudi Arabia $4.5 $4.8 $800 million EPC contract with Cleco Power for new coal plant EPC contract with Xcel Energy to build new 750 MW coal-fired power plant in Colorado EPC contract with SABIC to build High Density Polyethylene plant in Saudi Arabia Q 06 2Q 06 3Q 06 $200 million remediation contract with the Department of Energy (Paducah) 20

21 Highly Diversified Backlog with an Attractive Contract Mix $8.1 Billion as of 05/31/06 Environmental & Infrastructure 33% By Industry Other 1% Environmental & Infrastructure Division 33% By Business Segment Fabrication, Manufacturing & Distribution Division 3% Chemicals 25% Energy 41% Maintenance Division 15% By Contract Type Fixed-Price* 34% Energy & Chemicals Division 49% Cost-Reimbursable* 63% * As defined in our 10K under Types of Contracts Unit-Price 3% 21

22 Financial Highlights 9 Mos '06 FY '05 FY '04 Operating Results Total Revenues $ 3,606,732 $ 3,265,916 $ 3,015,813 Gross Profit 238, , ,324 Operating Income 76, ,168 8,410 Net Income (Loss) 37,878 16,376 (28,975) Net Income (Loss) per Diluted Share (0.50) Number of Shares Outstanding 80,292 69,792 58,005 Balance Sheet Data Total Assets $ 2,535,928 $ 2,083,788 $ 2,049,330 Short Term Debt 14,332 12,356 12,733 Long-Term Debt 251,534 65, ,173 Shareholder's Equity 1,216,766 1,144, ,371 Net working capital $ 679,704 $ 475,479 $ 291,069 Current ratio Net debt to net capitalization 9.6% -15.2%* 11.6% Total debt to total capitalization 17.9% 6.4% 23.8% * Negative Ratio reflects a net cash position 22

23 Shaw Overview Full service provider of engineering, design, procurement, and construction services Well positioned for strengthening core end markets Energy (fossil-fueled power projects) Chemicals (ethylene technology, deep catalytic cracking (DCC), clean fuels) Strong nuclear presence in maintenance and construction, plus strategic alliances with Westinghouse and utility companies in rapidly developing nuclear market Capitalizing on leading position in Federal Depts of Defense, Energy, Homeland Security and Environmental markets Strong portfolio of cost-plus and negotiated fixed-price contract structures Complementary areas of expertise deliver multiple solutions through single source Successful track record of strategic acquisitions 23