Slide 1: D.A. Davidson Engineering & Construction Conference
D.A. Davidson Engineering & Construction Conference Bill Utt – Chairman, President, and CEO Cedric Burgher – Senior Vice President and CFO September 2007
Slide 2: Forward-Looking Statements
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 K
Slide 3: The First Five Months……
The First Five Months…… Improved risk/return profile Skikda LNG hybrid contractual terms Escravos Conversion Cost-reimbursable / fixed-price backlog portfolio Disposition of non-core businesses Devonport Management Limited (“DML”) Brown & Root Condor (Algeria based joint venture) Large con
Slide 4: Business Discipline
Business Discipline Business Development Oversight Project Execution Project Management / EPCS Support Project Controls 2
Slide 5: Operational Transparency
Operational Transparency 2006 2007 & Beyond f Downstream f Government and Infrastructure f Energy and Chemicals Improving f Services Client and End Market f Government and Infrastructure Focus f Technology f Upstream f Ventures 3
Slide 6: Downstream – Strategic Focus
Downstream – Strategic Focus Growth Opportunities Addressable Market* f Continue leadership in PMC ($ in billions) $170 + 31% f Capitalize on growing end $130 markets f Leverage technology for opportunities f Emerging markets 2005 2010 Tangible Progress f Ras Tanura Integrated Project f Saudi Kayan
Slide 7: Government & Infrastructure – Strategic Focus
Government & Infrastructure – Strategic Focus Growth Opportunities f Leverage capabilities and proven track record to capture more design and construction work for federal, state, and local governments f Project portfolio diversification among defense services f Geographic diversification among defe
Slide 8: Services – Strategic Focus
Services – Strategic Focus Growth Opportunities f Build domestic construction capability f Expand industrial services / operation and maintenance services (domestically and internationally) f Examine re-entry into fabrication to improve competitive position in offshore construction Tangible Progress
Slide 9: Technology – Strategic Focus
Technology – Strategic Focus Growth Opportunities f Leverage intellectual property assets f Increase pull through opportunities based on technology f Capitalize on licensing opportunities f Continue to invest in research and development Tangible Progress f TRIG™ - Orlando Gasification Facility f SUP
Slide 10: Upstream – Strategic Focus
Upstream – Strategic Focus Growth Opportunities Addressable Market* f Maintain gas monetization ($ in billions) $300 leadership + 43% $210 f Expand Onshore / Offshore oil and gas opportunities f Continue to enhance engineering and technical capabilities 2005 2010 f Leverage consulting expertise Tang
Slide 11: Ventures - Strategic Focus
Ventures - Strategic Focus Growth Opportunities f Invest capital and knowledge for pull-through service opportunities f Make/manage equity investments on a stand-alone basis f Investment accountability f No more merchant risk Tangible Progress f Allenby/Connaught project f EBIC Ammonia Facility 9
Slide 12: Human Capital – Our Most Important Resource
Human Capital – Our Most Important Resource Human Resource Capacity Safety Record f Diversity in skill set requirements 6.3 f Different project scope and scheduling requirements f Careful resource allocation planning 1.1 f Hiring / retention programs Industry KBR f Growth and increased utilization o
Slide 13: Financial Overview
Financial Overview
Slide 14: Allocation of Risk and Capital
Risk Capital Allocation of Risk and Capital f Business Development Oversight Project Portfolio Mix f Project Management / Project Controls 29% f EPCS Support Group 52% + 53% f Executive review for all large contracts f M&A – same rigor and process 71% 48% f Efficient use of balance sheet 12/05 06/07
Slide 15: KBR Backlog
KBR Backlog $12,630 $12,437 ($ in millions) $9,284 + 36% $6,209 2004* 2005* 2006* Q207** Ventures G&I E&C Skikda LNG and Ras Tanura** * Not adjusted for Ventures segment breakout ** Projects not reflected in actual reported second quarter 2007 results. 13
Slide 16: Operating Income
Operating Income ($ in millions) $90 $66 $65 $43 $45 3.9% 3.0% 2.1% 3.0% Q2 2006 2.2% Q1 2006 (2.1%) Q2 2006 Q3 2006 Q4 2006 Q1 2007 Q2 2007 ($47) Operating Income Operating Income Margin (2.1%) 14
Slide 17: Return on Capital
Return on Capital 10% 8% 4% 4% Wi t h C a sh Wi t h o u t D i sc r e t i o n a r y C a sh(2) (1) 2006 1H07 Return on Capital = Net Income before Discontinued Operations + Interest Expense (1-ETR) Avg. Total Assets – Avg. Non-Interest Bearing Liabilities – Minority Interest (1) Annualized based on fi
Slide 18: Balance Sheet Supports Growth Opportunities
Balance Sheet Supports Growth Opportunities Strategic Uses of Cash Return Capital to Technology Investments / Shareholders Acquisitions Opportunistic Equity Investments in Acquisitions Projects Capitalization @ 6/30/07 ($ in millions) Available Cash 2,016 Cash Associated with JVs 771 Operating Cash
Slide 19: Investment Highlights
Investment Highlights Global Compelling Market Growth Leader Opportunities Strong Best-in-Class Management Technical Team Expertise Improving Financial Blue-Chip Profile Client Base Stringent Risk Balanced Project Management Portfolio 17
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