Worley Limited · ASX:WOR
Worley — WorleyParsons — FY2018 Earnings Presentation
54 slides from Worley's earnings presentation, Aug 22, 2018
Slide 1: Full Year Results 2018
For personal use only Full Year Results 2018 Andrew Wood, CEO Full year results 2018
Slide 2: Disclaimer
Disclaimer For personal use only The information in this presentation about the WorleyParsons Group and its activities is current as at 22 August 2018 and should be read in conjunction with the Company’s Appendix 4E and Annual Report for the full year ended 30 June 2018. It is in summary form and is
Slide 3: FY2018 summary
FY2018 summary Our strategy is delivering. Market strengthening. For personal use only Improved financial performance $4,749.2m $171.4m ▪ Revenue growth driven by UK acquisition Aggregated revenue Underlying NPAT ▪ Cost reductions delivering operating leverage +8.5% growth from FY17 +39.1% growth fr
Slide 4: Overview: FY2018 achievements
Overview FY2018 achievements For personal use only ▪ Aggregated revenue growth, driven by UK acquisition ▪ EBIT and NPAT growth, with higher margins Financial results ▪ Cash flow improved ▪ Strengthened balance sheet metrics ▪ New USD700m multi-currency debt facility in place ▪ Successful acquisitio
Slide 5: Aggregated revenue and underlying EBIT
Aggregated revenue and underlying EBIT Return to growth For personal use only Half on half revenue Half on half underlying EBIT AUD'M H1 H2 AUD'M H1 H2 5,000.0 300.0 250.0 237 4,000.0 3,614 3,614 3,107 200.0 181 166 3,000.0 2,619 150 153 2,310 2,439 140 133 2,166 2,211 150.0 118 2,000.0 100.0 1,000.
Slide 6: Backlog is growing
Backlog is growing For personal use only 36 month backlog ($b) Approximate timing of backlog ($b) Backlog as at 30 June 2018 7.0 6.5 FY19 3.4 6.0 5.5 5.0 FY20 1.9 6.4 4.5 6.0 4.0 5.1 FY21 1.1 4.7 3.5 3.0 Dec16 Jun17 Dec17 Jun18 6 Full year results 2018
Slide 7: Awards announced in last six months
Awards announced in last six months Pace of awards is increasing For personal use only 9 10 16 2 8 11 Hydrocarbons ▪ Increase in recent ASX 5 16 Power announced wins providing 4 6 12 early positions in next 1 Minerals and metals 7 wave of investment Chemicals ▪ $400m in significant awards in July 20
Slide 8: UK Integrated Solutions Acquisition update
For personal use only UK Integrated Solutions Acquisition update 8 Full year results 2018
Slide 9: UK Integrated Solutions Integration
UK Integrated Solutions Integration For personal use only Workstream Progress Achievements Successfully delivered the transition including Organization, Systems & Processes systems–Global Integrated Solutions business launched Cost synergies beyond the original forecast have Cost been delivered Syne
Slide 10: UK Integrated Solutions – example revenue synergy
Nexen UK - topsides module Buzzard Phase II UK Integrated Solutions – example revenue synergy For personal use only Value Add Full ‘EPFC’ ( Engineering, Procurement, Fabrication & Construction) capability UK Integrated Solutions Rosenberg WorleyParsons, Norway long term customer relationship and fra
Slide 11: Hydrocarbons: Growing supply gap
Hydrocarbons Growing supply gap For personal use only Global liquids capacity by development status Project FIDs expected to almost triple Liquid capacity (million b/d) from 2017 to 2019 Yet to find Other discoveries $ Projects awaiting FID and US L48 future drilling Reserves growth Under developmen
Slide 12: Minerals & Metals: Return to investment
Minerals & Metals Return to investment For personal use only Global Mining capital expenditure Global copper market balance (Kt) top 15 global miners (by market capitalization) $60 Surplus Billions ($AUD) $50 $40 $30 $20 Deficit $10 $- 2017 2018 2019 Source: Newmont, Investor Presentation, May 2018
Slide 13: Power: Global energy transition
Power Global energy transition For personal use only 40,000 ▪ 2018 is the peak year for hydrocarbon fuelled TWh Other Renewables 30,000 Solar PV power generation Wind Hydro 20,000 Nuclear ▪ Two thirds of all new power capacity additions are Oil now renewables Gas 10,000 Gas CCS Coal CCS ▪ Focus area
Slide 14: Chemicals: Sustained growth
Chemicals Sustained growth For personal use only $100B ▪ Key megatrends driving growth –increasing urbanization, globalization, food security Global Accessible Chemical $95B Capital Spending $91B $87B ▪ WorleyParsons smaller than peers in this sector with significant headroom for growth ▪ Customers
Slide 15: Resources & energy provide real opportunity
Resources & energy provide real opportunity Acting concurrently on priorities across three horizons For personal use only 15 Full year results 2018
Slide 16: Health Safety and Environment
Health Safety and Environment Our safety performance For personal use only ▪ Employee Total Recordable Case Frequency Rate (TRCFR) at June 2018 was 0.12 (June 2017: 0.08) ▪ Employee, Contractor & Subcontractor and Partner TRCFR at June 2018 was 0.15 (June 2017: 0.14) ▪ Increase in TRCFR associated w
Slide 17: Responsible business at WorleyParsons
Responsible business at WorleyParsons For personal use only We have always taken a responsible and sustainable approach to our business This year we have: ▪ applied responsible business assessments on business partners, including ethical business Environmental and social license checks 50+ 13% 100+
Slide 18: Full Year Results 2018 – Tom Honan, CFO
For personal use only Full Year Results 2018 Tom Honan Group Managing Director Finance, CFO 18 Full year results 2018
Slide 19: Statutory statement of financial performance
Statutory statement of financial performance For personal use only 30 June 2018 30 June 2017 ($m) ($m) REVENUE AND OTHER INCOME Professional services revenue 3,837.3 3,558.7 ▪ Decrease in statutory revenue due Procurement revenue 432.3 1,142.4 to completion of Hebron project Construction and fabrica
Slide 20: Reconciliation of statutory to underlying NPAT result
Reconciliation of statutory to underlying NPAT result Adjusted for non-trading items For personal use only FY2018($m) FY2017($m) Statutory result 62.2 33.5 Additions (pre-tax) Staff restructuring costs - 59.2 Onerous lease contracts 12.2 24.2 Other restructuring costs 14.2 38.9 Acquisition costs 5.9
Slide 21: FY2018 key financials
FY2018 key financials For personal use only Statutory result 2018 2017 vs. 2017 Total revenue ($m) 4,835.8 5,220.6 (7.4%) ▪ Statutory revenue decrease due to completion of EBIT ($m) 263.8 129.6 103.5% Hebron project and associated procurement Net Profit After Tax ($m) 62.2 33.5 85.7% revenue at nil
Slide 22: Segment result by business line
Segment result By business line For personal use only FY 2018 FY 2017 vs. FY 2017 Aggregated Revenue ($m) 4,749.2 4,377.0 8.5% ▪ Services result impacted by some project Services 2,391.3 2,681.1 (10.8%) implementations moving to Major Projects and Major Projects and Integrated project completions in
Slide 23: Headcount growing: staff utilization on target
Headcount growing: staff utilization on target For personal use only Growth Growthin global in global headcount headcount Staff Utilization Total headcount Change in headcount from prior month Headcount 87% 85% Utilization % 83% 81% Target Monthly rate 79% 77% July Jan July Jan July Jan Jan-15 Apr-1
Slide 24: Key operating indicators
Key operating indicators Continuing in right direction For personal use only Overhead Cost Index EBIT Margin % HY15 FY15 HY16 FY16 HY17 FY17 HY18 FY18 7.0% 6.5% -10 6.0% -20 5.5% 5.0% -30 4.5% -40 4.0% -50 FY15 HY16 FY16 HY17 FY17 HY18 FY18 Gross Margin (%) NPAT Margin % 4.0% 3.0% Gross Margin % Gro
Slide 25: Key operating indicators: Operating leverage
Key operating indicators Operating leverage For personal use only Operating Leverage ▪ Cost out program is proving sustainable with revenue growth Overheads ($) ▪ Margins increasing Revenue ($) Revenue Overhead ▪ Business continues to be focused on achieving operating leverage with programs institut
Slide 26: Capital management
For personal use only Full Year Results 2018 Capital management 26 Full year results 2018
Slide 27: Cash flow, net debt and balance sheet
Cash flow, net debt and balance sheet Continuing in right direction For personal use only 300 $'m Gearing Ratio % Free Cash Flow 250 35.0% 200 30.0% 150 25.0% 100 20.0% Gearing ratio = net debt/net debt + equity 50 15.0% 0 10.0% FY15 FY16 FY17 FY18 FY15 HY16 FY16 HY17 FY17 HY18 FY18 1000 $'m Statuto
Slide 28: Gearing metrics
Gearing metrics Current balance sheet metrics For personal use only FY2018 HY2018 ▪ Sustained reduction in net debt over last six periods Gearing ratio1 % 23.0% 26.1% Facility utilization2 % 60.1% 59.7% ▪ Net debt reduced by $257.7m since December 2016 Average cost of debt % 4.5% 4.9% ▪ Net debt red
Slide 29: DSO: Sustained improvement
DSO Sustained improvement For personal use only DSO by Business ▪ Most regions/businesses now performing at or Jun-18 Target ahead of target 100+ 100+ 100+ 100 ▪ UK IS business improved by 13 days since acquisition 80 ▪ Canada and US East region reduced 16 days in 60 H2 APAC reduced 22 days in last
Slide 30: Liquidity
Liquidity Net debt reduced and facility refinanced For personal use only Debt facility utilization and maturity profile $m 1,400 1,200 1,000 UTILIZED AVAILABLE 800 A$M 600 400 200 - FY19 FY20 FY21 FY22 FY23 ▪ Core debt facility refinanced during FY18. New facility consists of a USD700 million multi-
Slide 31: Outlook
For personal use only Full Year Results 2018 Outlook 31 Full year results 2018
Slide 32: Concluding remarks
Concluding remarks Progress in FY2018 For personal use only ▪ Revenue* up 8.5%, EBIT* up 15.9%, NPAT* up 39.1%, cash flow up 229.2% ▪ Operating leverage realized ▪ Backlog increased ▪ Refinanced core debt facility ▪ Acquired global leader in offshore MMO market ▪ Successful capital raising ▪ Integra
Slide 33: Energy and Resources: Markets returning to growth
Energy and Resources Markets returning to growth For personal use only Hydrocarbons annual global capex Minerals & Metals annual global capex $ $ 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2018 capex >40% below 2013 peaks …
Slide 34: Group outlook
Group outlook For personal use only Driven by continued improvement in market conditions, our resources and energy customers are increasing early phase activity for the next cycle of investment. This is reflected in the recent level of contract awards and our growing backlog. By maintaining our focu
Slide 35: Q&A
For personal use only Full Year Results 2018 Q&A 35 Full year results 2018
Slide 36: Supplementary information
For personal use only Full Year Results 2018 Supplementary information 36 Full year results 2018
Slide 37: Segment result by region
Segment result By region By region For personal use only FY 2018 FY 2017 vs. FY 2017 Aggregated Revenue ($m) 4,749.2 4,377.0 8.5% ▪ Revenue growth supported by UK IS, Norway, APAC 1,080.9 1,064.8 1.5% Canada and ANZ, offset by reduction in the US and South Africa EMEA 2,121.7 1,577.6 34.5% AM 1,546.
Slide 38: Segment result by sector
Segment result By sector For personal use only FY 2018 FY 2017 vs. FY 2017 Aggregated Revenue ($m) 4,749.2 4,377.0 8.5% ▪ Hydrocarbons revenue increase from UK IS, Hydrocarbons 3,588.0 3,105.6 15.5% Norway, partially offset by lower revenues in the Professional Services ¹ 3,035.5 2,602.8 16.6% Const
Slide 39: Global operations and employee numbers
Global operations and employee numbers For personal use only 26,280 people 116 42 offices countries 39 Full year results 2018
Slide 40: Backlog increasing
Backlog increasing For personal use only Backlog by region Backlog by sector as at 30 June 2018 as at 30 June 2018 0.7 Australia, Pacific, Hydrocarbons 1.7 Asia, China (APAC) 0.9 Minerals & Metals, 3.0 Americas (AM) Chemicals Europe, Middle East, Infrastructure Africa (EMEA) 4.8 1.7 40 Full year res
Slide 41: Backlog increasing
Backlog increasing For personal use only Backlog by region Backlog by sector as at 30 June 2018 as at 30 June 2018 7.0 0.6 7.0 1.0 6.0 0.5 6.0 0.2 0.0 0.3 5.0 5.0 4.0 4.0 A$'B A$'B 3.0 6.4 3.0 6.4 5.1 5.1 2.0 2.0 1.0 1.0 - - 41 Full year results 2018
Slide 42: Underlying earnings profile
Underlying earnings profile For personal use only Group Underlying EBIT $m H2 H1 452.2 418.0 302.7 298.8 274.0 257.8 237.2 152.5 165.9 139.9 178.2 180.8 150.2 132.9 117.9 FY2014 FY2015 FY2016 FY2017 FY2018 Group Underlying NPAT $m H2 263.4 H1 243.1 153.1 171.4 162.7 138.8 123.2 79.2 93.2 66.1 100.7
Slide 43: Margin profile
Margin profile Operational Underlying EBIT % For personal use only 6.8% H1 7.6% 6.5% H2 5.8% 5.8% 6.3% 5.9% 5.8% 6.3% 6.1% 5.0% 5.3% 5.4% 4.7% 4.8% Total FY2014 FY2015 FY2016 (Restated) FY2017 FY2018 Operational Underlying NPAT % H1 4.5% 3.6% 3.8% 3.8% 3.6% H2 3.4% 3.4% 2.9% 3.0% 3.0% 2.8% 2.7% 2.7%
Slide 44: Revenue split
Revenue split For personal use only Contribution to aggregated revenue (%) Sector aggregated revenue (%) 9% Middle East & Africa, ANZ, 17% 16% Hydrocarbons 15% Asia, 6% Minerals, Metals & Chemicals Europe, 29% USA & LAM, 15% Infrastructure 76% Canada, 17% ▪ Contribution from Hydrocarbons and Europe
Slide 45: Revenue reconciliation
Revenue reconciliation For personal use only FY2018 ($m) FY2017 ($m) vs FY2017 Revenue and other income 4,835.8 5,220.6 (7.4%) Less: Procurement revenue at nil margin (94.4) (826.2) (88.6%) Less: Pass through revenue at nil margin (157.3) (229.0) (31.3%) Plus: Share of revenue from associates 170.6
Slide 46: EBIT reconciliation
EBIT reconciliation For personal use only FY2018 ($m) FY2017 ($m) EBIT 263.8 129.6 Add: staff restructuring costs - 59.2 Add: onerous lease contracts 12.2 24.2 Add: other restructuring costs 14.2 38.9 Add: acquisition costs 5.9 - Add: impairment of associate intangible assets 2.7 2.3 Add: onerous en
Slide 47: Cash flow
Cash flow For personal use only FY2018 ($m) FY2017 ($m) EBIT 263.8 129.6 ▪ Cash flow improved on better operating Add: Depreciation, amortization 68.0 80.8 performance and lower restructuring costs Less: Interest and tax paid (81.5) (45.8) Add / (Less): Working capital/other 9.4 (85.7) Net cash infl
Slide 48: Cash flow: Bridge to cash balance
Cash flow Bridge to cash balance For personal use only 900.0 800.0 ▪ Underlying operational cash flow $293.7m Underlying operating cash flow – 293.7 316 700.0 600.0 ▪ $34.0m of cash out for one off 376 non-trading items Cash one off costs 500.0 paid – 34.0 (77) (360) (9) 400.0 (27) 300.0 (114) (32)
Slide 49: Liquidity and debt maturity
Liquidity and debt maturity For personal use only Liquidity Summary $m FY2018 FY2017 change Loan, finance lease & overdraft facilities 1,677 1,835 (8.6%) ▪ Sufficient liquidity, bonding and debt facilities Less: facilities utilized (1,008) (1,106) (8.9%) Available facilities 669 729 (8.2%) Plus: cas
Slide 50: US tax changes
US tax changes For personal use only ▪ The charge to tax expense related both to the potential loss in future years of currently available deductions and to the reduction in the US corporate tax rate from 35% to 21% ▪ The reduction in the corporate tax rate required a revaluation of the US group’s d
Slide 51: Foreign exchange translation impact
Foreign exchange translation impact For personal use only Movement in major currencies against AUD (indexed) Average exchange rate Spot exchange rate Currency movement movement BRL 5.6% 11.9% CAD (1.7%) (2.4%) CNY (1.7%) (6.5%) EUR (6.1%) (5.3%) GBP (3.2%) (4.8%) NOK (2.3%) (6.4%) SGD (0.9%) (5.1%)
Slide 52: Foreign exchange: Impact total EBIT
Foreign exchange Impact total EBIT For personal use only 2.5 2.0 1.5 2.3 1.0 Millions 0.5 0.8 0.5 0.3 0.2 - (0.5) (0.6) (0.4) (0.6) (0.6) (0.7) (0.6) -0.5 -1.0 EUR GBP KWD KZT NGN NOK OMR Other TRY USD UZS ZAR 50 Group EBIT FX Translation impact 40 30 A $m 20 41 10 11 12 0.1 0 -8.3 -10 FY14 FY15 FY1
Slide 53: Acronyms
Acronyms For personal use only ADNOC - Abu Dhabi National Oil Company FX – Foreign Exchange APAC – Australia, Pacific, Asia, China FY – Financial Year AM – Americas HSE – Health Safety and Environment ASX - Australian Securities Exchange HY – Half Year CPS – Cents Per Share IFRS - International Fina
Slide 54: WorleyParsons resources & energy
WorleyParsons resources & energy