Worley Limited · ASX:WOR
Worley — H1 FY2021 Earnings Presentation
77 slides from Worley's earnings presentation, Feb 23, 2021
Slide 1: Half year results 2021
2021 Half year results Chris Ashton, Chief Executive Officer worley.com Worley Half Year Results 2021 1
Slide 2: Disclaimer
Disclaimer The information in this presentation about Worley Limited and the entities it controls (Group) and its activities is current as at 23 February 2021 and should be read in conjunction with the Company’s Appendix 4D and Interim Financial Report for the half year ended 31 December 2020. It is
Slide 3: Agenda
Agenda 1 2 3 Half year 2021 summary Market update Half year results 2021 Chris Ashton Chris Ashton Tom Honan 4 5 Outlook Q&A Chris Ashton Worley Half Year Results 2021 3
Slide 4: Protecting our people
Protecting our people • The safety and well-being of our people through the COVID-19 pandemic remains our priority • We continue to provide a safe work environment for our office and field- based people Industry leading health and safety performance TRCFR H1 FY21 SCFR H1 FY21 0.15 0.07 (FY20: 0.16)
Slide 5: Half year results 2021 summary
Half year results 2021 summary $4,498m $207m Delivering cash through challenging environment Aggregated revenue Underlying EBITA Global economic circumstances including the COVID-19 vs $5,998m in H1 FY20 vs $366m in H1 FY20 pandemic have impacted our customers, particularly demand in their end marke
Slide 6: Drivers of EBITA change
Drivers of EBITA change Underlying EBITA for H1 FY21 was $207m The following pages explain the key drivers of EBITA reduction from H2 FY20 EBITA Net business decline: Volume reduction: Business mix: EBITA difference in EBITA after EBITA impact of impact of proportional cost savings offset revenue re
Slide 7: Key drivers for EBITA change from H2 FY20
Key drivers for EBITA change from H2 FY20 600 • Net business decline of $279m driven by global economic 500 91 circumstances including the COVID-19 pandemic 18 400 • Volume reductions and business 279 mix are the key drivers of net 300 $m business decline $109m benefit in H1 FY21 200 from cost savin
Slide 8: Key drivers of net business decline from H2 FY20
Key drivers of net business decline from H2 FY20 Drivers of H1 FY21 net business decline ($m) • Key drivers of net business decline were volume reduction and change in 9 business mix 29 • Relative improvement of AUD 101 compared to USD, CAD and GBP resulted in $33m foreign exchange 279 translation i
Slide 9: Key drivers of volume reductions from H2 FY20
Key drivers of volume reductions from H2 FY20 Revenue change in H1 FY21 6,000 • Professional services revenue was 5,000 339 323 157 68 impacted in all regions by project deferrals 4,000 as a result of global economic circumstances including the COVID-19 $m 3,000 2,000 5,251 4,498 pandemic, particula
Slide 10: Key drivers of business mix change from H2 FY20
Key drivers of business mix change from H2 FY20 • Increased proportion of lower-margin H2 FY20 revenue1 by type H1 FY21 revenue1 by type construction and fabrication revenue, which is historically less variable in periods of downturn • Fabrication business in Norway had a strong 25% performance, how
Slide 11: Drivers of backlog change
Drivers of backlog change Backlog at 31 December 2020 is $13.5b The following pages explain the key drivers of backlog reduction Backlog: the value of Sales pipeline: the value New awards and Economic impact on work already awarded of known opportunities contract renewals long-term contracts: to the
Slide 12: Backlog impacted by project and award deferrals
Backlog impacted by project and award deferrals Factored sales opportunities are increasing Backlog1 For long-term contracts, the current run-rate is applied over a 36-month 1.2 0.1 period under our backlog definition • Global economic circumstances including the COVID-19 pandemic has driven deferra
Slide 13: Backlog: new awards and contract renewals
Backlog: new awards and contract renewals • Substantial numbers of awards were deferred New expected award date for opportunities deferred from H1 FY21 from H1 FY21 because of global economic circumstances including the COVID-19 pandemic. This has impacted the value of new awards and contract renewa
Slide 14: Backlog: economic impact on long-term contracts
Backlog: economic impact on long-term contracts • Economic impact on long-term contracts reduced backlog by $1.2b in H1 FY21 • For long-term contracts, the current activity level run-rate is applied over a 36-month period under our backlog definition1 60+ • Site access restrictions and project defer
Slide 15: Significant award in sustainability
Significant award in sustainability 1PointFive First commercial scale development using of Carbon Engineering’s Direct Air Capture (DAC) technology • FEED phase of first DAC unit for facility in the US • 1PointFive and Worley expect to form an alliance and Permian Basin—DAC 1 move into EPC phase for
Slide 16: Addressing climate change requires removing CO2 from the air
Addressing climate change requires removing CO2 from the air Immediate and significant IPCC: net-zero emissions required by 2050 to limit global warming to 1.5°C deployment of CO2 removal ~50% of CO2 reduction needs to come from the atmosphere infrastructure is needed to limit 45 global warming to 1
Slide 17: DAC+ sequestration – a technical solution for carbon removal
DAC+ sequestration – a technical solution for carbon removal Driving towards stabilizing the climate Direct Air Capture (DAC) How DAC+S works • CO2 in the atmosphere is very dilute, so direct air capture processes must contact large volumes of air cost-effectively Atmosphere • DAC uses large fans to
Slide 18: Business set up for the future
Business set up for the future The following pages explain the actions we have taken to set our business up for the future. We have delivered a total of $125m annualized savings from our cost savings programs in H1 FY21 which will flow into H2 FY21 and beyond. Operational savings: cost savings ECR a
Slide 19: Cost savings programs
Cost savings programs Operational savings ECR acquisition cost synergies Cost savings program to accelerate our Cost savings program identified as part of transformation integration of ECR acquisition We have delivered a total Annualized savings target: $350m by June 2022 Annualized savings target:
Slide 20: Operational savings target increased to $350m
Operational savings target increased to $350m1 Operational savings delivery ($m) • Target increased to $350m1 by 30 June 2022 from $275m1 by December 2021 Savings delivered In-period savings carried into run rate Savings total 64 • $121m1 savings delivered in H1 FY21 which will Savings to be deliver
Slide 21: Operational savings progress
Operational savings progress • Four categories of approximate equal size Property Discretionary • Operational savings target increased to $350m1 due to spend rationalization increased proportion of shared services Approx. 75% complete Complete • Shared services linked to go-live of integrated back
Slide 22: Final ECR acquisition cost synergies to be delivered by April 2021
Final ECR acquisition cost synergies to be delivered by April 2021 ECR acquisition cost synergy delivery ($m) 2 4 9 • $4m1 savings delivered in H1 FY21 which will flow into H2 FY21 and beyond Savings delivered 78 $2m in-period savings in H1 FY21 In-period savings carried into run rate Savings total
Slide 23: Cash flow, net debt and balance sheet
Cash flow, net debt and balance sheet Continuing focus Statutory operating cash flow Gearing ratio1 500 30% 400 ECR 25% acquisition 300 ECR acquisition $m 200 20% 100 Gearing ratio = net debt/net debt + equity 15% - HY18 FY18 HY19 FY19 HY20 FY20 HY21 HY18 HY19 HY20 HY21 Net debt1 Leverage ratio1 1,8
Slide 24: Our sustainability pivot provides the structural framework for growth
Our sustainability pivot provides the structural framework for growth Sustainability as defined by $1.2b revenue in H1 FY21 Energy transition and circular our sustainability domain1 economy opportunities increased from 11% to 18% of total factored sales pipeline2 Delivering a more sustainable world
Slide 25: Our sustainability domain
Our sustainability domain Energy Transition Low-carbon hydrogen, CCUS, gas, electrification, transition materials, nuclear, solar, offshore wind, DES Circular Economy Waste to energy, bio-based products such as renewable fuel, plastics recovery Restoration Decommissioning, contaminated land manageme
Slide 26: Sustainability related investment is increasing across all our sectors
Sustainability related investment is increasing across all our sectors ExxonMobil has launched a new Low Carbon Solutions BASF and Siemens Energy have partnered to accelerate BHP has signed a MOU with Japanese steel producer JFE business which will initially focus on advancing plans for commercial i
Slide 27: Delivering sustainable outcomes for customers
Delivering sustainable outcomes for customers Energy Transition Circular Economy Track record of 2400+ Energy Transition projects Supporting the world’s Developing a game changing Supporting two US states’ Designing world’s largest largest green hydrogen carbon capture process scheme ambitious clean
Slide 28: Sustainability is a growing part of our business
Sustainability is a growing part of our business • Sustainability1 represents around 30% of H1 FY21 Energy transition and circular economy Environment, social and water aggregated revenue, similar to FY2020 Excluding gas and LNG 5% 4.5% 3.5% 3.7% 3.7% 20% 18% 4% • Energy transition and circular econ
Slide 29: Sustainability project complexity drives gross margin
Sustainability project complexity drives gross margin • Our target sustainability1 projects are technically complex with a similar risk profile to historical Factored sales pipeline revenue2 (proportion of total) services – not lump sum turn-key 25% 20% • Sustainability1 opportunities in our factore
Slide 30: ESG leaders
ESG leaders AAA rating by MSCI for “Worley continues to Sector leader as fifth consecutive year demonstrate leading assessed by ACSI ESG performance” - MSCI Worley Half Year Results 2021 30
Slide 31: Addressing climate change through strategic action
Addressing climate change through strategic action We operate in an environmentally responsible manner and provide our customers with solutions for complex sustainability challenges: Aligned with Paris Agreement and UN Sustainable Our biggest contribution is in the work we do for our Development Goa
Slide 32: Our people and communities
Our people and communities We support the safety, health, and well-being of our people and communities where we operate: Approach based on our ‘Life’ Global Diversity and Inclusion The Worley Foundation provides framework that supports all our Council working with our People positive social and envi
Slide 33: Operating responsibly
Operating responsibly We are further strengthening the governance and operational controls we have in place to reinforce a culture of acting lawfully, ethically and responsibly. Responsible Business Assessment Ethical Supply Chain and Modern Our Data Protection Office to ensure all customers and Sla
Slide 34: Market update
Market update Market sector trends and case studies Upstream and Power Refining and Chemicals Mining, Minerals and Midstream Metals Worley Half Year Results 2021 34
Slide 35: Upstream and Midstream
Upstream and Midstream Leading indicator: FID activity is expected to recover this year Sector outlook Investment in oil and gas required to meet demand under SDS • Continued investment is required in oil and gas to meet 120 future demand under the IEA’s Sustainable Development Supply with investmen
Slide 36: Upstream and Midstream project case studies
PROJECT CASE STUDIES Upstream and Midstream Digitalization and innovation Full asset lifecycle support Focus on clean energy Leveraging automation and the use of digital Building on our long-standing relationship in the Playing a key role in the supply of a cleaner, lower products North Sea carbon e
Slide 37: Power
Power Energy transition driving industry change Sector outlook • Renewable-related capex spend stayed steady through the USD2-3b 20 GW 35 GW pandemic with major companies increasing their capex forecasts annual investments installed energy capacity installed energy capacity going forward Shell plans
Slide 38: Power project case studies
PROJECT CASE STUDIES Power Carbon Capture and Storage Green hydrogen for the Amsterdam metropolitan Green hydrogen from offshore wind in the UK Creating a carbon-negative power station area Collaborating across sectors to decarbonize Scaling-up production Worley has been awarded a contract to provid
Slide 39: Refining and Chemicals
Refining and Chemicals Markets recovering at different rates Sector outlook Global refining crude throughput not returning to 2015-2019 average in 2021 • Refining: Demand for transportation fuels will continue to 85 recover through 2021 although overall global refining throughput is not expected to
Slide 40: Refining and Chemicals project case studies
PROJECT CASE STUDIES Refining and Chemicals From waste gas into sustainable ethanol Expanding our portfolio with BASF solvent suite Turning plastics into valuable chemicals Turning a circular economy idea into a Helping refiners meet their sulphur removal Recovering benzene, toluene and xylene from
Slide 41: Mining, Minerals and Metals
Mining, Minerals and Metals A green recovery will support demand growth Sector outlook Refined copper supply and demand balance • 2020 saw strong fundraising for metals and mining with junior 300 and intermediate mining companies raising USD11.23b, up 25% 200 Thousand tonnes on 2019 and the highest
Slide 42: Mining, Minerals and Metals project case studies
PROJECT CASE STUDIES Mining, Minerals and Metals Transition materials enabling new energy Mine water management study Australia’s largest hybrid renewable microgrid infrastructure Shaping Yanacocha’s future water strategy Leading the way in renewable energy Unlocking new copper resources The Hu’u Pr
Slide 43: Driving long-term shareholder value
Driving long-term shareholder value • Global leader delivering knowledge-based project and asset services • Strongly positioned to benefit from sustainable development mega trend • Global earnings base and broad end markets provides diversification and resilience • Strong balance sheet to support gr
Slide 44: Half year results 2021
2021 Half year results Tom Honan, Chief Financial Officer worley.com Worley Half Year Results 2021 44
Slide 45: Financial headlines
Financial headlines Statutory operating cash flow $253m • Compared to $227m in H1 FY20 Cash generation Underlying operating cash flow $281m • Compared to $361m in H1 FY20 Aggregated revenue $4,498m • Compared to $5,998m in H1 FY20 Performance Underlying EBITA $207m • Compared to $366m in H1 FY20 Gea
Slide 46: Statutory statement of financial performance
For the half year ended 31 December 2020 ($m) 31 December 2019 ($m) REVENUE AND OTHER INCOME Professional services revenue 2,964 3,873 Statutory Procurement revenue Construction and fabrication revenue 646 1,261 1,513 1,506 statement of Other income 1 5 financial Interest income 4 4 Total revenue an
Slide 47: Reconciliation of statutory to underlying results
31 December 2020 31 December 2019 For the half year ended ($m) ($m) Statutory result (NPAT) 22 115 Reconciliation of Transition costs 34 81 Impact of transformation and restructuring statutory to underlying Payroll restructuring Impairment of property assets 19 16 - - results Onerous contracts and o
Slide 48: H1 FY21 key financials
H1 FY21 key financials Statutory result HY2021 HY2020 vs. HY2020 • Aggregated revenue impacted by global Total revenue ($m) 4,876 6,901 (29%) economic circumstances including the EBITA ($m) 140 285 (51%) COVID-19 pandemic, resulting in project NPATA ($m) 60 154 (61%) deferrals and site access restri
Slide 49: Segment results
Segment results By region HY2021 HY20201 vs. HY 2020 Aggregated revenue ($m) • Americas margin decrease was primarily driven 4,498 5,998 (25%) Americas by US Field Services which was impacted by 1,907 3,044 (37%) COVID-19 with key sites inaccessible and EMEA 1,667 1,877 (11%) curtailed customer spen
Slide 50: Key operating indicators
Key operating indicators 15% Margin Underlying EBITA margin % 10% • Underlying EBITA margin impacted by change in business mix and rate of volume reduction 5% • Professional services segment margin % relatively stable compared to H1 FY20 0% • Higher proportion of construction and fabrication HY19 FY
Slide 51: Headcount: staff utilization on target
Headcount: staff utilization on target • Headcount approx. 48,400 at 31 January 2021 Worley global headcount • Total headcount down 7% since 30 June 2020 60,000 • Staff numbers have reduced 6% since 30 September 2020 Craft 40,000 • Craft numbers have increased 9% since 30 September 2020 Staff 40,700
Slide 52: Capital management
Capital management Strengthened liquidity position • Confirmed as an eligible issuer for the Bank of Underlying debt facilities expiry by maturity date England’s COVID-19 Corporate Financing 1,600 Facility (BoE CCFF) up to GBP300m has further strengthened our liquidity position 1,400 • Strengthened
Slide 53: Balance sheet metrics
Balance sheet metrics • Gearing well below target band of 25-35% HY2021 FY2020 • Average maturity of debt is 1.8 years Gearing ratio1 22.2% 22.9% • Dispute resolution mechanisms triggered in respect Facility utilization2 51.8% 57.4% of three non-paying SOEs. Receivables are Average cost of debt3 2.8
Slide 54: Our actions have set the business up for the future
Our actions have Simplified business structure set the business Focused and disciplined cash collection up for the future Strong capital management: net debt at lowest level since ECR acquisition Global common systems and processes in place, including sales, finance and People Operational savings ta
Slide 55: Outlook
2021 Outlook Chris Ashton, Chief Executive Officer worley.com Worley Half Year Results 2021 55
Slide 56: Summary
Summary Delivering cash through Business set up for future Delivering a more sustainable challenging environment growth world • The safety and well-being of our • We believe our strong cash result, • Our sustainability pivot provides the people through the COVID-19 cost savings programs and our stru
Slide 57: Group outlook
Group outlook As a result of the global economic circumstances, including We expect an improved EBITA in H2 FY21 compared to the COVID-19 pandemic, we have seen project deferrals, H1 FY21 due to recent project awards as well as the impact of although minimal project cancellations. Customer discussio
Slide 58: Worley Half Year Results 2021
& Worley Half Year Results 2021 58
Slide 59: Supplementary information
2021 Half year results Supplementary information worley.com Worley Half Year Results 2021 59
Slide 60: Segment results by region
Segment results By region Americas EMEA APAC TOTAL HY2021 HY20201 vs. HY2020 HY2021 HY20201 vs. HY2020 HY2021 HY20201 vs. HY2020 HY2021 HY20201 vs. HY2020 $m $m $m $m $m $m $m $m Aggregated revenue 1,907 3,044 (37%) 1,667 1,877 (11%) 924 1,077 (14%) 4,498 5,998 (25%) Professional services2 1,014 1,5
Slide 61: Segment results by sector
Segment results By sector • Upstream and Midstream revenue and margin HY2021 HY20201 vs. HY 2020 were impacted by project deferrals as a result of Aggregated revenue ($m) 4,498 5,998 (25%) global economic circumstances including the Energy COVID-19 pandemic, particularly in the Americas. 2,127 2,975
Slide 62: Revenue reductions in all regions
Revenue reductions in all regions Americas 4,000 • Upstream and Midstream revenue 3,000 169 517 impacted by project deferrals as a result 4 2,000 314 141 of global economic circumstances $m 3,044 including the COVID-19 pandemic, 1,000 1,907 particularly in the US, and completion of - major projects
Slide 63: Key drivers for EBITA change from H2 FY20
Key drivers for EBITA change from H2 FY20 Detail of cost savings 600 Operational savings • Net business decline of $279m ECR acquisition cost synergies driven by global economic 500 44 circumstances including the COVID- 83 19 pandemic 23 39 2 36 400 • Volume reductions and business 279 mix are the k
Slide 64: Global operations
Global operations Prudhoe Bay Pickering The Hague Bowmanville Meerssen Markham Aberdeen Stavanger Kincardine Glasgow Stenungsund Edmonton Sudbury Manchester Moscow Blackfalds Stockton-on-Tees Cologne Anchorage Kitimat Grimsby Ludwigshafen Vancouver, BC Calgary Bristol Sakhalin London Ghent Plzen Ula
Slide 65: Underlying earnings profile
Underlying earnings profile Group underlying EBITA ($m) H2 H1 694 743 413 377 313 359 172 251 335 366 207 141 162 FY2018 FY2019 FY2019 pro forma FY2020 FY2021 Group underlying NPATA ($m) H2 432 H1 260 216 182 157 97 216 85 103 117 FY2018 FY2019 FY2020 FY2021 The modified retrospective approach has b
Slide 66: Margin profile
Margin profile Underlying EBITA % H1 H2 7.0% 6.7% 6.6% 7.2% 6.6% Total 6.1% 6.6% 6.3% 6.5% 6.4% 6.5% 6.1% 4.6% FY2018 FY2019 FY2019 pro forma FY2020 FY2021 Underlying NPATA % H1 H2 4.0% 3.8% 4.0% 4.0% 4.0% 4.1% 3.8% Total 3.7% 3.6% 2.6% FY2018 FY2019 FY2020 FY2021 The modified retrospective approach
Slide 67: Revenue split
Revenue split Region aggregated revenue (%) Sector aggregated revenue (%) 15% 24% 6% 12% 18% 25% US & Latin America Canada Europe Middle East & Africa Asia ANZ Upstream & Midstream Power Refining & Chemicals MMM Worley Half Year Results 2021 67
Slide 68: Backlog
Backlog Backlog by region Backlog by region at 31 December 2020 at 31 December 2020 • Backlog reduction primarily in (1.2) Americas in Upstream and (1.6) 1.8 Americas (0.4) (0.1) - Midstream, and Refining and 16.8 Chemicals due to project deferrals $b 4.8 Europe, Middle East, Africa (EMEA) 13.5 and
Slide 69: Revenue reconciliation
Revenue reconciliation 1. Increase in revenue from an arbitration award in relation to a dispute with a HY2021 ($m) HY2020($m) vs HY2020 state-owned enterprise. 2. Aggregated revenue is defined as Revenue and other income 4,876 6,901 (29%) statutory revenue and other income plus share of revenue fro
Slide 70: Cashflow
Cashflow HY2021 ($m) HY2020 ($m) EBITA 140 285 Depreciation, amortization and impairments 176 188 Interest and tax paid (55) (88) Working capital/other (8) (158) Net cash inflow from operating activities 253 227 Non recurring costs 76 115 International government subsidies received, net of direct co
Slide 71: Cashflow
Cashflow Bridge to cash balance (6) (27) (13) (55) 336 (130) (33) (40) $m (76) 52 490 Underlying operating cash flow 498 $281m Worley Half Year Results 2021 71
Slide 72: Liquidity and debt maturity
Liquidity and debt maturity Liquidity summary $m HY2021 FY2020 Change Liquidity Loans, finance lease & overdraft facilities 3,326 3,256 2% Less: facilities utilized (1,722) (1,867) (8%) Available facilities 1,604 1,389 15% Plus: cash 498 490 2% Total liquidity 2,102 1,879 12% Bonding Bonding facilit
Slide 73: Foreign exchange translation impact
Foreign exchange translation impact Movement in major currencies against AUD (indexed) Currency Average exchange Spot exchange rate rate movement movement 110 BRL 41.0% 41.8% 108 106 CAD 5.4% 7.8% 104 CNY 1.8% 3.5% 102 EUR (0.8)% 0.8% 100 GBP 1.7% 5.5% 98 NOK 6.8% 7.2% 96 SGD 4.9% 8.3% 94 Jun-20 Jul
Slide 74: Foreign exchange
Foreign exchange Total EBITA impact 2 1 1 - (2) (1) (1) (1) (1) (1) (2) (2) (2) $m (4) (4) (6) (8) (7) ARS BRL CAD GBP INR KZT MNT MYR NOK USD US-Pegged Other Group EBITA FX translation impact 20 9 10 10 - $m (3) (2) (1) (10) (20) (20) (30) HY16 HY17 HY18 HY19 HY20 HY21 The modified retrospective ap
Slide 75: Glossary
Glossary $, $m – Australian dollars unless otherwise stated, Australian millions of dollars HSS - Health, Safety and Sustainability AABS - Australian Accounting Standards Board HY - Half Year ANZ - Australia & New Zealand IEA - International Energy Agency APAC - Australia, Pacific, Asia & China IFRS
Slide 76: Backlog definition
Backlog definition Backlog is the total dollar value of the amount of revenues expected to be recorded as a result of work performed under contracts or purchase/work orders already awarded to the Group. With respect to discrete projects an amount is included for the work expected to be received in t
Slide 77: Registered office
Registered office: Level 17, 141 Walker Street North Sydney NSW 2060 Australia T: +61 2 8923 6866 E: investor.relations@worley.com Worley Limited ABN 17 096 090 158 worley.com