Slide 1: 1Q 2018 Financial Results
1Q 2018 Financial Results April 26, 2018 Stuart Bradie – President and Chief Executive Officer Mark Sopp – Executive Vice President and Chief Financial Officer Nelson Rowe – Senior Vice President, Investor Relations
Slide 2: Forward-Looking Statements
Forward‐Looking Statements This presentation contains forward‐looking statements regarding our plans, objectives, goals, strategies, future events, future financial performance and backlog information and other information that is not historical. When used in this presentation, the words “estimates,
Slide 3: Stuart Bradie, Chief Executive Officer
Stuart Bradie Chief Executive Officer
Slide 4: Good Safety is Simply Good Business
Good Safety is Simply Good Business Total Recordable Incident Rate (TRIR) Performance: 2012 – Q1 2018 0.50 0.43 0.42 0.40 0.36 0.30 0.35 0.28 0.32 0.31 0.24 0.24 0.22 0.20 0.16 0.21 0.21 0.19 0.18 0.10 0.16 0.16 0.00 2012 2013 2014 2015 2016 2017 Q1 2018 KBR IOGP Top Q IOGP Average KBR is focused on
Slide 5: 1Q18 Highlights
1Q18 Highlights Revenues Adjusted EPS1 Strong first quarter results $1,038 $1,106 $0.34 $0.28 Steady revenues Earnings performance above expectations Q1 '18 Q1 '17 Q1 '18 Q1 '17 Progress on Ichthys LNG Adjusted EBITDA2 Margin % Operating Cash Flow Operation control of Aspire 20 0 mid‐Janua
Slide 6: Government Services, Technology, Hydrocarbons Services Market Outlook
Market Outlook • Highlights: 32% (11% organic) revenue growth, book‐to‐bill of 1.2x Government • Strategic Developments: Recently completed the acquisitions of SGT and Carillion’s interest in Aspire Defence Services • Market Outlook: Strong growth supported by increasing government and defense spend
Slide 7: SGT – Overview
SGT – Overview Company Overview Key Platforms and Programs Award-winning, high value engineering, mission operations, Human Exploration and Operations Mission Directorate scientific, and IT service solutions to a wide array of federal Science Mission Directorate NASA government agencies Spac
Slide 8: SGT – Transaction Rationale
SGT – Transaction Rationale Sapphire Overview SGT Delivers on KBR’s Strategy Grow Space Franchise Grow Core Engineering Well‐established, tightly integrated business with a strong brand and reputation Civil Army Command • Expand NASA franchise across • Leverage Army relationships and multiple cent
Slide 9: ASPIRE Defense JV
ASPIRE Defense JV Largest UK Government infrastructure PFI 35 year PFI contract with UK Ministry of Defence commenced in 2006 $1.5B contract expansion in 2017 in support of the UK Army Basing Programme Scope includes base construction, management, maintenance and life support for 25% of UK A
Slide 10: Ichthys LNG Status
Ichthys LNG Status Operations Temp. Power Complex Plant Combined Cycle Power Plant GTG GTG GTG GTG GTG 1 2 3 4 5 Offsites & Utilities June/July ‘18 STG STG STG • Structural & Mechanical substantially 1 2 3 complete • E&I and Commissioning remaining Q1 ‘19 LNG Train 2 RFSU Achieved LNG Train 1 Mechan
Slide 11: Mark Sopp, Executive Vice President
Mark Sopp Executive Vice President
Slide 12: Consolidated Results
Consolidated Results Quarter Ending ($ in millions, except EPS) Mar 31, 2018 Mar 31, 2017 Revenues $ 1,038 $ 1,106 Steady Revenue Gross Profit $ 81 $ 82 GS revenue growth mixture of organic and Aspire Equity in Earnings $ 23 $9 HS results are due to project completions GP + EE* $ 104 $ 91 Gene
Slide 13: ASPIRE & SGT
ASPIRE & SGT Aspire: • Operational control and consolidation of results effective January 15, 2018 • Prompt and orderly transition of contract responsibilities and employees to KBR • Uninterrupted services and performance to UK MoD • Acquisition of Carillion’s interest in Aspire entities on April 18
Slide 14: Segment Results – Government Services (GS)
Segment Results – Government Services (GS) Revenues GP + EE GP + EE Margin $677 8.8% 9.0% $60 $515 $46 1Q18 1Q17 1Q18 1Q17 1Q18 1Q17 32% revenue growth including Aspire, 11% organic growth book‐to‐bill of 1.2x coupled with strong bidding activity margin performance consistent with targets 13
Slide 15: Segment Results – Technology
Segment Results – Technology Revenues GP GP Margin $66 $16 $62 $14 25.5% 20.9% 1Q18 1Q17 1Q18 1Q17 1Q18 1Q17 14% growth in gross profits book‐to‐bill of 1.0x, robust pipeline targeted margins increased to mid 20s 14
Slide 16: Segment Results – Hydrocarbons Services (HS)
Segment Results – Hydrocarbons Services (HS) Revenues GP + EE GP + EE Margin $499 $33 $30 10.2% $299 6.7% 1Q18 1Q17 1Q18 1Q17 1Q18 1Q17 Revenues down year over year, but stabilizing from 4Q17 1Q bookings low, but recovering with new wins in 2Q delivering on targeted margins 15
Slide 17: Cash, Debt and Leverage Position
Cash, Debt and Leverage Position CASH Quarter Ending Mar 31, 2018 Mar 31, 2017 Ending Cash Balance $ 486 $ 410 Gross Debt $ 540 $ 650 Net Debt $ 54 $ 240 TTM Adjusted EBITDA2 $ 342 $ 85 Gross Debt/Adjusted EBITDA2 1.6 7.6 Net Debt/Adjusted EBITDA2 0.2 2.8 2TTM Adjusted EBITDA reconciliations provide
Slide 18: Refinancing
Refinancing Facilities Revolver Delayed Draw Performance Term Loan B Term Loan A (TLA) LC Facility (PLOC) for Ichthys Amount $500 million $350 million ($115 mm $500 million $800 million drawn at close) Rate L+300* L+300* N/A L+375 Optional Prepayable at Par Prepayable at Par N/A Prepayable at Par Pr
Slide 19: 2018 Guidance
2018 Guidance Reaffirm full year guidance 3 Adjusted EPS range $1.35 ‐ $1.45 excluding: ‒ legacy legal fees ‒ acquisition and integration related expenses ‒ new amortization associated with Aspire acquisition ‒ gain from consolidation of Aspire Effective Tax Rate: 22% ‐ 24% Operating Cash Fl
Slide 20: Summary
Summary KBR OVERVIEW Strong quarter Strong backlog performance in GS and Technology – and in HS in early Q2 Closed SGT, Aspire and Refinancing in April Upbeat market outlook across Government, Technology & Hydrocarbons Re‐affirmed guidance 19
Slide 21: Appendix
Appendix
Slide 22: Total Backlog
Total Backlog HS Technology GS Book‐to‐Bill 21
Slide 23: 2018 Backlog – Significantly Lower Risk Profile
2018 Backlog – Significantly Lower Risk Profile > 80% of earnings for 2018 secured in backlog Backlog by Contract Type Majority of KBR backlog is currently either long‐term, reimbursable, PFI or service contracts with a lower risk profile and predictable cash flows GS backlog excludes unexerci
Slide 24: Non-GAAP Reconciliation
Non‐GAAP Reconciliation 1Adjusted EPS Reconciliation Quarter Ending Mar 31, 2018 Mar 31, 2017 EPS (diluted) $ 0.97 $ 0.26 Add Back: Legacy Legal Fees $ 0.01 $ 0.02 Acquisition & Integration Related Expenses $ 0.02 $ 0.00 Amortization Related to Aspire Acquisition $ 0.01 $ 0.00 Aspire Gain on Consoli
Slide 25: Non-GAAP Reconciliation
Non‐GAAP Reconciliation 2Consolidated EBITDA, Adjusted EBITDA, and TTM Adjusted EBITDA Reconciliation Quarter Ending Quarter Ending ($ in millions) Mar 31, 2018 Mar 31, 2017 Jun 30, 2017 Sep 30, 2017 Dec 31, 2017 Mar 31, 2018 TTM 2018 EBITDA $ 117 $ 82 $ 48 $ 193 $ 440 Net Income Attributable To KBR
Slide 26: Non-GAAP Reconciliation
Non‐GAAP Reconciliation 32018 Adjusted EPS Guidance Reconciliations Guidance FY 2018 EPS (diluted) $1.85 - $1.95 Add Back: Legacy Legal Fees $ 0.07 Acquisition & Integration Related Expenses $ 0.04 Amortization Related to Aspire Acquisition $ 0.06 Aspire Gain on Consolidation ($0.67) Adjusted EPS $1