Worley Limited · ASX:WOR
Worley — FY2020 Earnings Presentation
69 slides from Worley's earnings presentation, Aug 26, 2020
Slide 1: Delivering a more sustainable world
Delivering a more sustainable world Full Year Results 2020 Chris Ashton, Chief Executive Officer Worley Full Year Results 2020 1 Image: London Array Wind Farm substation and turbines
Slide 2: Disclaimer
Disclaimer The information in this presentation about Worley Limited, the entities it controls (Group) and its activities is current as at 26 August 2020 and should be read in conjunction with the Company’s Appendix 4E and Annual Report for the full year ended 30 June 2020. It is in summary form and
Slide 3: Agenda
Agenda FY2020 highlights Results context Full year results 2020 Transformation strategy & market update Outlook Q&A Worley Full Year Results 2020 3
Slide 4: Delivering through global disruption
Delivering through global disruption 1 2 3 4 Delivering ECR acquisition Transformingfaster fastertoto Business performing Improved financial strength benefits ahead of Transforming emergestronger emerge stronger expectations $11,249m $881m 40% chemicals vs <10% FY17 $275m 45% opex Aggregated revenue
Slide 5: Results context
Results context The COVID-19 pandemic resulted in a rapidly changing environment for Worley’s business We entered the period of global disruption in a stable financial position and we improved this position through delivering a strong cash result and securing debt facilities We are proud of ho
Slide 6: Delivering through global disruption
Delivering through global disruption COST SAVINGS Increased synergy cost EXTERNAL FACTORS saving target to $190m COST SAVINGS run rate COVID-19 pandemic Oil price crash IMF projects global Increased synergy cost outbreak growth at -4.9% in 2020 saving target to $175m run rate ECR integration LOO
Slide 7: Earnings diversification
Sector mix Earnings diversification Approximately 40% of revenue from Chemicals sector, up from <10%1 Business mix 100% Approximately 20% of revenue from exposure to 10% 11% 9% 7% upstream and midstream capex, down from 65%1 80% 43% 48% Business mix 60% 55% 81% Approximately 45% of revenue fro
Slide 8: Long-term asset contract wins in FY2020
Long-term asset contract wins in FY2020 Americas EMEA Archer Daniels, maintenance master services agreement Covestro, capital investment alliance - EPCM services CNOOC, small capital projects EPC and maintenance services CEPSA Quimica SA, engineering framework agreement El Dorado Irrigation District
Slide 9: Sustainability is core to what we do…
Sustainability is core to what we do… Caring for our planet We operate in an environmentally responsible manner and provide our customers with solutions for the world’s complex environmental and sustainability challenges: We support the UN Sustainable Development Goals Our Climate Change Positio
Slide 10: Sustainability is core
Sustainability is core Our biggest contribution to delivering a more sustainable world is in the work we do for our customers We provide knowledge, intellectual property and technology solutions at scale to address the world’s complex sustainability challenges Contributing to a sustainable wor
Slide 11: Our Climate Change Position Statement
Our Climate Change Position Statement Worley acknowledges the findings of the Worley is committed to achieving net zero Scope 1 and Intergovernmental Panel on Climate Change. Scope 2 greenhouse gas emissions by 2030, and to pro- We contribute our project delivery and technical actively supporting ou
Slide 12: Health and safety
“The safety, health, and well-being Health and safety of ourselves and those around us is fundamental to Life. Without this, nothing we do is worth doing” Chris Ashton, CEO Life COVID-19 Our new health, safety Mobilized COVID-19 and well-being approach pandemic task force builds on the best of b
Slide 13: Summary
Summary Business is performing Aggregated revenue up 75% from pcp, up 7% from FY19 proforma Underlying EBITA up 80% from pcp, up 7% from FY19 proforma Improved financial strength Underlying operating cash flow to $881 million, up from $239 million Leverage1 decreased to 1.8x, gearing2 at 18.
Slide 14: Full Year Results 2020
Full Year Results 2020 Tom Honan, Chief Financial Officer
Slide 15: Financial highlights
Financial highlights Delivering through global disruption Underlying operating cash flow $881 million Improved from $239 million in FY2019 Cash generation DSO Down 13 days Improvement since HY2020 Aggregated revenue $11,249 million Improved 75% compared to FY2019 Performance Underlying EBITA $
Slide 16: Statutory statement of financial performance
Statutory statement of financial performance1 30 June 2020 ($m) 30 June 2019 ($m) REVENUE AND OTHER INCOME Professional services revenue 7,350 4,530 Procurement revenue 2,964 1,020 Construction and fabrication revenue 2,720 1,329 2 Other income 24 8 Interest income 10 37 Total revenue and other inco
Slide 17: Reconciliation of statutory to underlying NPATA results
Reconciliation of statutory to underlying NPATA results Adjusted for non-trading items FY2020($m) FY2019($m) Statutory result (NPAT) 171 152 Acquisition & related transition costs (see page 61) 147 83 Impact of transformation and restructuring (see page 61) 121 - Government subsidies, net of direct
Slide 18: FY2020 key financials
FY2020 key financials Statutory result Total revenue ($m) FY2020 13,068 FY2019 6,924 vs. FY2019 89% 12-month contribution of ECR has driven EBITA 1($m) 498 308 62% increase in revenue, EBITA and NPATA NPATA1 ($m) 252 173 46% Basic EPS (cps) 32.8 36.4 (10%) Improved underlying EBITA margin reflec
Slide 19: Key drivers for change
Key drivers for change Managing business fundamentals Cost synergy and operational savings ECR acquisition cost synergies improving underlying performance In period operational savings relate to discretionary spend 23 Net business decline driven by 14 28 62 36 economic circumstances, includes
Slide 20: Segment result
Segment result By line of business FY 2020 FY 20191 vs. FY 2019 Aggregated Revenue ($m) 11,249 6,439 75% Energy & Chemicals Services 4,952 2,855 73% Total segment revenue increased due to Mining, Minerals & Metals Services 1,184 286 314% ECR contribution Major Projects & Integrated Solutions 4,540
Slide 21: Key operating indicators
Key operating indicators Margin Underlying EBITA margin % Improved underlying EBITA margin reflects 7.0% higher relative contribution from Chemicals as well as synergy realization 6.0% Improvement in margin despite lower margin 5.0% construction work 4.0% HY18 FY18 HY19 FY19 HY20 FY20 Underlying
Slide 22: Headcount: staff utilization on target
Headcount: staff utilization on target Worley global headcount (30 June 2020) Staff utilization (30 June 2020) Headcount ECR acquisition 94% ECR acquisition Change to prior month (staff only since Apr 2019) 92% 90% UKIS 88% Acquisition 86% 84% 82% 80% 78% Jan-17 Jul-17 Jan-18 Jul-18 Jan-19 Jul-19 Ja
Slide 23: Backlog
Backlog For long-term O&M contracts, the Underlying backlog is stable current run-rate is applied over a 36-month period under our backlog New contract awards greater than 0.4 definition backlog delivered 0.4 0.2 We continue to win work with around 5.0 1.1 $2 billion of contracts awarded in Q4
Slide 24: Backlog
Backlog Backlog down 10% to $16.8 billion from 31 December 2019 to 30 June 2020 (8% on constant currency basis) Backlog decline mostly in long-term O&M contracts in the Energy and Chemicals sectors in North America COVID-19 site access restrictions impacting backlog Site shutdown season dela
Slide 25: Capital management
Capital management Strengthened liquidity position 1,800 Debt facilities expiry by maturity date Renewed $480 million of working capital for an 1,600 additional 12 months 1,400 Secured additional $465 million in 12-month 1,200 facilities, further improving liquidity 1,000 Strengthened through
Slide 26: Cash flow, net debt and balance sheet
Cash flow, net debt and balance sheet Continuing focus Underlying operating cash flow Gearing ratio* % m$ 1,000 35% UKIS acquisition 800 30% ECR acquisition 600 25% 400 20% 200 Gearing ratio = net debt/net debt + equity - 15% FY16 FY17 FY18 FY19 FY20 FY17 HY18 FY18 HY19 FY19 HY20 FY20 m$ Net debt* L
Slide 27: Balance sheet metrics
Balance sheet metrics FY2020 HY2020 FY2019 Gearing well below target band of 25-35% Gearing ratio1 18.5% 21.3% 21.3% Average maturity of debt is 2.4 years Facility utilization2 57.3% 68.9% 72.7% Average cost of debt 3 3.3% 4.2% 4.5% Dispute resolution mechanisms triggered in respect of three n
Slide 28: Synergy realization – cost synergies
Synergy realization – cost synergies $177 million run rate synergies delivered Synergy target increased to $190 million1 run rate 13 78 23 177 190 56 177 14 99 99 43 43 43 6 FY19 FY19 FY20 H1 FY20 H1 FY20 H2 FY20 H2 June 2020 June 2020 Run rate Total actions in actions run actions in actions run act
Slide 29: Operational savings progress
Operational savings progress Four categories of approximate equal size Discretionary spend In period operational savings relate to discretionary spend $165 million run rate of $275 million target delivered Ahead of run rate for key spend categories e.g. travel FY2021 budgets reflective of redu
Slide 30: New ways of working
New ways of working Enabled by global common systems and processes Safety Sales Life Our safety and Worley CSP well-being Launched in January approach 2020 our new integrated launched in Customer Success January 2020 Platform powered by the Salesforce tool Operations Knowledge & Back office Manageme
Slide 31: Transformation strategy and market update
Transformation strategy and market update Chris Ashton, Chief Executive Officer
Slide 32: Our transformation strategy
Our transformation strategy To enhance our Company’s leadership position in energy, chemicals and resources we will: work with our customers change the way we work Deliver our services in and other stakeholders by leveraging automation ways that will reflect the nationally and globally to and the us
Slide 33: Purpose and values
Purpose and values We are driven by a common purpose… … delivering a more sustainable world. We value Life We Rise to the We are Stronger Together And we Unlock We believe in the safety, Challenge We thrive in real relationships Brilliance health and well-being of We love a challenge. and partnershi
Slide 34: Sustainability in action
Sustainability in action Industry commitment to sustainability action is accelerating Sustainability risk will drive reallocation of investment capital Sustainability provides expanded opportunities for growth Worley has the knowledge, experience and scale to support our customers as they na
Slide 35: Our role: helping customers on their sustainability journey
Our role: helping customers on their sustainability journey Circular economy Developing sustainable technologies Decarbonizing existing Building the world’s Hydropower Turning waste power, hydrocarbons largest offshore and solar into an energy and resources facilities wind farms installations source
Slide 36: Delivering a more sustainable world
Delivering a more sustainable world Shifting to a new energy future Now 2050 Energy transition Fossil fuels Continuing but declining & decarbonizing (eg CCUS), gas as a transition fuel, fugitives, fuel switching (eg hydrogen) New energy and networks Renewables Sustainability Renewable energy, distri
Slide 37: Sustainability is a growing part of our business
Sustainability is a growing part of our business Energy transition related activities are a growing part of our business Sustainability opportunities are growing and we are capturing them with both new and existing customers Our project pipeline indicates emerging low-carbon technology opportu
Slide 38: Strategic transactions
Strategic transactions 3sun VECKTA TWPS Transaction closed on 25 October 2019 Transaction closed 12 November 2019 Transaction closed 9 July 2020 UK-based installation, inspection and maintenance US-based joint venture between Worley and Australia-based operations and maintenance specialist in
Slide 39: Helping transform the industries we serve
Helping transform the industries we serve Green hydrogen into refining Displacing fossil fuel-based refining Oil and gas production processing with clean options - Electric vehicle battery renewable electrification Germany manufacturing Decarbonizing the offshore oil and gas value Building infrastru
Slide 40: Delivering global expertise in Australia
Delivering global expertise in Australia Large-scale hydrogen production Building case for blue and green hydrogen as a decarbonizing fuel Diesel displacement (mining facility) Carbon capture and storage Decarbonizing mineral extraction through Supporting the world’s largest lower emission alternati
Slide 41: Upstream and Midstream
Upstream and Midstream Long term investment in Upstream will continue Upstream – global oil and gas investment1 Sector outlook 600 Demand has reduced in 2020 due to COVID-19, however the market is expected to rebalance in response to supply cuts and returning economic 400 activity USDb 200 Offshor
Slide 42: Upstream and Midstream
Upstream and Midstream Project case studies Reducing carbon emissions Focus on clean energy Digitalization and innovation Supporting the world’s largest greenhouse gas Playing a key role in the transition to cleaner, Using the latest technology to refurbish an abatement project lower carbon energy a
Slide 43: Power
Power Investment in the sector will continue Sector outlook What customers are saying… Renewable energy investment in 2021 is expected to surpass oil and gas for the first time in history accounting for about 25% of “We aim to be a very different kind of energy company by 2030 as we scale up inves
Slide 44: Power
Power Project case studies Distributed Energy Systems London Array offshore wind farm Using green hydrogen to produce ammonia Providing power resilience to local communities Displacing around 900,000 tonnes of CO2 a year Commercializing renewable hydrogen production We were selected to install a bat
Slide 45: Refining and Chemicals
Refining and Chemicals Product mix and investment changes 5 Annual oil demand change by product driven by the COVID-19 pandemic, 0 decarbonization and regulations -5 mb/d -10 Sector outlook -15 Refining: Reduced demand for transportation fuels is -20 expected through 2021 and will likely result in
Slide 46: Refining and Chemicals
Refining and Chemicals Project case studies From plants to plastics First ASA facility in the USA Waste to fuel takes off Bringing a next-generation sustainable plastic Supporting future growth for specialty Converting waste into clean-burning aviation to the market chemicals and road transport fuel
Slide 47: Mining, Minerals and Metals
Mining, Minerals and Metals Primary commodity price index Moderate impact of the COVID-19 pandemic 130 120 110 Sector outlook 100 Solid balance sheets enhances miners’ resilience to handle future expected volatility 90 Varied impact on commodity prices. Softening demand has impacted 80 base meta
Slide 48: Mining, Minerals and Metals
Mining, Minerals and Metals Project Case Studies Magnetic resonance bulk ore sorting technology Agnew gold mine Lihir – a project worth more than gold A leap forward in sustainability for miners Leading the way in renewable energy Expanding opportunities for PNG nationals NextOre, our joint venture
Slide 49: Outlook
Outlook Chris Ashton, Chief Executive Officer
Slide 50: Progress in FY2020
Progress in FY2020 Business is performing Aggregated revenue up 75%, underlying EBITA up 80%, underlying NPATA up 66% vs pcp Responding to current economic conditions as the global impact of COVID-19 evolves Improved financial strength Underlying operating cash flow increased to $881 million,
Slide 51: Group outlook
Group outlook The current economic circumstances have led to a rapidly changing environment for Worley's business, making the near- to medium-term outlook more difficult to predict than in previous years. We are a more resilient business following the completion of the acquisition of ECR with increa
Slide 52: Worley
Worley energy | chemicals | resources
Slide 53: Full Year Results 2020 Supplementary information
Full Year Results 2020 Supplementary information
Slide 54: Segment results
Segment results By region FY2020 FY20191 vs. FY 2019 Growth in all regions and North America Aggregated revenue ($m) in particular driven by ECR acquisition 11,249 6,439 75% APAC 1,944 1,347 44% Strong performance in Norway and EMEA 3,815 2,656 44% Canada from construction and Americas 5,490 2,4
Slide 55: Segment results
Segment results By sector Energy Chemicals Resources TOTAL FY2020 FY2019 vs. FY2019 FY2020 FY2019 vs. FY2019 FY2020 FY2019 vs. FY2019 FY2020 FY2019 vs. FY2019 $’m $’m $’m $’m $’m $’m $’m $’m Aggregated revenue 5,302 4,480 18% 4,525 1,326 241% 1,422 633 125% 11,249 6,439 75% Professional services 3,6
Slide 56: Global operations
Global operations 51,900 PEOPLE 49 COUNTRIES Worley Full Year Results 2020 56
Slide 57: Underlying earnings profile
Underlying earnings profile Group underlying EBITA $m H2 H1 694 743 413 313 359 377 172 251 335 366 141 162 FY2018 FY2019 FY2019 pro forma FY2020 Group underlying NPATA $m H2 432 H1 260 216 182 157 97 216 85 103 FY2018 FY2019 FY2020 The modified retrospective approach has been applied on adoption of
Slide 58: Margin profile
Margin profile Underlying EBITA % H1 H2 7.2% Total 7.0% 6.6% 6.7% 6.6% 6.6% 6.5% 6.4% 6.5% 6.3% 6.1% 6.1% FY2018 FY2019 FY2019 pro forma FY2020 Underlying NPATA % H1 H2 4.1% Total 4.0% 4.0% 4.0% 4.0% 3.8% 3.8% 3.7% 3.6% FY2018 FY2019 FY2020 The modified retrospective approach has been applied on ado
Slide 59: Revenue reconciliation
Revenue reconciliation FY2020 ($m) FY2019($m) vs FY2019 Revenue and other income 13,068 6,924 89% Less: Procurement revenue at nil margin (including share of revenue from associates) (2,190) (608) 260% Plus: Share of revenue from associates 393 183 115% Less: Pass through revenue at nil margin - (32
Slide 60: EBITA reconciliation
EBITA reconciliation FY2020 ($m) FY2019 ($m) EBITA1 498 308 Impact of acquisitions, comprised of: Acquisition costs - 51 Transition costs 147 35 Other - 10 Impact of transformation, restructuring, comprised of: Payroll restructuring 41 - Impairment of property assets 51 - Onerous contracts and other
Slide 61: Reconciliation of statutory to underlying NPATA results
Reconciliation of statutory to underlying NPATA results Notes Note 1: Acquisition & related transition costs FY2020($m) FY2019($m) Transition costs 147 35 Acquisition costs - 51 Other - 10 Interest on term deposits, net of capitalized costs write off - (27) US foreign tax credits write off due to EC
Slide 62: AASB 16 Leases
AASB 16 Leases Impact on FY20 results FY20 under previous AASB 16 Leases was adopted by the Group on accounting standard Impact of AASB 16 FY20 under AASB 16 1 July 2019 Modified retrospective approach was adopted, Underlying EBITA 733 10 743 as such no prior year comparatives have been restated
Slide 63: Cashflow
Cashflow FY2020 ($m) FY2019 ($m) EBITA 498 308 Add: Depreciation, amortization and impairments 321 65 Less: Interest and tax paid (166) (42) Add/(less): Working capital/other 176 (95) Net cash inflow from operating activities 829 236 Non recurring costs and income plus interest income received1 205
Slide 64: Cashflow
Cashflow Bridge to cash balance ( 162 ) DSO improved by 13 days in ( 42 ) ( 62 ) (9) the H2 2020 ( 208 ) Improved cash collection 1,043 across the Group ( 354 ) (9) ( 171 ) ( 34 ) ( 14 ) 20 492 490 Underlying operating cash flow – $881m Worley Full Year Results 2020 64
Slide 65: Liquidity and debt maturity
Liquidity and debt maturity Liquidity summary $’m FY2020 FY2019 Change Liquidity Loan & overdraft facilities 3,256 2,962 10% Less: facilities utilized (1,867) (2,153) (13%) Available facilities 1,389 809 72% Plus: cash 490 492 0% Total liquidity 1,879 1,301 44% Bonding Bonding facilities 1,709 1,540
Slide 66: Foreign exchange translation impact
Foreign exchange translation impact Movement in major currencies against AUD (indexed) Average exchange Spot exchange rate Currency 110 rate movement movement 108 106 BRL 8.0% 37.9% 104 102 CAD (5.0%) 2.3% 100 98 CNY (3.4%) 1.1% 96 94 EUR (3.2%) (0.4%) 92 90 GBP (3.7%) 0.2% 88 NOK 3.5% 11.7% 86 84 S
Slide 67: Foreign exchange
Foreign exchange 8 Impact total EBITA 6 4 1 7 1 1 1 1 2 A $m 3 2 - (1) (1) (2) (2) (1.2) (1.9) (2) (1.2) (4) BGN CAD CLP EUR GBP INR KWD NOK QAR USD US-Pegged Other 15 Group EBITA FX Translation impact 10 12 11 5 5 A $m 0.1) - (5) (8) (10) FY16 FY17 FY18 FY19 FY20 The modified retrospective approach
Slide 68: Acronyms
Acronyms Acronym Meaning Acronym Meaning Acronym Meaning Engineering, Procurement and Construction AABS Australian Accounting Standards Board EPCM O&M Operations & Maintenance Management ANZ Australia and New Zealand EPS Earnings Per Share OPEX Operating expenditure APAC Australia, Pacific, Asia & C
Slide 69: Worley
Worley energy | chemicals | resources