Slide 1: 2nd Quarter 2020 Financial Results
2nd Quarter 2020 Financial Results August 06, 2020 The future, designed and delivered. Stuart Bradie – President and Chief Executive Officer Mark Sopp – Executive Vice President and Chief Financial Officer Alison Vasquez – Vice President, Investor Relations ©2020 KBR Inc. All Rights Reserved.
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
Stuart Bradie President & Chief Executive Officer
Slide 4: KBR Sustainability Platform
KBR Sustainability Platform Proud history, bright future. 4 ©2020 KBR Inc. All Rights Reserved.
Slide 5: KBR Sustainability Moment
KBR Sustainability Moment SOCIAL MOBILITY At KBR, we believe everyone should have the same opportunity to succeed regardless of the circumstances in which they were born. COMMUNITY ENGAGEMENT HUMAN RIGHTS INCLUSION AND DIVERSITY We’ve worked with local communities We’ve invested in people in We've b
Slide 6: Key Takeaways Up Front – Executing on Our Strategy
Key Takeaways Up Front – Executing on Our Strategy ▪ Solid Q2 results – Reaffirming Adjusted EPS ▪ Stellar cash performance – Raising operating cash flow guidance ▪ Reimagining KBR ▪ Focus on upmarket, technical services and solutions ▪ Exiting commoditized services, construction and lump- sum EPC,
Slide 7: 2Q 2020 Highlights
2Q 2020 | Highlights REVENUE ADJUSTED EBITDA1 ADJUSTED EBITDA MARGIN1 $117 $1,422 $1,385 $106 8.2% 7.7% 2Q19 2Q20 2Q19 2Q20 2Q19 2Q20 ADJUSTED EPS1 ADJ. OPERATING CASH FLOW1 BACKLOG $113 $3.3B $0.41 $2.9B OPTIONS $0.39 $13.8B $12.6B BACKLOG $33 2Q19 2Q20 2Q19 2Q20 2Q19 2Q20 $ in millions, except EPS
Slide 8: Portfolio Shaping Advances Strategic Focus
Portfolio Shaping Advances Strategic Focus GOVERNMENT TECHNOLOGY SOLUTIONS SOLUTIONS ▪ Domain expertise across mission-critical, ▪ Sustainability-focused, innovative licensed long duration programs aligned with critical IP, catalyst and proprietary equipment priorities of health & human performance,
Slide 9: Market Outlook
Market Outlook Government Outlook Technology Outlook ▪ Defense budgets align well with ▪ Ammonia / fertilizer demand stable KBR strategic growth vectors: ▪ Olefins markets are active Reimagined KBR modernization, space superiority, Revenue mix health & human perf. ▪ Increasing activity in Asia ▪ Bip
Slide 10: Mark Sopp
Mark Sopp EVP & Chief Financial Officer
Slide 11: 2Q 2020 Consolidated Results
2Q 2020 | Consolidated Results ▪ Core results in line with expectations ▪ SG&A reflects impact of proactive cost measures ▪ Portfolio shaping resulted in primarily non-cash restructuring and impairment: $ in millions Pretax Goodwill impairment $ 37 Real estate capacity 21 Software & joint ventures 2
Slide 12: Q2 2020 Segment Results
Q2 2020 | Segment Results GOVERNMENT SOLUTIONS TECHNOLOGY SOLUTIONS ENERGY SOLUTIONS Revenue Adj. EBITDA Revenue Adj. EBITDA Revenue Adj. EBITDA 10% 11% 20% 26% 1,033 93 19 19 387 925 107 7% 103 73 296 21 1% 4 2Q19 2Q20 2Q19 2Q20 2Q19 2Q20 2Q19 2Q20 2Q19 2Q20 2Q19 2Q20 ▪ Revenue impacted by reduced
Slide 13: Capital Structure and Deployment
Capital Structure and Deployment CAPITAL HEALTHY LIQUIDITY PROFILE DEPLOYMENT ▪ Amended Credit Agreement Completed amendment to shift PRIORITIES 2.5x GROSS $500M of PLOC capacity to increase credit facility capacity to $1 billion Fund Organic Growth ▪ No revolver borrowings at June 30 LEVERAGE ▪ No
Slide 14: FY 2020 Guidance
FY 2020 Guidance FY 2020 Guidance (updated) GAAP EPS $(0.48) - $(0.18) Adjustments to GAAP EPS Restructuring and impairment charges $1.67 Ichthys interest and commercial dispute costs 0.16 Amortization related to Aspire amortization 0.08 Non-cash interest on convertible bonds 0.06 Legacy legal fees
Slide 15: In Conclusion
IN CONCLUSION Solid Q2 earnings – Reaffirming Adj. EPS guide Stellar cash – Raising operating cash flow guide Reimagined KBR – Significant portfolio shaping Continued resolution of legacy matters
Slide 16: Appendices
Appendices Appendices DOING THE RIGHT THING FOR THE PLANET, OUR PEOPLE AND OUR COMMUNITIES WHILE PURSUING BUSINESS GROWTH
Slide 17: Non-GAAP Reconciliations: Adjusted EPS & Adjusted Cash Flow
Non-GAAP Reconciliations: Adjusted EPS & Adjusted Cash Flow Adjusted EPS Reconciliation Adjusted EPS Guidance Quarter Ending 2Q19 2Q20 2020 Guidance EPS (Diluted) $0.34 $(0.28) EPS (Diluted) $(0.48) $(0.18) Add Back: Add Back: Restructuring and impairment charges 0.00 0.59 Restructuring and impairme
Slide 18: Non-GAAP Reconciliation: Consolidated & Adjusted EBITDA
Non-GAAP Reconciliation: Consolidated & Adjusted EBITDA EBITDA is defined as earnings before interest income / expense, income taxes, other non-operating income / expense (including FX) and depreciation & amortization. Adjusted EBITDA Reconciliation Quarter Ending Sep 30, 2018 Dec 31, 2018 Mar 31, 2
Slide 19: Non-GAAP Reconciliation: Segment EBITDA and Segment Adjusted EBITDA
Non-GAAP Reconciliation: Segment EBITDA and Segment Adjusted EBITDA EBITDA is defined as earnings before interest income / expense, income taxes, other non-operating income / expense (including FX) and depreciation & amortization. Quarter Ending Sep-18 Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 Mar-20 Jun-2
Slide 20: Operating Income by Segment
Operating Income by Segment 2Q20 ($ in millions, except EPS) GS TS ES NSB Other Total KBR Revenues $ 925 $ 73 $ 387 $0 $0 $ 1,385 Gross Profit $ 114 $ 23 $6 ($1) $0 $ 142 Equity in Earnings 7 - 9 - - 16 SG&A (29) (5) (15) - (24) (73) Goodwill Impairment - - (37) - - (37) Restructuring and Impairment