Worley Limited · ASX:WOR
Worley — H1 FY23 Earnings Presentation
61 slides from Worley's earnings presentation, Feb 22, 2023
Slide 1: Half Year Results 2023
2023 Half Year Results Delivering a more sustainable world
Slide 2: Stronger together
Stronger together This piece represents Worley's values and connection to the land Worley acknowledges and pays respect to the past, present and future Traditional Custodians of Country throughout Australia and extends this acknowledgement and respect to First Peoples in all countries in which we op
Slide 3: Disclaimer
Disclaimer Disclaimer The information in this presentation about Worley While the Group has prepared this information based on Limited, the entities it controls (Group) and its activities its current knowledge and understanding and in good is current as at 22 February 2023 and is in summary faith, t
Slide 4: Agenda
Agenda Business performance 1 and strategic progress Chris Ashton 2 Half year results 2023 Tiernan O’Rourke 3 Outlook Chris Ashton Worley - Half year results 2023 4
Slide 5: Key messages
Key messages 19% Aggregated 1 We’ve delivered on the growth outlook we revenue provided at FY22 and with momentum building vs H1 FY22 strongly, we see a clear path to increasing revenue and margins in the medium term 44% Sustainability related revenue 2 vs H1 FY22 We’re delivering on our strategy
Slide 6: Business performance and strategic progress
Business performance and strategic progress Chris Ashton, Chief Executive Officer
Slide 7: We're driven by a common purpose, delivering a more sustainable world
We’re driven by a common purpose… ….delivering a more sustainable world Our Values Our Ambition Our Strategy We value Life We will be recognized globally We partner with our customers We Rise to the Challenge as a leader in sustainability to accelerate their transition to We are Stronger together so
Slide 8: We support healthy lives, respect and wellbeing
We support healthy lives, respect and wellbeing Our highest priority is to All Abilities Our Life keep our people safe and well Network value embraces the We embedded psychosocial factors into our safety, health, and Life programs in line with ISO 45003:2001 wellbeing of our people We’re focused on
Slide 9: Delivering on our ESG business commitments
H1 FY23 result Delivering on our ESG business commitments DJSI leader Prime 5,535 48% Rated by S&P Global ISS ESG Corporate Rating Supplier and customer Graduates recruited were female due-diligence checks recognized as best in class upgrade from C- to C+ means our up from 47% in FY22 performance fo
Slide 10: Our results show continued improvement in key metrics
H1 FY23 result Our results show continued improvement in key metrics $5,202m $283m 6.1% 25c per share Interim dividend declared Aggregated revenue Underlying EBITA Underlying EBITA margin (85% payout ratio4) vs $4,368m in H1 FY22 vs $251m in H1 FY22 excluding procurement5 vs H1 FY22 interim dividend
Slide 11: Continued strong momentum
Continued strong momentum 1 Aggregated revenue Underlying EBITA margin Underlying EBITA excluding procurement3 19% % Sustained $m 13% $b 300 5 250 4 6 200 3 4 150 2 100 2 1 Procurement 50 0 142% 0 0 H1 FY22 H2 FY22 H1 FY23 H1 FY22 H2 FY22 H1 FY23 H1 FY22 H2 FY22 H1 FY23 Headcount Backlog Factored s
Slide 12: Pipeline, bookings and backlog
Pipeline, bookings and backlog Factored sales pipeline1 Rolling 12-month bookings2 Backlog3 15.4 16.5 16 14 28% 40% 12 56% 66% 10 8 $b 6 72% 60% 34% 4 44% 2 0 at Jun-22 at Dec-22 at Jun-22 at Dec-22 at Jun-22 at Dec-22 Traditional Sustainability Traditional Sustainability Traditional Sustainability
Slide 13: Wins are up globally across all of our sectors
Wins are up globally across all of our sectors Sustainability related work2 continues to grow 24% Building on traditional work Strategic wins in sustainability Ma’aden SSE Thermal Issued notice of award for EPCM contract wins1 in H1 Awarded FEED contract for low-carbon for integrated greenfield com
Slide 14: Unrivalled experience in shaping the global energy transition
Unrivalled experience in shaping the global energy transition 3,685+ An Australian company delivering some of the world’s largest and most innovative assets Energy transition projects worked on Solar power Wind power Electrification, energy Energy transition Geothermal, hydropower efficiency & grids
Slide 15: Partnering with customers to deliver infrastructure in Australia
Partnering with customers to deliver infrastructure and integrated solutions that drive economic growth in Australia We’re working on 100+ sites and have executed 1,000+ projects in the last 12 months alone Woodside gas Rio Tinto: Long Net zero Australia We operate and maintain and LNG: term sustain
Slide 16: Northvolt
Northvolt Resources | Battery materials Northvolt | Sweden New battery cathode active material facility Northvolt has awarded us a services contract for a new battery cathode active material facility which is a major component within its Northvolt Ett battery gigafactory development in Skellefteå, S
Slide 17: ENOWA
ENOWA (NEOM’s Energy & Water subsidiary) Resources | Water ENOWA | Kingdom of Saudi Arabia Creating a circular economy from waste products We'll provide engineering and advisory services to create facilities for treating, storing, and distributing water using low-carbon electricity. The desalination
Slide 18: Kwinana Energy Hub and Khazzan Gas
Kwinana Energy Hub Khazzan Gas Chemicals and fuels | Low carbon fuels Low carbon energy | Integrated gas bp | Australia bp | Oman Converting what was Australia’s largest oil refinery Improving operational efficiency to renewable fuels Worley and Special Technical Services LLC joint venture We’re wor
Slide 19: Kuwait Oil
Kuwait Oil Conventional and low carbon energy | Upstream Kuwait Oil Company | Kuwait Implementing new technology solutions We'll provide front-end engineering design and project management consultancy services for traditional and sustainability related work. This will include new solar, power and wa
Slide 20: Half year results 2023
Half year results 2023 Tiernan O’Rourke, Chief Financial Officer
Slide 21: Financial headlines
Financial headlines H1 FY23 H1 FY22 Aggregated revenue $5,202m $4,368m Americas segment EBITA $128m $112m Underlying performance EMEA & APAC segment EBITA $263m $223m Underlying EBITA $283m $251m Underlying operating cash $129m $110m Compared to 2.5x at 30 June 2022 Leverage1 2.4x Within target rang
Slide 22: Drivers of underlying EBITA change over the half
Drivers of underlying EBITA change over the half EBITAEBITA change change drivers drivers EBITA: • Strong volume growth partially 84 68 offset by an increased 5 21 2 1 29 27 procurement mix Compared EBITA margin: 296 283 with $251m at H1 FY22 • Benefits associated with rate improvement have been off
Slide 23: Indicators of future margin improvement
Indicators of future margin improvement 1 Competitive advantage 2 Market dynamics 3 Operating leverage We’re doing an increasing number We’re actively prioritizing We expect to benefit from of complex large-scale higher margin work further operating leverage sustainability related projects in the me
Slide 24: Our $100m strategic investment
Our $100m strategic investment Targeted at high growth / high margin markets $18m investment in H1 FY23 1 Selected Addressable Growth in pipeline Value of wins in H1 growth area market (FY25)2 over last 12 months3 FY23 by revenue • 20% on market assessments and planning • 45% spent on capability bui
Slide 25: Outlook
Outlook Chris Ashton, Chief Executive Officer
Slide 26: Market update
Market update FY23 growth rates 15% • Our addressable market1 is growing at a faster rate compared with the total Energy, Chemicals 10% and Resources (ECR) market due to our focus on sustainability related investment. • We’re growing our earnings in line with our 5% addressable market and we continu
Slide 27: Medium-term outlook FY24+
Executive Medium-term outlook FY24+ Summary Earnings momentum is accelerating Double digit medium-term Building blocks to medium-term EBITA EBITA CAGR2 EBITA margins growing to Continued market ~7+% in FY24 (excluding Continued growth in share gains across procurement) addressable market growth unit
Slide 28: Group outlook – FY23 forecast and long term margin growth
Group outlook – FY23 forecast and long term margin growth Near / medium term Longer term We expect the FY23 underlying EBITA margin (excluding the Longer term, we continue to see revenue and earnings impact of procurement) to be similar to FY22. growth due to: In the medium term, we have visibility
Slide 29: Key messages
Key messages 19% Aggregated 1 revenue We’ve delivered on the growth outlook we vs H1 FY22 provided at FY22 and with momentum building strongly, we see a clear path to increasing revenue and margins in the medium term 44% Sustainability related revenue 2 vs H1 FY22 We’re delivering on our strategy
Slide 30: Worley - Half year results 2023
Worley - Half year results 2023 30
Slide 31: Supplementary information
Supplementary information
Slide 32: Our strategic portfolio
Our strategic portfolio Our markets span multiple sub-sectors across Energy, Chemicals and Resources Core Transitional Breakthrough markets markets markets and (Strengthen (Extend capabilities and support) high-growth (Create valuable businesses) options) Fertilizers Upstream Combustion Base Resourc
Slide 33: Delivering our ambition
Delivering our ambition Our ambition H1 FY23 achievements demonstrating we are on track Our people • Launched our peer to peer recognition program, Appreciate, in 42 countries to 30,000 people We energize and • Won GRIT award for our Kuumba People Network Group for the third year in a row empower ou
Slide 34: Delivering our ambition (cont.)
Delivering our ambition (cont.) Operational priorities H1 FY23 achievements demonstrating we are on track Operational excellence • Utilization above target (87%+) Quality of earnings, • 26% growth in GID hours compared to H1 FY22; GID utilization at 12.5%, up from 12.2% at Jun-22 utilization targets
Slide 35: Our diversified business
Our diversified business Global leader delivering Sector aggregated revenue (%) Traditional / sustainability aggregated revenue (%) Sustainability aggregated revenue (%) knowledge-based project Traditional Low Carbon and asset services 12% Low Carbon Energy 19% Energy 18% Energy 15% 28% Traditional
Slide 36: How we define our sustainability related work
How we define our sustainability related work We define our sustainability related business through four pathways: asset sustainability; resource stewardship; decarbonization; and environment & society. This is calculated based on two measures: 1. The work we conduct in relation to the following mar
Slide 37: Sustainability related revenue and factored sales pipeline
Sustainability related revenue and factored sales pipeline Resource stewardship Decarbonization 60% 60% 7% 7% 49% 49% 6% Other Revenue % decarbonization Revenue % 4% 5% 28% 4% 26% 28% Other decarbonization Integrated gas 24% 30% 9% 8% 8% Integrated gas FY22 H1 FY23 Jul-22 Jan-23 FY22 H1 FY23 Jul-22
Slide 38: Leading indicators of future growth
Number of wins in different project phases for sustainability related work in H1 FY23 Leading indicators of future (each prong of the fan represents one of our sustainability related sub-sectors and the different colours represent different project phases) growth Project phase Wins by project phase1
Slide 39: Americas
Americas Aggregated revenue1 Highlights $b • Customers continue to invest, especially in relation to sustainability 3 21% programs. 2.5 2 • The US Inflation Reduction Act is providing financial incentives leading to a 1.5 noticeable increase in new opportunities in low carbon hydrogen and CCUS. 1 0.
Slide 40: EMEA & APAC
EMEA & APAC Aggregated revenue1 Highlights • Business conditions remain robust although we’re seeing potential softness in $b 17% 3 traditional downstream industry in Europe due to high feedstock / energy prices 2.5 • The resources sector is buoyant and seeing increasing levels of sole sourcing 2 1.
Slide 41: H1 FY23 key financials
Statutory result H1 FY23 H1 FY22 vs. FY22 Total revenue ($m) 5,391 4,662 16% H1 FY23 FY22 key key financials EBITA ($m) NPATA ($m) 23 (63) 202 114 (89%) (155%) financials Interim dividends (cps) Operating cash flow 25 100 25 89 - 12% Underlying result H1 FY23 H1 FY22 vs. FY22 Revenue is higher We’re
Slide 42: Reconciliation of statutory to underlying results
Reconciliation of statutory to underlying results Reconciliation of statutory results to underlying results H1 FY23 ($m) H1 FY22 ($m) adjusted for non-trading items Statutory result (NPAT for the Group) (96) 80 Reconciliation of Add: Net finance costs 48 27 statutory to underlying Add: Amortization
Slide 43: Segment EBITA results H1 FY23 vs H1 FY22
Segment EBITA results Aggregated revenue ($m) H1 FY23 5,202 H1 FY22 4,368 vs. H1 FY22 19% H1 FY23 vs H1 FY22 Americas EMEA 2,392 1,846 1,985 1,548 21% 19% By region APAC 964 835 15% • Americas increase in revenue and EBITA driven Segment EBITA ($m) 391 335 17% by a strong H1 with ramp up of key proj
Slide 44: Segment results H1 FY23 vs H2 FY22
H1 FY23 H2 FY22 vs. H2 FY22 Segment results Aggregated revenue ($m) Americas 5,202 4,697 11% H1 FY23 vs H2 FY22 2,392 2,202 9% EMEA 1,846 1,620 14% By region APAC 964 875 10% Segment EBITA ($m) 391 401 (2%) • Americas reduced margins are consistent Americas 128 159 (19%) with H1/H2 seasonality EMEA
Slide 45: Segment results by revenue type
Segment results By revenue type Americas EMEA APAC Total H1 FY23 H1 FY22 vs. H1 FY22 H1 FY23 H1 FY22 vs. H1 FY22 H1 FY23 H1 FY22 vs. H1 FY22 H1 FY23 H1 FY22 vs. H1 FY22 Aggregated revenue ($m) 2,392 1,985 20% 1,846 1,548 19% 964 835 15% 5,202 4,368 19% Professional services1 960 879 9% 1,187 1,114 7
Slide 46: Segment EBITA H1 FY23 vs H1 FY22 by sector
H1 FY23 H1 FY22 vs. H1 FY22 Segment EBITA Aggregated revenue ($m) Energy 5,202 2,471 4,368 2,129 19% 16% H1 FY23 vs H1 FY22 Chemicals Resources 1,761 970 1,622 617 9% 57% By sector Segment EBITA ($m) 391 335 17% • Energy sector has shown resilience through Energy 163 150 9% increased margins while n
Slide 47: Margin profile
Margin profile Underlying EBITA % excluding procurement1 Underlying EBITA $m 6.7% 547 6.1% 6.4% 6.1% 296 H2 H1 H1 FY22 H2 FY22 FY22 H1 FY23 283 251 Underlying EBITA % FY22 FY23 5.7% 6.3% 6.0% 5.4% Underlying NPATA Underlying $m $m NPATA H1 FY22 H2 FY22 FY22 H1 FY23 329 Underlying NPATA % 179 H2 H1 1
Slide 48: Calculation of EBITA% excluding procurement
Calculation of EBITA% H1 FY22 H1 FY22 H1 FY23 excluding procurement Aggregated revenue ($m) 4,368 4,697 5,202 Growth rate on pcp 19% EBITA ($m) 251 296 283 Underlying Underlying EBITA EBITA margin = Growth rate on pcp 13% excluding aggregated revenue – procurement procurement revenue EBITA% 5.7% 6.3
Slide 49: Foreign exchange
Foreign exchange Impact total EBITA (A$m) Impact total EBITA (A$m) 4 2 2 1 (1) (1) (1) (1) (2) USD US Pegged CAD SGD MAD EUR BGN ARS Other GroupEBITA Group EBITAFX FXtranslation Translationimpact impact 5 3 (57) FY21 FY22 H1 FY23 Worley - Half year results 2023 49
Slide 50: Cash collection on track
H1 FY23 H1 FY22 ($m) ($m) Cash collection on EBITA1 Add: Depreciation, amortization and significant 254 202 track non-cash items 97 98 Less: Interest and tax paid (60) (59) Cash conversion is in line with H1 FY23 (Less)/add: Receivables movement (121) 190 Cash outflows in the first half were impacte
Slide 51: Balance sheet and liquidity metrics
Balance sheet and liquidity metrics as at 31-Dec-22 as at 30-Jun-22 Average cost of debt2 3.4% 2.4% Average maturity (years) 1.7 2.2 • Maintained gearing below the target range Interest cover (times) 8.8x 10.6x and leverage within our covenant definitions Net debt, $m (statutory definition) 1,821 1,
Slide 52: Capital management
Capital management Underlying debt facilities expiry by maturity date Underlying debt facilities expiry by maturity date 2,000 1,800 • Average debt maturity is 1.7 years 1,600 • Maintained gearing below the target 1,400 range and leverage within our covenant 1,200 definitions A$m 1,000 • Worley is i
Slide 53: Headcount: utilization above target
Worley global headcount Headcount: utilization above 50,000 40,000 target Staff 30,000 34,500 36,200 38,200 Craft 20,000 10,000 • Headcount at 52,800 at 31 December 13,800 15,000 14,600 0 2022, up 3% on FY22 H1 FY22 FY 22 H1 FY23 • Staff utilization remains above target 96% • Global Integrated Deliv
Slide 54: Backlog increasing
Backlog increasing (6.7) 16.5 16.5 15.4 15.4 $18.0 18.0 2.9 $16.0 16.0 2.5 $14.0 14.0 5.4 9.9 $12.0 12.0 5.5 $10.0 11.1 10.0 (5.7) $8.0 8.0 $6.0 Sustainability 6.0 7.4 8.2 6.6 $4.0 4.0 53% $2.0 4.3 2.0 $0.0 0.0 at Jun-22 at Dec-22 at Jun-22 at Dec-22 Sustainability Traditional 30-Jun-22 Backlog New
Slide 55: Cost savings initiatives delivering long-term benefits
Cost savings initiatives Providing scalability for the business delivering long-term Savings Target benefits delivered • Costs incurred in H1 FY23 are $29m $367m $375m annualised savings of recurring savings • Using H1 FY23 as a basis: incremental as at December 2022 by June 2023 savings of actions
Slide 56: Market update
Market update High capex investment growth rates are expected to continue into the medium term Low-carbon energy Conventional energy Chemicals and fuels Resources • Our top renewables customers forecast • IOC customers using profits • Build out of refining and petrochemical • Mined fertilizer produc
Slide 57: Glossary
Glossary Australian dollars unless otherwise stated, Australian millions of dollars, Australian $, $m, $b GM Gross Margin billions of dollars AUD Australian dollars GST Goods and Services Tax APAC Australia, Pacific, Asia & China GW Giga watts b Billion HSE Health, Safety and Environment B2B Busines
Slide 58: Backlog definition
Backlog definition Backlog is the total dollar value of the amount of revenues Due to the variation in the nature, size, expected duration, expected to be recorded as a result of work performed under funding commitments and the scope of services required by contracts or purchase/work orders already
Slide 59: Rules for items excluded from underlying results
Rules for items excluded from underlying results Worley has guidelines for determining items to be excluded from non IFRS profit measures, such as underlying NPATA and underlying EBITA. These guidelines are for determining underlying profit for internal management reporting and external reporting pu
Slide 60: Fixed price vs reimbursable contract types
Fixed price vs reimbursable contract types • Reimbursable Contracts (~80% of our revenue): • Contracts based on reimbursement of reasonable and allowable actual costs plus agreed profits including incentives, partial/fixed fee in accordance with the contract terms and conditions. • Fixed Price Contr
Slide 61: 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