Slide 1: 2Q 2016 Financial Results
2Q 2016 Financial Results July 29, 2016 Stuart Bradie – President and Chief Executive Officer Brian Ferraioli – EVP and Chief Financial Officer Lynn Nazareth – VP, Investor Relations
Slide 2: Forward-Looking Statements
Forward‐Looking Statements This presentation contains “forward‐looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward‐looking statements include statements regarding our plans, objectives, goals, strat
Slide 3: Safety: Moving Towards Zero Harm
Safety: Moving Towards Zero Harm 47% decrease in TRIR and 20% increase in Zero Harm Days achieved over last 18 months. Achieved top quartile IOGP performance in 2016. Total Recordable Incident Rate (TRIR) Performance: 2011‐YTD 2016 0.50 0.37 0.38 0.40 0.35 0.31 0.35 0.35 0.30 0.32 0.30 0.24 0.20 0.2
Slide 4: Summary of 2Q16 and Initiatives Progress
Summary of 2Q16 and Initiatives Progress 2Q 2016 Highlights Progress on Initiatives • Solid earnings quarter – $0.32/share ($0.35 • Strong growth in Government Services excluding $4M in legacy USG legal fees) business offsetting hydrocarbons headwinds • Signed agreement with USG on • Closed Wyle acq
Slide 5: Consolidated Results: 2Q 2016 vs 2Q 2015
Consolidated Results: 2Q 2016 vs 2Q 2015 Quarter Ending • 2Q16 backlog reflects ($ in millions, except EPS) Jun 30, 2016 Jun 30, 2015 workoff of two large LNG projects in Australia and an approximate $0.5B New Awards $ 331 $ 785 reduction due to GBP to USD Fx translation. Backlog of Unfilled Orders
Slide 6: Technology & Consulting
Technology & Consulting • In 2Q16, T&C revenues were $98M which was 23% higher than 2Q15 due to significantly higher revenue from sales of proprietary OLEFINS REFINING ACID TREATMENT equipment which accounted for almost 60% of total revenue in the quarter. • This trend has continued from 1Q16 and is
Slide 7: Engineering & Construction
Engineering & Construction • In 2Q16, E&C revenue was $621M (35% decrease from 2Q15) due to the sale and deconsolidation of the Industrial Services OFFSHORE LNG/GTL business in 3Q15 as well as and reduced activity on several projects including one of the major LNG LNG/GTL projects in Australia. Ther
Slide 8: Government Services
Government Services • In 2Q16, GS revenues were $229M (45% higher than 2Q15) due to expansion of existing U.S. Govt contracts in the first half of 2016 as well as APAC the settlement of $33M in reimbursable legal fees EMEA related to the sodium dichromate matter. • GS gross profit in 2Q16 increased
Slide 9: Government Services: KBRwyle
Government Services: KBRwyle Share of 2016 Pro Forma Revenue • Strategic acquisition in 3Q16 that provides higher value, lower risk, Govt geographic diversity, and long‐term annuity type Services revenue streams with very little overlap E&C, Other • Creates a full service, global Government Services
Slide 10: Cash / Debt Position Post Wyle Transaction
Cash / Debt Position Post Wyle Transaction Cash Balance at June 30, 2016 $804M Wyle Purchase Price (Cash Paid) on July 1, 2016* $(200)M Cash Balance Post‐Wyle Transaction $604M Debt: Revolver Usage to Fund Wyle Purchase Price on July 1, 2016* $400M Permanent financing process underway and expected t
Slide 11: Balanced Capital Allocation Strategy
Balanced Capital Allocation Strategy Invest in Ongoing Business & Organic Pay Dividends Growth • Current dividend is • Focus on working capital $0.08/share • Maintain revolver and strong LC/ • Highest yielding dividend among bonding capacity peers • Divested / exiting under‐performing • Returned $30
Slide 12: KBR: Outlook for 2017
KBR: Outlook for 2017 • Higher proportion of earnings driven by Government Services and Technology & Consulting in 2017 moving towards greater balance between Hydrocarbons and Government Services markets • Full‐year impact of expected 2016 Army 2020 contract award • In Hydrocarbons markets, focus on
Slide 13: 2016 Guidance
2016 Guidance • Previous Guidance: EPS range $1.20 ‐ $1.45, excluding legacy legal fees (estimated at $15M or $0.11 EPS) • No change to previous guidance including Wyle: ‒ Wyle EPS range $0.05 ‐ $0.08 ‒ Range includes acquisition and integration costs related to transaction ($1.4M in deal costs incu
Slide 14: Conclusion
Conclusion • Focused business strategy: Global Hydrocarbons & International Government Services company with strong synergies between businesses • Differentiated offerings covering entire life cycle of projects via specialized consulting, proprietary technologies and strong global engineering expert
Slide 15: Appendix
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Slide 16: Consolidated EBITDA Reconciliation: 2Q 2016
Consolidated EBITDA Reconciliation: 2Q 2016 Quarter Ending ($ in millions) Jun 30, 2016 Jun 30, 2015 Net income attributable to KBR $ 47 $ 62 Add Back: Interest income (expense) $0 $2 Provision for income taxes $ 23 $ 23 Depreciation & amortization $ 10 $8 Consolidated EBITDA $ 80 $ 95 Note: EBITDA