Worley Limited · ASX:WOR

Worley — H1 2020 Earnings Presentation

67 slides from Worley's earnings presentation, Feb 24, 2020

  1. Slide 1: Half Year Results 2020

    For personal use only Half Year Results 2020 Chris Ashton, Chief Executive Officer

  2. Slide 2: Disclaimer

    Disclaimer For personal use only The information in this presentation about Worley Limited and the entities it controls (Group) and its activities is current as at 24 February 2020 and should be read in conjunction with the Company’s Appendix 4D and Interim Financial Report for the half year ended 3

  3. Slide 3: HY2020 summary

    HY2020 summary Realizing benefits of acquisition For personal use only Improved financial performance $5,998m $366m  EBITA and NPATA increased from proforma PCP Aggregated revenue Underlying EBITA  More consistent earnings through increased proportion in +134% growth from PCP +126% growth from PCP

  4. Slide 4: Overview

    Overview HY2020 achievements For personal use only  EBITA and NPATA growth from acquisition realized  Improved operating cash flow  Change in business mix with increased construction revenue in North America Financial results  Consistency of earnings with increase in opex, chemicals and North Am

  5. Slide 5: Aggregated revenue and underlying EBITA

    Aggregated revenue and underlying EBITA Revenue and EBITA growth For personal use only AUD'm Half on half revenue AUD'm Half on half underlying EBITA 6,000 H1 H2 400 H1 H2 350 5,000 300 4,000 250 3,000 5,998 200 5,522 359 366 4,978 335 150 2,000 100 2,310 2,439 172 1,000 2,166 2,211 128 147 141 50 -

  6. Slide 6: Backlog growth

    Backlog growth For personal use only Backlog ($b)  Backlog growth continues 18.7  Growth in core business 18.0 17.6  Growth in Integrated Solutions awards 16.4  Europe fastest growing region  Refer to pages 51-52 for regional and sector breakdown * * Jun-18 Dec-18 Jun-19 Dec-19 *proforma backlo

  7. Slide 7: Earnings diversification – growth in opex and chemicals

    Earnings diversification – growth in opex and chemicals For personal use only Business Mix  Acquisition has delivered earnings 100% 10% 11% 9% 7% resilience with growth in open based 80% contracts 43% 48% 60% 55% 81%  Sector mix diversifying with growth in 40% historically more stable chemicals 20

  8. Slide 8: Health and Safety

    Health and Safety For personal use only Our safety performance  Employee Total Recordable Case Frequency Rate (TRCFR*) for HY20 was 0.14 (FY19: 0.11)  Employee, Contractor & Subcontractor and Partner TRCFR for HY20 was 0.16 (FY19: 0.14) The Group’s HSE Committee focus areas HY2020  Launch our new

  9. Slide 9: Sustainability at Worley

    Sustainability at Worley We have always taken a responsible and sustainable approach. For personal use only We are:  a top 20 ASX company for reporting on United Nations Sustainable A key player in the global  Development Goals* aligning with global initiatives consistent with our sustainability e

  10. Slide 10: Sector update: Energy transition

    For personal use only Sector update Energy transition Half year results 2020 10

  11. Slide 11: Energy transition: Worley is a leader

    Energy transition: Worley is a leader 1500+ For personal use only New Energy projects H2 Waste to energy Smart & Carbon capture Solar power Wind power Hydropower Hydrogen & renewable distributed utilization and Nuclear power fuels energy storage 290+ 540+ 200+ 20+ 100+ 75+ 200+ 55+ Solar projects On

  12. Slide 12: Energy transition at Worley

    Energy transition at Worley Battery energy storage system Green hydrogen to ammonia Renewable diesel refinery For personal use only Installation of a battery energy Integrating green hydrogen storage system, solar panels, and production into operating application. Conversion from crude oil to a 100%

  13. Slide 13: Upstream & midstream: Gas is the transition fuel

    Upstream & midstream Gas is the transition fuel For personal use only Sector outlook Midstream – Global LNG Upstream – Global oil and gas investment (USDb) investment (USDb)  Gas – growth (5%*), expanding global gas trade to service Asian market 100 1,400  LNG – strong investment phase to 2025 1,2

  14. Slide 14: Refining & chemicals

    Refining & chemicals Refined product mix undergoing For personal use only change driven by petrochemical demand and decarbonization Sector outlook  Refining – developed economies investing in opex reduction and decarbonization, capex growth in emerging economies is focused on nation building, produ

  15. Slide 15: Mining, minerals & metals

    Mining, minerals & metals Growth phase with opportunity in capex and opex For personal use only MMM sector capital expenditure outlook Sector outlook (USDb) 400  Strong cash flows with investor confidence returning  Increasing spend across all commodities with strong outlook for 300 base metals an

  16. Slide 16: Power

    Power Electricity supply shifts towards renewable energy, For personal use only but all low-carbon technologies are needed Sector outlook Global electricity generation mix by scenario  Electrification is seeing dramatic changes to power Average annual energy investment generation 2018 Sustainable D

  17. Slide 17: 3Sun Group: Offshore wind O&M

    3Sun Group: Offshore wind O&M For personal use only  Transaction closed on 25 October 2019  UK-based installation, inspection and maintenance specialist in the offshore wind sector  Fully integrated into Worley offshore MMO business  Entry into Europe, the world’s largest offshore wind market, a

  18. Slide 18: Distributed energy systems (microgrids & storage)

    Distributed energy systems (microgrids & storage) For personal use only  Transaction closed on 12 November 2019  US based joint venture between Worley and XENDEE to assess design and deploy microgrids and distributed energy systems  Links core energy configuration digital platform with equipment,

  19. Slide 19: Energy transition: capturing global opportunities

    Energy transition Capturing global opportunities arising from the energy transition For personal use only Large scale electrolysis Power to gas Offshore wind asset optimization Solar microgrid Blending hydrogen into gas Offshore topside substations Converting industry to 100% hydrogen Grid resilienc

  20. Slide 20: Energy transition: Australian market

    Energy transition Delivering global expertise into the Australian market For personal use only Mine site microgrid with solar PV & battery storage Solar PV O&M LNG carbon capture & sequestration Green hydrogen to ammonia Biomass projects using biofuel technology Large-scale solar PV & energy storage

  21. Slide 21: Half Year Results 2020 – Tom Honan, CFO

    For personal use only Half Year Results 2020 Tom Honan, Chief Finance Officer Half year results 2020 21

  22. Slide 22: Statutory statement of financial performance

    Statutory statement of financial performance1 31 December 2019 31 December 2018 For personal use only ($m) ($m) REVENUE AND OTHER INCOME Professional services revenue 3,873 1,943 Procurement revenue 1,513 319 Construction and fabrication revenue 1,506 371 Other income 5 2 Interest income1 4 11 Total

  23. Slide 23: Reconciliation of statutory to underlying NPATA results

    Reconciliation of statutory to underlying NPATA results Adjusted for non-trading items For personal use only HY2020($m) HY2019($m) Statutory result (NPAT) 115 82 Acquisition & transition costs 81 5 Impairment of investment in equity accounted associates 4 - Impact of the arbitration award1 (3) 9 Oth

  24. Slide 24: HY2020 key financials

    HY2020 key financials For personal use only Statutory result HY2020 HY2019 vs. HY2019 Total revenue ($m) 6,901 2,646 161%  Lower margins reflect change in EBITA ($m) 284 139 104% revenue mix from North American 154 NPATA ($m) Basic EPS (cps) 22.1 87 23.8 77% (7%) construction and procurement revenu

  25. Slide 25: Key drivers of change

    Key drivers of change Business growth of 7.6% excluding synergies, > 15% with synergies For personal use only 14 18  Underlying business growth 22 6 29 26 7.6%  Delivering synergies with full run rate benefits to follow 359 353 353 375 371 366  H1/H2 phasing estimate for 341 341 this period only

  26. Slide 26: Segment result by line of business

    Segment result By line of business For personal use only HY 2020 HY 2019 vs. HY 2019 Aggregated Revenue ($m) 5,998 2,566 134% Energy & Chemicals Services 2,605 1,157 125%  Total segment revenue increased due to Mining, Minerals & Metals Services 636 108 489% ECR contribution Major Projects & Integr

  27. Slide 27: Headcount growing: staff utilization on target

    Headcount growing: staff utilization on target Worley lobal headcount For personal use only ECR Acquisition Staff utilization Headcount Change to prior month (staff 94% ECR Acquisition only since Apr 2019) UKIS 92% Acquisition 90% Utilization % 88% 86% 84% 82% 80% 78% Jul-17 Jul-18 Jul-19 Jan-17 Jan

  28. Slide 28: Key operating indicators

    Key operating indicators Margin For personal use only Underlying EBITA Margin %  Margin reflects the increased mix of revenue 7.0% from fabrication and Integrated Solutions 6.5% 6.0%  Increased volumes of lower margin 5.5% construction work in North America, as per acquisition business model 5.0%

  29. Slide 29: Capital management

    For personal use only Half Year Results 2020 Capital management Half year results 2020 29

  30. Slide 30: Cash flow, net debt and balance sheet

    Cash flow, net debt and balance sheet Continuing focus For personal use only Operating cash flow Gearing ratio* % m$ First half performance 35% UKIS 200 acquisition 30% ECR acquisition 100 25% 20% - Gearing ratio = net debt/net debt + equity 1HY17 1HY18 1HY19 1HY20 15% (100) HY17 FY17 HY18 FY18 HY19

  31. Slide 31: Gearing metrics

    Gearing metrics Balance sheet metrics For personal use only HY2020 FY2019  Gearing below target band of 25-35% Gearing ratio1 21.3% 21.3% Facility utilization2 68.9% 72.7%  Average maturity of debt is 2.8 years Average cost of debt 3 4.2% 4.5%  Exploring longer term debt options given global inte

  32. Slide 32: Liquidity

    Liquidity Stable core facility For personal use only 1,800  Core facility consists of USD500m 1,600 multi-currency revolving facility 1,400 and USD800m term loans 1,200 1,000  Additional bilateral facilities of USD175m for working capital, A$m 800 further improve liquidity 600 400  Maintain stron

  33. Slide 33: ECR – Acquisition update

    For personal use only ECR – Acquisition update Chris Ashton, Chief Executive Officer Half year results 2020 33

  34. Slide 34: Integration largely complete

    Integration largely complete - remaining activities part of normal operations Achievements For personal use only Systems and Synergy process integration  Cost synergy target increased to $175m¹within 30 months post acquisition  Will deliver $150m in two years post acquisition Common systems and 

  35. Slide 35: Common systems and processes

    Common systems and processes For personal use only Safety Sales Life Worley CSP Our safety and Launched in January 2020 well-being our new integrated approach launched Customer Platform in January 2020 powered by the Salesforce tool Operations Knowledge & Back office Management System Integration of

  36. Slide 36: Synergy realization – cost synergies

    Synergy realization – cost synergies For personal use only $99m of $150m synergy target delivered Synergy target raised to $175m within 30 months post completion 25 51 56 175 150 150 99 99 14 99 43 43 43 6 Dec 2019 exit run Run rate actions Apr 2021 exit run Run rate actions Total Synergies FY19 act

  37. Slide 37: Revenue synergies: technical services framework with ORPIC

    Synergy realization – revenue synergies: E&C Services Technical services framework with ORPIC For personal use only Worley Oman awarded a three-year technical services framework agreement with Oman Oil Refineries and Petroleum Industries Company (ORPIC), one of the largest and most rapidly growing C

  38. Slide 38: Revenue synergies: Secunda Synfuels, Sasol

    Synergy realization – revenue synergies: E&C Services Secunda Synfuels facility, South Africa - Sasol For personal use only Sasol South Africa (Pty) Ltd (Sasol) awarded a five year agreement to Worley for services to the Contract Sasol Secunda Synfuels facility. WorleyParsons brought... ECR brought.

  39. Slide 39: Revenue synergies: YCI Methanol One plant

    Synergy realization – revenue synergies: E&C Services YCI Methanol One plant – Louisiana, US For personal use only Worley awarded the pre-commissioning, commissioning and start-up support services for YCI’s Contract 1.7m tonnes of methanol per year plant located in St. James Parish, Louisiana, US. W

  40. Slide 40: Revenue synergies: Neptune Energy offshore assets

    Synergy realization – revenue synergies: MPIS & E&C Services Neptune Energy’s offshore assets in the Netherlands For personal use only Energy & Chemicals Services and Integrated Solutions’ business lines will collaborate to deliver services to all of Neptune Energy’s offshore assets in the Netherlan

  41. Slide 41: Revenue synergies: strategic study for Vale

    Synergy realization – revenue synergies: MMM Services Strategic study for Vale For personal use only A pre-feasibility study of two of Vale's most important brownfield nickel orebodies, the Contract development of which is forecasted to extend the life of their underground mining operations. WorleyP

  42. Slide 42: Moving from integration to Transformation

    Moving from integration to Transformation For personal use only Enhancing the company’s leadership position in energy, chemicals and resources … …working with our customers and other stakeholders, both nationally and globally on their sustainability journey… … to capture the ...and changing the way

  43. Slide 43: Outlook

    For personal use only Outlook Chris Ashton, Chief Executive Officer Half year results 2020 43

  44. Slide 44: Progress in FY20

    Progress in FY20 For personal use only  Realizing the benefits of the acquisition. Aggregated revenue up 134%, EBITA¹ up 126%, NPATA¹ up 110%  More consistent earnings through increased proportion in opex, chemicals and North America and Europe  Improved cash flow  Strong balance sheet  Increas

  45. Slide 45: Group outlook

    Group outlook For personal use only The energy, chemicals and resources market indicators and growth in backlog provide evidence of continued strength in market conditions. The energy transition provides expanded opportunities for growth. As a result of the ECR acquisition, we have enhanced the dive

  46. Slide 46: Q&A

    For personal use only Half Year Results 2020 Q&A Half year results 2020 46

  47. Slide 47: Supplementary information

    For personal use only Half Year Results 2020 Supplementary information Half year results 2020 47

  48. Slide 48: Segment result by region

    Segment result By region By region For personal use only HY 2020 HY 2019 vs. HY 2019  Growth in all regions and North Aggregated Revenue ($m) America in particular 5,998 2,566 134% APAC 1,077 584 84%  Strong performance in Norway and EMEA 1,877 1,193 57% Canada from construction and AM 3,044 789 2

  49. Slide 49: Segment result by sector

    Segment result By sector For personal use only HY 2020 HY 2019 vs. HY 2019 Aggregated Revenue ($m) 5,998 2,566 134% Energy 2,831 2,010 41%  ECR brings growth in all sectors, and construction and fabrication Professional Services 1 1,976 1,639 21% Construction & Fabrication 855 371 130% Chemicals 2,

  50. Slide 50: Global operations and employee numbers

    Global operations and employee numbers For personal use only 59,000 people More than 50 countries 50 Half year results 2020

  51. Slide 51: Backlog by region

    Backlog by region For personal use only Backlog by region Backlog by region as at 31 December 2019 as at 31 December 2019 1.1 (0.3) 2.1 (0.1) Americas 5.8 A$'B Europe, Middle East, 18.0 18.7 Africa (EMEA) 10.8 Australia, Pacific, Asia, China (APAC) 51 Half year results 2020

  52. Slide 52: Backlog by sector

    Backlog by sector For personal use only Backlog by sector Backlog by sector as at 31 December 2019 as at 31 December 2019 0.0 0.1 0.6 2.3 Chemicals 8.4 A$’b Energy 18.0 18.7 8.0 Resources 52 Half year results 2020

  53. Slide 53: Underlying earnings profile

    Underlying earnings profile For personal use only Group underlying EBITA $m H2 694 H1 413 359 313 251 172 366 335 141 162 FY2018 FY2019 FY2019 proforma FY2020 Group Underlying NPATA $m H2 260 H1 182 157 97 216 85 103 FY2018 FY2019 FY2020 The modified retrospective approach has been applied on adopti

  54. Slide 54: Margin profile

    Margin profile Underlying EBITA % For personal use only H1 7.0% H2 6.1% 6.6% 6.3% 6.5% 6.4% 6.7% 6.5% 6.6% 6.1% Total FY 2020 FY2018 FY2019 FY2019 pro forma FY2020 Underlying NPATA % H1 H2 Total 3.7% 4.0% 3.8% 4.0% 4.0% 4.0% 3.6% FY2018 FY2019 FY 2020 FY2020 The modified retrospective approach has b

  55. Slide 55: Revenue split

    Revenue split For personal use only Region aggregated revenue (%) Sector aggregated revenue (%) 9% 16% 9% USA & LAM 32% Europe Energy 11% Canada 47% Chemicals Middle East & Africa Resources Asia ANZ 37% 19% 20% 55 Half year results 2020

  56. Slide 56: Revenue reconciliation

    Revenue reconciliation For personal use only HY2020 ($m) HY2019($m) vs HY2019 Revenue and other income 6,901 2,646 161% Less: Procurement revenue at nil margin (1,075) (137) 685% Less: Pass through revenue at nil margin - (37) (100%) Plus: Share of revenue from associates 179 96 86% (Less)/Plus: Imp

  57. Slide 57: EBITA reconciliation

    EBITA reconciliation For personal use only HY2020 ($m) HY2019($m) EBITA 284 139 Add: Impact of acquisitions, comprised of: Acquisition and related transition costs HY2020($m) HY2019($m) Acquisition costs - 12 Transition costs 81 - Transition costs 81 - Acquisition costs - 12 Bridging facility fee -

  58. Slide 58: Cash flow

    Cash flow For personal use only HY2020 ($m) HY2019 ($m) EBITA 284 139 Add: Depreciation, amortization 188 32 Less: Interest and tax paid (88) (24) Less: Working capital/other (157) (126) Net cash inflow from operating activities 227 21 Non recurring costs plus interest income received1 115 4 Lease p

  59. Slide 59: Cash flow: bridge to cash balance

    Cash flow Bridge to cash balance For personal use only (85) (45) (6) (78)  DSO improved by five 492 (81) 362 (73) days in the half (20) 413 (34) (19)  Improved cash collection across the Underlying operating cash Group flow – $277m Half year results 2020 59

  60. Slide 60: Liquidity and debt maturity

    Liquidity and debt maturity For personal use only Liquidity summary AUD’m HY2020 FY2019 Change Liquidity Loan & overdraft facilities1 3,051 2,962 3% Less: facilities utilized (2,103) (2,153) (2%) Available facilities 948 809 17% Plus: cash 413 494 (16%) Total liquidity 1,361 1,303 4% Bonding Bonding

  61. Slide 61: Foreign exchange translation impact

    Foreign exchange translation impact For personal use only Movement in major currencies against AUD (indexed) Average exchange Spot exchange rate 106 Currency rate movement movement 104 102 BRL (1.7%) 9.3% 100 CAD (5.0%) (7.1%) 98 CNY (3.1%) (4.6%) 96 94 EUR (1.8%) (4.1%) 92 GBP (2.7%) (7.9%) 90 NOK

  62. Slide 62: Foreign exchange

    Foreign exchange Impact total EBITA For personal use only 5.0 Impact total EBITA 4.0 3.0 2.0 3.8 3.0 1.0 0.5 0.6 0.4 0.3 0.3 0.2 0.3 A $m 0.2 0.7 - (0.8) (0.5) (0.5) (1.2) (0.8) (1.2) (1.2) (1.9) (1.0) (1.2) (1.9) (2.0) (3.0) ARS BGN CAD CLP CNY EUR INR KWD MAD MNT NOK NZD QAR US USD OTHER Pegged 15

  63. Slide 63: Sustainability at Worley project examples

    Sustainability at Worley project examples For personal use only Battery energy storage system Green hydrogen to ammonia facility Worley has been selected to install a battery energy storage system For Queensland Nitrates Pty Ltd (QNP) at their existing ammonium nitrate (BESS), solar panels, and micr

  64. Slide 64: Sustainability at Worley project examples

    Sustainability at Worley project examples For personal use only Renewable diesel refinery Green aviation fuel Marathon Petroleum Company LP awarded Worley a contract to Part of Velocys' portfolio is the development of green jet fuel refineries, provide detailed engineering services for the conversio

  65. Slide 65: Acronyms

    Acronyms Acronym Meaning Acronym Meaning For personal use only AASB Australian Accounting Standards Board EBITDA Earnings Before Interest and Tax, Depreciation and Amortization Energy, Chemicals and Resources diversion acquired from Jacobs AM Americas ECR Engineering Group Inc in the financial year

  66. Slide 66: Acronyms

    Acronyms Acronym Meaning For personal use only Million b/d Million barrels oil per day MMM Mining, Minerals & Metals MMO Maintenance, Modifications and Operations MPIS Major Projects & Integrated Solutions NPATA Net Profit After Tax and Amortization O&M Operations & Maintenance OEM Original Equipmen

  67. Slide 67: Worley energy | chemicals | resources

    Worley energy | chemicals | resources

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