Slide 1: 2nd Quarter 2019 Financial Results
2nd Quarter 2019 Financial Results July 31, 2019 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 ©2019 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, Chief Executive Officer
Stuart Bradie Chief Executive Officer Proud history, bright future. ©2019 KBR Inc. All Rights Reserved.
Slide 4: Leading Health, Safety, Security & Environmental Excellence
Leading Health, Safety, Security & Environmental Excellence Total Recordable Incident Rate (TRIR) Performance: 100% 2014 – 2Q 191 0.50 80% 0.42 86% 0.40 79% 60% 62% 70% 72% 74% 0.30 0.28 0.24 40% 52% Improvement 0.22 0.19 in incident rates since 0.20 launch of Zero Harm in 2014 0.11 20% 0.10 Zero Ha
Slide 5: Highlights | 2nd Quarter 2019
Highlights | 2nd Quarter 2019 $ in millions, except EPS Revenues Adjusted EBITDA1 Adjusted EBITDA Growth fueled by industry leading organic growth in favorable markets Margin $117 ‐ 12% top line revenue growth $1,422 $101 • 19% growth in GS, 16% organic $1,267 8.0% 8.2% • 29% growth in TS, all org
Slide 6: Market Outlook
Market Outlook Healthy government spending outlook, both domestic and international; Government progress toward favorable U.S. FY 20 and FY 21 budget deal Solutions Full life-cycle capabilities aligned with defense strategy objectives (GS) Excellent execution, contract performance and client r
Slide 7: Growth Outlook
Growth Outlook Our Pursuit Pipeline 2019 – 2022 Revenue Growth Profile New business: ~27% Our robust pursuit pipeline affords $120B significant growth opportunities. $68B $22 $24 One LNG project: ~10% $40 $56 Today’s book of business: ~63% Our recurring, long-term contracts $6 $40 provide stability
Slide 8: Mark Sopp, Chief Financial Officer
Mark Sopp Chief Financial Officer Proud history, bright future. ©2019 KBR Inc. All Rights Reserved.
Slide 9: Consolidated Results
Consolidated Results Quarter Ending June 30, 1 ($ in millions, except EPS) 2018 2019 Revenues $ 1,267 $ 1,422 Strong growth in revenues and adjusted EBITDA Gross Profit $ 161 $ 160 Equity in Earnings $ 12 $ 15 Adjusted EBITDA up 16% over 2Q18 on higher revenues, Selling, General & Administrative
Slide 10: KBR Segments
KBR Segments $150 $1,000 Revenues of $1,033 million, up $165 million or 19% from Q2 2018 $75 $500 EBITDA of $107 million, up $27 million or 33% from Q2 2018; 10% margin GS ‐ EBITDA and margins favorably impacted by sale of investment $0 $0 Six straight quarters of double-digit organic revenue
Slide 11: Capital Structure and Liquidity
Capital Structure and Liquidity Gross 3.4x Leverage 3.3x 3.2x 3.1x 2.9x Net 1.8x Leverage 1.7x 1.4x 1.4x 1.5x 2Q 2018 3Q 2018 4Q 2018 1Q 2019 2Q 2019 Cash $ 519 $ 581 $ 739 $ 708 $ 611 Gross debt 1,078 1,169 1,336 1,334 1,295 TTM adjusted EBITDA1 316 353 412 436 452 43% TTM EBITDA growth and discipl
Slide 12: Reaffirming 2019 Full-Year Guidance
Reaffirming 2019 Full-Year Guidance Reaffirming FY 2019 Guidance GAAP EPS $1.29 - $1.44 Adjusted EPS1 $1.58 - $1.73 Effective Tax Rate 23% - 25% Operating Cash Flow $175M - $205M 1 Adjusted EPS reconciliation provided in the Appendix 12 Proud history, bright future. ©2019 KBR Inc. All Rights Reserve
Slide 13: KBR… Growth and Value
KBR… Growth and Value Strong Growth…revenue growth underpinned by industry leading organic growth in GS and TS Predictable Performance…10 consecutive quarters of meeting or exceeding expectations Cash Focus…strong 2019 net income to operating cash conversion of 92%; reducing leverage Positiv
Slide 14: APPENDICES
APPENDICES Proud history, bright future. ©2019 KBR Inc. All Rights Reserved.
Slide 15: Appendix: Backlog Trend
Appendix: Backlog Trend $ in millions $13,602 $13,824 $13,495 $13,481 $13,497 $13,157 Majority of KBR backlog is currently associated $1,601 $2,144 $1,898 $1,898 $2,280 $2,635 Energy Solutions with long-term, reimbursable, PFI and/or $423 $544 $594 $10,342 $10,570 $509 $547 $500 Technology service
Slide 16: Non-GAAP Reconciliations: Adjusted EPS & 2018 NCI Adjusted Rev & Op Income
Non-GAAP Reconciliations: Adjusted EPS & 2018 NCI Adjusted Rev & Op Income Adjusted EPS Reconciliation Adjusted EPS Guidance Quarter Ending 2Q18 2Q19 2019 Guidance EPS (Diluted) $0.31 $0.34 EPS (Diluted) $1.29 $1.44 Add Back: Add Back: Legacy Legal Fees 0.02 0.01 Legacy Legal Fees 0.06 Non-cash impu
Slide 17: Non-GAAP Reconciliation: Consolidated, Adjusted and TTM Adjusted EBITDA
Non-GAAP Reconciliation: Consolidated, Adjusted and TTM 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, 2017 Dec 31
Slide 18: 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. Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 Net Income At