Investor
Presentation
November / December
2015
Stuart Bradie – President and Chief Executive Officer Brian Ferraioli – EVP and Chief Financial Officer Zachary Nagle – VP, Investor Relations
Forward-Looking Statements
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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, strategies, future events,
future financial performance and backlog information and other information that is not historical information. When used in this presentation, the words
“estimates,” “expects,” “anticipates,” “projects,” “plans,” “intends,” “believes,” “forecasts” or future or conditional verbs such as “will,” “should,” “could,” or
“may,” and variations of such words or similar expressions are intended to identify forward-looking statements. All forward-looking statements are based
upon our current expectations and various assumptions. Our expectations, beliefs, and projections are expressed in good faith, and we believe there is
a reasonable basis for them. However, there can be no assurance that management’s expectations, beliefs, and projections will be achieved.
There are numerous risks and uncertainties, many of which are beyond our control, that could cause actual results to differ materially from the forward-
looking statements contained in this presentation. These risks and uncertainties include, but are not limited to: current or future economic conditions; our
ability to obtain and perform under contracts from existing and new customers, including the U.S. Government; exposure to cost overruns, operating
cost inflation and potential liability claims and contract disputes; access to trained engineers and other skilled workers; risks relating to operating through
joint ventures and partnerships; risks inherent in doing business internationally; potential tax liabilities; maritime risks; changes in the demand for our
services and increased competition; protection of intellectual property rights; risks associated with possible future acquisitions; risks related to our
information technology systems; impairment of goodwill and/or intangible assets; reduction or reversal of previously recorded revenues; risks relating to
audits and investigations, including by governments; compliance with laws and regulations, and changes thereto, including those relating to the
environment, trade, exports and bribery; our creditworthiness and ability to comply with the financial covenants in our credit agreement; and other risk
factors discussed in our most recently filed Form 10-K, any subsequent Form 10-Qs and 8-Ks, and other Securities and Exchange Commission filings.
All forward-looking statements attributable to us, or persons acting on our behalf, apply only as of the date made and are expressly qualified in their
entirety by the cautionary statements in this presentation. Except as required by law, we undertake no obligation to revise or update forward-looking
statements to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events.
This presentation contains the financial measure “EBITDA,” which is not calculated in accordance with generally accepted accounting principles in the
U.S. (“GAAP”). A reconciliation of the non-GAAP financial measure EBITDA to the most directly comparable GAAP financial measure has been
provided in the Appendix to this presentation.
KBR’s Zero Harm 24/7
0.39 0.37
0.35
0.39
0.30
0.22
0.26 0.23
0.21 0.19 0.18
0.34 0.35 0.35 0.32
0.31
0
0.05
0.1
0.15
0.2
0.25
0.3
0.35
0.4
0.45
2010 2011 2012 2013 2014 2015
KBR TRIR IOGP Top Q IOGP Average
5-Year TRIR Performance
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• KBR, Inc. is a global technology, engineering,
procurement and construction company serving the
hydrocarbons (predominantly Gas Monetization) and
government services industries.
• More than 100 year proud history.
• #424 in Fortune 500 rankings.
• ~ 25,000 employees in more than 40 countries.
• Customers in more than 70 countries.
KBR Overview
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• Focus on differentiated offerings in core markets /
clients with emphasis on global sales, commercial
rigor and consistent delivery
• Streamline operations and significantly reduce costs
• Rebalance business portfolio
• Continue efforts to proactively resolve commercial
disputes – i.e. less litigation
• Retain strong balance sheet and employ a balanced
capital allocation policy
Strategic Objectives
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Strategic Priorities
Priority Markets
Global Hydrocarbons (Gas) &
International Government
Services
Early project involvement
via differentiated technology
(gas monetization) &
specialized consultancy
services
Pursue Fixed Price EPC
when differentiated by: - KBR Technology
- Related experience
- Ability to self-perform
construction
(predominantly gas monetization)
Global project delivery focus
organized with regional
accountability
Re-focus
Growth
Strategy
1 2
3 4
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Framework to Support Core Focus
Exit non-strategic businesses:
- Stand-alone Fixed Price EPC Power
- Fixed Price U.S. Infrastructure &
U.S. Minerals
- Building Group
- Fixed Priced Stand-alone Construction
One KBR: Consistent use & application of
standard policies, processes, systems,
tools & procedures to deliver
consistency and efficiency
Allocate capital
in an efficient
and balanced
manner
Efficiencies: Be cost competitive;
$200 million reduction in annual
operating costs by 2016; > $150 million
in savings already identified / actioned
Streamline
Operations
1 2
3 4
Note: All statements current as of KBR’s 3Q15 earnings call on 11/02/2015
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Old KBR operating segment structure (16 business units)
New streamlined operating segment structure (5 business units)
Structure – Streamlined / Focused
KBR
Gas Monetization
Hydrocarbons Infrastructure, Government &
Power Services Operations
KBR
Technology & Consulting
Engineering &
Construction
Government
Services
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Global Leadership Team
Engineering & Construction John Derbyshire
Technology & Consulting
37 Years of Industry
Experience
Engineering & Construction Andrew Pringle
Government Services
14 Years of Industry
Experience (37 Years
Military Experience)
Graham Hill
Global Sales & Strategy
37 Years of Industry
Experience
Roy Oelking
E&C Americas
40 Years of Industry
Experience
Jan Egil Braendeland
E&C EMEA
22 Years of Industry
Experience
Ivor Harrington
E&C APAC
30 Years of Industry
Experience
David Zelinski
E&C Americas (Onshore)
30 Years of Industry
Experience
Stuart Bradie
President and CEO
E&C Group President
27 Years of Industry
Experience
Brian Ferraioli
CFO
37 Years of Industry
Experience
Jay Ibrahim
E&C MENA
21 Years of Industry
Experience
Farhan Mujib
Commercial
27 Years of Industry
Experience
Eileen Akerson
General Counsel
25 Years of Industry
Experience
Nick Anagnostou
HSSE
19 Years of Industry
Experience
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Technology and Consulting Business
Broad Range of Technologies and Solutions from Wellhead to
Specialty Chemicals – Primarily Gas Focused
Proprietary
Technologies
Consulting
and Services
Upstream
Semi-submersible hull design
Monohull vessels
Downstream
Refining (VCC, ROSE, FCC, Hydroprocessing, Distillation)
Olefins (SCORE, K-COT)
Ammonia (KRES, KAAP, Purifier)
Chemicals (Phenol, BPA, Acetic Acid, PVC, specialty technologies)
Coal Gasification
Upstream
Field development planning
Project assurance
Integrity management Structural analysis
Downstream
Downstream consulting
Feasibility and revamp studies
Technical services
Automation consulting and project management
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E&C Core Sectors – Full Service Offering
OFFSHORE
Fixed Platforms
Floating Facilities
Hulls, Moorings & Risers
SURF
BP Thunderhorse
LNG / GTL
Liquefaction
Regasification
FLNG
FSRU
BP Tangguh
ONSHORE Oil & Gas
Refining
Petrochemicals
Chemicals
Ammonia & Fertilizers
Gasification
Saudi Kayan
ASSET SERVICES
Maintenance
Modifications
Small Capex Projects
Asset Integrity
Maintenance
GDF Suez Bonaparte
Total Pazflor EBIC Ammonia Plant
MMM
Full service EPC with primary focus on Natural Gas related projects
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Bahrain Life Support
Government – Core Services
AMERICAS
International Base Operations Support
Remote Life Support Services
Logistics
EMEA
Home Base Operational Support
Overseas Operational Support
Programme Management Services
Resilience Planning & Execution
Training
APAC
Asset Management
Systems Engineering
Integrated Logistics Support
Capability Risk Management
Training
Djibouti BOS
Embassy Security Upgrades
Heavy Equipment Transporter
Police Firearms Training
Met Police Facilities Management Integrator FCO Embassy Life Support
National Emergency Mortuary Arrangements Land 121
Landing Helicopter Dock Capability Support Contractor
Joint eHealth Data and Information
Amphibious and Afloat Support System
PMKeyS Technical Refresh Training and User Support
Project Allenby/Connaught
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KBR Global Operations
Mexico City
Houston
Gothenburg
London
Moscow
Delhi
Dubai Pune
Jakarta
Tokyo
Seoul
Singapore
Beijing
Caracas
Perth Rio de Janeiro
Kuala Lumpur Monterrey
Wilmington
Birmingham
Edmonton
Luanda
Atyrau
Baku
Saudi Arabia
Bahrain
Chennai
Melbourne
Arlington
Canberra
Baghdad
Kabul
Freetown
Sydney
~25,000 Employees in more than 40 Countries
Customers in more than 70 Countries
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Strategic Objective Progress to date
Exit non-strategic businesses Stand-Alone EPC Power The first of three power plants is largely complete. The second will be completed in 1Q 2016. The third is targeted for 1Q 2017 completion. U.S. Minerals & U.S. Infrastructure Closed U.S. Minerals office Sold Infrastructure business Building Group Sale closed 2Q 2015 realizing cash of $23 million and a gain of $28 million. Fixed Priced Stand Alone Construction Completed existing contracts and team is integrated into E&C Americas
Businesses under review Canadian Module Fabrication Business transferred to announced JV with BCP
Focus on specific key prospects Won Magnolia LNG EPC 1, Yara/BASF Ammonia EPC, Johan Sverdrup EPC, Maersk Culzean Engineering
Cost reduction initiatives of $200 million by 2016 More than $150 million in savings identified/actioned to date
Resolve outstanding disputes Significant progress in closing legacy U.S. Military audits; efforts continue on remaining third party cases
Balanced capital allocation policy $22 million and $35 million in share repurchases and dividends paid, respectively, in 2015
Progress Report on Strategic Objectives
Note: All statements current as of KBR’s 3Q15 earnings call on 11/02/2015 1 Press release issued 11/16/2015
Market Outlook: Technology & Consulting
Technology market opportunities led by ammonia, refining and olefins, particularly
revamps – Middle East, North Africa, Eastern Europe & Asia.
Opportunities in Eastern Europe for VCC (Veba Combi-Cracker) technology and
converting heavy Hydrocarbons into lighter fuels, esp. diesel.
Increased consulting opportunities in upstream oil and gas, and downstream (LNG,
refining, petrochemicals, fertilizers) albeit market remains tight.
Continue to look for additional opportunities to expand T&C technology portfolio into new
products and services.
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Note: All statements current as of KBR’s 3Q15 earnings call on 11/02/2015
Market Outlook: E&C
Recent strategic developments:
Growing industrial services / maintenance business with N.A. Brown & Root joint venture.
Strategic alliance for pipe fabrication & module assembly – key for EPC prospects in North America.
1 EPC contract award for multi-billion dollar Magnolia LNG project in Gulf Coast (progressing towards FID)
See 11/16/2015 press releases by KBR and Magnolia LNG
Continue to capture previously identified large offshore projects:
Johan Sverdrup oil and gas field project has commenced – Norway, North Sea.
Won detailed engineering and design award for Maersk Culzean offshore gas development in October – U.K., North
Sea (Q4 booking).
Continued strong base of large projects in backlog through 2015 & 2016:
Executing two mega-LNG projects – Gorgon and Ichthys, with expected earnings from LNG projects to remain
significant components of earnings through 2016; favorable resolution of pending change orders continues to
provide opportunity for 2016 LNG income to be comparable to 2015.
Significant backlog of ammonia / urea, refining and oil & gas projects.
Note: All statements current as of KBR’s 3Q15 earnings call on 11/02/2015 1 Press release issued 11/16/2015
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Market Outlook: E&C (Continued)
Good pipeline of near-term and long-term prospects:
Increased focus on Middle East opportunities (refining and petrochemicals).
Onshore upstream opportunities in Middle East & Caspian remain positive due to low cost to develop. JV with
National Oil Company of Azerbaijan (SOCAR) announced in 1Q15 also positions us well for offshore brownfield.
Offshore developments continue in GoM, North Sea, Azerbaijan and Thailand.
Pursuing a ~$2B fertilizer complex in the Midwest U.S. (confidential client).
Major LNG developments continue to evolve providing add’l support for backlog growth in 2016 and beyond:
• KBR/SK JV awarded EPC contract for multi billion dollar Magnolia LNG project on U.S. Gulf Coast – 4 train
(8mtpa) LNG facility; Limited notice to proceed for early procurement and engineering only booked into
backlog in Q4.1
• Bearhead mega-LNG project in Canada - potential follow-on opportunity to Magnolia (same customer /
technology as Magnolia LNG); also expected to be a sole source negotiation.
• KBR/JGC/Rekayasa JV continue FEED and EPC bid opportunity for Tangguh Train 3. Award expected 2016.
• Continue to work on Shell Global LNG Agreement, with assignments underway.
• Four add’l FERC FEEDs in North America (clients confidential).
• Pre-FEED work and tendering ongoing for two major FLNG projects.
• Continued pursuit of LNG developments in North America where economics are promising given low forecasted
cost of development versus most other regions of the world.
17 Note: All statements current as of KBR’s 3Q15 earnings call on 11/02/2015
1 Press release issued 11/16/2015
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Market Outlook: Government Services
Confirmed preferred bidder for U.K. MoD Fixed Wing Training (MFTS) contract – another
long-term annuity type project. Award expected Q4.
U.K. Army re-basing – discussions continue on a sole source basis.
Strong operational performance continues for U.K. PFI contracts – primarily MoD long-
term facilities maintenance.
A number of U.S. overseas base operations support opportunities under tender; e.g.,
Kuwait.
Services in Iraq under LogCap IV contract grew in the period with further growth
possible.
Continued progress in successfully closing U.S. Gov’t audits of legacy LogCap III and
RIO billings.
Note: All statements current as of KBR’s 3Q15 earnings call on 11/02/2015
Consolidated Results: Q3 2015 vs Q3 2014
Commentary
Third consecutive quarter of solid earnings and
operational performance, following strategic
restructuring charges in 4Q14.
Backlog impacted by 50% sale of Americas Industrial
Services ($340M) and FX on strong dollar ($391M).
Revenues reflect winding down of Canadian pipe
fabrication and N.A. construction projects, reduced
activity on an LNG project, and sale of the Building
Group in Q2 (~$60M quarterly run-rate).
Gross profit and equity in earnings reflects improved
business performance and reduced operational costs.
G&A reflects cost reduction initiatives.
Restructuring charges and impairment of long-lived
assets related to strategy implementation and cost
reduction initiatives partially offset by gain on
disposition of certain assets.
Net Income reflects improved operational
performance and cost reduction initiatives.
*Consolidated EBITDA reconciliation provided in the Appendix.
Quarter Ending
($ in millions, except EPS) Sep 30, 2015 Sep 30, 2014
New awards $272 $ 1,099
Backlog of Unfilled Orders $ 13,300 $ 12,144
Revenues $ 1,199 $ 1,657
Gross profit $ 87 $ 30
Equity in earnings $ 35 $ 38
General & administrative expenses ($38) ($58)
Asset impairment and restructuring charges ($15) $ 0
Gain on disposition of assets $ 6 $ 0
Benefit (provision) for income taxes ($19) $ 1
Net income attributable to KBR $ 55 $ 30
EPS (diluted) $ 0.38 $ 0.21
EBITDA* $ 86 $ 45
Note: All statements current as of KBR’s 3Q15 earnings call on 11/02/2015 19
Segment Reporting: Q3 2015 vs Q3 2014
*Consolidated EBITDA reconciliation provided in the Appendix.
Revenue
T&C reflects less proprietary equipment and reduced upstream oil
related project consulting activity; E&C reflects winding down of
Canadian pipe fabrication and N.A. construction projects and
reduced activity on an LNG project. Non-Strategic down on sale
of Building Group in Q2 (~$60M quarterly run-rate) and wind down
of power projects.
Gross Profit and Equity in Earnings
E&C reflects solid underlying business performance / lower
overheads.
GS reflects solid operational performance, increased activity on
the company’s LogCAP IV and other U.S. Military operating base
contracts and reduced overheads. 3Q14 included an award fee
on LogCAP III of $21M that did not recur.
Non-Strategic Business reflects stronger than anticipated
operational performance on the company’s power projects versus
significant charges in 3Q14, favorable settlements with a major
subcontractor and lower overheads.
EBITDA largely reflects improvements noted above; Other
EBITDA primarily reflects gain on settlement with former parent of
$24M in the prior year that did not recur in 2015, partially offset by
lower G&A.
Quarter Ending ($ in millions) Sep 30, 2015 Sep 30, 2014
Revenues
Technology & Consulting 79 94
Engineering & Construction 828 1,196
Government Services 176 178
Non-Strategic Business 116 189
Consolidated Revenues 1,199 1,657
Gross profit (Loss) and equity in
earnings
Technology & Consulting 17 18
Engineering & Construction 74 72
Government Services 17 36
Non-Strategic Business 14 (58)
Consolidated Gross profit & equity in
earnings 122 68
EBITDA
Technology & Consulting 16 20
Engineering & Construction 61 50
Government Services 16 36
Non-Strategic Business 11 (56)
Other (18) (5)
Consolidated EBITDA* 86 45
20 Note: All statements current as of KBR’s 3Q15 earnings call on 11/02/2015
Cash / Capital Allocation
KBR Cash Balance Return of Cash to Shareholders
($ in millions) Q3 2015 Q2 2015
Domestic $304 $289
International $395 $381
JV $69 $61
Total $768 $731
Key Impacts to Cash in Q3 2015 ($M)
Cash from close of BCP transactions (net) 33
Previously announced loss projects cash exp. (18)
Settlement payment to former parent (12)
Dividends (12)
U.K. Pension (11)
FX impact on cash (16)
Subtotal (36)
• Maintained strong balance sheet and cash
position, providing confidence to our clients
and optionality as our markets continue to
evolve.
($ in millions) Q3 2015 YTD 2015
Since Jan
Jan-07
Share Repurchases $5 $22 $753
Dividends $12 $35 $274
Total $17 $57 $1,027
*
Final net cash payment * Note: All statements current as of KBR’s 3Q15 earnings call on 11/02/2015 21
Summary
Third consecutive quarter of solid earnings and operational performance, following
strategic restructuring charges in 4Q14.
E&C management has made good progress de-risking the business through strong
performance on Non-Strategic power projects and closing out Canadian pipe fab /
mod assembly projects.
We continue to capture previously identified key sales prospects.
New credit facility in place.
Strong balance sheet provides optionality in challenging markets.
Good near-term prospects – backlog growth opportunities.
Our strategy is progressing on plan.
22 Note: All statements current as of KBR’s 3Q15 earnings call on 11/02/2015
Appendix
Consolidated EBITDA Reconciliation Q3 2015
Note: EBITDA is defined as earnings before interest, income tax, depreciation and amortization
Quarter Ending
($ in millions) Sep 30, 2015 Sep 30, 2014
Net Income Attributable to KBR $55 $30
Add Back:
Interest Income (Expense) ($2) $3
Provision for Income Taxes ($19) $1
Depreciation & Amortization ($10) ($19)
Consolidated EBITDA $86 $45
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