Credit Suisse 2012 Engineering and Construction Conference
June 7, 2012Bill Utt - Chairman, President and CEOSue Carter - Executive Vice President and CFO
Forward Looking Statements
This presentation contains “forward-looking statements.” All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements include statements about the benefits of the split-off, the discussions of KBR’s business strategies and KBR’s expectations concerning future operations, profitability, liquidity and capital resources. You can generally identify forward-looking statements by terminology such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “forecast,” “goal,” “intend,” “may,”“objective,” “plan,” “potential,” “predict,” “projection,” “should” or other similar words. These statements relate to future events or future financial performance and involve known and unknown risks, uncertainties and other factors that may cause actual results, levels of activity, performance or achievements to differ materially from those in the future that are implied by these forward-looking statements. Many of these factors cannot be controlled or predicted. These risks and other factors include those described under “Risk Factors” in KBR’s Annual Report on Form 10-K dated February 22, 2012, Forms 10-Q, recent Current Reports on Forms 8-K, and other Securities and Exchange Commission filings. Those factors, among others, could cause KBR’s actual results and performance to differ materially from the results and performance projected in, or implied by, the forward-looking statements. As you read and consider this presentation, you should carefully understand that the forward-looking statements are not guarantees of performance or results. KBR cautions you that assumptions, beliefs, expectations, intentions and projections about future events may and often do vary materially from actual results. Therefore, KBR cannot assure you that actual results will not differ materially from those expressed or implied by forward-looking statements.
The forward-looking statements included in this presentation are made only as of the date of this document. New risks and uncertainties arise from time to time, and KBR cannot predict those events or their impact. KBR assumes no obligation to update any forward-looking statements after the date of this presentation as a result of new information, future events or developments, except as required by the federal securities laws.
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KBR – A Leading Global E&C Provider
Revenue: Full Year 2011 - $9.3 Billion
Backlog: March 31, 2012 - $15.8 Billion
Headquarters in Houston, Texas
~27,000 employees; 70+ countries
KBR is a global engineering, construction, and services company supporting the energy, hydrocarbons, government services, minerals, civil infrastructure, power, industrial, and commercial markets.
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KBR’s Global Footprint
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Edmonton
Calgary
WilmingtonArlington
RaleighCharlotte
AtlantaHouston
Birmingham
MMM
Rio De Janeiro
Monterrey
Buenos Aires
GothenburgGreenford
Leatherhead Frankfurt
Algiers
MoscowAtyrau
BakuBaghdad
Kuwait City
DubaiAbu Dhabi
Dhahran
Lagos
Luanda
Johannesburg
New Delhi
Beijing
SingaporeJakarta
PerthAdelaide
MelbourneCanberra
SydneyBrisbane
Ontario
ChicagoSalt Lake City
DohaDammam
KBR’s Three Business Groups
LNGFLNGGTL
Gas Monetization
OffshoreOnshorePipelines
Oil & Gas
RefiningPetrochemicalsBiofuelsFertilizers
Downstream
RefiningPetrochemicalsSyngasCoal Gasification
Technology
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Infrastructure, Government & Power Services
InfrastructureTransportationWaterFacilities
N.A. Government & Logistics (NAGL)U.S. Federal GovernmentDepartment of Defense
International Government, Defence & Support Services (IGDSS)
U.K. Ministry of DefenceMiddle EastAsia Pacific (APAC)
Power & IndustrialPowerPulp & PaperAlternate Energy
MineralsCoal, Iron OreBase MetalsMaterial Handling
ConstructionRefiningChemicalsOil & GasPower
Industrial ServicesRefining & ChemicalsOil & GasPower Pulp and Paper
Canada OperationsOil SandsMining Gas Treating
Building GroupLife Sciences and EducationGovernment BuildingsHealthcareGeneral Industrial & AerospaceFood & Beverage
Hydrocarbons
Global Industry Drivers
mmcf/d
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
1995 2000 2005 2010 2015 2020 2025
North America South America EU / EurasiaMiddle East Africa Asia Pacific
World Gas Demand by Region
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Source: PFC Energy
Global Industry Drivers
Global Oil Demand: Two Paths
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Source: PFC Energy
mmb/d
0
10
20
30
40
50
60
70
80
90
100
OECD
Non - OECD
2000
2006
2007
2008
2010
2012
2001
2002
2003
2004
2005
2009
2011
2013
Global Industry Drivers
0%
2%
4%
6%
8%
10%
12%
Germany
ChinaIndia
World
US
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Real GDP Growth % changefrom prior year
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Source: PFC Energy
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Australia
LNG Remains RobustGorgon Trains 1-3 EPCMIchthys LNG EPCGorgon Train 4 Pre-FEED with expected FEED transitionBrowse EPC bidding phasePluto Expansion Trains
Industry-Wide Cost and Labor Challenges in Australia
Mining Resources AbundantKBR’s global Minerals Business Unit headquarters located in AustraliaRio Tinto’s Hope Downs 4 EPCM
PerthAdelaide
MelbourneCanberra
Sydney
Brisbane
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China, India and Japan
KBR’s Technology Business Unit Continues Making Strong Inroads
Doubled headcount in Beijing, China office during 2011Doubled headcount in Delhi, India office during 2011
Strong Suite of TechnologiesAdvanced Catalytic Olefins (ACO™)Veba Combi-Cracker (VCC)Transport Gasifier (TRIG™)Selective Cracking Optimum Recovery (SCORE™)Ammonia Technology (Purifier™)
New Delhi
Beijing
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Middle East
Seeing Significantly Stronger Downstream and Infrastructure Activity Compared to Last Two Years
KBR-AMCDE joint ventureSadara Petrochemical Complex PMCYanbu Export Refinery PMCJazan Refinery FEED and PMSDoha Expressway PMS and engineering support
Iraq
Decline in LogCAP as work transitions from military focus to Department of StateAnticipate establishing hydrocarbons related Baghdad office in 2012
DubaiAbu Dhabi
DhahranDoha
Dammam
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Africa
LNG
Skikda LNG EPCMozambique LNG FEED tenderingEast Africa could provide lower cost options for LNG development
Seeing a Reawakening with Customers Discussing Large Projects
Refining
Lobito Refinery
Algiers
Lagos
Luanda
Johannesburg
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Europe / Former Soviet Union
United Kingdom
Leatherhead officeGreenford officeAllenby & Connaught project
Caspian
Kashagan projectShah Deniz projectChirag Oil project
GothenburgGreenford
Leatherhead
Frankfurt
Moscow
Atyrau
Baku
Russia
Sales officeVeba Combi-Cracker (VCC)International Paper maintenance and small capital construction projects
PolandInternational Paper maintenance and small capital construction projects
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South America
Strong Technology Presence for KBR
Successful Completion of 8 FPSO Hull Designs for Petrobras in 2011
Establishing Regional Office in Rio De Janeiro for Industrial and Engineering Offerings
Rio De Janeiro
Buenos Aires
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Canada
Stronger Levels of Investment and Seeing Projects Moving More Quickly; KBR Had Approximately $2 Billion in Tenders Outstanding at End of April, 2012, including:
TurnaroundsModule fabricationConstruction projects in Alberta Oil SandsGas processing projects in Western CanadaClient camp support
LNG
Kitimat LNG open book tendering processTwo additional LNG prospects in Western Canada
KBR Positioning for Stronger Mining MarketEdmonton
CalgaryOntario
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United States
Wilmington
AtlantaHouston
Birmingham
Chicago
Salt Lake City CharlotteRaleigh
Favorable Natural Gas Forward Price Curves Providing Opportunities in Downstream and Technology Businesses
New ethylene and ammonia facilitiesAnticipate significantly higher levels of capital investment in coming years
Low Priced Natural Gas And Air Quality Regulations Driving Power-Related Opportunities
Compelling value proposition for new gas-fired, combined cycle power plantsConstruction of pollution control facilities
Maintenance Business
Increase in Export LNG and GTL Opportunities
KBR currently bidding FEED for LNG project Gulf Coast areaAnticipate pursuing one or more FEEDs for GTL projects
U.S. Construction and Industrial Services Businesses
Strong bookings in 2011, but 2012 started out slower than expectedLow natural gas prices providing opportunities in gas processing
KBR Building GroupStrong multi-family residential and manufacturing constructionHealthcare and higher education spending remains slow
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KBR Financials and Backlog
Full year 2012 earnings per dilute share guidance in $2.45 to $2.80 range:
Full year G&A expense between $240 million and $250 million of which an estimated $20 million to $25 million is related to ERP
Full year CAPEX of approximately $100 million of which an estimated $60 million to $65 million related to ERP
Estimated overall effective tax rate in mid 20% (as of April 26, 2012)
Share count of approximately 148 million shares outstanding
Full year LogCAP revenue between $300 million and $500 million
KBR 2012 Guidance*
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*Note: All comments based on original 2012 guidance provided on December 20, 2012; unless otherwise noted
Cash Generation and Deployment
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$497M$1.2B
$413M
$265M
12/31/09 12/31/11
Acquisitions & Licensing
Arrangements
Share Repurchases & Dividends
$941M
2010 and 2011
Operating Cash
Generation
CAPEX; Other
Investing & Financing Activities
$966M
Future
Cash Deployment OptionsCapital ExpendituresAcquisitionsShare repurchasesDividends
Backlog
20
80
90
100
110
120
130
140
150
160
170
180
190
200
210
220
2006 2007 2008 2009 2010 2011 3/31/2012
Perf
orm
ance
Inde
x
Revenue Backlog Job Income Backlog
Continued focus on job income backlog:
Up 40% from December 31, 2011
Up 113% since December 31, 2006
Tax
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Effective Tax Rate Effective Tax Rate Excluding Discrete Items
0%
10%
20%
30%
40%
50%
60%
70%
80%
2006 2007 2008 2009 2010 2011 1Q12
Tax
Perc
enta
ge
1Q12 Earnings Summary - KBR
Revenue, excluding LogCAP, up 5% year-over-year
Operating income of $112 million compared to $144 million year-over-year
Effective tax rate of 9% compared to 16% year-over-year
Earnings per diluted share of $0.61 compared to $0.69 year-over-year
Cash and equivalents of $837 million compared to $788 million year-over-year
Backlog of $15.8 billion compared to $12.0 billion year-over-year
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Note: All statements reflected on this slide are as of KBR’s 1Q12 earnings conference call on April 26, 2012
1Q12 Earnings Summary - Hydrocarbons
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($ in millions)
$ Change % Change $ Change % Change
Revenue: $ 1,116 $ 1,047 69 7% $ 989 127 13%
Job Income: 136 125 11 9% 129 7 5%
2012 2011 2011
Three Months EndedMarch 31, March 31, December 31,
Job Income (JI) up $11 million compared to first quarter 2011; related to: Gas Mon JI up $15M, primarily related to start-up of Ichthys LNG proj and increased activity on other LNG projects, partially offset by lower work vol on Skikda LNG and Pearl GTL projects; and
Downstream JI down $5M, primarily related to lower vol on projects in the Middle East nearing completion and lower volon a refinery proj in Africa, partially offset by increased profits from projects in the U.S. and KBR-AMCDE in Saudi Arabia
1Q12 Earnings Summary - IGP
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($ in millions)
$ Change % Change $ Change % Change
Revenue: $ 518 $ 855 (337) -39% $ 707 (189) -27%
Job Income: 75 107 (32) -30% 94 (19) -20%
March 31, March 31, December 31,Three Months Ended
2012 2011 2011
Job Income (JI) down $32 million compared to first quarter 2011; related to: NAGL JI down $40M, primarily related to completion of ops under LogCAP III and $16M in award fees received in 1Q11 which did not reoccur in 1Q12, partially offset by JI related to the LogCAP IV contract
IGDSS JI up $19M, primarily related to reduced cost est for construction activities on Allenby & Connaught project, increased activity on a NATO contract in Afghanistan, and a project close-out on an Afghanistan infrastructure project
Infrastructure JI down $7M, primarily related to 1Q11 incentive fee of $10M received on transport project which did not reoccur in 1Q12, partially offset by higher work vol on two expressway projects in Qatar and Australia
Minerals JI down $8M, primarily related to costs and schedule issues to complete a legacy EPC proj, partially offset by higher activity on Hope Downs 4 iron ore proj and Rio Tinto fuels infrastructure and logistics proj
P&I JI up $4M, primarily related to increased activity on waste-to-energy and coal gasification projects, partially offset by lower work vol from the completion of a waste-to-energy refurbishment project
1Q12 Earnings Summary – Services
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($ in millions)
$ Change % Change $ Change % Change
Revenue: $ 348 $ 397 (49) -12% $ 378 (30) -8%
Job Income: 28 32 (4) -13% 30 (2) -7%
2012 2011 2011March 31, March 31, December 31,
Three Months Ended
Job Income (JI) down $4 million compared to first quarter 2011; related to: Lower work vol on U.S. Const and Indust Svcs’ projects and lower activity due to maintenance on a vessel in the MMM JV, partially offset by increased activity on a new module assembly project and other projects in the Canada Operations
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Why KBR?
Investment Thesis
Fundamentally strong, global growth company with diverse portfolio of businesses
Multiple platforms for acceleration of new orders across global end markets
Strong balance sheet with emphasis on cash management
Patience, prudence and discipline in managing KBR’s businesses
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