analyst and investor day bu final · kbr swot analysis update 2009 to 2011 ¾strengths ¾breadth of...

2011 KBR Analyst and Investor Day

Why KBR?Bill Utt – Chairman , President, and Chief Executive Officer

November 11, 2011

of 71

Forward Looking StatementsThis 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 23, 2011, 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.

of 71

KBR – A Leading Global E&C Provider

* For contracts that contain both fixed-price and cost-reimbursable components, KBR classifies the components as either fixed-price or cost-reimbursable according to the composition of the contract, except for smaller contracts that are characterized on the predominate component.

Revenue: Full Year 2010 - $10.1 Billion; Fortune 500 Company #242

Backlog: September 30, 2011 - $11.7 Billion (77% reimbursable / 23% fixed-price)*

Current 2011 Earnings Guidance - $3.15 to $3.30 per diluted share

Headquarters in Houston, Texas

~35,000 employees; 65+ countries

KBR is a global engineering, construction, and services company

supporting the energy, hydrocarbons, government services, minerals, civil

infrastructure, power, industrial, and commercial markets.

of 71

KBR’s Global Footprint

Edmonton

Calgary

Houston

Monterrey

Arlington

MMM

GreenfordLeatherhead

Moscow

Atyrau

Baku

Dubai

Rio De Janeiro

Algiers

Angola

Lagos

Johannesburg

BaghdadKuwait City Beijing

SingaporeJakarta

Perth

Brisbane

SydneyAdelaide Canberra

Melbourne

Gothenburg

Abu Dhabi

DhahranNew Delhi

BirminghamAtlanta

Wilmington

Raleigh / Charlotte

Frankfurt

Buenos Aires

of 71

KBR Safety Record

RecordableIncident Rate* Incident Rate*

0.19

0.12

0.11

0.49

0.39

0.37

2009

2010

2011 YTD

Lost Time

Note: Safety statistics include all KBR subcontractors safety performance*Incident Rate defined as number of recordable cases multiplied by 200,000 divided by total work hours

of 71

KBR SWOT Analysis Update 2009 to 2011

StrengthsBreadth of the Franchise

Delivering complex jobs in remote areas of the world

Risk awareness and management processes driving consistent financial performance

Integrated global resource pool

Balance Sheet – no debt, ~$700 million cash, good credit resources

Passion to the mission – “We Deliver”

WeaknessesEnterprise Resource Planning – high cost and limited scalability

of 71

KBR SWOT Analysis Update 2009 to 2011

OpportunitiesGrow project “share of wallet”

Grow direct hire construction offerings

Leverage our financial strength / position

Focus on long-term vs. short-term opportunities

ThreatsMaintain status quo

Increased competition from new entrants

of 71

KBR 2012 Objectives

of 71

KBR 2012 Objectives

In 2012, KBR Plans to:

Sign up our “Big Elephants” – Inpex LNG, Kitimat LNG, Browse LNG, Pluto LNG and the Angola Refinery projects

Continue to grow KBR’s Power, Mineral, Infrastructure, Services and Other Hydrocarbons Businesses

Successfully manage the transition of our military support businesses to a broader based government services business

Continue to deploy our cash thoughtfully to shareholders, new businesses and into our existing businesses

Begin implementation of a new ERP system

of 71

KBR 2012+ Strategy

of 71

Broad Market Trends for KBRCorporations are healthy and have money to spend; Governments will see increased financial austerity

Global economic, social and political change presents higher risks for non-diversified players

Local content pressures continue to increase and have increasingly larger influence on international awards

Increasing a project’s “Share of Wallet” reduces project risk and increases control and profit opportunities

of 71

KBR Strategy Statement

“To be the world’s Contractor of Choice by consistently delivering successful and innovative

capital projects and services anywhere in the world.”

KBR Aspiration

of 71

KBR Key Strategic AttributesKBR will:

Become a more vertically integrated international contractor

Establish additional local operations in important market geographies

Maintain Best-in-Class Risk Awareness and Management

Organically grow existing market positions

Consider acquisitions and investments to accelerate strategic execution

Increase High Value Engineering Centers execution

of 71

KBR Strategy

Expand KBR’s success in domestic direct hire construction projects over the past 3 years to international projects

Increase KBR vertical integration on international projects to reduce risk as well as increase control and project “share of wallet” / profitability

Initial focus on Australia followed by Middle East and Africa over time

Establish an International Direct Hire Construction Capability

of 71

KBR Strategy

Expand our alliance with Korea fabricator STX to execute EPC services on FPSO projects

Develop strategic alliances to fabricate modules for LNG projects

Package ancillary services, including procurement management andconstruction management on Oil and Gas projects worldwide

Expand Access to Fabrication Capabilities to Increase Vertical Integration on Both Offshore

and Onshore Projects

of 71

KBR Strategy

Continue to grow recently established offices in Perth, Australia, Luanda, Angola and Atyrau, Kazakhstan

Establish new operations centers in Saudi Arabia (GES+), Brazil and Iraq to position KBR for increased Hydrocarbon and Infrastructure spending in these markets

Target office sizes of 500+ in three years

Expand Operational Presence in Key Markets to Address Local Content Requirements

of 71

KBR Strategy

Leverage Roberts & Schaefer’s footprint internationally

Establish separate Minerals Business Unit and leadership

Expand relationships with Rio Tinto outside of Australia

Expand Mineral footprint to include Latin America and Africa

Continue to Build Out Capability Set in Minerals Market

of 71

KBR StrategyWhat is “The Prize” for pursuing these strategic initiatives:

Increased financial performance, reduced risk and better execution across KBR

Provide our customers with lower cost and more predictable project delivery

Build out larger and more profitable global business across all of our markets

of 71

HydrocarbonsRoy Oelking – Group President

November 11, 2011


of 71

Hydrocarbons Group

StudyPre-FEEDFEEDEPCCommissioning

Study/ConsultingFEEDPMCEPC / EPCMCommissioning

LicensingBasic EngineeringProprietary EquipmentTechnical Service AgreementAdvance Chemical Engineering (ACE)

Gas Monetization Downstream Technology

KBR Hydrocarbons Group delivers Licensing, Conceptual Study and Consulting, FEED/PMC, EPC, EPCM and Commissioning for the wide spectrum of Hydrocarbons Value Chain around the World:

Hydrocarbons

Mar

ket

Sect

ors

Serv

ices

Bus

ines

s U

nits

RefiningPetrochemicalsBiofuelsFertilizers

RefiningPetrochemicalsSyngasCoal Gasification

LNGFLNGGTL

Bus

ines

s G

roup

Ris

k M

gmt

Strong Risk Awareness and Double Regard to Risk Management

Field DevelopmentConsultingFEEDDetail EngineeringProject Management ServicesEPC / EPCM

Oil & Gas

OffshoreOnshorePipelines

of 71

Hydrocarbons – Global Market Drivers

Ammonia

Bottom of barrel technologies – VCC, ROSE

TRIG (Coal-to-Gas/Liquids)

Revamps in Ammonia, Refineries and Naphtha-based Ethylene Crackers.

Population/ Economic growth

Refinery margins tight

Utilization of National Coal Reserves

Old and Less Profitable Plants

Technology

Ethane based crackers in North America.

Petrochemicals in resource rich regionsBiofuelsRefining Investments in many parts of the World

Shale Gas Development and Domestic Gas @ $4/mmBtu

NOC moving up Value Chain with low cost gas resourcesDownstream

International Investment in LNG –Australia, North America, Africa

North America Investment in GTL

High Asia gas price @ $15/mmBtuStrong LNG demand (Replace Nuclear)

Large spread between oil and gas pricesGas Mon

Global Investment in

o Onshore

o Shallow Water

o Deepwater

Oil stable @ $80-$100/bbl

Steady demand growth

Exploration successOil & Gas

Business ImpactIndicatorBusiness Unit

of 71

Hydrocarbons - Aspiration & Strategic Attributes

Conceptual Engineering through EPC Business Model

Strong Client Relationships

Focus on Safety, Risk Management, Execution Certainty and Innovative Culture

Global Footprint – Focused on Major Markets in Each Business Unit

Business Aspirations

Strategic Attributes

‘Tier 1 in all 4 Business Units with Increasing Group

Revenue and Job Income by Delivering High Quality

Projects and Services Worldwide’

of 71

Hydrocarbons Growth Strategy

GEOGRAPHIC EXPANSION

INCREASE “SHARE OF THE WALLET”

ADDING CAPABILITIES

International Direct Hire Construction

STX Alliance for Offshore Fabrication

Continued Domestic EPC

Technology Alliances/ Acquisitions

Subsea Engineering

Al Khobar

Baghdad

Rio De Janeiro

Luanda

Atryau

Perth

of 71

Gas Monetization BU – Capex & Major Prospects

North America

Africa

Europe & Eurasia

Asia

• Snohvit LNG Train 2

• Kitimat LNG Tr I&II• BG Canada LNG Tr I & II• BG Trunkline LA LNG• Cameron LNG• Freeport LNG• Sasol/Talisman

Canadian GTL• Shell US GTL

• Malaysia LNG Train 9• Tangguh LNG Train 3

• Anadarko Mozambique LNG• BG Tanzania LNG• NLNG Seven Plus• SEGAS TR 2

• Inpex Ichthys LNG• Arrow Energy LNG Tr I&II• Arrow Energy LNG Tr III&IV• Browse LNG• Gorgon Tr 4• Pluto LNG Tr 2&3

$81B

$46B

$17B

$11B

$57B

2012-2014 Addressable Market Capex

Australia

Middle East$5B

LatinAmerica

$3B

of 71

Challenges – Modular construction.Status – FEED in progress with assistance to client on early site work. Expected EPC award of Train 1 in 2Q12 and Train 2 in 2Q13.

Gas Mon – Major Project Portfolio

Challenges – Remote location and resources required. Status – Open Book Tender (OBT) work is in progress. EPC proposal submitted in Oct’11. Expected EPC award by end of 2011.

INPEX ICHTHYS LNG KITIMAT LNG

ANADARKO MOZAMBIQUE LNG BROWSE LNG

Challenges – Remote coastal location with challenging site options with respect to soil conditions.Status – Pre-FEEDs under progress by KBR and Technipseparately. Expected FEED award in 2Q12 and EPC award in 4Q13.

Client – WoodsideLocation – West AustraliaScope – FEED and EPC for the Grassroots 3 LNG trains each of 4 mmtpacapacity located in the Kimberley region.

Challenges –Remote location, modular design, transportation & installation and complex marine facilities.Status – FEED in progress with expanded FEED deliverables scope. Expected EPC award in 2H12.

Client – InpexLocation – Darwin, AustraliaScope – FEED, Open Book Tender and EPC for LNG portion of Ichthys field development including two trains each of 4.2 mmtpa capacity.

Client – ApacheLocation – British Columbia, CanadaScope – FEED and EPC for two LNG trains each of 5 mmtpa capacity liquefying natural gas from Horn River and Montney shale plays.

Client – AnadarkoLocation – Near Palma, MozambiqueScope – Pre-FEED, FEED and EPC for two LNG trains each of 5 mmtpacapacity. Space and planning for future third train will also be provided.

Offshore Floating Production Unit

Subsea Gas Gathering System

Gas Pipeline to Beach

LNG Production

PlantConstruction

Camp

LNG Offloading

Jetty

Airport

Offshore Floating Production Unit

Subsea Gas Gathering System

Gas Pipeline to Beach

LNG Production

PlantConstruction

Camp

LNG Offloading

Jetty

Airport

of 71

Oil & Gas BU – Capex & Major Prospects

North America

Africa

Middle East

Asia

Australia

• Shah Deniz Phase 2• TCO Future Growth Project• Karachaganak Phase 3• Pearls Project• HOD Redevelopment• Rosebank

• Kaskida, GoM• Hadrian, GoM• White Rose

Extension Project, Canada

• Hess Pony TLP

• Peregrino II FPSO• Petrobras 8 FPSO• Petrobras P14/P17

Drilling Rigs Upgrade

• Chevron Vietnam Block B• Chevron Gendalo-Gehem• Ubon Development

• Lucapa FPSO, Angola• Mafumeira Sul (SMAD)• Tweneboa 1&2 Development• Quiluma Wellhead Platform• Chissonga FPSO Topsides• Reggane Nord Development

• Rumaila Field• Shell Majnoon Full Field• Umm Lulu• SARB Field Development• Dorra Oil & Gas Field• ZADCO UZ-750K Project

• Browse Upstream Development

• Ichthys Offshore FPSO Topsides

• Scarborough Offshore

• Hess Equus

$24B

Europe & Eurasia

$18B

$22B

$18B

$10B

$19B

$33B


LatinAmerica

of 71

Challenges – Modular construction and working with HHI.Status – Proposal work is underway with FEED verification being performed. Award expected 2Q12.

Oil & Gas – Major Project Portfolio

Challenges – Integration of offshore and onshore.Status – FEED work ramping up. Construction Management award expected in 1Q12 while Detail Engineering and Procurement Services award expected in 1Q13.

SHAH DENIZ PH 2 LUCAPA FPSO

ZADCO UZ-750K QUAD 204

Client – ChevronLocation – Offshore, AngolaScope – FEED for a FPSO Topsides, Hull & Moorings to produce 100,000 bopdoil. The development option also include Subsea scope of work.

Challenges – Local content requirements and Capability to execute combined FPSO i.e. Topsides, Hull and Moorings.Status – Bid submitted in March’11. Award expected in 4Q11.

Client – BP/HHILocation – West of Shetland Water, UKScope – Engineering Design and Procurement support for new FPSO.Challenges - Strict safety and environmental regulations for harsh weather operations.Status – Detail design is underway.

Client – BP ( Shah Deniz)Location – AzerbaijanScope – Detail Engineering, Procurement Services and Construction Management for Onshore and Offshore Gas Processing with flowrate of 16 bcma gas and 100,000 bpd condensate.

Client – ZADCOLocation – Artificial Islands, UAEScope – Detailed Engineering, Project Management and Procurement services for 750kbpd oil production facility located on 4 artificial islands with 140,000 tones of modules.

of 71

Downstream BU – Capex & Major Prospects

North America

LatinAmerica

Africa

Middle East

Europe & Eurasia

Asia pacific• Tula Refinery, Mexico• Isthmus - Advance

bio-ethanol project• Cadereyta Refinery

Diesel HDS, Mexico• Ecopetrol PCIP Liquid

Ethylene Cracker• Petromonagas

Upgrader, Venezuela

• Sonangol Refinery Phase I• PetroSA Project Mthombo• Natref Clean Fuels, S Africa• Sasol Gasoline

Hydrogenation

• Shell/QP Petrochemical complex, Qatar

• Sadara EO Derivatives• Sadara CPMC Amendment• Sadara HP-LDPE• PetroRabigh II Project• Fujairah Refinery, UAE• KNPC Clean Fuels 2020• KNPC New/4th Refinery

Project• Millenium Inorganic

Chemicals (TiO2), Saudi• United Cracker $58B

$31B

$30B

$33B

$33B

• TOTAL Antwerp Refining -ROSE

• Ustyurt Gas Chemical Complex

• Pavlodar Refinery upgrade• Rosneft Primorsk Refinery• Gazprom Olefins

• Fertilizers• Refinery

Modernization

$13B

• Corunna Cracker Revamp• INEOS Olefins• Shell Grassroots Ethylene• Confidential Gulf Coast

Ethylene• Baytown Lubes Expansion• Toledo Repositioning Proj• PPG Chlor Alkali

Expansion• PCS Phosphate Ammonia• KiOR’s Newton Phase 2


of 71

Downstream – Major Project PortfolioSADARA SONAREF

JAZAN

Client – Saudi AramcoLocation – Al-Jubail, Saudi ArabiaScope – FEED/PMC along with complex configuration optimization and construction management services.

Challenges – Mega projects with 30+ downstream units. Status - FEED near completion and PMC ramping up.

Client – SonangolLocation – Lobito, AngolaScope – EPCm for a grassroots refinery to process 200,000 bpd crude oil and produce flexible and high quality products. Challenges – Transport of heavy plant equipment from shore to site, which is on a 919 ft high plateau.Status– Work on Phase 1 continued under the Interim Service Agreements. Expected EPCm award in 2012.

Client – Saudi AramcoLocation – Jazan, Saudi ArabiaScope –FEED and Project Management Services (PMS) for 400,000 bpd refinery with associated utilities, Tank Farm, Marine, Port and Terminal facilities.Challenges – Execution of part of the FEED in the Kingdom of Saudi Arabia. Status – Client selection of licensors completed. KBR FEED/Integration Services well underway.

KiORClient – KiOR, Inc.Location – Columbus, Mississippi, USScope – EPC services of a wood biomass-to-renewable crude facility.Challenges – Aggressive schedule.

Status – Engineering is being executed from Houston office, while construction activities are ramping up at site.

of 71

Technology BU – Capex & Major Prospects

North America

LatinAmerica

Africa

Middle East

CIS

Rest of Asia• Refining• Ammonia New• Petrochemicals

• Refining• Ammonia New• Petrochemicals

$1020MM

$630MM

$860MM

$450MM

$580MM

• Refining Revamps• Ammonia Revamps

• Ammonia Revamps• Refining - Hydroprocessing• Petrochemicals• Coal Gasification- Indonesia

$690MM

• Refining Revamps• Ethane Based

Ethylene Crackers• Ammonia Revamps


China

$1300MM

• Ammonia New & Revamps

• Refining New & Revamps

• Ammonia New• Coal Gasification• Refining – VCC &

ROSE

India

$550MM

$400MM

Europe

• Refining Revamps• Coal Gasification• Ammonia New & Revamps• Petrochemicals• Refining - VCC & ROSE

of 71

Technology – Major Project Portfolio

FCC: ShRaffineria di Milazzo (RAM) FCC Revamp, Italy

ROSE: Luberef-II ROSE Revamp, Saudi Arabia

VCC: Beijing Petrochemical Engineering Co, (BPEC) Coal Tar and Coal/Oil VCC, China

REFINING PETROCHEMICALS

SYNGAS / AMMONIA COAL GASIFICATION

Catalytic Olefins: Shaanxi Yanchang Petroleum Yanan Energy and Chemical Co, China

Olefins: Multiple Expansions, US/Canada

Olefins: Saudi Kayan, Saudi Arabia

Phenol: LG Chem, Korea and Lihuayi, China

Ammonia: Kaltim 5, Indonesia

Ammonia: Jaiprakash Associates Ltd (JAL), India

Ammonia: KRIBHCO, India

TRIG: Dongguan IGCC Retrofit Project, China

TRIG: Berun Holding Group 100 KTA Glycol Project, Inner Mongolia, China

TRIG: Kemper County IGCC Project, Mississippi of 71

Strong Foundation for Continued Organic Growth

Opportunities to Expand Project “Share of Wallet”

Continued Expansion into High Growth Regions

Great Breadth of the Franchise

Strong Risk Awareness and Double Regard to Risk Management

Why KBR?

of 71

Infrastructure, Government, and PowerMark Williams – Group President

November 11, 2011


of 71

Infrastructure, Government & Power

EngineeringEPCM/EPCProject ManagementConstruction ManagementEvent Management

Operations and MaintenanceLogisticsConstructionDesign/Build

Facilities ManagementProgram & Project ManagementConstruction ManagementTraining

EngineeringEPCProject ManagementConstruction Management

Infrastructure N.A. Government & Logistics

Power & IndustrialInternational Government, Defence

& Support Services

Infrastructure, Government, and Power

U.S. Federal GovernmentDepartment of Defense

Mar

ket

Sect

ors

Serv

ices

Prod

uct S

ervi

ce L

ines

Coal, Iron OreBase MetalsMaterial Handling

TransportationWaterFacilities

U.K. Ministry of DefenceMiddle EastAsia Pacific (APAC)

Bus

ines

s U

nit

KBR Delivers in six distinct markets: Infrastructure, Minerals, Government, Logistics, Power and Industrial

Minerals*(1/1/2012)

EngineeringEPCMProject ManagementConstruction Management

PowerPulp & PaperAlternate Energy

Strong Risk Awareness and Double Regard to Risk ManagementRis

k M

gmt

of 71

IGP – Business Drivers

Increased global demand drives infrastructure, minerals and power investment

Government regulations and energy demand will drive power opportunities

Forest products capital expenditure increases

Government spending to decrease with defense reductions more on hardware than services

U.K. Ministry of Defence outsourcing

Business Drivers

of 71

Infrastructure, Government & Power - Outlook

Leading and vertically integrated businesses in power, minerals, industrials and infrastructure

Balanced and growing U.S. and international government services business



Power EPC capability

Premiere logistics services contractor

Best-in-Class safety and quality programs

Global footprint in minerals and material handling

Positioned for Middle East infrastructure spend of 71

Build on full EPC offering in US now to Build on full EPC offering in US now to expand internationally expand internationally

Sold $800MM power business in 2011Sold $800MM power business in 2011

Opportunities in UK, Middle EastOpportunities in UK, Middle East

Follow industrial customers Follow industrial customers internationallyinternationally

Value Proposition and Strategy

Power and Industrial

Southern Company Plant Franklin

Smiths Station, Alabama

Strategic Aspiration

Organic growth beyond traditional Southeastern Organic growth beyond traditional Southeastern United States with full EPC capabilitiesUnited States with full EPC capabilities

International PaperKwidzyn, Poland

of 71

Kemper County IGCC Project

TIC $286MM (KBR $171.6MM)

582 MW integrated gasification combined-cycle

Clean coal facility

First use of Transport Integrated Gasification (TRIGTM) technology in US

Carbon Capture & Storage of 50 percent of plant’s CO2 emissions

CO2 captured and reused for Enhanced Oil Recovery

EPC: Southern Company (Mississippi River)

of 71

To be a preferred logistics and construction To be a preferred logistics and construction services business among the top government services business among the top government

and select commercial clientsand select commercial clients

Premiere leader in the contingency Premiere leader in the contingency markets for logistics, facility markets for logistics, facility management, base life supportmanagement, base life support

Support US, UK, AUS and NATOSupport US, UK, AUS and NATOforces todayforces today

Diversify federal and commercial clientsDiversify federal and commercial clients

Target opportunities that yield higher Target opportunities that yield higher margins margins


Government and Logistics

BasraAfghanistan

Eastern Processing FacilityCape Canaveral, Florida


of 71

Base Life Support to U.S. Dept of State Diplomats and advisors in IraqContract: Cost Plus – Fixed Fee, 1 Base year + 1 year Option, over $500M Scope: Fuels, maintenance, fire protection, camp operation, diningFocus: Minimize costs, Increase local (Iraqi) content

Department of State Iraq Support

of 71


Local customer facing offices with Local customer facing offices with global resource/knowledge reachglobal resource/knowledge reach

Proud history of technical engineering Proud history of technical engineering excellenceexcellence

Strong safety cultureStrong safety culture

Industry best risk awarenessIndustry best risk awareness

Infrastructure

To be a top 15 ENR global, integrated To be a top 15 ENR global, integrated infrastructure business with >$1B revenueinfrastructure business with >$1B revenue

Regional Rail LinkVictoria, Australia

First new airport built in US since 9\11, Panama City, Florida


of 71

Build EPCM/EPC business off global Build EPCM/EPC business off global minerals footprintminerals footprint

Dedicated leadership team to focus on Dedicated leadership team to focus on growthgrowth

Recognized industry leader for Recognized industry leader for materials handlingmaterials handling


Minerals

To be a top 5 global To be a top 5 global EPC(mEPC(m) provider in mining, ) provider in mining, minerals, and material handlingminerals, and material handling

Rio Tinto Hope Downs,Pilbara Region, Western

Australia

ElkView Coal Washery, British Columbia, Canada


of 71

Why KBR?

Ability to leverage power in new domestic and international markets

Opportunity to build out integrated global minerals footprint

Diversification of KBR’s industry leading logistics services capabilities to new customers

Positioned to capture growing infrastructure spend in the Middle East

Strong risk awareness and double regard to risk management

of 71

ServicesDavid Zimmerman – Group President

November 11, 2011


of 71

2

Services

Construction ManagementGeneral ContractingDirect Hire ConstructionSmall Capital ProjectsMechanical Subcontracting

Operations & Maintenance Turnarounds, Shutdowns and OutagesBoiler Repair / UpgradesBuilding Facilities ServicesOn Call ConstructionMMM – Marine Maintenance & Small Cap Work

Construction ManagementGeneral ContractingDirect Hire ConstructionModule AssemblyPipe FabricationMaintenance / Turnarounds

Commercial Construction ManagementDesign-BuildGeneral ContractingPublic-Private BuildingsPreconstruction

Construction Industrial Services

Building Group

Canada Operations

Services

Power Pulp and PaperGeneral IndustrialM

arke

t Se

ctor

sSe

rvic

esB

usin

ess

Line

s

Life SciencesEducationGovernment Buildings

HealthcareAerospaceFood & Beverage

RefiningChemicalsOil & Gas

Oil SandsMining Gas Treating

Bus

ines

s G

roup

Strong Risk Awareness and Double Regard to Risk ManagementRis

k M

gmt

KBR Services delivers construction, construction management and maintenance services to clients across a variety of industries:

of 71

3

Services – Business Drivers

Key Market Trends

Business Unit

Indicators Business Impact

Construction

Cost effective Ethane feedstock Increased investment in Petrochemical and Ammonia market

Changes to Federal Clean Air Regulation Act Increased number of environmentally driven projects

Growing demand in US for specialty paper products Increased activity for new and revamped paper machines

High number of LNG and minerals projects in Australia Openings for direct hire construction in Australia

Canada

Oil sands investments to grow to record levels by 2013

High number of major projects moving from engineering to construction in 2012 / 2013, e.g., NWU, Suncor, Syncrude, etc.

Continuing demand for Canadian minerals, e.g., Gold, Uranium, Iron Ore, Potash, etc.

Opportunities in British Columbia, Saskatchewan and Ontario

Increased Shale Gas activity in British ColumbiaIncreased gas production facilities in addition to off-take projects, such as, Kitimat LNG and potential GTL facilities

Industrial Services

North America Chemical business rebound Increased activity in multi-site maintenance and TARs (Turnarounds)

Customers addressing deferred TARS Increased demand for TARs

International client outsourcing maintenance Increased demand for International maintenance opportunités (KSA - SATORP)

Building Group

Improving investment in manufacturing Increasing number of opportunities in S.E. US

Continued investment in Healthcare Continuing to secure backlog, however projects are smaller

of 71

4

Services – Aspirations and Strategic Attributes


Services aspires to be the leading provider of global construction and maintenance services on

EPC and stand alone projects

Expandable construction and maintenance capability into international markets

Ability to leverage existing competencies in current markets

Deliver competitive construction and maintenance services to our Hydrocarbons, Minerals, Power and other Business Units


of 71

5

Looking Back: Acquisitions Impact to Aspirations

Key Market TrendsTGI – Specialty Turnaround (TAR) Company – Acquisition April ‘08

Multi-site TAR and International expertiseManagement, controls and professional consultingReturned to North America TAR direct hire executionResults: Turnarounds for Suncor, BP Texas City, Chevron Pascagoula

BE&K – Regional Construction and Maintenance Contractor –Acquisition July ‘08

Power position for KBRForest Products / Industrial position Chemical / DuPont – multi-site EPCm, EPC and maintenanceReturned KBR as one of the leading US direct hire contractors in the USResults: SWA, Plant Ratcliff, DuPont Engineering, Construction and Maintenance Services

WABI – Ontario based CLAC labor Construction Contractor –Acquisition Oct ’08

Regional expansion in Alberta, British Columbia, Ontario and SaskatchewanMinerals projects, including R&S collaboration In addition to Building Trades Union, we now have access CLAC labor poolResults: Sifto Salts, Cameco, Northgate

of 71

Services – Construction

Key Business Indicators

Key Market Trends 2011 Quarterly Sales New Awards Performance Growing US shale gas production in areas such as Texas, Wyoming, North Dakota, Pennsylvania

Significant increase in Downstream market opportunities due to ethane supply from shale gas estimated at $16B in 2012

Increased Power market activity associated with environment projects. Southern to build 17 baghouses in next five years

Increased activity in forest products due to demand for specialty and general paper products

Booming Australian construction market

Developing International construction opportunities in Australia

Secured major 2011 construction backlog in 2011, e.g., Scherer, Pascagoula and Baytown Lube Project

Increased local presence, e.g., Pascagoula MS, and Gonzales, LA

Leveraging vertical integration of other business units, e.g., Downstream and Power & Industrial

Continued growth in the market

367%

547%

1405%

598%

Q1 Q2 Q3 Q4

2010 2011 Estimated

of 71

Key Market Trends

Services – Industrial ServicesAddressable Market - US Only


Clients’ multi-site maintenance and strategy continues, e.g., Shell, Dow, LyondellBasell, etcIncreasing number of clients are outsourcing facility maintenance, e.g., Exxon Mobil and ShellIncreased interest and renewed activity in job

order contract market with municipalsClients moving ahead with previously deferred turnarounds (TAR) and some clients moving forward with multi-site TAR strategy, e.g., Dow and LyondellBasell

Growing international footprint, e.g., Egypt, Poland, Russia, Mexico, and KSASelf performed MMM vessel dry dockContinue to grow domestic footprint and support of clients’ multi-site maintenance strategy, e.g., DuPontIncreased maintenance and turnaround man hours year on year Continue to grow facility maintenance business, e.g., Texas Instruments, Shell, and Exxon Mobil

Increased Maintenance and Turnaround Footprint

Columbia, MO3 Sites

Dallas, TX2 Sites

Texas City, TX2 Sites

Houston, TX34 Sites

Austin, TX2 Sites

Orange, TX2 Sites

Jackson, MS3 Sites

Mobile, AL2 Sites

Belle, WV2 Sites

Total Sites = 93

EgyptPolandRussiaCanada – 2 Sites

International Sites

of 71

Increasing market and regional diversification• Siftosalt Salt Mine, ON• IOL Turnaround, Sarnia• Cameco uranium, Saskatchewan• Northgate Gold, ON• Suncor TAR’s, AB• Power Maintenance, AB

Solid 2011/2012 fabrication bookings with facility expansion plansLeveraging vertical integration of other Business Units (Gas Monetization – Kitimat, R&S – Siftosalt, Downstream –NovaChemicals)

Services – Canada Operations

Oil sands investments expected to grow to record levels by 2013Oil sands and SAGD projects moving from detail design and module fabrication into construction over next two yearsMajor investment in minerals market continues, e.g., gold, potash, uranium, etcIncreased shale gas activity in British ColumbiaCanadian investment in LNG and GTL


Key Market Trends Addressable Market

Kitimat Case Study

Capability • In-depth knowledge of local construction

market including resources, suppliers etc.

• Own one of largest fabrication yards in AB

• Successful First Nations relationships

Need • Large LNG project

• Remote location

• Local content with competitive solution

Solution • Competitive EPC

• Local participation

• Enhance risk management & project scope of 71

Services – Building Group

Active ProjectsKey Business Indicators

Key Market Trends Addressable MarketSlowdown in commercial building constructionSmaller project sizeImproving residential market in DC area Healthcare consistent Continued investment in manufacturing in the Southeast

Successful execution of flagship projects for:• Boeing 787 Dream liner• Duke Hospital• Birmingham Children’s Hospital

• Continue to secure new awards in a high competitive market, however, projects are of a smaller size

• Increased regional market diversity, e.g., Texas

Current SiteRegional Office

of 71

Project: Plant Scherer Scope: Construction of a Flue Gas Desulfurization (FGD) and Selective Catalytic Reduction (SCR) equipment, at two 880MW coal fired power plantsChallenges: Working at 250 feet around pre-outage, outage and post outage activitiesStatus: 80% complete on the Heavy Steel project; 5% complete on the prime FGD/SCR construction

Services – Typical ProjectsIndustrial Services : DuPont – Multi-Site

Project: Continuous Construction & Maintenance ServicesScope: Maintenance, Construction & TAR’sChallenges: Successfully completed numerous large and medium sized shut-downs in addition to several fast tracked capital projects during 2011Status: Over 3.6MM manhours have been worked by 2,100 craft between the 16 different sites in 2011

US Construction: Southern Company – Juliette, GA

Canada Ops: KM LNG – British Columbia, CanadaProject: Kitimat LNGScope: FEED and Early Works Site ManagementChallenges: Isolated site, water only access, cold coastal temperate rain forest climate, logisitics and working with the coastal labor force and climate Status: FEED ongoing. Site clearing and site preparation work underway

Building Group: Gulfstream Aero Corp. – Savannah, GAProject: Business Jet Production Facility -Building YScope: Construction of a 456,000 SF manufacturing facility to be completed in September 2012. Challenges: 12 month schedule for construction, proximity to airportStatus: Erection of structural steel has begun

of 71

Market tested capabilities which deliver differentiated, predictable outcomes for construction and maintenance

Well positioned in recovering North American markets

People, systems, tools, knowledge and vision to extend our direct hire capabilities to international markets

Strong risk awareness and double regard to risk management

Why KBR?

of 71

Financial PerformanceSue Carter – Executive VP & Chief Financial Officer

November 11, 2011


of 71

2011 Earnings Guidance

Third Quarter 2011 Guidance $3.15 to $3.30

Second Quarter 2011 Guidance $2.60 to $2.85

$0.45 for Barracuda/Caratinga arbitration

$0.10 to lower end of range for stronger operating

performance and G&A expense control

January 2011 Guidance $2.05 to $2.30

$0.37 for discrete tax items & lower ETR

$0.09 for stronger operating performance

$0.09 for G&A expense control

of 71

Historical Earnings Guidance vs. Performance

2008 $1.84

Note: All share amounts represent earnings per diluted share

2009 $1.79

2010 $2.07

KBR Delivers

$1.30 to $1.60 Range

Analyst range at that time (January 2011) was $1.59 to $2.00“In-line with Analyst Expectations”

Guidance GivenYear Delivered

Raised to $1.75 to $2.00 during 2010$1.60 to $1.80 Range

of 71

Strengthening Backlog

90

95

100

105

110

115

120

125

130

135

140

145

150

155

160

165

Perf

orm

ance

Inde

x

Job Income Backlog

Revenue Backlog

2006 2007 2008 2009 2010 9/30/11

13% CAGRIn 2011, Job

Income Backlog Up 10% Compared

to Revenue Backlog Down 3%

of 71

Strengthening Backlog Contributing to Margins

2006

20072008

2009

2010

2011*

*Note: Annualized based on First Nine Months of 2011 Actual Reported financials from Form 10-Q dated October 26, 2011

6.0%

7.0%

8.0%

9.0%

10.0%

11.0%

12.0%

13.0%

$8,000 $9,000 $10,000 $11,000 $12,000 $13,000

Revenue (in millions)

Job

Inco

me

Mar

gin

of 71

Backlog Growth Expected

9/30/2011 2012E 2013E 2014E

Prospect List Indicates Backlog Growth for

KBR’s 3-Year Planning Horizon

of 71

$941M

$319M$549M

$265M

$120M

12/31/09 12/31/10

Acquisitions & Licensing

Arrangements

Share Repurchases & Dividends $125M

$119M

$786M

$164M2010

Business Cash

Generation

MWKL Acquisition

Cash Generation & Cash Deployment

$312M

9 Months 2011

Business Cash

Generation

CAPEX; Other

Investing & Financing Activities

$690M

Share Repurchases & Dividends

09/30/11

CAPEX; Other

Investing & Financing Activities

of 71

Historical Corporate G&A

*Note: Annualized based on First Nine Months of 2011 Actual Reported financials from Form 10-Q dated October 26, 2011

2007 2008 2009 2010 2011 Annualized$150.0

$160.0

$170.0

$180.0

$190.0

$200.0

$210.0

$220.0

$230.0

Cor

pora

te G

&A

$ in

Mill

ions

ERP Spend of 71

KBR’s Financial Strength

Working Capital Management

Focused on balance sheet

Cash neutral or greater on projects

Balanced receivables and payables; resolving and collecting on past disputes (EPC-1 and disputed withhold amounts)

Process efficiencies

Credit Resources and Leverage Ability

KBR has a $1.1 billion, three-year Revolving Credit Facility

As of September 30, 2011, only $253 million is committed to letters of credit and no advances outstanding

Ample credit to pursue large projects with letter of credit commitments

of 71

2008

Hydrocarbons Infrastructure ,Government and Power Services & Other

A Shifting & More Balanced Portfolio

28%

62%

10%

46%

13%

37%Revenue

Business Unit Income

YTD 2011

43%

44%

52%35%

13% 13%

of 71

Growing KBR Revenue Excluding LogCAP

LogCAP KBR Revenue Without LogCAP

$0.0

$2.0

$4.0

$6.0

$8.0

$10.0

$12.0

$14.0

2006 2007 2008 2009 2010 2011 Annualized

Rev

enue

$ in

Bill

ions

of 71

-30%

-20%

-10%

0%

10%

20%

30%

40%

KBR PEERS DJIA S&P500 KBR PEERS DJIA S&P500

Shareholder Returns

*Peer Average includes Fluor, Jacobs Engineering, Foster Wheeler, McDermott, Chicago Bridge & Iron, Shaw Group, and URS

Year-to-Date 2011 2006 through Year-to-Date 2011

Note: Year-to-Date 2011 (Closing price on 12/31/10 through closing price on 11/4/11)Note: 2006 through Year-To-Date 2011 (Closing price on November 16, 2006 through closing price 11/4/11) of 71

E&C 2012 Price to Earnings Multiples

0x

3x

6x

9x

12x

15x

FLR JEC CBI SHAW KBR FWLT URS MDR

2012

For

war

d P/

E M

ultip

les

Source: FirstCall from ThomsonReutersNote: Based on closing price on November 4, 2011

of 71

Why KBR?

Backlog continues to strengthen to enhance margin improvement

Backlog growth expected through strong prospect list

Strong cash generation

Corporate G&A control

Continued thoughtful and strategic deployment of cash

KBR has strong financials to support growth

of 71

KBR’s 2012 Preliminary Guidance Items

Preliminary 2012 Guidance Items

Anticipated LogCAP revenue between $300 - $500 million

Effective Tax Rate expected to be approximately 28%

of 71


Why KBR?Bill Utt – Chairman , President, and Chief Executive Officer

November 11, 2011

of 71

Why KBR?We have a diverse series of growth drivers

Close the “Big Elephant” projects in Hydrocarbons

Continue to organically grow our Breadth of Franchise, including Power, Minerals, Infrastructure, and Services businesses

Expand our “Share of Wallet” by leveraging our North American vertical integration internationally

Continue to expand into new markets

Track record in acquisitions

We are committed to “Best-in-Class Risk Awareness” driving consistent financial performance

We will continue to successfully execute our business – improving margins, overhead control and thoughtful cash deployment

of 71

analyst and investor day bu final · kbr swot analysis update 2009 to 2011 ¾strengths ¾breadth of...

Documents