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Bill Utt – Chairman, President and CEO
Sue Carter - Executive Vice President and CFO
September 20, 2011
D.A. Davidson’s Tenth AnnualEngineering & Construction Conference
Page 1 of 19
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 24, 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.
Page 2 of 19
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 #242Full Year 2009 - $12.1 Billion; Fortune 500 Company #193
» Backlog: June 30, 2011 - $12.0 Billion (76% reimbursable / 24% fixed-price)*June 30, 2010 - $12.4 Billion (79% reimbursable / 21% fixed-price)*
» Headquarters in Houston, Texas
» 100+ years of operating history
» ~35,000 employees; 65+ countries
» Extensive service capabilities:
KBR is a global engineering, construction, and services company
supporting the energy, hydrocarbons, government services, minerals,
civil infrastructure, power, industrial, and commercial markets.
Page 3 of 19
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
Page 4 of 19
Frankfurt
Buenos Aires
Hydrocarbons
Market-leading position on 6 major LNG projects
Ichthys FID expected fourth quarter of 2011
Kitimat FEED expected completion end of 2011 with FID in first half 2012
Pluto Expansion pre-FID services continuing
Browse expected FEED completion for mid-2012 FID
Gorgon 4 pre-FEED finalized
Anadarko Mozambique LNG pre-FEED awarded
Current large projects portfolio
Skikda LNG approximately 80% complete
Gorgon LNG execution is strong Page 5 of 19
Hydrocarbons
Oil & Gas
FEEDs being converted to detailed engineering, design, and implementation
GOM: Big Foot; Jack & St. Malo
North Sea: Quad 204 - West of Shetlands; South Arne
West Africa: CLOV;
Caspian: Chirag; Shah Deniz 2; Kashagan
Western Australia: GDF SUEZ Bonaparte;
Brazil: 8 Petrobras FPSOs;
Strong level of global offshore activity Caspian and West Africa over next 18 months; Opened new offices in Kazakhstan and Angola
Seeking to expand service offerings from engineering to project execution Page 6 of 19
Downstream
Lobito 200,000 barrels-per-day refinery project
FEED complete; working under EPCm bridging agreement
Saudi Arabia projects progressing well
Yanbu Export Refinery project - KBR’s PMC team moving to site
Ras Tanura Integrated project – FEED completion and FID expected later this year
Jazan Refinery FEED and PMC underway
Aramco GES Plus awarded – first work in 3Q11
North America
BP/Husky Toledo refinery EPCm services 60% complete
KiOR Inc. Biomass-to-Renewable crude facility awarded
Page 7 of 19
Technology
Ammonia: Purifier™; Purifierplus™; KAAP™; KAAPplus™
Refining: Veba Combi-Cracking (VCC); ROSE©; FCC
Coal Gasification: Transport Gasifier (TRIG™)
Olefins: SCORE™; SUPERFLEX™; ACO™
Synthesis Gas: SMR; KRES™
Organic Chemicals: Aniline; KBR-Phenol; NExOCTANE™
Carbon Capture and Storage: Pre and Post-Combustion Capture; CO2Compression & Sequestration Page 8 of 19
KBR develops new technologies that reduce cost while improving efficiency and safety. This allows KBR to offer customers unsurpassed value through a suite of technologies, including:
North America Government & DefenseLogCAP Updates and Outlook
Expected 2011 revenue between $1.6 to $1.8 billion
Assuming current 50,000 troop levels until the back half of 2011, with substantial ramp down by end of 2011
LogCAP III modified to cost-plus-fixed-fee
Expect final award fee under LogCAP contract during third quarter of 2011
Awarded LogCAP IV contract for base life-support activities in Iraq for U.S. Department of State
Other NAG&D Prospects
Awarded by U.S. Central Commands for design-build and construction projects for a $3.8 billion Multiple Award Task Order Contract (MATOC)
Page 9 of 19
Maintenance support and construction activities at U.S. military installations
Short-listed on the $2.5 billion National Sciences Foundation Antarctica project
Infrastructure, Government, and PowerPower & Industrial
$450 million KBR award for Palm Beach Solid Waste Authority new state-of-the-art waste to energy facility
Ramp-up in North America capital investment: up 10-15% year-over-year
Page 10 of 19
Infrastructure & MineralsMiddle East infrastructure activity improving based on stabilized oil price; Doha Express Way award
Minerals markets strengthening; Hope Downs 4 EPCm award and Roberts & Schaefer opportunities
KBR awarded numerous Australian infrastructure projects in 2011
International Government & DefenseContinued support for U.K. Ministry of Defence and NATO in Afghanistan; newly acquired NATO contract ramped up
U.K.’s Foreign and Commonwealth Office award
Building on U.K. based logistics and life support and consultancy and training capabilities in Australia to expand services within the Asia-Pacific region
ServicesU.S. construction markets
Now seeing the beginnings of a return of larger construction projects
Chevron’s Base Oil expansion project award
Southern Company’s Plant Scherer project award
Increasing activity in Alberta oil sands region
Building Group benefitting from strong sales activity in 2010; seven on-going major hospital projects
Industrial ServicesLarge DuPont construction, maintenance and services project has grown to 21 projects across three separate service product lines
Increased turnaround work in Canada Page 11 of 19
Second Quarter 2011 Earnings SummaryRevenue up 5% year-over-year excluding LogCAP revenue
Operating income of $169 million, up 17% compared to the first quarter of 2011
Earnings per diluted share of $0.65 compared to $0.66 for secondquarter of 2011
Cash flows from operating activities of $223 million for first six months of 2011; Cash and equivalents of $712 million on June 30, 2011
$2.4 billion of new work added to backlog during second quarter of 2011
Page 13 of 19
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
Strengthening Backlog Contributing to Margins
Page 14 of 19
2006
20072008
2009
2010
2011*
*Note: Annualized based on First Six Months of 2011 Actual Reported financials from Form 10-Q dated July 27, 2011
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
$8,000 $9,000 $10,000 $11,000 $12,000 $13,000Revenue (in millions)
Ope
ratin
g In
com
e M
argi
nStrengthening Backlog Contributing to Margins
Page 15 of 19
2006
2007
2008 2009
2010
2011*
*Note: Annualized based on First Six Months of 2011 Actual Reported financials from Form 10-Q dated July 27, 2011
KBR’s Backlog MethodologyFor long-term contracts, the amount included in backlog is limited to five years
Only projects for actual awards where work scope is definitized are added to backlog
IDIQ / MATOC style contracts are only added to backlog when awarded or definitized
For projects where KBR acts solely in a project management capacity, only the PMC revenue is placed in backlog
No owner-provided equipment and/or materials in KBR backlog
Page 16 of 19
$941M$786M
$319M$549M
$265M
$120M
12/31/09 12/31/10
Acquisitions & Licensing
Arrangements
Share Repurchases & Dividends
$81M$52M
$786M
$164M
2010 Business
Cash Generation
MWKL Acquisition
Cash Generation & Cash Deployment
$223M6 Months
2011 Business
Cash Generation
Page 17 of 19
CAPEX; Other
Investing & Financing Activities
$712M
Share Repurchases & Dividends*
06/30/11
CAPEX; Other
Investing & Financing Activities
*Note: Share repurchase does not include the 10 million share repurchase announced on August 8, 2010
Working Capital Management
Focused on balance sheet
Cash neutral or greater on projects
Balanced receivables and payables
Process efficiencies
Collecting on past disputes (EPC 1)
Diligently working to resolve disputed withhold amounts
Page 18 of 19
KBR Investment Thesis
• KBR is a catalyst driven growth company across a broad based and diverse series of businesses
• Optimism for acceleration in new orders around growth opportunities across markets
• Strong balance sheet with emphasis on cash management
• Patience, prudence, and thoughtfulness in managing KBR’s cash balances
Page 19 of 19