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KBRAnalyst Day
December 11th 2014
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/A, 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 GAAPfinancial measure has been provided in the Appendix to this presentation.
2
Forward Looking Statements
• Clear and consistent Health, Safety, Security and Environment (HSSE) messaging from Senior Management in town halls and videos
• Structured HSSE Campaign Strategy launched
• HSSE Global Branding Strategy developed, driving single point of focus
• Improvement in Total Recordable Incident Rate (TRIR):
– 18% improvement year-to-date since Q1– 38% improvement - Q3 versus Q1
3
Safety
0.32
0.39
0.24
0.00
0.05
0.10
0.15
0.20
0.25
0.30
0.35
0.40
0.45
Q1 Q2 Q3
YTD
Actual By Quarter
0.36
0.34
2014 – KBR TRIR* Driving to Zero Harm
* Recordable Incidents per 200k man-hours
• KBR has a solid base business (“good bones”), but…
• Going forward, focus will be on differentiated offerings in core markets / clients with emphasis on global sales, commercial rigor and consistent delivery
• We will streamline operations and significantly reduce costs
• We will rebalance our current business portfolio
• We will continue our efforts to commercially resolve disputes –i.e. less litigation
• We will employ a balanced capital allocation policy
4
What You Will Hear Today
5
Strategic Priorities
Priority MarketsGlobal Hydrocarbons &
International Government Services
Early project involvementvia specialized
consultancy services(Granherne/GVA)
Pursue Fixed Price EPCwhen differentiated by:
- KBR Technology- Related experience- Ability to self-performconstruction
Differentiate offeringsvia proprietarytechnology and
equipment
Re-focusGrowthStrategy
1 2
34
6
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
Businesses still under review:- Considering options for U.S. military
support activities- Canadian Module Fabrication
Allocate capitalin an efficientand balanced
manner
Efficiencies:Be cost competitive;
$200 million reduction in annual operating costs by 2016
StreamlineOperations
1 2
34
Current operating segment structure (16 business units)
New streamlined operating segment structure (5 business units)
7
Structure – Streamlined / Focused
KBRKBR
Gas Monetization
Gas Monetization HydrocarbonsHydrocarbons
Infrastructure, Government &
Power
Infrastructure, Government &
PowerServicesServices OperationsOperations
KBR
Technology & Consulting
Technology & Consulting
Engineering &ConstructionEngineering &Construction
GovernmentServices
GovernmentServices
8
Strategic Overview
• Targeted Industries:– Hydrocarbons– Government– EPC Power– Fixed Price U.S. Infrastructure– U.S. Minerals– Building Group– Fixed Price Stand-Alone Construction
Old KBR New KBR
• Focus on Core Industries:– Hydrocarbons
– International Government
• 16 Business Units • 5 Business Units
• Structured in Silos • Synergistic Regional Organization
• Mixed Project Delivery Performance • Project Delivery Accountability, Discipline of Application and Increased Commercial Rigor
• FY 2013 Revenue: $7.2B • FY 2013 Revenue: $6.2B
• FY 2013 Gross Profit & Equity in Earnings Margin: 7.7%
• FY 2013 Gross Profit & Equity in Earnings Margin: 11.0%
9
Business Leaders Here Today
Brian Ferraioli Engineering & Construction Engineering & Construction
CFO
37 Years of IndustryExperience
Graham HillGlobal Sales & Strategy
37 Years of IndustryExperience
Jan Egil BraendelandE&C EMEA
22 Years of IndustryExperience
John DerbyshireTechnology & Consulting
37 Years of IndustryExperience
Farhan MujibCommercial
27 Years of IndustryExperience
Ivor HarringtonE&C APAC
30 Years of IndustryExperience
Andrew PringleGovernment Services
14 Years of IndustryExperience (37 Years Military Experience)
Roy OelkingE&C Americas
40 Years of IndustryExperience
David ZelinskiE&C Americas (Onshore)
30 Years of IndustryExperience
Stuart BradiePresident and CEOE&C Group President
27 Years of IndustryExperience
10
KBR Global Operations
Mexico City
Houston
Gothenburg
London
Moscow
Delhi
DubaiPune
Jakarta
Tokyo
Seoul
Singapore
Beijing
Shanghai
Caracas
PerthRio de Janeiro
Kuala LumpurMonterrey
Wilmington
Birmingham
Edmonton
Luanda
Johannesburg
Atyrau
Baku
Saudi Arabia
Bahrain
Chennai
Melbourne
Arlington
Canberra
BaghdadKabul
Freetown
Sydney
27,000 Employees in over 70 Countries
Global KBR Markets
Graham Hill
Oil MarketGlobal Oil Supply Economics
2015 – continued oil price volatility due to over-supply (U.S. Shale Oil and Libya), and higher dollar
Longer term support for higher oil prices
Short term decline in high cost production –oil sands, ultra deep water, some U.S. shale
Knock-on effect –decline in cash flow, leading to capital discipline – some reduction / delays –majors using $75-85/bbl
Source: Rystad Energy
Brent closing Fri 5th Dec
12
29
4349 53 54 55
62
74
57
13
Oil Market (Contd…)
Global Oil Supply & Demand
Oversupply to 2016, but demand growth requires new developments. Such developments are underway in 2015 for 2017-2018 production
Investment critical to meet growing demand and decline in existing fields –Capex forecast to decline marginally (3%/yr) for next 2 yrs
Low production cost major developments, shallow water, onshore production, subsea tiebacks, and brownfields expected to proceed. Plays to KBR “sweet spot”
Million bbl/d
Source: Rystad Energy
14
LNG MarketLNG Economics
LNG demand expected to grow 4.7%/yr – demand growth is centered in Asia, but Europe is expected to rebound
15% of announced capacity to be online by 2025 – means 110 million tpa additional capacity required
US, Canada and East Africa projects have better economics for Asia destinations
Growth Regions:o U.S. Gulf Coast Brownfield o Canada – due to new tax
ruleso East Africa due to successful
appraisals o Asia-Pacific expansions
Source: IHS, KBR Analysis
Asia
EUR
2015
2025
2015
2025
Brent Crude Pricefor LNG Indexing
$111/bbl
$77/bbl
15
Downstream: Oil RefiningRefined Products Demand
-
20
40
60
80
100
120
2000 2005 2010 2015 2020 2025 2030 2035 2040
Gasoline DieselJet/Kero NaphthaResidual Fuel Oil Other
Million bd
Source: IHS
Rapid consumption growth in non-OECD, mainly Asia and Middle East
Diesel is growing the fastest while gasoline is slowing. Fuel oil consumption declines
To meet demand, World needs annual additional of 800 kbpd
Advantage crude processing and fuel import reductions driving grassroots and expansions
Change in product mix – driving refinery complexity: high diesel vs. lower gasoline, residue upgrades, modernization and regulatory changes driving refinery conversions
Provides opportunities for KBR Technology
16
Downstream: Petrochem/ChemicalsEthylene Demand and Capacity
Source: IHS
Demand for plastics and advanced materials (PE, PP etc.) driven by GDP
Low cost feedstock / production driving petrochemical investments
Resource rich countries moving up the value chain
New capacity in areas with either feedstock advantages e.g. North America and Middle East or high demand growth e.g. China
In mature regions, producers are focusing on cost efficiency and feedstock flexibility
Ethane-based ethylene plants market share expected to increase beyond 40%, due to natural gas availability and cost advantages
Years
17
Downstream: FertilizersUrea Demand and Capacity
Source: Fertecon
Demand growth strong in developing world, largely driven by population growth
Capacity addition driven by either low feedstock costs or urea import reduction
Urea capacity growth ~3.2%/y (i.e. 4-5 new plants each year)
Production costs are driven mainly by feedstock costs – U.S. Gulf Coast and Middle Eastern projects have feedstock cost advantages
High production cost regions expected to focus on energy efficiency improvements (revamps) –provide opportunities for KBR Technology
Years
18
Market Summary: Impact on KBR
Key markets for KBR:
Upstream: oil & gas in GoM, North Sea, W. Africa, Brazil, Middle East, & Caspian
Midstream: LNG in U.S. Gulf Coast, Canada BC, East Africa, SE Asia
Downstream: mainly N. America and Middle East (others N. Africa, Latin America, CIS, & Asia)
KBR is well placed to capitalize in these growth markets (with technology, resources, track-record, geographical reach and key customers)
KBR has a balanced portfolio – Upstream, Midstream and Downstream, with more focus on natural gas and downstream, with a relatively low dependence on oil compared with peers
Technology&
Consulting
John Derbyshire
Technology and Consulting Business
20
Broad Range of Technologies and Solutions from Wellhead to Specialty Chemicals
ProprietaryTechnologies
Consultingand Services
UpstreamSemi-submersible hull design Monohull vessels
DownstreamRefining (VCC, ROSE, FCC, Hydroprocessing, Distillation)Olefins (SCORE, K-COT)Ammonia (KRES, KAAP, Purifier)Chemicals (Phenol, BPA, Acetic Acid, PVC, specialty technologies)Coal Gasification
UpstreamField development planning Project assuranceIntegrity managementStructural analysis
DownstreamDownstream consultingFeasibility and revamp studiesTechnical servicesAutomation consulting and project management
Business Model
21
Low Risk
• Smaller Project Size• Home Office Only Engineering• Multiple Markets/Geographies• Limited Liability
• License• Basic Engineering• Proprietary Equipment• Catalyst• Services
Superior Margins
Portfolio Offerings – Consulting
22
Upstream Consulting Field Development Planning• Technology Selection• Risk Management• Capital Spending Optimization
Offshore Integrity Management• Recurring Business• About 1,000 Production Platforms Globally
Petrochemical Complex• Feasibility Studies• Integration Planning
Refinery Planning• Configuration Studies• Efficiency, Capacity, Life Extension
Downstream Consulting
Portfolio Offerings – Upstream Technology
23
Semi-Submersible Design and Proprietary Technology• Proven Semi-Submersible Designs for 12,000
to 40,000 tons topside• Drilling, Production, and Accommodation Units
Monohull Vessel Design• Ultra-deep, Harsh Environments• Drill Ship and FPSO
Portfolio OfferingsDownstream & Syngas Technologies
24
Veba Combi Cracking (VCC™)• Convert Heavy Hydrocarbon Streams to Fuels• Produces On-Spec Fuels with 95%+ Once-Through
Conversion
KBR Catalytic Olefins Technology (K-COT™)• Highest Propylene-to-Ethylene Ratio• Flexibility to Process High- or Low-Quality Feedstocks
Fertilizer Technology• Global Market Leader in Ammonia Technology• Over 200 Plants Globally• Energy Efficient Technology
Transport Integrated Gasification (TRIG™)• Only Gasification Technology Designed to Process
High-Moisture, High-Ash Coals• Chemicals, Synthetic Natural Gas or Power
Applications
Recent Wins
25
QAFCO Revamp (2 units)Qatar Fertilizer Co.(Mesaied, Qatar)KBR KRES revamp: Increase capacity from 1150 to 1650 MTPD
Fertial Revamp (2 units)Fertial (Arzew & Annaba, Algeria)KBR KRES revamp: Increase capacity from 1000 to 1500 MTPD and energy reduction
UFN‐ 5Petrobras (Brazil)KBR Purifier: 1500 MTPD
Lotte‐Titan KCOTLotte Chemical Titan Sdn Bhd (Pasir Gudung, Johor, Malaysia)K‐COT: 127 KTA propylene and 93 KTA ethylene
KPIC Ethylene Revamp of Lummus PlantKorea Petrochemical Ind. Co., Ltd (Onsan, South Korea)SCORE: Increase capacity from 486 KTA to 800 KTA Ethylene
Kashima ROSE UnitJX Nippon Oil and Energy (Kashima, Japan)ROSE: 18,000 BPD
Dyno Nobel Ammonia PlantDyno Nobel Inc. (Waggaman, LA USA)Ammonia Plant: 2300 MTPD
Iowa Fertilizer Ammonia PlantIowa Fertilizer Co (Wever, IA USA)Ammonia Plant: 2200 MTPD
Maddog 2BP (Gulf of Mexico, USA)Semi‐Submersible Hull Design –Lazy Wave Configuration
Ethylene ExpansionLyondellBasell (Channelview, TX USA)SCORE: Increase capacity by 250 MMlb/yr
Refinery FCC ModernizationPhillips 66 (various locations, USA)FCC: various capacities
HebronExxonMobil (Offshore Newfoundland, Canada)Advanced Analysis, Earthquake Eng., Structural Dynamics
Deepwater Tano/Cape Three PointsHess Ghana Exploration Ltd. (Ghana)FPSO Pre‐FEED
NSikoChevron (Offshore Nigeria)PreFEED
Captain Enhanced Oil Recovery (EOR) Phase 2Chevron North Sea LimitedPre‐FEED Study
HereemaWorldwideSemi‐Heavy Lift Vessel
Statoil Cat DStatoil (North Sea)Joint Design of Semi‐Submersible Drilling Unit
Technology & Consulting Growth Strategy
26
• Continue to Broaden T&C Consulting Offerings through Acquisitions And Alliances
• Add Scope Extensions that Focus on Recurring Revenues
Acquisitions andScope Expansions
• Additional Sales Coverage in Growth Regions
• Localized Technical Support
• Localized Product Marketing
Extending Geographic Coverage
• Expansion of Existing HVEC Centers
• Expansion of Mechanical, Structural and Equipment Specialists
OrganizationalEffectiveness
Early Customer Engagement
27
Trusted Advisor Status
Early Project Involvement
Feasibility Studies
Field Development Planning
Revamp and Capacity Studies
Technology Selection
Consulting
Continuity for EPC
Business
Engineering&
Construction
Stuart BradieRoy Oelking
Farhan MujibIvor Harrington
Jan Egil BraendelandDavid Zelinski
E&C Group Organization
29
Stuart BradiePresident and CEOE&C Group President
27 Years of IndustryExperience
Jan Egil BraendelandE&C EMEA
22 Years of IndustryExperience
Ivor HarringtonE&C APAC
30 Years of IndustryExperience
Roy OelkingE&C Americas
40 Years of IndustryExperience
David ZelinskiE&C Americas (Onshore)
30 Years of IndustryExperience
E&C Core Sectors – Full Service Offering
30
OFFSHOREFixed Platforms
Floating FacilitiesHulls, Moorings & Risers
SURF
BP Thunderhorse
LNG / GTLLiquefaction
RegasificationFLNGFSRU
BP Tangguh
ONSHOREOil & GasRefining
PetrochemicalsChemicals
Ammonia & FertilizersGasification
Saudi Kayan
ASSET SERVICESMaintenanceModifications
Small Capex ProjectsAsset Integrity
Maintenance
GDF Suez Bonaparte
Total Pazflor EBIC Ammonia Plant
MMM
E&C Addresses a Broad Rangeof Industries / Types of Projects:
Project Delivery
Industry
Offshore
Onshore
LNG / GTL
Scope of Services
Engineering
EPC
Asset Services
Commercial
Reimbursable
Hybrid
Fixed Price
31
Project Delivery
What Does “Everyone Want”?
Consistency Predictability Certainty of Outcome
All Executed in a Safe Manner
32
Project Delivery
Common Fundamentals of ALL PROJECTS
Safety is theFirst Priority
Good Execution Plan
Integrated EPC Schedule
Experienced / Trained Project Management Team
Complete Front EndEngineering Design (FEED)
Accurate Estimatew / Appropriate Contingency
Risk Identification / Funding / Mitigation Plan
Corporate Capabilityto Execute
33
Project Delivery
People
ProcessesTools
CorporateCapabilityto Execute“KBR Way”
GOAL
On a consistent basis, every
time, throughout the
world
“We Deliver”
34
The Single Biggest Difference Going Forward?
ORGANIZATION STRUCTURE
• Global Project Support Organization • Capability Embedded in Business vs. Oversight • Streamlined Structure Drives Consistency • Management Discipline to Implement “KBR Way”• Increased Commercial Rigor from Bid Through Delivery
Project Delivery
35
36
KBR Portfolio – E&C Projects
Commercial & Risk Management
Consistency Predictability Certainty of Outcome
Right Deal
Balanced Risk ProfileSelf Perform or JVSound EstimateRealistic ScheduleAchievable Results
Execution
Right Leadership Change Management Cost & Schedule Control Productivity & Wage Risks Claim Management Vendor Performance Proactive Management
Outcome
ON Time
ON Budget
ON Spec
Zero Harm
Risk Management
37
KBR’s History in LNG
38
Strong Portfolio of LNG Experience
EPC Awards every 2-3 years
EPC
FEED
NWS Train 5Australia2003
Olokola LNGNigeria2006
Nigeria Trains 4, 5Nigeria2001
Malaysia Tiga Trains 7, 8 Malaysia2000
Nigeria Trains 4, 5Nigeria2002
Nigeria Train 6Nigeria2003
Peru LNGPeru2002
Angola LNGAngola
2005
Gorgon LNGAustralia
2005
Skikda New TrainSkikda, Algeria2006
Nigeria Train 7Nigeria2007
Arzew New TrainArzew, Algeria2006
Skikda New TrainSkikda, Algeria2007
Gorgon Trains 1, 2 & 3Australia2009
Ichthys LNGAustralia 2009
Pluto Trains 2, 3Australia2009
Yemen LNGYemen2005
Browse LNGAustralia2011
SEGAS LNGEgypt2000
2010
2005 2015
2000
Kitimat LNGCanada2011
Ichthys Trains 1 & 2Australia2012
Tangguh Trains 1, 2Indonesia2005
Pacific Northwest LNGCanada2013
We DeliverMozambiqueFLNG 2014
TangguhTrain 3 2014
Shell LNG Alliance
Nigeria Train 6Nigeria 2005
Gorgon LNG 3 Trains 15.6 mtpa LNG Barrow Island, Australia
LNG Loading Wharf
Project Execution in Progress
LNG Tank Farm
Delivery of LNG Train 2 Modules
39
Ichthys LNG 2 Trains 8.4 mtpa LNG Darwin, Australia
Blaydin Point SiteCentral Piperack Module Loadout
First Module Delivery Construction Workers’ Village
40
Major Sales Prospects
41
Pacific Northwest LNG Client: Petronas Scope: EPC Award: 2Q 2015
ConfidentialLNG Facility Scope: FEED & EPC
Price Award: 1Q 2015
Lake Charles LNG Client: BG Group Scope: EPC Award: 3Q 2015
Tangguh LNG Train 3 Client: BP Scope: FEED & EPC
Price Award: 1Q 2016
Tanzania LNG Client: BG Group/ Statoil/
ExxonMobil Scope: FEED/ EPC Award: 3Q 2015/ 1Q 2017
ConfidentialFLNG Scope: FEED Award: 2Q 2015
ConfidentialLNG Facility Expansion Scope: FEED Award: 1Q 2015
Mozambique LNG Client: Anadarko Scope: PMC Award: 1Q 2016
Mozambique FLNG Client: Eni Scope: FEED & EPC
Price Award: 4Q 2015
Break
Oil & Gas – Offshore Project Experience
43
Oil & Gas – Existing Major ProjectsBP Shah Deniz Phase II
ADMA OPCO NASR Phase II
Maersk Culzean
Chevron Big Foot
44
FPSO in Fabrication Yard
45
Statoil Johan Sverdrup EPC
BP Rumaila Offsites EPC
BP Mad Dog Phase II
Oil & Gas – Major Sales Prospects
Chevron UBON
46
Confidential ClientGlobal Strategic Alliance
47
Scope of work will span the venture stages and project types
Create Appraise Select Define Execute Operate
CapabilitySupport
Services
PMTs
VentureTypes
Surf Floater / FPSO Jacket / Topside
Pipeline / Offshore
Pipeline / Onshore
Onshore Processing
LNG (except for Services) Unconventionals Brownfield
1
2
3
Onshore – Rich Experience and Capability
48
Color KeyPetrochemicalsBiofuels SyngasRefiningOil & Gas
KBR Technology Project
Diversified Portfolioo Execute ~50 Projects per yearo Leverage KBR Technologyo Project Size = Thousands to Billions $o Global Footprinto Grassroots, Revamps & Continuing Services
2000 2005 2010 2015
WRB Refining Borger NGL
INEOS New Cracker Furnace
BP-Husky Toledo Reformer 3
UGCC Ethylene Cracker
Saudi Kayan Ethylene Project
Shell Pearl GTL Project
EBIC Ammonia Plant
Chevron Escravos GTL Plant
Sasol SuperFLEX
Sonaref Refinery FEEDEsso Chad Cameroon Project
BP/Sonatrach/Statoil In Amenas Gas Project
BP/Sonatrach In Salah Gas Plant
Saudi Aramco GES+ MSA
DuPont Blackhawk
Syncrude Canada Ltd. Upgrader
Lyondell NOx Reduction EPC Saudi Aramco Jazan Refinery
Saudi Aramco Shaybah NGL Program
Pequiven Moron Ammonia Project
BP Amoco Olefins Project
CNOOC Ammonia/Urea Plant
PetroSA Refinery
ExxonMobil Mogas EPC Project
DuPont MSA for EPCm
Equistar LDPE FEED
Major Projects Completed
Onshore – Existing Major Projects
49
o YASREF Grassroots Refinery• Client: Saudi Aramco / Sinopec• Scope: Pre-FEED, FEED, PMC
o SADARA Chemical Complex• Client: Dow / Saudi Aramco• Scope: Pre-FEED, FEED, PMC
o Channelview Ethylene Furnace Expansion• Client: Equistar Chemicals Lp• Scope: EPC & Tech. License
o Dyno Nobel Ammonia Plant• Client: Dyno Nobel Louisiana• Scope: EPC & Tech. License
o ENOC Refinery Expansion• Client: Emirates National Oil
Company• Scope: FEED
o SADAF Petrochemical Complex• Client: SABIC / Shell• Scope: Pre-FEED, FEED
o Omsk Refinery Revamp• Client: Gazpromneft• Scope: PMC
o Sonaref Grassroots Refinery• Client: Sonangol• Scope: FEED / CM
o INEOS Gemini HDPE Project• Client: INEOS Olefins &
Polymers• Scope: EPC
o Crude Oil Flexibility Project• Client: Lima Refining Co. • Scope: EPCm
o Toledo Feedstock Optimization / Post Treater• Client: BP-Husky Refining LLC• Scope: FEED
o Koch Enid Expansion• Client: Koch Nitrogen Co.• Scope: EPC Services
o Borger Ammonia Revamp / Grassroots Urea • Client: Agrium Wholesale• Scope: EPC
FEED / PMC / Eng. Services
Reimbursable EPC / Cm
Lump Sum EPC / Cm
Commercial Basis
Key Strategies:• Balanced Risk Profile• Differentiated EPC through Technology / Construction• Market Diversification across Industries and Geographies
o DuPont Master Services• Client: DuPont• Scope: Engineering / CM
Onshore – Major Prospects
50
Onshore Pipeline of Prospects• 70+ Prospects totaling > $6 Billion• 50+ Prospects to be Awarded in 2015• Spans industries covered with significant
opportunities in Petrochemicals & Ammonia/Syngas
• FEED and EPC
Major Prospects – 2015
20%
36%
20%
22%Petro -chemicals
Ammonia & Syngas
RefiningBiofuels 2%
Oil & Gas
Onshore – Reference Project
51
Burrup 2200 MTPD Ammonia Plant
Government Services
Andrew Pringle
Government - Principal Execution Offices / Key Clients
AmericasEMEA (UK) APAC
53
Bahrain Life Support
Government – Core Services
AMERICASInternational Base Operations Support
Remote Life Support ServicesLogistics
EMEAHome Base Operational SupportOverseas Operational Support
Programme Management ServicesResilience Planning & Execution
Training
APACAsset Management
Systems EngineeringIntegrated Logistics SupportCapability Risk Management
Training
Djibouti BOS
EmbassySecurity 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
54
Government – Key Market Opportunities
EMEA
APAC
Americas
Ebola Treatment Centres Military Flying Training System Army 2020 Rebasing Communications Integrator Facilities Management Integrator
Deployable Health Capability HMAS Choules Catalyst Interactive TrainingRAAF Ground Support EquipmentMaritime Acquisition Branch
Kuwait Base Support AFCAP IV Djibouti Base Rebid Nevada Training Ranges Air Force Material Reserves
55
Financial Overview & Summary
Brian FerraioliStuart Bradie
57
Pro-forma Historical Financial Results Continuing Businesses
$ Millions
Technology & Consulting 296 331 285
Engineering & Construction 5,539 4,946 3,542
Government Services 1,095 928 522
Revenues 6,930 6,205 4,349
Technology & Consulting 80 27% 69 21% 48 17%
Engineering & Construction 589 11% 463 9% 257 7%
Government Services 145 13% 151 16% 79 15%
Gross Profit and Equity in earnings of unconsolidated affiliates 814 12% 683 11% 384 9%
EBITDA 619 401 229
- Excludes US Construction losses of $75M and $8M for 2012 and 2014 3Q YTD, respectively. - Excludes Canadian Fabrication losses of $132M and $80M for 2013 and 2014 3Q YTD, respectively.
2012 2013 2014 3Q YTD
• Goal: Reduce annual operating expenses by $200 Million by 2016
• Goal: By 2016, Gross Profit and Equity in Earnings
% by group:
– Technology & Consulting Low 20s %
– Engineering & Construction Upper single digits %
– Government Services Low teens % (excluding legacy LogCap issues)
58
Cost Reduction / Streamline Activities
Item Cash ImpactGoodwill / Intangibles Impairment 275$ - 325$ Non-Cash
ERP & Other Impairments 165 - 200 $35M Potential Future Cash, Balance Non-Cash
Foreign Tax Credits 180 - 200 Non-Cash
Allowance: U.S. Power Projects 100 - 125 Future Cash (3 Years)
Allowance: U.S. Government 50 - 100 Non-Cash
Restructuring 30 - 50 Cash
Total 800$ - 1,000$
Cash 30$ - 50$ Future Cash 135$ 160$ Non-Cash 635$ - 790$
$ Millions
59
Potential Pre-Tax Financial Impacts from Restructuring
Cash Balance ~ $1 billion / Bank Amendment Approved
60
Capital Allocation
Balanced Capital Allocation Strategy
Focus on core businesses
Continueto pay a
dividend with competitive
yield(currently 1.91%
vs. industry average of
0.76%)
Continuewith an
opportunisticshare
buybackprogram($265M
remainingunder current authorization)
Selective M&A (priority on
hydrocarbons focused
technologies)
• Pemex long-term receivable $401M
– In litigation until 2016
• U.S. Government long-term receivable $191M
– Ongoing discussions to create path to resolution
61
Major Commercial Disputes
Disputes: LogCap III Tort Cases:
• Burn Pits– Filed petition with U.S. Supreme
Court. Awaiting Solicitor General Brief and Supreme Court decision to accept the case. May impact two cases below.
• Electrocution– Pending Supreme Court decision
• Sodium Dichromate – Appealing jury trial award of
$81M. Additional cases pending in Texas.
Note: The above is a partial list of pending litigation. See Company’s Forms 10-Q and 10-K for additional details.
62
Summary• KBR has a solid base business
• Strategic focus will be on core markets and quality of earnings
• Clear objective and positive changes towards greater predictability of Project Delivery
• Will significantly reduce costs and streamline operations– Annual Operating Expenses reduced by $200 Million
– Achieve target Gross Profit and Equity in Earnings % by 2016
• Rebalance current business portfolio– Three core business segments structured on delivery lines and customer facing
– Exit non-strategic businesses
• Balanced capital allocation– Dividends
– Share buyback program
– Selective M&A (priority focused on hydrocarbons based technology)
Q&A
63
BP Atlantis EBIC Ammonia
Navajo Refinery ROSE Unit SEGAS
Appendix
65
Pro-forma Historical Financial ResultsNon-Strategic Businesses to Exit
Note: Non-Strategic Businesses to Exit include:• Stand-alone Fixed Price EPC Power• Fixed Price U.S. Infrastructure & U.S. Minerals• Building Group
$ Millions
Revenues 840 1,009 600
Gross Profit and Equity in earnings of unconsolidated affiliates (70) -8% 3 0% (81) -14%
2012 2013 2014 3Q YTD
$ Millions
Gross Profit + Equity in Earnings (Continuing Businesses) 814 683 384
General and administrative expenses (222) (248) (178)
Other Income 33 2 8
Depreciation & Amortization 56 61 51
Net income attributable to noncontrolling interests (58) (96) (54)
Other non-operating income (expenses) (4) (1) 18
Consolidated EBITDA (Continuing Businesses) 619 401 229
$ Millions
Gross Profit + Equity in Earnings (Continuing Businesses) 814 683 384
Gross Profit + Equity in Earnings (Non-Strategic Businesses to Exit) (70) 3 (81)
US Construction and Canadian Fabrication Losses (75) (132) (88)
Gross Profit + Equity in Earnings (KBR as Reported) 669 554 215
2012 2013 2014 3Q YTD
2012 2013 2014 3Q YTD
Pro-forma EBITDA Reconciliation – Continuing Businesses:
66
Reconciliations
Reported Gross Profit + Equity in Earnings Reconciliation: