nasdaq: fwlt presented by: ankit chadha, ellen...
TRANSCRIPT
Nasdaq: FWLT
Presented by: Ankit Chadha, Ellen Yang, Ken Chen & Nicu-Mihai Achihaei
Agenda
Introduction Investment Thesis Company Breakdown Catalysts/Key Drivers Competitors Risks Valuation Question and Answer
Company History
Formed in 1927 out of Power Specialty Company and Wheeler Condenser & Engineering Company
Incorporated in Canton of Zug, Switzerland of as 2008
Headquartered in Clinton, New Jersey
Business Overview
Global engineering and construction contractor and power equipment supplier
Operates through two segments Global Engineering and Construction (E&C) Global Power Group (GPG)
Investment Thesis
Proprietary technology Expansion into emerging markets (by geography and
sector) Hedged against rising input prices
Global E&C
Designs and constructs leading-edge processing facilities Industries serviced include oil refining, power
generation, chemical/petrochemical, and pharmaceuticals Services include Consulting Design and Engineering Project management and control Procurement Construction/Commissioning and Start-up Operations and Maintenance
Example E&C Project
Power generation upgradeESSO Sriracha Refinery, Thailand
What is Flow-Through?
Two primary types of contracts: Cost-Reimbursable Contracts Fixed-Rate Contracts
Specialized Fixed-Rate Contract: Lump-sum Turnkey
Flow-Through’s Impact on Top Line
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
2006 2007 2008 2009E 2010E 2011E
Flow-ThroughScope Revenue
% of E&C Contracts by Type
83%
17%
Reimbursable
Fixed-Rate
Delayed Coking
FWLT licenses “Selective Yield Delayed Coking” (SYDEC) to customers
One of the leading technologies in refinery residue upgrading
Global Power Group
Offers full range of steam generator equipment, aftermarket products, and services to the power, industrial, and waste-to-energy sectors Leader in carbon reduction and fuel-flexible
combustion technology and the development of solutions to address carbon reduction
% of GPG Contracts by Type
53%32%
15%
Fixed-RateLSTKReimbursable
Products and Services
Circulating Fluid-Bed Steam Generators (CFB)
Pulverized Coal (PC) Steam Generator
Industrial Steam Generators
Auxiliary Equipment and Aftermarket Services
CFB for Lagisza, Poland Project
Revolutionary New Advances
What are the Advantages?
Circulating Fluid-Bed (CFB) steam generator with Flexi-Burn technology
Benefits Low emissions Fuel flexibility
Revenue Generation
Sales, installation, and servicing of generators Maintains two noncontrolling equity interests Waste-to-energy project and wind farm project in
Italy Refinery/electric power generation project in Chile
Global E&C and GPGRepresentative Clients
State-owned and multinational oil and gas companies Major petrochemical, chemical, and
pharmaceutical companies National and independent electric power
generation companies Government agencies
Operating Revenue by Industry (2008)
Power Generation24%
Power Plant Operation and Maintenance
2%
Pharmaceutical1%
Oil and Gas28%
Chemical/Petrochemical22%
Oil Refining23%
Environmental0%
Other (net)0%
Catalysts and Key Drivers - Global E&C
Unique Technologies Strengthening Macro-economic conditions Timing of Client Investment Long Term Energy Demand
Bio Kinetics Inc. (Feb 2008)
Catalysts and Key Drivers – GPG
• New Technologies –Environmentally Friendly
• Power Plant Price Inflation• Entry into New
Geographic Markets
Recent Contracts
10/13/09: Saudi Arabia: Expansion of an industrial wastewater
treatment plant 7/23/09: Australia: Power generation and water
treatment facilities 4/1/09: India 20 year agreement with BGR Boilers
Limited Pulverized coal steam generators to be
sold in India Multiple contracts within next five
years.
Current Backlog
Asia43%
Europe22%
Middle East11%
Americas18%
Australasia6%
Global E&C Scope
Asia7%
Europe44%
Middle East5%
North America
33%
South America
11%
Global Power Scope
Competitive Landscape
Profitability 13 weeks ending 2009-06-30 FWLT Fluor Jacobs IndustriesGross Profit Margin 16.8% 6.0% 13.7%Pre-tax Profit Margin 11.8% 5.3% 5.5%Net Profit Margin 9.3% 3.2% 3.5%Return on Equity 22.2% 5.8% 3.7%Return on Assets 4.1% 2.5% 2.2%
Valuation FY 10Price to Sales 0.9 0.4 0.5Price to Earnings 11.1 11.8 13.5Price to Book 1.5 1.30 1.27Price to Cash Flow 10.5 8.7 17.4
Risks
Fixed Price Contracts Cyclical Greenhouse Copenhagen
Conference Dec 2009
ForEx Asbestos Claims
Wrap-up
Q&A
Appendix Slides: Asbestos
Appendix Slides: Asbestos
Appendix Slides: Asbestos