Q Stockholder Update Call

Transcription

1 Q Stockholder Update Call Jacque Hinman, Chairman and CEO Gary McArthur, Executive VP and CFO Natalie Eldredge, Director of Investor Relations May 8 th, 2015

2 Disclosures Forward-Looking/Safe Harbor This presentation contains forward-looking statements, as that term is defined in U.S. Federal and certain foreign securities regulations, including information related to our anticipated future operational and financial results, business strategies, client market segment expectations, and growth opportunities. Although CH2M HILL s management believes that its expectations are based on reasonable assumptions, these assumptions are subject to a wide range of economic, business, regulatory, technical, legal, and other unforeseen risks which may cause actual results to differ materially from those stated or implied by these forward-looking statements. This communication therefore should be read in conjunction with all the other information included in our most current Prospectus and European Prospectus, which are filed with the U.S. Securities and Exchange Commission (SEC) and the U.K. Financial Conduct Authority (FCA), respectively, and, for our stockholders outside of the U.S. and the European Union, similar documents filed with local securities regulators, where required. You should also read our Annual Report on Form 10-K and quarterly reports on Form 10-Q, which include a list of factors that could cause actual operational and financial results to differ from those expected. For information about the price of CH2M HILL stock, please view our most recent Form 8-K. All documents required to be filed with the SEC and other regulators are available via the company s website at and on the SEC s website. Non-GAAP Measures Certain measures contained in this presentation are not measures calculated in accordance with generally accepted accounting principles (GAAP). While management considers these measures important in its assessment of Company performance, they should not be considered a replacement for GAAP results. Non- GAAP financial measures appearing in these slides are identified in footnotes. A reconciliation of these non- GAAP measures to the most directly comparable GAAP financial measures is incorporated in our 8-K filed with the SEC on May 7, 2015 and in the Q CEO Quarterly Report located in the Financial News section of our the stockholder information website at 2

3 Q Results First quarter 2015 net income of $23 million Our business groups and regions generally enjoyed strong project and financial performance, accompanied by significant new project wins around the world Restructuring efforts we initiated in the third quarter of 2014 contributed to a reduction in total controllable indirect costs (TCIC) in the first quarter of 2015 of $40 million as compared to the first quarter of 2014 Positive safety performance improved Total Recordable Rate by 12% over 2014 Stock price valued at $51.14 per share Optimistic about balance of 2015, but top and bottom line execution will be key 3

4 Q Financial Highlights Gross Revenue $1.3 billion, 1% lower than Q Net Income $23 million compared to net loss of $6 million in Q Diluted Income per Share Cash Gross Revenue New Awards $0.86 compared to diluted loss per share of $0.21 in Q $134 million $1.2 billion Gross Revenue Backlog $8.0 billion 4

5 Q was better than 2014 even when adding back the Power business losses in the first quarter of last year Q1 2015: Excluding Power business losses and restructuring costs, Q net income would have been $30 million* and diluted earnings per share would have been $1.08* Q1 2014: Excluding Power business losses, Q net income would have been $24 million* and diluted earnings per share would have been $0.82* YEAR OVER YEAR IMPROVEMENT IN ADJUSTED NET INCOME $30 million in 2015 compared to $24 million in 2014 * Non-GAAP financial measure 5

6 Q Segment Performance Environment & Nuclear Industrial & Urban Environments Oil, Gas & Chemicals Revenue of $359 million, increase of 3% over Q Operating income of $17 million, essentially flat compared to Q Recently awarded professional services contract for the U.S. Air Force Civil Engineer Center for architecture and engineering services Also awarded contract for one of U.S. Department of Energy s sites for final design of a mock test facility to solve one of highest risk liabilities Revenue of $119 million, increase of 8% over Q Operating income of $1 million, compared to an operating loss of $6 million in Q due to several additional consulting and project management contracts and costs savings from restructuring the IUE business group Key new wins in the IUE business group included new contracts for facility design work in the U.S. and Middle East for a global semiconductor manufacturer, for a food products manufacturing facility in Singapore, and for a medical products manufacturer in Brazil Revenue of $214 million, increase of 5% over Q Operating income of $8 million, compared to operating income of $1 million in Q1 2014, primarily due to increased volume Recently awarded projects include a 3-year operations and maintenance contract for a BP fabrication shop in Alaska, another BP contract on the North Slope for equipment field services, and Master Service Agreements for engineering and construction management for Dow and Axion plants in Argentina.

7 Q Market Performance (continued) Transportation Water Power Revenue of $236 million, in line with Q Operating loss of $4 million, compared to operating income of $10 million in Q due to an $11 million additional loss provision in this quarter Recently selected to provide systems reference design for Mass Rapid Transit Line 2 in Kuala Lumpur Selected for the by Infrastructure Ontario for a technical advisory services contract Revenue of $300 million, decrease of 2% over Q Operating income of $21 million, a decrease of $4 million compared to Q due primarily to a $3 million claim settlement Signed contract with Corvias Solutions to provide planning and design services for a county-wide stormwater system retrofit Awarded Phase II Expansion of the Changi Water Reclamation Plant for PUB Singapore Revenue of $36 million, decrease from $74 million in Q Break even operating income, compared to $56 million loss in Q Strategic decision to exit the Power business in 2014, except for projects that were already under contract, which we remain committed to complete 7

8 Cash and Credit Capacity Cash at March 27, 2015 of $134 million (most is offshore or in JVs) Total debt outstanding of $488 million Unused available capacity under the credit facility of $354 million Positive cash flow from operations in Q of $41 million March 30, 2015 amendment to credit agreement: Increased maximum leverage ratio of 3.75x, increasing our safety margin of credit capacity Changes to restricted payments including share repurchases 8

9 Stock Price Stock price of $51.14 per share for the June 5, 2015 trade date 7% increase from the price set on February 20, 2015 Exclusions from Q1 stock valuation: Restructuring charges of $6 million after-tax Acquisition depreciation and amortization of $6 million after-tax Power business losses of $1 million after-tax Eligible participants who wish to buy or sell common stock in their ownership accounts on this trade date will need to notify our broker, Neidiger, Tucker and Bruner, Inc. ( NTB ), no later than 5:00 p.m. MDT May 22, Participants who wish to sell shares in their 401(K) account will need to notify Fidelity no later than 2:00 p.m. MDT May 13,

10 Stock Price Valuation Overview Q Consultant Overall Valuation Range, $1.1 - $1.8 Billion Public Market Public Comparables Market Comparables $1,200 $2,200 Mergers & Acquisitions M&A Comparables Comparables $1,100 $1,700 $1,700 Valuation implied by M of 1.2 with the factors impacting P added back resulting in a Formula Equity Value of $1.45 billion and a stock price of $51.14 per share Discounted DCF Analysis Cash Flow Analysis $1,400 $1,900 $1,900 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 $2,000 $2,200 ($ in millions) 10

11 Guidance 2015 Current view for the year is unchanged with revenue in the same range as 2014 and substantially improved net income more in line with profitable past performance as a result of the recent restructuring actions, improved operational and sales efficiency, and the expectation that we will have fewer projects in a loss position in

12 Questions 12

13 2015 Focus Core businesses continue to perform well Continued savings from restructuring activities are maintained Progress on problem EPC projects is made Increased operational discipline Invest in people Build financial strength 13