Worley Limited

Good morning, and thank you for standing by. Welcome to the Whirly Full Year 2025 Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Chief Executive Officer Chris Ashton.

Welcome, everyone, and thanks for joining Worley's full year results for the financial year ending 30 June 2025. I'm really pleased to be presenting these today with Justine Travis, her first results as Worley's CFO. So today I'll share an overview of the business performance over the period and Justine will provide details on our financial results before I conclude with an update on our strategy and our outlook. And then, of course, as usual, we'll be open for questions. Moving on to slide two, just remind you of the disclaimer shown here. And before I begin, I just want to acknowledge the Gadigal people of the Eora Nation as the traditional custodians of the land on which I'm calling from today. We value the strength, determination and resilience of all First Nations peoples and communities around the world and we're committed to the ongoing journey of listening and learning. And I extend that respect to any First Nations people joining us on the webcast today. Moving to slide three, I want to take you through our business performance for the financial year. And so now we'll move on to slide four. Let me start with a few remarks on the environment in which we're operating. There's no doubt that this year has been challenging across all markets and geographies. And I'm super proud of how the Worley team has responded and the support they've provided to our customers through the uncertainty they themselves have faced. We've delivered another strong result. growing revenue, growing earnings, and growing margins in line with our long-term strategy. This is the fourth consecutive year of growth, which is a significant achievement and speaks to the resilience of our business model and the disciplined execution of our strategy. Our competitive strengths, including our diversification, lower risk profile, and strong balance sheet sets us apart from our peers. We're well positioned for growth, And while near-term operating environment remains challenging, the long-term fundamentals of our customers and markets remain positive. And we're ready to capitalize on the growth opportunities that lie ahead. Turning to our performance highlights on slide five. In FY25, our aggregated revenue increased 4% on the prior year. Our underlying EBITDA grew 10%, and our underlying EBITDA margin excluding procurement is 9.2%, which is above our outlook expectations of 8% to 8.5%. Our earnings growth is outpacing revenue, and our cash result is at the top end of our target range, with high cash conversion a consistent feature of our results in recent years. And as you know, we commenced a non-market share buyback in March this year. And this initiative reflects the confidence we have in the company's financial position and growth outlook. The Worley board is determined to pay a final dividend of 25 cents per share, which is unfranked. In FY25, 60% of our revenue was derived from sustainability-related work, an increase from 52% in 24%. And while we've seen a more recent shift in sentiment and investment spend, the strategy we set five years ago has positioned us well to capture this great opportunity. And this capability is now very much embedded into the DNA of our business. I'm pleased with the progress we've made toward our own ESG commitments, and we've maintained leading ESG rating amongst our peers. Our scope one and two emissions have reduced by 73% from our 2020 base, and we will remain on track to meet our own net zero commitments for 2030. Moving on to slide six. Our highest priority is to keep our people safe, feeling included and respected. Our total recordable case frequency rate was 0.13 across the group, reflecting a strong physical health and safety record. And we're supporting our leaders within an operating model which drives performance and growth, and we're preparing them with the development support as we increase AI adoption across the business. I'll come back to our AI readiness when I talk to our strategic priorities later in this presentation. Moving on to slide seven. We continue to see structural shifts globally. Geopolitical tensions, trade and tariff volatility, and other macroeconomic pressures are adding complexity and creating near-term investment uncertainty. However, we have confidence that global demand persists in our end markets with security and affordability and sustainability continue to shape our customer decisions. In this environment, our business model has demonstrated our resilience, building our agility, diversification, improved risk management, and strengthened by our global footprint and scale. Our deep customer relationships result in trusted, long-term partnerships, and our respected industry expertise and quality delivery underpins our success. Financial discipline, one of Wall-E's many strengths, differentiates us from our peers, with a strong balance sheet, good cash generation, and excellent liquidity to fund growth, giving our customers confidence in our ability to deliver. And finally, we're embedding advanced digital initiatives, including AI, into our organization and ensuring we have the right foundations to leverage the opportunities ahead. Moving to slide eight. This slide highlights our diversification, which in the shifting market demonstrates our ability to be agile and adapt to the market, as well as our customers' changing priorities. We've brought in market exposure in many of our peers, and we maintain early move positions in high growth markets. We remain closely aligned with our customers and can support them across their entire portfolio and along the value chain with the agility to do so wherever they're investing their capital. And finally, let me reiterate our focus on risk-adjusted returns and low risk appetite. Over 80% of our work is through reimbursable contracts, and over half of the fixed price work relates to professional services. Importantly, unlike many of our peers, we do not do, and we will not do, material, competitively bid, lump sum, turnkey projects, which bring with it far higher business risk. Moving on to slide nine. We recorded another year of solid bookings. In July, we received full notice received for the first phase of the Global CP2 project. CP2 is a major LNG facility in the US state of Louisiana, and one of the world's largest LNG assets. We're providing engineering, procurement and construction planning services to that project. Including CP2, the total value of bookings has increased 32% since June 30, 2024, to $17.1 billion. The strength of our bookings across energy, chemicals and resources, together with 45% of the work awarded on a sole source basis, demonstrates our strong customer relationships and trusted partnerships, as well as the cost competence customers place in our capability, experience, and expertise, the end-to-end delivery of complex projects. Turning to slide 10. With the final investment decision for CP2 achieved on July 28th, the remaining scope of work for CP2 phase one has now moved from pipeline to backlog. Including CP2, backlog is now 16.9 billion, representing an increase of 22% since June 30, 2024. On a pro forma basis, excluding the cancellation of the $1.6 billion North Pole Sweden battery materials project, which was a buy to the modern earlier in the financial year, backlog has grown 4% in the year from June 30, 2025. Despite the softer market environment, we've not seen project cancellations nor material scope reductions in the second half of the year, and we're maintaining a healthy backlog of work. Moving to slide 11. Our customers continue to take a disciplined approach to investment decisions. Even so, there are pockets of strength and we maintain good visibility of opportunities ahead, with 49% of our work in the pipeline expected to be awarded in the next 12 months. We also see a continuing trend towards investment in traditional and traditional opportunities over the short to medium term. And we remain vigilant in monitoring our customers' decisions, whether this is the potential for any project delays or for opportunities presented by the changing landscape. As we move to slide 12, we'll look at our performance across each of the sectors in which we operate. Our energy sector, which includes oil, gas, power generation, networks, and storage through this year. We saw high levels of activity as projects moved through to execution phase, and we drove margin expansion through productivity gains, improved performance on some of our framework agreements, and benefited from higher margin work flowing through from backlog. In the near term, we expect integrated gas and oil to continue to be areas of significant demand and ongoing activity for us. We also see power for data centers as a key driver for energy. This supports demand across several areas of our capability and expertise, including transmission grids, battery and energy storage, nuclear, conventional, and renewable power generation. Moving to slide 13. Our work within the chemical sector was impacted by lower levels of activity consistent with our expectations given a more subdued market. Petrochemicals will, however, continue to be a driver of oil demand into the future. We see opportunities to offer our expertise in low-carbon fuels, such as sustainable aviation fuel mandates, because sustainable aviation fuel mandates continue to support demand. Chemicals will remain an important market for us, and we're confident about customers' long-term investments in this sector, despite the current challenges. Turning to slide 14. Work in the resource sectors contributed significantly to our result this year, continuing its multi-year growth trajectory. Since 2022, resources revenue has grown an impressive 36% year on year. This year's result was driven by an increase in activity across fertilizers and energy transition material projects, and we expect these subsectors to continue to drive growth in the near term. We've seen strong growth in Latin America and sustained activity across the Middle East, North America, and Europe. Moving to slide 15. I'd like to share some case studies which illustrate the types of work we're delivering. In energy, we're serving the major LNG terminal in Brunsbüttel, Germany. It's a strategically important project reducing Europe's reliance on Russian gas and builds on our phase one work where we delivered a floating storage re-gasification unit in under nine months. The new facility will import LNG from the U.S., highlighting our ability to support the full value chain. In chemicals, we're working with SAVIC Netherlands on a mass recycling unit. and this enables production of certified circular polymers as part of SAVIC's TrueCircle portfolio and reflects the strengths of our long-term relationship. And in resources, we've been appointed lead integration delivery partner to reattend those $2.5 billion lithium carbonate plant in Argentina. And this facility will produce 60,000 tons of battery-grade lithium annually, and our role is to oversee all subcontractors and technology providers. I'm now going to hand over to Justine for further details on our financial results.

Thanks Chris and good morning everyone. After more than a year in the role of Deputy CFO, I'm now very pleased to have started my tenure as Worley CFO, delivering another great result for our shareholders. Four consecutive years of growth in revenue, earnings and margins is a good achievement. While we knew we were facing into a more challenging environment at the beginning of the financial year, the geopolitical environment and unexpected changes in US policy since have created a more uncertain market than anyone could have predicted. Despite this, our business continues to grow and we have delivered in line with our outlook. Our financial performance demonstrates three things. First, we can deliver consistent earnings growth. Second, our long-term focus on margin expansion continues to deliver improved earnings, even in a challenging environment. And third, our capital management is a differentiator and key enabler, and we've maintained this strong position to support growth. Turning to slide 17, our aggregated revenue of $12 billion is up 4% on the prior corresponding period. Over the year we saw an increase in construction and fabrication activity as well as a significant increase in procurement revenue. These were key contributors to this top line growth. This was in line with our expectations and reflects our current mix of projects. We expect this current mix to continue into this financial year with several large in-flight projects in execution phase. This is consistent with our long-term strategy to do more end-to-end project delivery. Bringing this all together and looking at group profit, we've delivered an underlying EBITDA of $823 million, representing 10% growth on the prior corresponding period. Importantly, we have continued our trend of growing earnings at a higher rate than growth in revenue as our focus on margin expansion continues to deliver results Underlying EBITDA margin including procurement increased to 6.8% from 6.5% as at 30 June 2025. Underlying EBITDA margin excluding procurement was 9.2%, up from 7.9% and above our guidance range of 8% to 8.5%. We've made a deliberate shift to higher value solutions leading to an improved rate and margin across all service types. Our underlying MPAT-A for the year is $475 million. This is up 14% on the prior corresponding period and importantly there are no one-off item adjustments in this result. Turning to the next slide, as Chris highlighted Key contributions to our earnings growth in FY25 came from our energy and resources segments and from our work in the Americas and EMEA region. We also saw increased volumes driven by a stronger focus on end-to-end project delivery. As is typical of our half-on-half seasonality, we saw a stronger second half in both revenue and earnings, and we expect similar phasing looking ahead to FY26. The EBITDA margin walks on the right show the main drivers of margin expansion over the financial year. Our progress towards high single-digit margins has been consistently driven by rate improvements over the period. Professional services, construction and fabrication and development have all delivered higher margins. While Project MIX has had a small impact, our strategy remains focused on margin expansion And winning work at higher margins is flowing through from backlog to revenue, and it's supported by a disciplined bidding approach. Strong project assurance through the project lifecycle has also delivered productivity gains and improved performance on framework agreements. This ensures we capture the margins we sell, and of course our result is strengthened by our agility and diversification across markets and geographies. Turning to slide 19, as Chris highlighted, following receipt of the full notice to proceed on Venture Global CP2 Phase 1 project, a backlog now sits at $16.9 billion. Approximately 50% of the $16.9 billion backlog is expected to be delivered in the next 12 months. This is a similar volume to last year. The backlog walk that you can see on the slide shows that despite the challenging market, we've seen no major cancellations over the last six months following the North Vault cancellation that we noted earlier in the financial year. The work in our backlog is well diversified across traditional, transitional and sustainable work and as the charts show, we have a greater proportion of backlog in the Americas and the energy sectors. As Chris has talked to, we remain well positioned to continue to support our customers across sectors, geographies and traditional transitional and sustainable work, which is particularly important in the current environment. Turning to slide 20. Finally, I'd like to take you through our capital management position. You've seen this framework at many of our previous presentations. and it's an important framework which supports the decisions by which we manage capital effectively. It is tightly aligned to our overarching growth strategy, including how we manage risk, and it helps us communicate the decisions we make on how we're allocating capital. The reported cash conversion for the full year was 112.5% of underlying EBITDA, compared with 118% in the prior year. Our normalised cash conversion ratio which accounts for the movements in advance billings between periods was 94.9% compared with 99% from the last year. This result is at the top end of our target range and continues to reflect our strong underlying cash flows over multiple periods as well as our disciplined approach to collecting cash in the business. Our day sales outstanding was 52 days down from 59.3 days at the same time last year, which continues to be below our target range. As Chris mentioned, we commenced our share buyback program in March, reflecting the confidence in our business. We have now purchased over 13 million shares for a total consideration of 168 million. We expect this program to be largely complete by the end of December and this is just one component of a wider strategy to drive value for our shareholders. During the 2025 financial year, we invested $62 million as part of our investment program. This was a mix of capitalised expenditure and OPEX, which is included in our EBIT-A. Further investment will be directed towards activities aligned with our strategic priorities particularly our ongoing investment in digital enablement and AI. Finally, we have been consistently delivering returns to our investors through dividends and we continue to prudently manage our net debt. We are committed to ensuring we deploy capital where it matters most, where it aligns with our strategy and will deliver accretive returns and drive long-term shareholder value. We also remain deliberate in our consideration of these options and we are careful to maintain a strong liquidity position, a key differentiator from some of our competitors. Our balance sheet strength is supported by leverage at 1.4 times, which is reduced from 1.5 times at 30 June 2024. We continue to demonstrate our prudent use of free cash flow to reduce debt, reduce risk and manage liquidity. We balance this with our interest in continuing to provide capacity to invest in business growth. During the year, we received a strong response from global credit investors, raising $400 million through a new seven-year bond, which will mature in 2032. More recently, we completed a private debt placement with one of the UK's largest savings and retirement businesses with a 15-year term. We are committed to maintaining a diversified funding base and we take a proactive approach to managing our debt maturity profile. At the end of the financial year, our weighted average cost of debt was 4.3%. This was down from 4.7% in June last year and we expect this to continue to be in the range of 4.3% to 4.6% for FY26. Our underlying effective tax rate on profit before tax and amortisation of acquired intangibles was 33.4% for FY25, slightly lower than the 33.6% for the prior year. In FY26, we expect this to be in a similar range to prior years, that is 30% to 35%. We are confident that our financial discipline and prudent approach to capital management sets us apart from our peers. and together with that expertise and capability remains an attractive and business-critical attribute for our customers. I'd like to finish by making a further comment about our cost management. Chris highlighted this as a priority at our investor day in May, and we'll talk shortly about an even greater commitment to resetting the cost base. While we have always been focused on cost, our operational restructure has provided an opportunity to take a fresh look at our business, and streamline the work that we do. We are reviewing our overheads and looking to the future with a more efficient, technology-enabled and resilient cost base to support growth over the longer term. I'll now hand back to Chris to take us through outlook for FY26.