Worley Limited

Good morning and thank you for standing by. Welcome to the Worley Half Year 2026 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. We ask that you limit yourself to one question and one follow-up question. 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.

Good morning, everybody, and welcome to the call today, and thanks for joining the Harpier Results Presentation for Worli for 2026 financial year. The results are defined by a solid revenue growth and resilient earnings outcome. Once again, showing our adaptability in the face of dynamic markets. As I start my seventh year as CEO, these results continue a pattern of consistent growth. Despite market disruptions, Worley continues to deliver. Our performance reflects deliberate decisions about portfolio, capability, where we compete, and the agility with which we can adjust. And we have a dedicated team around the world who work to deliver the outcomes that our customers trust. Let me now give you an overview of our business performance for the period before our CFO, Justine Travis, takes you through the financial results in more detail. I'm pleased to share an early look into how we're positioning for the next phase of growth as we go through this presentation today, with the strategy focused on increasing our total addressable markets and generating value for shareholders. Today, we reconfirm the outlook we provided to the market at our full year results in August last year. We continue to expect a year of moderated growth, but calendar 26 has started with renewed momentum. Some big wins recently include being provisionally named as EPCM partner on Glen Farnes Alaska LNG pipeline and appointed marine and port infrastructure technical advisor for the WA Westport program in Western Australia. We're already delivering phase one of Venture Global CP2 LNG project in the US and are continuing our partnership to deliver phase two. These wins on some of the largest projects in the world demonstrate the confidence customers have in our capability to execute major complex projects. And we continue to scale across a growing pipeline of these opportunities. Given this momentum, we're encouraged by the visible signs of growth for Worley beyond this financial year. Turning the slide to, I remind you to review the disclaimer shown here. I'd also like to take the time to acknowledge the Gadigal people of the Eora Nation, the traditional custodians of the land from which I'm calling today. And I pay my respects to the elders past, present, and as well to the emerging leaders. Turning to slide three. Let me now turn to our business performance for the first half of the financial year. And so let's turn to slide four. As I said, revenue has grown even while navigating challenging market conditions, and earnings have been resilient. The last six months, we've seen solid revenue growth of 5.4% over the prior corresponding period. A number of major projects and execution phase contributed steady earnings, and bookings are up 63% on the prior period. Venture Global CP2 Phase 1 was a major contributor, but I want to highlight some of the other significant wins across the sectors and regions. like the EPC for ConocoPhillips Scandinavia for their Norwegian continental shelf project, the FEE for OQ refineries and petroleum industries decarbonization project for the SOHA refinery in Oman, and construction for ExxonMobil's major reconfiguration project of its integrated complex in Baytown, Texas. Momentum through increased wins in the first few months of this calendar year reinforce our confidence we can deliver a stronger second half. We've taken deliberate actions to enhance earnings quality. Our cost out and business restructuring initiatives are well advanced, and we're targeting more than $100 million of annualized savings from 2027 onwards, resetting our cost base and positioning the business for our next phase of growth. We have knowledge. There's been $82 million of transformation and business restructuring cost this half, and Justine will talk to this later. And finally, our balance sheet remains strong. Disciplined working capital management drove strong first half cash performance, giving us the capacity to keep investing in growth. Turning to slide five. Our highest priority remains the safety of our people. Our safety performance has been maintained with a total recordable frequency rate of 0.10. At Rio Tinto's Rincon project in Argentina, for instance, we recently marked more than 1 million work hours with zero safety incidents. Visiting last year, I witnessed the discipline, care, and pride the team brings to their work. And it's milestones like this that reflect the safety leadership on the ground and the commitment to looking out for one another each and every day. Positive ESG progress continues too. We've maintained leading external ESG ratings and we've strengthened our approach to preventing modern slavery. And we remain on track with our own scope one and scope two emissions reduction targets. We're also well prepared for the new Australian sustainability reporting requirements. Bookings are up 63% compared to the prior six-month period. And in the first half, bookings totaled $9.8 billion, including venture global CP2 Phase 1, which achieved FID last July. SoleSource wins also increased, reinforcing customer confidence in Worley's capability and delivery. And as I've mentioned, a number of significant project awards already this calendar year build on this momentum. Energy and resource have both grown, with the Americas continue to deliver wins for our portfolio, and the mix of bookings reflect increased construction, fabrication, and procurement activity as these projects move into the execution phase. The quality of these bookings remains high. As noted, large, complex projects where Worley is supporting customers across the full project lifecycle underpin backlog quality and forward earnings visibility. Turning to slide seven. I'll now turn to leading indicators. Backlog remains resilient at $6.7 billion, providing good visibility of revenue into the second half of FY26 and into FY27. Backlog is slightly lower than the reported period for June 25, and this reflects the delivery timing rather than the drop-off in demand. $6.3 billion has been added to backlog through scope increases and project wins during this period. And while work on the Baytown Blue project has paused, we've retained in the project backlog and continue to work closely with ExxonMobil on that. Project wins already in the first few weeks of calendar year 26 will add more than $3.5 billion to backlog. Our factored sales pipeline remains robust, and we continue to convert opportunities into backlog as we secure contract wins. And the pipeline keeps replenishing. Around 46% of these opportunities are expected to be awarded in the next 12 months, reflecting the extended project delivery timeframe for major projects. As we target more of these projects, we'll focus on opportunities in the early stage consulting phase with potential for pull-through. And consulting opportunities have increased by 24% in our pipeline over the past six months. Turning to slide eight. The slide shows the diversification and competitive strengths underpinning our business model and earnings resilience. Our broad exposure across sectors, geographies, and services reduces reliance on any single market or customer decision, and revenue is well balanced across energy, chemicals, and resource. It's geographically diversified with meaningful scale across the Americas, EMEA, and APAC. Our services mix across professional services, construction and fabrication and procurement shows our increasing relevance to customers across the full project lifecycle. And we're attracting a greater share of project capital with expanded capabilities. We also continue to differentiate through our use of digital and AI. Enterprise efficiency is a non-negotiable. Technology is transforming project delivery. Our digital and AI initiatives will reshape how we deliver projects and strengthen our competitive advantage. For customers, intelligent solutions will bring their assets into operation sooner and accelerate returns on capital. I'd now like to give an update on each of our sectors and turning to slide nine. Aggregated revenue from energy work increased 8.8% over the prior corresponding half and growth was driven by major projects moving into the execution phase, lifting construction, fabrication, and procurement activity, particularly in the Americas. Integrated gas continues to be a growth driver. Demand for gas is supporting ongoing LNG import and export terminal developments, and integrated gas work represented 25% of Worley's total revenue during the period. The variety of LNG projects we're working on around the world is notable in places like Germany, Indonesia, and Australia, as well as the US. While the outlook remains softer overall in oil, activity is increasingly concentrated in higher margin offshore projects and selected onshore developments, particularly shale. And power is an important growth market. Structural change is driving energy demand and investment across gas-fired power generation, renewables, and nuclear. Turning to slide 10. The global chemicals market remains important to us. Near-term conditions are challenging, reflecting regional aggregated revenue declined 9% over the period, with project cancellations in Western Europe and lower professional services activity across APAC and EMEA. This was partially offset by ongoing major project execution in the Americas, where construction and fabrication activity continues. Looking at specific subsectors, refined fuels remains promising, and it continues to attract investment in product slate optimization, decarbonization, and asset life extension. Petrochemicals remain a major contributor to our chemicals revenue, although Western European plant closures related to global overcapacity have had an impact. Low carbon fuels present more selective opportunities where projects are commercially viable. Turning to slide 11. Finally, resources have delivered growth for Worley in the first half, and aggregated revenue has increased 12.3% over the prior corresponding period. Resources now represents 29% of our business. Population growth, urbanization, and the energy transition are demand fundamentals which will continue long term. Fertilizers remains our largest subsector. Here, demand is supported by population growth and food security. Demand for copper is driven by the need for energy transition materials and an increasing demand from data centers, cloud, and AI infrastructure. In battery materials, there's been a research into activity and sentiment with a focus on front-end work and commercialization of technology. And we're confident resources will make an important contribution to second-half growth, and we expect this to continue beyond the next year. I'm now going to hand over to Justine to put the details on the financial results. Justine.

Thanks Chris and good morning everyone. Turning to slide 13. A half year performance and execution of strategic priorities such as cost management and earnings quality coupled with strong capital management positions us well to deliver moderate growth this year. I want to re-emphasize three points in relation to the results we are delivering today. First, we continue to deliver aggregated revenue growth and solid earnings supported by our global operations and strategic focus on major project delivery. Second, targeted actions to reset the cost base are underway and aim to strengthen earnings quality and resilience. And finally, we remain in a strong financial position to support growth and return capital to shareholders. Aggregated revenue for the half was $6.3 billion, up 5.4% on the prior corresponding period. We continue to see an increase in construction and fabrication revenue as we execute on major projects, as well as an increase in procurement revenue. Supported by the contribution from our global operations and our major projects, underlying EBITDA was steady at $377 million. Underlying NPAD A was $207 million. A lower statutory NPAD A at $152 million reflects the inclusion of transformation and business restructuring costs. While business as usual costs are included in underlying EBITDA, these transformation and business structuring costs were beyond the scope of the normal course of business. Normalised cash conversion was 95.5%. a fantastic achievement. This continues to be an important focus for our business. Our balance sheet strength and strong cash position provide capacity to invest in growth and return capital to shareholders through our ongoing buyback and payment of dividends. Leverage at the end of the half was one and a half times, comfortably within our target range, reinforcing the strength of our financial position. Turning to slide 14, our aggregated revenue growth has supported steady earnings despite the challenging market backdrop. As I've highlighted, a driver of revenue growth this half was major project activity with increased volume flowing through construction, fabrication and procurement, particularly across the Americas. This work is delivered under a lower risk contracting model. and has supported a stable earnings outcome, reflecting both project delivery stage and discipline delivery across the portfolio. As a reminder, we don't do competitively bid lump sum turnkey projects. On the right hand side, the EBITDA margin walk highlights our continued focus on rate improvement. Margins reflect the combined impact of volume, mix and pricing. with rate improvement partially offsetting mixed impacts in the period. Importantly, this demonstrates an ongoing focus on margin discipline. While near-term earnings reflect project phasing, the underlying drivers of margin improvement continue to build through backlog, the cost out program, and disciplined execution. Turning to slide 15. As communicated at the full year results in August, we're transforming the way we work by removing complexity, improving efficiency and driving consistency. This work is well underway. We acted proactively to reposition the business in response to softer conditions in chemicals and some project cancellations in Western Europe to strengthen margins and ensure ongoing business resilience. we've accelerated actions aligned with our strategic priorities, specifically resetting the cost base, scaling GID and expanding margins. During half one, we incurred 82 million of costs associated with these actions, much of this being severance and related costs predominantly in Western Europe, where we have seen high restructuring costs due to local labor protections. We expect further costs in the second half as the program continues. However, we do anticipate these costs being lower than those already incurred in half-once. The actions we've taken include repositioning capability to areas of higher demand and right-sizing where demand has softened. These restructuring actions, together with our efforts to transform the way we work, are setting the foundation for stronger earnings and margin quality. Our business will be supported by a leaner, more scalable operating model supported by global integrated delivery, GID. In delivering this transformation, we're progressing at pace. With a disciplined cost out program, we're targeting over 100 million annualized savings from FY27 onwards. Our cost management efforts are focused on and include repositioning capability to areas of higher demand, increasing enterprise service center utilization, rationalizing our third-party contracts, and adjusting our office network to reduce cost while supporting global delivery. We're also deploying digital solutions to simplify processes and improve productivity. Embedding AI across our business will be an ongoing part of our broader strategy to leverage technology and new ways of working to create sustainable value. I have been working closely with the business on this program and it is clear to me that steps that we are taking strengthen our cost discipline and will enhance our earnings quality. We will ensure we retain the capability and capacity required to support growth and deliver for our customers with greater cost discipline, commercial agility and technology focus. Turning to slide 17. Finally, I'd like to take you through our capital management position. Operating cash flow is strong. Normalized cash conversion of 95.5% is above our target range and continues to reflect strong underlying cash generation and a disciplined approach to working capital management. Day sales outstanding of 46.2 days remains well controlled and comfortably within our target. We have been consistently delivering returns to our investors through dividends and our buyback program. The Worley Board has determined to pay an interim dividend of 25 cents per share, which is unfranked. We continue to execute our share buyback program of up to 500 million, reflecting the confidence we have in our business. As at 31st of December, 2025, we had purchased over 24 million shares for a total consideration of $324 million. We will continue to execute on this program. During the half, we continue to invest in the business in a measured way, while prudently managing debt and maintaining flexibility to invest in growth with capital directed towards initiatives aligned with our strategic priorities. A balance sheet remains strong with leverage at one and a half times comfortably within our target. We continue to use free cash flow to manage liquidity and support growth. We remain committed to maintaining a diversified funding base and proactively manage our debt maturity profile. We are looking at a variety of options for the group's Euro medium term note debt as it matures at the end of the year. I am getting to know our debt investors and we are confident and well-placed to manage this upcoming maturity in June. Our weighted average cost of debt remains stable and our effective tax rate continues to track within our expected range. Overall, our disciplined approach to capital management remains a key differentiator and supports long-term value creation. I'd like to make a final comment on foreign exchange rates. The Australian dollar has moved over the past few weeks and we note the possibility of FX being a headwind in the second half if it remains at these levels. In summary, a solid half-year performance and execution of strategic priorities including cost management and earnings quality coupled with consistent and strong cash conversion and balance sheet strength positions us well to scale for growth. I'll now hand back to Chris to take you through strategy and outlook.