Worley Limited

Good morning and thank you for standing by. Welcome to the Worldly Full 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. Please be advised that today's conference is being recorded. And I'd like to hand the conference over to your first speaker today, Chief Executive Officer, Chris Ashton.

Thank you and welcome everyone for joining Worley's full year results presentation for the 2026 financial year. As usual, I draw your attention to the disclaimer on slide two. I'd first like 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 their elders past and present and to the emerging leaders. Turning to slide three. I'll begin with business performance. Justine will then take you through the financial results and I'll return to cover our strategy and outlook. It's fair to say FY26 was a story of two halves, with resilient results and strong momentum in the first half, followed by a more challenging second half. The main factor impacting our growth this financial year was the conflict in the Middle East. Together with foreign currency transaction impact, we weren't able to achieve our FY26 outlook expectations. We've also navigated softer conditions in some markets, but elsewhere activity remained strong, particularly in the Americas, and we stayed close to our customers, secured significant contract wins and maintained a healthy pipeline supported by strong demand drivers. During the year, we repositioned resources toward areas of stronger demand and reset the cost base to support future growth. and at our investor day in May we outlined our growth strategy focusing on winning more full project delivery work and leveraging our expertise in complex critical infrastructure to expand into adjacent markets and we're already seeing good traction. This year saw significant progress in delivering venture global CP2 LNG project in the US and both phase one and phase two reached full and final investment decision. and more recently we were named as the preferred bidder on Uniper's Connor Key low carbon power project in the UK. There is strong evidence of momentum in major EPC and EPCM contract wins reinforcing our competence in medium term growth. Turning to slide four. I'm now going to take you through the headline numbers. where aggregated revenue was $12 billion, broadly in line with FY25 and on a constant currency basis revenue of $12.3 billion showing a growth of 2.3%. Growth was 5.4% in the first half and soft activities within segments of chemicals market and the Middle East conflict impacted the second half. Underlying EBITDA was $734 million reflecting these factors along with the impact of FX translation. on a constant currency basis underlying EBITDA was $773 million. We made margin resilience and cash generation remain strong with normalized cash conversion at 93.6% well within our target range reflecting continued operating discipline. Supporting future performance cost initiatives and business restructuring set our cost base and we expect improved earnings momentum into FY27. Our outlook expectation for FY27 is mid to high single digit growth in revenue and underlying EBITDA. And I'll talk more about this, how we get to this through the group outlook. Looking further ahead, the opportunity remains compelling. Worley is positioned at the center of the long-term need for secure and affordable energy, chemicals, and resources. With the customer relationships, we scale and the expertise to deliver more full project delivery work and expand into higher growth markets. And that is how we deliver our FY30 ambition. Turning to slide five. Our highest priority has always been on keeping our people safe, and we had another year of strong safety performance, notable given the nature of some of the environments in which we operate, including in particular the conflict in the Middle East this year. Our total recordable frequency rate has improved to 0.07, and our serious case frequency rate improved to 0.006. That performance matters. It reflects the discipline and care of our teams around the world. I cannot overstate how deeply proud the Board, my leadership team and I are of our people in the Middle East. Their professionalism and dedication to supporting our customers while continuing to deliver through periods of intense military activity and heightened security risk has been nothing short of extraordinary. Our leaders and our three teams have worked tirelessly to support our people and our customers throughout this period. and I'm pleased that our workforce of more than 4,000 people along with their families within the region remains safe and will continue to focus on keeping our people safe and supporting our customers. On ESG performance, we've strengthened modern slavery reporting and have reduced emissions by 76% from our 2020 base. We've published our Australian Mandatory Sustainability Reporting Disclosures in our annual report in line with the new reporting and disclosure requirements. Turning to slide six. As I mentioned, FY26 was challenging, but the drivers of growth remained firmly in place. Strong demand fundamentals continue to support activity across the broader portfolio, particularly in the Americas, offsetting software operating conditions in some markets. In the second half of the year, the Middle East conflict led to project delays and resulted in lower volumes impacting growth. and we provided them with updates on the impact to our business as it became known. The conflict has continued for longer than anyone anticipated and the timing of recovery remains uncertain. Throughout this period, we stayed close to our customers and supported them where we can. This has strengthened those relationships and positions as well as the deferred work begins to return, which is what we're seeing. As noted, FX Translation also weighed on the reported results. Turning to slide seven. What differentiates Worley is the breadth of capabilities and global scale we bring to customers around the world. We have a capital-like business model, long-standing customer relationships, and diversified earnings across geographic regions and across energy, chemicals, and resources. Our capability and expertise across the full project lifecycle continue to underpin our growth strategy. Professional services remain at our core. with construction, fabrication, and procurement growing as customers engage us across more of their capital programs. And that shift is deliberate and supports our FY30 growth ambition. Turning to slide eight, our leading indicators continue to show strong demand and support confidence in our FY30 ambition. The fact that sales pipeline increased 24% with the greatest momentum coming from the Americas and EMEA. The pipeline of opportunities has grown as Worley builds its portfolio in reimbursable EPC and EPCM work scopes and future-facing growth markets. We're strengthening early-stage consulting positions to capture opportunities in full project delivery. Bookings for the year were $15.5 billion, supported by wins predominantly across energy and resources. 44% of these wins have been sole source, reinforcing the confidence customers have in Worley. As I've said, both Phase 1 and Phase 2 of CP2 were booked during the course of the financial year. Note that we'd already provided enduring procurement and construction services planning under a reimbursable contract, so only the remaining scope of work moved into backlog. Backlog increased 9% over the 12 months to $13.8 billion, with over 62% of that expected to be delivered in the next 12 months. This is down on $16.7 billion reported in the half year due to major project work being delivered in the second half and timing of new awards. As we noted in investor day in May, we removed Exxon Mobil's Baytown Blue project, which remains on pause. FX Translation also had a bearing on backlog, which would have been $15 billion on a constant currency basis. The focus on FY27 is clear. continue to deliver backlog, driving revenue growth and converting near-term pipeline opportunities into wins. Moving on to slide nine. Our strategy to win more full project delivery scope is supporting our competence in achieving our FY30 growth ambition. We're focused on identifying opportunities in reimbursable EPC, EPCM work scopes within our pipeline and more than 45% of our current backlog consists of active EPC, EPCM projects. Our strategy is showing early success. You'll have seen the strategic project wins we've announced to the market over the course of the year. These wins span both our existing core markets and targeted future facing growth markets and reflect both established relationships and new customer relationships. We're working closely with leading global customers in high demand growth markets. In FY26, we booked more than 10 billion of wins in our identified growth markets. Since year end, we've continued that momentum, securing contract wins across power, copper, integrated gas, and other energy projects. And we've highlighted those project wins, which form part of our major projects and programs on this slide. Energy remains our largest sector with strong underlying demand drivers. Aggregated revenue increased 8% to $6.4 billion, supported by major EPC projects moving into execution. Integrated gas and LNG in particular remains a key driver of growth, and project timing is influenced by regulatory approval. The Middle East remains an important market for Worli. Our long-standing customer relationships across the region have led customers to engage us on damage assessments, reconstruction planning, and advice to support resilient rebuilding when conditions allow. Power infrastructure is becoming increasingly important, supported by rising electricity demand from data centers and investment across gas-fired generation, renewables, and nuclear, representing a strong growth opportunity for Worli. Moving on to slide 12. Unibus, Connor's key project in the UK, reflects a major opportunity for us in the power infrastructure. The planned development of the project combines growing electricity demand, energy security, and emissions reduction, and is representative of the growth and opportunities we're seeing in our pipeline. Moving on to chemicals and slide 13. Chemicals remains an important long-term market, although conditions were challenging in 26 and are likely to remain so in 27. Aggregated revenue declined 22% to $2.4 billion, reflecting project cancellations such as Shell's Red to Green project and lower activity in some regions, particularly where the market is still working through oversupply. and at the same time we continue to see investment in refining and asset optimization including de-bottlenecking, product slate changes, decarbonization and life extension projects. Petrochemical rationalization and low carbon fuels represent opportunities with project progression to final investment decision the important indicator over the next 12 months. Moving to slide 14. Heidelberg's Pads Wood project highlights the continued investment we're seeing in industrial scale decarbonization. This project demonstrates how our EPCM capability helps customers reduce emissions from existing operations while developing critical carbon capture infrastructure. Moving on to resources. Resources have been our fastest growing sector over the last four years. In FY26, aggregated revenue increased 6% to $3.3 billion. Growth this year was driven by increased activity across mine fertilizers, copper, and battery materials while with continued investment in iron ore. We're also seeing an uplift in demand across the aluminium value chain. Copper is critical. Electrification, data centers, and grid investment continue to support long-term demand growth. Both brownfield expansions and greenfield development will be needed to close the supply gap. We've won contracts with 16 customers for copper projects this financial year alone. Fertilizers and fertilizer projects are supported by population growth and food security, although the Middle East conflict is affecting sulfur supply and phosphate projects in North Africa, while potash projects continue to progress at pace. Battery materials are showing signs of renewed activity. We're seeing a stronger pipeline and broader value chain exposure from mineral extraction through to active materials and recycling. BHP's Janssen Podash project reflects the attractive long-term fundamentals supporting fertilizer demand and global food security. The project demonstrates how we bring together fabrication, modularization, and construction services to support delivery of one of the world's largest potash developments. I'm now going to hand over to Justine to talk you through the financial results in more detail.

Thanks Chris and good morning everyone. Before I take you through the details, I want to highlight three key points that provide context for our FY26 performance and how we're positioned moving forward. Activity levels across much of the business remain strong during the year. And while earnings were impacted by disruption in the Middle East and softer activity in parts of the chemicals market, we continue to secure significant contract wins, supporting booking and backlog growth, which provides line of sight to future earnings. Second, we've taken targeted actions to simplify the business, reduce structural costs and improve efficiency. These actions help strengthen the business today while also creating capacity to selectively reinvest in priority growth opportunities. And third, we've maintained a strong financial position throughout the year. Our balance sheet and cash generation provide the flexibility to invest in our ambition, navigate near-term uncertainty and continue returning capital to shareholders. With that context, let me take you through the results in more detail and turning to slide 18. Aggregated revenue for the 2026 financial year was $12 billion, broadly in line with FY25. On a constant currency basis, aggregated revenue was $12.3 billion. Underlying EBITDA was $734 million. The adverse impact of the Middle East conflict on earnings was $58 million in line with what we had communicated in our 25th of June update. And as Chris noted, the foreign exchange translation impact had a bearing on the result. EBITDA margin on an ex-procurement basis was 9% and on a constant currency basis in line with FY25 and remained within our outlook range. One-off costs related to restructuring activities for the full year were $120 million. Consistent with the half year, these have been excluded from underlying EBITDA. You can see the impact of these costs on our statutory NPAT-A. Savings from our cost management program launched this time last year have exceeded our initial target. These initiatives result in a leaner cost base to support growth, AI and digital deployment, and future earnings performance, as well as partially offsetting inflationary pressures. and normalized cash conversion remains strong at 93.6%, well within our target range of 85 to 95% and it reflects our continued focus on cash and operating discipline. We remain in a strong financial position to support growth and return capital to shareholders. The Worley Board has determined to pay a final dividend of 25 cents per share on Frank We returned $359 million to our shareholders as we completed the $500 million on market share buyback in the full year 2026 and in May we commenced a new $300 million buyback program. Turning to slide 19. I'd now like to just talk through a number of some of the key drivers. While the aggregated revenue was $12 billion, if we look at this on a constant currency basis, the result was stronger at $12.3 billion, reflecting growth of 2.3%. The growth was less than what we had anticipated at the beginning of the year and highlights the headwinds we've faced as our results have been translated to Australian dollars for presentation reporting. Underlying EBITDA declined from 823 million to 734 million. On a constant currency basis, the result was 773 million. Headwinds impacting the result were the extended conflict in the Middle East, which resulted in disruption to existing projects, although the greater impact was the delayed commencement of new awards. We also continued to experience a slower chemicals market. As we expand the scope of our work along the project value chain, there is a mix of margins within that expanded service offering. Major project activity phasing moved towards greater construction and fabrication and procurement. This supported revenue growth and attracted a different margin profile. Our EBITDA margin excluding procurement was within our target range. and our underlying EBITDA margin including procurement was 6.3% on a constant currency basis. Turning to slide 20 and the translation impact. Approximately 93% of Woolies revenue is generated outside Australia and as you can see in the chart, movements in foreign exchange with a larger translation headwind in FY26 than we have seen in recent years. During the year, the Australian dollar strengthened against multiple currencies, particularly in the second half, and this has had a direct translation impact on our Australian dollar presentation of results. If FY25 average rates had applied, at FY26 EBITDA would have been $39 million higher. Relative to the FX rates assumed in our FY26 outlook, the translation impact was greater and reduced our FY26 EBITDA by approximately 50 million against our outlook expectation. We've provided our results on a constant currency basis where relevant to provide a comparative view of underlying business performance. Worley is exploring a change to its reporting currency from Australian dollars to US dollars The group currently has a substantial economic presence outside Australia and the current and expected foreign currency earnings mix is an important consideration to evaluate a change in reporting currency which would reduce translation volatility. Consolidated financial results for the year ending 30 June 2027 will continue to be reported in Australian dollars. following which results for the half and the full year to 30 June 2028 would potentially be reported in US dollars. We will continue to keep the market updated on this potential change. If I turn now to slide 21, during the year we continued our efforts towards reshaping the business to strengthen future performance. We incurred 120 million of one-off costs relating to transformation and Business Restructuring. These costs predominantly relate to restructuring in Western Europe where local labour protections resulted in higher severance and related costs. We incurred 82 million of these costs in the first half and 38 million in the second half. This was in line with our earlier guidance that we expected further costs to be incurred in the second half but these would be lower than those already incurred in half one. The Cost Out program exceeded the initial target of $100 million and we've achieved $132 million of savings. These actions are focused on resetting the cost base, aligning resources to areas of higher demand, reducing complexity and improving scalability. The efforts of the team to take these important steps to strengthen our cost discipline and improve our earnings quality benefit shareholders in this financial year as we see this come through in lower global support costs and in addition these savings in FY27 will partially offset inflationary pressures and be used to reinvest in strategic hires, differentiated delivery platforms and investment in digital tools. As we set out at our Investi Day in May, we are targeting approximately $70 million of investment over two years. These actions support a more efficient and scalable operating model and they support stronger future earnings performance. If I turn now to slide 22, I'd finally like to take you through our capital management position. Our capital framework remains disciplined and it's designed to support both growth and returns to shareholders. We continue to invest in the business while prudently managing debt and maintaining balance sheet flexibility. Our balance sheet position is supported by an investment grade credit rating of BBB with a stable outlook. Normalised cash conversion was 93.6%. well within our target range and our day sales outstanding improved to 44.3 days and remains well controlled and comfortably within our target. Our balance sheet remains strong with leverage at 1.8 times and remains below our target of two times. Total liquidity was 2.1 billion at 30 June 2026. The Board's decision to commence a further $300 million buyback program reflects confidence in our business. In May, we refinanced the Euro medium-term note with a new five-year Australian dollar medium-term note for $375 million, and together with a new 364-day liquidity facility and part utilization of the syndicated facility Revolver, We continue to maintain a diversified debt portfolio with a balance between loan markets and global debt capital markets. The weighted average cost of debt was 4.4% at 30 June 26 and although this will increase following the refinancing of the Euro medium term note at current market interest rates. Overall, our disciplined approach to capital management remains a key differentiator and support long-term value creation. In summary, a challenging earnings performance for the full year, but activity levels across much of the business remain strong. We have delivered on the cost management program and created the platform to deliver our ambition and we have continued as strong focus on cash conversion and balance sheet strength, which positions us well to support growth and returns to our shareholders. I'll hand back to Chris to take you through our strategy and outlook ahead.