19 March 2019
Full year results for the year ended 31 December 2018
“Returning to growth and delivering strong operational cash generation”
Year ended 31 December
Movement vs. proforma %
Revenue including joint ventures2
Adjusted EBITA Margin
Revenue (statutory revenue which excludes joint ventures)
Operating Profit before exceptional items
(Loss)/profit for the period
Adjusted diluted EPS3
“Wood delivered good organic growth in 2018. We completed the integration of AFW at pace, increased cost synergy targets by 24% and unlocked new opportunities across our broader range of capabilities and sectors to secure revenue synergies of over $600m. We have delivered strong operational cashflow which has supported both a reduction in net debt of $450m since completion of the acquisition of AFW, and the payment of $231m in dividends in 2018. We have built a unique platform and are in the early stages of what we can achieve. Our performance in 2018 has strengthened our conviction in Wood’s potential and we are excited about our prospects. We are confident of achieving further growth in 2019.”
Robin Watson, Chief Executive
- Return to growth and ahead of 2018 consensus: Revenue including joint ventures up 12% and adjusted EBITA up 5% vs Pro forma 2017 reflecting good trading momentum and cost synergy delivery of $55m
- Operating profit before exceptional items increased by 68% to $357m (2017 proforma: $212m), after non-cash amortisation charges of $249m5
- Loss for the period reduced to $7.6m (2017: $30.0m), after exceptional costs of $183m related to synergy delivery, restructuring, impairment of EthosEnergy and guaranteed minimum pensions6
- Strong balance sheet: Net debt reduced to $1.5bn in line with guidance at December trading update. Total facilities headroom of $1.3bn. Net debt : Adjusted EBITDA reduced to 2.2x (2017: 2.4x)
- Cash conversion, calculated as cash generated from operations (after exceptional items) as a percentage of Adjusted EBITDA (excluding JVs), improved significantly to 102% (proforma 2017 14%), including $154m drawn down from our receivables facility
- Good progress on non core asset disposal programme; entered agreements to dispose of assets for consideration of over $50m to date
- AEPS of 57.4 cents up 8% and ahead of 2018 consensus3
- Proposed final dividend of 23.7c up 2% in line with progressive dividend policy; dividend cover of 1.6x $231m distributed to shareholders in 2018
Operations and integration
- Higher activity levels across all business units:
- Growth in ASA in power, downstream & chemicals and US shale
- ASEAAA grew in operations solutions work in Asia Pacific and the Middle East
- STS delivered increased activity in minerals processing, automation & control and nuclear
- E&IS saw increased consultancy work with long standing customers in North America
- Well aligned operational cultures enabled integration ahead of schedule in 12 months
- Excellent progress on cost synergies: in year benefit of $55m in 2018 equating to an annualised run rate of $85m, three year target increased to $210m, up 24%
- Secured revenue synergies >$600m; strong pipeline of opportunities
- Enhanced risk management framework and project delivery governance embedded
Outlook for 2019
- Well positioned for growth trends emerging across a broad range of energy and industrial markets
- Order book currently stands at $10.3bn4, c60% of forecast FY2019 revenue secured in line with expectations for this point in the year. Reimbursable work is the largest element; c70%.
- Revenue growth in the region of 5% will deliver organic earnings growth which, together with the impact of cost synergies of around $60m, is expected to lead to growth in Adjusted EBITA in line with market expectations3
- Deleveraging to 1.5x Net debt to Adjusted EBITDA7 will be more gradual than originally anticipated due to impact of slower sector recovery in oil & gas since completion, working capital commitments on the legacy AEGIS contract and slower progress on non-core asset disposals due to our focus on value
- Confident in the strong free cashflow generation of our business. Further deleveraging primarily driven by earnings growth in 2019, delivering cash conversion after exceptional items at c80%-85%, retaining capital discipline and the timing of additional disposals.
- Proforma 2017 results are unaudited. They include 12 months of AFW’s results but exclude the results of businesses disposed; principally the AFW North Sea upstream business, the AFW North American nuclear operations and the disposed elements of GPG. It also excludes the results of other, less material disposed interests including the Aquenta consultancy, an interest in Incheon Bridge and interests in two Italian windfarms.
- See detailed footnotes following the Financial Review. ‘Revenue including joint ventures’, ‘Adjusted EBITA’ and ‘Adjusted EBITDA’ are presented based on proportionally consolidated and includes the contribution from joint ventures. A reconciliation to statutory numbers is provided in note 1 to the accounts.
- Company compiled publicly available consensus 2018 Adjusted EBITA is $624mm and AEPS is 55.9c. Adjusted EBITA on a proportionally consolidated pre IFRS 16 adoption basis for 2019 is $716m and AEPS is 67.6c. Consensus EBITDA on the same basis is estimated to be $764m.
- Order book comprises revenue that is supported by a signed contract or written purchase order for work secured under a single contract award or frame agreements. Work under multi-year agreements is recognised in order book according to anticipated activity supported by purchase orders, customer plans or management estimates. Where contracts have optional extension periods, only the confirmed term is included. Order book includes Wood’s proportional share of joint venture order book.
- Operating profit before exceptional items is stated after non cash amortisation charges of $249m, including $126m of amortisation of intangibles arising on the acquisition of AFW.
- Loss for the period is stated after exceptional costs net of tax of $183m, including $42m of costs to deliver synergies, $30m relating to restructuring and onerous leases, $41m related to an impairment in the carrying value of EthosEnergy and $10m of other write-offs related to EthosEnergy, investigation support costs of $26m, $10m relating to an arbitration settlement provision and a $32m defined benefit pension scheme charge related to guaranteed minimum pensions
- Our previously stated target net debt : Adjusted EBITDA range of 0.5x to 1.5x is based on an existing “frozen GAAP” basis prior to the adoption of IFRS 16 in 2019
Wood is a global leader in the delivery of project, engineering and technical services in energy, industry and the built environment. We operate in more than 60 countries, employing around 60,000 people, with revenues of around $11 billion. We provide performance-driven solutions throughout the asset life-cycle, from concept to decommissioning across a broad range of industrial markets including the upstream, midstream and downstream oil & gas, power & process, environment and infrastructure, clean energy, mining, nuclear and general industrial sectors. www.woodplc.com
For further information contact:
Andrew Rose – Group Head of Investor Relations 01224 532 716
Ellie Dixon – Investor Relations Senior Manager 01224 851 369
Citigate Dewe Rogerson
Kevin Smith 020 7638 9571
There will be an analyst and investor presentation at the London Stock Exchange, 10 Paternoster Square, EC4M 7LS at 09.00. Early registration is advised from 08.30.
A live webcast of the presentation will be available from https://www.woodplc.com/investors/financial-events-calendar
Replay facilities will be available later in the day.