Transcript Michael Baker Corporation

2001 MICHAEL BAKER CORPORATION
Investor Relations Presentation
e ngineering
and
e nergy
solutions
2001
Safe Harbor
This presentation will contain information related to
events which may occur in the future. These
forward-looking statements may include future
business trends, revenue and earnings forecasts,
and acquisition and corporate finance activity.
These statements are subject to market, operating
and other risks and uncertainties and, as a result,
actual results may vary. Such forward-looking
statements are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform
Act of 1995.
2001
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Summary / Highlights
Leader in Professional Services
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Oil & Gas Production O&M
Transportation and Civil Infrastructure Engineering
Positioned to Accelerate Margin Growth, Led
by Energy Segment
Focused on Two Segments with New
Management Team in Place
Recognized Expertise in Transportation,
Pipeline and Power Generation Markets
Under-followed Micro Cap Valued at 4x
EBITDA
2001
Decade of Performance
$400
Dollars in Millions
$349
Continuing Business Revenue
$121
$283
$300
$248
$199
$200
$157
$127
$100
$41
$136
$115
$93
1990
1991
$179
$150
$127
1993
1994
$69
$228
$55
$203
$39
$45
$134
$210
$43
$42
$43
$86
$72
$189
$205
$80
$179
$162
$165
1996
1997
$0
1992
1995
Engineering
Energy
1998
1999
2000
2001
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Core Energy Service Offerings
Oil & Gas
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Operations & Maintenance
Competency-Based Training
Operations Engineering
Supply Chain Management
Power
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Operations & Maintenance
New Equipment Installation
Outage Planning/Overhauls
Engineering / Start-up Assistance
2001
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Differentiation of Services
Energy
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Integrated Services and Solutions for Global
O&G Upstream Production Operations
Competency-Based Training and
Nationalization Programs
OPCOSM
2001
OPCO
SM
OPCO Integrated Decision-making
in Production Operations
Idea
Explore
Construct
Management
Develop
Produce
Operations
Network Growth
Maintenance
OPCO
Supply Chain
Management
HS&E
Production
Operations
Functions and
Critical Decisions
Training &
Development
Human
Resources
Monetize
2001
Growth Drivers
Outsourcing Trends
$4 bil. Total
GOM Market
$? bil. Total
Int’l. Market
GOM
10% GOM
Outsourced
O&M Market
International
?% Int’l.
Outsourced
O&M Market
2001
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Growth Drivers
Energy
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Outsourcing and Industry Growth Commitments
of Major and Independent Oil and Gas
Producers
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Political and Economic Requirements to
Develop Nationalized Workforce
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Favorable Environment for Fossil Fuel Sources
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Bush Administration Energy Proposal
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Deregulation of Electric Power Industry
2001
Energy Growth Drivers
Fixed Fee Income
Annual Performance Bonus
Sharing Cost Savings
Baker
VALUE CREATION
SHARED SAVINGS
LEVERAGED
ECONOMIES of SCALE
OPCO
SM
Client
Reduced Operating Costs
Increased Revenues
Increased Efficiency
2001
Our Potential Market
2001
Our Served Market
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An on
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D
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Fo
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Avg. BOED as Reported to MMS, 1999
2001
SM
OPCO
Top Producers in the GOM
350,000
300,000
OPCO Total Operated Production
250,000
200,000
150,000
100,000
50,000
0
Top Producers
2001
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eOPS
Fully-Integrated, Operations and Maintenance System
for Upstream Energy Industry
Alliance:
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Baker - Content
SAIC - Technology, Telecom and Knowledge Management
Deloitte - Planning, Strategy and Analysis
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Global Market - $160 Billion
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Benefits
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Shortened Cycle Time
Improved Operating Performance
Lower Cost of Operation
Greater Asset Return
2001
Energy - Recent Contracts
CLIENT
INITIAL TERM
Chevron (Thailand)
Burlington Resources
El Paso Production
Nigeria LNG Limited
BP (Various)
Magnum Hunter
Panaco
EnerVest
Mitsubishi Heavy Industries
Sonatrach
5 YR.
3 YR.
3 YR.
3 YR.
INITIAL CV
$25m
$60m
$64m
$10m
$5m
>$1m
>$1m
>$1m
2001 Core Engineering Service Offerings
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Transportation Engineering Services
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Highways
Bridges (Structures)
Airports
Civil Infrastructure
Services
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Cold Region Pipelines
Water/Waste Water
Power / Utilities
2001
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Alignment of Services
Engineering
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Large Infrastructure
Design Market Presence
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17th Transportation
19th Highways
12th Bridges
23rd Airports
2001
Growth Drivers
Transportation: TEA-21
3rd
9th
8th
1st
4th
11th
7th
12th
35th
10th
29th
23rd
6th
2nd
5th
22nd
Ranking TEA-21 Funded States
Baker Office
Source: Projected TEA-21 Apportionments 1998-2003, ENR (08/00)
Growth Drivers
Transportation: TEA-21
Total Federal Authorizations
$45
$40
$35
$ in billions
2001
$36.7
$37.8
$38.7
$39.8
2000
2001 (E)
2002 (E)
2003 (E)
$30
$25
$20
$15
$10
$5
$0
Source: Federal Highway Administrations, U.S. Department of Transportation
2001
Growth Drivers
Transportation: AIR-21
10th
(Tied)
10th
(Tied)
4th
5th
8th
1st
9th
7th
14th
18th
34th
6th
13th
2nd
3rd
Ranking AIR-21 Funded States
Baker Office
Source: Annual Airport Grant Entitlement Funds, ENR (08/00)
2001
Growth Drivers
Transportation: AIR-21
AIR-21 Conference Agreement Funding Levels ‘01-’03
Compared to FY 2000 Enacted Level
($ in billions)
E n a c te d E n a c te d
1999
2000
O p e ra tio n s
A u th o riz e d
2001 2002
2003
‘0 1 -’0 3
T o ta l
5 .5
5 .9
6 .6
6 .9
7 .4
2 0 .8
1 .9 5
1 .9
3 .2
3 .3
3 .4
9 .9
2 .1
2 .1
2 .7
2 .9
3 .0
8 .6
R e s e a rc h , E n g in e erin g & D e v e lo p m e n t
(R E & D )
.1 5 0
.1 5 6
.2 3 7
.2 4 9
.2 5 5
.7 4 1
F A A T o ta l B u d g e t R e s o u rc e s
9 .8
1 0 .0
1 2 .7
1 3 .4
1 4 .0
4 0 .0
A irp o rt Im p ro v e m e n t P ro g ra m (A IP )
F a c ilitie s & E q u ip m e n t
Source: U.S. Department of Transportation
2001
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Growth Drivers
Oil & Gas Pipelines
Cold Regions Expertise
Trans-Alaska Pipeline
 Alpine Extension - Colville River
 Sakhalin Island
 Alas-Can Project
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2001
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Competitive Barriers to Entry
Energy
Customer Relationships
 Content and Information Delivery Systems
 Implementation/Delivery Capability
 OPCO Network
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Engineering
Alignment of Services to Meet Customer
Needs
 Long-Term Relationships
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2001
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Key Customer Relationships
Energy
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Engineering
2001
“Blur the Segments”
Alaska
Aberdeen
O&M
Engineering Design
GIS Database -Facilities Management
CMMS Implementation
Nigeria
O&M
Environmental Assessment
and Design
2001 Acquisition Growth Opportunities
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Geographic and Capacity Expansion
Energy Opportunities
 Engineering Opportunities
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Additional Capabilities
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Energy
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Training Program Development
Maintenance Management Systems
Engineering
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Power
Water/Wastewater
Asset Management
2001
Total Revenues
$600
$521.3
$506.0
Dollars in Millions
$500
$390.7
$348.7
$400
$300
$400.0
$281.9
$247.0
$200
$100
$0
1998
1999
Revenues
Engineering
2000
Energy
2001 (E)
2001
Revenues
$150
Dollars in Millions
$125
Q1/Q1 Total Reported/Engineering/Energy Revenues
$115.1
$108.3
$92.6 $92.1
$100
$83.2
$75
$35.1
$62.9
$25.6
$19.3
$50
$57.6
$43.6
$25
$57.0
$0
1999
Revenues
2000
Engineering
2001
Energy
2001
Operating Performance
(in Thousands of $)
TO TAL CO NTRACT REVENUES
T o ta l R e p o rte d
L e s s N o n -C o re
ENERGY
E N G IN E E R IN G
T o ta l C o re
‘9 8
‘9 9
‘0 0
$ 5 2 1 ,2 7 1
$ 5 0 6 ,0 1 2
$ 3 9 0 ,7 1 0
2 7 4 ,2 4 9
2 2 4 ,1 3 2
4 2 ,0 1 8
6 8 ,6 0 7
8 0 ,1 5 8
1 2 0 ,7 0 8
1 7 8 ,4 1 4
2 0 1 ,7 2 2
2 2 7 ,9 8 4
2 4 7 ,0 2 1
2 8 1 ,8 8 0
3 4 8 ,6 9 2
T O T A L O P E R A T IN G IN C O M E (P re -C o rp . O /H a n d I/C In s . P re m iu m s )
7 ,0 7 5
(5 1 1 )
1 7 ,5 4 3
T o ta l R e p o rte d
1 .4 %
-.1 %
4 .5 %
%
ENERGY
%
E N G IN E E R IN G
%
T o ta l C o re
%
5 ,2 9 7
5,471
9 ,3 1 4
7 .7 %
6 .8 %
7 .7 %
1 3 ,7 9 6
1 3 ,3 5 6
1 6 ,7 8 3
7 .7 %
6 .6 %
7 .4 %
$ 1 9 ,0 9 3
$ 1 8 ,8 2 7
$ 2 6 ,0 9 7
7 .7 %
6 .7 %
7 .5 %
Adjusted for $1 Million Non-Recurring Charge
2001
Operating Performance (Q1/Q1)
(in Thousands of $)
TO TAL CO NTRACT REVENUES
T o ta l R e p o rte d
L e s s N o n -C o re
ENERGY
E N G IN E E R IN G
T o ta l C o re
‘9 9
‘0 0
‘0 1
$ 1 1 5 ,1 1 8
$ 1 0 8 ,2 9 5
$ 9 2 ,6 2 3
5 2 ,2 3 4
2 5 ,0 9 6
456
1 9 ,3 4 8
2 5 ,5 6 7
3 5 ,1 5 0
4 3 ,5 3 6
5 7 ,6 3 2
5 7 ,0 1 7
6 2 ,8 8 4
8 3 ,1 9 9
9 2 ,1 6 7
T O T A L O P E R A T IN G IN C O M E (P re -C o rp . O /H a n d I/C In s . P re m iu m s )
2 ,5 7 2
5 ,5 6 3
T o ta l R e p o rte d
2 .2 %
5 .1 %
%
ENERGY
%
E N G IN E E R IN G
%
T o ta l C o re
%
6 ,4 8 4
7 .0 %
1 ,4 6 6
1 ,6 0 8
2 ,6 9 6
7 .6 %
6 .3 %
7 .7 %
2 ,5 4 4
3 ,7 8 7
3 ,7 1 4
5 .8 %
6 .6 %
6 .5 %
$ 4 ,0 1 0
$ 5 ,3 9 5
$ 6 ,4 1 0
6 .4 %
6 .5 %
7 .0 %
2001
Cash Flow
(in millions of $)
N e t In c o m e
D e p re c ia tio n & A m o rtiza tio n
O th e r
C a s h fro m O p e ra tio n s
C a p ita l E x p e n d itu re s
A c q u is itio n /In v e s tm e n ts
S h a re R e p u rc h a s e
P ro c e e d s fro m S a le o f A s s e ts /S to c k O p tio n s
N E T B o rro w in g s (R e p a y m e n ts )
N E T In c re a s e (D e c re a s e ) in C a s h
‘9 8
‘9 9
‘0 0
$ (2 .4 )
5 .0
(4 .0 )
(1 .4 )
$ (8 .2 )
7 .4
1 .9
1 .1
$ 5 .4
7 .1
(0 .1 )
1 2 .4
(1 0 .6 )
(.8 )
(.8 )
2 .7
$ (1 0 .9 )
(5 .3 )
(4 .9 )
7 .8
$ (1 .3 )
(2 .9 )
(9 .0 )
1 5 .0
(1 0 .1 )
$ 5 .4
2001
Balance Sheet
(in millions of $)
‘9 8
‘9 9
‘0 0
$ 5 .0
8 2 .7
2 2 .4
$ 3 .7
7 7 .4
2 0 .8
$ 9 .1
9 .0
6 8 .0
1 6 .1
1 7 .5
7 .5
1 6 .8
1 5 1 .9
1 7 .1
1 4 .6
1 5 .6
1 4 9 .2
1 0 .1
1 0 .8
1 0 .2
1 3 3 .3
L IA B IL IT IE S
C u rre n t P rt L T D
T ra d e A /P
A c c ru e d O th e r
.8
4 3 .4
5 1 .7
3 .5
2 8 .9
5 7 .1
2 .2
2 5 .7
5 5 .0
L o n g T e rm D e b t
3 .1
1 4 .9
0 .1
5 2 .9
$ 1 5 1 .9
4 4 .8
$ 1 4 9 .2
5 0 .3
$ 1 3 3 .3
ASSETS
C ash
S h o rt-T e rm In v e s tm e n t
A /R
C o s t in E x c e s s o f B illin g
PPE
In ta n g ib le s
O th e r
O w n e rs ’ E q u ity
2001
EPS Growth
R e p o rte d
EPS
P ro F o rm a E P S
C o re O p e ra tin g In c o m e
L e s s C o rp o ra te O v e rh e a d
O p e ra tin g In c o m e
‘9 8
‘9 9
‘0 0
$ (.3 0 )
$ (1 .0 0 )
$ .6 5
$ 1 9 ,0 9 3
(8 ,7 4 4 )
1 0 ,3 4 9
$ 1 7 ,8 2 7
(7 ,6 6 4 )
1 0 ,1 6 3
$ 2 6 ,0 9 7
(7 ,7 1 5 )
1 8 ,3 8 2
(4 ,8 6 4 )
5 ,4 8 5
(4 ,7 7 7 )
5 ,3 8 6
(9 ,3 7 5 )
9 ,0 0 7
$ .6 7
$ .6 6
$ 1 .0 9
P ro v is io n fo r In c o m e T a x e s
(4 7 % R a te fo r 1 9 9 8 & 1 9 9 9 a n d
5 1 % R a te fo r 2 0 0 0 )
P ro F o rm a E P S
2001 Estimate: $1.25 - $1.30
2001
Ownership
Holders
Shares
Baker ESOP
3,420,821
Goldman Sachs Asset Management
720,900
Lord, Abbett & Co.
525,200
Dimensional Fund Advisors Inc.
478,214
Seacor Smit, Inc.
340,000
Management/Insiders
296,445
Pennsylvania Public School ERS
236,400
Corbyn Investment Management
141,600
2001

Conclusion
Leader in:






Oil & Gas Production O&M
Transportation and Civil Infrastructure
Engineering
Energy Market Conditions Catalyst for
Significant Growth
Investment in Transportation Infrastructure
Providing Substantial Opportunity
Debt-free, Leverageable Balance Sheet
Under-followed Micro Cap Valued at 4x
EBITDA
2001 MICHAEL BAKER CORPORATION
Investor Relations Presentation
e ngineering
and
e nergy
solutions