Half year results for the six months ended 30 June 2024

*See notes on page 4. Full headline results are shown on pages 13, 14 and 20

Ken Gilmartin, CEO, said:

“These results demonstrate continued progress on our turnaround. Our strategy continues to deliver higher EBITDA and a larger order book, and we are improving the quality of our business with better pricing and higher margins. Our Simplification programme is progressing at pace, with nearly half of the annualised $60 million savings from next year already secured. I am also pleased that we have achieved all of this while recording our highest level of employee satisfaction ever, putting Wood in the top quartile of all our peers and demonstrating that our team is focused and energised on driving Wood to its full potential.

“We have finalised our views on our exit from lump sum turnkey and large-scale EPC work and have reflected this in our results today, though crucially this has not changed our cash guidance. We have also recognised a non-cash goodwill impairment in our Projects business, which relates to legacy acquisitions.

“Generating sustainable, strong free cash flow continues to be an important focus for the delivery of our turnaround. Our adjusted operating cash flow was up in the period, and we continue to anticipate reducing cash drags going forward. We welcomed Arvind Balan as our new CFO in April and he has brought a renewed cash focus across the business.

“As we look ahead, we remain confident that our strategy, actions we are taking and growth potential across our markets will deliver significant value for our shareholders. We are pleased to reconfirm our outlook today, both for 2024 and 2025, including generating significant free cash flow in 2025.”

We are delivering a higher quality business

• Our growth strategy is delivering
  • Adjusted EBITDA up 8.5% to $219 million
  • Order book up 3.6% to $6.2 billion
• We are improving profitability
  • Adjusted EBITDA margin expanded to 7.7%
  • Continuation of improved pricing across our pipeline and order book
• Our Simplification programme is moving at pace
  • Already secured $25 million of the targeted $60 million annualised savings from 2025 onwards, with the in-year benefit in 2024 confirmed to be around $10 million
• Finalised our views on exit from LSTK and large-scale EPC
  • $140 million exceptional charge, consisting of $53 million write-off of receivable balances, $61 million of new provisions, and $26 million of final settlements (see pages 16-17)
  • Anticipated cash impacts spread over many years
  • No change to our cash guidance
• We continue to win exciting and complex work
  • 6-year contract with Shell for the world’s largest floating offshore LNG facility in Australia
  • Completed FEED for the first phase of Aramco’s carbon capture project in Saudi Arabia
• Significant sustainable solutions business⁷
  • Sustainable solutions revenue of c.$600 million represents 21% of Group revenue
  • Around 40% of factored sales pipeline now in sustainable solutions
• We continue to evolve our portfolio in line with our strategic priorities
  • CEC Controls sale agreed, net proceeds of c.$30 million expected in the second half
  • Disposal of Ethos Energy JV progressing well, expected to complete in the second half

We are focused on cash delivery

• We have made significant progress on our turnaround to date
  • Delivered EBITDA growth above targets
  • Expanded our margins and will continue to do so
  • Now a higher quality business with no lump sum turnkey work remaining in our order book
• The next stage of our turnaround is to deliver cash
  • Operating cash flow continues to improve
  • Working capital focus year-round, with a clear plan to make significant improvements
  • Cash drags will continue to reduce as outlined previously
• We are nearing the inflection point in our cash journey in 2025
  • Underlying business is highly cash generative
  • Pathway to significant free cash flow from 2025 onward

Reconfirmed 2024 outlook

• High single digit growth in adjusted EBITDA, before the impact of disposals
• Performance will be weighted to the second half, reflecting the typical seasonality of our business and the phasing of the in-year benefit of the Simplification programme
• Operating cash flow to continue to improve, partly through improved cash management across our business, especially given the second half weighted revenue profile of the Group this year. Exceptional cash outflows will be around $125 million, of which c.$50 million relate to our Simplification programme to deliver around $60 million of savings from 2025, and now include c.$6 million of Sidara-related costs
• Net debt at 31 December 2024 is expected to be at a similar level to 31 December 2023 after the proceeds from planned disposals, which are due to complete in the second half of this year

Reconfirmed 2025 outlook

• Adjusted EBITDA growth in 2025 above our medium-term targets, with the c.$60 million of annualised Simplification benefits on top of the originally targeted mid to high single digit growth
• We expect to generate significant free cash flow in 2025

HY24 financial highlights

• Revenue of $2.8 billion was down 5% with growth in Operations offset by lower revenue in Projects given lower pass-through activity, our strategic shift away from EPC and weakness in our minerals business
• Pass-through revenue in the period was $405 million compared to $506 million in HY23, with all the reduction in our Projects business. Excluding pass-through, Group revenue was down 2%
• Adjusted EBITDA of $219 million was up 8.5% with margin expansion more than offsetting the revenue performance, reflecting our shift to a higher quality business
• Adjusted EBITDA margin of 7.7% compared to 6.8% last year, helped by improved pricing and lower EPC and pass-through work in Projects
• Adjusted EBIT up 14.2% to $102 million
• Adjusted diluted EPS up 127.3% to 2.5c, reflects the EBIT growth and a lower tax charge
• Free cash flow of $(168) million includes the typical seasonality of our working capital profile and the expected phasing of exceptional cash flows ($75 million in the first half)
• As a result, net debt (excluding leases) was $876 million at 30 June 2024

HY24 statutory results

• Operating loss of $899 million reflects the exceptional items in the period
• Exceptional items of $966 million (pre-tax)
  • $815 million impairment of goodwill and intangibles (see page 17 for details)
  • $140 million losses related to our exit from LSTK and large-scale EPC work
  • $12 million of Simplification costs
  • $6 million of costs related to Sidara’s takeover proposals in the period
• Loss for the period of $983 million
• Basic loss per share of 142.9c
• Cash flow from operating activities of $31 million was significantly improved on last year

Presentation

A presentation with Ken Gilmartin (CEO), Arvind Balan (CFO) and Jennifer Richmond (CSO) will be webcast at 8:00am (UK time) today, followed by a Q&A session. The webcast is available at: https://edge.media-server.com/mmc/p/jjv68c9f.

The webcast and transcript will be available after the event www.woodplc.com/investors.

For further information:

Simon McGough, President, Investor Relations                  +44 (0)7850 978 741

Vikas Gujadhur, Senior Manager, Investor Relations         +44 (0)7855 987 399

Alex Le May, Ariadna Peretz, FTI Consulting                         +44 (0)20 3727 1340 / FTI_Wood@FTIconsulting.com