In this edition, we will look at the H1 FY24 financial performance of Worley, an engineering service provider in the energy sector. Through a series of clear and concise graphs, we'll break down the key numbers and trends. We aim to provide you with a quick yet thorough understanding of Worley's financial health. Join us as we explore the data and what it means for the Australian company.

Disclaimer: At the time of writing, I am employed by Worley. This content has not been reviewed or requested by Worley. All information included is publicly accessible.

Income Statement

Over the last period, Worley has considerably turned its financial situation around. Boasting a 143% increase in its gross profit for the year. Despite an A$58M write-off due to the Ecuador incident, they produced a net profit of A$109M.

Segment EBITA

Professional services are the primary driver for Worley’s revenue. Productivity increases have enabled Worley to grow its profits faster than its overheads, resulting in stronger margins.

• Professional Services Revenue: A$3.8B increasing 26%_Y/Y

• Construction & Fabrication Revenue: A$745M decreasing -53%_Y/Y

• Procurement Margin: A$1.0B increasing increasing 85%_Y/Y

Americas: Last year Worley sold its Americas Field Services business, significantly reducing its revenue generation capability in the Americas. However, a considerable improvement in the professional services revenue and procurement margin nearly offsets the loss in revenue. Although the revenue is lower, the segment profit margin increased 0.9%. Americas saw a total segment revenue of A$2.2B, with a -6%_Y/Y change.

EMEA saw the greatest segment revenue increase of 20%_Y/Y with a total segment revenue equal to Americas of A$2.2B and an impressive conversion to segment EBITA, with an increase of 29%_Y/Y. They increased their margin by 0.6%

APAC: Whilst Americas and EMEA generate 40% of the segment revenue each, APAC contributes the final 20% of the pie. However, APAC has the strongest margins at 12%. As a result, more than carried their weight producing just shy of 30% of the total segment EBITA. Currently, APAC provides the best bang for the buck. I may be biased as this is the region I work and live in.

Energy: It is fair to say this is Worley’s bread and butter. The sector saw a segment revenue of $2.6B with an increase of 5%_Y/Y. Furthermore, they saw a strong increase in segment margin of 0.9%, inching closer to the other sectors. This is evident by the strong 20%_Y/Y growth of the segment EBITA. As Worley continues to higher margin net zero and energy transition work, this segment’s EBITA will likely continue to grow.

Chemicals: In the middle Chemicals generate about a third of the segment revenue and segment EBITA. With a segment revenue of A$1.8B and an increase of 3%_Y/Y, the segment improved its margin by 0.2%.

Resources: Although there wasn’t a large growth in the margin, Worley still grew its segment EBITA by 18%. Overall the sector saw a segment revenue of A$1.2B with an increase of 24%_Y/Y.

Cashflow Statement

This is an unusual-looking cashflow statement. Normally cash from operations supports cash from investing and cash from financing (in a -< shape). However, the cash from investing made a positive return due to the disposal of investments. As such we end up with the >- shape instead. Notably, Worley was cashflow positive and added A$158M to its cash reserves.

Balance Sheet

Nothing too substantial occurred to the balance sheet over the last quarter. A slight decline in overall assets by 2%. This can mostly be attributed to the A$134M paid in dividends.

Profit and EBITA over time

Worley has shown strong financial growth from last year. The sectors that they operate in are known to be cyclical. As such, let’s look at the overall profit and EBITA over the last few years for Worley (and the heritage WorleyParsons). It can be argued that the traditional oil and gas sectors have had a downward cyclical trend. However, the sustainability sector (Worley’s current primary focus) is trending upwards, with considerable spending required to meet the net zero and energy transition objectives. This means, that if Worley plays their cards correctly, they should see a continued increase in their profits, assuming they can meet the demand.

H1 FY24 (Shown as 2023 in the graph) yielded a record-high total EBITA of A$278M, just beating the previous high of A$286M in 2019. Due to the impact of the Ecuador write-off, Worley did not quite see a record-high profit during this period. However, it would likely have been, if not very close.

The margins show a similar story. The total EBITA margin of 4.7% falls shy of the peak in 2018 during the heritage WorleyParsons days. However, 2018 had a considerably lower EBITA, In 2022, Worley had a profit margin of -1.8%, whereas this year they have a margin of +1.8%.

Cheers,

Connor

All data can be found at the Worley Investors website.