425 1 d428830d425.htm 425 425
    

Filed by Jacobs Engineering Group Inc.

pursuant to Rule 425 under the Securities

Act of 1933, as amended, and deemed filed

pursuant to Rule 14a-12 under the Securities

Exchange Act of 1934, as amended

Subject Company: CH2M Hill Companies, Ltd.

Commission File No.: 000-27261

 

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Delivering Advanced Solutions for a More Connected, Sustainable World


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Additional Information and Where to Find It In connection with the proposed acquisition of CH2M Hill Companies, Ltd. (“CH2M”) by Jacobs Engineering Group Inc. (the “Company”) pursuant to the terms of an Agreement and Plan of Merger by and among CH2M, the Company and Basketball Merger Sub Inc., a wholly owned subsidiary of the Company (“Merger Sub”), the Company intends to file with the Securities and Exchange Commission (the “SEC”) a Registration Statement on Form S-4 (the “Form S-4”) that will contain a proxy statement of CH2M and a prospectus of the Company, which proxy statement/prospectus will be mailed or otherwise disseminated to CH2M’s stockholders when it becomes available. BEFORE MAKING ANY VOTING OR INVESTMENT DECISION, INVESTORS ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS (INCLUDING ALL AMENDMENTS AND SUPPLEMENTS) BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE COMPANY, CH2M AND THE MERGER. Investors may obtain free copies of the proxy statement/prospectus when it becomes available, as well as other filings containing information about the Company and CH2M, without charge, at the SEC’s Internet website (http://www.sec.gov). Copies of these documents may also be obtained for free from the companies’ websites at www.jacobs.com or www.ch2m.com. Non-GAAP Financial Measures To supplement the financial results presented in accordance with generally accepted accounting principles in the United States (“GAAP”), we present certain non-GAAP financial measures within the meaning of Regulation G under the Securities Exchange Act of 1934, as amended. These measures are not, and should not be viewed as, substitutes for GAAP financial measures. 2


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Participants in Solicitation The Company, CH2M and their respective officers and directors may be deemed to be participants in the solicitation of proxies from the stockholders of CH2M in connection with the proposed Merger of Merger Sub with and into CH2M. Information about the Company’s executive officers and directors is set forth in its Annual Report on Form 10-K, which was filed with the SEC on November 22, 2016 and its proxy statement for its 2017 annual meeting of stockholders, which was filed with the SEC on December 9, 2016. Information about CH2M’s executive officers and directors is set forth in its Annual Report on Form 10-K, which was filed with the SEC on March 7, 2017, and the proxy statements for its 2017 annual meeting of stockholders, which was filed with the SEC on April 24, 2017. Investors may obtain more detailed information regarding the direct and indirect interests of the Company, CH2M and their respective executive officers and directors in the acquisition by reading the preliminary and definitive proxy statement/prospectus regarding the proposed transaction when it is filed with the SEC. When available, you may obtain free copies of these documents as described in the preceding paragraph. No Offer or Solicitation This presentation relates to a proposed business combination between the Company and CH2M. This presentation is for informational purposes only and shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such jurisdiction. This document is not a substitute for the prospectus or any other document that the Company or CH2M may file with the SEC in connection with the proposed transaction. No offering of securities shall be made, except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended. 3


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Forward-Looking Statement Disclaimer Certain statements contained in this document constitute forward-looking statements as such term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and such statements are intended to be covered by the safe harbor provided by the same. Statements made in this presentation that are not based on historical fact are forward-looking statements, including statements regarding whether and when the proposed transaction with CH2M will be consummated and the anticipated benefits thereof. Although such statements are based on management’s current estimates and expectations, and currently available competitive, financial, and economic data, forward-looking statements are inherently uncertain, and you should not place undue reliance on such statements as actual results may differ materially. We caution the reader that there are a variety of risks, uncertainties and other factors that could cause actual results to differ materially from what is contained, projected or implied by our forward-looking statements. The potential risks and uncertainties include, among others, the possibility that CH2M may be unable to obtain required stockholder approval or that other conditions to closing the transaction may not be satisfied, such that the transaction will not close or that the closing may be delayed; general economic conditions; the transaction may involve unexpected costs, liabilities or delays; risks that the transaction disrupts current plans and operations of the parties to the transaction; the ability to recognize the benefits of the transaction; the amount of the costs, fees, expenses and charges related to the transaction and the actual terms of any financings that will be obtained for the transaction; the outcome of any legal proceedings related to the transaction; the occurrence of any event, change or other circumstances that could give rise to the termination of the transaction agreement. For a description of some additional factors that may occur that could cause actual results to differ from our forward-looking statements see our Annual Report on Form 10-K for the period ended September 30, 2016, and in particular the discussions contained under Item 1—Business; Item 1A—Risk Factors; Item 3—Legal Proceedings; and Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations, our Quarterly Report on Form 10-Q for the period ended June 30, 2017, and in particular the discussions contained under Part II, Item 1A – Risk Factors; Part I, Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations; and Part II, Item 1 – Legal Proceedings, as well as the Company’s other filings with the Securities and Exchange Commission. Neither the Company nor CH2M is under any duty to update any of the forward-looking statements after the date of this presentation release to conform to actual results, except as required by applicable law. 4


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Agenda Strategy Update Steve Demetriou, Chairman & CEO Financial Overview Kevin Berryman, EVP & CFO 5


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Jacobs At A Glance 2016 Revenue $11B Listed JEC (NYSE) Countries 25+ 21% 30% Employees ~54,000 Locations 230+ 24% 25% Petroleum & Chemicals Oil & gas upstream, refining & chemical markets 2016 Op. Profit* $586M Mining & minerals, specialty chemicals & manufacturing, Industrial life sciences, field services Buildings & Infrastructure Public and private sectors, institutional, highway, rail, 30% 21% aviation, educational, corporate facilities Public and private sectors, defense; scientific, engineering, 14% Aerospace & Technology construction, nuclear and technical support services 35% 6 *Segment operating profit excludes non-allocated corporate expenses


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Jacobs Was Built On Key Acquisitions… Revenue ($B) 20 18 FNS Federal Network Systems 16 P&C 14 Z A T E 12 Stork Engineering 10 Humphreys & Group Glasgow 8 6 4 2 —1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 Acquired 80+ Companies 7


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CH2M is The Right Time, Right Transaction Strong Foundation at Jacobs Together, a Compelling Strategic Fit • Driving accountability through four • Delivers on our strategic blueprint global Lines of Business (LOBs) • Creates world’s premier global • Rightsized overhead and streamlined solutions provider footprint – significantly reduced G&A • Positions us in targeted high-margin, • Improved project delivery – resulting in high-growth industries record gross margin levels • Builds on common cultures and • Invested strategically in system shared values enhancements, growth initiatives • Achieves significant financial benefits • Focused on top tier talent development / retention Foundation in Place for Transformational Growth 8


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CH2M at a Glance Revenue of $4.4 B6 Founded Employees 1946 20,000 By Sector By Service Type Environment & O&M Water Nuclear 15% 26% Industry-leading Design Positions 35% Integrated 12% Delivery Wastewater Treatment Manufacturing 22% #1 73% Semiconductors Transportation 17% Consulting / PM Energy & Industrial Water Treatment & Desalination By Region #2 Environment By Client Type RoW National Middle East Transportation 5% Private Govt 7% Water Supply 28% 29% #3 Design Firm Europe 13% Program Management / Construction Management 75% Source: ENR, July 2017 North 43% America State & Local Govt 9


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Metrolinx Rapid Transit | Toronto CH2M Strong Momentum Across CH2M Business • Exited power EPC and transportation design-build – MOPAC nearing completion; risk mitigation in place – Inpex risk parameters appropriately considered • Attractive business portfolio—90% reimbursable services • Transformed organization taking hold – Expanding client-centric focus – Significantly improved cost structure – Demonstrating step-change profit improvement • New awards up ~25% during first half of 20177 • Adj. EBITDA through June 2017 of $324 M4 10


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Creates A Premier Global Industry Leader Jacobs Revenue8 Combined Revenue8 $2.3B $3.7 B $4.8 B $2.6B (21%) (24%) (32%) (24%) $10.7 B $15.1 B $3.0B $2.9B (28%) $3.3 B (27%) (22%) $3.3 B (22%) Aerospace & Technology Buildings & Infrastructure Industrial Petroleum & Chemicals 11

 


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Strengthens Highest Margin, Highest Growth Business Lines Jacobs Margin9 Revenue ($B)8 Buildings & $4.8 7.7% $2.3 Infrastructure Aerospace & $3.7 8.0% $2.6 Technology 3.3% Industrial $2.9 $3.3 Petroleum & 4.7% $3.0 $3.3 Chemicals Jacobs Revenue Combined Revenue 12

 


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Common Cultures – Shared Values Safety Ethics People Growth Client Centric Quality Embedded in Culture Greater Opportunities for Employees – Greater Value for Clients 13

 


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A Compelling Strategic Fit Sector Strengths Premier Capabilities Enhanced Value Sustained Global Leadership in Water Operating Platform Differentiated Client Solutions Tier 1 Nuclear / Longstanding Client Enviro. Remediation Relationships Industry Leading Advanced + = Talent Project Delivery Manufacturing Excellence Accelerated Profitable Growth PM/CM on Well Capitalized Iconic Projects 14


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Advancing Our Profitable Growth Strategy Water Canal Pedestrian Bridge | Dubai CH2M


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Advancing Our Profitable Growth Strategy A&T B&I Industrial P&C US Gov’t Services Water Life Sciences Downstream Environmental Transportation Licensed Technologies Upstream & Midstream Nuclear Aviation Cons. Goods/Adv. Mfg Weapons Sustainment Highways & Rail Mining & Minerals Telecom Social Infrastructure Commercial Aero & Auto Mission Critical Non-US Gov’t Services Strategic Benefit Priority growth areas High value niche businesses Maintain position and improve performance 16


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Water By the Numbers10 Industry leading position in Water – deployed across strong, global operating platform – creates significant growth opportunity $100 B Total Addressable Market • Scarcity of water driving investments in desalination and water reuse facilities globally – clear areas of combined expertise • Combined resource depth responds to growing demand – scale matters 4-5% CAGR • World renowned technical expertise in critical areas positions combined #1 Wastewater Treatment / Sewer & Waste platform for accelerated growth • Track record of design-build-operate services specifically addresses #2 Water Treatment & Desalination client demand for cost effective, integrated solutions #3 Water Supply CH2M Source: ENR Top 500 Design Firms Sourcebook, July 2017 Thames Barrier | London PUB Deep Tunnel Sewage System | Singapore Northern Water Treatment Plant | Denver CH2M CH2M CH2M 17

 


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Environmental By the Numbers10 Premier environmental expertise specifically addresses global demand for sustainable and resilient solutions $160 B Total Addressable Market • A leader with broad and deep environmental capabilities in the industry • Significant cross-sell opportunity through leverage of Jacobs’ private 4-5% CAGR sector customer base Jacobs #2 Environment CH2M • Together we are positioned to capitalize on dynamic regulatory #2 / #5 Site Assessment & Compliance requirements in both developed and emerging geographies Source: ENR Top 500 Design Firms Sourcebook, July 2017 Gowanus Canal | New York Kingston Fossil Plant Recovery | Tennessee, US Pasco County Wetlands | Florida, US CH2M Jacobs CH2M 18


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Nuclear By the Numbers10 Combined platform achieves Tier 1 global supplier status in Nuclear space and positions us for global growth $145 B Total Addressable Market • Strong program and project delivery offering in global nuclear space • Combination of environmental and nuclear skillsets allows us to 2-3% CAGR enhance position with US Department of Energy Tier 1 Global supplier • Proven delivery in UK nuclear decommissioning and nuclear new-build provides catalyst for global expansion Idaho Cleanup Project – DOE | Idaho, US Magnox Hunterston Decommissioning Site | Scotland Hanford Plateau Remediation – DOE | Washington, US CH2M Jacobs | © Magnox Limited CH2M 19


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Jacobs + CH2M Creates Global Design Leader Global Design Revenues11 10 10.0 7.4 $B 5 6.4 5.0 4.8 3.7 3.6 3.3 3.0 2.7 2.6 0 Jacobs + CH2M AECOM Jacobs WSP SNC + Arcadis CH2M Fluor Stantec Worley Wood + Atkins Parsons Amec FW Source: ENR, July 2017 20

 


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Financial Overview Panama Canal Expansion | Panama CH2M

 


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Transaction Overview $2.85 B Equity Value Purchase Price 1 2 Enterprise Value / Adj. EBITDA – 6.9x 3 60% Cash / 40% Equity Consideration Mix 4 Pro-forma Net Debt to Adj. EBITDA of 1.9x Expected Annual Cost Savings of $150 M Synergies Significant Upside Revenue Potential Accretion5 Adj. Cash EPS accretion ~25% (Year 1 post-close) Adj. EPS Accretion (incl. estimated amortization) ~15% ROIC >10% Estimated Close By end of Q1 FY2018 (Subject to Satisfaction of Customary Closing Conditions, Regulatory and CH2M Shareholder Approvals) 1) Equity Value plus CH2M net debt 2) TTM Adj. EBITDA as of March 2017; excludes restructuring charges and Inpex/MOPAC changes in project estimates, and includes full run-rate cost savings 3) Excluding the cash-out and rollover of certain CH2M equity awards 4) TTM Adj. EBITDA excludes restructuring charges and Inpex/MOPAC changes in project estimates 5) Adj. Cash EPS and Adj. EPS exclude transaction and integration costs. Adj. Cash EPS also excludes amortization of intangibles 22


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Delivers on our Profitable Growth Strategy and M&A Framework Focus Areas High Growth Sectors Water, Transportation, Environmental, Nuclear Superior Technical Expertise Track record of innovation, advanced technical skillset and leader in iconic projects Leading Positions Water, Transportation, Environmental, Tier 1 Nuclear, PM/CM, Advanced Manufacturing Financial Expectations Cost Synergies $150 M per year Double-digit ROIC >10% Strong IRR and NPV >14% and >$4 B Total Expected Value Accretive to EPS in first full Adj. Cash EPS Accretion ~25% year post-close5 Adj. EPS Accretion ~15% 23


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Rigorous Integration Approach Drives Significant Synergy Realization $150 M Annual Cost Synergies Identified Additional Cost & Cash Opportunities Real Estate: Significant co-location and consolidation opportunities • Project delivery excellence • Utilization of high value service centers Corporate: Optimize corporate operations • Working capital improvement Business: Align organizational structures Significant Upside Revenue Synergies Procurement: Implement best practices across non-labor spend IT Systems: Consolidate systems and migrate to common platforms Full run-rate savings realized by end of Year 2 (non-recurring costs-to-achieve of ~$225 M) Proven Ability to Deliver Cost Savings and Enhanced Returns 24


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Industry Leading Low-Risk Profile Remains Intact • Exited Power EPC and Transportation Jacobs Risk Profile Combined Risk Profile Design-Build 18% 15% – Focus area of due diligence – Confirmed exit of past problem businesses – Economics fully considered in transaction value 82% • Remaining portfolio now represents similar risk profile to Jacobs CH2M Risk Profile 85% – Detailed diligence on balance of project portfolio 10% – Combined strength in key industries to drive greater revenue stability – Increased position in government and longer-term, stable contracts 90% Fixed Price Reimbursable 25

 


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Generating Solid EBITDA Delivering a Consistent Adjusted EBITDA Margin of +7% Over the Last Four Quarters $100 $85 $78 $83 $77 $50 $0 -$50 -$100 -$150 Q3 Q4 Q1 Q2 Adjusted EBITDA Restructuring & MOPAC and Inpex Costs GAAP EBITDA ($43) $46 $40 $83 26

 


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Recent Precedent M&A Transactions – EBITDA Multiples With Synergies 12.0x 10.4x 10.1x 8.6x 7.7x 6.9x Source: Company filings, news releases, Capital IQ Note: Multiples represent Enterprise Value / TTM EBITDA. Precedent E&C transactions include SNC-Lavalin / Atkins, Wood Group / Amec Foster Wheeler and Stantec / MWH 27


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Thames Tideway—Lee Tunnel | London CH2M Transaction Financing • Consideration mix of 60% Cash / 40% Equity3 • Total funding requirement of $2.4 B (including payoff of CH2M debt) – Combination of existing cash and revolver capacity – New, committed $1.2 B three-year term loan • Post-close liquidity $900 M • Investment grade profile remains firmly in place; pro-forma net debt to Adj. EBITDA4 at 1.9x • Post-acquisition, CH2M shareholders to own 15% of JEC outstanding shares Balance Sheet Remains Strong Post-Close 28

 


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Integration & Wrap-up National Western Center | Denver CH2M


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Two Medicine River Bridge | Montana, ??? |??? US Jacobs Committed to Successful Integration • Leveraging integration lessons learned – Evaluated transactions over past 10 years – Capturing opportunities / mitigating challenges • Proven discipline in delivering cost savings – Strong accountability, processes, systems and tools in place • Focusing on critical success factors – Retain talent and build on common cultures – Ensure base business performance – Enhance and deliver cost and growth synergies • Realistic about level of effort and timeline • Transparent communication on progress Ready, Able and Confident to Execute 30


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Comprehensive, Focused and Disciplined Approach • Joint Integration Management Office (IMO) – Full-time integration leaders and teams – Experienced hands-on leadership across all business lines – External advisors with proven transformational integration expertise Gary Mandel Lisa Glatch Executive VP Executive VP • Early capture of ‘hearts and minds’ Jacobs CH2M • Ensure adoption of best practices • Accountability and transparency – Rigorous integration process and cadence – Executive Steering Team reviews – High engagement with Board of Directors Capture Synergies While Minimizing Disruptions to Ongoing Business 31


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Compelling Strategic Combination: Creates Significant Shareholder Value Creates a world premier global solutions provider 1 • Delivers enhanced, differentiated value proposition for clients through end-to-end solutions • Bolsters portfolio quality, stability and diversity • Preserves attractive low-risk portfolio profile Positions us in targeted high growth areas 2 • Enhances leadership position: Water, Transportation, Environmental and Nuclear • Provides scale in target industries and geographies Builds on common cultures and shared values 3 • Dynamic, engaging and entrepreneurial cultures • Focus on Safety, Ethics, Sustainability, Client Centricity, Performance Excellence, and Growth Significant expected financial benefits 4 • Accelerates ability to achieve 2019 margin, ROIC and growth targets • Significantly accretive to Adj. EPS12 in the first full year post-close • Identified cost synergies of $150 M per year • Enterprise Value1 / Adj. EBITDA2 multiple of 6.9x 32


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Jacobs & CH2M: Delivering Advanced Solutions for a More Connected, Sustainable World London Olympics | UK CH2M

 


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Consolidated Footnotes 1) Equity Value plus CH2M net debt 2) TTM Adj. EBITDA as of June 2017; excludes restructuring charges and Inpex/MOPAC changes in project estimates and includes full run-rate cost savings 3) Excluding the cash-out and rollover of certain CH2M equity awards 4) TTM Adj. EBITDA excludes restructuring charges and Inpex / MOPAC changes in project estimates 5) Adj. Cash EPS and Adj. EPS exclude transaction and integration costs. Adj. Cash EPS also excludes amortization of intangibles 6) TTM Revenue pro-forma for the deconsolidation of CNEA JV, a large nuclear project in a consolidated Canadian JV 7) Gross Profit 8) Jacobs Revenue and Combined Revenue for TTM ended FY17 Q2 9) TTM Operating Profit as percentage of Revenue as of FY17 Q2 10) Cumulative 2017-2021; based on internal assessment and third-party research 11) Excludes Power Cons. Corp. of China ($7.3), China Comm. Constr. Group ($4.2), and China Energy Engineering Corp. ($6.2) 12) Adj. EPS excludes transaction and integration costs 34