Please be advised that today's conference is being recorded. I will now like to hand the conference over to your first speaker today, Chief Executive Officer, Chris Ashton. Please go ahead.
Thank you. Well, welcome everyone, and thanks for joining Worley's half-year results for 2025 financial year. As usual, I've got Tiernan O'Rourke with me, Worley CFO. Look, today I'm going to provide an overview of our business performance and strategic progress over the period. And as usual, Tiernan will add further detail on our half-year results before I conclude with our outlook. Then we'll open for questions. So just turning to slide two and reminding everyone of the disclaimer shown here. Before I begin, I want to acknowledge the Gadigal people of the Eora Nation and the traditional custodians of the land on which we meet today. We value the strength, determination, and resilience of all First Nation peoples and communities around the world, and we're committed to the ongoing journey of listening and learning. And I extend that respect to any First Nation people joining us today.
Moving on to our performance highlights on slide three. Today, I want to leave you with three key messages. First, we've delivered a strong result in what has been a more challenging operating environment, and while the market is still shifting, this more challenging environment is in line with that which we flagged in our Investor Day in May last year. Despite this, we remain on track to achieve our FY 2025 outlook. We've continued to deliver solid earnings growth at a higher rate than revenue through a deliberate focus on margin expansion. We've maintained a strong cash result, supporting our target to deliver low double-digit EBITDA growth. The second point is that our results are supported by the strong foundations we've built for the business, enabling execution of our strategy to meet our ongoing customer needs.
We've built a highly diversified business, and the resilience this brings underpins the strength of our results, with the agility, flexibility, and breadth of capability to support our customers across geographies and across each of the energy, chemicals, and resource sectors as they rebalance their own investment portfolios. We also continue to invest in the transformation of the organization to build cost scalability and process effectiveness to underpin future growth. And thirdly, we remain resolutely confident in our long-term growth. Our markets have positively leveraged the global trends, and we expect investment momentum to continue to build over the medium to long term. This supports our aim to continue delivering high single-digit EBITDA margins and targeting a double-digit EBITDA compound annual growth rate.
For the half-year to December 31st, 2024, we've delivered 6.8% growth in aggregated revenue, 9% growth in our underlying EBITDA, and our efforts to drive margin improvement have resulted in an uplift in EBITDA margin, excluding procurement, to 8.4%. The proportion of revenue from sustainability-related work is now at 58%. Importantly, we retain our long-standing heritage and capability across traditional markets, which contributed 42% of our total revenue for the period. The Worley board has determined to pay an interim dividend of $ 0.25 per share, which will be unfranked. Finally, Worley has announced today its intention to undertake a share buyback of up to $500 million. The initiative reflects the board's confidence in the company's financial position and growth outlook. Importantly, the buyback forms one component of a wider strategy to enhance shareholder value.
Turning to slide four, I'll now take you through our business performance and strategic project, beginning on slide five. Our success is thanks to our energized and talented people. Keeping us safe remains our highest priority, and our dedication to a diverse and inclusive workforce is unwavering. Our Total Recordable Frequency Rate was 0.12 across the group, remaining steady from the end of FY 2024. We invest in our people, and our ability to attract and retain talent remains a focus and remains strong. This is a key part of our agility and is essential to deliver on our ambition in a resource-constrained environment where customer demand will span both sustainability-related and traditional work. Moving on to slide six, we're again proud to deliver a strong set of results for our investors. We've now consistently delivered growth across aggregated revenue, EBITDA, and EBITDA margin since 2022.
That's seven periods delivering consistent growth and is reflective of a more resilient business model. We continue to deliver these results as the world faces evolving and challenging geopolitical dynamics. We recognize some of our customers are actively reassessing capital investments as the economics of sustainability projects undergo increased scrutiny. While the pace of energy transition tempers, we're uniquely positioned to work with our customers across the spectrum of sustainable, transitional, and traditional segments. We're also continuing to invest in our company to make it more efficient, more resilient to cyclicality, and better able to cope with the demands of growth. The cost of these programs is already embedded in our earnings, providing the opportunity for further efficiency gains in the future. I'm pleased with our continued progress across our business's ESG commitments.
We published our fourth modern slavery statement, and we continue to take a proactive approach to managing this risk in our business and looking after our people. Moving on to slide seven, delivering on our strategy is a key part of our success, and measuring our strategic performance helps us to keep both our executive and I accountable for our growth. Put simply, once again, we've delivered on what we said we'd do. Our focus on using various levers identified within the business to drive earnings and margins growth is delivering the intended outcome. Our strategic investment in growth areas is delivering accretive returns. Confidence in our ability to drive investment returns continues to grow as we successfully scale new businesses like carbon capture, utilization and storage, and direct capture, and win- work in new areas of capability such as blue hydrogen.
Our capital management position remains strong, and Tiernan will provide more detail. However, I'd like to emphasize the strength of our debt and bonding facilities, which provide our customers with confidence to award Worley large-scale projects, something our peers are finding increasingly more difficult to do. Moving on to slide eight. As I mentioned earlier, our business model delivers a strategic diversification across sectors and geographies, as well as across Traditional, Transitional, and Sustainable segments. This diversification, coupled with our agility and flexibility to move people where our customers need them, has been key to resilience in earnings and margin growth. We retain deep domain expertise in mature markets such as oil and gas and maintain leading positions in growth markets. Our people have interchangeable skills across our globally diverse portfolio, which we believe is important.
A great example of this is our recent win with ExxonMobil as they plan their first world-scale blue hydrogen project in the U.S. We're aligned with our existing customers and continue to attract work with new customers. We're a trusted partner to our customers and maintain long-term relationships and contracts. We maintain a low-risk business with a focus on risk-adjusted returns. The majority of our work remains reimbursable, and we have no competitively bid lump sum turnkey EPC work. We never have pursued this market. We don't now, and we won't in the future. Turning to slide nine, we've announced a number of important wins over the half. Bookings remain healthy despite the headwinds noted earlier, and we continue to focus on winning work across our three key growth areas.
We're strengthening our market presence in the ECR sectors where we have a strong level of expertise, expanding into attractive adjacencies and growth markets, and focusing on unlocking high-growth opportunities through innovation. Importantly, our project wins continue to outpace work delivered, which is a key measure of our activity across our business. Our book- to- burn is greater than one. Our continued emphasis on project delivery excellence has supported our bookings, which are up on half one 2024 and steady on half two FY 2024. The strength of our customer relationships is also resulting in an increase in sole source wins, which are now at 45% of total wins. Our backlog is showing a slight decline on the last half. However, it still supports our FY 2025 outlook, and Tiernan will provide more detail on the movement in our backlog later.
However, I note that much of the change in the backlog since the last half is due to the cancellation of the Northvolt Battery Materials Project, which has previously been advised to the market. Turning to slide 10, we remain confident in our long-term growth with the agility, flexibility, and capability to support our customers' shifting portfolios. Our pipeline remains consistent with our view that FY 2025 will be a moderated year, albeit we are seeing some positive trends emerging. And while our factored sales pipeline has seen a marginal decline in the six-month period to January, it remains broadly in line with the same as last year, and we're confident in high-quality work we continue to win. Our work on Venture Global CP2 LNG export facilities continues under a Limited Notice to Proceed, and the majority of our CP2 scope remains in our factored sales pipeline.
We expect to fully mobilize the site under a Full Notice to Proceed mid-calendar year 2025 once FID is granted, at which point the full scope of work will shift from our pipeline into our backlog. Reflecting market sentiment, we've seen a shift in near-term opportunities to traditional and traditional projects, as demonstrated by the chart on the lower right of this slide, which shows the change in customers' capital allocation between segments. Moving on to slide eleven, while the energy transition rightfully creates headlines, it's important to note that broader global trends are continuing to drive momentum across the energy, chemicals, and resource sectors. With positively leveraged to these trends and with focus on key growth markets, we remain confident in our ability to deliver on our medium and long-term ambitions.
Additionally, with recent announcements regarding tariffs across a range of key materials, we're committed to helping our global customers successfully adapt to this evolving landscape. Our diversification, value chain, and industry expertise provide us with a unique vantage point to help navigate the rapidly changing global policy environment. Turning to slide twelve, I'm now going to hand over to Tiernan, who's going to take us through further details on our half-year results. Tiernan, over to you.
Thanks, Chris. Good morning, everyone. Let me start by echoing Chris's earlier comments that we've delivered a strong result for the half, and despite a challenging operating environment, we remain on track to deliver our FY 2025 outlook.
Our financial performance has improved again, as Chris has mentioned, and something that sets us apart from our competition is how well we're managing our cash flow and applying a disciplined approach to capital management, which continues to underpin our growth strategy. So turning to slide 13 first, our aggregated revenue of $6 billion for the half is up 6.8% on the prior corresponding period. This result has been driven by the Americas and EMEA regions and through our work in the energy and resources sectors. During the period, we also had an increase in construction and fabrication, as well as in procurement. This was anticipated and is reflective of us moving into the execution phase for several large projects as we start to do more end-to-end EPC work.
Importantly, the current level of activity in the market is as we expected when we provided our FY 2025 outlook in August 2024. Looking at group profits, we've delivered an underlying EBITDA of $376 million, which represents a 9% growth on the prior corresponding period. Importantly, and consistent with our last few reporting periods, our growth in earnings is higher than the rate of growth in revenue due to our continued focus on improving margins. Underlying EBITDA margin, including procurement, increased to 6.3% from 6.1% at 31 December 2023. Underlying EBITDA margin, excluding procurement, is 8.4%, up from 7.5% in the prior corresponding period. This half-year progress is also consistent with us achieving the outlook we provided for full-year EBITDA margin, excluding procurement, in the range of 8%-8.5%. Our underlying NPATA is $216 million, up 14.9% on the prior corresponding period.
Importantly, there are no one-off items excluded from this result. Moving on to slide 14, these EBITDA margin walks show our progress towards raising margins to high single digits, excluding procurement, in the medium term. We continue to see sustained benefits from our deliberate strategic actions, which are driving further margin improvements. In the top EBITDA walk, we are comparing the first half of last financial year to the first half of this year. You can see that there's been a slight impact from project mix, but the key driver of the margin improvement has been rate increases. Notably, professional services, construction and fabrication, and procurement have all delivered higher margins on the comparative period. In the bottom EBITDA margin walk on this slide, we see the margin, excluding procurement, for the half is flat on the second half of last financial year.
The second half margin is usually stronger in our business, but ongoing improvement in margin, together with mixed changes, means the margin for this half is particularly strong, due mainly to slightly different phasing. This sets us up well, though, to deliver our full-year margin outlook. Moving to slide fifteen, we're focused on maintaining high single-digit EBITDA margins, excluding procurement, and targeting double-digit EBITDA CAGR. During periods of moderated growth, like we're in now, the building blocks of our strategy remain fundamental to support the process of margin improvement. First, our strategy has been delivering high-value solutions and sharing in the value we bring to our customers. The trend towards increasing gross margins in our factored sales pipeline and backlog has continued, and we see this flowing through to revenue. Second, a key driver of margin expansion is maintaining operational leverage and improving business productivity.
Our focus on project assurance and cost scalability through the lifecycle of all of our projects is also ensuring that our solid margins are delivered effectively. Third, we continue to invest in areas that we believe will yield accretive returns, and I'll share an update on this shortly. We're also investing in process improvement to continue to drive cost efficiency across the group in readiness for further future growth at scale. Finally, we're focused on risk-adjusted returns and maintaining attractive contract terms and conditions. From all of this, the takeaway message is the successes achieved from executing our strategy, as well as broad market and customer understanding, is what gives us confidence in our ability to achieve further margin expansion.
Turning to slide 16, looking at our backlog, which remains healthy and continues to support our outlook for FY 2025, while the backlog, as Chris mentioned, is down over the half, we remain confident in our ability to win work to support our growth outlook. What this chart shows you is that our wins and scope increases have been greater than our backlog delivered, which is a positive indicator that there is still a lot of activity in the prevailing market. However, the total backlog is down due, in large part, to the cancellation of the Northvolt Battery Materials Project in Sweden, which we did announce at the November AGM. Such project changes occur from time to time in our business, but are more evident during periods of uncertainty. The pie charts on this slide show the diversification of our backlog across regions, sectors, and Traditional, Transitional, and Sustainable work.
This diversification continues to deliver strength to the underlying business, even with some large project changes. It's also important to note that the majority, as Chris has said, of Venture Global's CP2 project remains in the factored sales pipeline, with only a much smaller scope under a limited notice to proceed booked in the backlog. When we receive Full Notice to Proceed after FID, the full project will be booked to backlog. Venture Global published a prospectus late last year, which contained a significant amount of information about the scale of this project and their approach to using contractors like Worley. This information indicates this will be a very significant project for us. The project is moving towards receiving final FERC approval, and again, as Chris has said, we expect mobilization to be likely mid-calendar year.
Moving on to slide 17, Worley's strong capital management position supports the company's growth plans and reflects a focus on prudent free cash flow management, capital allocations, and enduring balance sheet strength. The reported cash conversion ratio for the half is 97.5% of underlying EBITDA, compared to 141.4% on PCP. We've continued to secure improved terms and conditions, including some increased advance billings on a number of contracts, and due to this, we've also been providing an underlying cash conversion over the last couple of periods, which shows the normalization of cash. This shows this time that the impact of the effect of advance payments has resulted in the cash conversion ratio this period being 116.2% compared to 95.7% on PCP. This reflects the variation. This movement reflects the variation in the timing of advance billings from one period into the next.
Similar to cash conversion ratio, we normalize our Days Sales Outstanding, which continues to move in a positive direction down to 56.3 days from 65.7 days. We've maintained, therefore, DSO lower than our target range. We retain good liquidity, we've maintained our strong credit rating, and we have access to flexible, competitively priced debt. Our balance sheet strength is supported by leverage of 1.5 times, which remains unchanged from 30th of June 2024. This is indicative of the prudent use of free cash flow to reduce risk, increase liquidity, maintain a solid dividend payout ratio within its target range, and continue to provide appropriate capacity to invest in business growth. This strong balance sheet positions the company with the option to pursue a variety of capital management initiatives.
At 31st of December 2024, our weighted average cost of debt was 4.3%, down from 4.7% in June last year, and we expected to be in the range of 4.3%-4.6% during the cycle. Our underlying effective tax rate, excluding the amortization of acquired intangibles, was 33% at first half versus 33.8% at first half last year. This is in the middle of our target range, and we expect this to be similar for the remainder of FY 2025. As I've said, our disciplined capital management is a differentiator for us. It positions us with future capacity, including substantial bank guarantees and surety bonds essential for success in large-scale project delivery. Customers are increasingly looking to use contractors who have the financial strength to see large-scale project delivery through to commissioning and beyond.
Turning now to slide 18, as I've noted, the benefit of our strong capital management position provides us with a broad range of options to continue to invest and grow. Today, we announced our intention to undertake an on-market share buyback of up to $500 million. Of course, the timing and value of shares purchased will be dependent upon prevailing market conditions, on the share price, and other relevant factors. This initiative reflects the board's confidence in the company's financial position and growth outlook. We recognize the importance of making investments now that will drive shareholder returns in the future. This is particularly true for digital and AI, although these investments are not expected to materially contribute to earnings growth and margin expansion immediately. In the first half, we've invested $23 million, which is a combination of both CapEx and OpEx, including $14 million in strategic costs.
Over the second half, we're expecting to invest a further circa $58 million. This is a substantial increase in investment over previous years. In addition to our investment in generative AI development, we've also been investing in business improvement initiatives and growing our consulting business. It's early days in some of these investments, and we plan to report back to you in time over how these investments are contributing to value creation. To conclude, I'm happy to report that Worley's financial position is sound. We're immensely proud of this result and the efforts and dedication of all of us here at Worley who have delivered it. I'll now hand back to Chris to take us through the outlook for the rest of 2025. Chris?
Thanks, Tiernan. Look, turning to slide twenty and the near-term outlook.
So look, a higher cost of capital as well as policy and economic headwinds are influencing the pace of the energy transition. But we're seeing some customers rebalance their portfolios and reassess capital allocation decisions. But we expect current headwinds to continue, and we remain confident of delivering our FY 2025 outlook. We're actively focusing on winning work in growth markets, redeploying our people to match customer needs, focusing on the disciplined bidding of work and low-risk reimbursable contracts, improving efficiency through the application and use of technology, and of course, importantly, the prudent cost and capital management. We're successfully executing our strategy, which supports high single-digit EBITDA margins and targets double-digit EBITDA CAGR.
We reconfirm our outlook expectations for FY25, and we're targeting low double-digit EBITDA growth and expect the underlying EBITDA margin, excluding the impact of procurement, to be within a range of 8%-8.5%. As a leading global solutions provider in the markets we serve, we continue to be encouraged by the work we win as we support our customers across their Traditional, Transitional, and Sustainable portfolios. Turning to slide 21. Before we move to Q&A, I'd like to reiterate how proud we are to deliver another strong result, and particularly at a time when we are facing a more challenging environment. Our result is underpinned by the disciplined strategy execution and business diversification, and we remain confident in our long-term growth. That concludes the formal presentation.
Appreciate that you're joining us on the webcast today, and Tiernan and I are happy to take any questions that you may have.
Thank you. As a reminder, to ask a question, press star one one on your telephone and wait for your name to be announced. Please have one question and one follow-up per person. If you have more questions, please requeue. To withdraw your question, please press star one one again. Please stand by as we compile the Q&A roster. Our first question comes from James Bryan from Citi. Your line is now open.
Good morning, team. So if I just think about the double-digit EBITDA CAGR over the medium term, do you think that this is going to become increasingly reliant now on top-line growth?
Just noting that your EBITDA margin in the mid-eights now is approaching that high single-digit number that you've called out and where you think you get to in the cycle. And I guess if we are increasingly reliant on top-line, and you might suggest that we're not, but if I look at some of the indicators around, say, where your backlog and factored sales pipeline landed for the half, I guess it's perhaps easier to conclude that that's more difficult to achieve now. I suspect you take the other side of that because you're obviously deploying scarce balance sheets by about $500 million of shares today, and I'm just interested to hear your view on that top-line outlook.
I think, look, I think if you look at that EBITDA CAGR, [audio distortion] a mix of things. It's going to come from growth.
It's going to come from continued margin benefit as we continue to pursue the high-quality work, but also the efficiency with which we deliver the projects that we do. So it's going to come from a range of places. I'm not overly concerned at all around the future pipeline as it stands today. We've just come out of 2024, which has been a year of incredible turbulence with a number of government shifts in the major jurisdictions. And what we expect is that as they come into power, we'll see policy stability, and we'll see a different level of confidence, an increased level of confidence in investment. So I still think from a future top-line growth potential that there's opportunity there.
Again, we've been able over the last five years to pursue higher quality work with the customers we want to work with and the sectors we want to work. Tiernan talked about organic investment in the business. One of them is just investing in our systems and tools to allow us to be more efficient in delivering the projects we've got. Whatever margin we win them at, we can deliver them with higher efficiency. So overall, James, I'm confident that the opportunity to grow the business remains. I think this result; it's a strong result in a challenging environment. It's another period where we've just delivered and said what we're going to deliver. I'm confident that there's long-term growth opportunity for the organization. Tiernan?
Yeah, I might just add a couple of things, James.
We mentioned a couple of times that we are investing in efficiency measures, which are actually allowing us to scale the business as we grow, so I think we will get some efficiency benefits in our earnings as we go forward, significantly looking at developments in systems, in process, so you shouldn't underestimate the impact that that will have. I think we'll be able to continue to drive a very cost-efficient culture across Worley as we grow, and the second thing is, let's not forget the Global Integrated Delivery service we have in India. We've been increasing the number of hours that are coming out of that. Customers are on board with that. They're looking for efficiencies themselves, and we're sharing in that value, and so that is improving our cost efficiency as well, so I totally agree with Chris. It's going to come from a combination of areas.
Of course, we want to continue to drive profitability. The services we offer are valuable. I think what you can see in the improvement in the EBITDA margin is that we are already selling some contracts higher than the average margin and higher than high single digits. It is a profitable sector. All the sectors we're in are profitable sectors. Very confident about the components of delivering that double-digit EBITDA CAGR.
That's a great answer. Thank you. As my follow-up, can we perhaps zoom in on traditional? Now, I can see that there's some green shoots there on slide 10 with the factored sales pipeline. But the backlog does continue to contract, and there's a lot of ground to actually win back.
I guess if I go back to the strategy there, I think some of the fear in the market was more around sustainability rolling over and there being a lag on your customers allocating capital back into traditional from sustainability. I guess that's not really showing up in the backlog numbers. What's actually driving the momentum here in traditional?
Well, let's just come to your comment on backlog. Look, if you take out the Northvolt win, the Northvolt award, that was a project that was canceled. Backlog's growing. Yeah? I mean, Northvolt was $1.6 billion, and that's one project in one location. If you strip that out, our backlog's growing. So I think that's a really important message. Look, the energy needs to come from somewhere. Look, we know that global energy consumption is on the increase per capita. Yeah?
It's got to come from one of three places: Sustainable, Transitional, or Traditional. Customers such as the big energy companies, whether it's ExxonMobil, Chevron, Shell, whether it's the NOCs, Aramco, ADNOC, KOC, they have to continue to invest to replace their reserves. Look, in the U.S., as an example, we're seeing already signs of rebound. Clearly, the Republican administration has been crystal clear in what their view is of traditional energy. We're already seeing a shifting level of confidence. But it takes a bit of time for the confidence to flow through into decisions that will ultimately lead to capital being committed to projects. I'm not concerned around the opportunity to grow in the Traditional space or Transitional or, in fact, Sustainable, because companies are still working on sustainability-related projects.
Look, I think that there's plenty of opportunity for us to continue to grow the business. There's going to see a continued increase in the ECR demand increase in the ECR markets and for our services.
I'd add another couple of things in terms of your question about lag. In our backlog, we expect 59% of that backlog to be delivered in the next 12 months. That's up on last year. Similarly, in the pipeline, about 67% is expected to be awarded in the next 12 months. That's up on last year. In fact, and by the way, our sole-sourced contracts are also up.
So I think there's quite a lot of indication that a lag is not occurring in the market, that there is a seamless transition, to Chris's point, to ensure that energy, chemicals, and resources are being delivered as and when they're needed. And you're seeing plenty of economies starting to grow again as interest rates are coming down. So I think that's one of the reasons why there isn't a lag.
Just, James, I don't think I answered part of your question. Yeah? I don't think I answered part of your question. The first one around, I think you talked, if I'm right, you mentioned about the buyback. Look, we've taken a very disciplined view of our capital management options. But it's really important, I think, to communicate to everybody on the call that we look at the options.
Obviously, we've got dividend, we've got organic investment, we've got the buybacks. But there's clearly, we all know, there are a spectrum of options available to us on the capital management spectrum. And all those options will continue to remain available to us as we move forward.
Thanks, Tiernan.
Thank you. One moment for our next question, please. Next, we have Gordon from RBC. Your line is now open.
Thank you very much, and congratulations on a good solid result. Tiernan, I have a question related to Venture Global. Obviously, it's a very material contract for Worley. Can you outline how the backlog will flow into revenue for Worley from Venture Global CP2 in terms of timing, assuming it all moves forward in the middle of 2025?
Yeah. Hi, Gordon from RBC. Good to chat. So the project, we finished phase I engineering, and we're starting phase II engineering.
If we mobilize to site in the middle of this calendar year, then if you look at the prospectus, this is probably a five to seven-year project. Certainly, phase I would be five years, probably. So I'd say it's more likely to be a round of that kind of phasing. And then it depends on when they want to roll into phase II construction as to whether it's shorter or longer. Perhaps they do some overlap. So I don't know. We'll have to wait to see when they mobilize to site.
Yeah. Look, just building on what Tiernan said, that we've completed phase I engineering, we're doing phase II. You can imagine when you've got a two-phase project, the first phase will include all of the common infrastructure that will then need to support integration of phase II into it.
Phase I will naturally be a longer period of time for execution. But the idea being is that phase I would start, and then phase II would continue into. You'd expect a seamless progression from phase I build into phase II build. And look, the timeline for construction, the timeline from mobilizing to site to commissioning and first product is subject to a lot of factors. But I think it's outlined, some specific data outlined in the prospectus of VG.
Excellent. My other question is, what's driven the buyback decision? Was it share price driven? Why not invest more into the strategic investment program, which has been highly successful for Worley, or other opportunities?
Well, the good news, Gordon, is that we're doing all of the above. We have invested another $14.5 million into strategic investments.
For the full year, that means we'll spend circa $30 million, which is about the same as we've been spending in the first three years of the last program. We've also invested, as I mentioned, another $9 million in other capital. And we are expecting to spend another $58 million in the second half. So it's not from a lack of capital. We've got plenty of liquidity, as you know, with leverage of 1.5. We just felt that we had that surplus liquidity, and it was a good option from a capital management point of view to drive accretion for shareholders in the absence of, say, any large bolt-on acquisition. But the key message is we're doing everything. We have the capacity to grow. We have the capacity to invest in the business. And we're producing very significant free cash flow to be able to do that.
And we'll continue to, as we grow, and particularly going back to James's question about the double-digit EBITDA CAGR, that's going to continue to throw off surplus free cash flow in the future, which we'll have to deploy. So it just gives us a significant amount of options. And a buyback is a good option. And Chris and I think, and the board think, that this company is worth more than it's currently trading at.
Of course. Thank you very much.
Thank you. Appreciate it. Thanks.
Thank you. One moment for our next question, please. Next, we have Nicole Penny from Rimor Equity Research. Your line is now open.
Thank you very much. And good morning. Just one question on some of the assumptions in factored sales pipeline and bookings.
We note that the factored sales pipeline, with 67% of projects expected to be awarded in the next 12 months, which is up last year, declined slightly, but broadly in line, and then alongside a slight softening in bookings. We note the wins in backlog, but it has been impacted by project cancellation. You mentioned persistent uncertain macroeconomic environment and shifting capital allocation trends. Have you perhaps revised any assumptions underlying pipeline conversion and specifically how you are accounting for project deferrals and cancellations in your probability assessments and how pipeline quality is qualified, please?
Yeah. So maybe put it in the context. At any one time, we have, in execution, project-wise, about 12,000 projects. So you can imagine the number of project or prospect opportunities we have in the pipeline. Every one of those opportunities goes through an analysis of two stages of probability assessment.
What's the probability of the project going ahead? And then what's the probability of us being successful? And we're continuing to look at that through the lens of market conditions. So as market conditions evolve, yeah, we will continue to go back and revisit the probability of a project going ahead and the probability of us winning it. So the pipeline is a live look at our opportunities that are ahead of us, but continually viewed through a shifting and evolving set of market conditions. That's just what we do. And you can imagine the allure of big numbers. If you think we've got 12,000 projects in backlog, we've got many, many more thousands prospective projects in the pipeline. But they go through that process. And we've got we use Salesforce as the analytics tool.
And so we do a lot of analysis to give us a level of confidence in the pipeline. But it is live, Nicole. It is live, and it continues to get reviewed through the lens of shifting market conditions. That's the important thing.
And I would just confirm, Nicole, that the methodology of calculating the backlog and the pipeline has not changed period on period. All of the application of judgment around macroeconomic uncertainty is in the process that Chris has just described.
Thank you for that detail. That's super. Thank you.
Our next question comes from Rohan Sundram from MST Financial. Your line is now open.
Thank you. Hi, Chris and Tiernan. Just one from me. Maybe tying back to what you were talking about earlier around the geopolitical side of things, how do you see the implications from the Trump administration coming in?
I guess there will be pluses and minuses around traditional energy versus renewables. But how are you assessing the net implications here from this?
Wow. That's a great question. I'm surprised it's taken so long to get to that one, Rohan. But thanks. Look, living in the U.S., I live it every day. Yeah? And what I've learned is when I open up the news, now I read about five or six different media outlets every day, and I've learned not to be surprised. Look, you have to look at it through different lenses. There's the economic lens, the social lens, the economic lens, the social lens, some of the legislative changes that he's driving through. None of them conventional. Let's be honest. None of what he does appears to be conventional.
But if we look at what it means to us from an energy, chemicals, and resource point of view, I have to say overall, we believe it's a net positive. Now, there's lots of things going on in that space. But we operate in 45 countries. And each one of those is always subject to a different set of sort of drivers. If we look at the U.K., we look at Europe, and we look at the Middle East, and we look here in Australia. But I think overall, from a U.S. point of view, I think that what's happening in the U.S. will be a net positive. And we're used to if I had a portfolio of countries in our business, and a portfolio of business, a portfolio of sectors, portfolio of customers, we're used to managing changes. We're used to managing volatility.
We're used to managing rapidly changing policy constructs. So it's still early. It's still early in the U.S. And things are still working through. Obviously, some of the executive orders have been subject to significant legal challenge. But overall, [audio distortion] a net positive.
Right. Thanks, Chris.
Thank you. Just a moment for our next question. As a reminder, to ask a question, please press star one one on your telephone. Next, we have Nathan Reilly from UBS. Your line is now open.
Thank you. Morning, Chris and Tiernan. CP2, I'm sensing an increasing degree of confidence around mobilizing on that project by mid-year. There's obviously a bunch of delays on that project, which have been quite frustrating. But what's giving you the confidence on being able to mobilize on the timeframe you've planned?
Well, [audio distortion] Trump did on day one. [audio distortion] kind of kiboshed the DOE moratorium. So although that wasn't impacting getting to site, that's reliant upon FERC. Look, the customers told [audio distortion] there's a lot more planning now and a plan toward mobilization middle of the year. So they're confident that the FERC approval will be through the process and received clearly for them to give us that directive.
Got it. That's pretty clear. And you've already touched on the prospects around the U.S. market and developments there. But can I just get an update on how you're seeing the prospects for your business in the Middle East, please?
Oh, gangbusters. I mean, and I say that with absolute we had our board meeting in Saudi last week, Nathan, because we wanted to clearly message our customer base that we see the Middle East and North Africa. We had our board meeting in Morocco in June last year. We want to message to our customer base in the Middle East and North Africa that we see MENA as a continued growth engine for the business, but the Middle East is presenting great opportunity for growth for us, and we met with a number of customers last week. We had lunch with the CEO of Aramco and his senior executive team, again, reinforcing our commitment to specifically that meeting in the Kingdom, but very optimistic about growth opportunity in the Middle East and North Africa.
Okay. Thanks very much.
Thank you. This concludes the Q&A session.
I will now hand back to Chris for closing remarks. Look, I just want to thank everyone for joining us today. I think everyone really had a really strong result in a challenging operating environment. But we remain on track to achieve our FY 2025 outlook. We've achieved what we said we would through the disciplined delivery of our strategy. And we're confident in the long-term growth opportunity of the organization. And I want to credit the leadership team of Worley and the incredible people around the world who do amazing work for our customers every day. But look, thanks for your continued support. I'm sure with many of you, I'll meet over the next week. We've got meetings today, tomorrow, and Friday in Melbourne, then Monday, Tuesday back in Sydney. And I look forward to meeting with many of you over the next week.
But thanks for your support and thanks for your interest in Worley. We're excited about the future. Thank you.
This concludes today's conference call. Thank you for participating. You may now disconnect.