Q4 2016 Real-Time Call Brief

Highlights

In March we completed our first Euro dominated bond offering of EUR500 million with an interest rate of 1.75%.

2016 earnings attributable to Fluor from continuing operations were $281 million or $2 per diluted share.

Excluding the previously announced non-cash adverse tax effects of $45 million or $0.32 per diluted share, we reported a net profit from continuing operations of $326 million or $2.32 per diluted share.

This compares with $418 million and $2.85 per diluted share a year ago.

Consolidated segment profit for 2016 was $744 million compared to a $1 billion a year ago.

Segment profits for 2016 were 3.9% compared to 5.7% last year.

Excluding the negative impact of the charges taken in Q2 into Q3 on our fixed price contract for CP Camp, segment profit margin for the year would have been approximately 5.2%.

Consolidated 2016 revenue was $19 billion, up from $18.1 million a year ago.

Full year new awards were $21 billion including $8.4 billion in energy and chemicals and mining, $6.2 billion in industrial infrastructure and power, $4.6 billion in government, and $1.8 billion in our maintenance modification and asset integrity segment.

Consolidated backlog at year end was $45 billion, flat from the $44.7 billion reported a year ago.

The energy chemicals and mining segment booked a $1 billion new award in the quarter.

Any backlog for energy and chemical and mining segment was $21.8 billion, compared to $29.4 billion in 2015.

Fourth quarter new awards in industrial infrastructure and power were $1.3 billion.

We closed the year with a backlog in IIT of $15.1 billion compared to $9.7 billion at the end of 2015.

The government group posted fourth quarter new awards of $101 million, ending backlog in 2016 was $5.2 billion compared with $3.6 billion at the end of 2015.

The maintenance modification integrity segment posted fourth quarter new awards of $357 million, ending backlog in 2016 was $2.9 billion compared to $2.1 billion at the end of 2015.

Revenue for the quarter was $5 billion, up from $4.4 billion a year ago.

Corporate G&A expense for the fourth quarter was $56 million compared to $54 million a year ago.

As we stated in our pre announcement last week taxes in the fourth quarter include $45 million and non cash tax effects related primarily to new IRS regulations issued in December.

Our tax estimate of 33% to 35% remains unchanged for 2017.

Fluor's cash plus current and non-current marketable securities totaled $2.1 billion compared to $2.1 billion last quarter and $2.4 billion a year ago.

In 2016 the company generated $706 million in cash flow from operating activities compared to $849 million in 2015.

The company also returned a $118 in cash to shareholders through dividends.

Fluor's consolidated backlog at quarter end was $45 billion.

The change of fixed price contracts and our overall backlog declined 27%.

At quarter end the mix by geography was 52% US and 48% non-US.

This is the first time US based backlog has been above 6% since 2008.

We are maintaining our guidance for 2017 to $2.75 to $2.25 per diluted share.

Our guidance for 2017 also assumes G&A expense in the range of $180 million to $200 million and a tax rate of 33% to 35%.

Other expectations for 2017 include a modest decline in expenses approximately $80 million and capital expenditures of approximately $200 million to $275 million depending upon opportunities.

We anticipate average full year margins in energy chemicals and mining group to be in the 4% to 5% range; industrial, infrastructure and power to be in the 4% to 4.5% range; maintenance, modification and asset integrity to be around 4.5% to 5.5%; and government to be approximately 3%.