Market Overview

Fluor Reports Second Quarter Results

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Fluor Corporation (NYSE:FLR) today announced financial results for its
second quarter ended June 30, 2018. Earnings attributable to Fluor for
the second quarter were $115 million, or $0.81 per diluted share,
compared to a net loss of $24 million, or $0.17 per diluted share a year
ago. Consolidated segment profit for the quarter was $194
million, compared to $15 million a year ago. Second quarter revenue was
$4.9 billion compared to $4.7 billion in the prior year.

New awards for the quarter were $5.4 billion, including $3.6 billion in
Mining, Industrial, Infrastructure & Power, $742 million in Government,
$513 million in Diversified Services, and $493 million in Energy &
Chemicals. Consolidated ending backlog was $29.3 billion, up from $29.1
billion last quarter.

"This quarter we saw an increase in backlog for the first time since
2016, and we expect continued improvement in backlog as we move through
the remainder of 2018," said David Seaton, Fluor chairman and chief
executive officer. "For the second half of the year we will be focused
on closing out legacy projects and deploying our cost-efficient
integrated solutions model on future opportunities."

Corporate G&A expense for the second quarter of 2018 was $18 million,
compared to $47 million a year ago. Expenses for the quarter reflect a
benefit of $25 million related to foreign currency exchange
fluctuations. Fluor's cash and marketable securities balance at the end
of the second quarter was $1.8 billion.

Outlook

The Company is maintaining its EPS guidance for 2018 at the previously
announced range of $2.10 to $2.50 per diluted share.

Business Segments

Fluor's Energy & Chemicals segment reported segment profit of
$97 million, compared to $124 million in the second quarter of 2017.
Results for the quarter include a pre-tax charge of $67 million for
forecast revisions on a downstream project. Revenue for the segment was
$2.0 billion compared to $2.2 billion a year ago. New awards for the
segment totaled $493 million and ending backlog was $12.4 billion
compared to $18 billion a year ago.

The Mining, Industrial, Infrastructure & Power segment reported a
segment profit of $16 million, compared to a segment loss of $165
million in the second quarter of 2017. Results for the quarter include a
pre-tax charge of $16 million for forecast revisions on a gas-fired
power project. Revenue for the segment was $1.3 billion compared to $1.2
billion a year ago. New awards in the second quarter were $3.6 billion,
including an iron ore replacement mine in Australia and the Los Angeles
International Airport Automated People Mover project. Ending backlog for
the segment was $12.4 billion, compared to $12.6 billion a year ago.

The Government segment reported segment profit of $51 million, compared
to $20 million a year ago. Revenue for the quarter was $863 million,
compared to $744 million a year ago. Second quarter new awards of $742
million include task orders for LOGCAP IV in Afghanistan. Ending backlog
was $2.3 billion compared to $4.1 billion a year ago.

The Diversified Services segment reported segment profit of $29 million
in the second quarter of 2018, compared to $36 million a year ago.
Revenue for the quarter was $666 million compared to $641 million in the
second quarter of 2017. New awards totaled $513 million for the quarter,
and ending backlog was $2.2 billion compared to $2.9 billion a year ago.

Second Quarter Conference Call

Fluor will host a conference call at 5:30 p.m. Eastern time on Thursday,
August 2, which will be webcast live on the Internet and can be accessed
by logging onto investor.fluor.com.
A supplemental slide presentation will be available shortly before the
call begins. The webcast and presentation will be archived for 30 days
following the call.

Non-GAAP Financial Measure

This press release contains a discussion of consolidated segment profit
that would be deemed a non-GAAP financial measure under SEC rules.
Segment profit is calculated as revenue less cost of revenue and
earnings attributable to noncontrolling interests excluding: corporate
general and administrative expense; interest expense; interest income;
domestic and foreign income taxes; and other non-operating income and
expense items. The company believes that consolidated segment profit
provides a meaningful perspective on its business results as it is the
aggregation of individual segment profit measures that the company
utilizes to evaluate and manage its business performance. A
reconciliation of this measure to earnings (loss) before taxes is
included in the press release tables.

About Fluor Corporation

Founded in 1912, Fluor
Corporation
(NYSE:FLR) is a global engineering, procurement,
fabrication, construction and maintenance company that transforms the
world by building prosperity and empowering progress. Fluor serves its
clients by designing, building and maintaining safe, well executed,
capital-efficient projects around the world. With headquarters in
Irving, Texas, Fluor ranks 153 on the Fortune 500 list with
revenue of $19.5 billion in 2017 and has more than 56,000 employees
worldwide. For more information, please visit www.fluor.com
or follow Fluor on Facebook,
Twitter,
LinkedIn
and YouTube.

Forward-Looking Statements: This
release may contain forward-looking statements (including without
limitation statements to the effect that the Company or its management
"believes," "expects," is "positioned" or other similar expressions).
These forward-looking statements, including statements relating to
future growth, backlog, earnings and the outlook for the Company's
business are based on current management expectations and involve risks
and uncertainties. Actual results may differ materially as a result of a
number of factors, including, among other things, the cyclical nature of
many of the markets the Company serves, including the Company's Energy &
Chemicals segment; the Company's failure to receive new contract awards;
the Company's failure to meet cost and schedule estimates; cost
overruns, project delays or other problems arising from project
execution activities; intense competition in the industries in which we
operate; failure of our joint venture or other partners, suppliers or
subcontractors to perform their obligations; failure to obtain favorable
results in existing or future litigation or dispute resolution
proceedings or claims; cyber-security breaches; foreign economic and
political uncertainties; client cancellations of, or scope adjustments
to, existing contracts; client delays or defaults in making payments;
risks or uncertainties associated with events outside of our control,
including weather conditions; the Company's failure, or the failure of
our agents or partners, to comply with laws; the potential impact of
certain tax matters; possible information technology interruptions or
inability to protect intellectual property; new or changing legal
requirements, including those relating to environmental, health and
safety matters; liabilities associated with the performance of nuclear
services; foreign currency risks; the availability of credit and
restrictions imposed by credit facilities, both for the Company and our
clients, suppliers, subcontractors or other partners; failure to
maintain safe worksites and international security risks; the inability
to hire and retain qualified personnel; possible limitations on bonding
or letter of credit capacity; risks or uncertainties associated with
acquisitions, dispositions and investments; risks arising from the
inability to successfully integrate acquired businesses; the use of
estimates and assumptions in preparing our financial statements; and the
Company's ability to secure appropriate insurance. Caution must be
exercised in relying on these and other forward-looking statements. Due
to known and unknown risks, the Company's results may differ materially
from its expectations and projections.

Additional information concerning these and other factors can be
found in the Company's public periodic filings with the Securities and
Exchange Commission, including the discussion under the heading "Item
1A. Risk Factors" in the Company's Form 10-K filed on February 20, 2018.
Such filings are available either publicly or upon request from Fluor's
Investor Relations Department: (469) 398-7222. The Company disclaims any
intent or obligation other than as required by law to update its
forward-looking statements in light of new information or future events.

 
 
FLUOR CORPORATION
CONSOLIDATED FINANCIAL RESULTS
(in millions, except per share amounts)
Unaudited
       
CONSOLIDATED OPERATING RESULTS
 
THREE MONTHS ENDED JUNE 30 2018 2017
Revenue $ 4,883.8 $ 4,716.1
Cost and expenses:
Cost of revenue 4,673.7 4,684.1
Corporate general and administrative expense 17.8 47.3
Interest expense, net   8.7   8.6  
Total cost and expenses   4,700.2   4,740.0  
Earnings (loss) before taxes 183.6 (23.9 )
Income tax expense (benefit)   52.5   (17.3 )
Net earnings (loss) 131.1 (6.6 )
Less: Net earnings attributable to noncontrolling interests   16.3   17.4  
Net earnings (loss) attributable to Fluor Corporation $ 114.8 $ (24.0 )
 
Basic earnings (loss) per share
Net earnings (loss) $ 0.82 $ (0.17 )
Weighted average shares 140.7 139.8
Diluted earnings (loss) per share
Net earnings (loss) $ 0.81 $ (0.17 )
Weighted average shares 141.3 139.8
 
New awards $ 5,382.4 $ 3,194.8
Backlog $ 29,324.0 $ 37,570.5
Work performed $ 4,758.4 $ 4,609.8
 
 
FLUOR CORPORATION
CONSOLIDATED FINANCIAL RESULTS
(in millions, except per share amounts)
Unaudited
       
CONSOLIDATED OPERATING RESULTS
 
SIX MONTHS ENDED JUNE 30 2018 2017
Revenue $ 9,707.6 $ 9,552.0
Cost and expenses:
Cost of revenue 9,439.7 9,370.0
Corporate general and administrative expense 75.0 92.4
Interest expense, net   18.3   20.1  
Total cost and expenses   9,533.0   9,482.5  
Earnings before taxes 174.6 69.5
Income tax expense (benefit)   55.5   (1.2 )
Net earnings 119.1 70.7
Less: Net earnings attributable to noncontrolling interests   21.9   34.1  
Net earnings attributable to Fluor Corporation $ 97.2 $ 36.6  
 
Basic earnings per share
Net earnings $ 0.69 $ 0.26
Weighted average shares 140.4 139.6
Diluted earnings per share
Net earnings $ 0.69 $ 0.26
Weighted average shares 141.3 140.9
 
New awards $ 7,918.5 $ 5,508.1
Backlog $ 29,324.0 $ 37,570.5
Work performed $ 9,468.4 $ 9,343.3
 
 
FLUOR CORPORATION
Unaudited
           
BUSINESS SEGMENT FINANCIAL REVIEW AND U.S. GAAP RECONCILIATION
($ in millions)
 
THREE MONTHS ENDED JUNE 30   2018     2017  
Revenue
Energy & Chemicals $ 2,014.5 $ 2,150.1
Mining, Industrial, Infrastructure & Power 1,339.5 1,180.4
Government 863.4 744.2
Diversified Services   666.4     641.4  
Total revenue $ 4,883.8   $ 4,716.1  
 
Segment profit (loss) $ and margin % (2)
Energy & Chemicals $ 97.2 4.8 % $ 123.6 5.7 %
Mining, Industrial, Infrastructure & Power (1) 16.4 1.2 % (165.0 ) (14.0 )%
Government 51.4 6.0 % 19.7 2.7 %
Diversified Services   28.8   4.3 %   36.3   5.7 %
Total segment profit $ and margin % $ 193.8 4.0 % $ 14.6 0.3 %
 
Corporate general and administrative expense (17.8 ) (47.3 )
Interest expense, net (8.7 ) (8.6 )
Earnings attributable to noncontrolling interests   16.3     17.4  
 
Earnings (loss) before taxes $ 183.6   $ (23.9 )
 
 
 
SIX MONTHS ENDED JUNE 30   2018     2017  
Revenue
Energy & Chemicals $ 3,957.5 $ 4,278.7
Mining, Industrial, Infrastructure & Power 2,249.8 2,553.3
Government 2,190.6 1,509.4
Diversified Services   1,309.7     1,210.6  
Total revenue $ 9,707.6   $ 9,552.0  
 
Segment profit (loss) $ and margin % (2)
Energy & Chemicals $ 202.9 5.1 % $ 208.0 4.9 %
Mining, Industrial, Infrastructure & Power (1) (127.7 ) (5.7 )% (167.8 ) (6.6 )%
Government 123.3 5.6 % 48.7 3.2 %
Diversified Services   47.6   3.6 %   59.0   4.9 %
Total segment profit $ and margin % $ 246.1 2.5 % $ 147.9 1.5 %
 
Corporate general and administrative expense (75.0 ) (92.4 )
Interest expense, net (18.3 ) (20.1 )
Earnings attributable to noncontrolling interests   21.8     34.1  
 
Earnings before taxes $ 174.6   $ 69.5  

(1)

 

Includes research and development expenses associated with NuScale
totaling $24 million and $47 million for the three and six months
ended June 30, 2018, respectively, compared to $17 million and $33
million for the three and six months ended June 30, 2017,
respectively.

 

(2)

Segment profit margin % is calculated as segment profit divided by
segment revenue.

 
 
FLUOR CORPORATION
Unaudited
       
SELECTED BALANCE SHEET ITEMS
($ in millions)
JUNE 30, DECEMBER 31,
  2018     2017  
Cash and marketable securities, including noncurrent $ 1,783.1 $ 2,078.8
Total current assets 5,455.8 5,601.3
Total assets 9,119.2 9,327.7
Total short-term debt 80.6 27.4
Total current liabilities 3,751.6 3,574.2
Long-term debt 1,575.4 1,591.6
Shareholders' equity 3,043.4 3,342.3
 
 
 
SELECTED CASH FLOW ITEMS
($ in millions)
 
SIX MONTHS ENDED JUNE 30   2018     2017  
 
Cash provided (utilized) by operating activities $ (132.6 ) $ 427.9  
 
Investing activities
Net sales and maturities (purchases) of marketable securities 171.4 (70.4 )
Capital expenditures (110.4 ) (141.6 )
Proceeds from disposal of property, plant and equipment 40.1 27.9
Investments in partnerships and joint ventures (16.7 ) (191.1 )
Other items   (0.4 )   2.6  
Cash provided (utilized) by investing activities   84.0     (372.6 )
 
Financing activities
Dividends paid (59.6 ) (59.3 )
Net proceeds from issuance of commercial paper 49.6 -
Repayment of borrowings under revolving lines of credit - (53.5 )
Distributions paid to noncontrolling interests, net of capital
contributions
(28.4 ) (17.0 )
Other items   (2.0 )   6.7  
Cash utilized by financing activities   (40.4 )   (123.1 )
 
Effect of exchange rate changes on cash   (33.1 )   37.2  
 
Decrease in cash and cash equivalents $ (122.1 ) $ (30.6 )
 
 
Depreciation $ 102.5   $ 101.9  
 
 
FLUOR CORPORATION
Supplemental Fact Sheet
Unaudited
               
NEW AWARDS
($ in millions)
 
THREE MONTHS ENDED JUNE 30 2018 2017
 
Energy & Chemicals $ 493 9 % $ 742 23 %
Mining, Industrial, Infrastructure & Power 3,634 68 % 790 25 %
Government 742 14 % 1,109 35 %
Diversified Services   513     9 %   554     17 %
Total new awards $ 5,382     100 % $ 3,195     100 %
 
 
SIX MONTHS ENDED JUNE 30 2018 2017
 
Energy & Chemicals $ 1,214 15 % $ 1,447 26 %
Mining, Industrial, Infrastructure & Power 4,973 63 % 1,678 31 %
Government 785 10 % 1,282 23 %
Diversified Services   946     12 %   1,101     20 %
Total new awards $ 7,918     100 % $ 5,508     100 %
 
 
BACKLOG TRENDS
($ in millions)
 
AS OF JUNE 30 2018 2017
 
Energy & Chemicals $ 12,404 42 % $ 18,010 48 %
Mining, Industrial, Infrastructure & Power 12,409 42 % 12,571 33 %
Government 2,292 8 % 4,099 11 %
Diversified Services   2,219     8 %   2,890     8 %
Total backlog $ 29,324     100 % $ 37,570     100 %
 
 
United States $ 10,615 36 % $ 17,936 48 %
The Americas (excluding the United States) 3,594 12 % 2,956 8 %
Europe, Africa and the Middle East 11,534 40 % 15,278 40 %
Asia Pacific (including Australia)   3,581     12 %   1,400     4 %
Total backlog $ 29,324     100 % $ 37,570     100 %
 
 

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