Fluor Corporation (NYSE: FLR) today announced financial results
for its third quarter ended September 30, 2015. Net earnings
attributable to Fluor from continuing operations were $176 million,
or $1.21 per diluted share, compared to $183 million, or
$1.15 per diluted share a year ago. Consolidated segment
profit for the quarter was $240 million, down 28 percent from $335
million in the third quarter of 2014. Revenue for the third quarter
was $4.4 billion, down from $5.4 billion a year ago, mainly due to
lower contributions from the Oil & Gas and Industrial &
Infrastructure segments.
New awards for the quarter were $5.3 billion, including $3.6
billion in Oil & Gas, $926 million in Industrial &
Infrastructure, $534 million in Power and $277 million in
Government. Consolidated backlog at the end of the quarter was
$41.7 billion, compared to $41.6 billion last quarter and $42.3
billion a year ago.
"Even in a tough environment, strong awards this quarter
demonstrate that customers are still moving forward with major
awards," said David Seaton, chairman and chief executive officer.
"It is also evidence that, as a result of our focus on our
integrated solutions offering and cost optimization, we are well
positioned to win additional work from our customers across all of
the end markets we serve."
Corporate G&A expense for the third quarter of 2015 was $35
million, comparable with a year ago. During the quarter, the
Company repurchased $145 million worth of Fluor shares, and
paid out $31 million in dividends to shareholders. Fluor’s cash and
marketable securities balance at the end of the third quarter was
$2.3 billion.
Ending backlog was reduced by approximately $1.1 billion as a
result of the strong dollar. Foreign exchange rates did not have a
significant impact on earnings for the third quarter.
U.S. Defined Benefit Pension
Plan
On October 29, 2014, the Company’s Board of Directors approved
the termination of the U.S. defined benefit pension plan effective
December 31, 2014. In the third quarter, the Company recorded a
pre-tax settlement expense of $9 million, or $0.04 per diluted
share after-tax, related to the pension plan. Excluding this
expense, which is not included in Company guidance, EPS from
continuing operations would be $1.25 per diluted share. The full
settlement of the plan is expected to occur in the fourth
quarter.
Outlook
The Company is narrowing its 2015 guidance for EPS from
continuing operations to a range of $4.05 to $4.20 per diluted
share, from the previous range of $4.05 to $4.35 per diluted share,
excluding all pension settlement-related charges. For 2016, the
Company is establishing its initial EPS guidance at a range of
$3.50 to $4.00 per diluted share.
Business Segments
Fluor’s Oil & Gas business reported segment profit of $190
million, compared to $178 million a year ago. Segment profit
results were also favorably impacted by higher margin engineering
activities. Revenue for the quarter was $2.4 billion, a 26 percent
decline from the third quarter of 2014, due to certain large
upstream projects progressing to completion. Third quarter new
awards for the segment totaled $3.6 billion, including a refinery
project in Kuwait and a refinery reconfiguration project in the
United States. Ending backlog for the Oil & Gas segment was
$29.1 billion, up 9 percent from $26.6 billion a year ago.
In addition to the Oil & Gas results above, the Company also
recognized a $68 million pre-tax non-operating gain, or $0.30 per
diluted share after-tax, related to the sale of 50% of the
Company’s ownership interest in a Spanish subsidiary to create a
new joint venture.
The Industrial & Infrastructure group reported segment
profit of $45 million, compared with $101 million in the third
quarter of 2014. Revenue for the quarter was $928 million, down
from $1.2 billion a year ago. Revenue and segment profit results
reflect lower contributions from the mining and metals and
infrastructure business lines. New awards for the third quarter
were $926 million, including a highway project in Texas. Backlog
for the quarter was $6.6 billion, down from $8.6 billion a year
ago.
The Government group reported segment profit of $30 million,
comparable to a year ago. Revenue for the quarter was $661 million,
up from $615 million a year ago. New awards in the third quarter
totaled $277 million, and ending backlog was $3.8 billion, compared
with $5.2 billion a year ago.
Segment profit for Global Services was $9 million in the third
quarter, which compares to $21 million a year ago. Revenue declined
to $120 million from $140 million a year ago. Lower results in the
quarter were mainly driven by reductions in the equipment business
line’s activities.
Fluor’s Power group reported a segment loss of $34 million,
compared to a segment profit of $6 million a year ago. Excluding
NuScale expenses of $29 million in the third quarter and $17
million a year ago, the group reported a segment loss of $5 million
this quarter and a segment profit of $22 million a year ago.
Segment results for the quarter reflect cost increases on a
gas-fired facility that is nearing completion. Revenue for the
quarter was $269 million, up from $237 million a year ago. New
awards for the quarter were $534 million, including a full notice
to proceed on a gas-fired power plant in Florida, and compares with
$382 million in the third quarter of 2014. Ending backlog was $2.2
billion, compared with $1.8 billion a year ago.
Third Quarter Conference
Call
Fluor will host a conference call at 5:30 p.m. Eastern time on
Thursday, October 29, which will be webcast live on the Internet
and can be accessed by logging onto http://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. Certain non-GAAP financial measures, as
defined under SEC rules, are included in this press release and may
be discussed during the conference call. A reconciliation of these
measures is included in this press release which will be posted in
the investor relations section of the Company’s website.
About Fluor Corporation
Fluor Corporation (NYSE: FLR) is a global engineering and
construction firm that designs and builds some of the world's most
complex projects. The Company creates and delivers innovative and
integrated solutions for its clients in engineering, procurement,
fabrication, construction, maintenance and project management on a
global basis. For more than a century, Fluor has served clients in
the energy, chemicals, government, industrial, infrastructure,
mining and power market sectors. Headquartered in Irving, Texas,
Fluor ranks 136 on the FORTUNE 500 list. With 40,000 employees
worldwide, the company's revenue for 2014 was $21.5 billion. For
more information, visit www.fluor.com or follow us on Twitter
@FluorCorp.
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," "anticipates," "plans" or other
similar expressions). These forward-looking statements, including
statements relating to future backlog, revenue and earnings,
expected performance of the Company's business and the outlook of
the markets which the Company serves 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 commodity-based
business lines, and the Company’s vulnerability to downturns; the
Company's failure to receive anticipated new contract awards and
the related impact on revenue, earnings, staffing levels and costs;
difficulties or delays incurred in the execution of contracts,
resulting in cost overruns or liabilities, including those caused
by the performance of the Company’s clients, subcontractors,
suppliers and joint venture or teaming partners; client
cancellations of, or scope adjustments to, existing contracts, and
the related impacts on staffing levels and cost; intense
competition in the global engineering, procurement and construction
industry, which can place downward pressure on the Company’s
contract prices and profit margins; failure of our joint venture
partners to perform their venture obligations; current economic
conditions affecting our clients, partners, subcontractors and
suppliers, which may result in decreased capital investment or
expenditures by the Company’s clients or other financial
difficulties by our partners, subcontractors or suppliers that may
increase costs or delay project schedules; foreign economic and
political uncertainties or changes that could lead to project
disruptions, increased costs and potential losses; the Company’s
failure, or the failure of our agents or partners, to comply with
laws, including anti-bribery laws, international trade laws or
environmental, health and safety laws or regulations; failure to
obtain favorable results in existing or future litigation or
dispute resolution proceedings or claims; client delays or defaults
in making payments; failure to meet timely completion or
performance standards that could result in higher costs, reduced
profits or, in some cases, losses on projects; risks or
uncertainties associated with acquisitions, dispositions and
investments; liabilities arising from faulty services; risks or
uncertainties associated with events outside of our control, such
as the effects of severe weather, which may result in project
delays, increased costs, liabilities or losses on projects; the
potential impact of certain tax matters including, but not limited
to, those from foreign operations and ongoing audits by tax
authorities; possible information technology interruptions,
security breaches or inability to protect intellectual property;
foreign exchange risks; the inability to hire and retain qualified
personnel; failure to maintain safe worksites and international
security risks; the availability of credit and restrictions imposed
by credit facilities, both for the Company and our clients,
suppliers, subcontractors or other partners; possible limitations
on bonding or letter of credit capacity; the Company’s ability to
secure appropriate insurance; and restrictions on possible
transactions imposed by the Company’s charter documents and
Delaware law. 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 press releases as well as 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 18, 2015. Such filings are
available either publicly or upon request from Fluor's Investor
Relations Department: (469) 398-7070. 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 SEPTEMBER 30
2015 2014 Revenue $ 4,384.6 $ 5,440.1 Cost and
expenses: Cost of revenue 4,133.8 5,060.0 Gain related to a partial
sale of a subsidiary (68.2 ) - Corporate general and administrative
expense 35.2 35.1 Interest expense, net 5.6
1.6 Total cost and expenses 4,106.4
5,096.7 Earnings from continuing operations before taxes
278.2 343.4 Income tax expense 91.4 114.6
Earnings from continuing operations 186.8 228.8 Loss from
discontinued operations, net of taxes (5.1 ) (113.9 )
Net earnings 181.7 114.9 Less: Net earnings attributable to
noncontrolling interests 10.4 45.4 Net
earnings attributable to Fluor Corporation $ 171.3 $ 69.5
Amounts attributable to Fluor Corporation: Earnings from
continuing operations $ 176.4 $ 183.4 Loss from discontinued
operations, net of taxes (5.1 ) (113.9 ) Net earnings
$ 171.3 $ 69.5 Basic earnings (loss) per share
attributable to Fluor Corporation: Earnings from continuing
operations $ 1.22 $ 1.17 Loss from discontinued operations, net of
taxes (0.03 ) (0.73 ) Net earnings $ 1.19 $
0.44 Weighted average shares 144.3 157.3 Diluted earnings
(loss) per share attributable to Fluor Corporation: Earnings from
continuing operations $ 1.21 $ 1.15 Loss from discontinued
operations, net of taxes (0.04 ) (0.71 ) Net earnings
$ 1.17 $ 0.44 Weighted average shares 146.1 159.5 New
awards $ 5,294.3 $ 6,011.4 Backlog $ 41,693.3 $ 42,269.8 Work
performed $ 4,264.5 $ 5,299.5
FLUOR CORPORATION CONSOLIDATED FINANCIAL
RESULTS (in millions, except per share amounts)
Unaudited CONSOLIDATED OPERATING RESULTS
NINE MONTHS ENDED SEPTEMBER 30 2015
2014 Revenue $ 13,743.4 $ 16,076.4 Cost and expenses: Cost
of revenue 12,901.2 15,038.7 Gain related to a partial sale of a
subsidiary (68.2 ) - Corporate general and administrative expense
124.1 129.6 Interest expense, net 20.4 8.0
Total cost and expenses 12,977.5
15,176.3 Earnings from continuing operations before taxes
765.9 900.1 Income tax expense 252.8 282.9
Earnings from continuing operations 513.1 617.2 Loss from
discontinued operations, net of taxes (5.1 ) (199.0 )
Net earnings 508.0 418.2 Less: Net earnings attributable to
noncontrolling interests 44.2 121.8 Net
earnings attributable to Fluor Corporation $ 463.8 $ 296.4
Amounts attributable to Fluor Corporation:
Earnings from continuing operations
$ 468.9 $ 495.4 Loss from discontinued operations, net of taxes
(5.1 ) (199.0 ) Net earnings $ 463.8 $ 296.4
Basic earnings (loss) per share attributable to Fluor
Corporation: Earnings from continuing operations $ 3.21 $ 3.12 Loss
from discontinued operations, net of taxes (0.03 )
(1.25 ) Net earnings $ 3.18 $ 1.87 Weighted average
shares 146.1 158.7 Diluted earnings (loss) per share attributable
to Fluor Corporation: Earnings from continuing operations $ 3.17 $
3.08 Loss from discontinued operations, net of taxes (0.04 )
(1.24 ) Net earnings $ 3.13 $ 1.84 Weighted
average shares 148.0 160.8 New awards $ 14,010.4 $ 22,543.0 Backlog
$ 41,693.3 $ 42,269.8 Work performed $ 13,368.1 $ 15,648.1
FLUOR CORPORATION Unaudited BUSINESS
SEGMENT FINANCIAL REVIEW ($ in millions) THREE
MONTHS ENDED SEPTEMBER 30 2015
2014 (1)
Revenue Oil & Gas $ 2,407.3 $ 3,263.5 Industrial &
Infrastructure 927.5 1,184.6 Government 660.7 615.1 Global Services
120.2 140.0 Power 268.9 236.9
Total
revenue $ 4,384.6 $ 5,440.1
Segment profit (loss) $ and margin % Oil &
Gas $ 189.8 7.9 % $ 178.3 5.5 % Industrial & Infrastructure
45.1 4.9 % 100.6 8.5 % Government 30.0 4.5 % 29.6 4.8 % Global
Services 9.5 7.9 % 20.5 14.6 % Power (2) (34.1 ) (12.7 )%
5.7 2.4 %
Total segment profit $ and margin %
$ 240.3 5.5 % $ 334.7
6.2 % Gain related to a partial sale of a
subsidiary 68.2 - Corporate general and administrative expense
(35.2 ) (35.1 ) Interest expense, net (5.6 ) (1.6 ) Earnings
attributable to noncontrolling interests 10.5
45.4
Earnings from continuing operations before taxes
$ 278.2 $ 343.4
NINE MONTHS ENDED SEPTEMBER 30 2015
2014 (1)
Revenue Oil & Gas $ 7,630.1 $ 8,903.6 Industrial &
Infrastructure 3,087.8 4,248.4 Government 1,909.8 1,806.9 Global
Services 375.3 425.7 Power 740.4 691.8
Total revenue $ 13,743.4 $
16,076.4 Segment profit (loss) $ and margin
% Oil & Gas $ 575.4 7.5 % $ 484.5 5.4 % Industrial &
Infrastructure 174.5 5.7 % 293.4 6.9 % Government 62.0 3.2 % 56.0
3.1 % Global Services 38.9 10.4 % 62.8 14.8 % Power (2)
(52.8 ) (7.1 )% 19.2 2.8 %
Total segment profit $
and margin % $ 798.0 5.8 % $
915.9 5.7 % Gain related to a partial
sale of a subsidiary 68.2 - Corporate general and administrative
expense (124.1 ) (129.6 ) Interest expense, net (20.4 ) (8.0 )
Earnings attributable to noncontrolling interests 44.2
121.8
Earnings from continuing operations
before taxes $ 765.9 $ 900.1
(1) Effective January 1, 2015, the Company
implemented certain organizational changes that impacted the
composition of its reportable segments. Revenue and segment profit
for the Oil & Gas, Industrial & Infrastructure and Global
Services segments in 2014 have been recast to reflect these
changes.
(2) Includes research and development expenses associated
with NuScale totaling $29 million and $65 million, respectively,
for three and nine months ended September 30, 2015 compared to $17
million and $33 million, respectively, for three and nine months
ended September 30, 2014.
FLUOR CORPORATION Unaudited SELECTED
BALANCE SHEET ITEMS ($ in millions, except per share
amounts) SEPTEMBER 30, DECEMBER 31, 2015
2014 Cash and marketable securities, including noncurrent $
2,266.4 $ 2,441.9 Total current assets 5,229.8 5,758.0 Total assets
7,599.4 8,194.4 Total short-term debt - 28.7 Total current
liabilities 2,861.8 3,330.9 Long-term debt 992.7 991.7
Shareholders' equity 3,062.3 3,110.9 Total debt to
capitalization % (based on shareholders' equity) 24.5 % 24.7 %
Shareholders' equity per share $ 21.53 $ 20.93
SELECTED CASH FLOW ITEMS ($ in millions)
NINE MONTHS ENDED SEPTEMBER 30 2015 2014
Cash provided by operating activities $
570.4
$
407.3 Investing activities Net
(purchases) sales and maturities of marketable securities (38.7 )
(42.4 ) Capital expenditures (181.1 ) (222.6 ) Proceeds from
disposal of property, plant and equipment 70.4 72.5 Proceeds from a
partial sale of a subsidiary 45.6 - Proceeds from sales of equity
method investments - 44.0 Investments in partnerships and joint
ventures (80.9 ) (34.2 ) Other items 14.5 2.0
Cash utilized by investing activities
(170.2 ) (180.7 )
Financing activities Repurchase of common stock (359.6 )
(410.6 ) Dividends paid (94.6 ) (93.0 ) Repayment of convertible
debt and other borrowings (28.4 ) (0.1 ) Distributions paid to
noncontrolling interests, net of capital contributions
(40.9
)
(73.3 ) Other Items (10.7 ) 14.7
Cash
utilized by financing activities (534.2 )
(562.3 ) Effect of exchange rate
changes on cash (77.7 )
(47.7 ) Decrease in cash and cash
equivalents $
(211.7 ) $
(383.4 )
Depreciation $
141.0 $
143.8 FLUOR CORPORATION
Supplemental Fact Sheet Unaudited
NEW AWARDS ($ in millions)
THREE MONTHS ENDED SEPTEMBER 30 2015
2014 (1)
% Chg Oil & Gas $ 3,557 67 % $ 4,479 75 % (21)%
Industrial & Infrastructure 926 18 % 450 7 % 106% Government
277 5 % 700 12 % (60)% Power 534 10 %
382 6 % 40%
Total new awards
$ 5,294 100 %
$ 6,011 100 %
(12)% NINE MONTHS ENDED SEPTEMBER 30
2015
2014 (1)
% Chg Oil & Gas $ 9,143 65 % $ 14,850 66 % (38)%
Industrial & Infrastructure 2,889 21 % 2,571 12 % 12%
Government 1,077 8 % 4,536 20 % (76)% Power 901
6 % 586 2 %
54%
Total new awards $ 14,010
100 % $ 22,543
100 % (38)% BACKLOG
TRENDS ($ in millions) AS OF SEPTEMBER 30
2015 (2)
2014 (1)
% Chg Oil & Gas $ 29,059 70 % $ 26,600 63 % 9%
Industrial & Infrastructure 6,590 16 % 8,618 21 % (24)%
Government 3,826 9 % 5,218 12 % (27)% Power 2,218
5 % 1,834 4 % 21%
Total backlog $ 41,693
100 % $ 42,270
100 % (1)% United States $ 14,369 34 %
$ 11,887 28 % 21% The Americas (excluding the United States) 10,058
24 % 14,029 33 % (28)% Europe, Africa and the Middle East 14,327 35
% 12,776 30 % 12% Asia Pacific (including Australia) 2,939
7 % 3,578 9 %
(18)%
Total backlog $ 41,693
100 % $ 42,270
100 % (1)%
(1) Effective January 1, 2015, the Company
implemented certain organizational changes that impacted the
composition of its reportable segments. New awards and backlog for
the Oil & Gas and Industrial & Infrastructure segments in
2014 have been recast to reflect these changes.
(2) Backlog was negatively impacted by approximately $1.1
billion and $2.3 billion for the three and nine months ended
September 30, 2015, respectively, due to a strengthening U.S.
dollar compared to most major foreign currencies.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20151029005904/en/
Fluor CorporationMedia RelationsBrian Mershon,
469-398-7621orBrett Turner, 864-281-6976orInvestor RelationsGeoff
Telfer, 469-398-7070orJason Landkamer, 469-398-7222
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