Fluor Corporation (NYSE: FLR) today announced financial results
for its third quarter ended September 30, 2016. Earnings from
continuing operations attributable to Fluor for the third quarter
were $5 million, or $0.03 per diluted share, compared to $176
million, or $1.21 per diluted share a year ago. Results for the
quarter include an after-tax charge of $154 million, or $1.10 per
diluted share, for estimated cost increases on a petrochemical
facility in the United States. Consolidated segment profit for the
quarter was $25 million, including the impact of the charge
mentioned above, down from $240 million a year ago. Third quarter
revenue was $4.8 billion, up from $4.4 billion in the prior
year.
New awards for the quarter were $7.0 billion, including $5.6
billion in Energy, Chemicals & Mining and $955 million in
Government. Consolidated ending backlog of $44.3 billion compares
to $41.7 billion a year ago.
"We are very disappointed in the construction progress on a
fixed-price Gulf Coast project that led to a significant charge
this quarter," said David Seaton, Fluor chairman and chief
executive officer. "Looking ahead to 2017, we remain focused on
project execution and continuing to capture key prospects as they
develop across our businesses.”
Corporate G&A expense for the third quarter of 2016 was $27
million, compared to $35 million a year ago. Fluor’s cash and
marketable securities balance at the end of the third quarter was
$2.1 billion.
Outlook
As a result of the charge in Energy, Chemicals & Mining, the
Company is revising its 2016 guidance for EPS to a range of $2.20
to $2.40 per diluted share, from the previous range of $3.25 to
$3.50 per diluted share. For 2017, the Company is establishing its
initial EPS guidance at a range of $2.75 to $3.25 per diluted
share. Guidance for 2017 assumes continued challenges in our
commodity focused segment, offset by increasing opportunities in
infrastructure, industrial and government.
Business Segments
Fluor’s Energy, Chemicals & Mining segment reported a
segment loss of $60 million, compared to a segment profit of
$208 million a year ago. Results for the quarter reflect a $241
million pre-tax charge on a petrochemical facility in the United
States. Revenue of $2.3 billion declined from $2.8 billion a year
ago primarily due to lower mining activities. Third quarter new
awards of $5.6 billion include an award for the Tengiz Oil
Expansion Project in Kazakhstan. Ending backlog was $23.7 billion
compared to $30.1 billion a year ago, and reflects an adjustment
for an LNG contract that has been suspended.
The Industrial, Infrastructure & Power segment reported
segment profit of $28 million, compared to a loss of $29 million in
the third quarter of 2015 that was primarily due to cost increases
on a power project. Revenue for the segment increased 89 percent to
$1.1 billion from $596 million a year ago. Results for the quarter
reflect increased execution activities on nuclear and gas-fired
power projects. Ending backlog for the segment was $11.5 billion,
up from $5.1 billion a year ago.
The Government segment reported segment profit of $26 million,
compared to $30 million a year ago. Revenue for the quarter
was $681 million, compared to $661 million a year ago. Third
quarter new awards of $955 million include additional funding on
the Savannah River project. Ending backlog was $5.9 billion, up
from $3.8 billion a year ago.
The Maintenance, Modification & Asset Integrity segment
reported segment profit of $29 million in the third quarter of
2016, compared to $32 million a year ago. Revenue for the quarter
was $632 million compared to $326 million in the third quarter of
2015. Results for the quarter reflect contributions from the Stork
business, offset by declines in the equipment and power services
business lines. New awards totaled $350 million for the quarter,
and ending backlog was $3.3 billion, up from $2.7 billion a year
ago.
Third Quarter Conference
Call
Fluor will host a conference call at 5:30 p.m. Eastern time on
Thursday, November 3, 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.
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; other
non-operating income and expense items; and loss from discontinued
operations. 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 from continuing
operations attributable to Fluor Corporation is included in the
press release tables.
About Fluor Corporation
Fluor Corporation (NYSE: FLR) is a global engineering,
procurement, fabrication, construction and maintenance company that
designs, builds and maintains capital-efficient facilities for its
clients on six continents. For more than a century, Fluor has
served our clients by delivering innovative and integrated
solutions across the globe. With headquarters in Irving, Texas,
Fluor ranks 155 on the FORTUNE 500 list with revenue of $18.1
billion in 2015 and has more than 60,000 employees worldwide. For
more information, please 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," 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 & Mining commodity-based segment; the Company's
failure to receive anticipated new contract awards; difficulties or
delays incurred in the execution of contracts, including those
caused by the performance of the Company’s clients, subcontractors,
suppliers and joint venture or teaming partners; failure to meet
timely completion or performance standards; intense competition in
the industries in which we operate; failure of our joint venture or
other partners to perform their obligations; failure to obtain
favorable results in existing or future litigation or dispute
resolution proceedings or claims; client delays or defaults in
making payments; risks or uncertainties associated with events
outside of our control, including weather conditions; current
economic conditions affecting our clients, partners, subcontractors
and suppliers; cyber-security breaches; liabilities arising from
faulty services; client cancellations of, or scope adjustments to,
existing contracts; risks or uncertainties associated with
acquisitions, dispositions and investments; risks arising from the
inability to successfully integrate acquired businesses; foreign
economic and political uncertainties; 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; liabilities associated with the performance of nuclear
services; 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; 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 18, 2016. 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
2016 2015 Revenue $ 4,766.9 $ 4,384.6 Cost and
expenses: Cost of revenue 4,729.7 4,133.8 Gain related to a partial
sale of a subsidiary - (68.2 ) Corporate general and administrative
expense 27.1 35.2 Interest expense, net 12.8
5.6 Total cost and expenses 4,769.6
4,106.4 Earnings (loss) from continuing operations before
taxes (2.7 ) 278.2 Income tax expense (benefit) (20.1 )
91.4 Earnings from continuing operations 17.4 186.8
Loss from discontinued operations, net of taxes -
(5.1 ) Net earnings 17.4 181.7 Less: Net earnings
attributable to noncontrolling interests 12.6
10.4 Net earnings attributable to Fluor Corporation $ 4.8
$ 171.3 Amounts attributable to Fluor
Corporation: Earnings from continuing operations $ 4.8 $ 176.4 Loss
from discontinued operations, net of taxes -
(5.1 ) Net earnings $ 4.8 $ 171.3 Basic
earnings (loss) per share attributable to Fluor Corporation:
Earnings from continuing operations
$
0.03 $ 1.22 Loss from discontinued operations, net of taxes
- (0.03 ) Net earnings $ 0.03 $ 1.19
Weighted average shares 139.3 144.3 Diluted earnings (loss)
per share attributable to Fluor Corporation: Earnings from
continuing operations 0.03 1.21 Loss from discontinued operations,
net of taxes - (0.04 ) Net earnings $ 0.03
$ 1.17 Weighted average shares 140.9 146.1 New
awards $ 7,021.5 $ 5,294.3 Backlog $ 44,325.3 $ 41,693.3 Work
performed $ 4,661.6 $ 4,264.5
FLUOR CORPORATION CONSOLIDATED FINANCIAL
RESULTS (in millions, except per share amounts)
Unaudited CONSOLIDATED OPERATING RESULTS
NINE MONTHS ENDED SEPTEMBER 30 2016
2015 Revenue $ 14,046.9 $ 13,743.4 Cost and expenses: Cost
of revenue 13,505.7 12,901.2 Gain related to a partial sale of a
subsidiary - (68.2 ) Corporate general and administrative expense
134.9 124.1 Interest expense, net 38.4 20.4
Total cost and expenses 13,679.0 12,977.5
Earnings from continuing operations before taxes 367.9 765.9 Income
tax expense 111.5 252.8 Earnings from
continuing operations 256.4 513.1 Loss from discontinued
operations, net of taxes - (5.1 ) Net earnings 256.4
508.0 Less: Net earnings attributable to noncontrolling interests
45.5 44.2 Net earnings attributable to Fluor
Corporation $ 210.9 $ 463.8 Amounts attributable to
Fluor Corporation: Earnings from continuing operations $ 210.9 $
468.9 Loss from discontinued operations, net of taxes -
(5.1 ) Net earnings $ 210.9 $ 463.8 Basic
earnings (loss) per share attributable to Fluor Corporation:
Earnings from continuing operations
$
1.52 $ 3.21 Loss from discontinued operations, net of taxes
- (0.03 ) Net earnings $ 1.52 $ 3.18 Weighted average
shares 139.1 146.1 Diluted earnings (loss) per share
attributable to Fluor Corporation: Earnings from continuing
operations 1.50 3.17 Loss from discontinued operations, net of
taxes - (0.04 ) Net earnings $ 1.50 $ 3.13
Weighted average shares 140.9 148.0 New awards $ 18,134.7 $
14,010.4 Backlog $ 44,325.3 $ 41,693.3 Work performed $ 13,730.7 $
13,368.1
FLUOR CORPORATION Unaudited
BUSINESS SEGMENT FINANCIAL REVIEW AND U.S. GAAP
RECONCILIATION ($ in millions) THREE MONTHS
ENDED SEPTEMBER 30 2016
2015 (1)
Revenue Energy, Chemicals & Mining $ 2,325.2 $ 2,801.4
Industrial, Infrastructure & Power 1,128.3 596.2 Government
681.2 660.7 Maintenance, Modification & Asset Integrity
632.2 326.3
Total revenue $
4,766.9 $ 4,384.6 Segment
profit (loss) $ and margin % (3) Energy, Chemicals &
Mining $ (59.7 ) (2.6 )% $ 208.2 7.4 % Industrial, Infrastructure
& Power (2) 28.4 2.5 % (29.4) (4.9 )% Government 26.4 3.9 %
30.0 4.5 % Maintenance, Modification & Asset Integrity
29.5 4.7 % 31.5 9.7 %
Total segment profit $ and
margin % $ 24.6 0.5 % $
240.3 5.5 % Gain related to a partial
sale of a subsidiary - 68.2 Corporate general and administrative
expense (27.1 ) (35.2) Interest expense, net (12.8 ) (5.6) Income
tax (expense) benefit 20.1 (91.4)
Earnings
from continuing operations attributable to Fluor Corporation
$ 4.8 $ 176.3 NINE
MONTHS ENDED SEPTEMBER 30 2016
2015 (1)
Revenue Energy, Chemicals & Mining $ 7,245.1 $ 9,047.2
Industrial, Infrastructure & Power 2,971.6 1,723.8 Government
2,025.1 1,909.8 Maintenance, Modification & Asset Integrity
1,805.1 1,062.6
Total revenue $
14,046.9 $ 13,743.4 Segment
profit (loss) $ and margin % (3) Energy, Chemicals &
Mining $ 247.8 3.4 % $ 655.4 7.2 % Industrial, Infrastructure &
Power (2) 91.7 3.1 % (15.3) (0.9 )% Government 65.5 3.2 % 62.0 3.2
% Maintenance, Modification & Asset Integrity 90.7 5.0 % 95.9
9.0 %
Total segment profit $ and margin % $
495.7 3.5 % $ 798.0 5.8
% Gain related to a partial sale of a subsidiary -
68.2 Corporate general and administrative expense (134.9 ) (124.1)
Interest expense, net (38.4 ) (20.4) Income tax expense
(111.5 ) (252.8)
Earnings from continuing operations
attributable to Fluor Corporation $ 210.9
$ 468.9 (1) During the first quarter of 2016,
the company changed the composition of its reportable segments to
better reflect the diverse end markets that the company serves.
Segment operating information for 2015 has been recast to reflect
these changes. (2) Includes research and development
expenses associated with NuScale totaling $22 million and $70
million for the three and nine months ended September 30, 2016,
respectively, and $29 million and $65 million for the three and
nine months ended September 30, 2015, respectively. (3)
Segment profit margin % is calculated as segment profit divided by
segment revenue.
FLUOR CORPORATION Unaudited SELECTED
BALANCE SHEET ITEMS ($ in millions, except per share
amounts) SEPTEMBER 30, DECEMBER 31, 2016
2015 Cash and marketable securities, including noncurrent $
2,061.6 $ 2,367.6 Total current assets 5,741.6 5,105.4
(1)
Total assets 9,316.6 7,625.4
(1)
Total short-term debt 133.7 - Total current liabilities 3,876.2
2,935.4 Long-term debt 1,555.5 986.6
(1)
Shareholders' equity 3,106.3 2,997.3
SELECTED CASH FLOW
ITEMS ($ in millions) NINE MONTHS ENDED
SEPTEMBER 30 2016 2015 Cash provided by
operating activities $
452.5 $
570.4
Investing activities Net (purchases) sales and
maturities of marketable securities 136.4 (38.7 ) Capital
expenditures (165.5 ) (181.1 ) Proceeds from disposal of property,
plant and equipment 60.8 70.4 Proceeds from a partial sale of a
subsidiary - 45.6 Investments in partnerships and joint ventures
(518.0 ) (80.9 ) Acquisitions, net of cash acquired (240.7 ) -
Other items 10.2 14.5
Cash utilized
by investing activities (716.8 )
(170.2 ) Financing activities
Repurchase of common stock (9.7 ) (359.6 ) Dividends paid (89.0 )
(94.6 ) Proceeds from issuance of 1.75% Senior Notes 553.0 - Debt
issuance costs (3.5 ) - Repayment of Stork Notes, convertible debt
and other borrowings (331.3 ) (28.4 ) Borrowings under revolving
lines of credit 883.3 - Repayment of borrowings under revolving
lines of credit (884.9 ) - Distributions paid to noncontrolling
interests, net of capital contributions (17.1 ) (40.9 ) Other Items
(3.0 ) (10.7 )
Cash provided (utilized) by
financing activities 97.8
(534.2 ) Effect of exchange rate changes on
cash (3.0 ) (77.7 )
Decrease in cash and cash equivalents $
(169.5
) $
(211.7 )
Depreciation $
155.1 $
141.0
(1) Certain amounts in 2015 have been reclassified to
conform to the 2016 presentation due to the implementation of new
accounting pronouncements.
FLUOR CORPORATION
Supplemental Fact Sheet Unaudited
NEW AWARDS ($ in millions) THREE MONTHS
ENDED SEPTEMBER 30 2016
2015 (1)
Energy, Chemicals & Mining $ 5,643 80 % $ 3,628 69 %
Industrial, Infrastructure & Power 74 1 % 1,281 24 % Government
955 14 % 277 5 % Maintenance, Modification & Asset Integrity
350 5 % 108 2 %
Total new awards $ 7,022
100 % $ 5,294
100 % NINE MONTHS ENDED SEPTEMBER 30
2016
2015 (1)
Energy, Chemicals & Mining $ 7,395 41 % $ 9,822 70 %
Industrial, Infrastructure & Power 4,860 27 % 1,903 13 %
Government 4,461 24 % 1,077 8 % Maintenance, Modification &
Asset Integrity 1,419 8 % 1,208
9 %
Total new awards $ 18,135
100 % $ 14,010
100 % BACKLOG
TRENDS ($ in millions) AS OF SEPTEMBER 30
2016
2015 (1)
Energy, Chemicals & Mining $ 23,682 54 % $ 30,051 72 %
Industrial, Infrastructure & Power 11,461 26 % 5,084 12 %
Government 5,899 13 % 3,826 9 % Maintenance, Modification &
Asset Integrity 3,283 7 % 2,732
7 %
Total backlog $ 44,325
100 % $ 41,693
100 % United States $ 20,784 47
% $ 14,369 34 % The Americas (excluding the United States) 3,635 8
% 10,058 24 % Europe, Africa and the Middle East 17,660 40 % 14,327
35 % Asia Pacific (including Australia) 2,246
5 % 2,939 7 %
Total backlog
$ 44,325 100 % $
41,693 100 % (1)
During the first quarter of 2016, the company changed the
composition of its reportable segments to better reflect the
diverse end markets that the company serves. New awards and backlog
for 2015 have been recast to reflect these changes.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20161103006551/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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