- Third Quarter EPS from Continuing
Operations up 10 Percent to $1.15
- Third Quarter New Awards of $6.0
Billion; Backlog Rises to $42.3 Billion
- 2015 EPS Guidance Established at a
Range of $4.50 to $5.00
Fluor Corporation (NYSE: FLR) today announced financial results
for its third quarter ended September 30, 2014. Net earnings
attributable to Fluor from continuing operations rose to $183
million, or $1.15 per diluted share, from $173 million, or
$1.05 per diluted share a year ago. Consolidated segment
profit for the quarter was $335 million, up 8 percent from $311
million in the third quarter of 2013. Improved segment profit
results were primarily driven by a 65 percent increase in Oil &
Gas, which was partly offset by a decline in the Industrial &
Infrastructure segment. Revenue for the third quarter was $5.4
billion, down from $6.7 billion a year ago, mainly due to continued
reductions in the Industrial & Infrastructure segment’s mining
and metals business line.
New awards for the quarter were $6.0 billion, including $4.5
billion in Oil & Gas, $700 million in Government, $460 million
in Industrial & Infrastructure and $382 million in Power.
Consolidated backlog at the end of the quarter rose to $42.3
billion, up 5 percent over last quarter and up 16 percent from
$36.5 billion a year ago.
"Despite recent volatility in oil prices, our energy industry
clients continue to invest in strategically important long-term
initiatives," said Chairman and Chief Executive Officer David
Seaton. "As we look ahead to 2015, we continue to be encouraged by
our growing Oil & Gas business, augmented by modest
improvements in prospects in mining and metals, infrastructure,
power and Government.”
Corporate G&A expense for the third quarter of 2014 was $35
million, compared with $46 million a year ago. Reduced expenses in
the quarter were largely a result of lower stock-based compensation
costs. During the quarter, the Company committed $100 million
to share repurchases, and paid out $33 million in dividends to
shareholders. Fluor’s cash and marketable securities balance at the
end of the third quarter was $2.4 billion, down from $2.7 billion
last quarter, primarily due to increased working capital balances
at quarter end and the share repurchases mentioned above.
Business Segments
Fluor’s Oil & Gas business reported segment profit of $179
million, rising 65 percent from the third quarter of 2013. Strong
segment profit results reflect favorable project performance and
increased contributions from upstream and petrochemical projects.
Revenue for the quarter was $3.2 billion, a 12 percent increase
over the third quarter of 2013, reflecting rising contributions
from major projects. Third quarter new awards for the segment
totaled $4.5 billion, including a refinery project in Malaysia and
an oil sands project in Canada. Ending backlog for the Oil &
Gas segment was a record $26.5 billion, up 41 percent from $18.7
billion a year ago.
The Industrial & Infrastructure group reported segment
profit of $101 million, compared with $132 million in the third
quarter of 2013. Revenue for the quarter was $1.2 billion, down
from $2.7 billion a year ago. Revenue and segment profit results
reflect a continued decline in contributions from the mining and
metals business line. The decline in segment profit was partly
offset by growth in the infrastructure business line. New awards
for the third quarter were $460 million, including awards in the
mining and metals and industrial services business lines. Backlog
for the quarter was $8.7 billion, down from $13.8 billion a year
ago, mainly due to substantially lower mining and metals new awards
over the past two years.
The Government group reported segment profit of $30 million,
down from $38 million a year ago as a result of a decline in task
order volume on the LOGCAP IV contract in Afghanistan. Revenue for
the quarter declined 9 percent to $615 million, due to the lower
LOGCAP IV task order volume. New awards in the third quarter
totaled $700 million, including a multi-year award from the
Department of Energy for the Paducah Gaseous Diffusion Plant in
Kentucky. Ending backlog was $5.2 billion, compared with $1.8
billion a year ago and $5.2 billion last quarter.
Segment profit for Global Services was $19 million in the third
quarter, which compares to $25 million a year ago. Revenue declined
modestly to $141 million from $150 million a year ago. Lower
results in the quarter were mainly driven by reductions in the
equipment business line’s mining-related activities in Latin
America and reduced equipment demand in Afghanistan.
Segment profit for the Power business was $6 million, which
compares to $8 million a year ago. NuScale expenses in the current
quarter, net of the U.S. Department of Energy cost sharing award,
were $17 million which compares with $13 million a year ago. Power
revenue for the quarter declined to $237 million, from
$302 million a year ago, as two solar projects and a gas-fired
power plant neared completion. New awards for the quarter were $382
million, including a new gas-fired power plant in the United
States, and compares with $846 million in the third quarter of
2013. Ending backlog was $1.8 billion, compared with $2.1 billion a
year ago.
Results for the Nine
Months
Net earnings attributable to Fluor from continuing operations
for the nine months ended September 30, 2014 were
$495 million, or $3.08 per diluted share. This compares with
$501 million, or $3.05 per diluted share, for the first nine months
of 2013. Revenue declined to $16.1 billion, compared with $21.1
billion for the first nine months of 2013, mainly due to a decline
in contributions from the mining and metals business line.
Other Matters
Discontinued Operations
In October 2014, the Company entered into a settlement agreement
with counsel for a number of plaintiffs who had filed lawsuits
against the Company relating to the Doe Run lead business, which
the Company sold in 1994. As a result, the Company updated its
assessment of its loss contingency and has recorded an additional
after-tax charge in the third quarter of approximately $114
million, or $0.71 per diluted share from discontinued operations.
For the nine months ended September 30, 2014, the after-tax charge
from discontinued operations is approximately $199 million, or
$1.24 per diluted share. This charge is expected to result in cash
outflows upon the receipt of releases from the plaintiffs. The
Company continues to seek to enforce its rights to indemnification
from the buyer pursuant to the terms of the 1994 sale
agreement.
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. The settlement of the plan, subject to
regulatory approval, is expected to be complete in 2015.
Outlook
The Company is narrowing its 2014 guidance for EPS from
continuing operations to a range of $4.10 to $4.30 per diluted
share, from the previous range of $4.10 to $4.45 per diluted share.
For 2015, the Company is establishing its initial EPS guidance at a
range of $4.50 to $5.00 per diluted share, excluding any pension
settlement-related charges which are not fully estimable at this
time. EPS guidance for 2015 reflects a rising backlog and solid
growth opportunities in Oil & Gas and stable to moderate
improvement in the Company’s other end markets.
Third Quarter Conference
Call
Fluor will host a conference call at 5:30 p.m. Eastern time on
Thursday, October 30, 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
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 109 on
the FORTUNE 500 list. With more than 40,000 employees worldwide,
the company's revenue for 2013 was $27.4 billion. Visit Fluor at
www.fluor.com and follow 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, 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; intense competition in the global engineering,
procurement and construction industry, which can place downward
pressure on the Company’s contract prices and profit margins; the
Company's failure to receive anticipated new contract awards and
the related impacts on revenues, earnings, staffing levels and
costs; 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; failure to obtain
favorable results in existing or future litigation or dispute
resolution proceedings; 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 may increase costs or delay project schedules; client
cancellations of, or scope adjustments to, existing contracts, and
the related impacts on staffing levels and cost; foreign economic
and political uncertainties that could lead to project disruptions,
increased costs and potential losses; international security risks;
delays or defaults in client payments; failure to meet timely
completion or performance standards that could result in higher
costs, reduced profits or, in some cases, losses on projects;
liabilities arising from faulty services; the impact of
anti-bribery and international trade laws and regulations; 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 or
inability to protect intellectual property; foreign exchange risks;
failure to maintain safe worksites; the impact of environmental,
health and safety regulations or other laws; possible limitations
on bonding or letter of credit capacity; the Company’s ability to
secure appropriate insurance; the availability of credit and
restrictions imposed by credit facilities, both for the Company and
our clients, suppliers, subcontractors or other partners; and risks
or uncertainties associated with acquisitions, dispositions and
investments. 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, 2014. Such filings are
available either publicly or upon request from Fluor's Investor
Relations Department: (469) 398-7220. 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
2014 2013 Revenue $ 5,440.1 $ 6,684.2 Cost and
expenses: Cost of revenue 5,060.0 6,329.7 Corporate general and
administrative expense 35.1 46.1 Interest expense, net 1.6
3.7 Total cost and expenses 5,096.7
6,379.5 Earnings from continuing operations before taxes
343.4 304.7 Income tax expense 114.6 87.4
Earnings from continuing operations 228.8 217.3 Loss from
discontinued operations, net of taxes (113.9 ) - Net
earnings 114.9 217.3 Less: Net earnings attributable to
noncontrolling interests 45.4 44.3 Net
earnings attributable to Fluor Corporation $ 69.5 $ 173.0
Amounts attributable to Fluor Corporation: Earnings from continuing
operations $ 183.4 $ 173.0 Loss from discontinued operations, net
of taxes (113.9 ) - Net earnings $ 69.5 $
173.0 Basic earnings (loss) per share attributable to Fluor
Corporation: Earnings from continuing operations $ 1.17 $ 1.06 Loss
from discontinued operations, net of taxes (0.73 ) -
Net earnings $ 0.44 $ 1.06 Weighted average shares 157.3
162.9 Diluted earnings (loss) per share attributable to Fluor
Corporation: Earnings from continuing operations $ 1.15 $ 1.05 Loss
from discontinued operations, net of taxes (0.71 ) -
Net earnings $ 0.44 $ 1.05 Weighted average shares 159.5
164.8 New awards $ 6,011.4 $ 5,605.7 Backlog $ 42,269.8 $ 36,481.1
Work performed $ 5,299.5 $ 6,534.6
NINE MONTHS
ENDED SEPTEMBER 30 2014 2013 Revenue $ 16,076.4 $
21,060.2 Cost and expenses: Cost of revenue 15,038.7 20,030.9
Corporate general and administrative expense 129.6 110.6 Interest
expense, net 8.0 8.9 Total cost and expenses
15,176.3 20,150.4 Earnings from continuing
operations before taxes 900.1 909.8 Income tax expense 282.9
271.8 Earnings from continuing operations 617.2 638.0
Loss from discontinued operations, net of taxes (199.0 )
- Net earnings 418.2 638.0 Less: Net earnings attributable
to noncontrolling interests 121.8 137.0 Net
earnings attributable to Fluor Corporation $ 296.4 $ 501.0
Amounts attributable to Fluor Corporation: Earnings from continuing
operations $ 495.4 $ 501.0 Loss from discontinued operations, net
of taxes (199.0 ) - Net earnings $ 296.4 $
501.0 Basic earnings (loss) per share attributable to Fluor
Corporation: Earnings from continuing operations $ 3.12 $ 3.08 Loss
from discontinued operations, net of taxes (1.25 ) -
Net earnings $ 1.87 $ 3.08 Weighted average shares 158.7
162.7 Diluted earnings (loss) per share attributable to Fluor
Corporation: Earnings from continuing operations $ 3.08 $ 3.05 Loss
from discontinued operations, net of taxes (1.24 ) -
Net earnings $ 1.84 $ 3.05 Weighted average shares 160.8
164.3 New awards $ 22,543.0 $ 19,311.3 Backlog $ 42,269.8 $
36,481.1 Work performed $ 15,648.1 $ 20,606.2
FLUOR CORPORATION
Unaudited BUSINESS SEGMENT FINANCIAL REVIEW
($ in millions) THREE MONTHS ENDED SEPTEMBER
30 2014 2013 Revenue Oil & Gas $
3,231.6 $ 2,892.7 Industrial & Infrastructure 1,216.0 2,665.0
Government 615.1 675.2 Global Services 140.5 149.7 Power
236.9 301.6
Total revenue $
5,440.1 $ 6,684.2
Segment profit $ and margin % Oil & Gas $ 178.6 5.5 % $
108.3 3.7 % Industrial & Infrastructure 101.4 8.3 % 132.4 5.0 %
Government 29.6 4.8 % 37.8 5.6 % Global Services 19.4 13.8 % 24.5
16.4 % Power 5.7 2.4 % 7.6 2.5 %
Total segment profit $ and margin % $ 334.7
6.2 % $ 310.6 4.6 %
Corporate general and administrative expense (35.1 ) (46.1 )
Interest expense, net (1.6 ) (3.7 ) Earnings attributable to
noncontrolling interests 45.4 43.9
Earnings from continuing operations before taxes $
343.4 $ 304.7
NINE MONTHS ENDED SEPTEMBER 30 2014 2013
Revenue Oil & Gas $ 8,778.8 $ 8,518.5 Industrial &
Infrastructure 4,370.6 8,879.5 Government 1,806.9 2,101.0 Global
Services 428.3 454.0 Power 691.8 1,107.2
Total revenue $ 16,076.4
$ 21,060.2 Segment profit $ and
margin % Oil & Gas $ 483.9 5.5 % $ 319.6 3.8 % Industrial
& Infrastructure 298.8 6.8 % 388.7 4.4 % Government 56.0 3.1 %
92.7 4.4 % Global Services 58.0 13.5 % 79.8 17.6 % Power
19.2 2.8 % 11.4 1.0 %
Total segment profit
$ and margin % $ 915.9 5.7 %
$ 892.2 4.2 % Corporate general
and administrative expense (129.6 ) (110.6 ) Interest expense, net
(8.0 ) (8.9 ) Earnings attributable to noncontrolling interests
121.8 137.1
Earnings from continuing
operations before taxes $ 900.1 $
909.8 FLUOR
CORPORATION Unaudited SELECTED BALANCE SHEET
ITEMS ($ in millions, except per share amounts)
SEPTEMBER 30, DECEMBER 31, 2014 2013
Cash and marketable securities, including noncurrent $ 2,401.5 $
2,745.0 Total current assets 5,659.5 6,003.7 Total assets 8,048.7
8,323.9 Total short-term debt 29.8 29.8 Total current liabilities
3,303.3 3,407.2 Long-term debt 496.9 496.6 Shareholders' equity
3,558.9 3,757.0 Total debt to capitalization % (based on
shareholders' equity) 12.9 % 12.3 % Shareholders' equity per share
$ 22.74 $ 23.29
SELECTED CASH FLOW ITEMS ($
in millions) NINE MONTHS ENDED SEPTEMBER 30
2014 2013 Cash provided by operating
activities $
407.3 $
702.5
Investing activities Net (purchases) sales and maturities of
marketable securities (42.4 ) 12.1 Capital expenditures (222.6 )
(181.1 ) Proceeds from disposal of property, plant and equipment
72.5 43.7 Proceeds from sales of equity method investments 44.0 3.0
Investments in partnerships and joint ventures (34.2 ) (37.5 )
Consolidation of a variable interest entity - 24.7 Acquisitions -
(7.7 ) Other items 2.0 9.1
Cash
utilized by investing activities (180.7 )
(133.7 ) Financing activities
Repurchase of common stock (410.6 ) - Dividends paid (93.0 ) (52.5
) Repayment of 5.625% Municipal Bonds - (17.8 ) Repayment of
convertible debt and notes payable (0.1 ) (8.6 ) Distributions paid
to noncontrolling interests, net of capital contributions
(73.3
)
(78.0 ) Other Items 14.7 21.2
Cash
utilized by financing activities (562.3 )
(135.7 ) Effect of exchange rate
changes on cash (47.7 )
(50.1 ) Increase (decrease) in cash and
cash equivalents $
(383.4 ) $
383.0
Depreciation $
143.8 $
162.3
FLUOR CORPORATION
Supplemental Fact Sheet Unaudited
NEW AWARDS ($ in millions) THREE MONTHS
ENDED SEPTEMBER 30 2014 2013 % Chg
Oil & Gas $ 4,469 74 % $ 2,355 42 % 90 % Industrial &
Infrastructure 460 8 % 472 8 % (3 )% Government 700 12 % 1,933 35 %
(64 )% Power 382 6 % 846
15 % (55 )%
Total new awards $ 6,011
100 % $ 5,606
100 % 7 % NINE MONTHS
ENDED SEPTEMBER 30 2014 2013 % Chg
Oil & Gas $ 14,788 66 % $ 8,729 45 % 69 % Industrial &
Infrastructure 2,633 12 % 6,284 33 % (58 )% Government 4,536 20 %
2,945 15 % 54 % Power 586 2 % 1,353
7 % (57 )%
Total new awards $
22,543 100 % $
19,311 100 % 17 %
BACKLOG TRENDS ($ in millions)
AS OF SEPTEMBER 30 2014 2013 %
Chg Oil & Gas $ 26,503 63 % $ 18,740 51 % 41 %
Industrial & Infrastructure 8,715 21 % 13,806 38 % (37 )%
Government 5,218 12 % 1,796 5 % NM Power 1,834
4 % 2,139 6 % (14 )%
Total backlog
$ 42,270 100 % $
36,481 100 % 16 %
United States $ 11,887 28 % $ 12,551 34 % (5 )% The Americas
(excluding the United States) 14,029 33 % 10,442 29 % 34 % Europe,
Africa and the Middle East 12,776 30 % 10,916 30 % 17 % Asia
Pacific (including Australia) 3,578 9 %
2,572 7 % 39 %
Total backlog $
42,270 100 % $
36,481 100 % 16 %
NM - Not meaningful
Fluor CorporationMedia RelationsBrian Mershon,
469-398-7621orEric Krantz, 281-263-6030orInvestor RelationsKen
Lockwood, 469-398-7220orJason Landkamer, 469-398-7222
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