EXHIBIT 99.1
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Fluor Corporation
One Enterprise Drive
Aliso Viejo, California 92656-2606 | | Jerry Holloway/Leann Vandergrift Media Relations 949.349.7411/7420 |
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| 949.349.2000 tel | | Lila Churney |
| 949.349.5014 fax | | Investor Relations |
| | 949.349.3909 tel |
| | 949.349.5375 fax |
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| News Release | |  |
FLUOR REPORTS CONTINUED GROWTH IN
NEW AWARDS AND BACKLOG IN THIRD QUARTER RESULTS
ALISO VIEJO, Calif. – October 27, 2004 – Fluor Corporation (NYSE: FLR) today announced net earnings for its third quarter ended September 30, 2004 of $47.3 million, or 57 cents per share, compared with net earnings in the third quarter last year of $44.1 million, or 55 cents per share. Revenues increased 11 percent to $2.4 billion from $2.1 billion a year ago.
New project awards in the third quarter increased 18 percent to $3.2 billion compared with $2.7 billion in the same quarter of 2003, continuing the trend of strong new bookings experienced throughout the first half of the year. New awards in the quarter were distributed broadly across the Industrial & Infrastructure, Oil & Gas, and Government segments, and included the annual booking for Fluor’s two major ongoing Department of Energy projects. Consolidated backlog grew 33 percent to $13.7 billion, compared with $10.3 billion a year ago, and up from $12.9 billion at the end of the second quarter.
“Fluor’s backlog continues to build as the global economy improves and capital spending strengthens,” said Chairman and Chief Executive Officer Alan Boeckmann. “This quarter again reflects the benefit of our market diversity. While the power market is clearly hitting the bottom of its cycle, the majority of Fluor’s markets are strong, and continue to support our positive outlook for further growth.”
Consolidated operating profit in the third quarter was $95.5 million, compared with $97.5 million a year ago. Fluor’s operating margin in the quarter was 4.0 percent compared with 4.6 percent last year.
Corporate G&A was $23.7 million compared with $33.5 million in the third quarter of 2003. This quarter included a gain of $5.5 million related to the final disposal of a residual interest in a property sold by the company in 1985, and the net effect of several adjustments
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related to currency translation and certain accruals. Fluor’s financial condition remains strong, with cash and securities of $562 million at the end of the quarter compared with $595 million at the end of the second quarter.
Business Outlook
The positive outlook for expanding business prospects across Fluor’s markets is reflected in the strong level of new awards and backlog growth achieved throughout the first nine months of the year. Although the timing of major new project awards is difficult to predict, the company continues to anticipate further growth in backlog, driven by ongoing investment and rising capital spending in key markets.
Based on year-to-date performance, including the expected sharp decline in Power, 2004 earnings will be relatively flat. Considering the continuing uncertainties regarding the level and pace of Iraq reconstruction activity, which has slowed in recent months, the company’s earnings guidance for 2004 is now in the range of $2.15 to $2.25 per share.
Looking ahead, strong new awards in 2004 combined with continuing broad-based expansion in backlog have set the stage for renewed earnings growth in 2005. The company continues to caution investors regarding the lag time inherent in translating rising backlog into earnings growth during the early stages of project execution. Given the variability associated with the timing of major new awards and the pace of project execution, the company’s initial guidance for 2005 is a range of $2.30 to $2.60 per share.
Business Segments
Fluor’s Oil & Gas segment reported operating profit of $45.1 million, an increase of 63 percent compared with $27.7 million in the third quarter a year ago. Revenues increased 74 percent to $965 million from $555 million last year. Operating margin in the quarter was 4.7 percent compared with 5.0 percent a year ago. The strong third quarter operating profit for the Oil & Gas segment reflects increased work performed and was enhanced by good progress and transition to field activities on two major international projects. Quarterly operating margin can vary depending on the overall project mix and types of services being performed.
Quarterly operating profit for the Industrial & Infrastructure segment was $16.8 million, down 9 percent from $18.4 million in the third quarter last year. Revenues declined 16 percent to $557 million from $664 million a year ago, primarily reflecting the residual impact of a lower
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level of new awards and backlog in the second half of last year, along with slower startup of certain new projects. Operating margin for the quarter was 3.0 percent compared with 2.8 percent last year. The quarterly operating profit and margin included a modest net negative impact for a provision taken on an estimated project loss, partially offset by favorable resolution of a project related dispute.
Fluor’s Government segment posted another strong quarter, increasing operating profit by 54 percent to $18.2 million, compared with $11.8 million in the third quarter a year ago. Revenues increased 31 percent to $530 million, up from $403 million in the same quarter last year. The year-over-year improvement in profits and revenues is primarily related to reconstruction activity in Iraq, which had not yet begun in the year ago period. Operating margin for the third quarter was 3.5 percent, up from 2.9 percent in the same quarter of 2003, primarily due to strong progress and performance on Department of Energy projects.
Operating profit for Fluor’s Global Services segment was $25.5 million, an increase of 35 percent, compared with $18.9 million in the third quarter a year ago. The profit improvement is due primarily to higher levels of procurement and increased temporary staffing services, driven by overall growth in Fluor’s work performed. Revenues increased 19 percent to $280 million from $235 million last year, primarily driven by the company’s Operations & Maintenance business. The operating margin in the quarter was 9.1 percent compared with 8.1 percent last year.
Fluor’s Power segment reported an operating loss of $10.1 million compared with an operating profit of $20.7 million in the third quarter a year ago. Revenues declined 88 percent to $32 million from $264 million last year. The expected decline in Power results in the second half of this year was further impacted this quarter by costs associated with the startup and commissioning of a waste-coal power plant, caused by unanticipated problems in the fuel mix preparation process, which are being corrected.
Results for the Nine Months
Earnings from continuing operations and net earnings for the first nine months of 2004 were $138.8 million, or $1.68 per share. Earnings from continuing operations for the same period in 2003 were $128.0 million, or $1.60 per share. Including the impact from discontinued operations and the cumulative effect of the change in accounting principle recorded in the first quarter, Fluor’s net earnings through the first nine months of 2003 were $106.0 million, or $1.32
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per share. Revenues for the 2004 nine-month period were $6.6 billion compared with $6.4 billion in 2003.
Third Quarter Conference Call
Fluor will host a conference call at 5:30 a.m. Pacific Daylight Time on Thursday, October 28, which will be webcast live on the Internet and can be accessed by logging onto http://investor.fluor.com. The webcast will be archived for 30 days following the call.
About Fluor Corporation
Fluor provides services on a global basis in the fields of engineering, procurement, construction, operations, maintenance and project management. Headquartered in Aliso Viejo, Calif., Fluor is a FORTUNE 500 company with revenues of nearly $9 billion in 2003. For more information, visit www.fluor.com.
Forward-Looking Statements: This release contains forward-looking statements, including, without limitation, statements relating to the expected performance of the Company’s business and growth in markets which the Company serves, the anticipated growth in the Company’s backlog and the outlook for expanding business prospects across the Company’s markets. The forward-looking statements are based on current management expectations and involve risks and uncertainties. Actual results may differ materially as a result of several factors, including, among other things: failure to achieve projected earning levels; the timely and successful implementation of strategic initiatives; customer cancellations of, or scope adjustments to, existing contracts; difficulties or delays incurred in the execution of contracts; decreased capital investment or expenditures, or a failure to make anticipated increased capital investment or expenditures, by the Company’s clients including our oil, gas, transportation, industrial, infrastructure and government clients; the Company’s failure to receive anticipated new contract awards; increased liability risks in any of the markets the Company serves; the Company’s inability to successfully convert front-end engineering services into future project awards; the cyclical nature of many of the markets the Company serves; the Company’s ability to successfully identify and integrate acquisitions; and, changes in global business, economic, political and social conditions. 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 1. Business — Company Risk Factors” in the Company’s Form 10-K filed on March 15, 2004. Such filings are available either publicly or upon request from Fluor’s Investor Relations Department: (949) 349-3909. The Company disclaims any intent or obligation to update its forward-looking statements in light of new information or future events.
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FLUOR CORPORATION
CONSOLIDATED FINANCIAL RESULTS
(in millions, except per share amounts)
Unaudited
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THREE MONTHS ENDED SEPTEMBER 30
| | 2004
| | 2003
|
| Revenues | | $ | 2,362.7 | | | $ | 2,120.8 | |
| Costs and Expenses: | | | | | | | | |
| Cost of Revenues | | | 2,267.2 | | | | 2,023.3 | |
| Corporate G&A | | | 23.7 | | | | 33.5 | |
| Net Interest Income | | | (1.1 | ) | | | (1.1 | ) |
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| Total Costs and Expenses | | | 2,289.8 | | | | 2,055.7 | |
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| Earnings before Income Taxes | | | 72.9 | | | | 65.1 | |
| Income Tax Expense | | | 25.6 | | | | 21.0 | |
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| Net Earnings | | $ | 47.3 | | | $ | 44.1 | |
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| Basic Earnings per Share | | | | | | | | |
| Net Earnings | | | .58 | | | | .55 | |
| Weighted Average Shares | | | 81.8 | | | | 79.9 | |
| Diluted Earnings per Share | | | | | | | | |
| Net Earnings | | | .57 | | | | .55 | |
| Weighted Average Shares | | | 83.1 | | | | 80.6 | |
| New Awards | | $ | 3,225.4 | | | $ | 2,736.4 | |
| Backlog | | $ | 13,745.9 | | | $ | 10,303.8 | |
| Work Performed | | $ | 2,312.6 | | | $ | 2,079.4 | |
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NINE MONTHS ENDED SEPTEMBER 30
| | 2004
| | 2003
|
| Revenues | | $ | 6,640.4 | | | $ | 6,441.2 | |
| Costs and Expenses: | | | | | | | | |
| Cost of Revenues | | | 6,346.4 | | | | 6,149.9 | |
| Corporate G&A | | | 84.5 | | | | 101.6 | |
| Net Interest Income | | | (1.0 | ) | | | (2.1 | ) |
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| Total Costs and Expenses | | | 6,429.9 | | | | 6,249.4 | |
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| Earnings from Continuing Operations before Income Taxes | | | 210.5 | | | | 191.8 | |
| Income Tax Expense | | | 71.7 | | | | 63.8 | |
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| Earnings from Continuing Operations | | | 138.8 | | | | 128.0 | |
| Loss from Discontinued Operations | | | — | | | | (11.6 | ) |
| Cumulative Effect of Change in Accounting Principle | | | — | | | | (10.4 | ) |
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| Net Earnings | | $ | 138.8 | | | $ | 106.0 | |
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| Basic Earnings (Loss) per Share | | | | | | | | |
| Earnings from Continuing Operations | | $ | 1.71 | | | $ | 1.61 | |
| Loss from Discontinued Operations | | | .00 | | | | (.15 | ) |
| Cumulative Effect of Change in Accounting Principle | | | .00 | | | | (.13 | ) |
| Net Earnings | | | 1.71 | | | | 1.33 | |
| Weighted Average Shares | | | 81.3 | | | | 79.6 | |
| Diluted Earnings (Loss) per Share | | | | | | | | |
| Earnings from Continuing Operations | | $ | 1.68 | | | $ | 1.60 | |
| Loss from Discontinued Operations | | | .00 | | | | (.15 | ) |
| Cumulative Effect of Change in Accounting Principle | | | .00 | | | | (.13 | ) |
| Net Earnings | | | 1.68 | | | | 1.32 | |
| Weighted Average Shares | | | 82.6 | | | | 80.2 | |
| New Awards | | $ | 9,659.6 | | | | 7,622.6 | |
| Backlog | | $ | 13,745.9 | | | $ | 10,303.8 | |
| Work Performed | | $ | 6,498.9 | | | $ | 6,319.6 | |
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FLUOR CORPORATION
SELECTED BALANCE SHEET ITEMS (Unaudited)
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($ in millions, except per share amounts)
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| | | SEPTEMBER 30, 2004
| | DECEMBER 31, 2003
|
| Cash and Cash Equivalents | | $ | 561.5 | | | $ | 496.5 | |
| Total Current Assets | | | 2,573.7 | | | | 2,213.6 | |
| Total Assets | | | 3,768.4 | | | | 3,449.5 | |
| Total Short-Term Debt | | | — | | | | 221.5 | |
| Total Current Liabilities | | | 1,707.2 | | | | 1,829.1 | |
| Long-term Debt | | | 347.6 | | | | 44.7 | |
| Shareholders’ Equity | | | 1,228.4 | | | | 1,081.5 | |
| Total Debt to Capitalization % | | | 22.1 | % | | | 19.7 | % |
| Shareholders’ Equity Per Share | | $ | 14.66 | | | $ | 13.17 | |
OTHER ITEMS (Unaudited)
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($ in millions)
| | Three Months Ended | | Nine Months Ended |
| | | September 30
| | September 30
|
| | | 2004
| | 2003
| | 2004
| | 2003
|
| Depreciation ** | | $ | 20.8 | | | $ | 19.4 | | | $ | 63.5 | | | $ | 59.9 | |
| Capital Expenditures ** | | | 26.4 | | | | 19.2 | | | | 68.8 | | | | 47.6 | |
| ** | | Continuing operations only. |
BUSINESS SEGMENT FINANCIAL REVIEW (Unaudited)
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($ in millions)
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THREE MONTHS ENDED SEPTEMBER 30
| | 2004
| | | | | | | | | | 2003
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Revenues | | | | | | | | | | | | | | | | | | | | | | | | |
| Oil & Gas | | $ | 965.1 | | | | | | | | | | | $ | 555.0 | | | | | | | | | |
| Industrial & Infrastructure | | | 556.7 | | | | | | | | | | | | 663.7 | | | | | | | | | |
| Government | | | 529.7 | | | | | | | | | | | | 403.3 | | | | | | | | | |
| Global Services | | | 279.5 | | | | | | | | | | | | 235.1 | | | | | | | | | |
| Power | | | 31.7 | | | | | | | | | | | | 263.7 | | | | | | | | | |
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Total revenues | | $ | 2,362.7 | | | | | | | | | | | $ | 2,120.8 | | | | | | | | | |
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Operating Profit / Margin % | | | $ | | | | | | | | % | | | | $ | | | | | | | | % | |
| Oil & Gas | | $ | 45.1 | | | | | | | | 4.7 | | | $ | 27.7 | | | | | | | | 5.0 | |
| Industrial & Infrastructure | | | 16.8 | | | | | | | | 3.0 | | | | 18.4 | | | | | | | | 2.8 | |
| Government | | | 18.2 | | | | | | | | 3.5 | | | | 11.8 | | | | | | | | 2.9 | |
| Global Services | | | 25.5 | | | | | | | | 9.1 | | | | 18.9 | | | | | | | | 8.1 | |
| Power | | | (10.1 | ) | | | | | | | (32.0 | ) | | | 20.7 | | | | | | | | 7.8 | |
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Total operating profit / margin % | | $ | 95.5 | | | | | | | | 4.0 | | | $ | 97.5 | | | | | | | | 4.6 | |
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NINE MONTHS ENDED SEPTEMBER 30
| | 2004
| | | | | | | | | | 2003
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Revenues | | | | | | | | | | | | | | | | | | | | | | | | |
| Oil & Gas | | $ | 2,274.0 | | | | | | | | | | | $ | 1,938.4 | | | | | | | | | |
| Industrial & Infrastructure | | | 1,519.3 | | | | | | | | | | | | 1,985.5 | | | | | | | | | |
| Government | | | 1,698.7 | | | | | | | | | | | | 1,088.7 | | | | | | | | | |
| Global Services | | | 896.9 | | | | | | | | | | | | 824.2 | | | | | | | | | |
| Power | | | 251.5 | | | | | | | | | | | | 604.4 | | | | | | | | | |
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Total revenues | | $ | 6,640.4 | | | | | | | | | | | $ | 6,441.2 | | | | | | | | | |
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Operating Profit / Margin % | | | $ | | | | | | | | % | | | | $ | | | | | | | | % | |
| Oil & Gas | | $ | 102.6 | | | | | | | | 4.5 | | | $ | 85.1 | | | | | | | | 4.4 | |
| Industrial & Infrastructure | | | 42.3 | | | | | | | | 2.8 | | | | 44.9 | | | | | | | | 2.3 | |
| Government | | | 63.5 | | | | | | | | 3.7 | | | | 32.4 | | | | | | | | 3.0 | |
| Global Services | | | 68.8 | | | | | | | | 7.7 | | | | 69.1 | | | | | | | | 8.4 | |
| Power | | | 16.8 | | | | | | | | 6.7 | | | | 59.8 | | | | | | | | 9.9 | |
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Total operating profit / margin % | | $ | 294.0 | | | | | | | | 4.4 | | | $ | 291.3 | | | | | | | | 4.5 | |
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FLUOR CORPORATION
Supplemental Fact Sheet
NEW AWARDS
($ in millions)
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THREE MONTHS ENDED SEPTEMBER 30
| | 2004
| | 2003
| | % Chg
|
| Oil & Gas | | $ | 612 | | | | 19 | % | | $ | 398 | | | | 14 | % | | | 54 | % |
| Industrial & Infrastructure | | | 1,133 | | | | 35 | % | | | 696 | | | | 25 | % | | | 63 | % |
| Government | | | 1,197 | | | | 37 | % | | | 1,166 | | | | 43 | % | | | 3 | % |
| Global Services | | | 274 | | | | 9 | % | | | 267 | | | | 10 | % | | | 3 | % |
| Power | | | 9 | | | | 0 | % | | | 210 | | | | 8 | % | | | -96 | % |
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TOTAL NEW AWARDS | | $ | 3,225 | | | | 100 | % | | $ | 2,737 | | | | 100 | % | | | 18 | % |
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NINE MONTHS ENDED SEPTEMBER 30
| | 2004
| | 2003
| | % Chg
|
| Oil & Gas | | $ | 2,858 | | | | 30 | % | | $ | 2,934 | | | | 39 | % | | | -3 | % |
| Industrial & Infrastructure | | | 3,919 | | | | 41 | % | | | 2,075 | | | | 27 | % | | | 89 | % |
| Government | | | 1,848 | | | | 19 | % | | | 1,454 | | | | 19 | % | | | 27 | % |
| Global Services | | | 920 | | | | 9 | % | | | 844 | | | | 11 | % | | | 9 | % |
| Power | | | 115 | | | | 1 | % | | | 316 | | | | 4 | % | | | -64 | % |
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TOTAL NEW AWARDS | | $ | 9,660 | | | | 100 | % | | $ | 7,623 | | | | 100 | % | | | 27 | % |
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BACKLOG TRENDS ($ in millions) | | | | | | | | | | | | | | | | | | | | |
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AS OF SEPTEMBER 30
| | 2004
| | 2003
| | % Chg
|
| Oil & Gas | | $ | 4,802 | | | | 35 | % | | $ | 3,349 | | | | 33 | % | | | 43 | % |
| Industrial & Infrastructure | | | 5,240 | | | | 38 | % | | | 3,451 | | | | 33 | % | | | 52 | % |
| Government | | | 1,688 | | | | 12 | % | | | 1,320 | | | | 13 | % | | | 28 | % |
| Global Services | | | 1,938 | | | | 14 | % | | | 1,619 | | | | 16 | % | | | 20 | % |
| Power | | | 78 | | | | 1 | % | | | 565 | | | | 5 | % | | | -86 | % |
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TOTAL BACKLOG | | $ | 13,746 | | | | 100 | % | | $ | 10,304 | | | | 100 | % | | | 33 | % |
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| United States | | $ | 5,567 | | | | 40 | % | | $ | 6,137 | | | | 60 | % | | | -9 | % |
| The Americas | | | 2,695 | | | | 20 | % | | | 1,214 | | | | 12 | % | | | 122 | % |
| Europe, Africa and the Middle East | | | 4,503 | | | | 33 | % | | | 2,440 | | | | 23 | % | | | 85 | % |
| Asia Pacific | | | 981 | | | | 7 | % | | | 513 | | | | 5 | % | | | 91 | % |
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TOTAL BACKLOG | | $ | 13,746 | | | | 100 | % | | $ | 10,304 | | | | 100 | % | | | 33 | % |
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