EXHIBIT 99.1
Fluor Corporation | Jerry Holloway/Leann Vandergrift | |
One Enterprise Drive | Media Relations | |
Aliso Viejo, California 92656-2606 | 949.349.7411/7420 | |
949.349.2000 tel | Lila Churney | |
949.349.5014 fax | Investor Relations | |
949.349.3909 tel | ||
949.349.5375 fax |
News Release
Fluor Reports Preliminary 2004 Results with
Record New Awards and Strong Backlog Growth
ALISO VIEJO, Calif., – February 2, 2005 – Fluor Corporation (NYSE: FLR) today announced preliminary financial results for its year ended December 31, 2004. Net earnings for the 2004 year were $186.3 million, or $2.25 per share, compared with $157.5 million, or $1.95 per share, in 2003, which included a net loss from discontinued operations and an after-tax provision for the cumulative effect of a change in accounting principle totaling $22.0 million, or 28 cents per share. Revenues for 2004 increased 7 percent to $9.4 billion compared with $8.8 billion in 2003.
Net earnings for the fourth quarter were $47.5 million, or 57 cents per share, compared with $51.4 million, or 63 cents per share, in 2003. Revenues for the quarter were $2.7 billion, up 16 percent compared with $2.4 billion a year ago.
New awards for 2004 were a record $13.0 billion, up 31 percent from $10.0 billion in 2003. Awards in the fourth quarter continued the strong trend experienced throughout the year, increasing 43 percent to $3.4 billion, compared with $2.4 billion a year ago. Consolidated backlog grew 39 percent to $14.8 billion, compared with $10.6 billion at the end of last year, and was up from $13.7 billion at the end of the third quarter.
“We are pleased with our overall performance in 2004,” said Chairman and Chief Executive Officer Alan Boeckmann. “We delivered earnings performance at the high end of our
guidance. This was accomplished by growing our Oil & Gas, Government, Industrial & Infrastructure and Global Services segments, offsetting the anticipated decline in Fluor’s Power business.
“We’re particularly encouraged,” continued Boeckmann, “by the strong growth we’ve achieved in backlog this year, driven by strengthening trends in capital spending across a number of Fluor’s markets, building a solid foundation for future earnings growth. As expected, we’re starting to see renewed revenue growth, with increases year over year in both the third and fourth quarters.”
Consolidated operating profit for the year was $410.9 million, up from $406.3 million a year ago. While revenues were up, driven by increases in Oil & Gas, Government, and Global Services, operating margins decreased to 4.4 percent from 4.6 percent in 2003. The lower margin was primarily due to the significant fall-off in Power which delivered particularly strong margins as projects completed in 2003.
Corporate G&A expense for the year was reduced by 6 percent to $133.7 million compared with a year ago. Fluor’s financial condition remains strong, with cash and securities of $614 million at year-end. With $130 million of commercial paper outstanding, the debt-to-total capital ratio was 27 percent.
Outlook
Looking ahead to 2005, Fluor continues to see a favorable outlook for new project prospects. With few exceptions, the major markets that Fluor serves are in a positive part of their business cycle, and the company is well positioned to capitalize on broad-based, strengthening capital spending trends. With $14.8 billion in backlog, the company is positioned to continue to grow revenues and earnings over the next several years. During the year, the
company began work on a significant number of new multi-year projects. Given the profit lag associated with the slow ramp-up of new projects and variability associated with the timing of future new awards, the company’s guidance for 2005 at this early point in the year remains in the range of $2.30 to $2.60 per share.
Business Segments
Fluor’s Oil & Gas segment reported strong operating profit for the year of $149.9 million, an increase of 24 percent compared with $121.2 million in 2003. Revenues for the segment increased 21 percent to $3.2 billion, while the operating margin increased slightly to 4.7 percent from 4.6 percent a year ago. These improved results reflect the significant ramp-up in new awards throughout 2003 and 2004 for both upstream and downstream projects globally, and substantial progress on major upstream projects in Russia and the Caspian Sea region.
Operating profit in 2004 for Fluor’s Industrial & Infrastructure segment increased 4 percent to $65.6 million compared with $62.8 million last year. Revenues declined 12 percent to $2.3 billion, impacted by the residual effect of a lower level of new awards in the second half of 2003, along with slower startup of certain new projects. Operating margin increased to 2.9 percent from 2.4 percent in 2003. This improvement reflects a larger proportion of high-margin infrastructure work in the overall mix of the segment. While there was an increase in margins, the year was impacted by an estimated project loss on a transportation project.
Fluor’s Government segment posted a 74 percent increase in operating profit for the year to $83.5 million. The significant growth in the operating profit was driven by a 34 percent increase in revenues to $2.3 billion and an improvement in the operating margin to 3.7 percent from 2.8 percent last year. The year-over-year improvement in revenues, operating profit and
margin were mainly due to reconstruction activity in Iraq and strong performance on environmental remediation programs for the Department of Energy.
Operating profit for the Global Services segment in 2004 was $98.3 million, modestly above last year’s $96.9 million. A 16 percent increase in revenues to $1.3 billion was mainly driven by higher work performed on operations and maintenance projects. The operating margin declined to 7.7 percent compared with 8.7 percent a year ago, mainly due to lower levels of company-wide construction activity, which impacted the segment’s construction equipment business.
Fluor’s Power segment reported $13.6 million in operating profit, a reduction from $77.3 million in 2003. Consistent with the completion of a major cycle of investment in power projects, revenues and operating margin for the power segment declined significantly, as expected. Results were further impacted by costs associated with the startup and commissioning of a waste-coal power plant.
Preliminary Results
The financial information in this announcement reflects the company’s preliminary results subject to completion of the annual audit. Audited financial results will appear in Fluor’s Form 10-K, which will be filed on or before March 16, 2005.
Fourth Quarter and Year-End Conference Call
Fluor will host a conference call at 5:00 a.m. Pacific Standard Time on Thursday, February 3, which will be webcast live on the internet and can be accessed by logging ontohttp://investor.fluor.com. The webcast will be archived for 30 days following the call.
About Fluor Corporation
Fluor Corporation (NYSE: FLR) provides services on a global basis in the fields of engineering, procurement, construction, operations, maintenance and project management. Headquartered in Aliso Viejo, California, Fluor is a FORTUNE 500 company with revenues of $9.4 billion in 2004. For more information, visitwww.fluor.com.
Forward-Looking Statements: This release contains forward-looking statements, including, without limitation, statements relating to the preliminary financial results of the Company pending completion of the Company’s audit, future backlog, revenue and earnings growth opportunities, expected performance of the Company’s business and the expansion of the markets which the Company serves. The forward-looking statements 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: differing financial results upon completion of the Company’s audit; failure to achieve projected backlog, revenue and/or earnings 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; 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.
FLUOR CORPORATION
CONSOLIDATED FINANCIAL RESULTS (PRELIMINARY)
(in millions, except per share amounts)
Unaudited
THREE MONTHS ENDED DECEMBER 31 | 2004 | 2003 | ||||||
Revenues | $ | 2,739.9 | $ | 2,364.5 | ||||
Costs and Expenses: | ||||||||
Cost of Revenues | 2,623.0 | 2,249.5 | ||||||
Corporate G&A | 49.2 | 39.9 | ||||||
Net Interest Income | (2.5 | ) | (1.1 | ) | ||||
Total Costs and Expenses | 2,669.7 | 2,288.3 | ||||||
Earnings before Income Taxes | 70.2 | 76.2 | ||||||
Income Tax Expense | 22.7 | 24.8 | ||||||
Net Earnings | $ | 47.5 | $ | 51.4 | ||||
Basic Earnings per Share | ||||||||
Net Earnings | .58 | .64 | ||||||
Weighted Average Shares | 82.3 | 80.4 | ||||||
Diluted Earnings per Share | ||||||||
Net Earnings | .57 | .63 | ||||||
Weighted Average Shares | 83.4 | 81.6 | ||||||
New Awards | $ | 3,369.0 | $ | 2,353.3 | ||||
Backlog | $ | 14,765.8 | $ | 10,607.1 | ||||
Work Performed | $ | 2,686.6 | $ | 2,315.7 |
YEAR ENDED DECEMBER 31 | 2004 | 2003 | ||||||
Revenues | $ | 9,380.3 | $ | 8,805.7 | ||||
Costs and Expenses: | ||||||||
Cost of Revenues | 8,969.4 | 8,399.4 | ||||||
Corporate G&A | 133.7 | 141.5 | ||||||
Net Interest Income | (3.5 | ) | (3.2 | ) | ||||
Total Costs and Expenses | 9,099.6 | 8,537.7 | ||||||
Earnings from Continuing Operations before Income Taxes | 280.7 | 268.0 | ||||||
Income Tax Expense | 94.4 | 88.5 | ||||||
Earnings from Continuing Operations | 186.3 | 179.5 | ||||||
Loss from Discontinued Operations | — | (11.6 | ) | |||||
Cumulative Effect of Change in Accounting Principle | — | (10.4 | ) | |||||
Net Earnings | $ | 186.3 | $ | 157.5 | ||||
Basic Earnings (Loss) per Share | ||||||||
Earnings from Continuing Operations | $ | 2.28 | $ | 2.25 | ||||
Loss from Discontinued Operations | .00 | (.15 | ) | |||||
Cumulative Effect of Change in Accounting Principle | .00 | (.13 | ) | |||||
Net Earnings | 2.28 | 1.97 | ||||||
Weighted Average Shares | 81.6 | 79.8 | ||||||
Diluted Earnings (Loss) per Share | ||||||||
Earnings from Continuing Operations | $ | 2.25 | $ | 2.23 | ||||
Loss from Discontinued Operations | .00 | (.15 | ) | |||||
Cumulative Effect of Change in Accounting Principle | .00 | (.13 | ) | |||||
Net Earnings | 2.25 | 1.95 | ||||||
Weighted Average Shares | 82.8 | 80.5 | ||||||
New Awards | $ | 13,028.6 | $ | 9,976.0 | ||||
Backlog | $ | 14,765.8 | $ | 10,607.1 | ||||
Work Performed | $ | 9,185.5 | $ | 8,635.3 |
FLUOR CORPORATION
(PRELIMINARY)
Unaudited
SELECTED BALANCE SHEET ITEMS
($ in millions, except per share amounts)
DECEMBER 31, 2004 | DECEMBER 31, 2003 | |||||||
Cash and Cash Equivalents | $ | 613.7 | $ | 496.5 | ||||
Total Current Assets | 2,788.8 | 2,213.6 | ||||||
Total Assets | 4,046.6 | 3,449.5 | ||||||
Total Short-Term Debt | 129.9 | 221.5 | ||||||
Total Current Liabilities | 1,856.7 | 1,829.1 | ||||||
Long-term Debt | 347.6 | 44.7 | ||||||
Shareholders’ Equity | 1,325.4 | 1,081.5 | ||||||
Total Debt to Capitalization % | 26.5 | % | 19.7 | % | ||||
Shareholders’ Equity Per Share | $ | 15.68 | $ | 13.17 |
OTHER ITEMS
($ in millions)
Three Months Ended | Year Ended | |||||||||||||||
December 31 | December 31 | |||||||||||||||
2004 | 2003 | 2004 | 2003 | |||||||||||||
Depreciation ** | $ | 23.5 | $ | 19.8 | $ | 87.0 | $ | 79.7 | ||||||||
Capital Expenditures ** | 35.6 | 31.6 | 104.4 | 79.2 |
** | Continuing operations only. |
BUSINESS SEGMENT FINANCIAL REVIEW
($ in millions)
THREE MONTHS ENDED DECEMBER 31 | 2004 | 2003 | ||||||
Revenues | ||||||||
Oil & Gas | $ | 933.3 | $ | 708.6 | ||||
Industrial & Infrastructure | 776.6 | 611.9 | ||||||
Government | 571.8 | 605.1 | ||||||
Global Services | 383.3 | 284.1 | ||||||
Power | 74.9 | 154.8 | ||||||
Total revenues | $ | 2,739.9 | $ | 2,364.5 | ||||
Operating Profit / Margin % | $ | % | $ | % | ||||||||||||
Oil & Gas | $ | 47.3 | 5.1 | $ | 36.1 | 5.1 | ||||||||||
Industrial & Infrastructure | 23.3 | 3.0 | 17.9 | 2.9 | ||||||||||||
Government | 20.0 | 3.5 | 15.7 | 2.6 | ||||||||||||
Global Services | 29.5 | 7.7 | 27.8 | 9.8 | ||||||||||||
Power | (3.2 | ) | (4.2 | ) | 17.5 | 11.3 | ||||||||||
Total operating profit / margin % | $ | 116.9 | 4.3 | $ | 115.0 | 4.9 | ||||||||||
YEAR ENDED DECEMBER 31 | 2004 | 2003 | ||||||
Revenues | ||||||||
Oil & Gas | $ | 3,207.3 | $ | 2,647.0 | ||||
Industrial & Infrastructure | 2,295.9 | 2,597.4 | ||||||
Government | 2,270.5 | 1,693.8 | ||||||
Global Services | 1,280.2 | 1,108.3 | ||||||
Power | 326.4 | 759.2 | ||||||
Total revenues | $ | 9,380.3 | $ | 8,805.7 | ||||
Operating Profit / Margin % | $ | % | $ | % | ||||||||||||
Oil & Gas | $ | 149.9 | 4.7 | $ | 121.2 | 4.6 | ||||||||||
Industrial & Infrastructure | 65.6 | 2.9 | 62.8 | 2.4 | ||||||||||||
Government | 83.5 | 3.7 | 48.1 | 2.8 | ||||||||||||
Global Services | 98.3 | 7.7 | 96.9 | 8.7 | ||||||||||||
Power | 13.6 | 4.2 | 77.3 | 10.2 | ||||||||||||
Total operating profit / margin % | $ | 410.9 | 4.4 | $ | 406.3 | 4.6 | ||||||||||
FLUOR CORPORATION
Supplemental Fact Sheet (PRELIMINARY)
Unaudited
NEW AWARDS
($ in millions)
THREE MONTHS ENDED DECEMBER 31 | 2004 | 2003 | % Chg | |||||||||||||||||
Oil & Gas | $ | 730 | 22 | % | $ | 752 | 32 | % | -3 | % | ||||||||||
Industrial & Infrastructure | 1,119 | 33 | % | 483 | 21 | % | 132 | % | ||||||||||||
Government | 406 | 12 | % | 540 | 23 | % | -25 | % | ||||||||||||
Global Services | 617 | 18 | % | 408 | 17 | % | 51 | % | ||||||||||||
Power | 497 | 15 | % | 170 | 7 | % | 193 | % | ||||||||||||
TOTAL NEW AWARDS | $ | 3,369 | 100 | % | $ | 2,353 | 100 | % | 43 | % | ||||||||||
YEAR ENDED DECEMBER 31 | 2004 | 2003 | % Chg | |||||||||||||||||
Oil & Gas | $ | 3,587 | 27 | % | $ | 3,686 | 37 | % | -3 | % | ||||||||||
Industrial & Infrastructure | 5,038 | 39 | % | 2,558 | 26 | % | 97 | % | ||||||||||||
Government | 2,254 | 17 | % | 1,995 | 20 | % | 13 | % | ||||||||||||
Global Services | 1,538 | 12 | % | 1,252 | 12 | % | 23 | % | ||||||||||||
Power | 612 | 5 | % | 485 | 5 | % | 26 | % | ||||||||||||
TOTAL NEW AWARDS | $ | 13,029 | 100 | % | $ | 9,976 | 100 | % | 31 | % | ||||||||||
BACKLOG TRENDS
($ in millions)
AS OF DECEMBER 31 | 2004 | 2003 | % Chg | |||||||||||||||||
Oil & Gas | $ | 4,778 | 33 | % | $ | 3,420 | 32 | % | 40 | % | ||||||||||
Industrial & Infrastructure | 5,658 | 38 | % | 3,273 | 31 | % | 73 | % | ||||||||||||
Government | 1,520 | 10 | % | 1,488 | 14 | % | 2 | % | ||||||||||||
Global Services | 2,258 | 15 | % | 1,821 | 17 | % | 24 | % | ||||||||||||
Power | 552 | 4 | % | 605 | 6 | % | -9 | % | ||||||||||||
TOTAL BACKLOG | $ | 14,766 | 100 | % | $ | 10,607 | 100 | % | 39 | % | ||||||||||
United States | $ | 5,418 | 37 | % | $ | 5,041 | 48 | % | 7 | % | ||||||||||
The Americas | 3,781 | 25 | % | 1,190 | 11 | % | 218 | % | ||||||||||||
Europe, Africa and the Middle East | 4,708 | 32 | % | 3,871 | 36 | % | 22 | % | ||||||||||||
Asia Pacific | 859 | 6 | % | 505 | 5 | % | 70 | % | ||||||||||||
TOTAL BACKLOG | $ | 14,766 | 100 | % | $ | 10,607 | 100 | % | 39 | % | ||||||||||