Exhibit 99.1
Fluor Corporation | Keith Stephens / Brian Mershon |
6700 Las Colinas Blvd | Media Relations |
Irving, Texas 75039 | 469.398.7624 / 469.398.7621 tel |
| |
469.398.7000 main tel | Ken Lockwood / Jason Landkamer |
| Investor Relations |
| 469.398.7220 / 469.398.7222 tel |
| 
|
News Release | |
FLUOR REPORTS THIRD QUARTER RESULTS INCLUDING RECORD BACKLOG
· Q3 NEW AWARDS OF $6.7 BILLION
· BACKLOG RISES TO A RECORD $41.8 BILLION
· 2011 EPS GUIDANCE NARROWED TO A RANGE OF $3.20 TO $3.40
· 2012 EPS GUIDANCE ESTABLISHED AT A RANGE OF $3.40 TO $3.80
IRVING, TEXAS — November 3, 2011 — Fluor Corporation (NYSE: FLR) announced financial results for its third quarter ended September 30, 2011. Net earnings attributable to Fluor for the third quarter were $135 million, or $0.78 per diluted share, compared with a loss of $54 million, or $0.30 per diluted share a year ago. Segment profit for the third quarter of 2011 was $236 million, including a $38 million pre-tax charge for increased costs to complete the Greater Gabbard Offshore Wind Project. This compares with segment profit of $38 million in the third quarter of 2010, which was impacted by charges in the Industrial & Infrastructure segment on Greater Gabbard and a completed road project. Revenue for the current quarter increased 10 percent to $6.0 billion, from $5.5 billion in the third quarter of 2010.
“We are encouraged that our strong market position has once again enabled us to book substantial new work and grow our backlog,” said Chief Executive Officer David Seaton. “While there are continuing concerns about the global macroeconomic environment, we have not seen any material change in our clients’ capital spending outlook to date.”
New awards for the third quarter were a strong $6.7 billion, which compares with $7.6 billion a year ago. The current quarter included $2.8 billion of awards in Industrial & Infrastructure, $1.7 billion in Government, $1.6 billion in Oil & Gas and $470 million in Power. Consolidated backlog at the end of the third quarter rose to a record $41.8 billion, which is a $1.5 billion increase over last quarter and a 27 percent increase from a year ago.
Corporate G&A expense for the quarter was $37 million, compared with $40 million in the third quarter of 2010. During the quarter the company completed a $500 million offering of 10 year unsecured notes to enhance cash balances in the United States. The company also repurchased 4.2 million shares during the third quarter for $241 million. Cash plus current and non-current marketable securities rose to $2.8 billion at quarter-end, up from $2.5 billion last quarter and $2.5 billion a year ago.
Outlook
The company’s guidance for 2011 EPS has been narrowed to a range of $3.20 to $3.40 per share, from the previous range of $3.10 to $3.40 per share, reflecting the strength of operating results to date. Looking ahead to 2012, the company expects varying levels of profit growth from all business segments except Power, which continues to experience particularly weak market conditions. The company is establishing its initial guidance for 2012 earnings at a range of $3.40 to $3.80 per share, which includes the estimated impact of ongoing operating expenses associated with the company’s recently announced investment in NuScale Power.
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Business Segments
Fluor’s Oil & Gas segment reported growth in third quarter revenue to $2.2 billion, up 27 percent from the third quarter of 2010. Segment profit was effectively flat at $74 million, compared with $75 million a year ago, reflecting a shift in the current project mix toward lower margin construction activities. New awards in the third quarter totaled $1.6 billion, including topsides for an offshore platform project in Canada and additional scope on a petrochemical project in the Middle East. Ending backlog for Oil & Gas at September 30, 2011 was $14.6 billion, which compares with $14.9 billion last quarter, and is up 25 percent from $11.7 billion a year ago.
Fluor’s Industrial & Infrastructure segment reported an 11 percent revenue increase to $2.4 billion, reflecting continued growth in the mining and metals business line. Segment profit in the third quarter was $67 million, compared with a loss of $147 million a year ago, when a charge of $163 million was taken for cost increases on the Greater Gabbard project and an adverse legal ruling impacted the collectability of $95 million in amounts due the company on a completed road project. During the current quarter the company recorded a charge of $38 million on the Greater Gabbard project for additional costs primarily associated with the installation of subsea cabling. Challenges in the cable installation process have been compounded by the bankruptcy of a critical subcontractor in January which forced the project to secure alternative vessels and equipment. The project is approximately 90 percent complete and is expected to be substantially complete in early 2012. New awards in the quarter were $2.8 billion, including the infrastructure and processing facilities for a major copper project in Peru. Ending backlog rose to $22.3 billion, up from $21.4 billion last quarter and up 29 percent from $17.3 billion a year ago.
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Revenue for the Government segment rose by 11 percent to $882 million in the third quarter of 2011, mainly due to increased activity on LOGCAP IV task orders in Afghanistan, and project activities associated with the gaseous diffusion project in Portsmouth, Ohio which was awarded in the first quarter of 2011. Segment profit for the quarter increased 24 percent to $43 million, from $35 million a year ago, reflecting increased contributions from LOGCAP IV task orders. Third quarter new awards totaled $1.7 billion, compared with $1.2 billion a year ago, including the annual funding of the Portsmouth and Savannah River contracts for the Department of Energy and increased funding for LOGCAP IV task orders in Afghanistan. Ending backlog rose to $1.8 billion, up from $1.0 billion a year ago.
The Global Services segment reported revenue of $390 million, down 7 percent from the third quarter of last year when the operations and maintenance business line had substantial volume from Gulf Coast oil spill cleanup activities. Segment profit rose 11 percent to $39 million, compared with $35 million a year ago, reflecting increased contributions from the equipment and temporary staffing business lines. New awards for operations and maintenance contracts in the third quarter were $302 million, compared with $478 million last year. Backlog was $2.0 billion at the end of the third quarter, which compares with $2.2 billion a year ago.
Fluor’s Power segment reported revenue of $143 million, down from $383 million in the third quarter of 2010. Segment profit in the third quarter declined to $13 million, from $40 million in the third quarter of 2010. Lower segment results are mainly due to the impact of continued weak demand for new power generation capacity coupled with the completion of several large projects in prior periods. Segment new awards were $470 million in the third quarter, including a
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major environmental compliance program in the United States. Ending backlog rose to $1.1 billion, from $744 million last quarter and $855 million a year ago.
Results for the Nine Months
Net earnings attributable to Fluor for the first nine months of 2011 were $441 million, up from $240 million for the first nine months of 2010, primarily due to strong performance by the Industrial & Infrastructure segment in 2011 and project charges which adversely impacted 2010. Earnings per diluted share for the nine months improved to $2.51, which compares with $1.33 per diluted share for the same period last year. Revenue for the first nine months of 2011 was $17.1 billion, up 10 percent from $15.6 billion in the first nine months of last year.
Third Quarter 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. 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) designs, builds and maintains many of the world’s most challenging and complex projects. Through its global network of offices on six continents, the company provides comprehensive capabilities and world-class expertise in the fields of
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engineering, procurement, construction, commissioning, operations, maintenance and project management. Headquartered in Irving, Texas, Fluor is a FORTUNE 200 company and had revenue of $20.8 billion in 2010. For more information visit www.fluor.com.
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, failure to achieve projected backlog, revenue and/or earnings levels; 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 financial viability and concentration of the Company’s clients, subcontractors, suppliers and joint venture or teaming partners; 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; the Company’s failure to receive anticipated new contract awards and the related impacts on staffing levels and cost; decreased capital investment or expenditures, or a failure to make anticipated increased capital investment or expenditures, by the Company’s clients; risks or uncertainties associated with past or future acquisitions or dispositions; foreign economic and political uncertainties; failure to meet timely completion or performance standards that could result in higher costs, reduced profits or, in some cases, losses on projects; the effects of severe weather, which may result in project delays, increased costs, liabilities or losses on projects; client cancellations of, or scope adjustments to, existing contracts, including the Company’s government contracts that may be terminated at any time, and the related impacts on staffing levels and cost; the potential impact of certain tax matters including, but not limited to, those from foreign operations and ongoing audits by tax authorities; delays or defaults in client payments; the availability of credit and restrictions imposed by credit facilities, both for the Company and our clients; failure to maintain safe worksites; liabilities arising for faulty engineering services; the Company’s ability to hire and retain qualified personnel; and the timely and successful implementation of strategic initiatives. 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 23, 2011 and our Form 10-Q filed on August 4, 2011. 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.
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FLUOR CORPORATION
CONSOLIDATED FINANCIAL RESULTS
(in millions, except per share amounts)
Unaudited
CONSOLIDATED OPERATING RESULTS
THREE MONTHS ENDED SEPTEMBER 30 | | 2011 | | 2010 | |
Revenue | | $ | 6,037.6 | | $ | 5,511.5 | |
Cost and expenses: | | | | | |
Cost of revenue | | 5,775.5 | | 5,449.6 | |
Corporate general and administrative expense | | 37.3 | | 39.6 | |
Interest income, net | | (6.1 | ) | (2.6 | ) |
Total cost and expenses | | 5,806.7 | | 5,486.6 | |
Earnings before income taxes | | 230.9 | | 24.9 | |
Income tax expense | | 69.3 | | 54.9 | |
Net earnings | | 161.6 | | (30.0 | ) |
Net earnings attributable to noncontrolling interests | | (26.2 | ) | (23.6 | ) |
Net earnings attributable to Fluor Corporation | | $ | 135.4 | | $ | (53.6 | ) |
Basic earnings per share | | | | | |
Net earnings | | $ | 0.79 | | $ | (0.30 | ) |
Weighted average shares | | 171.6 | | 178.2 | |
Diluted earnings per share | | | | | |
Net earnings | | $ | 0.78 | | $ | (0.30 | ) |
Weighted average shares | | 173.2 | | 178.2 | |
New awards | | $ | 6,747.3 | | $ | 7,568.5 | |
Backlog | | $ | 41,833.0 | | $ | 32,984.1 | |
Work performed | | $ | 5,883.5 | | $ | 5,381.1 | |
NINE MONTHS ENDED SEPTEMBER 30 | | 2011 | | 2010 | |
Revenue | | $ | 17,129.3 | | $ | 15,582.5 | |
Cost and expenses: | | | | | |
Cost of revenue | | 16,290.1 | | 14,976.4 | |
Corporate general and administrative expense | | 102.2 | | 98.3 | |
Interest income, net | | (16.2 | ) | (9.3 | ) |
Total cost and expenses | | 16,376.1 | | 15,065.4 | |
Earnings before income taxes | | 753.2 | | 517.1 | |
Income tax expense | | 238.9 | | 215.1 | |
Net earnings | | 514.3 | | 302.0 | |
Net earnings attributable to noncontrolling interests | | (73.7 | ) | (61.6 | ) |
Net earnings attributable to Fluor Corporation | | $ | 440.6 | | $ | 240.4 | |
Basic earnings per share | | | | | |
Net earnings | | $ | 2.54 | | $ | 1.35 | |
Weighted average shares | | 173.6 | | 178.2 | |
Diluted earnings per share | | | | | |
Net earnings | | $ | 2.51 | | $ | 1.33 | |
Weighted average shares | | 175.8 | | 180.9 | |
New awards | | $ | 22,630.9 | | $ | 20,272.9 | |
Backlog | | $ | 41,833.0 | | $ | 32,984.1 | |
Work performed | | $ | 16,701.8 | | $ | 15,222.1 | |
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FLUOR CORPORATION
Unaudited
BUSINESS SEGMENT FINANCIAL REVIEW
($ in millions)
THREE MONTHS ENDED SEPTEMBER 30 | | 2011 | | | | 2010 | | | |
Revenue | | | | | | | | | |
Oil & Gas | | $ | 2,217.9 | | | | $ | 1,748.8 | | | |
Industrial & Infrastructure | | 2,404.0 | | | | 2,167.7 | | | |
Government | | 882.4 | | | | 792.8 | | | |
Global Services | | 389.9 | | | | 418.9 | | | |
Power | | 143.4 | | | | 383.3 | | | |
Total revenue | | $ | 6,037.6 | | | | $ | 5,511.5 | | | |
| | | | | | | | | |
Segment profit $ and margin % | | | | | | | | | |
Oil & Gas | | $ | 73.7 | | 3.3 | % | $ | 75.3 | | 4.3 | % |
Industrial & Infrastructure | | 67.5 | | 2.8 | % | (147.4 | ) | -6.8 | % |
Government | | 43.0 | | 4.9 | % | 34.7 | | 4.4 | % |
Global Services | | 39.1 | | 10.0 | % | 35.2 | | 8.4 | % |
Power | | 12.6 | | 8.8 | % | 40.5 | | 10.6 | % |
Total segment profit $ and margin % | | $ | 235.9 | | 3.9 | % | $ | 38.3 | | 0.7 | % |
| | | | | | | | | |
Corporate general and administrative expense | | (37.3 | ) | | | (39.6 | ) | | |
Interest income, net | | 6.1 | | | | 2.6 | | | |
Earnings attributable to noncontrolling interests | | 26.2 | | | | 23.6 | | | |
Earnings before taxes | | $ | 230.9 | | | | $ | 24.9 | | | |
NINE MONTHS ENDED SEPTEMBER 30 | | 2011 | | | | 2010 | | | |
Revenue | | | | | | | | | |
Oil & Gas | | $ | 5,852.1 | | | | $ | 5,648.8 | | | |
Industrial & Infrastructure | | 6,992.8 | | | | 5,230.6 | | | |
Government | | 2,548.9 | | | | 2,232.3 | | | |
Global Services | | 1,174.5 | | | | 1,084.8 | | | |
Power | | 561.0 | | | | 1,386.0 | | | |
Total revenue | | $ | 17,129.3 | | | | $ | 15,582.5 | | | |
| | | | | | | | | |
Segment profit $ and margin % | | | | | | | | | |
Oil & Gas | | $ | 204.2 | | 3.5 | % | $ | 265.3 | | 4.7 | % |
Industrial & Infrastructure | | 268.5 | | 3.8 | % | (67.3 | ) | -1.3 | % |
Government | | 108.8 | | 4.3 | % | 105.0 | | 4.7 | % |
Global Services | | 111.4 | | 9.5 | % | 94.3 | | 8.7 | % |
Power | | 71.8 | | 12.8 | % | 146.6 | | 10.6 | % |
Total segment profit $ and margin % | | $ | 764.7 | | 4.5 | % | $ | 543.9 | | 3.5 | % |
| | | | | | | | | |
Corporate general and administrative expense | | (102.2 | ) | | | (98.3 | ) | | |
Interest income, net | | 16.2 | | | | 9.3 | | | |
Earnings attributable to noncontrolling interests | | 74.5 | | | | 62.2 | | | |
Earnings before taxes | | $ | 753.2 | | | | $ | 517.1 | | | |
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FLUOR CORPORATION
Unaudited
SELECTED BALANCE SHEET ITEMS
($ in millions, except per share amounts)
| | SEPTEMBER 30, | | DECEMBER 31, | |
| | 2011 | | 2010 | |
Cash and marketable securities, including noncurrent | | $ | 2,759.4 | | $ | 2,607.4 | |
Total current assets | | 6,049.4 | | 5,562.8 | |
Total assets | | 8,189.8 | | 7,614.9 | |
Total short-term debt | | 23.7 | | 96.7 | |
Total current liabilities | | 3,795.9 | | 3,523.4 | |
Long-term debt | | 513.4 | | 17.8 | |
Shareholders’ equity | | 3,295.8 | | 3,497.0 | |
| | | | | |
Total debt to capitalization % (based on shareholders’ equity) | | 14.0 | % | 3.2 | % |
Shareholders’ equity per share | | $ | 19.43 | | $ | 19.82 | |
SELECTED CASH FLOW ITEMS
($ in millions)
NINE MONTHS ENDED SEPTEMBER 30 | | 2011 | | 2010 | |
| | | | | |
Cash provided by operating activities | | $ | 711.2 | | $ | 210.4 | |
| | | | | |
Investing activities | | | | | |
Net sales and maturities of marketable securities | | 95.2 | | 415.1 | |
Capital expenditures | | (237.4 | ) | (211.3 | ) |
Proceeds from disposal of property, plant and equipment | | 43.6 | | 39.2 | |
Other items | | (6.1 | ) | (10.9 | ) |
Cash (utilized) provided by investing activities | | (104.7 | ) | 232.1 | |
| | | | | |
Financing activities | | | | | |
Repurchase of common stock | | (599.9 | ) | (17.1 | ) |
Dividends paid | | (66.4 | ) | (67.6 | ) |
Proceeds from issuance of Senior Notes | | 495.6 | | — | |
Repayment of convertible debt | | (73.0 | ) | (10.5 | ) |
Distributions paid to noncontrolling interests | | (72.3 | ) | (55.6 | ) |
Capital contribution by joint venture partner | | 22.6 | | 1.0 | |
Repayment of corporate-owned life insurance loans | | — | | (32.2 | ) |
Other Items | | (6.1 | ) | (7.1 | ) |
Cash utilized by financing activities | | (299.5 | ) | (189.1 | ) |
| | | | | |
Effect of exchange rate changes on cash | | (55.7 | ) | 36.7 | |
| | | | | |
Increase in cash and cash equivalents | | $ | 251.3 | | $ | 290.1 | |
| | | | | |
Depreciation | | $ | 148.0 | | $ | 139.2 | |
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FLUOR CORPORATION
Supplemental Fact Sheet
Unaudited
NEW AWARDS
($ in millions)
THREE MONTHS ENDED SEPTEMBER 30 | | 2011 | | 2010 | | % Chg | |
| | | | | | | | | | | |
Oil & Gas | | $ | 1,562 | | 23 | % | $ | 2,879 | | 38 | % | (46 | )% |
Industrial & Infrastructure | | 2,758 | | 41 | % | 3,003 | | 40 | % | (8 | )% |
Government | | 1,655 | | 25 | % | 1,162 | | 15 | % | 42 | % |
Global Services | | 302 | | 4 | % | 478 | | 6 | % | (37 | )% |
Power | | 470 | | 7 | % | 47 | | 1 | % | 900 | % |
Total new awards | | $ | 6,747 | | 100 | % | $ | 7,569 | | 100 | % | (11 | )% |
NINE MONTHS ENDED SEPTEMBER 30 | | 2011 | | 2010 | | % Chg | |
| | | | | | | | | | | |
Oil & Gas | | $ | 5,777 | | 25 | % | $ | 5,313 | | 26 | % | 9 | % |
Industrial & Infrastructure | | 11,734 | | 52 | % | 11,223 | | 55 | % | 5 | % |
Government | | 3,598 | | 16 | % | 2,229 | | 11 | % | 61 | % |
Global Services | | 888 | | 4 | % | 1,222 | | 6 | % | (27 | )% |
Power | | 634 | | 3 | % | 286 | | 2 | % | 122 | % |
Total new awards | | $ | 22,631 | | 100 | % | $ | 20,273 | | 100 | % | 12 | % |
BACKLOG TRENDS
($ in millions)
AS OF SEPTEMBER 30 | | 2011 | | 2010 | | % Chg | |
| | | | | | | | | | | |
Oil & Gas | | $ | 14,645 | | 35 | % | $ | 11,674 | | 35 | % | 25 | % |
Industrial & Infrastructure | | 22,292 | | 53 | % | 17,267 | | 52 | % | 29 | % |
Government | | 1,795 | | 4 | % | 1,038 | | 3 | % | 73 | % |
Global Services | | 2,025 | | 5 | % | 2,150 | | 7 | % | (6 | )% |
Power | | 1,076 | | 3 | % | 855 | | 3 | % | 26 | % |
Total backlog | | $ | 41,833 | | 100 | % | $ | 32,984 | | 100 | % | 27 | % |
| | | | | | | | | | | |
United States | | $ | 8,486 | | 20 | % | $ | 9,618 | | 29 | % | (12 | )% |
The Americas | | 12,457 | | 30 | % | 9,691 | | 29 | % | 29 | % |
Europe, Africa and the Middle East | | 9,222 | | 22 | % | 9,125 | | 28 | % | 1 | % |
Asia Pacific | | 11,668 | | 28 | % | 4,550 | | 14 | % | 156 | % |
Total backlog | | $ | 41,833 | | 100 | % | $ | 32,984 | | 100 | % | 27 | % |
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