- Q3 2023 net earnings attributable to Fluor of $206
million
- Q3 2023 diluted earnings per share (EPS) of $1.15; adjusted
diluted EPS of $1.02
- Q3 2023 revenue of $4.0 billion and new awards of $5.0
billion
- Backlog 70% reimbursable compared to 58% a year ago
- Company increases 2023 guidance for adjusted EPS and
adjusted EBITDA
Fluor Corporation (NYSE: FLR) announced financial results for
its third quarter ended September 30, 2023. Revenue for the quarter
was $4.0 billion and net earnings attributable to Fluor were $206
million, or $1.15 per diluted share. Consolidated segment profit1
for the quarter was $276 million compared to $31 million profit in
the third quarter of 2022. Excluding the adjustments outlined in
the reconciliation table at the end of this release, the company
recognized adjusted earnings per diluted share1 of $1.02.
“This quarter’s results reflect our deliberate focus on driving
profitability through improved project execution and our
high-quality contract backlog,” said David E. Constable, chairman
and chief executive officer of Fluor. “Combined with our
strengthened and simplified capital structure, Fluor is well
positioned to support demand-driven growth and improved shareholder
returns.”
Third quarter new awards were consistent with company
expectations at $5.0 billion compared to $9.7 billion in the third
quarter of 2022. Ending consolidated backlog was $26 billion
compared to $25.4 billion a year ago. General and administrative
expenses for the third quarter of 2023 were $56 million compared to
Q3 2022 expenses of $30 million. Fluor’s cash and marketable
securities at the end of the quarter were $2.4 billion, excluding
amounts held by NuScale.
1 Non-GAAP Financial Measure. See “Non-GAAP Financial Measures”
for additional information.
Outlook
We are not providing forward-looking guidance for U.S. GAAP net
earnings or U.S. GAAP earnings per share, or a quantitative
reconciliation of adjusted EBITDA or adjusted EPS guidance, because
we are unable to predict with reasonable certainty all of the
components required to provide such reconciliation without
unreasonable efforts, which are uncertain and could have a material
impact on GAAP reported results for the guidance period. See
“Non-GAAP Financial Measures” for additional information.
Fluor is increasing its full year adjusted EPS guidance from a
range of $2.00 to $2.30 per diluted share to a range of $2.50 to
$2.70 per diluted share. The company is also increasing its full
year adjusted EBITDA guidance from the previous range of $500 to
$600 million to an expectation of approximately $600 million. This
revised guidance reflects positive advances on large Energy
Solutions projects and continued progress on projects in our legacy
portfolio. The company also reaffirms its guidance for 2026.
2023
2026
Adjusted EBITDA1 Guidance
Approximately $600 million
$800 to $950 million
Adjusted EPS1 Guidance
$2.50 to $2.70 per share
$3.10 to $3.60 per share
Adjusted EPS and adjusted EBITDA guidance exclude items similar
to those outlined in the reconciliation table at the end of this
release.
Business Segments
Energy Solutions reported a profit of $177 million in the third
quarter compared to $59 million in the third quarter of 2022.
Segment profit significantly improved primarily due to the initial
recognition of cost recovery entitlements on several fixed-price
projects, partially offset by cost growth on a large upstream
legacy project and a charge for the expected net settlement of a
longstanding claim. Revenue for the quarter was $1.6 billion,
consistent with a year ago. New awards in the quarter totaled $3.3
billion, compared to $3.6 billion in the third quarter of 2022.
Ending backlog was $9.2 billion compared to $10.2 billion a year
ago.
Urban Solutions reported a profit of $66 million in the third
quarter compared to a $50 million loss in the third quarter of
2022. This quarter’s results include an incentive fee earned on a
large mining project that is nearing completion as well as a
favorable arbitration outcome on a separate mining project. Segment
profit from the prior year period includes project charges due to
cost growth and schedule delays on three legacy infrastructure
projects. Revenue for the third quarter increased to $1.4 billion
from $1.1 billion a year ago. New awards for the quarter were $1.0
billion, up from $933 million a year ago. Ending backlog was $11.1
billion compared to $8.1 billion a year ago.
Mission Solutions reported a profit of $38 million in the third
quarter compared to $29 million in the third quarter of 2022.
Results for the quarter reflect increased execution for FEMA
hurricane support. Revenue for the third quarter was $655 million
compared to $639 million a year ago. New awards for the quarter
totaled $345 million, compared to $4.9 billion in the third quarter
of 2022. Ending backlog was $4.6 billion compared to $6.2 billion a
year ago.
The Other segment, which includes Stork and Fluor’s 55%
ownership in NuScale, reported revenue of $324 million and a loss
of $5 million. Segment results for the quarter include $19 million
of loss related to NuScale.
Conference Call
Fluor will host a conference call at 8:30 a.m. Eastern on
Friday, November 3, which will be webcast live and can be accessed
by logging onto investor.fluor.com. The call will also be
accessible by telephone at 888-800-3960 (U.S./Canada) or +1
646-307-1852. The conference ID is 4438700.
A replay of the webcast will be available for 30 days.
Non-GAAP Financial
Measures
This news release contains discussions of consolidated segment
profit (loss), adjusted net earnings, adjusted EPS and adjusted
EBITDA that are non-GAAP financial measures under SEC rules.
Segment profit (loss) is calculated as revenue less cost of revenue
and earnings attributable to noncontrolling interests. The company
believes that segment profit (loss) 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. Adjusted net earnings
is defined as net earnings from core operations excluding NuScale
profit (loss) and the impacts of foreign exchange fluctuations,
impairments and certain items that management believes are
unrelated to actual normalized operational performance. Net
earnings from core operations is net earnings attributable to Fluor
excluding the results of our remaining Stork and AMECO equipment
businesses that are no longer classified as discontinued operations
but that continue to be marketed for sale or that have been sold.
Adjusted EPS is defined as adjusted net earnings divided by
adjusted weighted average diluted shares outstanding. Adjusted
weighted average diluted shares outstanding assumes the conversion
of our convertible preferred stock. Adjusted EBITDA is defined as
net earnings from operations before interest, income taxes,
depreciation and amortization (EBITDA), further adjusted by the
same items excluded from adjusted net earnings. The company
believes adjusted net earnings, adjusted EPS and adjusted EBITDA
allow investors to evaluate the company’s ongoing earnings on a
normalized basis and make meaningful period-over-period
comparisons. However, non-GAAP measures have limitations as
analytical tools and should not be considered in isolation from or
a substitute for measures of financial performance prepared in
accordance with U.S. GAAP. In addition, these non-GAAP measures are
not necessarily comparable to similarly titled measures reported by
other companies. Reconciliations of consolidated segment profit
(loss), adjusted net earnings, adjusted EPS and adjusted EBITDA to
the most comparable GAAP measures are included in the press release
tables. The company is unable to provide a reconciliation of its
adjusted EPS and adjusted EBITDA guidance to the most comparable
GAAP measure without unreasonable efforts because it is unable to
predict with reasonable certainty all of the components required to
provide such reconciliation, including the impact of foreign
exchange fluctuations, which are uncertain and could have a
material impact on GAAP reported results for the guidance
period.
About Fluor Corporation
Fluor Corporation (NYSE: FLR) is building a better world by
applying world-class expertise to solve its clients’ greatest
challenges. Fluor’s 40,000 employees provide professional and
technical solutions that deliver safe, well-executed,
capital-efficient projects to clients around the world. Fluor had
revenue of $13.7 billion in 2022 and is ranked 303 among the
Fortune 500 companies. With headquarters in Irving, Texas, Fluor
has provided engineering, procurement and construction services for
more than 110 years. For more information, please visit
www.fluor.com or follow Fluor on Twitter, LinkedIn, Facebook and
YouTube.
Forward-Looking Statements: This release may contain
forward-looking statements (including without limitation statements
to the effect that the Company or its management "will,"
"believes," "expects," “anticipates,” "plans" or other similar
expressions). These forward-looking statements, including
statements relating to strategic and operation plans, future
growth, new awards, backlog, earnings and the outlook for the
company’s business.
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; the Company's failure to receive
new contract awards; cost overruns, project delays or other
problems arising from project execution activities, including the
failure to meet cost and schedule estimates; intense competition in
the industries in which we operate; failure of our joint venture or
other partners to perform their obligations; the failure of our
suppliers, subcontractors and other third parties to adequately
perform services under our contracts; cyber-security breaches;
possible information technology interruptions; foreign economic and
political uncertainties; client cancellations of, or scope
adjustments to, existing contracts; the inability to hire and
retain qualified personnel; failure to maintain safe worksites and
international security risks; risks or uncertainties associated
with events outside of our control, including weather conditions,
pandemics, public health crises, political crises or other
catastrophic events; the use of estimates and assumptions in
preparing our financial statements; client delays or defaults in
making payments; uncertainties, restrictions and regulations
impacting our government contracts; the potential impact of certain
tax matters; the Company's ability to secure appropriate insurance;
liabilities associated with the performance of nuclear services;
foreign currency risks; the loss of one or a few clients that
account for a significant portion of the Company's revenues;
failure to adequately protect intellectual property rights; asset
impairments; climate change and related environmental issues;
increasing scrutiny with respect to sustainability practices; risks
related to our indebtedness; 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; failure to
obtain favorable results in existing or future litigation and
regulatory proceedings, dispute resolution proceedings or claims,
including claims for additional costs; failure by us or our
employees, agents or partners to comply with laws; new or changing
legal requirements, including those relating to environmental,
health and safety matters; failure to successfully implement our
strategic and operational initiatives; risks arising from the
inability to successfully integrate acquired businesses; risks
related to provisions of our convertible preferred stock; and
restrictions on possible transactions imposed by our charter
documents and Delaware law. 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 21, 2023. Such filings are available either publicly or
upon request from Fluor's Investor Relations Department: (469)
398-7222. 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.
SUMMARY OF FINANCIALS AND U.S. GAAP RECONCILIATION OF
CONSOLIDATED SEGMENT PROFIT (LOSS)(1)
Three Months Ended
September 30,
Nine Months Ended
September 30,
(in millions)
2023
2022
2023
2022
Revenue
Energy Solutions
$
1,553
$
1,592
$
4,886
$
4,097
Urban Solutions
1,431
1,084
3,842
3,279
Mission Solutions
655
639
2,009
1,779
Other
324
297
917
879
Total revenue
$
3,963
$
3,612
$
11,654
$
10,034
Segment profit (loss) $ and margin
%
Energy Solutions
$
177
11.4
%
$
59
3.7
%
$
355
7.3
%
$
177
4.3
%
Urban Solutions
66
4.6
%
(50)
(4.6
)%
121
3.1
%
(21)
(0.6
)%
Mission Solutions
38
5.8
%
29
4.5
%
84
4.2
%
115
6.5
%
Other
(5)
NM
(7)
NM
(108)
NM
(18)
NM
Total segment profit $ and margin
%(1)
$
276
7.0
%
$
31
0.9
%
$
452
3.9
%
$
253
2.5
%
G&A
(56)
(30)
(177)
(146)
Impairment
—
—
—
63
Foreign currency gain (loss)
23
34
(62)
51
Interest income (expense), net
42
14
120
4
Earnings (loss) attributable to NCI
(25)
(46)
(42)
(31)
Earnings before taxes
260
3
291
194
Income tax expense
(79
)
(27)
(172
)
(89)
Net earnings (loss)
$
181
$
(24)
$
119
$
105
Less: Net earnings (loss) attributable to
NCI
(25
)
(46)
(42
)
(31)
Net earnings attributable to
Fluor
$
206
$
22
$
161
$
136
New awards
Energy Solutions
$
3,252
$
3,574
$
4,718
$
5,595
Urban Solutions
1,033
933
5,090
3,549
Mission Solutions
345
4,874
1,015
5,312
Other
346
362
1,097
763
Total new awards
$
4,976
$
9,743
$
11,920
$
15,219
New awards related to projects located
outside of the U.S.
65
%
48
%
Backlog (in millions)
September 30,
2023
December 31,
2022
Energy Solutions
$
9,159
$
9,134
Urban Solutions
11,051
10,270
Mission Solutions
4,563
5,666
Other
1,231
979
Total backlog
$
26,004
$
26,049
Backlog related to projects located
outside of the U.S.
52%
49%
Backlog related to reimbursable
projects
70%
63%
(1) Certain amounts in tables may not
total or agree back to the financial statements due to immaterial
rounding differences.
RECONCILIATION OF U.S. GAAP NET EARNINGS TO ADJUSTED NET
EARNINGS AND U.S. GAAP EARNINGS PER SHARE TO ADJUSTED EARNINGS PER
SHARE (1) Three Months EndedSeptember 30, Nine Months
EndedSeptember 30, (In millions, except per share
amounts)
2023
2022
2023
2022
Net earnings attributable to Fluor
$
206
$
22
$
161
$
136
Less: Dividends on CPS
(10)
(10)
(29)
(29)
Less: Make-whole payment on conversion of CPS
(27)
-
(27)
-
Net earnings available to Fluor common stockholders
169
12
105
107
Less: Earnings from Stork and AMECO
(11)
(5)
48
(25)
Less: Tax expense on Stork and AMECO
-
-
-
Net earnings from core operations*
158
7
153
82
Add (less): Dividends on CPS
$
10
$
10
$
29
$
29
Make-whole payment on conversion of CPS
27
-
27
-
NuScale (profit) loss
16
15
63
44
ICA Fluor embedded derivatives loss (gain)
(24)
5
23
1
Tax expense (benefit) on ICA Fluor embedded derivatives
7
(2)
(6)
(1)
Asbestos Reserve expense
-
-
3
6
Foreign currency (gain) loss
(23)
(34)
62
(51)
Tax expense (benefit) on foreign currency
4
7
(14)
4
SEC investigation
2
1
12
13
NuScale Marketing costs borne by Fluor
-
-
5
-
Impairment
-
4
-
(59)
Adjusted Net Earnings
$
177
$
13
$
357
$
68
Diluted EPS available to Fluor common stockholders
$
1.15
$
0.08
$
0.72
$
0.74
Adjusted EPS
$
1.02
$
0.07
$
2.07
$
0.39
Weighted average common shares outstanding
144
142
143
142
Conversion of CPS
26
27
27
27
Assumed issuance of shares under equity awards
3
3
2
2
Adjusted weighted average diluted shares outstanding
173
172
172
171
*Core operations excludes the results of our Stork business and
remaining AMECO equipment business that no longer meet all of the
requirements to be classified discontinued operations but that
continue to be marketed for sale or that have been sold. (1)
Certain amounts in tables may not total or agree back to the
financial statements due to immaterial rounding differences.
RECONCILIATION OF U.S. GAAP NET EARNINGS TO ADJUSTED EBITDA
(1)
Three Months Ended September
30,
Nine Months Ended September
30,
(in millions)
2023
2022
2023
2022
Net earnings attributable to Fluor
$
206
$
22
$
161
$
136
Interest (Net)
(42)
(14)
(120)
(4)
Taxes
79
27
172
89
Depreciation & Amortization
19
19
57
55
EBITDA
$
262
$
54
$
270
$
276
Adjustments: Other: NuScale, Stork and AMECO earnings
$
(1)
$
-
$
100
$
5
Energy Solutions: Embedded foreign currency derivative
(gains)/losses
(24)
5
23
1
Asbestos Reserve expense
0
0
3
6
G&A: Foreign currency (gain)/loss
(23)
(34)
62
(51)
G&A: SEC Investigation costs
2
1
12
13
G&A: Impairment
0
4
0
(59)
Adjusted EBITDA
$
216
$
30
$
470
$
190
(1) Certain amounts in tables may not total or agree back to the
financial statements due to immaterial rounding differences.
#corp
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version on businesswire.com: https://www.businesswire.com/news/home/20231103835877/en/
Brett Turner Media Relations 864.281.6976 tel
Jason Landkamer Investor Relations 469.398.7222 tel
Fluor (NYSE:FLR)
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