Fluor Reports Fourth Quarter and Full Year 2023 Results
- None.
- None.
Insights
The financial results released by Fluor Corporation suggest a robust performance in the fiscal year, with a notable increase in consolidated segment profit from $427 million in 2022 to $537 million in 2023. This improvement reflects the company's operational efficiency and the successful execution of its projects. The backlog growth, which serves as a future revenue indicator, has expanded significantly, signaling a healthy pipeline and potential for sustained earnings. The emphasis on a high percentage of reimbursable contracts (87% of new awards and 76% of backlog) mitigates risk exposure to cost overruns, enhancing the predictability of future revenue streams.
Moreover, the capital structure optimization, designed to lower interest expenses, is a strategic move that will likely contribute to improved profit margins and cash flow conversion. This financial maneuvering, alongside the anticipation of improved cash flow conversion in 2024, indicates a forward-looking approach to financial management that could bolster investor confidence. However, the net loss reported in the fourth quarter of 2023, primarily due to a legacy project settlement and a loss on the sale of the Stork business, introduces a note of caution. Investors should monitor how these one-time impacts might influence the company's short-term financial health, despite the positive full-year figures.
Fluor's strategic positioning within the global engineering and construction industry is underscored by its diverse and robust prospect pipeline, which is reportedly 15 times the ending backlog. This breadth suggests a strong competitive stance and the ability to capitalize on a variety of market opportunities. The company's sector-specific performance, particularly in the Energy Solutions and Urban Solutions segments, indicates a successful pivot towards high-demand areas such as LNG projects and infrastructure development. These segments have shown significant profit growth and backlog increases, indicative of market trends favoring large-scale energy and urban development projects.
However, the Mission Solutions segment experienced a decrease in profit and a significant reduction in backlog, which warrants attention. The decline may reflect market volatility or project-specific challenges and could impact the segment's future performance. The company's ability to navigate these challenges and leverage its diverse portfolio will be critical in maintaining its market position and ensuring long-term growth.
Fluor Corporation's financial results hold broader economic implications, particularly in terms of employment and investment within the engineering and construction sectors. The company's increased backlog and new awards indicate an uptick in infrastructure and development projects, which could signal a positive trend for job creation in these industries. As Fluor undertakes more projects, there will likely be a corresponding increase in demand for skilled labor, which can have a ripple effect on the economy through increased consumer spending and investment in human capital.
Furthermore, the company's strategic priorities set in 2021, which have been reaffirmed through their financial results and guidance for 2024 and 2026, reflect a confidence in the sector's growth potential. This could encourage further investment in the industry, both from private and public sources, as Fluor's performance may be seen as indicative of the sector's health. Investors and stakeholders should consider these broader economic indicators when evaluating the company's long-term prospects.
-
Full year new awards of
$19.5 billion 87% reimbursable -
Increased backlog by over
10% each of the past two years to$29.4 billion 76% reimbursable - Prospect pipeline 15x ending backlog with opportunities across all three segments
- Revamped capital structure lowers interest expense while supporting future growth
- Anticipate improved cash flow conversion in 2024
“In 2023, we not only reached but surpassed a critical inflection point on our journey to solidifying our position as a technical solutions leader in the global engineering and construction industry,” said David Constable, chairman and chief executive officer of Fluor. "We are advancing with purpose, bolstered by our dedicated teams, robust end markets, strong client relationships, and a resilient capital structure. This positions us to deliver substantial shareholder value for years to come."
Full year new awards were
[1] Non-GAAP Financial Measure. See “Non-GAAP Financial Measures” for additional information.
Fourth Quarter Results
Fourth quarter 2023 results include a net loss attributable to Fluor of
Revenue for the quarter was
Including the adjustments outlined in the reconciliation table at the end of this release, the company recognized adjusted EBITDA of
Outlook
We are not providing forward-looking guidance for
The company continues to be well served by the strategic priorities set in 2021. Based on the volume of new awards received over the past two years, early achievement of our
The company is also reaffirming its 2026 adjusted EBITDA guidance of
Adjusted EPS and adjusted EBITDA guidance include items similar to those outlined in the reconciliation table at the end of this release.
Business Segments
Energy Solutions reported a profit of
Urban Solutions reported a profit of
Mission Solutions reported a profit of
The Other segment, which includes NuScale, Stork and the now divested AMECO business, reported a full year loss of
Conference Call
Fluor will host a conference call at 9:30 a.m. Eastern Time on Tuesday, February 20, which will be webcast live and can be accessed at investor.fluor.com. The call will also be accessible by telephone at 888-800-3960 (
A replay of the webcast will be available for 30 days. A replay of the call will be available by telephone for one week.
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
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 30,000 employees provide professional and technical solutions that deliver safe, well-executed, capital-efficient projects to clients around the world. Fluor had revenue of
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; the inability to hire and retain qualified personnel; 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; 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 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; climate change, natural disasters 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; and restrictions on possible transactions imposed by our charter documents and
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 20, 2024. 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
|
Three Months Ended |
|
Year Ended |
||||||||||||||||||
December 31, |
December 31, |
||||||||||||||||||||
(in millions) |
2023 |
|
2022 |
|
|
2023 |
|
2022 |
|
||||||||||||
Revenue |
|
|
|
|
|
|
|
|
|
||||||||||||
Energy Solutions |
$ |
1,422 |
|
|
$ |
1,775 |
|
|
|
$ |
6,307 |
|
|
$ |
5,872 |
|
|
||||
Urban Solutions |
|
1,420 |
|
|
|
1,093 |
|
|
|
|
5,262 |
|
|
|
4,373 |
|
|
||||
Mission Solutions |
|
646 |
|
|
|
509 |
|
|
|
|
2,655 |
|
|
|
2,289 |
|
|
||||
Other |
|
332 |
|
|
|
332 |
|
|
|
|
1,250 |
|
|
|
1,210 |
|
|
||||
Total revenue |
$ |
3,820 |
|
|
$ |
3,709 |
|
|
|
$ |
15,474 |
|
|
$ |
13,744 |
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||||||
Segment profit (loss) $ and margin % |
|
|
|
|
|
|
|
|
|||||||||||||
Energy Solutions |
|
26 |
|
1.8 |
% |
|
124 |
|
7.0 |
% |
|
|
381 |
|
6.0 |
% |
|
301 |
|
5.1 |
% |
Urban Solutions |
|
147 |
|
10.4 |
% |
|
38 |
|
3.5 |
% |
|
|
268 |
|
5.1 |
% |
|
17 |
|
0.4 |
% |
Mission Solutions |
|
31 |
|
4.8 |
% |
|
20 |
|
3.9 |
% |
|
|
116 |
|
4.4 |
% |
|
136 |
|
5.9 |
% |
Other |
|
(119 |
) |
NM |
|
|
(8 |
) |
NM |
|
|
|
(228 |
) |
NM |
|
|
(27 |
) |
NM |
|
Total segment profit $ and margin % |
$ |
85 |
|
2.2 |
% |
$ |
174 |
|
4.7 |
% |
|
$ |
537 |
|
3.50 |
% |
$ |
427 |
|
3.1 |
% |
|
|
|
|
|
|
|
|
|
|
||||||||||||
G&A |
|
(55 |
) |
|
|
(89 |
) |
|
|
|
(232 |
) |
|
|
(237 |
) |
|
||||
Impairment |
|
— |
|
|
|
(40 |
) |
|
|
|
— |
|
|
|
24 |
|
|
||||
Gain (loss) on pension settlement |
|
— |
|
|
|
42 |
|
|
|
|
— |
|
|
|
42 |
|
|
||||
Foreign currency gain (loss) |
|
(36 |
) |
|
|
(27 |
) |
|
|
|
(98 |
) |
|
|
25 |
||||||
Interest income (expense), net |
|
49 |
|
|
|
31 |
|
|
|
|
168 |
|
|
|
35 |
|
|
||||
Earnings (loss) attributable to NCI |
|
(19 |
) |
|
(41 |
) |
|
|
|
(60 |
) |
|
|
(72 |
) |
|
|||||
Earnings before taxes |
|
24 |
|
|
|
50 |
|
|
|
|
315 |
|
|
|
244 |
|
|
||||
Income tax expense |
|
(64 |
) |
|
|
(82 |
) |
|
|
|
(236 |
) |
|
|
(171 |
) |
|
||||
Net earnings (loss) |
$ |
(40 |
) |
|
$ |
(32 |
) |
|
|
$ |
79 |
|
|
$ |
73 |
|
|
||||
Less: Net earnings (loss) attributable to NCI |
|
(19 |
) |
|
|
(41 |
) |
|
|
|
(60 |
) |
|
|
(72 |
) |
|
||||
Net earnings attributable to Fluor |
$ |
(21 |
) |
|
$ |
9 |
|
|
|
$ |
139 |
|
|
$ |
145 |
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||||||
New awards |
|
|
|
|
|
|
|
|
|
||||||||||||
Energy Solutions |
$ |
2,153 |
|
|
$ |
916 |
|
|
|
$ |
6,871 |
|
|
$ |
6,512 |
|
|
||||
Urban Solutions |
|
5,052 |
|
|
|
3,351 |
|
|
|
|
10,141 |
|
|
|
6,900 |
|
|
||||
Mission Solutions |
|
40 |
|
|
|
36 |
|
|
|
|
1,055 |
|
|
|
5,347 |
|
|
||||
Other |
|
363 |
|
|
|
294 |
|
|
|
|
1,461 |
|
|
|
1,056 |
|
|
||||
Total new awards |
$ |
7,608 |
|
|
$ |
4,597 |
|
|
|
$ |
19,528 |
|
|
$ |
19,815 |
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||||||
New awards related to projects located outside of the |
|
|
|
||||||||||||||||||
Backlog (in millions) |
|
December 31,
|
|
December 31,
|
||||
Energy Solutions |
|
$ |
9,722 |
|
|
$ |
9,134 |
|
Urban Solutions |
|
|
14,848 |
|
|
|
10,270 |
|
Mission Solutions |
|
|
3,945 |
|
|
|
5,666 |
|
Other |
|
|
926 |
|
|
|
979 |
|
Total backlog |
|
$ |
29,441 |
|
|
$ |
26,049 |
|
|
|
|
|
|
||||
Backlog related to projects located outside of the |
|
|
|
|
|
|
||
Backlog related to reimbursable projects |
|
|
|
|
|
|
||
(1) Certain amounts in tables may not total or agree back to the financial statements due to immaterial rounding differences. |
(2) Please see page 1 of the 2023 10-K for the definitions and abbreviations set forth below apply to the indicated terms used throughout this filing. |
SUMMARY OF CASH FLOW INFORMATION
|
Year Ended December 31, |
||||||
(in millions) |
2023 |
|
2022 |
||||
OPERATING CASH FLOW |
$ |
212 |
|
|
$ |
31 |
|
|
|
|
|
||||
INVESTING CASH FLOW |
|
|
|
||||
Proceeds from sales and maturities (purchases) of marketable securities |
|
(141 |
) |
|
|
(64 |
) |
Capital expenditures |
|
(106 |
) |
|
|
(75 |
) |
Proceeds from sales of assets (net of cash divested) |
|
(5 |
) |
|
|
95 |
|
Investments in partnerships and joint ventures |
|
(33 |
) |
|
|
(53 |
) |
Other |
|
8 |
|
|
|
19 |
|
Investing cash flow |
|
(277 |
) |
|
|
(78 |
) |
|
|
|
|
||||
FINANCING CASH FLOW |
|
|
|
||||
Proceeds from issuance of 2029 Notes, net of issuance costs |
|
560 |
|
|
|
— |
|
Capped call transactions related to 2029 Notes |
|
(73 |
) |
|
|
— |
|
Purchases and retirement of debt |
|
(249 |
) |
|
|
(41 |
) |
Proceeds from NuScale de-SPAC transaction |
|
— |
|
|
|
341 |
|
Proceeds from sale of NuScale interest |
|
— |
|
|
|
107 |
|
Dividends paid on CPS |
|
(29 |
) |
|
|
(39 |
) |
Make-whole payment on conversion of CPS |
|
(27 |
) |
|
|
— |
|
Distributions paid to NCI |
|
(53 |
) |
|
|
(60 |
) |
Capital contributions by NCI |
|
10 |
|
|
|
21 |
|
Other |
|
(12 |
) |
|
|
(14 |
) |
Financing cash flow |
|
127 |
|
|
|
315 |
|
|
|
|
|
||||
Effect of exchange rate changes on cash |
|
18 |
|
|
|
(38 |
) |
Increase in cash and cash equivalents |
|
80 |
|
|
|
230 |
|
Cash and cash equivalents at beginning of year |
|
2,439 |
|
|
|
2,209 |
|
Cash and cash equivalents at end of year |
$ |
2,519 |
|
|
$ |
2,439 |
|
|
|
|
|
||||
Cash paid during the year for: |
|
|
|
||||
Interest |
$ |
53 |
|
|
$ |
54 |
|
Income taxes (net of refunds) |
|
169 |
|
|
|
99 |
|
Noncash investing and financing activities: |
|
|
|
||||
Marketable securities transferred to trustee to discharge the 2024 Notes |
$ |
262 |
|
|
$ |
— |
|
Debt assumed by buyer of Stork Latin America |
|
19 |
|
|
|
— |
|
|
|
|
|
||||
RECONCILIATION OF |
|||||||||||||||
|
Three Months Ended |
|
Year Ended |
||||||||||||
|
December 31, |
|
December 31, |
||||||||||||
(In millions, except per share amounts) |
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Net earnings (loss) attributable to Fluor |
$ |
(21 |
) |
|
$ |
9 |
|
|
$ |
139 |
|
|
$ |
145 |
|
Less: Dividends on CPS |
|
— |
|
|
|
10 |
|
|
|
29 |
|
|
|
39 |
|
Less: Make-whole payment on conversion of CPS |
|
— |
|
|
|
— |
|
|
|
27 |
|
|
|
— |
|
Net earnings (loss) available to Fluor common stockholders |
|
(21 |
) |
|
|
(1 |
) |
|
|
83 |
|
|
|
106 |
|
Exclude: Stork and AMECO businesses marketed for sale |
|
88 |
|
|
|
(18 |
) |
|
|
133 |
|
|
|
(39 |
) |
Exclude: Tax expense on Stork and AMECO |
|
5 |
|
|
|
3 |
|
|
|
8 |
|
|
|
1 |
|
Net earnings (loss) from core operations* |
$ |
72 |
|
|
$ |
(16 |
) |
|
$ |
224 |
|
|
$ |
68 |
|
Adjustments: |
|
|
|
|
|
|
|
||||||||
Dividends on CPS |
$ |
— |
|
|
$ |
10 |
|
|
$ |
29 |
|
|
$ |
39 |
|
Make-whole payment on conversion of CPS |
|
— |
|
|
|
— |
|
|
|
27 |
|
|
|
— |
|
NuScale loss |
|
32 |
|
|
|
28 |
|
|
|
94 |
|
|
|
72 |
|
(Gain) loss on embedded derivatives |
|
(6 |
) |
|
|
3 |
|
|
|
17 |
|
|
|
3 |
|
Tax expense (benefit) on embedded derivatives |
|
2 |
|
|
|
(1 |
) |
|
|
(5 |
) |
|
|
(1 |
) |
Reserve for legacy legal claims |
|
— |
|
|
|
— |
|
|
|
3 |
|
|
|
6 |
|
Foreign currency (gain) loss |
|
36 |
|
|
|
27 |
|
|
|
98 |
|
|
|
(25 |
) |
Tax expense (benefit) on foreign currency gain/loss |
|
(7 |
) |
|
|
(3 |
) |
|
|
(20 |
) |
|
|
1 |
|
SEC investigation |
|
(12 |
) |
|
|
25 |
|
|
|
— |
|
|
|
38 |
|
NuScale marketing costs borne by Fluor |
|
— |
|
|
|
— |
|
|
|
5 |
|
|
|
— |
|
Impairment |
|
— |
|
|
|
43 |
|
|
|
— |
|
|
|
(17 |
) |
(Gain) loss on pension settlement |
|
— |
|
|
|
(42 |
) |
|
|
— |
|
|
|
(42 |
) |
Adjusted net earnings |
$ |
117 |
|
|
$ |
74 |
|
|
$ |
472 |
|
|
$ |
141 |
|
|
|
|
|
|
|
|
|
||||||||
Diluted EPS available to Fluor common stockholders |
$ |
(0.12 |
) |
|
$ |
(0.01 |
) |
|
$ |
0.54 |
|
|
$ |
0.73 |
|
Adjusted EPS |
$ |
0.68 |
|
|
$ |
0.43 |
|
|
$ |
2.73 |
|
|
$ |
0.82 |
|
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding |
|
170 |
|
|
|
142 |
|
|
|
150 |
|
|
|
142 |
|
CPS |
|
— |
|
|
|
27 |
|
|
|
20 |
|
|
|
27 |
|
Assumed issuance of shares under equity awards |
|
3 |
|
|
|
3 |
|
|
|
3 |
|
|
|
3 |
|
Adjusted weighted average diluted shares outstanding |
|
173 |
|
|
|
172 |
|
|
|
173 |
|
|
|
172 |
|
|
|
|
|
|
|
|
|
||||||||
*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 as 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 |
|
|
||||||||||
|
Three Months Ended |
Year Ended |
||||||||||
|
December 31, |
December 31, |
||||||||||
|
|
|
|
|
||||||||
Net earnings (loss) attributable to Fluor |
$ |
(21 |
) |
$ |
9 |
|
$ |
139 |
|
$ |
145 |
|
Interest (income) expense, net |
|
(49 |
) |
|
(31 |
) |
|
(168 |
) |
|
(35 |
) |
Income tax expense |
|
64 |
|
|
82 |
|
|
236 |
|
|
171 |
|
Depreciation & amortization |
|
18 |
|
|
18 |
|
|
74 |
|
|
73 |
|
EBITDA |
$ |
12 |
|
$ |
78 |
|
$ |
281 |
|
$ |
354 |
|
|
|
|
|
|
||||||||
Adjustments: |
|
|
|
|
||||||||
Other: NuScale, Stork and AMECO (earnings) loss |
$ |
115 |
|
$ |
2 |
|
$ |
209 |
|
$ |
10 |
|
Energy Solutions: (Gain) loss on embedded derivatives |
|
(6 |
) |
|
3 |
|
|
17 |
|
|
3 |
|
G&A: NuScale marketing costs borne by Fluor |
|
— |
|
|
— |
|
|
5 |
|
|
— |
|
G&A: Reserve for legacy legal claims |
|
— |
|
|
— |
|
|
3 |
|
|
6 |
|
G&A: Foreign currency (gain)/loss |
|
36 |
|
|
27 |
|
|
98 |
|
|
(25 |
) |
G&A: SEC investigation |
|
(12 |
) |
|
25 |
|
|
— |
|
|
38 |
|
Impairment |
|
— |
|
|
43 |
|
|
— |
|
|
(17 |
) |
Loss on pension settlement |
|
— |
|
|
(42 |
) |
|
— |
|
|
(42 |
) |
Adjusted EBITDA |
$ |
145 |
|
$ |
136 |
|
$ |
613 |
|
$ |
327 |
|
(1) Certain amounts in tables may not total or agree back to the financial statements due to immaterial rounding differences. |
||||||||||||
#corp
View source version on businesswire.com: https://www.businesswire.com/news/home/20240220181367/en/
Brett Turner
Media Relations
864.281.6976 tel
Jason Landkamer
Investor Relations
469.398.7222 tel
Source: Fluor Corporation
FAQ
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