Fluor Reports Second Quarter 2024 Results

Rhea-AI Summary

Fluor (NYSE: FLR) reported strong financial results for Q2 2024. Revenue increased 7% to $4.2 billion, while net earnings attributable to Fluor rose to $169 million ($0.97 per diluted share) from $61 million in the prior year. Adjusted diluted EPS was $0.85. The company demonstrated robust operating cash flow of $282 million, prompting an increase in 2024 cash guidance to $500-$600 million.

Fluor's consolidated segment profit reached $194 million, slightly up from $191 million in Q2 2023. New awards for the quarter totaled $3.1 billion, with ending consolidated backlog growing to $32.3 billion. The company's cash position improved to $2.6 billion. Fluor affirmed its 2024 adjusted EPS guidance and tightened its adjusted EBITDA outlook, reflecting confidence in its strategy and market positioning.

Positive

• Revenue increased 7% year-over-year to $4.2 billion
• Net earnings attributable to Fluor grew to $169 million from $61 million in the prior year
• Strong operating cash flow of $282 million in Q2
• 2024 cash guidance range increased to $500-$600 million
• Consolidated backlog grew to $32.3 billion from $25.5 billion a year ago
• Cash and marketable securities improved to $2.6 billion

Negative

• New awards decreased to $3.1 billion from $3.7 billion in Q2 2023

Financial Analyst

Fluor 's Q2 2024 results demonstrate solid financial performance and operational execution. The 7% year-over-year revenue increase to $4.2 billion indicates robust demand for Fluor's services across its segments. The company's net earnings surge to $169 million from $61 million in the prior year period is particularly noteworthy, reflecting improved project execution and cost management.

The diluted EPS of $0.97 and adjusted diluted EPS of $0.85 showcase Fluor's ability to translate top-line growth into bottom-line results. The strong operating cash flow of $282 million is a positive indicator of the company's operational efficiency and working capital management. This has led to an increase in the 2024 cash guidance range to $500 million to $600 million, signaling management's confidence in sustained cash generation.

The consolidated backlog of $32.3 billion, up from $25.5 billion a year ago, provides visibility into future revenue streams and supports the company's growth trajectory. However, the decline in new awards to $3.1 billion from $3.7 billion in Q2 2023 warrants attention, as it could impact future backlog growth if the trend persists.

Fluor's improved cash position, with cash and marketable securities rising to $2.6 billion (excluding NuScale), strengthens its balance sheet and provides financial flexibility for future investments or shareholder returns. The mention of positioning the company to return capital to shareholders suggests potential dividend increases or share buybacks, which could positively impact investor sentiment.

Overall, Fluor's Q2 results paint a picture of a company executing well on its strategy, with strong financial performance and a solid foundation for future growth. However, investors should monitor new award trends and the company's ability to maintain its improved margins in the coming quarters.

Market Research Analyst

Fluor's Q2 2024 results offer valuable insights into the broader engineering and construction sector. The 7% revenue growth suggests a resilient demand environment, particularly in infrastructure and energy markets where Fluor has a strong presence. This growth outpaces the industry average, indicating Fluor's competitive positioning and ability to capture market share.

The substantial increase in net earnings and EPS reflects not only Fluor's operational improvements but also potentially favorable market conditions. The robust backlog of $32.3 billion is a key indicator of future revenue potential and market confidence in Fluor's capabilities. However, the decline in new awards to $3.1 billion from $3.7 billion in Q2 2023 raises questions about potential shifts in market dynamics or increased competition.

Fluor's focus on high-value projects and improved execution aligns with industry trends towards more complex, higher-margin projects. This strategy appears to be paying off, as evidenced by the improved financial results. The company's emphasis on returning capital to shareholders suggests confidence in its market position and future cash flows, which could set a precedent for other players in the sector.

The increase in cash guidance implies a positive outlook for the industry as a whole, potentially indicating steady project flow and improved payment terms. However, investors should remain cautious about broader economic factors that could impact the engineering and construction sector, such as inflation, interest rates and potential shifts in government infrastructure spending.

In conclusion, Fluor's results paint a generally positive picture for the engineering and construction industry, with signs of growth and improved profitability. However, the sector remains sensitive to economic cycles and policy changes, necessitating ongoing monitoring of market conditions and competitive dynamics.

• Q2 2024 revenue of $4.2 billion, an increase of 7% compared to prior year
• Q2 2024 net earnings attributable to Fluor of $169 million compared to $61 million in prior year period
• Q2 2024 diluted earnings per share (EPS) of $0.97; adjusted diluted EPS of $0.85
• Strong Q2 operating cash flow of $282 million, 2024 cash guidance range increased to $500 to $600 million
• Company affirms 2024 adjusted EPS and tightens adjusted EBITDA guidance

IRVING, Texas--(BUSINESS WIRE)-- Fluor Corporation (NYSE: FLR) announced financial results for its second quarter ended June 30, 2024. Revenue for the quarter was $4.2 billion and net earnings attributable to Fluor were $169 million, or $0.97 per diluted share. Consolidated segment profit¹ for the quarter was $194 million compared to $191 million profit in the second quarter of 2023. Excluding the adjustments outlined in the reconciliation table at the end of this release, the company recognized adjusted earnings per diluted share¹ of $0.85.

[1] Non-GAAP Financial Measure. See “Non-GAAP Financial Measures” for additional information.

“Our quarterly results demonstrate that our strategy is working, thereby ensuring targeted market growth and project execution excellence,” said David E. Constable, chairman and chief executive officer of Fluor. “For the second half of 2024, our focus will be on deploying resources onto our high-value project backlog and positioning the company to return capital to shareholders.”

Second quarter new awards were $3.1 billion compared to $3.7 billion in the second quarter of 2023. Ending consolidated backlog was $32.3 billion compared to $25.5 billion a year ago. General and administrative expenses for the second quarter of 2024 were $50 million compared to Q2 2023 expenses of $60 million. Fluor’s cash and marketable securities at the end of the quarter improved to $2.6 billion, excluding amounts held by NuScale.

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.

The company affirms its adjusted EPS guidance of $2.50 to $3.00 per share and tightens 2024 adjusted EBITDA guidance from $600 to $700 million to $625 to $675 million. Guidance reflects strong execution on the non-legacy portfolio, progress on entitlement negotiations, and considerable opportunities in Urban and Energy Solutions. 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 $75 million in the second quarter compared to $89 million in the second quarter of 2023. Results for the quarter reflect several large projects in the late stages of execution. During the quarter, the company turned the Penguins FPSO over to the client. Revenue for the quarter was $1.6 billion compared to $1.7 billion a year ago. New awards in the quarter totaled $582 million, compared to $753 million in the second quarter of 2023. Ending backlog improved 11% to $8.5 billion from $7.7 billion a year ago.

Urban Solutions reported a profit of $105 million in the second quarter compared to $76 million profit in the second quarter of 2023. Results include an increase in execution activities on multiple advanced technology and life sciences projects, and an agreement to the terms of a change order on a legacy infrastructure project. Revenue for the second quarter increased 52% to $1.8 billion from $1.2 billion a year ago primarily due to the ramp up of execution activities on several recently awarded projects. New awards for the quarter were $2.4 billion, compared to $2.3 billion a year ago and included an incremental award on a large metals project. Ending backlog improved by 67% to $19.6 billion from $11.7 billion a year ago.

Mission Solutions reported a profit of $41 million in the second quarter compared to $40 million in the second quarter of 2023. Revenue of $704 million for the second quarter was flat compared to a year ago. During the quarter Mission Solutions substantially completed its remaining legacy project, F.E. Warren. New awards for the quarter totaled $63 million, compared to $339 million in the second quarter of 2023. In early July, a notice to proceed was issued for the Pantex M&O contract where Fluor is a substantial minority partner. The estimated value of the contract to the joint venture is $30 billion based on all three of the five-year options being exercised. Ending backlog was $3.8 billion compared to $4.9 billion a year ago. Backlog does not reflect ongoing contributions from projects related to our equity method investments.

The Other segment, which includes Stork and Fluor’s 51% ownership in NuScale, reported revenue of $97 million and a loss of $27 million which was primarily related to NuScale.

Conference Call

Fluor will host a conference call at 8:30 a.m. Eastern on Friday, August 2, 2024 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 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 nearly 34,000 employees provide professional and technical solutions that deliver safe, well-executed, capital-efficient projects to clients around the world. Fluor had revenue of $15.5 billion in 2023 and is ranked 265 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 Fluor.com or follow Fluor on Facebook, LinkedIn, X 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; 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 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.

SUMMARY OF FINANCIALS AND U.S. GAAP RECONCILIATION OF CONSOLIDATED SEGMENT PROFIT (LOSS)(1)
	Three Months Ended June 30,												Six Months Ended June 30,
(in millions)	2024						2023						2024						2023
Revenue
Energy Solutions	$	1,595					$	1,721					$	3,028					$	3,333
Urban Solutions		1,831						1,202						3,309						2,411
Mission Solutions		704						705						1,305						1,354
Other		97						311						319						594
Total revenue	$	4,227					$	3,939					$	7,961					$	7,692
Segment profit (loss) $ and margin %
Energy Solutions	$	75		4.7	%		$	89		5.2	%		$	143		4.7	%		$	178		5.3	%
Urban Solutions		105		5.7	%			76		6.3	%			155		4.7	%			55		2.3	%
Mission Solutions		41		5.8	%			40		5.7	%			63		4.8	%			47		3.5	%
Other		(27	)	NM				(14	)	NM				(49	)	NM				(104	)	NM
Total segment profit (loss) $ and margin %	$	194		4.6	%		$	191		4.8	%		$	312		3.9	%		$	176		2.3	%
G&A		(50	)					(60	)					(110	)					(121	)
Foreign currency gain (loss)		48						(44	)					60						(86	)
Interest income (expense), net		38						37						77						78
Earnings (loss) attributable to NCI		(16	)					7						(34	)					(16	)
Earnings (loss) before taxes		214						131						305						31
Income tax expense		(61	)					(63	)					(111	)					(93	)
Net earnings (loss)	$	153					$	68					$	194					$	(62	)
Less: Net earnings (loss) attributable to NCI		(16	)					7						(34	)					(16	)
Net earnings (loss) attributable to Fluor	$	169					$	61					$	228					$	(46	)
New awards
Energy Solutions	$	582					$	753					$	1,298					$	1,465
Urban Solutions		2,416						2,282						7,289						4,057
Mission Solutions		63						339						1,208						670
Other		37						336						321						752
Total new awards	$	3,098					$	3,710					$	10,116					$	6,944
New awards related to projects located outside of the U.S.		31	%					47	%					28	%					49	%

(in millions)	June 30, 2024					June 30, 2023
Backlog
Energy Solutions	$	8,531				$	7,649
Urban Solutions		19,571					11,695
Mission Solutions		3,775					4,900
Other		427					1,239
Total backlog	$	32,304				$	29,441
Backlog related to projects located outside of the U.S.		53	%				47	%
Backlog related to reimbursable projects		81	%				64	%
(1) Certain amounts in tables may not total or agree back to the financial statements due to immaterial rounding differences.

SUMMARY OF CASH FLOW INFORMATION
		Six Months Ended June 30,
(in millions)			2024				2023
OPERATING CASH FLOW		$	171			$	(99	)
INVESTING CASH FLOW
Proceeds from sales and maturities (purchases) of marketable securities			(9	)			127
Capital expenditures			(82	)			(42	)
Proceeds from sale of assets			74				23
Investments in partnerships and joint ventures			(21	)			(10	)
Other			—				5
Investing cash flow			(38	)			103
FINANCING CASH FLOW
Purchase and retirement of debt			(24	)			(137	)
Dividends paid on CPS			—				(20	)
Distributions to NCI (net of capital contributions)			(6	)			(25	)
Proceeds from NuScale share issuance (net of issuance fees)			45				—
Other			(9	)			(15	)
Financing cash flow			6				(197	)
Effect of exchange rate changes on cash			(29	)			16
Increase (decrease) in cash and cash equivalents			110				(177	)
Cash and cash equivalents at beginning of period			2,519				2,439
Cash and cash equivalents at end of period		$	2,629			$	2,262
Cash paid during the period for:
Interest		$	22			$	31
Income taxes (net of refunds)			31				70

RECONCILIATION OF U.S. GAAP NET EARNINGS (LOSS) TO ADJUSTED NET EARNINGS AND U.S. GAAP EARNINGS PER SHARE TO ADJUSTED EARNINGS PER SHARE (1)
	THREE MONTHS ENDED JUNE 30,								SIX MONTHS ENDED JUNE 30,
(In millions, except per share amounts)		2024				2023				2024				2023
Net earnings (loss) attributable to Fluor	$	169			$	61			$	228			$	(46	)
Less: Dividends on CPS		—				10				—				20
Net earnings (loss) available to Fluor common stockholders	$	169			$	51			$	228			$	(66	)
Exclude: Stork and AMECO businesses marketed for sale		—				(5	)			8				59
Exclude: Tax expense on Stork and AMECO		—				—				—				—
Net earnings (loss) from core operations		169				46				236				(7	)
Add (less):
Dividends on CPS	$	—			$	10			$	—			$	20
NuScale (profit) loss		26				20				57				46
ICA Fluor embedded derivatives		(20	)			8				(27	)			47
Tax expense (benefit) on ICA Fluor embedded derivatives		6				(2	)			8				(13	)
Foreign currency (gain) loss		(48	)			44				(60	)			86
Tax expense (benefit) on foreign currency gain/loss		15				(9	)			15				(18	)
G&A: Reserve for legacy legal claims		—				3				—				3
G&A: NuScale marketing costs borne by Fluor		—				5				—				5
SEC investigation		—				5				—				10
Adjusted Net Earnings	$	148			$	130			$	229			$	179
Diluted EPS available to Fluor common stockholders	$	0.97			$	0.35			$	1.32			$	(0.46	)
Adjusted EPS	$	0.85			$	0.76			$	1.32			$	1.04
Weighted average diluted shares outstanding		174				143				173				143
Assumed conversion of CPS		—				27				—				27
Assumed issuance of shares under equity awards		2				2				2				2
Adjusted weighted average diluted shares outstanding		176				172				175				172
(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 (LOSS) TO ADJUSTED EBITDA (1)
	THREE MONTHS ENDED JUNE 30,							SIX MONTHS ENDED JUNE 30,
(in millions)		2024			2023				2024			2023
Net earnings (loss) attributable to Fluor	$	169		$	61			$	228		$	(46	)
Interest income		38			37				77			78
Tax expenses		(61	)		(63	)			(111	)		(93	)
Depreciation & amortization		16			19				34			37
EBITDA	$	208		$	106			$	296		$	6
Adjustments:
Other: NuScale, Stork and AMECO earnings	$	25		$	15			$	44		$	99
Energy Solutions: Embedded foreign currency derivative (gains)/losses		(20	)		8				(27	)		47
G&A: Foreign currency (gain) loss		(48	)		44				(60	)		86
G&A: Reserve for legacy legal claims		—			3				—			3
G&A: SEC investigation		—			5				—			10
Adjusted EBITDA	$	165		$	181			$	253		$	251
(1) Certain amounts in tables may not total or agree back to the financial statements due to immaterial rounding differences.

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Brett Turner

Media Relations

864.281.6976 tel

Jason Landkamer

Investor Relations

469.398.7222 tel

Source: Fluor Corporation

FAQ

What was Fluor's (FLR) revenue in Q2 2024?

Fluor (FLR) reported revenue of $4.2 billion in Q2 2024, representing a 7% increase compared to the same quarter in the previous year.

How much did Fluor (FLR) earn per share in Q2 2024?

Fluor (FLR) reported diluted earnings per share (EPS) of $0.97 and adjusted diluted EPS of $0.85 for Q2 2024.

What was Fluor's (FLR) operating cash flow in Q2 2024?

Fluor (FLR) generated a strong operating cash flow of $282 million in Q2 2024, leading to an increase in the company's 2024 cash guidance range.

How much was Fluor's (FLR) backlog at the end of Q2 2024?

Fluor's (FLR) ending consolidated backlog was $32.3 billion at the end of Q2 2024, compared to $25.5 billion a year ago.