- Year-end cash balance of $2.0 billion, domestic unrestricted
cash balance improves during the fourth quarter
- Announces retention of Government group to optimize cash
flow and portfolio diversification
- Full year new awards of $12.6 billion and expected backlog
of $32.7 billion
- Announces review of prior period reporting on certain
projects and delay of Form 10-K filing
- 2020 Adjusted EPS Guidance established at a range of $1.40
to $1.60
Fluor Corporation (NYSE: FLR) today disclosed preliminary select
financial results for its fiscal year and fourth quarter ended
December 31, 2019 and announced a delay in the submission of full
year financial statements. The Company does not expect to file its
annual report on Form 10-K for the period ended December 31, 2019
prior to the end of February.
Full Year Results
Given the Company has not finalized and filed its full year
financial results, the following information is preliminary and
unaudited, and could be affected by subsequent events or
determinations.
At year-end, Fluor’s cash plus current and marketable securities
was $2.0 billion, up slightly from a year ago. Corporate G&A
expense is expected to be $167 million, up from $118 million a year
ago and primarily driven by foreign currency exchange losses as
compared to foreign currency exchange gains a year ago. Full year
financial results, when filed, are expected to include a non-cash
charge of $668 million related to establishing a valuation
allowance against net deferred-tax assets; non-cash impairments of
$305 million; restructuring and other exit costs of $202 million,
$84 million of which is non-cash; and non-cash expenses of $138
million related to the settlement of the U.K. pension plan.
Full year new awards for 2019 were $12.6 billion, consisting of
$3.7 billion in Energy & Chemicals, $1.9 billion in Mining
& Industrial, $2.6 billion in Infrastructure & Power, $2.2
billion in Government, and $2.2 billion in Diversified Services.
Consolidated backlog at year-end is expected to be $32.7
billion.
“In 2019 we started down the path of making tangible, actionable
changes to our business strategy and structure to position Fluor
for long-term success,” said Carlos Hernandez, Fluor chief
executive officer. “As we look ahead, driven by our talented
workforce, we will continue to act with a sense of urgency to drive
our business forward and deliver positive results to our clients
and our shareholders.”
Update on Planned
Divestitures
Last fall, as part of Fluor’s strategic review process to
improve its financial position, the Company announced that it was
initiating plans to sell substantially all of its Government
business. As Fluor worked through the fourth quarter and realized
some of the early benefits of its restructuring plan, the Company
gained confidence in its solid liquidity position and its viable
options for generating cash flow such that the Company no longer
deemed it advisable or necessary to proceed with the sale of this
business. As a result, the Company has decided to retain the
Government segment which will cease to be reported as a
discontinued operation in the first quarter of 2020.
Mr. Hernandez continued, “We are excited about retaining this
important and attractive asset that provides us exposure to long
term clients, with less-cyclical projects, cost-reimbursable
contracts and high cash flow potential all drive our company-wide
focus on having an appropriate mix of risk in our backlog.
Furthermore, our significantly enhanced risk criteria and oversight
will play a critical role in how we manage the Government business
going forward.”
The Company’s plan to sell the AMECO equipment business remains
unchanged. It is the Company’s intent to have made significant
progress with one or more potential buyers by the end of the second
quarter.
SEC Investigation and Form 10-K
filing
Fluor announced that the Securities and Exchange Commission
(“SEC”) is conducting an investigation of the Company’s past
accounting and financial reporting, and has requested documents and
information related to projects for which the Company recorded
charges in the second quarter of 2019.
In the course of responding to the SEC’s data requests and
conducting our own internal review, the Company is reviewing its
prior period reporting and related control environment. The Company
has not made a determination at this time as to whether there are
prior period material errors in its financial statements, although
such remains possible. Given the ongoing internal review and recent
developments on two projects, the Company does not expect to
complete and file its annual report on Form 10-K prior to the end
of February.
Outlook
For 2020, Fluor is introducing adjusted EPS guidance of $1.40 to
$1.60 per share from continuing operations, which includes the
Government business. Adjusted EPS guidance excludes costs related
to restructuring and NuScale. Additionally, the Company is
providing guidance on the following financial metrics for 2020:
Adjusted EPS Guidance
$1.40 to $1.60 per share
Excludes restructuring expenses and
NuScale
Segment Margins
Energy & Chemicals: 3.0% to 5.0%
Mining & Industrial: 2.0% to 3.0% Infrastructure & Power:
~1.0% Government: 2.5% to 3.5% Diversified Services: 3.0% to
4.0%
Government margin guidance excludes
Radford and Warren
Adjusted G&A
~$40 million to $50 million per
quarter
Excludes restructuring expenses
Tax Rate
~28%
Actual tax rate will vary
NuScale Expenses
~$110 million
Expected to be funded by investors
Business Segments
Additional preliminary information regarding Fluor’s segment
results for 2019 and the fourth quarter of 2019 is set forth below.
Given the Company has not finalized and filed its full year
financial results, the following information is preliminary and
unaudited, and could be affected by subsequent events or
determinations.
Full year new awards for its Energy & Chemicals segment were
$3.7 billion, compared to $10.6 billion in 2018. In the fourth
quarter, the segment booked new awards of $1.7 billion, including a
project for INVISTA in China and the Polyols Petrochemicals project
for Bharat Petroleum Corporation in India. Ending backlog is
expected to be $14.1 billion compared to $17.8 billion a year
ago.
Full year new awards for the Mining & Industrial segment
were $1.9 billion, compared to $8.7 billion in 2018. In the fourth
quarter, the segment booked new awards of $527 million and ending
backlog is expected to be $5.4 billion compared to $8.9 billion a
year ago.
Full year new awards for the Infrastructure & Power segment
in 2019 were $2.6 billion, compared to $2.1 billion in 2018. In the
fourth quarter, the segment booked new awards of $67 million and
ending backlog for the segment is expected to be $6.9 billion
compared to $6.3 billion a year ago.
Full year new awards for the Government segment were $2.2
billion, compared to $4.1 billion a year ago. New awards totaled
$146 million for the fourth quarter including an award for the
Hanford Central Plateau Cleanup Contract for the Department of
Energy. Ending backlog is expected to be $3.8 billion compared to
$4.6 billion a year ago.
Full year new awards for the Diversified Services segment,
including certain retained AMECO operations, were $2.2 billion,
compared to $2.1 billion in 2018. New awards totaled $574 million
for the fourth quarter and ending backlog is expected to be $2.5
billion, up from $2.3 billion a year ago.
The Other segment includes allocated overhead expenses on the
Radford and Warren projects and expenses for NuScale. Full year
NuScale expenses will be approximately $79 million. Funding for
NuScale in the second half of 2019 was provided by outside
investors.
Fourth Quarter and Year-End Conference
Call
Fluor will host a conference call at 8:30 a.m. Eastern time on
Tuesday, February 18th, which will be webcast live on the Internet
and can be accessed by logging onto http://investor.fluor.com. The
call will also be accessible by telephone at 800-458-4148
(U.S./Canada) or 323-794-2093. The conference ID is 1769290. A
supplemental slide presentation will be available shortly before
the call begins.
A replay of the webcast will be available for 30 days. A replay
of the call will be available by telephone for one week. Click Here
to register for the replay.
Non-GAAP Financial
Measures
This press release contains forward-looking references to
Adjusted EPS and Adjusted G&A that are non-GAAP financial
measures under SEC rules. Adjusted EPS is defined as net earnings
per diluted share from continuing operations attributable to Fluor
less restructuring expenses and NuScale expenses. Adjusted G&A
is defined as corporate general and administrative expense less
restructuring expenses. The Company believes that Adjusted EPS and
Adjusted G&A allow investors to evaluate the Company’s ongoing
earnings and general and administrative expenses on a normalized
basis and make meaningful period-over-period comparisons. The
Company is unable to provide a reconciliation of these
forward-looking non-GAAP financial measures to the most comparable
GAAP measure because it is unable to predict with reasonable
certainty the outcome of certain significant items without
unreasonable efforts. These items include restructuring expenses
and other unusual gains or losses. These items are uncertain,
depend on various factors, and could have a material impact on U.S.
GAAP reported results for the guidance period.
About Fluor Corporation
Founded in 1912, Fluor Corporation (NYSE: FLR) is a global
engineering, procurement, fabrication, construction and maintenance
company that transforms the world by building prosperity and
empowering progress. Fluor serves its clients by designing,
building and maintaining safe, well executed, capital-efficient
projects around the world. With headquarters in Irving, Texas,
Fluor ranks 164 on the Fortune 500 list with revenue of $19.2
billion in 2018 and has more than 47,000 employees worldwide. For
more information, please visit www.fluor.com or follow Fluor on
Facebook, Twitter, LinkedIn and YouTube.
Forward-Looking Statements: This
release contains forward-looking statements (including without
limitation statements to the effect that the Company or its
management "believes," "expects," ”plans,” “intends,” is
“positioned” or other similar expressions). These forward-looking
statements, including statements relating to the timing of the
filing of our annual report on Form 10-K, financial and operating
results for the quarter and year ended December 31, 2019, efforts
to sell the AMECO business and other strategic and operational
plans, projected earnings level, revenue, margins, cash flow, tax
rate, charges, expenses and costs, forecast adjustments, market
outlook, new awards, and backlog levels, 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, the results of the review of prior
period accounting on certain projects; developments in governmental
investigations and/or inquiries; the use of estimates and
assumptions in preparing our financial statements; the cyclical
nature of many of the markets the Company serves, including the
Company’s Energy & Chemicals segment; 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 to obtain favorable
results in existing or future litigation or regulatory proceedings,
dispute resolution proceedings or claims, including claims for
additional costs; failure of our joint venture or other partners,
suppliers or subcontractors to perform their obligations;
cyber-security breaches; 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,
public health crises, political crises or other catastrophic
events; client delays or defaults in making payments; the
availability of credit and restrictions imposed by credit
facilities, both for the Company and our clients, suppliers,
subcontractors or other partners; failure to implement strategic
and operational initiatives; risks or uncertainties associated with
acquisitions, dispositions and investments; the inability to hire
and retain qualified personnel; the potential impact of certain tax
matters; possible information technology interruptions or inability
to protect intellectual property; the Company’s failure, or the
failure of our agents or partners, to comply with laws; the
Company's ability to secure appropriate insurance; new or changing
legal requirements, including those relating to environmental,
health and safety matters; 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; possible limitations on bonding or letter
of credit capacity; asset impairments; and risks arising from the
inability to successfully integrate acquired businesses.
Caution must be exercised in relying on these and other
forward-looking statements. Due to the preliminary and unaudited
nature of the financial information included in this release, the
risks and uncertainties identified in this release, and the
possibility for additional or 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, 2019. 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.
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version on businesswire.com: https://www.businesswire.com/news/home/20200218005377/en/
Brian Mershon Media Relations 469.398.7621 tel
Jason Landkamer Investor Relations 469.398.7222 tel
Fluor (NYSE:FLR)
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