Fluor Reports Fourth Quarter and Full Year 2023 Results

Published
  • 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

IRVING, Texas--(BUSINESS WIRE)-- Fluor Corporation (NYSE: FLR) announced financial results for its year ended December 31, 2023. Revenue for 2023 was $15.5 billion and net income attributable to Fluor was $139 million, or $0.54 per diluted share. Consolidated segment profit1 for the year was $537 million compared to $427 million in 2022. Including the adjustments outlined in the reconciliation table at the end of this release, the company recognized adjusted EBITDA1 of $613 million and adjusted diluted earnings per share1 of $2.73 for 2023.

“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 $19.5 billion compared to $19.8 billion a year ago. Ending backlog for 2023 was $29.4 billion compared to $26.0 billion in the prior year. General and administrative expenses for 2023 were $232 million compared to $237 million a year ago. Fluor’s cash and marketable securities at the end of the year were $2.5 billion, not including $118 million in cash and marketable securities held by NuScale.

[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 $21 million, or ($0.12) per diluted share, compared to net earnings attributable to Fluor of $9 million, or ($0.01) per diluted share in the fourth quarter of 2022. Results for the fourth quarter of 2023 include a settlement of claims on a legacy infrastructure project offset by cost growth and schedule extension on a large upstream legacy project that is scheduled to complete in the first quarter of 2024. Results also include a $93 million loss on sale related to the Stork business in Latin America.

Revenue for the quarter was $3.8 billion compared to $3.7 billion a year ago. Consolidated segment profit for the fourth quarter of 2023 totaled $85 million compared to $174 million a year ago. G&A expenses in the fourth quarter were $55 million, compared to $89 million a year ago. New awards for the quarter were $7.6 billion compared to $4.6 billion in 2022.

Including the adjustments outlined in the reconciliation table at the end of this release, the company recognized adjusted EBITDA of $145 million and adjusted EPS of $0.68 for the fourth quarter of 2023.

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 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 75% reimbursable backlog target, and our robust and diverse prospect pipeline, the company is establishing an adjusted EBITDA guidance for 2024 of $600 to $700 million and adjusted EPS of $2.50 to $3.00 per share.

The company is also reaffirming its 2026 adjusted EBITDA guidance of $800 to $950 million.

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 $381 million in 2023 compared to $301 million in 2022. Segment profit improved significantly primarily due to initial recognition of inflation-adjusted variable consideration on certain downstream projects and due to increased execution activities on those same projects as well as construction activities on a large LNG project. This was partially offset by charges totaling $91 million for cost growth and schedule extension on a large upstream legacy project that is scheduled to be completed in Q1 2024. Revenue for 2023 was $6.3 billion, up from $5.9 billion in the previous year. Revenue in 2023 increased due to the ramp up of execution activities on our refinery projects in Mexico, chemicals projects in China, and mid-scale LNG projects. Full year new awards in 2023 totaled $6.9 billion, compared to $6.5 billion in 2022, and included a multi-billion-dollar reimbursable EPCM contract for the Dow net-zero ethylene cracker and derivatives project in Canada as well as a chemicals project in Poland. Ending backlog was $9.7 billion compared to $9.1 billion a year ago.

Urban Solutions reported a profit of $268 million in 2023 compared to $17 million in 2022. Segment profit improved as a result of a settlement on a legacy infrastructure project and a discretionary fee award on a large mining project that was completed in 2023. Full year revenue for the segment increased to $5.3 billion compared to $4.4 billion a year ago due to the ramp up of execution activities on several recently awarded projects including a large metals project in the U.S., two life sciences projects and a semiconductor project. New awards for 2023 improved to $10.1 billion, compared to $6.9 billion in 2022, primarily from awards for a large mining project, a metals project and a life sciences project. Ending backlog was $14.8 billion compared to $10.3 billion a year ago.

Mission Solutions reported a profit of $116 million in 2023 compared to $136 million a year ago. The decline in segment profit was substantially driven by a $30 million charge recognized in the first half of 2023 for cost growth associated with additional schedule delays on a weapons facility project expected to complete in mid-2024. Full year revenue for the segment of $2.7 billion compares to $2.3 billion a year ago. Revenue increased in 2023 due to increased execution activities on multiple DOE and Defense contracts, and FEMA hurricane support. Full year new awards in 2023 were $1.1 billion, compared to $5.3 billion in 2022. New awards decreased during 2023 due to a large award booked in the prior year for a 4-year contract extension on the DOE Savannah River Site. Ending backlog was $3.9 billion compared to $5.7 billion a year ago.

The Other segment, which includes NuScale, Stork and the now divested AMECO business, reported a full year loss of $228 million compared to a loss of $27 million a year ago. Full year revenue was $1.3 billion in 2023 and $1.2 billion in 2022. Results for the year reflect losses on the sales of our AMECO South America business and Stork business in Latin America.

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 (U.S./Canada) or +1 646-307-1852. The conference ID is 4438700.

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 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 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 $15.5 billion in 2023 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 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.

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 U.S. GAAP RECONCILIATION OF CONSOLIDATED SEGMENT PROFIT (LOSS)(1) (2)

 

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 U.S.

 

76%

46%

Backlog (in millions)

 

December 31, 2023

 

December 31, 2022

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 U.S.

 

 

62%

 

 

49%

Backlog related to reimbursable projects

 

 

76%

 

 

63%

(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 U.S. GAAP NET EARNINGS TO ADJUSTED NET EARNINGS AND U.S. GAAP EARNINGS PER SHARE TO ADJUSTED EARNINGS PER SHARE (1)

 

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 U.S. GAAP NET EARNINGS TO ADJUSTED EBITDA (1)

 

 

 

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.

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Brett Turner Media Relations 864.281.6976 tel Jason Landkamer Investor Relations 469.398.7222 tel

Source: Fluor Corporation

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