Fluor Corporation (NYSE: FLR) today announced net earnings, and earnings
from continuing operations, for its first quarter ended March 31, 2004,
of $46.7 million, or 57 cents per share. This compares with net earnings
in the first quarter last year of $16.9 million, or 21 cents per share,
and earnings from continuing operations of $40.9 million, or 51 cents
per share. Revenues were $2.1 billion, level with $2.1 billion a year
ago.
First quarter 2004 net earnings included $5.1 million, or 6 cents per
share related to gains from the sale of two real estate properties
completed during the quarter. Net earnings in the first quarter of 2003
included a loss from discontinued operations of $13.6 million, or 17
cents per share, as well as an after-tax charge of $10.4 million, or 13
cents per share, to recognize the cumulative effect of a change in an
accounting principle relating to the consolidation of certain leased
engineering office facilities.
New project awards in the first quarter increased 19 percent to $3.1
billion, the highest quarterly total in seven years. The mix of new
awards during the quarter was broad based, with strong contributions
from all segments except Power. Fluor's Government segment reported
solid new awards in the quarter, despite the fact that the recently
announced Nash contract awards for reconstruction work in Iraq were not
included in the period. These Fluor/AMEC joint venture awards will be
booked in future periods as specific task orders are received.
Consolidated backlog increased 15 percent to $11.9 billion, up from
$10.3 billion a year ago, and up from $10.6 billion at the end of 2003.
"Fluor continues to benefit from its broad market diversity, enabling us
to deliver solid earnings in the first quarter that were in line with
our expectations," said Alan Boeckmann, Fluor's chairman and chief
executive officer. "We are particularly encouraged by the strength in
new awards for the quarter, which were broadly diversified across our
markets. With the transition away from power projects, we expect to see
a continuing pickup in activity across our other businesses over the
remainder of the year, helping us to achieve our long-term earnings
growth goals."
Consolidated operating profit for the quarter was $98.9 million,
compared with $96.7 million in the first quarter last year, while the
operating margin was 4.8 percent compared with 4.7 percent.
Excluding the gains on real estate, Corporate G&A improved to $35.5
million compared with $36.7 million in the first quarter of 2003.
Fluor's financial condition remains strong, with cash and securities of
$546 million at the end of the quarter. During the quarter, the company
successfully issued $330 million in convertible senior notes with
favorable market terms, including an attractive interest rate of 1.5
percent and a 40 percent conversion premium. This low-cost debt was used
to repay outstanding commercial paper borrowings and lease financings
for the company's Aliso Viejo, California, facilities, and to fund
increases in working capital primarily for the Hamaca project in
Venezuela. This action further strengthens Fluor's balance sheet to meet
both short- and long-term financial requirements.
Outlook
The company continues to expect that 2004 will be a year of transition
from an earnings standpoint, moving from a cycle of completions in its
power business to a cycle of new projects in oil and gas and certain
economically sensitive industrial markets, along with continued growth
in Government. The broad-based strength experienced in first quarter new
awards is expected to continue and is adding to Fluor's confidence that
2004 will be a year of backlog expansion. The outlook for significant
new investment in the global oil and gas industry remains strong,
supported by continuing front-end activities and project awards, as well
as ongoing client discussions. In the Industrial segment, we see
continuing investment in the life sciences market, with increasing
capital spending plans by the chemicals and mining industries adding to
this positive outlook. The expected growth in backlog during the year
should build the basis for good earnings growth over the next few years.
Due to the lower level of profit recognition during the early stages of
project execution, the pace of earnings contribution from newly booked
projects will begin slowly in 2004, particularly for larger projects.
However, certain other projects, such as Fluor's fast-paced
participation in the Iraq reconstruction effort, will help bridge the
expected earnings decline in Fluor's Power segment. Given the strength
of first quarter new awards, further anticipated Iraq task orders, and
other first-half prospects, the company has narrowed its earnings
guidance for 2004 to a range of $2.10 to $2.40 cents per share.
Business Segments
Fluor's Oil & Gas segment reported operating profit of $27.1 million, up
slightly from $26.8 million in the first quarter a year ago. Revenues
declined 19 percent to $604 million from $744 million last year.
Operating margin in the quarter improved to 4.5 percent from 3.6
percent, offsetting the impact of the revenue decline. The decline in
revenues is attributable to a cycle of project completions, primarily in
downstream clean fuels projects, which have not yet been fully offset by
recent new upstream awards that are still in the early stages of
execution. Also contributing to the revenue decline is an increasing
amount of front-end engineering services that do not generate
significant revenue, but do carry attractive margins and should lead to
increasing future project awards.
Operating profit in the quarter for Fluor's Industrial & Infrastructure
segment declined to $10.1 million from $16.8 million, on a 19 percent
decline in revenues to $477 million. Operating margin for the segment
also declined to 2.1 percent from 2.9 percent. The decline in overall
performance is primarily due to a slower pace of new awards last year,
contributing to a decline in backlog. The pace of work performed in the
Industrial & Infrastructure segment is anticipated to improve as the
year progresses, based on record first quarter new awards, and a strong
outlook for a number of its markets.
Fluor's Government segment posted a more than three-fold increase in
quarterly operating profit to $27.5 million compared with $8.6 million
last year, on a 73 percent increase in revenues to $578 million. The
significant operating profit and margin increase was primarily driven by
Iraq reconstruction activity, which had not yet begun a year ago. Also
adding to the increase were results from the company's Del-Jen and J.A.
Jones acquisitions, which also were not yet contributing factors in the
first quarter last year.
Operating profit for Fluor's Global Services segment was $20.1 million,
down 14 percent compared with $23.2 million in the first quarter last
year. Revenues increased 19 percent to $314 million from $265 million.
The decrease in operating profit was driven primarily by lower
construction-related site services activities related to the cycle of
project completions in Fluor's Power and Oil & Gas segments. The
decrease was partially offset by increased operating profits from the
company's operations and maintenance business, as well as growth in
Fluor's temporary staffing business due to increasing levels of
engineering activity on projects.
Fluor's Power segment reported operating profit of $14.1 million
compared with a very strong $21.3 million in the first quarter last
year. Both periods reflected successful projects nearing completion,
which contributed to very strong operating margins. As anticipated,
revenues continued to decline, down 38 percent to $91 million, with the
further workoff of Fluor's Power backlog. Earnings for the Power segment
are expected to be moderately lower over the balance of the year, with
few projects remaining to be completed.
First Quarter Conference Call Information
Fluor will host a conference call at 11 a.m. Eastern time on Thursday,
April 29, which will be webcast live on the Internet and can be accessed
by logging on to http://investor.fluor.com/.
The webcast will be archived for 30 days following the call.
About Fluor Corporation
Fluor Corporation (NYSE: FLR) provides services on a global basis in the
fields of engineering, procurement, construction, operations,
maintenance and project management. Headquartered in Aliso Viejo,
Calif., Fluor is a FORTUNE 500 company with revenues of $8.8 billion in
2003. For more information, visit www.fluor.com.
Forward-Looking Statements: This release contains forward-looking
statements, including statements relating to the expected performance of
the Company's business and growth in markets which the Company serves.
The forward-looking statements are based on current management
expectations. Actual results may differ materially as a result of
several factors, including, among other things: failure to achieve
projected earning levels; the timely and successful implementation of
strategic initiatives; customer cancellations of, or scope adjustments
to, existing contracts; difficulties or delays incurred in the execution
of contracts; decreased capital investment or expenditures, or a failure
to make anticipated increased capital investment or expenditures, by the
Company's clients including our oil, gas, transportation, industrial,
infrastructure and government clients; the Company's failure to receive
anticipated new contract awards; increased liability risks in any of the
markets the Company serves; the Company's inability to successfully
convert front-end engineering services into future project awards; the
cyclical nature of many of the markets the Company serves; the Company's
ability to successfully identify and integrate acquisitions; and,
changes in global business, economic, political and social conditions.
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 press releases as well as the Company's public periodic filings with
the Securities and Exchange Commission, including the discussion under
the heading "Item 1. Business - Company Risk Factors" in the Company's
Form 10-K filed on March 15, 2004. Such filings are available either
publicly or upon request from Fluor's Investor Relations Department:
(949) 349-3909. The Company disclaims any intent or obligation to update
its forward-looking statements in light of new information or future
events.
For further information please contact Jerry Holloway, +1-949-349-7411,
or Lisa Boyette, +1-949-349-3652, both Media Relations, or Lila Churney,
Investor Relations, +1-949-349-3909, or fax, +1-949-349-5375, all of
Fluor Corporation.
|
FLUOR CORPORATION
|
|
CONSOLIDATED FINANCIAL RESULTS
|
|
(in millions, except per share amounts)
|
|
Unaudited
|
|
THREE MONTHS ENDED MARCH 31
|
|
2004
|
|
2003
|
|
Revenues
|
|
$
|
2,063.3
|
|
$
|
2,077.0
|
|
|
Costs and Expenses:
|
|
|
|
|
|
Cost of Revenues
|
|
|
1,964.4
|
|
|
1,980.3
|
|
|
Corporate G&A
|
|
|
27.8
|
|
|
36.7
|
|
|
Net Interest Expense (Income)
|
|
|
0.8
|
|
|
(0.6
|
)
|
|
Total Costs and Expenses
|
|
|
1,993.0
|
|
|
2,016.4
|
|
|
Earnings from Continuing Operations
|
|
|
|
|
|
before Income Taxes
|
|
|
70.3
|
|
|
60.6
|
|
|
Income Tax Expense
|
|
|
23.6
|
|
|
19.7
|
|
|
Earnings from Continuing Operations
|
|
|
46.7
|
|
|
40.9
|
|
|
Loss from Discontinued Operations
|
|
|
--
|
|
|
(13.6
|
)
|
|
Cumulative Effect of Change in
|
|
|
|
|
|
Accounting Principle
|
|
|
--
|
|
|
(10.4
|
)
|
|
Net Earnings
|
|
$
|
46.7
|
|
$
|
16.9
|
|
|
Basic Earnings (Loss) per Share
|
|
|
|
|
|
Earnings from Continuing
|
|
|
|
|
|
Operations
|
|
$
|
.58
|
|
$
|
.52
|
|
|
Loss from Discontinued Operations
|
|
|
.00
|
|
|
(.17
|
)
|
|
Cumulative Effect of Change in
|
|
|
|
|
|
Accounting Principle
|
|
|
.00
|
|
|
(.13
|
)
|
|
Net Earnings
|
|
|
.58
|
|
|
.22
|
|
|
Weighted Average Shares
|
|
|
80.9
|
|
|
79.3
|
|
|
Diluted Earnings (Loss) per Share
|
|
|
|
|
|
Earnings from Continuing
|
|
|
|
|
|
Operations
|
|
$
|
.57
|
|
$
|
.51
|
|
|
Loss from Discontinued Operations
|
|
|
.00
|
|
|
(.17
|
)
|
|
Cumulative Effect of Change in
|
|
|
|
|
|
Accounting Principle
|
|
|
.00
|
|
|
(.13
|
)
|
|
Net Earnings
|
|
|
.57
|
|
|
.21
|
|
|
Weighted Average Shares
|
|
|
82.1
|
|
|
79.6
|
|
|
New Awards
|
|
$
|
3,127.7
|
|
$
|
2,618.5
|
|
|
Backlog
|
|
$
|
11,864.6
|
|
$
|
10,303.0
|
|
|
Work Performed
|
|
$
|
2,018.8
|
|
$
|
2,037.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FLUOR CORPORATION
|
|
|
|
|
|
|
|
SELECTED BALANCE SHEET ITEMS (Unaudited)
|
|
($ in millions, except per share amounts)
|
|
|
|
MARCH 31, 2004
|
|
DECEMBER 31, 2003
|
|
Cash and Cash Equivalents
|
|
$
|
546.2
|
|
|
$
|
496.5
|
|
|
Total Current Assets
|
|
|
2,351.4
|
|
|
|
2,213.6
|
|
|
Total Assets
|
|
|
3,546.4
|
|
|
|
3,449.5
|
|
|
Total Short-Term Debt *
|
|
|
--
|
|
|
|
221.5
|
|
|
Total Current Liabilities
|
|
|
1,545.4
|
|
|
|
1,829.1
|
|
|
Long-term Debt *
|
|
|
375.1
|
|
|
|
44.7
|
|
|
Shareholders' Equity
|
|
|
1,128.9
|
|
|
|
1,081.5
|
|
|
|
|
|
|
|
|
Total Debt to Capitalization %
|
|
|
24.9
|
%
|
|
|
19.7
|
%
|
|
Shareholders' Equity Per Share
|
|
$
|
13.60
|
|
|
$
|
13.17
|
|
|
|
|
|
|
|
|
* Includes debt from the consolidation of variable interest entities
as
|
|
prescribed by FASB Interpretation No. 46. At December 31, 2003,
|
|
short-term includes debt of $100.0 million. Long-term debt at
|
|
March 31, 2004 and December 31, 2003 includes debt of $27.5 million
|
|
and $27.0 million, respectively.
|
|
|
|
|
|
|
|
OTHER ITEMS (Unaudited)
|
|
|
|
|
|
($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004
|
|
|
|
2003
|
|
|
Depreciation **
|
|
$
|
22.2
|
|
|
$
|
20.8
|
|
|
Capital Expenditures **
|
|
|
19.3
|
|
|
|
16.8
|
|
|
|
|
|
|
|
|
** Continuing operations only.
|
|
|
|
|
|
BUSINESS SEGMENT FINANCIAL REVIEW (Unaudited)
|
|
($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS ENDED MARCH 31
|
|
2004
|
|
|
|
2003
|
|
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
Oil & Gas
|
|
$
|
603.9
|
|
|
|
$
|
744.3
|
|
|
|
Industrial & Infrastructure
|
|
|
476.8
|
|
|
|
|
587.2
|
|
|
|
Government
|
|
|
577.6
|
|
|
|
|
333.1
|
|
|
|
Global Services
|
|
|
314.1
|
|
|
|
|
264.8
|
|
|
|
Power
|
|
|
90.9
|
|
|
|
|
147.6
|
|
|
|
Total revenues
|
|
$
|
2,063.3
|
|
|
|
$
|
2,077.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Profit / Margin %
|
|
$
|
|
%
|
|
$
|
|
%
|
|
Oil & Gas
|
|
$
|
27.1
|
|
4.5
|
|
$
|
26.8
|
|
3.6
|
|
Industrial & Infrastructure
|
|
|
10.1
|
|
2.1
|
|
|
16.8
|
|
2.9
|
|
Government
|
|
|
27.5
|
|
4.8
|
|
|
8.6
|
|
2.6
|
|
Global Services
|
|
|
20.1
|
|
6.4
|
|
|
23.2
|
|
8.8
|
|
Power
|
|
|
14.1
|
|
15.5
|
|
|
21.3
|
|
14.4
|
|
Total operating profit / margin %
|
|
$
|
98.9
|
|
4.8
|
|
$
|
96.7
|
|
4.7
|
|
FLUOR CORPORATION
|
|
Supplemental Fact Sheet
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NEW AWARDS
|
|
|
|
|
|
|
|
|
|
|
|
($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS ENDED MARCH 31
|
|
2004
|
|
2003
|
|
% Chg
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil & Gas
|
|
$
|
993
|
|
32
|
%
|
|
$
|
1,424
|
|
54
|
%
|
|
-30
|
%
|
|
Industrial & Infrastructure
|
|
|
1,303
|
|
41
|
%
|
|
|
603
|
|
23
|
%
|
|
116
|
%
|
|
Government
|
|
|
412
|
|
13
|
%
|
|
|
145
|
|
6
|
%
|
|
184
|
%
|
|
Global Services
|
|
|
399
|
|
13
|
%
|
|
|
359
|
|
14
|
%
|
|
11
|
%
|
|
Power
|
|
|
21
|
|
1
|
%
|
|
|
88
|
|
3
|
%
|
|
-76
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL NEW AWARDS
|
|
$
|
3,128
|
|
100
|
%
|
|
$
|
2,619
|
|
100
|
%
|
|
19
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BACKLOG TRENDS
|
|
|
|
|
|
|
|
|
|
|
|
($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AS OF MARCH 31
|
|
2004
|
|
2003
|
|
% Chg
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil & Gas
|
|
$
|
4,235
|
|
36
|
%
|
|
$
|
2,943
|
|
28
|
%
|
|
44
|
%
|
|
Industrial & Infrastructure
|
|
|
3,951
|
|
33
|
%
|
|
|
4,185
|
|
41
|
%
|
|
-6
|
%
|
|
Government
|
|
|
1,233
|
|
10
|
%
|
|
|
700
|
|
7
|
%
|
|
76
|
%
|
|
Global Services
|
|
|
1,897
|
|
16
|
%
|
|
|
1,695
|
|
16
|
%
|
|
12
|
%
|
|
Power
|
|
|
549
|
|
5
|
%
|
|
|
780
|
|
8
|
%
|
|
-30
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Backlog
|
|
$
|
11,865
|
|
100
|
%
|
|
$
|
10,303
|
|
100
|
%
|
|
15
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
$
|
5,001
|
|
42
|
%
|
|
$
|
5,411
|
|
52
|
%
|
|
-8
|
%
|
|
The Americas
|
|
|
1,790
|
|
15
|
%
|
|
|
1,416
|
|
14
|
%
|
|
26
|
%
|
|
Europe, Africa and the Middle East
|
|
|
4,611
|
|
39
|
%
|
|
|
2,841
|
|
28
|
%
|
|
62
|
%
|
|
Asia Pacific
|
|
|
463
|
|
4
|
%
|
|
|
635
|
|
6
|
%
|
|
-27
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Backlog
|
|
$
|
11,865
|
|
100
|
%
|
|
$
|
10,303
|
|
100
|
%
|
|
15
|
%
|
Jerry Holloway, +1-949-349-7411, or Lisa Boyette,+1-949-349-3652, both Media Relations, or Lila Churney, Investor Relations,+1-949-349-3909, or fax, +1-949-349-5375, all of Fluor Corporation//Web site: http://investor.fluor.comhttp://www.fluor.com /