EX-99.1 2 d38533exv99w1.htm PRESS RELEASE exv99w1
 

EXHIBIT 99.1
     
Fluor Corporation
  Keith Stephens / Steve Roth
6700 Las Colinas Blvd
  Media Relations
Irving, Texas 75039
  469.398.7624 / 469.398.7623 tel
 
    
469.398.7000 main tel
  Ken Lockwood / Jason Landkamer
469.398.7255 main fax
  Investor Relations
 
  469.398.7220 / 469.398.7222 tel
(FLOUR LOGO)
News Release
Fluor Reports Strong Second Quarter Results; New Awards and Backlog Surge
  •   record $5.8 billion in new awards
 
  •   17 percent sequential increase in backlog to $18.0 billion
Irving, TX, – August 7, 2006 – Fluor Corporation (NYSE: FLR) today announced financial results for its second quarter ended June 30, 2006. Revenues for the second quarter increased 18 percent to $3.5 billion, up from $2.9 billion in the second quarter of 2005. Net earnings were $66.6 million, or $0.74 per diluted share, compared with a loss of $16.4 million, or $0.19 per diluted share for the same period last year. Operating profits rose sharply to $161.5 million, with substantial increases from the Oil & Gas, Government, Global Services and Industrial & Infrastructure segments compared to a year ago. Operating margins rose to 4.7 percent, up from 1.1 percent a year ago. The second quarter of 2005 was impacted by charges relating to an unfavorable jury verdict on a resort hotel project in the Caribbean and other project issues.
     New awards for the second quarter were a record breaking $5.8 billion, up from $3.2 billion a year ago. The quarter included $2.6 billion in new Oil & Gas project awards and $2.3 billion in Industrial & Infrastructure awards. Consolidated backlog rose 17 percent to $18.0 billion, compared with $15.4 billion at March 31, 2006.
     “Fluor had a phenomenal quarter, particularly from a new awards perspective,” said Chief Executive Officer Alan Boeckmann. “The strength in new awards and backlog is indicative of our ability to provide world-class engineering, construction and project management expertise to complex capital projects globally.”
     Corporate G&A expense for the quarter was $54.3 million, including $8.8 million associated with the relocation of the corporate headquarters to the Dallas, Texas area, $3.4 million due to the adoption of accounting rule FAS123-R relating to stock-based compensation, and $3.3 million due to higher compensation costs. This compares with $27.7 million in G&A

 

 

Page 2 of 8   (FLOUR LOGO)
expense a year ago, which included a $4.2 million gain from the sale of real estate. Fluor’s cash and securities at quarter end were $585 million, down from $654 million last quarter, primarily due to substantial outstanding working capital balances on work for the Federal Emergency Management Agency (FEMA), which are expected to be collected over the next two quarters.
Outlook
     Revenue and net income for the first half reflect strong performance across the company, which was bolstered by substantial contributions from the Government group’s disaster relief work for FEMA, reconstruction work in Iraq and the Fernald project for the Department of Energy. Earnings Per Share guidance for the full year remains at a range of $2.90 to $3.20 per share, reflecting the fact that the three government programs mentioned above are nearly complete and should provide a significantly lower contribution in the second half of 2006.
Business Segments
     Fluor’s Oil & Gas segment reported revenues of $1.3 billion, up from $1.2 billion in the second quarter of last year. Operating profit rose 54 percent to $76.5 million, compared to $49.6 million a year ago, with operating margins improving to 5.9 percent from 4.1 percent last year. Margin improvement was driven in part by recognition of profits on completed projects. New awards were very strong across the upstream, downstream and petrochemical markets, and include the previously announced RasGas project in Qatar, valued at over $1 billion. Backlog grew by 23 percent to $8.4 billion, up from $6.8 billion last quarter.
     Fluor’s Industrial & Infrastructure segment reported revenue of $749.1 million, up 34 percent from $557.9 million a year ago. Operating profit for the quarter was $17.8 million, compared to a $63.8 million loss a year ago that was primarily the result of an unfavorable verdict on a hotel resort in the Caribbean. The charge was partially reversed in the third quarter of last year after the judge in the case overturned the verdict and a settlement was reached. Operating margins rose to 2.4 percent in the second quarter, compared with 1.8 percent last quarter, driven by solid project progress and performance. New awards included the previously announced San Francisco-Oakland Bay bridge project valued at $717 million. Backlog improved 42 percent over last quarter to $5.4 billion.

 

 

Page 3 of 8   (FLOUR LOGO)
     The Government segment reported second quarter revenues of $816.2 million, up from $647.2 million a year ago. Operating profit increased to $24.7 million, up from $19.5 million in the second quarter of 2005. Operating margins were even with a year ago at 3.0 percent. The positive impact of FEMA work which began in late 2005 was offset by loss provisions of $21 million on two embassy projects and $8 million for higher costs to complete a project in Afghanistan.
     Revenue for the Global Services segment grew 26 percent to $483.5 million, from $382.8 million a year ago. Operating profit increased 70 percent to $39.9 million, up from $23.5 million a year ago. Operating margins increased to 8.2 percent from 6.1 percent a year ago. Improved operating profits and margins were primarily a result of hurricane relief support work.
     Fluor’s Power segment reported $105.9 million in revenue, down from $119.0 million in the second quarter of 2005. For the quarter, the Power segment reported operating profit of $2.6 million compared to $3.1 million a year ago. Operating profit margin was level with a year ago at 2.6 percent.
Results for the Six Months
     Net earnings for the first six months of 2006 were $155.4 million, or $1.74 per diluted share. This compares with $31.0 million, or $0.36 per diluted share, for the first six months of 2005. As previously mentioned, results for the first half of 2005 included a pre-tax charge of $65.0 million for a hotel project in the Caribbean. Revenues for the 2006 six-month period rose 22.5 percent to $7.1 billion, compared with $5.8 billion in 2005.
Second Quarter Conference Call
     Fluor will host a conference call at 10:00 a.m. Eastern Daylight Time on Tuesday, August 8, 2006 which will be webcast live on the internet and can be accessed by logging onto 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 and maintenance and project management.

 

 

Page 4 of 8   (FLOUR LOGO)
Now headquartered in Irving, Texas, Fluor is a FORTUNE 500 company with revenues of $13.2 billion in 2005. For more information, visit www.fluor.com.
Forward-Looking Statements: This release contains forward-looking statements, including, without limitation, statements relating to, future backlog, revenue and earnings, expected performance of the Company’s business and the expansion of the markets which the Company serves. The forward-looking statements 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: failure to achieve projected backlog, revenue and/or earnings 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; 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; 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 1A. Business — Company Risk Factors” in the Company’s Form 10-K filed on March 1, 2006 and Form 10-Q filed on May 8, 2006. Such filings are available either publicly or upon request from Fluor’s Investor Relations Department: (469) 398-7220. The Company disclaims any intent or obligation to update its forward-looking statements in light of new information or future events.

 

 

Page 5 of 8   (FLOUR LOGO)
FLUOR CORPORATION
(in millions, except per share amounts)
Unaudited
CONSOLIDATED OPERATING RESULTS
THREE MONTHS ENDED JUNE 30
                 
    2006     2005  
Revenues
   $ 3,456.4     $ 2,919.9  
Costs and Expenses:
                
Cost of Revenues
     3,294.9       2,888.0  
Corporate G&A
     54.3       27.7  
Net Interest Expense (Income)
     0.7       (1.4 )
 
            
Total Costs and Expenses
     3,349.9       2,914.3  
 
            
Earnings before Income Taxes
     106.5       5.6  
Income Tax Expense
     39.9       22.0  
 
            
Net Earnings (Loss)
   $ 66.6     $ (16.4 )
 
            
Basic Earnings (Loss) per Share
                
Net Earnings (Loss)
   $ 0.77     $ (0.19 )
Weighted Average Shares
     86.3       85.0  
Diluted Earnings (Loss) per Share
                
Net Earnings (Loss)
   $ 0.74     $ (0.19 )
Weighted Average Shares
     89.6       85.0  
New Awards
   $ 5,755.6     $ 3,230.3  
Backlog
   $ 18,030.2     $ 15,666.4  
Work Performed
   $ 3,350.5     $ 2,857.5  
SIX MONTHS ENDED JUNE 30
                 
    2006     2005  
Revenues
   $ 7,081.3     $ 5,779.7  
Costs and Expenses:
                
Cost of Revenues
     6,735.4       5,629.3  
Corporate G&A
     96.1       65.8  
Net Interest Expense (Income)
     0.5       (1.6 )
 
            
Total Costs and Expenses
     6,832.0       5,693.5  
 
            
Earnings before Income Taxes
     249.3       86.2  
Income Tax Expense
     93.9       55.2  
 
            
Net Earnings
   $ 155.4     $ 31.0  
 
            
Basic Earnings per Share
                
Net Earnings
   $ 1.81     $ 0.37  
Weighted Average Shares
     86.1       84.3  
Diluted Earnings per Share
                
Net Earnings
   $ 1.74     $ 0.36  
Weighted Average Shares
     89.3       85.6  
New Awards
   $ 9,581.4     $ 6,581.0  
Backlog
   $ 18,030.2     $ 15,666.4  
Work Performed
   $ 6,891.4     $ 5,663.9  

 

 

Page 6 of 8   (FLOUR LOGO)
FLUOR CORPORATION
Unaudited
BUSINESS SEGMENT FINANCIAL REVIEW
($ in millions)
THREE MONTHS ENDED JUNE 30
                                 
    2006             2005          
Revenues
                                
Oil & Gas
   $ 1,301.7             $ 1,213.0          
Industrial & Infrastructure
     749.1               557.9          
Government
     816.2               647.2          
Global Services
     483.5               382.8          
Power
     105.9               119.0          
 
                            
Total revenues
   $ 3,456.4             $ 2,919.9          
 
                            
 
                                
 
   $     %     $     %  
 
                        
Operating Profit (Loss) Margin $ and %
                                
Oil & Gas
   $ 76.5       5.9     $ 49.6       4.1  
Industrial & Infrastructure
     17.8       2.4       (63.8 )     (11.4 )
Government
     24.7       3.0       19.5       3.0  
Global Services
     39.9       8.2       23.5       6.1  
Power
     2.6       2.6       3.1       2.6  
 
                            
Total Operating Profit (Loss) Margin $ and %
   $ 161.5       4.7     $ 31.9       1.1  
 
                            
SIX MONTHS ENDED JUNE 30
                                 
    2006             2005          
Revenues
                                
Oil & Gas
   $ 2,492.9             $ 2,396.9          
Industrial & Infrastructure
     1,511.9               1,228.2          
Government
     1,950.0               1,208.4          
Global Services
     942.8               748.2          
Power
     183.7               198.0          
 
                            
Total revenues
   $ 7,081.3             $ 5,779.7          
 
                            
 
                                
 
   $     %     $     %  
 
                        
Operating Profit (Loss) Margin $ and %
                                
Oil & Gas
   $ 133.2       5.3     $ 103.9       4.3  
Industrial & Infrastructure
     31.4       2.1       (43.0 )     (3.5 )
Government
     103.2       5.3       28.6       2.4  
Global Services
     75.5       8.0       54.7       7.3  
Power
     2.6       1.4       6.2       3.1  
 
                            
Total Operating Profit (Loss) Margin $ and %
   $ 345.9       4.9     $ 150.4       2.6  
 
                            

 

 

Page 7 of 8   (FLOUR LOGO)
FLUOR CORPORATION
Unaudited
SELECTED BALANCE SHEET ITEMS
($ in millions, except per share amounts)
                 
    JUNE 30, 2006   DECEMBER 31, 2005
Cash and Cash Equivalents
   $ 584.8     $ 789.0  
Total Current Assets
     3,280.6       3,108.2  
Total Assets
     4,812.6       4,574.4  
Total Short-Term Debt
     430.0       330.0  
Total Current Liabilities
     2,384.2       2,339.3  
Long-term Debt
     129.9       92.0  
Shareholders’ Equity
     1,790.2       1,630.6  
 
                
Total Debt to Capitalization %
     23.8 %     20.6 %
Shareholders’ Equity Per Share
   $ 20.44     $ 18.72  
SELECTED CASH FLOW ITEMS
($ in millions)
                 
    SIX MONTHS ENDED JUNE 30  
    2006     2005  
Cash Provided (Utilized) by Operating Activities
   $ (243.9 )   $ 176.8  
 
            
 
                
Investing Activities
                
Capital Expenditures
     (110.8 )     (86.2 )
Other Items
     14.6       12.5  
 
            
Cash Utilized by Investing Activities
     (96.2 )     (73.7 )
 
            
 
                
Financing Activities
                
Increase (decrease) in short-term borrowings
     100.0       (30.0 )
Non-Recourse Project Financing
     32.4       —  
Issuance of Common Stock
     —       41.8  
Cash Dividends
     (17.8 )     (27.6 )
Other Items
     24.9       33.9  
 
            
Cash Provided by Financing Activities
     139.5       18.1  
 
            
 
                
Effect of Exchange Rate Changes on Cash
     (3.6 )     (36.7 )
 
            
 
                
 
            
Increase (Decrease) in Cash and Cash Equivalents
   $ (204.2 )   $ 84.5  
 
            
 
                
Depreciation
   $ 56.1     $ 48.7  
 
            

 

 

Page 8 of 8   (FLOUR LOGO)
FLUOR CORPORATION
Supplemental Fact Sheet
Unaudited
NEW AWARDS
($ in millions)
                                         
THREE MONTHS ENDED JUNE 30   2006   2005   % Chg
Oil & Gas
   $ 2,644       46 %   $ 1,220       38 %     117 %
Industrial & Infrastructure
     2,267       39 %     348       11 %     551 %
Government
     443       8 %     349       11 %     27 %
Global Services
     280       5 %     748       23 %     (63 )%
Power
     122       2 %     565       17 %     (78 )%
 
                                        
                 
TOTAL NEW AWARDS
   $ 5,756       100 %   $ 3,230       100 %     78 %
                 
                                         
SIX MONTHS ENDED JUNE 30   2006   2005   % Chg
Oil & Gas
   $ 4,448       46 %   $ 2,700       41 %     65 %
Industrial & Infrastructure
     2,939       31 %     940       14 %     213 %
Government
     1,208       13 %     793       12 %     52 %
Global Services
     859       9 %     1,502       23 %     (43 )%
Power
     127       1 %     646       10 %     (80 )%
 
                                        
                 
TOTAL NEW AWARDS
   $ 9,581       100 %   $ 6,581       100 %     46 %
                 
BACKLOG TRENDS
($ in millions)
                                         
AS OF JUNE 30   2006   2005   % Chg
Oil & Gas
   $ 8,353       46 %   $ 5,982       38 %     40 %
Industrial & Infrastructure
     5,355       30 %     4,479       29 %     20 %
Government
     699       4 %     1,165       7 %     (40 )%
Global Services
     2,529       14 %     3,106       20 %     (19 )%
Power
     1,094       6 %     934       6 %     17 %
 
                                        
                 
TOTAL BACKLOG
   $ 18,030       100 %   $ 15,666       100 %     15 %
                 
 
                                        
United States
   $ 6,420       36 %   $ 5,475       35 %     17 %
The Americas
     3,058       17 %     3,519       22 %     (13 )%
Europe, Africa and the Middle East
     7,657       42 %     5,598       36 %     37 %
Asia Pacific
     895       5 %     1,074       7 %     (17 )%
 
                                        
                 
TOTAL BACKLOG
   $ 18,030       100 %   $ 15,666       100 %     15 %
                 

FLRF