2Q 2018 Earnings Conference Call S E C O N D Q U A R T E R

Transcription

1 Fluor Corporation 2Q 2018 Earnings Conference Call S E C O N D Q U A R T E R

2 Safe Harbor Statement This presentation contains forward-looking statements concerning the expected financial performance of Fluor Corporation and its subsidiaries ( we, our or the Company ) and the Company s strategic and operation plans, including statements about our projected earnings level, expenses, market outlook, new awards, backlog levels, and client capital investments. Words such as believes, expects, anticipates, assumes, may, positions, looking ahead, views, think, target, trend, can, appears, estimates, should, outlook, guidance or other similar expressions often identify forward-looking statements. Such statements are based on current management expectations as to what may occur in the future. Risks and uncertainties may cause actual results to differ materially from the results predicted, and reported results should not be considered as an indication of future performance. Investors are cautioned not to place undue reliance on the forward-looking statements included in this presentation, which speak only as of the date hereof. The company disclaims any intent or obligation, other than as required by law, to update this information in light of new information or future events. Additional information about potential risk factors that could affect the Company s business and financial results is included in our Form 10-K filed on February 20, During this presentation, we may discuss certain non-gaap financial measures. Reconciliations of these amounts, with the comparable GAAP measures, are reflected in our earnings release and are posted in the investor relations section of our website at investor.fluor.com. S E C O N D Q U A R T E R

3 Energy & Chemicals Second Quarter Highlights Segment profit of $97 million, compared to $124 million last year New awards of $493 million, compared to $742 million last year Backlog of $12.4 billion, compared to $18.0 billion last year Received limited notice to proceed for the LNG Canada project in Kitimat Continue to see opportunities in LNG and methanol along with downstream and petrochemical opportunities in Asia and EAME COOEC-Fluor fabrication yard Zhuhai, China Backlog ($B) 2Q 17 2Q New Awards ($B) 3

4 M i n i n g, I n d u s t r i a l, I n f r a s t r u c t u r e, & Po w e r Second Quarter Highlights Segment profit of $16 million, compared to a loss of $165 million last year New awards of $3.6 billion, up from $790 million last year BHP South Flank iron ore replacement mine in Australia Los Angeles Intl Airport Automated People Mover Segment backlog of $12.4 billion, vs. $12.6 billion last year $4.8 billion from mining NuScale R&D expense for the quarter of $24 million Expect to book Gordie Howe International Bridge Project later this year Gov. Mario M. Cuomo bridge Tarrytown, New York Backlog ($B) 2Q 17 2Q New Awards ($B) 4

5 Government Second Quarter Highlights Segment profit of $51 million, up from $20 million last year Includes project closeout fees from our power restoration work in Puerto Rico New awards of $742 million, compared to $1.1 billion last year Task order awards for LOGCAP IV in Afghanistan Backlog of $2.3 billion, compared to $4.1 billion a year ago Recently selected to manage the Naval Nuclear Laboratory Part of team that will oversee operations at the Los Alamos National Laboratory Future prospects include LOGCAP V and liquid waste contracts at Savannah River and Hanford Idaho Cleanup Project Idaho Falls, Idaho Backlog ($B) 2Q 17 2Q New Awards ($B) 5

6 Diversified Serv ices Second Quarter Highlights Segment profit of $29 million, compared to $36 million a year ago New awards of $513 million, compared to $554 million a year ago Includes award to operate and maintain gas fields in Colombia Backlog of $2.2 billion, compared to $2.9 billion a year ago Continued expansion opportunities for Stork in North Stork maintenance operations Q 17 2Q 18 America Backlog ($B) New Awards ($B) 6

7 New Awards & Backlog $3.2 $0.6 $1.1 N E W A W A R D S ( $ B ) $3.8 $0.3 $0.2 $3.2 $0.6 $2.5 $1.7 $1.1 $0.4 $0.1 $5.4 $0.5 $0.7 $3.6 DS Govt MIIP $37.6 $2.9 $4.1 $12.6 B A C K L O G ( $ B ) $32.9 $30.9 $2.7 $29.1 $29.3 $2.5 $3.6 $2.3 $2.2 $3.8 $2.4 $2.3 $10.1 $9.6 $10.3 $12.4 $0.8 $0.7 $1.5 $0.6 $1.3 $1.0 $0.7 $0.5 E&C $18.0 $16.5 $15.1 $14.1 $12.4 2Q 17 3Q 17 4Q 17 1Q 18 2Q 18 2Q 17 3Q 17 4Q 17 1Q 18 2Q 18 Book-to-Bill: 0.68x 0.77x 0.64x 0.53x 1.10x 2Q new awards of $5.4B and steady revenue of $4.9B improved book-to-bill from 0.53x in Q1 to 1.1x this quarter 7

8 Second Quarter 2018 Overv iew Revenue for 2Q was $4.9 billion, compared to $4.7 billion a year ago New awards of $5.4 billion compared to $2.5 billion last quarter Book-to-bill of 1.1 First time new awards exceeded quarterly revenue since 3Q 2016 Corporate G&A expense for 2Q was $18 million, compared to $47 million a year ago Expenses for the quarter reflect a benefit of $25 million related to foreign currency exchange fluctuations Connect 202 Project Phoenix, Arizona 8

9 Second Quarter 2018 Overv iew Net income attributable to Fluor for the second quarter was $115 million, or $0.81 per diluted share Results include: $0.56 charge related to estimated cost increases on a downstream project and a power project $0.21 for combined positive impact of foreign currency fluctuations and an embedded derivative $0.10 income for final close-out efforts in Puerto Rico 9

10 Corporate Items 2Q Cash plus current marketable securities was $1.8 billion Quarter end domestic cash balance was approximately 13% of total cash and marketable securities balance Reflects cash needed to fund Puerto Rico working capital and legacy projects until they are complete Stork Fabrication & Welding Workshop Activities Quarterly dividend payment of $29 million 10

11 Corporate Outlook 2018 Guidance Commentary EPS $ $2.50 Maintaining guidance based on expectations for Energy & Chemicals, Mining, and Infrastructure Quarterly G&A Expense ~$50 million/ quarter Excludes any impact of foreign exchange fluctuations, integration or pension expenses Tax Rate 25% - 30% NuScale $75 million Current run rate higher than normal this year but limiting investment to $75 million Expect to invest at a lower rate in

12 Segment Outlook Energy & Chemicals Mining, Infrastructure, Industrial, & Power 2H 2018 Margin Guidance 6.0% - 7.0% 2.5% - 3.5% *excluding NuScale Commentary LNG Canada FID expected 2H 2018 Opportunities include LNG and methanol projects Mining opportunities in copper, iron ore, gold, and aluminum Expect to see mining backlog in $6-$8 billion range in 2H 2018 Financial close of Gordie Howe bridge expected 2H 2018 Government ~3.0% Currently transitioning onto Los Alamos National Laboratory and Navy Nuclear Laboratory Future prospects include LOGCAP V and liquid waste contracts at Savannah River and Hanford Diversified Services 4.5% - 5.5% Continued expansion opportunities in the Americas 12

13 Fluor Corporation Appendix S E C O N D Q U A R T E R

14 2Q Backlog: $29 Billion G e o g ra p h y C o n t ra c t Ty p e Asia Pacific 12% United States 36% Fixed Price 37% EAME 40% The Americas (excl. U.S.) 12% Reimbursable 63% 14

15 Power Update Two of the four underperforming gas-fired projects are 100% complete Greensville County, VA Project Citrus County, FL Project Anderson County, SC Project Freeman, VA Project Project Type Gas-fired Power Plant Gas-fired Power Plant Gas-fired Power Plant Gas-fired Power Plant Original Booking Value $1.1bn $0.6bn $0.3bn $0.9bn Remaining backlog as of 6/30/2018 $58mm $37mm $2mm $0 Assessment Expected to be completed by YE 2018 Expected to be completed by YE 2018 Substantial Completion certificate received Complete Current Status as of 8/1/ % complete, 1 st fire achieved on two of three Gas Turbines 93% complete, 1 st fire achieved on Power Block 1 100% complete 100% complete 15

16 Real Estate Footprint Fluor has been committed to square footage reduction and efficiency Since 2015, Fluor has reduced its major office real estate footprint by over 500 thousand square feet Planned and committed reductions will reduce footprint by an additional 21% Clients expect to be able to work alongside project teams Approximately 600 thousand square feet is being used by clients and subcontractors globally Additionally, efforts at densification and modernization have kept seating capacity stable while reducing rentable square footage Average sq ft/seat has been reduced by 11% while seating capacity has remained flat for offices that have been densified 5,150 Major Office* Square Footage by Year (in thousands) 4,850 4,850 4,650 3, Jun-18 Planned * Includes twenty three of our largest offices 16

17 Corporate G&A Expense Normalized corporate G&A has moved in-line with revenue This excludes FX and Stork integration expenses FX variability has overshadowed normalized G&A improvements Expenses in 2018 include select early cycle investments in technology, training, and project execution standardization Normalized G&A as a Percentage of Revenue 0.9% 1.0% 0.8% 0.9% 0.9% 0.7% H 2018 Total G&A H 2018 Normalized G&A FX, integration & restructuring costs 17

18 Fluor & NuScale Partnership Update on Small Modular Reactor Market Highly attractive, clean power source Maximizes cost and schedule benefits from repetitive factory fabrication Advanced nuclear technology producing safe, reliable energy at a competitive price point Significant demand forecast with market size estimated to be as high as ~$540bn in next 20 years 1 Update on NuScale An industry leader in small modular reactor (SMR) technology First SMR to be undergoing U.S. Nuclear Regulatory Commission design certification review Unique features scalable, flexible, resilient, and highly reliable power source On path to start power module production in the next four years Growing interest globally for NuScale technology has advanced significantly 1 Per UK National Nuclear Laboratory, Small Module Reactor Feasibility Study (2014). & The Fluor and NuScale partnership represents the foundation for future SMR facility construction and deployment Fluor investment has enabled a long-term strategic EPC supplier relationship Potential to secure multiple projects on an ongoing basis - repeat business model New investors expected Fluor to lower ongoing investment after