Fluor Reports Fourth Quarter and Full Year 2012 Results
Fluor Reports Fourth Quarter and Full Year 2012 Results
2012 New Awards of $27.1 Billion; Ending Backlog of $38.2 Billion
2012 Revenue up 18 Percent to Record $27.6 Billion
2012 Earnings of $2.71 Per Share Including $1.57 Per Share Charge from Previously Announced Greater Gabbard Arbitration Ruling
Category: Business Groups (Corporate)
Wednesday, February 20, 2013 4:05 pm EST
Public Company Information:
"The underlying profitability of the Company has never been stronger, notwithstanding the surprising and unexpected adverse arbitration decision on our Greater Gabbard claims,"
IRVING, Texas--(BUSINESS WIRE)--Fluor Corporation (NYSE: FLR) today announced financial results for its fiscal year ended December 31, 2012. Net earnings attributable to Fluor for 2012 were $456 million, or $2.71 per diluted share, compared with $594 million, or $3.40 per diluted share in 2011. Earnings per share results included a charge of approximately $1.57 per share relating to the previously announced arbitration ruling on the Greater Gabbard project. Excluding this charge, net earnings attributable to Fluor for 2012 would have been $4.28 per diluted share. Consolidated segment profit for the year was $769 million, including the impact of a $416 million pre-tax charge on Greater Gabbard, which compares with $1.0 billion in segment profit in 2011. Results in 2012 reflected strong double-digit growth in Oil & Gas and Global Services, and strength in Industrial & Infrastructure which was adversely impacted by the Greater Gabbard charge. Consolidated revenue for the year totaled a record $27.6 billion, which was up 18 percent from $23.4 billion a year ago, mainly due to strong growth in the Industrial & Infrastructure and Oil & Gas business segments.
Full year new awards were strong at $27.1 billion, compared with bookings of $26.9 billion a year ago, including $12.6 billion in Oil & Gas and $9.5 billion in Industrial & Infrastructure. Consolidated backlog at year-end was $38.2 billion, which compares with $39.5 billion a year ago.
“The underlying profitability of the Company has never been stronger, notwithstanding the surprising and unexpected adverse arbitration decision on our Greater Gabbard claims,” said Chairman and Chief Executive Officer David Seaton. “We are very optimistic about the opportunities we see in our oil, gas, petrochemical and infrastructure markets in particular, and expect to deliver solid results in line with our guidance for 2013.”
Corporate G&A expense for the year was reduced to $151 million, from $163 million a year ago. The effective tax rate for the year was 22 percent, reflecting the recognition of benefits associated with the favorable resolution of various issues, including the settlement of a tax audit relating to prior years. Fluor’s financial condition remains very strong, with cash plus current and noncurrent marketable securities totaling $2.6 billion. During 2012, the Company generated $628 million in cash flow from operating activities, repurchased $389 million worth of Fluor shares, and paid out $129 million in dividends.
The Company remains encouraged by the opportunities across its diverse end-markets, and is maintaining its EPS guidance for 2013 at the previously announced range of $3.85 to $4.35 per diluted share.
Fluor’s Oil & Gas unit reported a 21 percent increase in segment profit to $335 million in 2012, from $276 million in 2011. Revenue rose by 19 percent to $9.5 billion in 2012. The segment’s strong financial performance reflects increasing new awards and progress on existing backlog projects. Full year new awards in 2012 totaled $12.6 billion, which represents a 51 percent increase from $8.3 billion in 2011. In the fourth quarter, the segment booked new awards of $1.7 billion, including petrochemical projects in North America, Europe and Asia. Ending Oil & Gas backlog rose 21 percent from a year ago to end 2012 at $18.2 billion.
The Industrial & Infrastructure group reported segment profit of $124 million, down from $389 million in 2011. Segment results reflect strong growth in the mining and metals business line and progress on large domestic infrastructure projects, but were impacted by a $416 million pre-tax charge due to the adverse arbitration decision in the fourth quarter relating to the Greater Gabbard wind farm project. Total revenue for the segment rose 26 percent to $12.2 billion in 2012, mainly due to significant growth in the mining and metals business line. New awards in 2012 were substantial at $9.5 billion, but declined from $12.2 billion a year ago when mining and metals markets were particularly strong. New awards in the fourth quarter were $3.0 billion, including a sizable copper mining project in South America. Year-end backlog declined to $15.5 billion, from a segment record of $19.6 billion a year ago, reflecting lower new awards and the cancellation of two mining projects in the third quarter that totaled $2.0 billion.
Government posted segment profit of $150 million, which was up from $145 million a year ago. Revenue in 2012 of $3.3 billion compares with $3.4 billion a year ago. Segment results include substantial ongoing activities from LOGCAP IV task orders in Afghanistan and long-term Department of Energy contracts at the Savannah River and Portsmouth sites. New awards totaled $3.2 billion for the year, compared with $3.7 billion in 2011 which included higher LOGCAP IV task order volume. Ending backlog in 2012 was $978 million, which compares with $1.1 billion a year ago.
Segment profit for Global Services rose 17 percent to $178 million in 2012, from $152 million in 2011, mainly due to growth in the operations & maintenance and temporary staffing business lines. Revenue increased by 9 percent to $1.7 billion, reflecting growth across all business lines. Full year new awards of $904 million compared with awards of $1.0 billion a year ago. Ending backlog declined to $1.7 billion from $1.9 billion a year ago.
Fluor’s Power group reported a segment loss of $17 million, which included expenses of $63 million associated with the Company’s continued investment in NuScale. This compares with profit of $81 million a year ago, which included $7 million in NuScale expenses. Segment revenue increased to $841 million from $743 million a year ago. Full year new awards were $884 million, compared with $1.6 billion in 2011. The segment continues to be impacted by relatively weak demand for new power generation projects. Power segment backlog rose modestly to $1.9 billion, from $1.8 billion a year ago.
Fourth Quarter Results
The fourth quarter of 2012 was a net loss attributable to Fluor of $4 million, or a loss of $0.03 per diluted share, which compared with net earnings attributable to Fluor of $153 million, or $0.90 per diluted share, in 2011. Fourth quarter net earnings were impacted by an after-tax charge of $265 million, or approximately $1.61 per diluted share, relating to the adverse arbitration ruling on the Greater Gabbard wind farm project. Excluding this charge, net earnings attributable to Fluor for the fourth quarter would have been $1.58 per diluted share. This previously announced charge, which totaled $416 million before tax, took strong underlying fourth quarter segment profit results down to a consolidated segment loss of $49 million, which compares with a segment profit of $279 million a year ago. Current quarter segment profit benefited from favorable events including the renegotiation of the LOGCAP IV contract which yielded a $17 million improvement in Government’s results, and a $43 million pre-tax gain on the sale of the Company’s equity interest in a joint venture in the U.K. which improved Industrial & Infrastructure’s results. The quarter also benefited from a lower than expected tax provision due to the favorable resolution of various tax matters. Corporate G&A expenses in the fourth quarter of 2012 were $41 million, below the $61 million reported a year ago, primarily due to improvements in foreign currency positions and lower incentive compensation expenses. Revenue for the quarter was $7.0 billion, which represents a 12 percent increase over last year, mainly due to a significant increase in the Oil & Gas segment. Fourth quarter new awards were $5.1 billion, including awards of $3.0 billion in Industrial & Infrastructure and $1.7 billion in Oil & Gas.