Dive Brief:
- Fluor announced it lost $21 million in the fourth quarter of 2023, compared with $9 million in profits for the same period last year.
- Revenue for the fourth quarter hit $3.82 billion compared to $3.71 billion a year ago, about a 3% increase, said Fluor CEO David Constable during a conference call with investment analysts. Backlog reached $29.44 billion, a 13% jump from $26.05 billion in the fourth quarter of 2022.
- The firm’s loss stemmed from a $69 million settlement of claims on the Gordie Howe bridge project, a $93 million loss on a sale related to its Stork business in Latin America and a significant decrease in profit from its Energy Solutions segment, according to the company's fourth quarter earnings report.
Dive Insight:
Fluor anticipates similar or better performance regarding revenue and backlog in 2024, said Constable. That suggests the company remains optimistic about its ability to secure new projects and drive revenue growth, despite potential losses.
The firm is also working on its capital structure, including debt reduction and extending maturity dates of credit facilities, said CFO Joe Brennan during the call.
The Irving, Texas-based company reported about 87% of its new awards for the fourth quarter were reimbursable. That’s significant because it means less risk on the costs it incurs on projects, more revenue stability and potentially higher profits.
These awards include a $1.7 billion win for the H2 Green Steel project in Sweden, a $1.3 billion contract for a chemical project in Poland, additional work on a large EPC project in Mexico and an engineering services award for a major Middle East chemicals project, according to the report.
Constable said construction teams have made significant progress this past year on the Gordie Howe Bridge, the project connecting Windsor, Ontario, to Detroit, and remains on track to complete the new span this summer. However, officials recently pushed back its completion date and raised its cost by $523.6 million in January, citing issues dating back to the start of the COVID-19 pandemic.
Takeaways from earnings
Fluor’s 2023 fourth quarter results contained a mix of positives and negatives, said Andrew Wittmann, senior research analyst at Baird, a Milwaukee-based financial services company.
“Positives were driven by strong awards and excellent cash generation,” said Wittmann in a research note. “The negative was a substantial and unexpected charge.”
The charge refers to $33 million in higher costs and a schedule overrun on an unspecified “legacy project” mentioned during the call, which caused profits in the firm’s Energy Solutions unit to sink by 79% to $26 million in the fourth quarter. The segment provides engineering, procurement and construction services to clients across a variety of energy markets, such as the oil, gas and petrochemical industries.
On the positive side, profits in two other business units rose.
Fluor’s Urban Solutions unit, which offers engineering, procurement and construction services for the infrastructure, manufacturing, mining, metals and life sciences industries, reported a profit of $147 million during the fourth quarter, a 287% increase from the year before.
Likewise, profits rose in Fluor’s Missions Solutions unit to $31 million, a 55% increase, due to a renewed focus on offerings in the national security market. The segment helps the U.S. and select international governments with national security and nuclear technology.
