UPDATE: Nov. 13, 2020: Flour announced financial results for its second quarter of 2020 this week, saying that revenue for the quarter was $4.1 billion and net loss from continuing operations was $27 million.

Consolidated segment profit for the quarter was $61 million, compared to a loss of $393 million a year ago. Results for the quarter reflect the impact to its operations due to a severe downturn in the economy related to COVID-19, the company said in a press statement. 

In addition, new awards for the second quarter were $2.2 billion and ending backlog was $29 billion. 

Earlier this month, the company announced the appointment of a new CEO, the third chief executive to head the Irving, Texas-based firm in two years. David E. Constable, a member of the Fluor board of directors, will take over on Jan. 1, succeeding Carlos Hernandez, who will retire as CEO and a member of the board at the end of the year.

Dive Brief:

• After an internal accounting review and a Securities and Exchange Commission investigation delayed their release, Irving, Texas-based Fluor Corporation announced financial results for its first quarter 2020 yesterday, saying that revenue was $4.12 billion, down slightly from 2019 Q1 revenue of $4.13 billion. 
• Net loss from continuing operations was $171 million, or $1.22 per diluted share. New awards were $4.2 billion — up 24% from $3.4 billion in Q1 2019 — and ending backlog was $31.4 billion.
• The quarter, which ran from Jan. 1 to March 31, includes activity from before the coronavirus set in across world markets. Even so, the numbers reflect $52 million in negative project adjustments for COVID-19 schedule delays and an approximately $100 million tax benefit authorized under this spring’s federal Coronavirus Aid, Relief and Economic Security (CARES) Act, the company said in a statement.

Dive Insight:

The effects of coronavirus-induced challenges will most likely show up in Fluor's Q2 and Q3 reports as well. In an investor call earlier this month to announce 2019 earnings, Fluor said that it had suspended its guidance for 2020 due to "a significant shift in end markets in 2020 driven by volatility in commodity prices and the global disruption from the COVID-19 pandemic."

The company said it expects to report second quarter results in approximately four weeks and third quarter results four weeks after that. 

The company is still assessing the outbreak's impact to project timelines and costs, CEO Carlos Hernandez said during the call. "We're having conversations with our clients on the best path forward to success in this environment and are providing notices asserting our rights under change of law and force majeure provisions," he said.

He indicated that rising material costs are a problem as well. "Pressure on commodity prices has pushed a number of our pre-COVID prospects further into the future and will require further adjustment to our business model," he said.

Baird senior research analyst Andrew Wittmann said the Q1 results bring “nothing new to the table,” which will most likely please investors of the firm, which has been beset by internal and federal investigations into its accounting and financial practices.

Earlier this year, Fluor announced the SEC was investigating its past accounting and financial reporting, and that due to the investigation, the company would be delayed in filing conclusive full-year financial statements. The SEC review is still ongoing, executive chairman Alan Boeckmann said during the call.

In May, the company announced that it received a Justice Department subpoena seeking documents relating to charges reported by the company during the second quarter of 2019.

In addition, a special committee of independent members of the board of directors also reviewed past financial information and is sharing its findings with federal investigators.

“It seems like the worst is likely behind the company (for now),” Wittmann wrote in an investor’s note yesterday. “That's not to say its end markets are conducive, because they are not, but the lack of material cash burn disclosed with the company's last update still remains a notable positive.” 

The breakdown of Fluor's Q1 2020 profit by segment includes:

• Energy & Chemicals reported a loss of $6 million in the first quarter of 2020 compared to a profit of $12 million in the first quarter of 2019. Segment results include a $55 million reserve on receivables and contract assets for clients that were directly and materially affected by the impacts of COVID-19 and declining oil prices and $40 million for change in project positions due to COVID-19 schedule delays and associated cost growth. 
• Mining & Industrial reported a profit of $39 million in the first quarter of 2020 compared to a profit of $28 million in the first quarter of 2019. New awards of $1.6 billion included a large metals project in North America.
• Infrastructure & Power reported a profit of $5 million in the first quarter of 2020 compared to a loss of $22 million in the first quarter of 2019 and announced new awards of $7.3 million.
• Government reported a profit of $31 million in the first quarter of 2020 compared to $38 million in the first quarter of 2019. 
• Diversified Services reported a profit of $5 million in the first quarter of 2020 compared to $9 million in the first quarter of 2019.