IRVING, Texas--(BUSINESS WIRE)--Fluor Corporation (NYSE: FLR) today announced financial results for its quarter ended March 31, 2020. Revenue for the quarter was $4.1 billion and the net loss from continuing operations was $171 million or $1.22 per diluted share. Consolidated segment profit for the quarter was $52 million, up from $39 million a year ago. Consolidated continuing operations for the first quarter of 2020 included non-cash impairments and charges of approximately $353 million to reflect the impact of weak commodity prices and COVID-19. Results for the quarter also include $52 million in project adjustments for potential COVID-19 schedule delays and an approximately $100 million tax benefit from the Coronavirus Aid, Relief and Economic Security (CARES) Act.
Summary of Non-Cash Impairments and Charges
| Continuing Operations | |
| $298 million impairment | $169 million goodwill in Diversified Services$86 million equity method investments in Energy & Chemicals segment$27 million intangible customer relationships in Diversified Services segment $16 million impairment of information technology assets |
| $55 million non-cash charge | Established reserve on receivables and contract assets for certain joint venture clients in Mexico impacted by declining oil prices in the Energy & Chemicals segment |
| Discontinued Operations | |
| $100 million AMECO impairment | Impairment of assets held-for-sale, $12 million of which relates to goodwill write down |
“As we previously disclosed, these impairments reflect the unprecedented impact of COVID-19 and related pressure on commodity prices,” said Carlos Hernandez, Fluor chief executive officer. “Project adjustments during the quarter were primarily related to COVID-19. We continue to have the necessary liquidity to meet all of our obligations and operate our business.”
New awards for the first quarter were $4.2 billion and ending backlog was $31.4 billion. Corporate G&A for the quarter was a benefit of $14 million due to a $44 million foreign currency gain in the quarter.
Outlook
While Fluor has suspended its guidance for 2020, the company expects to report second quarter results in approximately four weeks and third quarter results four weeks after that. The company will hold its next call with the investment community in conjunction with the release of its third quarter results.
Business Segments
The Energy & Chemicals segment reported a segment 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. New awards of $1.5 billion included an EPC contract for the Canada Kuwait Petrochemical Corporation propane dehydrogenation facility.
The Mining & Industrial segment reported a segment 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.
The Infrastructure & Power segment reported a segment profit of $5 million in the first quarter of 2020 compared to a loss of $22 million in the first quarter of 2019. New awards of $7.3 million in the first quarter reflect the company’s disciplined bidding protocols.
The Government segment reported a segment profit of $31 million in the first quarter of 2020 compared to $38 million in the first quarter of 2019. Government is now included as continuing operations in all financial results. Results include $9 million for change in project positions due to COVID-19 schedule delays. New awards of $684 million included an extension to the LOGCAP IV contract as well as a project with the U.S. Air Force.
The Diversified Services segment reported a segment profit of $5 million in the first quarter of 2020 compared to $9 million in the first quarter of 2019. Results include $2 million for change in project positions due to COVID-19 schedule delays. New awards of $357 million in the quarter include a framework agreement awarded to a Stork joint venture for Neptune Energy’s Dutch assets in the North Sea.
The Other segment, which is comprised of NuScale and the Radford and Warren government projects, reported a loss of $22 million in the first quarter of 2020 compared to a loss of $26 million in the first quarter of 2019. NuScale expenses in the first quarter of 2020 were $23 million. Remaining backlog in the segment is $209 million.
Discontinued Operations
Results from discontinued operations, which includes the held-for-sale AMECO equipment business, were a loss of $95 million in the first quarter of 2020 or a loss of $0.68 per share. Due to the impact of COVID-19 and the steep decline in oil prices on the AMECO business during the first quarter of 2020, the company recognized an impairment charge of $100 million, of which $12 million was related to goodwill, to write down the AMECO assets held for sale to fair value less cost to sell.
Non-GAAP Financial Measures
This news release contains a discussion of consolidated segment profit from continuing operations that would be deemed a non-GAAP financial measure under SEC rules. Segment profit is calculated as revenue less cost of revenue and earnings attributable to noncontrolling interests excluding: corporate general and administrative expense; impairment, restructuring and other exit costs; interest expense; interest income; domestic and foreign income taxes; other non-operating income and expense items; and earnings from discontinued operations. The company believes that consolidated segment profit from continuing operations provides a meaningful perspective on its business results as it is the aggregation of individual segment profit measures that the company utilizes to evaluate and manage its business performance. A reconciliation of consolidated segment profit from continuing operations to earnings from continuing operations before taxes is included in the press release table.
About Fluor Corporation
Fluor Corporation (NYSE: FLR) is a global engineering, procurement, fabrication, construction and maintenance company with projects and offices on six continents. Fluor’s 45,000 employees build a better world and provide sustainable solutions by designing, building and maintaining safe, well executed projects. Fluor had revenue of $17.3 billion in 2019 and is ranked 181 among the Fortune 500 companies. With headquarters in Irving, Texas, Fluor has served its clients for more than 100 years. For more information, please visit www.fluor.com or follow Fluor on Twitter, LinkedIn, Facebook and YouTube.
