FLUOR CORP

Previous wording

In March 2024, we completed the sale of Stork's operations in continental Europe for $67 million, including a second payment of $38 million that was received in April 2024. During the 2024 Quarter, we recognized a gain on sale of $11 million including de-recognition of Stork's net assets and cumulative foreign currency translation.

Current wording

In March 2024, we completed the sale of Stork's operations in continental Europe for $67 million. During the 2024 Period, we recognized a gain on sale of $11 million including de-recognition of Stork's net assets and cumulative foreign currency translation.

Previous wording

During April 2024, we also entered into a definitive sale agreement for Stork's U.K. operations, which could close as early as the second quarter of 2024. The financial statement effects for this proposed U.K. sale did not meet the requirements for held-for-sale reporting as of March 31, 2024. The transaction, as agreed to, is not expected to have a material earnings impact when recognized.

Current wording

During April 2024, we also entered into a definitive sale agreement for Stork's U.K. operations, which could close in late 2024, most significantly dependent upon regulatory approval. The financial statement effects for this proposed U.K. sale did not meet the requirements for discontinued operations and held-for-sale reporting as of June 30, 2024. The transaction, as agreed to, is not expected to have a material earnings impact when consummated. After completion of the Stork U.K. sale, our operations being actively marketed will be only Stork's immaterial operations in the Middle East and in Trinidad and Tobago.

Previous wording

In March 2023, we sold our AMECO South America business, which included operations in Chile and Peru. This transaction marked the completion of the AMECO divestiture. Upon the sale of AMECO South America in the 2023 Quarter, we recognized a $60 million negative earnings impact, including $35 million associated with foreign currency translation.

Current wording

In March 2023, we sold our AMECO South America business, which included operations in Chile and Peru. This transaction marked the completion of the AMECO divestiture. Upon the sale of AMECO South America in the 2023 Period, we recognized a $60 million negative earnings impact, including $35 million associated with foreign currency translation.

Previous wording

(3)Includes backlog of $1.2 billion and $1.3 billion for legacy projects in a loss position as of March 31, 2024 and December 31, 2023, respectively.

Current wording

(3)Includes backlog of $1.0 billion and $1.3 billion for ongoing legacy projects in a loss position as of June 30, 2024 and December 31, 2023, respectively.

Previous wording

While we experienced reductions in demand for certain services and the delay or abandonment of ongoing or anticipated projects during the COVID pandemic, our ability to win work was not materially impacted by COVID during the 2024 Quarter. Although many of our projects are in a state we consider normal, we continue to deal with the effects of COVID on our operating results as our estimates are inclusive of COVID effects and client recoveries.

Current wording

While we experienced reductions in demand for certain services and the delay or abandonment of ongoing or anticipated projects during the COVID pandemic, our ability to win work was not materially impacted by COVID during the 2024 Period. Although many of our projects are in a state we consider normal, we continue to deal with the effects of COVID on our operating results as our estimates are inclusive of COVID effects and the related client recoveries.

Previous wording

The effective tax rate on earnings for the 2024 Quarter was 55.6% compared to (30.1)% for the 2023 Quarter. A reconciliation of U.S. statutory federal income tax expense to income tax expense follows:

Current wording

The effective tax rate was 28.5% for the 2024 Quarter and 36.4% for the 2024 Period compared to 48.1% for the 2023 Quarter and 300.0% for the 2023 Period. A reconciliation of U.S. statutory federal income tax expense to income tax expense follows:

Previous wording

Revenue decreased in the 2024 Quarter primarily due to a decline in execution activity for several projects nearing completion partially offset by the ramp up of execution activities on chemicals projects in China and Canada and a batteries project in Poland.

Current wording

Revenue declined slightly in the 2024 Quarter and 2024 Period primarily due to a decline in execution activity for several projects nearing completion partially offset by the ramp up of execution activities on chemicals projects in China and Canada.

Previous wording

New awards in the 2024 Quarter remained flat compared to the 2023 Quarter. Backlog declined slightly during the 2024 Quarter due to the execution pace exceeding new award activity.

Current wording

New awards were lower in the 2024 Quarter and 2024 Period compared to 2023. Backlog declined during the 2024 Period due to the execution pace exceeding new award activity.

Previous wording

Revenue in the 2024 Quarter increased primarily due to the ramp up of execution activities on several recently awarded projects including two life sciences projects, a green steel project and two semiconductor projects. The revenue increases in the 2024 Quarter were partially offset by declines in the volume of execution activity for projects nearing completion including a large mining project and a life sciences project as well as the realignment of a large metals project.

Current wording

Revenue in the 2024 Quarter and 2024 Period significantly increased primarily due to the ramp up of execution activities on several recently awarded projects including a large metals project, two life sciences projects, a green steel project and a large mining project as well as the agreement to the terms of a change order on a legacy infrastructure project. The revenue increases in the 2024 Quarter and 2024 Period were slightly offset by declines in the volume of execution activity for projects completed or nearing completion including a life sciences project and a large mining project.

Previous wording

Segment profit in the 2024 Quarter significantly improved due to the ramp up of execution activities on the new projects discussed above and segment profit in the 2023 Quarter included a $59 million charge for rework associated with subcontractor design errors, related schedule impacts and system integration testing timelines on the LAX Automated People Mover project. The increase in segment profit margin in the 2024 Quarter reflects these same factors.

Current wording

Segment profit significantly improved in the 2024 Quarter and 2024 Period due to an increase in execution activities on advanced technology projects and a life sciences project. Segment profit in the 2024 Quarter and 2024 Period included the agreement to the terms of a change order on a legacy infrastructure project compared to a $59 million charge for rework associated with subcontractor design errors and related schedule impacts on the same project during the 2023 Period. The changes in segment profit margin in the 2024 Quarter and 2024 Period reflect these same factors.

Previous wording

New awards significantly increased in the 2024 Quarter due to awards for a large life sciences project and a mining project. Backlog increased during 2024 due to the new award activity. Our staffing business does not report new awards or backlog.

Current wording

New awards increased during the 2024 Quarter and 2024 Period. New awards booked during the 2024 Quarter included an incremental award on a large metals project. Backlog significantly increased during the 2024 Period due to a large life sciences award booked during the first quarter of 2024. Our staffing business does not report new awards or backlog.

Previous wording

Revenue decreased in the 2024 Quarter due to lower contributions from 2 DOE contracts and the cancellation of a power project in 2023 partially offset by increased execution activities on FEMA hurricane support and a DOE contract.

Current wording

Revenue remained flat in the 2024 Quarter compared to the 2023 Quarter. Revenue recognized for a recently awarded defense contract largely replaced a revenue decline resulting from the cancellation of a nuclear power project in 2023. Revenue declined slightly in the 2024 Period due to lower contributions from a DOE contract and the aforementioned power project cancellation in 2023 partially offset by increased execution activities on a DOE contract and the recently awarded defense contract.

Previous wording

Segment profit improved in the 2024 Quarter compared to the 2023 Quarter that included a $21 million charge for cost growth associated with additional schedule delays on a weapons facility project. The increase in segment profit margin in the 2024 Quarter was also driven by this same factor.

Current wording

Segment profit remained flat in the 2024 Quarter compared to the 2023 Quarter. Segment profitand profit margin were higher in the 2024 Period compared to the 2023 Period that included a $30 million charge for cost growth associated with schedule delays on a weapons facility project that is substantially complete.

Previous wording

New awards increased during the 2024 Quarter and included task order contract awards under the Air Force Contract Augmentation Program V. Backlog included $2.8 billion and $2.7 billion of unfunded government contracts as of March 31, 2024 and December 31, 2023, respectively. Unfunded backlog reflects our estimate of future revenue under awarded government contracts for which funding has not yet been appropriated. We do not report new awards or backlog for projects related to our equity method investments even though these awards may be significant contributors to earnings in future periods.

Current wording

New awards decreased during the 2024 Quarter compared to the 2023 Quarter. However, new awards increased during the 2024 Period due to task order contracts awarded under the Air Force Contract Augmentation Program V. Backlog included $2.1 billion and $2.7 billion of unfunded government contracts as of June 30, 2024 and December 31, 2023, respectively. Unfunded backlog reflects our estimate of future revenue under awarded government contracts for which funding has not yet been appropriated. We do not report new awards or backlog for projects related to our equity method investments even though these awards may be significant contributors to earnings in future periods. For example, our new awards and backlog will not reflect the Pantex management and operations contract, recently awarded to a joint venture in which we have significant influence but a noncontrolling interest. The estimated value of the contract to the joint venture is $30 billion, if all of the 5-year options are exercised.

Previous wording

Segment profit in 2024 includes an $11 million gain on the sale of Stork's operations in continental Europe. During April 2024, we also entered into a definitive sale agreement for Stork's U.K. operations, which could close as early as the second quarter of 2024.

Current wording

Segment profit in the 2024 Period includes an $11 million gain on the sale of Stork's operations in continental Europe. We expect to consummate the sale of Stork's U.K. operations in late 2024, upon receipt of regulatory approval for the proposed transaction.

Previous wording

Segment profit in 2023 includes the $60 million negative earnings impact upon the sale of our AMECO South America business, including $35 million for foreign currency translation.

Current wording

Segment profit in the 2023 Period includes the $60 million negative earnings impact upon the sale of our AMECO South America business, including $35 million for foreign currency translation.

Previous wording

As of March 31, 2024, letters of credit totaling $450 million were outstanding under our $1.8 billion credit facility, which matures in February 2026. This credit facility contains customary financial covenants, including a debt-to-capitalization ratio that cannot exceed 0.60 to 1.00, a limitation on the aggregate amount of debt of the greater of $750 million or €750 million for our subsidiaries, and a minimum liquidity threshold of $1.2 billion, all as defined in the amended credit facility, which may be reduced to $1.0 billion upon the repayment of debt. Borrowings under the facility, which may be denominated in USD, EUR, GBP or CAD, bear interest at a base rate, plus an applicable borrowing margin. As of March 31, 2024 and through the issuance of this 10-Q, we had not made any borrowings under our credit facility. We have a sublimit of up to $1.0 billion in aggregate cash advances and financial letters of credit available to us under our credit facility with a current borrowing capacity of $776 million.

Current wording

As of June 30, 2024, letters of credit totaling $429 million were outstanding under our $1.8 billion credit facility, which matures in February 2026. This credit facility contains customary financial covenants, including a debt-to-capitalization ratio that cannot exceed 0.60 to 1.00, a limitation on the aggregate amount of debt of the greater of $750 million or €750 million for our subsidiaries, and a minimum liquidity threshold of $1.2 billion, all as defined in the amended credit facility, which may be reduced to $1.0 billion upon the repayment of debt. Borrowings under the facility, which may be denominated in USD, EUR or GBP, bear interest at a base rate, plus an applicable borrowing margin. As of June 30, 2024 and through the issuance of this 10-Q, we had not made any borrowings under our credit facility. We have a sublimit of up to $1.0 billion in aggregate cash advances and financial letters of credit available to us under our credit facility with a current borrowing capacity of $831 million.

Previous wording

Cash and cash equivalents combined with marketable securities were $2.4 billion and $2.6 billion as of March 31, 2024 and December 31, 2023, respectively. Cash balances as of March 31, 2024 and December 31, 2023 include cash and cash equivalents and marketable securities held by NuScale of $120 million and $118 million, respectively. Cash and cash equivalents are held in numerous accounts throughout the world to fund our global project execution activities. Non-U.S. cash and cash equivalents amounted to $1.1 billion as of both March 31, 2024 and December 31, 2023. Non-U.S. cash and cash equivalents exclude deposits of U.S. legal entities that are invested in offshore, overnight accounts or short-term time deposits, to which there is unrestricted access.

Current wording

Cash and cash equivalents combined with marketable securities were $2.7 billion and $2.6 billion as of June 30, 2024 and December 31, 2023, respectively. Cash balances as of June 30, 2024 and December 31, 2023 include cash and cash equivalents and marketable securities held by NuScale of $132 million and $118 million, respectively. Cash and cash equivalents are held in numerous accounts throughout the world to fund our global project execution activities. Non-U.S. cash and cash equivalents amounted to $1.2 billion as of both June 30, 2024 and December 31, 2023. Non-U.S. cash and cash equivalents exclude deposits of U.S. legal entities that are invested in offshore, overnight accounts or short-term time deposits, to which there is unrestricted access.

Previous wording

In evaluating our liquidity needs, we consider cash and cash equivalents held by our consolidated variable interest entities (joint ventures and partnerships). These amounts (which totaled $462 million and $491 million as of March 31, 2024 and December 31, 2023, respectively) were not necessarily readily available for general purposes. We do not include our share of cash held by our proportionately consolidated joint ventures and partnerships in our consolidated cash balances even though these amounts may be significant. We also consider the extent to which client advances (which totaled $44 million and $80 million as of March 31, 2024 and December 31, 2023, respectively) are likely to be sustained or consumed over the near term for project execution activities and the cash flow requirements of our various foreign operations. In some cases, it may not be financially efficient to move cash and cash equivalents between countries due to statutory dividend limitations and/or adverse tax consequences. We did not consider any cash to be permanently reinvested outside the U.S. as of March 31, 2024 and December 31, 2023, other than unremitted earnings required to meet our working capital and long-term investment needs in non-U.S. foreign jurisdictions where we operate.

Current wording

In evaluating our liquidity needs, we consider cash and cash equivalents held by our consolidated variable interest entities (joint ventures and partnerships). These amounts (which totaled $526 million and $491 million as of June 30, 2024 and December 31, 2023, respectively) were not necessarily readily available for general purposes. We do not include our share of cash held by our proportionately consolidated joint ventures and partnerships in our consolidated cash balances even though these amounts may be significant. We also consider the extent to which client advances (which totaled $47 million and $80 million as of June 30, 2024 and December 31, 2023, respectively) are likely to be sustained or consumed over the near term for project execution activities and the cash flow requirements of our various foreign operations. In some cases, it may not be financially efficient to move cash and cash equivalents between countries due to statutory dividend limitations and/or adverse tax consequences. We did not consider any cash to be permanently reinvested outside the U.S. as of June 30, 2024 and December 31, 2023, other than unremitted earnings required to meet our working capital and long-term investment needs in non-U.S. foreign jurisdictions where we operate.

Previous wording

Cash flows from operating activities result primarily from our EPC activities and are affected by our earnings level and changes in working capital associated with such activities. Working capital levels vary from period to period and are primarily affected by our volume of work and billing schedules on our projects. These levels are also impacted by the stage of completion and commercial terms of engineering and construction projects, as well as our execution of our projects compared to their budget. Working capital requirements also vary by project and the payments terms agreed to with our clients, vendors and subcontractors. Most contracts require payments as the projects progress. Additionally, certain projects receive advance payments from clients. A typical trend for our lump-sum projects is to have higher cash balances during the initial phases of execution due to deposits paid to us which then diminish toward the end of the construction phase. As a result, our cash position is reduced as customer advances are utilized, unless they are replaced by advances on other projects. We maintain cash reserves and borrowing facilities to provide additional working capital in the event that a project’s net operating cash outflows exceed its available cash balances. As of March 31, 2024, our backlog included $1.2 billion for loss projects, including approximately $300 million of estimated unfunded losses associated therewith. The comparable amounts in December 31, 2023 were $1.3 billion of backlog and $344 million of unfunded losses.

Current wording

Cash flows from operating activities result primarily from our core EPC activities and are affected by our earnings level and changes in working capital associated with such activities. Working capital levels vary from period to period and are primarily affected by our volume of work and billing schedules on our projects. These levels are also impacted by the stage of completion and commercial terms of engineering and construction projects, as well as our execution of our projects compared to their budget. Working capital requirements also vary by project and the payments terms agreed to with our clients, vendors and subcontractors. Most contracts require payments as the projects progress. Additionally, certain projects receive advance payments from clients. A typical trend for our lump-sum projects is to have higher cash balances during the initial phases of execution due to deposits paid to us which then diminish toward the end of the construction phase. As a result, our cash position is reduced as customer advances are utilized, unless they are replaced by advances on other projects. We maintain cash reserves and borrowing facilities to provide additional working capital in the event that a project’s net operating cash outflows exceed its available cash balances. As of June 30, 2024, our backlog included $1.0 billion for ongoing legacy projects in a loss position, including approximately $200 million of estimated unfunded losses associated therewith. The comparable amounts in December 31, 2023 were $1.3 billion of backlog and $344 million of unfunded losses.

Previous wording

Capital expenditures in 2024 primarily related to improvements to our new office lease in Houston as well as construction equipment on infrastructure projects compared to expenditures for construction equipment and investments in IT in 2023.

Current wording

Capital expenditures in the 2024 Period primarily related to improvements to our new office lease in Houston compared to expenditures for construction equipment and investments in IT in the 2023 Period.

Previous wording

Proceeds from sales of assets during the 2024 Quarter included $29 million for the sale of our Stork's European business. We received additional proceeds from the sale of $38 million in April 2024. Proceeds from sales of assets during the 2023 Quarter included $17 million for the sale of our AMECO South America business, which included operations in Chile and Peru.

Current wording

Proceeds from sales of assets during the 2024 Period included $67 million for the sale of our Stork's European business compared to $17 million for the sale of our AMECO South America business in the 2023 Period.

Previous wording

Investments in unconsolidated partnerships and joint ventures in the 2024 Quarter included capital contributions to an infrastructure joint venture.

Current wording

Investments in unconsolidated partnerships and joint ventures in the 2024 Period included capital contributions to an infrastructure joint venture compared to capital contributions to a Mission Solutions joint venture and two infrastructure joint ventures in the 2023 Period.

Previous wording

During the 2024 Quarter, we redeemed $10 million of aggregate outstanding 2028 Notes, with an immaterial earnings impact. During the 2023 Quarter, we redeemed the remaining €129 million of outstanding 2023 Notes for $140 million with no earnings impact.

Current wording

During the 2024 Period, we redeemed $24 million of aggregate outstanding 2028 Notes, with an immaterial earnings impact. During the 2023 Period, we redeemed the remaining €129 million of outstanding 2023 Notes for $140 million with no earnings impact.

Previous wording

In September 2023, we exercised our mandatory conversion rights on our CPS in which all of the outstanding shares of CPS converted to 44.9585 shares of our common stock, plus a cash payment of $45.23 per CPS for a make-whole premium. 2023 Quarter CPS dividends of $10 million were paid in February 2023. Upon conversion, all dividends on the CPS ceased.

Current wording

In September 2023, we exercised our mandatory conversion rights on our CPS in which all of the outstanding shares of CPS converted to 44.9585 shares of our common stock, plus a cash payment of $45.23 per CPS for a make-whole premium. CPS dividends of $20 million were paid during the 2023 Period. Upon conversion, all dividends on the CPS ceased.

Previous wording

Distributions paid to holders of NCI represent cash outflows to partners of consolidated partnerships or joint ventures created primarily for the execution of single contracts or projects. Distributions in the 2024 Quarter related to a Mission Solutions joint venture. Capital contributions by NCI during the 2024 and 2023 Quarters related to investments by NuScale's NCI holders.

Current wording

Distributions paid to holders of NCI represent cash outflows to partners of consolidated partnerships or joint ventures created primarily for the execution of single contracts or projects. Distributions in the 2024 Period related to a Mission Solutions joint venture. Distributions in the 2023 Period related to a Mission Solutions joint venture and an infrastructure joint venture. Capital contributions by NCI during the 2023 Period related to investments by NuScale's NCI holders.

Previous wording

As of March 31, 2024, letters of credit totaling $450 million were outstanding under committed lines of credit. As of March 31, 2024, letters of credit totaling $916 million were outstanding under uncommitted lines of credit including letters of credit totaling $345 million for two lump-sum projects in Kuwait that are substantially complete except for the resolution of unapproved change orders and extension of time claims. Letters of credit are ordinarily provided to indemnify our clients if we fail to perform our obligations under our contracts. Surety bonds may be used as an alternative to letters of credit.

Current wording

As of June 30, 2024, letters of credit totaling $429 million were outstanding under committed lines of credit. As of June 30, 2024, letters of credit totaling $927 million were outstanding under uncommitted lines of credit including letters of credit totaling $346 million for two lump-sum projects in Kuwait that are substantially complete except for the resolution of unapproved change orders and extension of time claims. Letters of credit are ordinarily provided to indemnify our clients if we fail to perform our obligations under our contracts. Surety bonds may be used as an alternative to letters of credit.

Previous wording

The maximum potential amount of future payments that we could be required to make under outstanding performance guarantees, which represents the remaining cost of work to be performed, was estimated to be $15 billion as of March 31, 2024.

Current wording

The maximum potential amount of future payments that we could be required to make under outstanding performance guarantees, which represents the remaining cost of work to be performed, was estimated to be $14 billion as of June 30, 2024.