Dive brief:
- Fluor announced that it lost $21 million fourth quarter of 2023compared to $9 million in profit for the same period last year.
- Fourth-quarter revenue reached $3.82 billion compared with $3.71 billion a year ago, an increase of about 3 percent, Fluor CEO David Constable said on a conference call with analysts d investment Backlog reached $29.44 billion, up 13% from $26.05 billion in Q4 2022.
- The company’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 of the profits of its energy solutions segment, according to the company’s quarter. quarterly earnings report.
Diving knowledge:
Fluor expects similar or better performance in terms of revenue and backlog in 2024, Constable said. This suggests the company remains optimistic about its ability to secure new projects and drive revenue growth, despite the potential losses.
The company is also working on its capital structure, including reducing debt and extending the maturity dates of its credit facilities, Chief Financial Officer Joe Brennan said on the call.
The Irving, Texas-based company reported that about 87% of its new awards for the fourth quarter were repayable. This is significant because it means less risk in the costs involved in the projects, more stability of income and potentially higher profits.
These prizes include a $1.7 billion win for the H2 Green Steel project in Swedena $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 chemical project in the Middle East, the report said.
Constable said construction crews have made significant progress in the past year on the Gordie Howe Bridge, the project connecting Windsor, Ont., to Detroit, and are on track to complete the new span this summer. However, officials recently delayed its completion date and increased its cost by $523.6 million in January, citing problems dating back to the start of the COVID-19 pandemic.
Contributions of earnings
Fluor’s fourth-quarter 2023 results contained a mix of positives and negatives, said Andrew Wittmann, senior research analyst at Baird, a Milwaukee-based financial services firm.
“Positives were driven by large premiums and excellent cash generation,” Wittmann said in a research note. “The downside was a substantial and unexpected charge.”
The charge relates to $33 million in higher costs and a schedule overrun on an unspecified “legacy project” mentioned on the call, which caused profits at the company’s Energy Solutions unit to sink 79% to $26 million in the fourth quarter. The segment provides engineering, procurement and construction services to clients in various energy markets, including the oil, gas and petrochemical industries.
On the positive side, the profits of two other business units increased.
Fluor’s Urban Solutions unit, which provides engineering, procurement and construction services for the infrastructure, manufacturing, mining, metals and life sciences industries, posted a profit of $147 million in the fourth quarter , a 287% increase over the previous year.
Also, profits at Fluor’s Mission Solutions unit increased to $31 million, up 55%, due to a renewed focus on offerings in the homeland security market. The segment assists the US and selected international governments with national security and nuclear technology.
