Fluor Strategy Day 2021
Fluor Strategy Day
January 28, 2021
© 2021 Fluor Corporation. |
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Safe Harbor Statement
This presentation contains forward-looking statements concerning the expected financial and operational performance of Fluor Corporation and its subsidiaries ("we," "our" or the "Company") and the Company's strategic and operational plans, including statements about our business prospects, strategic and operational initiatives, project management, and projected earnings, revenue, proceeds, margins, expenses, expense reductions, market outlook, new awards, and backlog levels. Words such as "believes," "expects," "anticipates," "assumes," "intends," "plans," "will," "may," "should," "positions," "looking ahead," "views," "think," "target," "trend," "can," "appears," "estimates," "prospects," "outlook," "guidance" or other similar expressions identify forward-looking statements. Such statements are based on current management expectations and involve risks and uncertainties, known and unknown, which can cause actual results to differ materially from the Company's expectations and projections. Factors that could cause actual results to differ materially include, among other things, the cyclical nature of many of the markets the Company serves; the Company's failure to receive new contract awards; cost overruns, project delays or other problems arising from project execution activities, including the failure to meet cost and schedule estimates; failure of our joint venture or other partners, suppliers or subcontractors to perform their obligations; client delays or defaults in making payments; risks or uncertainties associated with planned dispositions, including factors affecting the ability to realize anticipated proceeds or dispose of associated liabilities; asset impairments; and unanticipated expenses arising from restructuring activities. Investors are cautioned not to place undue reliance on the forward-looking statements included in this presentation, which speak only as of the date hereof. The company disclaims any intent or obligation, other than as required by law, to update this information in light of new information or future events. Additional information about potential risk factors that could affect the Company's business and financial results is included in our Form 10-K filed on September 25, 2020 and our reports on Form 10-Q filed on October 22, 2020, November 12, 2020 and December 10, 2020.
During this presentation, we may discuss certain non-GAAP financial measures. Reconciliations of forward-lookingnon-GAAP financial measures are not available due to the inability to reliably estimate the amounts of items excluded from such measures, which may be significant.
Fluor Strategy Day 2021
© 2021 Fluor Corporation. |
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Fluor Strategy Day 2021
Sustainability Leadership at Fluor
Al Collins
Fluor Strategy Day 2021
© 2021 Fluor Corporation.
Sustainability Leadership at Fluor
- Comprehensive sustainability program
-
- Community
- Environmental
- Health & Safety
- Supply Chain
- Employees & Workplace
- Ethics and governance
- Report annually since 2008
- History of awards and recognition
Fluor Strategy Day 2021
© 2021 Fluor Corporation. |
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Fluor's role in Sustainability: past
1983 |
1992 |
2008 |
2007 - 2012 |
2012 - 2014 |
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Photovoltaic |
Carbon Capture |
Biofuels Production |
Polysilicon |
Carbon Capture |
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Facility |
and Storage |
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Fluor Strategy Day 2021
© 2021 Fluor Corporation. |
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Fluor's role in Sustainability: 2013 - present
2013 |
2014 |
2017 |
2018 |
2019 |
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Solar |
Gas Sulphur Recovery |
Clean Products |
Tier 3 Emissions |
Clean Fuels |
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Upgrade |
Reduction |
|||||
Fluor Strategy Day 2021
© 2021 Fluor Corporation. |
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Fluor's role in Sustainability: future
Enabling reliable renewable energy
- Grid stability
- Scalability cost effectiveness
- Lithium-ionalternatives
Driving first wave of low carbon H2
- Pre-combustion
- Post-combustion
- Pyrolysis
Carbon to Value |
Long duration |
Waste to Energy |
Hydrogen |
energy storage |
|||
Converting CO2
- Valuable end products
- Alternative sequestration
- Piloting with Fluor CO2 capture IP on front end
Scaling innovation
- Waste and methane elimination
- Syngas / H2 production
- Carbon net-zero / net- negative
Fluor Strategy Day 2021
© 2021 Fluor Corporation. |
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Fluor Strategy Day 2021
Advancing Diversity, Equity
and Inclusion (DE&I)
Stacy Dillow
Fluor Strategy Day 2021
© 2021 Fluor Corporation.
DE&I - Four Impact Pillars
Champion |
Recruit, |
Enhance |
Improve |
|
an Inclusive |
Develop and |
Employee |
Social Progress |
|
Culture |
1 |
Retain Talent2 |
Experience 3 |
and Impact 4 |
Q4'202 regional |
United States |
Inclusion Councils |
and Australia |
Fluor Strategy Day 2021 |
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Fluor Strategy Day 2021 |
© 2021 Fluor Corporation. |
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DE&I Goals and Commitments
Increase women and diverse representation in leadership
US HBCU and HSI Sponsorship
$1 million over the next three years to select universities in support of Black and Hispanic STEM education
Fluor Strategy Day 2021
Fluor Strategy Day 2021 10
© 2021 Fluor Corporation.
Agenda
Welcome |
Jason Landkamer |
Sustainability Leadership at Fluor |
Al Collins |
Advancing DE&I |
Stacy Dillow |
Opening Remarks |
Alan Boeckmann |
Building a Better Future |
David Constable |
Financial Strategy |
Joe Brennan |
Project Execution and Risk Management |
Mark Fields |
Urban Solutions |
|
Infrastructure |
Terry Towle |
Advanced Technology & Life Sciences |
Juan Hernandez |
Mining & Metals |
Tony Morgan |
Mission Solutions |
Tom D'Agostino |
Energy Solutions |
Jim Breuer |
LNG Canada Project Update |
Phil Clark |
Summary and Q&A |
David Constable |
Fluor Strategy Day 2021
© 2021 Fluor Corporation. |
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Fluor Strategy Day 2021
Building a Better Future
David Constable
Fluor Strategy Day 2021
© 2021 Fluor Corporation12 .
Fluor's New Management Team
CEO
David Constable
Corporate Dev. |
Project |
Execution |
Energy |
Solutions |
Urban |
Solutions |
Mission |
Solutions |
Corporate |
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& Sustainability |
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Mark Fields |
Jim Breuer |
Terry Towle |
Tom D'Agostino |
Functions |
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Al Collins |
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Finance |
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Joe Brennan |
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Human Resources |
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Stacy Dillow |
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Legal / Compliance |
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John Reynolds |
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Information |
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Technology |
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Robert Taylor |
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© 2021 Fluor Corporation. |
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Building a Better Future by becoming the preeminent leader in professional and technical solutions
Fluor Strategy Day 2021
© 2021 Fluor Corporation. 14
Industry 4.0 |
Energy Transition |
|
and Urbanization |
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Mega
Trends
Beyond |
Stakeholder |
|
Globalization |
Engagement |
|
Fluor Strategy Day 2021 |
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© 2021 Fluor Corporation. |
Industry 4.0 |
Fluor Opportunities |
- Technical innovation
- Medical advancements
- Connected devices
- Artificial intelligence
- Automation and robotics
- Data-drivenprocesses
Digital twin |
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Life sciences |
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Data centers |
Artificial intelligence |
|
Fluor Strategy Day 2021
© 2021 Fluor Corporation. |
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Energy Transition and Urbanization
- Population growth
- Resource scarcity
- Climate change
- Government policy
Fluor Opportunities
Energy efficiency |
Biofuels / carbon capture |
Efficient infrastructure |
High demand metals |
Fluor Strategy Day 2021
© 2021 Fluor Corporation. |
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Beyond Globalization |
Fluor Opportunities |
Populism |
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Trade barriers |
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Regionalization |
Local supply chains |
Reshoring manufacturing |
Government intelligence |
Mission support |
© 2021 Fluor Corporation. |
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Stakeholder Engagement |
Fluor Opportunities |
- Investors
- Clients
- Employees
- Communities
- Governments
Energy transition |
Sustainability |
|
New ways of working |
Technology expertise |
Fluor Strategy Day 2021
© 2021 Fluor Corporation. |
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Fluor Strengths and Capabilities
World-Class Expertise
Engineering
Technology
Supply chain
Program management
Construction management
Global platform
Fluor Strategy Day 2021
© 2021 Fluor Corporation. |
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Near-term Market Outlook
Global Economy
Election Impact
Recovery in second half of 2021
Government policy expected to support energy transition and infrastructure
Commodities
Strong price signals for mining, metals and chemicals
Data Storage
Growth Data storage and computing support growth in data centers
© 2021 Fluor Corporation. |
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Fluor's Small Modular Reactor (SMR) strategy
- Sell down our NuScale equity in 2021
- Position for preferred project execution services
Fluor Strategy Day 2021
© 2021 Fluor Corporation. |
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Strategic Priorities
Drive growth |
Pursue |
Foster a high |
Reinforce |
|||||||||||
across the |
contracts with |
performance |
financial |
|||||||||||
portfolio |
fair and |
culture with |
discipline |
|||||||||||
balanced |
purpose |
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terms |
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Fluor Strategy Day 2021
© 2021 Fluor Corporation. |
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Strategic Priorities and Goals
Drive growth
across the
portfolio
70% of revenue from non- traditional oil & gas segments by 2023
Fluor Strategy Day 2021
© 2021 Fluor Corporation. |
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Strategic Priorities and Goals
Pursue
contracts with
fair and
balanced
terms
Backlog mix will be more than 75% reimbursable by 2024
Fluor Strategy Day 2021
© 2021 Fluor Corporation. |
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Strategic Priorities and Goals
Foster a high performance culture with purpose
- Improve employee engagement annually
- Increase women & diversity in leadership positions
- Net Zero in 2023
Fluor Strategy Day 2021
© 2021 Fluor Corporation. |
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Strategic Priorities and Goals
Reinforce
financial
discipline
By 2024
- Debt to capitalization ratio of 20 - 40%
- Return on invested capital of 20%
- Overhead reduction of $100 million
- EPS range of $3.00 - $3.50
Fluor Strategy Day 2021
© 2021 Fluor Corporation. |
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Fluor Strategy Day 2021
Financial Strategy
Joe Brennan
Fluor Strategy Day 2021
© 2021 Fluor Corporation. |
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Financial Strategic Actions
Restructure the balance sheet to produce sufficient free cash flow to support the go-forward business strategy
Improve |
Lower debt |
Renew line |
of credit |
||
Liquidity |
to capitalization |
|
facilities |
||
ratio |
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Fluor Strategy Day 2021
© 2021 Fluor Corporation. |
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Improve Liquidity
ACCOMPLISHMENTS TO DATE
Real Estate Sales |
Reduced global real estate footprint by ~20% |
P3 Monetization |
Generated cash proceeds ~$20 million |
AMECO Divestiture |
Sold AMECO Jamaica in Q3 2020 |
Reduction of capital expenditures |
|
Stork Divestiture |
Sold EQIN (equipment rental) in Q3 2020 |
Overhead Savings |
Achieved run rate savings of $100 million in |
overhead savings in 2020 |
|
2021 EXPECTATIONS
- Realize $20 to $50 million
- Sell North American investments
- Received Letter of Intent for AMECO North America Q1'21
- Decision on AMECO South America
- Will be listed as discontinued operations
- Expect additional savings
Fluor Strategy Day 2021
© 2021 Fluor Corporation. |
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Lower Debt to Capitalization Ratio |
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3Q 2020 |
|||
Shareholders' Equity |
$1,592 M |
||
Debt |
$1,734 M |
||
Total Capitalization |
$3,326 M |
||
Debt to Capitalization Ratio |
52% |
2020 Shareholders' Equity is Q3'20 |
|
actual ending balance |
|||
Shareholders' Equity excludes AOCI
Targeting debt to capitalization ratio below 40% by
reducing debt $300 - $500 million
Fluor Strategy Day 2021
© 2021 Fluor Corporation. |
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Renew Committed Lines of Credit
Outstanding Lines of Credit and Long-term Debt by Maturity Date (in millions)
$3,500 *
Debt |
Credit Facilities |
|||
2016 notes |
2014 notes |
2018 notes |
|||||
1.750% |
3.50% |
4.25% |
|||||
€ 500 |
$500 |
$600 |
|||||
2021 |
2022 |
2023 |
2024 |
2025 |
2026 |
2027 |
2028 |
- Credit Facilities mature in February 2022 but will become current in February 2021
Fluor Strategy Day 2021
© 2021 Fluor Corporation. |
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Financial Targets
Achieve investment grade credit rating with both agencies
Reduce risk in backlog
Maintain cash balance
Reduce debt to capitalization ratio
Overhead reductions
ROIC Target
Earnings Per Share
- Cash flow leverage ratio (debt / EBITDA) less than 2.5
- Predictable profitability and higher returns
- 2021 cash balance above $2.0 billion
- Below 40% by 2022
- Targeting an additional $100 million by 2024
- 20% by 2024
- EPS range of $3.00 - $3.50 by 2024
Fluor Strategy Day 2021
© 2021 Fluor Corporation. |
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Fluor Strategy Day 2021
Project Execution and Risk Management
Mark Fields
Fluor Strategy Day 2021
© 2021 Fluor Corporation.
Pursuit Principles and Goal
Pursuit principles
- Clear understanding of scope
- Healthy relationship with our clients
- Fair and balanced distribution of risk
75% of our backlog will be
reimbursable by 2024
Fluor Strategy Day 2021
© 2021 Fluor Corporation. |
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Project Post-Mortem
Reasons for failure
Unverified third-party FEED package
Risk process not followed
Lack of fair and balanced contractual terms
Out-of-sequence execution
Fluor Strategy Day 2021
© 2021 Fluor Corporation. |
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Progress Toward De-risking the Backlog
Past Q3'19 |
Plan 2021 |
Reimbursable |
Reimbursable |
||
Cost |
Fixed Price |
Cost |
|
Fixed Price |
45% |
53% |
|
55% |
47% |
Goal 2024
Fixed Price
25%
Reimbursable Cost
75%
Fluor Strategy Day 2021
© 2021 Fluor Corporation. |
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Fixed Price Success Elements
- Align goals and interests
- Good client relationships
- Proven teams, experienced execution
- In-sequenceconstruction
- Fair and balanced terms
© 2021 Fluor Corporation. |
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Fluor Strategy Day 2021
Urban Solutions:
Infrastructure
Terry Towle
© 2021 Fluor Corporation.
Urban Solutions:
Infrastructure |
Strategic Focus Areas |
TRENDS
Energy
Transition &
Urbanization
Energy
Transition &
Urbanization
Stakeholder Engagement
- Aging highways costing $160B/year
- 30% of US bridges beyond their design life
- Urban growth of 51 million people
- Improved mobility and decreased road congestion
- Competitor risk appetite slowing
- Increase in failed procurement
- Coverage ratios increasing
Proven Highway Expansions
Replicate Texas Model
Diligence and
Selectivity
Fluor Strategy Day 2021
© 2021 Fluor Corporation. |
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Texas Region
13 projects
valued at $5.6B
Project |
Contract |
SH 130 |
2002 |
SH 161 |
2010 |
Horseshoe |
2013 |
Bergstrom |
2015 |
Southern Gateway |
2017 |
Ennis Co 287 |
2017 |
IH 20 |
2017 |
SH 360 |
2018 |
US 77 |
2019 |
IH20 Duncanville |
2019 |
IH 635 LBJ |
2019 |
Grants Lane |
2020 |
Oak Hill |
2020 |
Fluor Strategy Day 2021
© 2021 Fluor Corporation. |
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Oak Hill Parkway
Austin, Texas
- Client: TxDOT
- Partner: Balfour Beatty
- Scope: Design Build with Warranty
- Project Description:
-
- "Y" Project located 10 miles from ongoing 183 South project
- 7 miles of additional lanes
- Shared use path
- Ponds, tree paths, aesthetics
Fluor Strategy Day 2021
© 2021 Fluor Corporation. |
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Fluor Strategy Day 2021
Urban Solutions:
Advanced Technologies & Life Sciences
Juan Hernandez
© 2021 Fluor Corporation. |
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Urban Solutions:
Advanced Technologies & Life Sciences
Advanced Technologies |
Advanced Manufacturing |
Life Sciences |
||
c
Data Centers |
Fast Moving Consumer Goods |
Biologics |
Semiconductors |
Specialty Products |
Pharma |
Smart Batteries |
Advanced Materials |
Animal Health |
Food and Beverage |
Medical Devices |
Knowledge Based Solutions • Diversity • Innovation • Accessibility • Transformational Delivery
Fluor Strategy Day 2021
© 2021 Fluor Corporation. |
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Urban Solutions: |
|
Advanced Technologies & Life Sciences |
Strategic Focus Areas |
TRENDS |
On demand consumption of expert |
|
Beyond |
knowledge |
Globalization |
Minimal risk of disruption |
De-risking supply chains |
|
Digitalization in manufacturing operations |
|
Industry 4.0 |
Improved reliability |
Optimized life cycle costs |
|
Consumer evolution |
|
Stakeholder |
Health |
Engagement |
Sustainability |
Social responsibility |
Global
Technology
Hubs
Deliver Knowledge- based solutions
Transform Execution and Delivery model
Fluor Strategy Day 2021
© 2021 Fluor Corporation. |
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Urban Solutions: Advanced Technologies & Life Sciences
Accelerating our strategic journey …
STRATEGIC GROWTH |
IMPLEMENTATION |
Key regional locations
- Establishing global technology hubs
Human |
|
Investing, training, and empowering our people |
|
Capital |
|||
Moving up the value chain
- Creating a new Professional and Technical Services Segment
Fluor Strategy Day 2021
© 2021 Fluor Corporation. |
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Fluor Strategy Day 2021
Urban Solutions:
Mining & Metals
Tony Morgan
© 2021 Fluor Corporation. 47
Urban Solutions:
Mining & Metals
TRENDS
Strategic Focus Areas
Energy Transition & Urbanization
Beyond Globalization
Stakeholder
Engagement
Industry 4.0
- Underground mining
- Battery metals
- Copper concentrators
- Safe jurisdictions
- Lower emissions
- Energy efficiency
- Sustainable practices
- Digital twin
- Automation
- Remote monitoring
Centers of
Excellence
Local Teams
Material
Handling
Digital
Mine
Fluor Strategy Day 2021 |
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Fluor Strategy Day 2021 |
© 2021 Fluor Corporation.
Metals Required for Energy Transition
Solar |
Al |
13 |
26 |
29 |
82 |
28 |
14 |
30 |
|||||||||
Fe |
Cu |
Pb |
Ni |
Si |
Zn |
||||||||||||
Aluminum |
Iron |
Copper |
Lead |
Nickel |
Silicon |
Zinc |
|||||||||||
Wind |
Al13 |
Fe26 |
Cu29 |
Pb82 |
Zn30 |
Co27 |
Mn25 |
Cr24 |
Mo42 |
|||||||||
Aluminum |
Iron |
Copper |
Lead |
Zinc |
Cobalt |
Manganese |
Chromium |
Molybdenum |
||||||||||
Electric |
13 |
26 |
29 |
82 |
28 |
14 |
25 |
3 |
6 |
22 |
||||||||||||||||||||||||
27 |
Li |
C |
Ti |
|||||||||||||||||||||||||||||||
Al |
Fe |
Cu |
Pb |
Ni |
Si |
Co |
Mn |
|||||||||||||||||||||||||||
Vehicles |
||||||||||||||||||||||||||||||||||
Aluminum |
Iron |
Copper |
Lead |
Nickel |
Silicon |
Cobalt |
Manganese |
Lithium |
Carbon |
Titanium |
||||||||||||||||||||||||
Fluor Strategy Day 2021
© 2021 Fluor Corporation. |
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Fluor Strategy Day 2021
Mission Solutions
Tom D'Agostino
© 2021 Fluor Corporation. 50
Mission Solutions
TRENDS
Beyond Globalization |
|
Advanced solutions |
|
Trusted partner |
|
Industry 4.0 |
Talent/clearances |
Rapid response |
|
Community involvement |
|
Stakeholder |
|
Engagement |
|
Strategic Focus Areas
Expand core; grow in complementary markets
Build digitally- enabled mission solutions portfolio
Transform workforce for next gen challenges
Fluor Strategy Day 2021
© 2021 Fluor Corporation. |
51 |
Strategic direction
Core and complimentary growth
Expand our core business
Mission critical operations and labs
Offer knowledge- based solutions
Fluor Strategy Day 2021
© 2021 Fluor Corporation. |
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Fluor Strategy Day 2021
Energy Solutions
Jim Breuer
© 2021 Fluor Corporation. 53
Energy Solutions
TREND
Address dual challenge |
|
Decarbonize energy supply |
|
Energy Transition & |
Meet new regulatory policies |
Urbanization |
|
Right technology solutions |
|
Sustainable operations |
Strategic Focus Areas
Decarbonize existing assets
Low carbon energy sources
Traditional oil & gas
NuScale project development
Fluor Strategy Day 2021
© 2021 Fluor Corporation. |
54 |
NuScale recent milestones
- Received design certification approval
- U.S. Department of Energy approved a multi-yearcost-share award for up to $1.4 billion
- Multiple investors have taken equity positions in NuScale
- NuScale and Fluor recently signed contracts with UAMPS
- In active discussion with multiple clients
Fluor Strategy Day 2021
© 2021 Fluor Corporation. |
55 |
Fluor Strengths
- Broad industry experience
- Technical expertise
- Full project life-cycle delivery
- Technology evaluation and selection
- Strong relationships with partners
© 2021 Fluor Corporation. |
56 |
Energy Transition
Ongoing Fluor Work in Decarbonization
Renewable |
Refinery |
Battery |
Carbon |
Small Modular |
Fuels |
Electrification |
Chemicals |
Capture |
Reactor |
Fluor Strategy Day 2021
© 2021 Fluor Corporation.
Summary
Foster a high performance culture with purpose
- Improve employee engagement annually
- Increase women & diversity in leadership positions
- Net Zero in 2023
ACTIONS:
Advance DE&I
Promote social progress Lead in sustainability
Fluor Strategy Day 2021
© 2021 Fluor Corporation. |
58 |
Summary
Drive growth
across the
portfolio
70% of revenue from non-traditional oil & gas segments
ACTIONS:
- Organic growth in energy transition, chemicals, mining, life sciences and infrastructure
- Invest in advanced technologies and government
- Strategic knowledge hires
Fluor Strategy Day 2021
© 2021 Fluor Corporation. |
59 |
Summary
Pursue
contracts with
fair and
balanced
terms
Backlog mix will be more than 75% reimbursable by 2024
ACTION:
Focus on reimbursable work
Fluor Strategy Day 2021
© 2021 Fluor Corporation. |
60 |
Summary
Reinforce
financial
discipline
By 2024
- Debt to capitalization ratio of 20 - 40%
- Return on invested capital of 20%
- Overhead reduction of $100 million
- EPS range of $3.00 - $3.50
ACTION:
Rebuild balance sheet Predictable cash flow Reduce overhead Lower debt
Fluor Strategy Day 2021
© 2021 Fluor Corporation. |
61 |
Summary
STRATEGIC PRIORITIES
Foster a high performance culture with purpose
Drive growth across the portfolio
Pursue contracts with fair and balanced terms
Reinforce financial discipline
ACTIONS
- Advance DE&I
- Promote social progress
- Lead in sustainability
- Organic growth in energy transition, chemicals, mining, life sciences and infrastructure
- Invest in advanced technologies and government
- Strategic knowledge hires
- Focus on reimbursable work
- Rebuild balance sheet
- Predictable cash flow
- Reduce overhead
- Lower debt
GOALS
- Improve employee engagement annually
- Increase women and diversity in leadership
- Net Zero in 2023
- 70% of revenue from non-traditional oil & gas segments by 2023
- Backlog mix will be more than 75% reimbursable by 2024
By 2024
- Debt to capitalization of 20 - 40%
- Return on invested capital of 20%
- Overhead reduction of $100 million
- EPS range of $3.00 - $3.50
Fluor Strategy Day 2021
© 2021 Fluor Corporation. |
62 |
Attachments
Disclaimer
Fluor Corporation published this content on 28 January 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 28 January 2021 16:03:22 UTC.