between short-term adversity and long- term discipline

144 Pages·2017·4.76 MB·English

BRIDGING
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between short-term
adversity and long-
term discipline
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GOV. MARIO M. CUOMO BRIDGE
2 0 1 7 A N N U A L R E P O R T
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Bridging The Gap
CONTENTS
FLUOR CORPORATION (NYSE: FLR) is one of the largest professional services firms, providing engineering, procurement, construction, fabrication and
modularization, commissioning and maintenance, as well as project management services, on a global basis. Fluor, through its operating subsidiaries, is an integrated solutions
provider for clients in a diverse set of industries worldwide, including oil and gas, chemicals and petrochemicals, mining and metals, transportation, power, life sciences and
manufacturing. Fluor is also a service provider to the U.S. federal government and other governments abroad, and performs operations and maintenance activities globally for major
industrial clients.
FORWARD-LOOKING STATEMENTS T his annual report contains statements that may constitute forward-looking statements involving risks and uncertainties,
including statements about market outlook, new awards, backlog levels, competition, and the implementation of strategic initiatives, including investments and acquisitions. These
forward-looking statements reflect the Company’s current analysis of existing information as of the date of this annual report, and are subject to various risks and uncertainties.
As a result, caution must be exercised in relying on forward-looking statements. Due to known and unknown risks, the Company’s actual results may differ materially from our
expectations or projections. Additional information concerning factors that may influence Fluor’s results can be found in the Form 10-K that follows this annual report, under the
heading “Item 1A. Risk Factors.”
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2017
A N N UA L R E P O RT
02
SHAREHOLDER LETTER
1 0
TIMELINE
1 2
ENERGY, CHEMICALS & MINING
1 4
INDUSTRIAL, INFRASTRUCTURE & POWER
1 6
GOVERNMENT
1 8
DIVERSIFIED SERVICES
20
NEW AWARDS & BACKLOG DATA
21
SELECTED FINANCIAL DATA
22
CORPORATE MANAGEMENT TEAM
23
BOARD OF DIRECTORS
25
FORM 10-K
1
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DAVID T. SEATON
CHAIRMAN & CHIEF EXECUTIVE OFFICER
While financial markets sometimes drive companies to make
decisions focused on the short term, we remain committed to
deploying our strategies, initiatives and actions with a vision
for the long term.
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2017
A N NU A L R E P O RT
TO OUR VALUED SHAREHOLDERS
2017 was a year in which we continued our transformation
into building a company that can deliver sustainable long-
term growth for our stakeholders. We are bridging the gap
between the recent capital constraints of our clients and our
expectation of a multi-year recovery in the markets we serve.
T
hus, in 2017 we continued on We have taken significant steps to prepare create the projects that make society work.
our journey to fully deploy our our company for the future, making progress The energy that powers us, the raw materials
strategy to deliver the capital- on predictive analytics that will enable more that build our industries and cities, the bridges
efficient projects our clients accurate project reporting and forecasting, and highways that connect us, the missions
demand. This was evidenced by new awards and on developing our proprietary Zero Base that keep our people and nations safe – these
across the entire asset life cycle, from front- ExecutionSM (ZBESM) approach for simplified are the vitally important arenas in which our
end engineering and design (FEED) to full design that delivers fit-for-purpose facilities clients operate. Through the power of our
engineering, procurement, fabrication and which meet our clients’ needs. integrated solutions, Fluor helps these clients
construction, and to Stork’s operations and bring their plans to fruition.
Focusing on long-term sustainability has always
maintenance services.
been a key part of our foundation. Our clients
NORTH WEST REDWATER
STURGEON REFINERY
ALBERTA, CANADA
18.1 19.0 19.5
Focusing on long-term sustainability
has always been a key part of our
foundation. Our clients create the
projects that make society work.
2015 2016 2017
REVENUE
(Dollars in Billions)
3
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2017
A N NU A L R E P O RT
2 0 1 7
CONSOLIDATED
NEW AWARDS & BACKLOG
(Dollars in Billions)
Awards
Backlog
7 0
4. 5.
4 4
0
1.
3
8 0
21. 21.
6
2.
1
2015 2016 2017
FINANCIAL RESULTS 2017 ACCOMPLISHMENTS Other achievements in the Energy, Chemicals
and Mining segment included the completion
Total new awards for 2017 were $12.6 billion, Since we began our strategic journey to
of The Dow Chemical Company’s new
and ending backlog was $31 billion. New become the integrated solutions provider
ethylene production facility in Freeport, Texas,
awards for the year reflect the fact that many of choice for our clients, we have seen a
which produces the raw materials for many of
of our clients continue to evaluate their capital fundamental shift in our markets, especially
Dow’s industry-leading performance plastics
expenditure needs and remain focused on in energy and commodities. More than
products. Fluor was involved with this client
moving select advantaged projects forward. ever before, clients are demanding cost
throughout the entire project, from FEED
and schedule certainty, and that facilities
Net earnings attributable to Fluor in 2017 through engineering, procurement
be designed and built for capital efficiency,
were $191 million, or $1.36 per diluted share. and construction (EPC).
allowing them to thrive in any commodity
This includes the impact of recently enacted
price environment. The global mining industry is emerging from
U.S. tax reform legislation of $37 million, or
a period of low commodity prices, and over
$0.27 per diluted share. Fluor’s revenue for the Our client-focused approach was a strong
the past year we have begun to see clients
full year was $19.5 billion, up from $19 billion contributor to our selection by LyondellBasell
move forward with significant investments.
in 2016. We are encouraged by what we see to perform the engineering and procurement
In 2017, we secured several FEED awards with
from a revenue standpoint. for its propylene oxide (PO) and tertiary butyl
the potential to convert them to full EPC
alcohol (TBA) facility near Houston, Texas.
Fluor’s balance sheet remains strong, with engagements. We completed the Ma’aden
PO is a key component of many everyday
$2.1 billion in cash and marketable securities phosphate megaproject in Saudi Arabia and
products, including bedding, furniture,
at year-end. During the year, we returned signed a memorandum of understanding
carpeting, coatings, building materials and
$118 million in dividends to shareholders. to support the client’s future projects.
adhesives. The TBA will be converted to fuel
We remain committed to being good Additionally, a Fluor joint venture was awarded
additives that help gasoline burn cleaner and
stewards of our balance sheet and the EPC for a copper concentrator at BHP’s
reduce automobile emissions. This project is
capital structure. Spence open-cut copper mine in Chile. These
the world’s largest of its kind and represents the
mines produce essential components of
single largest capital investment in Lyondell-
products used for household, industrial and
Basell’s history.
agricultural applications around the world.
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U.S. ARMY CORPS OF ENGINEERS
PUERTO RICO RESTORATION PROJECT
PUERTO RICO
In 2017, restoring power to Puerto Rico
was an example of the unique value
that Fluor can bring.
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U.S. DEPARTMENT OF ENERGY
IDAHO CLEANUP PROJECT
IDAHO FALLS, IDAHO, USA
We remain committed to
deploying our strategies,
initiatives and actions with
a vision for the long term.
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2017
A N NU A L R E P O RT
As we look to the future, the foundation of
our company is as solid as it has ever been in
our 105-year history.
GOLDCORP PEÑASQUITO PYRITE LEACH PROJECT
ZACATECAS, MEXICO
In our Industrial, Infrastructure and Power the refurbishment of OPG’s Darlington Stork won a number of awards – including
segment, we completed the first span of Nuclear Generating Station. NuScale Power a contract from Ecopetrol to support its
the Governor Mario M. Cuomo Bridge in made significant progress in 2017 toward operations in Colombia, building on a 30-year
New York, opening four new lanes to ease the approval for its small modular reactor (SMR) relationship with the client. Our AMECO
city’s traffic congestion. Scheduled to fully technology design. In March, the company’s equipment business and TRS Staffing
open to traffic in 2018, it will be the largest design certification was accepted for review Solutions achieved growth by supporting
bridge project in New York State history, and by the U.S. Nuclear Regulatory Commission clients and projects around the world.
will significantly enhance travel efficiency for (NRC), and they recently approved NuScale’s
commuter and commercial traffic. Residents design approach, eliminating the need for
INVESTING IN THE FUTURE
and visitors in the Boston area will benefit back-up electrical power. NuScale expects final
from the Green Line Light Rail Extension, approval of its design in 2020, paving the way While financial markets sometimes drive
which was awarded to a Fluor joint venture in for the deployment of the first reactors by the companies to make decisions focused on the
2017 and is scheduled to open in 2021. And mid-2020s, delivering a safe, clean, flexible and short term, we remain committed to deploying
in the Netherlands, a Fluor joint venture was more affordable nuclear power solution. our strategies, initiatives and actions with a
selected for a project to expand the A10 South vision for the long term.
Our Government Group continues to support
motorway and the Amsterdam Zuid rail our clients’ missions, from contingency For example, we continue to invest in the
station, improving quality of life in the area. operations and base operations support to innovation that differentiates us from our
In Texas, Fluor benefited from much-needed nuclear site clean-up and remediation. In competitors and enables us to deliver the
investment in the regional road infrastructure, 2017, restoring power to Puerto Rico was an capital-efficient solutions that our clients
with two awards to improve highways in example of the unique value that Fluor can demand. In 2017, we held our third Innovation
the Dallas area. bring. After Hurricane Maria devastated the Unwrapped event, where employees from
In Life Sciences and Advanced Manufacturing, island, Fluor was brought in by the U.S. Army across the company competed to spend a week
we are progressing well on our project to design Corps of Engineers to bring power back. working on real client challenges – in part with
and build Novo Nordisk’s manufacturing We have made significant progress to date the client – and come up with robust solutions.
facility in North Carolina, which will produce and are proud to help restore a sense of We are implementing solutions from our
critical ingredients for its new oral treatment normalcy to Puerto Rico’s residents. There previous events, including Safety PinSM ,
for diabetes patients. The project is Novo is potential for additional work, as the a smart technology application designed
Nordisk’s largest ever, and is the biggest single U.S. Congress moves toward providing to improve safety planning and reduce
life sciences manufacturing investment in additional disaster relief support to help incidents on job sites.
the history of the state. We see significant rebuild the island’s infrastructure. We also introduced our ZBE approach,
opportunities in this market, given the number Our Diversified Services segment continues to a unique set of work processes that combines
of new drugs that were approved by the U.S. be a key part of our total integrated solutions our technical and executional capabilities in
Food and Drug Administration in 2017. offering by providing facility start-up and ways our competitors cannot. ZBE allows us
In Power, we are helping clients fulfill their management, plant and facility maintenance, to simplify design for our clients and provide
mission to deliver reliable electricity to operations support and asset management them with facilities that run effectively and
communities. We were selected by Ontario services. In 2017, we fully integrated our efficiently on a leaner build.
Power Generation (OPG) in Canada to operations and maintenance with Stork.
provide procurement and construction for Despite pressure on maintenance spend,
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TEXAS DEPARTMENT OF TRANSPORTATION
HORSESHOE PROJECT
DALLAS, TEXAS, USA
CONSOLIDATED BACKLOG BY REGION BACKLOG BY SEGMENT
10% 12% 8%
AMERICAS GOVERNMENT DIVERSIFIED
5% SERVICES
ASIA PACIFIC
& AUSTRALIA
25% 55%
43%
42% INDUSTRIAL, ENERGY,
EUROPE, AFRICA INFRASTRUCTURE CHEMICALS
& MIDDLE EAST UNITED STATES & POWER & MINING
8
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