Fluor Corp. reported more losses in the fourth quarter of 2020 that were tied to foreign currency losses, the cost of investigations and higher compensation for managers, as its stock price improved.
The company lost $115 million on continuing operations in the fourth quarter, on revenue of $3.7 billion, compared to $294 million on $4.4 billion in 2019, it said Feb. 26.
But 2020's loss for the entire year came in far lower than 2019's billion-dollar-plus ocean of red ink, breeding optimism by management. The company had recognized most of its losses for 2020 in the first quarter.
"Positively, problem projects are in the past, and previous and pending asset sales will help further shore up the balance sheet." says Andrew Wittmann, lead industry sector analyst for Baird Equity. He notes "improving" outlook for company markets, including mining, data centers, specialty chemicals, life sciences and "potentially" infrastructure this year, but says "bread and butter" awards in energy are needed.
For all of 2020, Fluor sustained a net loss from continuing operations of $225 million, on $15.7 billion in revenue, compared to a $1.5-billion loss on $17.3 billion in 2019 revenue, the company reported.
The company's overall financial performance was weighed down by asset write-downs and charges it blamed on weak commodity prices and COVID-19. About one-third of infrastructure work has a profit margin of zero, and Fluor reiterated its earlier pledge that any projects in that segment in the future will be carefully chosen and staffed.
"While 2020 was a challenging year, I am encouraged by the resilience of our organization," said Fluor CEO David Constable. "This year will be a bridging year as we anticipate COVID-19 impacts abating coupled with our focus shifting to implementation of the newly announced strategy. I am confident that our path forward will serve Fluor’s shareholders well."
Consolidated backlog stands at $25.6 billion, down across all business segments from 2019's conclusion, when the backlog tallied $32 billion. Additionally, the company has $2.2 billion in cash and marketable securities.
Pandemic-related project-award delays in 2020, the company noted separately in a presentation to investors, will create "headwinds" for future earnings.