Fluor Corporation · NYSE:FLR
Fluor — Investor Day (January 2021)
62 slides from Fluor's investor day presentation, Jan 28, 2021
Slide 1: Fluor Strategy Day
Fluor Strategy Day 2021 Fluor Strategy Day January 28, 2021 © 2021 Fluor Corporation. 1
Slide 2: Safe Harbor Statement
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 busines
Slide 3: Sustainability Leadership at Fluor
Fluor Strategy Day 2021 Sustainability Leadership at Fluor Al Collins Fluor Strategy Day 2021 © 2021 Fluor Corporation.
Slide 4: Sustainability Leadership at Fluor
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. 4
Slide 5: Fluor's role in Sustainability: past
Fluor’s role in Sustainability: past 1983 1992 2008 2007 - 2012 2012 - 2014 Photovoltaic Carbon Capture Biofuels Production Polysilicon Carbon Capture Facility and Storage Fluor Strategy Day 2021 © 2021 Fluor Corporation. 5
Slide 6: Fluor's role in Sustainability: 2013 – present
Fluor’s role in Sustainability: 2013 – present 2013 2014 2017 2018 2019 Solar Gas Sulphur Recovery Clean Products Tier 3 Emissions Clean Fuels Upgrade Reduction Fluor Strategy Day 2021 © 2021 Fluor Corporation. 6
Slide 7: Fluor's role in Sustainability: future
Fluor’s role in Sustainability: future Enabling reliable renewable energy Driving first wave of low carbon H2 Grid stability Pre-combustion Scalability cost effectiveness Post-combustion Lithium-ion alternatives Pyrolysis Long duration Carbon to Value Waste to Energy Hydrogen energy stor
Slide 8: Advancing Diversity, Equity and Inclusion (DE&I)
Fluor Strategy Day 2021 Advancing Diversity, Equity and Inclusion (DE&I) Stacy Dillow Fluor Strategy Day 2021 © 2021 Fluor Corporation.
Slide 9: DE&I - Four Impact Pillars
DE&I - Four Impact Pillars Champion Recruit, Enhance Improve an Inclusive Develop and Employee Social Progress Culture Retain Talent Experience and Impact 1 2 3 4 Q4’20 2 regional Inclusion Councils United States and Australia Fluor Strategy Day 2021 Fluor Strategy Day 2021 © 2021 Fluor Corporation.
Slide 10: DE&I Goals and Commitments
DE&I Goals and Commitments US HBCU and HSI Sponsorship Increase women and diverse representation $1 million over the next three years in leadership to select universities in support of Black and Hispanic STEM education Fluor Strategy Day 2021 Fluor Strategy Day 2021 © 2021 Fluor Corporation. 10
Slide 11: Agenda
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
Slide 12: Building a Better Future
Fluor Strategy Day 2021 Building a Better Future David Constable Fluor Strategy Day 2021 12 © 2021 Fluor Corporation.
Slide 13: Fluor's New Management Team
Fluor’s New Management Team CEO David Constable Corporate Dev. Project Execution Energy Solutions Urban Solutions Mission Solutions Corporate & Sustainability Mark Fields Jim Breuer Terry Towle Tom D’Agostino Functions Al Collins Finance Joe Brennan Human Resources Stacy Dillow Legal / Complia
Slide 14: Building a Better Future by becoming the preeminent leader in professional and technical solutions
Building a Better Future by becoming the preeminent leader in professional and technical solutions Fluor Strategy Day 2021 © 2021 Fluor Corporation. 14
Slide 15: Mega Trends
Energy Transition Industry 4.0 and Urbanization Mega Trends Beyond Stakeholder Globalization Engagement Fluor Strategy Day 2021 Fluor Strategy Day 2021 © 2021 Fluor Corporation. 15
Slide 16: Industry 4.0 Fluor Opportunities
Industry 4.0 Fluor Opportunities Technical innovation Medical advancements Connected devices Life sciences Digital twin Artificial intelligence Automation and robotics Data-driven processes Data centers Artificial intelligence Fluor Strategy Day 2021 © 2021 Fluor Corporation. 16
Slide 17: Energy Transition and Urbanization Fluor Opportunities
Energy Transition and Fluor Opportunities Urbanization Population growth Resource scarcity Climate change Energy efficiency Biofuels / carbon capture Government policy Efficient infrastructure High demand metals Fluor Strategy Day 2021 © 2021 Fluor Corporation. 17
Slide 18: Beyond Globalization Fluor Opportunities
Beyond Globalization Fluor Opportunities Populism Trade barriers Regionalization Local supply chains Reshoring manufacturing Government intelligence Mission support Fluor Strategy Day 2021 © 2021 Fluor Corporation. 18
Slide 19: Stakeholder Engagement Fluor Opportunities
Stakeholder Engagement Fluor Opportunities Investors Clients Employees Energy transition Sustainability Communities Governments New ways of working Technology expertise Fluor Strategy Day 2021 © 2021 Fluor Corporation. 19
Slide 20: World-Class Expertise
Fluor Strengths and Capabilities World-Class Expertise Engineering Technology Supply chain Program management Construction management Global platform Fluor Strategy Day 2021 © 2021 Fluor Corporation. 20
Slide 21: Near-term Market Outlook
Near-term Market Outlook Global Economy Recovery in second half of 2021 Election Impact 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 i
Slide 22: Fluor's Small Modular Reactor (SMR) strategy
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. 22
Slide 23: Strategic Priorities
Strategic Priorities Drive growth Pursue Foster a high Reinforce across the contracts with performance financial portfolio fair and culture with discipline balanced purpose terms Fluor Strategy Day 2021 © 2021 Fluor Corporation. 23
Slide 24: Strategic Priorities and Goals: Drive growth across the portfolio
Strategic Priorities and Goals Drive growth 70% of revenue from non- across the traditional oil & gas segments portfolio by 2023 Fluor Strategy Day 2021 © 2021 Fluor Corporation. 24
Slide 25: Strategic Priorities and Goals: Pursue contracts with fair and balanced terms
Strategic Priorities and Goals Pursue Backlog mix will be more than contracts with 75% reimbursable by 2024 fair and balanced terms Fluor Strategy Day 2021 © 2021 Fluor Corporation. 25
Slide 26: Strategic Priorities and Goals: Foster a high performance culture
Strategic Priorities and Goals Improve employee engagement Foster a high annually performance Increase women & diversity in culture with leadership positions purpose Net Zero in 2023 Fluor Strategy Day 2021 © 2021 Fluor Corporation. 26
Slide 27: Strategic Priorities and Goals: Reinforce financial discipline
Strategic Priorities and Goals By 2024 Debt to capitalization ratio of 20 – 40% Reinforce financial Return on invested capital of 20% discipline Overhead reduction of $100 million EPS range of $3.00 – $3.50 Fluor Strategy Day 2021 © 2021 Fluor Corporation. 27
Slide 28: Financial Strategy
Fluor Strategy Day 2021 Financial Strategy Joe Brennan Fluor Strategy Day 2021 © 2021 Fluor Corporation. 28
Slide 29: Financial Strategic Actions
Financial Strategic Actions Restructure the balance sheet to produce sufficient free cash flow to support the go-forward business strategy Renew line Improve Lower debt of credit Liquidity to capitalization facilities ratio Fluor Strategy Day 2021 © 2021 Fluor Corporation. 29
Slide 30: Improve Liquidity
Improve Liquidity ACCOMPLISHMENTS TO DATE 2021 EXPECTATIONS Real Estate Sales Reduced global real estate footprint by ~20% Realize $20 to $50 million P3 Monetization Generated cash proceeds ~$20 million Sell North American investments Received Letter of Intent for AMECO Sold AMECO Jamaic
Slide 31: Lower Debt to Capitalization Ratio
Lower Debt to Capitalization Ratio 3Q 2020 Shareholders’ Equity $1,592 M Debt $1,734 M Total Capitalization $3,326 M 52% 2020 Shareholders’ Equity is Q3’20 Debt to Capitalization Ratio actual ending balance Shareholders’ Equity excludes AOCI Targeting debt to capitalization ratio below 40% by reduci
Slide 32: Renew Committed Lines of Credit
Renew Committed Lines of Credit Outstanding Lines of Credit and Long-term Debt by Maturity Date (in millions) $3,500 * * Credit Facilities mature Debt Credit Facilities in February 2022 but will become current in February 2021 2016 notes 2014 notes 2018 notes 1.750% 3.50% 4.25% € 500 $500 $600 2021
Slide 33: Financial Targets
Financial Targets Achieve investment grade credit rating Cash flow leverage ratio (debt / EBITDA) less than 2.5 with both agencies Reduce risk in backlog Predictable profitability and higher returns Maintain cash balance 2021 cash balance above $2.0 billion Reduce debt to capitalization ratio
Slide 34: Project Execution and Risk Management
Fluor Strategy Day 2021 Project Execution and Risk Management Mark Fields Fluor Strategy Day 2021 © 2021 Fluor Corporation.
Slide 35: Pursuit Principles and Goal
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. 35
Slide 36: Project Post-Mortem
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. 36
Slide 37: Progress Toward De-risking the Backlog
Progress Toward De-risking the Backlog Past Q3’19 Plan 2021 Goal 2024 Fixed Price Reimbursable Cost Reimbursable 25% Cost Fixed Price 45% Fixed Price 53% Reimbursable Cost 55% 47% 75% Fluor Strategy Day 2021 © 2021 Fluor Corporation. 37
Slide 38: Fixed Price Success Elements
Fixed Price Success Elements Align goals and interests Good client relationships Proven teams, experienced execution In-sequence construction Fair and balanced terms Fluor Strategy Day 2021 © 2021 Fluor Corporation. 38
Slide 39: Urban Solutions: Infrastructure
Fluor Strategy Day 2021 Urban Solutions: Infrastructure Terry Towle Fluor Strategy Day 2021 © 2021 Fluor Corporation.
Slide 40: Urban Solutions: Infrastructure Strategic Focus Areas
Urban Solutions: Infrastructure Strategic Focus Areas TRENDS Energy Aging highways costing $160B/year Proven Highway Transition & 30% of US bridges beyond their design life Expansions Urbanization Energy Urban growth of 51 million people Replicate Texas Transition & Improved mobility and dec
Slide 41: Texas Region: 13 projects valued at $5.6B
Texas Region Project Contract SH 130 2002 SH 161 2010 Horseshoe 2013 Bergstrom 2015 13 projects Southern Gateway Ennis Co 287 2017 2017 valued at $5.6B 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 Corporat
Slide 42: Oak Hill Parkway
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 ©
Slide 43: Urban Solutions: Advanced Technologies & Life Sciences
Fluor Strategy Day 2021 Urban Solutions: Advanced Technologies & Life Sciences Juan Hernandez Fluor Strategy Day 2021 © 2021 Fluor Corporation. 43
Slide 44: Urban Solutions: Advanced Technologies & Life Sciences
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 Medi
Slide 45: Advanced Technologies & Life Sciences Strategic Focus Areas
Urban Solutions: Advanced Technologies & Life Sciences Strategic Focus Areas TRENDS On demand consumption of expert knowledge Global Beyond Technology Globalization Minimal risk of disruption Hubs De-risking supply chains Digitalization in manufacturing operations Deliver Industry 4.0 Impr
Slide 46: Accelerating our strategic journey
Urban Solutions: Advanced Technologies & Life Sciences Accelerating our strategic journey … STRATEGIC GROWTH IMPLEMENTATION Key regional Establishing global technology hubs locations Human Investing, training, and empowering our people Capital Moving up the Creating a new Professional and Tech
Slide 47: Urban Solutions: Mining & Metals
Fluor Strategy Day 2021 Urban Solutions: Mining & Metals Tony Morgan Fluor Strategy Day 2021 © 2021 Fluor Corporation. 47
Slide 48: Mining & Metals Strategic Focus Areas
Urban Solutions: Mining & Metals Strategic Focus Areas TRENDS Underground mining Energy Transition Centers of Battery metals Excellence & Urbanization Copper concentrators Beyond Safe jurisdictions Local Teams Globalization Lower emissions Stakeholder Material Energy efficiency Engagemen
Slide 49: Metals Required for Energy Transition
Metals Required for Energy Transition 13 26 29 82 28 14 30 Solar Al Fe Cu Pb Ni Si Zn Aluminum Iron Copper Lead Nickel Silicon Zinc 13 26 29 82 30 27 25 24 42 Wind Al Fe Cu Pb Zn Co Mn Cr Mo Aluminum Iron Copper Lead Zinc Cobalt Manganese Chromium Molybdenum 22 Electric 13 26 29 82 28 14 27 25 Li 3
Slide 50: Mission Solutions
Fluor Strategy Day 2021 Mission Solutions Tom D’Agostino Fluor Strategy Day 2021 © 2021 Fluor Corporation. 50
Slide 51: Mission Solutions Strategic Focus Areas
Mission Solutions Strategic Focus Areas TRENDS Expand core; grow in complementary Beyond Globalization markets Advanced solutions Trusted partner Build digitally- Talent/clearances enabled mission Industry 4.0 solutions Rapid response portfolio Community involvement Stakeholder Transform E
Slide 52: Strategic direction
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. 52
Slide 53: Energy Solutions
Fluor Strategy Day 2021 Energy Solutions Jim Breuer Fluor Strategy Day 2021 © 2021 Fluor Corporation. 53
Slide 54: Energy Solutions Strategic Focus Areas
Energy Solutions Strategic Focus Areas TREND Decarbonize existing assets Address dual challenge Low carbon Decarbonize energy supply energy sources Energy Transition & Meet new regulatory policies Urbanization Right technology solutions Traditional Sustainable operations oil & gas NuScale
Slide 55: NuScale recent milestones
NuScale recent milestones Received design certification approval U.S. Department of Energy approved a multi-year cost-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 wit
Slide 56: Fluor Strengths
Fluor Strengths Broad industry experience Technical expertise Full project life-cycle delivery Technology evaluation and selection Strong relationships with partners Fluor Strategy Day 2021 © 2021 Fluor Corporation. 56
Slide 57: Energy Transition: Ongoing Fluor Work in Decarbonization
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. 57
Slide 58: Summary: Foster a high performance culture
Summary Improve employee engagement annually Increase women & diversity in leadership positions Foster a high Net Zero in 2023 performance ACTIONS: culture with Advance DE&I purpose Promote social progress Lead in sustainability Fluor Strategy Day 2021 © 2021 Fluor Corporation. 58
Slide 59: Summary: Drive growth across the portfolio
Summary 70% of revenue from non-traditional oil & gas segments ACTIONS: Drive growth Organic growth in energy transition, chemicals, mining, life sciences and across the infrastructure portfolio Invest in advanced technologies and government Strategic knowledge hires Fluor Strategy Day 2021 ©
Slide 60: Summary: Pursue contracts with fair and balanced terms
Summary Backlog mix will be more than 75% reimbursable by 2024 Pursue contracts with ACTION: fair and Focus on reimbursable work balanced terms Fluor Strategy Day 2021 © 2021 Fluor Corporation. 60
Slide 61: Summary: Reinforce financial discipline
Summary By 2024 Debt to capitalization ratio of 20 – 40% Return on invested capital of 20% Overhead reduction of $100 million Reinforce EPS range of $3.00 – $3.50 financial ACTION: discipline Rebuild balance sheet Predictable cash flow Reduce overhead Lower debt Fluor Strategy Day 2021 ©
Slide 62: Summary
Summary STRATEGIC PRIORITIES ACTIONS GOALS Foster a high Advance DE&I Improve employee engagement annually Promote social progress Increase women and diversity in performance culture Lead in sustainability leadership with purpose Net Zero in 2023 Organic growth in energy transition, ch