BRIDGING A N N U A L T HE G A P R E P O R T 2 0 1 7 between short-term adversity and long- term discipline 10 page GOV. MARIO M. CUOMO BRIDGE 2 0 1 7 A N N U A L R E P O R T 819586.indd 1 3/1/18 8:56 AM 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.” 819586.indd 2 2/28/18 1:57 PM 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 819586.indd 3 2/28/18 1:57 PM 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. 819586.indd 4 2/28/18 1:57 PM 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 819586.indd 5 2/28/18 1:57 PM 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. 4 819586.indd 6 2/28/18 1:57 PM 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. 5 819586.indd 7 2/28/18 1:57 PM 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. 6 819586.indd 8 2/28/18 1:58 PM 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, 7 819586.indd 9 2/28/18 1:58 PM 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 819586.indd 10 2/28/18 1:58 PM