Dive Brief:

• Multinational general contractor and engineering firm Fluor held its 2021 strategy day last week, outlining during a webcast four areas the public company thinks will create more shareholder value and sustainable results in the next few years.
• Fluor expects to make nontraditional oil and gas projects 70% of its revenue by 2023. The nontraditional oil and gas sector includes chemicals, mining and life sciences as well as energy transition projects that focus on a shift from fossil-based production and consumption. This strategy also includes investment in advanced technologies and new hires with the requisite knowledge. Fluor also said it is committed to pursuing work that has more "fair and balanced terms" and expects its project backlog mix to be 75% reimbursable by 2024. 
• Fluor stated other goals as: a debt-to-capitalization ratio range between 20% to 40%; return on invested capital of more than 20%; achievement of investment-grade credit ratings; delivery of top-performing shareholder returns; and earnings per share of $3 to $3.50 by 2024.

Dive Insight:

Fluor said during the Jan. 28 event it is bullish on infrastructure because of President Joe Biden's stated commitment to a potential $2 trillion investment in infrastructure and energy. The infrastructure portion would create millions of union jobs, Biden said, through a plan to rebuild the nation's surface transportation system as well as provide new green spaces, water systems, electricity grids and universal broadband.

During the Fluor strategy day presentation, Terry Towle, group president for Urban Solutions, said some of the factors driving infrastructure initiatives in the U.S. are its aging assets, continued urbanization and "client appetite for risk."

There has been a reluctance on the part of the construction industry to acknowledge the risk inherent in large infrastructure projects, he said, but that is changing, albeit slower than Fluor would like to see.

Citing its exit from the Purple Line light-rail project in Maryland as an example, Towle said Fluor would avoid those projects where owners refuse to include reasonable contract terms and allow for "higher margins and contingencies."

Last month, Fluor announced the company had reorganized its operations and reporting structure into three business units: Urban Solutions, Mission Solutions and Energy Solutions. 

In a report after last week's event, Baird Equity Research senior research analyst Andrew Wittmann said Fluor's new strategies remind him of an older rendition of Jacobs Engineering, but said they are realistic about the strategies, except for the 2024 earnings per share target, which Wittmann said will be closer to $2 to $2.50.

"Execution matters more [than strategy] in [energy and construction], and only time will tell," he said.

During the event, the contractor also said it will increase women and diversity in leadership roles and achieve net zero for certain CO2 emissions by the end of 2023.