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Fluor (FLR) Up 12.2% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Fluor (FLR - Free Report) . Shares have added about 12.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Fluor due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Fluor Corporation reported fourth-quarter results with earnings and revenues missing the Zacks Consensus Estimate. The top line missed the Zacks Consensus Estimate for the second straight quarter, while the bottom line missed the same for the third consecutive quarter. The company also provided lower-than-expected 2021 earnings guidance.
Inside the Headlines
During the fourth-quarter 2020, the company reported loss of 82 cents per share against the Zacks Consensus Estimate of earnings of 11 cents. In the prior-year quarter, the company had reported a loss (from continuing operations) of $2.10 per share. Quarterly Revenues of $3,655.7 million missed the consensus mark of $3,681 million and decreased 17.1% from the year-ago level of $4,408.7 million. The downside was primarily caused by lower volumes in Energy & Chemicals and Mining & Industrial projects due to the pandemic. Total Revenues in 2020 came in at $15,668.5 million compared with $17,317.3 million in 2019. Fluor's total new awards in 2020 came in at $9 billion compared with $12.6 billion in 2019. Consolidated backlog for the year came in at $25.6 billion, down from $31.9 billion in 2019.
2020 Segmental Discussions
Energy & Chemicals segment’s revenues fell 9.7% year over year to $5,260.4 million in 2020. For the year, the segment reported profit of $164 million against loss of $95 million in 2019. Notably, the profits were primarily driven by charges taken in 2019, partially offset by reduced execution activity and margin diminution owing to the pandemic. New awards came in at $2 billion, down from $3.7 billion in 2019. Backlog at the end of 2020 was $11 billion compared with $14.1 billion in 2019.
Revenues in the Mining & Industrial segment totaled $4,149.1 million, down 18% on a year-over-year basis. The downside was primarily driven by a six-month suspension of a large mining project in South America along with deferred execution activities of a large life sciences project and two mining projects owing to the COVID-19 pandemic. Segment profit came in at $122 million for 2020, down from $159 million in 2019. New awards came in at $2.8 billion, up from $1.9 billion in 2019. Backlog at the end of 2020 was $4 billion compared with $5.4 billion in 2019.
Revenues in the Infrastructure & Power segment totaled $1,595.5 million, up 16.4% on a year-over-year basis. The segment reported profit of $13.7 million, against a loss of $244 million in 2019. Notably, the company benefitted from a positive settlement of a cancelled rail project (in 2019), partially offset by charges for cost growth in the infrastructure legacy portfolio. The segment booked new awards worth $764 million, down from $2.6 billion in 2019. Backlog at the end of 2020 was $5.2 billion compared with $6.1 billion in 2019.
Revenues in the Government segment in 2020, totaled $2,922.8 million, down 1.6% on a year-over-year basis. The segment generated profit of $88 million, down from $200 million in 2019. The decline was substantially driven by the favorable settlement of two nuclear power plant projects (in 2019) coupled with pandemic-related woes. The segment booked new awards worth $1.9 million, down from $2 billion in 2019. Backlog at the end of 2020 was $2.8 billion compared with $3.6 billion in 2019.
Diversified Services (including certain retained AMECO operations) revenues dipped 20.1% on a year-over-year basis to $1,630.9 million. The decline was primarily attributed to reduced volumes of higher-margin operations and maintenance activities owing to the pandemic. However, this was partially offset by a decline in overhead costs. The segment generated profit of $14 million, down from $15 million in 2019. New awards in 2020 totaled $1.5 billion, down from $2.2 million in 2019. Backlog decreased to $2.4 billion from $2.5 billion in 2019.
The Other segment — which now includes NuScale and the Radford and Warren government projects — reported revenues of $109.8 million, up from $56.6 million in 2019. Backlog in 2020 amounted to $119.2 million, down from $244 million in 2019. It reported loss of $85 million compared with a loss of $220 million in 2019.
Other Updates
Fluor is focusing on debt retirement to improve its liquidity position. During the fourth-quarter 2020, the company entered into an amended and restated credit facility of $1.65 billion, replacing its previous letter of credit facilities. Extended through February 2023, the management believes that the facility will offer flexibility to support its business and reduce its risk profile. At the end of December 2020, Fluor’s cash balance (including Marketable securities) was $2.2 billion, up from $2.1 billion at September-end.
Other 2020 Highlights
Operating cash flow in 2020 came in at $186 million compared with $219 million in 2019. Corporate general and administrative expenses in 2020 came in at $240.7 million compared with $165.9 million in 2019. In 2020, net loss from continuing operations came in at $2.09 per share compared with a loss of $10.89 per share in the previous year.
2021 Guidance
For 2021, Fluor expects adjusted earnings per share in the range of 50-80 cents. Analysts expected earnings of 97 cents per share. However, the guidance excludes impacts related to NuScale expenses, foreign currency exchange as well as restructuring or impairments. Meanwhile, the company remains optimistic for new awards in second half of 2021, subject to improvement in post-pandemic capital spending. Capital expenditures in 2021 are anticipated to be below $100 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -89.47% due to these changes.
VGM Scores
At this time, Fluor has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. It's no surprise Fluor has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
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Fluor (FLR) Up 12.2% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Fluor (FLR - Free Report) . Shares have added about 12.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Fluor due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Fluor (FLR - Free Report) Q4 Earnings & Revenues Lag Estimates
Fluor Corporation reported fourth-quarter results with earnings and revenues missing the Zacks Consensus Estimate. The top line missed the Zacks Consensus Estimate for the second straight quarter, while the bottom line missed the same for the third consecutive quarter. The company also provided lower-than-expected 2021 earnings guidance.
Inside the Headlines
During the fourth-quarter 2020, the company reported loss of 82 cents per share against the Zacks Consensus Estimate of earnings of 11 cents. In the prior-year quarter, the company had reported a loss (from continuing operations) of $2.10 per share. Quarterly Revenues of $3,655.7 million missed the consensus mark of $3,681 million and decreased 17.1% from the year-ago level of $4,408.7 million. The downside was primarily caused by lower volumes in Energy & Chemicals and Mining & Industrial projects due to the pandemic. Total Revenues in 2020 came in at $15,668.5 million compared with $17,317.3 million in 2019. Fluor's total new awards in 2020 came in at $9 billion compared with $12.6 billion in 2019. Consolidated backlog for the year came in at $25.6 billion, down from $31.9 billion in 2019.
2020 Segmental Discussions
Energy & Chemicals segment’s revenues fell 9.7% year over year to $5,260.4 million in 2020. For the year, the segment reported profit of $164 million against loss of $95 million in 2019. Notably, the profits were primarily driven by charges taken in 2019, partially offset by reduced execution activity and margin diminution owing to the pandemic. New awards came in at $2 billion, down from $3.7 billion in 2019. Backlog at the end of 2020 was $11 billion compared with $14.1 billion in 2019.
Revenues in the Mining & Industrial segment totaled $4,149.1 million, down 18% on a year-over-year basis. The downside was primarily driven by a six-month suspension of a large mining project in South America along with deferred execution activities of a large life sciences project and two mining projects owing to the COVID-19 pandemic. Segment profit came in at $122 million for 2020, down from $159 million in 2019. New awards came in at $2.8 billion, up from $1.9 billion in 2019. Backlog at the end of 2020 was $4 billion compared with $5.4 billion in 2019.
Revenues in the Infrastructure & Power segment totaled $1,595.5 million, up 16.4% on a year-over-year basis. The segment reported profit of $13.7 million, against a loss of $244 million in 2019. Notably, the company benefitted from a positive settlement of a cancelled rail project (in 2019), partially offset by charges for cost growth in the infrastructure legacy portfolio. The segment booked new awards worth $764 million, down from $2.6 billion in 2019. Backlog at the end of 2020 was $5.2 billion compared with $6.1 billion in 2019.
Revenues in the Government segment in 2020, totaled $2,922.8 million, down 1.6% on a year-over-year basis. The segment generated profit of $88 million, down from $200 million in 2019. The decline was substantially driven by the favorable settlement of two nuclear power plant projects (in 2019) coupled with pandemic-related woes. The segment booked new awards worth $1.9 million, down from $2 billion in 2019. Backlog at the end of 2020 was $2.8 billion compared with $3.6 billion in 2019.
Diversified Services (including certain retained AMECO operations) revenues dipped 20.1% on a year-over-year basis to $1,630.9 million. The decline was primarily attributed to reduced volumes of higher-margin operations and maintenance activities owing to the pandemic. However, this was partially offset by a decline in overhead costs. The segment generated profit of $14 million, down from $15 million in 2019. New awards in 2020 totaled $1.5 billion, down from $2.2 million in 2019. Backlog decreased to $2.4 billion from $2.5 billion in 2019.
The Other segment — which now includes NuScale and the Radford and Warren government projects — reported revenues of $109.8 million, up from $56.6 million in 2019. Backlog in 2020 amounted to $119.2 million, down from $244 million in 2019. It reported loss of $85 million compared with a loss of $220 million in 2019.
Other Updates
Fluor is focusing on debt retirement to improve its liquidity position. During the fourth-quarter 2020, the company entered into an amended and restated credit facility of $1.65 billion, replacing its previous letter of credit facilities. Extended through February 2023, the management believes that the facility will offer flexibility to support its business and reduce its risk profile. At the end of December 2020, Fluor’s cash balance (including Marketable securities) was $2.2 billion, up from $2.1 billion at September-end.
Other 2020 Highlights
Operating cash flow in 2020 came in at $186 million compared with $219 million in 2019. Corporate general and administrative expenses in 2020 came in at $240.7 million compared with $165.9 million in 2019. In 2020, net loss from continuing operations came in at $2.09 per share compared with a loss of $10.89 per share in the previous year.
2021 Guidance
For 2021, Fluor expects adjusted earnings per share in the range of 50-80 cents. Analysts expected earnings of 97 cents per share. However, the guidance excludes impacts related to NuScale expenses, foreign currency exchange as well as restructuring or impairments. Meanwhile, the company remains optimistic for new awards in second half of 2021, subject to improvement in post-pandemic capital spending. Capital expenditures in 2021 are anticipated to be below $100 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -89.47% due to these changes.
VGM Scores
At this time, Fluor has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. It's no surprise Fluor has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.