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Fluor (FLR) Wins Contracts to Support Dow's Net Zero Drive
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Encashing Dow's push for lower greenhouse gas emissions, Fluor Corporation (FLR - Free Report) won two contracts to construct the world's first net-zero scope 1 and 2 emissions ethylene complex in Fort Saskatchewan, Alberta, Canada.
These reimbursable services contracts, recognized in the third quarter on a confidential basis, are valued at more than $3 billion. Per the contract, FLR will undertake engineering, procurement, and construction management for a new ethylene cracker unit, along with associated utilities, power, and infrastructure facilities. The comprehensive program also includes expanding and retrofitting Dow’s existing manufacturing facilities.
The project is expected to reduce approximately 20% of Dow's global ethylene capacity emissions while increasing polyethylene capacity by around two million metric tonnes annually.
FLR secured the front-end engineering and design contract for the project in February. Commencing construction on early works in July, the program is scheduled to launch in phases, with the first phase operational in 2027 and the subsequent phase in 2029.
Image Source: Zacks Investment Research
Shares of this Zacks Rank #3 (Hold) company inched up 0.9% in the after-hours trading session on Dec 4 and 29.2% in the past six months compared with the Zacks Engineering - R and D Services industry’s rise of 7.1%.
Strategic Initiatives to Boost Backlog
The company has been focusing on a new strategy, "Building a Better Future," with four key priorities. It aims to drive portfolio growth by expanding into non-traditional sectors like energy transition, technology, life sciences, metals, infrastructure, and mission solutions. Fluor plans to pursue contracts with fair terms, avoiding competitive fixed-priced EPC in Energy & Chemicals and being more selective in Infrastructure. This marks a shift from the prior high-risk, high-margin strategy.
The company emphasizes reinforcing financial discipline and maintaining a solid balance sheet through predictable cash flow and earnings. Lastly, Fluor is dedicated to fostering a high-performance culture by advancing diversity, equity and inclusion efforts and promoting social progress and sustainability.
The demand for Fluor's services is clearly demonstrated by its robust prospect pipeline. In the third quarter of 2023, Fluor successfully secured consolidated new awards amounting to $5 billion, aligning with its full-year plan to achieve a book-to-burn ratio exceeding 1. Notably, 94% of these new awards are reimbursable. The total backlog for Fluor stands at $26 billion, with 70% of it being reimbursable. This substantial backlog underscores the continued strong demand for Fluor's services and the recognized value it brings to its clients.
Key Picks
Some better-ranked stocks from the Zacks Construction sector are:
The Zacks Consensus Estimate for EME’s 2023 sales and earnings per share (EPS) suggests growth of 12% and 52.8%, respectively, from the year-ago period’s levels.
M-tron Industries, Inc. (MPTI - Free Report) currently sports a Zacks Rank of 1. MPTI delivered a trailing four-quarter earnings surprise of 35.6%, on average. It has surged 297.6% in the past year.
The Zacks Consensus Estimate for MPTI’s 2023 sales and EPS indicates growth of 30.6% and 156.7%, respectively, from the previous year.
TopBuild Corp. (BLD - Free Report) carries a Zacks Rank of #2 (Buy). It has a trailing four-quarter earnings surprise of 14.3%, on average. Shares of BLD have surged 105.1% in the past year.
The Zacks Consensus Estimate for BLD’s 2023 sales and EPS indicates gains of 3.7% and 14%, respectively, from the year-ago period’s levels.
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Fluor (FLR) Wins Contracts to Support Dow's Net Zero Drive
Encashing Dow's push for lower greenhouse gas emissions, Fluor Corporation (FLR - Free Report) won two contracts to construct the world's first net-zero scope 1 and 2 emissions ethylene complex in Fort Saskatchewan, Alberta, Canada.
These reimbursable services contracts, recognized in the third quarter on a confidential basis, are valued at more than $3 billion. Per the contract, FLR will undertake engineering, procurement, and construction management for a new ethylene cracker unit, along with associated utilities, power, and infrastructure facilities. The comprehensive program also includes expanding and retrofitting Dow’s existing manufacturing facilities.
The project is expected to reduce approximately 20% of Dow's global ethylene capacity emissions while increasing polyethylene capacity by around two million metric tonnes annually.
FLR secured the front-end engineering and design contract for the project in February. Commencing construction on early works in July, the program is scheduled to launch in phases, with the first phase operational in 2027 and the subsequent phase in 2029.
Image Source: Zacks Investment Research
Shares of this Zacks Rank #3 (Hold) company inched up 0.9% in the after-hours trading session on Dec 4 and 29.2% in the past six months compared with the Zacks Engineering - R and D Services industry’s rise of 7.1%.
Strategic Initiatives to Boost Backlog
The company has been focusing on a new strategy, "Building a Better Future," with four key priorities. It aims to drive portfolio growth by expanding into non-traditional sectors like energy transition, technology, life sciences, metals, infrastructure, and mission solutions. Fluor plans to pursue contracts with fair terms, avoiding competitive fixed-priced EPC in Energy & Chemicals and being more selective in Infrastructure. This marks a shift from the prior high-risk, high-margin strategy.
The company emphasizes reinforcing financial discipline and maintaining a solid balance sheet through predictable cash flow and earnings. Lastly, Fluor is dedicated to fostering a high-performance culture by advancing diversity, equity and inclusion efforts and promoting social progress and sustainability.
The demand for Fluor's services is clearly demonstrated by its robust prospect pipeline. In the third quarter of 2023, Fluor successfully secured consolidated new awards amounting to $5 billion, aligning with its full-year plan to achieve a book-to-burn ratio exceeding 1. Notably, 94% of these new awards are reimbursable. The total backlog for Fluor stands at $26 billion, with 70% of it being reimbursable. This substantial backlog underscores the continued strong demand for Fluor's services and the recognized value it brings to its clients.
Key Picks
Some better-ranked stocks from the Zacks Construction sector are:
EMCOR Group, Inc. (EME - Free Report) carries a Zacks Rank #1 (Strong Buy). It has a trailing four-quarter earnings surprise of 25%, on average. Shares of EME have risen 45.5% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for EME’s 2023 sales and earnings per share (EPS) suggests growth of 12% and 52.8%, respectively, from the year-ago period’s levels.
M-tron Industries, Inc. (MPTI - Free Report) currently sports a Zacks Rank of 1. MPTI delivered a trailing four-quarter earnings surprise of 35.6%, on average. It has surged 297.6% in the past year.
The Zacks Consensus Estimate for MPTI’s 2023 sales and EPS indicates growth of 30.6% and 156.7%, respectively, from the previous year.
TopBuild Corp. (BLD - Free Report) carries a Zacks Rank of #2 (Buy). It has a trailing four-quarter earnings surprise of 14.3%, on average. Shares of BLD have surged 105.1% in the past year.
The Zacks Consensus Estimate for BLD’s 2023 sales and EPS indicates gains of 3.7% and 14%, respectively, from the year-ago period’s levels.