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Fluor (FLR) Q2 Earnings & Revenues Top Estimates, Backlog Up

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Fluor Corporation (FLR - Free Report) reported earnings of 81 cents per share in second-quarter 2018, beating the Zacks Consensus Estimate of 69 cents by 17.4%. The reported earnings also improved from 72 cents per share recorded in the year-ago period.

Second-quarter revenues came in at $4,883.8 million, surpassing the Zacks Consensus Estimate of $4,510 million and were also up 3.6% year over year. The upsurge in revenues from Mining, Industrial, Infrastructure & Power, as well as Government and Diversified Services more than offset the revenue decline at Energy & Chemicals segments.

Segment Discussion

Revenues from the Energy & Chemicals segment were down 6.3% year over year to $2,014.5 million. In the reported quarter, the segment booked new awards of $493 million. Backlog at the end of quarter amounted to 12.4 billion compared with $18 billion a year ago.

Mining, Industrial, Infrastructure & Power segment's revenues recorded growth of 13.5% year over year to $1,339.5 million. New awards came in at $3.6 billion, including the South Flank iron ore replacement mine for BHP in Australia and Los Angeles International Airport Automated People Mover project. Backlog for the segment at the end of the quarter was $12.4 billion compared with $12.6 billion a year ago.

Revenues at the Government segment soared 16% year over year to $863.4 million. The business received new awards of $742 million in the quarter, including task orders for LOGCAP IV in Afghanistan. Quarter-end backlog was $2.3 billion compared with $4.1 billion a year ago.

Diversified Services revenues increased 3.9% to $666.4 million on a year-over-year basis. The segment’s new awards came in at $513 million. Quarter-end backlog was $2.2 billion compared with $2.9 billion a year ago.

Fluor Corporation Price, Consensus and EPS Surprise

 

Fluor Corporation Price, Consensus and EPS Surprise | Fluor Corporation Quote

New Awards & Backlog

In the reported quarter, Fluor's total new awards recorded an increase of 68.5% to $5.4 billion on a year-over-year basis.

At the end of the reported quarter, consolidated backlog was $29.3 billion, down from $37.6 billion in the year-ago quarter. That said, the reported backlog was up from $29.1 billion in the preceding quarter. Notably, the company registered an increase in backlog in the second quarter for the first time since 2016. The company expects the improved momentum to continue through the remaining of 2018.

Liquidity & Share Repurchases

As of Jun 30, 2018, Fluor had cash and marketable securities (including non-current) of $1,783.1 million, down from $2,078.8 million on Dec 31, 2017. Long-term debt at the end of second-quarter 2018 decreased to $1,575.4 million from $1,591.6 million as of Dec 31, 2017.

2018 Guidance Reaffirmed

For 2018, it currently expects earnings per share in the range of $2.10-$2.50.

Our Take

Fluor’s leading position in nuclear remediation at the government facilities bodes well for future growth. The company anticipates an increase in front-end engineering awards moving ahead, which is also expected to boost growth. Moreover, its investment projects, particularly the LNG projects in North America, including the LNG Canada project for Shell, chemical facilities as well as pipeline projects in the United States, are encouraging.

The company enjoys a solid track record of receiving awards and management remains optimistic about continuation of this trend in the future as well, which is expected to drive growth.

Currently, Fluor carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Peer Releases

Quanta Services Inc. (PWR - Free Report) reported second-quarter 2018 adjusted earnings of 59 cents per share, missing the Zacks Consensus Estimate of 61 cents by 3.3%.

KBR, Inc. (KBR - Free Report) reported adjusted earnings of 34 cents per share in second-quarter 2018, beating the Zacks Consensus Estimate of 33 cents by 3%.

Upcoming Peer Release

Jacobs Engineering Group Inc. (JEC - Free Report) is scheduled to report third-quarter fiscal 2018 (ended Jun 30, 2018) results on Aug 6, before the opening bell.

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