We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Fluor's (FLR) Shares Drop More Than 14% on Q2 Earnings Miss
Read MoreHide Full Article
Fluor Corporation’s (FLR - Free Report) shares fell more than 14% in the pre-market trading session, as the company reported lower-than-expected results in second-quarter 2019. Notably, it withdrew all its previously issued guidance for 2019 due to the ongoing strategic review of business and operations.
Fluor reported adjusted earnings of 33 cents per share, missing the Zacks Consensus Estimate of 50 cents by 36.5%. The reported figure also deteriorated significantly from the year-ago earnings of 81 cents per share by 59.3%.
Revenues during the quarter totaled $4.09 billion, lagging the consensus mark of $4.56 billion by 10.2% and declining 16.2% year over year. The downside was mainly caused by lower contribution from Energy & Chemicals, Government, and Diversified Services segments.
Fluor Corporation Price, Consensus and EPS Surprise
In the reported quarter, Fluor's total new awards of $2.4 billion dropped more than 56% on a year-over-year basis. At the end of the second quarter, consolidated backlog came in at $35.5 billion, up from $29.3 billion recorded in the year-ago period.
Segment Discussion
Energy & Chemicals segment’s revenues decreased 30.6% year over year to $1,397.1 million. During the quarter, the segment’s loss came in at $229.1 million against a profit of $97.2 million a year ago. Loss margin was 16.4% versus profit margin of 4.8% registered in the prior year.
The tepid performance was due to pre-tax charges related to late design changes, schedule-driven cost increase, client and subcontractor negotiations on two fixed-price downstream projects and scope reductions on a large upstream project. Results in the quarter were also impacted by pre-contract costs related to its continued evaluation of the probability of receiving an award and the removal of embedded foreign currency derivatives.
New awards came in at $732 million, up from $493 million in the comparable period of 2018. The segment’s backlog at the end of the quarter was $15.5 billion compared with $12.4 billion a year ago.
Revenues from the Mining, Industrial, Infrastructure & Power segment totaled $1,507.6 million, up 12.9% on a year-over-year basis. The segment’s loss margin was 8.1% during the quarter against a profit margin of 3.1% a year ago, owing to agreements in principle associated with client disputes on three gas-fired power projects and forecast revisions on several fixed-price infrastructure projects.
The segment booked new awards worth $510 million, significantly lower than $3,629 million a year ago. Backlog at the end of the quarter amounted to $13.5 billion compared with $12.4 billion a year ago.
Government segment reported revenues of $612 million, which declined 29.5% year over year. Loss margin from the segment came in at 36.9%, significantly up from the year-ago profit margin of 3.1%, primarily due to cost revisions for late engineering changes, rising costs and ongoing assessments of unapproved change orders on a fixed-price project for the Department of Defense, wherein Fluor is a subcontractor.
The said business received new awards of $543 million in the quarter, lower than the year-ago level of $747 million. Quarter-end backlog was $3.9 billion compared with $2.3 billion a year ago.
Diversified Services revenues registered a fall of 13.3% on a year-over-year basis to $577.7 million. Segment margin contracted 350 basis points to 0.8% in the quarter. This reflect softness in the power services business and the completion of certain large projects in the equipment business.
The segment’s new awards came in at $574 million, up from $513 million in the year-earlier period. Quarter-end backlog was $2.7 billion compared with $2.2 billion a year ago.
Liquidity & Share Repurchases
As of Jun 30, 2019, Fluor had cash and marketable securities of $1,930.4 million, down from $1,979.6 million at the end of 2018. Long-term debt at the end of the second quarter decreased slightly to $1,657.2 million from $1,661.6 million on Dec 31, 2018. Cash provided by operating activities was $91.4 million during the first six months of 2019 versus cash used in operations of $132.6 million a year ago.
Guidance
Due to ongoing strategic review of business and operations, the company withdrew all its previously announced earnings per share guidance for 2019.
In the Energy & Chemicals segment, it expects revenues to decrease 15-20% in the second half of 2019, while operating margins are likely to improve modestly from the prior-year period.
In the Mining, Industrial, Infrastructure & Power segment, revenues are projected to grow 30-40% in the said period, backed by increased mining activities. Operating margins are expected in the 2-3% range.
The Government segment’s second-half revenues are anticipated to decline approximately 5% from the second half of 2018 and operating margins will be nearly 3%, excluding NuScale.
Diversified Services’ revenue growth for the said period is expected within 8-10%, whereas margins will remain nearly flat year over year.
KBR, Inc. (KBR - Free Report) reported strong second-quarter 2019 results, buoyed by continued solid organic growth in Government Services and Technology businesses. It reported adjusted earnings of 41 cents per share, beating the Zacks Consensus Estimate of 40 cents by 2.5%. The reported figure also increased 17.1% year over year from 35 cents per share registered a year ago. Total revenues of $1.42 billion surpassed the consensus mark by 3.3% and increased 12.2% year over year.
Quanta Services Inc. (PWR - Free Report) reported lower-than-expected results in second-quarter 2019. The company reported adjusted earnings of 31 cents per share, missing the Zacks Consensus Estimate of 84 cents by 63.1%. Also, the reported figure decreased 47.5% from 59 cents per share recorded in the year-ago period. Total revenues of $2.84 billion lagged the consensus mark of $2.89 billion by 1.8%. However, the said metric increased 6.8% year over year.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +98%, +119% and +164% in as little as 1 month. The stocks in this report could perform even better.
Image: Bigstock
Fluor's (FLR) Shares Drop More Than 14% on Q2 Earnings Miss
Fluor Corporation’s (FLR - Free Report) shares fell more than 14% in the pre-market trading session, as the company reported lower-than-expected results in second-quarter 2019. Notably, it withdrew all its previously issued guidance for 2019 due to the ongoing strategic review of business and operations.
Fluor reported adjusted earnings of 33 cents per share, missing the Zacks Consensus Estimate of 50 cents by 36.5%. The reported figure also deteriorated significantly from the year-ago earnings of 81 cents per share by 59.3%.
Revenues during the quarter totaled $4.09 billion, lagging the consensus mark of $4.56 billion by 10.2% and declining 16.2% year over year. The downside was mainly caused by lower contribution from Energy & Chemicals, Government, and Diversified Services segments.
Fluor Corporation Price, Consensus and EPS Surprise
Fluor Corporation price-consensus-eps-surprise-chart | Fluor Corporation Quote
New Awards & Backlog
In the reported quarter, Fluor's total new awards of $2.4 billion dropped more than 56% on a year-over-year basis. At the end of the second quarter, consolidated backlog came in at $35.5 billion, up from $29.3 billion recorded in the year-ago period.
Segment Discussion
Energy & Chemicals segment’s revenues decreased 30.6% year over year to $1,397.1 million. During the quarter, the segment’s loss came in at $229.1 million against a profit of $97.2 million a year ago. Loss margin was 16.4% versus profit margin of 4.8% registered in the prior year.
The tepid performance was due to pre-tax charges related to late design changes, schedule-driven cost increase, client and subcontractor negotiations on two fixed-price downstream projects and scope reductions on a large upstream project. Results in the quarter were also impacted by pre-contract costs related to its continued evaluation of the probability of receiving an award and the removal of embedded foreign currency derivatives.
New awards came in at $732 million, up from $493 million in the comparable period of 2018. The segment’s backlog at the end of the quarter was $15.5 billion compared with $12.4 billion a year ago.
Revenues from the Mining, Industrial, Infrastructure & Power segment totaled $1,507.6 million, up 12.9% on a year-over-year basis. The segment’s loss margin was 8.1% during the quarter against a profit margin of 3.1% a year ago, owing to agreements in principle associated with client disputes on three gas-fired power projects and forecast revisions on several fixed-price infrastructure projects.
The segment booked new awards worth $510 million, significantly lower than $3,629 million a year ago. Backlog at the end of the quarter amounted to $13.5 billion compared with $12.4 billion a year ago.
Government segment reported revenues of $612 million, which declined 29.5% year over year. Loss margin from the segment came in at 36.9%, significantly up from the year-ago profit margin of 3.1%, primarily due to cost revisions for late engineering changes, rising costs and ongoing assessments of unapproved change orders on a fixed-price project for the Department of Defense, wherein Fluor is a subcontractor.
The said business received new awards of $543 million in the quarter, lower than the year-ago level of $747 million. Quarter-end backlog was $3.9 billion compared with $2.3 billion a year ago.
Diversified Services revenues registered a fall of 13.3% on a year-over-year basis to $577.7 million. Segment margin contracted 350 basis points to 0.8% in the quarter. This reflect softness in the power services business and the completion of certain large projects in the equipment business.
The segment’s new awards came in at $574 million, up from $513 million in the year-earlier period. Quarter-end backlog was $2.7 billion compared with $2.2 billion a year ago.
Liquidity & Share Repurchases
As of Jun 30, 2019, Fluor had cash and marketable securities of $1,930.4 million, down from $1,979.6 million at the end of 2018. Long-term debt at the end of the second quarter decreased slightly to $1,657.2 million from $1,661.6 million on Dec 31, 2018. Cash provided by operating activities was $91.4 million during the first six months of 2019 versus cash used in operations of $132.6 million a year ago.
Guidance
Due to ongoing strategic review of business and operations, the company withdrew all its previously announced earnings per share guidance for 2019.
In the Energy & Chemicals segment, it expects revenues to decrease 15-20% in the second half of 2019, while operating margins are likely to improve modestly from the prior-year period.
In the Mining, Industrial, Infrastructure & Power segment, revenues are projected to grow 30-40% in the said period, backed by increased mining activities. Operating margins are expected in the 2-3% range.
The Government segment’s second-half revenues are anticipated to decline approximately 5% from the second half of 2018 and operating margins will be nearly 3%, excluding NuScale.
Diversified Services’ revenue growth for the said period is expected within 8-10%, whereas margins will remain nearly flat year over year.
Zacks Rank & Key Picks
Fluor, which shares space with Jacobs Engineering Group Inc. in the Zacks Engineering - R and D Services industry, currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
KBR, Inc. (KBR - Free Report) reported strong second-quarter 2019 results, buoyed by continued solid organic growth in Government Services and Technology businesses. It reported adjusted earnings of 41 cents per share, beating the Zacks Consensus Estimate of 40 cents by 2.5%. The reported figure also increased 17.1% year over year from 35 cents per share registered a year ago. Total revenues of $1.42 billion surpassed the consensus mark by 3.3% and increased 12.2% year over year.
Quanta Services Inc. (PWR - Free Report) reported lower-than-expected results in second-quarter 2019. The company reported adjusted earnings of 31 cents per share, missing the Zacks Consensus Estimate of 84 cents by 63.1%. Also, the reported figure decreased 47.5% from 59 cents per share recorded in the year-ago period. Total revenues of $2.84 billion lagged the consensus mark of $2.89 billion by 1.8%. However, the said metric increased 6.8% year over year.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +98%, +119% and +164% in as little as 1 month. The stocks in this report could perform even better.
See these 7 breakthrough stocks now>>