Stork — a unit of Fluor Corporation’s (FLR - Free Report) Diversified Services business — has received a maintenance contract from Delamine B.V in the Netherlands. This five-year maintenance contract will commence from Jul 1, 2020 and Fluor will book the undisclosed contract value in second-quarter 2020.
Since 2006, Stork has been supporting Delamine’s production facilities. Per the latest contract renewal, Stork will provide maintenance and capital expenditure services. This also includes multidisciplinary piping and mechanical, electrical and instrumentation, along with other specialty services.
According to Carla Rodenburg, Stork’s vice president, Europe, "This contract demonstrates the excellent work performed and importance of strong relationships with clients in the Eemsmond region of the Netherlands,". "It strengthens our continuity and offers a foundation to pursue many inspiring new energy and other innovative industrial initiatives in the northern region of the Netherlands.”
New Awards to Revive Fluor’s Diversified Services
Fluor’s Diversified Services segment, which accounts for more than 13% of total revenues, is set to benefit from contract wins. In January, Stork received a four-year framework contract from Neptune Energy for the latter’s brownfield and decommissioning project. Notably, Fluor booked its portion of the undisclosed contract value in first-quarter 2020.
Again, on Dec 11, 2019, Stork received a contract from HES Hartel Tank Terminal — a project of HES International — to support the new tank terminal’s construction. Notably, Fluor’s fourth-quarter 2019 backlog will reflect the contract value.
The company has been posting dismal results over the last few quarters due to unimpressive segmental performance. Nonetheless, it believes that the diversified service business will improve in the upcoming quarters as clients have already started increasing maintenance spending. The company initiated certain restructuring activities to optimize costs and improve operational efficiency in the Stork business during the first quarter.
Shares of Fluor have gained 114.2% in the past three months, outperforming the industry's 30.7% growth. We believe new contract wins and the above-mentioned initiatives will help revive the company’s performance. Over the last few quarters, major contract wins have allowed Fluor to expand long-term recurring revenue opportunities.
Fluor — which shares space with Gates Industrial Corporation plc (GTES - Free Report) , Quanta Services, Inc. (PWR - Free Report) and AECOM (ACM - Free Report) in the same industry — currently carries a Zacks Rank #5 (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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