Fluor Q3 Earnings Beat, Revenues Disappoint; Guidance Cut
Fluor Corporation FLR'>(FLR) reported third-quarter 2014 earnings from continuing operations of $1.15 per share that beat the Zacks Consensus Estimate of $1.10 by 4.5%. Quarterly earnings were also up 9.5% from the prior-year quarter earnings of $1.05.
Fluor Corporation - Earnings Surprise | FindTheBest
Total revenue for the quarter decreased substantially by 18.6% year over year to $5.4 billion. The deterioration was primarily led by sluggish performance of the mining and metals business under the Industrial & Infrastructure segment. Revenues also fell short of the Zacks Consensus Estimate of $6.2 billion.
The company has been benefiting from the uptrend in the Oil & Gas and Petrochemical sectors. However, prevailing weakness in a number of non-energy-related markets is proving to be a drag on the company’s financials.
In the reported quarter, Fluor inked contracts worth $6.0 billion. This included a $4.5 billion deal in the Oil & Gas segment, $460 million in Industrial & Infrastructure, $382 million in Power and $700 million in the Government segment. Consolidated backlog was $42.3 billion at quarter-end, highlighting an increase of 15.9% from $36.5 billion in the third quarter of 2013.
Segmental Revenues
Revenues from the Oil & Gas segment grew 11.7% year over year at $3.2 billion. New awards for the segment totaled $4.5 billion, including a refinery project in Malaysia and an oil sands venture in Canada. At the end of the quarter under review, backlog at the Oil & Gas segment grew 41.4% year over year to $26.5 billion.
Revenues in the Industrial & Infrastructure segment dipped 54.4% year over year to $1.2 billion owing to a soft mining and metals business.
New awards for the quarter valued $460 million, comprising contracts in the mining and metals, and industrial services businesses. Backlog stood at $8.7 billion, down 36.9% year over year owing to a substantially lower number of mining and metal deals in the past year.
Revenues in the Government segment were down 8.9% to $615.1 million due to volume reduction in LOGCAP IV task order in Afghanistan. New agreements inked in the quarter, valued at $700 million, included a multi-year award from the Department of Energy for the Paducah Gaseous Diffusion plant in Kentucky. Backlog at quarter-end stood at $5.2 billion, indicating substantial improvement from $1.8 billion recorded in the year-ago quarter.
Revenues in the Global Services segment declined 6.1% year over year to $140.5 million impacted by reduced mining activity in the equipment business in Latin America and low equipment demand in Afghanistan.
The Power Group segment reported a 21.5% decline in quarterly revenues to $236.9 million. New awards for the quarter totaled $382 million compared with $846 million in the third quarter of 2013. The downside can be attributed to lower demand for new power facilities. Backlog at the end of the third quarter was $1.8 billion, down from the prior-year quarter’s $2.1 billion.
Other Financial Details
Fluor exited the quarter with cash and marketable securities of $2.4 billion, long-term debt of $496.9 million, and shareholders’ equity of $3.6 billion.
Outlook
Following the earnings release, the company narrowed the higher end of its earnings guidance for full-year 2014. Earnings are now projected in the range of $4.10–$4.30 a share compared with $4.10–$4.45 mentioned earlier. The Zacks Consensus Estimate for the same is currently pegged at $4.21.
Zacks Rank
Fluor currently has a Zacks Rank #3 (Hold). Some better-ranked stocks worth considering in the same sector include Foster Wheeler AG (FWLT), Pernix Group Inc. (PRXG) and Quanta Services Inc. (PWR). All three carry a Zacks Rank #2 (Buy).
Read the Full Research Report on FWLT
Read the Full Research Report on FLR
Read the Full Research Report on PWR
Read the Full Research Report on PRXG
Zacks Investment Research
