USA: Fluor Announces Q3 Financial Results

USA: Fluor Announces Q3 Financial Results

Fluor Corporation has announced financial results for its third quarter ended September 30, 2012. Net earnings attributable to Fluor for the third quarter were $145 million, or $0.86 per diluted share, compared with $135 million, or $0.78 per diluted share in the third quarter of 2011.

Segment profit for the quarter was $278 million, which compared with $236 million a year ago. Consolidated revenue grew by 18 percent to $7.1 billion, from $6.0 billion in the third quarter of 2011. Improved results were partially offset at the end of the quarter by a lower than expected award fee on the LOGCAP IV contract, the impact of foreign currency losses, and a higher than anticipated effective tax rate.

New awards for the third quarter were $6.3 billion, which compares with $6.7 billion a year ago. Current quarter awards were broad-based with $2.0 billion in the Oil & Gas segment, $2.0 billion in Government, $1.7 billion in Industrial & Infrastructure and $581 million in Power. Consolidated backlog for the quarter declined to $40.8 billion, from $43.0 billion last quarter, primarily due to the cancellation of two mining projects totaling $2.0 billion.

“While we are on track for 2012 and there continues to be a robust list of opportunities in oil, gas, petrochemical and infrastructure, our outlook for 2013 is tempered by the continuing weak global economy and the deferral of major mining capital programs,” said Chairman and Chief Executive Officer David Seaton. “Although we see growth in 2013, the anticipated resurgence in oil and gas is not expected to fully benefit financial results until 2014.”

Fluor’s cash plus current and noncurrent marketable securities totaled $2.8 billion at the end of the quarter, compared with $2.8 billion a year ago. Over the past year, the Company has returned approximately $300 million of cash to shareholders through share repurchases and dividends. Corporate G&A expense for the quarter was $41 million, compared with $37 million in the third quarter of 2011.

Outlook

The Company is raising the lower end of its EPS guidance for 2012 to a range of $3.60 to $3.80 per share, from the previous range of $3.50 to $3.80 per share. For 2013, the Company is establishing its initial EPS guidance at a range of $3.85 to $4.35 per share, reflecting the potential for growth in all business segments except Industrial & Infrastructure, which is experiencing a slowing in new mining and metals awards as commodity demand weakens.

Business Segments

Fluor’s Oil & Gas business reported segment profit of $87 million, an increase of 18 percent from the third quarter of 2011. Revenue grew 15 percent to $2.6 billion, from $2.2 billion a year ago. Strong third quarter results were mainly driven by increased contributions from upstream projects. Oil & Gas new awards in the quarter were $2.0 billion, compared to $1.6 billion in the third quarter of 2011. New awards included a large petrochemical facility for Dow Chemical in Texas and a carbon capture and storage project for Shell in Canada. Backlog at the end of the third quarter was $19.2 billion, up 31 percent from $14.6 billion a year ago.

The Industrial & Infrastructure group reported segment profit of $132 million, up from $67 million a year ago which included a charge of $38 million for additional costs related to the Greater Gabbard Offshore Wind Project. Revenue for the segment was $3.2 billion, up 33 percent from a year ago. Results for the quarter were driven by growth in the mining and metals business line. Third quarter new awards totaled $1.7 billion, including approximately $700 million for the I-95/395 managed toll lanes project in Virginia and a blood fractionation project in Georgia. Segment backlog at the end of the quarter declined to $16.2 billion, from $22.3 billion a year ago, mainly due to strong revenue burn in mining and metals and $2.0 billion in cancellations relating to a copper project in Peru and an iron ore project in Australia.

The Government group reported segment profit of $23 million, down 47 percent from $43 million in the third quarter of 2011, due to the impact of lower than expected award fees on the LOGCAP IV contract in Afghanistan. Revenue for the quarter was $790 million, compared with $882 million a year ago primarily due to a lower volume of work related to LOGCAP IV task orders. New awards totaled $2.0 billion in the third quarter, compared with $1.7 billion last year, and included LOGCAP IV task orders and annual amounts for Department of Energy contracts at Savannah River and Portsmouth. Backlog at the end of the quarter was $1.6 billion, compared with $1.8 billion a year ago.

Segment profit for Global Services was $42 million in the third quarter, up 7 percent from $39 million a year ago. Revenue for the quarter improved 8 percent to $423 million. Improved results reflect increased contributions from the operations and maintenance and temporary staffing business lines. New awards for the quarter were $165 million and ending backlog was $1.8 billion, compared with $2.0 billion a year ago.

Fluor’s Power group reported a segment loss of $6 million, which compares with segment profit of $13 million a year ago. Third quarter results included $16 million in expenses associated with the Company’s continued investment in NuScale, in which a majority interest was acquired in late 2011. Revenue for the quarter was $170 million, up 18 percent from $143 million in the third quarter of 2011 due to increased activity on gas-fired and solar projects. New awards for the quarter were $581 million, including an award for Phase I of a 175 megawatt solar photovoltaic energy facility in California. Segment backlog at the end of the quarter was $2.1 billion, up from $1.1 billion in the third quarter of 2011, reflecting awards for a gas-fired plant and two solar power developments.

Results for the Nine Months

Net earnings attributable to Fluor for the nine months ended September 30, 2012 were $461 million, or $2.72 per diluted share. This compares with $441 million, or $2.51 per diluted share, for the first nine months of 2011. Revenue for the first nine months of 2012 was $20.6 billion, up 20 percent from $17.1 billion in the first nine months of last year.

[mappress]

Press release, November 2, 2012; Image: Fluor

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