Fluor's (FLR) Q3 Earnings & Revenues Miss, Guidance Cut

Fluor Corporation’s (NYSE:FLR) third-quarter 2018 earnings came in below analysts’ expectation and also decreased from the year-ago figure. The company reported earnings of 55 cents per share in the quarter, missing the Zacks Consensus Estimate of 58 cents by 5.2%. The reported earnings also declined 13.4% from 67 cents per share recorded in the year-ago period.

Third-quarter revenues came in at $4,658 million, lagging the consensus mark of $4,695 million and also decreasing 5.7% year over year. The downside was mainly due to decrease in revenues from Energy & Chemicals, and Diversified Services segments.

Segment Discussion

Revenues from the Energy & Chemicals segment were down 14% year over year to $1,902.3 million. In the reported quarter, the segment booked new awards of $644 million. Backlog at the end of the quarter amounted to 11.4 billion compared with $16.5 billion a year ago. Operating margin decreased 190 basis points (bps) year over year to 2.6%.

Mining, Industrial, Infrastructure & Power segment's revenues recorded growth of 3.6% year over year to $1,387.3 million. New awards came in at $5.4 billion, including a copper mine in Peru and an international bridge project in Canada. Backlog for the segment at the end of the quarter was $16.5 billion compared with $10.1 billion a year ago. Operating margin expanded 450 bps to 7.3% in the quarter.

Revenues at the Government segment inched up 1.9% year over year to $780.9 million. That said, operating margin grew 20 bps to 4.1% in the quarter. The business received new awards of $3.3 billion in the quarter. Quarter-end backlog was $5.1 billion compared with $3.6 billion a year ago.

Diversified Services revenues decreased 5.8% to $587.5 million on a year-over-year basis. The segment’s new awards came in at $336 million. Quarter-end backlog was $2 billion compared with $2.7 billion a year ago. Operating margin contracted 160 bps to 4.1% in the quarter.

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 152.3% to $9.6 billion on a year-over-year basis, courtesy of improvements in energy and commodity markets, as well as the achievements in infrastructure and government business.

At the end of the reported quarter, consolidated backlog was $34.9 billion, up from $32.9 billion in the year-ago quarter. The company expects the improved momentum to continue through the remaining of 2018.

Liquidity & Share Repurchases

As of Sep 30, 2018, Fluor had cash and marketable securities (including non-current assets) of $1,922.8 million, down from $2,078.8 million on Dec 31, 2017. Long-term debt at the end of third-quarter 2018 increased to $1,667.4 million from $1,591.6 million as of Dec 31, 2017.

2018 Guidance

For 2018, it currently expects earnings per share in the range of $1.80-$1.90 versus $2.10-$2.50 expected earlier.

Currently, Fluor carries a Zacks Rank #5 (Strong Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Peer Releases

KBR, Inc.’s (NYSE:KBR) third-quarter 2018 adjusted earnings of 46 cents per share beat the Zacks Consensus Estimate of 39 cents by 18% and also increased 31.4% from 35 cents recorded a year ago. The company’s revenues of $1,278 million lagged the consensus mark of $1,308 million but improved 23.6% year over year.

Quanta Services Inc. (NYSE:PWR) reported third-quarter 2018 adjusted earnings of 88 cents per share, missing the Zacks Consensus Estimate of 99 cents by 11.1%. However, the reported figure notably increased 39.7% from 63 cents recorded a year ago. Total revenues came in at a record level of $2.99 billion, surpassing the consensus mark of $2.95 billion by 1.3%. Also, the top line increased 14.6% year over year, aided by robust revenue growth across the board.

Upcoming Peer Release

Jacobs Engineering Group Inc. (NYSE:JEC) is scheduled to report fourth-quarter fiscal 2018 results on Nov 20, before the opening bell.

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