Fluor Reports Net Earnings Of $221.3 Million In Q1 2009

Published: 11-May-2009

By: Staff Writer Staff Writer Staff Writer

Fluor Corporation (Fluor) has reported revenues of $5.8 billion for the first quarter of 2009, up 21%, compared with the revenues of $4.8 billion in the year-ago quarter. It has also reported net earnings of $221.3 million, or $1.12 per diluted share, for the first quarter of 2009, compared with the net earnings of $144.3 million, or $0.74 per diluted share, in the year-ago quarter.

Net earnings attributable to Fluor for the first quarter rose 50% to $205 million, up sharply from $137 million in the year-ago quarter. Earnings per diluted share were $1.12, up 51% from $0.74 per diluted share for the same period last year. Segment profit for the quarter grew by 33% to $332 million, compared with $249 million in the year-ago quarter. Strength in the Oil & Gas and Government segments were the primary drivers of the profit growth over last year. Segment profit margin rose to 5.7%, compared with 5.2% a year ago.

New project awards for the first quarter were $5.5 billion, which compares with $5.7 billion in new awards a year ago. The first quarter of 2009 included $2.5 billion in Industrial & Infrastructure awards and $2.0 billion in Oil & Gas awards, with the balance representing orders across the other three segments. During the quarter, the company removed two previously disclosed project cancellations from backlog - the $2.1 billion al-ZThe company’srefinery project in Kuwait and around $580 million for the construction portion of two hydrocrackers for Valero. First quarter backlog also included an $850 million reduction associated with a revised scope on the BP Whiting refinery project. As a result, consolidated backlog declined to $29.1 billion, down 7% from a year ago, and down sequentially from $33.2 billion at December 31, 2008.

Corporate G&A expense for the first quarter was $25 million, compared with $40 million in the year-ago quarter. This 36% improvement is primarily the result of lower compensation expense and the impact of overhead reduction efforts. Fluor’s financial condition continues to be very strong, with cash and marketable securities of $2.0 billion, up from $1.9 billion a year ago. During the quarter the company repurchased around 1.8 million shares, or $60 million, of the company’s stock.

Outlook

While the company reassured by the strength of first quarter results, and are tracking a many new award prospects that could positively impact the year, recent cancellations including the $2.1 billion refinery in Kuwait, have created some downward pressure on the 2009 earnings forecast. As a result, the company is lowering 2009 EPS guidance to a range of $3.80 to $4.10 from the previously issued range of $3.90 to $4.20 per share.

Business Segments

Fluor’s Oil & Gas segment reported first quarter 2009 revenue of $3.4 billion, up 29% from $2.6 billion in the year-ago quarter. Segment profit grew to $201 million, up 46% over 2008. Improved results reflect the significant level of new project awards over the last few years and the associated increase in project execution activity. New oil, gas and petrochemical awards in the first quarter totaled $2.0 billion, including around $1.6 billion in awards for non-US projects that were concentrated in the upstream market. After reducing backlog by around $3.5 billion for the previously discussed project cancellations and scope reductions, ending backlog at March 31, 2009 for Oil & Gas declined to $16.3 billion, a 20% decrease from a year ago.

Fluor’s Industrial & Infrastructure segment reported revenue of $1.2 billion in the quarter, up 48% from $796 million in the first quarter of last year, reflecting a higher level of pass-thru costs associated with certain mining and infrastructure contracts. Segment profit was $28 million, compared with $29 million in the first quarter a year ago. New awards for the quarter were $2.5 billion, including a large mining project in Australia. Backlog at the end of the quarter rose to $8.1 billion, up 41% from $5.7 billion a year ago.

Revenue for the Government segment improved by 33% to $371 million in the first quarter, compared with $280 million a year ago. Segment profit was $28 million, sharply higher than the $8 million reported last year. Improved revenue and profit during the quarter was primarily driven by contributions from the Savannah River project, LOGCAP IV task orders and FEMA task orders. First quarter new awards totaled $243 million, which brought ending backlog to $574 million.

The Global Services segment reported a 23% decline in first quarter revenue to $542 million, primarily due to lower levels of small capital projects and delays in plant shutdown and turnaround orders. First quarter segment profit was $55 million, compared with $54 million last year, reflecting an improved mix of higher margin work and improved performance in the operations and maintenance and equipment services business lines. New awards were $276 million in the first quarter, and backlog declined to $2.3 billion from $2.6 billion a year ago.

Fluor’s Power segment reported revenue of $339 million, down from $422 million in the year-ago quarter, mainly due to lower volume on the Oak Grove project which is progressing toward completion. Segment profit was $20 million in the first quarter, essentially flat with the year-ago quarter. Power segment new awards were $423 million, including a new gas-fired power plant. Segment backlog was $1.9 billion, which compares with $2.2 billion in the year-ago quarter.

“Fluor booked a substantial $5.5 billion in new project awards and still maintains a significant backlog, even after the project cancellations that The company experienced during the quarter,” said Chairman and Chief Executive Officer, Alan Boeckmann. “I’m very encouraged by Fluor’s ability to deliver solid results in an increasingly difficult market environment.”

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