Fluor Corporation (FLR) reported third quarter earnings per share of 89 cents, matching the Zacks Consensus Estimate. Revenue declined by 4% to $5.4 billion, which compares with $5.7 billion in the third quarter of 2008. This change was driven primarily by decreases in the Oil & Gas and Power segments. Revenue in both Industrial & Infrastructure and Government segments was up from last year.
While three of the five business segments reported earnings growth over 2008, the Oil & Gas segment profit declined by 8% and the Global Services segment profit was impacted by a $45 million provision relating to a collection issue on a completed paper mill revamp project.
New project awards for the quarter were $2.9 billion, compared with record awards of $8.8 billion a year ago. Consolidated backlog at the end of the quarter was $28 billion. This represents a $2.9 billion increase from the last quarter and a 23% decrease from a year ago. During the quarter, it removed approximately $1.2 billion from backlog for gas processing expansion project in Russia, which has been delayed indefinitely by the client. Including this project, the cancellations and scope reductions for this year now stand at an accumulative $5.3 billion.
Fluor’s Oil & Gas segment reported quarterly revenue of $2.9 billion, down 11% from the third quarter of 2008, while segment profit declined 8% to $189 million. Declines in both revenue and segment profits reflect declining new award and backlog levels in the recent quarters.
Fluor’s Industrial & Infrastructure segment reported a 26% revenue increase to $1.1 billion and a 49% rise in segment profit to $42 million, reflecting increases in both the infrastructure and mining and metals business lines. Segment profit in the third quarter of 2008 included the impact of a $16 million provision relating to the London Connect infrastructure project.
Revenue for the Government segment rose by 47% to $544 million for the reported quarter. Segment profit for the quarter increased 34% to $24 million, compared to $18 million a year ago. Growth in results can primarily be attributed to contributions from the Savannah River project and LOGCAP IV task orders in Afghanistan.
The Global Services segment reported revenue of $529 million, down 11% from the third quarter of last year. Segment profit was $0.5 million compared with $49 million a year ago, with the majority of the decline attributable to a $45 million provision for the collection issue on the completed paper mill revamp project in Louisiana.
Fluor’s Power segment reported revenue of $317 million, down 40% from the third quarter of 2008. While the segment has continued to replenish backlog throughout the year, revenue declined as a large coal-fired project in Texas progressed closer to completion.
Due to collection issue and recent order cancellations, Fluor has lowered its 2009 earnings guidance to a range of $3.75 to $3.90 per share. The current Zacks Consensus Estimate is $3.85.
Cash and equivalents were $2.3 billion, with negligible long-term debt and shareowners’ equity at $3.1 billion.
Fluor Corporation also announced that its board elected David Seaton to the newly created position of chief operating officer, effective immediately. Seaton, 48, will oversee all five of the company’s operating business groups, along with Project Operations, a unit formed earlier this year. He joined Fluor in 1984.
Fluor Corporation through its subsidiaries provides engineering, procurement, construction management, and project management services worldwide. Fluor Corporation was founded in 1912 and is headquartered in Irving, Texas. Major competitors include ABB Ltd (ABB) and Foster Wheeler AG (FWLT).
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