ENP Newswire - 04 August 2014
Release date- 01082014 - IRVING, Texas - Fluor Corporation (NYSE: FLR) today announced financial results for its second quarter ended June 30, 2014.
Net earnings attributable to Fluor from continuing operations were $163 million, or $1.02 per diluted share, compared with $161 million, or $0.98 per diluted share a year ago.
Consolidated segment profit for the quarter was $313 million, up 9 percent from $288 million in the second quarter of 2013. Improved segment profit results were primarily driven by a 57 percent increase in Oil & Gas, which was partly offset by a decline in the Industrial & Infrastructure segment. Revenue for the second quarter was $5.3 billion, down from $7.2 billion a year ago, mainly due to reductions in the Industrial & Infrastructure segment's mining and metals business line.
New awards for the quarter were $5.9 billion, including $3.1 billion in Government, $1.5 billion in Oil & Gas and $1.2 billion in Industrial & Infrastructure. Consolidated backlog at the end of the quarter rose to $40.3 billion, up modestly over last quarter and up 9 percent from $37.0 billion a year ago.
'Our Oil & Gas group continues to generate substantial double-digit profit growth,' said Chairman and Chief Executive Officer David Seaton. 'While we see continued weakness in many non-energy-related markets, we are very encouraged by the robust slate of major oil, gas and petrochemical prospects globally.'
Corporate G&A expense for the second quarter of 2014 was $57 million, compared with $32 million a year ago. Expenses in the quarter increased primarily due to higher stock-based compensation and expenses for severance and other costs associated with organizational realignment. During the quarter, the Company repurchased approximately $132 million worth of Fluor shares, and paid out $34 million in dividends to shareholders. Fluor's cash and marketable securities balance rose modestly over prior periods to $2.7 billion.
Results to date were consistent with the Company's expectation for lower overall revenue, offset by improved margins. Looking ahead, the Company expects that improved results in a number of businesses will complement continuing strength in Oil & Gas to drive stronger EPS in the second half of the year. The Company is maintaining its full year 2014 EPS from continuing operations guidance of $4.10 to $4.45 per diluted share.
Fluor's Oil & Gas business reported segment profit of $167 million, rising 57 percent from the second quarter of 2013. Strong segment profit results reflect favorable project performance, growing contributions from upstream and petrochemical projects and an increase in higher margin engineering and design activities.
Revenue of $2.8 billion was level with the second quarter of 2013, as contributions from new projects were largely offset by lower revenue on large projects that progressed toward completion. Second quarter new awards for the segment totaled $1.5 billion, including a refinery project in Belgium. Ending backlog for the Oil & Gas segment was $24.2 billion, up 29 percent from $18.7 billion a year ago.
The Industrial & Infrastructure group reported segment profit of $97 million, compared with $129 million in the second quarter of 2013. Revenue for the quarter was $1.5 billion, down from $3.1 billion a year ago. Revenue and segment profit results reflect a continued decline in contributions from the mining and metals business line, partly offset by growth in the infrastructure business line.
New awards for the second quarter were $1.2 billion, including the engineering, procurement and construction management of a large manufacturing facility in the United States. Backlog for the quarter was $9.2 billion, down from $16.2 billion a year ago, mainly due to substantially lower mining and metals new awards over the past two years.
The Government group reported segment profit of $14 million, level with a year ago when results were impacted by a $17 million charge associated with the resolution of the Company's final claim on a completed embassy project. Current quarter segment profit reflects reductions in task order volume on the LOGCAP IV contract in Afghanistan. Revenue for the quarter declined 11 percent to $599 million, due to the lower LOGCAP IV task order volume.
New awards totaled $3.1 billion for the quarter, including a multi-year nuclear decommissioning project in the United Kingdom and LOGCAP IV task order awards. Ending backlog rose to $5.2 billion, compared with $531 million a year ago and $2.6 billion last quarter. Effective December 31, 2013, the Company began including the unfunded portion of multi-year government contracts in new awards and backlog, to be more comparable with industry practice.
Segment profit for Global Services was $20 million in the second quarter, which compares to $28 million a year ago. Revenue declined modestly to $145 million from $154 million last year. Lower results in the quarter were mainly driven by reductions in the equipment business line's mining-related activities in Latin America.
Segment profit for the Power business was $15 million and includes the recording of $17 million in a cost-sharing award from the U.S. Department of Energy related to NuScale. NuScale expenses in the current quarter, before the benefit of the cost-sharing award, were $21 million which compares with $13 million a year ago.
Revenue for the quarter declined to $204 million, from $423 million a year ago, as two solar projects and a gas-fired power plant neared completion. New awards for the quarter were $38 million, compared with $59 million in the second quarter of 2013, reflecting weak demand for new power facilities. Ending backlog was $1.7 billion, which was comparable with $1.6 billion a year ago.
Results for the Six Months
Net earnings attributable to Fluor from continuing operations for the six months ended June 30, 2014 were $312 million, or $1.93 per diluted share. This compares with $328 million, or $2.00 per diluted share, for the first six months of 2013. Revenue declined to $10.6 billion, compared with $14.4 billion in the first half of last year, mainly due to a decline in contributions from the mining and metals business line.
In the second quarter of 2014, the Company received an appellate court ruling relating to the Doe Run lead business, which the Company sold in 1994. As a result, the Company has recorded an after-tax charge of approximately $85 million, or $0.54 per diluted share from discontinued operations, which may result in cash outflows in the future.
Both parties have filed motions for rehearing with respect to various aspects of the opinion and to transfer the matter to the Missouri Supreme Court. The Company will also continue to seek to enforce its rights to indemnification from the buyer pursuant to the terms of the 1994 sale agreement.
About Fluor Corporation
Fluor Corporation (NYSE: FLR) is a global engineering and construction firm that designs and builds some of the world's most complex projects. The company creates and delivers innovative solutions for its clients in engineering, procurement, fabrication, construction, maintenance and project management on a global basis. For more than a century, Fluor has served clients in the energy, chemicals, government, industrial, infrastructure, mining and power market sectors.
Headquartered in Irving, Texas, Fluor ranks 109 on the FORTUNE 500 list. With more than 40,000 employees worldwide, the company's revenue for 2013 was $27.4 billion. Visit Fluor at www.fluor.com and follow on Twitter @FluorCorp.
This release may contain forward-looking statements (including without limitation statements to the effect that the Company or its management 'believes,' 'expects,' 'anticipates,' 'plans' or other similar expressions). These forward-looking statements, including statements relating to future backlog, revenue and earnings, expected performance of the Company's business and the outlook of the markets which the Company serves are based on current management expectations and involve risks and uncertainties.
Actual results may differ materially as a result of a number of factors, including, among other things, difficulties or delays incurred in the execution of contracts, resulting in cost overruns or liabilities, including those caused by the performance of the Company's clients, subcontractors, suppliers and joint venture or teaming partners; intense competition in the global engineering, procurement and construction industry, which can place downward pressure on the Company's contract prices and profit margins; the Company's failure to receive anticipated new contract awards and the related impacts on revenues, earnings, staffing levels and costs; the cyclical nature of many of the markets the Company serves, including the Company's commodity-based business lines, and the Company's vulnerability to downturns; failure to obtain favorable results in existing or future litigation or dispute resolution proceedings; current economic conditions affecting our clients, partners, subcontractors and suppliers, which may result in decreased capital investment or expenditures by the Company's clients or may increase costs or delay project schedules; client cancellations of, or scope adjustments to, existing contracts, and the related impacts on staffing levels and cost; foreign economic and political uncertainties that could lead to project disruptions, increased costs and potential losses; international security risks; delays or defaults in client payments; failure to meet timely completion or performance standards that could result in higher costs, reduced profits or, in some cases, losses on projects; liabilities arising from faulty services; the impact of anti-bribery and international trade laws and regulations; risks or uncertainties associated with events outside of our control, such as the effects of severe weather, which may result in project delays, increased costs, liabilities or losses on projects; the potential impact of certain tax matters including, but not limited to, those from foreign operations and ongoing audits by tax authorities; possible information technology interruptions or inability to protect intellectual property; foreign exchange risks; failure to maintain safe worksites; the impact of environmental, health and safety regulations or other laws; possible limitations on bonding or letter of credit capacity; the Company's ability to secure appropriate insurance; the availability of credit and restrictions imposed by credit facilities, both for the Company and our clients, suppliers, subcontractors or other partners and risks or uncertainties associated with acquisitions, dispositions and investments.
Caution must be exercised in relying on these and other forward-looking statements. Due to known and unknown risks, the Company's results may differ materially from its expectations and projections.
Additional information concerning these and other factors can be found in press releases as well as the Company's public periodic filings with the Securities and Exchange Commission, including the discussion under the heading 'Item 1A. Risk Factors' in the Company's Form 10-K filed on February 18, 2014. Such filings are available either publicly or upon request from Fluor's Investor Relations Department: (469) 398-7220. The Company disclaims any intent or obligation other than as required by law to update its forward-looking statements in light of new information or future events.