Fluor Corporation (FLR)
Q3 2009 Earnings Call
November 9, 2009 5:30 pm ET
KenLockwood - VP of IR
Alan Boeckmann - Chairman and CEO
Mike Steuert - CFO
Jamie Cook - Credit Suisse
John Rogers - D.A. Davidson
Barry Bannister - Stifel Nicolaus
Andrew Kaplowitz - Barclays Capital
Richard Paget - Morgan Joseph
Alex Rygiel - FBR Capital Markets
Will Gabrielski - Broadpoint AmTech
Graham Mattison - Lazard Capital Markets
Michael Dudas - Jefferies & Co
Joe Ritchie - Goldman Sachs
Andrea Wirth - Robert Baird
Mark Levin - Davenport
Previous Statements by FLR
» Fluor Corporation Q2 2009 Earnings Call Transcript
» Fluor Corporation Q1 2009 Earnings Call Transcript
» Fluor Corporation, Q4 2008 Earnings Call Transcript
The web replay will be available for 30 days. A telephone replay will also be available through 8:30 P.M. Eastern time on November 15 at the following telephone number: 888-203-1112. The passcode of 246-5414 will be required.
At this time, for opening remarks, I'd like to turn the call over to Ken Lockwood , Vice President of Investor Relations. Please go ahead, Mr. Lockwood.
Thank you, Operator. Welcome everyone to Fluor's third quarter conference call. With us today, are Alan Boeckmann, Fluor's chairman and CEO and Michael Steuert, Fluor's Chief Financial Officer.
Our earnings announcement and our 10-Q were released this afternoon after the market closed. We have posted a slide presentation on our website which we will reference while making our prepared remarks today. Before getting started, I would like to refer to you our Safe Harbor note regarding forward-looking statements, which is summarized on slide two of the slide deck.
During today's call, and slide presentation, we will be making forward-looking statements which reflect our current analysis of existing trends and information, and there is an inherent risk that actual results and experience could differ materially. You can find a discussion of those risk factors in our 10-K, which was filed on February 25 of 2009.
During this call, we may discuss certain non-GAAP financial measures. Reconciliations of these amounts with the comparable GAAP measures are reflected in our earnings release and are also posted on our website at investor.fluor.com.
Now with that I will turn the call over to Alan Boeckmann, Fluor's chairman and CEO.
Thank you, Ken. Good afternoon, everybody and thank you for joining us. Today, we will be reviewing our financial results for the third quarter. We will talk about our outlook for each business line and then we're going to discuss our initial EPS guidance for 2010.
If you will turn to slide three, I'd like to provide some highlights of our financial performance in the third quarter. While our financial results were off a bit, when compared to our record year of 2008, we continue to deliver very strong results in a challenging economy.
Revenue declined by 4% to $5.4 billion, and that 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, the Industrial & Infrastructure, and Government segments was up from last year.
Segment profit for the quarter declined 8% to $300 million compared to $324 million a year ago. This reflected lower profit contributions from the Oil & Gas segment, and a $45 million charge in Global Services relating to a collection issue on a completed papermill revamp project. Mike will provide some more detail on this issue in a few minutes.
Consolidated segment margins in the quarter were a very solid 5.5% even after the impact of the charge, and this compares to 5.7% in the third quarter of 2008. Net earnings attributable to Fluor, for the third quarter were $162 million. This is a decrease of 11% from a year ago. Earnings per diluted share were $0.89 compared with $1 per diluted share for the same period last year.
Moving to slide four, new project awards for the quarter were $2.9 billion. This compares to our record $8.8 billion a year ago and $6.8 billion last quarter. I would like to point out that this is another example of how lumpy new awards can be from quarter to quarter.
Major awards during this quarter included approximately $400 million related to our ongoing work at Savannah River. It was also a full EPCM scope on an underground gas storage project in the Netherlands and a mining construction award in Chile. Given that there were no elephants in the quarter and this is the first time in 10 quarters that we haven't had a billion dollar award in our new bookings, we do think that $2.9 billion in bookings was very respectable.
Consolidated backlog at the end of the third 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, we 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 accumulative $5.3 billion.
With regard to our markets and our prospects, as we look out through 2009 and into 2010, global demand for energy, goods and services continues to be weak. However, with regard to new opportunities going forward, we are seeing a fairly significant level of new FEED and study work, which bodes well for new EPC prospects. In fact, many of the prospects we're tracking are in fact elephant projects which have the potential to close during 2010.