Fluor Corporation (FLR)

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Fluor (FLR)

Q2 2011 Earnings Call

August 04, 2011 5:30 pm ET

Executives

David Seaton - Chief Executive Officer and Director

D. Steuert - Chief Financial Officer, Principal Accounting Officer and Senior Vice President

Kenneth Lockwood - Vice President of Corporate Finance and Investor Relations

Analysts

Scott Levine - JP Morgan Chase & Co

Alexander Rygiel - FBR Capital Markets & Co.

Tahira Afzal - KeyBanc Capital Markets Inc.

Robert Connors - Stifel, Nicolaus & Co., Inc.

Christopher Wiggins - Oppenheimer & Co. Inc.

John Rogers - D.A. Davidson & Co.

Andrew Wittmann - Robert W. Baird & Co. Incorporated

Andy Kaplowitz - Barclays Capital

Sameer Rathod - Macquarie Research

Andrew Obin - BofA Merrill Lynch

Joseph Ritchie - Goldman Sachs Group Inc.

Will Gabrielski - Gleacher & Company, Inc.

Brian Konigsberg

Jamie Cook - Crédit Suisse AG

Steven Fisher - UBS Investment Bank

Avram Fisher - BMO Capital Markets U.S.

Presentation

Operator

Good afternoon, everyone, and welcome to Fluor Corporation's Second Quarter 2011 Conference Call. Today's call is being recorded. [Operator Instructions] A replay of today's conference call will be available at approximately 8:30 p.m. Eastern Time today, accessible on Fluor's website at www.fluor.com. A web replay will be available for 30 days. A telephone replay will also be available through 7:30 p.m. Eastern Time on August 10 at the following phone number, (888) 203-1112. The passcode of 6931964 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, sir.

Kenneth Lockwood

Thank you, operator. Welcome, everyone, to our conference call today. And with us in the room are David Seaton, Fluor's Chief Executive Officer; and Mike Steuert, Fluor's Chief Financial Officer. Our earnings announcement, as you know, was released this afternoon after the market closed, and we have posted a slide presentation on our website, which we will reference while making prepared remarks today.

Before getting started, I'd like to refer you to our Safe Harbor note regarding forward-looking statements, which is summarized on Slide 2. 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 23, 2011, and in our most recent Form 10-Q filed today, August 4, 2011.

During this call, we may also discuss certain non-GAAP financial measures. Reconciliations of these amounts with the comparable GAAP measures are reflected in our earnings release and are posted in the Investor Relations section of our website at investor.fluor.com.

With that, I'd like to turn the call over to David Seaton, Fluor's Chief Executive Officer. David?

David Seaton

Thanks, Ken. Good afternoon, everyone, and thank you for joining us on what has turned out to be a pretty interesting day in the markets. I'd like to start by highlighting a few of our accomplishments for the second quarter and ask you to please turn to Slide 3.

Net earnings attributable to Fluor for the second quarter were $165 million or $0.94 per diluted share. Our segment profit totaled $280 million and included substantial positive contributions from all of our businesses. Our consolidated revenues totaled $6 billion, which represents a 17% increase over the second quarter of 2010.

We also continue to have strong cash flow generation, ending the quarter with $2.5 billion in cash and marketable securities after utilizing $113 million during the quarter for repurchase of our shares. Increased demand for our services and our success in capturing key prospects is evident as new awards for the quarter were totaled $9.7 billion. We had substantial award activities across our businesses with Mining & Metals and Oil & Gas and Government contributing significantly during the quarter. As a result of our strong bookings, our backlog grew to a record $40.3 billion, which exceeds our previous high mark set last quarter by over $3 billion.

If you turn to Slide 4, the Oil & Gas segment had a number of wins during the quarter, including a significant award for utilities and offsites component of the Dow/Aramco Ras Tanura integrated project or RTIP in Saudi Arabia. We're particularly pleased about our success in winning this critically important award in the project, which will become the largest integrated petrochemical complex in the world. We were able to leverage our strong relationship with Dow and our experiences with them in the Middle East and our extensive history with the Saudi -- excuse me, in Saudi Arabia but, more importantly, reestablish our relationship with Aramco, which has been an important strategic initiative for Fluor for some time.

Other major awards included the polymers project in Saudi, additional scope on the West Qurna project in Iraq and the Kearl Oil Sands project in Canada in addition to a polysilicon project award in China. More importantly, we continue to work on numerous front-end projects and are tracking sizable prospects in our – in that particular market around the globe that will begin to help us as we go into 2012.

The Industrial & Infrastructure segment also had a very strong quarter with the group more than doubling their profit from a year ago. They also had strong new awards, including a $2.7 billion award of the major new scope relating to the Port Hedland Inner Harbour project and as part of the BHP Billiton's ongoing iron ore expansion program in Australia.

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