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Foster Wheeler Q3 Earnings Beat; Revs Miss - Analyst Blog
Foster Wheeler AG ( FWLT ) reported earnings per share (excluding the impact of one-time items) of 52 cents in the third quarter of 2013. Earnings were 23.8% above the Zacks Consensus Estimate of 42 cents. However, the quarter's results were down 8.8% from the prior-year quarter, primarily due to the weak performance of the Global Power Group, which was partially offset by strong performance of the Global Engineering and Construction group.
Consolidated operating revenues in the quarter were $801 million, down 0.6% year over year. Strong growth in the Global Engineering and Construction group was fully offset by a steep decline in the Global Power group. Revenues were well below the Zacks Consensus Estimate of $879 million.
Global Engineering and Construction (E&C) group's operating revenues (FW scope) were $441 million, up 16.1% from $380 million in the prior-year period. Revenue growth was driven by increased volume of work. The segment reported a 69.6% surge in new orders during the quarter. The orders were driven by the booking of a large EPC contract for a grassroots petrochemical plant in Texas.
Global Power Group (GPG) operating revenues (FW Scope) were $185 million, down 17.7% from $217 million in the year-ago quarter. New orders in the segment were down 4.3% year over year to $176 million from $184 million. The decline was attributable to slippage of award dates for committed key prospects, which resulted in a lack of boiler orders.
Income & Expenses
Contract profit in the quarter was $153.4 million, down 0.5% from the prior-year quarter, primarily due to lower operating revenues. SG&A expense was $85.5 million, up 10.4% from $77.5 million in the year-ago quarter.
E&C EBITDA margin was 13.6% in the quarter, down from 13.7% in the prior-year quarter. GPG EBITDA margin was 24.6%, down from 29.7% in the prior-year quarter.
Cash and cash equivalents as of Sep 30, 2013, were $497 million, down from $582 million at the end of Dec 31, 2012. Long-term debt was $117.1 million, down from $124.0 million at the end of Dec 31, 2012. Shareholders' equity was $717.6 million, down from $713.9 million at the end of Dec 31, 2011.
Following the earnings release, Foster reiterated its full-year earnings guidance to be marginally above $1.54 a share.
In the Global E&C Group, Foster Wheeler modestly increased its margin guidance. The company now expects full-year EBITDA margin on scope revenues to be in the range of 11% to 13% compared with the previous guidance of 10% to 12%. Scope revenues for the segment in 2013 are expected to be up materially as compared with 2012.
In the Global Power Group, the company maintained its previous guidance. Full-year EBITDA margin on scope revenues is expected to be in the range of 17% to 19% on a material decline in sequential-year scope revenues.
Foster currently has a Zacks Rank #4 (Sell). Other companies in the same industry and worth considering at the moment are VSE Corp. ( VSEC ), AO Smith Corp. ( AOS ) and Rexnord Corporation ( RXN ). VSE Corp and AO Smith have a Zacks Rank #1 (Strong Buy), while Rexnord has a Zacks Rank #2 (Buy).
SMITH (AO) CORP (AOS): Free Stock Analysis Report
FOSTER WHELR AG (FWLT): Free Stock Analysis Report
REXNORD CORP (RXN): Free Stock Analysis Report
VSE CORP (VSEC): Free Stock Analysis Report
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