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Fluor's (FLR) Q4 Earnings Beat Estimates, New Awards Strong

Fluor Corporation 's FLR fourth-quarter 2018 earnings surpassed the Zacks Consensus Estimate and increased from the year-ago level. The company reported adjusted earnings of 77 cents per share in the quarter, beating the consensus mark of 61 cents by 26.2%. The reported earnings increased 10% from 70 cents per share recorded in the year-ago period.

Fourth-quarter revenues came in at $4,801 million, lagging the consensus mark of $4,826 million by 0.5% and decreasing 4.5% year over year. The downside was mainly caused by lower contribution from Energy & Chemicals, Government and Diversified Services segments.

Segment Discussion

Revenues from the Energy & Chemicals segment were down 11.4% year over year to $1,838.4 million. In the reported quarter, the segment booked new awards worth $8,783 million, significantly higher than $977 million a year ago. Backlog at the end of the quarter amounted to $17.8 billion compared with $15.1 billion a year ago. Operating margin decreased 100 basis points (bps) year over year to 4.6%.

Mining, Industrial, Infrastructure & Power segment's revenues recorded 20.5% year-over-year growth to $1,549 million. New awards came in at $438 million, down from $637 million in the fourth quarter of 2017. The segment's backlog at the end of the quarter was $15.3 billion compared with $9.6 billion a year ago. Operating margin improved to 0.9% from a negative 0.8% a year ago.

Revenues at the Government segment declined 16.4% year over year to $800.5 million. Also, operating margin contracted 220 bps to 2.94.1% in the quarter. The business received new awards of $33 million in the quarter, significantly lower than the year-ago level of $1,053 million. Quarter-end backlog was $4.6 billion compared with $3.8 billion a year ago.

Diversified Services revenues decreased 13.6% on a year-over-year basis to $613.1 million. The segment's new awards came in at $856 million, up from $568 million in the year-earlier period. Quarter-end backlog was $2.3 billion compared with $2.5 billion a year ago. Operating margin contracted 100 bps to 4.5% in the quarter.

Fluor Corporation Price, Consensus and EPS Surprise

Fluor Corporation Price, Consensus and EPS Surprise | Fluor Corporation Quote

New Awards & Backlog

In the reported quarter, Fluor's total new awards recorded an increase of 212.2% on a year-over-year basis to $10.1 billion. Full-year new awards more than doubled to $27.7 billion, comprising $10.6 billion in Energy & Chemicals; $10.8 billion in Mining, Industrial, Infrastructure & Power; $4.1 billion in Government and $2.1 billion in Diversified Services.

At the end of 2018, consolidated backlog was $40 billion, up from $30.9 billion in the year-ago quarter.

2018 Highlights

Adjusted earnings came in at $2.15 per share compared with $1.63 a year ago. Full-year 2018 total revenues of $19.2 billion were down from $19.5 billion in 2017. Consolidated segment profit was $602 million, up from $545 million a year ago.

Liquidity & Share Repurchases

As of Dec 31, 2018, Fluor had cash and marketable securities (including non-current assets) of $1,979.6 million, down from $2,078.8 million in the comparable period of 2017. Long-term debt at the end of 2018 increased to $1,661.6 million from $1,591.6 million on Dec 31, 2017.

2019 Guidance

For 2019, it currently expects earnings per share in the range of $2.50-$3.00.

Zacks Rank & Stocks to Consider

Currently, Fluor carries a Zacks Rank #4 (Sell).

You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

Some better-ranked stocks in the Zacks Construction sector are Great Lakes Dredge & Dock Corporation GLDD , Comfort Systems USA, Inc. FIX and EMCOR Group, Inc. EME . While Great Lakes sports a Zacks Rank #1, both EMCOR and Comfort Systems carry a Zacks Rank #2 (Buy).

Great Lakes' earnings are expected to grow 1,400% in 2019.

Comfort Systems has a solid earnings surprise history, having surpassed the Zacks Consensus Estimate in three of the last four quarters, with the average positive surprise being 16.5%.

EMCOR has a strong record o f earnings surprises, having surpassed the Zacks Consensus Estimate in all the trailing four quarters, with the average being 19.1%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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