Fluor Corporation (FLR) reported second-quarter 2012 earnings from continuing operations of 95 cents, 3.3% higher than the Zacks Consensus Estimate of 92 cents and up 1.1% from the prior-year earnings of 94 cents. Profits during the quarter were driven by end-market diversification and strong international presence.
Total Revenue
Total revenue for the quarter grew 18.1% year over year to $7.1 billion on the back of higher revenues across all the company’s segments. Total backlog as of June 30, 2012 was about $43.0 billion compared with $2.7 billion as of June 30, 2011.
Segment Revenue
Revenue from the Oil & Gas segment was $2.3 billion in second-quarter 2012, up 16% year over year, driven by improvement in the upstream business. New awards won during the year were $5.0 billion with backlog amounting to $19.5 billion (up 30% year over year).
Industrial & Infrastructure revenue was up 29.2% year over year to $3.4 billion. The rise was due to increased mining and metals businesses. New awards won during the year were $1.1 billion with backlog amounting to $19.5 billion (down 8.9% year over year) at the end of the quarter.
Government segment revenue was $871 million, up 2.7% year over year. New awards won during the quarter were $769 million with backlog amounting to $505 million (27.3% decline sequentially) at the end of the quarter.
Global Services segment revenue was down marginally by 0.6%. New awards won during the year were $279 million with backlog amounting to $1.9 billion (down 9.5% year over year) at the end of the quarter.
Power segment revenue was flat year over year. This segment continues to be impacted by relatively weak demand for new power generation. New awards won during the quarter were $118 million, with backlog amounting to $1.7 billion (up from $744 million in the prior-year period) at the end of the quarter.
Income & Expenses
Earnings before taxes were $288.2 million, up 2.5% from $281.2 million in the prior-year quarter. Total cost and expenses for the quarter amounted to $6.8 billion, up 18.9% from $5.7 billion.
Operating margin for the Oil & Gas segment was 3.7% compared with 3.5% in the prior-year period, Infrastructure & Industrial segment margin came in at 3.6% versus 4.2% in the prior-year quarter and Government segment margin was 4.6% compared with 3.7% in the prior-year quarter.
Global Services segment operating margin was 12.1% versus 10.2% in the comparable prior-year quarter. Operating margin in the Power segment was (3.2%) compared with 14.4% in the year-ago quarter.
Balance Sheet & Cash Flow
Cash and marketable securities, including noncurrent, amounted to $2.5 billion at the end of the quarter compared with $2.78 billion at the end of 2011. Long-term debt was $513.7 million compared with $513.5 million and shareholder’s equity was $3.55 billion versus $3.40 billion at the end of 2011.
Outlook
Driven by the company’s strong performance in the second quarter, management has raised the lower end of its earnings guidance.
Earnings per share are now expected in the range of $3.50 to $3.80, up from $3.40 to $3.80 projected earlier. The company’s solid earnings and strong new awards and backlog are favorable factors.
Fluor delivers engineering, procurement, construction, maintenance (EPCM) and project management to governments and clients in diverse industries globally. Fluor currently has a Zacks #4 Rank, indicating a short-term (1-3 months) Sell rating on the stock.
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