Fluor Corporation FLR reported first-quarter 2015 net earnings of 96 cents per share, which missed the Zacks Consensus Estimate of 98 cents, but came above the year-ago figure of 92 cents.
Earnings benefitted from the company’s successful project completions and strong oil and gas performance. However, low revenues continue to be the headwind.
Inside the Headlines
Total revenue for the quarter decreased 15.5% year over year to $4,548.6 million. The deterioration was primarily led by continued sluggish performance of the mining and metals business of the company. Revenues also fell short of the Zacks Consensus Estimate of $5,310 million.
As per the segments, revenues from the Oil & Gas segment dipped 11.2% year over year at $2,471.6 million; Industrial & Infrastructure segment revenues fell 33.1% year over year to $1,080.2 million; revenues in the Global Services segment declined 9% year over year to $129.7 million; and Power Group segment revenues reported a 11.9% decline in quarterly revenues to $221.1 million. On the other hand, revenues in the Government segment were up 8.9% year over year to $646 million.
In the reported quarter, Fluor won contracts worth $4.4 billion. This included an order worth $2.9 billion in the Oil & Gas segment and worth $1.4 billion in Industrial & Infrastructure. Consolidated backlog was $41.2 billion at quarter-end, higher than $40.2 billion in the year-ago period.
Liquidity
Fluor exited the quarter with cash and marketable securities (including noncurrent) of $2.2 billion, long-term debt of $992.2 million, and shareholders’ equity of $3.1 billion.
Share Repurchase & Dividend
During the quarter, Fluor repurchased shares worth $112 million and expended $32 million in the form of dividends.
Outlook Reiterated
For 2015, Fluor reaffirmed its earnings in the range of $4.40–$5.00 a share. The Zacks Consensus Estimate for the same is currently pegged at $4.47.
Notably, the outlook excludes the impact of the previously announced termination and settlement of Fluor’s U.S. defined benefit pension plan.
Our Take
Fluor missed earnings this season, hurt by low revenues, with Industrial & Infrastructure segment continuing as the spoiler. Notably, a major portion of the company’s revenues is derived from its Industrial & Infrastructure segment, which has been witnessing weakness for the past few quarters owing to a decline in contributions from its mining and metals business line. If the sluggish growth trend in the global mining industry continues, Fluor’s business can face further negative impact.
Fluor currently has a Zacks Rank #4 (Sell). Some better-ranked stocks in the same sector include II-VI Incorporated IIVI, Capstone Turbine Corp. CPST and AO Smith Corp. AOS. While II-VI sports a Zacks Rank #1 (Strong Buy), Capstone Turbine and AO Smith have a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment