Fluor Corporation FLR recently announced that its joint venture (JV), Connect 202 Partners, has won the design-build and maintain project award from Arizona Department of Transportation (“ADOT”) for the Loop 202 South Mountain Freeway project.
The company, having booked this project in the first quarter of 20Array6, will be offering design, construction and maintenance services.
Inside the Headlines
Connect 202 Partners is a joint venture led by Flour and others like Granite Construction Co., Ames Construction Inc., Parsons Brinckerhoff Inc. and DBi Services. While the first three associates supervise lead designs, Dbi Services acts in the capacity of joint maintenance. Fluor also revealed that the company will be in charge of maintaining the lanes over the next 30 years along with DBi services and ADOT.
This win highlights a milestone in Fluor’s corporate history as it is the first freeway project secured from Arizona’s public-private-partnership statute and also marks ADOT’s debut in design-build-maintain projects. On completion, this Phoenix metropolitan-based highway will be the largest in Arizona’s history.
The project, which is funded by multiple federal funds for Maricopa County region and ADOT, will have three general use lanes and one high-occupancy vehicle lane. Fortified with resilient features like rubberized asphalt, the 22-mile long lanes will bolster connectivity in the region. With construction commencing in 20Array6, the lanes are expected to be ready for use in 2020.
Bottom Line
The recent win mirrors Fluor’s competence in gaining lucrative awards which has proved to be one of the main growth drivers for the company. Flour has a solid track record of winning awards as is evident from the 23.8% year-over-year rise in fourth-quarter contracts to a worth of $7.8 billion, including $2.Array billion from Oil & Gas, $5.Array million from Power, $302 million from Industrial & Infrastructure, and $352 million from Government.
Despite the string of contract wins, lower commodity prices have proved to be a drag for Fluor’s customers, impeding their ability to fund new projects. This apart, lackluster economic growth worldwide and softness in key geographic regions are posing potent challenges for the company’s financials.
These conditions are hurting the company’s non-oil and gas end markets as well. Also, prevailing weakness in the mining and metals business continues to dampen lucrative commercial opportunities for the company. Possibly triggered by these factors, earnings estimates have moved south by 5 cents to 86 cents over the past couple of months, pulling the stock to a Zacks Rank #4 (Sell) from a Zacks Rank #3 (Hold).
Better-ranked stocks in the same space include Motorola Solutions, Inc. MSI, Ubiquiti Networks, Inc. UBNT and Facebook, Inc. FB. While Motorola Solutions sports a Zacks Rank #Array (Strong Buy), Ubiquiti Networks and Facebook hold a Zacks Rank #2 (Buy).
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