Fluor Reports 2Q Financial Results, New Awards of $6.8B

Fluor has announced financial results for its second quarter ended June 30, 2009. Net earnings attributable to Fluor were $169 million, or $0.93 per diluted share, compared with $208 million or $1.12 per diluted share for the same period last year. Segment profit for the quarter was $309 million, compared with $392 million in the second quarter of 2008 which included a pre-tax gain of $79 million, or $0.27 per diluted share, from the sale of the Company's joint venture interest in the Greater Gabbard Offshore Wind Farm project. Segment margin improved to 5.8 percent, from 5.4 percent a year ago excluding the Greater Gabbard gain. Revenue declined 8 percent to $5.3 billion in the second quarter of 2009, down from $5.8 billion a year ago, driven by declines in the Oil & Gas, Global Services and Power segments.

New project awards for the second quarter were substantial at $6.8 billion, compared with $6.4 billion in new awards a year ago. Current quarter awards included a large mining project and a $1.3 billion oil sands project. Consolidated backlog rose to $30.9 billion, up from $29.1 billion last quarter, but down 6 percent from a year ago primarily due to cancellations and scope reductions of Oil & Gas projects during the first quarter. At the end of the second quarter, the company was notified that it had won the LOGCAP IV competition for northern Afghanistan, with a total contract value of potentially more than $7 billion over five years. New awards under this contract will be recognized as specific task orders are incrementally funded.

Corporate G&A expense for the quarter was $42 million, down from $62 million in the second quarter of 2008. The reduction in G&A expense is primarily due to lower compensation related expenses and overhead cost reduction efforts. Fluor’s financial condition continues to be very strong, with cash plus current and non-current marketable securities totaling $2.3 billion, which compares with $2.4 billion a year ago.

"Fluor's focus on specific near-term prospects in its diversified end markets has once again allowed us to record substantial new bookings in a very challenging economic environment," said Chairman and Chief Executive Officer Alan Boeckmann. "While we have posted strong results to date, we remain sensitive to the pace of global economic recovery which could impact the timing of future new awards."

Outlook

Given the strength of our results to date, the company is maintaining its 2009 EPS guidance at a range of $3.80 to $4.10 per share.

Business Segments

Fluor's Oil & Gas segment reported second quarter revenue of $3.0 billion, down 9 percent from the second quarter of 2008, while segment profit grew by 7 percent to $181 million. Results were driven by a reduced level of project execution activity, offset by an increase in segment margin in the quarter. New oil, gas and petrochemical awards in the second quarter totaled $2.9 billion, including the $1.3 billion award for Imperial Oil's Kearl oil sands project in Canada. Ending backlog at June 30, 2009 for Oil & Gas was $15.8 billion, a 25 percent decline from $20.9 billion a year ago.

The Global Services segment reported revenue of $452 million, down 35 percent from the second quarter of last year, and segment profit declined by 48 percent to $34 million. These declines were primarily due to sharply reduced levels of small capital projects and continued delay of refinery shutdown and turnaround work. New awards were $533 million, which compares with $673 million last year. Backlog at quarter end was $2.6 billion at the end of the second quarter, down slightly from $2.7 billion a year ago.

Results for the Six Months

Net earnings attributable to Fluor for the first six months of 2009 were $374 million, or $2.05 per diluted share. This compares with $345 million, or $1.86 per diluted share, for the first six months of 2008. Revenue rose 5 percent to $11.1 billion, compared with $10.6 billion in the first half of last year.
 

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