Fluor Doubles Operating Profit to $392MM in Second Quarter
Fluor Corporation has announced financial results for its second quarter ended June 30, 2008. Net earnings rose 119 percent to $209 million, or $1.13 per diluted share, compared with $96 million or $0.53 per diluted share for the same period last year. Operating profit for the quarter more than doubled to $392 million, compared with $187 million in the second quarter of 2007.
All business segments contributed to this positive result by posting solid growth in profit over last year. Second quarter results included a pre-tax gain of $79 million, or $0.26 per diluted share, from the sale of its joint venture interest in the Greater Gabbard Offshore Wind Farm project. Operating margins rose to 6.8 percent, reflecting improvement in all segments. Excluding the Greater Gabbard sale, operating margins were 5.4 percent, up from 4.4 percent a year ago. Revenue rose by 37 percent to $5.8 billion, up from $4.2 billion in the second quarter of 2007, driven primarily by significant growth in the Oil & Gas and Power segments.
New project awards for the second quarter were a record $6.4 billion, compared to $5.8 billion in new awards a year ago. The quarter included a $1.8 billion award for the Greater Gabbard Offshore Wind Farm power project in the United Kingdom, which will provide carbon neutral, renewable electricity for more than 415,000 homes. Consolidated backlog rose to another new company record of $33.0 billion, up 28 percent from a year ago and up $1.5 billion over the prior quarter.
Corporate G&A expense for the quarter was $62 million, compared with $52 million in the second quarter of 2007, primarily due to an increase in compensation expense resulting from strong operating performance and an increase in the company's share price. Strong cash flow from operations drove cash and marketable securities to $2.4 billion, up from $1.9 billion last quarter and $1.5 billion a year ago.
"Fluor continues to be actively engaged in the delivery of solutions for major energy and infrastructure programs globally," said Chairman and Chief Executive Officer Alan Boeckmann. "We are very well positioned and remain confident that strong demand in our key markets in the U.S. and around the world will continue to drive substantial growth for the company."
"We are encouraged by the strength of our financial results to date, and see substantial opportunity for the balance of the year," said Chief Financial Officer Mike Steuert. "As a result, we are increasing our full year guidance for Earnings Per Share to a range of $3.65 to $3.80 per share for 2008." This compares with previous guidance of $3.30 to $3.45 per share after adjusting for a two-for-one stock split that was effective on July 16, 2008.
Fluor's Oil & Gas segment reported second quarter revenue of $3.3 billion, up 56 percent from the second quarter of 2007. Operating profit grew by 68 percent to $169 million. These strong results are primarily the result of increased project execution activities. New oil, gas and petrochemical awards in the second quarter totaled $3.0 billion, including large refinery upgrade projects in the United States which had a combined value in excess of $1 billion. Ending backlog at June 30, 2008 for Oil & Gas rose to $20.9 billion, a 49 percent increase from a year ago.
Fluor's Industrial & Infrastructure segment reported revenue of $912 million, up 4 percent over last year. Operating profit for the second quarter rose from $23 million a year ago to $121 million, including $79 million from the sale of Fluor's joint venture interest in the Greater Gabbard Offshore Wind Farm project. Improved operating performance was driven primarily by the mining and metals and infrastructure business lines. Segment new awards of $2.4 billion for the quarter included the $1.8 billion Greater Gabbard project. Backlog rose to $7.1 billion, up 25 percent from $5.7 billion a year ago.
Revenue for the Government segment was $300 million for the second quarter, compared with $325 million a year ago. Operating profit was $11 million, up from $9 million a year ago. During the second quarter, the formal protests of the Savannah River and LOGCAP IV contract awards were favorably resolved. The company expects to book a new award for the first year of the Savannah River contract in the third quarter of 2008, and will record backlog for LOGCAP IV as individual task orders are awarded. Second quarter new awards totaled $87 million, and ending backlog was $316 million.
The Global Services segment reported revenue of $696 million, up 16 percent from $598 million in the second quarter of last year. Operating profit grew 37 percent to $66 million, reflecting strong growth from both the operations and maintenance and equipment services business lines. New awards were $673 million, growing backlog to $2.7 billion at the end of the second quarter.
Fluor's Power segment reported revenue of $522 million, up 86 percent from $280 million last year. Operating profit increased four-fold to $25 million in the second quarter, compared with $6 million a year ago. Growth in revenue and operating profit for the quarter was driven by substantial progress on major projects, including the Oak Grove coal-fired power generation units in Texas. Power segment new awards were $206 million, and ending backlog for the quarter was $1.9 billion.
Results for the Six Months
Net earnings for the first six months of 2008 were $347 million, or $1.88 per diluted share. This compares with $180 million, or $1.00 per diluted share, for the first six months of 2007. Earnings per share amounts have been adjusted to reflect a two-for-one stock split that was effective on July 16, 2008. Revenue rose 35 percent to $10.6 billion, compared with $7.9 billion in the first half of last year.
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