Fluor's Revenues Rise 38% in Third Quarter
Fluor has announced financial results for its third quarter ended September 30, 2008. Revenue rose by 38 percent to $5.7 billion, compared with $4.1 billion in the third quarter of 2007.
Net earnings for the third quarter were $183 million, an increase of 95 percent over $94 million a year ago. Earnings per share doubled to $1.01 per diluted share, compared with $0.51 per diluted share for the same period last year.
Operating profit for the quarter increased 71 percent to $324 million, compared with $190 million a year ago, reflecting solid profit contributions from all business segments. Operating margins increased to 5.7 percent compared with 4.6 percent in the third quarter of 2007.
New project awards for the third quarter were a record $8.8 billion, including a $3.4 billion award for the BP Whiting Modernization Project in the U.S., a large gas processing project in Russia and a $1.3 billion mining project in Latin America. Consolidated backlog at the end of the third quarter rose to a new company record of $36.5 billion, which is a $3.5 billion sequential increase over last quarter and a 31 percent increase from the same period a year ago.
Corporate G&A expense for the quarter was $45 million, level with $45 million reported in the third quarter of 2007. Cash and marketable securities at quarter end were $2.2 billion, up from $1.6 billion a year ago.
"Fluor's focus on major, long-term capital projects with well-funded clients continues to generate significant growth and opportunity for the company," said Chairman and Chief Executive Officer Alan Boeckmann.
"Although the current economic environment has created uncertainty on a number of fronts, we are optimistic that our substantial backlog and industrial and geographic diversification will allow Fluor to continue to grow in 2009."
Based on strong performance to date and record third quarter new award levels, the company has narrowed its 2008 earnings guidance to a range of $3.70 to $3.80 per share. For 2009, the company acknowledges the possibility that a prolonged economic downturn could moderate the demand for large capital expansion programs globally. While the potential exists for near-term decline in demand in certain of our markets, based on our current prospect list and the substantial earnings power of the existing $36.5 billion backlog, we are establishing initial 2009 earnings guidance in the range of $3.90 to $4.20 per share.
Fluor's Oil & Gas segment reported third quarter revenue of $3.3 billion, up 52 percent from the third quarter of 2007. Operating profit rose by 84 percent to $206 million. This strong performance resulted from significant growth in the level of oil, gas and petrochemical work globally. New awards in the third quarter totaled $5.1 billion, including a $3.4 billion award for a refinery modernization project at BP's Whiting, Indiana complex and a large gas processing expansion project for Sibur Group in Russia. Ending backlog for Oil & Gas at September 30, 2008 rose to $22.8 billion, up 39 percent from $16.4 billion a year ago and up $1.9 billion sequentially.
Fluor's Industrial & Infrastructure segment reported revenue of $879 million in the third quarter, up 19 percent from last year. Operating profit was $28 million, compared with $27 million a year ago. Strong profit contributions from the Mining & Metals business line were partially offset by a $16 million charge relating to the London Connect project in the United Kingdom.
New awards in the quarter were $2.2 billion, including a $1.3 billion award for a large gold and copper processing project in Latin America and a $420 million contract for a solar panel manufacturing complex for Renewable Energy Corporation in Singapore. Ending backlog rose to $8.5 billion, up 63 percent from $5.2 billion a year ago and up 19 percent sequentially.
Revenue for the Government segment was $369 million for the third quarter, compared with $337 million a year ago. Operating profit for the quarter was $18 million, compared to a loss of $2 million for the third quarter of 2007 which included a $21 million charge relating to the Bagram Air Base project in Afghanistan. Third quarter new awards totaled $922 million, including approximately $600 million for transitional work and the first full year of operations at the Department of Energy's Savannah River site. Ending backlog was $886 million, compared with $839 million a year ago.
The Global Services segment reported revenue of $593 million, up 9 percent from $542 million in the third quarter of last year. Operating profit was $49 million compared with $48 million a year ago. Current quarter results were adversely impacted by delays in refinery turnarounds and hurricanes along the Gulf Coast. New awards were $405 million, bringing backlog to $2.7 billion at the end of the third quarter.
Fluor's Power segment reported revenue of $531 million, up 64 percent from $324 million in the third quarter of 2007. Operating profit in the third quarter increased to $24 million, which compares with $6 million a year ago. Results for the quarter reflect significant progress on projects, including two coal-fired power generation units in Texas. The Power segment booked new awards of $226 million in the third quarter, bringing ending backlog to $1.6 billion which compares with $2.8 billion in the same period of 2007.
Results for the Nine Months
Net earnings for the first nine months of 2008 increased 94 percent to $530 million, including a pre-tax gain of $79 million from the sale of a joint venture interest in a wind power project, up from $274 million for the first nine months of 2007. Earnings per diluted share for the nine months were $2.89, compared with $1.51 per diluted share for the same period last year. Revenue rose 36 percent to $16.3 billion, compared with $12.0 billion in the first nine months of last year.
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