Fluor: 1Q Results Consistent with Expectations
Fluor announced financial results for its first quarter ended March 31, 2010. Net earnings attributable to Fluor for the first quarter were $137 million, or $0.76 per diluted share, compared with $205 million, or $1.12 per diluted share in the first quarter of 2009. Consolidated segment profit for the quarter was $243 million, compared with $332 million a year ago. Revenue was $4.9 billion, down from $5.8 billion in the first quarter of 2009. As expected, first quarter results reflect lower Oil & Gas revenue and profit, partly offset by growth in the Power, Government and Industrial & Infrastructure segments.
"Fluor's results for the quarter are consistent with our expectations for a delayed recovery as we go through 2010," said Chairman and Chief Executive Officer, Alan Boeckmann. "Our end-market diversification has enabled us to deliver good profitability despite lower new award levels in recent quarters and the trailing impact of a significant reduction in spending by our oil and gas clients. We are encouraged by our significant prospect list that should allow the company to increase backlog in 2010."
New project awards for the first quarter were $3.4 billion, which compares with $5.5 billion in new awards a year ago. Awards in the quarter were diversified, including $1.4 billion in Oil & Gas projects, $1.0 billion in Industrial & Infrastructure projects, and approximately $400 million from each of the Government and Global Services segments. Consolidated backlog for the quarter was $25.7 billion, which compares sequentially with $26.8 billion at December 31, 2009.
Corporate G&A expense for the first quarter was $31 million, compared with $25 million in the first quarter of 2009. Fluor's financial condition is very strong, with cash plus current and noncurrent marketable securities totaling $2.3 billion, up from $2.0 billion a year ago. During the quarter the company repurchased approximately 380 thousand shares, or $17 million, of the company's stock.
Fluor serves a broad and diverse group of markets globally. Prospects in mining continue to show particular strength, while operations and maintenance spending remains weak. Fluor's oil and gas markets are still in transition, but there are indications that a limited number of key projects could be released this year. Overall, Fluor's new award prospects across its portfolio are substantial. It is important to note that the marketplace for engineering and construction services is increasingly competitive which will likely impact the company's overall margin profile, especially when considering the growth in mining projects which typically carry lower than average margins.
We are encouraged by the potential for increasing bookings in coming quarters, and are reaffirming our 2010 EPS guidance range of $2.80-$3.20 per diluted share.
Fluor's Oil & Gas business unit reported segment profit of $92 million, down from $201 million in the first quarter of 2009. Revenue was $2.1 billion, compared with $3.4 billion last year, reflecting slowing new awards and a declining backlog. Segment profits decreased in line with revenue, but have been further impacted by reduced levels of engineering man-hours and the retention of key resources in part to support increased bid and proposal activities. New awards for the segment totaled $1.4 billion, including a large upstream award for the engineering, procurement and construction management of a gas processing project in Qatar, which compares with new awards of $2.0 billion in 2009. Ending backlog at the end of the first quarter was $10.9 billion, a $0.9 billion reduction from last quarter.
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