Fluor Soars in 2Q with $9.3B in New Project Awards
Fluor announced financial results for its second quarter ended June 30, 2010. Net earnings attributable to Fluor were $157 million, or $0.87 per diluted share, compared with $169 million or $0.93 per diluted share for the same period last year. Segment profit for the quarter was $262 million, compared with $309 million in the second quarter of 2009, driven mainly by strength in Industrial & Infrastructure and Power which was offset by lower results in Oil & Gas. Segment margin was 5.1 percent, compared with 5.8 percent a year ago. Revenue was $5.2 billion in the second quarter of 2010, just under last year's $5.3 billion.
New project awards for the second quarter were a record $9.3 billion, surpassing the company's previous high for a single quarter, well above the quarterly run rate of approximately $3 billion in the prior three quarters. Awards in the quarter included $7.2 billion in Industrial & Infrastructure driven by new mining and metals projects, $1.0 billion of Oil & Gas awards and approximately $600 million of Government awards. Consolidated backlog rose to $30.2 billion, up from $25.7 billion last quarter, and compared with $30.9 billion a year ago.
Corporate G&A expense for the quarter was $28 million, down from $42 million in the second quarter of 2009. The lower G&A expense is primarily due to lower compensation costs. Fluor's financial condition continues to be very strong, with cash plus current and noncurrent marketable securities totaling $2.1 billion, which compares with $2.3 billion a year ago.
"Fluor has once again demonstrated the tremendous power of its diversified business model with the recognition of record new awards and growing backlog led by our global mining business," said Chairman and Chief Executive Officer Alan Boeckmann. "Looking ahead to the balance of 2010, we see the potential for continued strong new awards in the second half, especially in our mining, oil and gas, and infrastructure businesses."
Given the strength of results in the second quarter, the company is raising the lower end of its 2010 EPS guidance to a range of $2.90 to $3.20 per share, from the previous range of $2.80 to $3.20 per share.
Fluor's Oil & Gas segment reported second quarter revenue of $1.8 billion, down 42 percent from the second quarter of 2009. Segment profit declined to $98 million, compared with $181 million a year ago, driven mainly by lower revenues. New oil and gas awards in the second quarter totaled $1.0 billion, driven by international awards including a program management contract on the Shah Gas program in Abu Dhabi, which compares with $2.9 billion a year ago. During the quarter, Fluor was selected for the upstream facilities component of Santos' Gladstone Liquefied Natural Gas (GLNG) project in Australia. Approximately $45 million was included in second quarter new awards, with a full contract award expected in late 2010 or early 2011. Ending backlog at June 30, 2010 for Oil & Gas was $10.2 billion, which compares with $15.8 billion a year ago.
Fluor's Industrial & Infrastructure segment reported second quarter revenue of $1.8 billion, up 82 percent over last year. Segment profit for the second quarter increased 42 percent from a year ago to $48 million. Increased results for the current quarter were mainly attributable to substantially higher levels of mining and infrastructure project activity. Segment new awards were a record $7.2 billion for the quarter, compared with $2.2 billion a year ago, including a large aluminum program in Saudi Arabia valued at approximately $3 billion, a copper project in Chile valued at $1.4 billion, a copper/gold project in Mongolia valued at approximately $1 billion, and a $1 billion copper/gold project in Australia. Backlog rose to a segment record of $16.1 billion, increasing $5.6 billion over last quarter, and up 65 percent from a year ago.
Revenue for the Government segment was $777 million for the second quarter of 2010, up 62 percent from $479 million a year ago. Segment profit was $35 million, up from last year's results which included $15 million from a favorable project settlement. Improved results in the quarter were primarily due to increased contributions from LOGCAP IV task orders in Afghanistan. Second quarter new awards totaled $638 million, including $542 million for LOGCAP IV task orders. Segment backlog at the end of the quarter was $635 million, which is down from $974 million a year ago due to project execution activities related to American Recovery and Reinvestment Act work at the Savannah River site.
The Global Services segment reported revenue of $327 million, on par with $341 million in the second quarter of last year. Segment profit was $32 million, a 24 percent increase from a year ago, reflecting higher margins in the equipment services business line and contributions from the operations and maintenance business line in support of the Gulf Coast oil spill cleanup. New awards were $359 million, which compares with $371 million last year. Backlog at quarter end was $2.1 billion at the end of the second quarter, up 16 percent from $1.8 billion a year ago.
Fluor's Power segment reported revenue of $469 million, up 5 percent from last year. Segment profit increased 41 percent to $50 million in the second quarter, mainly due to the recognition of additional fees upon the successful completion of a large coal-fired power plant and substantial progress on other projects in the segment. The segment's positive results in the quarter were impacted by a $51 million provision for the estimated additional costs to complete a gas-fired power plant in Georgia. Power segment new awards were $82 million, and ending backlog for the quarter was $1.1 billion, compared with $2.6 billion a year ago.
Results for the Six Months
Net earnings attributable to Fluor for the six months ended June 30, 2010 were $294 million, or $1.63 per diluted share. This compares with $374 million, or $2.05 per diluted share, for the first six months of 2009. Revenue was $10.1 billion, compared with $11.1 billion in the first half of last year.
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