Fluor posts $61M profit, boosts backlog
- Fluor announced Friday it earned $61 million in the second quarter of 2023, compared to a $66 million profit a year ago, with leading performance from its energy and urban solutions segments, according to the company’s Q2 earnings report.
- Revenue for the second quarter hit $3.94 billion compared to $3.3 billion a year ago, about a 19.4% increase, said Fluor CEO David Constable during the earnings call. Backlog reached $25.48 billion, a 30.5% jump from $19.52 billion in Q2 2022.
- The Irving, Texas-based company reported its new awards for the second quarter totaled $3.7 billion, a 2.8% increase from $3.6 billion a year ago, according to the report. “I want to note that our results and accomplishments this quarter reflect notable progress,” said Constable during the call. “[It’s] indicative of our ongoing transformation into one of the leading engineering and construction companies in the world.”
The positive second quarter follows a somewhat cloudy first quarter earlier this year, when $80 million in charges from two legacy projects obscured an otherwise healthy start to the year.
This time around, Fluor reported both “positive momentum on legacy infrastructure projects” as well as a positive forecast adjustment related to those legacy infrastructure projects, said Constable.
“Our positive results for the quarter continue to support our strategic direction and confirms there is strong demand for our engineering and construction solutions,” said Constable. “We believe we are approaching an inflection point that will deliver increasing shareholder value.”
New awards in the second quarter included $574 million for the first phase of a new life sciences production facility in the central U.S., $487 million for the expansion of a biotech facility in Denmark and a $700 million contract on the I-35 NEX South project in San Antonio, Texas.
Anticipated new awards include the multi-billion Dow’s Path 2 Zero ethylene and derivatives chemical complex in Canada, a $1.4 billion Salina Cruz refinery in Mexico, nuclear engineering work in Romania and a large chemical project in Europe, according to Constable.
About 70% of new awards are reimbursable, while total backlog moved up to about 64% reimbursable contracts, said Constable. These types of contracts require the client to cover the cost of all completed work, meaning the final price is determined once the project is finished, reducing the risk for the contractor.
Takeaways from earnings
There were “pluses and minuses” from the second quarter earnings report, but it was a more positive takeaway at first glance, said Andrew Wittmann, senior research analyst at Milwaukee-based financial services company Baird.
“Results were better and cleaner than recent quarters, and the net drama is much less,” said Wittmann in a research note. “One quarter doesn’t fix that, but it’s a step in the right direction.”
Fluor’s Energy Solutions segment reported a profit of $89 million in the second quarter compared to $65 million in the second quarter of 2022, largely due to the ramp-up of execution activities on refinery projects in Mexico and positive forecast adjustments totaling $74 million on two projects, according to the release.
Urban Solutions hit a profit of $76 million in the second quarter compared to $12 million in Q2 2022, predominantly due to a positive forecast adjustment on a legacy infrastructure project as well as the ramp-up of execution activities on newly awarded projects.