Fluor Q4 Profit Beats View, But Revenues Miss; Trims 2015 Outlook

(RTTNews) - Engineering and construction company Fluor Corp. (FLR) reported a 29 percent increase in profit for the fourth quarter from last year, reflecting a lower tax rate as well as decline in expenses that helped offset a decrease in revenues.

Earnings per share from continuing operations for the quarter beat analysts' expectations, while revenues missed their estimates. Looking ahead, the company trimmed the low end of its earnings range outlook for fiscal 2015.

Irving, Texas-based Fluor's fourth-quarter net earnings attributable to the company were $214.5 million or $1.37 per share, up from $166.8 million or $1.01 per share in the same period last year.

Earnings from continuing operations were $1.41 per share, up from $1.01 per share in the year-ago period. On average, 24 analysts polled by Thomson Reuters expected the company to earn $1.10 per share for the quarter. Analysts' estimates typically exclude special items.

The company noted that the effective tax rate of 23 percent in the latest quarter was lower than normal, primarily due to the favorable resolution of tax audit issues.

Revenue for the quarter declined 13 percent to $5.46 billion from $6.29 billion in the same period last year. Analysts had a consensus revenue estimate of $5.78 billion.

Consolidated segment profit for the quarter increased 9 percent from the year-ago period to $346.6 million and reflects improved contributions from the Oil & Gas and Power segments.

However, Fluor's oil and gas division revenues for the quarter declined 14 percent from the year-ago period to $2.59 billion, while industrial & infrastructure unit revenues declined 23 percent to $1.69 billion.

Government segment revenues decreased 9 percent from last year to $705.0 million and global services units' revenues edged down to $156.7 million. Power group revenues rose 11 percent to $312.3 million.

The company's total costs and expenses declined 14 percent from the year-ago period to $5.15 billion.

Fluor's consolidated backlog at the end of the fourth quarter was $42.48 billion, up 22 percent from $34.91 billion a year ago. The increase in backlog reflects growth in both the Oil & Gas and Government segments.

Total new awards at the end of the quarter rose 15 percent to $28.83 billion.

For fiscal 2014, net earnings attributable to Fluor declined to $510.9 million or $3.20 per share from $667.7 million or $4.06 per share in the previous year. Net earnings from continuing operations were $4.48 per share, up from $4.06 per share in the prior year.

Revenue for the year decreased 21 percent to $21.53 billion from $27.35 billion last year.

Street expected the company to earn $4.19 per share for the year on revenues of $21.93 billion.

Looking ahead to fiscal 2015, Fluor now forecasts earnings in a range of $4.40 to $5.00 per share, compared to the prior range of $4.50 to $5.00 per share. The outlook excludes the effects of the previously announced termination and settlement of Fluor's U.S. defined benefit pension plan later in 2015.

Analysts expect the company to earn $4.62 per share for the year.

Fluor noted that while it continues to closely monitor the capital spending plans of its major oil and gas clients, it currently believe that effects from slower spending by customers on its earnings per share guidance will be significantly offset by the positive effects of its announced share repurchase program.

However, the company now believe the upper half of the earnings outlook range, while still achievable, has become more challenging.

David Seaton, Chairman and Chief Executive Officer of Fluor said, "Although we continue to track a robust prospect list across a number of end markets and geographies, the short-term impact of oil prices and the timing of major capital investment decisions by our customers create uncertainty."

FLR is trading at $59.20, up $1.63 or 2.83 percent on a volume of 839,849 shares.