Engineering & Construction Company Fluor Misses Big On Q3 Earnings And Revises 2024 Guidance As Project Delays Bite

Fluor Corp FLR shares plummeted after the company reported third-quarter results below street expectations.

FLR’s revenue grew 3.3% year over year to $4.09 billion, missing the consensus of $4.738 billion. Adjusted EPS declined to 51 cents from $1.02 a year ago, missing the consensus of 76 cents.

Sales by segment: Energy Solutions $1.428 billion (-8.1% YoY), Urban Solutions $1.93 billion (+34.9% YoY), Mission Solutions $635 million (-3.1% YoY) and Others $100 million (-69.1% YoY).

FLR recorded a total segment profit of $117 million, compared to $276 million a year ago. The margin contracted 411 bps to 2.9%.

The company reported net earnings from core operations of $60 million, down from $158 million a year ago.

The total new awards were $2.69 billion compared to $4.976 billion a year ago. New awards related to projects located outside of the U.S. totaled 68%.

Consolidated backlog surged 20.4% year-over-year to $31.32 billion, with 80% of projects being reimbursable.

Adjusted EBITDA declined 42.6% year-over-year to $124 million, and the margin declined 242 bps to 3%.

At the end of the quarter, Fluor’s cash and marketable securities were $2.9 billion, excluding amounts held by NuScale. Operating cash flow for the nine months ended September amounted to $501 million.

Buyback: Fluor’s Board of Directors approved expanding its share repurchase program to 30.5 million shares as part of its capital allocation strategy.

Fluor announced it will deconsolidate NuScale starting in the fourth quarter, resulting in a $1.6 billion gain. Also, the company expects to complete the sale of Stork’s U.K. operations as early as the first quarter of 2025, pending regulatory approval.

2024 Outlook: FLR tightened its adjusted EPS outlook to $2.55 to $2.75 (prior $2.50 to $3.00) versus the $2.89 consensus.

The company lowered its adjusted EBITDA outlook to $525 million – $575 million (prior $625 million – $675 million) and increased cash flow guidance to ~$700 million.

Price Action: FLR shares are trading lower by 16.4% at $49.25 at the last check Friday.