Fluor (FLR) Q4 Earnings Beat, New Awards & Backlog Rise Y/Y
Fluor Corporation FLR reported better-than-expected results for fourth-quarter 2023, wherein earnings surpassed the Zacks Consensus Estimate and increased year over year.
In the quarter, the top line of the company grew year over year on the back of solid contributions from the Urban Solutions and Mission Solutions business segments. It has been benefiting from robust end markets, strong client relationships and a resilient capital structure. This growing trend is reflected in solid growth in new awards and backlog value, which are, in turn, solidifying the growth prospects of the company.
Yet, soft contributions from the Energy Solutions segment are concerning along with foreign exchange risks.
The company’s shares dwindled 12.7% on Feb 20 during the trading session, post the earnings release.
Inside the Headlines
Fluor reported adjusted earnings per share (EPS) of 68 cents, which topped the Zacks Consensus Estimate of 56 cents by 21.4%. The reported figure increased from an EPS of 43 cents a year ago.
Quarterly revenues of $3.82 billion increased 3% from the year-ago level of $3.71 billion.
Fluor Corporation Price, Consensus and EPS Surprise
Fluor Corporation price-consensus-eps-surprise-chart | Fluor Corporation Quote
Overall, the company’s segment profit was $85 million, reflecting a decline from $174 million a year ago. The segment margin of 2.2% contracted from 4.7% in the year-ago period. Adjusted EBITDA for the reported period was $145 million, up from $136 million in the prior-year period.
Fluor's total new awards in the quarter were $7.61 billion compared with $4.6 billion in the year-ago period. The consolidated backlog at the fourth-quarter end was $29.44 billion, up from $26.05 billion at 2022 end.
Segmental Discussion
The Energy Solutions segment’s revenues declined 19.9% year over year to $1.42 billion in the fourth quarter. The segment margin was 1.8% in the quarter, down from 7% a year ago. New awards were $2.15 billion for the quarter, up from $916 million a year ago. The backlog at the quarter-end was $9.72 billion, up from $9.13 billion at 2022 end.
Revenues in the Urban Solutions segment totaled $1.42 billion, up 29.9% on a year-over-year basis. The segment margin was 10.4% in the quarter, up from 3.5% a year ago. New awards were $5.05 billion for the quarter, up from $3.35 billion a year ago. The backlog at the quarter-end was $14.85 billion, up from $10.27 billion at 2022 end.
Revenues in the Mission Solutions segment totaled $646 million, up 26.9% on a year-over-year basis. The segment margin improved 90 basis points (bps) to 4.8% from the previous year. It booked new awards worth $40 million, up from $36 million a year ago. The backlog at the quarter-end was $3.95 billion, down from $5.67 billion in 2022 end.
The Other segment, which comprises NuScale, generated revenues of $332 million for the fourth quarter, flat year over year. The segment generated a loss of $119 million compared with an $8 million loss a year ago. It booked new awards worth $363 million, up from the year-ago level of $294 million. The backlog at the quarter-end was $926 million compared with $979 million at 2022 end.
2023 at a Glance
In the full year, Fluor reported revenues of $15.47 billion, up 12.6% from $13.74 billion reported in 2022. The adjusted earnings during the year were $2.73 per share, up from 83 cents reported in 2022.
Adjusted EBITDA was also up 87.5% year over year to $613 million, from $327 million.
2024 Guidance
For 2024, Fluor expects adjusted EPS in the range of $2.50-$3.00. The full-year revenues are expected to grow approximately 15% year over year.
It expects adjusted EBITDA to be between $600 million and $700 million. For the year, G&A expenses are expected to be about $190 million.
For 2024, Fluor expects the margin percentage for its segments including Energy Solutions, Urban Solutions and Mission Solutions to be 5%, within 3-4%, and 6%, respectively.
For 2026, it still anticipates adjusted EBITDA in the range of $800-950 million.
Zacks Rank & Recent Construction Releases
Fluor currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Vulcan Materials Company VMC reported strong results for fourth-quarter 2023, wherein earnings and revenues surpassed the Zacks Consensus Estimate. On a year-over-year basis, both metrics increased year over year.
This performance can be attributed to the consistent strategic execution and the strong performance of its aggregates-led business. Additionally, large industrial projects contributed to its better-than-expected results. For 2024, the company anticipates adjusted EBITDA in the range of $2.15-$2.30 billion and net earnings of $1.07-$1.19 billion. Capital expenditures are anticipated between $625 million and $675 million for maintenance and growth projects.
Martin Marietta Materials, Inc. MLM reported mixed fourth-quarter 2023 results, with earnings surpassing the Zacks Consensus Estimate and increasing on a year-over-year basis. Revenues missed the consensus mark but rose year over year.
Going forward, MLM anticipates strong demand for infrastructure, large-scale energy and domestic manufacturing projects. This will largely offset weaker residential demand and the anticipated softening in light non-residential activity. With mortgage rates stabilizing and affordability headwinds receding, MLM fully expects single-family residential construction to recover, as demand still exceeds supply, particularly in its key markets. For 2024, it expects consolidated products and services revenues of $6.75-$7.19 billion. Also, adjusted EBITDA is projected to be between $2.14 billion and $2.34 billion.
Owens Corning OC reported better-than-expected results for fourth-quarter 2023. Both earnings and net sales surpassed the Zacks Consensus Estimate and increased on a year-over-year basis.
The Roofing segment’s contributions, favorable price and cost mix, and manufacturing performance aided the uptrend. The Roofing segment’s net sales rose 16% year over year to $928 million, driven by strong demand tied to the mild weather extending the roofing season in many regions and strong components attachment rate, as well as favorable mix and positive price. For the first quarter of 2024, OC expects net sales to be slightly below the first quarter of 2023 while generating mid-teens margins.
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