Fluor (FLR) Wins Position in Multiple Award IDIQ Contract
Fluor Corporation FLR has been selected for a position on an Indefinite Delivery/Indefinite Quantity (IDIQ) contract by the U.S. Department of Energy (“DOE”) Office of Environmental Management to offer support services for nationwide Deactivation, Decommissioning and Removal of facilities, waste management and program assistance. The company’s shares gained 4.6% in the after-hours trading session, following the news.
Fluor is one of the nine companies that are selected for firm-fixed price and cost reimbursement task orders with a maximum ceiling of $3 billion over a 10-year ordering period.
The company will carry out the assignment through the Government business segment and work at various locations across the United States to support the National Nuclear Security Administration, Office of Naval Reactors and Office of Science.
Fluor’s Government Business Bodes Well
Shares of the company have rallied 47% in the past three months compared with the Zacks Engineering - R And D Services industry’s 13.8% increase. We believe new contract wins will help the company to drive growth. Over the past few quarters, major wins for the Government business have enabled Fluor to expand long-term recurring revenue opportunities.
On May 2020, the DOE selected Hanford Works Restoration, LLC — a joint venture between a subsidiary of BWX Technologies, Inc. and Fluor — to lead the Tank Closure Contract at the DOE’s Hanford Site. The contract is valued at up to approximately $13 billion over a 10-year period.
During third-quarter 2019, it had planned to sell the Government segment. Meanwhile, on Feb 18, 2020, the company announced that it has withdrawn the plan to sell the said segment, as Fluor has gained confidence in its solid liquidity position and viable options for generating cash flow. The business ceased to be reported as a discontinued operation from first-quarter 2020.
According to preliminary numbers, new awards were $2.2 billion in 2019 and $146 million in the fourth quarter for the Government segment. Backlog at the end of 2019 is expected to be $3.8 billion.
Zacks Rank
Fluor — which shares space with Gates Industrial Corporation plc GTES, Quanta Services, Inc. PWR and AECOM ACM in the same industry — currently carries a Zacks Rank #2 (Buy).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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