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Fluor Wins LOGCAP V Contract, Supports U.S. Africa Command

Zacks Equity Research

Fluor Corporation FLR has won a Logistics Civil Augmentation Program (“LOGCAP”) V contract from the U.S. Army Sustainment Command. The company will offer regional forward planning support to U.S. Africa Command (“AFRICOM”). This contract includes a one-year base period and four single-year options.

As part of this multiple award task order contract, Fluor will help the U.S. Armed Forces to complete missions in difficult and remote locations across the world. Fluor was one of the four companies to receive this contract through a competitive bidding process.

Headquartered in Stuttgart, Germany, AFRICOM and its partners protect personnel, prevent conflict and build defense capability to encourage security, stability and prosperity in the region.

The company’s Government segment has been providing high-quality rapid response to contingency construction, humanitarian assistance and disaster recovery support for more than a decade in the most severe and remote environments. Specifically, it has been providing its services to the U.S. Army under LOGCAP since 2008.

Fluor’s Government Business Bodes Well

The company’s Government business has a solid track record of deal wins and the trend is expected to continue in the near term as well. The company remains confident about the segment’s performance in 2019 as it has won multiyear Department of Energy (“DOE”) contracts, including participation in the DOE National Laboratory Complex and ongoing Departmental of Defense contracts.

At the end of 2018, the company’s consolidated backlog totaled $40 billion, up 29.4% from the comparable year-ago period. Particularly, in the Government segment, backlog was $4.6 billion as of Dec 31, 2018, compared with $3.8 billion as of Dec 31, 2017.

Notably, in 2018, new awards in the segment recorded an increase of 57.7% year over year, primarily attributable to five-year extension of the Strategic Petroleum Reserve contract, a thirty-month extension at the Portsmouth Gaseous Diffusion Plant site, a contract extension for the LOGCAP IV program and a one-year extension at the Savannah River site.

Recent Contract Wins

On Ap 8, 2019, the company was selected as one of the six companies by Naval Facilities Engineering Command Atlantic to provide construction, design-build construction and associated engineering services for up to 60 months.

Total value of the Global Contingency Construction Multiple Award Contract is nearly $975 million. The contract will help the Navy, Department of Defense and other U.S. federal agencies to cope with natural disasters, humanitarian assistance, conflicts and other urgent requirements.



Notably, shares of Fluor have gained 8% in the past month, comparing favorably with its industry and the S&P 500 composite’s growth of 5% and 2%, respectively. Ongoing contract wins and strong backlog are helping the stock to gain further.

Zacks Rank & Stocks to Consider

Currently, Fluor carries a Zacks Rank #3 (hold). Some better-ranked stocks in the Zacks Construction sector include Apergy Corporation APY, Quanta Services, Inc. PWR and AECOM ACM. While Apergy and Quanta Services sport a Zacks Rank #1 (Strong Buy), AECOM carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Apergy, Quanta Services and AECOM’s earnings for the current year are expected to increase 2.8%, 25.3% and 2.6%, respectively.

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Quanta Services, Inc. (PWR) : Free Stock Analysis Report
 
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