JEC Jacobs Engineering Group Inc

Fluor Corporation (FLR) reported second-quarter 2011 earnings per share of 94 cents, outperforming the Zacks Consensus Estimate of 81 cents. Prior-year earnings per share were 87 cents.

Total Revenue

Total revenue was $6.0 billion compared with $5.2 billion in the second quarter of 2010, led by growth in the Industrial & Infrastructure segment.

Segment Revenue

Revenue from Oil & Gas segment was $2.0 billion compared with $1.8 billion in the year-ago quarter, driven by new awards and strong order backlog. New awards won during the quarter were approximately $3.2 billion with backlog amounting to $14.9 billion at the end of the quarter.

Industrial & Infrastructure revenue was $2.6 billion, an increase of 43% year over year as the mining and metals business expanded substantially. New awards won during the quarter were $5.1 billion with backlog amounting to $21.4 billion at the end of the quarter. 

Government segment revenue was $848 million compared with $777 million in the prior-year quarter, benefiting from revenue due to Portsmouth contract with the Department of Energy and higher volume from LOGCAP IV task orders in Afghanistan. New awards won during the quarter were $1.1 billion with backlog amounting to $1.1 billion at the end of the quarter.

Global Services segment posted revenue of $406 million, an increase of 24% year over year, led by improvement in the operations and maintenance businesses. New awards won during the quarter were $164 million with backlog amounting to $2.1 billion at the end of the quarter.

Power segment revenue declined by 56% to $206 million resulting from weak market condition and decline in demand for new domestic power generation. New awards won during the quarter were $107 million with backlog amounting to $744 million at the end of the quarter.

Income & Expenses

Earnings before taxes were $281.2 million compared with $259.1 million at the end of the prior-year quarter. Total cost and expenses for the quarter amounted to $5.75 billion compared with $4.89 billion.

Operating margin in Oil & Gas segment was 3.5% compared with 5.5% in the prior-year period, Infrastructure & Industrial segment came in at 4.2% compared with 2.7%, Government segment was 3.7% compared with 4.5%, Global Services segment was 10.2% compared with 9.7% and Power segment was 14.4% compared with 10.6% in the comparable quarter last year.

Balance Sheet & Cash Flow

Cash and marketable securities, including noncurrent, amounted to $2.49 billion at the end of the quarter compared with $2.61 billion at the end of 2010. Long-term debt was $17.8 million, unchanged from that at the end of 2010 and shareholder’s equity was $3.49 billion compared with $3.50 billion in the year-ago quarter.

Outlook

The company changed its 2011 earnings per share guidance to $3.10 – $3.40 from $3.00 –$3.40, led by strong earnings, new awards and backlog in the second quarter.

Acting through its subsidiaries, Fluor Corporation is one of the largest professional services firms, providing engineering, procurement, construction and maintenance as well as project management services on a global basis.

It serves a diverse set of industries worldwide including oil and gas, chemical and petrochemicals, transportation, mining and metals, power, life sciences and manufacturing. It is also a primary service provider to the U.S. federal government.  The company’s prime competitor is Jacob’s Engineering Group (JEC).

We continue to maintain a Neutral rating on Fluor Corporation, with a Zacks #2 Rank (Buy recommendation) over the next one-to-three months.

 
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