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Fluor's (FLR) Regular Contract Flow Bode Well, Competition Ail
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Fluor Corporation (FLR - Free Report) has been witnessing regular contract flow for its businesses. In sync with this, Fluor recently received a multi-hundred-million-dollar reimbursable contract from a leading biologics company.
Per this contract, FLR will perform procurement and construction management services for a Scandinavia-based large scale biologics drug substance manufacturing facility. Scheduled to be operational by 2025, this facility will produce new capacity for advanced biologics that are used in various treatments, including vaccines, oncology and quality-of-life medicines.
Fluor’s Advanced Technologies & Life Sciences business is leading the project. It will book the contract value in its third-quarter 2022 backlog.
In addition to this contract, FLR also won a 4-year, $4.5 billion contract extension from the U.S. Department of Energy (DOE) for the Savannah River Nuclear Solutions, LLC (SRNS). This management and operating contract has an additional one-year option and a total reimbursable contract value of $12 billion for five years.
Tom D’Agostino, group president of Fluor’s Mission Solutions business, stated, “This extension represents the DOE’s confidence in our performance to help safeguard our nation’s security and deliver on the important mission at the site.”
Solid Contract Flow & Strategic Moves Aid FLR Business
Fluor’s market diversity remains a key strength that helps the company mitigate the cyclicality of the markets in which it operates. The company’s strategy of maintaining a good business portfolio mix permits it to focus on more stable business markets and capitalize on developing cyclical markets at suitable times.
Fluor has been focusing on the “Building a Better Future” strategy that includes four strategic priorities for driving shareholders’ value. The first strategy is to drive growth across portfolios by enhancing the markets outside the traditional oil and gas sector, including energy transition, advanced technology and life sciences, high-demand metals, infrastructure and mission solutions. The second one aims to pursue contracts with fair and balanced commercial terms that reward value, with a bias toward reimbursable contracts. Third, it intends to reinforce financial discipline and maintain a solid balance sheet by generating predictable cash flow and earnings. The last strategy is fostering a high-performance culture with purpose by advancing diversity, equity and inclusion efforts and promoting social progress and sustainability.
This industry leader in nuclear remediation at government facilities throughout the United States is expected to benefit from the rising demand for energy across the globe. Fluor also has exclusive rights to service NuScale nuclear projects, the first of which is already in the pipeline.
2022 Prospects Looks Good
The company exited 2021 with a healthy ending backlog of $18.9 billion and a total backlog of $20.8 billion. For second-quarter 2022, the ending backlog totaled $19.52 billion with new bookings of $3.55 billion (versus $1.7 billion in the year-ago period). Management expects bookings to be solid in the rest of 2022 and help it achieve a $2.50-$2.90 per share gross margin by 2024.
For 2022, Fluor expects an adjusted EPS of $1.15-$1.35 per share from continuing operations. It expects adjusted EBITDA to be in the range of $380 million to $430 million. In 2022, it assumes increased opportunities for new awards across all segments and continued progress on the company's cost optimization program. The assumptions for 2022 include revenue similar to 2021, adjusted G&A expense of $50 million per quarter and a second-half effective tax rate of approximately 36%. The company anticipates segment margins in the second half of 2022 to be approximately 5% in Energy Solutions, 4.5% in Urban Solutions and 3.5% in Mission Solutions.
Industry Woes Ail
FLR and other Zacks Engineering - R and D Services industry players like Jacobs Engineering Group Inc. (J - Free Report) , AECOM (ACM - Free Report) and Quanta Services Inc. (PWR - Free Report) have been working in a highly-fragmented industry. The increasing competition, coupled with the inclination toward globalization, has triggered a consolidation trend across all industries, especially in the engineering and construction sector. The power market is extremely competitive and Fluor continues to face a series of challenges in this market. Amid the prevailing uncertainty, the companies are coming together via mergers and acquisitions to thrive in the global economy.
A Brief Discussion of the Above-Mentioned Stocks
Jacobs is one of the leading providers of professional, technical and construction services to industrial, commercial and governmental clients.
J’s expected earnings growth rate for fiscal 2022 is 10.3%.
AECOM provides professional, technical and management solutions to diverse industries across end markets like transportation, facilities, government and environmental, energy and water businesses.
ACM’s expected earnings growth rate for fiscal 2022 is 22.7%.
Quanta is a leading national provider of specialty contracting services and one of the largest contractors serving the transmission and distribution sector of the North American electric utility industry.
PWR’s expected earnings growth rate for 2022 is 27.2%.
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Fluor's (FLR) Regular Contract Flow Bode Well, Competition Ail
Fluor Corporation (FLR - Free Report) has been witnessing regular contract flow for its businesses. In sync with this, Fluor recently received a multi-hundred-million-dollar reimbursable contract from a leading biologics company.
Per this contract, FLR will perform procurement and construction management services for a Scandinavia-based large scale biologics drug substance manufacturing facility. Scheduled to be operational by 2025, this facility will produce new capacity for advanced biologics that are used in various treatments, including vaccines, oncology and quality-of-life medicines.
Fluor’s Advanced Technologies & Life Sciences business is leading the project. It will book the contract value in its third-quarter 2022 backlog.
In addition to this contract, FLR also won a 4-year, $4.5 billion contract extension from the U.S. Department of Energy (DOE) for the Savannah River Nuclear Solutions, LLC (SRNS). This management and operating contract has an additional one-year option and a total reimbursable contract value of $12 billion for five years.
Tom D’Agostino, group president of Fluor’s Mission Solutions business, stated, “This extension represents the DOE’s confidence in our performance to help safeguard our nation’s security and deliver on the important mission at the site.”
Solid Contract Flow & Strategic Moves Aid FLR Business
Fluor’s market diversity remains a key strength that helps the company mitigate the cyclicality of the markets in which it operates. The company’s strategy of maintaining a good business portfolio mix permits it to focus on more stable business markets and capitalize on developing cyclical markets at suitable times.
Fluor has been focusing on the “Building a Better Future” strategy that includes four strategic priorities for driving shareholders’ value. The first strategy is to drive growth across portfolios by enhancing the markets outside the traditional oil and gas sector, including energy transition, advanced technology and life sciences, high-demand metals, infrastructure and mission solutions. The second one aims to pursue contracts with fair and balanced commercial terms that reward value, with a bias toward reimbursable contracts. Third, it intends to reinforce financial discipline and maintain a solid balance sheet by generating predictable cash flow and earnings. The last strategy is fostering a high-performance culture with purpose by advancing diversity, equity and inclusion efforts and promoting social progress and sustainability.
This industry leader in nuclear remediation at government facilities throughout the United States is expected to benefit from the rising demand for energy across the globe. Fluor also has exclusive rights to service NuScale nuclear projects, the first of which is already in the pipeline.
2022 Prospects Looks Good
The company exited 2021 with a healthy ending backlog of $18.9 billion and a total backlog of $20.8 billion. For second-quarter 2022, the ending backlog totaled $19.52 billion with new bookings of $3.55 billion (versus $1.7 billion in the year-ago period). Management expects bookings to be solid in the rest of 2022 and help it achieve a $2.50-$2.90 per share gross margin by 2024.
For 2022, Fluor expects an adjusted EPS of $1.15-$1.35 per share from continuing operations. It expects adjusted EBITDA to be in the range of $380 million to $430 million. In 2022, it assumes increased opportunities for new awards across all segments and continued progress on the company's cost optimization program. The assumptions for 2022 include revenue similar to 2021, adjusted G&A expense of $50 million per quarter and a second-half effective tax rate of approximately 36%. The company anticipates segment margins in the second half of 2022 to be approximately 5% in Energy Solutions, 4.5% in Urban Solutions and 3.5% in Mission Solutions.
Industry Woes Ail
FLR and other Zacks Engineering - R and D Services industry players like Jacobs Engineering Group Inc. (J - Free Report) , AECOM (ACM - Free Report) and Quanta Services Inc. (PWR - Free Report) have been working in a highly-fragmented industry. The increasing competition, coupled with the inclination toward globalization, has triggered a consolidation trend across all industries, especially in the engineering and construction sector. The power market is extremely competitive and Fluor continues to face a series of challenges in this market. Amid the prevailing uncertainty, the companies are coming together via mergers and acquisitions to thrive in the global economy.
A Brief Discussion of the Above-Mentioned Stocks
Jacobs is one of the leading providers of professional, technical and construction services to industrial, commercial and governmental clients.
J’s expected earnings growth rate for fiscal 2022 is 10.3%.
AECOM provides professional, technical and management solutions to diverse industries across end markets like transportation, facilities, government and environmental, energy and water businesses.
ACM’s expected earnings growth rate for fiscal 2022 is 22.7%.
Quanta is a leading national provider of specialty contracting services and one of the largest contractors serving the transmission and distribution sector of the North American electric utility industry.
PWR’s expected earnings growth rate for 2022 is 27.2%.