Fluor Corporation (FLR) experienced a significant stock price drop on Friday, plummeting over 16%, following the release of its third-quarter earnings report that fell short of Wall Street’s expectations. The company’s revenue growth, while positive, missed the consensus estimate, and adjusted earnings per share saw a notable decline compared to the previous year.
The company reported a 3.3% year-over-year increase in revenue, reaching $4.09 billion. However, this figure fell short of the consensus estimate of $4.738 billion. Adjusted earnings per share declined to 51 cents from $1.02 a year ago, missing the consensus estimate of 76 cents.
Looking at the individual segments, Energy Solutions saw a revenue decline of 8.1% year-over-year, while Urban Solutions recorded a 34.9% increase. Mission Solutions experienced a slight decrease of 3.1%, and the ‘Others’ segment saw a significant drop of 69.1%. This resulted in a total segment profit of $117 million, down from $276 million a year ago.
Despite the revenue miss, Fluor’s backlog saw a substantial surge of 20.4% year-over-year, reaching $31.32 billion. This backlog is heavily weighted towards reimbursable projects, with 80% of the total falling into this category.
While Fluor faces challenges in its financial performance, the company is taking proactive steps. The Board of Directors has approved an expansion of the share repurchase program to 30.5 million shares. This move signals the company’s commitment to returning value to shareholders.
Additionally, Fluor announced plans to deconsolidate NuScale, expecting a gain of $1.6 billion from this action. The company also anticipates finalizing the sale of Stork’s U.K. operations by the first quarter of 2025, subject to regulatory approval.
Looking ahead to 2024, Fluor has adjusted its outlook. The company narrowed its adjusted EPS forecast to a range of $2.55 to $2.75, compared to the previous range of $2.50 to $3.00. This revised outlook still falls short of the consensus estimate of $2.89. The company also lowered its adjusted EBITDA outlook to $525 million to $575 million, down from the prior range of $625 million to $675 million. However, the company increased its cash flow guidance to approximately $700 million.
Fluor’s performance in the third quarter highlights the challenges faced by the engineering and construction industry. However, the company’s strategic initiatives and strong backlog suggest a potential for future growth. Investors will be closely watching how Fluor navigates these headwinds in the coming quarters.
