IRVING, Texas - Fluor Corporation (NYSE: NYSE:FLR), a global engineering and construction firm, reported a fourth-quarter earnings per share (EPS) of $0.68, surpassing analyst expectations by $0.11. However, the company's revenue for the quarter fell short of consensus estimates, coming in at $3.82 billion against expectations of $4.11 billion. This discrepancy led to a 10% decline in Fluor's stock price, indicating a negative market response to the revenue miss.
The company's fourth-quarter revenue saw a slight increase from $3.7 billion in the same quarter last year, but this was not enough to meet analyst projections. Despite the earnings beat, the revenue shortfall has overshadowed the positive aspects of the report, such as the year-over-year improvement in EPS from the fourth quarter of 2022, when the company reported a loss of $0.01 per share.
Fluor's full-year results showed resilience, with new awards totaling $19.5 billion and an increase in backlog to $29.4 billion, marking over 10% growth for the second consecutive year. The company's prospect pipeline is also robust, at 15 times the ending backlog, presenting opportunities across all segments.
David Constable, chairman and CEO of Fluor, expressed confidence in the company's trajectory, stating, "In 2023, we not only reached but surpassed a critical inflection point on our journey to solidifying our position as a technical solutions leader in the global engineering and construction industry."
Looking ahead, Fluor has provided an adjusted EPS guidance for the fiscal year 2024 in the range of $2.50 to $3.00, with the midpoint of $2.75 slightly below the analyst consensus of $2.84. The company also reaffirmed its 2026 adjusted EBITDA guidance of $800 to $950 million.
The company's Energy Solutions segment reported a profit of $381 million for the full year, up from $301 million in the previous year, driven by increased execution activities on downstream projects and a large LNG project. Urban Solutions saw a significant profit increase to $268 million, compared to $17 million in 2022, thanks to settlements on legacy projects and discretionary fee awards. Mission Solutions experienced a slight decrease in profit, primarily due to a charge for cost growth associated with a weapons facility project.
The stock's 10% decline reflects investor concerns over the revenue miss and the implications for future performance. Despite the challenges faced in the fourth quarter, Fluor's management remains optimistic about the company's ability to improve cash flow conversion in 2024 and beyond.
InvestingPro Insights
Fluor Corporation (NYSE: FLR) has recently caught the attention of the market with its fourth-quarter earnings report. While the company's EPS outperformed expectations, the revenue miss has put the spotlight on its financial health and future prospects. Here are some insights based on InvestingPro data and tips that shed light on the company's current position and what investors might expect moving forward.
InvestingPro data shows that Fluor holds a market capitalization of $6.46 billion, indicating a significant presence in the engineering and construction sector. The company's price-to-earnings (P/E) ratio stands at 52.07, which may seem high, but when considering the adjusted P/E ratio for the last twelve months as of Q3 2023, which is 61.7, it suggests that investors are expecting higher earnings growth in the near term. This is further supported by a PEG ratio of 0.44 for the same period, implying that Fluor's earnings growth could be undervalued relative to its P/E ratio.
Despite the revenue miss in the fourth quarter, Fluor's year-over-year revenue growth is notable, with a 12.51% increase over the last twelve months as of Q3 2023. This aligns with management's confidence in the company's trajectory and the robust prospect pipeline highlighted by CEO David Constable.
One of the InvestingPro Tips points out that Fluor is expected to be profitable this year, which aligns with the company's positive guidance for adjusted EPS in fiscal year 2024. Another tip suggests that Fluor holds more cash than debt on its balance sheet, which is a strong indicator of financial stability and could reassure investors concerned about the company's ability to navigate future challenges.
Investors interested in a deeper analysis of Fluor Corporation can explore additional InvestingPro Tips, with 14 more available on the platform. For those seeking to make informed investment decisions, using coupon code PRONEWS24 will provide an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro.
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