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Fluor 'very disappointed' with Q1 results; Quanta earnings beat Street estimates

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Fluor 'very disappointed' with Q1 results; Quanta earnings beat Street estimates

Engineering, construction and procurement companies' financial results for the first quarter of 2019 closed mixed, with Fluor Corp. recording an adjusted net loss, and Quanta Services Inc. and Babcock & Wilcox Enterprises Inc. posting year-over-year improvement in their adjusted earnings.

Fluor 'very disappointed' with Q1 results, slashes 2019 guidance

Fluor's shares tanked May 2, ending at $29.72 compared to the previous day's closing price of $39.15, after the Irving, Texas-headquartered company reported an adjusted net loss of $19 million, or 14 cents per share, missing the S&P Global Market Intelligence consensus normalized EPS estimate of 52 cents.

The same day, David Seaton abruptly resigned as CEO and left the board of directors. Seaton, who was CEO since February 2011 and chairman since February 2012, would remain through a transition period, according to a company statement. The reason for his resignation was not mentioned.

Former Fluor CEO Alan Boeckmann would take over as executive chairman of the board, while Carlos Hernandez, chief legal officer of the company, was named interim CEO.

Fluor slashed its full-year 2019 adjusted earnings guidance to a range of $1.50 per share to $2.00 per share from the previous EPS guidance of $2.50 to $3.00.

The company reported a net loss attributable to Fluor of $58 million, or 42 cents per share, compared to a net loss of $18 million, or 13 cents per share, a year ago, reflecting restructuring charges, foreign exchange losses and related tax impacts of $39 million.

"Needless to say, we are very disappointed with these results," Hernandez said during the company's earnings conference call.

First-quarter revenue came in at $4.19 billion, compared to $4.82 billion a year ago. The company recorded consolidated ending backlog of $39.33 billion, compared to $29.13 billion a year ago.

In the mining, industrial, infrastructure and power segment, the company recorded $26 million in additional costs related to the punch list items for its legacy gas-fired power business.

"If you look back at some of the gas-fired power projects, that was a little bit different. That was a very competitive market. We probably were more aggressive than we should have been in bidding those projects," said Fluor Vice President Alan Matthew Fleming.

Quanta Services beats analyst expectations in Q1, raises 2019 guidance

Quanta Services on May 2 posted first-quarter adjusted net income attributable to common stock of $140.6 million, or 96 cents per share, beating the S&P Global Market Intelligence normalized consensus EPS estimate of 83 cents. The result compares to adjusted net income of $61.9 million, or 39 cents per share, a year ago.

Adjusted EBITDA totaled $201.8 million, rising from $156.6 million in the corresponding quarter of 2018. The company ended the quarter ended March 31 with "a record" backlog of $12.61 billion.

"It is worth highlighting that backlog continues to grow without meaningful large project awards and is primarily the result of incremental growth of programmatic spending with existing and new customers," President and CEO Earl Austin said during the company's earnings conference call.

Quanta's revenues rose year over year to $2.81 billion, from $2.42 billion a year ago.

Looking ahead, the company is targeting full-year 2019 adjusted EPS in the range of $3.40 to $3.86. It also raised its full-year revenues guidance to a range of $11.2 billion to $11.6 billion, with $300 million of that increase attributable to its electric segment.

During the quarter, Quanta and project partner ATCO Ltd. placed into service the 500-kV Fort McMurray West transmission line in Alberta, after completing the project on budget and three months ahead of schedule.

B&W narrows Q1 losses, targets $100M in cost-saving initiatives

Babcock & Wilcox Enterprises, or B&W, on May 9 posted first-quarter adjusted EBITDA of negative $5.0 million, improving from adjusted EBITDA of negative $77.6 million in the same quarter of 2018. The company changed its calculation of the adjusted EBITDA to exclude net pension benefit, foreign currency exchange effects, and other income and expense.

B&W reported net loss attributable to shareholders of $49.8 million, or 29 cents per share, compared with a net loss of $120.4 million, or $2.65 per share, a year ago.

Revenues came in at $231.9 million, a drop from $253.2 million in the first quarter of 2018, due to several EPC contracts being in the final stages of completion in the first quarter.

"Our performance in the first quarter of 2019 reflects the impact of the strategic actions we have taken over the past several months. Combined with the settlements we reached in March 2019 and our additional financing, we have momentum on our path to profitability," said CEO Kenneth Young in the earnings announcement.

The company continues to target a run-rate adjusted EBITDA of approximately $100 million as it exits 2020, not including corporate overhead, Young said.

B&W also identified and started implementing over $100 million of cost-saving initiatives and has challenged its segments to find an additional $30 million of cost reductions.

"Ultimately, as we return to a more stable operational and financial environment over the next few quarters, we will position the company for refinancing as soon as possible under more advantageous terms and reduce our leverage ratio after using proceeds from our rights offering to pay down our debt," Young said during the company's earnings conference call.