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Energy EPCs record improvements in bookings, backlogs in Q2

Q2: U.S. Solar and Wind Power by the Numbers

Essential Energy Insights - September 17, 2020

Essential Energy Insights September 2020

Rate case activity slips, COVID-19 proceedings remain at the forefront in August


Energy EPCs record improvements in bookings, backlogs in Q2

As some big energy projects begin to push through, engineering, procurement and construction contractors in the industry saw solid improvements in bookings and backlogs in the second quarter of 2018.

Fluor Corp., which received a limited notice to proceed on the LNG Canada project during the quarter, also announced that this has been the first time since 2016 that they a positive movement in backlog.

The company posted a backlog of $29.32 billion at the end of the 2018 second quarter, compared to $37.57 billion in the prior-year period. Fluor continues to see the backlog improving in the second half of 2018.

"This quarter, we booked new awards of $5.4 billion, driven mainly by $3.6 billion in our Mining, Industrial, Infrastructure & Power segment. We're pleased to win several big awards this quarter across the end markets we serve and are encouraged by the growing pipeline of work our clients have entrusted to us," said CEO Bruce Stanski during the Aug. 2 earnings call.

In particular, Fluor's energy and chemical segments recorded a $493 million in new awards, and ending backlog of $12.4 billion, compared to $18 billion a year ago.

Quanta Services Inc. had a similar story, recording a 12-month backlog of $7.4 billion. Each of its electric power, oil and gas and consolidated segments also posted record 12-month backlog levels.

"The second half of this year is strengthening as our base business activity seasonally increases and our larger pipeline projects ramp into construction, which should result top — in top line growth and margin expansion," said President, CEO and COO Earl Austin during the Aug. 2 earnings call.

This also allowed the company to maintain its full-year adjusted EPS guidance range of $2.55 to $2.95. Quanta expects revenues to range between $10.35 billion and $10.75 billion in 2018.

"[R]elative to our revenue guidance as it stands here today, we do not need any additional large awards in either electric power or oil and gas to come through relative to our current guidance. So anything would be incremental to this year at this stage," said Quanta CFO Derrick Jensen.

Earlier in June, Quanta was chosen by BC Hydro and Power Authority for the Site C transmission project, which includes construction of two new 500-kV power lines. This project is included in the backlog at June 30.

Quanta was also recently selected by TransCanada Corp. subsidiary NOVA Gas Transmission Ltd. for spread three of the North Montney Mainline Project. The installation of the new natural gas mainline pipe in British Columbia will be reflected in Quanta's third quarter backlog.

SNC-Lavalin Group Inc. also reached a milestone of C$15 billion of backlog at the end of June 30, which executives said positions the company for a strong second half.

"Our new awards were strong in the second quarter, mainly from Infrastructure," said CEO and President Neil Bruce during the Aug. 2 earnings call. "Despite delays in some contract awards, we remain optimistic as our clients restart significant investments in their capital expenditures for the end of 2018 or early 2019."

The company's total booking amounted to C$4.1 billion in the second quarter.

Babcock & Wilcox Enterprises Inc. had solid bookings in the first half of 2018, amid a challenging quarter. The company expects these bookings to keep it largely on track for its 2018 targets.

"In the near term, we're focused on executing our work in our backlog, continuing to serve our customers in core Power and Industrial markets with high-quality engineered equipment and services and driving the Renewable projects to completion," said President and CEO Leslie Kass during the Aug. 9 earnings call.

Babcock & Wilcox posted a backlog of $1.52 billion as of June 30, compared to $1.88 billion in the same period of 2017. The company reported bookings of $126 million, down from $234 million in the prior-year period.

BWX Technologies, meanwhile, recorded exceptionally strong bookings in its Nuclear Power Group.

"On the last call, I mentioned the Bruce Power steam generator contract. We've received this contract in the second quarter, and I want to underscore that it was the largest contract in the history of this segment. So even with significant revenue growth, segment backlog is at record levels over CAD 1 billion," said CEO and President Rex Geveden during the Aug. 7 earnings call.

Overall, the company's bookings came in $470.8 million, up from $254.6 million a year ago. Backlog was at $3.61 billion in the most recent quarter, compared with $3.76 billion in the same period a year earlier.

Other financial results

Fluor reported second-quarter net earnings attributable to the company of $114.8 million, or 81 cents per share, compared to a net loss of $24 million, or 17 cents per share, a year ago. The S&P Capital IQ consensus normalized EPS estimate was 68 cents. Fluor's revenue improved year over to $4.88 billion from $4.72 billion.

Quanta recorded second-quarter adjusted EBITDA of $198.6 million, up from $177.8 million in the prior-year period. Adjusted net income attributable to common stock grew year over year to $90.8 million, or 59 cents per share, from $78.3 million, or 50 cents per share.

The S&P Capital IQ normalized consensus EPS estimate was 60 cents per share. Quanta posted revenues of $2.66 billion in the most recent quarter, up from $2.20 billion a year ago.

SNC-Lavalin posted adjusted net income of C$154.9 million, or 89 cents per share, compared with C$107.8 million, or 72 cents per share, in the same quarter of 2017. The S&P Capital IQ normalized consensus EPS estimate was 85 cents per share. Revenues increased to C$2.53 billion, from C$1.93 billion a year earlier.

B&W narrowed second-quarter negative adjusted EBITDA $96.2 million from $110.5 million. Net loss attributable to B&W shareholders was $265.8 million, or $2.12 per share, compared with a net loss of $151 million, or $3.09 per share, in the prior-year period. Revenues dropped year over year to $291.3 million from $306.2 million.

BWX Technologies reported non-GAAP net income for the second quarter of $58 million, or 58 cents per share, compared to $56.2 million, or 56 cents per share, in the second quarter of 2017. The S&P Capital IQ consensus normalized EPS estimate was 60 cents. Revenues grew year over year to $438.9 million from $410.0 million.