Fluor (FLR) Q2 2012 Earnings Call August 02, 2012 5:30 pm ET Executives Kenneth H. Lockwood - Vice President of Corporate Finance and Investor Relations David T. Seaton - Chairman, Chief Executive Officer and Chairman of Executive Committee Biggs C. Porter - Chief Financial Officer Analysts Andy Kaplowitz - Barclays Capital, Research Division Jamie L. Cook - Crédit Suisse AG, Research Division Scott J. Levine - JP Morgan Chase & Co, Research Division Michael S. Dudas - Sterne Agee & Leach Inc., Research Division George O'Leary - Tudor, Pickering, Holt & Co. Securities, Inc., Research Division Steven Fisher - UBS Investment Bank, Research Division John Rogers - D.A. Davidson & Co., Research Division Will Gabrielski - Lazard Capital Markets LLC, Research Division Brian Konigsberg - Vertical Research Partners Inc. Tahira Afzal - KeyBanc Capital Markets Inc., Research Division Andrew J. Wittmann - Robert W. Baird & Co. Incorporated, Research Division Robert Connors - Stifel, Nicolaus & Co., Inc., Research Division Presentation Operator
Kenneth H. LockwoodThanks very much, operator. Welcome, everyone, to Fluor's second quarter 2012 conference call. With us today on the call are David Seaton, Fluor's Chairman and Chief Executive Officer; and Biggs Porter, Fluor's Chief Financial Officer. Our earnings announcement was released this afternoon after the market closed. We have posted a slide presentation on our website, which we will reference while making our prepared remarks today. Before getting started, I'd like to refer you to our Safe Harbor note regarding forward-looking statements, which is summarized on Slide 2 of the presentation. During today's call and slide presentation, we will be making forward-looking statements, which reflect our current analysis of existing trends and information, and there is an inherent risk that actual results and experience could differ materially. You can find the discussion of those risk factors in the company's Form 10-K filed on February 22, 2012, and in our 10-Q, which was filed earlier today. During this call, we may discuss certain non-GAAP financial measures. Reconciliations of these amounts with the comparable GAAP measures are reflected in our earnings release and are posted in the Investor Relations section of our website at investor.fluor.com. With that, I'd like to turn the call over to David Seaton, Fluor's Chairman and CEO. David? David T. Seaton Thanks, Ken. Good afternoon, everyone, and thank you for joining us here today. Today, we'll be reviewing our results for the second quarter and discussing trends we see for the second half of the year. Now I'd like to start by covering some of the highlights of our second quarter performance and ask that you maybe -- please turn to Slide 3. Net earnings for the quarter were $161 million or $0.95 per diluted share. Our consolidated segment profit for the quarter was just over $287 million, which compares favorably with $280 million of segment profit in the second quarter 2011.
I'm pleased to report that results for the quarter included double-digit profit growth in all segments except for Power, which continues to experience a weak market demand and includes approximately $15 million in expense associated with NuScale.Our consolidated revenues for the quarter were $7.1 billion, an increase of 18% over $6 billion reported a year ago. New awards were strong with $7.3 billion in new contract awards during the quarter. Now segment awards included $5 billion in Oil & Gas and $1.1 billion in Industrial & Infrastructure and almost $800 million in Government. Our consolidated backlog rose to a record $43 billion. Turning to Slide 4. At $5 billion, the Oil & Gas segment had a sizable new award -- awards for the quarter, which included additional scope and incremental releases for a major oil sands expansion in Canada. Our ending backlog for Oil & Gas is now at $19.5 billion, which represents 16% increase over last quarter and a 30% increase over a year ago. Now the Oil & Gas group is gaining some momentum. Now we're encouraged by the recent growth in new awards and backlog. Looking forward, not only do we see a large number of prospects internationally, but our opportunity set in North America is substantial and should progress in EPC awards as we get into '13, which is what we've discussed, I think, for the last 2 quarters. We expect that natural gas prices in the United States will remain well within the attractive investment levels, which will drive significant investment in petrochemical and gas-to-liquids projects, many of which we're already involved in. Considering our strategic relationships with Dow and BASF and a host of other key clients, we -- they are considering those major capital expenditures. We're very enthusiastic about this market. Earlier this month, we announced that we have formed a joint venture with Sao Paolo-based Construcap to pursue engineering, procurement and construction management projects in Brazil. Construcap has been active in Brazil for nearly 70 years and is one of Brazil's largest construction companies serving the industrial, commercial and heavy civil markets. Now the joint venture will link Construcap's long-term presence in Brazil with Fluor's project execution and leadership. This model, I must say, is very similar to the approach that we took in Mexico some 15 years ago, and you've seen our extremely satisfactory performance with that long-term joint venture that we call Grupo -- and with Grupo ICA that we call ICA Fluor. Read the rest of this transcript for free on seekingalpha.com