Fluor Corp.’s government division got a boost from the company’s nuclear cleanup work at the Energy Department’s Idaho and Portsmouth sites in the first quarter, boosting earnings almost 70 percent to roughly $30 million on revenue of about $765 million: about a 10-percent year-over-year increase.
The gains for government were “primarily due to increased contributions from project execution activities for the Idaho Core Project and the Portsmouth Gaseous Diffusion Plant Project,” Fluor wrote in its latest 10-Q filing with the U.S. Securities and Exchange Commission.
The company highlighted “increased contributions from the Portsmouth Project,” where its joint venture, Fluor-BWXT Portsmouth, recently received a major contract modification that delayed some deactivation milestones at the site’s disused uranium enrichment facilities. That allowed Fluor to nail an important fee-bearing milestone on March 31, by which time the company had to partially deactivate the first of 10 cells in Portsmouth’s X-326 uranium processing building.
The Portsmouth contract is worth about $3.5 billion over 10 years, including options; it runs through March 2021. The Idaho contract is worth $1.5 billion over five years and runs through May 2021.
The positive result in the government sector, where Fluor books its work for DOE’s Office of Environmental Management, came in spite of lower revenue due from the Magnox nuclear reactor decommissioning project in the United Kingdom. In March, The U.K. Nuclear Decommissioning Authority decided to cancel Cavendish Fluor Partnership’s Magnox decommissioning contract in 2019. The deal, awarded in 2014, was supposed to run for 14 years and covered decommissioning at 12 sites throughout the Kingdom. The contract was worth more than $7.5 billion when it was awarded.
Overall, Fluor earnings took a dive, sinking more than 40 percent year over year to about $60 million. The decrease was due in part to lower-margin projects working their way into the construction segment’s pipeline, relative to more profitable work the company was doing this time last year.
Fluor’s revenue rose a little more than 9 percent to about $4.8 billion.
Meanwhile, Fluor will wait until the end of the year at least to see whether its bid to become the prime liquid cleanup contractor at DOE’s Savannah River Site will bear fruit.
Fluor teamed with Westinghouse Government Services last year to bid on the 10-year liquid waste management contract at the Aiken, S.C., site. The deal could be worth between $4 billion and $6 billion. DOE was supposed to announce a new contractor this summer but last month extended the contract for incumbent Savannah River Remediation through Dec. 31. The agency said it needed more time to weigh the bids it got for the follow-up contract.
On a quarterly earnings call with investors Thursday, CEO David Seaton sought to allay investor fears that Fluor would lose millions of dollars in Westinghouse’s recently initiated bankruptcy reorganization. Fluor is working with the company, which is owned by Japan’s financially troubled Toshiba Corp., on the four new Westinghouse AP1000 reactors being installed at the Vogtle nuclear plant in South Carolina and the V.C. Summer plant in Georgia.
Seaton said Fluor expected eventually to “recover all of our outstanding receivables and costs incurred on these projects prior to bankruptcy, as well as going forward.”
