Bad news about power plants, nuclear and otherwise, dominated discussion during Fluor Corp.’s second-quarter earnings call Thursday, shouldering out talk of the company’s work on clearnup of the Energy Deaprtment’s nuclear legacy.
That latter work has gone well this year for the company, according to its latest 10-Q filing with the U.S. Securities and Exchange Commission.
Fluor was working with Westinghouse, owned by Japan’s financially troubled Toshiba Corp., on expansions of the Vogtle nuclear power plant in Georgia and V.C. Summer facility in South Carolina. Fluor was in charge of construction, and Westinghouse would provide its AP1000 reactor.
However, Westinghouse filed for Chapter 11 bankruptcy in March. And the owners of the V.C. Summer plant, South Carolina Electric & Gas and Santee Cooper, this week announced they were halting the two-reactor expansion.
Six of nine investor analysts permitted to ask questions during Thursday’s conference call with Fluor management touched either on the nuclear plants, or the U.S. gas-fired power plants plants whose poor performance prompted Fluor to take a massive earnings hit in the three months just ended. However, Fluor CEO David Seaton brushed aside the notion of backing out of the power market.
Earnings in Fluor’s Government unit, where the company books its work for DOE and other government clients, sank 10 percent or so to $19.7 million even as unit revenue rose 13 percent year over year to almost $745 million. For the half year, unit profits rose nearly 25 percent, while revenue rose 13 percent to about $1.5 billion.
The quarterly profit slip in Government was mostly due to an Army logistics contract unrelated to DOE nuclear programs, Fluor said in its latest 10-Q. In the half, the company said, Government unit profits rose “primarily due to increased contributions from project execution activities for the Idaho Core Project and the Portsmouth Gaseous Diffusion Plant.” Both of those Cold War cleanup sites are managed by DOE’s Office of Environmental Management.
Overall, Fluor’s quarterly earnings plummeted 123 percent to a loss of just under $25 million, or 17 cents a share, as quarterly revenue fell almost 3 percent to about $4.7 billion. For the half, earnings fell some 82 percent year over year to around $36 million, or 26 cents a share. Six-month revenue rose about 3 percent to roughly $9.5 billion.
Quarterly losses stemmed mostly from a $194 million charge in the second quarter that was caused by “forecast revisions for estimated cost growth at three fixed-price, gas-fired power plant projects in the southeastern United States,” according to the latest 10-Q. Net of the charge, Fluor would have turned a profit in the quarter, Seaton said during Thursday’s conference call.
Meanwhile, Bruce Stanski has taken over as Fluor’s chief financial officer, becoming the point man for finance, audit, investor relations, and mergers and acquisitions. Stanski was formerly president of Fluor’s Government Group and replaced Biggs Porter as of Friday. Fluor announced Porter’s impending departure in March.
