Fluor Wins Contract - Analyst Blog

Fluor Corporation (FLR) announced that Fluor-B&W Portsmouth LLC, its joint venture with Babcock and Wilcox, has been awarded a contract for cleaning up and de-installation of the Portsmouth Gaseous Diffusion Plant (GDP). The tenure of the contract is 10 years with a value of $2.1 billion.

The Department Of Energy’s Portsmouth GDP is located near Piketon, in southeastern Ohio. The work includes breaking down three uranium gigantic enrichment process buildings, each covering an area of 30 acres.

Fluor stands out as one of the few engineering and construction companies that has the technological expertise, logistics, procurement capabilities and project management experience needed to execute on a large variety of projects, including large complex projects for a diverse group of industrial and government clients virtually anywhere in the  world.

Given its strong financial position, Fluor will have ample financial resources to pursue a niche acquisition program aimed at strengthening its considerable service breadth. The company is delivering solid results driven by its diversified business model and targeted new awards strategy. 

Fluor is one of the best-in-class E&C companies with a favorable contract mix, diverse service offerings, and strong relationships around the world; allowing it to sustain its operating margin going forward relative to its peers. However, project wins in the medium term will be fraught with intense competition, raising concerns over potential margins on new awards.  

Given the breadth of Fluor's power experience from solid fuel to gas fired to nuclear and renewable solutions, we feel that it is extremely well positioned to capture significant market share as demand returns.

Fluor's Government Business Group provides engineering, construction, contingency response, management and operations services to the U.S. government. In the United States, it is primarily focused on the Departments of Energy, Homeland Security and Defense. As the U.S. government is the single largest purchaser of outsourced services in the world, with a relatively stable year-to-year budget, it represents an attractive and less cyclical growth opportunity for the company.
 
Fluor Corporation was incorporated in Delaware on September 11, 2000 prior to a reverse spin-off that separated it from the coal business, which now operates as Massey Energy Company.

Fluor is a holding company that owns the stock of a number of subsidiaries. It is one of the largest professional services firms, providing engineering, procurement, construction and maintenance as well as project management services across the globe. It serves a diverse set of industries worldwide, including oil and gas, chemical and petrochemicals, transportation, mining and metals, power, life sciences and manufacturing. It is also a primary service provider to the U.S. federal government. It performs operations and maintenance activities for major industrial clients, and in some cases, operates and maintains their equipment fleet.

We currently have a Neutral recommendation on Fluor Corporation.