Goldman Sachs Gives Its First Take On Foster Wheeler Following Earnings Release

Foster Wheeler FWLT reported 1Q2011 EPS of $0.19 vs. GS/Consensus estimates of $0.34/$0.38. The miss was driven primarily by weaker-than-expected margins in both segments, but the company reiterated FY EBITDA margin guidance of 13%-15% and 14%-16% for E&C and Power, respectively. Highlights from the quarter include: FWLT posted scope E&C EBITDA margins of 11.6% vs. GS 13.5%, FWLT reported scope awards of $523mn vs GS $771, implying a book-to-bill of 0.92, and FWLT repurchased $29mn worth of shares during 1Q2011 and $10.8mn in April, with an opportunity to repurchase an additional $461mn under its current authorization. Goldman Sachs views this is a negative result for Foster Wheeler, given the extent of the margin degradation and weaker-than-expected awards in both the E&C and Power segments. Goldman continues to believe 2011/2012 consensus expectations are too high and will likely be revised downward. FWLT is trading lower at $33.52