Foster Wheeler Outperforms - Analyst Blog

Foster Wheeler AG (FWLT) reported first-quarter 2012 earnings per share from continuing operations of 40 cents compared with 19 cents in the prior-year quarter. The company surpassed the Zacks Consensus Estimate by a penny.

Including an asbestos-related provision, earnings per share in the quarter came in at 38 cents, up 11.6% compared with 18 cents in the prior-year quarter.

Total Revenue

Consolidated operating revenue in the quarter was $933.1 million, up 10% compared with $1.04 billion in the prior-year period. FW scope revenue, excluding revenues relating to third-party cost incurred by the company as agent or principal on a reimbursable basis, was $625.0 million compared with $568.8 million.

Segment Results

Global Engineering and Construction (E&C) Group’s operating revenue (FW scope) was $365.0 million, up 1.7% compared with $358.8 million in the prior-year period. In the reported quarter, orders, which are generally of small and medium sizes, declined to $375.8 million from $561.5 million.

Global Power Group (GPG) operating revenue (FW Scope) increased to $260.0 million from $210.0 million in the prior-year period, up 23.8%, led by backlog executed steadily. New order in the segment increased to $159.4 million compared with $141.3 million in the prior-year period.

Income & Expenses

Contract profit in the quarter was $139.3 million, up  40% compared with $99.3 million in the prior-year quarter. SG&A expense was $83.3 million, up 12.9% compared with $73.8 million in the year-ago quarter.

E&C EBTDA was $46.9 million in the quarter, up 12.5% compared with $41.7 million in the prior-year quarter and GPG EBITDA was $52.3 million, up 97.4% compared with $26.5 million in the year-ago comparable period.

Balance Sheet

Cash and cash equivalents at the end of March 2012 were $648.9 million compared with $718.0 billion at the end of 2011. Long-term debt was $138.3 million compared with $136.4 million and shareholders’ equity was $736.5 million compared with $687.7 million at the end of 2011.

During the reported quarter, the company repurchased 564,100 shares for approximately $10.1 million.

Outlook

The company expects Global E&C Group and Global Power Group scope revenue to increase in 2012 versus 2011.  Global E&C Group EBITDA margin on scope revenue in 2012 is expected to be in the range of 12%–14% and for Global Power Group in the range of 16%-18%.

Further, Foster Wheeler expects its earnings per share to increase significantly in 2012 versus 2011 with an expected rise in volume and a decline in share count.

Foster Wheeler AG is based in Zug Switzerland, but its operational headquarters are in Clinton NJ USA. Majority of Foster’s revenues and new businesses originate from outside the United States.  The company serves the following industries: Oil and Gas; Oil Refining; Chemical & Petrochemical; Pharmaceutical; Environmental; Power Generation; and Power Plant Operation and Maintenance. Major competitors of Foster Wheeler are Fluor Corporation (FLR) and Jacobs Engineering Group Inc. (JEC).

We maintain a Zacks #2 Rank (Buy recommendation) over the next one-to-three months on Foster Wheeler.

FLUOR CORP-NEW (FLR): Free Stock Analysis Report

FOSTER WHELR AG (FWLT): Free Stock Analysis Report

JACOBS ENGIN GR (JEC): Free Stock Analysis Report

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