Fluor's Q3 2025: Contradictions Emerge on NuScale Monetization, Infrastructure Execution, and EBITDA Growth

Date of Call: None provided

Financials Results

• Revenue: $3.4B, includes $653M revenue reversal related to Santos litigation
• EPS: Adjusted EPS $0.68, compared to $0.51 in 2024

Guidance:

• Adjusted EBITDA for 2025 raised to $510-$540M.
• Adjusted EPS for 2025 raised to $2.10-$2.25.
• Operating cash flow for 2025 expected $250-$300M (excluding anticipated Santos payment).
• 2025 new awards outlook $13B; revenue roughly flat vs. 2024 excluding Santos effect.
• 2025 segment margin expectations: Urban ~2.5%, Energy ~6% (ex-Santos), Mission ~4.5%.
• 2026: EBITDA expected marginally better than 2025; detailed 2026 guidance in February.

Business Commentary:

* NuScale Investment and Monetization: - Fluor's investment in NuScale has been a strategic focus, with a recent conversion of the remaining investment into Class A shares to ensure shareholder value delivery. - - The monetization process is expected to commence next week, with completion targeted by the second quarter of 2026.

• Revenue Trends and Segment Performance:
• Revenue for the third quarter was $3.4 billion, including a $653 million revenue reversal in energy solutions due to the Santos litigation.

• The Urban Solutions segment reported a profit of $61 million, driven by ramp-ups in mining and metals projects, with new awards totaling $1.8 billion.

• Infrastructure Project Progress:

• Fluor continues to make solid progress on the four remaining lost infrastructure projects, with the Gordie Howe project expected to complete in late 2025 or early 2026.

• The company expects to reach substantial completion on the 635 LBJ project in Q2 of 2026.

• Capital Allocation and Share Repurchase:

• The company announced an additional $800 million in share repurchases through February, reflecting confidence in their strategic execution and financial health.
• This action is exclusive of the monetization of the remaining NuScale stake, demonstrating Fluor's commitment to returning capital to shareholders.

Sentiment Analysis:

Overall Tone: Neutral

• Mixed signals: management touted NuScale conversion and raised adjusted EBITDA/EPS guidance, but GAAP results reflect a $653M Santos charge and Q3 consolidated segment loss of $439M. Adjusted metrics improved (Adjusted EBITDA $161M vs $124M LY; adjusted EPS $0.68 vs $0.51). Guidance remains cautious on timing of awards.

Q&A:

• Question from Jamie Cook (Truist Securities): You noted 2026 EBITDA could be marginally better — what are the puts and takes driving that? Is it legacy projects finishing, Mexico ramp, or deferred work? Also, excluding Santos, how should we think about normalized Energy Solutions margin this quarter? And how will you fund the Santos payment — will NuScale proceeds be used?
  Response: 2026 modestly better driven by Urban growth (mining/metals) and Mexico normalization; normalized ES margin not yet provided; Santos payment will be funded from core operating cash (not from NuScale proceeds), and NuScale monetization proceeds will be directed to repurchases.

• Question from Sanjita Jain (KeyBanc): Can you discuss the 2026 opportunity set: data centers, power-gen practice buildout, types and sizes of opportunities, and where you stand on data center pursuits? Also, regarding the White House memo and Westinghouse-related builds, is Fluor part of that mix or in discussions?
  Response: Fluor sees a strong pipeline in mining, metals, pharma and is accelerating power (gas-fired) via early strategic relationships; targeting large, complex hyperscaler data-center campuses (U.S. smaller projects often have unattractive terms); actively engaged with nuclear tech providers, including Westinghouse, but timing is long.

• Question from Andy Kaplowitz (Citigroup): On NuScale, what does 'giving up some economic rights' mean for your ability to do NuScale-related EPC work going forward? Also, can you realistically win large data-center projects in 12–24 months? And regarding those infrastructure project offsets, were they accounting changes or true cost offsets?
  Response: The NuScale agreement preserves a favored commercial position and bidding rights while enabling rapid monetization; Fluor is confident but not guaranteeing wins on large data centers in 12–24 months; infrastructure P&L gains were negotiated outcomes offset by changes in variable consideration, not new cost growth.

• Question from Stephen Fisher (UBS): On the cited $90B of potential awards, how concentrated is the competitive set, how much is sole-source or negotiated, and what win rates should we model? Also, how will you execute the NuScale monetization — repeated ad-hoc filings or a structured program?
  Response: The $90B pipeline spans Urban (early, mining/metal-heavy) then Energy (later); many opportunities are negotiated/relationship-driven where Fluor is already engaged; NuScale monetization will follow a structured program (likely a 144-type program) to maximize NPV rather than ad-hoc Form 4 sales.

• Question from Andy Wittmann (Baird): Clarify the Mexican JV collections — you cited $800M in Q3 and $300M in October; why isn't that cash on Fluor's balance sheet? Also, was the $800M backlog adjustment CFM accounting or real scope/profit? And on Santos, is the $653M net of insurance and are remaining carriers expected to sign up?
  Response: JV-level collections remain on the JV balance sheet until distributed (hence not consolidated as Fluor cash); the backlog adjustment included both customer-furnished materials and scope growth (some revenue timing shifts); Santos amount reflected committed insurer contributions but negotiations with remaining carriers continue and management expects to finalize contributions soon.

• Question from Michael Dudas (Vertical Research): Given changes since your April four-year plan, how has the FEED pipeline and bid visibility evolved? Has the timing or magnitude of the 10–15% EBITDA growth to 2028 shifted (e.g., pushed to 2029)?
  Response: Feed quality remains strong across Urban and Energy though energy-transition activity has slowed; traditional oil & gas is picking up; management now sees roughly a four-quarter shift in EBITDA delivery, effectively pushing some 2028 targets toward 2029 while still expecting significant growth.

• Question from Brent Thielman (DA Davidson): The $800M of additional repurchases through February — is that exclusive of NuScale monetization proceeds? And given the Urban pipeline, can you sustain one-time or elevated bookings in that segment over the near term?
  Response: The $800M repurchase target is independent of NuScale proceeds; near-term awards are Urban-weighted and management expects Urban strength in the coming quarters with Energy awards ramping in 2H26/2027, but 2026 operating plan is still being finalized.

Contradiction Point 1

NuScale Monetization Strategy

It involves the strategic approach to monetizing NuScale, which is a key asset and potential revenue stream for the company.

What does giving up economic rights with NuScale mean for the company? - Andy Kaplowitz (Citigroup)

2025Q3: We retained our exclusivity rights on projects but modified the scope to align with our pursuit criteria. Our position remains strong due to our expertise in NuScale projects. - Jim Breuer(CEO)

Does the conversion of 15 million shares mark the beginning of reducing ownership in NuScale? Are there alternatives to strategic buyers? - Jamie Lyn Cook (Truist Securities)

2025Q2: The 15 million shares demonstrate the path to convert Class B shares to Class A. This monetization will cover our initial investment and allows for the conversion to proceed with market-facing solutions. There is no significant change to management expectations with the NuScale conversion. - John Regan(CFO)

Contradiction Point 2

Infrastructure Project Execution

It involves the execution of infrastructure projects, which are critical to the company's revenue and operational performance.

Has the four-year plan changed due to recent market delays? - Michael Dudas (Vertical Research)

2025Q3: We face challenges on three infrastructure projects, but we are addressing issues aggressively. The current results reflect potential upsides, and we will work towards accretable outcomes. - Jim Breuer(CEO)

What is the current status of infrastructure projects, and are they ring-fenced for future periods? - Michael Dudas (Vertical Research)

2025Q2: The portfolio outside the problematic projects is performing well. We need economic clarity for long-term decision-making, especially in industries affected by tariffs. Current projects are tracking within forecasts. - James R. Breuer(CEO)

Contradiction Point 3

Customer Sentiment and Backlog Growth

It involves customer sentiment and expectations for backlog growth, which are crucial for the company's future performance.

Is there a potential delay in meeting the 10-15% EBITDA growth target? - Michael Dudas (Vertical Research)

2025Q3: The quality of the feed pipeline remains strong, but energy transition has slowed. Traditional oil and gas is picking up. - Jim Breuer(CEO)

Have you observed stabilization in customer conversations due to the stabilized tariff environment? Will there be backlog growth in H1 2026, and if so, from where? - Andrew Alec Kaplowitz (Citi)

2025Q2: Trade policies are impacting client sentiment. Clarity is needed on costs and supply chain rebalancing. We're pursuing opportunities in mining, advanced manufacturing, data centers, and power. New awards for 2025 are expected to be $13-$15 billion. - James R. Breuer(CEO)

Contradiction Point 4

Future EBITDA Growth Expectations

It involves changes in financial forecasts, specifically regarding EBITDA growth expectations, which are critical indicators for investors.

Can you explain the factors driving the expected improved 2026 EBITDA vs. 2025, despite back-end loaded energy solutions bookings? - Jamie Cook (Truist Securities)

2025Q3: The increase in EBITDA for 2026 is due to the completion of legacy projects and an improved operating environment. - John Regan (CFO)

Does Q1 EBITDA multiplied by four reach the high end of guidance, and how conservative are your numbers and how to accelerate growth to achieve 15% top-line guidance? - Jamie Cook (Truist Securities)

2025Q1: Fluor remains confident in its guidance, expecting EBITDA to grow from the first quarter level. - James Breuer (CEO)

Contradiction Point 5

Santos Payment Funding

It involves the method of funding for the Santos payment, which impacts the company's liquidity and financial management.

How will the Santos payment be funded? - Jamie Cook (Truist Securities)

2025Q3: The Santos payment is expected to be funded by cash on hand, not from NuScale proceeds. - John Regan (CFO)

With the doubled share repurchase authorization and maintained cash flow guidance, are there potential upward revisions to the cash flow guidance and opportunities to reduce funding for legacy projects? - Jamie Cook (Truist Securities)

2025Q1: The $200 million funding for 2025 legacy projects remains unchanged. - John Regan (CFO)