Fluor profits fall, data center and nuclear offer upside

Mission delays and cancellations weighed on Fluor’s third quarter results, although CEO David Constable emphasised robust demand for knowledge facilities and nuclear vitality, even because the agency’s new awards plummeted from a 12 months in the past.

The information middle market, notably in North America, stays a major focus as tech firms speed up capital expenditures for hyperscale and colocation services, mentioned Constable in the course of the name.

As a result of that development, Fluor developed an offsite modularization design and manufacturing course of that ought to expedite the construct out of those tasks. That ought to permit the corporate to successfully meet the tight schedules typical in data center construction, in response to the agency.

“Within the knowledge middle market, we proceed to interact with massive tech firms and count on development within the first half of 2025,” mentioned Constable. “The corporate is engaged on a number of aggressive benefits for knowledge middle execution … [such as] creating revolutionary cooling course of ideas.”

The Irving, Texas-based firm additionally expects nuclear tasks to play a bigger position in its vitality options phase. The latest U.S. election also needs to assist scale back a number of the hesitation that impacted project timelines, mentioned Constable.

“We’re happy the election course of delivered a transparent winner,” mentioned Constable. “This creates an environment of certainty that our shoppers want to be able to make main capital funding choices.”

Fluor’s nuclear portfolio consists of small modular reactors and conventional reactors. Constable added the agency is positioned to supply carbon-free energy options to satisfy rising calls for from knowledge facilities and different sectors.

“There’s a powerful urge for food for nuclear vitality to satisfy unbelievable demand for energy globally, curiosity has by no means been better,” mentioned Constable. “We’re very excited in regards to the alternatives for Fluor and for small modular reactor shareholders.”

Takeaways from earnings

Fluor reported it earned $54 million within the third quarter of 2024, a notable drop in comparison with a $206 million revenue a 12 months in the past. Its income hit $4.09 billion, a couple of 3.3% achieve from $3.96 billion in final 12 months’s third quarter.

The corporate’s backlog jumped to $31.32 billion within the third quarter, round a 20.4% improve from final 12 months’s third quarter. Nonetheless, new awards within the third quarter totaled $2.7 billion, a 46% drop from the $5 billion in new awards within the third quarter of 2023, in response to the earnings report.

Setbacks in its vitality phase largely prompted that drop in revenue.

Mission cancellations and delayed timing on sure massive vitality tasks impacted the agency’s income outcomes, mentioned CFO Joe Brennan in the course of the name. He added “the contributions from [those projects] will probably be generated, however it’s been pushed.” A good portion of Fluor’s vitality income, initially anticipated in 2024, will now shift into 2025 resulting from these venture timing points.

Constable added chip producer Intel just lately canceled work on a big manufacturing facility venture. Total, the earnings report fell brief, mentioned Andrew Wittmann, senior analysis analyst at Baird, a Milwaukee-based monetary providers firm.

“The third quarter of 2024 was not a superb print with monetary metrics lacking expectations and smooth awards,” mentioned Wittmann in a research note. “Fluor had a cost in its vitality phase and venture cancellations. It pointed to delayed timing of latest tasks. We suspect Fluor’s macro hasn’t actually modified, however the execution wasn’t nice.”