Fluor outlines $800M additional share repurchases through February as it accelerates asset-light model

Earnings Call Insights: Fluor Corporation (FLR) Q3 2025

MANAGEMENT VIEW

* CEO James Breuer highlighted a key milestone in the company's long-term investment in NuScale, announcing, "we announced yesterday the conversion of our remaining investment into Class A shares. We will begin monetizing these shares in an orderly way starting next week and expect to complete this process in the second quarter of 2026."
* Breuer stated, "This accomplishment is a result of negotiations with NuScale over the past several quarters. Our monetization plan ensures we can have line of sight to deliver the significant value of this investment to Fluor shareholders while also considering NuScale's own capital raising needs."
* He emphasized the company's strategic shift, noting, "this milestone accelerates our broader strategic journey, where we have moved successfully to an asset-light model with a majority reimbursable backlog, creating a strong foundation to fuel long-term growth."
* On operations, Breuer reported third quarter revenue of $3.4 billion, including a $653 million revenue reversal in Energy Solutions due to the Santos litigation. He added, "Consolidated new awards for the third quarter were $3.3 billion and 99% reimbursable...we recognized nearly $800 million in positive backlog adjustments, which keeps our total backlog around $28 billion, of which 82% is reimbursable."
* Urban Solutions profit reached $61 million, with new awards totaling $1.8 billion, up from $828 million the previous year. Notable awards included a copper mining project in Canada and a life sciences project in the U.S.
* Breuer described progress on major infrastructure projects, specifying completion timelines for Gordie Howe, LAX People Mover, 635/LBJ, and I-35E Phase 2.
* CFO John Regan stated, "Our GAAP results notably reflect 4 items: one, the $653 million charge related to Santos...two, a $400 million mark-to-market loss related to our investment in NuScale, but with a related tax benefit of $230 million...three, a net charge of $13 million for additional infrastructure items. And four, anomalous tax outcomes wherein the Santos charge was not tax benefited, but the NuScale conversion yielded $125 million release of valuation allowances with no corresponding book income."
* Regan added, "Adjusted EBITDA for Q3 was $161 million compared to $124 million a year ago. Our adjusted EPS of $0.68 compares to $0.51 in 2024."

OUTLOOK

* Regan updated guidance: "we are increasing our '25 adjusted EBITDA guidance to $510 million to $540 million, and our adjusted EPS guidance to $2.10 to $2.25."
* He noted, "Our expectations for operating cash flow increased, and we now expect $250 million to $300 million generated for the full year, excluding the anticipated payment to Santos."
* Regan shared, "Key assumptions and expectations for Cal '25 are shown on the slide, but include a new awards outlook of $13 billion and revenue roughly flat with 2024 when excluding the Santos effect."
* Segment margin expectations for 2025: "approximately 2.5% for Urban Solutions, approximately 6% for Energy Solutions, when excluding the Santos effect, and approximately 4.5% for Mission Solutions."

FINANCIAL RESULTS

* Breuer reported that cash and marketable securities ended the quarter at $2.8 billion, up $0.5 billion from June 30, including over $400 million in net proceeds from NuScale shares sold during the quarter.
* Regan stated, "operating cash flow for the quarter was strong at $286 million."
* The company bought back 1.4 million shares in Q3, spending $70 million, and targets an additional $800 million in repurchases through the end of February.
* Projects in a loss position represented $642 million of total backlog, down $200 million from last quarter.

Q&A

* Jamie Cook, Truist Securities: Asked about 2026 EBITDA guidance, margin normalization in Energy Solutions, and funding for Santos. Regan explained, "Energy Solutions does catch a tailwind based on the resumption of work in Mexico...In terms of the Santos payment...it is generally my intent to deploy everything that we generated from the early NuScale...as part of the $800 million program...So not using NuScale and the benefits therein for Santos, but to honor our commitment to deploy those proceeds for the benefit of our shareholders."
* Sangita Jain, KeyBanc: Inquired about power generation and data center ecosystems. Breuer responded, "in Urban...there's a lot of momentum around Mining & Metals, particularly copper...in Energy, there is a good, healthy pipeline of midsized projects...we have accelerated our efforts and our conversations with U.S.-based clients for gas-fired opportunities...As far as Data Centers...we're still very well positioned for the bigger, more complex projects..."
* Andrew Kaplowitz, Citi: Asked about NuScale economic rights and future work. Breuer explained, "we have modified the exclusivity of rights to do work, but we still have those in the sense that we have the opportunity to bid on the projects...we're the only EPC contractor that has real project experience on NuScale."
* Steven Fisher, UBS: Asked about the $90 billion of potential awards. Breuer clarified, "it's spread across the 3 businesses...our position in copper...is extremely strong...we think we're well positioned there."
* Brent Thielman, D.A. Davidson: Sought clarification on share repurchases and Urban Solutions momentum. Regan confirmed, "the conversion...has no bearing on the $800 million that we're going to repo."

SENTIMENT ANALYSIS

* Analysts maintained a neutral tone, focusing on clarification and strategic execution, with recurring questions on NuScale monetization, award pipeline, and funding for Santos. Cook's questioning was detailed but not overtly skeptical.
* Management's responses were confident and detailed, often reiterating the company's strategic focus and progress, with statements such as, "we are confident in our ability to win work that meets our pursuit criteria."
* Compared to the previous quarter, management appeared more assertive about capital allocation, while analysts maintained a similar level of cautious inquiry.

QUARTER-OVER-QUARTER COMPARISON

* Guidance for adjusted EBITDA increased to $510 million-$540 million from the prior range of $475 million-$525 million, with adjusted EPS now $2.10-$2.25 versus $1.95-$2.15 previously.
* The share repurchase target expanded, planning $800 million through February, compared to a slower cadence last quarter.
* Urban Solutions' segment profit and new awards grew, while Energy Solutions was impacted by the Santos charge; backlog remained stable at $28 billion.
* Management's tone shifted to greater confidence in monetizing NuScale and deploying capital, while analysts continued to probe for clarity on execution and risk.

RISKS AND CONCERNS

* The $653 million Santos litigation charge weighed on reported revenue and segment profit, with uncertainty remaining around insurance recoveries and payment structure.
* Award delays due to trade and policy uncertainty, chemical oversupply, and energy transition funding deferrals were cited as impacting 2025 new awards and backlog growth.
* Management acknowledged the impact of government shutdown risks on Mission Solutions and highlighted mitigation through accelerated focus in mining, power, and data centers.

FINAL TAKEAWAY

Management underscored its confidence in Fluor's asset-light model, pointing to the successful NuScale monetization and a robust capital allocation plan, including $800 million in additional share repurchases through February. Despite external headwinds and the impact of the Santos litigation, the company raised its 2025 guidance and remains focused on execution, backlog quality, and targeting high-value opportunities in mining, power, and data centers to drive long-term growth and shareholder value.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/flr/earnings/transcripts]

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