Delays and cancellations weighed on the project Fluor’s third quarter resultsalthough chief executive David Constable highlighted strong demand for data centers and nuclear power, even as the company’s new awards plummeted from a year ago.
The data center market, particularly in North America, remains a primary focus as technology companies accelerate capital expenditures for hyperscale and colocation facilities, Constable said on the call.
Because of this growth, Fluor developed an off-site modularization design and production process that should streamline the construction of these projects. This should enable the company to effectively meet typical tight schedules data center constructionaccording to the firm.
“In the data center market, we continue to engage with large technology companies and expect growth in the first half of 2025,” Constable said. “The company is working on several competitive advantages for data center execution… [such as] developing innovative cooling process concepts”.
The Irving, Texas-based company also expects nuclear projects to play a larger role in its energy solutions segment. The recent US election should also help reduce some of that hesitation that affected project deadlinessaid the agent.
“We are pleased that the electoral process has produced a clear winner,” Constable said. “This creates a environment of certainty that our clients need to make important capital investment decisions.”
David Constable
Courtesy of Fluor
Fluor’s nuclear portfolio includes small modular reactors and traditional reactors. Constable added that the company is positioned to provide carbon-free energy solutions to meet the growing demands of data centers and other sectors.
“There is a strong appetite for nuclear power to meet incredible demand for energy globally, interest has never been higher,” Constable said. “We are very excited about the opportunities for Fluor and the shareholders of Small Modular Reactors.”
Contributions of earnings
Fluor reported a profit of $54 million in the third quarter of 2024, a sharp drop from a profit of $206 million a year ago. Its revenue reached $4.09 billion, a 3.3% increase from $3.96 billion in the third quarter last year.
The company’s backlog rose to $31.32 billion in the third quarter, about a 20.4% increase over last year’s third quarter. However, new awards in the third quarter totaled $2.7 billion, a 46% drop from $5 billion in new awards in the third quarter of 2023, according to the earnings report.
Setbacks in its energy segment largely caused this drop in profits.
Project cancellations and delayed timelines for certain major energy projects hurt the company’s revenue results, CFO Joe Brennan said on the call. He added “the contributions of [those projects] will be generated, but it has been pushed.” A significant portion of Fluor’s energy revenue, originally expected in 2024, will now be moved to 2025 because of these project schedule issues.
Constable’s incorporated chipmaker Intel recently canceled work on a large manufacturing facility project. Overall, the earnings report came up short, said Andrew Wittmann, senior research analyst at Baird, a Milwaukee-based financial services firm.
“The third quarter of 2024 was not a good impression with financial metrics without expectations and soft awards,” Wittmann said. in a research note. “Fluor had a position in its energy segment and project cancellations. He noted a delay in the schedule for new projects. We suspect Fluor’s macro hasn’t really changed, but the execution wasn’t great.”
