Fluor Corporation 2026 Q2 Earnings Call

Thank you, Jade. Good morning, and welcome to Fluor's 2026 second quarter earnings call. Jim Breuer, Fluor's Chief Executive Officer, and John Regan, Fluor's Chief Financial Officer, are with us today. Fluor issued its second quarter earnings release earlier this morning, and a slide presentation is posted on our website that we will reference while making prepared remarks. Before getting started, I would like to refer to our safe harbor note regarding today's forward-looking statements, which is summarized on slide two. During today's presentation, we will be making forward-looking statements which reflect our current analysis of existing trends and information. There is an inherent risk that actual results and experience could differ materially. You can find a discussion of our risk factors, which could potentially contribute to such differences, in our 2025 Form 10-K and in our Form 10-Q, which was filed earlier today.

During this call, we will discuss certain non-GAAP financial measures. Reconciliations of these amounts to the comparable GAAP measures are reflected in today's slide presentation and posted in the investor relations section of our website at investor.fluor.com. I will now turn the call over to Jim Breuer, Fluor's Chief Executive Officer.

Jim? Thank you, Jason, and good morning, everyone.

I will start by reviewing some highlights from the quarter. Please turn to Slide three. First, as we previewed on our call in Q1, the pull-through capture of our prospect pipeline is taking flight. New awards for the quarter were strong at over $6 billion, and backlog grew to almost $27 billion. These figures support a book-to-bill ratio above one for the full year. We didn't expect some of these awards until the back half of the year, so it's a positive outcome that our clients are accelerating these decisions. Second, and equally important, this growth is coming from a range of end markets. Clients are choosing Fluor for our ability to deliver large, complex projects. Third, in the quarter, we completed two legacy infrastructure projects and expect the other two remaining projects to complete by the end of the year.

Finally, with the award of the Centrus fuel enrichment project, Fluor continues to build its presence in the nuclear value chain. I will expand my thoughts on this in a moment. Turning to slide four. Last quarter, I discussed our prospect pipeline and the work required to mature these opportunities into full EPC awards, which then drive backlog and EBITDA. This quarter, we had significant front-end work translate into full EPC programs supporting nuclear fuels, fertilizers, copper, and midstream. This is shown in the dark blue area of the chart. Furthermore, as these front-end projects graduate to EPC status, we are replenishing the pipeline with new front-end opportunities in our target markets. Shown in the lighter blue, these opportunities include fertilizers in the U.K., data center work, copper in the Americas, domestic refining, nuclear power, chemicals in the Middle East, and LNG.

We are leaning into these growth markets and investing time and effort with our clients during the planning phase to set projects up for success once they are fully funded and released. Turning to slide five. Urban Solutions continues to contribute a majority of our revenue and will drive further growth over the next several quarters. In Mining & Metals, our clients have signaled more robust capital spending over the next 18 months. Our in-house M&M pipeline includes nearly $30 billion of potential awards in this timeframe, and we expect to capture a significant amount of these opportunities. In infrastructure, we've had an active quarter. On the LBJ Project, all main lanes, toll lanes, and side roads have been turned over to TxDOT. We also completed the Oak Hill Parkway in Texas, the Red Purple Line elevated rail project in Chicago, and the Gordie Howe International Bridge.

The bridge opened to traffic on July 27th. During the quarter, results for this project were impacted by the effects of foreign currency fluctuation, the bankruptcy of one of our subcontractors, and client-driven changes. We continue to work collaboratively with the client, our partners, and subcontractors to resolve the remaining commercial matters. For the quarter, Urban Solutions new awards were $3.2 billion and include construction management for a copper mine in Chile, a feasibility study for Anglo's fertilizer project in the U.K., an expanded scope for a fertilizer project in Canada, additional scope on a life sciences project in the U.S., and an infrastructure project in Europe. Looking ahead to our prospect pipeline, we're well-positioned for new life sciences work, a rare earth magnet facility, two copper projects in South America, and an aluminum rolling mill for an existing client in the Middle East.

We're also advancing work for TeraWulf and their data center in Kentucky. On a limited release basis, we're currently providing project management and engineering services and are working towards finalizing the commercial terms of the EPC contract. Moving to slide six. In Energy Solutions, as you know, we have closed out several mega projects in recent months. We're now executing front-end work that we booked over the past few quarters, which will support the next wave of EPC projects. Starting with power, demand for electricity generation continues to build, driven by data center growth, industrial expansion, and broader electrification. That demand is creating a meaningful set of opportunities in domestic gas-fueled power, where clients are engaging us and seeking to advance work under reasonable commercial terms.

We are working on a front-end basis for a combined cycle project on the East Coast. We recently submitted our proposal to another client for two single-cycle projects in the Midwest. We're also advancing a standardized combined cycle design for a third client. These collective efforts will support meaningful growth in our backlog in the first half of 2027. In nuclear, we're progressing the FEED work for the X-energy Dow project and are preparing a detailed cost estimate for the Cernavoda project in Romania. We're also in discussions with SMR and traditional nuclear technology providers for several opportunities. In the oil and gas space, we recently signed a long-term agreement with Aramco. This contract positions Fluor to support a broad portfolio of capital projects around the globe and extends our decades-long relationship with this important client.

Last month, we announced the sale of our equity in the Mexican joint venture for $175 million. Over the past 30 plus years, our joint venture completed numerous projects across Mexico's oil and gas, power, mining, and manufacturing markets. We are grateful to our partner and to our employees for the tremendous successes we shared. We are proud of the legacy we have built together. Given our current strategic priorities and the expected capital spending cycle in Mexico for the rest of the decade, we determined it was the right time to conclude this joint venture. This step gives our former partner more autonomy to pursue opportunities independently. For Fluor, it sharpens our focus on our targeted growth areas and bolsters our liquidity further. New awards for the quarter include the limited notice to proceed for phase 2 of the LNG Canada project.

This award enables early planning and advances key activities in support of the client's proposed final investment decision expected later this year. We also started execution of a FEED package for a new aromatics facility in Bahrain and booked a gas compression project for a West Coast client. Over the next few quarters, we are positioning for front-end work in the Canadian oil sands. We're seeing a notable uptick for front-end refinery work domestically that could translate into EPC work in 2027 and 2028. With regards to the Middle East, we continue to monitor the evolving situation. The well-being of our employees and their families continues to be our highest priority. We have been able to execute the work in backlog without significant disruption.

We remain engaged with our clients on additional opportunities and are well-positioned to support them once the situation stabilizes and they're ready to move forward. Turning to slide seven. Mission Solutions continues to work for the Departments of Energy and War while expanding into additional EPC opportunities. During the quarter, we received an additional task order to support Operation Epic Fury and an extension to an intelligence services contract. When combined with a two-year extension received last month, every ongoing intelligence contract in our portfolio has been extended this year. Prospects for the next few quarters include the rebid for the Savannah River program. As a reminder, under the rebid, the M&O scope and the plutonium pit project will be combined. Our proposal is in. We're confident in our value proposition.

While we anticipate a decision early next year, we do expect a six-month extension for our current work at this site later this year. Finally, during the quarter, we booked an award on the Centrus fuel enrichment facility. This significant award demonstrates our ability to apply our project delivery experience to the combined mission of national security and energy independence. While we're on the topic of nuclear, and before I turn the call over to John, I'd like to expand on our broader nuclear offering and how it supports our growth strategy. Please turn to slide eight. Fluor's experience spans the full life cycle of the industry, including commercial power generation, plant operation and maintenance, SMRs, nuclear fuels, national security, lab management, decontamination, and decommissioning. Starting with conventional power gen, Fluor has performed design or construction work on 21 nuclear power plants.