Fluor(FLR) - 2025 Q2 - Quarterly Report

Glossary of Terms - This section provides a comprehensive list of abbreviations and definitions for Fluor-specific terms and other general terms used throughout the filing, ensuring clarity and consistency in financial reporting[6][7][8] Part I: Financial Information Item 1. Condensed Consolidated Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements and accompanying notes, detailing financial position, performance, cash flows, and equity changes for the specified periods Condensed Consolidated Statement of Operations | (in millions, except per share amounts) | 3ME June 30, 2025 | 3ME June 30, 2024 | 6ME June 30, 2025 | 6ME June 30, 2024 | | :-------------------------------------- | :---------------- | :---------------- | :---------------- | :---------------- | | Revenue | $3,978 | $4,227 | $7,959 | $7,961 | | Gross profit | $56 | $178 | $197 | $278 | | Operating profit (loss) | $(26) | $176 | $65 | $228 | | Net earnings attributable to Fluor | $2,460 | $169 | $2,219 | $228 | | Basic EPS | $14.93 | $0.99 | $13.30 | $1.33 | | Diluted EPS | $14.81 | $0.97 | $13.19 | $1.32 | Condensed Consolidated Statement of Comprehensive Income (Loss) | (in millions) | 3ME June 30, 2025 | 3ME June 30, 2024 | 6ME June 30, 2025 | 6ME June 30, 2024 | | :---------------------------------- | :---------------- | :---------------- | :---------------- | :---------------- | | Net earnings | $2,438 | $153 | $2,206 | $194 | | Total OCI, net of taxes | $46 | $(8) | $72 | $(58) | | Comprehensive income attributable to Fluor | $2,506 | $160 | $2,291 | $169 | Condensed Consolidated Balance Sheet | (in millions) | June 30, 2025 | December 31, 2024 | | :---------------------------- | :------------ | :---------------- | | Total current assets | $5,027 | $5,175 | | Total noncurrent assets | $6,761 | $3,968 | | Total assets | $11,788 | $9,143 | | Total current liabilities | $3,102 | $3,071 | | Long-term debt | $1,070 | $1,104 | | Total equity | $5,978 | $3,992 | Condensed Consolidated Statement of Cash Flows | (in millions) | 6ME June 30, 2025 | 6ME June 30, 2024 | | :------------------------------------------ | :---------------- | :---------------- | | OPERATING CASH FLOW | $(307) | $171 | | INVESTING CASH FLOW | $(61) | $(38) | | FINANCING CASH FLOW | $(341) | $6 | | Increase (decrease) in cash and cash equivalents | $(657) | $110 | | Cash and cash equivalents at end of period | $2,172 | $2,629 | Condensed Consolidated Statement of Changes in Equity | (in millions) | June 30, 2025 | December 31, 2024 | | :---------------------------- | :------------ | :---------------- | | Total Shareholders' Equity | $5,949 | $3,949 | | Total Equity | $5,978 | $3,992 | | Repurchase of common stock (6ME) | $(295) | $0 | Notes to Financial Statements 1. Principles of Consolidation - The financial statements are unaudited and rely on management's estimates, which may not be indicative of full-year results[22] Quarterly reporting periods are typically 13 weeks, ending on the Sunday nearest March 31, June 30, and September 30[23][24] 2. Recent Accounting Pronouncements - Fluor adopted ASU 2023-05 in 2025, which had no impact on consolidated results[25] ASU 2023-09 (effective 2025) and ASU 2024-03 (effective 2027/2028) are not expected to impact consolidated results[26][27] A proposed ASU on internal use software is expected in 2025, and ASU 2025-03 (effective 2027) on identifying accounting acquirers in VIE transactions is not expected to have an impact[28][29] 3. Earnings Per Share | (in millions, except per share amounts) | 3ME June 30, 2025 | 3ME June 30, 2024 | 6ME June 30, 2025 | 6ME June 30, 2024 | | :-------------------------------------- | :---------------- | :---------------- | :---------------- | :---------------- | | Net earnings attributable to Fluor | $2,460 | $169 | $2,219 | $228 | | Weighted average common shares outstanding | 165 | 171 | 167 | 171 | | Weighted average diluted shares outstanding | 166 | 174 | 168 | 173 | | Basic EPS | $14.93 | $0.99 | $13.30 | $1.33 | | Diluted EPS | $14.81 | $0.97 | $13.19 | $1.32 | - Potentially dilutive securities include convertible debt, stock options, RSUs, and performance-based award units[31] The conversion feature of 2029 Notes has a dilutive impact when the average market price of common stock exceeds $45.37 per share, which was not the case during the 2025 and 2024 Quarters[32] 4. Operating Information by Segment and Geographic Area | (in millions) | 3ME June 30, 2025 | 3ME June 30, 2024 | 6ME June 30, 2025 | 6ME June 30, 2024 | | :------------ | :---------------- | :---------------- | :---------------- | :---------------- | | Revenue | | | | | | Urban Solutions | $2,070 | $1,831 | $4,227 | $3,309 | | Energy Solutions | $1,143 | $1,595 | $2,349 | $3,028 | | Mission Solutions | $762 | $704 | $1,358 | $1,305 | | Other | $3 | $97 | $25 | $319 | | Total revenue | $3,978 | $4,227 | $7,959 | $7,961 | | Segment profit (loss) | | | | | | Urban Solutions | $29 | $105 | $99 | $155 | | Energy Solutions | $15 | $75 | $63 | $143 | | Mission Solutions | $35 | $41 | $40 | $63 | | Other | $(1) | $(27) | $8 | $(49) | | Total segment profit | $78 | $194 | $210 | $312 | | (in millions) | June 30, 2025 | December 31, 2024 | | :------------ | :------------ | :---------------- | | Total assets by segment | | | | Urban Solutions | $1,906 | $1,472 | | Energy Solutions | $737 | $729 | | Mission Solutions | $886 | $734 | | Other | $6 | $72 | | Corporate | $3,253 | $3,870 | | Investment in NuScale | $5,000 | $2,266 | | Total assets | $11,788 | $9,143 | | (in millions) | 3ME June 30, 2025 | 3ME June 30, 2024 | 6ME June 30, 2025 | 6ME June 30, 2024 | | :------------ | :---------------- | :---------------- | :---------------- | :---------------- | | Revenue by project location | | | | | | North America | $2,757 | $2,929 | $5,410 | $5,299 | | Asia Pacific | $306 | $558 | $622 | $1,001 | | Europe | $723 | $558 | $1,564 | $1,333 | | Central and South America | $146 | $136 | $285 | $203 | | Middle East and Africa | $46 | $46 | $78 | $125 | | Total revenue | $3,978 | $4,227 | $7,959 | $7,961 | - Urban Solutions segment profit in 2025 was impacted by $54 million in forecast adjustments for cost growth on infrastructure projects, partially offset by increased execution on life sciences projects[34][35] Energy Solutions segment profit declined due to projects nearing completion and a $31 million arbitration ruling loss[37] Mission Solutions segment profit declined due to reduced DOD project activity and a $28 million reserve for a long-standing claim[34] 5. Income Taxes | (in millions) | 3ME June 30, 2025 | 3ME June 30, 2024 | 6ME June 30, 2025 | 6ME June 30, 2024 | | :------------ | :---------------- | :---------------- | :---------------- | :---------------- | | Effective tax rate (including equity method earnings) | 24% | 29% | 24% | 36% | | Total income tax expense | $765 | $61 | $712 | $111 | 6. Partnerships and Joint Ventures | (in millions) | June 30, 2025 | December 31, 2024 | | :------------------------------------------ | :------------ | :---------------- | | Investments in a loss position | $181 | $292 | | Accounts receivable for unconsolidated partnerships and joint ventures | $238 | $175 | | Aggregate carrying value of unconsolidated VIEs (net asset) | $5,300 | $2,400 | | Future funding commitments for unconsolidated VIEs | $48 | N/A | 7. Guarantees | (in millions) | June 30, 2025 | | :------------------------------------------ | :------------ | | Maximum potential future payments under outstanding performance guarantees | $14,000 | 8. Contingencies and Commitments - Fluor Australia is involved in a lawsuit with Santos Ltd., where a panel recommended judgment for Santos on claims valued at approximately AUD $790 million, despite a contractual liability cap of AUD $236 million[46] Court decisions on Fluor's application to set aside the reference and Santos's application to adopt the panel's report are pending[46] - A joint venture, Prairie Link Constructors JV (PLC), settled a lawsuit with NTTA for approximately $415 million (including interest and costs) after a jury verdict[47] Fluor recognized an $84 million impact to earnings in Q1 2025 and paid $33 million to NTTA in June 2025[47] 9. Contract Assets and Liabilities | (in millions) | June 30, 2025 | December 31, 2024 | | :------------------------------------------ | :------------ | :---------------- | | Contract assets: | | | | Unbilled receivables - reimbursable contracts | $1,394 | $1,050 | | Contract work in progress - lump-sum contracts | $95 | $88 | | Total contract assets | $1,489 | $1,138 | | Revenue associated with claims | $233 | $244 | | Back charges that may be disputed | $85 | $23 | | Revenue recognized from contract liabilities as of January 1 | $481 | $430 | 10. Remaining Unsatisfied Performance Obligations | (in millions) | June 30, 2025 | | :------------ | :------------ | | Within 1 year | $14,830 | | 1 to 2 years | $6,872 | | Thereafter | $5,135 | | Total RUPO | $26,837 | 11. Debt and Letters of Credit | (in millions) | June 30, 2025 | December 31, 2024 | | :------------ | :------------ | :---------------- | | Total debt | $1,070 | $1,104 | | 2028 Notes | $507 | $543 | | 2029 Notes | $575 | $575 | - As of June 30, 2025, $463 million in letters of credit were outstanding under the $2.2 billion credit facility, with a borrowing capacity of $852 million[54][55] An additional $941 million in letters of credit were outstanding under uncommitted lines[56] The company redeemed $36 million of 2028 Notes during the 2025 Period[56] 12. Fair Value Measurements | (in millions) | June 30, 2025 | December 31, 2024 | | :------------------------------------------ | :------------ | :---------------- | | Assets measured at fair value (Level 1) | | | | Investment in NuScale | $5,000 | $2,266 | | Trading securities | $8 | $18 | | Financial instruments not measured at fair value | | | | Cash (Level 1) | $1,482 | $1,613 | | Cash equivalents (Level 2) | $690 | $1,216 | | Marketable securities (Level 2) | $99 | $130 | | 2028 Senior Notes (Carrying Value) | $505 | $541 | | 2028 Senior Notes (Fair Value) | $499 | $517 | | 2029 Senior Notes (Carrying Value) | $565 | $563 | | 2029 Senior Notes (Fair Value) | $755 | $725 | - The company recognized pre-tax gains of $3.2 billion for the 2025 Quarter and $2.7 billion for the 2025 Period from the mark-to-market valuation of its investment in NuScale[57] 13. Stock-Based Compensation | Performance-based Award Units Granted in 2025 | Units Granted | Weighted Average Grant Date Fair Value Per Share | | :-------------------------------------------- | :------------ | :----------------------------------------------- | | 2025 Performance Award Plan | 140,597 | $37.07 | | 2024 Performance Award Plan | 68,794 | $39.75 | | 2023 Performance Award Plan | 69,169 | $39.99 | | (in millions) | 3ME June 30, 2025 | 3ME June 30, 2024 | 6ME June 30, 2025 | 6ME June 30, 2024 | | :------------------------------------------ | :---------------- | :---------------- | :---------------- | :---------------- | | SGI awards expense | $12 | $7 | $9 | $12 | | Performance-based awards for non-Section 16 executives expense | $0 | $2 | $2 | $10 | | Liabilities | June 30, 2025 | December 31, 2024 | | | | SGI awards liability | $28 | $51 | | | | Performance-based awards for non-Section 16 executives liability | $19 | $30 | | | - Performance-based award units generally cliff vest after 3 years, with 70% (2025 plan) or 80% (2024/2023 plans) earned based on earnings before taxes targets and the remainder on 3-year cumulative TSR relative to S&P 500 companies[63][64] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on financial performance, condition, and future outlook, including segment analysis, critical accounting policies, and liquidity and capital resources CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS - Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially[73] Key factors include cyclical markets, failure to receive new contract awards, inaccurate cost/schedule estimates, intense competition, inability to retain personnel, joint venture partner non-performance, cybersecurity breaches, political/economic risks, project cancellations, and earnings volatility from NuScale investment fair value measurements[75] Results of Operations - Revenue decreased slightly in the 2025 Quarter due to projects nearing completion and slowed progress at a Mexico joint venture pending customer payment[82] Earnings before taxes decreased due to cost growth on infrastructure projects, slowed execution in Mexico, and an arbitration loss, partially offset by increased life sciences project activity[83] | (in millions) | 3ME June 30, 2025 | 3ME June 30, 2024 | 6ME June 30, 2025 | 6ME June 30, 2024 | | :------------ | :---------------- | :---------------- | :---------------- | :---------------- | | Revenue | $3,978 | $4,227 | $7,959 | $7,961 | | Segment profit | $78 | $194 | $210 | $312 | | Earnings (loss) before taxes | $(9) | $214 | $99 | $305 | | Net earnings attributable to Fluor | $2,460 | $169 | $2,219 | $228 | | New awards | $1,768 | $3,098 | $7,577 | $10,116 | | Total backlog (June 30) | $28,205 | $32,304 | $28,205 | $32,304 | - The effective tax rate on earnings, including equity method earnings, was 24% for both the 2025 Quarter and Period, down from 29% and 36% in the comparable 2024 periods[84] The OBBB Act (July 2025) is not expected to have a material impact, and Pillar Two global minimum tax changes are not expected to materially impact the 2025 Quarter's tax provision[85] Segment Operations - Urban Solutions revenue increased due to life sciences and mining projects, but segment profit was impacted by $54 million in cost growth on infrastructure projects[87][88] Energy Solutions saw revenue and profit decline due to projects nearing completion, issues with a Mexico joint venture, and a $31 million arbitration loss[89][90][91] Mission Solutions revenue increased from DOE projects and FEMA relief, but segment profit declined due to reduced DOD project activity and a $28 million reserve for a long-standing claim[92][93][94] The 'Other' segment's results are expected to be immaterial for 2025 following the deconsolidation of NuScale and the sale of Stork's U.K. operations[95][96] G&A | (in millions) | 3ME June 30, 2025 | 3ME June 30, 2024 | 6ME June 30, 2025 | 6ME June 30, 2024 | | :------------ | :---------------- | :---------------- | :---------------- | :---------------- | | G&A | $52 | $50 | $88 | $110 | | Compensation | $27 | $37 | $50 | $80 | - The decrease in compensation expense in the 2025 Quarter and Period was primarily driven by lower performance-based compensation[97] Critical Accounting Policies and Estimates - There have been no material changes in critical accounting policies and estimates from those disclosed in the 2024 10-K[98] Recent Accounting Pronouncements - Information regarding recent accounting pronouncements is described more fully in the Notes to Financial Statements[99] LIQUIDITY AND CAPITAL RESOURCES - The company's liquidity is supported by cash, operations, credit facility, and capital markets[100] It believes current liquidity is sufficient for the next 12 months[101] The credit facility includes covenants like a debt-to-capitalization ratio limit of 0.60 to 1.00 and a minimum liquidity threshold of $1.1 billion, with potential collateral requirements if credit ratings are downgraded[102] | (in millions) | June 30, 2025 | December 31, 2024 | | :------------------------------------------ | :------------ | :---------------- | | Cash and cash equivalents combined with marketable securities | $2,300 | $3,000 | | Non-U.S. cash and cash equivalents | $880 | $1,100 | | Cash and cash equivalents held by consolidated VIEs | $401 | $333 | | Client advances | $46 | $79 | - During the 2025 Period, the company repurchased 7.6 million shares of common stock for $295 million[106] Between July 1 and July 25, 2025, an additional 0.8 million shares were repurchased for $41 million[106] The company targets repurchasing $150 million to $200 million of stock in the latter half of 2025[106] | (in millions) | 6ME June 30, 2025 | 6ME June 30, 2024 | | :------------------------------------------ | :---------------- | :---------------- | | Operating Cash Flow | $(307) | $171 | | Investing Cash Flow | $(61) | $(38) | | Financing Cash Flow | $(341) | $6 | | Increase (decrease) in cash and cash equivalents | $(657) | $110 | | Cash and cash equivalents at end of period | $2,172 | $2,629 | | Cash paid for interest | $19 | $22 | | Cash paid for income taxes (net of refunds) | $83 | $31 | - Operating cash flow for the 2025 Period was negatively impacted by increases in working capital on several large projects and is typically lower in the first half due to employee incentive award payouts[109][110] Investing cash flow included $61 million from the sale of Stork's U.K. operations and $135 million in investments in partnerships and joint ventures[112][113](index=113&type=chunk] Financing cash flow was primarily driven by common stock repurchases and debt retirement[114][115] - As of June 30, 2025, $463 million in letters of credit were outstanding under committed lines and $941 million under uncommitted lines[116] The maximum potential future payments under outstanding performance guarantees were estimated at $14 billion[117] Item 3. Quantitative and Qualitative Disclosures about Market Risk No material changes to market risk occurred during the 2025 Period, maintaining consistency with 2024 10-K disclosures - No material changes to market risk occurred during the 2025 Period, and relevant disclosures are consistent with the 2024 10-K[119] Item 4. Controls and Procedures This section confirms the effectiveness of disclosure controls and procedures and reports no material changes to internal control over financial reporting Evaluation of Disclosure Controls and Procedures - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective as of the end of the reporting period[120] Changes in Internal Control over Financial Reporting - There were no changes to the company's internal control over financial reporting that materially affected, or are reasonably likely to materially affect, ICFR during the period[121] Changes in Consolidated Backlog (Unaudited) This section provides an unaudited summary of changes in consolidated backlog, detailing new awards, adjustments, cancellations, and work performed for the specified periods | (in millions) | 3ME June 30, 2025 | 3ME June 30, 2024 | 6ME June 30, 2025 | 6ME June 30, 2024 | | :------------ | :---------------- | :---------------- | :---------------- | :---------------- | | Backlog, April 1 / January 1 | $28,718 | $32,739 | $28,484 | $29,441 | | New awards | $1,768 | $3,098 | $7,577 | $10,116 | | Adjustments and cancellations, net | $1,671 | $663 | $54 | $646 | | Work performed | $(3,952) | $(4,196) | $(7,910) | $(7,899) | | Backlog, June 30 | $28,205 | $32,304 | $28,205 | $32,304 | Part II: Other Information Item 1. Legal Proceedings This section confirms the company's involvement in various legal proceedings, with material matters detailed in Part I, Item 1 - The company is party to a number of legal proceedings and other matters, with material pending legal proceedings disclosed pursuant to SEC rules and further details available in Part I, Item 1 of this 10-Q[126][127] Item 1A. Risk Factors No material changes to the company's risk factors have occurred since those disclosed in the 2024 10-K - No material changes to the company's risk factors have occurred since those disclosed in the 2024 10-K[128] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details the company's purchases of its own equity securities under the share repurchase program during the quarter ended June 30, 2025 | Period | Total Number of Shares Purchased | Average Price Paid per Share | Maximum Number of Shares that May Yet Be Purchased Under the Plans or Program | | :---------------------- | :------------------------------- | :--------------------------- | :---------------------------------------------------------------------------- | | April 1 — April 30, 2025 | 1,646,339 | $34.12 | 22,936,729 | | May 1 — May 31, 2025 | 1,318,230 | $37.68 | 21,618,499 | | June 1 — June 30, 2025 | 1,010,427 | $46.87 | 20,608,072 | | Total | 3,974,996 | $38.54 | | - The share repurchase program, originally announced in November 2011 and incrementally authorized for an additional 20 million shares in November 2024, had 20,608,072 shares remaining for purchase as of June 30, 2025[131] Item 4. Mine Safety Disclosures Information concerning mine safety violations and other regulatory matters is provided in Exhibit 95.1 of this report - Information concerning mine safety violations or other regulatory matters is included in Exhibit 95.1 to this report[132] Item 5. Other Information No director or officer adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter ended June 30, 2025 - No director or officer adopted or terminated any Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements during the quarter ended June 30, 2025[133] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including corporate documents, certifications, and XBRL data - The exhibit index includes corporate documents (Certificate of Incorporation, Bylaws), a Consulting Agreement, CEO/CFO certifications (Sarbanes-Oxley Act Sections 302 and 906), Mine Safety Disclosure, and Inline XBRL documents[136] Signatures - The report was signed on July 31, 2025, by John C. Regan, Chief Financial Officer (Principal Financial & Accounting Officer) of Fluor Corporation[139]