Company Overview - Fluor is a holding company providing engineering, procurement, construction, fabrication, modularization, and project management services across three segments: energy solutions, urban solutions, and mission solutions [1] - The energy solutions segment focuses on traditional oil and gas markets, while urban solutions serve advanced technologies, life sciences, and infrastructure industries [1] - The mission solutions segment provides technical solutions to U.S. government agencies, including the Department of Energy and Department of Defense [1] Recent Developments - On October 21, Starboard Value announced a nearly 5% stake in Fluor, aiming to unlock value from Fluor's approximately 39% holding in NuScale Power, which constitutes over 60% of Fluor's market capitalization [3] - Fluor's operational turnaround began with the appointment of David Constable as CEO in 2021, shifting focus to lower-risk reimbursable projects, increasing their backlog from 45% to 80% [5] - The company has reduced exposure to loss-making legacy projects from $1.8 billion to $558 million, significantly lowering its risk profile [5] Financial Performance - Fluor has maintained a steady backlog and achieved a 14% compound annual growth rate (CAGR) in EBITDA from fiscal year 2021 to fiscal year 2024, with projections of approximately 9% CAGR from fiscal 2024 to fiscal 2028 [6] - The construction market has grown to over $918 billion, positioning Fluor favorably within a duopoly alongside Bechtel [7] - Fluor's current enterprise value is $6.7 billion, valued at 8.9 times its enterprise value to calendar year 2027 estimates for consensus EBITDA [8] Investment in NuScale - Fluor's investment in NuScale, valued at approximately $4.3 billion, represents more than half of Fluor's current enterprise value [11] - If the NuScale stake is excluded, Fluor's enterprise value would drop to $3.3 billion, reflecting a depressed valuation of 4.6 times [12] - Starboard has proposed various strategies to monetize Fluor's NuScale stake, including open-market sales or a tax-free spinoff, which could significantly enhance shareholder value [13][14] Activist Investor Influence - Starboard Value has a successful track record in activist investing, with an average return of 50.55% from prior campaigns in the industrial sector [2] - The relationship between Starboard and Fluor's management, particularly with David Constable, is expected to be constructive and beneficial for shareholders [16]

Core Insights - NuScale Power is on the verge of becoming the first company to successfully bring small modular nuclear reactors to market after 17 years of development [1][4] Group 1: Company Milestones - NuScale Power's market capitalization is currently at $10 billion, with potential for significant growth in the next 17 years [2] - The company received certification from the Nuclear Regulatory Commission for its 50 MW unit in 2023 and a larger 77 MW version in May 2025, marking a significant milestone in its operational timeline [3] - Production of 12 modular units has commenced, which is sufficient to fulfill a first order, with management aiming to secure a deal by the end of the year [3][4] Group 2: Competitive Landscape - The competition includes companies like Oklo, Westinghouse, and GE Vernova, each with different reactor designs and strategies [6][7] - NuScale focuses on civilian-grade commercial power generation, while Oklo is developing a compact liquid-metal fast reactor, which offers sustainability advantages [7][8] - NuScale's early certification and production capabilities provide a structural advantage over competitors, who may take years to achieve similar milestones [9] Group 3: Market Adoption - The adoption of small modular nuclear reactors will depend on which industries find the most utility in these technologies [10] - If ultra-compact reactors are favored for remote sites, Oklo may lead, but if electric utilities or data centers adopt SMRs, NuScale and Westinghouse could benefit [11] - The expected rise in demand for artificial intelligence and clean energy solutions suggests a strong market for NuScale's products over the next 17 years [12]