Fluor warns of potential $2 billion backlog reduction
Key Facts
Fluor warned that its backlog could be reduced by about $2 billion after a client told the company in late October that it was changing the scope of a project under a reimbursable contract. Chief Financial Officer John Regan said the company was still assessing the impact of the change and that the reduction could appear as early as the fourth quarter of 2026. The possibility puts part of the backlog under review despite the company recording record new awards in the third quarter. Regan said the matter involves a change in project scope, not a cancellation. He said it was "still under evaluation" and differed from project cancellations the company had faced in the past.
Fluor's third-quarter revenue was $3.7 billion, compared with analysts' consensus estimate of $4.16 billion, according to earnings data carried by Investing.com from Reuters. The company, meanwhile, reported $10.9 billion in new awards during the quarter, a level its chief executive described as a company record. Backlog at the end of the period stood at $34.3 billion, the highest Fluor has recorded this decade, according to the chief executive. The figures show that the flow of awards lifted backlog to a historic level, while an assessment of one project could reduce it in the coming period. The final impact will depend on the outcome of the assessment, which management said it had not yet resolved.
Among the largest awards was the second phase of the LNG Canada project, valued at $7.5 billion. Fluor said it recorded the award in the third quarter after receiving full notice to proceed. The contract represents part of the $10.9 billion in total awards during the same period. The potential backlog reduction of about $2 billion comes amid these large additions, but relates to a scope change on another project under a reimbursable contract. Regan said the company expects to determine the final amounts of the assessment and record the reduction in the fourth quarter. The figure reported at the end of the third quarter therefore remains provisional until the company completes its review of the scope change's impact.
The company kept its 2026 adjusted EBITDA guidance within a range of $500 million to $525 million. Management said it expects this measure to grow in the low double digits in 2027 compared with its 2026 outlook. Fluor is due to provide more detail on its preliminary 2027 outlook on its earnings call scheduled for February. The chief executive also said the company expects to record an award for a large copper project in South America, though the timing could be in the fourth quarter of 2026 or the first quarter of 2027. He added: "It could happen in the fourth quarter, and it could happen in the first quarter," without specifying a final award date.
Fluor shares closed at $44.98 on November 5, after closing at $47.61 on November 4 and $47.99 on November 3, according to EL7 data. RTTNews reported that the stock rose 0.82% to $44.65 in premarket trading on November 6, after ending Thursday's session down 5.52%. These moves distinguish the November 5 close from premarket trading the following day, when the company had announced the timing of its results release before the market open and management discussed the backlog assessment on the earnings call. On its February call, the company plans to provide additional details on its preliminary 2027 outlook. The expected timing for recording the copper project award remains between the fourth quarter and the first quarter, according to the chief executive.