Fluor (FLR -27.04%), an engineering and construction firm with a global footprint in industries spanning urban infrastructure, energy, and government services, released its second-quarter 2025 earnings on August 1, 2025. The most notable news from the release was a substantial miss on both non-GAAP earnings per share and GAAP revenue relative to analyst estimates: Non-GAAP EPS was $0.43, compared to the consensus estimate of $0.55, while GAAP revenue was $4.0 billion, missing expectations of $4.5 billion. The quarter’s results were driven by cost overruns on legacy projects, project delays, and a decline in segment profits. Management also slashed its full-year 2025 outlook, lowering adjusted EBITDA guidance from $575–$675 million to $475–$525 million and adjusted EPS guidance from $2.25–$2.75 to $1.95–$2.15 per share, underlining persistent execution and market challenges in the near term.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Non-GAAP) | $0.43 | $0.55 | $0.85 | (49.4%) |
| Revenue | $4.0 billion | N/A | N/A | N/A |
| Adjusted EBITDA (Non-GAAP) | $96 million | $165 million | (41.8%) | |
| Total Segment Profit | $78 million | $194 million | (59.8%) | |
| Operating Cash Flow | $(21) million | $282 million | -107.4% |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
Business Overview and Strategic Focus
Fluor specializes in engineering, procurement, and construction (EPC) services for clients worldwide. Its operations include complex project management for industries such as advanced technologies, life sciences, mining, infrastructure, energy, and government contracts.
Recently, the company’s business strategy has been to diversify away from traditional oil and gas markets, with a growing emphasis on markets like life sciences and infrastructure. It puts a strong focus on risk management, steering toward reimbursable contract models for more predictable revenue. Client relationships and consistent project execution remain key priorities.
Quarterly Performance and Notable Events
Fluor’s quarter was marked by softer-than-expected results and pressures on profit margins. Total GAAP revenue slipped to $4.0 billion, nearly 6% lower than the prior year period. Non-GAAP EPS dropped 49% year-over-year, missing analyst estimates by 21.8% (non-GAAP). Adjusted EBITDA also fell sharply, reflecting execution issues and ongoing costs from prior projects.
Margins in core segments came under acute pressure. Urban Solutions reported a profit of $29 million in the second quarter, compared to $105 million in the same period of 2024. Margin compressed to 1.4% from 5.7% a year ago. This was principally due to a $54 million hit from cost overrun disputes on three infrastructure projects. Similarly, Energy Solutions GAAP revenue declined 28.3% year-over-year. Segment profit and margin for Energy Solutions fell sharply due to an unexpected $31 million arbitration loss on a completed joint venture project, and continued slowdown in awards. In the more stable Mission Solutions segment, which manages government and defense-related projects, reported revenue of $762 million in the second quarter compared to $704 million in the same period of 2024, and profit of $35 million compared to $41 million.
Segment new awards were mixed. Urban Solutions ending backlog increased 5% to $20.5 billion, compared to $19.6 billion a year ago. The value of new awards in that segment dropped steeply, suggesting clients are delaying or reassessing capital spending. Energy Solutions faced a 34.5% decline in backlog year-over-year and weak new awards, signaling near-term softness in energy markets. Mission Solutions saw a sharp year-over-year jump in new awards. Its backlog contracted from $3.8 billion to $2.0 billion.
There were also notable one-time events this quarter. The company reported a $3.2 billion pre-tax mark-to-market gain on its NuScale Power investment, significantly distorting net earnings under accounting rules but not affecting core operational performance. Additionally, Fluor repurchased $153 million in shares during the quarter, bringing total repurchases so far in 2025 to $295 million. Operating cash flow was $(21) million for the quarter, driven by working capital outflows on large projects and costs related to resolving legacy obligations.
Looking Ahead
Management reduced its full-year 2025 adjusted EBITDA guidance to a range of $475 million to $525 million, down from the prior range of $575 million to $675 million (non-GAAP). The revised adjusted EPS (non-GAAP) range for FY2025 is now $1.95 to $2.15 per share, down from $2.25 to $2.75. Leadership reiterated its operating cash flow guidance of $200 million to $250 million for FY2025, but this is far lower than at the start of 2025 and implying that material improvements in cash collection and project cycling are needed in later quarters to achieve full-year operating cash flow guidance of $200–$250 million.
Investors should monitor several factors going forward. Margin recovery in Urban and Energy Solutions is a particular area of focus, alongside new project awards activity and the company’s ability to resolve legacy project cost issues. Variability in client spending and award timing remains a challenge, especially as project delays and shifting client priorities affected backlog and new awards in the quarter. While management described many of the setbacks as temporary, no further quantitative guidance for the second half was detailed beyond the lowered annual forecasts. FLR does not currently pay a dividend.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
