What happened

Shares in engineering contractor Fluor Corporation (FLR) were up by more than 8% as of 3 p.m. Thursday. The move comes down to a significant contract win by a Fluor joint venture ahead of Fluor's third-quarter earnings announcement on Nov. 5.

The deal gives confidence to investors over the company's near-term future after management told investors that "the optimism in post-pandemic capital spending from clients is partially offset by concerns about cost growth for labor and materials" during the second-quarter earnings presentations.

A rising stock chart.

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Digging into the deal's details: The Savannah River Mission Completion (SMRC), a joint venture of BWX Technologies (BWXT -2.01%), Fluor, and Amentum, won a 10-year environmental management contract for the Department of Energy at the Savannah River site. The contract is valued at up to $21 billion over a 10-year period. According to Fluor's press release, the work "includes liquid waste stabilization and disposition, and potentially nuclear materials management and stabilization, and other requirements."

So what

Fluor's bulls will see the deal as evidence that management's strategic repositioning is working. However, the company has been plagued with problems in recent years related to its overly aggressive bidding on fixed-price contracts. 

As part of its restructuring plan, management aims to de-risk its backlog by shifting it toward 75% reimbursable cost contracts, with the remaining 25% in fixed price contracts by 2024, compared to a split of 53% reimbursable cost and 47% fixed price in 2021.

In addition, at the Strategy Day presentation last January, management outlined its aim to generate 70% of revenue from its non-traditional oil and gas segments by 2023. This new contract is a demonstration of progress toward that aim.

Now what

With the company's upcoming results due in a week, it makes sense to wait and see what management says about the current trading environment and its potential long-term opportunities from a boost in infrastructural spending in the U.S. The Savannah River contract is an obvious plus, but investors will want to see more of the same before they feel fully confident Fluor is on the right track.