Fluor Divests Chinese Stake to Fuel Shareholder Returns

Fluor US3434121022

Engineering and construction giant Fluor Corporation has agreed to sell its ownership interest in a manufacturing facility located in Zhuhai, Guangdong province, to Offshore Oil Engineering Co. (COOEC). This strategic divestment, valued at approximately $122 million, forms part of a broader initiative to streamline the company's portfolio and concentrate resources on its core service-oriented operations. The transaction raises questions about the firm's capacity to fund its previously announced substantial share repurchase program.

The sale to COOEC will transfer full control of the fabrication yard to the buyer. Fluor has indicated that the facility will remain available for its future manufacturing requirements, leaving the door open for potential collaborative projects. Completion of the deal is anticipated in the coming months, pending the receipt of standard regulatory approvals.

Company leadership has a clear plan for the proceeds. The capital generated is intended to support an ongoing stock buyback initiative, which targets an additional $800 million in repurchases through February. This move follows a separate capital-raising event in late fall 2025, where the sale of 15 million shares in NuScale Power generated net proceeds of $605 million. Fluor retains an approximate 39% stake in NuScale and aims to fully monetize its remaining holdings by the conclusion of the second quarter in 2026.

A Robust Backlog Provides Stability

Operationally, Fluor's business foundation appears solid, supported by a significant backlog of work. Key operational metrics include:
* Total Backlog: $28.2 billion.
* Recent New Awards: $3.3 billion, with 99% of these contracts being reimbursable in nature.
* Operating Cash Flow: $286 million.

A deliberate strategic shift away from fixed-price contracts toward reimbursable agreements is designed to mitigate the risk of margin erosion on major projects. Current prominent projects underscoring this model include life-extension work at the Highland Valley copper mine and ongoing contributions to the LNG Canada development.

Financial Performance and Revised Outlook

While reported GAAP results were impacted by certain one-time charges—including a $653 million impairment related to the Santos decision—adjusted operational metrics demonstrated strength. The company's adjusted EBITDA increased by 29% to $161 million, and adjusted earnings per share climbed 33% to $0.68. This positive performance prompted management to raise its full-year 2025 guidance for both adjusted EBITDA and adjusted EPS.

The stabilization of the Mission Solutions and Urban Solutions segments, coupled with the successful handover of the second production unit to LNG Canada, reinforces confidence in Fluor's project execution capabilities. Looking ahead, the timely closure of the China divestiture and the planned monetization of the remaining NuScale position are expected to furnish the company with additional liquidity. These funds will be strategically deployed to advance the share repurchase program and support other corporate priorities.