Fluor Q3 2026 Earnings Call Transcript

Quartr
Provided by Quartr
November 6, 2026

Key Takeaways

  • Positive Sentiment: Record awards boosted backlog: Fluor booked a record $10.9 billion in awards in Q3, lifting backlog to $34.3 billion. Management expects book-to-burn above 1 in 2027, though the timing of major project approvals remains uncertain.
  • Positive Sentiment: Fluor maintained 2026 adjusted EBITDA guidance of $500 million–$525 million and adjusted EPS guidance of $2.70–$2.80, and preliminarily expects low-double-digit adjusted EBITDA growth in 2027. Management said recent mega-project awards should contribute more as they ramp, with a larger utilization improvement expected in 2028.
  • Negative Sentiment: A client scope change could reduce backlog by about $2 billion as early as Q4; the company is still evaluating the impact. Management described it as project-specific rather than a cancellation.
  • Positive Sentiment: Fluor has spent more than $2 billion on share repurchases since Q4 2024 and remains on pace to repurchase $1.4 billion of shares in 2026. It ended Q3 with $3.1 billion in cash and equivalents.
  • Negative Sentiment: Energy Solutions’ Q3 segment profit was $20 million excluding a $73 million gain from the EcoFluor sale, as mature projects rolled off faster than newer awards ramped up. Fluor also cautioned that favorable project closeouts in Q3 are not expected to repeat in Q4.
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Earnings Conference Call
Fluor Q3 2026
00:00 / 00:00

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Operator

Hello, everyone. Thank you for joining us, and welcome to Fluor's third quarter 2026 earnings conference call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow management's presentation. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. A web replay of today's conference call will be available at approximately 10:30 A.M. Eastern Time today, accessible on Fluor's website at investor.fluor.com. At this time, for opening remarks, I would like to turn the call over to Jason Landkamer, Vice President, Investor Relations. Please go ahead.

Jason Landkamer
Jason Landkamer
VP of Investor Relations at Fluor

Thank you, operator. Good morning, and welcome to Fluor's 2026 third quarter earnings call. Jim Breuer, Fluor's Chief Executive Officer, and John Regan, Fluor's Chief Financial Officer, are with us today. Fluor issued its third quarter earnings release earlier this morning, and a slide presentation is posted on our website that we will reference while making prepared remarks. Before getting started, I would like to refer you to our safe harbor note regarding forward-looking statements, which is summarized on slide two. During today's presentation, we will be making forward-looking statements which reflect our current analysis of existing trends and information. There is an inherent risk that actual results and experience could differ materially. You can find a discussion of our risk factors, which could potentially contribute to such differences, in our 2025 Form 10-K and our Form 10-Q, which was filed earlier today.

Jason Landkamer
Jason Landkamer
VP of Investor Relations at Fluor

During this call, we will discuss certain non-GAAP financial measures. Reconciliations of these amounts to the comparable GAAP measures are reflected in today's slide presentation and posted in the investor relations section of our website at investor.fluor.com. With that, I'll now turn the call over to Jim Breuer, Fluor's Chief Executive Officer. Jim?

Jim Breuer
Jim Breuer
CEO at Fluor

Thank you, Jason, and good morning, everyone. This was another strong quarter with record awards, a growing backlog, and continued capital returns to shareholders. I'd like to start by sharing some observations from the Fluor Supply Chain Summit that we hosted this quarter in Greenville, South Carolina. Please turn to slide three. The summit, now in its third edition, brought together 230 vendors and contractors from around the world, alongside clients and Fluor leaders. It was an opportunity to align our partners on upcoming projects and on the collaboration needed to deliver them for our shared clients. Over the next four years, Fluor plans to spend approximately $50 billion in procurement and contracts on our projects. As we look to grow our business, we will rely on our supply chain relationships to help us turn new opportunities into successful project delivery. We're executing projects in an uncertain environment.

Jim Breuer
Jim Breuer
CEO at Fluor

Geopolitical risk, tight labor markets, rising costs, and logistics disruptions demand an agile and resilient supply of goods and services. Engaging early in project planning with contractors and vendors helps us anticipate constraints and build more credible estimates, schedules, and execution plans. These efforts matter because of what our clients need: a well-thought-out, capital-efficient execution plan before committing a project and delivery certainty once execution begins. The summit reinforced that our supply chain partners are ready for the challenge. We have strong relationships built over multiple projects, and we see the opportunity to extend those relationships across new projects in different business lines. Turning to slide four, we had some significant accomplishments during the quarter. First, we are experiencing robust growth. New awards were $10.9 billion, a record for Fluor, and backlog is now $34.3 billion, the highest level we have seen this decade.

Jim Breuer
Jim Breuer
CEO at Fluor

These projects will ramp up to full execution over the next two years, solidifying our future earnings growth, and we have additional meaningful awards expected in the near future. Second, our capability to execute mega projects is an important differentiator. Our resume, our people, systems, and footprint set us apart in the marketplace, and I will discuss this in greater detail in a minute. Finally, we are steadfast in our approach to capital allocation. We are investing in capabilities and creating shareholder value. Turning to slide five, Urban Solutions. Here are a few highlights for the quarter. New awards were $2 billion, headlined by two copper projects in Chile. Our strategy in mining is producing tangible results, and the need for capacity expansion is clear. Clients want a partner that can carry a project from early engineering through construction, with a special focus on supply chain, as I mentioned earlier.

Jim Breuer
Jim Breuer
CEO at Fluor

Looking ahead in the near term, we are well-positioned for the release of a multi-billion dollar copper project in South America, where we are already doing early work. This will be the first large award coming out of our $30 billion mining pipeline that we mentioned last quarter. In the data center market, we recently announced a contract with TeraWulf for the development and construction of a three-building site in Kentucky. We expect to recognize an award for the first two buildings in the fourth quarter upon finalization of pricing. In life sciences, we are executing feasibility studies for several clients, including a new facility for Bayer. We expect these studies to develop into larger awards as we progress through 2027. Finally, in infrastructure, we continue to work off our remaining legacy projects.

Jim Breuer
Jim Breuer
CEO at Fluor

I-35 Phase 2 is on track to open its main lanes by year-end, and LA People Mover should complete shortly thereafter. On this project, we and our project partners are working collaboratively with LAWA to ensure the safe completion of systems demonstration to support passenger service availability. Moving to slide six. In Energy Solutions, our next growth cycle is beginning with the LNG Canada full notice to proceed, which we booked in the third quarter for $7.5 billion. I am pleased with how we collaborated with the client in these negotiations, resulting in a favorable outcome for both sides. The execution plan reflects the benefits of extensive replication, and the contract incorporates valuable learnings from Phase 1 related to labor availability, geopolitical risk, and other events outside of contractor control. Working alongside our JV partner, we are now in full execution mode and are off to a strong start.

Jim Breuer
Jim Breuer
CEO at Fluor

In power, momentum continues to build, where we are performing planning work on a large gas-fueled facility. With this client, we are finalizing the EPC contract for the first of what could be several plants. Our near-term portfolio looks promising, and we expect several EPC contracts next year. Specific to nuclear power, on the Cernavodă project, our JV team is finalizing the LNTP phase and positioning the project for a full release sometime in late 2027 or early 2028. Additionally, in nuclear, I am pleased to share that we continue to expand our relationship with X-energy, with a new award for a project at the Hanford site. This is our second project that will utilize this SMR technology. In anticipation of the next wave of nuclear development, we continue to deepen our engagement with multiple technology providers to support the pipeline of projects ahead.

Jim Breuer
Jim Breuer
CEO at Fluor

In domestic refining, we are seeing a resurgence in front-end activity. In addition to the work for America First Refining, which grew this quarter, we are also supporting other major U.S. refiners in advancing the early phases of their expansion projects. As I noted last quarter, we expect this front-end work to translate into EPC opportunities in 2027 and 2028. We are also positioning for the emerging opportunities in the Middle East and Venezuela. In the Middle East, we remain engaged with our clients and anticipate more clarity in 2027 on new work. These opportunities would be incremental to our current work across all three segments. In Venezuela, we are taking steps to re-establish our presence, including a local partnership. As a reminder, we have a long history of delivering energy projects in Venezuela. Turning to Mission Solutions on slide seven.

Jim Breuer
Jim Breuer
CEO at Fluor

We continue to ramp up on our nuclear fuels work and booked additional scope on the EPC project we announced last quarter. We also recognized a six-month extension of our management and operations scope at Savannah River, and we anticipate a decision on the new contract early next year. We are encouraged by the recent announcement from the NNSA approving the start of full-scale construction on the Savannah River plutonium processing facility. Before I turn the call over to John, I want to spend a moment discussing what is one of our key strengths in the marketplace, our capability to execute mega projects. Please turn to slide eight. At Fluor, we are proud to execute projects of all sizes, but our skill set to execute very large projects sets us apart and is a market differentiator.

Jim Breuer
Jim Breuer
CEO at Fluor

For perspective, our prospect pipeline in the next two years includes 25 mega projects with an average size of $4.5 billion, and we are well-positioned to capture many of them. Mega projects require a different level of capability, and the complexity grows exponentially with size. They demand the ability to move seamlessly from front-end development through engineering and into construction, supported by a global supply chain team, an experienced leadership, and a trained workforce. Success takes rigorous project controls and risk management, and the financial strength to ensure delivery over multiple years. Fluor brings these capabilities together, a global footprint, proven tools and systems, a resume spanning six continents, and teams who have delivered some of the world's largest and most complex projects. We continue to evolve and improve.

Jim Breuer
Jim Breuer
CEO at Fluor

We're investing in AI, in our ERP replacement, and in our Project of the Future initiative to strengthen the tools and systems required to plan and execute projects. The goal is to deliver greater project certainty and to reduce cost and schedule for our clients. For our shareholders, our mega project capability allows us to be selective, pursue work that fits our core strengths, and generate attractive returns. With that, I'll turn the call over to John.

John Regan
CFO at Fluor

Thanks, Jim. Good morning, everyone. Today, I'd like to cover a few topics, including Q3 results, capital allocation, plus our outlook for the balance of 2026 and some early framing for 2027. Let's start with consolidated results on slide 10. For the third quarter, revenue was $3.7 billion, up from $3.4 billion a year ago. Adjusted EBITDA was $142 million, compared with $161 million a year ago. Adjusted EPS was $0.77, compared with $0.68 last year. Our EPS metrics benefit from the 32 million shares that we have retired over the past 12 months. As a reminder, the prior year GAAP results for Q3 included a $653 million revenue reversal related to the Santos court ruling. So the year-over-year GAAP results are not meaningful on a standalone basis.

John Regan
CFO at Fluor

Our 2026 GAAP results also include the $73 million gain on ICA-Fluor, our former JV in Mexico. I'll put some perspective around what the sale means for next year a bit later. New awards were $10.9 billion, led by LNG Canada, mining awards for copper, and a six-month extension for Savannah River. New awards were almost three times quarterly revenue, which significantly bolsters our expectations of future earnings growth. Ending backlog was $34.3 billion and is now about 70% reimbursable, in large part due to the LNG Canada award. We anticipate the percentage of our reimbursable backlog to trend down to the 60s as we convert the pipeline of attractive power opportunities into backlog. Our approach to risk remains disciplined and consistent.

John Regan
CFO at Fluor

Reimbursable work continues to be an important contracting model, but we will accept fixed pricing where the returns are higher, risks are commercially balanced, and where the scope is within our proven execution capabilities. Let's look at our business segments on slide 11. Urban Solutions reported segment profit of $100 million, which is a 4.3% margin compared with last year's 2.6%. The improvement reflected a late-stage change order on a legacy infrastructure project, improved profitability on another infrastructure project that reached construction milestone during Q3, increased execution activity on a large life sciences project, as well as the $25 million effect in 2025 for delays at LBJ. Q3 results in 2026 also included $25 million for a charge on a mining project, the same project that we discussed in Q1 this year.

John Regan
CFO at Fluor

Working with our partner, we've reached a preliminary agreement on a change order that establishes the path to completing this project by mid-2027. Energy Solutions reported segment profit of $93 million, including the $73 million gain for the ICA-Fluor sale. This means that segment profit was otherwise $20 million, or about a 3% margin. This compared with $120 million a year ago without tHe Santos effect. ES's profitability declined as mature projects rolled off faster than recently awarded projects entered meaningful execution. The graphic we'll show later on slide 14 illustrates how we see projects generate earnings across our execution window, including these major energy projects. Mission Solutions reported segment profit of $55 million, up from $34 million a year ago. The increase was driven by improved award fee performance across the DOE portfolio and the ramp-up of EPC execution.

John Regan
CFO at Fluor

We ended Q3 with $3.1 billion in cash and equivalents versus $2.8 billion a year ago. That balance supports our planned share repurchases and gives us capacity to internally invest in key enablers, which will drive future growth. This includes our people and systems, plus inorganic opportunities. Operating cash flow for the quarter exceeded expectations at $186 million. Our year-to-date operating cash usage of $21 million under GAAP includes the tax payment in Q2 for the 2025 NuScale conversion, which totaled $357 million. The impact on Q4 guidance to come a little later. As it relates to our legacy projects, we did not have any funding in Q3, as the late-stage change order I mentioned offset any Q3 funding requirements.

John Regan
CFO at Fluor

Moreover, the revised forecast now means that our remaining obligations are around $20 million and are expected to hit Q4 investing cash flow in their entirety. Turning to slide 12, our financial position remains on solid footing, and our capital allocation priorities have not changed. We will keep shareholder value creation in focus while preserving the flexibility to invest in the business. The current chapter of our repurchases, which began in Q4 of 2024, we've spent more than $2 billion to retire our shares, including $300 million in the third quarter. This translates to more than 20% of our outstanding shares over the last 24 months. We remain on pace for $1.4 billion in repurchases for all of 2026. Turning to our internal investments, we continue to build momentum with our Project of the Future and our AI initiatives.

John Regan
CFO at Fluor

We have also made good progress on the design of our ERP replacement, and we expect to enter the detailed design phase of that transformational project by mid-2027. Collectively, these represent a profound step forward in our technology and will streamline both our execution playbook and the internal efforts arising from project execution. Separately, we continue to evaluate selected inorganic opportunities, but it looks increasingly like it's a 2027 consideration. With that context, let's turn to guidance beginning on slide 13. We are maintaining our full year 2026 adjusted EBITDA guidance of $500 million-$525 million, which implies a full year adjusted EPS range between $2.70 and $2.80, given our expected share repurchase tempo. We conditioned both of these ranges last quarter when we announced the divestiture of EcoFluor, so the guidance principally means continued execution against our backlog.

John Regan
CFO at Fluor

For reference, through the first nine months of 2026, we have delivered $351 million of adjusted EBITDA, so our range implies fourth quarter adjusted EBITDA of roughly $150 million-$175 million, and adjusted EPS of about $0.85-$0.95. Importantly, Q3 included some favorable closeouts and settlements that we don't expect to repeat in Q4, so that means real growth in recurring earnings. While some investors may dismiss these closeout efforts as one-time events, they represent the culmination of the earnings from across the project execution, and I commend those teams for the good outcomes this quarter. Our other key full year assumptions are outlined on the slide, including an adjusted operating cash flow of $430 million-$460 million.

John Regan
CFO at Fluor

Full year new awards book-to-burn ratio potentially approaching 1.4 times, with FID on some mega projects over the next few months, but in any case, would be well above one for all of 2026. G&A will be approximately $180 million-$190 million, which excludes up to $15 million in outside costs for the replacement of our ERP and for other technology and AI enhancements, which I touched on earlier. We assume a full year tax rate of 25%-27%, and a revenue split of approximately 65% Urban, 20% Energy Solutions, and 15% Mission Solutions. Assuming these splits, we expect full year segment margins of approximately 2.5% in Urban, 7% in Energy Solutions, and 6.5% in Mission Solutions, all on a GAAP basis, including CFM. Most of our refreshed guidance aligns to Q2, though the G&A growth was offset by PGM growth in refreshing the overall EBITDA guidance.

John Regan
CFO at Fluor

Before I close out Q4, one point worth connecting. The higher G&A and the higher operating cash flow guidance are directly linked. We've built the uplifted cash generation into our incentive comp projections, so stronger cash flow gave rise to higher G&A under the pay-for-performance model. Also, during late October, one of our reimbursable clients notified us of changes to its project scope. We are still evaluating the impact on backlog, but based on our early assessment, we could expect a reduction of approximately $2 billion as early as Q4. Please turn to slide 14. I'd like to put some preliminary context to next year's numbers when we compare them to the 2026 outlook. For adjusted EBITDA, we expect the growth percentage to be in the low double digits compared to 2026.

John Regan
CFO at Fluor

This assumes several changes to the earnings base, which I will describe, the expected gradual ramp-up of contributions from recent large awards, and the absence of the same level of closeout on major energy projects. A big factor is the sale of ICA-Fluor, which removes approximately $45 million of EBIT that we recognized year-to-date in 2026, so the growth in 2027 is far higher for our retained business. Spending on Project of the Future and our ERP implementation will continue into 2027, and although that spending will hit our GAAP P&L in whole or in part, they are important expenditures that define how we'll conduct business for years to come, and are excluded from the year-over-year EBITDA growth target.

John Regan
CFO at Fluor

As illustrated on the sample burn curve on the slide, our recent mega project awards will enter the earnings stream in 2027, but large projects generally take two years to approach peak earnings. These mega projects also execute over longer horizons than the work they are replacing, with peak activity starting in 2028.

John Regan
CFO at Fluor

We expect earnings to build as these projects move into full execution. Furthermore, our awards pipeline remains strong heading into 2027, when we expect a book-to-burn greater than one. We also plan to continue share repurchases, anchored around half of expected annual free cash flow. We will be adding to these preliminary 2027 views during February's call. To summarize our thinking coming out of Q3, the core business remains healthy, we delivered record new awards, simplified the portfolio, substantially advanced completion on legacy projects, and continue to direct value to our shareholders. With that, we are ready to open the line for questions.

Operator

We will now begin the question-and-answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one on your telephone keypad. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question, and if you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Sangita Jain from KeyBanc Capital Markets. Please go ahead.

Sangita Jain
Sangita Jain
Analyst at KeyBanc Capital Markets

Good morning. Thank you for taking my question. I want to ask about the TeraWulf award that you recently announced that you will book in Q4. Maybe you can share the sizing of that award and whether there is further upside being prospects in that award beyond the first three buildings.

Jim Breuer
Jim Breuer
CEO at Fluor

Good morning, Sangita. Thanks for the question. This is Jim. We are excited about entering that project. It would be, for the first two buildings, a low single-digit multi-billion award. There is a third building at the site that is being estimated and therefore released a little bit later. We are also in conversations with that client for potentially other sites. It could grow. The focus right now is on the first two buildings, followed by the third building at the Kentucky site.

Sangita Jain
Sangita Jain
Analyst at KeyBanc Capital Markets

Got it. On the operating cash flow in Q3 and the outlook, can you help us on what is driving that stronger outlook and the potential M&A targets that you are looking at for 2027?

John Regan
CFO at Fluor

Good morning, Sangita. It is Regan. Operating cash flow is a really good story in the quarter and in the outlook. It lays across all three segments. I will talk about what is in the rearview mirror and what is to come. During the quarter, with respect to Urban Solutions, it was in-flight projects and better working capital management across the portfolio, maybe with a little bit of a concentration in ATLS. That was fantastic. On the Energy Solutions side of things, the ultimate liability and funding of the warranty exposure at LNG was much lower than we had expected coming out of Q2. Our ability to work that down with less cash meant we were able to dividend out more of that money.

John Regan
CFO at Fluor

That money came to us again in Q3 at a larger quantum than we had expected at the time of the Q2 print. On the Mission Solutions side, as we said in the EBITDA bring-down for them, they had excellent fee scores across the DOE portfolio. When the federal government wrapped up its fiscal year in September, our fee scores were much better, and so that hit earnings in Q3, but will give us a tailwind on the cash flow when we make collection of that in Q4. Does that all hang together?

Sangita Jain
Sangita Jain
Analyst at KeyBanc Capital Markets

Yeah, that's very helpful. Thank you.

John Regan
CFO at Fluor

Yeah. On the inorganic opportunities, look, I think we continue to look to build to our depth and to add to kind of the earnings growth that we're expecting. Clearly, we're flush with cash in terms of being able to make those acquisitions, but just haven't been able to get them across the goal line, be increased in focus over the next few quarters. As I signaled in the prepared statements, we'll look for something, a little more transparency there in 2027.

Sangita Jain
Sangita Jain
Analyst at KeyBanc Capital Markets

Perfect. Thank you.

John Regan
CFO at Fluor

Of course.

Operator

Your next question comes from the line of Steven Fisher from UBS. Please go ahead.

Steven Fisher
Steven Fisher
Analyst at UBS

Thanks. Good morning, and congrats on all the awards. Obviously, the election is topical this week. I am curious if you can just discuss the election impact on data center and your energy business, and perhaps your booking opportunities more broadly, and curious what conversations you have had with customers in the last couple of days.

Jim Breuer
Jim Breuer
CEO at Fluor

Good morning, Steve. This is Jim. We are obviously following the implications of the election very closely. I think we need to let the dust settle a little bit. We are looking at potential impacts on energy, data centers, et cetera, et cetera. I think if you step back a little bit, the markets that we pursue, Steve, whether it is in the mission space or the private sector space, most of them have bipartisan support. Yes, there is a little bit of growing concerns around the data center ecosystem, but we feel that the data center work that we have today and the power work that we are hoping to book in the next few months is pretty resilient. I also take you even further back around Fluor's diversity of markets, whether it is domestic or international, copper, life sciences, manufacturing, iron ore.

Jim Breuer
Jim Breuer
CEO at Fluor

We feel pretty good that our diversity is working as we are not overly exposed to some of the concerns that are out there. On the positive side, both sides of the aisle are very determined to work on permitting reform. I think the permitting reform momentum that is building in the country is going to do well for some of the work we are pursuing. I think on and all, yeah, there are some areas of attention, but we do not expect any significant impact on our company's trajectory.

Steven Fisher
Steven Fisher
Analyst at UBS

Okay, that's helpful. Drilling into the gas-fired opportunity, you talked about some of the larger opportunities there. I assume those are all combined cycles. Can you just talk about what still has to happen to book those? Can you talk about any simple cycle opportunities you might have? To what extent are any potential customers reaching out to you? If not, why not? It seems like there's quite a bit of that activity going on and a need for contractors.

Jim Breuer
Jim Breuer
CEO at Fluor

We are pursuing both of those types of projects, Steve. We have our most matured opportunity is a combined cycle. Shortly thereafter, we're working on two simple cycles for a different client that we hope to convert, I would say, around the middle of next year. You're right, there are both types of projects out there. We're pursuing both of them, talking to several clients. As I said in my remarks, we expect several EPC contracts to be live next year.

Steven Fisher
Steven Fisher
Analyst at UBS

Okay. Just to clarify, you said next few months on the bigger ones. What still has to happen to book those?

Jim Breuer
Jim Breuer
CEO at Fluor

Oh, sorry. It's just we're working collaborative with the client on the estimate, the execution plan, and the contract terms. All that is very mature. The client, in the case of the first project, they have to go to their board for approval. Once they get that approval, they'll give us the go-ahead to start.

Steven Fisher
Steven Fisher
Analyst at UBS

Okay, terrific. Thank you.

Operator

Your next question comes from the line of Andy Kaplowitz from Citi. Please go ahead.

Andy Kaplowitz
Andy Kaplowitz
Analyst at Citi

Good morning, everyone.

John Regan
CFO at Fluor

Morning.

Jim Breuer
Jim Breuer
CEO at Fluor

Good morning.

Andy Kaplowitz
Andy Kaplowitz
Analyst at Citi

Jim, I think we all understand that the geopolitical environment these days is quite fluid, but maybe just frame this awards cycle a little more versus what you have seen in the past. I think you are going to book more than $25 billion this year. I think you just said next year would be over one again in terms of book-to-burn. Do you think 2027 could be similar to 2026 where book-to-burn could be way over one? Do you expect bookings to grow in 2027 versus 2026 despite, obviously, you booked LNG Canada, which is a large project this year?

Jim Breuer
Jim Breuer
CEO at Fluor

Andy, all good questions and questions that we are analyzing and addressing as a team, obviously, every day. 2026 is going to be a good year. As you can tell, we are already at $20 billion essentially at Q3, and anything in Q4 is additive to that. We are saying, as John said earlier, 2027 is going to be greater than one book-to-burn. Part of the challenge we have is the same story we have been telling you all along, is we sometimes struggle defining the exact timing of these big awards. For example, we feel very good about a large mining award in South America coming up in the next few months. It could land in Q4, it could land in Q1. That makes a difference when you look at the full fiscal year, but it does not really make a difference to us.

Jim Breuer
Jim Breuer
CEO at Fluor

The work comes in, we start executing it. I do not know what the exact number for 2027 will be yet. We will have more clarity in the beginning of next year. I can tell you that both years are going to be good, therefore backlog is going to continue to grow. It is fairly diversified. It is gas-fired power, it is copper, it is data center work, it is life sciences, it is advanced manufacturing, it is Mission Solutions.

John Regan
CFO at Fluor

Refining.

Jim Breuer
Jim Breuer
CEO at Fluor

Refining, it is picking up. There may be a nuclear award there. We feel good about diversity. We feel good about the clear line of sight we have to these projects. The exact timing is not always up to us, but we feel good about both this year, of course, and next year.

John Regan
CFO at Fluor

I think it comes back in large part to the board oversight that you referenced with respect to the power project, that once they get clearance from their own governance structure, that's the important hurdle for us to get over.

Jim Breuer
Jim Breuer
CEO at Fluor

That's the trigger point.

John Regan
CFO at Fluor

in terms of the booking.

Andy Kaplowitz
Andy Kaplowitz
Analyst at Citi

Very helpful, guys. We appreciate the color, the initial thoughts on 2027 EBITDA, but maybe can you give us a little more color on how to think about 2027 from a utilization perspective? Are you still relatively underutilized as you ramp up, particularly in Energy Solutions? That's part of the friction in terms of how quickly you can grow. Obviously, we're not going to talk about guidance for 2028, but could you have a bigger step up? I mean, I see the chart in terms of utilization helping margins as you go into 2028, so much bigger step up in earnings then.

Jim Breuer
Jim Breuer
CEO at Fluor

Yeah, Andy, so utilization will improve in 2027 and in 2028. Obviously, you understand the company, and so you bring up a good point. It's not just the large EPC awards, it's also the services that we're also building up, whether it's in front-end refining work or life sciences or even some early chemicals work. The objective is not just to do the large projects, which in themselves have significant utilization, but also continue to feed and replenish the pipeline with services-only work that then will feed the EPCM awards for 2028 and 2029. I do expect a gradual improvement of utilization, including in Energy Solutions in 2027, but the big step I think is going to be in 2028. Yeah.

John Regan
CFO at Fluor

Agreed. And that was at the root of slide 14 that hopefully landed well with Andy.

Andy Kaplowitz
Andy Kaplowitz
Analyst at Citi

It did. Just one quick follow-up, John. Any reason why Urban Solutions was light in revenue in Q3? Was something happen there?

John Regan
CFO at Fluor

No, I think that's just a typical burn across their portfolio.

Andy Kaplowitz
Andy Kaplowitz
Analyst at Citi

All right. Thanks, guys.

John Regan
CFO at Fluor

Thank you.

Jim Breuer
Jim Breuer
CEO at Fluor

Thanks.

Operator

Your next question comes from the line of Jamie Cook from Truist Securities. Please go ahead.

Jamie Cook
Jamie Cook
Analyst at Truist Securities

Hi. Congratulations on a good bookings and a fairly non-eventful quarter. I guess just two questions. One, Jim, you talked about your strength in mega, and you talked about 25 projects that you're looking at that have an average size of $4.5 billion. Can you just help us understand what markets largely are driving that? And just interested in the competitive dynamics on these projects, how many other players you're bidding against, or is it more a function of just a function of whether or not the project goes forward, because there's not a lot of people that have the capability that Fluor has? And then my second question, just on nuclear, congratulations on X-energy and the SMR. Just wondering if you can elaborate what else is to come on the nuke side, whether it's traditional or SMR, and just sort of the timeframe associated with that. Thank you.

Jim Breuer
Jim Breuer
CEO at Fluor

Thanks, Jamie. Good morning. On the mega project portfolio, pipeline portfolio, it's copper, it's power, it's life sciences, it's manufacturing, and it's both U.S. and international. So it's fairly diverse. Many of them, I can't say all the 25, but the majority of the 25, we're doing the front-end work, or we are in sole source conversations with clients, for example, in the case of these utilities. So we're really not bidding competitively these large mega projects. They're more negotiated deals. And the biggest hurdle to win the work is whether the project gets approved by the client's board and it overcomes its financial hurdles.

Jim Breuer
Jim Breuer
CEO at Fluor

As far as nuclear, we're doing two projects with X-energy now, and we talked about Cernavodă, so that's a conventional nuclear in Romania, and that project is now the LNTP is almost done, and they're working the financial picture to hopefully go into EPC in late 2027, maybe 2028. Above that, we are in conversations with two very established nuclear technology providers, one in the SMR space and one in the conventional reactor space, about establishing partnerships to tackle projects together. So, we don't have anything to announce today, neither names of technologies or projects, but I can tell you would very much recognize these two names.

John Regan
CFO at Fluor

It's a go-to-market strategy for the deployment of their technology.

Jim Breuer
Jim Breuer
CEO at Fluor

It's a go-to-market strategy as our country and other countries are getting more and more serious about building these large projects. So this is a longer play, as far as announcements, probably front-end announcements in 2027 and EPC announcements in 2028 and 2029.

Jamie Cook
Jamie Cook
Analyst at Truist Securities

Okay. Just one follow-up. Just as these mega projects move forward and just the constraints that there are in labor, do you see your business model evolving more towards strategic partnerships versus work that's been more transactional historically? I am just wondering what the implications are for potentially less cyclical earnings or a more stable earnings stream opportunity going forward.

Jim Breuer
Jim Breuer
CEO at Fluor

No, that is exactly right, Jamie Cook. We are working hard on growth, but predictability. So, whether it is in the execution of the project, in partnerships with other contractors, or longer-term account relationship with clients, there is a lot of effort on the team to try to provide more predictability to the earnings. But we are balancing that with our growth objectives.

Jamie Cook
Jamie Cook
Analyst at Truist Securities

Thank you.

Operator

Your next question comes from the line of Michael Dudas from Vertical Research. Please go ahead.

Michael Dudas
Michael Dudas
Analyst at Vertical Research

Good morning. Good morning, gentlemen.

John Regan
CFO at Fluor

Good morning, Mike.

Michael Dudas
Michael Dudas
Analyst at Vertical Research

Jim, as your bookings and the business evolves over the next few years, it seems like we can characterize the business right now as pretty clean. The legacy projects, thank goodness we are not going to have to talk about those much, or if at all, in 2027. Given where your mix of reimbursable lump sum and the margins you are booking in the current and with the expected backlog, how does the positioning look from a return and margin standpoint into the next few years versus the prior large project cycles, maybe with similar different end markets that Fluor has executed? I am assuming there is much more visibility and predictability in this, and maybe I am assuming better margin accretion. Maybe you can address that would be helpful. Thank you.

Jim Breuer
Jim Breuer
CEO at Fluor

Sure. Thanks, Mike. Let me say a couple of things here. One, we are pleased with the margins of the new awards we are seeing so far. We are seeing better margins in these awards than we were expecting a year and a half ago when we had our Investor Day, Mike, in early 2025. So that is encouraging. We are paying a lot of attention to the lump sum versus reimbursable mix. We are seeing good margins on both. Obviously, they are very different. Lump sum has higher margins, and so that is why they are an important aspect of our portfolio. We are also working hard with our teams on improving the margins on the reimbursable work, given the demand for qualified resources in the marketplace. Yeah, as we grow the company, the backlog, and the revenue, that is going to help margin.

Jim Breuer
Jim Breuer
CEO at Fluor

There is going to be better utilization, as we talked about. But we're also driving higher margin performance on the individual projects. I think over the next several years, as these big projects start entering into their peak production mode, if you will, as John explained, we expect margins to grow materially.

John Regan
CFO at Fluor

Yeah. Maybe I'll just append there. We do expect project level margins to improve, and then certainly with the additional scale, we're going to get more absorption of the overhead. So even bottom line margins should be expanding as we get into that peak execution window.

Michael Dudas
Michael Dudas
Analyst at Vertical Research

And I'm assuming, John, that with the ERP and the technology, maybe you can frame a little bit of what contribution or absorption or impact

John Regan
CFO at Fluor

Yeah.

Michael Dudas
Michael Dudas
Analyst at Vertical Research

that could have in this discussion as well.

John Regan
CFO at Fluor

Yeah. It is a great question. It is a little bit of a variable right now that is difficult to foretell. But certainly, our expectations coming out of that are going to be a much leaner organization. I think about better technologies making us more efficient in the bidding process, ultimately in the planning process, certainly in the execution and in the back office. It is just a little difficult in the moment to say it is going to trigger a 200 basis point improvement or something of that. But that is why we are so keen to advance the Project of the Future and incorporate those learnings to the ERP design, because it is very tempting what it could do to our margins. But certainly, we would expect up and to the right.

Michael Dudas
Michael Dudas
Analyst at Vertical Research

Excellent. Thank you.

Operator

Your next question comes from the line of Andy Wittmann from Baird. Please go ahead.

Andy Wittmann
Andy Wittmann
Analyst at Baird

Oh, great. Good morning. Thank you for taking my question. I always like to just try to understand the quarter a little bit better, so that is where I am going to go here. Particularly, I wanted to start in the Urban Solutions segments here, and you mentioned a couple of moving pieces. I guess we do have that the joint venture mine was 25 to the negative. First on that one, is that a consolidated JV or unconsolidated? Then you have some good guys here too. I think you mentioned a favorable claim. There was in the press release you talked about a milestone achievement. Are those good guys more than the 25? I am just trying to get a sense of what maybe the underlying margin of Urban was, and I would love it if you give the numbers.

Andy Wittmann
Andy Wittmann
Analyst at Baird

I do not expect that you will, but just understanding how they compared to the 25 bad guy, just to get a better understanding of what is happening there would be helpful, I think.

John Regan
CFO at Fluor

Yeah. Good morning, Andy. I will tackle that one. The project itself is a partial consolidation, so it is a 50/50 joint venture. The income statement has got the typical effects you would see for our ownership percentage. And you are right, it was a downer in the quarter, and it was largely offset by the two things in infrastructure space. So one was on one of our projects here in Dallas, and so we were successful with change orders that did give us a positive to our earnings. Again, those were you said claim, we said change order, so maybe I correct the record there.

John Regan
CFO at Fluor

Those were things that we were looking to drive to conclusion before year end, so it was a good outcome for us that we landed it in Q3 and at a little bit better than we had expected in establishing the forecast or the outlook. And then on the milestone, that is a different project that hit, as we said, that milestone in Q3 and caused an overall reevaluation of effort to go. And when we did that, there was a reduction in that effort forecasted and applied against percent complete, all of which gave rise to a tailwind. I would say the totality of those three things roughly offset each other, so what you see in Urban is really kind of the expectation moving into Q4 with maybe a slight uplift to what we think will come from them in Q4.

Andy Wittmann
Andy Wittmann
Analyst at Baird

That is great. That is really clear. I am smiling. I did not know if I would get that fulsome of an answer, and I did, so thank you for that, John. Also, I guess on Energy, wanted to kind of dig in a little bit here too. Obviously, we can see kind of the underlying segment profit there. Obviously, I heard full notice to proceed on LNGC-2. Obviously, that is going to have a big contribution, and with full notice to proceed, I would imagine that is going to ramp. And obviously, you got slide 14 that talks about the company's overall ramp. But maybe just to understand how this one goes, like, what is the expected completion date over which we should be thinking about that $7.5 billion being burnt?

Andy Wittmann
Andy Wittmann
Analyst at Baird

I think that would just give some people some framing as to how this is going to contribute to their earnings as well. Thank you.

Jim Breuer
Jim Breuer
CEO at Fluor

Yeah, Andy, this is Jim. A couple of comments. The graph on that slide is intended to show a theoretical project. Yeah. It is not the corporation. It is a typical large mega project. As far as LNGC, the client has announced startup in the early 2030s, I believe, first half of the 2030s. You can extrapolate from that a five- to six-year burn. Yeah. That project is a little different because we did have the sizable limited notice to proceed. We are maybe hitting the ground running a little faster on that versus what is on slide 14. It is also a really large project, so maybe not quite so much in the first year. It is complicated, but we wanted to put slide 14 out there to give us a frame to be able to comment on things like this.

Andy Wittmann
Andy Wittmann
Analyst at Baird

Yep. Okay, great. Duly noted. Thanks, guys, for your time. Have a good day and a good weekend. Thank you.

Jim Breuer
Jim Breuer
CEO at Fluor

See you next week, Andy.

Operator

Your next question comes from the line of Steven Fisher from UBS. Please go ahead.

Steven Fisher
Steven Fisher
Analyst at UBS

Great. Thanks for the follow-up. I just wanted to ask about that potential $2 billion backlog scope reduction, Jim, that you mentioned. Anything more you can say about what's driving that and the likelihood of that happening or not?

John Regan
CFO at Fluor

Yeah. Yeah, Steve. Maybe I'll tackle it. Steve, this is something that came up really late last month, so it's still very much a developing story. It's a change in scope on a project, so it's not as simple as situations we've had in the past that's a project cancellation. We know with an amount of precision what that impact is. So, it's still under evaluation. As we said, it's a reimbursable contract, so you can intuit what those margins might be. But we think it's in that $2 billion range, and we think we'll see those final amounts and have a derecognition going into quarter four. But it's more than nominal, so we wanted to make sure that we were being transparent with you guys on that is to come.

Steven Fisher
Steven Fisher
Analyst at UBS

Just in terms of, is this more kind of a macro environment kind of thing or just something company-specific, project-specific? Just any sort of color there.

John Regan
CFO at Fluor

Yeah, I think it's just project-specific and kind of somewhat ordinary in terms of in-flight projects and clients from time to time reevaluating the scope of what they want us to do.

Steven Fisher
Steven Fisher
Analyst at UBS

Okay. Thank you very much.

John Regan
CFO at Fluor

Yeah, sure.

Operator

This concludes. Your next is Andy Kaplowitz from Citi. Please go ahead.

Andy Kaplowitz
Andy Kaplowitz
Analyst at Citi

Sorry, guys. John, can I just ask one follow-up there? Does your guidance then for 2027, your initial guidance, like include the impact from this project? How do we think about that?

John Regan
CFO at Fluor

Yes. Everything that we talked about today is incorporated into that preliminary guidance.

Andy Kaplowitz
Andy Kaplowitz
Analyst at Citi

Okay. Thank you.

Operator

This concludes our question-and-answer session. I would like to turn the call back to Jim Breuer for closing remarks.

Jim Breuer
Jim Breuer
CEO at Fluor

Thank you, operator, and thank you for joining today's call. I am very pleased with our record new awards and the health of our pipeline, and excited about our ability to deliver shareholder returns in the years ahead. Thank you, and have a good day.

Operator

This concludes today's call. Thank you all for attending. You may now disconnect.

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      Jason Landkamer
      VP of Investor Relations
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      Jim Breuer
      CEO
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