Revenue and profit fell for several of construction’s biggest companies, according to numbers posted for their third quarters, but there was also optimism that fast-developing market sectors will become financial springboards to boost future results.

Fluor Corp. reported a 3.3% revenue rise to almost $4.1 billion. But the total still missed analysts’ consensus of $4.73 billion, with the engineer-contractor citing project impacts and reduced energy business earnings. Those factors lowered corporate net income to $54 million, from $169 million in the same quarter last year, it said. Q3 new awards also totaled $2.7 billion compared to $5 billion in the same quarter last year. CEO David Constable said expected conversion of front-end design packages to EPC awards “has not yet come to fruition.”

But executives and analysts for Fluor, and others, see future bottom-line potential in the energy transition, particularly growing demand for nuclear power prompted by the artificial intelligence boom. The firm announced on Nov.15 a design contract with AtkinsRealis, Sargent & Lundy and Ansaldo Nucleare for two new reactors in Romania that are set to double facility power output to 2.4 GW and are the first worldwide since 2007 to use Canadian CANDU technology.

Analyst Maxim Sytchev at National Bank of Canada said that while initial contract backlog won’t add to the Atkins Realis total until Q4, the firm’s current $3 billion in nuclear revenue is up 87% since last quarter and 200% year-over-year. He predicts “double-digit compound annual revenue growth” ahead but in spurts “due to inherent lumpiness of the business.”

Fluor said its consolidated backlog climbed to $31.3 billion from $26 billion, with 80% from reimbursable contracts. The $50-million Q3 profit in the Fluor energy unit reflected a lower-than-expected contribution from its contractor role in a not identified project believed to be the $14-billion first phase of the LNG Canada major export terminal in British Columbia.

Reloading

Constable also pointed to a cancelled Intel semiconductor plant but noted more work within the project it still has. He also is “pleased the election process delivered a clear winner,” he said. “This creates an environment of certainty that clients need to be able to make major capital investment decisions.” Chief Operating Officer Jim Breuer said Fluor is “reloading the hopper with significant front-end work, both in traditional markets and energy transition, for a new wave of projects [that] will come to fruition.” Truist Securities lead sector analyst Jamie Cook termed the shortfalls “unexpected and disappointing,” but said “we believe the market is missing that Fluor is executing operationally.”

Power services provider Quanta Services reported revenue below market expectations, driven by a 9.1% drop in its underground business, with project delays tied to hurricanes impacting unit sales and margins. 

But those results were offset by strong margins in its renewable energy work, the company said. Renewable sales were up 28.9% “with margins strong at 9.8% driven by execution,” said Cook, estimating a rise in total year sector margins of 8.6% to 9%, up from 8.3% to 8.8% previously. The firm “continues to believe it can grow renewables margins to [double-digit percentages] over time with strong sequential improvement expected in 2025,” she said. 

Quanta reported total backlog rose to a record $34 billion in Q3, with the firm “pursuing billions of dollars of projects” it believes it is “well positioned to win.”

Tutor Perini also reported record backlog rising to $14 billion in Q3, up 35% from the previous quarter. But project cost disputes on seven major projects generated net charges of about $152 million, which drove a diluted loss of $1.92 per share in Q3, it said. While the firm noted a positive outcome in several disputes, “two, maybe three were very unexpected and inexplicable legal decisions we strongly disagree with and are appealing,” said CEO Ron Tutor. “We are expecting to return to profitability in 2025, with stronger earnings anticipated in 2026,” he added.

For the nine-month period ended Sept. 30, Parsons Corp. reported net income of $34 million on $5 billion in revenue, compared to $116 million on $3.9 billion for the same 2023 period. But quarter net income was limited by a write-down on legacy critical infrastructure work that predates the firm’s current more disciplined approach to contracts. That work is set to substantially finish in Q4, CEO Carey Smith said. She pointed to growth in existing critical infrastructure security and cyber markets via new contracts and acquisitions. Future workload includes a growing portfolio of Saudi Arabia projects.