Fluor Corporation

Company Overview

Business Model: Fluor Corporation is a global professional and technical services firm, providing engineering, procurement, and construction (EPC) and project management services. The company's core value proposition is to deliver capital-efficient solutions with an emphasis on safety and operational excellence. Its services span six broad categories: engineering and design, project management, procurement, construction, and operations and maintenance. Fluor Corporation serves diverse industries including life sciences, advanced technologies and manufacturing, data centers, mining and metals, gas and nuclear derived power, infrastructure, chemicals, liquefied natural gas (LNG), and oil and gas production and fuels. It also acts as a service provider to the U.S. federal government and international governments.

Market Position: Fluor Corporation positions itself among the world's leading professional services firms, leveraging its global execution platform, excellence in project execution, market diversity, and strong client relationships. The company maintains an industry-leading position in traditional oil & gas, chemicals, commodity mining, life sciences, and U.S. Department of Energy (DOE) support. Its Mission Solutions segment holds a tier 1 position with differentiated expertise in managing complex national security missions for the DOE and the National Nuclear Security Administration. Fluor Corporation's competitive strengths include its commitment to safety, global footprint, ability to manage complex projects, diversified industry exposure, systematic risk management, and integrated sustainability practices.

Recent Strategic Developments:

• Strategic Priorities: Fluor Corporation is focused on four strategic priorities: driving growth across its portfolio (including energy addition, low carbon power, LNG, sustainable chemicals, data centers, semiconductors, critical metals and minerals, and national security), pursuing contracts with fair and balanced commercial terms (emphasizing reimbursable terms), reinforcing financial discipline (predictable cash flow and earnings, investing in growth, maintaining low debt, and returning capital to shareholders), and fostering a high-performance culture of project delivery through the use of Artificial Intelligence (A.I.) and technology. As of December 31, 2025, 81% of the company's backlog is reimbursable.
• NuScale Power Corporation (NuScale) Monetization: In 2025, Fluor Corporation converted 126 million of its NuScale voting shares into registered shares. It sold 15 million of these shares for net proceeds of $605 million. In November 2025, Fluor Corporation entered into a variable price forward sale agreement for 71 million of its remaining NuScale shares, which was completed in February 2026, generating total proceeds of $1.35 billion. The company expects to monetize the remaining 40 million NuScale shares by the second quarter of 2026.
• Stork Holding B.V. and subsidiaries (Stork) Divestiture: The divestiture of the Stork business was substantially completed in 2025 with the sale of its U.K. operations, following the sale of its continental Europe operations in 2024.
• Fabrication Yard Sale: In December 2025, Fluor Corporation reached an agreement to sell its ownership in a fabrication yard in China for approximately $122 million, with the sale expected to close in 2026.

Geographic Footprint: Fluor Corporation operates globally, with a significant presence across various regions. As of December 31, 2025, its global workforce distribution was North America (58%), Europe, Africa and Middle East (17%), Central and South America (5%), and Asia Pacific (20%). Revenue by project location in 2025 was predominantly North America ($11,314 million), followed by Europe ($2,895 million), Asia Pacific (includes Australia) ($604 million), Central and South America ($538 million), and Middle East and Africa ($152 million). The company maintains major facilities in the United States (Irving, Texas - Corporate Headquarters, Greenville, South Carolina, Houston, Texas, Southern California), Canada (Calgary, Alberta, Vancouver, British Columbia), Latin America (Santiago, Chile), Europe, Africa and the Middle East (Al Khobar, Saudi Arabia, Amsterdam, Netherlands, Farnborough, England, Gliwice, Poland), and Asia and Pacific Region (Manila, Philippines, New Delhi, India, Perth, Australia, Shanghai, China).

Financial Performance

Revenue Analysis

Profitability Metrics:

• Gross Margin: -0.77%
• Operating Margin: -2.44%
• Net Margin: -0.40%

Investment in Growth:

• Capital Expenditures: $50 million
• Strategic Investments: Fluor Corporation made investments in partnerships and joint ventures totaling $278 million in 2025, including $158 million in funding for a proportionately consolidated loss project for an infrastructure joint venture, $38 million for an Energy Solutions joint venture, and $33 million for a separate infrastructure joint venture to make a legal settlement payment.

Business Segment Analysis

Urban Solutions

Financial Performance:

• Revenue: $9,200 million (+27.09% YoY)
• Operating Margin: 2.2%
• Key Growth Drivers: Revenue increased due to the ramp-up of execution activities on life sciences and mining and metals projects. This growth was partially offset by a decline in execution activity for recently completed projects and those nearing completion. Segment profit decreased due to forecast adjustments for cost growth on three infrastructure projects related to subcontracted design errors, price escalation, and schedule impacts, totaling $108 million. These were partially offset by improved performance on other infrastructure projects, a favorable negotiation with a designer on a separate infrastructure project, and the ramp-up of life sciences projects.
• New Awards: $8,688 million
• Backlog: $18,746 million (+5.62% YoY)

Product Portfolio:

• Provides front-end engineering, program management, and EPC services for advanced technologies and manufacturing (including advanced materials, data centers, semiconductors, smart batteries, fast-moving consumer goods, food and beverage, and specialty products), with a focus on lean manufacturing principles.
• Offers front-end studies and EPC services to the pharmaceutical, biotechnology, medical device, and animal health industries, including validation and commissioning services.
• Delivers a comprehensive range of services for mining and metals clients (copper, lithium, rare earth minerals, iron ore, bauxite, alumina, aluminum, steel, diamond, gold, and fertilizers).
• Supports infrastructure development, focusing on state departments of transportation, with services including consulting, design, planning, financial structuring, engineering, construction, and operation and maintenance.
• Provides professional staffing services through TRS Staffing Solutions®.
• Offers outsourced and consultative reliability and maintenance services for power generation and industrial manufacturing in North America via Plant & Facility Services.

Market Dynamics:

• Driven by ongoing urbanization and the demand for innovative and sustainable solutions.
• Competitive advantage in life sciences through the ability to complete large-scale projects with critical time-to-market requirements.
• Executes large-scale mining and metals projects globally, often in remote or logistically challenging regions.
• North American infrastructure market is driven by continuing urbanization and the replacement/expansion of aging infrastructure.

Energy Solutions

Financial Performance:

• Revenue: $3,554 million (-40.54% YoY)
• Operating Margin: -11.65%
• Key Growth Drivers: Revenue decreased primarily due to a $643 million reversal of previously recognized revenue related to a judgment on the Santos project in Australia. Further declines were driven by reduced execution activity for several projects nearing completion and a slowdown at a joint venture in Mexico (though activities restarted after significant progress payments). These declines were partially offset by the ramp-up of a batteries project in Poland. Segment profit and margin declined due to the Santos project judgment.
• New Awards: $1,421 million
• Backlog: $4,601 million (-39.50% YoY)

Product Portfolio:

• Offers EPC services for traditional oil and gas markets (upstream, fuels, chemicals, LNG, and power), including expansion, modernization, and sustaining capital work.
• Supports energy transition markets, such as nuclear power, low-carbon energy sources, asset decarbonization, carbon capture, renewable fuels, green chemicals, and hydrogen.
• Capabilities include designing and constructing new facilities, upgrading and optimizing existing ones, and consulting services (feasibility studies, process assessments, project finance structuring).
• Active in ethylene-based and specialty chemicals markets, as well as battery chemicals projects and lower carbon solutions for chemical facilities.
• Experienced in LNG developments, including liquefaction, floating LNG facilities, mid-scale LNG solutions, and regasification terminals.
• Provides a full range of services for the power market, utilizing small modular and conventional nuclear reactor technologies, thermal power sources, and gas-fired power plants.

Market Dynamics:

• Excels at delivering large, complex projects in challenging locations, particularly as global and geopolitical complexities increase in energy and chemicals.
• Leveraging extensive experience in gas-fired power plants and nuclear technologies.

Mission Solutions

Financial Performance:

• Revenue: $2,720 million (+4.86% YoY)
• Operating Margin: 3.46%
• Key Growth Drivers: Revenue increased primarily due to higher project execution volume on a construction project for the DOE and hurricane claims administration support for the U.S. Federal Emergency Management Agency (FEMA). This was partially offset by reduced volumes on two other DOE projects. Revenue also included the recognition of revenue reserves for certain disputed costs on a U.S. Department of Defense (DOD) project and an adverse ruling on a long-standing claim for a project completed in 2019. Segment profit and margin declined due to these revenue reserves and the adverse ruling.
• New Awards: $1,847 million
• Backlog: $2,189 million (-19.73% YoY), including $1.0 billion of unfunded government contracts.

Product Portfolio:

• Delivers advanced technical services to the U.S. and other governments.
• Nuclear and environmental business holds a tier 1 position in managing complex national security missions for the DOE and the National Nuclear Security Administration, including nuclear security and operations, fuels enrichment, nuclear waste management, and laboratory management.
• Industry leader in nuclear remediation, overseeing site management, environmental remediation, and decommissioning at government facilities.
• Partner to FEMA for disaster recovery and emergency response in civil services.
• National security business provides operations and maintenance, global logistics, EPC, life support, and operations of mission-critical facilities for U.S. military service organizations.
• Offers security-cleared personnel for the intelligence community, including data center management, operations and maintenance of secure facilities, and technology platform services.
• Constructs and renovates secure facilities globally for various agencies.

Market Dynamics:

• Key competitive factors include performance, qualified personnel with appropriate clearance credentials, and the ability to execute complex projects safely, timely, cost-efficiently, and compliantly.
• Capable of rapid mobilization of people and equipment globally, often in harsh environments.

Other

Financial Performance:

• Revenue: $29 million (-94.27% YoY)
• Operating Margin: 20.69%
• Key Growth Drivers: Results from this segment were immaterial for 2025. The segment recognized a $7 million gain on the sale of Stork's U.K. operations.
• New Awards: $0 million
• Backlog: $0 million

Product Portfolio:

• This segment previously included the results of NuScale Power Corporation (NuScale) prior to its deconsolidation in October 2024, and the remaining operations of Stork Holding B.V. and subsidiaries (Stork), which was fully divested in 2025. American Equipment Company, Inc. (AMECO) was fully divested in 2023.

Capital Allocation Strategy

Shareholder Returns:

• Share Repurchases: Fluor Corporation repurchased and canceled 18 million shares of common stock for $754 million in 2025.
• Dividend Payments: The company has not paid dividends on its common stock since April 2020.
• Future Capital Return Commitments: In February 2026, the Board of Directors authorized a 30 million share expansion to the existing repurchase program. Fluor Corporation is targeting approximately $1.4 billion in share repurchases in 2026, including $500 million in the first quarter.

Balance Sheet Position:

• Cash and Equivalents: $2,146 million (as of December 31, 2025)
• Total Debt: $1,070 million (as of December 31, 2025)
• Net Cash Position: $1,076 million (as of December 31, 2025)
• Credit Rating: While not explicitly disclosed, the company's credit facility contains provisions requiring collateral if downgraded to BB by S&P and Ba2 by Moody's, implying an implied investment-grade rating from both agencies.
• Debt Maturity Profile: The company's debt includes $506 million of 4.250% Senior Notes due in September 2028 and $575 million of 1.125% Convertible Senior Notes due August 15, 2029. Its $2.2 billion credit facility matures in February 2028.

Cash Flow Generation:

• Operating Cash Flow: $(387) million in 2025. This included a significant payment of $642 million to Santos Ltd., net of insurance recoveries, related to a judgment on a reimbursable project completed in 2015.
• Free Cash Flow: Not explicitly disclosed, but calculated as $(437) million (Operating Cash Flow less Capital Expenditures).

Operational Excellence

Production & Service Model: Fluor Corporation's operational philosophy centers on delivering professional and technical services across the entire project lifecycle. This includes engineering and design, project management, procurement, construction (on a self-perform and/or subcontracted basis), and operations and maintenance. The company often serves as the overall program manager for large, complex projects, integrating various activities into a cohesive execution plan. Its operations and maintenance services are designed to enhance efficiency or extend the life of client facilities, encompassing facility management, technical operations, plant readiness, commissioning, start-up, maintenance technology, small capital projects, turnaround and outage services, and recapitalization.

Supply Chain Architecture: Key Suppliers & Partners:

• Fluor Corporation relies on a network of third-party subcontractors and suppliers for equipment and materials.
• The company has access to numerous global supply sources and regularly forms strategic alliances with local partners.
• Joint ventures, partnerships, and other collaborative arrangements are common for project execution, often with companies with whom Fluor Corporation has previously worked.

Facility Network:

• Fluor Corporation's global operations span 3.7 million rentable square feet across owned and leased properties.
• Manufacturing: The company has an agreement to sell its ownership in a fabrication yard in China for approximately $122 million, expected to close in 2026.
• Research & Development: While specific R&D centers are not detailed, the company emphasizes advanced engineering specialties and the use of A.I. and other technologies to improve project execution.
• Distribution: The company maintains numerous smaller offices, warehouses, and equipment yards strategically located worldwide to support its global project execution activities.
• Key Locations: Major facilities are located in the United States (Irving, Texas - Corporate Headquarters, Greenville, South Carolina, Houston, Texas, Southern California), Canada (Calgary, Alberta, Vancouver, British Columbia), Latin America (Santiago, Chile), Europe, Africa and the Middle East (Al Khobar, Saudi Arabia, Amsterdam, Netherlands, Farnborough, England, Gliwice, Poland), and Asia and Pacific Region (Manila, Philippines, New Delhi, India, Perth, Australia, Shanghai, China).

Operational Metrics:

• Backlog related to reimbursable projects: 81% as of December 31, 2025.
• Fluor Corporation expects to execute approximately half of its ending 2025 backlog in 2026.
• Total headcount was 22,995 as of December 31, 2025, reflecting a 14% reduction from the prior year, primarily due to the sale of Stork Holding B.V. and subsidiaries' U.K. operations and operational efficiency actions.
• Safety performance: The company achieved a total case incident rate of 0.36 in 2025, surpassing its goal of less than or equal to 0.38 and outperforming comparable industry benchmarks.

Market Access & Customer Relationships

Go-to-Market Strategy: Distribution Channels:

• Direct Sales: Fluor Corporation actively cultivates new relationships and builds on long-term relationships with existing clients, implying a direct sales approach for its complex project services.
• Channel Partners: The company regularly forms strategic alliances with local partners and utilizes joint ventures and other collaborative arrangements to strengthen market position or technical skills, or for large-scale/complex projects.
• Digital Platforms: While not explicitly detailed as a sales channel, the company emphasizes the use of A.I. and technology to improve project execution and client delivery.

Customer Portfolio: Enterprise Customers:

• Fluor Corporation maintains long-term relationships with its significant clients, aiming to better understand and respond to their requirements.
• Customer Concentration: In 2025, revenue from agencies of the U.S. government accounted for 17% of total revenue. Additionally, revenue from a single Urban Solutions customer spanning multiple projects amounted to 15% of total revenue.

Geographic Revenue Distribution:

• North America: 73.0% of total revenue ($11,314 million)
• Europe: 18.7% of total revenue ($2,895 million)
• Asia Pacific (includes Australia): 3.9% of total revenue ($604 million)
• Central and South America: 3.5% of total revenue ($538 million)
• Middle East and Africa: 1.0% of total revenue ($152 million)
• Growth Markets: The company is driving growth in energy addition, low carbon power, LNG, sustainable chemicals, data centers, semiconductors, critical metals and minerals, and national security.

Competitive Intelligence

Market Structure & Dynamics

Industry Characteristics: The markets served by Fluor Corporation are highly competitive, requiring substantial resources, investment in technology, and highly skilled personnel. The demand for services is cyclical, heavily dependent on clients' capital investments, and influenced by economic conditions (including inflation, tariffs, slow growth or recession, changes to fiscal/monetary policy, and high interest rates), commodity prices, political uncertainties, and currency fluctuations. The industry is experiencing a continuing influx of non-traditional competitors offering aggressive pricing and accepting greater risk.

Competitive Positioning Matrix:

Direct Competitors

Primary Competitors:

• U.S.-based: AECOM, Amentum Services, Inc., Bechtel Group, Inc., Black & Veatch, Burns & McDonnell, BWXT Technologies, Inc., EMCOR Group, Inc., Jacobs Solutions, Inc., KBR, Inc., Kiewit Corporation, Parsons Corporation, Turner Construction Company, V2X, Inc., and Zachry Group.
• International-based: ACS Actividades de Construccion y Servicios, Balfour Beatty plc, Chiyoda Corporation, Exyte GmbH, Hatch Ltd., JGC Corporation, Petrofac Limited, AtkinsRéalis, Technip Energies N.V., Wood Group plc, and WorleyParsons Limited.

Emerging Competitive Threats:

• The company faces competition from a continuing influx of non-traditional competitors willing to offer below-market pricing and accept greater risk.
• There is a risk that competitors may incorporate A.I. into their product and service offerings more quickly or successfully.

Competitive Response Strategy: Fluor Corporation's strategy involves driving growth in key markets, including energy transition and advanced technologies, while maintaining its strong position in traditional sectors. It focuses on pursuing contracts with fair and balanced commercial terms, prioritizing reimbursable agreements. The company reinforces financial discipline and fosters a high-performance culture of project delivery, leveraging A.I. and technology to enhance efficiency and quality.

Risk Assessment Framework

Strategic & Market Risks

Market Dynamics:

• Cyclicality: Fluor Corporation is vulnerable to the cyclical nature of the markets it serves, with demand for services dependent on clients' capital investments. This demand can be adversely affected by poor economic conditions (including inflation, tariffs, slow growth or recession, changes to governments' fiscal or monetary policy, and high interest rates), low or volatile oil and gas or other commodity prices, political uncertainties, and currency fluctuations.
• New Awards Dependency: Revenue and earnings are largely dependent on new awards, which are unpredictable and subject to complex, lengthy negotiations and competitive bidding processes. Factors such as client decisions, governmental approvals, financing contingencies, commodity prices, and environmental conditions can impact awards.
• Technology Disruption: The use of A.I., machine learning, and data science technologies presents risks, including potential flaws or biases in algorithms, insufficient or inferior datasets, and liability exposure related to confidentiality and intellectual property infringement. Evolving laws and regulations concerning A.I. could limit its use or impose restrictions.
• Customer Concentration: A significant portion of Fluor Corporation's revenue is derived from a few clients, including U.S. government agencies (17% of total revenue in 2025) and a single Urban Solutions customer (15% of total revenue in 2025). The loss of business from a significant client could have a material adverse effect.

Operational & Execution Risks

Supply Chain Vulnerabilities:

• Supplier Dependency: The company relies on third-party subcontractors and suppliers for equipment and materials. Risks include inability to hire qualified parties, cost overruns (especially on lump-sum contracts), faulty workmanship, and financial difficulties of partners during economic downturns.
• Project Execution Risks: Complex, multi-phase projects inherently carry risks of delays and cost overruns due to evolving estimates, technical problems, inaccurate site conditions, project modifications, inability to achieve guaranteed performance, inadequate execution tools, reliance on historical data, inaccurate cost/timing estimates (including inflation and labor costs), raw material price increases, judgment failures, poor partner performance, climate-related events, and regulatory delays. These can result in lower fees, liquidated damages, or significant losses.
• Personnel Risks: The ability to operate profitably depends on attracting, developing, and retaining qualified personnel (engineers, project management, craft employees, and management). Competition for experienced personnel is intense, and inflationary pressures can increase labor costs.
• Cybersecurity Vulnerabilities: Fluor Corporation's business relies on the secure processing, storage, and transmission of confidential and sensitive information. Cybersecurity breaches or cyber-attacks could lead to operational disruptions, financial losses, legal claims, and reputational damage. Evolving threats and data protection laws add complexity and cost to compliance.
• IT Systems Interruption: Heavy reliance on computer, information, and communications technology. Unplanned interruptions from natural disasters, power loss, cyber-attacks, or system defects, as well as challenges with new system implementations, could adversely impact operations.

Financial & Regulatory Risks

Market & Financial Risks:

• Fair Value Volatility: Earnings are subject to volatility due to recurring fair value measurements of the company's investment in NuScale Power Corporation (NuScale), which is based on the fluctuating price of NuScale's stock.
• Client Payment Delays/Defaults: Fluor Corporation sometimes commits resources before receiving sufficient client payments, increasing the risk of uncollectible accounts receivable and potential impacts on cash flows and liquidity if clients delay or default on payments.
• Indebtedness: Agreements governing the company's debt contain restrictive covenants that limit its ability to engage in certain activities (e.g., incurring additional debt, creating liens, paying dividends, making investments, selling assets, engaging in affiliate transactions, or effecting mergers/consolidations). A breach of these covenants could result in default and accelerated payments.
• Financial Assurances: Clients often require surety bonds, letters of credit, or bank guarantees. Difficulty in accessing sufficient bonding capacity or credit facility capacity could impair the company's ability to win new contract awards.
• Foreign Currency: Contracts may expose Fluor Corporation to foreign currency risk, particularly when project revenue is denominated in a different currency than its expected costs. Hedging strategies may not eliminate all foreign currency risk, and remeasurement of nonfunctional currency assets/liabilities can introduce profit volatility.

Regulatory & Compliance Risks:

• Government Contracts: Contracts with the U.S. federal government (DOE, DOD) carry additional risks, including funding delays or reductions, budget deficits, oversight audits, profit and cost controls, and the government's ability to terminate or modify contracts at its convenience. Non-compliance with regulations like the Federal Acquisition Regulation (FAR) or Cost Accounting Standards (CAS) can lead to penalties, contract termination, or debarment.
• Anti-Bribery Laws: Fluor Corporation is subject to the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act of 2010, and similar anti-bribery laws worldwide. Misconduct by employees, agents, or partners could lead to criminal or civil penalties, contract cancellations, or reputational damage.
• Import/Export Laws: Global operations necessitate compliance with U.S. and international trade and export laws (e.g., International Traffic in Arms Regulations, Export Administration Regulations, trade sanctions). Failure to comply can result in civil or criminal sanctions.
• Environmental, Safety & Health: The company operates at sites involving nuclear facilities, hazardous waste, and other highly regulated materials, subjecting it to numerous environmental, health, and safety laws. More stringent regulations or responsibility for hazardous substance releases could impose significant additional costs.
• Nuclear Services Indemnification: While the Price-Anderson Act generally indemnifies parties performing services to nuclear facilities, not all of Fluor Corporation's activities are covered. This could expose the company to significant monetary damages if adequate indemnification is not in place.
• Legal Proceedings: Fluor Corporation is involved in various legal proceedings, liability claims, and contract disputes.
  • Santos Project: A judgment in Australia against Fluor Australia Ltd. and Fluor Corporation for approximately AUD $790 million (excluding interest and costs) related to the Santos project resulted in a $649 million payment (net of GST) in December 2025. The company has appealed the decision, and discussions with insurers are ongoing.
  • Shareholder Litigation: Class action and derivative lawsuits have been filed in the U.S. District Court for the Northern District of Texas, alleging violations of federal securities laws and misconduct related to market conditions, rising costs on infrastructure projects, and risk mitigation strategies. Fluor Corporation intends to contest these claims.

Geopolitical & External Risks

Geopolitical Exposure: International operations expose Fluor Corporation to foreign economic and political uncertainties, including abrupt changes in government policies, trade restrictions, currency fluctuations, labor conditions, regional instability, natural disasters, public health crises, expropriation, nationalization, and international hostilities. These factors can lead to project disruptions, increased costs, and potential losses.

Innovation & Technology Leadership

Research & Development Focus: Core Technology Areas:

• Fluor Corporation emphasizes the use of A.I. and other technologies to improve project cost, schedule, and quality execution.
• Its engineering and design services encompass advanced engineering specialties, including process engineering, chemical engineering, simulation, integrated automation processes, and interactive 3-D modeling.
• The company is actively involved in energy transition markets, focusing on nuclear power, low-carbon energy sources, asset decarbonization, carbon capture, renewable fuels, green chemicals, and hydrogen.
• It also engages in advanced technologies and manufacturing, including advanced materials, data centers, semiconductors, and smart batteries.

Intellectual Property Portfolio:

• Fluor Corporation has developed, acquired, or licensed technology, know-how, and other proprietary rights, which it protects through patents, trade secrets, and contractual terms (e.g., confidentiality and license agreements).
• This intellectual property (IP) supports its technology offerings, such as carbon capture and sulfur recovery services.
• The company faces risks related to clients requiring broad ownership rights in work products, which could affect its ability to provide similar services in the future. There is also a risk of IP invalidation, circumvention, challenge, or infringement, and associated litigation can be costly.

Technology Partnerships:

• While specific technology partnerships are not detailed, Fluor Corporation regularly forms strategic alliances with local partners and engages in joint ventures and collaborative arrangements, which may include technology-sharing components.

Leadership & Governance

Executive Leadership Team

Leadership Continuity: Fluor Corporation recognizes the need for succession planning to identify and integrate new personnel into leadership roles as executives approach retirement age or leave the company. Changes in the management team may disrupt business operations.

Board Composition: The Board of Directors oversees cybersecurity with assistance from the Audit Committee. The Board can authorize the issuance of preferred shares and recently approved an expansion of the share repurchase program.

Human Capital Strategy

Workforce Composition:

• Total Employees: 22,995 as of December 31, 2025. This includes 17,122 salaried employees, 4,602 craft and hourly employees, and 1,271 TRS agency employees.
• Growth Trends: Total headcount reflects a 14% reduction from the prior year, primarily due to the sale of Stork Holding B.V. and subsidiaries' U.K. operations and actions taken to enhance operational efficiency.
• Geographic Distribution: The global workforce is distributed with 58% in North America, 17% in Europe, Africa and Middle East, 5% in Central and South America, and 20% in Asia Pacific (includes Australia).
• Skill Mix: The company requires a diverse skill mix, including engineers, project management, craft employees, and management, with intense competition for experienced personnel. It also employs security-cleared personnel for critical government contracts.

Talent Management: Acquisition & Retention:

• Hiring Strategy: Fluor Corporation faces intense competition for experienced personnel and may find it difficult to attract and retain qualified individuals with the necessary expertise within required timeframes.
• Employee Value Proposition: The company prioritizes a safe and secure workplace, guided by its "Safer Together SM" commitment, which aims to protect employees and prevent injuries. It champions overall employee well-being through resources like mental health awareness campaigns, a global Employee Assistance Program, and training in suicide prevention and mental health first aid.

Diversity & Development:

• Development Programs: Fluor Corporation provides ongoing training and development opportunities through Fluor University, an online platform offering self-paced, virtual, and instructor-led courses. These cover discipline-specific training, technical learning, leadership, business acumen, and communication. In 2025, employees received over 220,000 hours of training. Global initiatives for managers include webinars, orientation training for new managers, and a standardized resource toolkit.
• Culture & Engagement: The company's core values (Safety, Integrity, Teamwork, Excellence) guide its actions. Through Fluor Corporation and the Fluor Foundation, $5 million was contributed to global charitable initiatives in 2025. An additional $5 million was contributed through the employee giving and volunteering program, Fluor Cares, with employees volunteering 47,000 hours. The company delivered 594,000 hours of STEM instruction and provided workforce development to 5,500 individuals.

Environmental & Social Impact

Environmental Commitments: Climate Strategy:

• Fluor Corporation supports energy transition markets, including nuclear power, other low-carbon energy sources, asset decarbonization, carbon capture, renewable fuels, green chemicals, and hydrogen.
• The company is involved in battery chemicals projects and implementing lower carbon solutions on existing and new chemical facilities.
• It recognizes that policy changes and climate legislation could accelerate energy transition, potentially increasing demand for its services.

Social Impact Initiatives:

• Community Investment: In 2025, Fluor Corporation and the Fluor Foundation contributed $5 million to global charitable initiatives. An additional $5 million was contributed through the employee-driven Fluor Cares program, with employees volunteering 47,000 hours.
• Product Impact: The company delivered 594,000 hours of STEM (science, technology, engineering and math) instruction and provided workforce development to 5,500 individuals. It also provided 940,000 meals to the hungry and planted 58,500 trees.

Business Cyclicality & Seasonality

Demand Patterns:

• Seasonal Trends: Fluor Corporation's operations are subject to seasonal and other variations influenced by factors such as weather conditions (e.g., harsher winter weather in North America), customer spending patterns, bidding seasons, receipt of regulatory approvals, project timing and schedules, and holidays. These factors can lead to fluctuations in quarterly operating results.
• Economic Sensitivity: The demand for the company's services is dependent on clients' capital investments, which are adversely affected by poor economic conditions (including inflation, tariffs, slow growth or recession, changes to governments' fiscal or monetary policy, and high interest rates), low or volatile oil and gas prices or other commodity prices, political uncertainties, and currency fluctuations.
• Industry Cycles: The end markets served by Fluor Corporation have historically been, and are expected to remain, vulnerable to general economic downturns. The company's market diversity helps mitigate the impact of market cyclicality.

Planning & Forecasting:

• The uncertainty of contract award timing and unexpected award cancellations can create difficulties in matching workforce size with project needs.
• Uncertain economic and political conditions can make it challenging for Fluor Corporation, its clients, and vendors to accurately forecast and plan future business activities.

Regulatory Environment & Compliance

Regulatory Framework: Industry-Specific Regulations:

• Environmental: Fluor Corporation operates at sites globally, including those involving nuclear facilities, hazardous waste, hydrocarbon production, and military activities. These operations are subject to numerous environmental, health, and safety laws and regulations. The company believes it is compliant with these requirements.
• Government Procurement: Services provided to the U.S. federal government are subject to specific regulations, including the Federal Acquisition Regulation (FAR), the Truth in Negotiations Act, Cost Accounting Standards (CAS), the Services Contract Act, the False Claims Act, export controls, and U.S. Department of Defense (DOD) security regulations. Government clients can terminate, renegotiate, or modify contracts at their convenience.
• Nuclear: The company's nuclear-related projects are subject to regulations from the U.S. Nuclear Regulatory Commission (NRC) and non-U.S. regulatory bodies such as the International Atomic Energy Commission and the European Union. Delays in approvals, permits, or licenses, or failure to maintain compliance, can adversely affect these projects.

Trade & Export Controls:

• Export Restrictions: Fluor Corporation's global operations necessitate compliance with U.S. and international laws and regulations governing international trade and exports, including the International Traffic in Arms Regulations, the Export Administration Regulations, and trade sanctions administered by the Office of Foreign Assets Control. Non-compliance can result in civil or criminal sanctions, denial of export privileges, or debarment from U.S. government contracts.
• Sanctions Compliance: The company's policies mandate strict compliance with U.S. and foreign international trade laws.

Legal Proceedings:

• Santos Project: Fluor Australia Ltd., a wholly-owned subsidiary, and Fluor Corporation were subject to a judgment in Queensland Supreme Court in Australia related to the Santos project. In December 2025, a payment of $649 million (net of GST) was made to Santos Ltd. Fluor Corporation recognized a $643 million reduction to revenue reflecting the net estimated impact of the judgment, after allowing for committed insurance proceeds and reserves. The company has appealed the court's decision, with the appeal hearing scheduled for July 2026. Five insurers have disputed coverage.
• Shareholder Litigation: In September and October 2025, purported shareholder class action and derivative lawsuits were filed against Fluor Corporation and certain current and former executives in the U.S. District Court for the Northern District of Texas. These claims allege violations of federal securities laws and misconduct related to market conditions, rising costs on infrastructure projects, and the effectiveness of risk mitigation strategies. Fluor Corporation intends to contest these claims.

Tax Strategy & Considerations

Tax Profile:

• Effective Tax Rate: Fluor Corporation's effective tax rate was 39% in 2025, 103% in 2024, and 75% in 2023.
• Geographic Tax Planning: The company intends to indefinitely reinvest the portion of unremitted foreign earnings required to support working capital and long-term investment needs in the jurisdictions where it operates. Earnings in excess of these requirements are expected to be available for distribution. No deferred tax liabilities have been recorded for earnings designated as indefinitely reinvested.
• Tax Reform Impact: The One Big Beautiful Bill (OBBB) Act, signed into U.S. law in July 2025, which includes broad U.S. tax reforms, did not have a material impact on Fluor Corporation's consolidated results.
• Tax Attributes: In 2025, the conversion of NuScale Power Corporation (NuScale) Class B voting common shares into Class A common shares resulted in approximately $3.7 billion of taxable capital gain. To reduce the associated current tax liability, Fluor Corporation utilized prior-year foreign tax credits, capital loss carryforwards, and U.S. federal general business credits, leading to the release of $398 million of previously recorded valuation allowances. Subsequently, a valuation allowance of $268 million was recorded against certain deferred tax assets due to the lack of additional taxable income sources to support their realization.
• Unrecognized Tax Benefits: As of December 31, 2025, the total amount of unrecognized tax benefits that would favorably impact effective tax rates if recognized was $13 million. The company had $22 million of accrued interest and penalties related to unrecognized tax positions.
• Tax Audits: Fluor Corporation is subject to examination by taxing authorities worldwide, including major jurisdictions such as Australia, Canada, Chile, the Netherlands, the United Kingdom, and the United States. Generally, the company is no longer subject to U.S. federal, state and local, or foreign income tax examinations for years before 2012, with a few exceptions.

Insurance & Risk Transfer

Risk Management Framework:

• Insurance Coverage: Fluor Corporation maintains insurance coverage for various business risks, including workers' compensation, general liability, and cybersecurity threats. These policies typically include retention amounts, for which the company provides accruals based on reported claims and actuarially determined estimated liabilities for incurred but not reported claims. Professional liability coverage is on a "claims-made" basis.
• Risk Transfer Mechanisms: The company attempts to minimize foreign currency risk in its contracts through provisions that specify client payments in currencies corresponding to expected costs, and by implementing hedging strategies utilizing derivatives. For credit enhancements, clients often require surety bonds, letters of credit, or bank guarantees. Financial guarantees, in limited circumstances, generally obligate the company to make payments in the event of a borrower's default and typically require the borrower to pledge collateral.