Fluor expects growth in data centers and semiconductor construction

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Fluor CEO David Constable reiterated his positive outlook on building data centers in telephone information about the company’s results for the second quarter on Friday, indicating high demand resulting from the rapid development of cloud technologies and artificial intelligence.

Constable also expects significant investments in the semiconductor, life sciences and infrastructure segments, underlining the key role of such projects in Fluor’s strategic business area.

“In the U.S. market alone, the power consumption of data center servers, we think, is going to be about 35,000 megawatts by 2030,” Constable said on the call. “So a huge growth in data centers. The U.S. is 40% of the global market. So a lot, a lot of work in data centers. And from what we’ve seen, it’s mostly being paid back.”

Electricity consumption in data centers in the US market has reached approx. 17,000 megawatts in 2022– says Newmark, a New York-based commercial real estate consulting firm.

The constable added that these multi-billion dollar data centers are so huge and complex that there are only a few contractors in the country “that can really take on these really big projects.” Most of Fluor’s data center projects will start in the fourth quarter of this year and run through 2025, Constable said.

“We’re going to be right in the middle of this coming data center expansion,” Constable said. “So we’re very bullish on data centers.”

In addition to the data center work, Constable emphasized Fluor’s involvement in other high growth sectorsFor example, the company is positioning itself to capitalize on opportunities in semiconductor manufacturing, life sciences and infrastructure.

New awards this quarter in these sectors include a $361 million contract for the first phase Northvolt’s large-scale lithium-ion battery production facility in Germany, work at a petrochemical plant in Canada and a large metals project, Constable said in an interview.

“We continue to see significant investment in the semiconductor sector, where the CHIPS Act is supporting the opportunity,” Constable said on the call. “From smaller tooling opportunities all the way up to large manufacturing facilities, there’s over $5 billion of potential opportunity over the next 12 months.”

Fluor records a “clean” second quarter

Fluor said it earned $169 million in the second quarter of 2024, up from $61 million in profit a year earlier. Its revenue reached $4.2 billion, up about 7% from $3.9 billion in the second quarter last year.

The Irving, Texas-based company’s backlog rose to $32.3 billion in the second quarter, up about 26% from the second quarter last year. New awards totaled $3.1 billion in the second quarter, down 16% from $3.7 billion in new awards in the second quarter of 2023, according to the earnings report.

“Fluor’s second-quarter results were increasingly clean, despite normal assumptions,” said Andrew Wittmann, senior research analyst at Baird, a financial services firm based in Milwaukee. in a research note“Ultimately, the quarter reflects Fluor’s move toward becoming a lower-risk performer and its growing exposure to new drivers in advanced facilities — life sciences, semiconductors, data centers — which is at the heart of our positive thesis.”