Fluor CEO David Constable reiterated a positive outlook on data center construction during the firm’s second quarter earnings call on Friday, highlighting strong demand due to rapid growth in cloud technology and artificial intelligence.
Constable also expects strong investments in the semiconductor, life sciences and infrastructure segments, and underscored the critical role of these types of projects in Fluor’s strategic focus.
“In the U.S. market alone, the power consumption to reflect the number of servers of data centers we think will reach about 35,000 megawatts by 2030,” said Constable during the call. “So, a huge growth in data centers. The U.S. accounts for 40% of the global market. So, lots and lots of data center work. And, from what we’ve seen, it is primarily reimbursable.”
Power consumption for data centers in the U.S. market reached about 17,000 megawatts in 2022, according to Newmark, a New York City-based commercial real estate advisory firm.
Constable added that these multibillion-dollar data centers are so massive and complex, there are only a few contractors in the country “who can really take on these really large projects.” Most of Fluor’s data center pipeline will start in the fourth quarter this year and continue into 2025, said Constable.
“We’ll be right in the mix for the data center buildout that’s coming,” said Constable. “So, we’re very bullish on data centers.”
In addition to data center work, Constable highlighted Fluor’s commitment to other high-growth sectors. For example, the company is positioning itself to capture opportunities in semiconductor manufacturing, life sciences and infrastructure.
New awards in the quarter in these sectors include a $361 million contract for phase one of Northvolt’s large-scale lithium-ion battery manufacturing facility in Germany, petrochemical facility work in Canada and a large metals project, Constable said in the call.
David Constable
Courtesy of Fluor
“We continue to see strong investments in the semiconductor space where the outlook is supported by the CHIPS Act,” said Constable during the call. “From smaller tool install opportunities all the way up to large fabrication facilities, there’s over $5 billion in potential prospects over the next 12 months.”
Fluor posts ‘clean’ second quarter
Fluor reported it earned $169 million in the second quarter of 2024, compared to $61 million profit a year ago. Its revenue hit $4.2 billion, about a 7% gain from $3.9 billion in last year’s second quarter.
The Irving, Texas-based company’s backlog jumped to $32.3 billion in the second quarter, around a 26% increase from last year’s second quarter. New awards in the second quarter totaled $3.1 billion, a 16% drop from the $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 puts and takes,” said Andrew Wittmann, senior research analyst at Baird, a Milwaukee-based financial services company, in a research note. “Ultimately, the quarter reflects Fluor’s move to becoming a lower risk contractor and its increasing exposure to new drivers in advanced facilities — life sciences, semiconductors, data centers — which is the core to our positive thesis.”