New business slowed noticeably for a number of reasons, CEO James R. Breuer told analysts.

In recent months, Fluor (NYSE: FLR) clients were holding back as part of a wait-and-see approach before pressing forward with new projects, he said. Trade policy, cost escalation and interest rates had given customers pause, and, in a few cases, led to cancelled projects.

"It means that we are at a point in the cycle of short-term hesitation on our way to longer-term opportunity," Breuer said. "once the effect of 'pro growth policies' materializes, it will accelerate domestic investment in many of our markets, including manufacturing, semi conductors, data centers, power, mining. metals and national security."

Meanwhile, the company is planning legal action against subcontractors and designers to recover cost overruns on projects whose late completion and cost-overruns were already known.

Delayed finish of the $5.7-billion Gordie Howe International Bridge, a 1.5-mile cable-stayed span to connect Detroit and Windsor, Ont., was forecast in 2022. With the project now at 97% completion, Fluor has "experienced rework and additional efforts required to hand over both ports of entry," said Breuer. "We expect substantial completion this fall."

In response to what occurred on the bridge and on two major highway projects, "we have increased operations oversight and are strengthening the execution teams," he said, adding that the company is also "taking action" against subs and designers for what he alleged as "their poor performance."

Breuer said that other projects in Fluor's infrastructure portfolio "continue to perform to management expectations." 

Wall Street analysts had mixed reviews, "Results were tough with weak orders, charges and delays all peppering the report," said Andrew Wittmann, senior research analyst at Baird Equity Research. "We'd expected soft awards, but the operational challenges were new."

However, they noted Fluor's long anticipated monetization of about 10% of its major investment in advanced nuclear power technology firm NuScale Power, which is developing a small modular reactor. The action generated about $3.2-billion in pre-tax proceeds. Fluor said. "We believe the market is missing that this is the first tranche, and we expect additional monetization beyond the 15 million shares over time," said Jamie Cook, managing director and senior analyst at Truist Securities. 

Fluor also was selected as front-end engineering and design contractor for the just announced second phase of the massive LNG Canada liquefied natural gas export terminal in British Columbia, in joint venture with JGC Corp. 

The two held the EPC contract for the project's first $14-billion phase, which began operation this year and is set to double capacity, said Fluor. The plant is the first-of-its-kind in Canada, with production capacity of up to 14 million tons per year of LNG. An investment figure for Phase 2 was not disclosed, but is reported in media at more than $10 billion. Its full completion is set for 2028 or 2029. “We’ve been a proud partner of LNG Canada through Phase 1 and we look forward to contributing to the next chapter in the construction of this world-class facility,” said Mike Alexander, Fluor business group president of energy solutions.

The new award  "bodes well for the long term," said Wittmann, although the second phase still lacks a final investment decision.  

Fluor's "earnings miss and guidance cut was a disappointment to the market," Cook said, but "we view this as short-term and [it] should benefit as markets calm, reflecting its second-to-none competitive positioning in energy and power generation, life sciences and mining. 

She added: "We believe the balance sheet is strong [and] the business model is significantly de-risked."