Excited about NuScale Power stock? Check out the huge partner that gives it 74% of its revenue.

NuScale Power Supply (SMR 6.04%) is working on an exciting concept to provide the world with safe, carbon-free energy. But NuScale’s efforts and actions are heavily influenced by another company, Fluorine (FLR 2.13%).

Here’s what you need to know about NuScale’s relationship with Fluor before buying shares of the nuclear energy startup.

What is NuScale trying to build?

The main idea behind NuSale is to mass produce small modular nuclear power plants. The goal is to keep costs low, increase the safety of nuclear power, and make the units more easily usable in more locations. To add to the appeal of the project, multiple units can be assembled in a modular fashion to create a single large nuclear power plant, if desired. It’s a very interesting concept.

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So far, NuScale has worked with one potential customer hoping to deliver up to 24 units to power two data centers, one in Ohio and one in Pennsylvania. At this point, it has yet to produce a single one of its modular nuclear plants. But the technology holds great promise given the enormous demand for electricity from data centers and the growing shift to carbon-free energy sources.

But here’s something interesting you’ll discover if you read NuScale’s 2023 Form 10-K. In a section titled “Related Party Transactions,” NuScale states that “for the years ended December 31, 2023 and 2022, revenues from Fluor represented 74.1% and 72.4% of total revenues, respectively.” So, at this point, a single company accounts for about three-quarters of NuScale’s revenues.

NuScale is in some ways just a part of Fluor

Fluor’s importance to NuScale’s bottom line shouldn’t be all that surprising once you understand that, in the corporate presentation section of the 10-K, NuScale explains, “Fluor, a leading global engineering, procurement and construction (“EPC”) company, is the majority shareholder of NuScale.” In the risk section, management states, “Our go-to-market strategy is built on our relationship with Fluor.” When it comes to NuScale, Fluor runs the business in a number of ways.

That’s not a bad thing in and of itself. Fluor is a leader in the construction and engineering sector. Its market cap is around $7 billion, which isn’t huge, but it’s certainly not a small value either. In fact, given NuScale’s sub-$1 billion market cap, it’s kind of nice to know that the nuclear energy startup has a big brother looking out for it.

This deal could be very beneficial for Fluor if NuScale’s technology works. The construction and engineering company likely hopes to be the one developing projects using NuScale’s small nuclear units. It actually solves a big problem for NuScale, which can offer a ready-made solution to potential customers looking to develop a nuclear power project. But, and this is an important caveat, NuScale probably won’t want to disrupt its relationship with Fluor, and that could lead to decisions that are better for Fluor than for NuScale shareholders.

It may not be a problem today, but it may be tomorrow.

For now, Fluor’s presence in the company seems very valuable. Fluor is essentially supporting NuScale in its efforts to revive its business, so investors shouldn’t worry too much. Assuming NuScale can grow its business, however, the relationship with Fluor could play a more decisive role for shareholders. For now, potential investors simply need to understand Fluor’s importance. But one day, they may have to start paying close attention.