Q1 2022 Fluor Corp Earnings Call
Please standby we are about to begin.
And welcome to Fluor's first quarter 2022 earnings Conference call. Today's call is being recorded at this time all participants are in a listen only mode. A question and answer session will follow management's presentation.
A replay of today's conference call will be available at approximately 10 30, a M. Eastern time today accessible on fluor's website at Investor Dot, Florida Dot com.
The web replay will be available for 30 days a.
A telephone replay will also be available for seven days through a registration link also accessible on fluor's website at Investor Doc, Florida Dot com.
At this time for opening remarks, and introductions I would like to turn the conference over to Jason Lang camera head of Investor Relations. Please go ahead.
Thanks, Jake good morning, and welcome to Fluor's 2022 first quarter conference call with US today are David comfortable Fluor's, Chairman and Chief Executive Officer, and Joe Brennan, <unk> Chief Financial Officer.
We issued our earnings release earlier this morning, and have posted a slide presentation on our website, which we'll reference while making prepared remarks.
Before getting started I'd like to refer you to our safe Harbor note regarding forward looking statements, which is summarized on slide two during today's presentation, we will be making forward looking statements, which reflect our current analysis of existing trends and information.
There is an inherent risk that actual results and experience could differ materially.
Can find a discussion of our risk factors, which could potentially contribute to such differences in our 2021 and Form 10-K, and our Form 10-Q, which was filed earlier today.
During this call we may discuss certain non-GAAP financial measures reconciliations of these amounts to the comparable GAAP measures are reflected in our earnings release and posted in the Investor section Investor Relations section of our website at Investor that Florida Dot com.
I'll now turn the call over to David comfortable, Florida, Chairman and Chief Executive Officer, David.
Well, thank you Jason and good morning, everyone. Thank you for joining us today.
Before we get started on operational results I want to start by sharing an update on our community relations activities there.
That reinforce our purpose of building a better world. Please.
Please turn to slide four.
As part of our science technology engineering, math or stem education, giving priority in the first four months of 2022, we helped inspire and raise awareness of the importance of stem based careers to more than 23000 students.
Also part of our floor legacy is about giving and volunteering.
Which we accomplish through our Florida cares program.
Our program connects employees to millions of charitable causes around the world.
Recent charitable contributions included South African flood relief efforts and Ukraine humanitarian support.
More specifically with respect to Ukraine, I'd like to address the ongoing crisis in eastern Europe .
We share a deep concern and empathy for the people of Ukraine, and all of those who have been affected by the conflict.
We've also made the decision not to pursue new work in Russia.
And we're working with our clients to evaluate and determine the appropriate path forward to wind down current projects and cease all operations in Russia.
Along with many voices around the world.
We fully support a swift resolution to this crisis.
Q1, New awards for the quarter were $1 $9 billion in line with our expectations.
In Q2, I'm pleased to say that we are seeing significant improvement in optimism and momentum from clients that will drive a significant upswing in new awards over the balance of 2022.
Now please turn to slide six.
Urban solutions reported segment profit of $15 million for the first quarter.
Results for the quarter reflect the impact of cost growth on an advanced manufacturing project that is now complete and the <unk>.
<unk> associated with the closing of the <unk> transaction.
Looking ahead the outlook for this segment is increasingly positive as they are on the cusp of some sizable new awards over the next few quarters.
Mining and metals.
It is currently working on limited notices to proceed for two projects in South America.
If you include other prospects in the near term these opportunities represent over $6 billion in new work.
In addition, we continue to see our mining and metals group actively support energy transition efforts.
In the first quarter, we reached an agreement to be the program and EPC management partner on an industry, leading decarbonization program for a steel company in Europe and Canada.
We also see over $1 billion in potential awards for our rare Earth refinery in Australia.
On a lithium mine in the United States.
Moving to infrastructure on slide seven we continue our.
Our focus on executing the current slate of road and bridge projects in our portfolio.
<unk> project is now over 30% complete.
And during the quarter. The tower legs were successfully completed and construction of the pylon head has begun.
When finished the two peers will top out at 722 feet.
On our <unk> automated people mover project the fourth of six pedestrian bridge structures replaced and the 2.25 mile elevated train guideway structure has been completed.
The project recently passed the 60% completion Mark.
Another milestone in infrastructure was the handover of the Union Square branch on the Green line extension project in Boston construction.
Construction on the Green line project is anticipated to be complete by the end of Q2.
Looking ahead, we remain focused on regional road and bridge work and are optimistic that federal infrastructure funding will support future opportunities.
Please turn to slide eight.
Okay.
Our advanced technologies and life Sciences business is also off to a good start this year as we discussed last quarter. There continues to be a ground swell of interest in onshoring semiconductor manufacturing capacity as well as the continued expansion of data centers around the world.
We are currently executing multiple projects for Intel and are actively engaged in discussions regarding a handful of near term multibillion dollar opportunities to build new facilities.
<unk>, we have mobilized on several new data Center project in Asia that were awarded to us in the first quarter.
In life Sciences last year, we were awarded a contract for a large scale biologics manufacturing facility in Europe for Fuji film <unk>.
As a result of our efforts to date on this project. We are looking at additional expansion opportunities with this client. We are seeing these repeat engagements also play out with a pharmaceutical company.
To build additional facilities in the United States.
Now turn with me to slide 10.
Mission solutions reported segment profit of $58 million for the first quarter.
This higher than anticipated result was primarily driven by the favorable resolution of a 2017 U S. Army Corps of Engineers project in Puerto Rico.
During the quarter, we received a six month extension from the department of energy for our project in Portsmouth, Ohio, and a two year extension on our classified project that supports the intelligence community.
The outlook for emission solutions is increasingly robust.
Starting with Pantex Y 12, we await further information from the NSA as they assess the contract award.
Although a floor was awarded this $28 billion contract in the fourth quarter of 2021. The initial 14 billion dollar five year base period will not be reflected into our backlog until the NSA completed its assessment.
Presuming a favorable outcome, we anticipate transitioning onto this project later this year.
In addition to the positive future impact of Pantex Y 12, we see a strong slate of renewals recompete projects and new work I'm very pleased with the direction of mission solutions and remain confident that they will have significant success. This year.
Moving to energy solutions, Please turn to slide 12.
Segment profit of $54 million reflected increased execution activities on projects in North America, and a reduction in overhead costs.
New awards for the quarter included a reimbursable self performed construction contract for a chemical facility in the U S Gulf Coast.
Energy solutions also received a full notice to proceed contract for the NFC fast LNG project.
This reimbursable contract is for the construction of a modular mid scale facility offshore in the U S Gulf Coast.
The overall market and energy has changed in recent months with countries and clients assessing capital allocation needs to support energy security and energy transition.
Although oil prices have drastically increased the last few months, our clients are showing capex discipline and are being cautious in their assessment of long term oil prices.
Significant prospects for the remainder of the year included a large international petrochemical facility and additional refinery work in Mexico.
Now turning to slide 13.
As I mentioned on our last call energy transition continues to make steady progress across our end markets.
Notable ongoing work includes the carbon capture and sequestration project in North Dakota ongoing work to support various clients in their efforts to decarbonize facilities, and a lithium hydroxide monohydrate plant in China.
Yeah.
LNG, Canada continued to make progress during the quarter and is now over 60% complete.
The project continues to advance with the delivery of 24 modules in the first quarter and an additional 16 modules so far in Q2.
Deliveries in the quarter included the first ISBN modules for train number one.
This impressive structure measures of 115 feet in height and weight over 5000 tons.
We continue to track and assess COVID-19 related impacts across the project and are implementing mitigation measures in coordination with the client to minimize impacts.
Moving to slide 15, our new scale.
There's been quite a bit of interest and excitement and new scale over the past quarter.
Let's start with the Big news that happened over the past week.
Spring Valley shareholders approved the business combination with new scale, which is now traded on the New York stock exchange under the ticker S. M R.
The interest in the future of zero carbon power generation was quite evident as demonstrated by our redemption rate, which came in at a low of 37, 5% significantly lower than the average first quarter stock redemption rate of 84%.
<unk> now owns 57% of the new listed company and we're excited to see the surge in investor interest for both floor and new scale.
Notably, Florida, New scale with the only consortium to follow through on its Doa partnership and deliver not only the NRC certification, but a broad coalition of investors to support commercialization.
Tuesday listing was another milestone on this important green energy path.
In addition, new scale had a very active start to 2022 some.
Some of the more notable accomplishments include.
Firstly the expansion of the pipe investment the final amount was $235 million with 55 million added since the December spak announcement.
Second as of May 2nd New scales combined cash on hand is approximately $380 million.
Third an Mou was signed with Dairyland power cooperative in Wisconsin to evaluate new scale small modular reactor technology.
Fourth our collaboration agreement with the U S reactor forging consortium was signed to support commercialization of new skilled power modules.
And last week do saw an inability and new scale power finalized an agreement to start SMB production do you saw and is set to begin manufacturing of <unk> for our <unk> project.
We'll start manufacturing large forged materials used for SMB manufacturing in 2022, and we'll get into full scale manufacturing of <unk> equipment in the second half of 2023.
And finally on April 4th floor announced the Japan Bank for International cooperation through Japan, New scale innovation LLC purchased a preferred equity position in new scale power generating $110 million for floor.
Okay.
Before I turn the call over to Joe Let me touch on the 2020 guidance, we announced on strategy day, a little over a year ago.
I'm very pleased with the quality of New award bookings as mentioned last quarter. Our bookings were 120 basis points above our gross margin plan and this quarter, we were 470 points above our expectations.
I remain confident that the 24 guidance of $2 50 to $2 90 per share set last year is achievable.
And now I'll turn the call over to Joe for the financial update Joe.
Thanks, David and good morning, everyone.
Today I will review our results for the first quarter provide an update on our divestitures and capital structure plans and go over the key financial outlook assumptions that support our 2022 guidance. Please turn to slide 17.
For the first quarter of 2022 revenue of $3 1 billion was lighter than anticipated as we saw some impact from seasonality and Covid related slowdowns segment profit nearly doubled to $115 million when compared to 2021.
This included favorable contributions from a settlement related to a contract in Puerto Rico for mission solutions and increased execution activity uncertain energy solution projects in North America.
Also included was the adverse effect of additional costs associated with the closeout of an advanced manufacturing project in urban solutions.
Our diluted adjusted earnings per share for the quarter were <unk> 16.
Results for the quarter were broadly consistent with our expectations, except for tax expenses. Our tax expense is the result of jurisdictional earnings recognition in the U S and certain international locations that are not tax benefited this will start to normalize as we increased domestic revenue generation.
As we completed the first quarter, we determined that stork, our remaining <unk> business no longer met all the requirements to be classified as discontinued operations. We have moved these operations back into continuing operations under our other segment as a result, we have re measured the carrying value of these businesses and reversed 63.
[noise] of previously recorded impairment expenses since the entities are still marked for sale, we have excluded them from our adjusted results.
We'll provide an update on this in a moment.
Please turn to slide 18.
Our ending cash for the quarter was $2 $1 billion with 24% of this amount domestically available as a reminder, the rest of our cash is tied up in V. Ies and projects are in foreign accounts, we anticipate our cash to reach $2 $4 billion by the end of 2022.
Our operating cash flow for the quarter was an outflow of $188 million and reflects the increases in working capital on several large projects and timing of 2021 incentive payments for.
For the year, we expect operating cash flow to be flat to slightly positive.
As David mentioned, we received $110 million from Japan, New scale innovation in April note here that even though new scale is now a public company since we remain a 57% owner we will continue to consolidate their results, but will have a lower level of controlling interest.
Over the past two months, we've been asked about our plans as it relates to our current capital structure, we made significant improvements over the past 12 months, including the retirement of over $500 million of outstanding debt.
And this quarter, we expanded our credit facility and extended the maturity to 2025.
As part of our liability management program, we believe it's important to reduce outstanding debt to inappropriate level right. Now we have $1 2 billion outstanding including 187 million that matures in March of 2023 based on our expectations for monetizing our non core businesses and an increase in cash flow from operations.
We currently intend to use existing liquidity to retire the 2023 notes.
We've also had conversations about what to expect as it relates to our convertible preferred shares we have no near term plans to convert these shares to common at this time.
As we start to build our backlog and start to see an improved quality of earnings and cash generation. We will look at all options, including conversion of the convertible preferred shares retirement of the 2024 nodes reestablishing common share dividends and share repurchases for our clients our employees and our shareholders. We believe that is.
Important to me and a strong maintain a strong flexible balance sheet that supports EBIT generating activities.
Finally, we continue to make great progress on our top that caused us some optimization program, which we call project FID. We are on track to capture $97 million in ongoing savings in 2022, and we expect to be well above our 2024 strategic goal. Please.
Please turn to slide 19.
As it relates to Amigo, we are continuing our efforts to monetize our operations in South America, and Mozambique, if we fail to generate sufficient interest soon we will look at other options last quarter I discussed the need to have multiple transit transactions to accelerate our divestiture of Stuart I'm pleased to report some initial.
Yes, and then we now have entered into an exclusivity agreement for the purchase of <unk> European operations as the preferred bidder moves forward, we anticipate closing the transaction in the back half of 2022, we continue to review opportunities for storage to other regions.
Late last quarter, we mentioned the pending sale of our P. Three investment in Canada. We have reached agreement on terms and will recognize cash proceeds of approximately $25 million in the second quarter.
Please move to slide 20.
We are reaffirming our adjusted earnings per share guidance between $1 15 to $1 40 for the full year hitting this target is dependent on strong execution on existing projects and the timely conversion of projects in our prospect pipeline.
Our assumptions for 2022 include an increase in revenue of approximately 10%.
Adjusted G&A expenses of approximately $50 million per quarter, and a tax rate of approximately 28%. This may vary depending on the country in which revenue is generated we are also maintaining our previous segment level guidance and expect 2022 full year segment margins of approximately 5% in.
The energy solutions.
Three five to four 5% and urban solutions and approximately 4% in mission solutions. Operator, we are now ready for our first question.
Ladies and gentlemen, if you'd like to ask a question you can simply by pressing star one on your telephone keypad keep in mind. If you are using a speaker phone. Please make sure. Your mute function is released so that typical reach our equipment.
We ask that you limit yourself to one question and one follow up question once again star one for questions.
We will begin with Michael Dudas with vertical research.
Good morning, gentlemen.
Hey, Michael Good morning, Michael.
First David you mentioned in your response to the booking.
Booking margin.
470 basis points from expectations.
You can elaborate a little bit more of that and as we look to the pipeline over the next several quarters, how those margins with growth.
Two plan and outlook for plan together.
Thanks, Mike Good morning.
Yeah, we're very pleased with if you go to <unk>.
You know beat your margin plan and it's nice to do it in the first quarter and beating it by 470 basis points certainly.
Sets us up well.
For the year end for our guidance for the year I think that's that's the takeaway there is that the margins were extremely strong and and that it'll be burning this year and next so.
We continue to see really good deal shaping through the business segments.
Allowing us to to realize those as sold margins in <unk>.
And.
And convert those into two actual actual margins with strong execution. So I think that's a that's the point there are insights at the 'twenty plan and the pipeline.
Is very strong through 'twenty two it is.
Obviously, it's the strongest I've seen.
Since being here and it's broad based Mike it's it's through our government.
Our mission solutions business.
In Doa.
And obviously in <unk> as we've talked about quite a bit.
When you think about the data centers and semiconductor facilities that are that are right in front of us.
Mining as I said has over <unk>.
6 billion.
New awards coming up in the very near term energy solutions are seeing good traction in.
In chemicals and in energy transition in general coming on strong, but also traditional oil and gas. If you look at the Capex numbers for <unk>.
Big customers in traditional oil and gas their capex numbers are continuing to to increase and with the new the new landscape.
In energy and energy security and energy challenges in Europe , a lot a lot of work going on there. So very very pleased on margins and in the pipeline that we're looking at right now across across our business our business lines.
Thank you David My follow up is regarding advanced manufacturing in your semiconductor business, maybe you could.
I'm a bit more about the type of opportunities.
And especially on the construction side.
How much competition is there.
What are the customers that are more of them.
Over the next several quarters.
Win rate or potential opportunities.
In this area.
Given all the investment that's going up.
Yes.
Little hard to hear you, Mike, but I think you're asking about the state of the semiconductor business for floor, but also and on the construction side and how the company is shaping up.
Yes. Thank you.
Thanks, Okay. So, yes, it's exciting times right and.
We think we're in a very good position with the.
With a couple of the.
The key manufacturers that are coming are coming on strong in the U S.
I'm sure you know who they are and.
We've been working with one of the key manufacturers for over four years now so I think we've got a leg up on the competition from that standpoint.
We're just getting into the business right now.
We've been working with.
With the Intel and Samsung <unk> of the World here more recently and have a good history.
And a good experience in the locations there theyre considering in the U S.
We've got a great delivery model.
We understand the environment the union environment to self performed capability that we bring to the table, but also there the off site.
Roger manufacturing playbook that will be implementing we've got good discussions ongoing here. These are these are massive facilities as you know.
The up to $20 billion on one site.
Multibillion dollars on another.
So I think from that standpoint, we're bringing our mega product experience to bear our clean room experience. We've got 40 years over four years of clean room experience that are directed directly applicable to these types of facilities.
And so cost certainty they are looking for cost certainty.
<unk>.
And we feel that with our offering we really do have a.
A good a good opportunity a leg up if you will on the competition.
Not only on the design side.
With our modeling expertise, but also.
Through into construction and tool installation.
We can bring that to the party as well and improve the schedule. Even further so lots of good things happening on the semiconductor front.
Thank you David.
Thanks, Michael.
And now we'll hear from Andy Wittmann with Baird.
Hey, great. Thanks for taking my questions. Good morning, guys.
Couple of questions today, but I'll try to pick a couple here that I think are relevant.
Maybe just starting with new scale saw the 57%.
Equity ownership and that's helpful.
All the filings on new scale aren't exactly clear in most systems are still showing just only the spec shares to their kind of wrong. So how many total shares are there that you owned 57 percentage percent of so that we can assign proper value to that for per floor.
Joe I'll have to turn that one yes.
No.
Normally were 220 million shares were 57% of the 220 million shares.
So do a little math or about 100 and.
Not only about 114 115 million shares and represents a 57.
Okay. So the two 'twenty as the as the total share count of new scale I didn't know if that was just us back shares or if there was any pipe shares that were additive to that that should be included.
But it's part of the overall share count relative to the 8-K, that's going out through our through new scale power Okay.
And then just I guess I wanted to ask on LNG, Canada.
I'm really kind of two facets here.
One is the fab yard in China, and the impact that any shutdowns may or may not be having could you just give us an update as to that location and the production that's coming out of it today as well as any discussions that you might be happening, having with the customer to provide really.
Before that and then just maybe more broadly given the new world order here for energy I'm curious as to your thoughts on the potential for phase two and your interest in phase two.
Obviously this has been a project that has had a lot of headlines and I wanted to just see if there's anything that would prevent you from being interested in and bidding on phase two if and when it comes.
Thanks, Andy.
Yes.
Like as I said in the prepared remarks LNG, Canada is the project is coming along nicely I think I said over 60, hitting 64, 65% complete right.
Right now and are at the two fab yards, the key fab yards at Kodak and CFA Jai collect fluor heavy industries.
We're seeing good good progress on the modules coming out of China I've mentioned before there is 215 modules that we need to get to site.
For various yards.
If you add it all up.
With fourth quarter, and first quarter of 'twenty, two and and the modules we've brought over to date in Q2.
We've we've got 59 modules.
No.
[noise] overrun up in Kitimat.
That had been delivered.
And so.
Full second quarter should take us up to two.
To 92 modules of the $2 15 at the end of Q2.
So I think that gives you a good indication that things are starting to starting to move.
And of course, we've we continue to monitor.
The sites and ensure that COVID-19 impacts are kept to a minimum we have had some challenges getting.
All of our expats into the country.
Obviously, which is to be expected with the lockdown situation over there, but as far as as far as the physical progress at the fab yards are continuing to see to see good good progress.
Hmm.
Phase two obviously with everything that's happening in the world are.
I would venture to say that the.
<unk> LNG C would be looking to.
To install train three and four I think they've actually mentioned that in their earnings earnings call as well so.
That's a very good chance of moving forward on three and four I think again from their perspective, that's what I've I've heard.
And of course, we'd be very interested in continuing I think we will bring.
A lot of efficiency and cost.
Cost effectiveness.
<unk> a certainty to trains three and four based on our knowledge and our experience and our local capabilities and and interactions with with.
With the community up there and and and the customer relationship. So.
Yes, more to come on that but we stand ready to support to support on train three and four as well.
Thanks, Andy Thanks.
Now I'll move to a question from Jamie Cook with credit Suisse.
<unk>.
Hi, good morning, and nice quarter.
Yes, Q question, one it sounds like you're pretty confident in your FY 2022 guidance, but I think in our release.
It's dependent on new work, if you could just sort of frame that for me and then David I'd be interested given you know, Russia, Ukraine talks about LNG get your sort of view on another potential energy cycle, and how you'd be positioned given.
You're one of the few players left to support your customers. Thank you.
Thanks, Jamie and good morning.
Yes.
As far as the New Awards go.
We talked last quarter, Jamie about.
Where are we at the in the trough as far as you know we're at the at an inflection point on on <unk>.
Backlog and New awards coming I think.
I think that's clearly the case from what Joe and I are seeing.
In Q2, Q3 and Q4.
In in the sales forecast so.
And again its fairly broad broad based as I said, we had really good margins.
In Q1.
Well above plan.
And that's you know that's what we really need to be focusing on is that healthy healthy backlog to burn here. This year. So that gives us the confidence that I that I have in addition to coupling up with with.
With the Q2 awards are the <unk>.
Prospects are again broad based through.
Through chemicals.
Another big job in.
With each floor, we've got LNG are kicking in as.
As well in <unk> some more some more work there on the mid scale facilities.
Mining big aluminum job.
Copper over in Asia.
Big release in for mining in in South America in Q2, and then a really nice awards for the.
Intelligence community and Department of Defense, So again broad based.
It continues into chemicals in Q.
Q3, and Q4, and also energy transition and renewable renewable fuels. So.
Obviously that is coupled with all the semiconductor work and pharma work that we expect to see in the second.
Second half as well so I think.
Thank God.
Again from my standpoint, very exciting to see the prospect pipeline like it is in.
Ah in 2022, Joe David. Thanks, I was just going to add Jamie that there are a number of these projects and prospects that we've been pursuing that are not.
Waiting for their initial investment we've been working under L. N T V's and we've been working on extended work scopes supporting that decision. So a lot of what we're pursuing in terms of when we think that's going to convert from.
The stage that it's in into a full release into E. P. C. M are projects that we have been supporting.
In a quite a robust nature relative to detailed design and other things.
So it gives us a much higher level of confidence I think as to when we we believe these will will flip into backlog.
On the.
Energy front Jamie.
Barry.
So very pleased that we stayed very well.
Stock into our traditional oil and gas history and.
We're able to be there for our our our energy clients going forward with.
All the Capex plans that they have in.
In our traditional oil and gas petrochemicals and LNG, obviously will really start picking up.
Pace as you may have heard on on many of the AR.
Energy client.
First quarter calls here recently the Capex.
It's quite something that if you add up the capex of just just the majors.
It's north of a one.
120 billion for this year, just with Chevron and Exxon.
BP and shell.
And then it jumps up a little higher than in 'twenty three so.
Yeah lots lots.
Lots and lots to say grace over but again very very happy that we are.
Right in the middle in a preeminent player in the traditional oil and gas industry.
Okay. Thank you very much.
Jamie.
Now, we will hear from Sean Eastman with Keybanc capital markets.
Hi team thanks for taking my questions.
Just following up on Jamie's question there on the line of sight on the New award activity you listed a bunch of stuff that sounds.
Like it all translate the backlog very near term are you guys communicating that.
So we're going to see that book to Bill flip above one times starting in <unk>, just wanted to clarify sort of the cadence of.
New Awards translation, we're expecting over the next couple of quarters.
Yes, thanks for the question and like I said, it really is a turning point, but I'll, let Joe give some color on it yeah. Thank you for the question our book to burn.
Kind of the key projects that will fall first we believe is Manitex Y 12, there are a number of other opportunities, which I think David has laid out but we would our expectations are by the end of Q2 that we would be above the 1.11 book to burn.
And if things fall our way there we would be significantly above that booked in front of one point out.
Okay. Thanks, Thanks and.
I'm, just trying to parse out what changed in the guidance.
It looks like we had a pretty big close out.
So I'm not I'm not sure how how big that was but was that contemplated.
<unk> in the guidance before and then I guess on the other side of it.
Looks like there was some issues on it on an advanced manufacturing project in the quarter some cost creep there.
Can you just kind of walk us through the moving parts on what gets us back into this <unk> range.
Yeah.
Yeah, I'll take that question. Thanks.
I don't want to nail down the exact are the values that the.
The amount that was associated with the project.
It was a close out.
Of an existing contract and I would call it nominal for the quarter it was not a significant or material amount.
And the settlement.
We were able to achieve through the Puerto Rico activities was not an anticipated settlement. So I would I would certainly look at that as a onetime event.
<unk> four but I think when we look at it as a one time event. It also portends to good solid execution and our ability and how we're dealing with clients as we close out some of these contracts and in kind of the new execution approach moving forward I think under under this management team that we're starting to see some of those.
Those resolutions came out much more positively at the end of the day. So one could look at it as a onetime event, but I look at it is just good solid execution and how we're closing out our projects.
So just so just real quick to clarify so does that settlement that onetime settlement benefit kind of give us a.
Added cushion in terms of getting to this guidance over the balance of the year or was there something else.
On the other side.
Neutralize it.
Yeah. It's a fair question, we did not have let's put it this way if we did not have the the challenged project in <unk> in our guidance either.
Got it very helpful.
Yeah, I would call that a net net push.
Okay very helpful guys I'll turn it over there thanks very much.
Thanks.
Steven Fisher with UBS has the next question.
Thanks, Good morning.
So a nice start to the year on an EPS I guess to hit the midpoint of your EPS guidance, you've got a ramp up from the 16 cents.
Around 35 to 40.
Range per quarter that that's an average, but I guess I'm curious how backend weighted to use that.
And then to follow up on Sean's question. You know are there other one time things that your special items that you have embedded in there or is that majority are likely to be kind of project based.
Yeah.
Yeah, Stephen I'll take that question, we are seeing some ramping up.
In Q4, but I think what we're really seeing is more of a normalized kind of run rate moving forward and that ramping up is not through onetime events, it's through the booking.
And the gross margin thats being generated off the back of of what we have signaled in our earnings release and I think what we're signaling today in this phone call that we do expect Q2, and Q3 to be fairly substantive booking quarters for fluor.
Right, but just a follow up on the to clarify the EPS ramp I mean is that something that builds sequentially from here.
Or it is you know kind of Q2 and are likely to be somewhere below the 35 to 40 cents average and then Q3 Q4 needs to be about above that average.
Well it will end and yes that is a fair assumption that we're going to as we take a little bit of the noise that came through in Q1 relative to some of the positives offset by the negatives we will start to see a run rate that will ramp up over time, but I don't you're not youre not incorrect in your assumptions.
<unk> is how you should view that moving forward over the over the balance of the year.
Okay.
All right I'll follow up on that I guess, the other question that I was a bit surprised when you clarified that it sounds like that the first booking that's going to move the backlog was pantex thought based on your earlier comments in the call that it would be something in the urban solutions.
Giving you said sort of on the cusp of things and it sounds like some of these mining projects are really.
Ready to go so I guess I'm curious.
What what is the timing of expected bookings up both binding projects.
It is there it sounded like maybe one was in Q2.
And how much might that be and then there's another one some point later in the year.
Okay.
So again.
Thanks, David for the question.
We're seeing a lot of sizable work in the next few quarters from for mining right and.
So no it's not just pantex sure.
And again, it's broad basis.
Told Jamie across across our business segments, but mining is.
They've got two very large projects.
That they are working on limited notices to proceed so those.
Should drop in the very near term and then three others that one and I guess the one in the U S and a couple of international projects that get you to that 6 billion dollar number.
For mining and then.
We've got you.
Another $1 billion.
Down in Australia on a rare Earth refinery like I said so.
Mining has a lot of work in front of it and the awards should be.
You know Q2, Q3, Q4 spread spread across those quarters.
Okay. That's very helpful. Thanks, so much.
Thanks Steven.
Well now hear from Andy Kaplowitz with Citi.
Good morning, everyone.
And good morning.
Could you just step back and talk about the general terms and condition, you've seen obviously, a little bit of noise in advanced manufacturing. This quarter that you talked about can you get the terms and conditions you want on those types of projects I would assume youre, hoping to book work on a bunch of these types of projects in the near future, but how risky is this work and are you expecting to do a lot of it fixed price.
Okay.
Well thanks for that question and we are.
Fortunately seeing deal shaping.
Uh huh.
Play into our negotiations.
And the ability for us to.
To balance the risk profile, we've got a very stringent.
And selective pursuit criteria process, we continue to follow.
That ensures that the risk is with the right.
The right party in the contract so I'm I'm seeing good good terms and conditions that we've been able to negotiate.
And in addition to that we're seeing that we're able to if if clients are looking for.
Some fixed price some hybrid lump sum work that we will go to a negotiated.
Model, where its not in competition.
And it's where we will convert these projects well along into their project life. So.
That allows us to two.
To mitigate.
Mitigate the risk profile on the backend and through.
Having engineering, well, along having vendor data and having a solid quotes from our vendors and suppliers before full conversion as your as you are in the field and you've.
Obviously, you've got to nail down.
Destruction labor rates and productivity, but that's that's what we're seeing across.
Talk about a lot of different contracts, obviously, but generally speaking.
It feels like we're in a better place with such high demand.
For you know with all the Capex spend out there in such high demand for talent and resources and services companies that are that that allows us to.
Drive those fair and balanced terms, which is one of ours.
The key strategic priorities as we've talked about in the past so continue to focus on that and protect the company.
David just following up on that you've already talked about potential additional phases of LNG C. But in the bigger topic of LNG can floor do additional LNG work at the terms and conditions. You just mentioned you know besides LNG C.
So that's the that would obviously be the.
The goal is to get these large LNG projects to a place where the customer is not.
<unk> spending.
Inordinate amounts of contingency to.
To cover risk you know some of these LNG projects are in.
Very interesting places around the world.
And the risks that come along with that.
Are very difficult to to nail down so again moving to a hybrid lump sum, where we can obviously you know look at fixing our services or <unk>.
Procurement services indirect field staff and things of that nature.
And then work together with the customer to.
To reduce risk in a collaborative fashion and and attack it that way with with like I say a potential conversion late in the project.
Or or.
Allowances in for certain lie.
The line items in the estimate.
Rather than rather than a naming a naming an exact fixed price.
And then Joe maybe just a quick follow up given new scales. This back in the semi listening could you help us think about how that business will trend here in 'twenty two within that other segment that you have is the expectation for the overall segment to be like it was in Q1.
Flattish in revenue with a modest loss and then you know the NCI line as you reported in Q1 does that kind of looks at similar going forward.
Yes.
We will be continuing to fully consolidate and we do not expect really any significant variation from how we have reported as we as we view the investment in new scale over time and our participation in ownership percentages change then obviously, we will have an impact realm.
I've two fully consolidating in and how we view it from an equity perspective, but for the foreseeable future at least for 2020 the balance of 2022 I would expect similar a similar trajectory.
Thanks, guys.
A lot.
Ladies and gentlemen, this will conclude your question and answer session for today.
Turn the call back over to David for closing remarks.
Thank you operator, and many thanks to all of you for participating on the call today.
You know today's results represent another.
Another good milestone as we continue to build a better organization here. So that we can in turn build.
Build a better future for our clients and our employees in all of our stakeholders right. So we.
We appreciate your interest in Fluor Corporation. Thank you again for your time today stay safe. Thanks.
Ladies and gentlemen, this will conclude your conference for today. Thank you for your participation and you may now disconnect.
Okay.
Okay.
Yes.
Hum.
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