Q1 2024 Fluor Corporation Earnings Call
Operator: Good morning, and welcome to Fluor's first quarter 2024 earnings conference call. Today's call is being recorded. At this time, all participants are in a listen-only mode.
Good morning, and welcome to Fluor's first quarter 2024 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 replay.
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 dots or dot com.
The web replay will be available for 30 days.
A telephone replay will also be available for seven days through a registration link also accessible on fluor's website at investor Dot floor Dot com.
Operator: 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.fluor.com. The web replay will be available for 30 days. A telephone replay will also be available for seven days through a registration link also accessible on Fluor's website at investor.fluor.com. At this time, for opening remarks, I would like to turn the call over to Jason Landkamer, Head of Investor Relations. Please go ahead, Mr. Landkamer.
Speaker Change: At this time for opening remarks, I would like to turn the call over to Jason Lang Kimmer head of Investor Relations. Please go ahead, Mr like camera.
Jason Landkamer: Thanks, JL, and good morning, everyone. Welcome to Fluor's 2024 First Quarter Earnings Call. David Constable, Fluor's Chairman and Chief Executive Officer, and Jared Brennan, Fluor's Chief Financial Officer, are with us today. Fluor issued its first quarter earnings release earlier this morning, and a slide presentation is posted on our website that we will reference while making prepared remarks.
Speaker Change: Thanks, Joe and good morning, everyone. Welcome to <unk> 2024, first quarter earnings call, David Constable ports, Chairman and Chief Executive Officer, and Joe Brent enforced Chief Financial Officer are with Us Tonight.
Speaker Change: Four issued its first quarter earnings release earlier this morning, and a slide presentation is posted on our website, we will reference while making prepared remarks.
Jason Landkamer: Before getting started, I'd like to refer you to our Safe Harbor note regarding forward-looking statements, which is summarized on slide 2. During today's presentation, we'll be making four forward-looking statements which reflect our current analysis of existing trends and information. There is an inherent risk that actual results and expenses could differ materially.
Speaker Change: Before getting started I would like to refer you to our safe Harbor note regarding forward looking statements, which is summarized on slide two.
Speaker Change: Today's presentation, we'll be making forward looking statements, which reflect our current analysis of existing trends and information.
There is an inherent risk that actual results and expenses could differ materially you.
Jason Landkamer: You can find a discussion of our risk factors which could potentially contribute to such differences in our 2023 Form 10-K and in our Form 10-K, which was filed earlier today. During this call, we will 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 relations section of our website at investor.fluor.com. With that, I'll now turn the call over to David Constable, Forest Chairman and Chief Executive Officer. David?
Speaker Change: You can find a discussion of our risk factors, which could potentially contribute to such differences in our 2023 Form 10-K and in our Form 10-K, which was filed earlier today.
Speaker Change: During this call we will 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 Relations section of our website at investor that floor Dot com.
Speaker Change: With that I'll now turn the call over to David Constable Force, Chairman and Chief Executive Officer, David.
David Edward Constable: Thank you, Jason. Good morning, everyone. Thank you for joining us today. Please turn to slide three. To get started today, I'll briefly highlight a key component of our Fluor Nordic strategy centered around our technology hub in Europe. This hub, established three years ago in Copenhagen, is central to our growth strategy in the Nordic region. Its purpose was to establish a regional presence that is close to our customers, as well as to provide a collaborative center for our clients, floor subject matter experts, and local subcontracting partners.
David Edward Constable: Thank you, Jason and good morning, everyone and thank you for joining us today.
David Edward Constable: Now please turn to slide three.
David Edward Constable: Did you get started today I'll briefly highlight a key component of our floor Nordic strategy centered around our technology hub in Europe.
David Edward Constable: We established three years ago in Copenhagen.
Two our growth strategy in the Nordic region.
David Edward Constable: Its purpose was to establish a regional presence that is close to our customers as well as providing collaborative center for our clients.
David Edward Constable: Our subject matter experts and local sub contracting partners.
David Edward Constable: Strategically, our vision for this office was to be fit for purpose and able to service the advanced technology and life sciences market. Today, the local team supports key clients such as Fujifilm, Eli Lilly, and Novo Nordisk in the biopharma space, as well as advanced technology clients like Intel, Northvolt, and Microsoft. This hub is a great example of our global operations in action within this growing market and a significant supporter of results in the urban solutions segment.
David Edward Constable: Strategically our vision for this office was to be fit for purpose and able to service the advanced technology and life Sciences markets.
David Edward Constable: To date, our local teams supporting key clients, such as Fuji film, Eli Lilly and Novo No I guess in the Biopharma space.
David Edward Constable: In advanced technology clients, I can shell northern Bull and Microsoft.
This shop is a great example of our global operations in action within this growing market and a significant support for our results in the urban solutions segment.
David Edward Constable: We're looking forward to continuing traction in these markets as a result of our strategic decision. Now, let's turn to our operating review beginning on slide four. Revenue for the first quarter was $3.7 billion. Consolidated new orders for the first quarter were strong at $7 billion, led by key orders in our Advanced Technologies and Life Sciences business lines. Our book-to-burn ratio for the quarter was 1.9.
David Edward Constable: We're looking forward to continuing traction in these markets as a result of our strategic decisions.
David Edward Constable: Now, let's turn to our operating review beginning on slide four.
David Edward Constable: Revenue for the first quarter was $3 7 billion.
David Edward Constable: Consolidated New awards for the first quarter was strong at $7 billion.
David Edward Constable: Key awards in our advanced technologies and life Sciences business line.
David Edward Constable: Our book to burn ratio for the quarter was one nine.
David Edward Constable: New awards were 97% reimbursable, and our total backlog is now $32.7 billion, of which 80% is reimbursable. Our margins on new awards continue to reflect strong demand for our services. Specific to the margin profile, new award margins continue to outpace margin on existing backlog by an average of over 150 basis points for the past five quarters.
David Edward Constable: New awards were 97% Reimbursable and our total backlog is now at $32 7 billion of which 80% is reimbursable.
David Edward Constable: Our margins on New awards continues to reflect strong demand for our services.
David Edward Constable: Specific to the margin profile New award margins continued to outpace margin on existing backlog by an average of over 150 basis points for the past five quarters.
David Edward Constable: We continue to invest in our people and systems as execution excellence and positioning for future work remain a top priority for Fluor. Our pipeline of current and prospective feeds and studies to the end of 2025 represents a total installed cost of 14 times the size of our current backlog. This pipeline is being led by opportunities in life sciences, semiconductors, data centers, energy transition, as well as key prospects in mining and metals. Moving to our business segments, please turn to slide six. Urban Solutions, our largest and most diverse segment, reported a $50 million profit in the first quarter.
David Edward Constable: We continue to invest in our people and systems as execution excellence and positioning for future work remains a top priority for Florida.
David Edward Constable: Our pipeline of current and prospective feeds in studies through the end of 2025.
David Edward Constable: Represent a total installed cost of 14 times the size of our current backlog.
This pipeline is being led by opportunities in life Sciences semiconductors data centers.
David Edward Constable: Energy transition as well as key prospects in mining and metals.
Speaker Change: Let me try this the segments, please turn to slide six.
Speaker Change: Urban solutions, our largest and most diverse segment reported a $50 million profit in the first quarter.
David Edward Constable: Results in this segment reflect the strong ramp-up of execution activities on several recently awarded projects, including two life sciences projects, a green steel project, and two semiconductor projects. The awards for the quarter were $4.9 billion, compared to $1.8 billion a year ago, and the backlog is substantial and now stands at $18.6 billion, 78% of which is reimbursable. Now please turn to slide 7, in Mining and Metals. Our client Goldfields achieved first gold at the Solaris Norte project in Chile. This location, at altitudes between 13,000 and 15,000 feet, was extremely challenging and demanded an extraordinary level of modularization never seen before on a project in the Andes.
Speaker Change: Results in this segment reflects the strong ramp up of execution activities on several recently awarded projects.
Speaker Change: Your life Sciences projects, a greenfield project.
Speaker Change: Semiconductor projects.
Speaker Change: New awards for the quarter were $4 9 billion compared.
Speaker Change: Compared to $1 8 billion a year ago.
Speaker Change: The backlog is substantial and now stands at $18 6 billion, 17%.
Speaker Change: It is reimbursable.
Speaker Change: Now please turn to slide seven in mining and metals.
Speaker Change: Alright client Goldfields achieved first of all that the Soliris <unk> project in Chile.
Speaker Change: Dislocation.
Speaker Change: Also choose between 13000 15000 feet was extremely challenging and demand at an extraordinary level of modular <unk> never seen before on a project in the Andes.
David Edward Constable: Speaking of Chile, the Fluor Joint Venture received full notice to proceed with the expansion of Antofagasta's Sentinella copper-gold mining operation in Sierra Gorda. When completed, this project is estimated to produce 144,000 metric tons of copper, 130,000 ounces of gold, and 3,500 metric tons of molybdenum. We recognize approximately $740 million for our portion of this award in the first quarter. This strong start in mining metals is anticipated to continue over the next three quarters with nearly $4 billion in prospects across aluminum, rare earth refining, quark debottlenecking, and a lithium project in the United States for Ioneer. We are particularly encouraged with the progress on this last prospect as INR has stated that the Bureau of Land Management has completed its draft review of Moving to slide 8.
Speaker Change: Speaking of Chile.
Speaker Change: <unk> joint venture received full notice to proceed for the expansion of Antofagasta is centinela copper gold mining operation in Sierra Gorda when.
Speaker Change: When completed this project is estimated to produce a 144000 metric tons of copper 130000 ounces of gold and 3500 metric tons of molybdenum.
Speaker Change: We recognized approximately $740 million for a portion of this award in the first quarter.
Speaker Change: This strong start in mining metals is anticipated to continue over the next three quarters with nearly 4 billion of prospects across aluminum.
Speaker Change: Chris refining for Debottlenecking and Olympian projects in the United States for Ian here.
Speaker Change: We're particularly encouraged with the progress on this last prospects as I stated that the Bureau of land management has completed its draft review of the environmental impact study.
Speaker Change: Moving to slide eight.
David Edward Constable: Advanced Technologies and Life Sciences had another very strong quarter and continues to invest in people and support infrastructure to meet demand. New awards for the quarter included a $3.2 billion EPCM award for full notice to proceed on the Eli Lilly Manufacturing Facility in Indiana that will break ground in 2023. Over the past two months, we've seen the CHIPS Act beginning to kickstart semiconductor investment in the United States, including two government grants that we are currently working on in a limited capacity.
Speaker Change: Advanced technologies and life Sciences had another very strong quarter and continues to invest in people and support infrastructure to meet demand.
Speaker Change: New awards for the quarter included a $3 2 billion <unk> Award for full notice to proceed on the Eli Lilly manufacturing facility in Indiana that broke ground in 2023.
Over the past few months, we're seeing that shift back to beginning to kick start the semiconductor investment in United States.
Speaker Change: According to government grants that were currently working on in a limited capacity.
David Edward Constable: We expect this will support not only current positioning work but more significant awards later this year and into 2025. Meanwhile, on a parallel track, clients are orienting their CapEx plans toward data centers to support AI. While it is still early days, we are well positioned to support our clients in this space. Looking ahead, we see data center investments gaining momentum in the U.S. Midwest, the European Union, and Asia. In infrastructure, productivity remains strong on the Gordie Howe project.
We expect this will support not only current positioning work with more significant awards later this year and into 2025.
Speaker Change: On a parallel drive clients are orienting their capex plans toward data centers to support AI.
Speaker Change: While it is still early days, we are well positioned to support our clients in this space.
Looking ahead, we see data center investment is gaining momentum in the U S. Midwest.
Speaker Change: European Union in Asia.
Speaker Change: In infrastructure productivity remains strong on the Gordie Howe project.
David Edward Constable: This project is now 74% complete, and we are on track for bridge connection mid-year with handover of both ports of entry later this year. The automated people-mover project in Los Angeles is now 84% complete. Our joint venture continues to work collaboratively with the client for cost recovery entitlements and alignment of schedule to match their timeline. Our last legacy infrastructure project, 635 LBJ, continues to progress and is currently 63% complete. Finally, Plant and Facility Services secured nearly $700 million in new work, including a seven-year contract extension with Suncoak and a five-year renewal supporting the maintenance and sustaining capital project work for a power generation company we've worked with for the past 40 years. Moving on to slide nine.
Speaker Change: This project is now 74% complete and we are on track for a British connection midyear with handover of both toward a da Vinci later this year.
On the automated people mover project in Los Angeles is now 84% complete.
Speaker Change: Our joint venture continues to work collaboratively with the client for cost recovery entitlements and alignment are scheduled to match their timeline.
Our last legacy infrastructure projects 635, LBJ continues to progress and is currently 63% complete.
Finally plant and facility services secured nearly $700 million in new work, including a seven year contract extension with Suncoast and a five year renewal supporting the maintenance and sustaining capital project work for a power generation company, we've worked with for the past 40 years.
Speaker Change: Moving on to slide nine.
David Edward Constable: Mission Solutions reported a segment profit of $22 million for the first quarter, compared to $7 million a year ago. New awards increased during the quarter to $1.1 billion and included the Air Force Contract Augmentation Program V that has a five-year period of performance valued at approximately $409 million. On this project, we will be providing construction and transportation support for Tinian Airfield, which is located in an area closely aligned with the nation's national defense strategy for the Indo-Pacific region. Also, during the quarter, we received extension notices for a number of projects we are currently executing, including Paducah, the Strategic Petroleum Reserve, and Portsmouth. The standing backlog for the quarter was $4.4 billion.
Speaker Change: Mission solutions reported segment profit of $22 million for the first quarter compared to $7 million a year ago.
Speaker Change: New awards increased during the quarter to $1 1 billion and includes the Air Force contract augmentation program slides that has a five year period of performance valued at approximately $409 million.
Speaker Change: On this project, we will be providing construction and transportation support for Ginnie and airfield is located in an area and closely align with the nation's national defense strategy for the Indo Pacific region.
Speaker Change: Also during the quarter, we received extension notices for a number of projects. We are currently executing including Paducah, the strategic Petroleum reserve. Unfortunately.
Speaker Change: Ending backlog for the quarter was $4 4 billion.
David Edward Constable: It's important to note that the earnings potential for this segment is not fully represented by total backlog. Current and future earnings for this segment also include contributions from projects accounted for under the equity method of accounting. This is reflected in our Margin Guidance for Mission Solutions. Looking ahead, prospects include additional task order awards for missions in the national security space, as well as incremental assignments under the LAWCAP program. Also note that we expect to hear a decision on the Pantex award by mid-year. Moving on to energy solutions, please turn to slide 10. Segment profit decreased to $68 million from $88 million a year ago.
Speaker Change: It is important to note that the earnings potential for this segment is not fully represented by total backlog.
Speaker Change: Current and future earnings for this segment also include contributions from projects accounted for under the equity method of accounting.
Speaker Change: This is reflected in our margin guidance for emission solutions.
Speaker Change: Looking ahead progress include additional task order awards for missions in the National Security space.
Speaker Change: As well as the incremental assignments under the Logcap program.
Speaker Change: Also note that we expect to hear a decision on the <unk> award by mid year.
Speaker Change: Moving to energy solutions, Please turn to slide 10.
Speaker Change: Segment profit decreased to $68 million from $88 million a year ago.
David Edward Constable: Results of the quarter reflect $29 million in cost growth for delays, craft labor, and material escalation on a construction-only subcontract for a non-PMEX client being executed by our joint venture entity in Mexico. Fluor's portion of this unit rate subcontract is approximately $200 million.
Speaker Change: Results for the quarter reflect 29 million of cost growth for delays craft labor and material escalation on our construction only sub contract for a non <unk> clients being executed by our joint venture entity in Mexico.
Speaker Change: <unk> portion of this unit rates sub contract is approximately $200 million.
Speaker Change: These cost increases were recognized in the first quarter. However, the joint venture is working with the client to establish commercial resolution to project impacts.
David Edward Constable: However, the joint venture is working with the client to establish commercial resolution to project impact. New awards for the quarter totaled $716 million and included an EPCM award for refinery work at Johnson Matthews Roystone site in the UK. This was a reimbursable sole source award that rolled over from the initial fee package.
Speaker Change: New awards for the quarter totaled $716 million and included a maintenance GM Award for refinery work at Johnson Matthey is right on site in the U K.
Speaker Change: This was a reimbursable sole source award that rolled over from the initial feed package.
David Edward Constable: Also, we recently received a pre-feed award from a confidential client for a mega integrated refinery and petrochemical complex in the Middle East. On LNGC, progress is in excess of 90%. With over 5,000 people on site, the project is in full systems completion mode with a focus on testing and commissioning activities for LNG Canada. We expect to be ready for a safe startup in the second half of 2024. Moving to Shell Penguins, Fluor is currently handing over systems on this legacy platform and will complete the remaining commissioning activities later this month.
Speaker Change: Also we recently received a pre feed award from a confidential client for a mega integrated refinery.
Speaker Change: Petrochemical complex in the Middle East.
Speaker Change: On LNG, great progress is in excess of 90% with over 5000 people on site. The project is being full systems completion mode with a focus on testing and commissioning activities for LNG, Canada.
We expect to be ready for safe startup in the second half of 2024.
Speaker Change: Moving to shell Penguins floor is currently adding over sectors on this legacy offshore platform and will complete the remaining commissioning activities later this month.
David Edward Constable: For the remainder of 2024, this segment is pursuing energy transition projects across a number of end markets, including battery manufacturing, renewable fuels, reimbursable offshore LNG, and traditional refining. Regarding the liquid-to-chemicals project in Saudi Arabia that we've discussed over the past few quarters, the client has decided to put this program on hold as they re-evaluate the best approach to development.
Speaker Change: For the remainder of 2020 for this segment is pursuing energy transition projects across a number of end markets, including battery manufacturing renewable fuels reimbursable offshore LNG and traditional refining.
Speaker Change: Regarding the liquid chemicals pricing in Saudi Arabia that we've discussed over the past few quarters. The client has decided to put this program on hold as they reevaluate the best approach to development.
David Edward Constable: The collaboration agreement we have with this client remains in place, and we continue to ramp up and involve them in a variety of activities. Finally, with respect to NuScale, we continue to make progress with our strategic investor on the monetization of NuScale shares held by Fluor. With the ever-increasing demand for carbon-free power, which more recently includes the build-out of high-energy-consuming AI data centers and semiconductor facilities globally, investor and power offtake interest based on the commercialization of new-scale, industry-leading SMR technology has never been greater.
Speaker Change: The collaboration agreement we have with this fight remains in place and we continue to ramp up in kingdom for a variety of activities.
Speaker Change: Finally, with respect to new scale, we continue to make progress with our strategic investor on the monetization of new scale shares held by floor.
Speaker Change: With the ever increasing demand for carbon free power, which more recently includes the build out of high energy consuming AI data centers and semiconductor facilities globally, investor and power Offtake interest based on the commercialization of new scale industry, leading <unk> technology has never been greater.
David Edward Constable: We will continue to provide updates on this front in the coming quarters of 2024. Based on Fluor's performance over the past two years, it's clear that the significant demand for our services across the portfolio allows us to protect our margin corridor of 4-6% and provide strong support for our full-year guidance expectations. With that, let me turn the call over to Joe for the financial update. Joe? Yeah, thanks.
Speaker Change: We will continue to provide updates on this front in the coming quarters of 2024.
Speaker Change: Based on <unk> performance over the past few years, it's clear that the significant demand for our services across the portfolio allows us to protect our margin corridor of 4% to 6% and provides strong support for our full year guidance expectations.
Speaker Change: With that let me turn the call over to Joe for the financial update Joe.
Joseph L. Brennan: Yeah, thanks David, and good morning everyone. Today I will review our results for the first quarter and go over financial outlook assumptions that support our guidance. Please turn to slide 12. As David mentioned, for the first quarter of 2024, revenue was $3.7 billion. Our consolidated segment profit for the quarter was $118 million. Results reflect the normal seasonality we see for the quarter and the $29 million charge David previously discussed.
Brent Edward Thielman: Yes, Thanks, David and good morning, everyone. Today I will review our results for the first quarter and go over financial outlook assumptions that support our guidance. Please turn to slide 12.
Brent Edward Thielman: As David mentioned for the first quarter of 2024 revenue was $3 7 billion. Our consolidated segment profit for the quarter was $118 million.
Brent Edward Thielman: The results reflect the normal seasonality, we see for the quarter and the $29 million charge, David previously discussed.
Joseph L. Brennan: Adjusted EBIT after the first quarter was $88 million compared to $71 million a year ago. Our adjusted EPS was $0.47 compared to $0.28 in Q1 of 2023. Results for the quarter do not affect our expectations for full-year guidance. Our adjusted results for the quarter exclude $7 million for the positive income effects of FX and the invented derivative in Mexico. G&A expenses for the quarter were $59 million, down from $62 million a year ago.
Brent Edward Thielman: Adjusted EBITDA for the first quarter was $88 million compared to $71 million a year ago.
Brent Edward Thielman: Our adjusted EPS was <unk> 47.
Brent Edward Thielman: Compared to <unk> 28 in Q1 of 2023.
Brent Edward Thielman: For the quarter do not affect our expectations for full year guidance.
Brent Edward Thielman: Our adjusted results for the quarter excludes $7 million for the positive income effects of FX and the embedded derivative in Mexico <unk>.
Brent Edward Thielman: <unk> expenses for the quarter were $59 million down from $62 million a year ago.
Joseph L. Brennan: Net interest income in the quarter was $39 million, compared to $49 million last quarter and $41 million a year ago. Based on comments from the Fed, we are anticipating that the net interest income run rate for the rest of 2024 will remain in this range.
Brent Edward Thielman: Net interest income in the quarter was $39 million compared to $49 million last quarter and $41 million a year ago based on comments from the fed we are anticipating the net interest income run rate for the rest of 2024 will remain in this range.
Joseph L. Brennan: New awards of $7 billion in the quarter improved our ending backlog balance to $32.7 billion, which is now 80% reimbursable. Based on our prospect pipeline, we anticipate a book-to-burn ratio equal to or in excess of one for the third straight year. Moving to slide 13.
Brent Edward Thielman: New awards of $7 billion in the quarter improved our ending backlog balance to $32 7 billion, which is now 80% reimbursable.
Brent Edward Thielman: Based on our prospect pipeline, we anticipate a book to burn ratio equal to or in excess of one for the third straight year.
Brent Edward Thielman: Moving to slide 13, our.
Joseph L. Brennan: Our cash and marketable securities balance for the quarter was $2.3 billion. This excludes amounts held by NuScale. Operating cash flow for the quarter was an outflow of $111 million compared to an outflow of $161 million a year ago and reflects increases in working capital needs for reimbursable projects, the usual timing of annual incentive payments, and $55 million in funding for legacy projects. In Q1, we completed the sale of Storch European Operations to Bill Fenger.
Brent Edward Thielman: Our cash and marketable securities balance for the quarter was $2 3 billion.
Brent Edward Thielman: This excludes amounts held by new scale.
Brent Edward Thielman: Operating cash flow for the quarter was an outflow of $111 million compared to an outflow of $161 million a year ago and reflects increases in working capital needs for Reimbursable projects, the usual timing of annual incentive payments and $55 million in funding for legacy projects.
Brent Edward Thielman: During Q1, we completed the sale of <unk> European operations to Bill finger.
Joseph L. Brennan: We also entered into an agreement to sell Storch UK operations and expect to close this transaction as early as the second quarter. This is a significant milestone as it represents the final planned divestiture of our non-core business. Please turn to slide 14.
Brent Edward Thielman: We also entered into an agreement to sell storage UK operations and expect to close this transaction as early as the second quarter. This is a significant milestone as it represents the final planned divestiture of our noncore businesses. Please.
Joseph L. Brennan: We are affirming our 2024 Adjusted Earnings Per Share guidance of $2.50 to $3.00 and our Adjusted EBITDA guidance of $600 to $700 million. Our expectations for operating cash flow are between $450 million and $600 million. This excludes up to $150 million in funding for legacy projects. Our assumptions for 2024 include revenue growth of approximately 15%. G&A expense of approximately $190 million and an effective tax rate of approximately 35%. Our expectations for 2024 full-year segment margins are approximately 5% in energy solutions, approximately 4% in urban solutions, and approximately 6% in mission solutions. Operator, we are now ready for our first question.
Brent Edward Thielman: Please turn to slide 14, we are affirming our 2024 adjusted earnings per share guidance of $2 50 to $3 and our adjusted EBITDA guidance of $600 million to $700 million.
Brent Edward Thielman: Our expectations for operating cash flow are between $450 million and $600 million.
Brent Edward Thielman: This excludes up to $150 million in funding for legacy projects. Our assumptions for 2024 include revenue growth of approximately 15% G&A expense of approximately approximately $190 million and an effective tax rate of approximately 35%.
Brent Edward Thielman: Our expectations for 2020 for full year segment margins are approximately 5% in energy solutions, approximately 4% and urban solutions and approximately 6% and mission solutions. Operator, we are now ready for our first question.
Operator: Thank you. The floor is now open for questions. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question,
Speaker Change: Thank you the floor is now open for questions. If you have dialed in and we'd like to ask a question. Please press star one on your telephone keypad to raise your hand and joined the queue.
Speaker Change: If you would like to withdraw your question simply press Star one again too.
Speaker Change: To allow for as many questions as possible. We please ask that you restrict yourself to one question and one follow up you may queue up again for further follow up questions time permitting thank you.
Speaker Change: Called upon to ask you a question on your listening via a loudspeaker out in your device. Please pickup your handset to ensure that your phone is not on mute when asking a question.
Speaker Change: Your first question comes from the line of Jamie Cook of true Securities. Your line is open.
Jamie Lyn Cook: Well, close, it's Jamie Cook, but thank you.
Speaker Change: Ill close it's Jamie Cook.
Speaker Change: Hi.
Jamie Lyn Cook: Hey, Jason.
Jamie Lyn Cook: I haven't gotten that one before.
Jamie Lyn Cook: Two questions Joe It looks like you increased your free cash flow guide I think youre, saying $4 50, or sorry, your operating cash flow guidance for 50 to 600 versus before I think you were at $3 50 to $4 50, which is nice to see because it's now more approximating EBITDA. So what were the drivers behind that and given.
Jamie Lyn Cook: The stronger cash flow generation, how are you thinking about capital allocation in the back half of the year and then just my second question.
Is just the ramp to get to your EBITDA guide, 6% to $700 million I think the first quarter. Adjusted EBITDA was 88 million. So how do we think about that ramp given sort of probably.
Weaker first quarter.
Speaker Change: So yes, I guess those are my two questions. Thanks.
Joseph L. Brennan: Okay, yeah, good morning. Thanks, Jamie. From a cash perspective, we've got included in our guidance some of the activity and the repatriation, and the dividends, obviously, from LNGC, but what we're really seeing is kind of an underlying bit more clarity relative to the trajectory of our margins as we push into an 80% reimbursable model. We're getting a lot more clarity in terms of how that cash flow is going to flow into our cash flow statements for the year.
Speaker Change: Okay.
Speaker Change: Good morning, Thanks, Jamie from a cash perspective.
Speaker Change: We are.
Got included in our guidance some of the activity and the repatriation of dividends, obviously from LNG see but what we're really seeing is kind of an underlying.
Speaker Change: A bit more clarity relative to the trajectory of our margins as we push into an 80% Reimbursable model. So we're getting a lot more clarity in terms of how that cash flow is going to flow into into our cash flow statements for the year and we just feel as though with the early onboarding of some of the <unk>.
Joseph L. Brennan: And we just feel as though with the early onboarding of some of the activities and urban solutions, the business will start to generate a better cash flow profile. And I think that's where we're just kind of leaning into that confidence and having better transparency into how that cash is going to turn into free operating cash flow for us. On the capital allocation, nothing's changed, Jamie.
Speaker Change: Activity is an urban solutions.
Speaker Change: Business will start to generate.
Speaker Change: Better cash flow profile, and I think thats, where were just kind of leading into that confidence in having better transparency into and to have that gas is going to turn into a free operating cash flow for us on the capital allocation Nothing's changed Jamie we are going to be communicating with you.
Joseph L. Brennan: We are going to be communicating with you relative to our stated goals around returning shareholder capital. We'll do that as we get out into the latter half of the year. And from a ramp perspective, I think we've progressed a bit quicker than we had anticipated in getting up to the 80% reimbursable. And that ramp is really, that backlog is really going to start being the headline story as we move forward.
Speaker Change: Relative to our stated goals around returning shareholder capital, we'll do that as we get out into the latter half of the year and from a ramp perspective.
I think we've progressed.
Speaker Change: A bit quicker than even we had anticipated and getting up to the 80% Reimbursable.
Speaker Change: And that ramp is really that backlog is really going to start being the headline story as we move forward. So I would expect a very and an 80% Reimbursable model. What we're looking at Jamie is a nice.
Joseph L. Brennan: So I would expect a very, in an 80% reimbursable model, what we're looking at, Jamie, is a nice, less volatile ramp as we kind of get to the end of the year. So I would expect to see a nice, a little bit more linear ramp as we get from Q2 into Q4.
Speaker Change: Less volatile ramp as we kind of get to the end of the year. So I would expect to see a nice.
Speaker Change: A little bit more linear ramp.
Speaker Change: As we get from Q2 into Q4.
Jamie Lyn Cook: Okay, great. Thanks.
Speaker Change: Okay, great. Thanks.
Operator: My apologies for that, Jamie. Your next question comes from the line of Steven Fisher of UBS. Your line is open.
Speaker Change: Julien supported on the guide I apologies for that Jamie. Your next question comes from the line of Steven Fisher of UBS. Your line is open.
Steven Fisher: Thanks. Good morning.
Steven Fisher: Hi, Thanks. Good morning, you mentioned that the JV is working on a commercial resolution in Mexico Whats the degree of risk of further charges. There on that project and I know you mentioned that sort of a non pemex project, but I feel like more broadly in Mexico.
David Edward Constable: You mentioned that the GAV is working on a commercial resolution in Mexico. What's the degree of risk of further charges on that project? And I know you mentioned that's sort of a non-PEMEX project, but I feel like, more broadly, in Mexico, as a place to do business for you, it's had its ups and downs. And given that those ups and downs kind of continue here, how do you think about the risk-reward of continuing to work in Mexico?
Julien: As a.
Julien: Race to do business for you it's had its ups and downs so.
Julien: And given those ups and downs kind of continue year.
Julien: Do you think about.
Julien: The risk reward of continuing to work in Mexico.
David Edward Constable: Well, thanks for the questions, David. So, we've got a, you know, Eka Fluor is probably, as you look..., historically across the company, he says. I would say our best joint venture from a performance standpoint that we've had in the company. Really strong financial performance here, certainly since I've returned, and great work with Pemex on their refinery system. In fact, Dos Bocas is now mechanically complete, and we're a supporting startup as we speak, so we continue to do really great work with Pemex.
Speaker Change: Well thanks for the question is David.
Speaker Change: So we got a eco Florida, probably.
Speaker Change: As you look at.
Speaker Change: Historically across the company can floors.
Speaker Change: I would say our best joint venture.
Speaker Change: From a performance standpoint.
Speaker Change: That we do.
Speaker Change: What we've had in the company.
Speaker Change: Really strong performance financially here.
Speaker Change: Certainly since I've returned great work with Pemex on the refinery system.
Speaker Change: <unk> focus is now mechanically complete and we're supporting startup.
Speaker Change: As we speak so continue to do really great work for Pemex.
Speaker Change: And this particular project.
David Edward Constable: And this particular project, so I'm bullish on Mexico and EcoFluor and the work they do down there. This particular project, as you heard, was a very small project; it's a subcontract, actually, a unit rate contract on the direct cost. A couple hundred million dollars, construction only, for, like you heard, a commercial client that we're working with in Ensenada, Baja California, which is a challenging location, a volatile geographic location, and a very unique situation with border control issues and therefore craft labor instability.
Speaker Change: Hum.
Speaker Change: Bullish on Mexico, and eager floor.
Speaker Change: And the work they do down there. This particular project as you heard was very small projects to subcontract actually a unit rate contract on the direct costs a couple of hundred million dollars construction.
Speaker Change: Construction only.
Speaker Change: And.
Speaker Change: For like you heard our commercial clients.
Speaker Change: We're working with and location.
Speaker Change: Location is ensenada in Baja California, which is a.
Speaker Change: A challenging location of volatile geographic location.
Speaker Change: In a very unique situations with border control issues.
Therefore craft labor.
Speaker Change: And stability so.
David Edward Constable: So, you know, we've been negotiating a cost increase and schedule extension over the past six months. However, in Q1, it became apparent that the labor market, due to that unique location, the labor market had degraded to the point where, you know, the initial negotiation was not sufficient. So Detroit Venture and Florinica are currently addressing these challenges with the clients, and, you know, the cost increases had to be obviously taken up in the first quarter. And as we've done with many of our legacy projects, revenue recovery to claims perfection is where we're focused on this small subcontract right now.
Speaker Change: Bob.
Speaker Change: We have been negotiating a cost increase in schedule extension over the past.
Speaker Change: Six months.
Speaker Change: However in Q1, it became apparent that the labor market.
Speaker Change: Due to that unique location the labor market it great to the point, where the initial negotiations not sufficient so.
Speaker Change: Our adventure.
Speaker Change: In Florida currently addressing these challenges with the clients and.
Speaker Change: And <unk>.
Cost the cost increases that had to be obviously taken up in the first quarter, but as we've done with many of our legacy projects revenue recovery claimed perfection is where we're focused on this small sub contract right now.
Joseph L. Brennan: Maybe the only thing I would add is just to provide a little bit more color around the labor challenges that we see in the region. With its proximity to the border and some of the other activities that happen up in the northern region of Baja, we've got a lot of experience doing work in that region, but it's just been exacerbated coming out of the holidays. And again, with its proximity to the border, the attraction and retention of craft resources has become increasingly more challenging and more difficult.
Speaker Change: Maybe the only thing I would add is just to provide a little bit more.
Speaker Change: Color around the labor challenges that we see in the region.
Speaker Change: With its proximity to the border and some of the other activities that happen up in the northern region of Baja and we've got a lot of experience doing work in that region, but it's just been exacerbated coming out of the holidays and again with its proximity to the border the attraction and retention of craft resources is becoming increasingly more challenging and more difficult.
Joseph L. Brennan: And it is a set of challenges that we really don't have on any of our other projects in our portfolio. It's really unique to this project. But as David said, we're working through those challenges with the client to get the best commercial settlement risk.
Speaker Change: It is.
Speaker Change: A set of challenges that we really don't have on any of our other projects in our portfolio. It's really unique to this project, but as David said, we're working through those challenges with the client against the best commercial loan settlement resolution.
Joseph L. Brennan: And remind me, when was that project booked?
Speaker Change: And remind me when was that project booked.
Joseph L. Brennan: 2021.
Speaker Change: 2021 August of 'twenty one.
Speaker Change: Okay.
Steven Fisher: And so just my follow-up is, you know, the sort of idea of... It's scheduled for completion in February of 2025. Okay, that's helpful.
Speaker Change: And just my follow up is.
Speaker Change: The sort of the idea of frequent scheduled dates scheduled for completion in February of 2025.
David Edward Constable: And I guess just, you know, the concept of clean quarters with higher margins and consistency still seems like the vision here. And there's a lot of pieces of that being put in place, but it's just not quite there yet. So, you know, we know this is a long cycle business that takes time to work through some older projects. So, what kind of confidence can we have in the timing of achieving those consistent quarters and delivering those, you know, those nicely higher margins that you're putting into backlog on a consistent basis? Yeah, no, thanks for the question.
Speaker Change: Okay.
Speaker Change: That's helpful and I guess, just the concept of clean quarters with higher margins and consistency.
Speaker Change: Seems like the vision here.
Speaker Change: There's a lot of pieces of that being put in place but.
Speaker Change: It's just not quite there yet so we know that the long cycle business. It takes time to work through some older projects. So what what kind of confidence can we have and the timing of achieving those consistent quarters and delivering those nicely higher margins that youre putting into backlog on a consistent basis now.
David Edward Constable: Yeah, no, thanks for the question. I guess I look at it through the lens of the progress that we're making on our reimbursable portfolio. And where we are in terms of where we said we would be by the end of this year at 75%, being up in the 80% range, booking a $7 billion award quarter in Q1 at 90-plus percent reimbursable, I think that's giving us comfort that as we get a better balance of the risk profile within the P&L, we'll start to eliminate some of that volatility moving forward.
Speaker Change: Yes, no. Thanks for the question.
Speaker Change: I look through it through the lens of the progress that we're making on a reimbursable portfolio.
Speaker Change: And where we are in terms of where we said we would be by the end of this year at 75% being up in the 80% range booking a $7 billion over quarter in Q1 at 90 plus percent.
Speaker Change: Reimbursable I think thats, giving us comfort that as we get a better balance of the risk profile within the P&L that will start to eliminate some of that volatility moving forward and I think all of those factors and proven by not only the bookings, but the opportunities that we see in front of us remain.
David Edward Constable: And I think all of those factors, proven by not only the bookings but the opportunities that we see in front of us, remain very heavily weighted towards the reimbursable side of the ledger. So I think that will help us reduce some of that volatility that continues and certainly have more linear discussions relative to revenue and EBITDA profiles moving forward.
Speaker Change: Very heavily weighted towards the reimbursable side of the.
Speaker Change: Ledger, so I think that will help us get get some of that volatility that continues.
Certainly having more linear discussions relative to revenue and EBITDA profiles moving forward.
Speaker Change: Thank you very much.
Operator: Your next question comes from the line of Andy Wittmann of Baird. Your line is open.
Speaker Change: Your next question comes from the line of Andy Wittman of Baird. Your line is open.
Andrew John Wittmann: Hi, good morning. Thank you for taking my questions, guys. I wanted to have you drill in a little bit more on your mission solutions joint ventures. David, you mentioned them in your script and the fact that, you know, these aren't showing up in the backlog, but they're factored into your margin guidance. And, you know, obviously, the mission segment margin guidance here is much higher than you posted in the quarter and, frankly, much higher than we've seen in a while.
Andrew John Wittmann: Hi, Good morning, Thank you for taking my questions guys.
Andrew John Wittmann: Wanted to have you drill in a little bit more on your mission solutions Joint Ventures, David you mentioned them in your script.
Andrew John Wittmann: The fact that these aren't showing up in backlog, but they are factored into your margin guidance. Obviously the mission segment margins guidance here is much higher than inflows during the quarter and frankly much higher than we've seen in a while so it's clearly.
Andrew John Wittmann: Having a discernible impact.
Andrew John Wittmann: So it's clearly having a discernible impact. Given that, I thought it would be helpful for you to talk about the status of the contracts or, if you can, which contracts in particular are contributing to that margin outlook and if they've already begun. Certainly, in the quarter, you talked about and released your role at Hanford. But there was another one that you had at Arnold Engineering Center. I believe it's a fairly decent-sized one. Maybe, if you could just talk, Joe, talk about the projects that are contributing there and if there are any protests or things that have to be worked through before you're able to recognize those as profits.
Andrew John Wittmann: Given that I thought it would be helpful for you to talk about the status of <unk>.
Andrew John Wittmann: Which contracts in particular that you can are contributing to that margin outlook and if they have already begun.
Andrew John Wittmann: Certainly in the quarter you talked in the press release your role at Hanford. There was another one that you had.
Andrew John Wittmann: And Arnold Engineering Center, I believe Thats, a fairly decent sized one.
Andrew John Wittmann: Maybe if you could just talk Joe talked about the projects that are contributing there and if theres any protests are things that have to be worked through before you're able to recognize those as profit.
Joseph L. Brennan: Andy, maybe I'll talk a little bit about what's going on down below the line in the NCI. On an unrecognized proportional basis, we have approximately $2 billion worth of revenue that's not being reflected in the overall backlog for mission solutions. So I think that's obviously a big chunk and a big reason for the increased margin guidance. And Pantex itself will also be another non-consolidating opportunity for us of a very significant nature in the $30 billion range.
Andrew John Wittmann: Andy will maybe I'll talk a little bit about whats going down going on down below the line in the NCI on and on.
Andrew John Wittmann: Recognize proportional basis.
Andrew John Wittmann: Have approximately $2 billion worth of <unk>.
Andrew John Wittmann: Revenue, that's not being reflected.
Speaker Change: In the overall backlog.
Speaker Change: For mission solutions, So I think Thats, obviously, a big chunk and a big reason for the increased margin guidance and pantex itself will also be another non can say consolidating opportunity for us of a very significant nature.
And the $30 billion range. So we're working on how we will communicate a little bit better because of the size of some of the opportunities are going to flow in there below and above the line and we'll work on providing you some better guidance around what that margin means relative to emission solutions as we progress out into Q2 and Q3.
Joseph L. Brennan: So we're working on how we'll communicate a little bit better because of the size of some of the opportunities that are going to flow in there below and above the line. And we'll work on providing you with some better guidance around what that margin means relative to mission solutions as we progress out into Q2 and Q3. So those are kind of the underlying reasons that you're seeing that margin guide push up to 6%. Yeah, we're set.
Speaker Change: So those are kind of the underlying reasons that youre seeing that margin guide push up to the 6% yes.
David Edward Constable: Yeah, there's a lot of good things going on in Mission Solutions, Andy. We've had recent awards from FEMA, you know, $525 million over five years. We've got the Hanford tank, have the tech contract, $45 billion over 15 years. Looking at Longview Fusion further out in time, which is very interesting, you know, the technology that we're, you know, right in the forefront of with the award there with Longview. We're waiting for announcements from the National Cancer Institute, Pantex Joe mentioned. We've got enrichment bids out there for nuclear fuel. The street bid's outstanding right now.
Speaker Change: Yes, there is that there is a.
Speaker Change: Lot of good things going on emission solutions Andy.
Speaker Change: <unk> had recent awards from FEMA.
Speaker Change: 525 million over five years, we've got the Hanford tank.
Speaker Change: Protect contract 45 billion over 15 years.
Speaker Change: Looking at Longview fusion further out in time, which is very interesting.
Speaker Change: The technology that were.
Speaker Change: Right.
Speaker Change: In the forefront of with.
Speaker Change: With the New awards, there with long view.
Speaker Change: We're waiting for announcements from the national cancer Institutes pants.
Speaker Change: <unk> Joe mentioned.
Speaker Change: We've got the enrichment bid enrichment bids out there for <unk>.
Speaker Change: Our nuclear fuel.
III bids outstanding right now.
David Edward Constable: The Strategic Petroleum Reserve is going to, we think, come in again as an extension. So lots going on in the nuclear and environmental space. And then on the national security side, including defense and intelligence. You know, you've got all that AFCAP work, I mentioned the Tinian Island Program as well, the Test Operations and Sustainment Program for the Air Force, you know, so, and then a lot of work in the intelligence space, with right now six outstanding award announcements that we're waiting on. So, and many bids are in the process. So, there is a lot going on right now. It's a very busy time in Mission Solutions, especially as they support national security right now.
Strategic Petroleum reserve is going to we think come in again as an extension so lots going on in the nuclear environmental space and then the national security side, including Defense and intelligence.
Speaker Change: But I'll, let ASCAP work.
Speaker Change: I mentioned, the Tinian Island program as well the test operations and Sustainment.
Speaker Change: Our program for the Air Force.
Speaker Change: So and then a lot of work in the intelligence space.
Speaker Change: With the right now six outstanding.
The award announcements that we're waiting on so many bids in process. So a lot going on right now very busy time in it.
Speaker Change: In mission solutions.
Especially as they support our national security right now.
Joseph L. Brennan: Joe, was there anything to read into your comment there? You just brought up Pantex.
Speaker Change: Joe is there anything to read into your comment that you just brought up pantex.
Joseph L. Brennan: That's something that, you know, could have a significant impact. Are there any updates that you have beyond just expecting to hear something this summer? And this is a contract that you guys won and then, you know, coming back with a... They're reissuing the RFP, and you're coming back at it. But is there any update that you can provide on that?
Brent Edward Thielman: That's something that.
Brent Edward Thielman: Could have a significant thing is there is there any update that you have beyond just do you expect to hear something this summer and this is a contract that you guys won and then coming back with us.
Brent Edward Thielman: Reissuing, the RFP and Youre coming back at it but is there any update that you can provide on that one.
Joseph L. Brennan: We've submitted the proposal, and it's under review with the government. It's expected that we will hear something within the next month or so. But, yeah, we're kind of being held a bit hostage relative to when the government wants to announce the release, but we would expect it within the next two to four weeks. At least that's early warning signals at this point. Yeah, that's it. Last one for me; I'm just done. It could be later.
Brent Edward Thielman: We have submitted the proposal and it's under review with.
Brent Edward Thielman: The government.
Brent Edward Thielman: I expected that we would hear something within the next month or so but.
Brent Edward Thielman: Yes, it's we're kind of being held as a bit hostage relative to when the government wants to announce the release, but we would expected within the next two to four weeks at least Thats early warning signals at this point.
Brent Edward Thielman: Yes.
Speaker Change: Last one for me.
Speaker Change: It could be late and it could be later two right and.
David Edward Constable: They'll want to make the award before the election, put it that way. So, you know, they usually take up to a year to award those types of contracts, and we'll be coming up on a year in September. And, obviously, there's a good chance it'll be protested, so, you know, more to come on Pantech.
Speaker Change: Hello.
Speaker Change: They will want to make the award before the election put it that way and.
Speaker Change: So they usually take up to a year to reward those those types of contracts and we will be coming up on a year in September.
Speaker Change: And obviously, there's a good chance it will be protested so more to come on context.
David Edward Constable: Yeah. Okay, just last one for me, just on NuScale here.
Speaker Change: Okay. Just last one for me just on new scale here.
Speaker Change: Here I was just wondering what kind of you guys are thinking as a realistic outcome.
Andrew John Wittmann: I was just wondering what kind of outcome you guys are thinking is realistic. Obviously, you've been talking about this one for some time. There have been various kinds of milestones that have kind of come and gone. And obviously, the story over at NuScale has fluctuated as well. So I just kind of want to get your thoughts on a realistic outcome in terms of process and or timing.
Speaker Change: Obviously, you've been talking about this one for some time.
There's been various kind of milestones that have kind of come and gone and obviously the story over new scales.
Speaker Change: Fluctuated as well so I'm just kind of wanted to get your thoughts for a realistic outcome in terms of process and timing.
David Edward Constable: Yeah, so it's very exciting times right now, right, especially with the demand, as I mentioned in the remarks. Investors and Power Off take an interest in the carbon-free new scale technology. I don't think it's ever been greater as I've been following it, right? You know, just if you follow, obviously, the comments that I made on data centers, the need for data centers has obviously rapidly increased, even more so with artificial intelligence.
Speaker Change: Yes.
Speaker Change: It's very exciting times right now, especially with the demand as I mentioned in the remarks.
Speaker Change: Bob.
Speaker Change: Investor and power offtake interest in.
Speaker Change: In the carbon free new scaled technology I don't think has ever been greater as I've been following it right.
Speaker Change: Just.
Speaker Change: If you follow obviously the.
Speaker Change: The comments that I made on data centers.
Speaker Change: The need for data centers, obviously rapidly increased.
Speaker Change: Even more so with artificial intelligence I think in the U S market alone.
David Edward Constable: I think, you know, in the U.S. market alone... Power Consumption, to reflect the number of servers that are expected... They're going to need 35,000 megawatts, right? Versus I think we're at 17,000 megawatts right now by 2030. So it's a massive requirement for clean power, and I can tell you that.
Power consumption.
Speaker Change: To reflect the number of servers that are expected.
Speaker Change: Only 35 35000 megawatts right versus I think we're at 17000 megawatts right now by 2030 so.
Speaker Change: It's a massive.
Speaker Change: Requirement on clean power and I can tell you that.
David Edward Constable: There's significant and detailed discussions ongoing with those types of clients looking to new scale to solve those challenges. So the demand is there. We have exclusivity with our strategic investor. It's a very complex deal, I'll say that, but with a lot of moving parts. But I'd say that it's also a.
Speaker Change: There is significant and detailed discussions ongoing with those types of.
Speaker Change: Hi.
Speaker Change: Clients.
Speaker Change: Looking to new scale to solve those challenges so the demand is there.
Speaker Change: We have exclusivity with our strategic investor ongoing it's a very complex deal I'll say that.
Speaker Change: But.
With a lot of moving parts, but.
Speaker Change: I'd say Thats also.
David Edward Constable: It's industry leading when it comes to the path that a strategic investor is taking from a development standpoint globally on a new scale. So, I'm very, you know, I'm very, you know, supportive of the business model that the Strategic Investor has come up with. And we have, you know, three overarching objectives that we need on our side to ensure success. And that is, first of all, to ensure the successful commercialization of the new scale technology. Number one.
Speaker Change: You know its industry, leading when it comes to that.
Speaker Change: The path of strategic investors taking.
From a development standpoint globally for new scale. So.
Speaker Change: Barry.
Speaker Change: I'm very.
Speaker Change: Okay.
Speaker Change: Supportive of.
Speaker Change: The business model that the strategic investors has come up with.
David Edward Constable: Number two, drive maximum value for Fluor shareholders through the monetization of our New Scale shares. And thirdly, and importantly, ensure Fluor... Engineering, Construction, and Project Management Services are participating globally on new scale projects where we can add value. So all that is part of the path forward. And so, yeah, it continues to move forward. And like I said, with that investor and power offtake interest, things will, I think, move forward positively. Timeline-wise, like I said, we'll continue to update you through the year and hopefully see something later in 2024 that we can be really excited about for ourselves and our shareholders.
Speaker Change: And we have.
Speaker Change: Three overarching objectives that we need on our side.
Speaker Change: To ensure success and that is first of all ensure the successful commercialization of the new scale technology.
Speaker Change: <unk>.
Speaker Change: Number two drive maximum value for shareholders through the monetization.
Speaker Change: Of our new scale shares.
Speaker Change: And thirdly, and importantly ensure floors.
Speaker Change: Engineering construction and project management services.
Speaker Change: Participating globally.
Speaker Change: New scale projects, where we can add value. So all of that is as part of the.
Speaker Change: Our path forward and so yes it continues to.
Speaker Change: To move forward and like I said without investor empower.
Speaker Change: Phosphate.
Speaker Change: Interest.
Speaker Change: Yes, things things will I think moving forward positively timeline wise like I said, we'll continue to update you through the year and.
Speaker Change: And hopefully see something.
Speaker Change: Later in 2024 that we can we can be really excited about for for ourselves and our shareholders.
Speaker Change: Thanks.
Speaker Change: Okay.
Operator: Your next question comes from the line of Michael Dudas of Vertical Research. Your line is open.
Speaker Change: Your next question comes from the line of Michael Dudas of vertical research. Your line is open.
Michael Stephan Dudas: Morning, Jason, Joe, and David.
Michael Stephan Dudas: Good morning, Jason Joe David.
Michael Stephan Dudas: Hey, hello, Mike.
Michael Stephan Dudas: Hey.
Michael Stephan Dudas: Mike.
David Edward Constable: David, maybe follow up with your new scale answer on data centers and remind us how Fluor is positioned in that market. Is there any comparisons on Fluor's positioning on the construction relative to, say, the semiconductor cycle a couple of years ago? And, you know, it seems like an early stage, but is there? A lot of red tape, regulatory, maybe power consumption demand is enormous, but that's got to be parsed out. So maybe you could share a little bit about the timing and how Fluor gets involved, and how that can be visible in the backlog over the next 12 to 18 months.
Michael Stephan Dudas: David maybe follow up on your with your new skill answer on data centers. So you remind us how fluor's positioned in that market is the comparisons on fluids positioning on the construction relative to say the semiconductor cycle a couple of years ago.
Michael Stephan Dudas: And.
Michael Stephan Dudas: How does it seems early stage, but is there.
Michael Stephan Dudas: A lot of.
David Edward Constable: Lot of Red tape regulatory maybe power consumption demand is enormous but that's got to be parsed out. So maybe you could share a little bit about how that timing, how fluor gets involved and luca can that be visible too.
David Edward Constable: Two the backlog over the next 12 to 18 months.
David Edward Constable: Good morning, Mike. So, yeah, semiconductor work is ongoing and growing, as you know, and we're in the middle of that market. Data centers, I'd say it is a very similar model, right, that we're looking at to support the build-out of data centers in the U.S. and globally. For example, our build-out of data centers for Microsoft in India is one example, internationally, but we expect to also, you know, bring that experience to bear in the U.S. as these data centers start to come out to bid.
Speaker Change: Hey, good morning, Mike.
Mike: Yes semiconductor work is ongoing and growing as you know and we're in the middle of that market data centers I would say it is a very similar model right.
Speaker Change: That we're looking at too.
Speaker Change: To support build out of data centers in the U S and globally. For example are our build out of data centers for Microsoft in India.
Speaker Change: One example.
Speaker Change: Internationally, but we expect to also.
Speaker Change: Bring that experience to bear.
Speaker Change: In the U S. As these data centers start to.
Speaker Change: Start to come out to.
Speaker Change: And so.
David Edward Constable: I would say it... They'll be increasing the backlog in ATLS going forward, so, and we're, you know, well-positioned to support those clients in that space, and you know who the big players are for data centers. So we're right in the thick of it right now in positioning, so yeah, that should do good for that.
Speaker Change: I would say there'll be increasing.
Speaker Change: The backlog.
Speaker Change: In ATM Pos.
Speaker Change: Going forward so.
Speaker Change: And we are.
Speaker Change: We are well positioned.
Speaker Change: To support those clients in that space and you know.
Speaker Change: The big players are.
Speaker Change: For Datacenters, and so think of it right now.
Speaker Change: So.
Speaker Change: Yes.
Speaker Change: That's what we've got on that.
David Edward Constable: I appreciate that. And then maybe, on a follow-up, you know, given what you just mentioned there and all the manufacturing, reshoring, life science, and the bookings you've had, maybe a sense of capacity and competition. Our clients are starting to get more concerned about the ability to bring on the talent that's required from a vendor and from a contractor's space. And how do you think that's going to reflect in your ability to better, you know, continue these margin improvements? I guess that's a part of why the margins are moving up and getting better T&Cs. Now, most definitely.
Speaker Change: I appreciate that and then maybe on a follow up.
Speaker Change: Given what you just mentioned there and the activity and all the manufacturing reassuring life in your life science in the bookings you've had.
Speaker Change: Any chance of <unk> and competition.
Speaker Change: Our clients starting to get more concerned about the ability to bring on.
Speaker Change: The talent that's required from a from a vendor and from a contractor space and how do you think thats going to reflect in your ability to better.
Speaker Change: These margin improvements I guess, that's part of why the margins moving up and getting better tncs.
David Edward Constable: Well, most definitely, you know. Yeah, certainly in that market space. You can consider it a seller's market, not only in the EPC space but in the vendor space as well. [inaudible] to sign up agreements to make sure they get their arms around, you know, the A-teams, engineering talent, so that they have, you know..., blocked out their competition. It is a capacity challenge. We started our talent task force a couple of years ago.
Speaker Change: Now most definitely.
Speaker Change: Yes, certainly in that.
Speaker Change: Market.
Speaker Change: Face.
Speaker Change: So you can consider it a seller's market not only in the EPC space, but in the vendor vendor space as well.
Speaker Change: Some clients are just.
Speaker Change: Deciding to.
Speaker Change: To sign up agreements to make sure they get their arms around.
Speaker Change: Atms and engineering talent, so that they have.
Speaker Change: No.
Speaker Change: Blocked out their competition.
Speaker Change: It is a capacity challenge.
Speaker Change: We've been we started our challenge task force a couple of years ago.
David Edward Constable: As our backlog started to grow, we started booking those $20 billion years a couple years ago, and The Talent Task Force has really done a great job. We've been hiring 5,000 people a year for the past couple of years. We only have 1400 open requisitions right now that are not required immediately, so we've got time for those 1400, but that's where we stand, and so luckily, we got a jump on that.
Speaker Change: As our backlog start to grow you know we started booking those 20 billion years.
Speaker Change: A couple of years ago and.
Speaker Change: The task force has really done a great job, we've been hiring 5000 people a year for the past couple of years.
Speaker Change: We only have 1400 open requisitions right now.
Speaker Change: That's not required immediately so we've got time for those fortune 100, but thats, where we stand and so Luckily got a jump on that.
David Edward Constable: We also are redeploying right now, if you look at the backlog, what is it, almost $19 billion in ATLS in.., circa 10 billion in energy solutions, and you've got.., people in energy solutions that are easily redeployable and can cross-pollinate into those big HLS, you know, HLS now has.., has Megaprojects, which in the past 500 million used to be a large project over there, so bringing over project execution skills from elsewhere in the company is really what we're focusing on to make sure we can execute, and that's going really well. So in fact, the leader of ATLS, Richard Messerall, ran the big $46 billion TCO project, and so, He understands what large projects require, and that's how we're, you know, going after all that ATLS work, but yeah, it's, you know, vendors are also taking advantage. We're seeing price increases and longer scheduled deliveries, and so we've got to be very careful on that front and make sure the estimates are realistic for our clients as well. So, thanks, Mike. Excellent.
Speaker Change: We also are redeploying right now if you look at the backlog was at night almost $19 billion in Ngls.
Operator: Excellent, David. Thank you. Again, if you would like to ask a question, please press star followed by the number one on your telephone keypad. Your next question comes from the line of Sangita Jain of KeyBank. Your line is open.
Circa $10 billion in energy solutions and.
Speaker Change: And we've got.
Speaker Change: People in energy solutions that are easily redeploy a bowl.
Speaker Change: You can cross pollinate into those big Agl's HOS now is as a mega.
Speaker Change: Good projects, which in the past used to be.
Speaker Change: 500 million needs to be a large project over there so bringing over.
Speaker Change: The project management execution skills from elsewhere in the company is really what we're focusing on to to make sure we can execute.
Speaker Change: That's going really well so in fact that the.
Speaker Change: <unk> of that.
Speaker Change: CLS Richard message at all.
Speaker Change: One the big 46 billion <unk> project and <unk>.
Understood understands what life projects required.
Speaker Change: And that's how we're.
Speaker Change: Going after all at Ats work, but.
Speaker Change: Yes.
Speaker Change: Vendors are also taking advantage, we're seeing price increases and longer scheduled deliveries and so you've got to be very careful on that front and make sure. The estimates are.
Speaker Change: A realistic for our clients as well.
Speaker Change: Thanks, Mike.
Speaker Change: Excellent David Thank you.
Speaker Change: Thanks.
Speaker Change: Again, if you would like to ask a question. Please press star followed by the number one on your telephone keypad.
Speaker Change: Next question comes from the line of Sangeeta, Jane and if Keybanc. Your line is open.
Sangeeta: Hi, This is Alex Dawn continue.
Alex Dawn: Thanks for taking our questions.
Alex Dawn: Hum.
Sangeeta: Can you talk about your success in winning bid this quarter last quarter you had mentioned.
Alex Dawn: 178% of the pursuits last year too so I'm wondering if the strong backlog this quarter is more a.
Continued higher win rate or is it just more demand and more awards.
Coming to market.
Alex Dawn: Okay.
Yes.
David Edward Constable: So, yeah, we track our win rate. But I didn't see it this quarter.
Sangita Jain: So, yeah, we...
Speaker Change: So yes.
Speaker Change: We track our win rate I didn't see it this quarter, we tend to look at it on an annual basis and like you said, we are was seven 8%.
David Edward Constable: I look at it on an annual basis, and like you said, we are, what, 78%? The hit rate lapsed in 2023. You know, I would expect that to continue. That's a pretty high number. I think historically we're in the 50 to 70 percent range. So...
Speaker Change: Hit rate loss in 2023.
Speaker Change: I would expect that to continue that's a pretty high number I think historically, we are in the 50% to 70% range.
Speaker Change: So.
David Edward Constable: I think our selectivity is, you know, our pursuit criteria, and our selectivity screens on our prospects are, you know, allowing us to have a very high wind rate. You know, we're only going after prospects that we can deliver on and we have eight teams for. So, for the most part, and as we just talked about with Mike, it's a bit of a seller's market out there in most of our markets, many of our markets, which allows us to be more selective. And, you know, when I do look at the...
I think our selectivity is.
Speaker Change: Our pursuit criteria.
Speaker Change: And our selectivity screens on on our prospects.
Speaker Change: Yes.
Speaker Change: Allowing us to have a very high win rates.
Speaker Change: We're only going after <unk>.
Speaker Change: Prospects that we can deliver on and we have Atms for.
Speaker Change: So for the most part and as we just talked about with Mike.
Speaker Change: <unk>.
Speaker Change: A bit of a seller's market out there and most of our markets many of our markets, which allows us to.
To be more selective.
Speaker Change: And.
Speaker Change: When I do look at the.
David Edward Constable: The small amount of losses that we have each quarter, the vast majority of our losses are lost on price. And we'd love to lose on price. So we want to get paid through our strategic priority, fair and balanced contract terms. That means getting paid, having a fair contract, a fair risk profile, and getting paid for the value we provide. We're going to lose. That's how we lose it.
The small amount of losses that we have each quarter.
Speaker Change: The vast majority of our losses are.
Our lost on price and we'd love to lose on price right. So.
Speaker Change: We won't get paid through our strategic priority of fair and balanced contract terms.
That means getting paid having a fair contract fair risk profile and getting paid for the value we provide so yes.
Speaker Change: If we're going to lose that's out of laser.
Speaker Change: Yeah.
Speaker Change: To deploy our.
David Edward Constable: We just, you know, we need to deploy our... are key resources on prospects where the margins are starting to grow, and so we'll continue to push on.
Speaker Change: Our key resources.
Speaker Change: On prospects, where the margins are starting to grow and so we'll continue to push on that.
Speaker Change: Thanks.
Speaker Change: Thank you.
Operator: Your next question comes from the line of Natalia Bach of Citibank. Your line is open.
Speaker Change: Your next question comes from the line of Natalia back of Citibank. Your line is open.
Natalia Bach: Hi, good morning. This is Natalia Fox on behalf of Amy Kaplowitz. You mentioned you expect the book to bill in excess of one for the year, and as well as an 80% reimbursable backlog. You're expecting a more linear ramp up as you get from 2Q to 4Q. So maybe you could talk about the cadence of bookings across the segments, and is that linear ramp up something you expect across all the segments
Natalia: Hi, Good morning. This is <unk> on behalf of any cap rate.
Natalia: You mentioned you expect the book to Bill Macpherson one.
Natalia: For the year, although there's an 80% reimbursable backlog expecting more of a linear ramp up as you get from Q2 to 14.
Natalia: Can you talk about the cadence of bookings across the segment and is that linear ramp up something you expect across all the segments.
Natalia: Okay.
Natalia Bach: The last couple of questions have been very difficult to hear. I'm not sure if you could get a little closer to the mic or help us with that question one more time. No, it's all good.
Speaker Change: Could you.
Speaker Change: Great.
Speaker Change: The last couple of calls questions have been very difficult to hear I'm not sure. If you can get a little closer to the mic or help us with that question one more time.
Joseph L. Brennan: No, it's all good. So you mentioned you expect a book to bill in excess of one for the year, and with an 80% reimbursable backlog, you're expecting a more linear ramp-up as you get from 2Q to 4Q. Maybe you could talk about the cadence of bookings across all the segments, and is that linear ramp-up something you expect for all across the segments?
Speaker Change: So you mentioned you expect a book to bill in excess of one for the year as well as within 80% Reimbursable backlog youre expecting more linear ramp up as you get from Q2 to <unk>, maybe you could talk about the cadence of bookings across all the segments and is that linear ramp up something you expect or are all across the segments.
David Edward Constable: Well, maybe I'll start, Natalia, on the earnings side. Yes, we see strength across all three of our segments in terms of kind of supporting that linear growth model across the balance of the year. And I think that's supported by not only the new awards that we put in this quarter, but the $7 billion that we booked in Q4 as well have really kind of kicked-started the trajectory for the year that gives us confidence in terms of what that margin profile is going to look like over the next three quarters. On the new award cadence, David, if you want to... Yeah, I'd agree.
Speaker Change: Well, maybe I'll start and Italian with from the earnings side, Yes, we see strength across all three of our segments in terms of.
Speaker Change: Supporting that linear growth.
Speaker Change: Model across the balance of the year.
Speaker Change: So and I think that's supported by not only the new awards that we put in this quarter, but the $7 billion that we booked in Q4 as well have really kind of kick start kick started.
Speaker Change: Kind of the trajectory for the year that gives us confidence in terms of what that margin profile is going to look for it looked like over the next three quarters on the New award cadence I don't know David If you want to yes, I would agree with you I mean I.
David Edward Constable: Yeah, I'd agree with you. I mean, I would expect that 80% reimbursable to be there or higher by the end of the year, based on what we're seeing. Right, we've just had a few, you know, of the current 30... $85 billion we're chasing in the next four quarters, I think there's just a couple of lump sum prospects in there. So the reimbursable prospects, the projects, will continue to go up in backlog.
I would expect that that 80% reimbursable <unk> would be there or higher by the end of the year based on what we're seeing right. We've just very few.
Speaker Change: The current 30.
David Edward Constable: $5 billion, we're chasing in the next four quarters I think there's just a couple of lump sum prospects in there so the 80.
David Edward Constable: The reimbursable prospects, which projects will continue to go up in backlog.
David Edward Constable: And we expect a higher margin profile to continue. Obviously, HLS, we've talked about it a lot today as far as cadence across the segments and the businesses. HLS remains very promising with significant opportunities in data centers and chips and pharma, but also in mining and metals. They're in a very good place right now. We have key chemical projects out there, and then energy transition markets across the entire portfolio continue to be very strong. So we're going to see awards coming in across urban solutions and energy solutions, supplemented by recompete awards or extension awards in mission solutions.
David Edward Constable: And we expect a higher margin profile to continue that.
David Edward Constable: Obviously as we've talked about it a lot today as far as cadence.
David Edward Constable: Across the segments in the businesses.
David Edward Constable: HOS remains very promising with significant opportunities in data centers and chips in pharma.
But also in mining and metals there in a very good place right now we have key chemical projects out there.
And.
David Edward Constable: In energy transition markets across all the.
David Edward Constable: The entire portfolio continues to be very strong. So we're going to see awards coming in across urban solutions energy solutions.
David Edward Constable: <unk> Bye Recompete awards or extension awards in mission solutions.
David Edward Constable: Okay.
David Edward Constable: Okay, that's helpful. Thank you. And then just one more question from me, if you could just give us a little more color on what you're seeing in terms of demand by region, and what do you think about geopolitical risks? Do you see the Middle East as a good source of bookings in 2020?
Speaker Change: Okay. That's helpful. Thank you and then just one more question from me if you could just give us a little more color on what youre seeing in terms of demand by region. How do you think about geopolitical risk do you see middle East is a good source of bookings in 2024 or prospects more weighted towards the Americas.
David Edward Constable: Yeah, we've been booking a lot of work internationally recently, you know, geopolitical, you know, our clients, our major clients, not the developers, but our, you know, our key clients, you know, for the most part, tend to look past short-term economic and geopolitical challenges, right? And they're operating as multinationals globally, so if they didn't, you know, we would not have $32.7 billion in backlog, right, with all the challenges out there and the uncertainty. So their topics are plans.
Speaker Change: Yes, we've been booking a lot of work internationally recently.
Speaker Change: You know geopolitical or clients are major client lots of developers but are.
Speaker Change: Our key clients.
Speaker Change: For the most part <unk>.
Speaker Change: Tend to look through short term economic and geopolitical challenges right.
Speaker Change: Which.
Speaker Change: And they are operating as multinationals globally. So if they didn't we would not have $32 7 billion in backlog.
Speaker Change: With all the challenges out there and the uncertainty so.
Speaker Change: Their capex plans.
David Edward Constable: And their capital allocation and business model returns, you know, they're able to play the long game. So we're not seeing any reduction or challenge with our clients' CapEx plans due to geopolitical risk. Certainly, they are diversifying in certain regions and countries.
Speaker Change: And their capital allocation business model returns they are able to play the long game. So we're not seeing any.
Speaker Change: The reduction or challenge with our with our clients Capex plans due to geopolitical risk certainly they are diversifying out of certain.
Joseph L. Brennan: For example, the whole China plus one de-risking scenario that we're all in the middle of right now and supporting. But yeah, our top dozen customers spend between $160,000,000,000,000 and $165,000,000,000,000 in CapEx. These are commercial customers. $160-$165 billion in 2023; their 24 CapEx is $155-$165 billion, so it is up slightly. And beyond 2024, it's $165 to $180 billion. So CapEx continues to... stay at least flat, but for the most part, it's actually increasing when you look at our primary customers, that's just the top 12 customers that we're looking at.
Speaker Change: Regions and countries for example, the whole China, plus one de risking scenario that we're all.
Speaker Change: In the middle of right now and supporting.
Speaker Change: But yeah, our top dozen customers they spend between $160 65 billion.
Speaker Change: In Capex these are our commercial customers.
Speaker Change: $260 65 billion in 2023 20.
Speaker Change: 'twenty four Capex is 155 to 165 billion so up slightly.
Speaker Change: And beyond 2024, it's $165 billion to $180 billion. So theyre Capex continues to.
To stay at least flat, but for the most part is actually increasing.
Speaker Change: When you look at our.
Speaker Change: Again, our primary that's just the top 12 customers that were looking at and then obviously you've got.
Joseph L. Brennan: And then, obviously, you've got... That doesn't include our government budget, right? Requests for the U.S. Army are, you know, about $186 billion this year for the Army. The Department of Energy is $52 billion. FEMA's probably going to spend $26 billion. And TxDOT here in Texas, where we do a lot of infrastructure work, is up as well. All those numbers are up. The check stock is up to $16 billion this year. That's how I look at it. I see that the market still continues to be very strong, and we'll continue to build on it.
Speaker Change: Hum.
Speaker Change: That doesn't include our government budget request for the U S Army is.
Speaker Change: About $186 billion. This year for the Army Department of Energy's 52 billion in <unk>.
Speaker Change: <unk> is going to probably spent 26 billion and txdot here in Texas, where we do a lot of infrastructure work.
He is up as well all of those numbers are up the tech startup to $16 billion. This year. So.
Speaker Change: Yes, that's how I look at it I see the market is still continue to be very strong in.
Speaker Change: We will continue to to grow backlog.
Natalia Bach: If I could add, I think we've seen significant traction on bookings in the United States, which is quite helpful if you've been following the story. We have not been profitable in the U.S. for a number of reasons over the past five, six years relative to some performance prior to David and I arriving, and that has put us in a lost position in the U.S., which has created some tax friction. We're starting to see a very clean pathway to getting back to profitability in the United States, which will have some other kind of tag along benefits related to our effective tax rates and our use of value-added tax sitting on our balance sheet. So, that's a long-winded way of saying, you know, we're starting to see some traction and growth in our backlog here in the U.S.
Speaker Change: If I could add I think we've seen significant traction on bookings in the United States, which is quite helpful. If you've been following the story.
Speaker Change: We have not been profitable in the U S for a number of reasons over the past five six years relative to some performance prior to David and I are arriving and that has put us in a loss position in the U S, which has created some tax friction we're starting to see.
Speaker Change: A very clean pathway to getting back to profit profitable in the United States, which will have some other.
Speaker Change: Tagalong benefits related to our effective tax rates in our use of value VA sitting on our balance sheet. So.
Speaker Change: That's a long winded way of saying, yes, we are starting to see some traction and growth in our backlog here in the United States.
Operator: Okay, very helpful. Thank you.
Speaker Change: Okay very helpful. Thank you.
Speaker Change: Thanks Italia.
Michael J. Feniger: Your next question comes from the line of Michael Feniger of Bank of America. Your line is open.
Speaker Change: Your next question comes from the line of Michael Feniger of Bank of America. Your line is open.
Michael J. Feniger: Hey everyone, thanks for taking my question and squeezing me in. Just when we think of the operating cash flow guidance, obviously this year started with a use of I think 110 million, better than what it was a year ago. Just to get to that positive, well your guide, I know there's a level of seasonality, just any guardrails you can kind of give us as we kind of prepare for Q2 and Q3. Is the bulk of that cash from operations mostly Q4? Does it kind of inflect, you know, as we go into Q2? Just try to give us some guardrails on preparing how that cadence plays out through the year.
Michael J. Feniger: Hey, everyone. Thanks for taking my question squeezing me in just when we think of the operating cash flow guidance. Obviously this year. It started to use of $110 million better than what it was a year ago just to get to that positive full year guide I know, there's a level of seasonality just any.
Michael J. Feniger: <unk> kind of give us as we kind of prepared with Q2 and Q3 is the bulk of that cash from ops is that mostly Q4 does it kind of inflect as we go into Q2, just try to give us some guardrails on preparing how that cadence plays out through the year.
Joseph L. Brennan: Yeah, I think you'll see the more significant, Mike, towards the back end of the year. There will be some lumpiness as it relates during the year in Q2 and Q3, but with the majority of that, a little bit more back-end loaded related to some of the dividends that we're looking to repatriate in the middle part of 2024. So it'll be reasonably kind of flat between Q2 and Q3, and I think you'll see an uptick as we get closer to the end of the year.
Michael J. Feniger: Yeah.
Speaker Change: Youll see the more significant ramp Mike on towards the back end of the year, there will be some lumpiness as it relates during the year in Q2, and Q3, but with the majority of that a little bit more backend loaded related to some of the dividends that we're looking to repatriate.
Speaker Change: In the middle part of 2024.
Speaker Change: It'll it'll reasonably kind of flat between Q2, and Q3 and I think youll see an uptick as we get closer to the end of the year.
Michael J. Feniger: Great. And just my follow-up on the $150 million in legacy funding, you know; I believe that hasn't changed. Just any guideposts of how that could potentially move better or worse through the year? Any catalysts that we should kind of keep our eyes out for as we kind of progress through the year? And just that $150 million, just directionally, you know? How does that kind of look as we enter 2025 and some of these projects start to wind down or come close to completion? Thank you. Yeah, let me talk about heading into 2020.
Speaker Change: Great and just my follow up on the $150 million of legacy funding I believe that Hasnt changed just any guide post of how that could potentially move better worse through the year any any catalyst that we should kind of keep our eyes out for as you kind of progressed through the year and just that 150 just directionally.
Speaker Change: How does that kind of look as we enter 2025 and some of these projects start to wind down or come close to completion.
Joseph L. Brennan: Yeah, let me talk about heading into 2025. I think we'll have de minimis amounts of funding requirements for loss projects in 2025. I think the bulk of what we're trying to achieve relative to the completion of those projects will kind of come to fruition in 2024. And as for the legacy funding of the projects, that's the starting point. And if you look at historically what we've been able to do over the last couple of years, that signpost at the beginning of the year relative to cash flow requirements on loss projects, we've been able to significantly reduce that number, and our expectation is that 150 will be driven down to as low as the common denominator here for the year. And we feel comfortable based on how we've been able to achieve that historically.
Yes, let me talk about heading into 2025, I think we will have de minimis amounts of.
Speaker Change: Funding requirements on loss projects in 2020, so I think the bulk of what we're trying to achieve relative to the completion of those projects will come to fruition in 2024 and on the legacy funding of the projects.
Speaker Change: The starting point.
Speaker Change: And if you look at historically, what we've been able to do over the last couple of years.
Speaker Change: Is that that signposted at the beginning of the year relative to.
Speaker Change: Cash flow requirements on loss projects, we've been able to significantly significantly reduce that number and our expectation is that 150 will be driven down to its lowest common denominator here for the year and we feel comfortable based on historically, how we've been able to achieve that.
Operator: That concludes our Q&A session. I will now turn the conference back over to David Constable, Chairman and CEO, for closing remarks.
Speaker Change: That concludes our Q&A session I will now turn the conference back over to David Constable, Chairman and CEO for closing remarks.
David Edward Constable: Great, thank you, operator. Many thanks to all of you for participating in our call today. You know, given our performance over the last three years and our strong position in the marketplace, we expect to continue to generate substantial value for our shareholders in the future. Appreciate your interest in Fluor and thank you again for your time today.
David Edward Constable: Great. Thank you operator, and many thanks to all of you for participating on our call today.
David Edward Constable: Given our performance over the last three years and our strong position in the marketplace. We expect to continue to generate substantial value for our shareholders in the future.
Speaker Change: Great your interest in Florida, and thank you again for your time today.
Operator: This concludes today's conference call. You may now disconnect.
Speaker Change: This concludes today's conference call you may now disconnect.
Speaker Change: [music].
Okay.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: [music].