Q1 2025 Fluor Corp Earnings Call
Okay.
Unknown Executive: Good morning and welcome to Fluor's first quarter 2025 earnings conference call. Today's call is being recorded. At this time, all participants are in a listen-only mode.
Speaker Change: Good morning, and welcome to floors first quarter 'twenty 25 earnings Conference call today's call is being recorded.
At this time all participants are in English it only mode.
Unknown Executive: A question-and-answer session will follow management's presentation. A replay of today's conference call will be available at approximately 1030 a.m. Eastern Time today, accessible at Fluor's website at Investor.Fluor.com. The web replay will be available for 30 days.
Speaker Change: A question and answer session will follow management's presentation.
Speaker Change: A replay of today's conference call will be available at approximately 10 30, a M. Eastern time today accessible at forest website at Investor Dot for Dot com.
Speaker Change: Web replay will be available for 30 days.
Unknown Executive: A telephone replay will also be available for seven days through a registration link also accessible on Fluor's website at investor.fluor.com.
Speaker Change: A telephone replay will also be available for seven days through a registration link also accessible on fluor's website at investor not for Dot com.
Jason Landkamer: At this time, for opening remarks, I would like to turn the call over to Jason Landkamer, Vice President, Investor Relations. Please go ahead. Thanks, Ian.
Speaker Change: At this time for opening remarks, I would like to turn the call over to Jason Wang camera, Vice President Investor Relations. Please go ahead.
Speaker Change: Thanks Ian.
James Breuer: Good morning and welcome to Fluor's 2025 First Quarter Earnings Call.
Speaker Change: Good morning, and welcome to <unk> 2025, first quarter earnings call, Jim Breuer Force, Chief Executive Officer, and John Regan, Chief Financial Officer are with us today for.
James Breuer: Jim Breuer, Fluor's Chief Executive Officer, and John Regan, 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: Or 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.
Unknown Executive: Before getting started, I'd like to refer to our Safe Harbor note regarding forward-looking statements, which is summarized on slide 2. During today's presentation, we'll be making four looking statements which reflect our current analysis of existing trends and information. There is an inherent risk that actual results and experience could differ materially. You can find a discussion of our risk factors, which could potentially contribute to such differences, in our 2024 Form 10-K and our 10-Q, which was filed earlier today.
Speaker Change: Before getting started I'd like to refer to our safe Harbor note regarding forward looking statements, which is summarized on slide two.
Speaker Change: During today's presentation, we'll be making forward looking statements, which reflect our current analysis of existing trends and information.
Speaker Change: There is an inherent risk that actual results and experience could differ materially.
Speaker Change: You can find a discussion of our risk factors, which could potentially contribute to such differences in our 2024 Form 10-K, and our 10-Q, which was filed earlier today.
Unknown Executive: 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.gov.
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 <unk> Dot, Florida Dot com.
James Breuer: With that, I'll now turn the call over to Jim Breuer, Fluor's Chief Executive Officer. Thank you, Jason. Good morning, everyone, and thank you for joining us today.
Speaker Change: With that I'll now turn the call over to Jim Breuer, Florida, Chief Executive Officer, Jim.
Jim Breuer: Thank you Jason Good morning, everyone and thank you for joining us today.
James Breuer: Please turn to slide three. We'd like to start by thanking everyone who joined us last month in Indianapolis and on the webcast for our strategy update as we roll out the next chapter of our strategy for the period 2025 to 2028. As a quick recap, this slide provides a high-level look at how the strategy is going to evolve from Chapter 1, Fix and Build, to Chapter 2, Grow and Expand. Under reinforced financial discipline, our focus will shift from revitalizing the capital structure which we've accomplished to generating cash and earnings. As we discussed a few weeks ago, we will continue to pursue fair and balanced contract terms, maintaining our robust pursuant and risk principles while focusing on commercial acumen across all levels of the company.
Speaker Change: Please turn to slide three.
Speaker Change: I would like to start by thanking everyone, who joined US last month in Indianapolis and on the webcast for our strategy update as we roll out the next chapter of our strategy for the period, 2025% to 2028.
Speaker Change: As a quick recap.
Speaker Change: This slide provides a high level look at how the strategy is going to evolve from chapter one fix and build the chapter to grow and execute.
Speaker Change: Under reinforced financial discipline, our focus will shift from revitalizing the capital structure, which we've accomplished to generating cash and earnings.
Speaker Change: As we discussed a few weeks ago, we will continue to pursue fair and balanced contract terms, maintaining our robust pursue it and risk principles, while focusing on commercial acumen across all levels of the company.
James Breuer: As we grow across the portfolio, we will focus on target markets in our three segments. and consider bolt-on acquisitions that add specific technical capabilities in certain areas.
Speaker Change: As we grow across the portfolio, we will focus on target markets and our three segments and consider bolt on acquisitions that that specific technical capabilities in certain areas.
James Breuer: And finally, at Fluor, our high-performance culture is centered around project delivery. This is how we create value for our stakeholders. Strong and healthy client relationships are a critical element to building trust and delivering results. We will continue to develop and promote these areas of excellence to ensure we remain at the forefront of our institution.
Speaker Change: And finally.
Speaker Change: At floor, our high performance culture is centered around project delivery.
Speaker Change: This is how we create value for our stakeholders straw.
Speaker Change: Strong and healthy client relationships are a critical element to building trust and delivering results.
Speaker Change: We will continue to develop and promote these areas of excellence to ensure we remain at the forefront of our industry.
James Breuer: Now, let's start our operating review, beginning on slide four. Revenue for the first quarter was $4 billion. Consolidated new awards for the quarter were strong at $5.8 billion.
Speaker Change: Now, let's start to our operating review beginning on slide four.
Speaker Change: Revenue for the first quarter was $4 billion.
Speaker Change: Consolidated New awards for the quarter were strong at $5 8 billion.
James Breuer: led by two significant awards in Urban Solutions. Our book-to-burn ratio for the quarter was 1.5. New awards were 87% reimbursable, and our total backlog is now $28.7 billion, of which 79% is reimbursable. Our backlog reflects significant awards in life sciences and infrastructure.
Speaker Change: Led by two significant awards and urban solutions.
Speaker Change: Our book to burn ratio for the quarter was one five.
Speaker Change: New awards were 87% Reimbursable and our total backlog is now $28 7 billion of which 79% is reimbursable.
Speaker Change: Our backlog reflects significant awards in life Sciences and infrastructure.
James Breuer: offset by a reduction in scope on two large projects.
Speaker Change: Offset by a reduction in scope on two large projects.
James Breuer: Moving to our business segment, please turn to slide six. Urban Solutions, our largest and most diverse business, reported profit of $70 million in the first quarter. Results in this segment reflect the significant ramp-up of execution activities with a new award secured over the past 18 months. including several life sciences and metals projects. New awards for the quarter were 5.3 billion dollars. compared to $4.9 billion a year ago.
Speaker Change: Moving to our business segments, Please turn to slide six.
Speaker Change: Urban solutions, our largest and most diverse business reported profit of $70 million in the first quarter.
Speaker Change: Results in this segment reflect the significant ramp up of execution activities, where the new awards secured over the past 18 months include.
Speaker Change: Including several life sciences and metals projects.
Speaker Change: New awards for the quarter were $5 $3 billion.
Speaker Change: <unk> to $4 9 billion a year ago.
James Breuer: Ending backlog, now at $20.2 billion, represents 70% of Fluor's total backlog.
Speaker Change: Ending backlog now at $22 billion represents 70% of Fluor's total backlog.
James Breuer: Now please turn to slide 7. ATLF had another very strong quarter and continues to build our execution capabilities to meet client demand. Last month, we were pleased to announce a new award from one of the world's leading pharmaceutical makers to provide EPCM services for the next phase of their multi-billion dollar investment. This combined program is a world-class endeavor. underpinned by the close collaboration between Fluor, our customer, and our execution partner. is also a great example of Fluor's continued commitment to the life sciences market. In fact, over the past 50 years, we've worked on 1,500 life sciences projects for clients in 30 countries.
Speaker Change: Now please turn to slide seven.
Speaker Change: <unk> had another very strong quarter and continues to build our execution capabilities to meet client demand.
Speaker Change: Last month, we were pleased to announce a new award from one of the world's leading pharmaceutical makers to provide <unk> services for the next phase of their multibillion dollar investment.
Speaker Change: This combined program is a world class endeavor.
Speaker Change: Underpinned by the close collaboration between floor, our customer and our execution partners.
Speaker Change: It is also a great example of Fluor's continued commitment to the life Sciences market.
Speaker Change: In fact over the past 50 years, we've worked on 1500 life Sciences projects for clients in 30 countries.
James Breuer: This business line is also making significant advances on existing projects. For example, at a biotech project in Denmark earlier this month, we successfully doubled bioreactor capacity. When fully operational, this will be the largest biologic facility of its kind.
Speaker Change: This business line is also making significant advances on existing projects for.
Speaker Change: For example, at our biotech project in Denmark earlier. This month, we successfully doubled bioreactor capacity.
Speaker Change: When fully operational this will be the largest biologic facility of its kind.
James Breuer: We're excited about the opportunities that lie ahead for ATLS. Over the next few quarters, we see opportunities in pharmaceuticals and advanced manufacturing. In the semiconductor space, we're tracking a clean room opportunity with an existing client. Finally, we continue to advance the design for a data center in the U.S. under the master services agreement we signed last year with a major technology provider.
Speaker Change: We're excited about the opportunities that lie ahead for <unk>.
Speaker Change: Over the next few quarters, we see opportunities in pharmaceuticals, and advanced manufacturing.
Speaker Change: In the semiconductor space, we're tracking the clean room opportunity with an existing client.
Speaker Change: Finally, we continue to advance the design for a data center in the U S. Under the Master services agreement, we signed last year with a major technology provider.
James Breuer: In Mining and Metals, we received a Services Award for the Rakodik Copper Gold Project in Pakistan. This award is a precursor to future EP and CM support services on this project.
Speaker Change: In mining and metals, we received a services award for the record <expletive> Copper Gold project in Pakistan.
Speaker Change: This award is a precursor to future EP and <unk> support services on this project and it further cements our reputation as a world leader in large scale copper concentrator.
James Breuer: and it further cements our reputation as a world leader in large-scale copper concepts.
James Breuer: Looking ahead, we see interest in green steel production. multiple opportunities with an existing aluminum client. and increasing focus on projects to grow copper production in North and South America.
Speaker Change: Looking ahead, we see interest in Green steel production.
Speaker Change: <unk> opportunities within existing aluminum client.
Speaker Change: An increasing focus on projects that ink to grow copper production in north and South America.
James Breuer: Moving to slide eight. In infrastructure, new awards include $682 million for a construction contract for TxDOT in the college station area. The project involves widening a 12-mile stretch of highway from two lanes to three in each direction. This is a key commuter and commercial route for the state. Construction is set to begin this summer.
Speaker Change: Moving to slide eight.
Speaker Change: Right.
And infrastructure New awards include $682 million for a construction contract for Txdot in the college station area.
Speaker Change: The project involves widening at 12 mile stretch of highway from two lanes to three in each direction.
Speaker Change: This is a key commuter and commercial route for the state.
Speaker Change: The structure is set to begin this summer.
James Breuer: The Gordie Howe Project is now 96%. And we're on track to hand over the U.S. Port of Entry in July. getting us closer to our completion date this fall.
Speaker Change: The Gordie Howe project is now 96% complete and we're on track to handover the U S port of entry in July.
Speaker Change: Getting us closer to our completion dates this fall.
James Breuer: Moving to energy solutions, please turn to slide 9. Segment profit was $47 million, compared to $68 million a year ago. Results reflect projects nearing completion in a reserve related to a long-completed project at our joint venture in Mexico. This was partially offset by increased profit recognition on the chemicals project due to a client-directed change in scope and its impact on profit take. New awards for the quarter totaled $315 million. and included additional pre-feed services for the Aramco petrochemical facility in Saudi Arabia.
Speaker Change: Moving to energy solutions, please turn to slide nine.
Speaker Change: Segment profit was $47 million compared to $68 million a year ago.
Speaker Change: <unk> reflect projects nearing completion and a reserve related to a long completed project at our joint venture in Mexico.
Speaker Change: This was partially offset by increased profit recognition on the chemicals project due to a client directed changing scope and its impact on profit take up.
Speaker Change: New awards for the quarter totaled $315 million and included additional pre feed services for the Aramco petrochemical facility in Saudi Arabia.
James Breuer: In April, we learned of Dow's decision to slow down construction site activities on their Path to Zero project. due to market and financial considerations. Dow has instructed Fluor to complete home office engineering and procurement efforts to enhance construction readiness in advance of equipment deliveries expected in the coming quarter. Dow has stated that they remain committed to completing the project.
Speaker Change: In April we learned of Dow's decision to slow down construction site activities on their path to zero project due to market and financial considerations.
Speaker Change: Dow has instructed fluor to complete home office engineering and procurement efforts to enhance construction readiness in advance of equipment deliveries expected in the coming quarters.
Speaker Change: Dow has stated that they remain committed to completing the project.
James Breuer: On LNG Canada, field progress is advancing to the final stage. 782 out of 837 systems having achieved mechanical completion. In recent weeks, the project received an LNG commissioning cargo to facilitate equipment testing and cool down of the facility. This marks another important completion milestone. I'm increasingly confident in the progress made by our team as we enter the final stretch of this project. Our next significant milestone will be the achievement of Ready for Startup on Train 1. which will enable the client to start producing LNG.
Speaker Change: On LNG, Canada field progress is advancing to the final stages with.
Speaker Change: With 782 out of 837 systems, having achieved mechanical completion.
Speaker Change: In recent weeks the project received an LNG commissioning cargo to facilitate equipment testing and cool down of the facility.
Speaker Change: This marks another important completion milestone.
Speaker Change: I'm increasingly confident in the progress made by our team as we enter the final stretch of this project.
Speaker Change: Our next significant milestone will be the achievement of ready for start up on train one.
Speaker Change: Which will enable the client to start producing LNG.
James Breuer: Prospects for the next few quarters include a chemical recycling plant and a gas compression project.
Speaker Change: Prospects for the next few quarters include a chemical recycling plant and the gas compression project.
James Breuer: Moving on to slide 10. Mission Solutions reported a segment profit of $5 million for the first quarter, compared to $22 million a year ago. Results reflect a reserve of $28 million, stemming from a recent ruling on a long-standing claim related to a support services contract completed in 2019.
Speaker Change: Moving on to slide 10.
Mission solutions reported segment profit of $5 million for the first quarter compared to $22 million a year ago.
Speaker Change: Our results reflect a reserve of 28 million stemming from a recent ruling on a long standing claim related to a support services contract completed in 2019.
James Breuer: We were also informed that we lost a re-compete for the Strategic Petroleum Reserve. is a project that Fluor has managed over the past 11 years. If we're unsuccessful in our protests... We will transition to work in the second half of this. New awards of $164 million included bookings for the DOE, FEMA, and the Army. Ending backlog for the quarter was $2.4 billion.
Speaker Change: We were also informed that we lost a recompete for the strategic Petroleum Reserve a project that Fluor has managed over the past 11 years.
Speaker Change: If we're unsuccessful in our protest we would transition to work in the second half of this year.
Speaker Change: New awards were 100 of $164 million included bookings for the Doa FEMA and the army.
Speaker Change: Ending backlog for the quarter was $2 4 billion.
James Breuer: Over the next few quarters, we expect to hear about the full release of the Savannah River plutonium pit facility, as well as several strategic opportunities in the national security Before I turn over the call to John.
Speaker Change: Over the next few quarters, we expect to hear about the full release of the Savannah River plutonium pit facility as.
Speaker Change: As well as several strategic opportunities in the National security space.
Speaker Change: Before I turn over the call to John <unk>.
James Breuer: I wanted to share a few observations from my interactions with clients over the past few weeks. in the context of the current economic Our clients are always looking for the best way to deploy their capital on projects. Decisions include where to build, the size of facilities, the best supply chain solution, and the timing of projects. Fluors grow and execute strategy and supply chain acumen. position as well to support these efforts, whether domestic or international. We're seeing clients forge ahead with their projects where there is a clear time to market drive. They're not slowing down. However, there are some clients that are more sensitive to cost and GDP growth, and they require further market clarity and cost certainty before committing to final investment decisions.
Speaker Change: I wanted to share a few observations from my interactions with clients over the past few weeks in the context of the current economic sentiment.
Speaker Change: Our clients are always looking for the best way to deploy their capital on projects.
Speaker Change: Decisions include where to build the size of facilities, the best supply chain solution and the timing of projects.
Speaker Change: Fluor's grow and execute strategy and supply chain acumen.
Speaker Change: Positioning us well to support these efforts whether domestic or international.
We're seeing clients forge ahead with their projects, where there is a clear time to market driver.
Speaker Change: They're not slowing down.
Speaker Change: However, there are some clients that are more sensitive to cost and GDP growth and they require further market clarity and cost certainty before committing to final investment decisions.
James Breuer: Nonetheless, these clients continue to issue work releases to advance the underlying engineering and design until full project awards are signed.
Speaker Change: Nonetheless, these clients continue to issue work releases to advance the underlying engineering and design until fold project Awards our side.
James Breuer: Looking at our remaining new awards outlook for this year. We are already engaged and providing services on over 90% of underlying award revenue.
Speaker Change: Looking at our remaining New awards outlook for this year.
Speaker Change: We are already engaged and providing services on over 90% of underlying award revenue.
John Regan: Let me now turn the call over to John for the financial update. Thanks, Jim. And good morning, everyone. Today I'll review the results for the first quarter and go over guidance for the balance of the year.
Speaker Change: Let me now turn the call over to John for the financial update John.
John Regan: Thanks, Jim.
John Regan: And good morning, everyone.
John Regan: Today I'll review the results for the first quarter.
John Regan: And go over guidance for the balance of the year.
John Regan: Please turn to slide 12. Jim already referenced revenue and new awards for the quarter, but our consolidated segment profit for Q1 was $131 million. Our GAAP results notably reflect four items. First, A $15 million reduction in urban solutions margin due to Forex between the U.S. and Canada on the Gordie Howe project. Second, the Mission Solutions item from 2019 that Jim talked about, which amounted to $28 million. This matter still requires another hearing to determine an award amount, so results reflect our current best estimates. Third, the $22 million reserve that Jim also mentioned, related to a long-completed project at our joint venture in Mexico.
John Regan: Please turn to slide 12.
Jim Breuer: Jim already referenced revenue of New awards for the quarter.
Jim Breuer: But our consolidated segment profit for Q1 was $131 million.
Our GAAP results, notably reflect four items.
Jim Breuer: A $15 million reduction in urban solutions margin due to forex between the U S and Canada on the Gordie Howe project.
Speaker Change: Second the mission solutions item from 2019 that Jim talked about which amounted to $28 million.
Speaker Change: This matter is still requires another hearing to determine an award amount. So results reflect our current best estimate.
Speaker Change: Third the 22 million reserve that Jim also mentioned related to our long completed project at our joint venture in Mexico.
John Regan: And fourth, $14 million for other negative income impacts of FX, including the embedded derivative in Mexico.
Speaker Change: And fourth.
Speaker Change: $14 million for other negative income impacts of FX, including the embedded derivative in Mexico.
John Regan: Adjusted EBITDA for Q1 was $155 million, compared to $88 million a year ago. Our adjusted EPS was $0.73, compared to $0.47 and $0.22. Adjusted results for 25 exclude those four items I mentioned, except for Gordie Howe.
Speaker Change: Adjusted EBITDA for Q1 was $155 million compared to 88 million a year ago.
Speaker Change: Our adjusted EPS was <unk> 73.
Speaker Change: Compared to <unk> 47 and 24.
Speaker Change: Adjusted results for 25 excellent those four items I mentioned, except for Gordie Howe.
John Regan: Now all of that is detailed in the tables to our earnings release issued earlier today. G&A for the quarter was $36 million, down from $59 million a year ago. This reduction was primarily driven by compensation that is stock price. Net interest income in Q1 was $17 million compared to $35 million in Q4 and $39 million a year ago. This results from lower cash balances for projects nearing completion as the advance payments we had collected were used to fund our obligations to subcontractors.
Speaker Change: Now all of that is detailed in the tables to our earnings release issued earlier today.
Speaker Change: G&A for the quarter was $36 million down from $59 million a year ago.
This reduction was primarily driven by compensation that is stock price sensitive.
Speaker Change: Net interest income in Q1 was $17 million compared to $35 million in Q4 and $39 million a year ago.
Speaker Change: This results from lower cash balances for projects nearing completion as the advanced payments. We had collected were used to fund our obligations subcontractors.
John Regan: is especially relevant for a couple of our JV.
Speaker Change: This is especially relevant for a couple of our JV.
John Regan: Moving to slide 13, we had $2.5 billion of cash in marketable securities on March 31st. A decrease of just over $400 million from year-end, which is mostly attributable to our share repurchase program. increased working capital on a couple of our larger projects. and the typical cash flows for the first quarter, including incentive payments for the prior year. Operating cash flow for the quarter was an outflow of $286 million compared to an outflow of $111 million a year ago. This results from the working capital growth on the projects that I mentioned, though some of that has normalized in April, the incentive payments, and separately, timing of AR collections and missions.
Speaker Change: Moving to slide 13, we had $2 5 billion of cash and marketable securities at March 31.
Speaker Change: A decrease of just over 400 million from year end, which is mostly attributable to our share repurchase program.
Speaker Change: Increased working capital on a couple of our larger projects.
Speaker Change: And the typical cash flows for the first quarter, including incentive payments from the prior year.
Speaker Change: Operating cash flow for the quarter was an outflow of $286 million compared to an outflow of $111 million a year ago.
Speaker Change: This results from the working capital growth on the projects that I mentioned some of that has normalized in April the.
Speaker Change: The incentive payments and separately timing of AR collections and emission solutions.
John Regan: Also, 2024 cash flow included a $40 million positive effect from NuScale, which was still consolidated at that time. For our legacy info projects, in Q1, we provided $70 million in funding. As a reminder, due to our JV ownership structure, most of this is reflected as an investing activity and not in operating cash flow. Our expectation of funding about $200 million on legacy projects for all of 2025 remains unchanged. During the quarter, we recognized an $84 million positive benefit related to the settlement of a jury verdict that had been rendered against an infra-JV in Q4. As a reminder, this project was completed over 12 years ago.
Speaker Change: Also 2020 for cash flow included a $40 million positive effect from new scale, which was still consolidated at that time.
Speaker Change: For our legacy infra projects in Q1, we provided $70 million in funding.
Speaker Change: As a reminder, due to our JV ownership structure. Most of this is reflected as an investing activity and not in operating cash flow.
Speaker Change: Our expectation of funding about $200 million on legacy projects for all of 2025 remains unchanged.
Speaker Change: During the quarter, we recognized an $84 million positive benefit related to the settlement of a jury verdict that had been rendered against an infant JV in Q4.
Speaker Change: As a reminder, this project was completed over 12 years ago.
John Regan: With this settlement, we consider our remaining P&L exposure to be closed. As you may recall, this item is reflected in equity method results in our P&L. Separately, equity method also reflects the mark-to-market of our investment in NuScale, which was a $477 million negative in Q1, as their stock price slipped from approximately $18 to just over $14. though they have recovered to around $17 through yesterday.
Speaker Change: With this settlement, we consider our remaining P&L exposure to be close.
Speaker Change: As you May recall this item is reflected in equity method results in our P&L.
Speaker Change: Separately.
Speaker Change: Equity method also reflects the mark to market of our investment in new scale, which was a $477 million negative in Q1 as their stock price slipped from approximately $18 to just over $14.
Speaker Change: They have recovered to around $17 through yesterday.
John Regan: Finally, as a point of reference, our adjusted results exclude both of the equity methods I mentioned. Switching to capital returns, our organic cash flow generation continues to underpin our objectives in this area. In line with our previously announced share repurchase program, we seized upon the dip in our share price by repurchasing 3.6 million shares during Q1, spending $142 million. We now anticipate up to $600 million in repurchases for all of 2025, including approximately $150 million in Q2. will continue to leverage our robust financial foundation to pursue the most advantageous capital allocation opportunities for our shareholders.
Speaker Change: Finally, as a point of reference our adjusted results exclude both on the equity method items.
Speaker Change: Switching to capital returns.
Speaker Change: Our organic cash flow generation continues to underpin our objectives in this area.
Speaker Change: In line with our previously announced share repurchase program, we seized upon the dip in our share price by repurchasing $3 6 million shares during Q1 spending $142 million.
Speaker Change: We now anticipate up to $600 million in repurchases for all of 2025, including approximately $150 million in Q2.
Speaker Change: We will continue to leverage our robust financial foundation.
Speaker Change: Pursue the most advantageous capital allocation opportunities for our shareholders whether that is through reinvestment in the business.
John Regan: Whether that is through reinvestment in the business or purchasing shares. Executing bolt-on acquisition. or other forms of capital return.
Speaker Change: Purchasing shares.
Speaker Change: Executing bolt on acquisitions.
Speaker Change: Or other forms of capital return.
John Regan: Moving to guidance on slide 14. We are holding to our 2025 adjusted EBITDA guidance of $575 to $675 million. and our adjusted EPS guidance of two and a quarter to 275.
Speaker Change: Moving to guidance on slide 14.
Speaker Change: We are holding to our 2025, adjusted EBITDA guidance of $575 million to $675 million.
Speaker Change: And our adjusted EPS guidance of two in a quarter to $2 75.
John Regan: However, EPS may be impacted by the ultimate tempo of our share repurchase. Our expectations for operating cash flow remain between $450 and $500 million. Key assumptions for 2025 continue to include a new awards book-to-burn ratio above one Revenue growth of approximately 15%. as well as the other guidance listed on the slide.
Speaker Change: However, EPS may be impacted by the ultimate tempo of our share repurchase activity.
Speaker Change: Our expectations for operating cash flow remained between $450 million and $500 million.
Speaker Change: Key assumptions for 'twenty five continue to include a new awards book to burn ratio above one.
Speaker Change: Revenue growth of approximately 15%.
Speaker Change: As well as the other guidance listed on the slide.
John Regan: We also maintain our Cal 25 segment margins of approximately 4% to 5% in urban, approximately 3.5% to 4.5% in energy, and approximately 5% to 6% in mission. As a final modeling note, through our lens, the effective tax rate in Q1 was approximately 20%. This is illustrated on page 20 of the 10-Q. Over the course of 2025, we expect this rate to climb closer to 30% for the full year based on where we execute the projects in our backlog.
Speaker Change: We also maintain our Cal 'twenty five segment margins of approximately 4% to 5% and urban.
Speaker Change: Approximately three five to four 5% in energy and approximately five 6% and mission.
Speaker Change: As a final modeling note.
Speaker Change: Through our lens the effective tax rate in Q1 was approximately 20%.
Speaker Change: As illustrated on page 20 of the 10-Q.
Speaker Change: Over the course of 2025, we expect this rate decline closer to 30% for the full year based on where we execute the projects in our backlog.
Unknown Executive: And with that, Ian, we're ready for our first question. Thank you.
Ian: And with that Ian we're ready for our first question.
Michael Dudas: As a reminder, to ask a question, please press star followed by the number one on your telephone keypad to enter the question queue. Our first question comes from the line of Michael Dudas with Vertical Research Partners. Your line is open.
Speaker Change: Thank you as a reminder to ask a question. Please press star followed by the number one on your telephone keypad to enter the question queue.
Speaker Change: Our first question comes from the line of Michael Dudas with vertical Research partners. Your line is open.
Michael Dudas: Good morning, gentlemen. Good morning.
Michael Dudas: Good morning, gentlemen.
Speaker Change: Good morning, Greg Good morning.
Michael Dudas: Jim, maybe to further elaborate on your prepared remarks on your discussion with clients. So relative to maybe the fourth quarter conference call, our meeting in Indiana in April and today, the change of sentiment tender amongst the clients, maybe you can, which clients are more sensitive relative to ones that are more time to market? I assume it's much of the urban solutions area, but maybe a little bit more sense on that. And your comment about your new business award opportunities and you're working for that, that 90 percent, how that would reflect relative to maybe other periods of time in Florist's history.
Michael Dudas: Jim.
Speaker Change: To further elaborate on your prepared remarks on your discussion with clients so relative to maybe the fourth quarter conference call our meeting in Indiana in April and today.
Michael Dudas: The change of sentiment tender amongst the clients, maybe you can let which clients are more sensitive relative to ones that are more time to market I assume it's the.
Michael Dudas: Much of the urban solutions area, but maybe a little bit more sense on that and your comment about.
Michael Dudas: Your new business award opportunities and you're working for that that 90% power that would reflect relative to maybe other periods of time.
Michael Dudas: In Fluor's history. Thanks.
James Breuer: Thanks.
James Breuer: Thank you, Michael. Yeah. We have been engaging with our clients at various levels, including the very senior levels of our key clients. I would say that most of the projects in the markets we're tracking, the fundamentals of those projects are still there, whether it's the time to market projects, and you're correct, they're mostly in the urban space, particularly in the ATLS space. Those for sure are moving forward, but even the other ones that are more price sensitive and GDP growth and market certainty, those still have very sound fundamentals behind them. What those clients are looking for is certainty in the environment.
Michael Dudas: Thank you Michael.
Michael Dudas: Yes.
Speaker Change: We have been engaging with our clients at various levels, including the very senior levels of our key clients and.
Speaker Change: I would say that most of the projects in the markets. We're tracking tracking the fundamentals of those projects are still there whether it's the time to market projects and you are correct. They are mostly in the urban space, particularly in the ATM Pos base.
Speaker Change:
Speaker Change: Those for sure are moving forward, but even the other ones that are more price sensitive than GDP growth in market certainty those still have very sound fundamentals behind than what those clients are looking for it's certainty in the environment.
James Breuer: I think you, I mean, it's no surprise that the entire business community is watching very carefully what's happened with the trade negotiations, and we're hopeful that there's going to be some good news on certain fronts in the coming days and weeks so that we can start seeing some clarity in the broader picture. But projects in energy, projects in copper, I would say, are requiring a little bit more certainty, whereas projects in the ATLS arena and projects in the mission solution space, I would say, have greater clarity today and are proceeding as planned. As far as our pipeline of prospects for the near term, the 90% Comment on the underlying awards, Mike.
Speaker Change: Thank you I mean, that's it's no surprise that the entire business community is watching very carefully what's happened with the trade negotiations when we're hopeful that there's going to be some some good news on certain fronts in the coming days and weeks. So that we can start seeing some clarity in the broader picture.
Speaker Change: But.
Speaker Change: Projects and energy projects in copper I would say are requiring a little bit more certainty, whereas projects in the <unk> Arena in project and the mission solutions space I would say have <unk> greater clarity today and are proceeding as planned.
Speaker Change: As far as our pipeline of prospects for the near term that 90%.
Speaker Change: Comment on the underlying awards Mike.
James Breuer: It's similar to previous cycles in Fluor, maybe it's perhaps a little bit higher. We have spent a lot of effort in the last few quarters and a couple of years in the strategy to really focus on quality pursuits. and that on feeds that we think have a high conversion to EPC and EPC. So we feel good about that 90 percent. Some of that already materializing Q1. and we expect that trend to continue in the coming quarter. Maybe on the clients that are a little more price sensitive, I'm not sure our procurement group has ever been busier in terms of price refreshing on the projects.
Speaker Change: It's similar to previous.
Speaker Change: Cycles in Fluor I would maybe it's perhaps a little bit higher we have spent a lot of effort in the last few quarters and a couple of years and the strategy.
Speaker Change: To really focus on quality pursuits.
Speaker Change: And that feeds that we think have a high conversion to <unk>. So.
Speaker Change: So we feel good about that 90% some of that already materialized in Q1.
Speaker Change: And we expect that trend to continue in the coming quarters.
Speaker Change: Maybe on the that the clients that are a little more price sensitive.
Speaker Change: Im not sure our procurement groups ever been busier in terms of price refreshing on the projects. So we are we are there alongside our customers as they are trying to put a finer point on project estimates and.
James Breuer: So we are there alongside our customers as they're trying to put a finer point on project estimates and moving towards their FID.
Speaker Change: Moving towards these <unk>.
Michael Dudas: Excellent. Thanks, gentlemen.
Speaker Change: Excellent thanks, gentlemen.
Speaker Change: Thanks, Mike Thanks, Mike.
Jamie Cook: Our next question comes from the line of Jamie Cook with Truist Securities. Your line is open. Hi, good morning, and thank you for the additional disclosure on the earnings call and in the press release. It was helpful. I guess my first question, I can't believe I'm asking this, but if I look at your EBITDA for the first quarter, it was 155. If we just multiply that by 4, you're at the high end of your EBITDA guidance for the year, and I guess, how much conservative would you say there's in your numbers? I mean, I'm just looking at your revenue, growth has to accelerate in the remaining three quarters for you to make your 15% top line guide, you know what I mean?
Speaker Change: Our next question comes from the line of Jamie Cook with Truest Securities. Your line is opened.
Jamie Cook: Hi, good morning.
Jamie Cook: Thank you for the additional disclosure on the earnings call and in the press release. It was helpful. I guess my first question I can't believe I'm asking this but if I look at your EBITDA for the first quarter. It was $1 55, if we just multiply that by four here.
Jamie Cook: The high end.
Speaker Change: You mean, your EBITDA guidance for the year.
Speaker Change: And I guess, how much conservative would you say there is in your numbers I mean Im just looking at your revenue has two eight growth have to accelerate in the remaining three quarters for you to make your 15% topline.
Speaker Change: I mean, so it implies your EBITDA should be growing from the first quarter level. So I guess I'll start that with my with my first question. Thanks.
Jamie Cook: So it implies your EBITDA should be growing from the first quarter level. So I guess I'll start that with my first question. Thanks.
John Regan: Good morning, Jamie. Yeah, we got some sage counsel on how to improve our earnings relief. So thank you. Thank you for that. So I think as you're thinking about the shape of the EBITDA curve, you know, the one thing that we couldn't have predicted was the behavior of our stock price. And so, as I mentioned in the prepared remarks, we had a significant tailwind, unfortunately for us, in terms of the executive compensation results associated with our share price. And so you should think about roughly, you know, eight or nine cents of adjusted earnings or EPS attributable to that.
Jamie Cook: Good morning, Jamie, Yes, we got some sage counsel on how to improve our earnings release. So thank you and thank you for that.
Jamie Cook: So I think as Youre thinking about the shape of the EBITDA curve you know the one thing that we couldn't have predicted.
Jamie Cook: Was the behavior of our stock price and so as I mentioned in the prepared remarks, we had a significant tailwind.
Jamie Cook: Unfortunately for us.
Jamie Cook: In terms of the executive compensation results associated with our share price and so you should think about roughly eight or nine.
Jamie Cook: Adjusted earnings or EPS.
Jamie Cook: Attributable to that so that kind of distorts the shape of the curve.
John Regan: So that kind of distorts the shape of the curve. And so I don't know that it's conservatism. I think we remain confident in the outlook for the year. And I would say when you probably normalize for the share price impact, puts us a little more squarely in the midpoint.
Jamie Cook: And so I.
Jamie Cook: I don't know that its conservatism I think we remain confident and in the outlook for the year and I would say when you probably normalized for the share price impact.
Jamie Cook: Just a little more squarely in the mid point of that.
John Regan: Okay, and I guess just my second question, you know, on the We started out sort of in the hole on cash flow for the first quarter, but you increased your, you doubled your share of purchase authorization, maintained your cash flow guide. I'm just wondering if there's opportunities on upside on the cash flow guide, whether it's coming from, you know, funding less of those legacy projects, if you could just characterize those. Yeah. Yeah, I'll tackle that, Jamie. I think you've cracked up a little bit on our end. But in terms of where the cash flow guide is, Q1 performance, and ultimately the impact on share repurchases, again, we're signaling some confidence in where cash flow generation is.
Speaker Change: Okay, and I guess, just my second question.
Jamie Cook: On the.
Jamie Cook: Started out sort of in the hall on cash flow for the first quarter, but you increased your you download a new share repurchase authorization maintained here.
Jamie Cook: Cash flow guide I'm, just wondering if theres opportunities.
Jamie Cook: On the cash flow guide, whether it's coming from.
Jamie Cook: Finding lots of this legacy projects, if you could just characterize.
Jamie Cook: Yes.
Jamie Cook: Yes.
Speaker Change: I'll tackle that Jamie I think you've cracked up a little bit on our end, but in terms of where the cash flow guide is Q1 performance.
Speaker Change: And ultimately the impact on share.
Speaker Change: Share repurchases.
Speaker Change: Again.
Speaker Change: We're signaling some some confidence in where cash flow generation is as I suggested in the prepared remarks.
John Regan: As I suggested in the prepared remarks, we did see a little bit of an uptick in April in terms of working capital conversion to cash. Underpinning kind of the uplift from the 300 to the $600 million of share repo, you should consider, you know, our confidence in the outlook as as part and parcel to that. Yeah, I don't know if I missed anything else. We lost you for a few seconds, Jamie, so I'm not sure we caught the whole question.
Speaker Change: Did see a little bit of an uptick in April in terms of.
Speaker Change: Working capital conversion too to cash and so.
Speaker Change: Underpinning kind of the uplift from the $300 million to $600 million of share repo you should consider.
Speaker Change: Our confidence in the outlook as as part and parcel to that.
Speaker Change: Okay.
Speaker Change: Yes, I don't know if I missed it.
Speaker Change: Lost you for a few seconds, Jamie So I'm not sure we've got the whole question.
Jamie Cook: Yes, thank you, and nice quarter. Thank you, Jamie.
Speaker Change: Yes, thank you and nice quarter.
Speaker Change: Thank you Jamie.
Andy Kaplowitz: Our next question comes from the line of Andy Kaplowitz with Citigroup. Your line is open. Good morning, everyone. Good morning. Good morning, Andy. I just wanted to follow up on Jamie's question in one sense. I think you said you're more comfortable, you know, it's obviously a big range for EBITDA and EPS, like you're more comfortable maybe with a midpoint after a strong start.
Speaker Change: Our next question comes from the line of Andy Kaplowitz with Citigroup. Your line is opened.
Andy Kaplowitz: Hey, good morning, everyone.
Speaker Change: Good morning, good morning, Andy.
Speaker Change: I just wanted to follow up on Jamie's question in one sense I think you said you're more comfortable that's obviously, a big range for EBITDA and EBIT EPS like <unk>, you're more comfortable with the mid point after a strong start but how do we think about the second half of the year given the slow decision, making I think Jim you mentioned, the Dow project delay the Recompete loss in Michigan solution.
Andy Kaplowitz: But how do we think about the second half of the year, given the slow decision-making that you, I think, Jim, you mentioned, the Dow project delay, the recompete loss in mission solutions. Do we need to worry about, like, underutilization in the second half, or, you know, there's enough projects in terms of that book-to-bill still being overrun that you can sort of fill the gap?
Speaker Change: Do we need to worry about like Underutilization in the second half for and there's enough projects in terms of that book to Bill still being over one that you can sort of fill the gap.
James Breuer: Andy, let me start and maybe John can chime in later.
Speaker Change: Andy Let me start and then maybe John can chime in later.
James Breuer: Yeah, let me start with a Dow project first. Dow came out and very clearly explained their reasons for slowing down construction activities or not slowing down engineering and procurement, and it had to do with a combination of decisions around their market, the timing of the pricing of their products, and so on. We don't think, we're not seeing a trend of that in our other clients, Andy. Yes, people who haven't yet FID projects are looking for further clarity and certainty. But we're not seeing a trend. And because we're involved on these projects, and like John said, we're working hand in hand with our clients, with these mitigation strategies around the the tariffs and other factors.
Speaker Change: Yes, let me start with the Dow project for the dialog came out and very clearly explained the reasons for slowing down construction activities are not slowing down engineering and procurement and it had to do with the combination of decisions.
Speaker Change: Around their market the timing of the pricing other products and so on.
Speaker Change: We don't think we're not seeing that trend of that in our other clients Andy.
Andy Kaplowitz: Yes people, who are having yet.
Projects are expect looking for further clarity and certainty.
Andy Kaplowitz: But we're not seeing that trend and because we're involved on these projects and like John said, we're working hand in hand, with our clients with these mitigation strategies around the tariffs and other factors.
James Breuer: We feel pretty strongly about the quality of the backlog and our ability to convert. The exact timing of the conversion may be a little uncertain. Maybe they push out just a tad. But we're not we're not expecting significant underutilization compared to what what the baseline was a month or two ago.
Andy Kaplowitz: We feel pretty strongly about about the quality of the backlog and our ability to convert the exact timing of the conversion may it may be a little uncertainty maybe they pushed out just a tad.
Andy Kaplowitz: But we're not we're not expecting significant underutilization.
Andy Kaplowitz: Fair to what what the baseline it was say a month or two ago, John anything you'd like to add yes, I think a couple of points one just part and parcel of our execution strategy is an early buyout on the procurement front. So the things that are in backlog and ongoing tend to it's our belief that they're going to continue.
John Regan: John, anything you'd like to add? Yeah, I think a couple points. One, just part and parcel of our execution strategy is an early buyout on the procurement front. So the things that are in backlog and ongoing tend to, it's our belief that they're gonna continue moving forward. And then maybe Jim's prepared remarks was also hinting at kind of the earnings potential of the backlog. So even as things are slowing down, we are performing work on the vast majority of the things we see coming. And so from an earnings potential kind of unmitigated there, but obviously a little bit of disruption on the new award front.
Andy Kaplowitz: Moving forward.
Andy Kaplowitz: And then maybe Jim's prepared prepared remarks was also hinting at.
The earnings potential of the backlog so even as things are slowing down we are performing work on the vast majority of the things, we see coming and so from an earnings potential kind of unmitigated there.
Andy Kaplowitz: But obviously a little bit of disruption on the New award front.
James Breuer: Very helpful, guys. And then, you know, you kept guidance of still book-to-bill over one times, as you said. Jim, maybe you talked about some things that, you know, maybe need a little bit more time to get through, but confidence level on sort of end markets that can go through the fastest, or where do you get the confidence to continue to sort of tell us book-to-bill over one? Is it a couple chunky projects? Is it, you know, a couple particular end markets? Where does the confidence come from, you know, given the macro uncertainty? Andy, the the confidence comes in our close collaboration with these clients on the front end work.
Andy Kaplowitz: Very helpful guys and then <unk>.
Andy Kaplowitz: Kept guidance and still book to Bill over one times as you said, Jim maybe you talked about some things that maybe need a little bit more time to get through but confidence level on sort of end markets that can go through the fastest or where do you get the confidence to continue to sort of tell us book to bill over one.
Andy Kaplowitz: Couple chunky projects is it.
Andy Kaplowitz: A couple of particular markets, where does the confidence come from that given the macro uncertainty.
Andy Kaplowitz: Andy the confidence comes in or.
Andy Kaplowitz: The close collaboration with these clients on the front end work and you look at whether it's copper whether it's further additional pharmaceutical work, whether it's data centers.
James Breuer: And you look at whether it's copper, whether it's further additional pharmaceutical work, whether it's data centers. There's a midstream compression project in the U.S. There's a sustainable chemicals project. There's a project with a power and LNG component feeding a new power plant. These are real projects with clear economic incentives. Some of it is U.S. based, some of it is international, so our diversification is helping us. There are some large opportunities out there, I'll remind you of SRPPF, that's a significant opportunity we're tracking, and that's part of the plan. We have high confidence that there is a compelling need for our client to move forward with that project.
Andy Kaplowitz: There is a midstream compression project in the U S.
Andy Kaplowitz: There is a sustainable chemicals project.
Andy Kaplowitz: There is.
Andy Kaplowitz: <unk>.
Andy Kaplowitz: Power and LNG component feeding a new power plant.
Andy Kaplowitz: These are real projects with a clear economic incentive some of it is U S. Based some of it is international so our diversification is helping us.
Andy Kaplowitz: There are some large opportunities out there.
Andy Kaplowitz: I'll remind you of SRP PFS, that's a significant opportunity and we're tracking that as part of the plan. So.
Andy Kaplowitz: We have high confidence that there is a compelling need for our clients to move forward with that project.
James Breuer: So, despite the nervousness in the market, some of these key strategic pursuits we feel are solid enough and have a compelling enough reason that we feel good about it. The tariff story, Andy, is a developing story. It's still out there. We would like to see clarity on that in the short term, one way or another. I think the market will adjust to that, but I think that there needs to be clarity coming forward. But having said that, I think some of our key prospects, most of our key prospects have very strong footing underneath.
Andy Kaplowitz: So.
Andy Kaplowitz: Despite the nervousness in the market. Some of these key strategic pursuits, we feel are solid enough and have a compelling enough reason that we feel good about it of course.
Speaker Change: The Terra story, Andy is a developing story, it's still out there.
Andy Kaplowitz: <unk>.
Andy Kaplowitz: We would like to see clarity on that in the short term one way or another I think the market will adjust to that but I.
Andy Kaplowitz: I think that there needs to be clarity coming forward, but.
Andy Kaplowitz: Having said that I think some of our key process most of our key prospects.
Andy Kaplowitz: <unk> had very strong floating underneath them.
Andy Kaplowitz: Appreciate all the color.
Andy Kaplowitz: Appreciate all the color.
Andy Kaplowitz: Yes, Thanks, Andy.
Andy Wittmann: Our next question comes from the line of Andy Wittmann with Baird, your line is open. Great. Thanks for taking my questions. I had several here to just help understand the quarter. And the first thing I wanted to ask about was making sure that I heard something correctly related to the urban solutions segment and the $84 million benefit that you recognized during the quarter. Did I hear it correctly that that's an equity income and therefore not reported in that segment profit results? Is that right, John? You're spot on. And therefore it was added back or excluded from your adjusted results.
Speaker Change: Our next question comes from the line of Andy Wittmann with Baird. Your line is open.
Andy Wittmann: Great. Thanks for taking my questions I had.
Andy Wittmann: Several years to just help understand the quarter and the first thing I wanted to ask about was making sure that I heard something correctly related to the urban solutions segment and the.
Andy Wittmann: The $84 million benefit that you recognized.
Speaker Change: During the quarter did I hear it correctly that that's an equity income and therefore not reported in that in that segment profit results is that right John you're spot on and therefore it was it was it was X and therefore, it was added back or excluded from your adjusted results is that right at the $84 million is not in the $1 55 to be <unk> to be superior.
John Regan: Is that right? Yeah. The $84 million is not in the $155. to be. Yeah. Yeah, and it's not in the urban segment either. It's along the line.
Speaker Change: Yes, and it's not in the urban segment, either it's correct. The line. Okay. That's helpful. Okay. So then you talked about how two projects that got do you scoped.
John Regan: Okay, that's that's helpful. Okay, so then you talked about how two projects that got de-scoped were allowed you to, because you're, you're therefore farther along in your percentage of completion on these two projects, it allowed you to, I guess, accelerate some profit recognition into this quarter from the de-scoping process. You have to love E&C accounting. Could you tell us either by segment for urban and energy where those, I think, two projects resided, one in each. Could you tell us either individually per segment or in total how much benefit that POC change afforded you in the quarter?
Speaker Change: We're allowed you to because youre, therefore farther along in your percentage of completion on these two projects. It allowed you to I guess accelerate some profit recognition into this quarter from the de scoping process, you have to love E&C accounting.
Speaker Change: Could you tell us either by segment for urban and energy were those I think two projects resided one and each could you tell us either individually per segment or in total how much benefit.
Speaker Change: Yossi changed.
Speaker Change: As you in the quarter I think this will help all of us.
John Regan: I think this will help all of us get at Jamie's question that she asked about the kind of underlying EBITDA run rate. Sure. So the first thing I'd probably point out is that we were expecting the burn across both of those projects across the balance of $25,000. Maybe there was a small impact of $26,000. So the pull forward is not I mean, in as much as you may think of it as a one-time event, it was always kind of inside of our 2025 thinking. But you should think about those as around probably nine cents of EPS.
Speaker Change: Jamie's question that she asked about the kind of underlying EBIT.
Speaker Change: EBITDA run rate.
Speaker Change: Sure.
Speaker Change: So the first thing I'd, probably point out is that we were expecting the burn across both of those projects across the balance of 25, maybe there was a small impact to 2006. So the pull forward is not.
Speaker Change: I mean as much as you may think of it as a onetime event.
Speaker Change: It was always kind of inside of our 2025 thinking.
Speaker Change: But you should think about those at around probably nine of EPS in both of the segments Directionally got it so to speak.
John Regan: in both of the directionally. Got it. Just because your tax rate is always jumpy here, what would that be on an EBITDA basis? So you're probably looking at around $20 million each. Okay. We're going to eat. So for a total of 40 then. Yeah. Okay.
Speaker Change: Does your tax rate is always jumpy, Eric what would that be on an EBITDA basis.
Speaker Change: So youre, probably looking at around $20 million each.
Speaker Change: Okay.
Speaker Change: Each.
Speaker Change: For a total of $40 million.
Speaker Change: Yes, okay.
John Regan: Um, then just, just on cashflow. Andy, let me know. So as, as we're thinking about it, um, I know you look at it through a slightly different lens. So I think about the 40 is kind of the, the, the credit amount. Um, a certain portion of that would have been inside the frame for even Q1 thinking. So it's probably a little bit lower than that. But, uh, you know, we're spread out over the year. Yeah, that makes sense. We're spread out of the year. It's 40. It'd have been maybe 10 already here and 30 for the rest of the year.
Speaker Change: Okay.
Speaker Change: And then just on cash flow and let me know davita, so as we're thinking about it.
Speaker Change: I know you look at it through a slightly different lens. So I think about the 40 is kind of the credit amount.
Speaker Change: A certain portion of that would have been inside the frame for even Q1 thinking so it's probably a little bit.
Speaker Change: Lower than that but.
Speaker Change: So it's spread out over the year.
Speaker Change: That makes sense right out of the year, it's 40% would have been maybe 10 already here in <unk> for the rest of the year would be straight lining at kind of that process. Well then yes that makes sense. Okay. Thanks for that clarification I also wanted to ask about north, Texas. It looks like that project has resolution.
John Regan: It'd be straight lining it kind of. Well done. Yep. That makes sense. Okay. Thanks for that clarification.
John Regan: I also wanted to ask about North Texas. It looks like that project has resolution, and you recognized it, I guess, in fourth quarter, and then, you know, some lost that here for a net impact. But another complexity of E&C accounting here, it looks like the settlement was actually like $400 million to the joint venture, but you took a benefit here in the quarter that we're talking about here for the tune of $84 million.
Speaker Change: And you recognized it.
Speaker Change: I guess in fourth quarter and then.
Speaker Change: Some some lost side here for a net impact, but another complexity of E&C accounting here. It looks like the settlement was actually like $400 million to the joint venture, but you took.
Speaker Change: Benefit here in the quarter that we're talking about here for the tune of $84 million.
John Regan: Question is not so much on the income statement here, but I guess the question is, has the cash already been exchanged for this? Is that done as of the balance sheet that we see today? And if not, how much cash is going to be associated with this? when you when you when you finally get out of that cash position and when.
Speaker Change: It's not so much on the income statement here, but I guess the question is has the cash already been exchanged for this is that done as of the balance sheet that we see today.
Speaker Change: If not how much cash is going to be associated with this.
Speaker Change: When you when you finally get out of that cash position and win.
John Regan: Yeah, so it was very hurtful in the remarks to say we've closed out the P&L, but we will need to fund that, you know, in the balance of twenty five. And you should think about it in the 30 million dollar. Okay, that's helpful.
Speaker Change: Yes, so I was very artful in the remarks to say we've closed out the P&L.
Speaker Change: But we will need to fund that.
Speaker Change: In the balances of 25, and you should think about it in $30 million range.
Speaker Change: Okay. That's helpful. Okay. Those are all my clarifying questions.
John Regan: Okay, those are all my clarifying questions. Yep. Great. Thank you so much for helping clarify those things. Yeah, thank you. It certainly subsumed in the operating cash flow. Yep. Thanks. Great.
Speaker Change: Yes, yes, great. Thank you so much for helping clarify those things yes.
Speaker Change: Yes. Thank you it certainly subsumed in the.
Speaker Change: The operating cash flow guide.
Speaker Change: Guidance that I render.
Speaker Change: Yes, yes.
Speaker Change: Yes, Thanks, Andrew.
Judah Aronovitz: Our next question comes from the line of Judah Aronovitz with UBS. Your line is open. Hey, good morning. Thanks for taking the question. I'm for Steve Fisher.
Speaker Change: Our next question comes from the line of Judah <unk> with UBS. Your line is opened.
Judah: Hey, good morning, Thanks for taking my question on for Steve Fisher.
James Breuer: What exposure is left in Mexico on legacy projects and ongoing work that could cause any margin drag? Thank you for the question, Judah. Our joint venture in Mexico has a portfolio of projects with Pamex. Some are very close to completion, some are in the middle of execution. We feel good about those projects. They're active and they're strategic projects for the country.
Judah: What exposure is left in Mexico on legacy projects and ongoing work that could cause any margin drag.
Judah: Thank you for the question.
Judah: Our joint venture in Mexico.
Judah: <unk> has a portfolio of projects with Pemex, some are very close to completion somewhere in the middle of execution.
Judah: We feel good about those projects are there active under strategic projects for the country.
James Breuer: of the LNG project we've been talking about last year that that's proceeding well and we don't expect any additional surprises there the The announcement we made in this call around Mexico had to do with a project that was completed many many years ago. And so that was a decision we made to take that reserve. But other than that, I think we're in good shape in Mexico. Yeah, I would agree. It's probably four major ongoing projects down there, at least half of which are probably the ninth inning and maybe late middle innings on the other two.
Judah: The.
Judah: LNG project, we have been talking about last year, that's proceeding well and we don't expect any additional surprises there.
Judah: The.
Judah: The announcement, we made in this call around Mexico has to do with a project that was completed in many many years ago.
Judah: And so that was a decision we made to take that that reserve.
Judah: But other than that I think we're in good shape in Mexico, Yes, I would agree it's probably four major ongoing projects down there at least half of which are probably in the ninth inning and maybe late <unk> lendings on the MD others. So again to the exposure question.
James Breuer: So again, to the exposure question, we don't feel like there's a lot of forward-looking exposure. Okay, thanks.
Judah: We don't feel like there's a lot of.
Judah: Forward looking exposure.
Speaker Change: Okay. Thanks, and then just on cash what is the cash collection potential from JV This year.
James Breuer: And then just on cash, what is the cash collection potential from JVs this year? I would say probably a little bit lower than last year, certainly we're sort of expecting to recoup some of the profits out of Canada with a little more confidence than we are in Mexico, but again all of that subsumed in the cash flow guidance that we Okay, there are no further questions at this time.
Speaker Change:
Speaker Change: I would say, probably a little a little bit lower than last year.
Speaker Change: Certainly we're sort of expecting to recoup some of the profits out of Canada with a little more confidence than we are in Mexico. So.
Speaker Change: But again all of that subsumed in.
Speaker Change: The cash flow guidance that we published today.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: Okay. If there are no further questions at this time I'd like to hand, the call back over to Jim Brewer for some closing remarks.
James Breuer: I'd like to hand the call back over to Jim Breuer for some closing remarks. Thank you, Ian, and many thanks to all of you participating in the call today. As you can see, we had a strong first quarter and a successful launch to our grow and execute strategy.
Jim Brewer: Thank you Ian and many thanks to all of you participating in the call today.
Jim Brewer: As you can see we had a strong first quarter and a successful launch to our grow and execute strategy.
James Breuer: I want to take this opportunity to thank David and Joe for their service and leadership. We look forward to working with David in his new capacity as Executive Chairman and wish Joe the best going forward. And to our audience, we appreciate your interest in Fluor, and thank you for your time.
Jim Brewer: I want to thank I.
Speaker Change: I want to take this opportunity to thank David and Joe for their service and leadership.
Speaker Change: We look forward to working with David in his new capacity as executive Chairman and wished Joe the best going forward.
Speaker Change: And to our audience. We appreciate your interest in Fluor and thank you for your time.
Unknown Executive: 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].
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Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Sure.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: Sure.