Q3 2025 Fluor Corp Earnings Call

Speaker #2: Good morning and welcome to floors third quarter 2025 Earnings Conference Call . Today's call is being recorded . At this time , all participants are in a listen only mode .

Speaker #2: 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 floors website at investor .

Speaker #2: The Reb , the web replay will be available for 30 days . A telephone replay will also be available for seven days through a registration link .

Speaker #2: Also accessible on floors website at investor . At this time , for opening remarks , I would like to turn the call over to Jason Landkamer Vice President , Investor Relations .

Speaker #2: Please go ahead . Mr. Langhammer .

Speaker #3: Thanks , Ian . Good morning , everyone , and welcome to floors 2025 third quarter Earnings call . Jim Breuer , floors chief Executive Officer and John Floors , chief financial officer , are both with us today .

Speaker #3: Floor issued its third quarter earnings release earlier this morning , and a slide presentation is posted on our website that we will reference while making prepared remarks .

Speaker #3: Before getting started , I would like to refer you to our safe harbor note regarding forward looking statements , which are summarized on slide two .

Speaker #3: During today's presentation , we will be making forward looking statements which reflect our current analysis of existing trends and information . There is an inherent risk that actual results and experience could differ materially .

Speaker #3: You can find a discussion of our risk factors , which could potentially contribute to such differences in our 2024 form 10-K and our form 10-q , which was filed earlier today .

Speaker #3: During the 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 .

Speaker #3: Com . With that , I'll now turn the call over to Jim Breuer , Flores CEO . Jim . Thank you . Jason , and good morning , everyone .

Speaker #3: Thank you for joining us today . Please . To start , I'd like to comment on our very successful long term investment in new scale .

Speaker #3: I'm pleased to say that we've reached a major milestone with this investment since we pivoted earlier this year away from a strategic investor to a market focused solution .

Speaker #3: Working with Nuscale management and Board , we announced yesterday the conversion of our remaining investment into class A shares . We will begin monetizing these shares in an orderly way starting next week , and expect to complete this process in the second quarter of 2026 .

Speaker #3: This accomplishment is a result of negotiations with Nuscale over the past several quarters . Our monetization plan ensures we can have line of sight to deliver the significant value of this investment to Fluor shareholders , while also considering new sales .

Speaker #3: Own capital raising needs . John will provide details about Fluor's capital allocation plans in the moment . Furthermore , this milestone accelerates our broader strategic journey where we have moved successfully to an asset light model with a majority reimbursable backlog , creating a strong foundation to fuel long term growth .

Speaker #3: Now let's turn to our operating review . Beginning on slide four . Revenue for the third quarter was $3.4 billion , which includes a 653 million revenue reversal in energy solutions related to the Santos litigation .

Speaker #3: Consolidated new awards for the third quarter were 3.3 billion , a 99% reimbursable . In addition to these awards , we recognized nearly 800 million in positive backlog adjustments , which keeps our total backlog around 28 billion , of which 82% is reimbursable .

Speaker #3: Moving to our business segments . Please turn to slide six . Urban solutions reported profit of $61 million in the third quarter . Results in this segment reflect a ramp up of recently awarded projects in Atls and in mining and metals .

Speaker #3: New awards for the quarter totaled 1.8 billion , a significant increase from 828 million in the same period last year . Awards for the quarter included incremental bookings for two projects a copper mining project in Canada and a life sciences project in the United States .

Speaker #3: We were also awarded a front-end engineering and design services contract for MP Materials, as they build a new rare earth magnet manufacturing facility in Texas.

Speaker #3: These awards reflect our exposure to growth markets and highlight our leadership and professional and technical solutions supported by our global engineering and construction expertise .

Speaker #3: Ending backlog now at $20.5 billion , represents 73% of Fluor's total backlog . Now please turn to slide seven . In infrastructure , we continue to make solid progress on the four remaining Los projects at Gordie Howe .

Speaker #3: We anticipate completing all construction required to open for traffic in Q4 or early next year . On the LAX people mover , construction activities will be largely complete and positioned for operation in early 26 .

Speaker #3: The 635 LBJ project will reach substantial completion in Q2 of 2026 , and on the I-35 phase two project , most of the major construction activities will be nearing completion in late 26 .

Speaker #3: Many of these projects we continue to pursue cost recoveries and change orders from clients and subcontractors. While we ultimately expect to be successful in these recoveries, in many cases, these efforts materialize on an extended timeline.

Speaker #3: One proof point for this is a favorable negotiation result in the third quarter . On an infrastructure project that we completed in 2019 .

Speaker #3: Please turn to slide eight . For the next few quarters . We remain very excited about the opportunities in the urban solution space in mining and metals .

Speaker #3: We continue to engage clients developing copper , rare earths and critical minerals , as well as aluminum and green steel in life sciences .

Speaker #3: We anticipate a Q4 award for a pharmaceutical facility with a new client in data centers . We're looking to translate our success in India and in Europe to North America .

Speaker #3: While many clients are asking for terms and conditions that don't align with our pursuit principles , we are confident in the value that we provide for the more complex programs , including hyperscalers .

Speaker #3: Moving to energy solutions . Please turn to slide nine . For the quarter , Energy Solutions reported a segment loss of $533 million compared to a profit of 50 million a year ago .

Speaker #3: Results reflect a 653 million court ruling that we had previously announced in August . This was on the long completed reimbursable Santos project in Australia .

Speaker #3: John will provide further details in his comments . New awards and energy for the quarter totaled $222 million , mostly in services . If you recall , last quarter , we rebaseline our full year expectations for our joint venture in Mexico and slowed down our execution activities pending payment from a client .

Speaker #3: I am pleased to report that the client has made significant payments during the quarter and again in October . This enabled us to begin a controlled ramp up of our execution activities .

Speaker #3: Turning to slide ten: last week at LNG Canada, we achieved our FHSU on Train Two, and all systems have been handed over to the client.

Speaker #3: Our team is now focused on the remaining punch list items . This marks our final progress update . I want to congratulate the entire team and all workers for their dedication and hard work .

Speaker #3: This project will be remembered as one of the largest and most complex projects in Fluor's history , and its success is a testament to our global capabilities .

Speaker #3: Even in remote or difficult locations . Our work with the client continues as we update the feed package and estimate for a potential phase two expansion .

Speaker #3: Please turn to slide 11 . Trade and policy uncertainty . Oversupply of chemicals and defunding of energy transition have caused delays in our clients FIDs and have impacted 2025 new awards .

Speaker #3: We're staying close to our clients by performing front end work and remain encouraged by their commitment to traditional oil and gas . Most new awards in 2026 will be weighted towards the second half of the year .

Speaker #3: Now , with regards to growth opportunities , we're accelerating our efforts in the power market . Given the increased need for power generation currently we're active on the raw power and cernavoda projects in Romania .

Speaker #3: We're also executing a gas fueled power plant in Indonesia and pursuing a number of opportunities in the US and internationally , particularly where we have an operational footprint .

Speaker #3: We're also tracking short term midsize opportunities in chemicals and in upstream . Moving on to slide 12 . Mission solutions reported a segment profit of $34 million for the third quarter , compared to 45 million a year ago .

Speaker #3: During the quarter , Mission solutions continued to deliver solid performance across its portfolio of projects . However , third quarter results reflect allowances for certain questions and disputed costs on a defense support project .

Speaker #3: This was mostly offset by additional revenue recognized in connection with a favorable judgment on a long completed weapons project . New awards totaled 1.3 billion , compared to 274 million a year ago .

Speaker #3: This includes a 1.1 billion six year contract for the Doe , which extends our presence on the Portsmouth project in Ohio . We also received a final extension for work at the Strategic Petroleum Reserve , and were also awarded a position under a contract for the Defense Threat Reduction Agency .

Speaker #3: This award provides the opportunity to compete for task orders with a combined value of up to 3.5 billion over ten years on our project at Tinian Island .

Speaker #3: The stop work order has lifted and we are ramping up operations as we look ahead to the fourth quarter and the first part of 2026 .

Speaker #3: Prospects include work on the strategic Range Services contract for the Air Force , additional work to support the intelligence community , and work for the National Cancer Institute .

Speaker #3: We also anticipate hearing on a small but strategic Aukus related award with our partner in Australia on the nuclear enrichment front . Fluor is well positioned on four prospects .

Speaker #3: We anticipate that over the next two quarters , Doe will announce grant awards to allow our clients to effectively move forward . The above opportunities and Fluor's current portfolio of projects could shift based on any further impacts related to the government shutdown .

Speaker #3: Before I turn the call over to John , I want to provide an update on the business environment and how that aligns with our four year strategic plan .

Speaker #3: Please turn to slide 13. During our strategic update in April, we set clear targets for the management team to achieve throughout the grow and execute phase of our strategy.

Speaker #3: So far in 2025 , we have strengthened financial discipline , making significant progress in maintaining a robust capital structure while returning substantial capital to shareholders .

Speaker #3: This has been supported by our core business performance and will be enhanced by the monetization of new scale . We have continued to pursue fair and balanced contract terms with a majority reimbursable backlog .

Speaker #3: And when we take on fixed price projects , we do so in areas where we have a distinct competitive advantage and without overburdening our backlog , mix .

Speaker #3: And we have remained focused on project delivery consistently executing at or above the as sold gross margin . Now , while we're pleased with our strategic progress , external factors resulted in award delays , which means that our backlog remains level at $28 billion .

Speaker #3: These delays have put pressure on our EBITDA growth rates . We still anticipate approaching 90 billion in new awards over the four year planning cycle ended in 2028 , but most of these awards will be concentrated in 2026 to 2028 , with Ebit from these contracts coming in in 2027 to 2029 .

Speaker #3: Based on our current discussions with clients . These deferrals and cancellations are causing a roughly four quarter shift in Ebit delivery . To mitigate this .

Speaker #3: We've accelerated our plans to lean into markets where we can capture opportunities on a short to medium term . This includes deploying additional teams into mining and metals power , advanced technologies and LNG as a leading EPC firm .

Speaker #3: We are one of a few with high demand capabilities that include project execution , leadership , complex engineering acumen , robust supply chain and construction expertise .

Speaker #3: We can deliver projects that support global GDP growth and are confident in our ability to win work that meets our pursuit criteria . We see tremendous potential in our end markets and with an asset light model and a flexible workforce , we intend to take advantage of our ability to pivot our key execution resources across the organization into areas where we have a clear and distinct advantage .

Speaker #3: With that , let me now turn the call over to John for the financial update . John . Thanks , Jim , and good morning , everyone .

Speaker #4: Today I'll be going over our third quarter results and sharing our view on financial guidance for the full year . Plus details on our ongoing capital allocation plan .

Speaker #4: Please turn to slide 15 . Our GAAP results , notably reflect four items . One , the $653 million charge related to Santos , which , because its customer related was recorded as a reduction to revenue in establishing the liability .

Speaker #4: Two a $400 million mark to market loss related to our investment in Nuscale . But with a related tax benefit of $230 million .

Speaker #4: More on the tax effects later . Three A net charge of 13 million for additional infrastructure items and four anomalous tax outcomes , wherein the Santos charge was not tax benefited , but the new scale conversion yielded $125 million .

Speaker #4: Release of valuation allowances with no corresponding book income for Q3 . Our 10-q reflects a consolidated segment loss of $439 million impacted by many of those same enumerated items .

Speaker #4: When you remove the effects of the charge for Santos results for the quarter trended well above our expectations . Adjusted EBITDA for Q3 was 161 million , compared to 124 million a year ago .

Speaker #4: Our adjusted EPs of $0.68 compares to $0.51 in 2020 . For adjusted results exclude the mark to market effect of our investment in Nuscale , the charge for the Santos legal ruling , customary FX impacts , and notably for this quarter , the favorable judgments and settlements on two long completed projects .

Speaker #4: G&A for the quarter was $43 million, up from $37 million reported a year ago. Results actually reflected a reduction of G&A year over year.

Speaker #4: When you set aside 12 million in restructuring costs included in the 25 figures , some of that is the result of our share price reducing from 52 to 41 during the quarter , and the related impact on stock based comp net interest income in Q3 was slightly lower than last quarter at 13 million and compares to 37 million a year ago .

Speaker #4: This reduction results from less cash on hand at a large JV project nearing handover , and to a lesser extent by lower prevailing interest rates .

Speaker #4: Moving to slide 16 . As Jim mentioned , we've seen marked improvement from last quarter in Mexico , where we scaled down execution activities for much of Q2 in the face of liquidity constraints related to unpaid AR .

Speaker #4: Since then , we've seen significant cash receipts , including JV level collections of $800 million in Q3 , plus 300 million more in October .

Speaker #4: On a consolidated basis . We ended the quarter with $2.8 billion of cash and marketable securities , up half a billion from June 30th .

Speaker #4: This included over 400 million in net proceeds from new scale shares sold during the quarter , not reflected in our Q3 . Numbers were an additional 190 million in new scale proceeds from October .

Speaker #4: This initial 15 million share conversion and sale created no meaningful tax liability . Cash tax liability due to the tax attributes we've talked about over the last several quarters .

Speaker #4: After this conversion , we have consumed most , but not all of the attributes that we began the quarter with . That means the upcoming conversion will have the same , but not complete tax shielding as guided operating cash flow for the quarter was strong at $286 million .

Speaker #4: This was driven by reduced working capital on several large projects , as well as distributions from a large energy solutions joint venture . Because our JV in Mexico is recognized under the equity method .

Speaker #4: The robust collections there have not yet impacted our balance sheet . Cash or our operating cash flow results for the fourth quarter . We expect to send payments Santos to enable the appeal process , as is customary in Australia .

Speaker #4: The estimated payment will include several items , which we can only currently estimate , including contributions from our insurance providers interest on the ruling and legal fees .

Speaker #4: We continue to make progress with our carriers regarding their financial support for both the appeal payment and for the legal costs associated with the appeal .

Speaker #4: We'll update the markets once we finalize this and remit the funds as an update on our legacy projects in Q3 , we provided $73 million in funding , half of which came through operating cash flow .

Speaker #4: And with the remainder reflected as an investing activity for the fourth quarter . We expect legacy funding to be in the $70 million range , 20% coming from operating cash flow , and for 2026 , we anticipate around $140 million , with 50% of that coming from operating cash flow .

Speaker #4: I'd also like to point out that projects in a lost position represented $642 million of our total backlog , down $200 million from last quarter , reflecting our continued March to completion .

Speaker #4: For these projects . Please turn to slide 17 on the capital allocation front . We bought back 1.4 million shares in Q3 , spending $70 million to do so since last December , we've cut our outstandings by over 11 million shares .

Speaker #4: We modified the pace of the repo in Q3 when we believed a judgment on the Santos case could occur imminently , and in our desire to preserve capital for that potential event .

Speaker #4: Last quarter , we lowered our full share repurchase plan in consideration of our concerns around operating cash flow . Since then , cash flow generation has improved and we've monetized the initial conversion of SMR .

Speaker #4: We now see a path to target an additional $800 million in repurchases through the end of February . That would put us on pace for total share repurchases of 1.3 billion over the 15 month period beginning December 2024 .

Speaker #4: We see this $800 million as a great addition to our existing repurchase program and expect to announce additional capital allocation programs next year with the clarity of the proceeds from the upcoming conversion .

Speaker #4: Moreover , this deployment should be a clear signal of the confidence we have in our strategy and the operating ability we have to execute against it .

Speaker #4: Regarding our new scale investment , I want to reiterate that our conversion happens in November and funds from the sale of these shares are partially tax shielded .

Speaker #4: Monetization should begin next week . Moving to slide 18 . In the outlook . Based on the results from this quarter , we are increasing our 25 adjusted EBITDA guidance to 510 to $540 million .

Speaker #4: And our adjusted EPs guidance to $2.10 to two . And a quarter . Our guidance , like many of our competitors , does assume that the government shutdown ends relatively soon .

Speaker #4: Our expectations for operating cash flow have increased, and we now expect $250 million to $300 million generated for the full year, excluding the anticipated payment to Santos.

Speaker #4: He assumptions and expectations for Cal , 25 are shown on the slide , but include a new awards outlook of $13 billion and revenue roughly flat , with 2024 .

Speaker #4: When excluding the Santos effect . Our expectations for segment margins in Cal 25 are approximately 2.5% for urban solutions , approximately 6% for energy solutions .

Speaker #4: When excluding the Santos effect and approximately approximately 4.5% for mission solutions . With respect to income taxes in Q4 , we hope to find a better outcome on deductibility for the Santos ruling .

Speaker #4: Moreover, we note that our income tax rate for the balance of 2025 will hinge significantly on the taxes arising from the conversion of our NuScale shares later this week.

Speaker #4: We generally expect to fully utilize the remaining tax attributes to shield some of that step up . We , of course , would have tax effects for the gain or loss on sale that could could arise after conversion .

Speaker #4: While we are not prepared to give detailed guidance for 2026 , I do want to echo Jim's comments that the ongoing market conditions have had a meaningful impact on our ability to capture new awards and earnings in the short to medium term .

Speaker #4: Early indications would suggest EBITDA generation would be marginally better than our guide for full year 2025 . In February . We'll provide more perspective for full year 2026 after we finalize the operating plan .

Speaker #4: And with that , Ian , we're now ready to field our first question .

Speaker #2: At this time , I would like to remind everyone that in order to ask a question , please press star , followed by the number one on your telephone keypad .

Speaker #2: Our first question comes from the line of Jamie Cook with Truist Securities . Your line is open .

Speaker #5: Hi . Good morning and congratulations on new skill . I know it's been a it's been a long , long time coming . Anyway , I guess just my first comment , John .

Speaker #5: You know , you talked about , you know , 20 , 26 and 2026 being , you know , EBITDA being marginally better than 2025 , just trying , you know , that even sees , you know , could be aggressive just given what you're saying about bookings and is being , more back end loaded in 2026 .

Speaker #5: So can you just help me understand what the puts and takes are ? Is it just less noise related to the problem projects projects ?

Speaker #5: Is it Mexico like stuff that was deferred into 2025 goes into 2026 ? Just trying to understand your thoughts there . And it sounds like , you know , flat to up modestly at best .

Speaker #5: And then my second question understanding you don't want to get too granular , but the margins in ES excluding Santos was pretty good .

Speaker #5: Just trying to understand there's I know there's two factors that drove the margin outperformance . If we exclude Santos , how would we think about a normalized margin in that in the quarter just so we can think about that going forward ?

Speaker #5: And last , on Santos , just how you're planning to fund it . Does any of the funding come from Nuscale ? Thanks .

Speaker #4: Yeah . So one question , seven parts . Jamie good morning . With respect to 2026 guidance . So with respect to 2026 guidance , yes , you know , it's part of overall the portfolio nature of our business .

Speaker #4: So you know we do see significant contributions coming in growth in urban solutions I'd say particularly in the metals and mining space energy solutions does catch a tailwind based on the resumption of work in Mexico .

Speaker #4: So that will normalize in 2026 to kind of 2024 levels for us . So that's where we're thinking . And and as I may have suggested in the prepared remarks , based on our guide for 2026 and and where consensus is , I'm sorry , based on our guide for 25 and where consensus is for 26 , probably trending somewhere in the middle .

Speaker #4: And you know , it's it's continued progression in the business and unburdened by what we expect will be completion of some of those legacy projects on ES operating margin .

Speaker #4: The significant impact there , you know , very clearly , we are reaching the end of the line on LNG with handover on on train two , having occurred earlier this month .

Speaker #4: So , you know , very naturally , the the risk mitigation process that comes with handover would suggest that there are some reductions in reserves , giving them a bit of a tailwind .

Speaker #4: There . But moreover , it is on the on the strength of what's happening in Mexico and what where that where that resumption of work is taking us .

Speaker #4: So in terms of normalized margin, we'll have to coalesce around that figure and potentially get back to you in terms of the Santos payment. You should be thinking we've been planning for this for a long time.

Speaker #4: And in fact , this the step down of our share repo intensity that came out of Q2 was in large part to preserve capital from our core business to to fund that liability .

Speaker #4: And so it's my expectation that the 600 million ish payment that we're expecting will come from cash on balance sheet generated from our core operations , not just in 25 , but , you know , through through the last several , several years .

Speaker #4: And so as a consequence , it is generally my intent to deploy everything that we generated from the early new scale . The first conversion of new scale as part of the $800 million program that I described over the next three and three months or so , and then from the second conversion , we'll feed into the march and beyond , share repurchase program .

Speaker #4: So not using new scale and the benefits therein for Santos , but to honor our commitment to deploy those proceeds for the benefit of our shareholders .

Speaker #5: Wow , John , I'm impressed you got all those questions . You answered all my questions . Thank you . I'll get back in queue .

Speaker #4: I also had coffee . Jamie .

Speaker #2: Our next question comes from the line of Sangita Jain with KeyBanc . Your line is open .

Speaker #6: Hey . Good morning and thank you for taking my questions . So first off , can you talk a little bit more about the opportunity set for next year ?

Speaker #6: I know , Jim , you said you're going to maybe accelerate momentum in some of the power opportunities . So can you talk about the data center ecosystem , whether it's gas fired power or just data centers where you are in the process of standing up your power and practice and what kind of opportunities you're looking for , the sizes of opportunities .

Speaker #3: Thanks . Sangita . Good morning everyone . Again . Yeah . So let me let me spend a little bit of time talking about the short term opportunities .

Speaker #3: Of course , many of these projects we're already working on the front end , so we have good line of sight of them .

Speaker #3: It's a little hard for us to determine the exact timing of the full release , but the good news is we are inside of many of these opportunities in urban .

Speaker #3: Let me start with urban . There's a lot of momentum around mining and metals , particularly copper . So there's there's some good opportunities there in the coming quarters .

Speaker #3: There's also aluminum projects in the Middle East . There's a pharma project here in the United States , in addition to just a general wave of opportunities in all our other businesses .

Speaker #3: And and let me get back to data centers in a minute . But in energy , there is a good , healthy pipeline of mid-size projects .

Speaker #3: I mentioned specialty chemicals and the chlorine space . I mentioned a midstream project and upstream midstream in the United States . There is some services work in Europe around large integrated petrochemical refining complex .

Speaker #3: There's some services work in Canada . And of course , admission . We are looking at various opportunities for the government , such as the O&M opportunity in multiple bases for the Air Force .

Speaker #3: Our far as power is concerned , in addition to the current work that I mentioned in Romania and in Indonesia , we have accelerated our efforts and our conversations with us based clients for gas fired opportunities .

Speaker #3: We are talking to several of the major utilities in the US around . Their needs to engage reliable contractors early on to help work with them in shaping and developing these projects .

Speaker #3: So we're not looking . Sangeeta , at competitive bidding . We got three four bidders and lowest price wins . We're looking at strategic relationships where clients are trying to secure key resources , get involved early and then jointly get to a an EPC contract that that fits better .

Speaker #3: Our our preferred pursuit criteria . But on the flip side , it takes a little longer to mature those project . So that's that's an a here for gas in the US .

Speaker #3: And as far as nuclear we're active both internationally and domestically . Again , talking to the various technology providers early conversations . How do we how do we position jointly to get these projects off the ground ?

Speaker #3: Obviously , scope , definition , risk allocation are important components . So we're we're excited about those opportunities . We're being diligent in shaping them and making sure that the commercial side of it fits our our criteria .

Speaker #3: And we think we're going to have some very good progress next year in maturing these projects and turning them into real opportunities. As far as data centers, as I said in my prepared remarks, we've been very successful in Asia and in Europe.

Speaker #3: What we're seeing in the US for the projects , the terms and conditions and the commercials are not always ideal for what we're looking for , but we're still very well positioned for the bigger , more complex projects that big campuses , the big hyperscalers , we continue to talk to multiple clients about those opportunities .

Speaker #3: We we have not yet announced any , smaller but we continue to work on those diligently . So we hope to see some good news there in the coming quarters .

Speaker #6: Great . That was very comprehensive . I appreciate that . And then just one more follow up on the same theme on the white House memo on Trump's visit to Japan .

Speaker #6: They cited a couple EPCs who would be working on the Westinghouse build out . I'm just curious if you think that list is final or if it's a work in progress , and if you have even have an interest in being part of the mix .

Speaker #6: I know it's a long lead time , but just kind of wanted to hear your thoughts .

Speaker #3: Yeah , no . Great question . Sangeeta . We are in conversations with multiple technology providers , including the one you mentioned about collaborating on projects .

Speaker #3: There's there there are a lot of opportunities out there , some in the US , some overseas . There are very few companies in the world that can really tackle these projects .

Speaker #3: We are one of them . And so yeah , we we're excited about those opportunities . You're right . They will take time .

Speaker #3: But you gotta you gotta get there early and we're talking to all the big players about being a part of that market .

Speaker #6: Great I appreciate it . Thank you .

Speaker #7: Okay .

Speaker #2: Our next question comes from the line of Andy Kaplowitz with Citigroup . Your line is open .

Speaker #8: Hey good morning everyone .

Speaker #3: Good morning .

Speaker #9: Good morning .

Speaker #8: Jim or John . Maybe just on Nuscale again . What does it mean when you talk about agreeing to give up some of your economic rights ?

Speaker #8: I know , you know , there's been negotiation around Fluor doing back end nuscale work , but maybe talk about sort of where you are in the new agreement here on that .

Speaker #3: Thanks , Andy . I'll start maybe with the non-financial side of it , and I'll let John talk about the more technical financial stuff .

Speaker #3: So on the on the rights to do work , we have modified the rights to , to exclusive rights to do work , but we still we still have those in the sense that we have the opportunity to bid on the projects that they have with their strategic partner .

Speaker #3: And we have the same rights for projects that are not involving that strategic partner , but more importantly , what what we've analyzed and is , if you think about it , step back and think about it , we're the only EPC contractor that has real project experience on new scale .

Speaker #3: We we did the first of the project that ended up not going forward for economic reasons , but we have that experience now .

Speaker #3: We're working on the Romania project . As an active project that we're doing the feed and the estimated , the execution plan . And so we we feel we're very well positioned to do new scale work in the future .

Speaker #3: We have the expertise for large , complex projects , but we're also very clear to say we're going to do work following our pursuit criteria and where we have a competitive advantage .

Speaker #3: So there's still a favored position there . And we we're very excited about the market . We look forward to working with Nuscale and their clients and our collective clients for the future .

Speaker #3: I think we there can be some good opportunities there for us now . As far as the technical side of things , John , maybe you can explain that .

Speaker #4: Yeah . I mean , I think to Jim's point , I think we remain commercially in a favored nation status because of the work we've done for them .

Speaker #4: And we expect that as they continue to deploy their their technology , you know , with their strategic partner or otherwise , that will be in the Rolodex and on speed dial for them to to deliver EPC services .

Speaker #4: But but the overarching message in the bargain was the , the chorus that we heard from our shareholders about getting something done and providing clarity as to value .

Speaker #4: And so in the negotiation , you know , they're they're there are gives and gets . And for us , we feel like the the get around a speedy transaction with lots of clarity and the ability for our shareholders to measure our progress against that in very short order , was extremely valuable to us .

Speaker #4: And so that was the the crown jewel , as it were , of of the bargain . And I don't want to I don't want anything on the commercial arrangement side to diminish the shine that comes from that crown jewel .

Speaker #8: Very helpful guys . And then , Jim , I just want to follow up on your commentary on data centers and gas power plants .

Speaker #8: Just I know you said you hope to book , you know , a data center , but as you know , I mean , we're getting much larger in these projects in Florida historically has been very good at mega projects .

Speaker #8: I mean , you're talking about a big data center . You know , there's there's a couple trillion dollars of potential spend out there .

Speaker #8: So , I mean , do you expect to book 1 in 20 6 or 27 ? Can you get it at the terms that you want ?

Speaker #8: I know you said you hope to , but should we expect one , you know , over the next 12 to 24 months or more , given your historical prowess in doing this stuff ?

Speaker #3: Well , look , and we're we're confident in our capabilities . We're confident that we can sell a compelling story to clients . We're talking to multiple clients about the more complex projects .

Speaker #3: Many of them tier one companies . But we're going to make sure we follow our pursuit criteria and our commercial discipline . II cannot guarantee that we're going to win one , but I tell you that our team is very focused and we have some very clear expectations and plans to get there .

Speaker #3: So I'm I'm hopeful and I'm confident we can break into that market . On the complex projects . But we we'll see what the next few quarters bring .

Speaker #4: Yeah , we think we got the credentials . We think we're sitting in the right space . We've got the right relationships . It's just do the commercial terms come to us in a way that is sufficiently appetizing .

Speaker #8: John , just a quick follow up . You mentioned on the three infrastructure projects that , you know , they were offset by a refinement of expected claims against your subcontractors .

Speaker #8: You know, do you pick that up in short order, or is that just a change in accounting? Like, how does that work to offset the incremental cost?

Speaker #4: Yeah . So to be clear on the infrastructure projects , what we had was a negotiated outcome for a long completed project that gave us some some favorable results in the PNL .

Speaker #4: And that was offset by some changes in our views on variable consideration . And so you shouldn't think of it as cost growth or schedule extension or anything like that .

Speaker #4: Just some things that we thought were we were entitled to under the contract through June 30th began to dissipate for us in Q3 .

Speaker #4: We'll continue to negotiate to to get a better outcome . There . But we're dealing in some of the vagaries of contracts . So it isn't really it is not really cost growth .

Speaker #4: So I don't want to leave you with that impression . That was the impact during the quarter . But on an aggregate basis , you know , those are around 12 or $13 million for the good guy that came coupled with the the reduction in expected consideration .

Speaker #8: Helpful . Thank you . Yes .

Speaker #2: Our next question comes from the line of Steven Fisher with UBS. Your line is open.

Speaker #10: Hi . Thanks . Good morning . And congrats not only on the new scale , but also pretty much closing out the chapter on the first phase of of LNG Canada , a very long , long process .

Speaker #10: But good to see that . Can you just maybe remind us on the the $90 billion of potential awards ? What's the competitive set overall ?

Speaker #10: Look like on those ? How much of that is sole source and really how to think about the potential win rate there ? Because even though it's over a few years , it is still obviously quite substantial relative to your your existing backlog .

Speaker #3: Thanks , Steve . Let me start that . This is Jim , the it spread across the three businesses . Steve , with perhaps more focus on urban in the first half of the remaining period , if you will .

Speaker #3: And then shifting to energy on the second half . So if you look at urban , I would say the biggest contributor , not the only one , but the perhaps the more significant one would be in mining and metals and are position in copper .

Speaker #3: Steve is extremely strong and we're already working on the front end of a lot of those opportunities . North America , South America , Australia , and so our source I would tell you , I would the way I would characterize it is we're already on the project .

Speaker #3: The question is , will they get FID or not ? On the other urban markets around life sciences , advanced technologies , data centers , etc.

Speaker #3: , we have a leading position in life sciences . Some of this work will have to be not necessarily competitively bid , but negotiated .

Speaker #3: And again , we feel good about our position . There . We already talked about data centers and our situation there . We're also looking at semiconductors .

Speaker #3: And again , to the extent that these are large projects and many of them will be large projects , we have a competitive advantage there .

Speaker #3: So I think we're well positioned there . And then on energy solutions , LNG phase two , you know , where we are there .

Speaker #3: That job is obviously not guaranteed because we're going through a process with a client . But it's a negotiated position on the power side .

Speaker #3: We we are refocusing on power . We we're rebuilding those relationships . But like I said earlier , we're not looking at these competitive bidding processes , but we're looking at more relationship driven engagements where clients are realizing the market has really changed .

Speaker #3: It used to be a lot more competitive , price driven market . Five , ten years ago . Now it's more about securing resources and having good execution plans .

Speaker #3: And that's where we come in . So it's a combination of we're already on the project and we need to go to the next phase with , yeah , we , we we have to convince our clients that we are the right solution .

Speaker #3: And we think we have a very compelling story for many of these markets . And then on the on the mission side , of course , we've been talking about SRP for some time , but also we have a very strong position with Doe and some of the other agencies .

Speaker #3: So again , we think we we are well positioned to win that work . So we feel good about the convertibility of the 90 billion .

Speaker #3: And we were very focused on doing that going forward .

Speaker #4: Yeah , I might just chime in with a little bit on the nuclear front and then a little bit in the growing relationship with the Department of War and what we expect there in terms of national security also being rather critical elements to getting to the 90 .

Speaker #10: Great . That's very helpful . And then just on Nuscale not sure how much you can say on this , but I'm just curious if there are multiple options for how you plan to execute this monetization .

Speaker #10: Is it just going to be sort of in the kind of the chunky sales like we've seen you do to date ? Just more of them and more frequently ?

Speaker #10: Or are there other options that you're considering for how to get this done by the end of the second quarter? Thank you.

Speaker #4: Yeah . So so I think in in the first conversion , we did a very transparent market based approach daily kind of for form requirements .

Speaker #4: And you know , it was 15 million shares . But it did allow for a little gamesmanship in the marketplace . There . So it's much expectation that when we get to , you know , conversion and get into the market next week , that will be under a structured program .

Speaker #4: You should probably expect to see a 144 filing out there , but we expect a program that will be executed across the balance of the year and into the new year .

Speaker #4: And you won't see quite the form for tempo . But we're working with our financial advisors on on a program that we think will get us the overall best NPV and allow us to to add the most turbo to that .

Speaker #4: That repo program .

Speaker #10: Very good . Thank you .

Speaker #2: Our next question comes from the line of Andy Whitman with Baird . Your line is open .

Speaker #11: Great. Thanks for taking my questions. I just wanted to clarify a couple of things that I think you touched on. Maybe the first one is for John.

Speaker #11: John , I think maybe I misheard this , but on the Mexican joint venture talked a lot about how the cash is coming in .

Speaker #11: You're restarting the work and that's great . Did I hear you say that the cash that came in in the quarter , I think it was 800 during the quarter , then 300 after the quarter .

Speaker #11: Did I see that the $800 was not on the balance sheet, or did you? If I heard that correctly, how is that not on the balance sheet?

Speaker #11: If you've collected it ?

Speaker #4: Yeah , I did explicitly say that . So again , I caveat it because it's a it's a equity method JV . And so when the JV collects it , it sits on their balance sheet .

Speaker #4: But I am consolidating them into a single line item on my balance sheet called investments . So their entire balance sheet is collapsed into that single line item .

Speaker #4: And when that when that JV or any JV that is equity method makes a distribution to its partners , that is when it comes into the frame for purposes of recognition as cash and cash flow .

Speaker #4: In my statements .

Speaker #11: Okay , that makes total sense . I thought when you say we collected it , I thought you meant floor . We not JV meet are we so that makes sense .

Speaker #4: Yeah .

Speaker #11: I .

Speaker #4: Then I said JV level collections .

Speaker #7: Yeah . yeah .

Speaker #11: You probably did . These are these are complicated things . I hear you now . Okay . The just the other one here .

Speaker #11: Just the , the 800 million backlog adjustment . We've had a couple of these the last few quarters . Was that another kind of change on the on how you're recognizing customer furnished materials or was this actual incremental scope with profit dollars , real profit dollars attached ?

Speaker #7: Yeah .

Speaker #4: So it was across a couple projects and it did subsume . both some CFM growth as well as some some overall scope growth .

Speaker #4: And I would say it was kind of single digit million . I'm sorry , deferral of income in the current quarter . So stuff that we had expected to recognize in quarter three drifting into the remaining term of those handful of projects .

Speaker #11: Got it . And then just finally on Santos here and kind of the cash associated with that . Understand $650 million , I guess that number is I just want to confirm that's net of insurance is that I hear you say that you still think there's potentially more insurance that could go .

Speaker #7: Away .

Speaker #11: Against that . Is that right ?

Speaker #7: Yeah . So so .

Speaker #4: We'll we'll do a full accounting retelling of this next week . Andy . But essentially the insurance proceeds that we recognize in the quarter were those committed proceeds where we had signatures saying from the carriers that we are going to fund this , we continue to chop wood in terms of the rest of the the carriers in the program and once we so we are expecting the payment in quarter four .

Speaker #4: So we're very busy in the negotiations with the carriers . And that's why I said in my prepared remarks when we actually remit the payment , we will have crystallized the the interest component , the legal fee component and the insurance contribution component .

Speaker #4: But you should you should expect the insurance to only get better from what we recognized in the quarter as as we hope to bring more carriers into the the agreed upon path forward .

Speaker #11: Got it . Okay . Yeah , it looks like there was 15 of the 20 carriers have signed up and agreed . And it sounds like you got to get those other five on board to collect that portion .

Speaker #11: Is that the right way of thinking about it? And are all carriers the same size inside of this?

Speaker #7: And we would oh gosh .

Speaker #4: No , no , no , our program is is very complicated , obviously has many different layers . It is absolutely a like untangling of a bowl of spaghetti to to get to it .

Speaker #4: So it's very complicated . But in broad strokes , yes there are , there are several carriers , many of them play at different layers in the tower .

Speaker #4: But anyway , I expect we'll have some some form of announcement in the next 30 days around the ultimate cash . And as I said , that contribution that came from the tower .

Speaker #11: Okay . All right . I'll leave it there . Thanks , John .

Speaker #4: Yeah , thanks , Danny .

Speaker #2: Our next question comes from the line of Michael Dudas with Vertical Research . Your line is open .

Speaker #12: Good morning , gentlemen .

Speaker #4: Good morning Mike .

Speaker #3: Good morning Mike .

Speaker #12: Jim , you've been very helpful with the color on opportunities and new bidding and the pipeline over the next several years . But maybe you could step back from when you discussed your four year plan in April with us .

Speaker #12: And obviously , there's been quite a bit of changes last several months . But how does that feed opportunities like the amount of feed work that you were looking into when you put together your four year plan ?

Speaker #12: How does that look today ? How much does it change to bid ? Is it gotten better ? Is there still this and expectation of clients want to do work and they want to invest ?

Speaker #12: Obviously we've had some delays in certain end markets , but there's still that sensitivity . And then just the follow up , can we anticipate can we assume that the five year , the plan of 10 to 15% EBITDA through 2028 , that's pushed out .

Speaker #12: So that would be quote unquote likely 2029 . Is there any changes or amplitudes on that ? I don't want to get too far ahead .

Speaker #12: Just just directionally how we think about the outlook given the given some of the changes we've seen in the last couple of quarters .

Speaker #12: Thanks .

Speaker #3: Yeah . Thanks , Mike . So let me let me respond to two questions . The feed , the quality of the feed pipeline is still very good across urban and energy .

Speaker #3: For example , the awards in Q3 for energy granted the absolute number was fairly low . Most of that was in services . So the pipeline still is getting fed .

Speaker #3: Similarly , in urban . I'll repeat myself . But in mining and metals and life sciences and some of the other markets , aluminum , copper , etc.

Speaker #3: , very healthy , pipeline of feed work . So the the tone hasn't changed . I would say energy transition that that has more permanently , or at least for the foreseeable future , slowed down because of just the change in winds in Europe around the funding of energy transition .

Speaker #3: But .

Speaker #4: And the impact of the tax legislation.

Speaker #13: The tax legislation . So on the flip side , traditional .

Speaker #3: Oil and gas is picking up steam . So we're we're seeing some increased activity there . We're looking at the Middle East very closely , potentially do a lot of front end PMC services type work .

Speaker #3: There . So I we still feel good about the feed pipeline . Michael , as far as growth rates , the growth rates that we mentioned at the beginning of the year , as I said in my remarks , we're probably looking at a four quarter shift in EBITDA generation , which would take us to the lower range of that growth rate .

Speaker #3: But I think we still expect to see significant growth between 2025 and 2028 . But I think it'd be it'd be a good a good way to look at it , to say that .

Speaker #3: 2028 alternate goal may have shifted to 2029 .

Speaker #4: Now , I would like to just append that with some of the tailwinds that could amplify those numbers coming in the form of settlement of sort of trade policy on a global basis .

Speaker #4: Certainly the trend in interest rates . Generally should be encouraging of more capital investments . And so that's certainly the lay of the land of the day .

Speaker #4: But there are some things that that could could lead to an even better outcome . There .

Speaker #12: Duly noted . John and Jim , that that makes perfect sense . Thanks . Thanks for your thoughts . Appreciate it .

Speaker #3: Yeah .

Speaker #4: Thanks , Mike .

Speaker #2: Our next question comes from the line of Brent Thielman with D.A. Davidson . Your line is open .

Speaker #14: Hey , great . Thanks . Just I guess a clarification on the 800 million in additional share repurchases through February . That's completely exclusive of the the monetization of the remaining Nuscale stake .

Speaker #4: Yeah , the 100 , the the the conversion of I'll say today has no bearing on the 800 million that we're going to that we're going to repo .

Speaker #4: Now, obviously, it feeds into the confidence that there's near-term augmentation to our liquidity that will come from the monetization of the 111.

Speaker #4: But directly . No , none of none of the proceeds from the program . We're about to embark on feed into the 800 million .

Speaker #14: Got it . And then just from the perspective of the award cycle over the next 12 to 18 months , maybe if I look at urban Solutions , seems like that's where you've got most momentum .

Speaker #14: Pretty healthy pipeline . Are you ? I guess , with what you see coming forward within your sort of visibility , can you sustain a book ?

Speaker #14: The bill over one times in that segment with all the things in front of you ? There ?

Speaker #3: Let me let me start . Brent . We're still working through our operating plan for 2026 . So we don't yet have full visibility .

Speaker #3: But I'll tell you that for the for the for the next few quarters will be more weighted on the urban side , starting on the second half of 2026 and 2027 , you'll we're expecting more awards in the energy solution side .

Speaker #3: So it's initially waited on urban back end of 26 and into 27 . Greater contribution from energy and a steady stream from from mission across the quarters .

Speaker #4: Caveated only by SRP . And when that award comes and how chunky or not that award approximately is .

Speaker #14: Okay. Got it. I'll leave it there. Thank you.

Speaker #4: All right. Thanks, Brian.

Speaker #2: There are no further questions at this time . I would like to hand things back over to Jim Brewer for closing remarks .

Speaker #13: Thank you . Operator .

Speaker #3: And many thanks to all of you for participating in our call today . As a year draws to a close , I'm encouraged to see that our strategic priorities of project delivery and financial discipline continue to guide us through today's economic landscape .

Speaker #3: I'm also pleased to see that with our announced agreement , we can deliver significant value in the short term to our shareholders . We appreciate your interest in Fluor , and thank you again for your time .