Fluor Corp at UBS Global Industrials & Transportation Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Steven Fisher - UBS - Analyst : So maybe just to start off here. Very timely, appreciate to have you at our conference, Joe, just after the announcement of your retirement. I've gotten a lot of questions on it over the course of the week. If you want to just kind of give any color on your on announcement.

Question: Steven Fisher - UBS - Analyst : Well earned, and congratulations and best wishes again on that.

Question: Steven Fisher - UBS - Analyst : So maybe kind of similar type of discussion, but zooming out a little bit and rewinding really to think about how the industry has evolved over the last 5 to 10 years and how Fluor model has evolved. Maybe you could just talk about sort of the recent evolution of Fluor and where it's headed from a business model perspective as David Constable and you and the rest of the team have kind of really shaped -- made the decisions. As the industry was changing, I would say, like I said, over the last 5 to 10 years, how Fluor management made the decision to have the business model that you are going to go forward with. And so talk about some of that evolution and why that model that you have today is really relevant and the right model for the market today.

Question: Steven Fisher - UBS - Analyst : That's great. And Fluor, you just talked about relationship model around big project expertise. Often what comes along with that is uncertainty around timing of things. And one of the recent things that came up on the Q3 conference call, the 2026 targets, maybe a little bit of a slippage there. Can you talk a little bit about sort of the drivers of that and how we should think about 2025 in the context of maybe timing on '26 and maybe what you had?

Question: Steven Fisher - UBS - Analyst : Great. Yes, that was going to be my next question. We were just kind of talking about where the growth leadership is going to come from. So it sounds like urban first, then energy and then missions, but you have some big programs in missions as well. So how do you sort of rank?

Question: Steven Fisher - UBS - Analyst : Great. So maybe we can kind of dig in a little bit on the urban side of things. Like you said, it's a big piece of your backlog today. A number of different components to it. A lot of exciting things going on there. Can you maybe just break down for us how you see this -- that segment really evolving over the next couple of years?

Question: Steven Fisher - UBS - Analyst : Let's include mining in that.

Question: Steven Fisher - UBS - Analyst : Great. Maybe we can dig into data centers a little bit more since that's a very topical subject, and it sounds like you guys have some really interesting things ahead. Kind of it sounds like we're talking about relationship-based type opportunities. There's not one-offs here. Can you just talk about how you're -- and you've been working on data centers already. So maybe you can talk about how that's -- what you're doing now and what it might evolve into and how that might flow through the backlog and timing.

Question: Steven Fisher - UBS - Analyst : I do think it makes sense to talk about Power as part of the discussion, so we'll get to that. Maybe walk us through -- sticking with data centers a little longer. Maybe walk us through the progression of what we should expect over the next 6 to 12 months? Are there going to be big things coming into backlog? Is this sort of multiple programs, multiple customers? How do we think about how this might progress for you from here?

Question: Steven Fisher - UBS - Analyst : Interesting. And maybe as a kind of we get very US-focus here being US-centric, but I'm imagining there's more to it than this as you have these sort of alliance and bigger-picture things. How should we think about international versus domestic on the data center opportunity? Is this a global reach that you'll be kind of focused on?

Question: Steven Fisher - UBS - Analyst : Okay. Well, I think that's a good pivot point to talk about the Power angle on this. And Fluor has certainly had a long-running capability in the power area very broadly, and so maybe what seems to be most topical now is nuclear. So maybe we can talk a little bit about some of your recent nuclear experience. You announced an award recently. Can you talk about really kind of how nuclear you see developing for you from here?

Question: Steven Fisher - UBS - Analyst : Great. So maybe just taking that a step further here. You mentioned programs in Europe. How do we think about, again, US versus international opportunities there and sort of the timing of revenue generation? Obviously, nuclear often has very long lead times till actual revenue generation. So what's the sort of domestic versus international? And when could we start to see real revenue opportunities?

Question: Steven Fisher - UBS - Analyst : Sure.

Question: Steven Fisher - UBS - Analyst : Yes, sure. Great. Well, maybe to just continue to build on the NuScale discussion. Obviously, you're still a very large holder of the -- of that company. Anything you can talk about in this forum on...

Question: Steven Fisher - UBS - Analyst : Okay. That sounds good. All right. Maybe shifting over, not too far, staying on the power topic, but you mentioned gas-fired. Do you see opportunities

Question: Steven Fisher - UBS - Analyst : Actually, I wanted to go back to one last question on the nuclear side of things. So we get this question a lot in terms of just the size of individual opportunities around nuclear. Obviously, if we're talking about large scale, those are going to be very, very big. I don't know if those -- if your scope would be in the multibillions. And if we're thinking about if it's in SMR, is that sort of the same scale type of (inaudible)

Question: Steven Fisher - UBS - Analyst : Okay. Great. Wanted to just maybe to round out the discussion in urban solutions around mining. You mentioned a number of opportunities and things that you have going on. It's interesting, I was out at MINExpo back in the end of September. And some of the discussion back then was commodity prices are in a nice area, but there's still restraint on some investments due to permitting environment. And the discussion was if we get changes in administration, not only in the US but in certain other places, we could see sort of an unleashing of opportunities. Do you see or hearing anything more about opportunities that might come out of that?

Question: Steven Fisher - UBS - Analyst : Great. Want to get into cash, capital allocation, but maybe we'll pause here. And see if anyone would like to ask a question again to either use the QR code or raise your hand if anyone would like to ask any question. Please, we have one here. Unidentified Participant Can you please talk about just Shell's plans for Phase 2 as we think about LNG Canada? And I know that's been a source of revenues that's coming off. How do we think about that as we move out to '26 as well -- '25, '26?

Question: Steven Fisher - UBS - Analyst : Anybody else? Okay. Maybe we can round out the last few minutes here with discussion on cash flow, capital allocation. Can you talk, Joe, a little bit about cash flow and how to think about where we are in terms of what's the normalized level of cash flow conversion, however way you want to frame it in terms of EBITDA or net income? How do you see this for the next couple of years?

Question: Steven Fisher - UBS - Analyst : Okay. And in terms of allocation, you announced on a recent call your authorization of buybacks from -- I think it was 10 million to 30 million. Can you just talk about how you see that being executed or any kind of planned communication that you have around that? Is it too early to say exactly what you're going to do?

Question: Steven Fisher - UBS - Analyst : And one finer point here, going back to NuScale. You mentioned earlier in the discussion about locking up some value. I think you said your capital allocation plans assume will be exclusive of anything that...

Question: Steven Fisher - UBS - Analyst : Okay. And then lastly, multiyear targets. Should we anticipate, at your upcoming earnings quarter, there'll be sort of another longer-term framework to talk about from an EBITDA perspective? Or how should we set our expectations around that kind of communication? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 05, 2024 / 3:30PM, FLR.N - Fluor Corp at UBS Global Industrials & Transportation Conference

Question: Steven Fisher - UBS - Analyst : Okay. Got it. Terrific. Well, we're out of time. I want to thank you so much for being here, really appreciate the exciting times, and we will wrap it there. Thank you.