Fluor Corp Q1 2025 Earnings Call Transcript

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

Question: Michael Dudas - Vertical Research Partners - Analyst : 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 they 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 90%, how that would reflect relative to maybe other periods of time in Fluor's history? Thanks.

Question: Michael Dudas - Vertical Research Partners - Analyst : Excellent. Thanks, gentlemen.

Question: Jamie Cook - Trust Securities - Analyst : 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 million. If we just multiply that by four years at the high end of -- I mean your EBITDA guidance for the year. And I guess how much conservative would you say there is in your numbers? I mean, I'm just looking at your revenue has (inaudible) growth has to accelerate in the remaining three quarters for you to make your 15% top-line guide, you know what I mean, so it implies your EBITDA should be growing from the first quarter level. So I guess I'll start that with my first question.

Question: Jamie Cook - Trust Securities - Analyst : Okay. And I guess just my second question on the (technical difficulty) started out sort of in the hole on cash flow for the first quarter, but you increased your -- you doubled your share repurchase 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 funding less of those legacy projects, if you could just characterize.

Question: Jamie Cook - Trust Securities - Analyst : Yeah. Thank you, and nice quarter. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 02, 2025 / 12:30PM, FLR.N - Q1 2025 Fluor Corp Earnings Call

Question: Andy Kaplowitz - Citi - Analyst : I just wanted to follow up on Jamie's question in one sense. I think you said you're more comfortable -- it's obviously a big range for EBITDA and EPS, like you're more comfortable maybe with the midpoint 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 Mission Solutions. Do we need to worry about like underutilization in the second half? Or there's enough projects in terms of that book-to-bill still being over 1 that you can sort of fill the gap.

Question: Andy Kaplowitz - Citi - Analyst : Very helpful, guys. And then you kept guidance of still book-to-bill over 1 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 1. Is it a couple of chunky projects? Is it a couple of particular end markets? Where does the confidence come from, given the macro uncertainty?

Question: Andy Kaplowitz - Citi - Analyst : Appreciate all the color.

Question: Andy Whitman - Robert W. Baird & Co., Inc. - Analyst : Great. Thanks for taking my questions. I had several here to just help understand the quarter. And 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?

Question: Andy Whitman - Robert W. Baird & Co., Inc. - Analyst : And therefore, it was added back or excluded from your adjusted results. Is that right?

Question: Andy Whitman - Robert W. Baird & Co., Inc. - Analyst : Yeah. And it's not in the Urban segment either.

Question: Andy Whitman - Robert W. Baird & Co., Inc. - Analyst : Okay. That's helpful. Okay. So then you talked about how two projects that got descoped were allowed you to -- because you're, therefore, further 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 descoping process. We have to love E&C accounting. Could you tell us either by segment for Urban and Energy where those, I think, two projects resided in each. Could you tell us either individually per segment or in total, how much benefit that POC change afforded you in the quarter? I think this will help all of us get at Jamie's question that she asked about the kind of underlying EBITDA run rate.

Question: Andy Whitman - Robert W. Baird & Co., Inc. - Analyst : Got it. Just because your tax rate is always jumpy here, what would that be on an EBITDA basis?

Question: Andy Whitman - Robert W. Baird & Co., Inc. - Analyst : So total of $40 million then.

Question: Andy Whitman - Robert W. Baird & Co., Inc. - Analyst : Okay. Okay. And then just on cash flow --

Question: Andy Whitman - Robert W. Baird & Co., Inc. - Analyst : Yeah. (inaudible) over the year? That makes sense. (inaudible) over the year. It's [$40 million]. It has been maybe [$10 million] already here and [$30 million] for the rest of the year, be straight lining it kind of (inaudible). REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 02, 2025 / 12:30PM, FLR.N - Q1 2025 Fluor Corp Earnings Call

Question: Andy Whitman - Robert W. Baird & Co., Inc. - Analyst : Yes. That makes sense. Okay. Thanks for that clarification. 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 some offset 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 kind of $84 million. 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 finally get out of that cash position and when?

Question: Andy Whitman - Robert W. Baird & Co., Inc. - Analyst : Okay. That's helpful. Okay. Those are my clarifying questions. Great. Thank you so much for helping me clarify those things.