Good morning, and welcome to Fluor's First Quarter 2024 Earnings Conference Call. Today's call is being recorded. A replay of today's conference call will be available at approximately 10:30 a.m. Eastern Time today, accessible on Fluor's website at investor.fluor.com. The web replay will be available for 30 days. A telephone replay will also be available for 7 days through a registration link also accessible on Fluor's website at investor.fluor.com. At this time, for opening remarks, I would like to turn the call over to Jason Landkamer, Head of Investor Relations. Please go ahead, Mr. Landkamer.

Thanks, Jayel, and good morning, everyone. Welcome to Fluor's 2024 First Quarter Earnings Call. David Constable, Fluor's Chairman and Chief Executive Officer; and Joe Brennan, Fluor's Chief Financial Officer, are with us today. Fluor issued its first quarter earnings release earlier this morning, and a slide presentation is posted on our website that we will reference while making prepared remarks. Before getting started, I'd like to refer you to our safe harbor note regarding forward-looking statements, which is summarized on Slide 2. During today's presentation, we'll be making forward-looking statements, which reflect our current analysis of existing trends and information. There is an inherent risk that actual results and expenses could differ materially. You can find a discussion of our risk factors, which could potentially contribute to such differences, in our 2023 Form 10-K and in our Form 10-Q, which was filed earlier today. During this call, we will discuss certain non-GAAP financial measures. Reconciliations of these amounts to the comparable GAAP measures are reflected in our earnings release and posted in the Investor Relations section of our website at investor.fluor.com. With that, I'll now turn the call over to David Constable, Fluor's Chairman and Chief Executive Officer. David?

Thank you, Jason. Good morning, everyone. Thank you for joining us today. Please turn to Slide 3. To get started today, I'll briefly highlight a key component of our Fluor Nordic strategy centered around our technology hub in Europe. This hub, established 3 years ago in Copenhagen, is central to our growth strategy in the Nordic region. Its purpose was to establish a regional presence that is close to our customers as well as providing a collaborative center for our clients, Fluor subject matter experts and local subcontracting partners. Strategically, our vision for this office was to be fit for purpose and able to service the advanced technology and life sciences markets. Today, the local team supports key clients, such as FujiFilm, Eli Lilly and Novo Nordisk, in the biopharma space and advanced technology clients, like Intel, Northvolt and Microsoft. This hub is a great example of our global operations in action within this growing market and a significant supporter of results in the Urban Solutions segment. We're looking forward to continuing traction in these markets as a result of our strategic decisions. Now let's turn to our operating review beginning on Slide 4. Revenue for the first quarter was $3.7 billion. Consolidated new awards for the first quarter were strong at $7 billion, led by key awards in our Advanced Technologies & Life Sciences business line. Our book-to-burn ratio for the quarter was 1.9. New awards were 97% reimbursable, and our total backlog is now $32.7 billion, of which 80% is reimbursable. Our margins on new awards continue to reflect strong demand for our services. Specific to the margin profile, new award margins continue to outpace margin on existing backlog by an average of over 150 basis points for the past 5 quarters. We continue to invest in our people and systems as execution excellence and positioning for future work remains a top priority for Fluor. Our pipeline of current and prospective feeds and studies through the end of 2025 represents a total install cost of 14 times the size of our current backlog. This pipeline is being led by opportunities in life sciences, semiconductors, data centers, energy transition as well as key prospects in mining and metals. Moving to our business segments, please turn to Slide 6. Urban Solutions, our largest and most diverse segment, reported a $50 million profit in the first quarter. Results in this segment reflect the strong ramp-up of execution activities on several recently awarded projects, including 2 life sciences projects, a green steel project and 2 semiconductor projects. New awards for the quarter were $4.9 billion compared to $1.8 billion a year ago. Our backlog is substantial and now stands at $18.6 billion, 78% of which is reimbursable. Now please turn to Slide 7. In Mining and Metals, our client Gold Fields achieved first gold at the Salares Norte project in Chile. This location, at altitudes between 13,000 and 15,000 feet, was extremely challenging and demanded an extraordinary level of modularization never seen before on a project in the Andes. Speaking of Chile, the Fluor joint venture received full notice to proceed for the expansion of Antofagasta's Centinela copper-gold mining operation in Sierra Gorda. When completed, this project is estimated to produce 144,000 metric tons of copper, 130,000 ounces of gold and 3,500 metric tons of molybdenum. We recognized approximately $740 million for Portsmouth award in the first quarter. This strong start in Mining & Metals is anticipated to continue over the next 3 quarters with nearly $4 billion in prospects across aluminum, rare earth refining, port debottlenecking and lithium projects in the United States for Ioneer. We're particularly encouraged with the progress on this last prospect as Ioneer has stated that the Bureau of Land Management has completed its draft review of the environmental impact study. Moving to Slide 8. Advanced Technologies & Life Sciences had another very strong quarter and continues to invest in people and support infrastructure to meet demand. New awards for the quarter included a $3.2 billion EPCM award for full notice to proceed on the Eli Lilly manufacturing facility in Indiana that broke ground in 2023. Over the past few months, we're seeing the CHIPS Act beginning to kickstart semiconductor investment in the United States, including 2 government grants that we're currently working on in a limited capacity. We expect this will support not only current positioning work but more significant awards later this year and into 2025. On a parallel track, clients are orienting their CapEx plans toward data centers to support AI. While it is still early days, we are well-positioned to support our clients in this space. Looking ahead, we see data center investments gaining momentum in the U.S. Midwest, the European Union and Asia. In Infrastructure, productivity remained strong on the Gordie Howe project. This project is now 74% complete, and we're on track for bridge connection midyear with handover of both ports of entry later this year. On the Automated People Mover project in Los Angeles is now 84% complete. Our joint venture continues to work collaboratively with the client for cost recovery entitlements and alignment of schedule to match their timeline. Our last legacy infrastructure project, 635 LBJ, continues to progress and is currently 63% complete. Finally, Plant & Facility Services secured nearly $700 million in new work, including a 7-year contract extension with SunCoke and a 5-year renewal supporting the maintenance and sustaining capital project work for a power generation company we've worked with for the past 40 years. Moving on to Slide 9. Mission Solutions reported segment profit of $22 million for the first quarter compared to $7 million a year ago. New awards increased during the quarter to $1.1 billion and includes the Air Force Contract Augmentation Program V that has a 5-year period of performance valued at approximately $409 million. On this project, we will be providing construction and transportation support for Tinian airfield that is located in an area closely aligned with the nation's national defense strategy for the Indo-Pacific region. Also during the quarter, we received extension notices for a number of projects we are currently executing, including Paducah, the Strategic Petroleum Reserve and Portsmouth. Ending backlog for the quarter was $4.4 billion. It's important to note that the earnings potential for this segment is not fully represented by total backlog. Current and future earnings for this segment also included contributions from projects accounted for under the equity method of accounting. This is reflected in our margin guidance for Mission Solutions. Looking ahead, prospects include additional task order awards for missions in the national security space as well as incremental assignments under the LOGCAP program. Also note that we expect to hear a decision on the Pantex award by midyear. Moving to Energy Solutions, please turn to Slide 10. Segment profit decreased to $68 million from $88 million a year ago. Results for the quarter reflect $29 million in cost growth for delays, craft labor and material escalation on a construction-only subcontract for a non-Pemex client being executed by our joint venture entity in Mexico. Fluor's portion of this unit rate subcontract is approximately $200 million. These cost increases were recognized in the first quarter. However, the joint venture is working with the client to establish commercial resolutions to project impacts. New awards for the quarter totaled $716 million and included an EPCM award for refinery work at Johnson Matthey's Roystone site in the U.K. This is a reimbursable sole-sourced award that rolled over from the initial fee package. Also, we recently received a pre-FEED award from a confidential client for a mega integrated refinery and petrochemical complex in the Middle East. On LNGC, progress is in excess of 90%. With over 5,000 people on site, the project is in full systems completion mode with a focus on testing and commissioning activities for LNG Canada. We expect to be ready for safe start-up in the second half of 2024. Moving to Shell Penguins, Fluor is currently handing over systems on this legacy offshore platform and will complete the remaining commissioning activities later this month. For the remainder of 2024, this segment is pursuing energy transition projects across a number of end markets, including battery manufacturing, renewable fuels, reimbursable offshore LNG and traditional refining. Regarding the liquids and chemicals projects in Saudi Arabia that we've discussed over the past few quarters, the client has decided to put this program on hold as they reevaluate the best approach to development. The collaboration agreement we have with this client remains in place, and we continue to ramp up in the Kingdom for a variety of activities. Finally, with respect to NuScale, we continue to make progress with our strategic investor on the monetization of NuScale shares held by Fluor. With the ever-increasing demand for carbon-free power, which more recently includes the build-out of high-energy-consuming AI data centers and semiconductor facilities globally, investor and power offtake interest, based on the commercialization of NuScale's industry-leading SMR technology, has never been greater. We'll continue to provide updates on this front in the coming quarters of 2024. Based on Fluor's performance over the past 2 years, it's clear that the significant demand for our services across the portfolio allows us to protect our margin corridor of 4% to 6% and provide strong support for our full year guidance expectations. With that, let me turn the call over to Joe for the financial update. Joe?

Yes. Thanks, David, and good morning, everyone. Today, I will review our results for the first quarter and go over financial outlook assumptions that support our guidance. Please turn to Slide 12. As David mentioned, for the first quarter of 2024, revenue was $3.7 billion. Our consolidated segment profit for the quarter was $118 million. Results reflect the normal seasonality we see for the quarter and the $29 million charge David previously discussed. Adjusted EBITDA for the first quarter was $88 million compared to $71 million a year ago. Our adjusted EPS was $0.47 compared to $0.28 in Q1 of 2023. Results for the quarter do not affect our expectations for full year guidance. Our adjusted results for the quarter exclude $7 million for the positive income effects of FX in the embedded derivative in Mexico. G&A expenses for the quarter were $59 million, down from $62 million a year ago. Net interest income in the quarter was $39 million compared to $49 million last quarter and $41 million a year ago. Based on comments from the Fed, we are anticipating the net interest income run rate for the rest of 2024 will remain in this range. New awards of $7 billion in the quarter improved our ending backlog balance to $32.7 billion, which is now 80% reimbursable. Based on our prospect pipeline, we anticipate a book-to-burn ratio equal to or in excess of 1 for the third straight year. Moving to Slide 13. Our cash and marketable securities balance for the quarter was $2.3 billion. This excludes amounts held by NuScale. Operating cash flow for the quarter was an outflow of $111 million compared to an outflow of $161 million a year ago and reflects increases in working capital needs for reimbursable projects, the usual timing of annual incentive payments and $55 million in funding for legacy projects. During Q1, we completed the sale of Stork's European operations to Bilfinger. We also entered into an agreement to sell Stork's UK operations and expect to close this transaction as early as the second quarter. This is a significant milestone as it represents the final planned divestiture of our non-core businesses. Please turn to Slide 14. We are affirming our 2024 adjusted earnings per share guidance of $2.50 to $3 and our adjusted EBITDA guidance of $600 million to $700 million. Our expectations for operating cash flow are between $450 million and $600 million. This excludes up to $150 million in funding for legacy projects. Our assumptions for 2024 include revenue growth of approximately 15%, G&A expense of approximately $190 million and an effective tax rate of approximately 35%. Our expectations for 2024 full year segment margins are: approximately 5% in Energy Solutions, approximately 4% in Urban Solutions and approximately 6% in Mission Solutions.

Your first question comes from James Cook of Truist Securities.

Well, close. It's Jamie Cook. But I haven't gotten that one before. I have two questions. Joe, it seems you've increased your operating cash flow guidance from a range of $350 million to $450 million to now $450 million to $600 million, which is encouraging as it's more in line with EBITDA. What were the factors driving this change? And given the improved cash flow generation, how are you considering capital allocation for the latter half of the year? My second question pertains to the ramp-up to your EBITDA guidance of $600 million to $700 million. The first quarter adjusted EBITDA was $88 million. How should we look at that ramp, especially considering a potentially weaker first quarter? So those are my two questions.

Thank you, Jamie. From a cash perspective, our guidance includes some activity and the return of dividends from LNGC. We're gaining more clarity about the trajectory of our margins as we transition to an 80% reimbursable model. This clarity is helping us understand how cash flow will be reflected in our cash flow statements for the year. With the early onboarding of some activities in Urban Solutions, we expect the business to improve its cash flow profile. This gives us confidence and better visibility on how cash will convert into free operating cash flow for us. Regarding capital allocation, nothing has changed. We will communicate with you about our goals for returning shareholder capital as we approach the latter half of the year. We have progressed faster than anticipated towards reaching the 80% reimbursable model. This backlog will be a key focus as we move forward. I anticipate a smooth ramp as we transition to the end of the year, resulting in a more linear increase from Q2 to Q4.

Your next question comes from the line of Steven Fisher of UBS.

You mentioned that the joint venture is working on a commercial resolution in Mexico. What is the level of risk for additional charges on that project? I understand it's not directly related to Pemex, but more generally, doing business in Mexico has had its challenges. With those challenges persisting, how do you assess the risk versus reward of continuing operations in Mexico?

Thanks for the question. It's David. Historically, ICA Fluor has been our best joint venture in terms of performance, particularly with strong financial results since my return, especially in collaboration with Pemex on their refinery system. Currently, Dos Bocas is mechanically complete, and we are assisting with the start-up. We are doing excellent work for Pemex and on this project. I'm optimistic about the prospects in Mexico and the contributions of ICA Fluor. This specific project is relatively small, involving a subcontract based on direct costs, and amounts to a couple of hundred million dollars for construction only, and is with commercial clients in Ensenada, Baja California, which presents challenges due to its volatile geographic situation and issues with border control that affect labor stability. Over the past six months, we've been negotiating a cost increase and a schedule extension. However, in Q1, it became clear that the local labor market has deteriorated significantly, rendering the initial negotiations inadequate. Therefore, the joint venture, together with Fluor and ICA, is currently working to address these issues with the clients, and the necessary cost increases were recognized in the first quarter. As with our other legacy projects, our focus remains on achieving revenue recovery for this small subcontract.

Yes. Maybe the only thing I would add is just to provide a little bit more color around labor challenges that we see in the region with its proximity to the border and some of the other activities that happen in the northern region above. And we've got a lot of experience doing work in that region, but it's just been exacerbated coming out of the holidays. And again, with this proximity to the border, the attraction and retention of craft resources has become increasingly more challenging and more difficult. And it is a set of challenges that we really don't have on any of our other projects in our portfolio. It's really unique to this project. But as David said, we're working through those challenges with the client to get the best commercial settlement resolution.

And remind me, when was that project booked?

2021, August of '21.

Okay. And so just my follow-up is the sort of idea...

It's scheduled for completion in February of 2025.

Okay. That's helpful. And I guess just the concept of clean quarters with higher margins and consistency still seems like the vision here. And there's a lot of pieces of that being put in place, but it's just not quite there yet. So we know this is a long-cycle business. It takes time to work through some older projects. So what kind of confidence can we have in the timing of achieving those consistent quarters and delivering those nicely higher margins that you're putting into backlog on a consistent basis now?

Yes. No, thanks for the question. I guess I look through it through the lens of the progress that we're making on our reimbursable portfolio. And where we are in terms of where we said we would be by the end of this year at 75%, being up in the 80% range, booking a $7 billion award quarter in Q1 at 90-plus percent reimbursable, I think that's giving us comfort that as we get a better balance of the risk profile within the P&L, that we'll start to eliminate some of that volatility moving forward. And I think all of those factors and proven by not only the bookings, but the opportunities that we see in front of us, remain very heavily weighted towards the reimbursable side of the ledger. So I think that will help us get some of that volatility that continues and certainly having more linear discussions relative to revenue and EBITDA profiles moving forward.

Your next question comes from the line of Andy Wittmann of Baird.

I would like you to elaborate further on your Mission Solutions joint ventures. You mentioned them in your script and noted that these are not reflected in the backlog but are included in your margin guidance. The margin guidance for the Mission segment is significantly higher than what you reported for the last quarter and considerably higher than what we have seen recently. This indicates a noticeable impact. Could you discuss the status of the contracts that are contributing to this margin outlook? Have they already started? In your quarterly announcement, you mentioned your role at Hanford, and there is another project at the Arnold Engineering Center, which I believe is quite substantial. Joe, could you provide details on the projects contributing to this and let us know if there are any protests or issues that need to be addressed before you can recognize these as profit?

Andy, I'll discuss what's happening below the line and the NCI. We have about $2 billion in unrecognized revenue that isn't included in the overall backlog for Mission Solutions. This is a significant factor behind our increased margin guidance. Pantex presents another considerable nonconsolidating opportunity, estimated at around $30 billion. We're working on improving our communication regarding these sizable opportunities, both below and above the line. As we move into Q2 and Q3, we'll aim to provide clearer guidance on how the margin relates to Mission Solutions. These are the main factors contributing to the rise in margin guidance to 6%.

There's a lot of positive activity happening in Mission Solutions. Recently, we've secured awards from FEMA totaling $525 million over 5 years, along with the Hanford tanks contract valued at $45 billion over 15 years. Looking further ahead, we are engaged with Longview Fusion, which is an exciting technological advancement for us. We are also anticipating announcements from the National Cancer Institute and Pantex. Additionally, we have three outstanding bids for nuclear fuel enrichment. We believe the Strategic Petroleum Reserve may see an extension as well, reflecting significant developments in the nuclear and environmental sectors. On the national security front, including defense and intelligence, there's substantial ongoing work. I previously mentioned the Air Force's Test Operations and Sustainment program. Currently, there are six outstanding award announcements in the intelligence sector that we are awaiting, along with many bids in progress. Overall, it's a very busy period for Mission Solutions as it supports national security initiatives.

Joe, is there anything to take from your comment? You mentioned Pantex as something significant. Do you have any updates besides expecting to hear something this summer? This is a contract you won, and now they’re reissuing the RFP for you to respond to. Can you provide any updates on that?

We've submitted the proposal, and it's under review with the government. It's expected that we would hear something within the next month or so. But yes, we're kind of being held a bit hostage relative to when the government wants to announce the release. But we would expect it within the next 2 to 4 weeks. At least, that's early warning signals at this point.

It could be later, too, right? And they don't want to make the award before the election. Let's put it that way. And so they usually take up to a year to award those types of contracts, and we'll be coming up on a year in September. And obviously, there's a good chance it'll be protested, so more to come on Pantex.

Yes. Okay. And just last one for me, just on NuScale here. I was just wondering what kind of you guys are thinking is a realistic outcome. Obviously, you've been talking about this one for some time. There's been various milestones that have kind of come and gone, and obviously, the story over NuScale fluctuated as well. So I just kind of want to get your thoughts for realistic outcome in terms of process and/or timing.

Yes, these are very exciting times, especially considering the demand I mentioned earlier. Interest from investors and power offtake in NuScale's carbon-free technology has never been higher, in my experience. The need for data centers has surged, particularly with the rise of artificial intelligence. In the U.S. alone, power consumption is projected to reach 35,000 megawatts by 2030, compared to our current 17,000 megawatts. This represents a significant need for clean power, and we are engaged in detailed discussions with clients looking to NuScale for solutions. The demand is evident, and we are working under exclusivity with our strategic investor on a complex deal with many moving parts. However, it is a leading approach for strategic investors in developing NuScale globally. I fully support the business model proposed by our strategic investor. We have three main objectives to ensure our success: first, to successfully commercialize NuScale technology; second, to maximize value for Fluor's shareholders by monetizing our NuScale shares; and third, to ensure Fluor's engineering, construction, and project management services are involved in NuScale projects where we can provide value. This is all part of our path forward, and we will keep progressing. With the interest from investors and power offtake, I believe we will see positive movement in our timelines. We will continue to provide updates throughout the year and hopefully have something promising to share in 2024 that will excite both us and our shareholders. Thank you.

Your next question comes from the line of Michael Dudas of Vertical Research.

David, could you provide a follow-up on your NuScale response regarding data centers? Please remind us of Fluor's position in that market. How does Fluor's construction role compare to what we saw with the semiconductor cycle a couple of years ago? It seems like an early stage, but is there significant regulatory red tape and power consumption demand to consider? Could you share some insights on the timing of Fluor's involvement and whether this can be reflected in the backlog over the next 12 to 18 months?

Semiconductor work is continuing and expanding, and we are actively engaged in that market. The model for data centers is quite similar, as we are focused on supporting the development of data centers both in the U.S. and internationally. For instance, our project with Microsoft in India serves as an example of our international involvement. We anticipate applying that experience in the U.S. as bidding for these data centers begins. I believe this will lead to an increase in the backlog for ATLS in the future. We are well-prepared to assist our clients in this area and are currently deeply involved in positioning ourselves, especially with the major players in the data center sector. This is where we stand on that matter.

I appreciate that. And then maybe on a follow-up, given what you just mentioned there and the activity and all the manufacturing reshoring in Life Science and the bookings you've had, and then any sense of capacity and competition? Are clients starting to get more concerned about the ability to bring on the talent that's required from a vendor and from a contractor space? And how do you think that's going to reflect in your ability to better continue these margin improvements? I guess that's a part of why the margin is moving up and getting better T&Cs.

Most definitely. In that market, it is clearly a seller's market, both in the EPC space and among vendors. Some clients are opting to sign agreements to secure access to top teams and engineering talent, effectively locking out their competitors. This creates a capacity challenge. A couple of years ago, as our backlog started to grow and we began booking this $20 billion, we initiated a talent task force. This team has been effective, hiring 5,000 people each year recently. We currently have 1,400 open requisitions that are not immediately needed, so we have some time to address those. Fortunately, we got a head start. We are also redeploying talent; with nearly $19 billion in ATLS and about $10 billion in Energy Solutions, we have personnel in Energy Solutions who can easily be redeployed to the larger ATLS projects. ATLS is now handling mega projects; what used to be considered large projects at $500 million is now the norm. We are focusing on transferring project management skills from other areas of the company to ensure we can execute effectively, and this is progressing well. The leader of ATLS, Richard Meserole, has experience running the significant $46 billion TCO project, so he understands the requirements for large projects and that’s how we are tackling the ATLS work. However, vendors are also capitalizing on this situation, leading to price increases and longer delivery schedules. We need to be very cautious and ensure our estimates are realistic for our clients. Thank you, Mike.

Your next question comes from the line of Sangita Jain of KeyBanc.

This is Alex on for Sangita. I just had one. Can you talk about your success in winning bids this quarter? Last quarter, you had mentioned you won 78% of all pursuits last year. So I'm wondering if the strong backlog this quarter is more a function of a continued higher win rate. Or is it just more demand and more awards coming to market?

We monitor our win rate, but I didn't see it this quarter. I typically look at it annually. Last year, we had a 78% hit rate, and I expect that to continue. Historically, our win rate has been in the 50% to 70% range. Our criteria for selecting prospects is helping us achieve this high win rate since we only pursue opportunities we can fulfill and have strong teams for. Additionally, we are experiencing a seller's market in many of our sectors, allowing us to be more selective. When I assess our few losses each quarter, most of them are due to pricing, and we're okay with that. We want to be compensated fairly in alignment with our strategic priorities, contract terms, and the value we provide. If we have to lose, that's an acceptable way to do it. Moving forward, we need to focus our resources on prospects with increasing margins, and we will continue to push in that direction. Thank you.

Your next question comes from the line of Natalia Bak of Citibank.

This is Natalia Bak on behalf of Andy Kaplowitz. You mentioned you expect a book-to-bill in excess of 1 for the year, as well as an 80% reimbursable backlog, you're expecting more linear ramp-up as you get from 2Q to 4Q. So maybe you could talk about the cadence of bookings across the segments. And is that linear ramp-up something you expect across all the segments?

I will start by addressing the earnings aspect. We are observing strength across all three segments, which supports our linear growth model for the remainder of the year. This is backed not only by the new awards we secured this quarter but also by the $7 billion we booked in the fourth quarter, which has really set a positive trajectory for the year. This gives us confidence in our margin profile for the next three quarters. As for the cadence of new awards, David, would you like to add anything?

Yes, I agree with you. I expect the reimbursable percentage to reach 80% or higher by the end of the year, based on our current observations. We have only a few of the $35 billion in projects we are pursuing over the next four quarters, as there are just a couple of lump-sum prospects included. Therefore, the reimbursable project pipeline will continue to grow in our backlog, and we anticipate maintaining a higher margin profile. We've discussed ATLS extensively today. The prospects across different segments are promising, particularly in data centers, chips, and pharmaceuticals, as well as in Mining & Metals. ATLS is currently well-positioned. We also have significant chemical projects and strong energy transition markets throughout our portfolio. We expect to receive awards in Urban Solutions and Energy Solutions, along with recompete or extension awards in Mission Solutions.

Okay. That's helpful. And then just one more question from me. If you could just give us a little more color on what you're seeing in terms of demand by region and how you think about geopolitical risk? Do you see the Middle East as a good source of bookings in 2024 or prospects more weighted towards Americas?

Yes. We have been securing a significant amount of work internationally lately. Our major clients, primarily multinationals, tend to look past short-term economic and geopolitical challenges. If they didn't, we wouldn't have a backlog of $32.7 billion despite all the current uncertainties. Their capital expenditure plans and allocation strategies allow them to adopt a long-term perspective. Consequently, we are not noticing any decline in our clients' capital expenditure plans due to geopolitical risks. While they are diversifying away from certain regions, such as in the China Plus One risk mitigation strategy we are currently involved with, our top twelve commercial customers are projected to spend between $160 billion and $165 billion in capital expenditures in 2023. Their capital expenditure for 2024 is expected to range from $155 billion to $165 billion, indicating a slight increase, with projections beyond 2024 estimating between $165 billion and $180 billion. Overall, their capital expenditure remains stable, and in many cases, it is actually increasing among our primary customers. Additionally, this forecast does not include government budgets. For instance, the U.S. Army's budget request stands at about $186 billion this year, while the Department of Energy has allocated $52 billion and FEMA is likely to spend around $26 billion. In Texas, where we undertake a lot of infrastructure work, TxDOT's budget has increased to $16 billion this year. I perceive the markets to be very robust, and we will continue to see growth in our backlog.

If I could add, I think we've seen significant traction on bookings in the United States, which is quite helpful. If you've been following the story, we have not been profitable in the U.S. for a number of reasons over the past 5, 6 years relative to some performance prior to David and I arriving, and that has put us in a loss position in the U.S., which has created some tax friction. We're starting to see a very clean pathway to getting back to profitable in the United States, which will have some other kind of tag-along benefits related to our effective tax rates and our use of value VA sitting on our balance sheet. So that's a long-winded way of saying, yes, we're starting to see some traction and growth in our backlog here in the United States.

Your next question comes from the line of Michael Feniger of Bank of America.

Just when we think about operating cash flow guidance, obviously, this year started use of, I think, $110 million, better than what it was a year ago. Just to get to that positive full year guide, I know there's a level of seasonality. Just any guardrails you can kind of give us as we kind of prepare for Q2 and Q3. Is the bulk of that cash from ops? Is that mostly Q4? Does it kind of inflect as we go into Q2? Just try to give us some guardrails on preparing how that cadence plays out through the year.

Yes, I believe you will notice a more significant increase towards the end of the year. There will be some fluctuations during Q2 and Q3, but most of it is expected to be more heavily weighted towards the end of the year due to some dividends we plan to repatriate in the middle of 2024. So, it will likely remain relatively flat between Q2 and Q3, and I anticipate an uptick as we approach the end of the year.

Great. And just my follow-up, on the $150 million of legacy funding, I believe that hasn't changed. Just any guidepost of how that could potentially move better or more through the year? Any catalysts that we should kind of keep our eyes out for as you kind of progress through the year? And just that $150 million, just directionally, how does that kind of look as we enter 2025 and some of these projects start to wind down or come close to completion?

Yes. Let me talk about heading into 2025. I think we'll have de minimis amounts of funding requirements on loss projects in 2025. I think the bulk of what we're trying to achieve relative to the completion of those projects will kind of come to fruition in 2024. And on the legacy funding of the project, that's the starting point. And if you look at, historically, what we've been able to do over the last couple of years is that signpost at the beginning of the year relative to cash flow requirements on loss projects, we've been able to significantly reduce that number. And our expectation is that $150 million will be driven down to its lowest common denominator here for the year. And within, we feel comfortable based on historically how we've been able to achieve that.

That concludes our Q&A session. I will now turn the conference back over to David Constable, Chairman and CEO, for closing remarks.

Great. Thank you, operator, and many thanks to all of you for participating on our call today. Given our performance over the last 3 years and our strong position in the marketplace, we expect to continue to generate substantial value for our shareholders in the future. Appreciate your interest in Fluor, and thank you again for your time today.

This concludes today's conference call. You may now disconnect.