Good morning, and welcome to Fluor's fourth quarter and full year 2024 results conference call. Today's call is being recorded. At this time, all participants are in a listen-only mode. 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 Fluor's website at investor.fluor.com. the web replay will be available for 30 days a telephone replay will also be available for seven days through registration link also accessible on floor's website at investor.flor.com at this time for opening remarks i would like to turn the call over to jason landgamer vice president investor relations please go ahead mr landgamer thank you operator and welcome to the floor's 2024 fourth quarter earnings call david constable Floor's Chairman and Chief Executive Officer, Joe Brennan, Floor's Chief Financial Officer, Jim Brewer, our Chief Operating Officer, and John Regan, our current Chief Accounting Officer

and soon-to-be CFO, are here with us today. Floor issued its fourth 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 would like to refer you to our safe harbor note regarding forward-looking statements, which is summarized on slide two. 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 experience could differ materially. You can find a discussion of our risk factors which could potentially contribute to such differences in our 2024 Form 10-K, 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.floor.com. I'll now turn the call over to David Constable, Floor's Chairman and Chief Executive Officer. David.

Thank you for joining us today. Please turn to slide three, passing the CEO transition announcement issued earlier this morning. It has been just over four years since we launched our Building a Better Future strategy and set our long-term financial targets. In 2024, we achieved the goals under this strategy with strong cash flow and a robust capital structure supporting a backlog that is not only majority reimbursable but one that reflects our portfolio approach to our end markets importantly we have met and in most cases exceeded our strategic targets bringing the fix and build portion of our strategy to a close long-term succession plans and with the full support of floors board it is now the right time for me to transition into the role of executive chairman and pass the Chief Executive Officer role on to Jim Brewer. Starting on May 1st in my new role, I will be supporting Jim as he builds upon his relationships with clients and engages more fully with our stakeholders. In Jim's new role, he will be focused on developing the storylines for the next chapter of our strategy, which is thematically focused on grow and execute. This will include revised growth targets and a laser focus on project delivery markets over the next four years at our upcoming strategy update event on april 2nd at one of our major atls sites started floor as an engineer in our calgary office experiences and opportunities that awaited me and my family over the next five decades i'm filled with gratitude for the experiences traditions and proud moments that define my journey with the corporation and i'm really looking forward to seeing our new management team build upon floor's legacy Now, please turn to slide 4, $16.3 billion, marking a 5.4% increase from 2023. In 2024, we recorded new awards totaling $15.1 billion, achieving a book-to-burn ratio of just under 1, 150 basis points above new award margins last year, and well supports our established margin corridor of 4 to 6%. Importantly, our 2024 net gross margin book-to-burn ratio was a healthy 107%. 85% of new awards for 2024 were reimbursable. The backlog is now approximately 80% reimbursable. The rapid pace of announcements that are coming out of the executive branch is closely. While it's still too early to be definitive about the long-term impacts, we are focusing on the broad economic themes of the administration's agenda, which are to promote capital investment and job creation. The underlying themes of pro-domestic energy key minerals production structure development in the executive orders we see these directives as favorable to nuclear and thermal sources of energy favorable to lng exports and expedited permitting favorable to increasing domestic mineral production and favorable to significant data center build outs therefore we see positive elements across all the floors business segments and stand ready as we always have to support our clients. Before I turn the call over to Jim, I want to thank Joe for partnering with me through this journey and for playing an instrumental role in strengthening our financial stability and positioning Fleur for long-term success. Jim will now take us through the fourth quarter highlights for 2025. Jim?

I'd like to thank the board for entrusting me with this responsibility. At 31 years at Fleur, I've learned to appreciate and share the values that define this great company. I've seen firsthand the amazing work that we do around the world to support David's leadership during these last four-plus years. Our company is healthier financially and poised to meet the demand with our employees, partners, and other stakeholders to continue to serve. Now, moving to the results of the quarter and full year, please turn to slide six. Beginning with Urban Solutions, the segment reported a profit for the quarter of 81 million dollars versus 147 million a year ago new awards for the quarter total 1.4 billion dollars and ending backlog for the full year grew by 20 percent to 17.7 billion up from 14.8 billion a year ago in atls we received an incremental award of 243 million dollars for LP1 project in Lebanon, Indiana. This project has grown from 200 to 1,000 personnel and continues to progress with the installation of the facility's central utilities building, along with steel and concrete placement at the peptides, small molecule, and tank farm areas of the facility. The workforce is expected to increase in size in the first half of 2025. On the semiconductor front, based upon our project performance, a major semiconductor manufacturer in Arizona has awarded for more tool and still growing our experience in tool install scopes like this one, physicians does well for future semiconductor opportunities in the United States. For 2025, we see a robust slate of opportunities, including the next expansion phase of Lilly's Indiana project and another major peptide manufacturing facility in the U.S. In addition, we've recently signed a master agreement with a leading technology provider and have received initial data center work under this built upon our extensive data center project experience to the data center market. In addition to the opportunity I just mentioned, we're in conversations or have agreements with the top four. We continue to see this market as a significant contributor to the grow and execute phase of our in mining and metals we received an award for a port debottlenecking project in australia for a major mining company this project will support increased production capacity 2025 we see a continued focus by our clients on developing additional capacity for key resources including copper and iron ore We're currently tracking mining and metals opportunities that represent tens of billions in awards. Turn to slide 9. To make good progress on the Gordie Howe project, construction is now 94% of the U.S. port of entry is in progress. Substantial completion is targeted for Q3 of 2025. Automated people mover project is now 93% complete, and the forecasted substantial completion date remains on track for Q4 of 2025. On the I-635 LBJ project, construction is now 70% complete. Substantial completion is forecasted for Q2 of 2026. For this business line, as legacy projects wrap up, we are selectively pursuing opportunities in markets where we have strong client relationships and an appropriate risk. These include Texas, North Carolina, and the Netherlands. Moving on to slide 10, reported a fourth quarter segment profit of $63 million, a significant increase from the $26 million recorded in 2023. Quarterly results from last year included $33 million of cost growth for the Penguin's Legacy Project. In the fourth quarter, new awards totaled $406 million, which included additional scope on a revamped project in Sweden, full release on engineering for a regasification and power plant in Indonesia, and a front-end award for the Units 3 and 4 at the Chernoboda Nuclear Power Plant in Romania. This award marks a significant milestone in Romania's efforts to enhance sustainability and energy security in the region. Ending backlog for energy solutions was $7.6 billion, compared to $9.7 billion a year ago. During the quarter, we helped support key accomplishments for our clients, including the TCO project in Kazakhstan, achieving first oil, the BASF project in China, achieving 50 million hours without a lost time injury, and the recently completed lithium hydroxide project in China for Aldemarle, which was named a 2024 Global Best Project by Engineering News Record. At LNG Canada, the project has surpassed 95 percent completion mark overall with 771 of 838 systems having achieved mechanical completion additionally the main refrigeration compression systems on train one are in final commissioning in preparation for cool death project is experiencing some challenges with the installation of insulation on piping and equipment additional skilled labor has been mobilized to site in order to expedite by middle of 2020. This project continues to track. To date, our joint venture and the client have not yet fully resolved certain outstanding issues for COVID-related impacts. We believe that the client and our joint venture will resolve these items fairly and equitably, similar to resolutions reached on previous changes on the project. To add to 2025, our energy solutions business will be focused on reloading with front-end engineering and design packages to support future EPCM work, including large chemicals facilities in the Middle East and decarbonization. We're seeing opportunities in the LNG space, including additional interest in mid-scale LNG facilities. On the power front, we are actively deploying our strategy in both nuclear and thermal solutions to support additional energy demand from data centers and other broad power. We continue to negotiate with our strategic investor to reach an agreement on a long-term monetization and revenue stream to Fluor while moving new scale closer to commercialization. We believe our current path is the best way to bring value to Fluor shareholders and maximize our long-term investment. In moving to Mission Solutions, please turn to slide 11. We reported a segment profit of $45 million in the fourth quarter compared to $31 million a year ago. New awards for the quarter were $429 million, which included an eight-month extension for the Portsmouth Decontamination and Decommissioning Program, and FEMA task orders for Florida, Georgia, and Virginia. Our ending backlog for Mission Solutions was $2.7 billion, compared to $3.9 billion a year ago. And as a reminder, backlog does not include approximately $5 billion in annual revenue for projects related to our equity method investment, where we don't fully or partially consolidate our results. We're well-positioned with our Department of Defense and Department of Energy customers on recompetes or extensions of existing contracts, including work for the Army on our Law Cap 5 contract in Africa.

Thanks, Jim, and good morning, everyone. This morning, I'd like to discuss an overview of our financial performance and provide an update on the progress we have made in strengthening our capital structure. Please turn to slide 13. For the full year, floor reported revenue of $16.3 billion and a net income of $2.1 billion, or $12.30 per diluted share. Results for the year reflect the favorable impact of the new-scale deconsolidation and subsequent fair value accounting. During the quarter, we recognized a $116 million provision related to a jury verdict against a floor joint venture on an infrastructure project completed over 12 years ago. The client sued over alleged incorrect designs performed by a subcontractor. We believe that the jury verdict does not accurately reflect the evidence at trial, and we are evaluating all options that may eliminate most, if not all, of the provision The provision does not reflect any offsetting recoveries that we believe are owed to the joint venture. Our 2024 Form 10-K filed today contains additional discussion on this matter. Segment profit for the year was $635 million and adjusted EBITDA was $530 million. On an adjusted basis, our 2024 results were $2.32 per diluted share. corporate gna expenses for the year were 203 million dollars compared to 232 million dollars a year ago the improvement over 2023 can be attributed to an ongoing focus on overhead optimization and a reduction in performance-based compensation for the full year we reported net interest income of 150 million as our cash management team invested floors cash and high quality interest bearing assets which more than covered the 46 million dollars in low cost fixed rate interest expense on our outstanding debt please turn to slide 14. cash and cash equivalents combined with marketable securities were three billion dollars representing a 14 increase from 2023. our operating cash flow for the year of 828 million dollars including meaningful meaningful distributions from two large joint ventures and IRS refunds, but also reflect strong core cash generation. This was our best year for operating cash flow since 2015. During the year, legacy projects required $81 million in funding. We believe that these late-stage legacy projects will require up to $200 million of funding in 2025. Over the course of 2024, we communicated our intent to restart our capital allocation program. Based on our strong financial footing and confidence in sustained cash flow generation, we started our share repurchase program with $125 million, or 2.3 million shares purchased in the fourth quarter. Under this initial phase of our share repurchase program, we are targeting an additional $300 million in repurchases during 2025. Changes to our plan for share repurchases will hinge on potential proceeds from further monetization activities. Our performance over the past four years provides flexibility on capital allocation, including reinvesting in the business organically, the size and timing of our share repurchases, reinstating a dividend, and the ability to make select bolt-on acquisitions to support the continued growth in the business. Before we discuss our guidance for 2025 i want to review a few additional items please turn to slide 15. last year we purchased 57 million dollars of our outstanding 2028 notes we will continue to chip away at these notes opportunistically at or below par last month we closed the sale of our stork uk operations which essentially completes our transition to an asset light model led by our transaction of stork and right-sizing our office in Houston, we have been able to reduce our real estate footprint by more than half to 3.7 million square feet. Next, our investment in NuScale was deconsolidated in October of 2024, resulting in a $1.6 billion pre-tax gain. Subsequent mark-to-market gains based on its prevailing stock price through 1231 resulted in an additional pre-tax gain of $604 million for the fourth quarter of 2024. Since this will be my final earnings call, I wanted to introduce John Regan as my successor. John has worked side by side with me over the past four years and was a key part of the finance leadership team that led to the rebuilding of Fluor's capital structure. John, I'll turn the call over to you.

Thanks, Joe. What Fluor accomplished with the first chapter of our strategy has restored investor confidence as we pivot to the grow and execute forward to meeting our investors turn to slide 16 25 our eva dog guidance is 575 to 675 million operating cashing operational performance working capital needs under a largely reimbursable profile your eps to range between two and a quarter to two dollars and 75 cents per diluted share we currently don't see any material items that need normalizing from our gap earnings now mark to market to their screen price 6 million shares execute our 15 percent 80 million dollars eventually wide range of outcomes of tax rate of 2025 to four and a half for EBITDA as we ramp up

execute particularly advancing opportunity information into ours thank you the floor is now open for questions if you have dialed in and would like to ask a question please press star one on your telephone keypad to raise your hand and join the queue if you would like to withdraw your question simply press star 1 again if you are called upon to ask your question and they're listening via loudspeaker on your device please pick up your handset and ensure that your phone is not on mute when asking your question we do request for today's section that you please limit to one question and one follow-up again press star 1 to join the queue your Our first question comes from the line of Michael Dudas with Vertical Research. Please go ahead.

Good morning, gentlemen. Good morning, Mike.

Good morning, Mike.

Congrats, Jim, and well done, David. First, maybe for David or Jim, as you've put together your outlook for 2025 and some of the cross-currents that you've highlighted in your prepared remarks, you know, on the booked a bill that could be well above one, maybe a little bit more thought on timing in the areas.

Certainly, you highlighted energy solutions reloading, but in the urban side, which has really been a big driver the last couple of years, maybe a little bit more visibility on how that will be booked and the margins that you're seeing on some of these opportunities in the urban solutions area relative to the mixture business. yeah good morning mike maybe i'll start and ask jim to comment as well you know as you look at the backlog at the end of the year uh in 24 obviously we've seen urban solutions uh kick up dramatically as we had laid out and and uh planned for in our in our strategy to drive growth across the portfolio So you see that backlog sitting at 17.7 billion energy solutions coming down as we expected as well, and mission solutions holding firm. So we expect that to continue. We do see a book to bill significantly above one in 2025, just to emphasize that, and the margins we guided, we're comfortable, certainly comfortable with. so uh you know where where it's coming from specifically uh jim some comments on on on that please sure thanks david and thanks pharma in addition to building some of them in front end with doe and we it's urban and its mission primarily uh with a lot yeah just to mike just to kind of big picture support what what jim has just mentioned we've got about in the next 12 months We've got prospects just in the larger EPC-PCM project arena, not the front-end work, but just the full EPC awards, prospects of about $46.5 billion, with again, urban being about almost $24 billion of that, and then evenly split between energy solutions and mission for the other, you know, $20, $22 billion. So that kind of, you know, supports where we're heading with our bookings in the coming year.

And, Mike, just to add, you asked a little bit about timing.

I think it's encouraging to see some of the announcements through the mining group this early in the year and also through kind of the data center activity that we're kind of – we've got some inroads at the beginning of the cycle so it should help and support the burn curves as we move through the year maybe how when you look at the maybe upcoming data center cycle relative to say your let's say life science or semi-cycle and like where are we in maybe early inning or what innings you're in and the magnitude and scope of what you would be providing and what those numbers should look like when you uh convert those kind of prospects into the bookings mike mike we missed the sorry what was the um specific area we missed the beginning of that no i'm so i'm sorry i apologize uh on the data center site maybe compared to like your life science or semiconductor electronic space and what inning we're in and what when you convert those prospects what type of size of projects and what scope that you'd be providing as we move through this looks like a long cycle of build out on the um ai front data center high projects has grown about

multiple billions of dollars and develop uh but the the neat thing about this agreement with this client on multiple projects and therefore of efficiency projects so i think we're in the we're on the early stages methodically and we do believe that data centers will be a significant engine for

our for our growth in this next chapter of the strategy yeah and just adding to that mike right as jim said a significant contributor to only for the in the facilities data center facilities themselves but also where floor can add value on the power demand side of the equation right our expertise in power generation both you know thermal and nuclear is going to play a key role in supporting our clients needs and we're already you know currently ramping up our capabilities further uh on the power side you know the numbers are just uh astronomical for power demand for for data centers uh we've got 26 000 megawatts installed in the u.s right now Now that's going to go to 90, they say 92,000 is required by the end of the decade. And then the numbers are even larger globally. But the U.S. is about 40% of the market. So a big focus here on data centers combined with power generation, which is obviously in our wheelhouse.

Excellent. Thanks, gentlemen.

Thanks, Mike.

Your next question comes from the line of Sangeeta Jain with KeyBank Capital Markets. Please go ahead.

Thank you so much for taking my question. If I can ask one on new scale, I believe that there was a due date to execute a term sheet for the strategic fire. So I'm just wondering if that is still the case or if there's a change in your thinking on the timing of the monetization?

Good morning, Sangita. Thanks for the question. As Jim mentioned in his prepared remarks, you know, we're in detailed negotiations right now uh with our strategic investor to reach reach an agreement on a long-term monetization and revenue stream to floor while at the same time moving new scale closer to my monetization commercialization and uh you know we continue to believe that our current path is the best way to bring value to floor shareholders to the strategic investor and also to new skills and for that the business strategy to be successful we need all three parties to win so the timeline to monetization has been slower than desired however as you can as you can imagine anything in the nuclear space that is in a startup pre-commercialization mode does take patience and you know we want to get this right for decades to come not just for the next few years right so the overarching objectives are threefold here first to ensure the the successful commercialization of the new scale technology with our strategic investor and then second to drive maximum value for floor shareholders monetization and third ensure floors project execution services are are considered for a new scale installations on a global basis wherever we can add value to an opportunity So, on a related note, as I think you may know, FLUR is executing front-end design work for Roe Power's SMR project in Romania, and that is utilizing new skills, you know, still industry-leading technology. And Jim also talked about conventional work in nuclear power, which you've probably seen in the news recently. We've just kicked off with our joint venture partners on some front-end design scope for conventional nuclear power, which is our scope on that program is being executed on a reimbursable basis. So work continues and we're positive about new skills monetization. In fact, I'll be personally in a meeting later this week to continue the discussion. So we'll give you more information as it comes available.

Great, I appreciate that.

And I know you guys mentioned in your preparedness marks regarding the new administration of the EO, but there's also been a lot of confusing news regarding spending freezes so maybe you can give us an update on where you stand with your federal government contracts whether it's FEMA or NNSA or the Department of Defense and if you're seeing any movement there yeah I'll also ask Jim to comment here from what we can see because we primarily in the mission solutions space and based on our you know where we play in department of defense and department of energy two of our key clients plus fema at this point which is still firmly in place so you when you're talking about national security uh and uh energy and nuclear cleanup uh plus uh nuclear support of of uh the in the nuclear deterrent space all that work that we're doing in mission solutions really is top priority and we've we've got indications that you know most of the work that we're focused on will will continue because of that type of work that we do for the for the for the country

Jim anything else you know you're right David I think work we do for the government there has been a lot of continuing because they're with these other civil agencies.

Appreciate that. Thank you so much.

Your next question comes from the line of Jamie Cook with Truist Securities. Please go ahead.

Hi, good morning, and congrats, Jim, David, and Joe. I guess my first question, just on LNGC, you know, JGC announced cost increases, I think, last week in conjunction with their earnings, and you mentioned some stuff in your prepared remarks. So can you just give us more color there were there any cost increase uh that you guys incurred in the quarter associated with that project and your margins for es next year three and a half to four and a half percent so at the low end you know the margins are are lower than what you're expecting this year at the low end of the range so does that reflect lngc and then just my second question on the guide for the year i think you mentioned that it would be more uh back end loaded um if you could help us you know how we think about first half versus second half just so this street calibrates estimates correctly thank you morning jamie thanks for the question and hi um i'll ask jim's been

spearheading uh all of our uh discussions at lngc and uh i'll ask him to comment on that and then joe could comment on the es margins and and and regan can talk about the back end load and how we see the ramp up for the year yeah thanks david hello jamie so as everyone knows we're working closely with our jd partner and our client and this continues to perform jamie uh project when

it's all we continue our conversation on the final commercial resolution we've we've had some good fruits and weeks and days we're confident this is going to be a successful project at the end of the day track into our expectations.

So, Joe, do you want to comment on how that weaves into margin guide for energy solutions?

Yeah, Jamie, thanks for the question. Yeah, if we look at kind of the burn off of some major programs flowing into kind of a reload situation for energy solutions around feed work, what you're seeing is kind of the pivot of a lot of those resources as we move over to the demand driven growth side of the model. So you'll see a little bit of a drag in the beginning of the year and I think you'll see better strength in that margin performance as we get to the end of the year. But really this is kind of the pivot as we as we shift over to the urban solution side of the model in terms of where we see the demand driven growth and the types of teams that we need in order to support that and open the aperture to that opportunity within our backlog growth. So that's really where it's at right now. It's kind of the trail off of the projects that we're executing, and as we pivot some of those resources over to the urban solutions side of the business.

And I think a little bit of a testimony to the portfolio approach that these big projects in the ES, you really see a ramp in the urban side. But, you know, I'm not going to give you too much color on the shade, but we'll see a really high exit.

Thank you.

Thanks, Jamie.

Your next question comes from the line of Andy Whitman with Baird. Please go ahead.

Great, and thanks for taking my questions. Maybe, Joe, one for you. Just kind of looking at the cash flow guidance here, $450,000, that's at or maybe slightly above the net income guidance, which is a pretty good outcome. I think particularly concerned here, you've got, I guess, $237 million of burn associated with these legacy projects, yet a pretty good OCF number. So I guess my question is, got a couple parts to it, which is what are the offsets that are leading to maybe, you know, considering you've got this burn for legacy, what's the offset on the positive side? Are there more JV cash distributions that are kind of propping up the OCF guidance that you give here? Are you expecting, in 2024, you came into the year expecting to burn a lot more on the legacy projects than you actually did? Because during the year, you got some relief on those projects. I'm thinking about Gordy. I'm thinking about LEX. Some of those things, I think, helped offset some of the cash prints. Are you looking for some of these offsets in 2025 to deliver this number? Or can you just talk maybe about some of the moving parts inside of that?

I think you laid it out. You know, as we're looking at, you know, the bar that we set relative to the funding of the legacy projects at the beginning of the year, we had a similar number in 2024, and we drove that number down. This is what the planning basis has laid out for us. So the 450 to 500 cash flow guide that we're providing absorbs that 200 million into that discussion. And we will fight, obviously, as we did in 2024, to bring that number to the lowest possible common denominator. And I would suggest there's maybe 20% to 30% of that guide that is wrapped up into some of the additional dividends that we're repatriating in. Not so much from Mexico, but principally probably from our operations up in Canada at this point. But, yeah, there's a piece of it. it's probably a smaller piece 20 to 30 i would suggest the 450 to 500 probably represents is a better representation of what the ongoing business is going to present and and generate over the uh over the course of the planning um period coming up yep okay appreciate that and then i guess maybe david uh one for you you talked about the um the potential to attach power generation including thermal to the data center and being a more holistic solution.

I think, obviously, that makes a lot of sense and stands to reason. Just as it relates to the thermal side, I mean, this is a business, obviously, you guys have had a long history. You mentioned that. But from investors' point of view, this was a business that was kind of shut down because of the fixed price nature of the business. I would imagine that the experts that you had in the company might not any longer be with the company. how how do you position the business rebuilding a team presumably you'd only do it on a reimbursable basis how do you credibly rebuild that team to deliver that solution and can you just as part of the answer that question can you just talk about how advanced any discussions on the power generation side are for you on the thermal side thank you thanks Andy good morning thanks for the question you know yeah it's exciting utilities tell me it's exciting and electric times in the power generation world right now, everyone out there is scraping and scratching for where they can get power generated,

including coal to gas fired, SMRs, and thermal power. I had the opportunity to run our power business back in the mid-2000s, had a great run there with thermal power build-outs down and some clean coal facilities as well so definitely we do know how to to execute that was all fixed price back then but you're you're right we want to move into this space strategically and follow our our risk processes risk management processes as we as we look to to build a power generation uh to support to support uh you know the broad power demands uh going forward so uh we're rebuilding the capabilities you know when you see our traditional i think of our traditional clients the likes of uh chevron and exxon mobile uh get just announcing this this quarter both of them that they're developing power solutions for us data centers and we've got our traditional clients looking at that so which helps us obviously with our relationships and how to get involved with those projects uh but we do need to look at a deal shaping and um and either reimbursable or hybrid models uh where the risk is put in the right places uh on these on these generators so i'll ask jim to comment a little more because he's close to it uh having a chief

operating officer working closely with energy solutions and what they're doing to to get ready thanks david yeah um and you uh the market but in general just driven collectively in several projects early at the front end working closely with our clients the front end we're shaping the epc epcm faces to make sense for everyone just for future opportunities as as david said we're in discussions with several utilities about their project needs and we believe we have a lot to add there in terms of our execution and project management capabilities expertise and supply project today is driven by supply chain not just the main equipment but all the other ancillary equipment and making sure all that gets delivered on time both for engineering and for the construction so i think there's a lot of floor can add value in this market without having to go to a competitive lump sum bidding process late conversions partially reversible hybrids there's a lot of models we can implement and the clients today are more amenable to follow these more innovative creative models given that they know their project delivery certainty is is what they need yeah there's a lot of uh the existing power epc service providers

are stretched stretched right now in their execution capabilities so uh that that brings opportunity for floor as jim said we need to be very very uh careful and have have patience right uh one of the bigger issues in this in this space is that the turbine the turbine oems are sold out till 2028 so that's uh that's another challenge that we've got on our projects to to make sure we can we can get the supply chain right and the timing right but uh we're gonna be very very careful and measured in this space.

Thank you.

Thanks, Andy.

Your next question comes from the line of Stephen Fisher with UBS. Please go ahead.

Thanks. Good morning and congratulations to all with the new roles. Just wanted to follow up on the new scale discussion. I'm just curious, David, I mean, has anything changed in terms of the negotiations? I mean, are you actually making progress. I know investors are kind of sitting a little bit anxiously hoping you're able to lock in some of the value in the marketplace. So I understand it's probably hard to discuss negotiations that are ongoing, but I'm just wondering if there's any other comfort you can offer investors that you are actually making tangible progress towards some monetization.

Yeah, you're more, Steve. As you said, since we're in negotiations, not a lot I can say other than these are detailed discussions, which, as I said, I'll be participating in later in the week. So as I said, it takes patience in the nuclear space, and we're at the very front end we're in the first inning on on smrs uh and commercialization of the new scale technology but the demand uh and the interest in in that type of business model going forward is is really off the charts the uh you know as soon as uh as soon as some some power purchase agreements get get signed up uh you know i really think the floodgates are gonna gonna open up wide so i i'm very positive uh on on the uh the opportunity for floor and for our strategic investor and for

and for new scale supporting with their technology uh and like i said we're in we're in detailed discussions and hope to have some news for you soon okay that's helpful and then just Just to follow up on Jamie's question about the energy solutions margins, I guess I'm still a little unclear why the first half at least is a little bit low, given that it sounds like the mix should be much higher in terms of engineering services, which should be higher margins. It was the point that basically there's just an underabsorption of the project management resources and staffing that you have, and that offsets the higher engineering mix. And then, I guess more broadly, David, I think during a lot of your tenure, the message has really been about a focus on putting higher margins into backlog. And I'm wondering if, you know, if that under Jim and John, is that going to be sort of still the ongoing message here or is anything kind of changed in that regard?

As we came off the back end of some of these bigger programs, we have a significant amount of infrastructure that was in place to support those big programs, and as they start to trail off and we pivot to demand-driven growth, as we get the right people in place in order to open the aperture into what we see is a fairly robust opportunity slate within urban solution so it's just a bit of the friction that's going to occur in the beginning of the year through the first quarter into a portion of the second quarter but as that starts to shift you'll

start to see better leverages coming through energy solutions and you'll start to see better backlog growth into urban solutions and that'll help normalize your margin profile across the the spectrum of of the segments that we have right and then on um on uh higher margins and the focus on higher margins and a healthier backlog going forward and also moving to a primarily reimbursable uh backlog as part of that uh you know our strategic priorities which we'll talk about in april with you uh have not changed we've got a little more focus on on projects project delivery because we're growing and we we have to make sure we cover all our bases and execute with excellence as we grow and not get stretched so the strategic priorities are pretty well the same that you'll hear about and and when we talk about fair and balanced contract terms and getting paid properly for the value we provide that is still firmly in place and again that's what you'll be hearing more about here in April uh so I guess I should turn it to to Jim and Regan because uh you've asked them the question as well in the power discussion we had a minute ago but there's

also a lot of focus on the margins we are getting our I just echo that terrific thank you very much

your next question comes from the line of Brent Thielman with DA Davidson please go ahead hey thanks good morning congrats as well to everyone um I just had a question on the financial guidance inputs, and specifically just around the interest income expectation of $80 million in 2025. I think you realized $150 million in 2024. Can you bridge the difference there? Are there any other cash outflows you need to be aware of? Understand you're going to have some share repurchases in there, but I just wanted to understand that.

Yeah, good morning. Thanks for the question, Brent. So as you think about it, your intuition is, again, spot on. um you are seeing a little bit of the impact of the share repo which kicked off and will remain you know in progress in um the biggest thing that maybe you're you're not notably in canada and significant repatriation of those dollars uh back into fleur corp and out of the jv and so you wouldn't have necessarily seen that cash corporate portfolio and so we were kind of generating interest or the jv accounting so uh the biggest the biggest difference there in addition to a little bit uh but the biggest thing is yeah okay and we're returning and we're returning shareholders yes and and we're buying back shares too understood um yeah and i guess just to follow up and build a conversation around the um the stronger book to burn i think well understood

urban solutions is going to continue to be a nice driver here i guess i'm more curious on the timing and energy solutions as we advance through 2025 are you feel cautiously optimistic or optimistic we we might see an inflection in this kind of downward trend and backlog that's developed more recently i'm just trying to get a sense of when you think some of these these opportunities start to um accelerate there yeah brent this is yeah 2025 2025 is the real timing of efficient plans, some dragged on because the clients in the

energy market have been a little more their FIDs than the clients we see in other markets that are more time to market and are willing to jump the gun earlier. So when you ask when will the inflection, it depends a little bit on these FIDs. I would say 25, but I think the clients maneuver the, helping them maneuver the challenges of potential tariffs and other issues. So there's a lot of good work that happens on the front end to set these projects for success. The exact timing of them, it's up to the clients, and specifically to your question, I'm probably looking at it 26 times.

Very good.

Due to time constraints, this concludes our Q&A session. I will now turn the call back to David Constable, Chief Executive Officer, for closing remarks.

Thank you, Operator, and many thanks to everyone for participating on our call today. As we close out the 2024 financial year, we're really pleased with our cash generation trajectory and our ability to return capital to shareholders. In addition, we have significant near-term prospects that will support further revenue growth and broad-based industry diversification for the company. So we appreciate your interest in Fluor Corporation, and thanks again for your time today.

This concludes today's conference call. Thank you for joining. You may now disconnect.