Earnings Call Transcript - FLR Q2 2023

Operator, Operator

Good morning, and welcome to Fluor's Second Quarter 2023 Earnings 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 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.

Jason Landkamer, Head of Investor Relations

Thanks, Regina. Good morning, and welcome to Fluor's 2023 second 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 second quarter earnings release earlier this morning and a slide presentation is posted on our website that we'll 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 experience could differ materially. You can find a discussion of our risk factors, which could potentially contribute to such differences, in our 2022 Form 10-K, and 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. I'll now turn the call over to David Constable, Fluor's Chairman and Chief Executive Officer. David?

David Constable, Chairman and CEO

Thank you, Jason. Good morning, everyone. Thank you for joining us today. Please turn to slide 3. During the second quarter, I visited our New Delhi office and hosted a town hall meeting that was attended by over 1,100 of our Fluor colleagues. It was great to see the vibrancy and enthusiasm of our team, who will continue to play a critical role in supporting our current projects as well as our significant pipeline of growth opportunities worldwide. While in India, I also met with the CEO of Tech Mahindra to sign a strategic partnership agreement. Tech Mahindra is a leading provider of digital transformation, consulting and business reengineering services. Under the partnership both Fluor and Tech Mahindra will combine our respective expertise to help support the growing client demand for digital handovers. The seamless integration and interoperability of data is critical to support professional services teams in driving successful project delivery and optimizing life cycle operations and maintenance costs. I'm looking forward to providing updates on this strategic partnership in future quarters. Now let's turn to slide 4. Revenue for the second quarter was $3.9 billion, representing our second straight quarter of 20% growth over the prior year. Our increase in revenue was led by Energy Solutions as execution activities accelerate on refinery projects in Mexico, mid-scale LNG projects, and recently awarded chemicals projects in China. New awards for the quarter were $3.7 billion and on track relative to our full year plan of a book-to-burn ratio of one or greater. New awards were 70% reimbursable and our total backlog is now $25.5 billion, of which 64% is reimbursable. Margins on new awards continue to be strong, coming in over 200 basis points above our total backlog margin. Our optimism for the future of Fluor is further supported by a robust prospect pipeline. We are currently working on or recently completed FEED and study packages that represent an estimated $300 billion of installed cost high-quality new award prospects. In the near term, we are tracking key EPC and EPCM prospects, totaling approximately $49 billion across the company. Moving to our business segments. Please turn to slide 6. Urban Solutions reported a $76 million profit in the second quarter. Results included a positive forecast adjustment related to a legacy infrastructure project as well as increased execution activities on newly awarded projects. New awards for the quarter were $2.3 billion and any backlog is now $11.7 billion and 58% reimbursable. Please move to slide 7. In Mining & Metals, we are actively working on a number of front-end studies supporting the advancement of critical minerals production, including two pre-feasibility studies for lithium developments in North America and another lithium project feasibility study in Europe and a metals recycling facility in Europe. We also recently completed engineering services on a major new steel mill in the United States, using electric arc furnace technology and have two additional electric arc furnace projects entering the feasibility study and execution phases. These are just three projects in greenfield technology, which we consider to be a strategic growth market for Fluor. Near-term prospects in this segment include projects relating to potash, lithium, and copper. Moving to slide 8. Our Advanced Technologies & Life Sciences business continues to win new work in an expanding reimbursable growth market. During the quarter, we announced that we received a $574 million award for the first phase of a new life sciences production facility in the central US. We also won a $487 million expansion for an existing biotech facility with a key client in Denmark. Looking ahead, we are well positioned to expand our existing portfolio of semiconductor work, particularly in the US. I'm also pleased to report that our portfolio of infrastructure projects, including legacy projects, met our forecast expectations for the quarter. Specific to our legacy infrastructure portfolio, we are starting to see some very positive momentum from our efforts last fall. This included strengthening leadership and execution at the project and management levels, as well as working effectively with our joint venture partners to align our strategy to manage claims. On the Gordie Howe project, Fluor, along with our partners, have had a number of successful and productive conversations with the client regarding cost and schedule relief, including costs related to COVID. Negotiations are progressing with the client, which should result in a positive path forward by the end of the year. Finally, during the quarter, we booked a $700 million award for the I-35 South project in San Antonio for the Texas Department of Transportation. This project is a crucial step in our ongoing efforts to enhance the state's transportation infrastructure and further support the demand of population growth and business expansion in one of America's most rapidly developing regions. Moving on to slide 9. Mission Solutions reported segment profit of $40 million for the second quarter, compared to $28 million a year ago. Results for the quarter reflect increased execution activities on a European logistics support project for the Army and our ongoing work to support NuScale's carbon-free power project. Regarding the protest of our winning bid for the Hanford Tanks integrated disposition contract, we learned that the judge has set aside the award and sent it back to the DOE for corrective action. While we await the department's path forward on the acquisition, the incumbent has been extended on the contract for the time being. Fluor continues to be well positioned for Hanford and other future nuclear remediation opportunities with the DOE. Looking ahead, Q3 is shaping up to be an exciting quarter for this group. We recently announced that our joint venture with Amentum was successful in securing the contract for the Portsmouth Gaseous Diffusion plant decontamination and decommissioning contract. This contract has an estimated value of $5.9 billion over a 10-year ordering period and includes potential task orders for up to an additional five years. We expect to book our initial annual portion of this contract in the third quarter. Finally, the request for proposal for Pantex was recently issued. Fluor was successful in the original bid and is currently working on its RFP package, which we expect to submit in September. The revised RFP includes a five-year base period, with three five-year options valued up to $30 billion over 20 years. Moving to Energy Solutions. Please turn to slide 10. Segment profit improved to $89 million from $65 million a year ago. Results reflect the ramp-up of execution activities on refinery projects in Mexico, through our ICA Fluor joint venture. We also had positive forecast adjustments, totaling $74 million on two projects. Q2 results included a $34 million charge for cost growth and schedule extension on a large upstream legacy project. During the quarter, this project experienced a number of challenges arising from lower-than-anticipated subcontractor productivity, unexpected discovery work, and delays from weather and activist protests. Our new estimated completion date is December. New awards for the quarter totaled $753 million and included an EPC contractor Mitsubishi's ethylene vinyl alcohol copolymer facility in the UK, as well as incremental awards on existing LNG projects. Moving to slide 11. During the quarter, we had a number of accomplishments at the LNG Canada project. Last month, we announced that the 215th and final module was delivered to the site. This represents a significant milestone for the project and for the teams that led the fabrication efforts. With the project at 85% complete overall, our efforts now turn to module installation and hookup in advance of pre-commissioning and commissioning activities that will commence next year. In past earnings calls, we've discussed our collaborative conversations with the client regarding fabrication and construction costs. We continue to have successful resolution to ongoing variation orders. I'm also pleased to report that as a result of the tremendous effort by our project team, we continue to execute LNG Canada for our current expectations. Regarding the Phase II expansion, LNG Canada's five joint venture participants continue to evaluate the timeline and scope. For the balance of 2023, we are anticipating some significant new awards. This includes a multibillion-dollar full EPCM award for the Dallas Path to Zero ethylene and derivative chemical complex in Canada, the $1.4 billion Salina Cruz refinery in Mexico, nuclear engineering work in Romania, and a large chemical project in Europe. Before I turn the call over to Joe, I want to note that our results and accomplishments this quarter reflect notable progress against our corporate strategy and is indicative of our ongoing transformation into one of the leading engineering and construction companies in the world. With that let me turn the call over to Joe for the financial update. Joe?

Joe Brennan, CFO

Thanks, David, and good morning, everyone. Today, I will review our results for the second quarter, provide an update on divestitures and go over key financial outlook assumptions that support our guidance. Please turn to Slide 13. As David mentioned for the second quarter of 2023, revenue of $3.9 billion came in as expected and represented a 20% increase from last year. Revenue for the quarter was driven by the ramp-up of execution activities on several recently awarded projects in Energy Solutions, Urban Solutions, and Mission Solutions. This was partially offset by declines in the volume of execution activities for projects that were completed or nearing completion. Our consolidated segment profit for the quarter was $191 million. This performance was driven by higher execution activity on new projects as well as positive forecast adjustments on two Energy Solutions projects and a positive forecast adjustment on a legacy infrastructure project. Adjusted EBITDA for the second quarter was $181 million compared to $68 million a year ago. Our adjusted EPS was $0.76 compared to $0.15 in Q2 of 2022. Our adjusted results for the quarter exclude $52 million for the income effects of FX and the embedded derivative in Mexico. G&A expenses for the quarter were $60 million, up slightly from $45 million a year ago. This was driven higher by higher performance-based compensation that is expected to be paid in Q1 of 2024. Net interest income for the quarter was $37 million compared to $41 million last quarter and an expense of $1 million a year ago. Since our outstanding debt is at a fixed rate, I expect we will continue to generate positive net interest income throughout the year with prevailing interest rates on our deposits. New awards of $3.7 billion in the quarter drove our ending backlog balance to $25.5 billion. Based on our current prospect pipeline, we anticipate new awards will roughly approximate our revenue burn for the full year. Moving to Slide 14. Our cash and marketable securities balance for the quarter was $2.1 billion. This excludes cash held by NuScale. Operating cash flow for the quarter was a positive $62 million. We expect this positive cash flow trend to continue for the balance of 2023, which includes approximately $200 million for legacy project cash needs this year. We anticipate legacy project cash needs will be approximately $250 million in 2024. Finally, I'm pleased to say that during the quarter the DOJ has informed us that it has closed its investigation of the company and does not intend to bring charges. Please turn to Slide 16. We are raising our 2023 adjusted earnings per share guidance to a range of $2 to $2.30 and our adjusted EBITDA guidance to a range of $500 million to $600 million. Our assumptions for 2023 include revenue growth of approximately 10% to 15%, adjusted G&A expense of approximately $45 million per quarter, and an effective tax rate of approximately 40%. This may vary depending on the countries in which revenue is generated. We expect tax rates to moderate as revenue in our tax-advantaged locations start to increase. Our revised expectations for 2023 full year segment margins are approximately 6% in Energy Solutions, approximately 3% in Urban Solutions, and approximately 4% in Mission Solutions. Finally, we also reaffirm our 2026 adjusted EBITDA guidance of $800 million to $950 million. Operator, we are now ready for our first question.

Operator, Operator

Our first question will come from Jamie Cook at Credit Suisse. Please proceed.

Jamie Cook, Analyst

Hi. Good morning. My first question is for David or Joe. As I consider the guidance increase you provided today, it seems to suggest that for the second half of the year, it could indicate around $0.75 per quarter at the high end. Annualized, that amounts to approximately $3 in earnings power. Furthermore, if we annualize your adjusted EBITDA for the second half, it suggests around $800 million in EBITDA. I'm trying to understand what this means for 2024. Is this a reasonable baseline to consider, or are there projects concluding in 2023 that might indicate this is not a reliable run rate? Because suggesting earnings power of $3 or $800 million in EBITDA for 2024 is considerable. Any insights on that would be appreciated. Thank you, and let me know if I'm misinterpreting this. It seems the earnings potential is greater than I initially anticipated.

Joe Brennan, CFO

Yeah. Thanks for the question, Jamie. I think what we've leaned into the last few quarters is that we have been making progress on some of our activities in our infrastructure, our legacy kind of businesses relative to how we recognize cost and then as we look to claw back some of our entitlements through the contract. Some of that is flowing through the Q2 numbers. But I would suggest that that run rate that we're posting on an adjusted EBITDA basis of $181 million is probably overstated slightly. If I were thinking about run rates, as we continue to onboard new backlog in that $140 million to $160 million range. And with that, we would expect to see a ramp-up from that as your baseline. So, I think I would think about it that way at least for 2023 and again, as we onboard the new backlog that we're forecasting for the back half of the year, we should start to see that trend in a more positive direction moving forward.

Jamie Cook, Analyst

Okay. My second question is about the new award prospects for the second half of the year, which appear promising. Dave, how do you view the backlog as we approach the end of the year? Can you provide some insights into the bookings? I understand that the margins in the bookings have been improving. Could you discuss the terms and conditions of the projects you are considering and how we should view the margins on awards going into backlog compared to the current situation? I’m trying to get a clearer picture of the margin potential for 2024. Thank you.

David Constable, Chairman and CEO

Good morning Jamie. We are very pleased with our ability to enhance booking margins on reimbursable work. The key takeaway is that a significant portion of our work, around 84% of our prospects, are reimbursable and are exceeding our expectations, surpassing our planned target margins. We've added to the backlog at a rate of 200 basis points above what is currently recorded in the second quarter. As we proceed, this healthy backlog will provide us with greater certainty and predictability as we utilize it. We aim to maintain a book-to-burn rate of one or slightly above throughout the year, which will give you an indication of our year-end backlog. Importantly, the gross margin that is coming in higher than expected is actually being realized. We discussed this matter with our risk committee at the Board meeting this week. Since 2020, the projects that have entered our backlog are performing at 114% of our outsourcing expectations. We have significant earning potential due to our execution capabilities. It’s all about executing excellently. With that support, we believe it will enhance our earnings power moving forward and increase shareholder value.

Joe Brennan, CFO

Can I add to that too, Jamie? If you look at what we've done with our operating margin guidance for the quarter, we have increased our Energy Solutions and our Mission Solutions numbers for the period. We are starting to see that, and it's beginning to show in our quarterly reports. We are also noticing that flow through the backlog in a very positive way, which leads us to reassess our margin guidance. Thanks, Jamie.

Jamie Cook, Analyst

Thank you.

Operator, Operator

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

Andy Wittmann, Analyst

Great. Thank you for taking my question this morning. I guess I wanted to ask on the Urban Solutions, there was a positive adjustment on the legacy project. Good to see that you're recuperating some of those. And I do think that the balance on some of those legacy projects is substantial. So, I guess maybe my question is as it relates to your guidance for the rest of this year are you expecting more positive adjustments like the one you saw in the quarter to be in that guidance range? Or is the guidance that you're giving kind of clean of any of these claims resolution changes that you were able to accomplish this quarter. And maybe just to be a little more specific could you just talk about which project you're able to get this positive adjustment on during the quarter?

Joe Brennan, CFO

Yes, thank you for the question. For the year, we have not included any additional activity related to claims until we have a clearer assessment. Therefore, our guidance is based on the actual results from the first and second quarters, along with our typical outlook moving forward. As for your second question regarding the projects related to positive adjustments this quarter, I’ll need to provide more details.

Andy Wittmann, Analyst

Which project got the benefit?

Joe Brennan, CFO

Yes, I think we're going to hold off naming that client right now and we'll probably have some additional color for you in the next quarter.

Andy Wittmann, Analyst

Okay. Joe, following up on your last answer to Jamie, you mentioned that the profit margins improved in two of your segments. You're providing annual guidance, and some of the performance in the second quarter was strong due to these positive change orders. My question is about the outlook for the second half of this year: which margins have increased compared to prior expectations, rather than just the benefits from the second quarter performance.

Joe Brennan, CFO

Well, I guess, maybe let me understand your question a little better. You’re talking about how we're upping our guidance within Energy Solutions from the 5.5% to 6% and what's driving that I guess is...

Andy Wittmann, Analyst

Yes. I mean you're giving annual segment margin guidance which is fine. But I just – I'm trying to understand, how much of the increase in margin guidance was from performance in the second quarter versus an improved outlook for the second half of the year versus your prior quarter?

Joe Brennan, CFO

Sorry, okay. I understand the question a little bit. I think there's symmetry in what we're laying out relative to how the performance within Energy Solutions and Mission Solutions. So I would expect this not to be a 2023 activity. I would see this having some impact into 2024 and beyond.

David Constable, Chairman and CEO

As we've discussed on many calls, our range for the planning period when we first came out with our strategy in 2021, our range on margins was 4% to 6%. And we – it looks like we're going to be at that and near the higher end of that range through 2024 and then on into 2026 at the upper end.

Joe Brennan, CFO

Yes. And we're seeing – this is underpinned by the improved margins that we're putting into backlog relative to our plans. So I think that's all kind of playing into this improved margin outlook moving forward beyond the 2023 time frame.

David Constable, Chairman and CEO

And also that execution I talked about just a few minutes ago is that we're making progress.

Joe Brennan, CFO

Yes, a lot of factors there.

Andy Wittmann, Analyst

Yes, okay, that’s clear. Thank you very much. Have a good day.

Joe Brennan, CFO

Thanks, Andy.

David Constable, Chairman and CEO

Thank you.

Operator, Operator

Your next question comes from the line of Michael Dudas with Vertical Research. Please go ahead.

Michael Dudas, Analyst

Good morning, Jason, Joe, Dave.

David Constable, Chairman and CEO

Good morning, Michael.

Michael Dudas, Analyst

Joe, maybe you could share with us your updated thoughts on financial profile on the balance sheet relative to the 2024 notes and maybe an update on NuScale would be helpful.

Joe Brennan, CFO

Yes. Thanks, Mike. We're we have signaled over the last few quarters we're going to be addressing the 2024 that is something that we plan on doing here kicking off towards the last half of 2023 and into 2024. So we have – our plans are still to address the 2024s. And in terms of NuScale we continue the discussions around the monetization. They are going well. We would expect to have additional information to share with this audience towards the end of the year December or January time frame.

Michael Dudas, Analyst

Appreciate that. Thank you. And David, as you're looking at the $300 billion worth of front-end or FID a front-end design engineering and study work, can you maybe share a little bit of it is it across the board? What areas seem to be peaking your clients' interest more to get you involved? And is that – and I assume energy transition and we think of lithium even I guess the Dow project would fit into that. Is that – do you anticipate being a step function over the next couple of years of those types of projects coming in? And is that going to allow for maybe a possible better margin performance given what you guys are doing on the productivity in process?

David Constable, Chairman and CEO

Hey, good morning, Michael. Yes you're spot on energy transition, right? That $300 billion we think after analyzing it solid prospects are about $160 billion of that $300 billion. So we see $160 billion as very likely going forward. And a lot of it sits in the energy transition space. Just to give you an example of the Inflation Reduction Act and the carbon credits that flow through that the IRA, we're seeing significant activity in our carbon capture – in our Production & Fuels Energy Solutions business line. I think we've got 30 projects on the go or at some mostly front-end work, a few moving further on into EPC. So that's important like you said lithium as well. So energy transition is going to feature quite a bit. I think they are about 28%. If you look at the total work we're chasing, energy transition is about 28% of that. We're looking for about almost $3 billion in energy transition awards in Q3. And like you said Dow would feature because it is a path – Path To Zero program. But you also in those numbers see Mining & Metals feature significantly in the $160 billion. The downstream production of fuels again, a lot of it energy transition, LNG is in there. And the biggest portion, as I look at it here is chemicals. So we're seeing a lot of activity in chemicals with – across the board including recycling of plastics and the whole ethylene value chain. So pretty broad across those prospects and about like I said about $49 billion of full EPC, EPCM prospects that we'll be chasing in the next 18 months. And obviously, that gets supplemented by our Mission Solutions work which is the Department of Energy Department of Defense and the intelligence agencies all those budgets continue to either stay flat or grow year-on-year. So a lot of good growth coming at us in all of our business lines Michael. So thanks.

Operator, Operator

Your next question comes from the line of Brent Thielman with D.A. Davidson. Please go ahead.

Brent Thielman, Analyst

Hey. Thank you. Good morning. Just a comment about margins on new awards. I think you said 200 basis points above the current backlog margin, which business line or lines or markets are you seeing sort of more meaningful improvement in terms of what's coming in the door now relative to what you have in the book today?

David Constable, Chairman and CEO

Yes. It's broad. It's across all three segments. Again I'm looking at the plan across the board. So it's pretty broad-based.

Brent Thielman, Analyst

Okay. Okay. And then you mentioned continued expectations for modestly moving pieces I guess in particular, what could cause you to potentially outperform this year's expectation for cash flow in the second half?

Joe Brennan, CFO

Yes, reconfirming and that we do see positive trends for the back half of the year, and I think what's going to drive maybe some improvement within that is continued execution in our projects in Mexico and Canada will be a big contributor to that as we repatriate dividends back into Fluor's treasury. So I think both those will underpin a fairly positive cash trajectory moving forward.

Brent Thielman, Analyst

Okay. Great. Thank you.

Operator, Operator

Your next question comes from the line of Sean Eastman with KeyBanc. Please go ahead.

Sean Eastman, Analyst

Hi team, good update here. I wanted to ask about the revenue guidance for this year, which has increased from 10% to 15%. Is this due to accelerated schedules for projects that were already in the backlog? Additionally, regarding the projected book-to-bill ratio of around one for the full year, what insights can we take from that in terms of revenue expectations for next year?

Joe Brennan, CFO

Thank you, Sean. I believe we will continue to see growth in our revenue guidance. We are very confident based on the bookings we've received this year as well as in previous years, along with what we are experiencing in the latter half of 2023. Many of the opportunities we are seeing are coming from our nontraditional energy solutions, which are flowing through our ATLS business, and there are some substantial awards. Therefore, we feel optimistic about the revenue trajectory moving forward. Additionally, many of the projects we booked two or three years ago are now progressing into production, procurement, and construction activities. Overall, we foresee a revenue growth trajectory in the range of 10% to 15%, which is supported by strong fundamentals at this time.

Sean Eastman, Analyst

Okay. Got it. And then relative to the second half new award visibility I mean it's encouraging to see some specific prospects specific larger prospects being called out. I mean how would you describe the line of sight on that implied second half new awards outlook? I mean, are these projects FID-ed just teed up ready to go in the backlog. Any comments on that would be helpful?

David Constable, Chairman and CEO

Hi, Sean. Good morning. Yeah, looking at the third quarter and fourth quarter prospects and the go gets most of the projects are between 90% to 100%. And so the ones I spoke to are definitely cleared for takeoff so to speak in the chemicals work and it's at ICA Fluor. And in Urban Solutions in the semiconductor space, we've got some big reimbursable programs that are also ready to move forward. So generally speaking, the line of sight for all mission solutions projects is going ahead as well. So yes, I'd like to give you a high degree of comfort on our second half new awards and getting to that book-to-burn of one or slightly above.

Sean Eastman, Analyst

All right. Gentlemen, thanks very much. I’ll turn it over.

David Constable, Chairman and CEO

Thanks.

Joe Brennan, CFO

Thanks, Sean.

Operator, Operator

Your next question comes from the line of a Citigroup analyst. Please go ahead.

Unidentified Analyst, Analyst

Hi, good morning. I have a quick question. You mentioned that Fluor was recently awarded a chemicals project in China. Can you provide more details about the customer conversations you're having in that region? We've received feedback from some of our industrial companies that the environment is somewhat mixed, and I'm interested in your perspective and outlook for the area.

David Constable, Chairman and CEO

Yes, that's a great strategic question. As we integrate the scenarios in China into our strategies for each business segment, we are considering the potential risks not only related to execution but also for our multinational clients operating in the region. At a broader level, rather than purely derisking from China, there is a clear trend of decoupling as companies prefer not to concentrate all their resources in one area. The China Plus One strategy is gaining traction among our clients, leading to work shifting either to near-shoring in North America and Europe or friends-shoring in countries that support value-based globalization, with India playing a significant role and an expected increase in manufacturing in Mexico as well. This trend is becoming more apparent. For instance, a client in the chemicals sector has moved to China due to high feedstock costs in Europe, but I view this as an opportunity for us. We are establishing an India and Asia task force to prepare for the potential shift of manufacturing away from China, ensuring we can support our clients throughout the region during this transition. This is our current perspective on the situation.

Unidentified Analyst, Analyst

Awesome. Thank you for the color. I’ll turn it back over.

David Constable, Chairman and CEO

Thank you.

Operator, Operator

And with that, I'll turn the call back over to David for any closing remarks.

David Constable, Chairman and CEO

Thank you, operator, and many thanks to all of you for participating on our call today. We're really pleased with our performance and the diverse slate of opportunities in our prospect pipeline, primarily reimbursable. Based on the continued strong performance of our services, we're well on our way to delivering increased shareholder value. So, we appreciate your interest in Fluor, and thank you again for your time today.

Operator, Operator

That will conclude today's conference call. Thank you all for joining. You may now disconnect.