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Fluor Corporation is a global leader in engineering, procurement, construction, and project management services. In business for more than 100 years, Fluor operates through its Urban Solutions, Energy Solutions, and Mission Solutions segments, serving a wide range of industries—including advanced manufacturing, energy, infrastructure, and government. The company specializes in delivering complex projects, supporting energy transition initiatives, and providing technical and staffing solutions for both commercial and government clients worldwide. Founded in 1912, Fluor is known for its effective approach to large-scale infrastructure and energy projects.

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Fluor (FLR): Company Profile, Stock Price, News, Rankings

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Fluor

fluor

Good morning and welcome to Fluor's Fourth Quarter and Full Year twenty twenty four 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 10:30AM Eastern Time today, accessible on Fluor's website at investor.fluor.com.

The web replay will be available for thirty days. A telephone replay will also be available for seven days through 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, Vice President, Investor Relations. Please go ahead, Mr. Landkamer.

Thank you, operator, and welcome to the Fluor's twenty twenty four fourth quarter earnings call. David Constable, Fluor's Chairman and Chief Executive Officer Joe Brennan, Fluor'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. Fluor 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.

Thank you, Jason, and good morning, everyone, and thank you for joining us today. Please turn to slide three. I would like to start by discussing 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. Consistent with our long term succession plans and with the full support of Fluor's Board, it is now the right time for me to transition into the role of Executive Chairman and pass this Chief Executive Officer role on to Jim Brewer. Starting on May 1, 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 story lines 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.

We look forward to sharing our view of the markets over the next four years at our upcoming strategy update event on April 2 at one of our major ATS sites. On a personal note, back in 1982, when I first started Fluor as an engineer in our Calgary office, I had no idea of the incredible experiences and opportunities that awaited me and my family over the next five decades. And 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 Fluor's legacy. Now please turn to slide four.

Our revenue for the year was $16,300,000,000 marking a 5.4% increase from 2023. In 2024, we recorded new awards totaling $15,100,000,000 achieving a book to burn ratio of just under one. New awards for the year were 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%. Through our disciplined contract pursuits, 85% of new awards for 2024 were reimbursable and our total ending backlog is now approximately 80% reimbursable.

Moving to the new U. S. Administration and the rapid pace of announcements that are coming out of the Executive Branch, we are tracking the executive orders 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. Considering the underlying themes of pro domestic energy, key minerals production and AI infrastructure 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 of Fluor's 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 Fluor for long term success. Jim will now take us through the fourth quarter highlights and prospects for 2025. Jim?

Thank you, David, and good morning, everyone. Let me start by saying that I'm very excited to assume the role of CEO in May and would like to thank the Board for entrusting me with this responsibility and honor. Over my thirty one years at Fluor, 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 our clients and the many communities where we work. Through David's leadership during these last four plus years, our company is healthier financially and poised to meet the demand driven growth we see around the world.

As Fluor embarks on the next chapter of our strategy, I look forward to working closely with our employees, partners and other stakeholders to continue to serve our clients through excellence in project delivery. 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 $81,000,000 versus $147,000,000 a year ago. New awards for the quarter totaled $1,400,000,000 and ending backlog for the full year grew by 20% to $17,700,000,000 up from $14,800,000,000 a year ago.

Please turn to Slide seven. In ATLS, we received an incremental award of $243,000,000 for our ongoing efforts at Lilly's LP1 project in Lebanon, Indiana. This project has grown from 200 to 1,000 personnel in 2024 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 twenty twenty five. On the semiconductor front, based upon our project performance, a major semiconductor manufacturer in Arizona has awarded Fluor more tool installation work.

Growing our experience in tool install scopes like this one positions us 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 agreement. This builds upon our extensive data center project experience in Asia and Europe.

Specific to the data center market, in addition to the opportunity I just mentioned, we're in conversations or have agreements with the top four data center developers. We continue to see this market as a significant contributor to the grow and execute phase of our strategy. Please turn to Slide eight. 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 across the client's mines, rail and related port infrastructure assets.

The expected completion date is 2028. For 2025, we see a continued focus by our clients on developing additional capacity for key resources, including copper, green steel, lithium and iron ore. We're currently tracking mining and metals opportunities that represent tens of billions in awards over the next few years. Please turn to slide nine. Our infrastructure business continues to make good progress on the Gordie Howe project.

Construction is now 94% complete and handover of The U. S. Port Of entry is in progress. Substantial completion is targeted for Q3 of twenty twenty five. Next, the LAX Automated People Mover project is now 93% complete and the forecasted substantial completion date remains on track for Q4 of twenty twenty five.

On the I-six 35 LBJ project, construction is now 70% complete. Substantial completion is forecasted for Q2 of twenty twenty six. 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 profile. These include Texas, North Carolina and The Netherlands. Moving on to Slide 10.

Energy Solutions reported a fourth quarter segment profit of $63,000,000 a significant increase from the $26,000,000 recorded in 2023. Quarterly results from last year included $33,000,000 of cost growth for the Penguin's legacy project. In the fourth quarter, new awards totaled $4.00 $6,000,000 which included additional scope on a revamp project in Sweden, full release on engineering for a regasification and power plant in Indonesia and a front end award for the Units three and four at the Cerna Voda 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 $7,600,000,000 compared to $9,700,000,000 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 fifty million hours without a lost time injury and the recently completed lithium hydroxide project in China for Aldomarol, which was named a twenty twenty four global best project by Engineering News Record. At LNG Canada, the project has surpassed the 95% completion mark overall with seven seventy one of eight thirty eight systems having achieved mechanical completion. Additionally, the main refrigeration compression systems on Train one are in final commissioning in preparation for cool depth. The 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 completion.

However, we are on track to support the client's target to ship first cargos by middle of twenty twenty five. And this project continues to track to management expectations. To date, our joint venture and the client have not yet fully resolved certain outstanding issues for COVID related impacts to the project. We believe that the client and our joint venture will resolve these items fairly and equitably during 2025, similar to resolutions reached on previous changes on the project. Looking ahead 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, carbon capture 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 needs. Lastly, on NuScale, we continue to negotiate with our strategic investor to reach an agreement on a long term monetization and revenue stream to Fluor, while moving NuScale 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 NuScale. Moving to Mission Solutions.

Please turn to Slide 11. Mission Solutions reported a segment profit of $45,000,000 in the fourth quarter compared to $31,000,000 a year ago. New awards for the quarter were $429,000,000 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 $2,700,000,000 compared to $3,900,000,000 a year ago. And as a reminder, backlog does not include approximately $5,000,000,000 dollars in annual revenue for projects related to our equity method investment, where we don't fully or partially consolidate our results.

Finally, 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 LOGCAP V contract in Africa and at the Portsmouth site. With that, let me turn the call over to Joe for the financial update.

Joe? 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, Fluor reported revenue of $16,300,000,000 and a net income of $2,100,000,000 or $12.3 per diluted share.

the year reflect the favorable impact of the NuScale deconsolidation and subsequent fair value accounting. During the quarter, we recognized a $116,000,000 provision related to a jury verdict against a floor joint venture on an infrastructure project completed over twelve 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 taken. The provision does not reflect any offsetting recoveries that we believe are owed to the joint venture.

Our 2024 Form 10 ks filed today contains additional discussion on this matter. Segment profit for the year was $635,000,000 and adjusted EBITDA was $530,000,000 On an adjusted basis, our 2024 results were $2.32 per diluted share. Corporate G and A expenses for the year were $2.00 $3,000,000 compared to $232,000,000 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 $150,000,000 as our cash management team invested Floor's cash in high quality interest bearing assets, which more than covered the $46,000,000 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 $3,000,000,000 representing a 14% increase from 2023. Our operating cash flow for the year of $828,000,000 including meaningful distributions from two large joint ventures and IRS refunds, but also reflects strong core cash generation. This was our best year for operating cash flows since 2015. During the year, legacy projects required $81,000,000 in funding.

We believe that these late stage legacy projects will require up to $200,000,000 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 $125,000,000 or 2,300,000.0 shares purchased in the fourth quarter. Under this initial phase of our share repurchase program, we are targeting an additional $300,000,000 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 $57,000,000 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 U. K. Operations, which essentially completes our transition to an asset light model. Led by our transaction of STORK and rightsizing our office in Houston, we have been able to reduce our real estate footprint by more than half to 3,700,000 square feet. Next, our investment in NuScale was deconsolidated in October of twenty twenty four, resulting in a $1,600,000,000 pretax gain.

Subsequent mark to market gains based on its prevailing stock price through twelvethirty one resulted in an additional pretax gain of $6.00 $4,000,000 for the fourth quarter of twenty twenty four. 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 and established the foundation for the next chapter. I'm excited to support the business as we pivot to the grow and execute phase. Back in December, I had the opportunity to speak with the analyst community, and I look forward to meeting our investors in the days ahead. Please turn to Slide 16.

Looking to 2025, our EBITDA guidance is $575,000,000 to $675,000,000 which lends itself to an operating cash flow range of $450,000,000 to $500,000,000 Our estimated cash flow reflects the underlying operational performance and working capital needs under our largely reimbursable profile. We expect our full year EPS to range between $2.25 to $2.75 per diluted share. We currently don't see any material items that need normalizing from our GAAP earnings other than FX and NuScale, which is now mark to market to their screen price across our 126,000,000 shares. These expectations are based on our ability to successfully execute our strategic priorities as well as capturing the demand for our services across the end markets we serve. To provide a bit more granularity on the outlook for 2025, our assumptions include a new awards book to burn ratio well above one revenue growth of approximately 15% net interest income of approximately $80,000,000 G and A expense of around $180,000,000 and despite a potentially wide range of outcomes, we also see an effective tax rate of approximately 30% to 35%.

Our expectations for 2025 segment margins are approximately 4% to 5% in urban, 3.5% to 4.5% in energy and 5% to 6% in Mission. For 2025, we expect the normal shaping of quarterly cash flow. For EBITDA, we expect an acceleration in the second half of the year as we ramp up execution activities, particularly on our Urban Solutions portfolio. As a housekeeping matter, we'll file an S3 later today solely to refresh our ability to capitalize on expedited financing opportunities in the future. Lastly, once NuScale files their 10 ks, we will file an amended 10 ks to incorporate their financial information into ours as required under the securities laws.

Operator, with that, we're now ready for our first question.

Thank you. The floor is now open for questions. Your first question comes from the line of Michael Dudas with Vertical Research. Please go ahead.

Congrats, Jim and well done, David. First, maybe for David or Jim, as you put together your outlook for 2025 and some of the crosscurrents that you've highlighted in your prepared remarks, On the book to 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 in the last couple of years, maybe some 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?

Yes. Good morning, Mike. Maybe I'll start and ask Jim to comment as well. As you look at the backlog at

in 2024, obviously, we've seen Urban Solutions kick up dramatically as we had laid out and planned for in our strategy to drive growth across the portfolio. So you see that backlog sitting at $17,700,000,000 Energy Solutions coming down as we expected it 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 have guided we're comfortable certainly comfortable with.

So where it's coming from specifically? Jim, some comments on that, please.

Sure. Thanks, David. And thanks, Mike, for the words there. And looking forward to working with you and your colleagues going forward. Yes, so the book to bill is significantly above one.

A lot of good opportunities in ATLS. If you look at pharma and the market that we would have been very successful on in previous years, it's going to continue to be a good growth market for us. If you look at what we call the advanced technologies projects that includes semiconductors and data centers. Data centers is a market we're focusing on very strongly and we've already had some recent success on that in addition to building on our experience that we had in Europe and Asia. Mining has a significant slate of opportunities, some of them in front end work, some of them converting to EPCM.

And then of course in government, we have a very strong position in with DOE and we expect some of those significant awards to come from that client. So it's urban and it's mission primarily with a lot of front end work and energy preparing for subsequent years.

Yes. Just to Mike, just to kind of big picture support what Jim has just mentioned. We've got about in the next twelve months, we've got prospects just in the larger EPC, EPCM project, not the front end work, but just the full EPC awards, prospects of about 46,500,000,000 with again urban being about almost $24,000,000,000 of that and then evenly split between energy solutions and mission for the other $20,000,000,000 to $22,000,000,000 So that kind of 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, let's say, life science or semi cycle? And like where are we in the maybe early inning or what innings you're in and the magnitude and scope of what you would be providing and what those numbers would look like when you convert those kind of prospects to the bookings?

Mike, we missed the sorry, what was the specific area? We missed the beginning of the

No, I'm sorry, I apologize. On the data center side, maybe compared to like your life science or semiconductor electronic space and what anywhere in and what when you convert those prospects, what type of size of projects and what scope that you'd be providing as you move through this looks like a long cycle of build out on the AI front?

Yes. Thanks, Mike. I'll start that. This is Jim. We're in early phases.

If you just if you look at the projections by just the big five data center hyperscalers here in The United States, They're talking about several hundred billion dollars worth of announced investments. And I think given that the size of these projects is growing, they lend themselves to Fluor's project delivery expertise and model. Now we're going to remain diligent and methodical in taking on this work. But building on our track record of recent data center projects like I said in Europe and Asia. We believe we're well positioned for this big wave of data centers that is projected for The United States.

And as I said in the prepared remarks, we signed a major we signed a master agreement with a major data center company. We're kicking off the initial stages of the first project under this agreement. This project is a co location, data center which is on the smaller scale. Call it between half a billion and a billion dollars in scale. But this agreement allows you to build and work on data centers of all sizes including hyperscalers that now you're talking about multiple billions of dollars.

Now those jobs take a little more time to mature and develop. But the neat thing about this agreement is that it allows us to build a longer term relationship with this client on multiple projects and therefore take advantage of the benefits of replication of efficiencies, lessons learned on previous projects. So I think we're in the as to answer specifically your question, we're on the early stages of the cycle. We're going to approach the market methodically and with the proper project and pursue discipline. But we do believe that data centers will be a significant engine for our growth in this next chapter of the strategy.

Yes. And just adding to that Mike, right? As Jim said, a significant contributor to our grow and execute phase, not only for the in the facilities data center facilities themselves, but also where Fluor can add value on the power demand side of the equation, right? Our expertise in power generation, both thermal and nuclear is going to play a key role in supporting our clients' needs. And we're already currently ramping up our capabilities further on the power side.

The numbers are just astronomical for power demand for data centers. We've got 26,000 megawatts installed in The U. S. Right 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.

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

Good. Thank you so much for taking my question. If I can ask one on NuScale. I believe that there was a due date to execute a true sheet for the strategic buyer. 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. Sangeeta, thanks for the question. As Jim mentioned in his prepared remarks, we're in detailed negotiations right now with our strategic investor to reach an agreement on a long term monetization and revenue stream to Fluor while at the same time moving NuScale closer to monetization commercialization. And we continue to believe that our current path is the best way to bring value to Fluor shareholders to the strategic investor and also to NuScale. And for that, the business strategy to be successful, we need all three parties to win.

So the time line to monetization has been slower than desired. However, as you can imagine, anything in the nuclear space that is in startup pre commercialization mode does take patience. And 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 successful commercialization of the NuScale technology with our strategic investor and then second, to drive maximum value for Flour shareholders monetization and third, ensure Flour's project execution services are considered for new scale installations on a global basis wherever we can add value to an opportunity.

So on a related note, as you I think you may know, Fluor is executing front end design work for ROW Power's SMR project in Romania. That is utilizing new scales 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 NuScale's 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 prepared remarks regarding the new administration and 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 movements there.

Yes. 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 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 when you're talking about national security and energy and nuclear cleanup

nuclear support of in the nuclear deterrent space. All that work that we're doing in Mission Solutions really is top priority. And we've got indications that most of the work that we're focused on will continue because of that type of work that we do for the country. Jim, anything else you want to add on

your historical No, you're right, David. I think we believe that the project work we do and the support work we do for the government is tied to their very critical missions on these respective missions. So we expect the work to continue out there. There has been a lot of news coming out of Washington, Sangita, but it seems like a lot of it's been updated and refreshed soon thereafter. So then when it's all said and done, these programs are going to continue because they are mission critical and we feel good about continuity of them.

And we feel good about our future opportunities and mission also with these two big departments with FEMA and other civil agencies that we're pursuing work for.

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, 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 that you guys incurred in the quarter associated with that project? And your margins for ES next year are 3.5% to 4.5%.

So at the low end, the margins 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 back end loaded. If you could just help us how we think about first half versus second half just so The Street calibrates estimates correctly? Thank

Good morning, Jamie. Thanks for the question. Good morning.

I'll ask Jim has been spearheading all of our discussions at LNGC And I'll ask him to comment on that and then Joe could comment on the ES margins and Regan can talk about the back end load and how we see the ramp up for the year.

Yes. Thanks, David. Hello, Jamie. So as everyone knows, LNG Canada is obviously an important project for us and we're working closely with our JD partner and our client in this final stretch. The commission efforts, as I said, are progressing well and are very advanced.

And as I indicated, Train one is in advanced stages of commissioning and preparation for cooldown. Now despite the fact that we have had to expend additional resources on the insulation work, We are still on track to meet the client's objective of First Cargo middle of this year. The project continues to perform, Jamie, tracking to management expectations. And we expect it to be a very successful project when it's all said and done. We continue our conversations with the client on the final commercial resolution.

We've had some good fruitful discussions in recent weeks and days. And again, we're confident this is going to be a successful project at the end of the day, tracking to our expectations.

So Joe, you want to comment on how that weaves into the margin guide for Energy Solutions?

Yes. Jamie, thanks for the question. Yes, 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 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 in 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 into pivot some of those resources over to the Urban Solutions side

And I think a little bit of a testimony to the portfolio approach that as you're coming off these big projects in ES, you really see a ramp in the urban side in the back half of the year. So I'm not going to give you too much color on the shaping, but I'll say we'll see a really high exit velocity from an EBITDA as we get into the second half of the year.

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

Yes, great. And thanks for taking my questions. Maybe Joe, one for you. Just kind of looking at the cash flow guidance here $450,000,000 5 hundred million dollars that's at or maybe slightly above the net income guidance, which is pretty good outcome. I think particularly concerned here you've got, I guess, $237,000,000 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 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 LAX, some of those things I think helps offset some of the cash burn. So 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? Thanks.

Fluor (FLR) Q4 2024 Earnings Call Transcript

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