Fluor(FLR) - 2024 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenue for Q3 2024 was $4.1 billion, with consolidated new awards of$2.7 billion, leading to a total backlog of $31.3 billion, of which 80$124 million, down from $216 million a year ago, and adjusted EPS was$0.51 compared to 1.02 in Q3 2023 [18][23] - G&A expenses decreased to 37 million from $56 million a year ago, reflecting a reduction in anticipated incentive compensation [19] Business Segment Data and Key Metrics Changes - Urban Solutions reported segment profit of$68 million with new awards of $828 million and a backlog increase of 72$289 million award for a rare Earth minerals refinery in Australia, with a focus on large EPC projects [9] - Mission Solutions reported segment profit of $45 million, driven by increased activities on two DOE contracts, with a backlog of$3.1 billion [12] - Energy Solutions had a segment profit of $50 million, impacted by lower contributions from a large project and$18 million in cost growth [14] Market Data and Key Metrics Changes - The demand picture remains strong, with top clients expected to spend $195 billion in CapEx in 2024, up from$164 billion in 2023 [36] - Energy transition projects are expected to be lighter in the US, while Europe shows significant activity in this area [37] Company Strategy and Development Direction - The company is focusing on a diversified portfolio and is taking a holistic view of markets to align resources and project delivery [17] - The strategic planning cycle will emphasize growth in Urban Solutions and Mission Solutions, particularly in environmental remediation and nuclear sectors [15][16] - The company aims to return capital to shareholders through increased share repurchase programs and potential dividend reinstatement [22][29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term segment margins of 4% to 6% despite short-term challenges [26] - The company is optimistic about future growth opportunities, particularly in urban and mission solutions, and anticipates a strong CAGR for revenue and EBITDA through 2028 [16][33] Other Important Information - The company is developing innovative cooling processes and modularization designs for data centers to enhance competitive advantages [10] - The NuScale investment is expected to recognize a gain of $1.6 billion in Q4 2024, reflecting the strong market potential for SMRs [21] Q&A Session Summary Question: Concerns about revenue guidance and margin implications - Management acknowledged challenges with project delays impacting revenue recognition and assured that long-term margin expectations remain unchanged [26][32] Question: Share repurchase and dividend reinstatement potential - Management indicated plans to discuss a holistic shareholder return plan in Q4, with confidence in returning capital to shareholders [29] Question: Outlook for 2025 and strategic planning - Management is finalizing strategic plans and remains optimistic about growth in various segments, particularly urban solutions and energy transition projects [32][33] Question: Demand strength and selectivity in bookings - Management confirmed the ability to remain selective in bookings while achieving growth objectives, with a strong demand outlook from top clients [36] Question: Energy Solutions segment performance and future growth - Management highlighted ongoing front-end work in Energy Solutions and the expectation of significant contributions from upcoming projects [50][52]