Fluor Corporation

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 Floor's website at investor.floor.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 Floor's website at investor.floor.com. At this time, for opening remarks and introductions, I would like to turn the conference over to Jason Landkammer, Head of Investor Relations. Please go ahead.

Thanks, Jake. Good morning, and welcome to FLORES 2022 First Quarter Conference Call. With us today are David Constable, FLORES Chairman and Chief Executive Officer, and Joe Brennan, FLORES Chief Financial Officer. We issued our earnings release earlier this morning and have posted a slide presentation on our website, which we will reference while making prepared remarks. Before getting started, I'd like to refer you to our safe harbor note regarding forward-looking statements, which is summarized on slide 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 2021 Form 10-K and our Form 10-Q, which was filed earlier today. During this call, we may 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, Lord's Chairman and Chief Executive Officer.

David? Well, thank you, Jason, and good morning, everyone. Thank you for joining us today. Before we get started on operational results, I want to start by sharing an update on our community relations activities that reinforce our purpose of building a better world. Please turn to slide four. As part of our science, technology, engineering, math, or STEM education giving priority, in the first four months of 2022, we helped inspire and raise awareness of the importance of STEM-based careers to more than 23,000 students. Also, part of our FLUR legacy is about giving and volunteering, which we accomplish through our FLUR CARES program. Our program connects employees to millions of charitable causes around the world. Recent charitable contributions include South African flood relief efforts and Ukraine humanitarian support. More specifically, with respect to Ukraine, I'd like to address the ongoing crisis in Eastern Europe. We share deep concern and empathy for the people of Ukraine and all those who have been affected by the conflict. We've also made the decision not to pursue new work in Russia. And we are working with our clients to evaluate and determine the appropriate path forward to wind down current projects and cease all operations in Russia. Along with many voices around the world, we fully support a swift resolution to this crisis. Q1 new awards for the quarter were $1.9 billion in line with our expectations. Starting in Q2, I'm pleased to say that we are seeing significant improvement in optimism and momentum from clients that will drive a significant upswing in new awards over the balance of 2022. Now please turn to slide six. Urban Solutions reported segment profit of $15 million for the first quarter. Results for the quarter reflect the impact of cost growth on an advanced manufacturing project that is now complete and the timing associated with the closing of a P3 transaction. Looking ahead, the outlook for this segment is increasingly positive as they are on the cusp of some sizable new awards over the next few quarters. In mining and metals, Fluor is currently working on limited notices to proceed for two projects in South America. If you include other prospects in the near term, These opportunities represent over $6 billion in new work. In addition, we continue to see our mining and metals group actively support energy transition efforts. In the first quarter, we reached an agreement to be the program and EPC management partner on an industry-leading decarbonization program for a steel company in Europe and Canada. We also see over $1 billion in potential awards for a rare earth refinery in Australia, and a lithium mine in the United States. Moving to infrastructure on slide seven, we continue our focus on executing the current slate of road and bridge projects in our portfolio. The Gordie Howe project is now over 30% complete. And during the quarter, the tower legs were successfully completed and construction of the pylon head has begun. When finished, the two piers will top out at 722 feet. On our LAX automated people mover project, the fourth of six pedestrian bridge structures were placed, and the 2.25 mile elevated train guideway structure has been completed. The project recently passed the 60% completion mark. Another milestone in infrastructure was the handover of the Union Square branch on the Green Line Extension project in Boston. Construction on the Green Line project is anticipated to be complete by the end of Q2. Looking ahead, we remain focused on regional road and bridge work and are optimistic that federal infrastructure funding will support future opportunities. Please turn to slide eight. Our advanced technologies and life sciences business is also off to a good start this year. As we discussed last quarter, there continues to be a groundswell of interest in onshoring semiconductor manufacturing capacity, as well as the continued expansion of data centers around the world. We are currently executing multiple projects for Intel and are actively engaged in discussions regarding a handful of near-term multi-billion dollar opportunities to build new facilities. Additionally, we have mobilized on several new data center projects in Asia that were awarded to us in the first quarter. In life sciences, last year we were awarded a contract for a large-scale biologics manufacturing facility in Europe for Fujifilm. As a result of our efforts to date on this project, we are looking at a additional expansion opportunities with this client. We are seeing these repeat engagements also play out with a pharmaceutical company that is looking to build additional facilities in the United States. Now turn with me to slide 10. Mission Solutions reported segment profit of $58 million for the first quarter. This higher than anticipated result was primarily driven by the favorable resolution of a 2017 U.S. Army Corps of Engineers project in Puerto Rico. During the quarter, we received a six-month extension from the Department of Energy for our project in Portsmouth, Ohio, and a two-year extension on a classified project that supports the intelligence community. The outlook for Mission Solutions is increasingly robust. Starting with PANSEX Y-12, we await further information from the NNSA as they assess the contract award. Although FLUR was awarded this $28 billion contract in the fourth quarter of 2021, the initial $14 billion five-year base period will not be reflected under our backlog until the NNSA completes its assessment. Presuming a favorable outcome, we anticipate transitioning onto this project later this year. In addition to the positive future impact of Pantex Y12, we see a strong slate of renewals, re-compete projects, and new work. I'm very pleased with the direction of Mission Solutions and remain confident that they will have significant success this year. Moving to energy solutions, please turn to slide 12. Segment profit of $54 million reflected increased execution activities on projects in North America and a reduction in overhead costs. New awards for the quarter included a reimbursable self-performed construction contract for a chemical facility in the U.S. Gulf Coast. Energy solutions also received a full notice to proceed contract for the NFE FAST LNG project. This reimbursable contract is for the construction of a modular mid-scale facility offshore the U.S. Gulf Coast. The overall market in energy has changed in recent months, with countries and clients assessing capital allocation needs to support energy security and energy transition. Although oil prices have drastically increased the last few months, our clients are showing capex discipline and are being cautious in their assessment of long-term oil prices. Significant prospects for the remainder of the year include a large international petrochemical facility and additional refinery work in Mexico. Now turn to slide 13. As I mentioned on our last call, energy transition continues to make steady progress across our end markets. Notable ongoing work includes a carbon capture and sequestration project in North Dakota, ongoing work to support various clients in their efforts to decarbonize facilities, and a lithium hydroxide monohydrate plant in China. LNG Canada continued to make progress during the quarter and is now over 60% complete. The project continues to advance with the delivery of 24 modules in the first quarter and an additional 16 modules so far in Q2. Deliveries in the quarter included the first ISBL module for train number one. This impressive structure measures 115 feet in height and weighs over 5,000 tons. We continue to track and assess COVID-related impacts across the project and are implementing mitigation measures in coordination with the client to minimize impacts. Moving to slide 15 and NuScale. There's been quite a bit of interest and excitement in NuScale over the past quarter. Let's start with the big news that happened over the past week. Spring Valley shareholders approved the business combination with NuScale, which is now traded on the New York Stock Exchange under the ticker SMR. the interest in the future of zero carbon power generation was quite evident as demonstrated by a redemption rate which came in at a low 37.5%, significantly lower than the average first quarter SPAC redemption rate of 84%. Fluor now owns 57% of the new listed company, and we are excited to see the surge in investor interest for both Fluor and NuScale. Notably, Fluor and NuScale were the only consortium to follow through on its DOE partnership and delivered not only an NRC certification, but a broad coalition of investors to support commercialization. Tuesday's listing was another milestone on this important green energy path. In addition, NuScale had a very active start to 2022. Some of the more notable accomplishments include, firstly, the expansion of the pipe investment. The final amount was $235 million, with $55 million added since the December SPAC announcement. Second, as of May 2nd, NuScale's combined cash on hand is approximately $380 million. Third, an MOU was signed with Dairyland Power Cooperative in Wisconsin to evaluate NuScale's small modular reactor technology. Fourth, a collaboration agreement with the U.S. Reactor Forging Consortium was signed to support commercialization of NuScale power modules. And last week, Doosan Interbility and NuScale Power finalized an agreement to start SMR production. Doosan is set to begin manufacturing of SMRs for our UAMPS project. They will start manufacturing large forged materials used for SMR manufacturing in 2022 and will get into full-scale manufacturing of SMR equipment in the second half of 2023. And finally, on April 4th, Fluor announced that Japan Bank for International Cooperation through Japan New Scale Innovation LLC purchased a preferred equity position in New Scale Power generating $110 million for floor. Before I turn the call over to Joe, let me touch on the 2024 guidance we announced on Strategy Day a little over a year ago. I'm very pleased with the quality of new award bookings. As mentioned last quarter, our bookings were 120 basis points above our gross margin plan. In this quarter, we were 470 points above our expectations. I remain confident that the 2024 guidance of $2.50 to $2.90 per share set last year is achievable. And now I'll turn the call over to Joe for the financial update. Joe?