Fluor Corporation

Good morning and welcome to Floor's fourth quarter and full year 2025 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 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, I would like to turn the call over to Jason Landkammer, Vice President, Investor Relations. Please go ahead, Mr. Landkammer.

Thank you, Sarah, and welcome to Floor's 2025 Fourth Quarter Earnings Call. Jim Brewer, Floor's Chief Executive Officer, and John Regan, Floor's Chief Financial Officer, are with us today. FLOR 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 are summarized on slide two. During today's presentation, we will 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 differences in our 2025 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. When discussing revenue and related margins, We are introducing disclosure for adjusted net revenue and adjusted net margin, which we determined by reducing gap revenue to exclude at-cost revenue, which we define in the 10-K. I'll now turn the call over to Jim Brewer, Florida's Chief Executive Officer. Jim?

Thank you, Jason, and good morning, everyone. Thank you for joining today. I want to start by sharing my perspective on 2025, what's ahead of us in 2026, why we're excited about our strategy, and the business conditions supporting our growth. Please turn to slide three. When I think about our current state, it's helpful to reflect on the progression of our strategic journey over the past few years. We executed our fix and build chapter early in the decade, where we prioritize actions critical to our long-term success. These included creating a robust capital structure, re-establishing discipline pursuit principles, and diversifying our mix of revenue. Last year, this management team launched the next chapter of our strategy, Grow and Execute, with a focus on growth, project delivery, and returning value to shareholders. Since then, we deployed $754 million in share repurchases in 2025. plus an additional $335 million to date in 2026. We achieved a monetization solution for our investment in NuScale with $2 billion received since September of 2025 and more to come in the next few months. We completed the sale of Stork and signed an agreement for the sale of the CFHR yard. We maintain our discipline around contract terms, ensuring that we get paid for the value we provide. And we have much to be proud of in our three business segments. In energy solutions, in 2025, we completed several major projects successfully, including LNG Canada phase one, TCO in Kazakhstan, and BASF in China. In urban, We expanded in key markets, including a major award related to the largest pharmaceutical project in the world, a rare earth project in the United States, copper and iron ore projects across multiple continents, and a semiconductor tool install. And in mission, we saw a significant extension for nuclear remediation work and continued to make inroads in the intelligence space. Please turn to slide four. As we stand in early 2026, we're seeing improved confidence across our client base. This confidence is a result of high levels of new front end work, as well as detailed negotiations on projects that we see converting to backlog in the next several quarters, weighted towards the second half of 2026. The uncertainty and hesitation that we saw last year is abating. Furthermore, after last year's disruption, the Fluor team has been very active in finding new opportunities in our target market and progressing the ones already in-house. We're actively pursuing and shaping prospects across LNG, mining and metals, advanced technologies, and nuclear fuels. We also saw an increase in prospects in both gas-fired and nuclear power projects. Based on our conversations with clients and their current expectation of FID timing, we anticipate that new awards for 2026 will be significantly higher than in 2025, with a book to burn ratio in excess of one. On slide five, we have listed the major opportunities we're tracking for 2026, showing the diversity of our end markets. I'll provide more detail in my commentary on each segment. Now let's turn to our review of our results for 2025, beginning on slide six. John will cover the majority of the financials, but I'd like to cover a few highlights. Consolidated new awards for the year were $12 billion and 87% reimbursable. New awards last year were affected by clients' concerns around geopolitical and trade uncertainty. And in the case of SRPPF, the client's evolving approach for tendering the CM scope. In addition to these awards, we recognize close to $1 billion in positive backlog adjustments as part of normal growth in our project activities. Our backlog ended at $25.5 billion and 81% reimbursable. I'm encouraged by the earnings potential of our current backlog we saw an improvement in new award margin and in total backlog margin. These improvements are supportive of the operating margin range that we discussed last year at our investor day. Having these projects in hand, we're now focused on delivering at or better than as sold. Moving to our business segments, please turn to slide eight. Urban Solutions reported a profit of $205 million for 2025, compared to $304 million a year ago. Segment profit reflects $108 million in cost growth on three infrastructure projects, offset by $54 million of positive developments on other infrastructure projects, including a favorable negotiation on the project completed in 2019. Specific to our four infrastructure projects in the last position, we're still on track to hand over three projects in 2026 and one in early 2027. And we continue to aggressively pursue recoveries and change orders from clients and subcontractors. New awards in urban for the year were 8.7 billion and included the previously mentioned pharmaceutical project, two significant mining projects, and two highway projects. This is the third year in a row of new awards in the 9 billion range in urban, validating the benefits of our diversification. Ending backlog for urban solutions is 18.7 billion. Please turn to slide 9. We see opportunity to grow in 2026 with large copper, aluminum, and green steel projects in mining and metals. rare earth material production facilities and manufacturing, and life science facilities for two new clients. In advanced technologies, we brought in additional industry experience leadership to support our offering in both semiconductors and data centers. As a result of our increased efforts in these markets, we are in advanced discussions with a client for a major data center in the U.S. We're pursuing project management work on a data center project in Europe and are well positioned for semiconductor work in the U.S. Moving to energy solutions, please turn to slide 10. For full year 25, energy solutions reported a segment loss of $414 million compared to a profit of $256 million in 2024. These results reflect the Santos ruling the completion of several large projects, and a temporary slowdown in execution in Mexico. Excluding the Santos effect, the segment performed extremely well, exceeding our internal expectations for the year. New awards in energy solutions totaled $1.4 billion in 2025. Awards for the year were primarily related to higher margin engineering services. that will enable larger EPC awards in the next two years. Ending backlog was $4.6 billion. As a final point, we recently celebrated the mechanical completion of our work in BASF's largest investment to date in China. Our scope was delivered with more than 75 million work hours without a lost time injury. And Fluor provided full engineering, procurement, and construction management services across multiple facilities. This proudful achievement is another example of our ability to deliver successful projects, no matter the size and complexity. Please move to slide 11. Prospects for 2026 include our entrance back into the gas-fired power market. We currently have an LNTP with a confidential US utility for a large-scale project with the potential to add two additional facilities for the same client. These projects will start on a reimbursable basis and then convert to a negotiated fixed price once the execution plan and estimate are completed in late 26 or early 27. We're very excited about these opportunities. because they reflect our ability to jointly develop a contract and execution plan with the client, driving a win-win outcome under fair and balanced terms. In the nuclear power market, we're pleased with our progress to advance current projects and to diversify our portfolio of opportunities. On the Chernivota project, we continue to advance the front-end planning with the client and our JV partners. and expect to finalize all deliverables and EPC estimates by the end of 26. This project could result in a multi-billion dollar award next year. On the Road Power SMR project, we're actively coordinating with the client, the U.S. and Romanian governments, and with NuScale to obtain the next stage of funding to progress that project beyond the recently completed feed. We're also pursuing additional opportunities in conventional nuclear and SMR projects in partnership with several technology providers. So as you can see, we continue to expand and diversify our nuclear power portfolio, which we believe will provide significant growth potential in the mid to long term. In LNG, we continue to support the LNG Canada client as they work towards a decision on phase two. We're looking forward to replicating the success of phase one in this next phase. Our LNG team also recently started a feed package for a portion of a US LNG facility. Turning to mission solutions, please go to slide 12. This segment reported a profit of $94 million for the year, compared to $153 million a year ago. Results for the year reflect $60 million in the aggregate for the recognition of reserves on a DoD project and a previously disclosed ruling on a project completed in 2019. New awards total $1.8 billion, similar to 2024. Awards included the start of a six-year contract to extend our presence at the Portsmouth site. Backlog was $2.2 billion compared to $2.7 billion for 2024. As previously explained, these numbers exclude the work performed under the equity investment method. For 2026, we see opportunities in the civil agency market, including FEMA and the National Cancer Institute, pursuits in our national security business, additional law cap work, and support services for the intelligence community. Mission is very well positioned for nuclear fuels work. combining our EPC expertise with our extensive nuclear experience with the government. We expect this market to expand as the U.S. drives investment to increase domestic production. In this sense, we're extremely excited with last week's announcement of the Centris Award for the EPC of a major expansion of its Ohio uranium enrichment plant. We're proud of our longstanding partnership with Centris, and our contribution to rebuilding the US nuclear fuel supply chain. We recognize an early engineering award in Q1 and expect meaningful EPC awards in the second half of 26 and into 27. We continue to have a full team deployed on the SRPPF project, which is part of our scope at Savannah River. While we had previously anticipated a full release in 2026, We are awaiting additional information from the US government as to timing of next steps. Before I hand the call over to John, I wanted to briefly discuss artificial intelligence, which is a topic of great interest in our industry. Please turn to slide 13. When it comes to AI, Fluor was an early adopter. We began our AI journey in 2018 by developing a predictive analytics platform built on data from more than 200 of our largest EPC projects. This foundational work allows us to benchmark schedule, planning, and cost performance using proven historical outcomes, so projects are planned with greater accuracy and discipline from the start. At Fluor, We view AI as a strategic advantage that strengthens our fully integrated EPC model. AI will enhance our ability to plan, design, procure, and build, improving decision timeliness and quality, accelerating execution, and sharpening our competitive edge. As of today, we've deployed AI across the project lifecycle, from predicted analytics on capital projects to intelligent pricing insights across the supply chain. These applications are already embedded in how we plan projects and engage with suppliers across key markets. We have also implemented AI applications across individual functional roles, including HR, finance, legal, and procurement. Building on these capabilities and looking ahead, we are evolving our project delivery platform into what we call the project of the future. While still in the early stages, this next evolution of our platform is intended to deliver shorter schedules and greater cost competitiveness for our clients. We look forward to sharing more details in the future. With that, John will give us the financial update. John? Thanks, Jim.