Fluor Corporation

Good morning and welcome to Floor's first quarter 2026 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, 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 Landkamer, Vice President, Investor Relations. Please go ahead, Mr. Landkamer.

Thanks, Krista. Good morning and welcome to Floor's 2026 first quarter earnings call. Jim Brewer, Floor's chief executive officer, and John Regan, Floor's chief financial officer, are with us today. Floor issued its first 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 will reflect our current analysis of existing trends and information. There is an inherent risk that our 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 2025 Form 10-K and our 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.floor.com. With that, I'll now turn the call over to Jim Brewer, Floor's Chief Executive Officer. Jim.

Thank you, Jason. Good morning, everyone. Thank you for joining us on our first quarter 2026 earnings call. Before I discuss the quarter, I want to highlight the strong trajectory we're seeing in our prospect pipeline and our capacity to grow the business. Turn into slide three. At Floor, We're driven by the pursuit and capture of large and complex EPC projects. We apply our core competencies to project management and EPC execution to deliver world-class facilities globally. What differentiates us is not simply the scale of the projects we pursue, but the discipline with which we pursue them and the depth of our technical expertise and project delivery track record. We're focused on building a quality backlog where rigor in planning and execution translate into successful outcomes. Our preferred model for project execution is to get in early in the planning phase and stay until the end of the execution phase. This is how we add the most value. And therefore, it is very encouraging to see the many front end awards that we have announced in recent months. These early wins are a key stepping stone to accelerate growth in the latter part of this year and into 2027. During the front-end phase, we work with our clients to plan the project and establish a solid foundation for the scope, cost, and schedule of the execution phase, which kicks off after the final investment decision by the customer. That early engagement is where we shape the commercial model and ensure projects are set up for success before significant capital is deployed. Some of these early awards that we announced recently include the Centris Nuclear Fuels Enrichment Project, the Small Modular Reactor Project for Dow with X Energy, the America First Refinery, the Donlin Gold Project, the Tara Wolf Data Center, and our announcement yesterday for Anglo-American's Woodsmith Fertilizer Project. With these recent awards and the study work that we already have in-house, We're executing front end work representing over $60 billion of revenue on potential backlog if clients choose to move forward on these projects with Fluor. Furthermore, we're tracking additional prospects representing another $40 billion in potential over the next three years. Our prospect pipeline has increased by 50% in the past 12 months. This expansion reflects grown demand across the critical minerals, life sciences, LNG, nuclear, refining, and power markets. In mining, for example, copper opportunities in South America and other parts of the world underscore the long cycle investment required to support urbanization and electrification. In energy solutions, LNG demand and gas fuel power generation are aligned with current energy priorities. Grown demand for power is driven by investments in data centers, advanced manufacturing, and broader economic development. This is why we're optimistic about the future and confident in our ability to grow the company. But growth alone is not the objective. We are prioritizing backlog quality that aligns with our strategic priorities and with our strengths. Now, let's turn to our review of results in Q1, beginning on slide four. John will go into greater financial detail, but I'd like to cover a few key items. Consolidated new awards for the quarter were $2.7 billion and 98% reimbursable. As we said in February, larger new award bookings will be weighted towards the second half of this year. Importantly, margins on new awards in Q1 were 200 basis points higher than the margin represented in our current backlog, reinforcing our project selectivity. Our backlog improved slightly from year end to $25.7 billion and reflects an additional $1.1 billion in positive project adjustments on current work. Ending backlog was 82% reimbursable. Now let's turn to our review of the business segments starting on slide six. Urban Solutions reported a $6 million segment profit in the quarter. Results reflect a $37 million impact for a mining project in the Americas that experienced declining productivity in the field. While I'm disappointed in this result, we've taken steps to strengthen our execution team. This project is significantly advanced in the construction phase. New awards for the quarter were $2.1 billion compared to $5.3 billion a year ago when we received a multi-billion dollar award for a life sciences project. Awards for this quarter include a metals project in the Middle East, incremental work for a pharmaceutical facility, and an infrastructure expansion on a mining facility in Chile. Ending backlog for urban now at $19 billion represents 74% of Fluor's total backlog. We expect this percentage will rebalance as growth in energy and mission solutions starts to drive greater diversification and backlog. Moving to slide seven. Life sciences and advanced manufacturing remain in the capital spending up cycle. Demand is being supported by on-shoring initiatives and continued investment to expand capacity in select critical sectors. And we're well positioned to support clients as they move projects from planning into execution. For the balance of this year, we see some sizable prospects, including pharma work in a rare earth magnet facility. Turning to our data center efforts, we signed a limited notice to proceed with TerraWolf. Under this agreement, we are delivering master planning and pre-construction services for a large scale data center campus in Kentucky with access to 480 megawatts of grid connected power. We're currently working with the client towards a full notice to proceed. Generally speaking, we continue to see hyperscalers signaling a multi-year surge in demand for data center and power infrastructure. Contract and commercial terms in the data center market remain challenging, especially regarding risk allocation. We're staying disciplined and selective, and we're working to shape deals on a contract by contract basis to ensure opportunities meet our return expectations. Turning to slide eight. In mining and metals, as I mentioned in the quarter, we received a reimbursable EPCM contract for a new aluminum recycling facility in the Middle East. Our work on this project and in the region continues to move forward. Now, with regards to the Ricoh DIG project, We recently received notice from our clients that they are reducing the pace of development on the project as a result of their geopolitical and security concerns. We continue to perform engineering and procurement from our offices outside the region. For the second quarter, we received a feasibility study award for Anglo-American's large fertilizer project in the UK. Later this year, we're tracking several copper-related opportunities in South America. The infrastructure business line continues to focus on achieving substantial completion on a number of projects this year. On the Gordie Howe Bridge, on the LAX People Mover, and on the LBJ project, we have made good progress and expect to complete them over the next several months. And on I-35 Phase II, that project remains on track to achieve substantial completion in Q1 of 2027. As it relates to the non-legacy infrastructure portfolio, later this year we also expect to complete work on the Oak Hill Parkway project in Austin and the Red and Purple Line modernization in Chicago. Moving to energy solutions on slide nine. Segment profit was $74 million compared to $47 million a year ago. Results increased primarily due to the recognition of favorable closeout items on three projects. New awards for the quarter totaled $213 million and included the Feed Award for the America First Refinery in Brownsville, Texas. This will be the first grassroots refinery to be constructed in the United States in more than 50 years. When complete, The facility will process 60 million barrels per year of domestic crude and will contribute to the modernization of U.S. refining infrastructure. We also enter into a contract with X-Energy for the small modular reactor project at Dow's plant in Seadrift, Texas. Our initial award is for front-end engineering and execution planning. Fluor is excited to partner with Dow and X-Energy, and we look forward to advancing this strategic project. This is the second SMR technology we're adding to our resume, in addition to our project in Romania using NuScale technology. Moving to slide 10. I am pleased to see a very positive response from clients in the power market. There's a clear need for our EPC capabilities in domestic gas fuel projects, and our engagement with several clients are encouraging and are progressing well. We hope to make further announcements in this market in coming quarters. Similarly, we're excited about the growing momentum in nuclear and the recognition from governments and the private sector that nuclear power has a prominent role in supporting long-term solutions. In addition to X Energy and NuScale, we're currently engaged with two additional technology partners in the nuclear power space to position for project work in the future. Prospects in the next few quarters in energy solutions include LNG Canada Phase 2, a gas compression project, a gas-fueled power plant in the Northwest, and a chemical facility in Canada. Turn into slide 11. Mission Solutions reported a segment loss of $71 million for the first quarter compared to a profit of $5 million a year ago. Results reflect an outcome of a court ruling related to a lawsuit that was filed back in 2013 for law cap activities in Afghanistan. Fluor prevailed on three of the four claims involved in the matter. The final jury award for the fourth claim was $15 million, but increased to $96 million when included tribal damages and legal fees. We expect to appeal. Excluding this legal decision, results were consistent with our expectations for the quarter. New awards in the quarter were $332 million and ending backlog was $2.5 billion. Awards in the quarter included a significant feed award for the Centris uranium enrichment plant expansion. We also received a $100 million task order to provide services that Shaw Air Force Base in support of ongoing operations in the Middle East. This task order is in addition to our existing work at an air base in Kuwait, where we're providing support services for the Air Force. At Savannah River, we're currently executing both the maintenance and operations scope and the plutonium pit production project. NNSA took ownership of the site in late 2024. and is in the process of re-competing both the M&O and plutonium pit scopes of work under a single contract. We are well positioned for this work and expect to submit a bid later this year. Prospects for the remainder of 2026 include a two-year extension on current intelligence work, additional awards on CentRIS, including EPC work, an extension on our efforts at Savannah River, and several opportunities that will grow our civil market. Before I turn the call over to John, I want to provide Fleur's business perspective on the Middle East and on Venezuela on slide 12. Starting with the Middle East, our first priority is always the safety and well-being of our employees and their families. Everyone is safe and we're closely monitoring events. Our thoughts are with everyone affected by the conflict and we hope there's a quick and lasting conclusion to it. With our workforce safe, our activities in the Middle East have continued without interruption. Despite the conflict, we continue to serve our projects in the region and mitigate supply chain constraints. We remain committed to the Middle East and are leveraging our extensive experience in the region and in reconstruction of damaged facilities. Currently, We're in conversations on damage assessments and stand ready to respond to client needs. This early work could translate into larger scopes once the situation stabilizes and clients are ready to proceed. Speaking more broadly, the Middle East is not only a critical source of oil and gas, but also petrochemicals, metals, industrial gases, and fertilizers. all markets where we have an extensive track record and a strong market position. Therefore, we're monitoring the longer-term implications of the conflict, including new opportunities not just in the region, but globally, as clients will look to diversify energy and commodity sourcing. Turning to Venezuela. Similar to the Middle East, Fluor has a long history of project delivery in this country. In fact, Fluor has executed projects in Venezuela that total 2 million barrels of daily crude processing capacity, which represents a significant portion of the country's output at its past peak. We're in active discussions with clients and local partners, positioning for work as investment plans firm up. We will have more clarity on the timing of these opportunities in the coming months. I'll now turn the call over to John for a financial update. Thanks, Jim, and good morning, everyone.