Fluor(US:FLR)2023-11-03 14:23Financial Data and Key Metrics Changes - For Q3 2023, revenue was $4 billion, representing a 10% increase from the previous year, driven by increased execution activities across all segments [17][24] - Consolidated segment profit for the quarter was $276 million, with adjusted EBITDA rising to $216 million compared to $30 million a year ago [17][58] - Adjusted EPS for the quarter was $1.02, up from $0.07 in Q3 2022 [17] Business Line Data and Key Metrics Changes - Urban Solutions reported a profit of $66 million, with new awards totaling $1 billion and an ending backlog of $11.1 billion, of which 59% is reimbursable [25] - Energy Solutions saw significant profit improvement to $177 million from $59 million a year ago, with new awards totaling $3.3 billion [56] - Mission Solutions reported a segment profit of $38 million, reflecting increased execution activities for FEMA hurricane support [55] Market Data and Key Metrics Changes - Consolidated new awards for the quarter were $5 billion, maintaining a book-to-burn ratio of greater than 1 times, with total backlog now at $26 billion, of which 70% is reimbursable [13][30] - The demand for services is strong, with a prospect pipeline more than 15 times the size of the current backlog, particularly in chemicals and mining [53] Company Strategy and Development Direction - The company is leveraging artificial intelligence technologies to enhance project execution and predictive pricing for materials [11][12] - Focus on high-quality backlog and improved margins, with expectations for significant cash flow generation in 2024 [59][88] - The company is transitioning to a lower-risk portfolio and is actively working on monetizing its investment in Nuscale [94] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the mining and metals business, noting continued investment in energy transition minerals and stable CapEx levels among clients [37] - The company anticipates a significant year for cash flow generation in 2024, driven by a growing non-legacy portfolio [59][88] - Management highlighted the importance of financial discipline and execution excellence in driving positive outcomes [34][49] Other Important Information - The company completed a successful convertible debt offering, locking in a low coupon rate and preventing share dilution until the share price exceeds $68 [18] - The cash and marketable securities balance for the quarter was $2.4 billion, excluding amounts held by NuScale [59] - The company expects to close transactions related to the sale of Stork's remaining operations by Q2 next year [59] Q&A Session Summary Question: Insights on cost recovery entitlements and future recognition - Management indicated that the recognition of cost recoveries was driven by activities in Mexico and does not expect significant upticks in recognition going forward [34] Question: Macro outlook on mining activity and client CapEx - Management noted that mining clients are investing in energy transition minerals, with no cancellations observed and stable CapEx levels [37] Question: Clarification on adjusted EBITDA and run rate - Management explained that the adjusted EBITDA for the quarter was influenced by earlier recognition of cost recoveries, maintaining a comfortable range for Q4 [41] Question: Confidence in cash flow generation for 2024 - Management attributed confidence in cash flow generation to the resolution of legacy challenges and the addition of high-quality backlog [43] Question: Expectations for energy segment margins in Q4 - Management acknowledged that Q4 margins would be lower than year-to-date levels but emphasized confidence in the remaining legacy work and ongoing projects [46][70] Question: Update on Nuscale monetization discussions - Management confirmed ongoing discussions with a strategic investor for the monetization of Nuscale, with a term sheet in place [94]