# Fluor Corp: Form 10-Q for the period ended Sep 30, 2024

- Company: [Fluor Corp](/companies/flr.md) (CIK 1124198)
- Form: 10-Q
- Filed: 2024-11-08
- Accepted by EDGAR: Nov 7, 2024, 18:00 ET
- Period: 2024-09-30
- Accession: 0001628280-24-046432
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1124198/000162828024046432/flr-20240930.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1124198/000162828024046432/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2024-07-01 to 2024-09-30 | $4.09bn | us-gaap:Revenues |
| Revenue | 9 months, 2024-01-01 to 2024-09-30 | $12.05bn | us-gaap:Revenues |
| Cost of revenue | 3 months, 2024-07-01 to 2024-09-30 | $4.01bn | us-gaap:CostOfGoodsAndServicesSold |
| Cost of revenue | 9 months, 2024-01-01 to 2024-09-30 | $11.69bn | us-gaap:CostOfGoodsAndServicesSold |
| Gross profit | 3 months, 2024-07-01 to 2024-09-30 | $88.0m | us-gaap:GrossProfit |
| Gross profit | 9 months, 2024-01-01 to 2024-09-30 | $366.0m | us-gaap:GrossProfit |
| Operating income | 3 months, 2024-07-01 to 2024-09-30 | $49.0m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2024-01-01 to 2024-09-30 | $277.0m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2024-07-01 to 2024-09-30 | $11.0m | us-gaap:InterestExpense |
| Interest expense | 9 months, 2024-01-01 to 2024-09-30 | $35.0m | us-gaap:InterestExpense |
| Income tax | 3 months, 2024-07-01 to 2024-09-30 | $61.0m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2024-01-01 to 2024-09-30 | $172.0m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2024-07-01 to 2024-09-30 | $54.0m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2024-01-01 to 2024-09-30 | $282.0m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2024-07-01 to 2024-09-30 | $0.31 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2024-01-01 to 2024-09-30 | $1.63 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-07-01 to 2024-09-30 | $0.32 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2024-01-01 to 2024-09-30 | $1.65 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-07-01 to 2024-09-30 | 174,000,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2024-01-01 to 2024-09-30 | 174,000,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2024-01-01 to 2024-09-30 | $501.0m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2024-01-01 to 2024-09-30 | $133.0m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2024-09-30 | $2.91bn | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2024-09-30 | $5.26bn | us-gaap:AssetsCurrent |
| Total assets | at 2024-09-30 | $7.10bn | us-gaap:Assets |
| Current liabilities | at 2024-09-30 | $2.98bn | us-gaap:LiabilitiesCurrent |
| Long-term debt | at 2024-09-30 | $1.12bn | us-gaap:LongTermDebtNoncurrent |
| Shareholders' equity | at 2024-09-30 | $2.25bn | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 35,019 characters.

The following discussion and analysis should be read in conjunction with our financial statements and our 2023 10-K. Except as the context otherwise requires, the terms Fluor or the Registrant, as used herein, are references to Fluor and references to the company, we, us, or our, as used herein, shall include Fluor, its consolidated subsidiaries and joint ventures.

### CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Certain statements made herein, including statements regarding our projected operating results, liquidity, capital allocation plans, backlog levels and the implementation of strategic initiatives are forward-looking in nature. Under the Private Securities Litigation Reform Act of 1995, a “safe harbor” may be provided to us for certain of these forward-looking statements. We caution readers that forward-looking statements, including disclosures which use words such as we “believe,” “anticipate,” “expect,” “estimate,” "aspire," "commit," "will," "may" and similar statements, are subject to risks and uncertainties which could cause actual results to differ materially from stated expectations. Significant factors potentially contributing to such differences include:

- The cyclical nature of many of the markets we serve and our clients' vulnerability to poor economic conditions, such as inflation, slow growth or recessions, which may result in decreased capital investment and reduced demand for our services;
- Our failure to receive anticipated new contract awards and the related impact on our operations;
- Failure to accurately estimate the cost and schedule on our projects, potentially resulting in cost overruns or obligations, including those related to project delays and those caused by the performance of our clients, subcontractors, suppliers and partners;
- Intense competition in the global EPC industry, which can place downward pressure on our contract prices and profit margins and may increase our contractual risks;
- The inability to hire and retain qualified personnel;
- Failure of our joint venture partners to perform their venture obligations, which could impact the success of those ventures and impose additional financial and performance obligations on us;
- Failure of our suppliers or subcontractors to provide supplies or services at the agreed-upon levels or times;
- Cybersecurity breaches of our systems and information technology;
- Civil unrest, security issues, labor conditions and other unforeseeable events in the countries in which we do business;
- Project cancellations, scope adjustments or deferrals, or foreign currency fluctuations, that could reduce the amount of our backlog and the revenue and profits that we earn;
- Repercussions of events beyond our control, such as severe weather conditions, natural disasters, pandemics, political crises or other catastrophic events, that may significantly affect operations, result in higher cost or subject the company to contract claims by our clients;
- Differences between our actual results and the assumptions and estimates used to prepare our financial statements;
- Earnings volatility due to recurring fair value measurements of our investment in NuScale;
- Client delays or defaults in making payments;
- The potential impact of changes in tax laws and other tax matters including, but not limited to, those from foreign operations, the realizability of our deferred tax assets and the ongoing audits by tax authorities;
- Our ability to secure appropriate insurance;
- The loss of business from one or more significant clients;
- The inability to adequately protect our intellectual property rights;
- The availability of credit and financial assurances plus restrictions imposed by credit facilities, both for us and our clients, suppliers, subcontractors or other partners;
- Adverse results in existing or future litigation, regulatory proceedings or dispute resolution proceedings (including claims for indemnification), or claims against project owners, subcontractors or suppliers;
- Failure of our employees, agents or partners to comply with laws, which could result in harm to our reputation and reduced profits or losses;
- The impact of new or changing legal requirements, as well as past and future environmental, health and safety regulations including climate change regulations; and
- The risks associated with our strategic initiatives, including dispositions.

Any forward-looking statements that we may make are based on our current expectations and beliefs concerning future developments and their potential effects on us. There is no assurance that future developments affecting us will be those presently anticipated by us.

Additional information concerning these and other factors can be found in our press releases and periodic filings with the SEC, including the 2023 10-K. These filings are available publicly on the SEC’s website at http://www.sec.gov, on our website at http://investor.fluor.com or upon request from our Investor Relations Department at (469) 398-7222. We cannot control such risk factors and other uncertainties, and in many cases, cannot predict the risks and uncertainties that could cause actual results to differ materially from those indicated by the forward-looking statements. These risks and uncertainties should be considered when evaluating Fluor and deciding whether to invest in our securities. Except as otherwise required by law, we undertake no obligation to publicly update or revise our forward-looking statements, whether as a result of new information, future events or otherwise.

### Results of Operations

In March 2024, we completed the sale of Stork's operations in continental Europe for $67 million. During 2024 YTD, we recognized a gain on sale of $11 million including de-recognition of Stork's net assets and cumulative foreign currency translation.

During April 2024, we also entered into a definitive sale agreement for Stork's U.K. operations, which could close as early as the first quarter of 2025, most significantly dependent upon regulatory approval. The financial statement effects for this proposed U.K. sale did not meet the requirements for discontinued operations and held-for-sale reporting as of September 30, 2024. The transaction, as agreed to, is not expected to have a material earnings impact when consummated. After completion of the Stork U.K. sale, our Stork operations will be only the immaterial operations in the Middle East and in Trinidad and Tobago.

Beginning in October 2024, based principally on their equity sales, we no longer met the criteria to consolidate NuScale. As a result, we will deconsolidate NuScale and anticipate recognizing a gain of $1.6 billion in the fourth quarter of 2024, based on a stock price of $13.15 for our 126 million shares. We will recognize the fair value of our investment in NuScale prospectively on a fair value mark-to-market basis based upon the prevailing price of their stock on our balance sheet dates.

In March 2023, we sold our AMECO South America business, which included operations in Chile and Peru. This transaction marked the completion of the AMECO divestiture. Upon the sale of AMECO South America in 2023 YTD, we recognized a $60 million negative earnings impact, including $35 million associated with foreign currency translation.

In August and September 2023, we completed the issuance of the 2029 Notes and the conversion of all our CPS, respectively. In December 2023, we extinguished the remaining outstanding 2024 Notes.

*(in millions)*

| Revenue | 3ME September 30, 2024 |  | 2023 |  | 9ME September 30, 2024 |  | 2023 |  |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Energy Solutions | $1,428 |  | $1,553 |  | $4,456 |  | $4,886 |  |
| Urban Solutions | 1,931 |  | 1,431 |  | 5,240 |  | 3,842 |  |
| Mission Solutions | 635 |  | 655 |  | 1,940 |  | 2,009 |  |
| Other | 100 |  | 324 |  | 419 |  | 917 |  |
| **Total revenue** | $4,094 |  | $3,963 |  | $12,055 |  | $11,654 |  |
| **Segment profit (loss) $ and margin %** |  |  |  |  |  |  |  |  |
| Energy Solutions | $50 | 3.5% | $177 | 11.4% | $193 | 4.3% | $355 | 7.3% |
| Urban Solutions | 68 | 3.5% | 66 | 4.6% | 223 | 4.3% | 121 | 3.1% |
| Mission Solutions | 45 | 7.1% | 38 | 5.8% | 108 | 5.6% | 84 | 4.2% |
| Other | (46) | NM | (5) | NM | (95) | NM | (108) | NM |
| **Total segment profit $ and margin %(1)** | $117 | 2.9% | $276 | 7.0% | $429 | 3.6% | $452 | 3.9% |
| G&A | (37) |  | (56) |  | (147) |  | (177) |  |
| Foreign currency gain (loss) | (2) |  | 23 |  | 58 |  | (62) |  |
| Interest income (expense), net | 37 |  | 42 |  | 114 |  | 120 |  |
| Earnings (loss) attributable to NCI | (29) |  | (25) |  | (63) |  | (42) |  |
| Earnings before taxes | 86 |  | 260 |  | 391 |  | 291 |  |
| Income tax expense | (61) |  | (79) |  | (172) |  | (172) |  |
| Net earnings | 25 |  | 181 |  | 219 |  | 119 |  |
| Less: Net earnings (loss) attributable to NCI | (29) |  | (25) |  | (63) |  | (42) |  |
| **Net earnings attributable to Fluor** | $54 |  | $206 |  | $282 |  | $161 |  |
| **New awards** |  |  |  |  |  |  |  |  |
| Energy Solutions | $1,541 |  | $3,252 |  | $2,840 |  | $4,718 |  |
| Urban Solutions | 828 |  | 1,033 |  | 8,117 |  | 5,090 |  |
| Mission Solutions | 274 |  | 345 |  | 1,481 |  | 1,015 |  |
| Other | 56 |  | 346 |  | 377 |  | 1,097 |  |
| **Total new awards** | $2,699 |  | $4,976 |  | $12,815 |  | $11,920 |  |
| New awards related to projects located outside of the U.S. | 68% |  | 86% |  | 36% |  | 65% |  |

*(in millions)*

| Backlog (2)(3) | September 30, 2024 | December 31, 2023 |
| --- | ---: | ---: |
| Energy Solutions | $8,824 | $9,722 |
| Urban Solutions | 19,006 | 14,848 |
| Mission Solutions | 3,095 | 3,945 |
| Other | 394 | 926 |
| **Total backlog** | $31,319 | $29,441 |
| Backlog related to projects located outside of the U.S. | 56% | 62% |
| Backlog related to reimbursable projects | 80% | 76% |

(1) Total segment profit is a non-GAAP financial measure. We believe that total segment profit provides a meaningful perspective on our results as it is the aggregation of individual segment profit measures that we use to evaluate and manage our performance.

(2) Backlog as of September 30, 2024 increased from backlog as of December 31, 2023 primarily due to an award for a large life sciences project. Backlog may include significant estimated amounts of third-party, subcontracted, CFM and pass-through costs. We do not report new awards or backlog for projects related to our equity method investments even though these awards may be significant contributors to earnings in future periods. Although backlog reflects business that is considered to be firm, cancellations, deferrals or scope adjustments may occur.

(3) Includes backlog of $859 million and $1.3 billion for ongoing legacy projects in a loss position as of September 30, 2024 and December 31, 2023, respectively.

While we experienced reductions in demand for certain services and the delay or abandonment of ongoing or anticipated projects during the COVID pandemic, our ability to win work was not materially impacted by COVID during 2024 YTD. Although many of our projects are in a state we consider normal, we continue to deal with the effects of COVID on our operating results as our estimates are inclusive of COVID effects and the related client recoveries.

Revenue increased during the 2024 Quarter and 2024 YTD primarily driven by an increase in execution activities on several recently awarded projects in our Urban Solutions segment partially offset by revenue declines in Energy Solutions and Mission Solutions.

Segment profit declined during the 2024 Quarter and 2024 YTD primarily driven by the initial recognition of inflation-adjusted variable consideration on certain downstream projects during the 2023 Quarter and 2023 YTD and lower contributions from a large Energy Solutions project in the late stages of execution. We recognized a positive adjustment upon the negotiation of change orders on the same project in 2023 YTD. These declines were partially offset by increases in segment profit in Urban Solutions and Mission Solutions.

The effective tax rate was 70.9% for the 2024 Quarter and 44.0% for 2024 YTD compared to 30.4% for the 2023 Quarter and 59.1% for 2023 YTD. A reconciliation of U.S. statutory federal income tax expense to income tax expense follows:

*(In millions)*

|  | 3ME September 30, 2024 | 2023 | 9ME September 30, 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: |
| U.S statutory federal income tax expense | $18 | $55 | $82 | $61 |
| Increase (decrease) in taxes resulting from: |  |  |  |  |
| State and local income taxes, net of federal income tax effects | $2 | 3 | 5 | 1 |
| Valuation allowance, net | 16 | 18 | 46 | 94 |
| Foreign tax impacts | $13 | (2) | 14 | 14 |
| Noncontrolling interest | 6 | 5 | 14 | 9 |
| Sale of AMECO South America | — | — | — | (10) |
| Reserve for uncertain tax positions | 2 | — | (2) | — |
| Other adjustments | 4 | — | 13 | 3 |
| Total income tax expense | $61 | $79 | $172 | $172 |

During 2024 YTD, we received a refund of $169 million, including interest, from the IRS attributable to the 2013 tax year that was originally recognized as a receivable in 2020 pursuant to the CARES Act.

Beginning in January 2024, many non-US tax jurisdictions have enacted or are in the process of enacting legislation to adopt a minimum effective tax rate described in the Global Anti-Base Erosion Model Rules, also known as Pillar Two. Pillar Two establishes a global minimum tax of 15% on large multinational corporations. We considered the applicable tax law changes in the countries in which we operate and have determined that there is no material impact to our tax provision for the 2024 Quarter. We will continue to evaluate the impact of these tax law changes on future periods.

### Segment Operations

### Energy Solutions

Revenue declined during the 2024 Quarter and 2024 YTD primarily due to a decline in execution activity for several projects nearing completion as well as revenue on inflation-adjusted variable consideration recognized in the prior year periods. The decreases in revenue during the 2024 Quarter and 2024 YTD were partially offset by the ramp up of execution activities on chemicals projects in Canada and China.

Segment profit declined in the 2024 Quarter and 2024 YTD primarily due to the initial recognition of inflation-adjusted variable consideration on certain downstream projects during the 2023 Quarter and 2023 YTD. Segment profit in 2024 YTD was also impacted by lower contributions from a large project in the late stages of execution. We recognized a positive adjustment upon the negotiation of change orders on the same project in 2023 YTD. Further, cost growth on a construction-only subcontract executed by our joint venture in Mexico resulted in a $57 million charge during 2024 YTD. The decrease in segment profit during 2024 YTD was partially offset by final negotiations and handover of a large upstream legacy project which was completed during the second quarter of 2024. We recorded $58 million for cost growth on the now-completed project during 2023 YTD. Segment profit in the 2024 Quarter and 2024 YTD also included gains of $20 million and $47 million, respectively, on embedded foreign currency derivatives compared to a gain of $24 million in the 2023 Quarter and a loss of $23 million in 2023 YTD. The changes in segment profit margin in the 2024 Quarter and 2024 YTD reflect these same factors.

New awards were lower in the 2024 Quarter and 2024 YTD compared to 2023. New awards booked during the 2024 Quarter included a full notice to proceed on a downstream project in Mexico. Backlog declined during 2024 YTD due to the execution pace exceeding new award activity.

### Urban Solutions

Revenue in the 2024 Quarter and 2024 YTD significantly increased primarily due to the ramp up of execution activities on several recently awarded projects including two life sciences projects, a large metals project, a large mining project and a green steel project. The revenue increases in the 2024 Quarter and 2024 YTD were slightly offset by declines in the volume of execution activity for projects completed or nearing completion including a large mining project and a life sciences project.

Segment profit remained flat during the 2024 Quarter compared to the 2023 Quarter. Profit from recently awarded projects such as a life sciences project, a large metals project, a large mining project and 2 advanced technology projects made up for a decrease in profit from 2 completed mining projects. Segment profit significantly improved in 2024 YTD compared to 2023 YTD. Segment profit in 2024 YTD included an agreement to the terms of a change order on a legacy infrastructure project compared to a $59 million charge for rework associated with subcontractor design errors and related schedule impacts on the same project during 2023 YTD. The changes in segment profit margin in the 2024 Quarter and 2024 YTD reflect these same factors.

New awards decreased during the 2024 Quarter compared to the 2023 Quarter. However, new awards significantly increased during 2024 YTD compared to 2023 YTD due to a large life sciences project booked during the first quarter of 2024 and an incremental award on a large metals project booked during the second quarter of 2024. Backlog significantly increased during 2024 YTD due to these 2 large awards. Our staffing business does not report new awards or backlog.

### Mission Solutions

Revenue declined slightly in the 2024 Quarter and 2024 YTD compared to the 2023 Quarter and 2023 YTD. Revenue growth on 2 DOE contracts during the 2024 Quarter largely replaced revenue declines resulting from reduced volume on a different DOE contract as well as the cancellation of a nuclear power project in 2023. Revenue declined during 2024 YTD due to the aforementioned power project cancellation in 2023, the completion of an airfield construction project and reduced contributions from a DOE contract partially offset by execution activities for a recently awarded defense contract.

Segment profit and profit margin improved during the 2024 Quarter due to an increase in execution activities on the 2 DOE contracts discussed above. Segment profit and profit margin significantly improved during 2024 YTD compared to 2023 YTD that included a $30 million charge for cost growth associated with schedule delays on a weapons facility project that was completed in October 2024.

New awards decreased during the 2024 Quarter compared to the 2023 Quarter. However, new awards increased during 2024 YTD compared to 2023 YTD due to task order contracts awarded under the Air Force Contract Augmentation Program V. Backlog included $1.3 billion and $2.7 billion of unfunded government contracts as of September 30, 2024 and December 31, 2023, respectively. Unfunded backlog reflects our estimate of future revenue under awarded government contracts for which

funding has not yet been appropriated. We do not report new awards or backlog for projects related to our equity method investments even though these awards may be significant contributors to earnings in future periods. For example, our new awards and backlog will not reflect the Pantex management and operations contract, recently awarded to a joint venture in which we have significant influence but a noncontrolling interest. The estimated value of the contract to the joint venture is $30 billion, if all of the 5-year options are exercised.

### Other

Other includes the operations of NuScale and the remaining Stork and AMECO businesses prior to their sale.

*(in millions)*

|  | 3ME September 30, 2024 | 2023 | 9ME September 30, 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: |
| NuScale (1) | $(40) | $(19) | $(100) | $(71) |
| Stork | (6) | 14 | 6 | 25 |
| AMECO | — | — | (1) | (62) |
| Segment profit (loss) | $(46) | $(5) | $(95) | $(108) |
| (1) NuScale expenses included in the determination of segment profit were as follows: |  |  |  |  |
| NuScale expenses | $(79) | $(50) | $(196) | $(164) |
| Less: DOE Reimbursable expenses | 3 | 18 | 12 | 43 |
| NuScale expenses, net | (76) | (32) | (184) | (121) |
| Less: Attributable to NCI | 36 | 13 | 84 | 50 |
| NuScale profit (loss) | $(40) | $(19) | $(100) | $(71) |

Segment profit in the 2024 Quarter includes a $7 million charge for severance expected upon liquidation of a non-European Stork location. Segment profit in 2024 YTD includes an $11 million gain on the sale of Stork's operations in continental Europe. We expect to consummate the sale of Stork's U.K. operations as early as the first quarter of 2025, upon receipt of regulatory approval for the proposed transaction.

Segment profit in 2023 YTD includes the $60 million negative earnings impact upon the sale of our AMECO South America business, including $35 million for foreign currency translation.

### G&A

*(in millions)*

| G&A | 3ME September 30, 2024 | 2023 | 9ME September 30, 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: |
| Compensation | $26 | $45 | $104 | $123 |
| Facilities | 3 | 4 | 11 | 11 |
| Exit costs | 3 | 2 | 12 | 9 |
| SEC investigation | — | 2 | — | 12 |
| Reserve for legacy legal claims | — | — | — | 3 |
| Other | 5 | 3 | 20 | 19 |
| G&A | $37 | $56 | $147 | $177 |

The decrease in compensation expense in the 2024 Quarter and 2024 YTD was primarily driven by lower performance-based compensation including annual bonus projections.

### Critical Accounting Policies and Estimates

There have been no material changes in our critical accounting policies and estimates from those disclosed in our 2023 10-K.

### Recent Accounting Pronouncements

Item is described more fully in the Notes to Financial Statements.

### LIQUIDITY AND CAPITAL RESOURCES

Our liquidity arises from available cash and cash equivalents and marketable securities, cash generated from

operations, capacity under our credit facilities and, when necessary, access to capital markets. We have committed and uncommitted lines of credit available for revolving loans and letters of credit. We believe that for at least the next 12 months, anticipated cash generated from operations, along with our unused credit capacity and cash position, is sufficient to support operating requirements and debt maturities. We regularly review our sources and uses of liquidity and may pursue opportunities to address our liquidity needs.

Our credit facility contains provisions that will require us to provide collateral to secure the facility should we be downgraded to BB by S&P and Ba2 by Moody's, which is a one notch downgrade from both agencies' current ratings. If we are required to provide collateral, it would consist broadly of liens on our U.S. assets.

In January 2023, we redeemed the remaining €129 million of outstanding 2023 Notes for $140 million using cash on hand. During the fourth quarter of 2023, we extinguished the remaining outstanding $266 million principal amount of our 2024 Notes by transferring interest-bearing government securities to the trustee of those Notes.

As of September 30, 2024, letters of credit totaling $483 million were outstanding under our $1.8 billion credit facility, which matures in February 2026. This credit facility contains customary financial covenants, including a debt-to-capitalization ratio that cannot exceed 0.60 to 1.00 based upon total shareholders' equity excluding AOCI, a limitation on the aggregate amount of debt of the greater of $750 million or €750 million for our subsidiaries, and a minimum liquidity threshold of $1.2 billion, all as defined in the amended credit facility, which may be reduced to $1.0 billion upon the repayment of debt. Borrowings under the facility, which may be denominated in USD, EUR or GBP, bear interest at a base rate, plus an applicable borrowing margin. As of September 30, 2024 and through the issuance of this 10-Q, we had not made any borrowings under our credit facility. We have a sub-limit of up to $1.0 billion in aggregate cash advances and financial letters of credit available to us under our credit facility with a current borrowing capacity of $758 million.

Cash and cash equivalents combined with marketable securities were $3.0 billion and $2.6 billion as of September 30, 2024 and December 31, 2023, respectively. Cash balances as of September 30, 2024 and December 31, 2023 include cash and cash equivalents and marketable securities held by NuScale of $131 million and $118 million, respectively. Cash and cash equivalents are held in numerous accounts throughout the world to fund our global project execution activities. Non-U.S. cash and cash equivalents amounted to $1.4 billion and $1.1 billion as of September 30, 2024 and December 31, 2023, respectively. Non-U.S. cash and cash equivalents exclude deposits of U.S. legal entities that are invested in offshore, overnight accounts or short-term time deposits, to which there is unrestricted access.

In evaluating our liquidity needs, we consider cash and cash equivalents held by our consolidated variable interest entities (joint ventures and partnerships). These amounts (which totaled $518 million and $491 million as of September 30, 2024 and December 31, 2023, respectively) were not necessarily readily available for general purposes. We do not include our share of cash held by our proportionately consolidated joint ventures and partnerships in our consolidated cash balances even though these amounts may be significant. We also consider the extent to which client advances (which totaled $64 million and $80 million as of September 30, 2024 and December 31, 2023, respectively) are likely to be sustained or consumed over the near term for project execution activities and the cash flow requirements of our various foreign operations. In some cases, it may not be financially efficient to move cash and cash equivalents between countries due to statutory dividend limitations and/or adverse tax consequences. We did not consider any cash to be permanently reinvested outside the U.S. as of September 30, 2024 and December 31, 2023, other than unremitted earnings required to meet our working capital and long-term investment needs in non-U.S. foreign jurisdictions where we operate.

Based on our financial condition and improved liquidity, we will soon be initiating a plan to return capital to our shareholders.

### Cash Flows

*(in millions)*

|  | 9ME September 30, 2024 | 2023 |
| --- | ---: | ---: |
| **OPERATING CASH FLOW** | $501 | $(96) |
| **INVESTING CASH FLOW** |  |  |
| Proceeds from sales and maturities (purchases) of marketable securities | (22) | 10 |
| Capital expenditures | (133) | (71) |
| Proceeds from sale of assets | 69 | 23 |
| Investments in partnerships and joint ventures | (66) | (13) |
| Other | 23 | 5 |
| Investing cash flow | (129) | (46) |
| **FINANCING CASH FLOW** |  |  |
| Proceeds from issuance of 2029 Notes, net of issuance costs | — | 560 |
| Capped call transaction related to 2029 Notes | — | (73) |
| Purchase and retirement of debt | (44) | (249) |
| Dividends paid on CPS | — | (29) |
| Make-whole payment on conversion of CPS | — | (27) |
| Distributions to NCI (net of capital contributions) | (8) | (36) |
| Proceeds from NuScale share issuance (net of issuance fees) | 80 | — |
| Other | (6) | (15) |
| Financing cash flow | 22 | 131 |
| Effect of exchange rate changes on cash | (1) | (7) |
| Increase (decrease) in cash and cash equivalents | 393 | (18) |
| Cash and cash equivalents at beginning of period | 2,519 | 2,439 |
| Cash and cash equivalents at end of period | $2,912 | $2,421 |
| Cash paid during the period for: |  |  |
| Interest | $41 | $46 |
| Income taxes (net of refunds) | (42) | 129 |

#### Operating Activities

Cash flows from operating activities result primarily from our core EPC activities and are affected by our earnings level and changes in working capital associated with such activities. Working capital levels vary from period to period and are primarily affected by our volume of work and billing schedules on our projects. These levels are also impacted by the stage of completion and commercial terms of engineering and construction projects, as well as our execution of our projects compared to their budget. Working capital requirements also vary by project and the payments terms agreed to with our clients, vendors and subcontractors. Most contracts require payments as the projects progress. Additionally, certain projects receive advance payments from clients. A typical trend for our lump-sum projects is to have higher cash balances during the initial phases of execution due to deposits paid to us which then diminish toward the end of the construction phase. As a result, our cash position is reduced as customer advances are utilized, unless they are replaced by advances on other projects. We maintain cash reserves and borrowing facilities to provide additional working capital in the event that a project’s net operating cash outflows exceed its available cash balances. As of September 30, 2024, our backlog included $859 million for ongoing legacy projects in a loss position, including approximately $270 million of estimated unfunded losses associated therewith. The comparable amounts in December 31, 2023 were $1.3 billion of backlog and $344 million of unfunded losses.

Operating cash flow for 2024 YTD significantly improved driven by decreases in working capital on several large projects. The improvement in operating cash flow was also attributable to customer payments on several large projects, distributions from joint ventures of $252 million and a refund of $169 million, including interest, from the IRS attributable to the 2013 tax year that was originally recognized as a receivable in 2020 pursuant to the CARES Act. During 2024 YTD, we funded an estimated approximately $70 million on loss projects.

#### Investing Activities

We hold cash in bank deposits and marketable securities which are governed by our investment policy. This policy focuses on, in order of priority, the preservation of capital, maintenance of liquidity and maximization of yield. These investments may include money market funds, bank deposits placed with highly-rated financial institutions, repurchase agreements that are fully collateralized by U.S. Government-related securities, high-grade commercial paper and high quality short-term and medium-term fixed income securities.

Capital expenditures in 2024 YTD primarily related to improvements to our new office lease in Houston compared to expenditures for construction equipment and investments in IT in 2023 YTD.

Proceeds from sales of assets during 2024 YTD included $67 million for the sale of our Stork's European business compared to $17 million for the sale of our AMECO South America business in 2023 YTD.

Investments in unconsolidated partnerships and joint ventures in 2024 YTD included capital contributions to an infrastructure joint venture, an Energy Solutions joint venture and a Mission Solutions joint venture, compared to capital contributions to a Mission Solutions joint venture and two infrastructure joint ventures in 2023 YTD.

Return of capital from partnerships and joint ventures in 2024 YTD included capital distribution from an infrastructure joint venture.

#### Financing Activities

During 2024 YTD, we redeemed $44 million of aggregate outstanding 2028 Notes, with an immaterial earnings impact. During 2023 YTD, we redeemed the remaining €129 million of outstanding 2023 Notes for $140 million with no earnings impact.

In August 2023, we issued $575 million of the 2029 Notes due August 15, 2029 and received net proceeds of $560 million. In connection with the 2029 Notes offering, we entered into capped call transactions with certain banks. The cost of the capped call transactions was $73 million which was recorded as a reduction to APIC, and will not be subject to periodic remeasurement.

In August 2023, we completed a tender offer in which we repurchased $115 million of outstanding 2024 Notes, excluding accrued interest, for consideration of $975.03 per $1,000 principal amount of the notes. In January 2023, we redeemed the remaining €129 million of outstanding 2023 Notes for $140 million.

In September 2023, we exercised our mandatory conversion rights on our CPS in which all of the outstanding shares of CPS converted to 44.9585 shares of our common stock, plus a cash payment of $45.23 per CPS for a make-whole premium. The total make-whole premium amounted to $27 million. CPS dividends of $29 million were paid during 2023 YTD. Upon conversion, all dividends on the CPS ceased.

Distributions paid to holders of NCI represent cash outflows to partners of consolidated partnerships or joint ventures created primarily for the execution of single contracts or projects. Distributions in 2024 YTD related to a Mission Solutions joint venture. Distributions in 2023 YTD related to a Mission Solutions joint venture and two infrastructure joint ventures. Capital contributions by NCI during 2023 YTD related to investments by NuScale's NCI holders.

During 2024 YTD, NuScale received $80 million in proceeds from the issuance of their common stock. NuScale was a fully consolidated subsidiary at September 30, 2024.

We have a stock repurchase program, authorized by our Board of Directors, to purchase shares in the open market or privately negotiated transactions at our discretion. As of September 30, 2024, over 10 million shares could still be purchased under the existing stock repurchase program. In November 2024, the Board authorized an additional 20,000,000 shares to the repurchase program.

#### Letters of Credit

As of September 30, 2024, letters of credit totaling $483 million were outstanding under committed lines of credit. As of September 30, 2024, letters of credit totaling $946 million were outstanding under uncommitted lines of credit including letters of credit totaling $460 million for two lump-sum projects in Kuwait that are substantially complete except for the resolution of unapproved change orders and extension of time claims. Letters of credit are ordinarily provided to indemnify our clients if we fail to perform our obligations under our contracts. Surety bonds may be used as an alternative to letters of credit.

#### Guarantees

The maximum potential amount of future payments that we could be required to make under outstanding performance guarantees, which represents the remaining cost of work to be performed, was estimated to be $13 billion as of September 30, 2024.

Financial guarantees, made in the ordinary course of business in certain limited circumstances, are entered into with financial institutions and other credit grantors and generally obligate us to make payment in the event of a default by the borrower. These arrangements generally require the borrower to pledge collateral to support the fulfillment of the borrower’s obligation.

## Market risk

As filed, 139 characters.

There have been no material changes to market risk during 2024 YTD. Accordingly, our disclosures provided in the 2023 10-K remain relevant.

## Controls and procedures

As filed, 1,276 characters.

### Evaluation of Disclosure Controls and Procedures

Based on their evaluation as of the end of the period covered by this report, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) of the Exchange Act) are effective as required by paragraph (b) of Rule 13a-15 or Rule 15d-15 of the Exchange Act.

### Changes in Internal Control over Financial Reporting

There were no changes to our ICFR that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our ICFR.

### CHANGES IN CONSOLIDATED BACKLOG

UNAUDITED

*(in millions)*

|  | 3ME September 30, 2024 | 2023 |
| --- | ---: | ---: |
| Backlog, July 1 | $32,304 | $25,483 |
| New awards | 2,699 | 4,976 |
| Adjustments and cancellations, net | 377 | (519) |
| Work performed | (4,061) | (3,936) |
| Backlog, September 30 | $31,319 | $26,004 |

*(in millions)*

|  | 9ME September 30, 2024 | 2023 |
| --- | ---: | ---: |
| Backlog, January 1 | $29,441 | $26,049 |
| New awards | 12,815 | 11,920 |
| Adjustments and cancellations, net | 1,023 | (404) |
| Work performed | (11,960) | (11,561) |
| Backlog, September 30 | $31,319 | $26,004 |

25

## Risk factors

As filed, 1,049 characters.

There have been no material changes from our risk factors as disclosed in the 2023 10-K.

***Our earnings are subject to volatility due to recurring fair value measurements of our investment in NuScale.***

In the fourth quarter of 2024, we will begin accounting for our investment in NuScale using the fair value option for equity method investments, under which we will measure our investment at fair value on a recurring basis using the prevailing price of NuScale's stock on our balance sheet dates. The fair value of our investment in NuScale is subject to the fluctuations of NuScale's stock price, which may subject our consolidated earnings to volatility. The price of NuScale's stock has experienced significant volatility since it commenced trading in May 2022, and the volatility may continue in the future in response to many factors, including factors beyond the control of NuScale. As a result of the recurring fair value measurements, we may recognize non-cash gains or losses in future periods, some of which which could be material.

Filed Nov 8, 2024.
Source: SEC EDGAR, the filing index for accession 0001628280-24-046432. Last ingested by Listed: Oct 24, 2026, 15:05 ET. No prices; not investment advice.