Fluor - Q2 2023
August 4, 2023
Transcript
Operator (participant)
Good morning, and welcome to Fluor's second quarter 2023 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 Fluor's website at investor.fluor.com. The web replay will be available for 30 days. A telephone replay will also be available for 7 days through a registration link, also accessible on Fluor's website at investor.fluor.com. At this time, for opening remarks, I would like to turn the call over to Jason Landkamer, Head of Investor Relations. Please go ahead, Mr. Landkamer.
Jason Landkamer (Head of Investor Relations)
Thanks, Regina. Good morning, and welcome to Fluor's 2023 second quarter earnings call. David Constable, Fluor's Chairman and Chief Executive Officer, and Joe Brennan, Fluor's Chief Financial Officer, are with us today. Fluor issued its second quarter earnings release earlier this morning, and a slide presentation is posted on our website that we'll 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 2. During today's presentation, we will be making forward-looking statements which reflect our current analysis of existing trends and information. There's 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 2022 Form 10-K and our Form 10-Q, which was filed earlier today.
During the 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.fluor.com. I'll now turn the call over to David Constable, Fluor's Chairman and Chief Executive Officer. David?
David Constable (Chairman and CEO)
Well, thank you, Jason. Good morning, everyone. Thank you for joining us today. Please turn to slide 3. During the second quarter, I visited our New Delhi office and hosted a town hall meeting that was attended by over 1,100 of our Fluor colleagues. It was great to see the vibrancy and enthusiasm of our team, who will continue to play a critical role in supporting our current projects, as well as our significant pipeline of growth opportunities worldwide. While in India, I also met with the CEO of Tech Mahindra to sign a strategic partnership agreement. Tech Mahindra is a leading provider of digital transformation, consulting, and business reengineering services. Under the partnership, both Fluor and Tech Mahindra will combine our respective expertise to help support the growing client demand for digital handovers.
The seamless integration and interoperability of data is critical to support professional services teams in driving successful project delivery and optimizing lifecycle operations and maintenance costs. I'm looking forward to providing updates on this strategic partnership in future quarters. Let's turn to slide 4. Revenue for the second quarter was $3.9 billion, representing our second straight quarter of 20% growth over the prior year. Our increase in revenue was led by Energy Solutions as execution activities accelerate on refinery projects in Mexico, mid-scale LNG projects, and recently awarded chemicals projects in China. New awards for the quarter were $3.7 billion and on track relative to our full year plan of a book-to-burn ratio of 1 or greater. New awards were 70% reimbursable, and our total backlog is now $25.5 billion, of which 64% is reimbursable.
Margins on new awards continue to be strong, coming in over 200 basis points above our total backlog margin. Our optimism for the future of Fluor is further supported by a robust prospect pipeline. We are currently working on or have recently completed FEED and study packages that represent an estimated $300 billion of installed cost, high-quality, new award prospects. In the near term, we are tracking key EPC and EPCM prospects totaling approximately $49 billion across the company. Moving to our business segments, please turn to slide six. Urban Solutions reported a $76 million profit in the second quarter. Results included a positive forecast adjustment related to a legacy infrastructure project, as well as increased execution activities on newly awarded projects.
New awards for the quarter were $2.3 billion. Any backlog is now $11.7 billion and 58% reimbursable. Please move to slide seven. In mining and metals, we are actively working on a number of front-end studies supporting the advancement of critical minerals production, including two pre-feasibility studies for lithium developments in North America, another lithium project feasibility study in Europe, and a metals recycling facility in Europe. We also recently completed engineering services on a major new steel mill in the United States using electric arc furnace technology and have two additional electric arc furnace projects entering the feasibility, study, and execution phases. These are just three projects in green steel technology, which we consider to be a strategic growth market for Fluor. Near-term prospects in this segment include projects relating to potash, lithium, and copper. Moving to slide eight.
Our Advanced Technologies and Life Sciences business continues to win new work in an expanding, reimbursable growth market. During the quarter, we announced that we received a $574 million award for the first phase of a new life sciences production facility in the central U.S. We also won a $487 million expansion for an existing biotech facility with a key client in Denmark. Looking ahead, we are well positioned to expand our existing portfolio of semiconductor work, particularly in the U.S. I'm also pleased to report that our portfolio of infrastructure projects, including legacy projects, met our forecast expectations for the quarter. Specific to our legacy infrastructure portfolio, we are starting to see some very positive momentum from our efforts last fall.
This included strengthening leadership and execution at the project and management levels, as well as working effectively with our joint venture partners to align our strategy to manage claims. On the Gordie Howe project, Fluor, along with our partners, have had a number of successful and productive conversations with the client as it relates to cost and schedule relief, including costs related to COVID. Negotiations are progressing with the client, which should result in a positive path forward by the end of the year. During the quarter, we booked a $700 million award for the I-35 South project in San Antonio for the Texas Department of Transportation. This project is a crucial step in our ongoing efforts to enhance the state's transportation infrastructure and to further support the demands of population growth and business expansion in one of America's most rapidly developing regions.
Moving on to slide nine. Mission Solutions reported segment profit of $40 million for the second quarter, compared to $28 million a year ago. Results for the quarter reflect increased execution activities on a European logistics support project for the Army and our ongoing work to support NuScale's carbon-free power project. Regarding the protest of our winning bid for the Hanford Tanks Integrated Disposition Contract, we learned that the judge has set aside the award and sent it back to the DOE for corrective action. While we await the department's path forward on the acquisition, the incumbent has been extended on the contract for the time being. Fluor continues to be well positioned for Hanford and other future nuclear remediation opportunities with the DOE. Looking ahead, Q3 is shaping up to be an exciting quarter for this group.
We recently announced that our joint venture with Amentum was successful in securing the contract for the Portsmouth Gaseous Diffusion Plant decontamination and decommissioning contract. This contract has an estimated value of $5.9 billion over a 10-year ordering period and includes potential task orders for up to an additional five years. We expect to book our initial annual portion of this contract in the third quarter. Finally, the request for proposal for Pantex was recently issued. Fluor was successful in the original bid and is currently working on this RFP package, which we expect to submit in September. The revised RFP includes a five-year base period with three five-year options, valued up to $30 billion over 20 years. Moving to Energy Solutions, please turn to slide 10. Segment profit improved to $89 million from $65 million a year ago.
Results reflect the ramp-up of execution activities on refinery projects in Mexico through our ICA Fluor joint venture. We also had positive forecast adjustments totaling $74 million on two projects. Q2 results also included a $34 million charge for cost growth and schedule extension on a large upstream legacy project. During the quarter, this project experienced a number of challenges arising from lower than anticipated subcontractor productivity, unexpected discovery work, and delays from weather and activist protests. Our new estimated completion date is December. New awards for the quarter totaled $753 million and included an EPC contract for Mitsubishi's ethylene vinyl alcohol copolymer facility in the UK, as well as incremental awards on existing LNG projects. Moving to slide 11. During the quarter, we had a number of accomplishments at the LNG Canada project.
Last month, we announced that the 215th and final module was delivered to the site. This represents a significant milestone for the project and for the teams that led our fabrication efforts. With the project at 85% complete overall, our efforts now turn to module installation and hookup in advance of pre-commissioning and commissioning activities that will commence next year. In past earnings calls, we've discussed our collaborative conversations with the client related to fabrication and construction costs. We continue to have successful resolution to ongoing variation orders. I'm also pleased to report that as a result of the tremendous effort by our project team, we continue to execute LNGC per our current expectations. Regarding the phase two expansion, LNG Canada's five joint venture participants continue to evaluate the timeline and scope. For the balance of 2023, we are anticipating some significant new awards.
This includes a multi-billion dollar full EPCM award for Dow's Path2Zero ethylene and derivatives chemical complex in Canada, the $1.4 billion Salina Cruz refinery in Mexico, nuclear engineering work in Romania, and a large chemical project in Europe. Before I turn the call over to Joe, I want to note that our results and accomplishments this quarter reflect notable progress against our corporate strategy. Is indicative of our ongoing transformation into one of the leading engineering and construction companies in the world. With that, let me turn the call over to Joe for the financial update. Joe?
Joe Brennan (CFO)
Thanks, David, and good morning, everyone. Today, I will review our results for the second quarter, provide an update on divestitures, and go over key financial outlook assumptions that support our guidance. Please turn to slide 13. As David mentioned, for the second quarter of 2023, revenue of $3.9 billion came in as expected and represented a 20% increase from last year. Revenue for the quarter was driven by the ramp-up of execution activities on several recently awarded projects in Energy Solutions, Urban Solutions, and Mission Solutions. This was partially offset by declines in the volume of execution activities for projects, which were completed or nearing completion. Our consolidated segment profit for the quarter was $191 million.
This performance was driven by higher execution activity on new projects, as well as positive forecast adjustments on two Energy Solutions projects and a positive forecast adjustment on a legacy infrastructure project. Adjusted EBITDA for the second quarter was $181 million, compared to $68 million a year ago. Our adjusted EPS was $0.76, compared to $0.15 in Q2 of 2022. Our adjusted results for the quarter exclude $52 million for the income effects of FX and the embedded derivative in Mexico. G&A expenses for the quarter were $60 million, up slightly from $45 million a year ago. This was driven by higher performance-based compensation that is expected to be paid in Q1 of 2024.
Net interest income for the quarter was $37 million, compared to $41 million last quarter, and an expense of $1 million a year ago. Since our outstanding debt is at a fixed rate, I expect we will continue to generate positive net interest income throughout the year with prevailing interest rates on our deposits. New awards of $3.7 billion in the quarter drove our ending backlog balance to $25.5 billion. Based on our current prospect pipeline, we anticipate new awards will roughly approximate our revenue burn for the full year. Moving to slide 14. Our cash and marketable securities balance for the quarter was $2.1 billion. This excludes cash held by NuScale. Operating cash flow for the quarter was a positive $62 million.
We expect this positive cash flow trend to continue for the balance of 2023, which includes approximately $200 million for legacy project cash needs this year. We anticipate legacy project cash needs will be approximately $250 million in 2024. Finally, I'm pleased to say that during the quarter, the DOJ has informed us that it has closed its investigation of the company and does not intend to bring charges. Please turn to slide 16. We are raising our 2023 adjusted earnings per share guidance to a range of $2.00-$2.30, and our adjusted EBITDA guidance to a range of $500 million-$600 million.
Our assumptions for 2023 include: revenue growth of approximately 10%-15%, adjusted G&A expense of approximately $45 million per quarter, and an effective tax rate of approximately 40%. This may vary depending on the countries in which revenue is generated. We expect tax rates to moderate as revenue in our tax advantage locations start to increase. Our revised expectations for 2023 full year segment margins are approximately 6% in Energy Solutions, approximately 3% in Urban Solutions, and approximately 4% in Mission Solutions. We also reaffirm our 2026 adjusted EBITDA guidance of $800 million-$950 million, as indicated in our earnings release this morning. Operator, we are now ready for our first question.
Operator (participant)
At this time, to ask a question, as a reminder, please press star 1. Our first question will come from the line of Jamie Cook with Credit Suisse. Please go ahead.
Jamie Cook (Managing Director of Equity Research)
Hi, good morning. I guess my first question, David or Joe, as I, as I think about your guidance, the increase in guidance that you provided today and what that implies for the back half of the year, I think it implies, like, you know, at the high end, $0.75 a quarter. Let's say if you, you know, annualize that, it's about $3 in earnings power, and if you annualize your e- your, your back half EBITDA, adjusted EBITDA implies, like, $800 million in EBITDA. I'm just trying to understand what that means for 2024. Is that a good base that we can think about? Or are there projects, you know, rolling off in 2023, you know, that would, that would imply that that's not a good sort of run rate to think about?
That just implies the earnings power for 2024, $3 or $800 million in EBITDA is pretty substantial. Just any color on that? Thank you. If I'm thinking about that incorrectly, just the earnings power is greater, I guess, than I would have thought.
Joe Brennan (CFO)
Yeah. Thanks, thanks for the question, Jamie. I think what we've leaned into the last few quarters is that we have been making progress on some of our activities in our infrastructure, our legacy kind of businesses relative to how we recognize cost, and then as we look to claw back some of our entitlements through the contract. Some of that is flowing through the Q2 numbers, but I would suggest that that run rate that we're posting on an adjusted EBITDA basis of $181 million is probably overstated slightly. You know, if I were thinking about run rates, as we continue to onboard new backlog, is in that $140-$160 million range, and with that, we would expect to see a ramp-up from, from that as your baseline.
I think I would think about it that way, at least for 2023. As we onboard the new backlog that we're forecasting for the back half of the year, we should start to see that, you know, trend in a, in a more positive direction moving forward.
Jamie Cook (Managing Director of Equity Research)
Okay. Just my second question, sounds like, you know, new award prospects for the back half of the year, you know, also seem, you know, pretty good. Dave, how are you thinking about backlog, you know, as we exit the year? Can you give some color? I know the margins in the bookings have been improving. Can you just talk about the terms and conditions of the projects that you're sort of looking at, and how we should think about, you know, awards going into backlog relative to the margins on awards going into backlog relative to where it sits today? Just again, trying to understand what the margin power is for 2024. Thank you.
David Constable (Chairman and CEO)
Good morning, Jamie. Yeah, we've, we've been really pleased with the, our ability to increase booking margins on reimbursable work. I, I guess that's the, the, kind of the headline, is that all this... The majority of our work, I think we've about 84% of our, our prospects right now are reimbursable, and they're coming in higher than, than our expectations, higher than our planned target margins. As I said, I think we've put in into backlog at 200 basis points above what's in there now in, in second quarter. As we continue to do that, the, the healthy backlog will continue to, to give us more certainty and predictability, as we work, work that, that backlog off.
Yeah, we, we hope to be at a book to burn through the year of 1 or slightly above, that will kind of gives you an idea of where we'll be at, at the end of the year for backlog. Not just on revenue, I think what's important here is that gross margin that's coming in higher than expected is also being executed. We are executing. We had this discussion with our risk committee at the board meeting this week. Since 2020, those, those projects that have come into backlog are executing at 114% of as sold. We've got some, some great earnings power in our execution. It's all about execution excellence, and when you've got that behind you, right?
We just really think that it's gonna support that, that, that earnings power for us going forward and increase shareholder value for us.
Joe Brennan (CFO)
Maybe if I could just add to that, too, Jamie. You look at what we've done with our operating margin guidance for the quarter, we have, we have bumped our Energy Solutions and our Mission Solutions numbers for the period. We are starting to see that, and it is starting to demonstrate in our quarterly, quarterly postings here. We're starting to see that flow through the backlog in a very positive way, which is, which is considering us to readdress our margin guidance.
David Constable (Chairman and CEO)
Thanks, Jamie.
Jamie Cook (Managing Director of Equity Research)
Thank you.
Operator (participant)
Your next question comes from the line of Andy Wittmann with Baird. Please go ahead.
Andy Wittmann (Senior Research Analyst)
Well, great. Thank- Excuse me. Thank you for taking my question this morning. I guess I wanted to ask, on the Urban Solutions, there was a, there was a positive adjustment on a legacy project. Good to see that, you're recuperating some of those. You know, I do think that the balance on some of those legacy, legacy projects, is, is substantial. I guess maybe my question, is, as it relates to your guidance, for the, for, for the rest of this year, are you, are you expecting more positive adjustments like the one you saw in the quarter, to, to be in that guidance range? Or is, or is the guidance that you're giving kind of clean of any of these claims resolution changes that you were able to accomplish this quarter?
maybe just to be a little more specific, could you just talk about which project you were able to, to get this positive adjustment on during the quarter?
Joe Brennan (CFO)
Yeah, no, thank you for the question. For the year, we have not factored in any additional activity relative to claims until we get closer to better assessment on that. What you're looking at relative to our guidance is based on Q1 and Q2 actuals, and then our normal run rate from an outlook basis moving forward. I, I think that's- And your second question around... Sorry, what-
Andy Wittmann (Senior Research Analyst)
Which, which project, Yeah, which, which project got the, the benefit?
Joe Brennan (CFO)
Yeah, I, I think we're, we're, we're, we're gonna hold off, naming that client right now. We'll probably have some, some additional color for you in the next quarter.
Andy Wittmann (Senior Research Analyst)
Okay. Joe, J-Joe, just kind of a follow-up on your last answer to Jamie. Kind of mentioned that the profit margins ticked up in two of your segments. I guess, you know, you're giving annual, you're giving annual guidance here, and some of the performance in the second quarter was pretty good because of these positive change orders. I guess the question for me is on a prospective basis, meaning for the rest of the second half of this year, which margins are up versus prior expectations, rather than the benefit from the performance in the second quarter? Just to make that a little bit more clear.
Joe Brennan (CFO)
Well, I guess, maybe let me understand your, your question a little bit better. Are you talking about, you know, how we're upping our guidance within Energy Solutions from, from the 5.5%-6%, and what's driving that, I guess is?
Andy Wittmann (Senior Research Analyst)
Yeah. I mean, you, you're giving annual segment margin guidance, which is fine. I'm trying to understand how much of the, the increase in margin guidance was from performance in the second quarter versus an improved outlook for the second half of the year versus your prior assumption?
Joe Brennan (CFO)
Sorry. Okay, I understand the question a little bit. I think there's symmetry in what we're laying out relative to how the performance within Energy Solutions and Mission Solutions. I would expect this not to be a 2023 activity. I would see this having some impact into 2024 and beyond.
David Constable (Chairman and CEO)
Well.
Joe Brennan (CFO)
Sorry, go ahead, Dave.
David Constable (Chairman and CEO)
Sorry. As we've discussed, on many calls, our, our range for the, for the planning period, you know, when we first came out with our strategy in 2021, our, our range on margins was 4%-6%, right?
Joe Brennan (CFO)
Right.
David Constable (Chairman and CEO)
We, you know, it looks like we're gonna be at that and, near the higher end of that, that, range through 2024, and then, on into 2026, at the upper end.
Joe Brennan (CFO)
Yeah, we're seeing this is underpinned by the improved margins that we're putting into backlog relative to our plan. I think that's all kind of playing into this improved margin outlook moving forward beyond the 2023 timeframe.
David Constable (Chairman and CEO)
Well, also that execution I talked about just a few minutes ago...
Joe Brennan (CFO)
Right
David Constable (Chairman and CEO)
is that we're executing above as sold.
Joe Brennan (CFO)
Yeah, a lot of factors there.
Andy Wittmann (Senior Research Analyst)
Yep. Okay, that's clear. Thank you very much. Have a good day.
David Constable (Chairman and CEO)
Thanks, Andy.
Joe Brennan (CFO)
Thank you.
Operator (participant)
Your next question comes from the line of Michael Dudas with Vertical Research. Please go ahead.
Michael Dudas (Equity Research Analyst)
Morning, Jason, Joe, Dave, David.
David Constable (Chairman and CEO)
Hi, Michael.
Joe Brennan (CFO)
Good morning, Michael.
Michael Dudas (Equity Research Analyst)
Joe, maybe you could share with us your updated thoughts on financial profile on the balance sheet, relative to the 2024 Notes, and maybe an update on NuScale would be helpful.
Joe Brennan (CFO)
Yeah, thanks, Mike. We're, we're we have signaled over the last few quarters, we're going to be addressing the 2024 Notes. That is something that we plan on doing here kicking off towards the last half of 2023 and into 2024. We have our plans are still to to address the 2024 Notes. In terms of NuScale, we continue the discussions around the monetization. They are going well. We would expect to have additional information to share with this audience towards the end of the year, December or January timeframe.
Michael Dudas (Equity Research Analyst)
Appreciate that. Thank you. David, as you're looking at the $300 billion worth of front-end or FID of, of front-end design, engineering, and, and study work, can you maybe share a little bit, is it, is it across the board, what areas seem to be piquing your clients' interest more to get you involved? Is energy... And I assume energy transition, when we think of lithium, and even I guess the Dow project would fit into that, do you anticipate being step function over the next couple of years of those types of projects coming in? Is that going to allow for maybe a, an at or better margin performance, given what you guys are doing on the productivity and cost side?
David Constable (Chairman and CEO)
Good morning, Michael. You're spot on, on energy transition, right? You know, of that, of that $300 billion, we think after analyzing it, you know, solid prospects are about $160 billion of that $300 billion. We see $160 billion as very likely going forward, and a lot of it sits in the energy transition space. Just to give you an example of, you know, the Inflation Reduction Act and the carbon, the carbon credits that flow through that, the IRA, we're seeing significant activity in our carbon capture, you know, in our production of fuels, Energy Solutions, business line. I think we've got 30 projects on the go or at some, you know, mostly front-end work, a few moving further on into EPC.
That's, that's important, and like you said, lithium as well. Energy transition is gonna feature quite a bit. They are about 28%. If you look at the total work we're chasing, energy transition is about 20%, 28% of that. We're looking for about almost $3 billion in energy transition awards in Q3. Like you said, Dow would feature because it is a path, a Path2Zero program. You also in those numbers, see mining and metals feature significantly in the $160 billion. Downstream, production of fuels, again, a lot of it, energy transition. LNG is in there, and the biggest portion, as I look at it here, is chemicals.
We're seeing a lot of activity in chemicals with across the board, including recycling of plastics and and the whole ethylene value chain. Pretty broad across, across those prospects and about, like I said, about $49 billion of, of, of full EPC, EPCM prospects that we'll be chasing in the next, next 18 months. Obviously, that gets supplemented by our Mission Solutions work, which is the Department of Energy, Department of Defense, and the intelligence agencies. All those budgets continue to to either stay flat or, or grow year-on-year. A lot of lot of good growth coming at us in all of our business lines, Michael. Thanks.
Michael Dudas (Equity Research Analyst)
Excellent, David. Thank you.
Operator (participant)
Your next question comes from the line of Brent Thielman with D.A. Davidson. Please go ahead.
Brent Thielman (Managing Director and Senior Research Analyst)
Hey, thank you. Good morning. Hey, just a comment about margins on new awards. I think you said 200 basis points above the current backlog margin. Which, which business line or lines or markets are, are you seeing sort of more meaningful improvement in terms of what's coming in the door now relative to what you have in the book today?
David Constable (Chairman and CEO)
... Yeah, it's broad. It's across all three segments. Again, I'm looking at the plan versus the outlook here. We are performing above, you know, across the board. It's, it's pretty broad-based.
Brent Thielman (Managing Director and Senior Research Analyst)
Okay. Okay, you mentioned continued expectations for modestly positive cash flow this year. I know there's typically some, some moving parts to that. Could you talk about some of those moving pieces, I guess, in particular, what, what could cause you to potentially outperform this year's expectation for, for cash flow in the second half?
Joe Brennan (CFO)
Yeah, I reconfirming that we do see positive trends for the back half of the year. as-- A- and I think what's going to drive maybe some improvement within that is, is continued execution in our projects in Mexico, and Canada will be a big contributor to that as we repatriate dividends back into Fluor's treasury. I think both those will underpin a fairly positive cash trajectory moving forward.
Brent Thielman (Managing Director and Senior Research Analyst)
Okay, great. Thank you.
Operator (participant)
Your next question comes from the line of Sean Eastman with KeyBanc. Please go ahead.
Sean Eastman (Director and Senior Equity Research Analyst)
Hi, team. Nice update here. I just wanted to understand the, the revenue guidance for this year, stepping up from 10% to 10%-15%. Is that just, you know, accelerated schedules on stuff that was in the backlog already? Then, you know, second part of the revenue question, perhaps, is just relative to the, you know, 1x or slightly above 1x book-to-bill expectation for the full year this year. You know, what should we take away from that relative to, to, you know, revenue or revenue assumptions for next year?
Joe Brennan (CFO)
Yeah, thanks, Sean. I think from the revenue guidance, we would continue to see that growth. We feel... Yeah, we feel very confident based on not only the big bookings this year, bookings in previous years, and then also what we're seeing in the back half of 2023. A lot of some of the opportunities, a significant amount of the opportunities that we're seeing are coming from maybe our non-traditional Energy Solutions side. It's, it's flowing through our ATLS business, and there are some big, chunky awards. We feel reasonably good about the trajectory of kind of revenue moving forward. Then we're also seeing a lot of the projects that we booked two, three years ago, Sean, really starting to get into production as they move into procurement and into construction activities.
I think we really see a revenue growth trajectory within that 10%-15% that's supported by solid fundamentals at this point.
Sean Eastman (Director and Senior Equity Research Analyst)
Okay, got it. Then relative to the second half, new award visibility, I mean, it's encouraging to see some, you know, specific prospects, specific larger prospects being called out. I mean, how would you describe the line of sight on, on, you know, that, that implied second half new awards outlook? I mean, are these projects FID-ed, you know, just teed up, ready to go in the backlog? You know, any comments on that would be, would be helpful.
David Constable (Chairman and CEO)
Yeah. Hi, Sean. Good morning. Yeah, I'm looking at the third quarter and fourth quarter prospects and the go gets. Most of the goes are between 90 and 100. Well, 80, 80 to 100. The, the ones I spoke to are, are definitely, you know, cleared for takeoff, so to speak, in, in, the chemicals work and at, at ICA Fluor. In Urban Solutions, in, in, the semiconductor space, we've got some big, reimbursable programs that, are also, ready to move forward. Generally speaking, the line of sight, all the Mission Solutions projects are, are going ahead as well.
Yeah, I'd, I'd, I'd like to give you a high degree of, of comfort on our, our second half new awards and getting to that, book to burn of 1 or, or, slightly above.
Sean Eastman (Director and Senior Equity Research Analyst)
All right, gentlemen, thanks very much. I'll turn it over.
Joe Brennan (CFO)
Thanks. Thanks, Sean.
Operator (participant)
Your next question comes from the line of Sahil Manocha with Citigroup. Please go ahead.
Sahil Manocha (Associate VP and Equity Research Analyst of Industrials)
Hi, this is Sahil Manocha, on behalf of Andy Kaplowitz. Good morning.
Joe Brennan (CFO)
Good morning.
David Constable (Chairman and CEO)
Good morning.
Sahil Manocha (Associate VP and Equity Research Analyst of Industrials)
Hi, just a quick one for me. You guys mentioned that Fluor was recently awarded a, a chemicals project in China. Can you give us some more color on, on what customer conversations you're hearing out in the region? You know, we've heard from some of our industrial companies that the environment is, is still a bit of a mixed bag, but curious on your take and, and your outlook for the region.
David Constable (Chairman and CEO)
Yeah, great, great strategic question. As we, we roll with China, the China scenarios into our strategies for each of the business segments and what could happen, and the risk involved, not only on the execution side, but more importantly for our clients, our multinational-multinationals that we follow into the region. You know, I think what we're... At a big picture level, it may not be a de- a de-risking with China, but there's definitely a decoupling and not wanting to put all eggs in one basket. I think the China, China plus one strategy for our clients is taking hold, and we're seeing work flowing either-...
nearshoring to North America and Europe, or friendshoring in countries where, you know, values-based, values-based globalization, if you will. India is featuring prominently. Mexico, I think, will see an uptick as well for manufacturing. It's, it's, it's real. Yeah, there are certain clients that have, like you say, a chemicals client has moved in there. You know, they are obviously having, having trouble with very high-cost feedstock in Europe, and they've moved into China. I think it's something to watch. I see it as an opportunity.
We're putting together a, we've got an India task force put together, India plus, plus Asia task force being put together to just see, just be ready for this, this shift of manufacturing away from China, make sure we're ready for to support our clients elsewhere in the region, to, you know, to be, to be ready for that possibility. That's, that's how we're looking at it right now.
Sahil Manocha (Associate VP and Equity Research Analyst of Industrials)
Awesome. Thank you for the color. I'll, I'll turn it back over.
David Constable (Chairman and CEO)
Thank you.
Joe Brennan (CFO)
Thanks.
Operator (participant)
With that, I'll turn the call back over to David for any closing remarks.
David Constable (Chairman and CEO)
Well, thank you, operator. Many thanks to all of you for participating on our call today. You know, we're, we're really pleased with our performance and the diverse slate of opportunities in our prospect pipeline, primarily reimbursable. Based on the continued strong performance for our services, we're well on our way to delivering increased shareholder value. We appreciate your interest in Fluor, and thank you again for your time today.
Operator (participant)
That will conclude today's conference call. Thank you all for joining. You may now disconnect.