FLR 10-K & 10-Q changes, risk factors and insider trading

WeIn operateevaluating inour abusiness, complexyou andshould rapidlycarefully changingconsider globalthe environmentfollowing thatdiscussion involvesof numerousmaterial knownrisks, and unknown risksevents and uncertainties that couldmake materiallyan adverselyinvestment affectin ourus business,speculative financialor condition,risky resultsin ofaddition operations,to andother stockinformation price.in this Annual Report on Form 10-K. The risks described below highlight some of the factors that have affected and could affect us in the future. We may also be affected by unknown risks or risks that we currently think are immaterial. If any such events actually occur, our business, financial condition, results of operations, and stock price could be materially adversely affected. SomeThe ofdisclosures thebelow reflect our beliefs and opinions as to factors, events,events or contingencies that could materially and contingenciesadversely discussedaffect belowus mayand haveour occurredsecurities in the past,future. References to past events are provided by way of example only and the disclosures below are not representationsintended to be a complete listing or a representation as to whether or not thesuch factors, events or contingencies have occurred in the past,past butor aretheir provided because future occurrenceslikelihood of suchoccurring factors,in events,the or contingencies could have a material adverse effect.future.

•ClimateClimate-related change,events, natural disasters and related environmental issues could have a material adverse impact on us.

•Increasing scrutiny and changing expectations from stakeholders with respect to sustainability practices may impose additional costs on us or expose us to reputational harm or other risks.

•Adverse credit and financial market conditions, including increasing or continued high interest rates, could impair our clients', our partners' and our own borrowing capacity, which could negatively affect us.

The demand for our services is dependent upon our clients' capital investments. Our clients' interest in approving new projects, budgets for capital expenditures and need for our services have in the past been, and may in the future be, adversely affected by, among other things, poor economic conditions (including inflation, tariffs, slow growth or recession, changes to governments' fiscal or monetary policy and increasing or continued high interest rates), low or volatile oil and gas prices or other commodity prices, political uncertainties and currency fluctuations. Clients have been and remain selective in how they allocate their capital, especially the larger scale projects in which we specialize. For example, capital expenditures by our clients are influenced by factors such as prevailing hydrocarbon prices and expectations about future prices for underlying commodities, technological advances, the costs of exploration, production and delivery of product, domestic and international political, military, regulatory and economic conditions and other similar factors. There is no guarantee that current oil and gascommodity prices will be sufficient to justify clients' capital expenditures, and the timing and extent of any future improvements in demand remain uncertain. IndustriesThe servedend by that segment and many of the othersmarkets we serve have historically been and will continue to be vulnerable to general downturns, which in turn could materially and adversely affect the demand for our services.

The awardingaward and timing of projects is unpredictable and driven by our clients. Awards, including expansions of existing projects, often involve complex and lengthy negotiations and competitive bidding processes. These processes can be impacted by a wide variety of factors including a client's decision to not proceed with the development of a project, governmental approvals, financing contingencies (including governmental support), oil and gascommodity prices, environmental conditions and overall market and economic conditions. We maydo not always win contracts that we have bid on duefor toa variety of reasons such as price, a client's perception of our ability to perform and/or perceived technology advantages held by others. Many of our competitors may be more inclined to take greater risks or include terms and conditions that we might not deem acceptable, especially when the markets for the services we typically offer are relatively soft. Because a significant portion of our revenue is generated from large projects, our results can fluctuate depending on whether and when large project awards occur and the commencement and progress of work under large contracts already awarded. As a result, we are subject to the risk of losing new awards to competitors or the risk that revenue may not be derived from awarded projects as quickly as anticipated. Additionally, uncertain economic and political conditions may make it difficult for our clients, our vendors and us to accurately forecast and plan future business activities. For example, changes to U.S. policies related to global trade and tariffs, and responsive changes in policy by foreign jurisdictions, have resulted in the past and may result in future uncertainty surrounding the global economy as well as retaliatory trade measures implemented by other countries. The new U.S. presidential administration has mentioned plans to implement tariffs on U.S. imports generally, with higher rates for select U.S. trade partners (collectively, the "Proposed Tariffs"). We cannot predict the outcome of changing trade policies or other unanticipated economic or political conditions, nor can we predict the timing, strength or duration of any worldwide economic recovery or downturn.

•Evolving estimates related to productivity, scheduling estimates or future economic conditions, including with respect to the impacts of inflation and tariffs on lump-sum contracts;

•Failure to accurately estimate the timing and cost of projects, including due to inflation, tariffs, supply chain disruption, rising construction costs or unforeseen increases in the cost of labor;

•Unanticipated increases in the cost of raw materials, components or equipment, including due to inflation or the imposition of import tariffs, including the Proposed Tariffstariffs;

•Delays or productivity issues caused by weatherclimate-related events or other natural disasters; and

•Changes in local laws or difficulties or delays in obtaining permits, rights of way or other governmental approvals.

These and other risks have in the past, and may in the future, result in our failure to achieve contractual cost or schedule commitments, or to satisfy safety performance, overall client satisfaction or other performance criteria. As a result, we may receive lower fees or lose our ability to earn incentive fees. In other cases, our fee will not change but we will have to continue to perform work without additional revenue until the performance criteria is achieved. We may also incur liquidated damages if we fail to complete a project on its contractual timeline. In addition, if we fail to meet guaranteed performance or quality standards, we may be held responsible under the guarantee or warranty provisions of our contract for cost impact to the client, generally in the form of contractually agreed-upon liquidated damages or an obligation to re-perform work. To the extent these events occur, the total cost to the project (including any liquidated damages) could be material and could, in some circumstances, equal or exceed the full value of the contract. In such events, our financial condition or results of operations could be materially and negatively impacted.

The success of our business is dependent upon being able to attract, develop and retain personnel, including engineers, project management, craft employees and management, who have the necessary and required experience and expertise, and who will perform these services at a reasonable and competitive rate. Competition for experienced personnel can be intense. It may be difficult to attract and retain qualified individuals with the expertise and in the timeframe demanded by our clients. In certain geographic areas, for example, we may be unable to satisfy the demand for our services because of our inability to deploy qualified personnel. Also, it may be difficult to replace personnel who hold government required credentials. Loss of the services of, or failure to recruit, qualified technical and management personnel, including a preference by some candidates to work remotely, could limit our ability to successfully complete existing projects and compete for new projects. In addition, as costs related to our workforce are dependent on market conditions, inflationary pressure has increased, and may continue to increase, labor costs in certain geographic areas.

In the event of a cybersecurity breach or cyber-attack, we may experience operational disruptions, financial losses, legal claims, and reputational damage. Additionally, it may take considerable time for us to investigate and evaluate the full impact of a cybersecurity breach or cyber-attack, which may inhibit our ability to provide prompt, full and reliable information about cybersecurity incidents to our clients, regulators and the public. We may also incur significant costs to remediate the effects of such incidents, including costs associated with investigating the incident, repairing or replacing damaged systems and compensating affected parties.

The insurance we maintain that specifically covers cybersecurity threats may not sufficiently cover all types of losses or claims that we might experience, including losses from delays in our ability to provide services to our customers, reputational harm or the costs to improve security against future similar threats or losses arising from the computing environments and systems managed by others.

Artificial intelligence, machine learning, data science and similar technologies (collectively, “AI”), including third-party AI tools, may be enabled by, or integrated into, some of our business processes and solutions. As with many developing technologies, AI presents risks and challenges that could affect its further development, adoption, and use, and therefore our business. AI algorithms may be flawed or biased. Datasets used to train or develop AI systems may be insufficient, of inferior quality, or contain biasedbiased, or incorrect or incomplete information. The use of AI subjects us to additional risk and liability exposure relating to confidentiality, intellectual property infringement, and client use restrictions. Our AI governance review process and self-imposed requirement to implement safeguards before adopting AI may not be adequate to protect against these risks and challenges. Additionally, the laws and regulations concerning the use of AI continue to evolve. If the use or integration of AI systems, or the outputs generated by such systems, were determined to be non-compliant (e.g., in relation to IP or data privacy rights or in relation to the deployment of AI for certain activities or use cases), this may adversely affect us. It is possible that emerging regulations may limit or block the use of AI in our business or otherwise impose restrictions that may adversely affect the efficiency of our business processes or solutions that were utilizing AI technologies.

The safeguards we have implemented, including policies and procedures, governance reviews, technical measures where feasible, and contractual obligations relating to the ethical use of AI, may not be adequate or effective, and we cannot guarantee or control how third parties with whom we do business may utilize AI, which maysubjects increaseus ourto increased risk and exposure relating to confidentiality and information security and information accuracy. If a breach of confidentiality or error or defect were to occur as a result of using AI, directly or indirectly, it could adversely affect our business, reputation, financial condition and results of operations.

•tax or tariff changes (including the Proposed Tariffs) and withholding requirements;

Since October 2024, we account for our investment in NuScale using the fair value option for equity method investments, under which we 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 subjectsubjects 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 us or NuScale. As a result of the recurring fair value measurements, we may recognize non-cash gains or losses in future periods, some of which could be material.

We are subject to income taxes where we do business. A change in tax laws, treaties or regulations, or their interpretation, in any country in which we operate could change our overall tax rate, which could have a material impact on our results of operations. In particular, international operations could adversely be affected by the Organization for Economic Co-operation and Development (OECD) 's proposed international taxation reform and introduction of a global minimum tax. In addition, significant judgment is required in determining our worldwide provision for income taxes and our judgments could prove inaccurate. There are many transactions and calculations where the ultimate tax determination is uncertain. We are regularly under audit by tax authorities, and our tax estimates and tax positions could be materially affected by many factors including the final outcome of tax audits and related litigation, the introduction of new tax accounting standards, legislation, regulations and related interpretations, our global mix of earnings, our ability to realize deferred tax assets and changes in uncertain tax positions. Future changes in our tax rate or adverse changes in tax laws could have a material adverse effect on us. We may also be exposed to limitations on our ability to reinvest earnings from operations in one country to fund our operations in other countries due to tax laws in different jurisdictions.

ClimateClimate-related change,events, natural disasters and related environmental issues could have a material adverse impact on us.

Climate-related events, such as increasedthe frequency and severity of storms, floods, wildfires, droughts, hurricanes, freezing conditions, and other natural disasters, may have short-term, intermediate and long-term impacts on our business, financial condition and results of operation. Our efforts to mitigate our business risks associated with climateclimate-related changeevents and natural disasters cannot eliminate those risks, and we recognize that there are inherent climateclimate-related relatedand environmental risks regardless of where we conduct our businesses. For example, a catastrophic natural disaster could negatively impact any of our office locations and our project locations. Access to clean water and reliable energy in the communities where we conduct our business is critical to our operations. Accordingly, a natural disaster has the potential to disrupt our and our clients’ businesses and may cause us to experience work stoppages, supply chain disruptions, project delays, financial losses and additional costs to resume operations, including increased insurance costs or loss of cover, legal liability and reputational losses.

Further, theclimate-related and environmental risks caused by climate change span across the full spectrum of the markets we serve. The direct physical risks that climateclimate-related changeevents poses through chronicand environmental changes,issues pose, such as rising sea levels and temperatures, and acute events, such as hurricanes, droughts and wildfires, are common to each of these industries. Our clients could face increased costs to maintain their assets, which could result in reduced profitability and fewer resources for strategic investment. These types of physical risks could in turn lead to transitional risks (i.e., the degree to which society responds to the threat of climate changeand environmental matters). For example, concerns about climate changeand environmental matters may result in activism, protests, legislation, international protocols or treaties, regulation or other restrictions on greenhouse gas emissions or that otherwise seek to address climate changeand environmental matters that could affect our clients, including those who (a) are involved in the exploration, production or refining of hydrocarbons, such as our Energy Solutions clients, (b) emit greenhouse gases through the combustion of hydrocarbons or (c) emit greenhouse gases through the mining, manufacture, utilization or production of materials or goods. Such actions could increase the costs of projects for us and our clients or, in some cases, prevent a project from going forward, thereby potentially reducing the need for our services, which would in turn have a material adverse impact on us. However, policy changes and climate legislation could also accelerate energy transition, including the development of carbon capture and storage projects, alternative transportation, alternative energy facilities, such as wind farms or nuclear reactors, or incentivize increased implementation of clean fuels projects, which could positively impact the demand for our services. We cannot predict when or whether any of these legislative proposals may become law or what effect they will have on us and our clients.

We will also continue to incur additional expenses implementing U.S. and international regulations requiring additional disclosures regarding GHG emissions and/or broader sustainability-related factors. Compliance with such regulations and the associated potential costs is complicated by various countries and regions following different approaches to the regulation of climate change.and environmental matters.

Increasing scrutiny and changing expectations from stakeholders with respect to sustainability practices may impose additional costs on us or expose us to reputational harm or other risks.

In addition, while we may create and publish voluntary disclosures regarding sustainability matters, many of the statements in those voluntary disclosures are based on expectations and assumptions that may not be representative of current or actual risks, including the costs associated therewith. Such expectations and assumptions are necessarily uncertain and may be prone to error or subject to misinterpretation given the long timelines involved and the lack of an established single approach to identifying, measuring and reporting on many sustainability matters. In addition, there are increasing and inconsistent levels of regulation, disclosure-related and otherwise, with respect to sustainability matters. For example, the Corporate Sustainability Reporting Directive in the European Union as well as new sustainability-related disclosure requirements in U.S. states and other jurisdictions require companies to provide significantly expanded sustainability and other climate-related disclosures. Requirements from the SEC, European or other regulators may require us to incur significant costs to comply and distract our management and Board of Directors. We may also face material risks from the potential reversal or modification of these regulations, and reversal or material modification of these regulations could could lead to the loss of time and resources already invested to prepare for these requirements. Many of these costs may not be recoverable from our clients.

Adverse credit and financial market conditions, including increasing or continued high interest rates, could impair our clients', our partners' and our own borrowing capacity, which could negatively affect us.

In addition, adverse credit and financial market conditions, including increasing or continued high interest rates potentially as a result to the Proposed Tariffs,rates, also adversely affect our clients' and our partners' borrowing capacity, which could result in contract cancellations or suspensions, project award and execution delays, payment delays or defaults by our clients. These disruptions could materially impact us.

In addition, our credit facility requires us to maintain specified financial covenants. A breach of any of these covenants could result in a default. If a default occurs, the relevant lenders could elect to accelerate payments due.due or decline access to the facility for further borrowings. If our operating performance declines, or if we are unable to comply with any covenant, we may need to obtain amendments to our credit agreements or waivers from the lenders to avoid default. These factors could have a material adverse effect on us.

(2)Backlog represents the total amount of revenue we expect to record in the future based upon contracts that have been awarded to us. Backlog is stated in terms of gross revenues and may include significant estimated amounts of third-party, subcontracted, CFM and pass-through costs as well as other forms of variable consideration. For projects related to proportionately consolidated joint ventures, we include only our percentage ownership of each joint venture's backlog. 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. We recognize new awards into backlog when we and our client have approved the contract (written or verbal) and are committed to perform our respective obligations. Although backlog reflects business that is considered to be firm, cancellations, deferrals or scope adjustments may occur. Backlog is adjusted to reflect any known project cancellations, revisions to project scope and cost, foreign currency exchange fluctuations and project deferrals, as appropriate. Backlog differs from RUPO discussed elsewhere in this 10-K. Backlog includes the amount of revenue we expect to recognize under ongoing operations and maintenance contracts for the remainder of the current year renewal period plus up to 3 additional years if renewal is considered to be probable, while RUPO includes only the amount of revenue we expect to recognize under contracts with definite terms and substantive termination provisions. In 2025,2026, we expect to execute approximately half of our ending 20242025 backlog.

(34)Includes backlog of $702$255 million and $1.3$702 billionmillion for legacy projects in a loss position as of December 31, 20242025 and 2023,2024, respectively.

Net earnings (loss) excluding amounts attributable to equity method earnings were as follows:

The effective tax rate on earningsearnings, including equity method earnings, was 103%,39%, 103% and 75% and 70% for 2024,2025, 20232024 and 2022,2023, respectively. A reconciliation of U.S. statutory federal tax expense to total income tax expense follows:

Our results were significantly impacted by evolving foreign currency rates in 2024.2025. During 2024,2025, the U.S. dollar appreciateddepreciated against the Euro, British Pound, Canadian Dollar and Mexican Peso.

Our profit margin percentages may be favorably or unfavorably impacted by a change in the amount of CFM recorded. We record revenue on a gross basis, including CFMCFM, when we have concluded that we are a principal with respect to such materials and services, though the timing of CFM receipt can significantly impact completion percentage.

New awards in 20242025 included a large lifemulti-billion sciencesdollar project,pharmaceutical anfacility, incremental award on a large metals project as well as severaltwo significant contractmining extensionsprojects and construction contracts for Plant2 &infrastructure Facility Services.projects. Backlog increased duringin 20242025 due to thesethe 2new largeaward awards.activity. Our staffing business does not report new awards or backlog.

Results for the fourth quarter of 2024.2025. Segment profit in the fourth quarter of 2024 significantly2025 decreased due to thea favorable settlementportion of athe claimforecast adjustments for cost growth on anthe internationalinfrastructure bridgeprojects projectdiscussed during 2023.above.

New awards and backlog were lower in 20242025 compared to 2023. New awards booked during 2024 included a full notice to proceed on a downstream project in Mexico.2024. Backlog declined during 20242025 due to the execution pace exceeding new award activity.

Results for the fourth quarter of 2024.2025. Segment profit in the fourth quarter of 20242025 significantlywas increasedconsistent which reflected $33 million for cost growth and schedule extension in 2023 onwith the now-completed,fourth largequarter upstreamof legacy project.2024.

New awards increasedin during2025 were stable with 2024 comparedand included a six-year contract to 2023extend dueour topresence task order contracts awarded underat the AirPortsmouth Force Contract Augmentation Program V as well as contract extension awards at two DOE sites.site. Backlog included $1.0 billion and $665 million and $2.7 billion of unfunded government contracts as of December 31, 20242025 and 2023,2024, 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 does 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.

The decrease in compensation expense in 20242025 was primarily driven by lower stock price-driven compensation and performance-based compensation. TheDuring increase2025, inwe recognized severance and exit costs inprimarily 2024related wasto drivencertain byinternational theoffice Stork divestiture.closures.

Through our bank's execution, weWe completed the sale of all 71 million shares of NuScale in February 2026,2026 generating totalfor proceeds of $1.35 billion.billion Asand the sale of March 31, 2026, we had an ongoing program to sell the final 40 million shares of our NuScale shares but those shares remained on our balance sheet during the execution window. We completed the program in April 2026 and collected totalfor proceeds of $473 million. Since September 2025, sales of our NuScale shares have generated $2.43 billion in cash.cash, or $2.1 billion after tax.

Such at-cost revenue is generally reflected in our project estimates at equivalent amounts within the revenue and cost elements. Therefore, we believe our adjusted net revenue represents the basis for which we earn fees for our professional services. Others in our industry may have similar terms that they use to similarly measure the earnings power of their services. Even though our involvement with at-cost revenue elements as a principal gives rise to their inclusion in our consolidated revenue, the absence of meaningful markup to them elevates the importance of this non-GAAP analysis. During the 2026 and 2025 Quarters, at-cost revenue was approximately $2.1$2.6 billion and $1.9$2.0 billion, respectively (or approximately 58%60% and 48%51% of consolidated revenue). During 2026 and 2025 Periods, at-cost revenue was approximately $4.7 billion and $3.9 billion, respectively (or approximately 59% and 49% of consolidated revenue). Excluding the amounts of at-cost revenue from both GAAP revenue and from project cost yields an amount that we call adjusted net margin.

(34)Backlog at MarchJune 31,30, 2026 wasincreased levelcompared withto backlog at December 31, 2025.2025 due to several large awards booked during the 2026 Period including a multi-year, EPC contract for a uranium enrichment facility and incremental awards in life sciences and mining. 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. During the 2026 Quarter, project adjustments totaling $1.1 billion included a scope increase on a DOE project and an increase in CFM on a metals project.

(45)Includes backlog of $169$119 million and $255 million for legacy projects in a loss position as of MarchJune 31,30, 2026 and December 31, 2025, respectively.

Earnings before taxes decreasedincreased induring the 2026 Quarter and 2026 Period due to a ramp up of execution activities and the recognition of favorable close out items on certain projects partially offset by cost growth on a legacy infrastructure project. Earnings before taxes in the 2026 Period also included the impact of an unfavorable court ruling on a DOD project and cost growth on a large mining jointproject ventureas project,well partially offset byas the gain on the sale of CFHI.

Net earnings (loss) excluding amounts attributable to equity method earnings (loss) were as follows:

The effective tax rate on earnings, including equity method earnings, was (4)%17% and 6% for the 2026 Quarter and the 2026 Period, respectively, compared to 19%24% for both the 2025 Quarter.Quarter and the 2025 Period. A reconciliation of U.S. statutory federal income tax expense to income tax expense follows:

Revenue increased induring the 2026 Quarter and 2026 Period due to the ramp up of execution activities on life sciences and mining and metal projects. The increase in revenue during the 2026 revenuePeriod was partially offset by a decline in execution activity for a recently completed project. During the 2026 and 2025 Quarters, at-cost revenue for Urban Solutions was approximately $1.5$1.9 billion and $1.2 billion, respectively (or approximately 63%66% and 57% of their segment revenue). During the 2026 and 2025 Periods, at-cost revenue for Urban Solutions was approximately $3.4 billion and $2.4 billion, respectively (or approximately 65% and 57% of their segment revenue).

New awards decreasedincreased induring the 2026 Quarter compared to the 2025 due to a large life sciences award booked in 2025.Quarter. New awards in the 2026 Quarter included aan fullEPCM noticeaward to proceed onfor a large aluminumfertilizer project in theCanada Middleand East,an incremental worklife forsciences a pharmaceutical facility, infrastructure expansion on a mine in Chile and a limited notice to proceed on a large-scale data center projectaward in the U.S. Backlog as of MarchJune 31,30, 2026 increased compared to backlog at December 31, 2025 due to the new award activity.activity in the 2026 Period. Our staffing business does not report new awards or backlog.

Revenue decreased induring the 2026 Quarter and 2026 Period primarily due to a decline in execution activity for several projects nearing completion. These declines in revenue were partially offset by increased activity on a North American refinery project. During both the 2026 and 2025 Quarters, at-cost revenue for Energy Solutions was approximately $314$322 million and $472$522 million, respectively (or approximately 45% and 39%46% of their segment revenue). During the 2026 and 2025 Periods, at-cost revenue for Energy Solutions was approximately $636 million and $994 million, respectively (or approximately 45% and 42% of their segment revenue).

Segment profit and profit margin increased induring the 2026 Quarter and 2026 Period primarily due to the recognition of favorable close out items on 3certain projects,multi-year offsetprojects. slightly by an acceleration ofSegment profit recognition in the 2025 Quarter dueand to2025 Period was adversely affected by the recognition of $31 million for an arbitration ruling on a changefabrication ofproject scopeat onour anotherjoint project.venture in Mexico that was completed in 2021.

New awards in the 2026 Quarter wereincreased consistentcompared withto newthe 2025 Quarter. New awards in the 20252026 Quarter.Quarter included a limited notice to proceed on the Phase 2 expansion of the LNG Canada export facility. Backlog declined in the 2026 Period due to the execution pace exceeding new award activity.

Segment profit and profit margin increased during the 2026 Quarter primarily due to improved award fee performance within our DOE portfolio. Segment profit and profit margin declined induring the 2026 Period primarily due to the recognition of a $96$98 million charge during the first quarter of 2026, resulting from the outcome of a court ruling on a lawsuit filed against us in 2013. Segment profit induring the 2025 Period reflected an additional reserve of $28 million resulting from an adverse ruling on a long-standing claim on a project completed in 2019.

New awards increased induring the 2026 Quarter compared to 2025.the 2025 Quarter. New awards in the 2026 Quarter included a multi-year contract for EPC services for a uranium enrichment facility in the U.S. Backlog included $1.1$973 billionmillion and $1.0 billion of unfunded government contracts as of MarchJune 31,30, 2026, and December 31, 2025, 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.

The increase in compensation expense in the 2026 QuarterPeriod was primarily driven by higher stock price-driven compensation and performance-based compensation. We executed severance programs in several non-U.S. locations during 2025.

Our liquidity arises from available cash and cash equivalents and marketable securities, cash generated from operations, capacity under our credit facility and, when necessary, access to capital markets. In 2026, liquidity was positively impacted by proceeds from the sales of NuScale shares and CFHI.certain joint venture interests. 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.

As of MarchJune 31,30, 2026, letters of credit totaling $413$335 million were outstanding under our $2.2 billion credit facility, which matures in February 2028. 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 $1.1 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 MarchJune 31,30, 2026 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 $903 million.

Cash and cash equivalents combined with marketable securities were $3.2$3.0 billion and $2.2 billion as of MarchJune 31,30, 2026 and December 31, 2025, 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 $939$806 million as of MarchJune 31,30, 2026 and $820 million as of December 31, 2025. 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.

Cash and cash equivalents held by our consolidated variable interest entities (which totaled $336$320 million and $328 million as of MarchJune 31,30, 2026 and December 31, 2025, 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 $10$16 million and $14 million as of MarchJune 31,30, 2026 and December 31, 2025, 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 MarchJune 31,30, 2026 and December 31, 2025, other than unremitted earnings required to meet our working capital and long-term investment needs in non-U.S. foreign jurisdictions where we operate.

During 2026, we spent $516$816 million to repurchase and cancel 1117 million shares of common stock under our repurchase program. In February 2026, our board authorized a 30 million share expansion to the repurchase program. Over 2822 million shares could still be purchased under the program as of MarchJune 31,30, 2026. We are targeting approximately $1.4 billion in share repurchases in 2026.

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 as well as the payment 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 MarchJune 31,30, 2026, our backlog included $169$119 million for ongoing legacy projects in a loss position, including approximately $181$68 million of estimated unfunded losses associated therewith. The comparable amounts at December 31, 2025 were $255 million of backlog and $212 million of unfunded losses. We expect funding on legacy loss projects to be substantially complete by the end of 2026.

Operating cash flow in the 2026 Period included federal and state tax payments totaling $357 million primarily related to the 2025 conversion our shares in NuScale. Operating cash flow for the 2026 QuarterPeriod significantlyalso improved despite the annual payout of employee incentive awards. The increase in operating cash flow is primarily due to decreases in working capital on several large projects as well asincluded distributions from a large Energy Solutions joint venture and aseveral Mission Solutions joint venture.ventures. During the 2026 Quarter,Period, we funded $55$103 million on a2 consolidated infrastructure project.projects. Our operating cash flow for the 2025 QuarterPeriod was negatively impacted by increases in working capital on several large projects. Our operating cash flow is typically lower in the first quarter of each year due to the timing of payout of employee incentive awards from the prior year.

Proceeds from sales of assets during the 2026 QuarterPeriod included $124 million from the sale of our ownership interest in CFHI compared to $61 million from the sale of Stork's U.K. operations during the 2025 Quarter.Period.

We have an ongoing stock repurchase program, authorized by our Board of Directors, to purchase shares in the open market or privately negotiated transactions at our discretion. During the 2026 Quarter,Period, we repurchased 1117 million shares of common stock under the repurchase program for total consideration of $516$816 million. Since we restarted the program in the fourth quarter of 2024, a total of 3238 million shares have been purchased for $1.4$1.7 billion.billion through June 2026.

Capital contributions by NCI represent cash inflows from partners of consolidated partnership or joint ventures created primarily for the execution of single contracts or projects. Capital contributions by NCI during the 2026 QuarterPeriod related to an infrastructure joint venture.

As of MarchJune 31,30, 2026, letters of credit totaling $413$335 million were outstanding under committed lines of credit. As of MarchJune 31,30, 2026, letters of credit totaling $851$762 million were outstanding under uncommitted lines of credit including letters of credit totaling $343$97 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.

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$12 billion as of MarchJune 31,30, 2026.