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☒      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

☐        TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

(Exact name of registrant as specified in its charter)

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ý No o

Indicate by check mark whether the registrant has submitted electronically, if any, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes ý No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ☐  No ý

As of April 28, 2023, 143,237,347 shares of the registrant’s common stock, $0.01 par value, were outstanding.

The definitions and abbreviations set forth below apply to the indicated terms used throughout this filing.

These financial statements do not include footnotes and certain financial information presented annually under GAAP, and therefore, should be read in conjunction with our 2022 10-K. Accounting measurements at interim dates inherently involve greater reliance on estimates than at year-end. Although such estimates are based on management’s most recent assessment of the underlying facts and circumstances utilizing the most current information available, our reported results of operations may not necessarily be indicative of results that we expect for the full year.

The financial statements included herein are unaudited. We believe they contain all adjustments of a normal recurring nature which are necessary to present fairly our financial position and our operating results as of and for the periods presented. All significant intercompany transactions of consolidated subsidiaries are eliminated. Certain amounts in tables may not total or agree back to the financial statements due to immaterial rounding differences. Management has evaluated all material events occurring subsequent to March 31, 2023 through the filing date of this Q1 2023 10-Q.

Quarters are typically 13 weeks in length but, due to our December 31 year-end, the number of weeks in a reporting period may vary slightly during the year and for comparable prior year periods. We report our quarterly results of operations based on periods ending on the Sunday nearest March 31, June 30 and September 30, allowing for 13-week interim reporting periods. For clarity of presentation, all periods are labeled as if the periods ended on March 31, June 30 and September 30.

We did not implement any new accounting pronouncements during the 2023 Quarter. However, we are evaluating the impact of the future disclosures that may arise under recent SEC and other promulgators' proposals.

Potentially dilutive securities include CPS, stock options, RSUs and performance-based award units. Diluted EPS reflects the assumed exercise or conversion of all dilutive securities using the if-converted and treasury stock methods. In computing diluted EPS, only securities that are actually dilutive are included.

Energy Solutions. Segment profit in the 2023 Quarter included a favorable foreign currency remeasurement effect totaling $22 million (or $0.09 per share) on a project with multiple currencies. Segment profit in the 2023 Quarter and 2022 Quarter included expense of $39 million and $13 million, respectively, related to embedded foreign currency derivatives.

Urban Solutions. Segment profit in the 2023 Quarter included a $59 million (or $0.34 per share) charge for rework associated with subcontractor design errors, related schedule impacts and system integration testing timelines on the LAX Automated People Mover project. Intercompany revenue for our professional staffing business, excluded from the amounts shown above, was $69 million and $60 million for the 2023 Quarter and 2022 Quarter, respectively.

Mission Solutions. Segment profit in the 2023 Quarter included a $21 million (or $0.12 per share) charge for cost growth resulting from government directed change orders and the associated schedule delays on a weapons facility project.

Other. Segment profit (loss) for NuScale, Stork and AMECO follows:

(1) As of March 31, 2023, we had an approximate 56% ownership in NuScale.

Total assets by segment are as follows:

Revenue by project location follows:

						3ME March 31,
(in millions)						2023						2022
North America						$	2,651					$	1,908
Asia Pacific (including Australia)						324						249
Europe						512						549
Central and South America						221						351
Middle East and Africa						44						65
Total revenue						$	3,752					$	3,122

The effective tax rate on earnings for the 2023 Quarter was (30.1)% compared to 35.4% for the 2022 Quarter. A reconciliation of U.S. statutory federal income tax expense to income tax expense follows:

			3ME March 31
(In millions)			2023						2022
U.S. statutory federal tax expense (benefit)			$	(21)					$	18
Increase (decrease) in taxes resulting from:
State and local income taxes, net of federal income tax effects			(3)						1
Valuation allowance			52						16
Foreign tax effects			8						2
Noncontrolling interest			5						(2)
Sale of AMECO South America			(10)						—
Other adjustments			(1)						(4)
Total income tax expense			$	30					$	31

Many of our partnership and joint venture agreements provide for capital calls to fund operations, as necessary. Investments in a loss position of $379 million and $312 million were included in other accrued liabilities as of March 31, 2023 and December 31, 2022, respectively, and consisted primarily of provision for anticipated losses on legacy infrastructure projects. Accounts receivable related to work performed for unconsolidated partnerships and joint ventures included in “Accounts receivable, net” was $190 million and $185 million as of March 31, 2023 and December 31, 2022, respectively.

The aggregate carrying value of unconsolidated VIEs (classified under both "Investments” and “Other accrued liabilities”) was a net liability of $14 million as of March 31, 2023 and a net asset of $46 million as of December 31, 2022. Some of our VIEs have debt; however, such debt is typically non-recourse to us. Our maximum exposure to loss as a result of our investments in unconsolidated VIEs is typically limited to the aggregate of the carrying value of the investment and future funding necessary to satisfy the contractual obligations of the VIE. Future funding commitments as of March 31, 2023 for the unconsolidated VIEs were $57 million.

We are required to consolidate certain VIEs. Assets and liabilities associated with the operations of our consolidated VIEs are presented on the balance sheet. The assets of a VIE are restricted for use only for the particular VIE and are not available for our general operations. We have agreements with certain VIEs to provide financial or performance assurances to clients, as discussed elsewhere.

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 $15 billion as of March 31, 2023. For cost reimbursable contracts, amounts that may become payable pursuant to guarantee provisions are normally recoverable from the client for work performed. For lump-sum contracts, the performance guarantee amount is the cost to complete the contracted work, less amounts remaining to be billed to the client under the contract. Remaining billable amounts could be greater or less than the cost to complete. In those cases where costs exceed the remaining amounts payable under the contract, we may have recourse to third parties, such as owners, partners, subcontractors or vendors for claims. The performance guarantee obligation was not material as of March 31, 2023 and December 31, 2022.

We and certain of our subsidiaries are subject to litigation, claims and other commitments and contingencies, including matters arising in the ordinary course of business, of which the asserted value may be significant. We record accruals in the financial statements for pending legal matters when we determine that an unfavorable outcome is probable and the amount of the loss can be reasonably estimated. While it is reasonably possible that a loss may be incurred in any of the matters identified below, including a loss in excess of amounts accrued, management is unable to estimate the possible loss or range of loss or has determined such amounts to be immaterial. At present, except as set forth below, we do not expect that the ultimate resolution of any open matters will have a material adverse effect on our financial position or results of operations. However, legal proceedings and regulatory and governmental matters are subject to inherent uncertainties, and unfavorable rulings or other events could occur. Unfavorable outcomes could involve substantial monetary damages, fines, penalties and other expenditures. An unfavorable outcome might result in a material adverse impact on our business, results of operations or financial position. We might also enter into an agreement to settle one or more such matters if we determine such settlement is in the best interests of our stakeholders, and any such settlement could include substantial payments.

Fluor Australia Ltd., our wholly-owned subsidiary (“Fluor Australia”), completed a cost reimbursable engineering, procurement and construction management services project for Santos Ltd. (“Santos”) involving a large network of natural gas gathering and processing facilities in Queensland, Australia. On December 13, 2016, Santos filed an action in Queensland Supreme Court (the “Court”) against Fluor Australia, asserting various causes of action and seeking damages and/or a refund of contract proceeds paid of AUD $1.47 billion. Santos has joined Fluor to the matter on the basis of a parent company guarantee issued for the project. In March 2023, a panel of three referees appointed by the Court (the "Panel”) issued a draft, non-binding report setting forth recommendations to the Court regarding liability and damages in the lawsuit. When finalized, the Panel’s report has no legal effect unless it is adopted by the Court through an adoption hearing, and the Court can accept or reject, in whole or in part, the Panel’s recommendations. In the draft report, the Panel recommended judgment for Fluor on one of Santos’s damages claims that Santos contends has an approximate value of AUD $700 million, and recommended judgment for Santos on other claims that Santos contends have a roughly equivalent damages value (although the Panel has not yet recommended a precise amount of damages with respect to these claims and the amount of any damages is the subject of further submissions to the Panel). While the project contract contains a liability cap of approximately AUD $236 million, the Panel found that the liability cap did not apply to Santos’s claims. The Panel is expected to issue a final report later in 2023, after which the Court is expected to schedule an adoption hearing. In parallel with further action by the Panel, Fluor has submitted an application to have the Court set aside the reference to the Panel and the Panel’s recommendations on several procedural and substantive grounds, including its failure to apply the project contract’s liability cap. That application is expected to be heard in the third quarter of 2023.

Since September 2018, eleven separate purported shareholders' derivative actions were filed against current and former members of the Board of Directors, as well as certain of Fluor’s current and former executives. Fluor is named as a nominal defendant in the actions. These derivative actions purport to assert claims on behalf of Fluor and make substantially the same factual allegations as the securities class action matter which was resolved in 2022, as previously disclosed in our 2022 10-K, and seek various forms of monetary and injunctive relief. These actions are pending in Texas state court (District Court for Dallas County), the U.S. District Court for the District of Delaware, the U.S. District Court for the Northern District of Texas, and the Court of Chancery of the State of Delaware. Certain of these actions were consolidated, and all of these matters are currently stayed. The parties have reached an agreement for a global settlement of these matters. The settlement is subject to court approval, and the parties anticipate seeking that approval from the U.S. District Court for the Northern District of Texas.

Fluor Limited, our wholly-owned subsidiary (“Fluor Limited”), and Fluor Arabia Limited, a partially-owned subsidiary (“Fluor Arabia”), completed cost reimbursable engineering, procurement and construction management services for Sadara Chemical Company (“Sadara”) involving a large petrochemical facility in Jubail, Kingdom of Saudi Arabia. On August 23, 2019, Fluor Limited and Fluor Arabia Limited commenced arbitration proceedings against Sadara after it refused to pay invoices totaling approximately $100 million due under the contracts. As part of the arbitration proceedings, Sadara has asserted various counterclaims for damages and/or a refund of contract proceeds paid totaling $574 million against Fluor Limited and Fluor Arabia Limited.

Various wholly-owned subsidiaries of Fluor, in conjunction with a partner, TECHINT, (“Fluor/TECHINT”) performed engineering, procurement and construction management services on a cost reimbursable basis for Barrick Gold Corporation involving a gold mine and ore processing facility on a site straddling the border between Argentina and Chile. In 2013 Barrick terminated the Fluor/TECHINT agreements for convenience and not due to the performance of Fluor/TECHINT. On August 12, 2016, Barrick filed a notice of arbitration against Fluor/TECHINT, demanding damages and/or a refund of contract proceeds paid of not less than $250 million under various claims relating to Fluor/TECHINT’s alleged performance. Proceedings were suspended while the parties explored a possible settlement. In August 2019, Barrick drew down $36 million of letters of credit from Fluor/TECHINT ($24 million from Fluor and $12 million from TECHINT). Thereafter, Barrick proceeded to reactivate the arbitration. Barrick and Fluor/TECHINT exchanged detailed statements of claim and counterclaim pursuant to which Barrick's claim against Fluor/TECHINT totaled $364 million net of amounts acknowledged to be due to Fluor/TECHINT.

Fluor Enterprises Inc., our wholly-owned subsidiary, (“Fluor”) in conjunction with a partner, Balfour Beatty Infrastructure, Inc., (“Balfour”) formed a joint venture known as Prairie Link Constructors JV (“PLC”) and, through it, contracted with the North Texas Tollway Authority (“NTTA”) to provide design and build services in relation to the extension of the NTTA’s President George Bush Turnpike highway (“Project”). PLC completed the Project in 2012. In October 2022, the NTTA served PLC, Fluor and Balfour with a petition, filed at Dallas County Court, demanding damages of an unquantified amount under various claims relating to alleged breaches of contract and or negligence. In its initial disclosures as part of the litigation, the NTTA stated that its damages are expected to exceed $100 million and that damages will be calculated by experts and provided in the normal course of the litigation. We have answered the petition and asserted claims for, among other things, indemnity from subcontractors.

In February 2020, we announced that the SEC is conducting an investigation and requested documents and information related to projects for which we recorded charges in the second quarter of 2019. In April 2020 and January 2022, Fluor received subpoenas from the U.S. DOJ seeking documents and information related to the second quarter 2019 charges; certain of the projects associated with those charges; and certain project accounting, financial reporting and governance matters. These matters remain unresolved, and we have continued to cooperate and engage with the SEC and DOJ regarding these investigations including discussions with the SEC regarding the potential resolution of its investigation. Based upon our assessment in the fourth quarter of 2022, we recorded an accrual related to this matter, although no assurance can be given as to the ultimate outcome of these matters, and we are not able to predict whether any legal, regulatory or reputational impacts of any allegations or resolution of these matters will have a material impact on our results.

The following summarizes information about our contract assets and liabilities:

(in millions)			March 31, 2023			December 31, 2022
Information about contract assets:
Contract assets
Unbilled receivables - reimbursable contracts			$	866		$	738
Contract work in progress - lump-sum contracts			197			177
Contract assets			$	1,063		$	915
Advance billings deducted from contract assets			$	239		$	220
			3ME March 31,
(in millions)			2023			2022
Information about contract liabilities:
Revenue recognized that was included in contract liabilities as of January 1			$	313		$	531

We periodically evaluate our project forecasts and the amounts recognized with respect to our claims and unapproved change orders. We include estimated amounts for claims and unapproved change orders in project revenue to the extent it is probable we will realize those amounts. As of March 31, 2023 and December 31, 2022, we had recorded $526 million and $498 million, respectively, of revenue associated with claims and unapproved change orders for costs incurred to date. Additional costs, which will increase this balance over time, are expected to be incurred in future periods. We had no material disputed back charges to suppliers or subcontractors as of March 31, 2023 and December 31, 2022.

We estimate that our RUPO will be satisfied over the following periods:

Debt consisted of the following:

As of March 31, 2023, letters of credit totaling $420 million were outstanding under our $1.8 billion credit facility, which was amended in February 2023 to extend the maturity to February 2026. This credit facility contains customary financial covenants, including a debt-to-capitalization ratio that cannot exceed 0.60 to 1.00, 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, defined in the amended credit facility, which may be reduced to $1.0 billion upon the repayment of debt. The credit facility also 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, such collateral consisting broadly of our U.S. assets. Borrowings under the facility, which may be denominated in USD, EUR, GBP or CAD, bear interest at a base rate, plus an applicable borrowing margin. As of March 31, 2023, we had not made any borrowings under our credit line and maintained a borrowing capacity of $828 million.

As of March 31, 2023, letters of credit totaling $957 million were outstanding under uncommitted lines of credit.

First quarter CPS dividends of $10 million were paid in February 2023. In April 2023, our Board of Directors approved the payment of second quarter CPS dividends of $10 million, payable in May 2023.

Each share of CPS is convertible at the holder's option at any time into 44.9585 shares of our common stock per share of CPS. The conversion rate is subject to certain customary adjustments, but no payment or adjustment for accumulated but unpaid dividends will be made upon conversion, subject to certain limited exceptions. The CPS may not be redeemed by us; however, we are able, since May 20, 2022, to elect to cause all outstanding shares of CPS to be converted into shares of our common stock at the conversion rate, subject to certain conditions (and, if such conversion occurs prior to May 20, 2024, the payment of a cash make-whole premium). The most significant condition to our ability to invoke a conversion prior to May 2024 is the requirement that our common stock trade above $28.92 for 20 consecutive trading days, which occurred in the fourth quarter of 2022 and persisted through March 31, 2023. We estimate that the cash make-whole payment would have been $60 million (using the actual average 5-day trading price leading up to March 31, 2023).

If a make-whole fundamental change, as defined in the certificate of designations for the CPS, occurs, we will in certain circumstances be required to increase the conversion rate for a holder who elects to convert shares of CPS in connection with such make-whole fundamental change.

The following table delineates assets and liabilities that are measured at fair value on a recurring basis:

(1)    Consists of registered money market funds and an equity index fund. These investments, which are trading securities, represent the net asset value at the close of business of the period based on the last trade or official close of an active market or exchange.

(2)    Foreign currency and commodity derivatives are estimated using pricing models with market-based inputs, which take into account the present value of estimated future cash flows.

(3) The SMR warrant liabilities are comprised of public and private placement warrants redeemable by SMR under certain conditions, both measured using the price of the public warrants. The private placement warrants are not publicly traded and have been classified as Level 2 measurements while the public warrants are classified as Level 1.

We have measured assets and liabilities held for sale at fair value on a nonrecurring basis. The following summarizes information about financial instruments that are not required to be measured at fair value:

(1)    Cash consists of bank deposits. Carrying amounts approximate fair value.

(2)     The carrying amounts of these time deposits approximate fair value because of the short-term maturity of these instruments. Amortized cost is not materially different from the fair value.

(3)    Notes receivable are carried at net realizable value which approximates fair value. Factors considered in determining the fair value include the credit worthiness of the borrower, current interest rates, the term of the note and any collateral pledged as security. Notes receivable are periodically assessed for impairment.

(4)     The fair value of the Senior Notes was estimated based on the quoted market prices and Level 2 inputs.

(5)    Other borrowings represent bank loans and other financing arrangements which mature within one year. The carrying amount of borrowings under these arrangements approximates fair value because of the short-term maturity.

Our executive and director stock-based compensation plans are described more fully in the 2022 10-K. In the 2023 and 2022 Quarters, RSUs totaling 383,974 and 367,380, respectively, were granted to executives at a weighted-average grant date fair value of $35.76 and $21.90 per share, respectively, and generally vest over three years.

Stock options for the purchase of 178,434 and 250,656 shares at a weighted-average exercise price of $35.76 and $21.90 per share were awarded to executives during the 2023 and 2022 Quarters, respectively. The options granted in 2023 and 2022 generally vest over three years and expire ten years after the grant date.

Performance-based award units totaling 274,755 were awarded to certain senior executives and all Section 16 officers during the 2023 Quarter and performance-based award units totaling 426,957 were awarded to Section 16 officers during the 2022 Quarter. These awards generally cliff vest after 3 years and contain annual performance conditions for each of the 3 years of the vesting period. Under GAAP, performance-based elements of such awards are not deemed granted until the performance targets have been established. The performance targets for each year are generally established in the first quarter. For awards granted under the 2023 performance plan, 80% of the award is earned based on achievement of earnings before taxes targets over three one-year periods and 20% of the award is earned based on our three-year cumulative TSR relative to companies in the S&P 500 on the date of the award. For the majority of awards, generally only one-third of the units awarded in any given year are deemed to be granted each year of the 3-year vesting periods.

During 2023, the following units were granted based upon the establishment of performance targets:

For awards granted under the 2023, 2022 and 2021 performance award plans, the number of units are adjusted at the end of each performance period based on achievement of certain performance targets and market conditions, as defined in the award agreements.

SGI awards and performance-based awards for other executives vest and become payable at a rate of one-third of the total award each year.

The components of OCI follow:

The changes in AOCI balances follow:

The reclassifications out of AOCI follow:

The following discussion and analysis should be read in conjunction with our financial statements and our 2022 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.

Certain statements made herein, including statements regarding our projected operating results, liquidity and 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;

•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 acquisitions, dispositions or other investments, including the failure to successfully integrate acquired businesses.

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 2022 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.

In 2021, we committed to achieving net zero emissions for Scopes 1 and 2 absolute greenhouse gas emissions by the end of 2023, and we are on track to meet that objective.

(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.

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 the 2023 Quarter. 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 client recoveries.

During the 2023 Quarter, consolidated revenue increased due to the ramp up of execution activities on several recently awarded Energy Solutions and Urban Solutions projects partially offset by declines in the volume of execution activity for projects which were completed or nearing completion.

Segment profit during the 2023 Quarter includes a $59 million charge for rework associated with subcontractor design errors, related schedule impacts and system integration testing timelines on the LAX Automated People Mover project and a $21 million charge for cost growth resulting from government directed change orders and the associated schedule delays on a weapons facility project as well as the $60 million negative earnings impact upon the sale of our AMECO South America business.

The effective tax rate on earnings for the 2023 Quarter was (30.1)% compared to 35.4% for the 2022 Quarter. A reconciliation of U.S. statutory federal income tax expense to income tax expense follows:

Backlog as of March 31, 2023 remained flat compared to December 31, 2022. 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. RUPO includes only the amount of revenue we expect to recognize under contracts with definite terms and substantive termination provisions.

Revenue in 2023 significantly increased due to the ramp up of execution activities on recently awarded mid-scale LNG projects, recently awarded chemicals projects in China, refinery projects in Mexico as well as a favorable foreign currency remeasurement effect on a project with multiple currencies. The 2023 revenue increase was partially offset by declines in the volume of execution activity for projects nearing completion.

Segment profit in 2023 increased due to the ramp up of execution activities on the refinery projects in Mexico and the mid-scale LNG projects as well as a $22 million favorable foreign currency remeasurement effect on a project with multiple currencies. The increase in segment profit was partially offset by an increase in expense on embedded foreign currency derivatives. The increase in segment profit margin in 2023 reflects these same factors.

New awards remained flat during the 2023 Quarter. The decline in backlog during the 2023 Quarter resulted from work performed outpacing new award activity.

Revenue in 2023 increased primarily due to the ramp up of execution activities on a large metals project in the U.S., a life sciences project, a recently awarded advanced technologies project and a mining project. The 2023 revenue increase was partially offset by declines in the volume of execution activity for a large mining project nearing completion as well as forecast revisions on a legacy infrastructure project.

Segment profit in 2023 reflects a $59 million charge for rework associated with subcontractor design errors, related schedule impacts and system integration testing timelines on the LAX Automated People Mover project. The decline in segment profit was partially offset by the favorable resolution of close out items on an advanced manufacturing project. The decline in segment profit margin in 2023 reflects these same factors.

New awards in 2023 increased due to a large advanced manufacturing project and an advanced technologies project. Backlog increased during 2023 due to the new award activity. Our staffing business does not report new awards or backlog.

Revenue in 2023 increased due to increased execution activities on three DOE contracts partially offset by the completion of a humanitarian support project and the favorable resolution of close out items on a completed Army Corps of Engineers project in the 2022 Quarter.

The decline in segment profit in 2023 was substantially driven by a $21 million charge for cost growth resulting from government directed change orders and the associated schedule delays on a weapons facility project as well as the completion of the humanitarian support project and the favorable resolution of the Army Corps of Engineers project in the 2022 Quarter. The decline in segment profit margin was driven by these same factors.

New awards remained flat during the 2023 Quarter. New awards in the 2023 Quarter included a 6-month contract extension on a DOE project. The decline in backlog during the 2023 Quarter resulted from work performed outpacing new award activity. Backlog included $3.0 billion and $3.9 billion of unfunded government contracts as of March 31, 2023 and December 31, 2022, respectively. Unfunded backlog reflects our estimate of future revenue under awarded government contracts for which funding has not yet been appropriated.

Other includes the operations of NuScale, Stork and the remaining AMECO business.

			3ME March 31,
(in millions)			2023						2022
NuScale (1)			$	(29)					$	(21)
Stork			1						4
AMECO			(62)						3
Segment profit (loss)			$	(90)					$	(14)
(1) NuScale expenses included in the determination of segment profit were as follows:
NuScale expenses			$	(58)					$	(45)
Less: DOE reimbursable expenses			8						23
NuScale expenses, net			(50)						(22)
Less: Attributable to NCI			21						1
NuScale profit (loss)			$	(29)					$	(21)