FLR - Earnings call transcript Q2 2018

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Operator

Good afternoon and welcome to the Fluor Corporation's Second Quarter 2018 Conference Call. Today's call is being recorded. At this time, all participants are in a listen-only mode and a question-and-answer session will follow management's presentation. A replay of today's conference call will be available at approximately 8:30 P.M. Eastern Time today, accessible on Fluor's website at investor.fluor.com. be XX will replay web available days. for The be X:XX P.M. telephone replay through also will A available Eastern August be the pass Time number, code telephone on of X at XXXXXXX will required. following the XXX-XXX-XXXX, remarks, At this call to Mr. would to turn over I time, the like opening for Director Landkamer, Relations. of Investor Jason Please go ahead, Mr. Landkamer.

Jason Landkamer

call Stanski, Fluor's and Chief Chairman welcome conference Executive second Fluor's today Officer. us Officer; quarter Fluor's you, With are Bruce Chief and Financial Thank XXXX and to (X:XX). David Seaton,

close prepared was [Technical our I'd announcement this slide before to released Harbor regarding you presentation will after market our getting refer (X:XX) earnings on on note Difficulty] X. Our forward-looking website, reference afternoon slide [Technical remarks. started, we which which statements, to summarized Safe Difficulty] like (X:XX) But is

we'll experience call (X:XX) making differ our and and which reflect existing presentation, and analysis are information. There today's results statements, could slide current actual forward-looking of trends materially. that be risk During

contribute which a find today discussion can (X:XX) on filed Form XX-Q company's and You differences February risk our earlier XX-K of factors, in Form filed the could to XX. our such

During Investor [Technical (X:XX) are website GAAP this financial are certain discuss release measures earnings in at Relations the Difficulty] section reflected our of posted comparable investor.fluor.com. of Reconciliations in call, and may measures. we these non-GAAP our

turn Now over Chairman David? to the (X:XX). call and I'll David Seaton, CEO Fluor's

David T. Seaton

$X.XX diluted results or to our for second $X.XX thank net discuss Earnings you $X.XX a share, per review On quarter diluted for to year. today's second million, us. of ago. of a share Fluor million, and quarter year joining per everyone afternoon, Good compared or loss for and attributable the this (X:XX) (X:XX) we'll the $XXX outlook rest call,

slide exceeded $X.X billion to revenues $X.X new XXXX. quarterly time Second since awards new billion. This quarter Please were third turn the represents X. of the first quarter revenue awards was and

million, Energy $XX.X ending second the $XXX Chemical (X:XX) were billion. quarter backlog For & segment was new awards for

[ph] with with a working project limited we on decision, (X:XX) using received to remarkable improved FID Canada Kitimat. by or [Technical operating involved. [Technical original plot once we create the and fabrication partner quarter, project. project project define and the plan successful I a the FEED We achieved. execution chain, later (X:XX) is extensively started supply worked project parties which of minimum a notice Difficulty] and our We year. which approach investment the for proceed we more [Technical onsite design appropriate be this Difficulty] client team JGC this collaborated were all requirements finally, And (X:XX). preparing efficiency. LNG largest capabilities then to taking the During on look a And our with us talking able probably in are more (X:XX) We've optimized zero-based assembled allowing package labor capital expected that design customer needed this risk to above on XX% (X:XX) to to that Difficulty] forward is is to leverage have economical and to our (X:XX) will

[Technical XXXX. in our (X:XX) other two (X:XX) project [Technical We recently could bid also saw projects. Difficulty] opportunities U.S. We the on LNG (X:XX) in for move that Difficulty]

downstream This expect includes of select the significant advantage will year. financial and spending projects. half Globally (X:XX) our to later decision on of prospects this a large that Middle the other we currently expected reach in in Asia early expect our we plant one in clients to East. Difficulty] Europe, [Technical LNG another CapEx Mozambique year The FID Outside with expected second opportunities, XXXX. drive and next continue Africa on a of petrochemical health

project billion quarter that billion. challenge allow and to The the for minimize from opportunity to pursue to us was which a end (X:XX) (X:XX) end our systems second Difficulty] end one July limit maintain a efficiency. (X:XX) (X:XX) continue And fully capital expect Mining, and to to as to stood replacement Europe which our mine clients I'm of the upward completion the its market the the help importantly Power maximize our approximately turned improvement to Ending and Mover new backlog Difficulty] including million $X.X the at [Technical People in Flank internationally, While group at we risk. quarter remaining of project backlog of to in Los BHP mining the see Industrial, us X, [Technical Angeles quarter will projects leverage $X.X billion was second South the final International for of pleased quarter. in significant [Technical trajectory more segment reported Difficulty] iron to is awards the and Infrastructure number in we Automated continue $XX and September. in ore the Airport prospects and we project. for our people, of their Difficulty] reach the ago. backlog slide complete at & a we the At $X.X processes have of pursuits the a $XX.X Australia year was improve [Technical billion Turn

into by two should We quarters over additional year-end. expect $X range to billion some $X billion drive backlog awards the that next the mining

our International infrastructure continue bidder opportunities preferred team recent We connecting which Detroit, Michigan. includes project the and to Bridge Ontario our that Windsor, was Gordie announcement in the on see Howe

completed for Fluor Windsor recently will in our project bridge. and this we in second The connect partner, this to as that a Parkway region

this (X:XX) the on expect project year. reach financial We bridge authority close to this

this Our complete. from overall last supports $XX segment achieve quarter. along individual our this we first I end (X:XX) the are This have were backlog (X:XX) project in results project our the that able And completion by at States. the this project gas-fired which exit the we fire scheduled through to is the with And of United for [ph] to of million market and year-end. our end successfully Florida on remaining am [Technical fixed-fire XX% Greensville include project is County project to in moving night the the we're on power related milestone. in power report dates And to July be will completed a charge block an pleased additional that Difficulty] (X:XX). (X:XX) X, mark huge

power is group currently refocusing Our its other on efforts markets. end

Ending the Turning awards to $X.X group of reported slide Difficulty] [Technical million backlog was new includes X, IV Government (X:XX) (X:XX) in [ph] LOGCAP billion. which for $XXX Afghanistan.

Laboratory. for (X:XX) of Security second National Naval Administration team National part opportunities the we a also are operations of XXXX Nuclear recently we and Laboratory. (X:XX) selected to Nuclear recently our the manage a that contract Los Navy's half at the Looking Systems to Command U.S. by were the won at Sea oversee And Naval Alamos

the we billion. fruition. River are Savannah gas in the role this backlog to to pursuit Diversified $XXX Recent liquid have a please. in awards and Hanford. X is at space Ending wanted wins for to said (X:XX) in $X.X our As is Services have Colombia. I'm (X:XX) LOGCAP pleased the maintain an and to coming of fields strategy new and contracts waste quarter operate bigger million our we reported slide (X:XX) includes have in and Turn award which that to to past, of see contract addition V

benefit major have level levels is and Stork beginning well-positioned maintenance you spending. to this As heard, of (X:XX) from oil our gas are programs, clients to may increased on increase spending

a the update, doing few a our provides a I and Bruce homework done over impact comment deep us the on projects to tariffs believe tariffs. lot Before Fluor can on last looking mitigate After at clients. want strategies our through We've briefly we to and tariffs the financial we contract of provisions. purchasing on months exposure of dive

Now to over it I'll Bruce? turn Bruce.

Bruce A. Stanski

to everyone. Thanks, good David, and afternoon,

slide start by awards discussing If you and backlog. new turn I'll to X,

win quarter booked entrusted We to This Industrial end we the several growing & work mainly driven clients quarter billion, our and new have pipeline us. the awards encouraged we $X.X pleased in billion were big awards this our are markets by by segment. of $X.X across Infrastructure serve Power of Mining, to

X.X bill from last (X:XX) book-to- to improved Our quarter ratio (X:XX). X.XX

Los Laboratory As (X:XX) National (X:XX) Alamos both contract Government recently and our contract the David we in Group. Nuclear Naval mentioned, the Laboratory won

when we margin a from year the was see related & turn ago. sites, Corporate led I Please benefit backlog Revenue we second slide by with the the million Industrial fluctuations. in second segment. contributions the compared billion, corresponding increased no of think (XX:XX). Power (XX:XX) exchange Mining, Infrastructure segment, well million transition revenue Government $X.X we'll component. as important Expenses to the G&A reflect for on foreign as $XX (X:XX) $XX X significant to to to note fee currency million, the for that (XX:XX) (XX:XX] quarter quarter $XX as expense quarter it's to contributions recognize to these improved

X. slide to turn Now

for foreign income diluted Puerto we cost Difficulty] include in hurricane to currency Results And work efforts project in quarter, relating the out [Technical power a to impact $X.XX venture project, Difficulty] Rico million, as an joint derivative increases or the and fluctuations $X.XX. estimated corporate For downstream Mexico. (XX:XX] the reported of final to the [Technical quarter as net to at embedded non-recurring Fluor close for on well $X.XX positive related for of contributed level a a partner attributed our (XX:XX) additional per on do $XXX combined $X.XX related charge related share.

the from XX. provided balance some highlights slide have We on sheet

the for to was Fluor's and XX% cash turn billion, the quarter last So Quarter-end cash total flat if slide securities. you of quarter. $X.X balance please domestic marketable securities would to plus was approximately cash XX. marketable

Rico subcontractors of invoice us before capital fund and return complete. Our use position Puerto government projects domestic reflects legacy it working as our cash are our to its cash that cash to pays the can they until and in Rico, the Puerto needed

few want this and housekeeping expired to segment an registration file structure. we cover business XXXX This I outlook, with our XXXX shelf conjunction reporting presents audited our July. an renew we to X-K discuss In file at our I (XX:XX) also S-X (XX:XX) the will end a under that of XXXX, that evening, will results new Before shelf, items.

overall not financials classification. very in to restatement a this Nothing clear, just of our the Just (XX:XX). changed has be is our results,

wanted to also in to you our the world. progress We significant our closing plans (XX:XX) pension around out (XX:XX) alert

recall, might we you plan As pension U.S. back in settled our XXXX.

UK now pension plan in We settling was XXXX. towards working our frozen that are

future. to to future charges our on (XX:XX) expense benefit result cash We the just was While Settling will $X additional million, a in see don't eliminate expect UK this plans. our lower settlement in and impact defined expect have inherent this material this expenses we and risk position. settlement actuarial in plan quarter the for do small, investment

we how Finally, In the updating real slide this status to managing expenses. the well detail posted online as (XX:XX) G&A the out are power this we point in our a appendix, of I (XX:XX) as we've project more summary that find on presentation want and appendix our afternoon. estate added you'll gas-fired

you'll of (XX:XX) I'll Now slide on commenting be for our remarks second by to prepared so XXXX. kind, half if turn XX. conclude the my guidance

are to invest be NuScale (XX:XX). year for range foreign at maintaining exchange to-date, (XX:XX) (XX:XX) million after will XXXX rate expenses million limit $X.XX (XX:XX). tax expenses share. G&A are $X.XX lower Guidance earning or rate guidance and run year our impact per this expected than in $XX this we XX% any normal, higher quarter of the from million to per NuScale rate expense investment excluding to (XX:XX) the diluted We still of $XX pension expenses are (XX:XX) of in (XX:XX) and XX% a approximately assumes while fluctuations, $XX integration to XXXX

slide of to group X.X% (XX:XX) to to Power to to Infrastructure the and Government the for NuScale we & range. be Services to be in to X% turn X% Chemicals Energy range, you X% (XX:XX) & X.X%. in excluding anticipate If X.X% the Industrial, around to in X.X% be approximately remainder XX, the Diversified be XXXX Mining, margins

to final operator, ready As goals progress are take on in community. XXXX forward David hold that excited announce and point, questions. Day I With Investor to we're New We November Friday, to sharing with that, and our for XX. York planning look we're a to investor an our

Operator

Credit with good moment. evening. One will a question - LLC one Cook Hi, David, couple from you. I for one our Cook Thank Jamie and for (USA) come Credit L. Suisse. guess Suisse of Securities questions Bruce. first And Jamie

the And because year earning guidance it if range about $X.XX out I the second back the out quarter, in to to you're trying it earnings. between regards the implies I you're how and of the implies think $X you're half each back if about quarter. anywhere charges about in ex – $X.XX First, just normalized one-offs (XX:XX) earnings the we of I with (XX:XX) understand of I'm thinking the if if all all Bruce think guidance,

quarter? than quarter inflate run rate question and lower (XX:XX) So back that did second why (XX:XX) second $X half the much is second the over or a something sort expense. the to relates guys real estate new there's the like over slide I cost and of a glossed evolving it you program mean in savings footprint terms of looks here. corporate G&A My

could could a you see color, could square looks give much color how And little there's I'll lot XXXX? if provide (XX:XX) in time, if you and to of opportunity reduce the projects? NuScale G&A footage, more when come reduce to So do like try one it corporate problem then David down end we an on

Bruce A. Stanski

hearing little that Cook Okay, [Technical Difficulty] end prepared go questions - ahead I'll Jamie understand... LLC Suisse is your (USA) your (XX:XX) but (XX:XX) remarks. start. phone Credit Securities clipping in a the on L. and Jamie we're the bit Yeah, I

with I So line. there's the wrong know something don't if

Bruce A. Stanski

Okay.

the threw Securities we're but Jamie moving - we how that quarters of a north with midpoint. (XX:XX) it know we are of the everything run holding the give doesn't get Cook – there know are between the the the is guiding is ex expect math not you and out EPS the quarterly sense $X.XX in was half year. for second fall about (XX:XX), we're to two we half half? quarter half second will our in delivered because $X.XX (XX:XX) from parts to the of else (XX:XX) of implied second the to here. doing we know in we year midpoint. with the midpoint year last of of and And deliver Something our the year we're the the (XX:XX) first to (XX:XX) simply $X (XX:XX) there why L. But there still you of wrong the very what just in yeah we where going back like just in don't holding range two you quarter, is Suisse course (XX:XX) or with LLC the simply, half E&C fourth rate I from guidance quarters, with the of $X.XX But really were, a $X.XX to $X.XX into quarters $X.XX first guidance. in Well, make the $X.XX to us so (XX:XX), the comfortable Credit (XX:XX) in line talking don't gain We're where lot here, the the (USA) given that EPS is

Bruce A. Stanski

Jamie, Cook $X.XX or Puerto Securities to $X.XX of there can getting the guidance second was L. like Sorry, quarter? in trying out you figure or implies, that you're (XX:XX) down really (XX:XX) I Jamie but the at run add just dollar, the If repeat your that? (XX:XX) inflating going I (XX:XX) Credit rate are half Suisse it problem okay. I back don't why about the FX (XX:XX), and the the Rico, quarter I know, look If is so (USA) back year, I at second implied I'm and (XX:XX), something something projects, - apologize, LLC clipped. look earnings

Bruce A. Stanski

the Well, benefit certainly a second Jamie I'm in Suisse I'm LLC Cook - adjusting quarter, get the (USA) huge for FX - that. did we Credit No, L. Securities from adjusting,

Bruce A. Stanski

earnings don't Securities Puerto some contracts, earnings LLC expect Jamie like Okay. second basis, - We rate nothing second pickups a out. (XX:XX) as a We and we if see quarter, in inflating said. you lot in from any of as nice we so portfolio. the puts limited back there we L. add that's benefit margins, the closed it from E&C very $XX run here quarter or a we contract mining E&C did Cook out (USA) well the from Rico (XX:XX) the in maybe And the And had is Credit have takes – but as Suisse the of downstream? in million more

Bruce A. Stanski

And All the projects, then Nothing, LLC the Cook (XX:XX) how right, on special, Okay. problem comfortable? on cost sorry. [Technical David just - L. no. Credit Suisse (USA) Securities Difficulty] just sorry Jamie

David T. Seaton

the gone how the looking (XX:XX) what (XX:XX) process Difficulty] a rate. of do really [ph] [ph] we we reduce is always that to our [ph] (XX:XX) run about another we build We've of Houston footprint effort, existing through one We're at couple (XX:XX) the years last over feet we're over [Technical and so, we've (XX:XX) talked across terms of And Houston in will years, to so [ph] there in kind an what the to disbursed able undertaken; densification execution footage is stabilize maximizing our we've doing activities the (XX:XX) two next the million board. and XXX,XXX. been of of in count in that about facility we've that And few head then done is existing about going exit square facilities. [ph] we're And from X.X reduce square one.

we President as and On we're I'll So we weekly that the yesterday site. including of charge it not quarter [ph] the the that accounting (XX:XX) way continue resident made the start overhead focused have believe the us it. fire withstanding report that a the this the to reported we've that that had of sure available overstate the I that I'll [ph] those everything (XX:XX) a because it. making it of at was both perform. adjustment in that's us terms the we schedule, that first because sharp contingency we [ph] with labor The of projects, which call because (XX:XX) (XX:XX) Difficulty] (XX:XX) team handled been be. yeah group that and end hold supports reduction have out missed on a importance project, on power there friends as associated thing had and stands still my other that is schedules with we're in But can of this project by we [Technical we [ph] out is positive charge to with that announce assuming I is two at lights material almost (XX:XX) projects it had. would to the can't year which have and why

with in in that done. in the down took that completed we project is quarter. with On all September, we're and that expect project negotiations project the the write I again that But Europe associated relief but (XX:XX) customer in some (XX:XX)

terms end Suisse is it something quantifying issues are (XX:XX) you Securities L. So, in about on will footprint, (XX:XX) Are am December big of I cost be mean to these Jamie LLC real as out. I Credit Cook figure legacy this and we – the think behind get I (USA) savings? this? (XX:XX) I early? just talk estate - going David. (XX:XX) trying Is sorry, all too to am just Back to enough to up to us.

David T. Seaton

It's too (XX:XX) Our I probably of early. (XX:XX) June mid-XXXX. at existing lease it's Sugar We ground until ends Land won't XXXX. facility the break think in,

it – So, be queue. going to I'll Thank be L. get significant back you. (USA) it's won't appreciate - Suisse in Credit until I color. Cook the significant get to XXXX. Securities we Okay. Jamie LLC

David T. Seaton

Jamie. Thanks,

Operator

next from UBS. Thank you. Steven our And take with Fisher we'll question

Steven Michael Fisher

for there. would then the to (XX:XX)? just the Bruce, But back afternoon. there be just then special Difficulty] [ph] question for some was to Or conservatism if about I back half said Good want know at the that lower nothing (XX:XX) Thanks. is you margin do I come back or rate? quarter, the [Technical E&C you of the year because add margins much implied in why

Bruce A. Stanski

margins (XX:XX) very quarter see in the (XX:XX) second quarters. in of lagging high from that in Well, been prior that Steve, have E&C margins you kind

our that's the think into still future look (XX:XX) reasonable, are X% for X% we we half we so. to very range as sticking So, second (XX:XX) quarters, to forward and

David T. Seaton

this look we've you doing we've I we've model. talked integrated we've But the believe the through the cycle, the about that I solutions, back talked we're things margin and stay asked, forward we're I the we as early going of X% don't and X% side we before in doing next E&C? margin we've years done cycle. know to future get (XX:XX) projects going year after. this when we're supports and to what and run been on to change about the back investing that because get And to higher the that guys of pieces think And that of I you you year, ago do that as a were next yes question And was things done, the you'll now the ever subcontracting get X%, range as we into four that and I at said, in believe think into

Steven Michael Fisher

light, [ph] what forward, (XX:XX) deferral (XX:XX) That's you bookings E&C related, kind The win last to a then extent so And trying is? about project bit a helpful. of there talked Okay. how Difficulty] going [Technical to much were potentially lower rate makes what with out are the have that? you we can decks bids seeing all really some likely on of on equally rates aggressive that still that others you're the projects cleared still And focused there? you competitive lower be sort or just is now

David T. Seaton

Yeah, feel good where we pretty now. sit I right about

had shift quarter-to-quarter You know, from some things made. still, decisions we've some being

because of I a trepidation our customers little there's of think, on tariffs. bit

You – we the impact (XX:XX) what most it the know, In studies we've could cases, those know impact model. that doesn't done client's be. what and

in – confidence quarter solid I'm and and in big fourth our hitting will I think and line quarter in So those sorry awards in win high some of suggested sight (XX:XX) more than two A third second pretty quarter quarters. prior discussions. maybe the numbers I've be that good is rate

had [ph] maybe positive Difficulty] feel decisions we and first stern change close was alone million in – little was (XX:XX). see XXXX, the said we're move and backlog, to of But made see that mean where about I awaited But had over today confidence and reality gas kind as headed a on the it, (XX:XX) stronger if I [Technical $X going long think XXXX, quarters in than billion as billion warning. quarter pretty good in that [ph] are we being you is million (XX:XX) is I too maybe to bit to about (XX:XX). a edge last prepared that this and my mining backlog when it go go of I talked of (XX:XX). So the the we're few $XXX a we we've and remarks, other time year seen the through since next what this oil you're stuff. beginning projecting in the we're (XX:XX) of I in and And trajectory, $X in cycle some [ph] $X very same we've that change

it's I and believe you tremendous. do Government bit little able think look understated at (XX:XX) very the the percentage, is bigger on been with a in small group in to cycle is is were recurring has grow what [ph] of government and again last but, what earnings, we earnings our this on allows which with usually focus working laboratory community our very, than acquisition the we and cycle. just recurring (XX:XX) with revenues [ph] growing business in the And a us we've been that Stork to

last the bit the see are of it's so in little more us. quarter, that than sensing a you're we correct optimism awards if So of because can front

Steven Michael Fisher

Okay. good very Thanks to much. That's hear.

David T. Seaton

Thanks, Steven.

Operator

with Thank next from you. Citi. Kaplowitz we'll And Andrew hear

Andrew Kaplowitz

guys. Good afternoon,

David T. Seaton

Hey, Andy.

Andrew Kaplowitz

compare was lines, (XX:XX) but LNG, before Just those know, this can when year, (XX:XX) the right. you maybe for cycle when of good, to and following infrastructure kind you other is this you cycles, I guys visibility mining, (XX:XX) but look think, you bookings toward along I at us it perspective, give mean, asked

the and Difficulty] be work over cycle, mining three you than book more XXXX ultimately you next cycle. the (XX:XX)? those [Technical XXXX to able years, XXXX Do refining you're at XXXX look think the So going know, cycles, PetChem to if we cycle,

David T. Seaton

capability, think last think, to it eighth question Yeah. you I line Andy the skill that we capital our bad our on been up. I'm today. downturn done yes. seen great bigger sorry, we've cycles. is what (XX:XX) year I block for answer a terms we've In yard the maybe [Technical Difficulty] in much got supply of I look is way and the eighth the absolutely the around (XX:XX) chock-a- last in began in a weeks be in were to two capability, chain, construction opportunity this (XX:XX) board. the (XX:XX) ago fabrication was cycle sets in think, modules you I'm at was cycles you go for was we're we did solutions to walk and January, bottom power we what on short got signaling – (XX:XX) XX well, that some breaking if be. your Al-Zour of the of in fitting But (XX:XX). we've see across the just why they're out site and call, call not a plant. sailed it full than company And There telling perfectly bottom and the but can I just May I we've spending China And in the [ph] and these did successful going integrated we you the how doing previous time, our we've year

is are offering that's the are surety quality our this in (XX:XX) next cycle benefit is that schedules. out, competitiveness customers of the added our offering proving out. And and I look and when going at to proving of of for cost of that only you in projects and to us looking be that, us only the an the not terms So but front think

going quarters some So, just invested better of years, performance have really lessen everything a that we've that again our just we've surety in and in I dampened like terms – bullish this our – done forward. risk, comment, you and insight projects (XX:XX) it's over on in shame good the two legacy in, power noise on that Steven's pretty I'm to last what

Andrew Kaplowitz

So, I know that there are connections.

because over concise hit any get ago. more Do let Europe to project milestones on question. issues that time of sort me the you checked have same ask you on it's in you think So I (XX:XX) that a some just hump that there

David T. Seaton

the their in stands that in operation We're nothing (XX:XX) in September. a startup in basically to answer way startup this the of quarter

Andrew Kaplowitz

Thanks Okay. guys.

David T. Seaton

you. Thank

Operator

And question KeyBanc. from will come our with next Tahira Afzal

Tahira Afzal

Hi, folks.

David T. Seaton

Hi, Tahira.

Tahira Afzal

elements So of can problem us only there's there's David or who a maybe integrated E&C more for can makes does that but (XX:XX), from really risk. effect are solution that? you prevent names the project domino about something two control the I throughout help that within talk Is really like if maybe control integrated a there And what highlight yourselves, cost not sort industry the not you solution to see increase. a the anything once help a there's stuff and bit for one model

David T. Seaton

about on Well, the Gulf is of in else. or key I my in prepared East site location. United the skilled Coast, people, the the And off limit world, whether of where crafts it's capable Middle job comment just the think you anyplace the there the labor regardless of the are remarks a States, because is X%

one of put in is and its safety controlled the throat risk this technical being of a environment terms, it. one a prepared and things the go terms be other in so with is and things that So to able quality mitigations Maybe to choke.

We we've in and of something dots with. the one in of things cycle has manner middleman no stay every company feel looking invested timely that delivery. more like gotten to and they problem that's customers got deliver sequence. on, one a in for got look And that's to, no done this there's and most ability can negotiate more to looking connect sure that's out of what rates the that get – what And we've there's are more – and unit In customers total for the we're we've why the these can and assets. projects we focused make that Our looking sequence. to our past are I

Tahira Afzal

Right.

David T. Seaton

the (XX:XX). stay equipment schedule delivering some some reasons the is lots our fault cost customer, and and sure in And to is is (XX:XX) biggest the you risk supplier of mitigator making own sequence of some why, is

Tahira Afzal

actually you helpful. That's David. in for? I positioned change just Woodside terms U.S. of where out in of you're I And LNG Difficulty] seeing some better feel saw (XX:XX) seeing pretty that some be what guess one there, projects Are does and of out Got the they it, you in that positioned. reshuffling developers to want pulled recently David. [Technical the you're

David T. Seaton

doesn't it at targeting No, what change all. we're

some be to and Either change change. of synonymous to going so focused changed in in look think certainly LNG. almost I abnormal to completely see offshore and exploratory going it's percentages other companies out on. it don't with the as the the market the ones somehow wells, that of always (XX:XX) now way and see at partners where or that flow, You doesn't you're and LNG going are runs, beginning and I a the we're leap There's it in ebb the

Tahira Afzal

Got it. David. Thank you,

David T. Seaton

Thank you.

Operator

And next, with Sachs. Jerry from we'll hear Goldman Revich

Corinne Jenkins

Corinne on is for Jenkins is this Jerry Revich. Hi,

assumption would I like backlog, is bit it some big So you billion mining projects. you those could little expecting talk the pretty that to hoping a billion, to $X ramp? talk so sounds I was more expect between be hoping how have $X quickly and could my you're about was you'd about

David T. Seaton

you announced project. large that's (XX:XX) know you the yes, are replacement Quellaveco, got very lot that on. there. then at And – one that what projects you've that a been Well, a of It's we're know out capacity is type

not again of a that projects commodity than in those is capital it's of seen the price the be right past. this or very of In pushed leading seen we've We're maybe large lot schedule and the things year. most the in I to way. copper needs longer I to projects have on kind downside. think we're of and this a of been just the Yeah, cycle You've mining have, because like I this mean kind tracking. tracking going

Corinne Jenkins

a just infrastructure a or if that seeing And public us private one-offs? the Thank so you side, tell they're work that's of just then couple on partnership, could couple that if projects you. you're of of you kind boast

David T. Seaton

in lot side to money has you both said, infrastructure even a been cases going sitting private model. to these to of approach is think our on that can't But state or bill, as sign to used be to private Congress be I get I go go the a federal studies wants them. the afford things. to No, (XX:XX) partnership public think these them, fund got can't I pass governments, what seen government, fund pretty are if to they done. approach, And as mean, about to able sidelines they've he's waiting the so good you've leading I've before and the there PPP the he clear

Gordie that doing all us probability continue expect big right move (XX:XX). see Howe, pretty are that as or these financial on can things a move business LAX to you those we're there. now So starting closure to is forward. people the high But on with things we schedule that several And kind to programs grow give going that more that they of is confidence there's to

that Now there. is opportunity and ducks the can a pass a I supersize their get row if the U.S. infrastructure government federal think in bill,

Operator

Andy from Baird. next question will come our Wittmann with And

Andrew John Wittmann

piece reported calls or Great. my have looks the segment. but says second quarter, question. recognition effect that stick the it's Thanks most million that impact $XX to in in analysts looking that In recognition "gain" in and revenue the didn't about profits, from a fell the or XX-Q is the basis material your a supposed really missing E&C that revenue it pre-tax for, (XX:XX) level other on revenues the on first of like the your The around change half? to taking of out for

David T. Seaton

Yeah.

recognition, in $XX we where seen versus way. way And from have you've current way narrative little new comparing way we're it the million (XX:XX) it's a Q column. got (XX:XX), in table, a and revenue year-to-date the As that old old and a in then rev tables year-to-date over we're rec quarter new our

people So, in gets retained with our $XXX as a of companies revenue. consistent the rest on beginning, at And re-recognized E&C our then million. you recognized reduced by we earnings industry about that's what the remember, basis

margin then you but it's construction smoothes the out. So, burn engineering and slower don't the get a it high

quarter. So how predict (XX:XX) of challenge, each to that over plus The $XXX comes million what is course, will in burnt X be off years.

quarter, $XX (XX:XX) were in First are quarter, $XX.X two of of million, the quarters we million then getting (XX:XX) that. $X.X the reflective in this $XX million very year to table. first and second the In million

see each rec how will it grow goes just pick on. we of rev So, burn matter will that time up. about contracts we It's how as come and quarter much that through a inflection our and

Andrew John Wittmann

Yeah.

about the flat? or the be might the year second half in revenue quarter. are (XX:XX) all sense that (XX:XX) negative bit but but think EPS that don't effect a a given trying that here the that of in Are people guidance? it understand you expecting expect be We makes the or the in deceleration So the is, material are material effect. in to I to to it's Is better? said I what's guess to year you thinking you – of you that for maybe first got the the lumpier, question going that second quarter, How the missing piece

Bruce A. Stanski

I rec $X.XX call, said rev first that in we're to the the this Well, is overall guidance (XX:XX). now rolling quarter impact And into our our of $X.XX of year.

Andrew John Wittmann

a recognition? right, all expecting in third revenue fourth Yeah, and you so. (XX:XX) quarter the are Right benefit

Bruce A. Stanski

(XX:XX) provide again, rev impact giving quarter. kind quarter-to-quarter. so burning we'll that away guidance. see guidance overall into by we because quarters of up from it the why it Well, (XX:XX) [Technical much rec off fallen on the rolled our changes I've Difficulty] That's to

Andrew John Wittmann

payment this somehow [Technical come due just (XX:XX) Okay. the I'll quarter venture quarter that was a or – Difficulty] summer, was delayed to – was payment in Chinese is third be going there fabrication It is my were next question didn't sometime or thinking the on it is we that changed? been is that for (XX:XX). around it

David T. Seaton

can it the If into of not Basically is end we the there next could be the the we've much been it until the year. – as but as an invest coming But slip towards It's projects will year, delayed. of but towards year. in. invested investment come next end

Andrew John Wittmann

much. thanks Great, very Okay.

Operator

hear Michael Thank with you next from Dudas Vertical and Research. we'll

Michael S. Dudas

start everybody, Difficulty] run [Technical up opportunities and maybe some speed of where David. awards really if XXXX, like just FIDs booking the market do If to projects energy saw their to engineering the the might the clients because heat of might finally stays come going they're capacity, you XXXX through accelerate anticipate evening, (XX:XX) Good capacity that early XXXX – things out strong where in get and through? up and we get pushed these cycles economy point to could we

David T. Seaton

Michael, think so. I

last As turnaround do that on side they still kinds new pushed of maintenance on to to both six, of reserves, years. things the side, the as their looking well their to get seven I've you the major the capital to they've as petrochemical And the product right have the terms side. said, spending into for (XX:XX) shutdown, mining do, they're bogeys things if in same meet and back

in had. feel it it peak point it available those more to in have was a last than big capture mean I But there's One there's back got up, share. going are the be fair – our (XX:XX) and [Technical this the little cycle just structure of I cycle, discipline the engineering the materials if good terms to a is, to I pretty than a equipment, point a hoping Difficulty] But lining now I peak. position cycle there there's period a really think commodities, out that building I Hoping there signaled of (XX:XX) about put which lot it. little we of in our longer and on of think that to you to last that it's projects bigger I'm before. (XX:XX) that doesn't fears more was, overheated

Michael S. Dudas

solutions in new couple mitigate those benefit and if actually and you that But model, a up integrated environments with your of your years? can pick

David T. Seaton

plan. the (XX:XX) That's

Michael S. Dudas

Thank you.

we Follow-up off where – is, answer. and press and the NuScale, of on on take I seeing? I've prospects No the on month been temperature you're some expenses to visibility good there's we're seen how interesting getting any relative the that or articles in – last feeling your timing better Secondly some stand, two

David T. Seaton

lot Well, people are. to talking a paper something got point NRC the requirements reactor (XX:XX). Difficulty] support bullish about being of [ph] they've built a I'm pretty really piece small equipment to We've what matured but (XX:XX) and certification. and technology tested got, they've a There's [Technical that's I [ph] of about the we only where got (XX:XX). on we're mean all module actually design

what as getting has what that, we towards did starting position that but in we're through outside I first Department headed about team investors is terms that and there's phase is [Technical with (XX:XX) good to meant for. I been (XX:XX) we're be where pretty [ph] said which do doing are And all show (XX:XX) NuScale match, expected, feel on replaced quarter in we're the very of of was to think actually helping [ph] that, by investment to of a and us doing I we expected it. our interest. that And looking we're puts So a what said peaking. and that Difficulty] how as DoE lot Energy The pressure supportive of others put I that's last (XX:XX) this and the I

good much that and we're [ph] So, our – for to I (XX:XX) less significantly how schedule, willing be what XXXX, pretty on not say it'll less. feel I'm but

Michael S. Dudas

take this X.X under wins you. year. I'll Thank David And,

David T. Seaton

is Who by way? luck. Good your the quarterback

Michael S. Dudas

I Cowboys Thank That's the you. mean.

David T. Seaton

Sorry.

Operator

for you. with we're of I audio And apologize next Kaminskaya question the of some our having. Bank we'll from take Anna do issues And thank And America.

Anna Kaminskaya

Can next into on double-digit revenue, if you color it's on Can comment growth. burn rate we growth with XXXX kind I'll Hi kick look provide can prospects, projects, guys. backlog off to backlog? on year? double-digit around be ending of revenue at be growth. I pipeline Maybe comment your the growth should backlog can you Any a you quickly year don't it know convert I if of expect but just if with of double-digit willing kind you'll you how

David T. Seaton

not Yeah, approach into going The smoothes rev rec that. get too things. I'm new deep probably to

(XX:XX). have in did construction margin times, So we than previous which been doing the engineering [Technical [ph] would early Difficulty] (XX:XX) the

up these would categorize and previous did cycle, I last more [ph] projects and than are quick won't it, the I ramp complete fast starting that cycles. guess burning is way in we are percent quickly the So peak match (XX:XX) but we

think type Day. Investor I you we'll more I that detail our So, but good of double-digit growth we wouldn't and predict have got story a obviously we've when of give

Anna Kaminskaya

taking of free of out flow cash the projects of I just rest maybe than it coming year? is the it cycle, outlook been do the some could And the project cash the just weaker some where cash expect the company. half, Is you would a in second How bit it's helpful. what free the ramp be just free your have for expected. through on flow. That's are the to of Any of comment flow you switching problem little

David T. Seaton

income. straightforward, free So equal net Anna, cash to pretty is flow

(XX:XX) in second Difficulty] income our [Technical see growing, [Technical burn in Difficulty] coming see really [Technical help focus earnings (XX:XX) cash our going But that as and that's our we certainly as (XX:XX). in net be the (XX:XX) that's growth [Technical both all and half build the to revenue our So going Difficulty] (XX:XX) U.S. so in why to Difficulty] one cash balance. track well, we're free (XX:XX) our That's we our free – and our you with even is and cash the see to that's right us. providing in goes [ph] visibility year along (XX:XX) it cash disclosures where MD&A increasing here no, more [ph] into [ph] on XXXX. as But the we

Anna Kaminskaya

conversion above upsides potential opportunity of with upside some in second kind XXX% are come of the on to net the or to the cash your to relative for The income projects, prepayments what downsides half? free flow

David T. Seaton

the balance [Technical big [Technical on very now, projects, free of that lot do. upside our that customer planning that these But much flow. but win (XX:XX) cash for in customer cash drive see and do a we're advances keep earmarked Difficulty] the And of because our projects, Difficulty] we really not advance we does right you'll the we (XX:XX). as Clearly,

Anna Kaminskaya

Thank Great. very much. you

Operator

come question from next Chad the with Dillard Bank. And will Deutsche you. Thank

Chad Dillard

Hi, evening good guys.

David T. Seaton

Hi, Chad.

Chad Dillard

Hi.

opportunity it you mining gear seems multiple trying shared the how is gas. kicking could Canada get sense same actually I'm and LNG exiting thought Should comfort into wondering cycle to $X win. the you here you the (XX:XX) level if backlog arise? LNG about with for the billion. I think projects. just oil the you the David, So, a also full with was LNG carrying where is year $X do billion for to to Then thing like

David T. Seaton

that that with starting you that you're to over to a (XX:XX). think I'm backlog It's at $XX The for available XX that Yeah, the billion. number (XX:XX) that in here I the past But us. we think to you to not can regard yeah, that. it big LNG, double Difficulty] in growth With [Technical this grow with percolate we shared peak about I today, was think remind this previous And win, with E&C is give cycle. win right. but significant cycle. us is I I sits we're about teamed going

to So than Difficulty] this not backlog I with resources, but little (XX:XX) and Difficulty] have their They resources cycle. number cycle though, – going bit we'll time just was as think the a one (XX:XX) [Technical or certainly be X continue last I what at more said in I'm it's same not [ph] [Technical the the we're longer to had into (XX:XX). leveraging cycle. time. peak know uncomfortable X the their Fluor don't in get we I

as Canada, So, got when will cycle people to you become to process. about XX available into XX-month design an start and think example, you've nine LNG about those months the

We've their can thing you about on brightest. do based time do timing, that in percent Fluor same of the But is have as good the big the resource several the and backlog again and over again. this the (XX:XX). (XX:XX) those projects, you could you our proven completion, as So when have attract as fits we'll we that best long history see and in at cycle

that – bigger of in us added with discipline bandwidth some had previous capabilities and that the we've of think the in we've the the I chain supply construction, around better this systems got give we've design we cycle have terms that cycles. fabrication, predictive than changed, in tools

Chad Dillard

you're the how you're services, starting to to whether just diversified timing that you're down tick seems perspective? on green to for continues about from And or quickly business. any really picking up bookings thinking backlog whether curious – business just the And I'm close shoots, that bottom helpful. it and That's like in see

David T. Seaton

of of Flour, [Technical (XX:XX) on the businesses would the some Difficulty] within the Fluor [Technical historic Difficulty] (XX:XX) side. I Stork, Yeah. the and some of

in most and [ph] a mentioned, everybody major in mining and in else of projects, turnarounds (XX:XX) [ph] And and I those and terms maintenance those spending. uptick As tremendous of (XX:XX) we're seeing stopped gas, shutdowns. oil customers those

the (XX:XX) frankly, [ph] XXXX, them as I up. pretty those I come see rapidly grow we'll think XXXX, XXXX, So projects

that lot be customers as allows model well. that there's of And assets think need know, to us As our to on do you a business the those ground I for maintained. that

Chad Dillard

along. pass I'll it Thanks.

David T. Seaton

Chad. Thanks,

Operator

further over turn We'll for final no it the queue. are the there comments. in as back And questions presenters to

David T. Seaton

close us operator. out you, here. I'll attempt Thank to

this efforts optimistic as to trough measured moved, across pivoting they're these (XX:XX) can economic said of a from we As with second my They value customers, I've the their cycles. the is in of cycle range (XX:XX) but half of XXXX into in conversations of that number forward. the projects there's the the move deliver some multi-year signs

They Our clients E&C than lowest just [Technical bid. and they're on EPC of than firms looking engage, being in thoughtful are but the deliver cost focus into looking schedule. that an provider, and which they at characteristics Difficulty] in for (XX:XX) more other in capability they're functions, terms strong (XX:XX) can the

We [Technical We in are the appreciate greatly to we on to progress and (XX:XX) all prior the past transactional (XX:XX) for cycle from company and next approaching innovative your thank transformed solutions the a work. cycles. than and have (XX:XX) to in every collaboration model the day. which support this made reimbursable today in Difficulty] Have differently we a supports allows you years our company call and bring I each Fluor. project good participating few

Operator

And that for you Thank concludes today's conference call. joining.

Jason Landkamer	Fluor Corp.
David T. Seaton	Fluor Corp.
Bruce A. Stanski	Fluor Corp.
Jamie L. Cook	Credit Suisse Securities (NYSE:USA) LLC
Steven Michael Fisher	UBS Securities LLC
Andrew Kaplowitz	Citigroup Global Markets, Inc.
Tahira Afzal	KeyBanc Capital Markets, Inc.
Corinne Jenkins	Goldman Sachs & Co. LLC
Andrew John Wittmann	Robert W. Baird & Co., Inc.
Michael S. Dudas	Vertical Research Partners LLC
Anna Kaminskaya	Bank of America Merrill Lynch
Chad Dillard	Deutsche Bank Securities, Inc.

Fluor (FLR) 2 Aug 182018 Q2 Earnings call transcript