Fluor Corporation (NYSE:FLR) Q4 2019 Earnings Conference Call - Final Transcript

Sep 25, 2020 • 08:30 am ET


Fluor Corporation (NYSE:FLR) Q4 2019 Earnings Conference Call - Final Transcript


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Q & A

[Operator Instructions] We'll go first to Jamie Cook with Credit Suisse.

Jamie Lyn Cook

Hi, good morning. Good to hear from you guys, finally. I guess a couple of questions. One, just this -- the announcement that you will no longer be pursuing fixed price competitive Energy & Chemical projects. I guess just to take it sort of a step further, why even consider open book lump-sum projects and why are we considering exiting fixed price work in the segments outside of Energy & Chemicals, just sort of given the problem that we've had in Infrastructure & Power or even within Government on lump-sum projects?

And then my second question. Joe, congrats on the CFO role. Two questions to you. What are the metrics as a CFO that you are going to use to sort of evaluate Fluor's project relative to how prior CFOs looked at the business, whether it's more of a return metric or backlog or earnings, etc.? And then my second question, just based on the commentary with regards to what you said about cash flow through year-end, and that assumes funding problem projects, etc., can you just give some more parameters around what you're assuming with sort of the negatives and positives associated with cash flow, in particular, funding problem projects? Thanks.

Carlos M. Hernandez

Jamie, good -- good hearing your voice again. Good talking to you again. With respect to, say, lump-sum fixed-price projects, as we said, we're only going to be negotiating those in the Energy & Chemicals. We're not going to bid against anybody. And our clients are receptive to that. In infrastructure, obviously, we cannot bid competitively lump-sum projects, but we're only going to do it in a very, very selective way.

We're still dealing with legacy of Infrastructure projects and we've announced some charges on those projects. But I can tell you that nothing has been signed up since May 1 of 2019 that does not meet our very selective criteria. And we've learned some lessons, obviously. We're going to be -- we're not going to be bidding projects where we don't think that the client can properly manage the project. In terms of the rest of the business, we're really not doing much of any lump-sum work anywhere else. We're not doing it in Government in any significant way. And with respect to Mining, that's a primarily a reimbursable business. So we've really narrowed the scope of lump-sum work across the business.

Alan L. Boeckmann

So, Jamie, this is Alan. A very good question. I think you have to look at the last couple of years. And I think as we went through this investigation, you'll see the words in our 10-K -- it was a very optimistic view of being able to bid and not a great follow-up on strengthening our risk assessment criteria. Fluor in the past and in lump-sum projects where we get the opportunity to work collectively with the client, we take the risk off of the table to pursue it in a reimbursable cost fashion