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

Sep 25, 2020 • 08:30 am ET

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

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Presentation
Executive
Joseph L. Brennan

Through the end of June, new awards were $6 billion, led by projects in Mining and Government. This was up slightly compared to the first half of 2019, with a significant majority of our awards being reimbursable contracts. Preliminary revenue for the first six months was approximately $8 million, including the Government group, which is down compared to the first half of 2019.

Cash balance at the end of August was $2.1 billion, and our available domestic cash balance represents 35% of total cash.

As noted in our 8-K earlier this month, we decided to undertake an interim impairment test due to a steep decline in commodity prices and the impact of COVID-19 in Q1 2020. As a result of these impairment tests, we anticipate a non-cash impairment of approximately $450 million to $475 million in Q1 related to the impairment of goodwill, intangibles, equity method investments, assets held for sale and other equipment as well as losses associated with reserves for changes in client credit risk. While we do not anticipate additional impairments outside of these charges, we have yet to see the full impact of COVID-19 on our business, and the need for other balance sheet adjustments may arise.

Moving to capital structure and liquidity. We continue to believe that we have ample liquidity to meet the demands of current projects and future prospects. Since the last call, Fluor was downgraded to a non-investment rating by Moody's. While this was unfortunate and counter to the actions we are taking to stabilize and improve our credit rating over time, it did not have a significant impact to our operations. I also want to point out that we have amended our credit agreement to allow us to complete our filings by December 31. In early August, we received a notice from the trustee as it relates to the timely submission of financial statements for our bonds, while the filing of our 10-K and our expectations as it relates to the timing of the subsequent 10-Q, we intend to be compliant before the end of the cure period.

Before I discuss our outlook, I want to provide an update on a few of the financial initiatives that were addressed on the strategic review call last year. In 2020, we have continued the prospect -- the process of monetizing our investment in AMECO, our equipment rental business. In the past few months, we sold our operations in Jamaica, closed operations in Mexico and sold the equipment rental business owned by Stork. As for the remaining AMECO business, we've received bids last month and expect to make an announcement on next steps in the near future.

We are continuing to progress on reducing overhead expenses across the organization. We have accelerated our cost reductions post COVID and expect to exceed our previously disclosed -- disclosed run rate of $100 million in annual savings by the fourth quarter of this year. While our initiatives around P3 monetization and real estate have proceeded slower than