FLR
#Thank you, <UNK>.
Good evening, <UNK>.
That's correct.
Man, if I knew the answer to that, I could retire.
You and I could go to all the Giants games we wanted to go to.
Yes, <UNK>, that's a great question.
I'd just make two comments.
The first comment is I'm hearing from many of the oil and gas customers that $70 is the new $100.
And I think that what you've got is some stability in terms of oil price.
It's volatile; yesterday it was up 6%, not sure exactly what it ended up today.
But I think the oil and gas companies have gotten comfortable with the fact that $120 a barrel isn't something they should plan anything on.
So if they are thinking that $70 is the new $100, then they're planning on something that's significantly less than $70.
Now, it's taken time, and the second point I would make is in this process, these customers, and I might risk getting in trouble with some of them, but I think some of them would tell you that $120 a barrel made them lazy in terms of their capital decisions.
So they are trying to stepping back again, as I said earlier in what are those priorities and what is the actual need from a capital perspective, making sure that they've got that capital efficiency card played within their program.
And then slowly but surely moving towards FID.
So I think they've kind of ---+ the deep breath has taken place.
But they also see that if they don't keep doing, particularly in the upstream, some of these programs, that, you have got to think about it.
Some of these programs take 10 years from the first test well to actual production.
They can't wait much longer.
So that new statistic of you pick the number, I don't know if it's $50 or $40 or $35 or whatever the number is they are using in the models, they are clearly using a lower number.
And many, many of these projects that we were pursuing made sense at that new number.
But it needs to be reconfigured, and we need to ---+ they need to let us apply some of these things that we have learned in order to get those project values down.
So I think we're in that shakeout period right now where some things are slowly but surely moving towards FID that are in the upstream sector.
But that's just one piece, as I mentioned.
Refining is doing quite well, petrochemicals are doing quite well.
There's power projects in front of us.
There's infrastructure programs in front of us.
So it's not just a one-trick pony fourth Fluor when it comes to upstream oil and gas.
Hello, <UNK>.
Cerro Verde in Peru is one big one that is finishing up on the last of the big mining things that are there.
That's really the only thing of any consequence that finishes next year.
Of course it is an estimate; it can be higher or lower.
The biggest variability of it is associated with equipment demand.
So in terms of projects moving to construction and having demands in that regard, we certainly expect growth.
We don't expect a lot of growth out of mining at this point, as we've talked about, which was where certainly a lot of the business in the past has been associated.
The other part of spending is on the more corporate-related CapEx.
So to the extent we have buildings for our own use that we invest in around the world is a demand for capital.
We make those decisions as we go through time.
In some cases, we have options to purchase and that sort of thing is embedded in that number.
But that's one of the reasons why it ended up being something different, at the end of the day, it might be more or less depending on the circumstances and what we decide to do from a standpoint of lease versus buy.
I think, obviously, from a historical standpoint, our burn relative to backlog has been higher, but that's almost the new norm now.
So we will look at it at the end of the year, and we will actually publish [just take] as part of our 10-K what we expect the burn rate to be and the backlog at that point in time.
I think it's a little early to say right now, but it's probably going to end up being a lot like the way this year's was in terms of how it played out, in terms of the relationship of the revenues that actually burned out of backlog.
I don't expect anything real different, I don't expect ---+ I don't think there's any more risk to it or any less.
The stretch percentages are consistent with prior years.
The burn's been low.
It was higher in the past; it's lower now.
I know there is a lot of conversation about what might be in there that is causing that, but this by the nature of the projects we have being very large and very long-term in their execution, you're going to have some slower burn.
Well the ---+ based on what ---+ the same things you read, through count should be about the same in Afghanistan, so it would be consistent with what we see this year if there is no other LOGCAP available to us.
We did win the call-off contract ---+ one of the call-off contracts in the African continent.
But in my conversations with the Army, they still feel like they are going to have a pretty significant presence in Afghanistan.
And if you read the news, we're probably going to have a few more people in Iraq and potentially Syria.
That creates some opportunity for us as well.
That's right.
We're following the military and the deployments that they do.
A great example of that was the Ebola scare earlier this year, and we were tasked to build facilities and the like for the medical ---+ US Army Medical Corp and how they dealt with controlling that epidemic.
That's an example of where it's not just war fighters, I guess, is what I'm getting at.
There's also some things around humanitarian care that the military gets the mission for and we are there to support them.
No, we don't get paid on oil.
I wish we did sometimes.
No, that's just ---+ our contract is to manage of facility.
The US government is going to determine whether they sell off part of it to create some cash flow for them for other purposes and then refill it over time.
That's really doesn't have any impact on our profitability.
It's certainly in the discussion.
I really don't know what impact it would have on the plans that are underway or certainly the ones that are being suggested right now.
Most of them, there is no ---+ to my knowledge, I don't think any of the ones that are in the next wave are naphtha crackers, but I might be wrong in that.
No.
I think the more interesting thing is who's going to be investing in the US in ethylene.
And it's the traditional players, but in a lot of cases, they're partnering with folks like the Saudis and the Chinese, and I think that helps us because of our presence in those other places, in terms of building those facilities the client relationships that we have and those types of places around the world.
Absolutely, we're well down that road in terms of standard designs, and in offshore, it's all about weight and reducing weight as well as the benefits that we are providing in the supply chain of all the commodities.
So we're well down the road on that initiative.
And in fact, that's what really started for us about four years ago, so I think we are well-positioned and aligned with our customers.
Thank you.
Well we work for the US government and the British government in that space, and we are continuing to see opportunities in the Department of Energy space, if you will.
Some of those big programs are in the process of being bid, and we're in the process of getting extensions in some others.
So you're going to see in terms of DOE business some lumpiness, just because of when those things come forward.
There is some of the ---+ of one of them in this quarter but it's just a bridging period before we could take in the full extension.
So there is an example where it was a little bit this quarter but a bigger number coming later, and that's just in one facility in the DOE space.
So there's growth opportunity there, but is going to be tough competition.
Everybody has teamed up with one another, and it's pretty fierce competition.
In terms of the DOD, they are doing the same things that a lot of the private sector is doing, in terms of cost rationalization, some shutdowns, being more competitive in terms of how they provide the service to the military.
So some of these base contracts will be coming up, and it will be more based on best value and how much money you can take out of the endgame, not just the rate per hour for an individual.
But then there's also a fair amount of deployment bases that are coming up for bid during the next two years that we feel like we have got a good position to deal with.
It's going to be a lumpy thing.
It's not going to be as big as it was at the height of LOGCAP in Afghanistan.
We've said that in the past.
But it's a good steady state, almost annuity-type business that provides some of the underpinning of the Company, and it's for a pretty good customer.
We continue to support our customer, and again, that's one of those that has been rationalized and poked and prodded and re-estimated.
And we're waiting on our customer and what they want to do next.
But we're still supporting our customer there.
As you know, they brought a new partner in.
The new partner had new ideas, and they are looking at we going back to some of the fee documents and incorporated some of the new partners wishes.
It's going to be a slow roll.
Our level of effort there has been low over the last year, and we would expect it to be that way.
Well, they kind of had the whole scope before and they have got the whole scope now.
We're trying to figure out exactly what they will maintain and what they will ask us to do for them.
It's a little too early to say.
No.
We were anticipating some gain from this transaction as it was developing.
When we had the second-quarter call, we were pretty clear that we thought it was going to be at least $40 million, which assuming the tax rate played out as expected, would ---+ or at a normal tax rate would have been $0.18.
In the call I said there's some things to be estimated, including the fair value of what we are retaining, which under GAAP we were going to be recording a gain with respect to.
And that was something we didn't know exactly how it was going to play out and that's what produced the ultimately ---+ the gain at $68 million relative to the minimum of $40 million.
So clearly, the $40 million we said was in our guidance coming in.
Then after that it was a range of possibilities.
It obviously ended up playing out at $68 million.
By the same token, as I already said, we weren't planning on having any problem projects.
So there just ended up being an offset in terms of the circumstances of the quarter and the year between the extra gain that we recorded on the Spanish venture and then the one power project.
From a foreign exchange standpoint, there was a slight negative effect in the quarter; it was about a $1 billion negative effect on backlog.
On EPS in the quarter, it was about $0.03.
I think last quarter it was about $0.02.
Other than that, and so it's been fairly small and we're not projecting anything significant on a go-forward basis.
We did have a lot of natural hedges and specific edges we put in place, and we would assume that those continue to play out to be relatively effective.
Thank you, operator, and thank you to everyone who participated on our call today.
As you can see by our results this quarter, the oil and gas group continues to perform well.
Customers with high-quality projects continue to move forward, even in a tough environment and even as long as some of them are taking to get to FID.
Myself, along with the rest of our management team, have seen a number of cycles like these over the years.
We know that it's important to remain flexible, and the decisions we have made over the past few years to cut overhead costs and develop a better solution for our customers gives us just that.
As we look ahead to 2016, we see not only some headwinds but also pockets of opportunity.
Our ability to deliver in any environment has been proven and enhanced over the last few years.
With that, we really appreciate your interest in our Company, as well as your confidence, and we wish everyone a good day.
