FLR
#Well, I do expect second half cash generation to improve.
As I said, working capital should come down in the second half.
So you should interpret from that.
We expect it to be better relative to income in the second half, so cash from ops to improve on that basis.
I didn't think we'd get all the way back to get working capital normalized by the end of the year.
So I have to step back, too, and say, with some big projects and some big payments, timing always has a big effect.
And that's why we don't give cash guidance, the range just ends up having to be too broad to where it's not all that meaningful.
But I think that a general assumption that we get $100 to $200 million of improvement out of working capital in the second half would be reasonable.
Excuse me.
$100 million to $200 million of improvement in working capital in total.
Take cash out of working capital and almost everything else in there is project-related.
I think we're a much more competitive company, first.
So I think when you look at the integrated approach that we're doing and being able to utilize all of the assets the company has available to it, we've got a better cost model.
We've got a more effective and efficient execution approach.
And in the same vein, we're seeing improvement in terms of margin and backlog.
That's things that we can control.
And I think from the outside looking in, it's a highly competitive market.
And as I said, you really have to look at us a little bit differently because of the diversity, and we're seeing different pressures in different markets based on where they are in those cycles.
Clearly, if you go back to one of my previous comments about infrastructure and what I'm pleased about in terms of those smaller projects, there's a lot more competitors out there that can do that.
But the point I'd absolutely make is that there is absolutely no difference in the way we look at our contractual liabilities, what we're willing to accept, as well as what types of margin we're willing to accept.
And if that causes us to lose some projects, so be it.
We're going to maintain the discipline that I think has proven effective over 104 years of our history.
It's the same sorts of things that they been doing in that space.
If you really look at that particular segment, it's about being able to access customers' operating budgets as opposed to capital budgets.
And those have not changed.
They still have to maintain those facilities and keep those facilities going.
So I think by broadening our offering, by adding Stork, allowing Stork access to the Fluor world, I see that business growing pretty good over the next several years.
But keep in mind, it's still a small percentage of the total.
But the beauty of it is, I hate to use this term, annuity, but it's almost an annuity style business to where, when you think about that and you think about parts of Government, that's going to pay the light bills and we're going to be able to grow on the back of the other types of businesses.
So it raises, if you will, that sure spending, that sure earnings stream over the longer term and grows that, and then we're able to layer on top of that the capital spend in the different markets that we serve.
Oh, within that business.
I would say it's probably 70%.
No, it's all over the place.
It's the US.
When you think about the legacy Fluor side of it, of the business, it's South America, it's Australia.
Obviously, Western Europe, as well as the Middle East.
So it's pretty diverse in terms of its geographic footprint.
Very little.
It's interesting, it's almost like everybody woke up the next day and the world did not end.
But we really haven't seen the spending habits or any of the projects that we're working on change.
I think movement might get interesting as we go through time.
But remember, the eventual end of Brexit won't occur for another two years.
My estimation.
The only other affect is that we were talking about Stork's business.
Stork does have work in the North Sea, so devaluation of currency does have an effect on Stork's revenues and income for the year.
That's one of the headwinds that Stork has been dealing with is overall foreign exchange environment.
It's not a part of your question, but since we're coming close to the end of the call, I'll go back and come back to the margin question that <UNK> was asking about earlier, because I continue to try to think of how better to answer her question.
And I would just say that to the extent that someone questions whether it's all mix, I think it would be more realistic to make the assumption that we're being conservative, rather than to make the assumption there's something in there we're not talking about.
I think we're focused on integrating Stork right now, and doing a good job of that.
I still think our priorities haven't changed.
We're going to look for opportunities like Stork that are niche in size and in nature that fill a void in our service offering.
We're going to look at maintaining the dividend performance that we've practiced over time.
And when there's excess cash, then we'll look at other means of returning that to our shareholders, and that still remains our priority.
That's a great question.
I think it's basically kind of moderated a little bit.
When you look at a lot of the projects that were at least scheduled to go forward that are now delayed, and in some cases cancelled, we haven't seen that big glut that we needed.
So I think labor cost in the Gulf is pretty stable right now.
Thank you.
Well, I think that yes, we expect revenues to go up.
This has been one of the harder things to forecast over the last couple of years.
So I don't want to get too far out in terms of being real specific about what we expect, but I do think it's pretty reasonable to expect revenues to go up.
I think Industrial, Infrastructure and Power looks like it should go up.
I think MMAI, likewise, can go up, as Government.
I think that Energy, Chemicals and Mining, this is one that's a little harder to say exactly, but it is quite possible that it goes up, and that's one of the things that will affect ultimately that margin rate.
Because the margin is a little more predictable sometimes than the revenue line.
And that makes sense.
But that's just been the case, and so that's one of the reasons I went back and I said it could be that we're just a little conservative from a margin rate standpoint.
And I think it's safe to say in the Energy and Chemicals piece, we'll see some increase as we get into next year.
No, I don't.
I think we're looking at a couple of anomalies in terms of that.
I'd go back to what, in <UNK>' prepared remarks, we're at 29% fixed price, which isn't outside of the norm.
And I do believe that the new approach that we've taken, the way we're looking at execution, the way we're looking at supply chain, the use of fabrication, the direct hire construction approach, I have more confidence in being able to deliver those projects today than when we started this journey five years ago.
Absolutely.
The conversations I'm having, it's okay, we've studied this enough, and they're coming up with the same answer they came up with before.
And they're finally saying, let's get on with it.
Because they need those reserves added to their base or they're not growing, in terms of replacement of, whether it's gas or oil.
I think that, as I've said, I think they've gotten comfortable with the new 40, or the new 100, I guess, is at 40.
So in those conversations that I've had, some people are saying, well, I really don't need to spend any capital in the next year or so, but man, I'm going to have to catch up later, which I think concerns me a little bit, because as we saw in that last boom, there was hyper inflation, there was no customer happy and it didn't do anybody in our industry, in the service industry any good.
So I'm kind of hopeful that they stay with a good regimented approach and a good solid march forward in terms of bringing those capital programs to FID, as opposed to a herd mentality and you see a glut again.
Because I don't think that's good for anybody.
I think they're normal decisions as we go over the next couple of years.
As I said, I think when you look at the cracker complex, as an example, I think there's several years of one a year going to FID.
I wouldn't say it's any particular quarter, but I think it's pretty positive momentum, if you will, that supports at least a little bit of enthusiasm.
I'd probably moderate your description of my enthusiasm a little bit.
But I think there's good things out there and I think we're in a good place to be competitive.
Thank you, Operator.
And I really appreciate everyone participating tonight.
As I said in my opening remarks and throughout the Q&A, commodity prices remain volatile.
And I think this, along with some uncertainty that's created by some geopolitical issues, is causing some of our customers to maybe extend that decision.
But at the end of the day, those final investment decisions will be made.
I'm pleased to see the progress in our ability to diversify the backlog, as I mentioned, beyond just a commodity focused segment.
But I also believe our capital structure and our discipline around cost and the flexibility that we have in operations allows us to make some strategic investments for the long term.
I believe our integrated solutions approach is continuing to produce positive achievements, and the performance improvement in engineering, supply chain, construction, I think the overall schedule delivery that we're seeing has been well received by our customers.
With that, I really appreciate your interest in our Company and the confidence that you place in us, and I look forward to speaking with all of you soon.
I wish you all the best.
Thank you.
