Q3 2019 Earnings Call

Good morning, and welcome to the Fluor Corporation's third quarter 2019 earnings call today's call is being recorded.

Just time, all participants are in listen only mode. They questions and answers session will follow management's presentation.

A replay of todays conference call will be available at approximately 10 30 am eastern time today accessible on fluor's website at Investor Dot Dot com.

Replay will be available for 30 days.

A telephone replay will also be available true 730 PM Eastern time on November six.

<unk> registration link also accessible on the floors websites investor Darfur Dot com.

At this time for opening remarks, I would like to turn the call over to Jason I'm coming.

<unk> Investor Relations. Please go ahead Mr. then color.

Thank you and good morning [noise].

Welcome to floors third quarter 2019 conference call with US today, our current attorney Andas Force, Chief Executive Officer, and Mike Stewart floors, Chief Financial Officer.

Our earnings announcement. It was released this morning, we have posted a slide presentation on our website, which will reference when making prepared remarks before getting started I'd like to refer you to our safe Harbor note regarding forward looking statements, which is summarized on slide two.

During today's call a slide presentation, we will be making forward looking statements, which reflect our trend analysis at existing trains and information.

There is an inherent risks that actual results and experience could differ materially.

You can find a discussion of our risk factors, which could potentially contribute to such differences in the company's Form 10-Q filed earlier today in our 10-K filed on February 21st our 8-K was filed this morning, however, due to Edgar issues. It has not posted.

During this call we may discuss certain non-GAAP financial measures reconciliations of these amounts to the comparable GAAP measures are reflected in our earnings release and posted in the Investor Relations section of our web site at Investor Dot floor Dot com.

Now I'll turn the call Liberty Carlos to name just for CEO Charlotte's [noise].

Thanks, Jason and good morning, Thank you to everyone joining us today.

Before we discuss our quarterly results.

I went to quickly reiterate the changes we announced on September 24, as part of my strategic review and operational review.

If you would please turn to slide three [noise].

Last month, we committed to a plan to sell substantially all of our government and equipment rental businesses. Starting today, we will be reporting those business lines as discontinued operations.

We also created a segment called other well, we will keep our to fixed price government contracts and Nuscale.

We're also leading our mining industrial infrastructure in power segment into two Standalone segments.

Lighting, and industrial and infrastructure and power.

The actions we have taken over the last few months reflect the reality of our industry.

We continue to act with urgency and have undertaken these changes to strengthen floor and put the company on a path to deliver consistent and profitable growth.

As a result this process I believe we have a better understanding of our backlog and I have confidence in our backlog can positively drive future results.

Now turning to our segment updates.

Please turn to slide five.

Well the third quarter, New awards for the energy and chemical segment work $256 million and ending backlog was $13.7 billion.

Ending backlog he likes to be move a lot the one while chemical plant complex in Louisiana.

That was booked earlier this year and canceled by the client in the third quarter.

New awards for the quarter, primarily reflect the timing of clients and fight de decisions and are not the result of our revised pursued criteria.

We are committed to following a character criteria to pursue the right contracts with the right terms.

And we believe our new parse your criteria will help us the rest of business and deliver higher margins.

One example of a project that fits our new criteria is the Raghu My LNG project in Mozambique.

Sure and our joint venture partners JG C and technique FMC were awarded a limited notice to proceed earlier this month.

This fourth quarter Award allows.

The joint venture team to progress on the project until the final investment decision just reached in early 2020.

This this project is aligned with our updated bidding standards announced on last quarter.

Last quarter's call.

We worked closely with our consortium to develop the project model that appropriately leverages, each party's strengths and capabilities.

We also held a number of meetings with the client over the last several months reach an agreement on items that were critical to de risking our execution profile.

Like LNG, Canada, we have a good relationship with strong partners that have deep experience in the LNG space.

We're going to continue to work in lockstep with our partners to deliver a project that meets our requirements for safety productivity and.

Profitability.

As we look to the fourth quarter and early 2020 , our energy and chemicals prospects include several significant reimbursable projects around the world.

These include the foremost Sunshine petrochemicals make a complex in Louisiana.

A project in China for Investor.

And in ethylene oxide plant in Europe for BSF.

Let's turn to slide six.

The mining and industrial group reported New awards of $119 million in a third quarter and ending backlog was $6.2 billion.

Mining EGPC awards for 2019 continue to track our expectations from last year as we continue to work on feed.

And feasibility studies for large mining APC projects, we expect to be awarded in 2020 Andy 2021.

Now turning to slide seven.

The infrastructure and power group reported New awards of $2 billion in the third quarter in ending backlog was $7.7 billion.

New Awards included the addition of the Texas the OTI I 635, each project in Dallas.

As well as the Twentysix North Carolina deal T. project outside of Asheville.

Segment profit of 1 million dollar reflects our execution on lower margin projects that experienced forecast revisions in the second quarter.

Now looking ahead, we're pursuing additional road projects in Texas and remain confident in the stock strong prospects from our floor heavy civil group.

Let's turn to slide age.

Our diversified services segment reported new awards of $260 million.

And ending backlog was $2.4 billion.

This segment excludes Amico, North America, which has been moved to discontinued operations.

Restructuring of Stuart continues to progress on schedule.

And we anticipate this business will deliver improved results in 2020 .

Turning to slide nine the other segment includes our to fixed price government projects, Radford and warrant and our investment in new scale.

As highlighted in our strategic review, we recorded 70 $579 million in charges this quarter related to the radford worn projects.

These charges reflect additional cost growth relative to our initial estimate.

Engineering changes and unapproved change orders.

The charges taken today reflect our current cost.

Complete estimate.

[noise] nuscale expenses for the quarter were $14 million.

But I do want to point out that floor did not provide funding for new scale in the third quarter.

We expect to receive another tranche of funding in the fourth quarter and are actively engaged with additional investors.

In discontinued operations, which includes our government enemy cold in North America businesses, We reported earnings of $40 million for 28 cents per diluted share in the quarter.

The government business was successful in winning contract extensions for Savannah River in Idaho National Laboratory.

I plan to divest these businesses are progressing well and we expect those sales to be complete within one year.

Now I'll turn the call over to Mike you talked through financial results from the quarter and outlook.

Okay.

Thank you Carlos and good morning, everyone.

As you can read about our results for the quarter in the earnings release Synching too that we hope to file. This morning, I will focus on several key matters.

Please turn to slide 10.

For continuing operations earnings attributable to floor for the third quarter were a net loss of 782 million results for the quarter include the following items, a noncash charge of 546 million related to establishing evaluation allowance against net deferred tax assets.

290 million noncash impairment charges related to our fab yard in China, our investment in store and our joint venture was there.

44 million in restructuring activities and 79 million in projects adjustments that to government projects and Carlos just talked about.

All of these items are consistent with what we communicated on a strategic and operational review call last month.

As it relates to the adjustment of our deferred tax assets onto again point out that while we remove these assets for our balance sheet for technical accounting reasons are still available to us to four for tax purposes.

This higher than anticipated tax rate. This quarter is due to the company being impacted by this valuation allowance in certain foreign charges that could impact tax could not be tax benefited.

Corporate Jumei for the third quarter was $10 million compared to 61 million a year ago.

In a expenses lower due to reduced compensation accruals and favorable foreign exchange adjustments.

Last month, we announced our plan to reduce overhead by $100 million that plan is underway and will provide update later this year.

Shifting to the balance sheet, please turn to slide 11.

Cash plus marketable securities for the quarter for 1.85 billion slightly below last quarter.

Are available domestic cash improved from last quarter, and now represents 20% of total cash and marketable securities.

The asset impairments that we took this quarter for all non cash. In addition, a portion of the restructuring charges from this quarter and going forward also noncash.

Cash utilized by operating activities for the quarter totaled 25 million views approximately 70 million in cash to fund the loss projects.

Third quarter and expect to fund roughly 250 million in the fourth quarter.

Announcement as announced on September 24, yesterday, we declared our new quarterly dividend of 10 cents per share. This dividend reduces our cash usage by 15 million per quarter and aligns our payout what that with other similar dividend paying companies.

We remain focused on rebuilding our balance sheet and are confident that our financial flexibility will be further enhanced as you complete to sale of our government and equipment rental businesses.

These sales along with a monetization surplus real estate and other non core investments are expected to generate excess of $1 billion aggregate proceeds.

And now if you'll turn to slide 12, I'll conclude my comments.

By talking about our outlook for the fourth quarter.

Although the company suspended guidance for 2019, we anticipate margins for the fourth quarter to be 4% to 5% for energy and chemicals, approximately 2% for mining in industrial.

Again, approximately 2% for industrial power and 4% to 5% for diversified services.

I also want to point out that health energy and chemical margins in third quarter positively affected by Closeouts, which resulted in margins higher than that we're expecting the fourth quarter.

We are currently reviewing our operational plan for 2020, and we expect issue 2020 guidance for the full year at end of our call in February .

With that operator, we're ready to take questions.

Thank you, Sir ladies and gentlemen, if you would like to ask a question at this time. Please signaled by pressing star one on your telephone keypad. If you are using the speakerphone. Please make sure. Your mute function is turned off to allow your signal to reach our equipment. Once again. Please press star one at this time.

To ask a question.

I was just a brief moment to allow everyone an opportunity to signal for questions.

We'll now take our first question from Jamie Cook from Credit Suisse. Please go ahead. Your line is open.

Hi, Good morning, I guess, a couple of questions. One you know as we sit here a month later relative to your strategic outlook call. If you could just comment on your view on the health of the backlog and whether we properly properly understand like where the risk is in the back log in and risk.

Incremental charges going forward I guess second you know on the asset sale given some of the transactions that have been announced since you announced that decision to sell the government business sort of where we are in the process and whether you're more optimistic and then last Mike.

I understand you don't want to give long term guidance or guidance for 2020, yet is there any help you can give us sort as you know on cash flow how long that the problem projects burn on the cash flow when we expect cash flow positive you know outside as you know.

Sales and cash from operations I guess thanks.

Good morning, Jamie.

I'll take the first two I'll ask Mike to take the third one with respect to backlog as you can see this quarter. We took a couple of charges charges and a couple of government projects.

Which we had indicated we expect it to do that with respect to the rest of the of the portfolio.

Our estimates have been holding very well and I'm very optimistic that while we can't guarantee that we won't have charges in the future, where we've gotten our arms around the backlog innovates feeling very confident about where we are there.

With respect to the transactions.

It's very early in the process, but I can tell you that there is significant.

Interest.

With respect to both businesses, we've got we've engaged investment bankers in both businesses.

We've got a list of interested buyers and will be progressing that.

Very properly, we're probably a little bit further ahead on the bid on the rental business, but we expect to to close both transactions.

Probably no later than mid 2020.

And we're very very positive about how those are going to progress.

Sure Jamie let me talk about the cash flow issue.

First as we look at at the charges that we took in the second quarter and some of our or lost projects.

We did experience modest outflows in the third quarter.

We will have some outflows in the in the fourth quarter and through 2020 most of those the vast majority of those projects will be.

Well along their completion pacified into 2020, so we expect to address see all that but at the same time.

We are working on improving underlying operations and expect to have cash positive cash flow from there from the rest of our businesses.

Addition.

As you mentioned, we're working on asset sales were also working on selling a lot of other.

Non core investments or other assets that will positively impact cash flow and we have we have some claims and some other assets on the balance sheet that we hope to monetize over the next year as well.

I would not to point, yet that we can really break it out with the amount of.

DEFINITY like that I'd like to and perhaps we will in February .

But I am cautiously optimistic that we'll see some.

Net of all the other special and we'll see some positive cash growth.

Throughout the latter half of 2020 and as we move into 2021.

Okay. Thank you that's helpful I'll, let someone else getting.

Ladies and gentlemen, if you do find that your question has been answered you may remember so from the Q by pressing star too.

We'll now take our next question from Andrew Kaplowitz from Citi. Please go ahead. Your line is open.

Good morning, guys.

Good morning morning.

Pilots can you stepped back and talk about the bookings environment as you see a meeting but much in the quarter and I think you mentioned the cancellation in your prepared remarks. During your soon can you give you suggested that was overall backlog could be flattish in 19.

Turning to give you move government into me go from continued operations have you actually patients were back on change the bad given the cancellation or are you seeing any incremental delays in project awards.

Well, we have seen a little bit delay we had indicated earlier that they were going to project was delayed.

To probably the second first or second quarter for from the final notice to proceed but I think the new awards for for 2020 as we're looking at that will be.

Fairly consistent with with what we said is going to be fairly flat to 2019.

With the exclusion of obviously with the exclusion of the government in an equal businesses.

But we're pursuing several big reimbursable projects, any and see pretty optimistic about those.

So.

I can't say that we're seeing a lot of growth, but we're not going to see much deterioration either.

Thanks, So thats Carlos and then when you look back.

Thank you impaired most of the investment that the previous management made over the last several years, what the notable exception of need scale. So.

Point do you see any risk of further impairments and then when you step back it seems clear that floor.

Improve the way it invested cash so how do you take that lesson and move forward do you do fewer jeebies.

You do something different didn't integrated delivery model, what do you do going forward.

Well I'll, let Mike answer the question as to whether we anticipate future impairments, but now you're absolutely right in terms of our investment.

Experience we.

We're going be much more cautious in the future with respect to our investments.

We pursued a strategy of getting into fabrication and.

And that strategy is a valid strategy, but we haven't had.

The success of the yard that we expected as early as we did we are expecting now that the LNG modules will be the will be released to that yard in early to mid 2020, So that yard we expect will be performing.

Better than has in the past with respect to.

Historic investments.

We.

I would probably paid more than we should have for that but we're restructuring now and it's going to be performing at a higher level in 2020. So yes. We've made some investments it may have been better.

But we're dealing with them at right now and we're not going to be making investments in the future that don't have a rigorous review in terms of its potential its expected return.

Mike you want to talk about.

Sure sure.

Sure. We <unk>, we didn't take a very close look at impairments in the majority of impairments were regard to the February in China.

And we had a modest investment impairment on from Stork and.

So therefore as Carlos mentioned our outlook for.

For both of those for oil for both the fab yard and Stork is improving as we go through the remainder this year in 2020, we definitely think our impairments are sufficient for those on and I wouldn't expect any further impairments.

As we move forward and generate cash.

Thank you are going to see us, making similar investments.

Our priorities for cash or two to rebuild our cash balance to strengthen our balance sheet.

And then of course return cash to shareholders as we get to our a healthy balance sheet.

Cash position.

But.

That's how we look at a currently Andy and we would certainly at this stage do not do not anticipate any further impairments.

All right. Thanks, guys.

Well no take our next question from Steven Fisher from UBI. Yes. Please go ahead. Your line is open.

Thanks, Good morning, guys.

Hi, good morning CEO .

Good morning, B and C margin in the quarter and the forecast out were better than we expected and I know you did cite some some closeouts but.

Is the Q4 rate.

I think you could you could at a high level set as a starting point for 2020, but again, we're gonna be going through a very detailed review of 2020 as we close out this year and there will feel much better about providing detailed guidance in February .

But we are we're pleased with how the differences are performing as we exit this year and.

We're going to be setting fairly high expectations for performance in next year.

Okay. That's helpful and it seems like a infrastructure power profit dollars will still be pretty immaterial in the fourth quarter, but.

You are putting some new big projects in their life. The Isix 35 so.

Until LNG, Canada.

Some of the other big energy projects ramp up is this going to be the swing factor segment for overall profitability thinking and how long will it take for that segment to start showing up a more normalized margin, which I assume should be more like the mid to upper single digits.

It's going to take up a while for the.

The loss projects that we took in the second quarter to burn through backlog, but as we exit 2020 moving into 2021, I think you'll you'll start seeing in which.

In addition, the.

Let me just add something to that.

We've got now almost 20 projects and the infrastructure business.

Which is a very healthy number of projects and some of those have been around for a while in those some of those are the ones that are not delivering me.

The margin right now, but as we work our way through those I think you'll we should expect improve margins.

As Mike indicated.

Pleasantly surprise or last couple of months.

They are cash generating capability of our ongoing businesses, if you take take away.

These loss plus projects and we certainly haven't been as an organization.

Generating a fair amount of.

Of cash from that as well as from collecting cash from other other noncore assets and investments that were really scrubbing our balance sheet.

Terrific. Thanks, a lot.

We'll now take our next question from Jerry Revich from Goldman Sachs. Please go ahead. Your line is open.

Yes, hi, good morning, everyone.

Hi, Jerry.

I'm wondering if you could just expand on room, a LNG. So congratulations on the contractor selection.

Where we've had issues with.

Projects in the past since been either a function of timing overruns issues getting change orders approved or engineering design issues and so as it relates to those three.

Those issues within the bid for rumor LNG.

Well first of all we mentioned in the past changes we've made in our cell activity or pursue criteria.

And.

Clearly.

Reformer project.

And Tony both and have a significant experience in the.

LNG.

Reena.

We have engaged in discussions with our customer for a number of months now in de risking the project.

We've had high level conversations with that customer with respect to what's happened in the industry in general as far the allocation of risk having been.

Disproportionately shifted to the contractor. So it's been a very very cooperative process. There are certain risks in the project that we have not taken.

I can't go into detail and knows but.

We feel very very confident that.

We have.

Addressed orthovisc issues here so.

I am extremely extremely positive about this project and we are and so our partners. So.

So looking forward to it.

And then obviously, we know your back on Carlos in terms of focusing on terms and conditions. We're just trying to.

Building, our comfort level around timing in particular, so when we've seen costa runs in terms of.

Productivity and labor hours, it's been in part due to a function of tight project timing circuit can you just talk about that particular aspect of the contract structure.

If you will month.

Sure No no.

The.

The.

That is part of our criteria now that we're not going to agree to schedule that.

And in fact.

That has actually caused project for us to to be cancelled by the on it because we wouldn't we wouldn't agree on what the on a one for schedule.

Indra boom.

The.

The way we have structured that contract is that the risk lies with the party that's best best able to manage the risk.

For example, the client is responsible for all in country risks.

We're not going to were not responsible for security but of course, we are responsible for our people security and we're not going be mobilizing onto the site until securities in place and it is at an acceptable level.

There is a robust force majeure definitions and including all places where the work is being perform not just in country.

And we have procured subcontractors tier one subcontractors with a proven track record and.

And as I mentioned earlier, the project really meets our pursuit fried carrier.

Okay I appreciate the color and then in terms of eye on the infrastructure project opportunities. You know we've seen are a couple of.

The company's stepping away from a larger projects because of inadequate risk terms on multiyear infrastructure projects can you just talk about your assessment of the market environment and what your opportunity set looks like you would do you agree with the.

Settlement from from few of your competitors and partners.

Yes.

The one of the differences between some of the competitors that have.

We exited the mega infrastructure, he three or other large infrastructure projects as we do have the capacity in the balance sheet to take on those projects, but we're not going to take on projects for example.

Where we don't have the right team to execute we have we just recently walked away from an opportunity because we didnt have the right team I think that there will be plenty of opportunities in infrastructure, especially as we.

Complete existing projects.

We have a couple of opportunities, where we're going to be doing those on a.

Unit rate basis taken out.

We're not going to get ahead of our skis and take more work than we can execute effectively.

Okay. Thank you.

Well now take our next question from Michael just asked from vertical research. Please go ahead. Your line is open.

Good morning, gentlemen, Carlos when you're looking at the projects that you're waiting if I beyond that.

And.

From the risk standpoint that you renegotiate or thinking about it for how did those product those contracts that are waiting for award how does that fit in relative to what was done because those were probably become quite a bit in the past and then what are you telling your sales folks are your operating folks relative to the new level of projects at your Bill.

Being in the next now because the next six to nine months, how much differently or.

Most changing is that like.

Taking a look at different parts of the energy market different parts of the mining market relative given the risk mitigation that you're trying to portray through the organization. Thank you yeah with respect to the project said, we're waiting for if I'd on such as we rollout that project as well as actually LNG project did meet the existing for the new criteria in terms of time.

Contract negotiations, obviously those projects being a significant as they are they received a tremendous amount of scrutiny and.

We addressed all the issues, we either mitigated them negotiated them out or appropriately.

Price demand.

What we're telling our salespeople is what I'm, telling our salespeople as look we're going to pursue ex excellence in execution in that starts at the bid no bid the stage, we're not going a bit a project that we don't think we can execute effectively.

And we're not going to take terms conditions that unduly foot risk on us and we're not going to agree to schedules that we can't Act, we can't meet and this.

This change and approach to a more risk balanced approach has taken very well within the organization.

We have a list of the criteria and every project proposal or every package checks off whether the criteria is is.

Met or not and that's now standard operating procedure in view of projects. So the message has been delivered and very well received and I think it's going to serve as well.

I appreciate that Carlson, just a quick follow up and infrastructure and power that segment you have now what's the power part of that business.

Two questions there.

Basically.

So that'd be my family.

Mike I'm, sorry, my thanks.

That's basically running off the.

Power projects, we have warranty I want some warranty issues, but you're right there is not.

Any substantially new any new business in power, we do have a power services business, but that resides in a diversified services segment.

Understood and final quarters back to your comment on on the new process does that reducing the project funnel that you anticipate could be looking at over the next several months as well you know it probably will reduce it a little bit but not not been a significant way.

We are why thinks we're also doing is we're also chasing we're going to be chasing more.

Midcap type of work, which we had.

Moved away from we hit on almost not exclusively but largely after make it projects and some of that mid cap work will be reimbursable. So I think overall, it's not going to have a huge impact on our honor.

Backlog.

Thank you Carlos Thanks, Mike.

Thanks, Mike Thanks.

Well take our next question from Sean Eastman from Keybanc Capital markets. Please go ahead. Your line is open.

Hi, This is Andy Oh, so Sean Thanks for taking my questions.

I just want to ask on the favorable resolution that you talked about in the mining segment. If you could quantify that for us maybe.

Yes.

Responses.

Yeah that that was a a longstanding dispute that we had with a client.

It's been an arbitration for several years.

That was actually.

The result of what we had really pretty favorable.

Balance terms conditions and and that that is in.

We're gonna have a very modest capex going forward for continuing operations that absent the maaco equipment rental business.

Most of our Capex.

Is really going to be to support our infrastructure and our and our.

Office buildings.

And we just see modest requirements are going forward in terms of investment. So it's it is not going to be a material material part of our cash flow equation.

So we shouldn't there should we think about it and less than half of what do you have now which is like 200 million ish.

Oh, it's it's.

It's much less than half okay. Okay, great. Thank you and my last question on the government business that you have up for sale.

I understand that process is ongoing and you can share much but can you let us share with us how you think whether it's going to be one large transaction or are you seeing multiple buyers and it could be broken up into pieces.

Okay.

That to some extent because it just depends on the some of that nature in value. The offers but I suspect is more likely you're not going to be one to one transaction.

Okay, great. Thanks, so much that's all for me, let me correct something I said I think I told you 20 530 for that resolution actually I think as more than 20 $20 million range I was thinking or something else.

Okay. That's great. Thank you.

We'll now take our next question from Michael Feniger from Bank of America. Please go ahead. Your line is open.

Hey, guys yet thanks for fitting me in some on them on the mining side you guys.

Yeah, Mike at this point, that's not really impacting were basically doing feeds and feasibility studies or.

I have some projects ongoing as well but.

At this point, it's not the.

Packaging, our our visibility into the future in an adverse way.

Fair enough and following the strategic review I'm. Just curious if you guys have had any tend to reflect on how this business without government services, how we should be thinking about.

Free cash flow conversion going forward, the balance sheet structure going forward and with the proceeds you're gonna be getting I mean, why wouldn't we see you know any any notable buyback to like maybe offset the dilution. There I'm. Just curious how you guys are thinking about that following the strategic review.

That's a great question.

We do we do see the cash flow generation capability of the business going forward.

Remaining fairly solid even with the sale of government in American equipment American equipment.

Was not acidic any significant cash flow generation capability with the way. There was there was managed to when we we invested in new equipment.

Government. It was a solid cash flow generator, but a remaining businesses are as well so as we don't see a significant change in profile as as as we look at the proceeds that we're we're going to receive.

For all optimistic we can we can do better than that.

Optimistic with what we can do it with liquidating some of other assets.

Clearly as we improve our cash position as we and we.

Reduce or debt to what we think is appropriate level to remain solid investment grade or next priority is returning cash to shareholders and.

If we get to the point they were comfortable with our balance sheet, coupled with our cash position.

And we see some excess proceeds we will definitely consider share repurchase.

Well no move onto our next question from Chad Dillard from Deutsche Bank. Please go ahead. Your line is open.

Hi, This is Kevin on behalf of Chad I just had a quick question on the bidding environment for oil and gas has the lower risk model that the company adopted change the conversation with customers.

And if so how is the project funnel changed.

You know.

We've been having Kevin since since may want to be thing, having conversations with our major.

Oil and gas customers precisely about this issue of the bidding risk environment.

As you know there have been a number of.

Here is in the space It is left.

Oil and gas because of the.

Our customers understand it they get it.

They are now telling us look we need we need floor to be a successful company. We got understand we got to work together.

TV vis projects and Youve, what we've already seen some of that in some of the projects that we've talked about.

So I.

Going to be the models in the future it has to be.

We are one of the things we're doing now on a lot of projects is.

We're starting out as a reimbursable cost.

So.

There will be projects, we will walk away from for sure.

As I said earlier I think that overall.

We are in a very positive position in our seeing our industry because of our ability to execute the large projects our relationship for their clients and the the fact that others are not capable of managing risk.

Hi, good morning, everyone.

I've got no. Another 2020 question, but help me this one's a little bit more quantifiable just on the corporate and DNA expense, what's that was pretty stable for.

Several years running 40, 550 million a quarter with the restructuring and assuming that you know more normalized comps next year.

What level of DNA do you think is kind of that run rate for the business with with the divestitures.

[noise] it'll start out on a 45 to 6 million range and our expectation as we embark. These these cost reduction programs that we announced as wells.

Some other adjustments that are in line with the divestitures that it will gradually decrease throughout the year.

All the cost reductions will take take effect in one fell swoop, but.

Our initial a pass through that process through that process.

As identified a lot of opportunities, although not all going to reside at the corporate level, we're going to bottom are going to be reside in the business units.

But we do we do expect to graduate a reduction of corporate Jna throughout 2020.

Okay, Great. That's helpful. And then just on what was the size of the one why de booking and maybe we have that but I don't I didn't think you quantify.

Yeah that was.

500 really.

Great. Okay. Thank you very much.

Thank you.

Ladies and gentlemen. This concludes today's question and answer session. At this time I would like to turn the conference back over to Mr. Hernandez for any additional or closing remarks.

With our strategic and operational review now complete.

And our restructuring underway.

Floor is now focused on returning to excellence in our operations and consistent profitability.

Employees remain our greatest asset and I, thank them for their ongoing hardworking dedication to fluor, we're committed to working together as a team to execute our strategic priorities in physician floor for continued success and I'm confident we have the right people right structure and the right global footprint to leverage our talent and capabilities to generate shareholder value.

Thanks to all of you participating on our call today and we greatly appreciate your support a floor. Thank you.

Ladies and gentlemen, this concludes todays call. Thank you for your participation you may now disconnect.