formosa sunshine project epc
Billy Sunday (William Ashley Sunday, 1862-1935) was known as one of the most exciting and successful U.S. Christian evangelists. For additional information, see our release from this morning. This marks the receipt of all environmental permits needed for FG to begin construction of its world-scale ethylene complex in St. James Parish. It's a wide range of things. Formosa plans to operate the complex under its subsidiary and Louisiana registered company, FG LA LLC, and is branding the site as “The Sunshine Project.” Pending the completion and approval of permits for the site, FG could begin construction as soon as 2019 in what projects to be a 10-year building and development process in two phases. I'd like to take a moment to reinforce my conviction in Fluor's plan for long-term success. According to a study conducted by LSU economist Dr. Jim Richardson, the project will generate about $362 million in taxes for state and local governments during construction, with nearly $207 million being collected in the St. James area. With us today are Alan Boeckmann, Fluor's Executive Chairman; Carlos Hernandez, Fluor's Chief Executive Officer; and Mike Steuert, Chief Financial Officer. I'm just -- because you provided a range before when Government and AMECO were together. I appreciate it. It's also very complicated by the fact that lot of our projects are on a JV basis and we have partners and that impacts the cash that we pull out the projects [Indecipherable] over time, and that really complicates it. Just wanted to understand a little bit more about what that is. In addition to hiring qualified local residents and businesses, FG is coordinating with local leaders to prepare the workforce for future job opportunities with The Sunshine Project through creation of the FG Workforce Academy. I do expect our cash flow generation from our operations to fund a substantial portion of the cash that we're going to need to fund the loss projects that we've talked about in the second quarter of 2019. Please go ahead, your line is open. We have posted a slide presentation on our website, which we will reference while making prepared remarks. And yes, it does include Radford and Warren. Read more Returns as of 03/20/2021. Steven Fisher -- UBS Investment Research -- Analyst. John Bel Edwards on … And then in terms of the P3 and real estate sales, is there any kind of rough thought on whether it's a first half versus second half kind of timeline? [Operator Instructions] We'll now take our first question from Steven Fisher from UBS. Yeah, let me just add something to that because we've always known that Government business to be very valuable business. Thank you. The developments on the two projects, is these projects that are deteriorating in their performance or is this something different? What happened, as you can tell from the new awards in 2019, is there have been several projects that have been canceled. Well, as we talk to clients, they are obviously concerned about the coronavirus, but I don't -- they don't -- I don't -- they don't see that as a long-term impediment going forward with their capital expenditure plans. JOSH'S FROGS: Manages an online pet store that specializes in breeding frogs and other exotic animals. Please go ahead, your line is open. Some of the restructuring costs are to reduce our real estate footprint and generate savings going forward. That certainly remains my personal goal and we're working toward that going forward. We also booked the Polyols Petrochemicals project in India for Bharat Petroleum Corporation Limited. But looking at our cash flow for 2020, it's not based on insignificant [Phonetic] claim revenue. Just curious whether you first see any kind of delays or issues around some of the module deliveries to LNG Canada in light of some of this coronavirus outbreak in fact in the fab yard there? At this time, all participants are in a listen-only mode. Out of the $500 million of expected cash outflows to complete legacy projects, can you just give us a sense for how many projects we're talking about and does that include Radford and Warren as well? But are you expecting that you'll be able to exceed the previous targets that you've outlined though in your cost synergies? The fee is ... Yes. So, are the revenues in E&C now much lower than what we would have been thinking about a few months ago? Yeah, excuse me, sorry, guys. 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Couple of methanol projects have been canceled, a couple of projects that have moved into 2020, Rovuma being one of them. Or should we expect that that extra cash that you're putting into restructuring delivers incremental savings or cost savings in the bottom line? I also want to comment on cash flow in 2020. In Energy & Chemicals, we booked new awards of $1.7 billion in the fourth quarter and ending backlog is expected to be $14.1 billion. But on the energy side, is there a sense though of like kind of caution relative going into 2020, given low oil price and virus that you're sensing from your clients? The primary costs impacting our performance in 2020 are expected to be the following: Restructuring and other exit costs of $202 million, $84 million of which is non-cash; non-cash write-off of our deferred tax assets of $668 million; non-cash impairment charges of $305 million; and a non-cash expense of $138 million associated with the settlement of the U.K. pension plan. But as Alan stated, we are so pleased that we are going to be able to keep the significant contributor for -- of earnings and cash flow and the reasons that we're able to keep Government is a credit to our organization. For the full year 2019, we paid $118 million in dividends and given our announced dividend reduction, payments for 2020 will be approximately $56 million. Everybody just has to be aware that the books are open as we go through the remainder of this month and next month. I just wanted to understand is that one of the fixed priced lump sum job and how are you going to manage the risk. In addition, this means that any financial information we provide today is preliminary, unaudited, and subject to change. Industry Served. New awards for 2020 will be led by the Mozambique Rovuma LNG project. So the combination of these factors really drove our decision to keep Government. While we are unable to announce our final financial results, we can provide key preliminary unaudited highlights for 2019. Company executive Keh-Yen Lin and state Gov. Mining awards have been late in 2019, as anticipated, but we expect to see the FEED work we have been completing convert into EPC awards in the back half of 2020. So I was hoping you could just talk about just what each of the bookends represent and then how to think about that. FG LA LLC is a Taiwanese privately held company, which is a member of Formosa Plastics Group. It's something that we manage very aggressively and manage it on a project-by-project basis. That's it from me. Reflecting our revised pursuit criteria, we expect a minor improvement in new awards in 2020 with year-end 2020 backlog modestly down compared to 2019. We firmly believe that Fluor will emerge from 2020 in a position of strength, poised to succeed for the next decade and beyond. Argentina Propane/Butane Export Terminal. Among the greatest research universities around the world, MSU concentrate Certainly, we had some unusual costs in the fourth quarter that were non-recurring to the U.K. pension adjustment, which was a good thing to look for that allowed us over the past year to really essentially cap and reduce our liabilities on the future pension expenses. And then on the targeted domestic readily available cash balance of $1 billion you guys had laid out post the divestitures, we did see that balance tick up fairly meaningfully in 4Q versus 3Q it seems. Before getting started, I'd like to refer you to our safe harbor note regarding forward-looking statements, which is summarized on Slide 2. And that's why we did mention the two projects that were there because they are large projects that for us are somewhat more successful to changes as we go through the completion of our reviews that we hope that occurs as soon as reasonably possible. Most of the buyers has approached us when we announced that we are going to divest the business. Please turn to Slide 9. AES LNG Import Terminal. Yeah, let me answer that question in a few different parts. Region. The E&C margins, again, just reflects how some of these projects go throughout the year. And that's why we did mention of two projects and that it's impossible now to forecast what's going to happen. We have -- this is not be a predictable business side of the business, but we are very strong with FEMA as well and the LOGCAP business is going to be changing. Also, earlier this month, the Department of Energy approved up to $350 million in cost saving financial assistance. Now turning to Mining & Industrials on Slide 6. Our guidance also excludes any earnings from our AMECO business, which we expect to divest this year, and we are reporting as discontinued operations. You won't even see that much of it in the corporate numbers going forward, but rather in the business margins. There are couple that we just indicated that perhaps are little more sensitive to those changes than others and that's why we made the comment that, that really impacts all of our projects for the year. I mean, your observation is correct that it's tricky or difficult to forecast claim revenue. It's that milestone plus the opportunity for several projects is starting to attract investors and we're seeing a significant response. The Sunshine Project expects a workforce of more than 8,000 at peak construction. (Bloomberg) --By the time the ribbon is cut in 2029 on the Sunshine Project, a $9.4 billion petrochemical plant under construction in rural Louisiana, single-use plastic bags will likely be restricted for most shoppers in the U.S.Right now there are bans, fees, and other rules on plastic for more than 1 in 5 Americans. There is an inherent risk that actual results and experience could differ materially. 10.6. We expect to work off the majority of our problem projects this year and have a backlog that consists mainly of projects bid under the proper conditions. I'm just trying to understand the thought process there, given Government is now off the table. Fluor is also pursuing the Hanford Tank Closure Contract and we expect to hear decision toward the end of February. Okay. It's very complex for Fluor, because every single project is different and has a different cash profile. During today's call and slide presentation, we will be making forward-looking statements, which reflect our current analysis of existing trends and information. But I think we're well positioned in those areas for additional work in the Government. I guess, in the quarter, it seems like one of the large awards, and I don't know this, but maybe if you could comment on the Chinese EPC job here for the petchem job for nylon as the product here. Please go ahead, your line is open. Some of it's cash, some of it's non-cash and it's a wide range of actions just taken to improve our cost structure across the Company. Well, let me start with that -- answer part of that, Andy, and maybe I'll ask Mike to follow up. Our strategic review led to meaningful changes at Fluor, including significant organizational and management changes, Board refreshment, and the establishment of a risk committee at the Board level. Maybe you could add a little bit more insight relative to given what's happening in the oil markets, given the virus indications, what you're hearing on the ground with the clients. No, our yard got back to work on February 10. As we look through Q4 and realize some of the early benefits of the restructuring plan, we gained confidence in our solid liquidity position and our viable options for generating cash flow such that we no longer deemed it necessary or advisable to proceed with the sale of this important and attractive asset. Okay, Mike. Hi, gentlemen. So, I guess, to what extent now going forward do you have some more visibility to kind of your arms around what's going on and cleaner in quarters? Puerto Galvan, Bahia Blanca, … ... 2017 Future Growth Project – Wellhead Pressure Management Project (FGP-WPMP) is a … Or is it the lower-than-expected revenue versus a few months ago? I guess my first question, Mike, is on the cash flow side, understanding you said the $500 million of cash flow drag, of which two-thirds is in 2020, but what's your expectation in terms of cash generation if any for the year and how we think about first half versus second half? And that's in large part driven because of our percent [Phonetic] complete accounting that requires us to adjust our estimates for subsequent events that occur prior to our filing date. Now turning to Slide 8. D. Michael Steuert -- Executive Vice President, Chief Financial Officer. I think you guys mentioned you just hope to find new investors for -- to fund the NuScale, but how likely is it to find necessary investors versus funding ourselves ultimately? Located just downriver from the Sunshine Bridge, the complex would be built in two phases and produce ethylene, propylene, ethylene glycol and associated polymers. We recently won the EPFC for Canada Kuwait Petroleum Corporation's PDH Silo project, which we will book in the first quarter of 2020. Today, the company agreed to limit its construction activities until early next year, under a legal agreement reached with several community and environmental organizations who had filed a lawsuit … And as we look ahead now driven by our talented workforce, we will continue to act with a sense of urgency to drive our business forward and deliver positive results to our clients and our shareholders. 2012 Dow and Fluor sign Strategic Global EPC Agreement. Some other restructuring costs are to reduce headcount and also reduce savings. That impacts all projects. I'm just trying to understand how big -- how material that is and what are the decisions driving other potential asset sales? Aasta Hansteen Spar Topsides. Obviously, in the first part, we are looking for lower margins as some of our other projects kick in that were awarded in 2019 and as we progressed, some of the other projects such as LNG throughout the year. ET. As reported, the SEC is conducting an investigation of the Company's past accounting and financial reporting and has requested documents and information related to projects for which the Company recorded charges in the second quarter of 2019. After permits are issued, monitoring, recordkeeping and reporting assure that emissions meet U.S. Environmental Protection Agency and Louisiana Department of Environmental Quality requirements. 2012 Fluor rings NYSE opening bell, celebrating Fluor's 100 years. And then, I guess, my second question is, I guess on the asset sales, do we know -- do we have an updated proceeds number, given we're just selling AMECO now? And a lot of this point to bright side [Phonetic]. The Sunshine Project will be constructed and operated to meet all state and federal standards, which were established in order to protect the community and the environment. And now, I'll turn the call over to Mike to provide a few highlights for 2019 and our outlook for 2020. Thank you. So, can you just talk a little bit of other difference there? Cash flow in the fourth quarter is expected to be strong, benefiting from a $150 million close-out of a completed project. As an example of our new discipline around project pursuit, we recently participated in a bid proposal, where the client wanted to proceed with unreasonable schedule and cost risk assigned to the contractor. Backlog. If I didn't miss it in what your prepared remarks were, what -- where are those projects, what are the recent developments that you're talking about there? But I'm just wondering the timeline on achieving that $1 billion now with retaining Government and whether that's a goal we see achieved at some point here in '20? Wison Engineering Services Co. Ltd. (SEHK Stock Code: 2236) is one of the leading chemical engineering, procurement and construction ("EPC") management service providers in China. Formosa Petrochemical Corp. plans to bring $9.4 billion worth of sunshine to Louisiana. I can't recall seeing an EPC job of particular size for a while and I just wanted to get a sense of how you're going to execute that on the risk terms of that job in particular. Thanks for taking my question. Thanks. We continue to monitor our progress and are focused on achieving our next major milestones, completing the 90% model reviews. Norwegian North Sea. It's got reliable earnings and cash flow and substantially reimbursable. Now please turn to Slide 7. You can find a discussion of our risk factors, which could potentially contribute to such differences in the Company's filings with the SEC. That seems like one of the larger awards in the quarter, if not the largest award. Community outreach has included holding an open house, sponsoring local park improvements, supporting local education and providing food boxes to students and senior citizens. So, we greatly appreciate your support to Fluor. While it is disappointing to delay the filing of our audited financial statements, we are confident that the Company and our Board are on the right path to complete their review in a transparent and comprehensive manner. Results for the Government segment are in … Moving to Slide 12. We will continue to selectively pursue lump sum work and we now feel better positioned in bidding with our revised pursuit criteria and more disciplined in execution with our enhanced Board and management oversight. The contract includes the detailed design, engineering, procurement, and construction management services intended to help reduce India's dependence on petrochemical imports. Okay. Sure. That's what impacts the factor that we expect improving margins as we move throughout the year. Thanks for that question. Turning to slide seven. How does your pipeline look looking toward 2020 aside from the projects that you're -- you had called out in your prepared remarks that you anticipate happen later this year relative to get to that ramp for a slight decline in backlog and give you some confidence for a reasonable transition in 2021? Got it. Last fall, as part of Fluor's strategic review to improve its financial position, the Company announced that it was initiating plans to sell substantially all of the Government business. Carlos, I just want to make sure I had my arms around the cash conversions for 2020. We're encouraged by the interest in our P3 investments and our excess real estate and we've reduced the annual dividend by more than half. We are in discussions with potential investors right now that give us significant confidence in our statement that the third-party investors will be -- will provide the funding to cover the overhead costs of NuScale. Yes, we do. Thank you. Stock Advisor launched in February of 2002. I did have some further questions on the SEC investigation, but I guess I'll have to hold off on those. While we currently believe that the total dollar amount of the revenue and subsequent charges taken on this project was correct, we are reviewing whether the accounting and financial reporting, along with a limited number of additional projects, was recognized in the appropriate reporting period. Please visit sunshineprojectla.com for project updates, job information and other important project-related details. Please turn to Slide 10. And with that, thank you, operator and thanks to all of you for participating on our call today. The Formosa project is therefore incompatible with the state’s $50 billion master plan to slow down the loss of its coast. In the fourth quarter, we utilized approximately $100 million of cash to fund our previously announced Challenge Projects below what we anticipated. Terrific. Jason Landkamer -- Director, Investor Relations. Last quarter, Fluor and our joint venture partners were selected to lead the Central Plateau Cleanup Contract at the Department of Energy's Hanford site, near Richland, Washington. But of the ones that do have cash requirements going forward, that's what the $500 million represents. We're actively engaged in discussions with additional potential investors. We also see a number of refinery and petrochemical projects in Europe, North America, and Asia-Pacific. 17.8. The results benefited both the client and Fluor. 15.5. Carlos? Andrew Wittmann -- Robert W. Baird & Co. -- Analyst. It would be helpful to get a little bit of context as possible just around how much claims are driving that dynamic and just what gives you confidence around the line of sight around those claims, given those are things that seem to be tricky to pin down in a particular year in terms of getting the cash in the door? We have been executing that project on a reimbursable basis and at some point, we will convert to lump sum. I was wondering like if you just give us a little bit more detail on that. It's that we've got those projects as all the projects opened for subsequent adjustments. As Alan mentioned, risk imbalance has proven to be a challenge for our industry. Thanks for taking my question. Fluor was previously at the site from 1996 to 2009. Our market position remains very strong. At this time for opening remarks, I would like to turn the call over to Jason Landkamer, Director of Investor Relations. Formosa plans to operate the complex under its subsidiary and Louisiana registered company, FG LA LLC, and is branding the site as “The Sunshine Project.” There is a handful of those that are settlements and actually generating cash and some of them are just accounting adjustments that were non-cash. Okay, let me address cash flow. I'm sorry, did you say it does include Radford and Warren and how many projects in total does that include, appreciating the fact that a bunch of projects identified on Q2 had non-cash charges? We expect to complete a lot of those by the end of 2020. | Add your comment, Published 5:30 pm Tuesday, January 14, 2020, (Click here for the opposing view in Part 1 of 2), FG LA LLC, a member of Formosa Plastics Group, received its final Title V operating permits recently from Louisiana Department of Environmental Quality. FG has already invested in the students of St. James’ District 5 in many ways, including providing educational field trips, hosting in-service training sessions for teachers and funding a STEAM (Science, Technology, Engineering, Art, and Mathematics) education grant that will enhance educational opportunities for approximately 750 students. We were able to conform the contract to meet our revised pursuit criteria and we outline -- that we outlined last year. Let me make a statement that we do not believe at this time that we have material errors, that is the intent of the investigation. Yes, it does. We expect to end the year with a backlog of $5.4 billion and fourth quarter new awards were about $0.5 billion. 0.5. Cumulative Growth of a $10,000 Investment in Stock Advisor, Fluor Corp (FLR) Q4 2019 Earnings Call Transcript @themotleyfool #stocks $FLR, Fluor Corp (FLR) Q3 2019 Earnings Call Transcript, Copyright, Trademark and Patent Information. And then in the release, you talked about some recent developments on two projects. As a result, as of the end of 2019, we had $2.0 billion in the bank, which is more than we had anticipated. Our assumptions for 2020 include: Modest revenue growth over 2019; adjusted G&A expense of approximately $40 million to $50 million per quarter; a tax rate of approximately 28%; and approximately $60 million in restructuring costs. Given where we are with not finalizing our statements for 2019 and having the beginning balance, it's really hard to go through a very detailed cash flow reconciliation for you from earnings all the way down to cash. So we expect to see our -- right now, per our plan, our cash flow generation should fund a major part of the losses on those projects in 2020. That is probably the most critical gate in that entire process. And now we'll take our next question from Chad Dillard from Deutsche Bank. It appears there are no further questions at this time. Look, we have -- we said in the past that 2020 is going to be a transition year for us and we are still working off some of the problem projects and so, when we gave guidance, we are -- we're trying to regain our credibility in the marketplace. The Sunshine Project has received the permits needed to begin the construction phase and activities at the site are underway. Sean Eastman -- KeyBanc Capital Markets -- Analyst. And then secondly on the -- on NuScale. Mr. Mike Steuert, I'd like to turn the conference back to you for any additional or closing remarks. Of course. Good morning and welcome to Fluor's fourth quarter 2019 conference call. I'll now turn the call over to Alan Boeckmann, Fluor's Executive Chairman. And then it sounds like there is other assets that could potentially be up for sale. Workers from other provinces will be subject to a 14-day quarantine period before they commence work. The proposed plastics and chemical complex, Formosa’s Sunshine Project (named for its proximity to the Sunshine Bridge over the … Mike, I just wanted to clarify on the restructuring charges here. Moving to our offshore project. Before I discuss our 2020 outlook, I want to provide an update on a few of the financial initiatives we addressed on our strategic review call in September. Got it, OK. And last quick one from me. Hi, good morning. Angelin. There are three main topics I'd like to cover today. Our prospects continue to be led by copper, oxide, and lithium opportunities. Before we turn it over to G&A -- our Q&A, excuse me, we want to note that there is no additional information that we can share regarding the delay in our financial filings beyond what we provided today in our remarks and in our press release. Good morning, gentlemen. 15.5. Today's call is being recorded. See our office locations and completed and current projects in this interactive map. Known as the Sunshine Project, the complex would have a dock on the river and access to rail and pipelines. Trinidad and Tobago. But before I begin, I want to briefly address the coronavirus. The project's Engineering, Procurement and Construction (EPC) contractor and subcontractors will manage most of the hiring during the construction phase. Our available domestic cash balance at year-end represents 40% of total cash. I'll start by addressing the investigation that we reported in today's press release. Our goal remains to generate substantial cash from asset sales and other receivable collections sufficient to maintain our investment grade rating. A portion of this funding has already occurred so far in the first quarter. And is that extra $118 million needed to accomplish the $100 million run rate savings that you previously talked about and talked about on the call today? And then the other assets that you're contemplating, is it just real estate and the P3 investment, as I'm thinking about Fluor's, what will remain strategic to Fluor's portfolio? Market data powered by FactSet and Web Financial Group. The Formosa project is a doozy, promising to generate 8,050 construction jobs. It's up and down quite a bit as you move through the year and even as we move from month to month depending on advances on projects and then how we burn through the advances that we receive as well. We expect to book this project this year and are currently executing this project under a limited notice to proceed. “We will continue to invest in and address real needs in St. James through projects and initiatives developed with feedback from people who live and work in the local area,” Parks said. Funding in the second half of 2019 was provided by third-party investors. 2017. Our fabrication yard is also open and most of the local staff and craft are returning to work. Both the Radford and Warren projects are continuing to progress and we do not expect to take any additional forecast revisions in the fourth quarter. Now please turn to Slide 5 for an update on our segments. Yeah. Our major offices in China are now open, and we expect to ramp up normal staffing levels over the next several weeks. Got it. Please go ahead, your line is open. I think Mike is exactly right, but when you look at the comment as Carlos said to keep the Government group, I'm really pleased with the swift implementation of this team on all the actions that came out of our strategic and operational review.