Good day, and welcome to the Fluor Corporation’s Second Quarter 2019 Earnings Call. Today’s call is being recorded. [Operator Instructions] A replay of today’s conference call will be available at approximately 8:30 PM Eastern Time today, accessible on Fluor’s website at investor.fluor.com. The web replay will be available for 30 days. A telephone replay will also be available through 7:30 PM Eastern Time on August 8 through a registration link, also available on Fluor’s website at investor.fluor.com. At this time for opening remarks, I would like to turn the call over to Jason Landkamer, Director of Investor Relations. Please go ahead, Mr. Landkamer.

Thank you, operator. Welcome to Fluor’s second quarter 2019 conference call. With us today are Alan Boeckmann, Fluor’s Executive Chairman; Carlos Hernandez, Fluor’s Chief Executive Officer; and Mike Steuert, Fluor’s Chief Financial Officer. Our earnings announcement was released this afternoon. We have posted a slide presentation on our website which we will reference while 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 2. During today’s call and slide presentation, we will be making forward-looking statements which reflect our current analysis of existing trends and information. There is an inherent risk 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 and our 10-K filed on February 21. During this call, we may discuss certain non-GAAP financial measures. Reconciliations of historical non-GAAP amounts to the comparable GAAP measures are reflected in our earnings release and posted in the Investor Relations section of our website at investor.fluor.com. Now I’ll turn the call over to Alan Boeckmann, Fluor’s Executive Chairman. Alan?

Thank you, Jason, and good afternoon to all of you. Let me start by saying that I am extremely disappointed in the company’s results for this quarter, and I’m also very aware that we owe you a complete explanation of the issues and our path forward. Carlos, Mike and I are committed to doing just that. As a result of my 36-year prior career with Fluor, I have a very deep loyalty to this company and its people. And it was that loyalty that drove me to accept the position for the Executive Chairman, and also because I felt that I could team with Carlos to successfully address our issues. In my previous tenure as a CEO, I hope that I earned a reputation for strong execution and transparent communications. So it’s with that in mind that I began this discussion. If you would, please turn to Slide 3. On the 1st of May, the Board of Directors appointed me as Executive Chairman and Carlos as Chief Executive Officer. They then commissioned us to effect a complete review of the business. The first and major part of our review was to meet and talk with the business group leaders regarding their project teams, clients, suppliers and subcontractors, to allow us to assess all of the risk projects in our backlog. The second part of our assignment was to evaluate and modify as necessary our bidding and execution strategies to ensure that going forward we can have a high quality and reliably profitable backlog. Next, we assessed the organization, its leadership and its governance to make sure that we had the right team and structure in place. Several major investments that you’re aware of have been made in the last few years. Our next task was to take a critical look…

Thank you, Alan. Let me start by sharing with you the actions we’ve taken during my first quarter as CEO, and provide you some details on our path forward. To begin, I’ve made a number of changes to improve the effectiveness of Fluor’s executive team. Please turn to Slide 5, please. In addition to bringing Mike back as CFO, I appointed Mark Fields as the President of our Energy & Chemicals segment. Mark has nearly 40 years of experience including extensive mega-project execution and upstream, refining, mining, chemicals and petrochemicals. Also, we have separated infrastructure into a standalone business segment to increase transparency with Terry Towle as Group President reporting directly to me. Terry has been operationally responsible for 11 infrastructure projects over the last 10 years. Finally, we have moved risk management under long time Fluor executive Garry Flowers and expanded his authority to enhance reporting and accountability of this group. Garry is particularly well suited for this role as he has provided support and has been instrumental in developing resolution strategies on a number of challenging projects during his career. As Alan mentioned, we have a heightened focused on our risk profile. We have increased transparency and accountability throughout the organization. Please turn to Slide 6. It has become apparent to me that there a few significant and common issues in many of our challenged projects. In May, we immediately implemented a more rigorous framework to our pursuit process. We have already enacted changes in our bid, no bid process so that our future backlog will be comprised of high quality projects, where the contract structure and execution approach that will generate improved risk adjusted margins. To that end we have set the following pursuit criteria for new projects. For Energy & Chemicals, we will only pursue fixed-price…

Thank you, Carlos. And again, welcome to our second quarter conference call. Like Alan. I returned to Fluor based on my loyalty to the company and along with Alan and Carlos, I am committed to returning Fluor to industry leading performance. Since you can read about our results for the quarter in our earnings release in 10-Q filed this afternoon, I will focus on several key matters. First charges in the quarter. Please turn to Slide 12. Results for the quarter include $669 million of project charges, $46 million for ongoing restructuring efforts in Diversified Services, $26 million for pre-contract costs, and $19 million for the elimination of the embedded foreign currency derivatives related to the company’s joint venture in Mexico. As Carlos mentioned, and as stated in our earnings released in 10-Q, these charges are in large part the result of management’s efforts to resolve or at least progress a number of project matters during the quarter. Some matters have been resolved or a near resolution. However, in spite of our extremely diligent efforts to quantify risks this quarter, risk remains in our backlog in any additional project challenges could impact future results. In addition, the cost of actions to be taken as a result of our ongoing strategic review may also negatively impact future quarters. Consequently, we will not be providing guidance for 2019. Shifting to the balance sheet, Fluor’s cash plus marketable securities for the quarter totaled $1.9 billion, essentially flat to last quarter. Available domestic cash balance was approximately 20% of total cash and marketable securities. Our capital structure remains solid and we have substantial liquidity. In addition to our cash, we have committed lines of credit at $3.5 billion, approximately half of which is available for drawings. We have plenty of room under our key…

Thank you. [Operator Instructions] We’ll take our first question from Andy Kaplowitz with Citi. Please go ahead.

Good evening, guys. Mike, welcome back.

Thank you.

So Alan, I know you said there, before with Carlos, I know you said there could be more risks in our backlog – in your backlog, but The Street has wondered whether you actually created that they’re not getting sides of the charges you took, obviously resolving disagreements between settlement, but could you give us more color into how you looked at your contracts differently? And if it’s possible, could you give us any examples of how you’ve really estimated productivity on projects and did you understand the level of conservatism in your estimate?

Sure. Let me just comment on the several events that took place this quarter as resulted in the charge. For example, on the power projects, we were able to reach settlement agreement with the client. And as a result of that, we’re taking a charge of about $109 million and taking some positive and receiving some positive cash flow. With respect to certain estimates of cost to complete on the couple of projects, those were looked at this quarter given the progress that has been made, particularly with respect to engineering, which oftentimes drives – which drives other factors such as procurement and materials that need to be acquired. And those were re-estimated on that basis. As far as contracts, we have a number and as it is common in every project of change orders on various projects and we evaluate those products – those change orders, we discussed them with the client and we reach conclusions on where we are with respect to the government project, for example, we have a number of change orders that are outstanding and we met with a client and made a judgment as to whether we should take the charge at this time and we decided that we should. That doesn’t mean that we’re not going to pursue those change orders at a later date, but we thought it was prudent to do so at this time. In another factor that we sometimes look at, and obviously with respect to these estimates, there’s a degree of judgment that is exercised. And we’ve tighten the assumptions a little bit. And as a result of that, perhaps took some charges that are reflected in the $714 million of charges this quarter.

Okay. Thanks for that color. How should we think about Fluor’s ability to win major projects and grow backlog going forward? First of all, how favorable do you still think the overall oil and gas and mining markets are at this point? And you talked about some project delays. Do you still believe that we’re in a project upsale? And then are you actually in retrenchment mode [indiscernible] some of major potential awards that are out there, or do you still think you can grow backlog in the industry and in the mining infrastructure business?

Well, a couple of things. Certainly, we think we are well positioned to win work. And it’s no secret that the industry has suffered severely over the last couple of years given what has happened in shifting of risk from clients to contractors. And the industry is getting more selective, but we’re going to – and we’re getting more selective as well, but we think we’re well positioned to win work. For example, right now we have a backlog of $35 billion. We expect over the second half of this year for our backlog to grow perhaps to $40 billion. And with respect to this backlog growth that we’re expecting, we’re very comfortable with the kinds of projects that we’re – that we are expecting to win. We are, let’s assume for example, that we are award with the Rovuma project in Mozambique. That project has gone through a screen filter that’s consistent and compatible with the new rules of the road that we have established. So we’re very comfortable with that. We also have some other, for example, we have some other lump sum project that we’re pursuing but those are negotiated lump sum. So while our backlog would probably increase a little bit in terms of lump sum, it’ll be lump sum that we feel comfortable with.

And Mike, if I could just squeeze a quick one in on cash. You mentioned cash would be negative in the second half of 2019, cash from operations, but could you actually have an outflow next year given the project charges you’re taking now?

That’s a great question. We do expect modest negative cash outflow this year as a result of project charges, but we will also be seeing some inflow from our ongoing operations. For next year, there will definitely be some additional negative outflow from the projects, but we also have our base core business that will be generating cash throughout the year. And our net cash position next year will, to a large extent, really depend on our actions based on a strategic review that we are – that’s underway currently. And I certainly expect those actions, plus ongoing cash management activities where we’re really looking at all of our excess real estate. We’re looking at other assets that can be liquidated. We’re doing a number of things to enhance our cash position. So I would expect overall, I’d be very, very disappointed if we cannot generate significant amounts of cash in 2020.

Thanks, guys.

You bet.

We’ll take our next question from Jamie Cook with Credit Suisse. Please go ahead.

Hi. Good morning. Sorry, good evening. A couple of questions. One, just on the charges that you took on the problem projects, is there any way you can help us disclose the dollar amount of backlog, which is associated with the problem projects? How many are there? You highlighted some, but there were more in infrastructure, you didn’t highlight the number. And then what percent complete those projects are? To my second question is, in terms of how we’re thinking about the strategic review, when you guys were first down the road, you talked about cutting investment and restructuring store, you talked about COOEC. You talked about NuScale, you talked about real estate, but I’m just wondering how extensive this review is now that we have Lazard as a strategic advisor to whether we’re considering broader portfolio changes relative to what we announced before given the magnitude and the pervasiveness of the charges that we’ve seen? So I guess – and then last, like in – in what world can we get comfortable with LNG Canada given what we’ve just seen today?

Okay. Jamie, you’ve asked all the questions I expected you to ask. And let me take – let me start. 75% of the charges that we took this quarter relate to two projects, the offshore project and the government project, as well as the closeout of the power projects. With respect to the infrastructure project, and by the way, the power project is about, I mean, sorry, the government project is about 50% complete. The offshore project is a little bit higher than that in terms of completion. With respect to the infrastructure projects, the largest charge there is the Purple Line project in Maryland, which we discussed in the earlier remarks. With respect to the rest of the infrastructure charges, they’re all small charges that we probably wouldn’t have spoken about, but from a fact that they all add up, the total adds up to about $55 million. And some of those projects that we take in small charges are not even in a loss position. With respect to the strategic review that we’re engaged in, as we said, everything’s on the table. We’re going to be looking at capital structure, dividends, assets, portfolio everything that you can imagine to be in a position to report back on the September 24 call. Alan, I don’t know if you want to add anything to that?

No, I think that’s right, Carlos. Jamie, this last three months, we’ve been incredibly busy, working with our business unit lines, going through the backlog, addressing all of the risk projects. We’ve been progressing in our position on each of the investments and putting a significant focus on those. We also have – and Carlos has done a really excellent effort in providing some pretty stringent selectivity criteria and then enforcing that and working through the organization just to make sure that we are being much more highly selective in addressing these risks. That’s taken a tremendous amount of effort in this quarter. But in respect to the other parts of our portfolio, we have also been assessing that. We’re not in a position in the announcement right now that it requires additional work. We are looking this that some efforts that will reduce our overall cost footprint, Mike mentioned some of those. But I would say on September 24, we’re going to be able to tell you what this business – what the business portfolio of this company should be, what each of them represent and contribute to the total of Fluor and which ones that we think we can – we have to have in an optimum situation. So, we don’t mean to avoid that question at all, it’s just that we’re just not ready to make those decisions yet because of the analysis that’s going on. But you should rest assured that we’re looking at the entire portfolio

And then Alan, on LNG Canada, given what you guys have seen so far, it’s too early to possibly get comfortable with that project. Like how do I respond to that when investors ask me about?

Yes. LNG Canada, as I mentioned, we’re – it’s early in the project still. We’re still on, on schedule and on budget. We brought up a number of experts to augment our critical activity there. We have Mark Fields, who was there two days or three days after he got appointed Head of E&C. Mike and I have now joined the Board of Directors of that joint venture. We are dedicating all of our resources to that project. And at this point, we believe that that project has, would pass our – with new – pursuit the requirements that we’ve implemented now. So this point, we’re comfortable with that project.

All right, I’ll let someone get in there. Thank you.

Thank you, Jamie.

We’ll take our next question from Steven Fisher with UBS. Please go ahead.

Great, thanks, and good evening. Given the – you guys, given the breadth of everything you had to accomplish, do you think that two to three months was enough time to really do everything that you needed to do specifically on the backlog reviews? Like was it as absolutely thorough as it could be or did you have to kind of rush it at all to kind of be prepared for today?

Steve, they have worked their Chairman extremely hard.

I can assure you, Steve, we brought project that we have touched, we have gone thoroughly and deeply to it. And that’s not to say that we won’t be doing that for the next several quarters or so project completion. And that’s not to say, as you know, we can’t say that everything is done on each of these projects, but we have at this point we are very comfortable with where we are based on the information we have now. Now, some of these – but there’s one project that where the engineering has caused us to – have to increase our cost forecast, and that engineering is not complete. I don’t expect it, I mean, I can’t say that’s going to have additional charges, but until the engineering is complete there’s always a possibility of that. But we have worked long and hard the last three months. We’ve talked to clients, we’ve visited the project sites, we’ve talked to our project people. It has been an all out effort.

Steve, let me give you an example of our effort. In my prior life at quarter-end, I’d have one review with all the group CFOs and go through the numbers and make sure they’re comfortable. The last two months we had three rounds of reviews with all the group controllers and CFOs. We brought them in. We sat down for long periods of time on three different occasions to make sure that that we and they were comfortable with the accounting and the assessment of risk this quarter. That was – as Carlos said, it was very intense effort.

Okay. I’m wondering if you can help us understand the likely path of margins from here, particularly in the E&C business because that’s the one, if you look at the guidance that you have for the second half of this year relative to what maybe we should think would be normalized, has perhaps the most room for upside. So really kind of wondering how all this affects 2020. And, yes, should we expect as we go get into the first quarter and the first half of 2020 that that we should see still a step up significantly in margins as you do execute the LNG Canada project and get through some of the other things that are dragging on the margins?

And as you look at the remainder of this year and 2020, obviously the one offshore project will be a drag on margins. But the rest of the business we should expect a modest improvement in margins this year and that will continue into 2020 as we see the rest of the business moving through the backlog and get burned.

But on the E&C business, I mean, does that mean, can we get back to like a 5% to 6% margin in 2020 or is that off the table at this point?

I think it’s going to take a little longer to get back to that level of margin site. I think we’ll see modest improvement this year and the modest improvement next year.

Got it. All right, thanks a lot.

And we’ll take our next question from Tahira Afzal with KeyBanc Capital Markets. Please go ahead.

Good evening, folks.

Hi, Tahira.

Good evening.

So I guess as a first question, you’ve got some interesting partners now on NuScale, both of them have nuclear capabilities as well as expertise. Strategically, if you look out, where do you see their roles potentially going versus yourself?

Well, Tahira, first of all, we’re very pleased that we’ve gotten an investment that’s going to eliminate any funding obligation from Flour for the balance of this year, maybe into the beginning of next year once we get CPS approval. But we have noted a significant increase in investor interest in NuScale and we are pursuing discussions with other investors currently. So, the fact that we’ve gone through two recent gate reviews with NRC and we have passed them and we’re expecting NRC approval, I believe it’s late 2020, it makes us – it gives us a lot of confidence that we’ll be able to attract investors in the next six months to a year.

All right, thank you. And I know a lot of these very important milestones and modular technology are getting lost in all the noise, so obviously, it’s annoying to see that for yourself. I guess the second question for me, there have been several other construction companies that are facing and struggling with productivity issues and constipations. And some of them have been pretty vocal that they’re trying to get some resources from Canada. I guess my concern is even though you’re doing more modular construction for LNG Canada, are you being very watchful on showing up all the expertise units on ground?

Absolutely. That’s one of the things that Mark has enhanced to even since he took over, and he’s bringing resources to that project from other locations to enhance our capabilities there.

Got it. Thank you.

We’ll take our next question from Michael Dudas with Vertical Research. Please go ahead.

Good evening everybody, and appreciate all the frankness and the openness you’ve shared with us this evening.

Thanks, Mike. Thank you.

I guess Alan and Carlos, what were the common themes that you learned from your discussions with the client base, with your management’s, with the employees, with vendors that surprise you or got you to this point of, wow, we got – not Houston, but Dallas, we have a problem other than obviously the issues that we reported today in the second quarter.

Like one of the things that we’ve done is, Carlos and I have met with a lot of the CEOs of our clients. And it’s an interesting – it’s an interesting situation where they understand the issues that are occurring in our industry. They see the damage has been done to the sector. And they actually talk pretty openly about the need for a win-win situation I’m trying to correct that balance. I will tell you though, one of the things that we’ve had in our discussion just pointing out to them, that hasn’t always flow down through their supply chain, is that I’m sure that doesn’t surprise you. But we still and I’ve had two conversations just in the last week, where I’ve gone back up the chain and talked to the top of the company about the, that misdirection or that miss misalignment in the risk review. So we’re going to push on that. I think as Fluor we can be selective. And I think that we – not only can we be selective, as you’ve noticed all of the other announcements in this industry, there are actually people leaving it. There are people that are curtailing there. They’re selectivity criteria as well. I actually think that’s good for us. If we can be disciplined, and we can be selective, I actually think that it creates a better situation for us going forward. But we do have to be disciplined. I’ll let Carlos address the rest of your questions.

Let me comment on what has happened internally within the company. In the last couple of weeks, for example, we have made decisions not to bid projects that we probably would have bid previously. We have also changed our bids on a couple of projects to be noncompliant, but on a basis that we believe we can execute effectively. And we have established – we establishing a new discipline in this regard, we’re not going to take projects where we are going to be bidding against the number of other competitors and we don’t have a quantifiable advantage. And even when we have a quantifiable advantage, it’s going to be when there’s a very limited sight competitors. So this is a change that’s quickly being, that’s resonating throughout the company and every, every risk project comes to me for approval along with my management team and everybody’s on board with that.

I appreciate that, those thoughts. And I guess, Alan, to your point on the CEOs of the clients and the customer base, is this a secular – I mean, this cyclicality in risk transfer from contractor to client over the cycles, but is this somehow more secular, some other, something else being driven by this? Or will it be cyclical when let more people pull out of the business and types of capacity, and then it’ll be a better situation? And how does Fluor as the size of the company and where you’re focused on today, can be most effective for that to generate the returns that’s going to be required to improve your share price?

Mike, that’s an excellent question. This really started, and actually I saw it from the other side, when I was at the Board of an oil and gas company; when the oil price dropped so precipitously several years ago, that’s when the oil – all of the oil companies moved strongly to cut their costs. And one of the first places they did that was with their suppliers and contractors. I think that was the start of the initiative. And it’s just continued since then. In fact they had brought in consultants and so forth to work with their supply chain to continue to perfect that. I do believe that the changes now that are occurring in the industry, the problems that have occurred has woken these companies. And we’ve seen a realization of it. I do believe that what we’re going to do and our actions will actually help drive some momentum in that regard. But other companies are joining this quite frankly. But I think we can lead that effort with our brand and with our global reach and we intend to do this.

Thank you, Alan. Thank you, Carlos.

And we’ll take our next question from Jerry Revich with Goldman Sachs. Please go ahead.

Hi, good afternoon and good evening everyone. Carlos, I’m wondering if you could talk about where you folks drew the line in the sand in terms of projects that you’re monitoring but then take charges on, for example, projects like Tappan Zee, where there’s dispute with them, with the owners and projects like that. Just can you help us build a comfort level that there aren’t another number of projects that we’re monitoring that didn’t meet the threshold where we took charges that, where it’s possible going forward?

Yes, sure. First of all on Tappan Zee, I believe we took a small charge this quarter. We have a – and we do have a dispute with a client and a claim there which we have a legal basis to do, to pursue. So where we have a high level of confidence and comfort, Jerry, we will not take a charge, but in this case, we don’t have very many other projects where we have claims that we believe are at risk. So as I said earlier, we took a very hard look and within the range of reasonableness we got a little bit more conservative.

Okay. And then in terms of the charges that we saw this quarter, what are the cash payments that are going to be necessary where they go along with those charges or have a substantial portion of them effectively already been paid for via working capital growth. Can you help us understand that?

There are substantial future cash payments from some of the charges, probably in the $200 million to $300 million range for this year and then into the first part of next year. But again, we will have cash flow from rest of our operations offset a good portion of that. But there are some charges associated with projects that will actually result in positive cash flow. The Duke power is an example where we took some charges, but we expect to receive cash from the client. The restructuring activities for the AMECO, Mexico and the Caribbean, we took some restructuring charges, but as we liquidate those assets will have positive cash flow. So up, not all of the actions that we took will result in negative cash flow, similar results in positive cash flow with the future.

Okay. And as we look at the implied earnings range of the back half margin commentary that you folks laid out, that implies earnings run rate in the low $2 range. As we think about heading into the strategic review discussion in two months. I would assume that, that’s the starting point for the earnings power of the business and then we’ll look at strategic options from there. Is that the right starting point or would you make any observations relative to where we’re going to be exiting in the year?

Given all the moving parts of this quarter plus the next two quarters, as we go through our strategic review, I really, I don’t think is wise for us to give guidance relative to those starting point. I think we need to go through our strategic review and go through our fall assessment of 2020 and get more of a comfortable as we complete this year to be given guidance as a starting point for looking at next year.

Okay. I appreciate the discussion. Thanks.

Thank you, Jerry.

We’ll take our next question from Chad Dillard with Deutsche Bank. Please go ahead.

Hi, good evening everyone. So can you talk about your commitment to the integrated delivery model and then how this could potentially change and then if, are there any projects that you took charge of that were a bit under that model? And then secondly, with your new risk framework, like how does your prospect list change? What was it before the new framework was implemented, was it look like today?

Let me answer the second question first. Our prospect list really doesn’t change that much. One of the areas where we expect our prospects to materialize, we mentioned it the earlier remarks, is in mining. For example, where almost all the work is reimbursable and with respect, I mentioned earlier with respect to the next six quarters or so, we have prospects that are about between $12 billion and $13 billion of lump sum work, but two-thirds of that prospect list or the value of the prospects are either negotiated lump sum services or the Mozambique project, which we mentioned earlier passes all of our tests in terms of project pursuits. And remind me what was the first part of your question?

Yes. I was just curious about your commitment to the integrated delivery model, how it could change and were there any projects that took charges this quarter bit under that model?

We have the integrated delivery model is something that we’re going to continue to have – to have available to us. But to the extent that any of our strategic review results in some changes and how we handle our investments and that might change. But, we are – that’s a capability that we have, that we’re going continue to offer, but we’re not necessarily going to be limited to that. To the extent that we can offer parts of that delivery model. Because the clients want that, we’re prepared to do that. We’re not going to walk away from different offerings.

Got it. And so I’ll take $670 million of charges, let me guess like how much revenue does that represent and how much is still profitable?

That represents single digit revenue less than 10%, as we look forward for the company. Amount that’s profitable is a modest amount given where you are in those projects. It’s very modest. There were profitable projects in infrastructure as Carlos mentioned, where we took charges on and there were a couple of other one-off projects that were profitable, we reduced profitability going forward. But it’s those projects, I think Jamie asked the question earlier, they represent a large proportion of our revenue or our backlog.

Got you. If I can just squeeze in one last one and just with regard to your analysis of LNG Canada, meeting complicated requirements that probably – is that predicated on owning are there equity ownership in your fab yard?

Well, that’s certainly a part of the risking of that project that we have, our modules being built at the fabrication yard in China. So that’s definitely part of it, yes.

Thank you.

And we do have time for one more question. We’ll take our last question from Andy Wittmann with Baird. Please go ahead.

Great. Thanks for taking my question here. I guess, my question is building on some of the cash and balance sheet questions and would probably be appropriate for Mike. Just looking at the contract assets and the contract liabilities that you reported here, your assets are down sequentially and your liabilities are up significantly from the charges that you took. You’re now in a position for the first time where your contract asset or your contract liabilities are actually in excess of your contract assets. So typically the other way to the tune of about $600 million to $700 million to the positive on assets, so can we – is there any – can we use this relationship between contract liabilities and contract assets to forecast what your potential cash burn could be? You suggested that the second half of the year could burn $200 million or $300 million and there’d still be some burn into 2020. I mean, are we looking here at $700 million, $800 million of cash burn as we move into 2020 on these projects that have the negative contract capital position?

That’s a little high. The cash burn will be a portion of the losses we took were not all those losses do not represent a cash burn, some – for cash that’s already been spent. That was unapproved change orders, things like that that we took off our books where we spent the cash but just don’t expect a collection on the revenue side. We didn’t give out specific numbers, but some of the charges related to cost growth. And on the cost growth side, we will probably see cash outflow. On the revenue side where we expect less revenue income, we’ve already spend some cash and we won’t see that it’ll be a portion, it’ll certainly be more than half, but it won’t be the full amount of those charges.

Okay, that’s helpful. And then I guess just in the case of cash burn happening here, would you look to fund that off of your revolver or would you start considering repatriating some of the foreign domiciled cash? And if you did, what would the tax implications of that be, if that’s one of the options that’s on the table?

Given the cash that we have on hand domestically and our ability to repatriate foreign cash over time and we have a lot of other actions that I mentioned. We’re going to starting right away selling some excess real estate, we’re going to actually be cashing in some insurance policy, if we’re doing a lot of things to generate cash. I expected everything we can, so we’re not going to be funding any of our cash requirements off the revolver, that’s our last option.

Got it. Okay. That’s all my questions. Thank you.

And that does conclude today’s question-and-answer session. I’d like to turn the call back over to Mr. Hernandez for any additional or closing remarks.

Thank you, operator and thanks to all of you for participating on our call today. While we still have a lot of work to do with Fluor that we asked for your patience as we ensure we are taking the right steps. We maintain our conviction that Fluor is a best-in-class company and our remaining diligent in our pursuit to restore our reputation and credibility. Our priority going forward is to pursue win and profitably deliver on work that is aligned with Fluor’s risk profile, engineering, and project management capability. We look forward to providing additional information on September 24, as it pertains to our strategic review and our process regarding portfolio rationalization. Greatly appreciate your support of Fluor. Thank you.

Once again, that does conclude today’s conference. Thank you for your participation. You may now disconnect your phone lines.