Good morning and welcome to the Fluor Corporation’s 3Q 2020 Earnings Conference Call. Today’s call is being recorded. At this time, all participants are in a listen-only mode. A question-and-answer session will follow management’s presentation. A replay of today’s conference call will be available at approximately 10:30 am 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 for seven days through a registration link, also accessible 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. And welcome to Fluor’s third quarter 2020 conference call. With us today are Alan Boeckmann, Fluor’s Executive Chairman; Carlos Hernandez, Fluor’s Chief Executive Officer; and Joe Brennan, Fluor’s Chief Financial Officer. We released our earnings statement earlier this morning, and we are streaming a slide presentation on our website, which we will reference while making prepared remarks. Before getting started, I’d like to refer to you to our safe harbor note regarding forward-looking statements which is summarized on slide 1. During today’s 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. 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 website at investor.fluor.com. I’ll now turn the call over to Carlos Hernandez, Fluor’s Chief Executive Officer. Carlos?

Thanks, Jason, and good morning, everyone. It’s great to be talking with all of you again. And I am pleased to report that with this morning’s 10-Q filing, Fluor is now current with its financials. Our team around the world has worked tirelessly over the last several months to get us to this point. And we are proud and grateful for their diligence and hard work. And we look forward to speaking with the investment community on a more regular and consistent cadence, going forward. And we thank you for your patience as we confront with the challenges of 2020. Moving to slide 2, I’d like to start by providing an update on the effects of the pandemic on our operations, as well as discuss -- and we’ll discuss in greater detail, since we last spoke, we have been -- we have seen our projects continue to come back on line and recover from the initial rounds of regulatory, lockdown and COVID cases. We are monitoring restrictions in various states and countries with rising cases and we’ll keep you updated on any major impacts to our business that we might see. Over 75% of our offices are open and operating at a reduced level of operations with remaining offices still closed. We can flex the level of personnel at our offices as local restrictions and community spread of the virus changes. Only about 7% of our projects are closed, with the rest operating at normal, intermediate or limited capacity. We continue to engage with our clients on how to proceed successfully and safely and have provided notices asserting our rights under change of law and force majeure your provisions. We remain committed to the health and safety of our employees and communities where we work. And we have launched new…

Thanks, Carlos, and good morning, everyone. I’ll start with a financial update on slide 9. In the third quarter, we recorded revenue of $3.8 billion, down slightly from Q2, and earnings from continuing operations attributable to Fluor of $19.1 million or $0.14 per share. Results for the quarter include $30 million of foreign currency transaction losses, $22 million of NuScale expenses, and $19 million of internal investigation expenses. In regards to NuScale, while we previously stated 2020 expenses would be fully funded by investors, investment decision delays due to the pandemic have required Fluor to provide $15 million of the funding in the third quarter. Our overall segment profit margin of 3.4% for the quarter is evidence of the work we have done over the last 18 months to stabilize the business. We saw the strong performance across our business lines this quarter and have not taken any material project execution charges in the first three quarters of 2020. Specifically, in Energy & Chemicals, it’s important to note that our higher-than-normal operating margins for Q3 do not properly represent our performance in the quarter. Although we did see increased project execution activity on our LNG project, the effects of COVID and normal project adjustments were reflected in Q1 because of our delayed reporting schedule this year. Results for the segment also benefited from favorable FX. Thus, looking at the business line from a year-to-date perspective provides a better picture of our performance in that segment. Corporate G&A expenses in the quarter were $68 million. Most foreign currencies strengthened against the U.S. dollar in the quarter, resulting in the previously mentioned foreign currency loss of $30 million, which is driving up the corporate G&A expense. G&A also reflects $19 million of investigation expenses. Moving to slide 10. Our cash balance at…

Thank you, Joe. I’ll now ask you to move to slide 12, and I’d like to start this morning by saying a few words about Carlos Hernandez. It has been my absolute privilege to get to work alongside Carlos since he came into the Company in 2007, but more specifically, over the last 19 months. Carlos took over this Company and quickly back to work stabilizing our business and positioning the Company for growth going forward. His hallmark has to be always promoting a culture of transparency and accountability. And the changes he put in place have quickly filtered across the Company. The revised pursuit criteria that Carlos enacted has significantly reduced the risk in our backlog and has allowed our sales team to focus on high-quality projects where we can be profitable and successful. Additionally, I think, it’s important to note even again in this call that Fluor has not taken any significant project charges in the last nine months. We have also maintained strong liquidity and have completed a very detailed investigation. All of this is a testament to Carlos’ focus on risk assessment, transparency and accountability. The changes we made in this Company were necessary to set us up for the next chapter. And we are truly thankful for his contribution and wish him well in his much-deserved retirement. I’d like to now speak a bit about the CEO succession. As Carlos has put us on a stable operating platform, the Board recognized that it was time for the succession to allow us to move forward with a CEO that will own the forward strategy for the next time frame. Therefore, on January the 1st, David Constable will return to Fluor as our Chief Executive Officer. David held various leadership positions at Fluor from 1982 to 2011, and has also been a member of our Board since 2019. He has a deep understanding of our operations and opportunities and has a particular focus on effective risk management. I speak on behalf of the Board when we say we fully support this appointment for the CEO position and are confident he is the right person to lead our Company. I know that some of you remember David when he was last with the Company. And he is looking forward to reconnecting and with the rest of the investment community soon. As previously mentioned, we are planning a strategy game in early 2021. At that time, you will all get a chance to hear from David and the management team about their priorities and the actions that will move this Company in 2021 and beyond. And now, with that operator, we will open the line for questions.

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

Good morning, guys. Carlos, thanks for all your help, good working with you. Can you give us a little more color into how you and your customers are adjusting to COVID-related delays, especially on your problem projects? Basically, have COVID-related delays generally pushed back your timing to complete projects? And have customers in general agreed to the new completion dates and/or agreed to force majeure as you talked about, or might we see more noise around some of your projects until COVID fades?

Thanks for that question, Andy. Actually, obviously, the clients understand that COVID is impacting our projects. And generally speaking, we are negotiating with the clients on the effects of the COVID impact, both as to schedule and as to cost. And I think that the discussions are very collaborative for the most part. There is no question that there will be compensation to the contractor for impacts beyond our control. And we’re in process of resolving some of those to this point in time. The problem is that, obviously, we don’t know what the final COVID impact is going to be until we get past the pandemic. But, we’re engaged in some discussions right now with clients to resolve them to this point and then reserve the right to further negotiate down the road additional impacts.

All right. Thanks for that. And then, obviously, commodities have been rising relatively recently here. Have you sensed any increased willingness from your clients to open the spigot and start spending again outside of E&C? I mean, you’ve talked about these mining projects in the past. I know they’re pushed out. But, you did mention sort of a little bit more spend in mining, I think, over the last month. So, is there any higher probability, especially if these commodity prices continue their current trend, to see more of these EPC projects, non-energy in 2021 and beyond?

Yes. Actually, we viewed a number of prospects in the mining area as we have a process that’s very disciplined about how we decide on whether to bid project or not to bid a project, and then what to submit as a proposal. We are seeing -- we’re going through those processes on a number of projects in mining and have been for the last several months. So, yes, I’m optimistic that mining will actually begin to resurface as a major activity area for us. As the world becomes more electrified and copper becomes more necessary, I expect that we will be seeing copper and gold projects coming up. And we are in the premier position to execute those projects.

And then, maybe one more quickie for Joe. I don’t know if you can answer it. But, your initial margin guidance for E&C, before you had to pull it, was 3% to 5% margin. You talked about margin being more like year-to-date, which seems like it’d be in that range. So, is that the way to think about E&C margin generally going forward?

Yes. I think that we didn’t call it out to kind of take a look at the nine-month run rate, Andy. And that would be a better thought process around how you could view E&C moving forward.

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

I just wanted to follow-up on Andy’s question on the E&C margins, because Joe, I think if you take the year-to-date, you know what I mean, I don’t know if that’s necessarily reflective because I think you had some charges in the first quarter. And it implied probably more like a 3% margin. So, like, why wouldn’t margins be higher than that or at least at the high end, you know what I mean, of your 3% to 5% in 2021, in particular, as activity starts to pick up because that has meaningful implications for the earnings power for 2021? If we just took the third quarter at face value and adjusted for tax and G&A, it implies like a $0.50 number. Now, that’s probably too high, but it just has meaningful implications for 2021. And then, I guess, my second question just is, on the bookings outlook, understanding COVID has implications. But, I’m just trying to understand how much bookings are being weighed down by customers waiting for you to come out with your sort of strategic update and which businesses will be a focus or not.

I’ll take the first one. If you go back into the 3 -- nominally 3.1% run rate in E&C, and you view some of the impacts that are dragging that number down to the 3%, they’re really non-recurring issues. And I think, you’re right, Jamie, if you eliminate those non-recurring issues, you’re probably closer to the upper range of that 3% to 5%.

Jamie, with respect to your other question -- second question, we have been talking to customers really all along during this pandemic. And so, we’re very close to them. They know where we’re coming from. And I don’t expect that our strategy -- they’re not waiting for our strategy to be announced to go forward on projects for that. I think, they are very-comfortable, especially our oil and gas customers are very much -- expressed to us very much the desire for us to be available to them as a contractor and can execute their large capital project.

Okay. And just one follow-up. Can you just help us understand, you said the projects are on -- the problem projects are on schedule, and you haven’t had material charges. But, what’s the dollar amount now associated with the problem projects that’s in backlog?

Well, in terms of earnings, we’re on plan. In terms of cash, we’re on plan as well. In terms of cost -- we’re going to spend. Go ahead and answer.

Yes. No, I can speak to the cash side of it. We had signaled back in I think September, Jamie, that we had nominally $400 million. It’s about $438 million that we were going to spend on problem projects in 2020 and that there would be a residual $200 million at that point in time, based on a number of things that have occurred in the ‘21 and beyond. We’ve had improvement in execution as it relates to those problem projects. We’ve had some cost avoidance. And so, that $200 million is nominally somewhere between $50 million to $75 million at this point. So, we have been able to improve what we saw as a cash outlay relative to problem projects in ‘21 and beyond and seeing some significant improvement in what that will entail.

Yes...

Sorry go ahead, Carlos.

We’re very pleased with the execution of all of our projects, given what we took over in May of ‘19. So, we have been focusing on execution, as we said back then, and it paid dividends.

Okay. And Carlos, thanks for your help throughout this as well. So, it was a pleasure working with you. Thanks.

Thank you. Likewise.

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

Thanks. Good morning. And I’ll echo the sentiment. Thanks a lot, Carlos, and best wishes to you. So, just to follow up on Jamie’s question about the project deferrals and activities. So, it sounds like customers are not necessarily waiting for any strategy, but could you just talk a little bit more about what really is thinking and driver of the project deferrals? How much is COVID? How much is it commodity price? How much is it economic uncertainty? Things like that. And do you have a sense of where backlog could actually bottom or stabilize and when?

Yes. I think, it varies by business segment. With respect to oil and gas, obviously, oil prices are a big factor there. In terms of mining, commodity prices somewhat, but also COVID has impacted mining business maybe more than some of the other businesses. The other business -- life science is going very well, ATLS going very well; Government, well. So, we expect to see growth in Government, ATLS and even mining as we proceed into next year. In terms of the backlog, we’re going to -- where are we now today, Joe? It’s 15 -- 20 [multiple speakers]. We’re replacing some of that backlog. Obviously, we’re not replacing the entire backlog, but we’re replacing it. We’re -- the backlog we’re taking in -- and this is really an important point. Backlog that we’re taking in is very, very much based on the discipline that we’ve established early on in 2019. So, we’re not taking in bad projects. And so, backlog will decline somewhat, but it will be good backlog.

Okay. And then, in the Infrastructure segment, I wonder if you can just give us a sense of how the mix of legacy projects versus newer project will trend over the course of the year? I know it sounds like the legacy ones will become a smaller piece. But, do you think you’re going to start off with the year, say 20% newer project mix, and by the end of ‘21, that becomes 80%? How do we see that split as this business could be a big contributor to profit as well?

I don’t have the percentages. Joe…?

I can give you a sense, right now, we’re -- nominally about $500 million that we’re going to be pulling from previous backlog into 2021 and beyond. And then some of the new work like Oak Hill that we’ve just booked into, we’ll start to kind of balance that out as we move forward. But right now, we’re looking at about $0.5 billion of projects that we’re continuing to execute from the previous two, three years that will flow into ‘21.

Okay. Thanks. Yes. That’s helpful. And then just…

One more point on that, Steven. Obviously, the termination of the Purple Line project has been a very favorable development for us because that’s a large project, that’s the legacy project. And we’ll be able to exit that project and avoid any future risks and costs there.

Yes. That’s certainly important. And just one last clarification, I know you were talking about the potential to resolve COVID project delays. Did you say or can you say, do you expect a resolution on a force majeure decision in 2021 on LNG Canada in particular, or could that extend beyond that?

Yes. Thanks for that question. I think, the way it probably will play out in LNGC is, we’ll probably have a partial resolution with respect to the impacts to date. And then, later on, when we’re in a position to assess additional impacts, we’ll negotiate that. Like I said before, it’s not something we can negotiate once because situation of the effects are pretty lengthy. And just a point of clarification, it’s not just a force majeure plain. It’s something we call change of law because many of the impacts are a result of government-directed lockdown. So, it’s both of those provisions that give us the basis for resolution.

We’ll take our next question from Jerry Revich with Goldman Sachs.

Yes. Hi. Good morning, everyone. And Carlos, congratulations on really stabilizing the business and the financials. That was certainly not an easy task here.

Thank you, Jerry.

I’m wondering if we could just take a step back and talk about the balance sheet going forward, now that the cash outflows are wrapping up on the problem projects. Alan, are you and the Board thinking about the balance sheet going forward? What do you need to see before we’re deploying cash as a completion of LNG Canada? Can you just talk about conceptually what signposts we should look for to see when you folks might be deploying capital again, once we’re continuing with the turnaround here?

Yes. Jerry, I’d be glad to talk about that. Clearly, I mentioned the -- Carlos putting us in a position to reach stability. We’re at a point right now, and Joe has also mentioned in his remarks, where we’re engaging with our banks on our credit facilities, which will become current here early in this next year. And so, getting that done is an important step. Also solidifying our balance sheet and both looking to improve our credit ratings is important to us. And then, starting to pay down debt against that balance sheet to improve the strength of the balance sheet is another important part of the going forward strategy. We believe that we’ve got strong liquidity right now, as Carlos said, to be able to manage the business, to be able to -- face with the -- growth prospects and to be able to have funds for any eventuality. But, it’s the balance sheet now that’s our strong focus. And I think, also, it is starting to make our mark in those industries where we can see potential growth. And that’s going to be a very important part of the going forward strategy. We want to be able to invest in some of the industries where we think we have a great future. And again, it’s not necessarily the same business group that was in the past. So, I think, I don’t want to be able to -- don’t really want to say much more, but those are our main goals going through the strategy session. We have a lot of strength in the Company. And we have some opportunities, I think, to address the market that are coming forward and where we have strength that hadn’t necessarily put the focus on them in the past. I hope that answers your question.

That’s super helpful. And then, in terms of maybe just to pick up on the strength of the Company along the areas where there is perceived growth, hydrogen infrastructure, obviously, copper, you alluded to. Can you flesh out what are the Company’s strength in some of those areas that are obviously not driving the P&L currently but could be interesting if we do see alternative energy technologies going forward? Outside of NuScale, what are the Company’s capabilities today without spilling the beans on the strategy day?

I don’t want to have to scoop David Constable here. But -- so, I’m going to be very general. I think, we do have some significant strengths both in intellectual property but also in the ability to execute in locales, to be able to handle permitting, work in difficult locations to be able to use our project management overall skills, to be able to drive a successful project. So, I think, the actual unveiling of the markets we’re really going to tend to focus and push hard on. So, I’m going to save for David and his team to unveil in our Investor Day coming up in early 2021. But, I do think it’s going to be -- I think it is exciting, the opportunities that we have in front of us. And I think the position that we’re in now that Carlos has gotten us to will allow us to start slowly at first, but to gain momentum and in a staged process for a very strong forward strategy together.

And something that we’ve seen from some companies in this environment is companies reducing the size of their office space and companies essentially rightsizing their organizations and considering the new pockets of infrastructure build-out over the next 10 years will be different from what we’ve seen in terms of heavy energy investment, what we call it, the prior 20. How big of an opportunity is it to rightsize the cost structure and rightsize the footprint? Is that something that we should be thinking about…?

Yes. I think you can assume that there will be a focus on that.

We will take our next question from Sean Eastman with KeyBanc Capital Markets.

Hi, gentlemen. Thanks very much for taking my questions. I just wanted to confirm how much zero-margin work is left in the backlog as of the third quarter, and how much is expected to be remaining going into 2021? I think, you guys mentioned a $500 million number for the infrastructure segment specifically. But, I just wanted to understand how much of that your margin work sort of rolls off and becomes a margin tailwind into 2021?

And Sean, you’re talking about the loss projects, if you will, that we’re pulling into ‘21?

Exactly.

Yes. So, if I highlight the two biggest -- the Purple Line being pulled out of backlog, the two biggest numbers that -- two biggest projects that are contributing to the backlog rolling into ‘21 are Green Line and Bergstrom. And Bergstrom is 35% complete and -- or excuse me, Bergstrom is 80% complete, and Green Line is 35% complete. And they represent the lion’s share of that balance. So, my recommendation is that I think it’s tied up into those two projects. And then, we’ll start seeing some of the benefit of the new work that’s coming in that we booked in this quarter.

That’s helpful. Would you be able to tell us how infrastructure margins are running year-to-date in 2020, ex the loss project?

Yes. No, it’s difficult at this point because they’re all running at kind of zero-margin at this point for the loss projects. But then, we would have to do some weighted new relative to what we’re putting into backlog. But really, any of the new work that’s going into the infra side of the business has just been booked in the previous quarter. So, I think, it would be better to have that discussion in the February timeframe when we have a little bit more color around it.

Okay. That’s fair. And then, you guys had previously talked about getting that domestic readily available cash balance up to sort of the $1 billion level. I’m curious where that number is today and kind of exiting 2020?

Currently, we’ll exit -- for the $2.1 billion, about 36% of that is readily available domestic cash. So, we’re on our way. But again, to Alan’s comment, I don’t want to get out in front of Mr. Constable’s strategy meetings. But, as we go through the strategy, we’ll probably have a review of what that cash balance needs to be to support the organization and the brick-and-mortar footprint and some of the other things that will be fallout of what the new strategy is moving forward. So, that number may look or change as we get into discussions at Investor Day.

Okay. Thanks. I appreciate it.

Operator, can we take the next question?

Could you guys still hear me? Should I just keep going?

We can. Yes.

All right. That’s good. Okay. So, if you look at the corporate G&A expenses, the underlying number is running quite low year-to-date. So, could you guys talk a little bit about that dynamic, sort of where the savings are coming in there, what’s sustainable, and maybe where that corporate G&A run rate goes into next year?

Yes. So, I think, if you take in my opening comments, Sean, I think, we -- if you take the $68 million and you take the FX impact out of it, and take the investigative costs out of that, you’re down at about a $30 million number. But, I would suggest that by giving guidance around what that run rate may look like going forward, I’d say somewhere between $35 million to $45 million at this point.

We’ll take our next question from Justin Hauke with Robert W. Baird.

Thank you. I’ve got two here. First one, I guess, probably kind of easy one. But, can you just quantify the descoping on the Purple Line, what that was, the backlog? And it looks like actually, maybe there was a rescoping, going through the Q, but the reconciliation shows that maybe something came back in. So, can you just talk about those two items?

I can talk top line on Purple Line. What we did take out of backlog was $543 million. I would suggest maybe we go back and see if we can follow-up on your second question, Justin. Is it Justin, sorry?

Okay. So that’s fine. We can follow-up.

Yes. $543 million is the number that came out of backlog for Purple Line.

Great. Thank you. Second one is just on the AMECO sale. I guess, I mean, I understand being pushed back. But, I guess how advanced is that first half ‘21 expectation? And I think, in the past, you guys have quantified something like $200-plus million of proceeds from AMECO. You got the $18 million from the Jamaica piece, which was obviously a small piece. But, is that still a reasonable number, or is there anything that you can give us as an update about expectations for what the cash proceeds might be from that?

Yes. And so, as we had started this process and holistically trying to transact the business, it’s become clear as we’ve gotten into some fairly curious negotiations here that it will more than likely be transaction on a regional basis, being North Africa -- or excuse me, North America and South America being two discrete elements of the transaction. We are very well progressed in discussions on the North American side and continue to develop a transactional strategy for the South American side. So, we wouldn’t come off of that $200 million range. We believe that’s a reasonable expectation. We are just significantly closer to the North American sale than we are the South American sale, but still slated for first half of ‘21 for North America.

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

Good morning, gentlemen. Well done, Carlos.

Good morning, Mike. Thank you.

Recognizing how your new focus on discipline on bidding on projects and the overall decline in the market, maybe you can highlight a couple of areas that you’ve seen in the last couple of months maybe heading into 2021 on the energy side where you’re seeing some green shoots, and also maybe in the Government and Diversified Services, maybe a bit of some observations on recompetes, opportunities to grow backlog and generate better work in those two end markets. Certainly, Government’s a little bit countercyclical and Diversified Services certainly are impacted by COVID and small-cap projects being pressured. So, just maybe some of those observations to set things up as we look towards ‘21 and beyond?

Sure. Well, in Energy & Chemicals, we didn’t specifically mention this today, I just want to mention now. The chemicals business is still a very steady business for us. And we don’t expect to see a decline there. In the Energy & Chemicals business -- I mean, the oil and gas business, we’ve talked about the discipline that our clients are going to demonstrate. So, we expect that that’s going to be a challenging area for a little while. But, with respect to Government, we are very well positioned in the DOE space. For example, we’ve got -- we won a number of projects, but some of those are being challenged, being protested, but we feel pretty good about our position on those. And we see continued opportunities in the Government space. And that’s also true in the advanced technologies and life sciences, where we’re actually working on some COVID-related facilities as well as other pharmaceutical-type of projects. That is an area that we anticipate will have lots of opportunities for us as well. And again, we’ve mentioned -- we mentioned mining. I think, mining may be a little bit later coming up. But, we’re very bullish on mining as well. Infrastructure, we defined our -- that we’re going to restrict our bidding to jurisdictions where the Department of Transportation executes projects or advances projects in a way that’s fair and coming to us and to contractors in general, and we’ve been successful. And Texas is certainly one of those, and there are several other states that we’ve mentioned in the past where we’ve been able to complete projects successfully for both, the clients and for us.

And follow-up, Carlos, how do you guys feel about in general NuScale going into ‘21? Is some pretty big milestones, can we anticipate on that front, whether it’s a new project or more support on the development or investment side?

There’s lots going on there, but I’m going to let Alan take that one.

Yes, Mike. It’s a very good question. I think, the -- several things have happened over the last six months that have been incredibly positive for the NuScale business and its development. Number one, Carlos mentioned the NRC approval, that’s clearly one of the biggest ones. But, the Direct Finance Corporation of U.S. announced lifting their prohibition on lending for nuclear projects internationally. That has gotten a lot of attention and has resulted in probably two fairly good opportunities to turn into projects here within 2021. The other thing that happened is the DOE announced a $1.4 billion award, grant award for the first nuclear project to use small molecular reactors. And right now, that’s targeted for the U.S. project to drive it forward. But, we are talking with at least two other clients with potential imminent projects coming up within 2021. So, the project side is starting to look good, but also we’re having very serious discussions with investors. We want to come into the equity side with NuScale. So, both sides of the equation are looking strong right now. The timing is the issue and getting these projects on board as well as investors on board is taking a lot of our attention.

And Alan, I would think that the incoming administration would be net positive towards this, I would think, given decarbonization, but I don’t know if you have any observations there?

Actually, the answer to that is yes. It’s interesting that NuScale really got its boost and started moving forward under the Obama administration with Secretary Moniz as the Head of DOE. And we’ve seen over the last -- even during this last administration, a very strong bicameral support for this effort. So, we don’t think that will change at all. In fact, if anything, it may get a little bit extra for us.

We’ll now take our final question from Michael Feniger with Bank of America.

Hey, guys. Thanks for squeezing me in. I really appreciate it. The cash balance of $2 billion is impressive that it’s got that level. And even year-to-date, the cash from ops, it looks like the $144 million is up from a year ago, even with some of the losses that you guys talked about this year. I guess, anything we should be aware of that has benefited you this year that might reverse on the cash from op side in 2021? And with this question, I guess, the fact that the cash balance has been relatively stable over the last 12 months, yet your backlog is under pressure in new orders, is it likely that the cash balance comes down, gets drawn down through 2021? Any context you can provide there on that?

Yes. I’ll take the question. Our cash balances are kind of a function of a number of the initiatives that we’ve put into place, the least of which is the bidding principles and what is going into backlog and the cash that it’s generating, I think, one. Two, I think, the cost optimization program has been very, very beneficial. In fact, we had set a target of $100 million. And without divulging what that number is, we’ll be north of that number in terms of real cash savings for the year. I think to the extent that I mentioned earlier, Michael, that we are executing our loss provision projects more effectively and efficiently than we had anticipated back in September have all been benefits. But I would call this, most of the cash generation you’re seeing is through organic decisions and actions that the Company is taking currently.

Understood. And when we talked about, to Jamie’s question earlier, the 3.1% margin like year-to-date E&C, it actually sounds like it’s higher if we exclude some charges. So, you mentioned maybe 4% to 5%. Is that what we’re thinking, heading early into 2020 that we should be more on the 5% number? And can you just help me understand with what you’re saying year-to-date, how much has like LNG Canada actually contributed to that number? Is margin being recognized above that range as you guys start to build out that project?

I’ll answer it maybe holistically, and we’ll probably get into the LNGC call -- or question maybe a little bit later in February when we talk about it. But, the impacts really that are driving the 3.1% cumulative margins through the first nine months are some of the disclosed COVID impacts. We have a credit risk on a project in Mexico, and then, we have a loss on the transaction versus here at Fluor, which we would consider to be non-recurring events, at the end of the day. So, if you normalize those out, we’re closer to the 5% range. So, I would suggest that’s probably a better number to utilize moving forward.

Got it. That’s really helpful. And then, it’s impressive, as you guys mentioned, no product charges on execution in the last three quarters yet. Just following up on Steve’s question, it sounds like we get a little bit more visibility on the impact of COVID for LNG Canada. I guess, how many other projects out there right now that there are some need for resolution? I understand that’s kind of normal course of the business. I don’t know if this is a little bit more than normal course with what you guys are speeding. Because I guess, I’m just trying to reconcile the really impressive last two quarters of no big charges yet the outlook based on the pandemic is impacting staffing and execution. Can we wake up in the middle of 2021 or end of 2021 when the vaccine’s out there, economy coming, yet there still are some litigation or charges? Any way you guys can kind of frame that for us and how to think about that and time line?

Yes. I’ll take that one. In terms of COVID, obviously, the fixed price projects are the ones that we have COVID impacts that are being negotiated with the client. I don’t think any client is denying entitlements, but clients obviously will negotiate with us in terms of the amount and to scheduling cost. So, it’s still -- we’re working with the clients on some of these projects and have already reached some preliminary resolutions, which are favorable. But, we still have a number of them to be resolved. And it’s hard to resolve them because the impacts are still ongoing, in some cases -- in many cases. So, I can’t tell you the magnitude, but I can tell you that it’s obviously a recognized cost and schedule impact that we’re working with the clients to address in an equitable way.

That concludes today’s question-and-answer session. Mr. Hernandez, at this time, I will turn back the conference to you for any additional or closing remarks.

Thank you, operator, and thanks to all of you for participating on our call today. This is my last time speaking with you as CEO of Fluor. The challenges the Company has faced over the last 18 months from project write-downs and internal investigation to a global pandemic have been truly extraordinary. I want to thank all of our stakeholders, our shareholders, our clients, our partners, and of course, our 45,000 employees for sticking with us through this process. I strongly believe I’m leaving the Company stronger and more resilient than when I was named CEO in May of 2019. As an investor, I look forward to seeing great things in Fluor’s future. In the meantime, I’ve been working closely with David to ensure a smooth transition. I’ve known David for many years. And he brings a unique combination of deep insight into Fluor and an outsider’s perspective. He truly knows our Company inside and out, and I wish him all the best in his role. We greatly appreciate your support of Fluor. Thank you.

This concludes today’s call. Thank you for your participation. You may now disconnect.