Fluor 2Q16 Earnings Call Notes

Fluor (FLR) David Thomas Seaton on Q2 2016 Results

Expect continued slow recovery but are seeing capital spending return

“Generally speaking, we expect continued slow recovery in the global economy and modest improvement in the EPs and EC&M markets specifically. However, with that negative note, we are seeing capital spending return. We expect customers to award projects at a moderate pace as evidenced by our award of a bauxite project in the second quarter in mining and the award of the recently-announced Tengiz project which we’ll book in the third quarter.”

None of our customers makes plans based on spot oil prices

“It’s a good question. I would say we look at the volatility the same way our customers do, that it’s never as bad as it seems. It is never as good as it seems and none of us use spot oil prices or spot commodity prices in our long term planning process. So as I said, I think we’ve got good visibility into what – obviously what’s in our backlog now and good visibility into the things that we think we’ll take into backlog for the remaining part of the year. So I would argue that the latest oil price drop, I mean it was back up again today. So it lost what it lost and it gains what it gains and we just keep moving on. I think that the point I’ll make is that our customers particularly oil and gas customers, they’re basically re-entrenched in terms of $40 oil and those priority projects are still moving forward evidenced by the decision on TCO.”

No spending pattern changes from Brexit, but the end of Brexit wont occur for another two years