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 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 connect with all of you again. I am pleased to announce that with this morning’s 10-Q filing, Fluor is now current with its financials. Our global team has worked diligently over the last several months to reach this milestone, and we are proud of their hard work and commitment. We look forward to more regular conversations with the investment community going forward, and we appreciate your patience as we navigate the challenges of 2020. Moving to slide 2, I’d like to provide an update on the effects of the pandemic on our operations. Since our last discussion, our projects have started to come back online and recover from the initial rounds of regulatory lockdowns and COVID cases. We are closely monitoring restrictions in various states and countries with rising cases and will keep you informed of any significant impacts to our business. Over 75% of our offices are now open and operating at a reduced capacity, while the remaining offices remain closed. We can adjust the level of personnel based on local restrictions and the spread of the virus. Only about 7% of our projects are closed, with the remainder operating at normal, intermediate, or limited capacity. We continue to engage with our clients to proceed safely and successfully, and we have issued notices asserting our rights under change of law and force majeure provisions. Our commitment to the health and safety of our employees and the communities we serve remains strong, and we have implemented new procedures, training, and communication packages to help transition our staff back to work safely and conclude the year on a positive note. We are ensuring that our employees receive the mental and physical support necessary to stay resilient and keep our business progressing. Despite the ongoing impact of COVID, we are witnessing several positive trends within the Company. Most of our projects have continued to advance safely and successfully in the field, and the projects identified as problem projects last year have adhered to their updated cost forecasts and schedules, with no significant charges incurred in the third quarter. Before handing the call over to Joe for a financial update, I would like to share a high-level outlook regarding our various business segments and some project-specific details. Turning to slide 3, in the Energy & Chemicals segment, we are making progress on executing our backlog despite pandemic-related constraints. However, many of our oil and gas clients are indicating they plan to reduce capital expenditures over the next few years. We believe our clients will prioritize high-value projects that can yield returns in a weak commodity price environment. While we have a pipeline of projects, we will only pursue those that meet our revised criteria as we focus on delivering consistent profitability. On the TCO project, remobilization continues as the COVID situation in Tengiz and Western Kazakhstan has improved. We successfully increased the project workforce to over 15,000 in Q3 and aim to increase it to 20,000 by the end of 2020. Currently, we are over 19,000. In October, the project completed the final sealift module delivery on schedule, marking a crucial achievement amid the pandemic. The Fluor-led joint venture is 98% complete with engineering and construction in Tengiz and has surpassed 50% completion overall. Major construction activities include placing modules on foundations and completing metering stations and power and control scopes. In Kuwait, crude oil has begun pumping to the Al-Zour refinery ahead of commissioning, which, when complete, will be one of the largest oil refining facilities globally. Lastly, our offshore project work is ongoing, and we are targeting completion of the fabrication and pre-commissioning work in 2021. We are facing challenges from COVID and travel restrictions in China that are affecting progress, but we are taking mitigation actions. Now, moving to slide four. In Kitimat, we are advancing on the LNG Canada project, despite the challenges posed by government-imposed restrictions due to the pandemic. Our engineering deliverables are being generated in various global operating centers to keep pace with our COVID-19-impacted fabrication and construction schedules. Site activities are progressing while adhering to all recommended health measures. Site preparation and piling work for train 1 are complete, and train 2 is making good progress. The modules offloading facility, haul road, and bridges required to transport the modules to site will be ready ahead of receiving the first module in 2021. We have started pile capping, concrete foundations placement, and paving for train 1. While we continue working on-site, our primary focus remains the safety and well-being of our team. Moving on to our Mining & Industrial segment. Due to the ongoing pandemic and fluctuations in commodity prices, many large mining projects we anticipated to be awarded in 2020 and 2021 have been delayed. We are well-positioned to secure these projects when our clients are ready to proceed. Revenue and profit in this segment were adversely affected by delayed execution on some of these major projects. However, in the past month, we have started to see these projects come back online and anticipate revenue pickup as they resume operations. In our advanced technologies and life sciences sector, we completed the Novo Nordisk project in North Carolina during the third quarter, along with securing new awards for a cell-based influenza vaccine manufacturing facility in Australia. Now shifting to slide 6. Our Infrastructure margins reflect execution on several zero-margin projects in our backlog, but we are continuing to move these projects forward and expect margin relief as they conclude later this year and into 2021. This quarter, our Infrastructure segment secured the Oak Hill Parkway Highway project in Austin from the Texas Department of Transportation. This project exemplifies our focus on the Texas infrastructure market and demonstrates the trust Texas places in our services. As we previously mentioned, we terminated our contract with the Maryland Department of Transportation for the Purple Line project in the third quarter. This project has been removed from our backlog. In November, the Maryland Department of Transportation reached an agreement in principle worth $250 million with the consortium to settle outstanding claims. While this agreement is subject to approval by the Maryland Board of Public Works, it will help Fluor and its joint venture partners avoid further project costs. Turning to slide 7, in our Government segment, the third quarter reflects a return to near-normal outcomes, thanks to effective management and solid performance in work levels despite the pandemic, compared to the second quarter. This improvement was noted across the Government group, particularly in the Strategic Petroleum Reserve, Portsmouth, and Savannah River projects. In Diversified Services, reduced business volumes due to COVID-19 have continued to affect results in the third quarter. However, we have started to see volumes increase over the past two months as lockdown restrictions have eased, especially in Europe and Latin America. During the third quarter, we also divested EQIN, our professional equipment rental business in Europe. Now moving to our Other segment on slide 8. This segment includes the fixed price Radford and Warren projects that were previously part of the Government segment, as well as our NuScale initiative. The margin forecast for the Radford and Warren projects remains relatively unchanged. The Radford project is nearing completion, with site teams efficiently addressing punch list items. The water trials have been successful, and significant progress has been made in turning over subsystems to the client. Full turnover of all systems and effective site demobilization is expected early next year. Warren has had a productive construction campaign through the summer and fall, overcoming initial design challenges and achieving substantial progress with early structural work. The project successfully negotiated a time extension with the client, mitigating the risk of schedule-related damages. Thus far, the impacts from COVID have been manageable, and schedule challenges have been effectively addressed. In August, we announced that NuScale received final design certification from the NRC, establishing it as a leader in small modular reactor technology and allowing Fluor to meet customer needs for unique, flexible, safe, and carbon-free energy solutions. Since this approval, interest from potential customers, capital investors, manufacturers, and supply chain partners has increased, propelling our development efforts forward. Fluor is excited to support NuScale in creating a carbon-free power solution and we look forward to discussing our opportunities in the near future. I will now hand the call over to Joe for a financial update. Joe?

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 that 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 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 the end of the third quarter was $2.1 billion, with 36% of that domestically available for use. Our operating cash flow for the quarter was $80 million with free cash flow of $58 million. Moving to capital structure and liquidity. We continue to believe that we have ample liquidity to meet the demands of current projects and future prospects. As Carlos mentioned, with today’s filing, we are now current with all financial filings and debt requirements. Furthermore, we continue to have extensive and ongoing communications with our banking community. And before giving you some general comments about the fourth quarter and 2021, I wanted to provide a quick update on the sale of our AMECO equipment rental business. While this sale is still progressing, the pandemic has slowed progress on getting this transaction completed. We now anticipate that we will divest this business in the first half of 2021. In the third quarter, we sold substantially all of our assets of our AMECO Jamaica business for $18 million net of working capital and recognized a loss of $1 million. You can see this reflected in this quarter’s results from discontinued operations. Turning to slide 11. While we are not planning to provide 2021 guidance until our year-end earnings call in February, I would like to point out a few items as we close out the fourth quarter and move into quarter one. As we stand today, our cash balance is north of $2 billion, and we expect to maintain cash at this level through the end of the year. Our cash balance is roughly equivalent to where we stood at the end of 2019. Thus, we have been able to fund our loss projects through the year while maintaining strong liquidity. Our non-cash compensation expense in the fourth quarter will reflect the delayed filing of the 10-K and will increase our G&A expense for the quarter. For our loss projects, we have approximately $100 million left to fund in the fourth quarter and then a marginal impact beyond this year. As a reminder, because these projects have been written down to zero margin, they continue to reduce our overall margins since revenue and costs are recognized on a dollar-for-dollar basis. This is particularly evident when you look at the infrastructure segment. We expect to see margins increase as we wrap up these projects and are working through a healthier backlog. Finally, we continue to see a COVID impact on our business. Several of our larger clients are slowing work to ensure they can meet their year-end cash flow obligations. Additionally, the pandemic continues to impede our ability to staff projects. As we think about 2021, we will be starting from a lower backlog as we have worked down our existing backlog with much lower awards replacing them this year. This is especially apparent in oil and gas, and we will see a shift towards other business units until several of our larger clients feel comfortable reinvesting capital. Before we open the line for questions, I’d like to turn the call over to Alan Boeckmann, Fluor’s Executive Chairman, to provide some remarks on our upcoming Chief Executive Officer transition. Alan?

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 went 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 have significantly reduced the risk in our backlog and have 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 with the rest of the investment community soon. As previously mentioned, we are planning a strategy meeting 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.

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 on 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. 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 the 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. We have evaluated several opportunities in the mining sector, as we follow a strict process to determine whether to bid on a project and what to include in our proposals. We are actively engaging in these processes for multiple mining projects and have been doing so for several months. Therefore, I am hopeful that mining will start to emerge as a significant focus for us. With the increasing demand for electrification and the growing necessity for copper, I anticipate that copper and gold projects will become more prevalent. We are well-positioned to handle 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 margins 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 address the first question. If you consider the nominal run rate in E&C at around 3.1%, there are several factors that are negatively affecting that figure, bringing it down to 3%. However, these are primarily one-time issues. I agree with you, Jamie, that if we exclude those one-time issues, the rate is likely to be nearer to the higher end of the 3% to 5% range.

Jamie, regarding your second question, we have been consistently engaging with customers throughout this pandemic. We have a strong relationship with them, and they understand our position. I don’t believe our strategy announcement is a prerequisite for them to move forward with their projects. They seem quite at ease, particularly our oil and gas clients, who have clearly communicated their desire for us to act as a contractor and to manage their large capital projects.

Okay. Just one follow-up. Can you help us understand the current dollar amount associated with the problem projects that are in backlog, given that you mentioned the problem projects are on schedule and there haven’t been any material charges?

Well, in terms of earnings, we’re on plan. In terms of cash, we’re on plan as well.

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... 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 driving 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, it varies by business segment. Regarding oil and gas, oil prices are a significant factor. In mining, commodity prices play a role, but COVID has likely affected the mining sector more than other areas. The life sciences business is performing very well, ATLS is doing great, and government services are also strong. We anticipate growth in government, ATLS, and even mining as we move into next year. As for the backlog, where are we today, Joe? It’s between 15 and 20.

We’re addressing a portion of the backlog, though not the entire amount. The backlog we are currently taking on is significantly influenced by the discipline established in 2019. Therefore, we are avoiding unproductive projects. As a result, while the backlog may decrease somewhat, it will consist of quality projects.

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 projects 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...?

Right now, we’re looking at about $500 million that we’ll be pulling from previous backlog into 2021 and beyond. We’ll start to balance that out with new work like Oak Hill that we’ve just booked. Currently, we're focused on continuing to execute around $0.5 billion of projects from the last two to three years that will extend into 2021.

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 LNG Canada 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 the situation of the effects are pretty lengthy. And just a point of clarification, it’s not just a force majeure claim. 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, I’d be happy to address that. As I mentioned earlier, Carlos has positioned us to achieve stability. Currently, we are engaging with our banks regarding our credit facilities, which will be current early next year. Completing this is a crucial step for us. Additionally, it is important to solidify our balance sheet and improve our credit ratings. We aim to pay down debt to strengthen our balance sheet as part of our forward strategy. We believe we have strong liquidity to manage the business, pursue growth opportunities, and prepare for any eventualities. Our main focus now is on the balance sheet. We also want to establish our presence in industries with potential for growth, which will be a key aspect of our future strategy. We plan to invest in sectors where we foresee significant opportunities, and these may not align with past business groups. I don’t want to elaborate too much further, but those are our primary objectives moving forward. The company has considerable strength, and we have opportunities to engage the market that we have not previously emphasized. 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 take the spotlight from David Constable here, so I’ll keep it general. We have significant strengths in intellectual property and our ability to execute in various locations, manage permitting, and tackle challenging environments while applying our project management skills to ensure project success. I believe the key markets we intend to prioritize and invest in will be revealed by David and his team during our Investor Day early in 2021. I find the opportunities before us quite exciting, and the position we’re currently in, thanks to Carlos’s efforts, will enable us to start slowly but build momentum in a well-planned manner for a strong future 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. If I highlight the two biggest projects contributing to the backlog rolling into 2021, they are the Green Line and Bergstrom. Bergstrom is 80% complete and Green Line is 35% complete. They account for the majority of that balance. My recommendation is that it's mainly tied to these two projects. Then, we will start seeing some benefits from the new work that we booked this quarter.

That’s helpful. Would you be able to tell us how infrastructure margins are running year-to-date in 2020, excluding 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 will exit with $2.1 billion, of which about 36% is readily available domestic cash. We are making progress. However, as Alan mentioned, I don’t want to preempt Mr. Constable’s strategy meetings. As we advance with the strategy, we will likely assess the necessary cash balance to support the organization, our brick-and-mortar presence, and other implications from the new strategy moving forward. Therefore, that figure may change as we enter discussions at Investor Day.

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. In my opening comments, I mentioned that if you consider the $68 million figure and exclude the FX impact and investigative costs, you would arrive at approximately $30 million. However, I would recommend that when providing guidance on what this run rate might look like going forward, it could be between $35 million and $45 million at this time.

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 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. As we began this process and looked to conduct the business as a whole, it became evident during some complex negotiations that the transaction will likely occur on a regional basis, specifically in North America and South America as two separate components. We are making good progress in discussions regarding North America and are continuing to formulate a transactional strategy for South America. Therefore, we are not moving away from the $200 million estimate, which we consider a reasonable expectation. We are significantly further along with the North American sale compared to the South American one, but we still anticipate the North American transaction will occur in the first half of 2021.

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?

In the Energy and Chemicals sector, we didn't specifically discuss this today, but I want to highlight that our chemicals business remains stable, and we do not anticipate any decline. However, within the oil and gas segment, we expect our clients to continue demonstrating discipline, making this a challenging area for a time. Regarding Government contracts, we are well positioned in the Department of Energy sector, having won several projects, although some are currently being contested. Despite this, we are optimistic about our standing in these matters and see ongoing opportunities in the Government sector. The same applies to advanced technologies and life sciences, where we are engaged in projects related to COVID as well as other pharmaceutical initiatives, which we believe will bring us numerous opportunities. We've also mentioned mining, which may see a delayed uptick, but we are very optimistic about it. In terms of infrastructure, we have decided to limit our bidding to jurisdictions where the Department of Transportation conducts projects fairly, which has led to our success. Texas is certainly one of these areas, along with several other states we've previously noted where we have successfully completed projects for both our clients and ourselves.

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. Several positive developments have occurred over the last six months for the NuScale business and its growth. First, Carlos mentioned the NRC approval, which is one of the most significant achievements. Additionally, the Direct Finance Corporation of the U.S. has lifted its prohibition on lending for nuclear projects internationally. This change has garnered considerable attention and has created two promising opportunities for projects in 2021. Moreover, the DOE announced a $1.4 billion grant for the first nuclear project utilizing small modular reactors, aimed at advancing a U.S. initiative. We are also in discussions with at least two other clients regarding potential projects this year. Thus, the project landscape is becoming favorable, and we are also engaged in serious discussions with investors interested in joining the equity side with NuScale. Both aspects of our strategy are currently strong, but the challenge lies in the timing of securing both projects and investors, which is demanding much of our focus.

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?

Yes, the answer to that is affirmative. It’s noteworthy that NuScale gained momentum during the Obama administration with Secretary Moniz leading the Department of Energy. Throughout even the recent administration, there has been strong bipartisan support for this initiative. We believe this support will continue, and it may even increase slightly 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 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 has 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 address the question from a broader perspective, and we'll likely discuss the LNGC topic later in February. The factors that are affecting the 3.1% cumulative margins for the first nine months include some of the impacts related to COVID. We are facing a credit risk on a project in Mexico, along with a loss on a transaction with Fluor, both of which we view as non-recurring issues. If we exclude these anomalies, we are closer to the 5% range. Therefore, I believe that figure would be more appropriate to consider as we move 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 timeline?

Yes, I’ll take that question. Regarding COVID, the fixed price projects are where we are experiencing impacts from the pandemic that we are negotiating with the clients. No client is denying entitlements, but there will be negotiations concerning the amounts and the timing of costs. We are collaborating with clients on several projects and have already reached some favorable preliminary resolutions, but there are still many that need to be resolved. The ongoing impacts make it difficult to resolve them in some cases. While I can't specify the extent, it's clear that we are dealing with recognized costs and scheduling impacts that we are addressing with clients fairly.

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 in 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 investigations 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.