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23rd Annual Engineering & Construction CFO Roundtable and Tax Director Workshop

Opening Remarks

Erin Roberts, Americas Leader of Engineering & Construction

Las Vegas, NevadaSeptember 25-26, 2017

23rd Annual E&C CFO Roundtable and Tax Director Workshop

Disclaimer

► Ernst & Young refers to the global organization of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young LLP is a client-serving member firm of Ernst & Young Global Limited located in the US.

► The Ernst & Young organization is divided into five geographic areas and firms may be members of the following entities: Ernst & Young Americas LLC, Ernst & Young EMEIA Limited, Ernst & Young Far East Limited and Ernst & Young Oceania Limited. These entities do not provide services to clients.

► This presentation is ©2016 Ernst & Young LLP. All rights reserved. No part of this document may be reproduced, transmitted or otherwise distributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, rekeying or using any information storage and retrieval system, without written permission from Ernst & Young LLP. Any reproduction, transmission or distribution of this form or any of the material herein is prohibited and is in violation of US and international law. Ernst & Young LLP expressly disclaims any liability in connection with use of this presentation or its contents by any third party.

► Any US tax advice contained herein was not intended or written to be used, and cannot be used for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.

► These slides are for educational purposes only and are not intended, and should not be relied upon, as accounting advice.

► The views expressed by speakers at this event are not necessarily those of Ernst & Young LLP.


Welcome!

►Safety moment►Agenda for the day and logistics►Market Perspectives►Survey Results


Safety Moment

►Alarms►Emergency exits►Assistance


Agenda

► WIFI – EY2017► Conference website:

http://www.ey.com/us/en/home/2017-annual-cfo-roundtable-and-tax-director-workshop

► CPE – sign in sheet BOTH DAYS► CFO and Tax Directors together until 2:15pm today

► Focus on the market environment► Solutions Café

► Drill down into finance and tax topics in the afternoon► Dinner tonight – please confirm your attendance► Tuesday is a focus on Accounting and Regulatory topics► Formal session wraps at 11, and Revenue Recognition Summit will

begin at 11:30, and end by 1:30pm


Perspective


Disaster Strikes

► Harvey► 55 inches in under 5 days – heaviest

rainfall in US recorded history ► 20 trillion gallons – same as if

Niagara Falls spilled into Houston for 15 days

► 82 people lost their lives, 200,000 people lost their homes

► Irma ► Category 4 hurricane forces

mass evacuations► 65% of the houses in the Keys

sustained major damage► 6 million homes without power


Disaster Strikes

► Hurricane Maria► Immediately following Irma through

the Caribbean► 3.4 million Puerto Ricans without

power for a month► 19 lives lost

► Mexico Earthquakes ► 3 separate strong quakes over

the past week► Significant damage sustained► 305 confirmed dead


Rescue

► Coast Guard and Cajun Navy to the rescue!► Estimated 1,500 to 2,000 water rescues► Fluor employee from CP Chem project

saves 300


Resilience

$37M


Rebuild


Rebuild

► Negative Impacts► Direct impacts – distraction, dislocation, remob = delay► Supply chain – wallboard, plywood, refining capacity► Labor availability, but muted due to current tight supply► Estimated 0.5% impact on Q3 GDP► Insurance not enough to rebuild

► Positive impacts► FEMA support► Short term - Utility and road repair► Long term – Storm hardening► Estimated nearly $400B in damage from Harvey and Irma

2017 Ernst & Young Engineering and Construction Survey


Respondents

55%45%

Public or Private?

PrivatePublic

16%

55%

29%

Company Type

Design

GC, CM, EPC

Sub-contractor

32%

21%

5%

21%

21%

Industry Commercial building (mfg, warehouse, retail,office, hotel)Energy (including petroleum, power, utility)

Environmental, water, wastewater

Other

Transportation and other infrastructure


Earnings trends

43%

46%

11%

How does Operating Income for 2017 compare to 2016?

Better than 2016, but less than 5% increase

Increase of more than 5% over 2016

Worse than 2016


Earnings trends

74%

21%

5%

Backlog

Higher than at 12/31/16

Lower than at 12/31/16

Same as 12/31/16


Earnings trends

21%

3%

51%

3%

22%

How do you expect average margins to change during the next 24 months?

Decrease 1% - 3%

Decrease by more than 3%

Increase 1% - 3%

Increase by more than 3%

No change


Growth

52%

16%

3%

29%

How do you expect the company's geographic footprint to change over the next 24 months?

Expand into new marketsdomestically

Expand into new marketsinternationally

Leave current markets

No change


Growth

42%

58%

Do you have plans to grow through acquisition over the next 24 months?

No

Yes


Growth

18%

3%

8%

10%

8%

53%

Greatest opportunity for growth over the next 24 months: Commercial building (mfg,

retail, office)

Downstream Oil &Gas/Petrochemicals

Health care

Power generation,transmission and distribution

Public works

Transportation


Growth

11%

55%

8%

26%

What is your greatest concern about the success of your business?

Availability of capital to supportyour business

Availability of skilled labor

Increasing regulation

Lack of GDP growth in the U.S.


Trend in Contracting Risk

21%

24%55%

How has the percentage of fixed price work changed since the prior year?

DecreasedIncreasedStay about the same


Trend in Contracting Risk

55%

8%

37%

Does the company expect to change its level of involvement with joint ventures in the next 24 months?

No change

Yes, decrease in use ofjoint venturesYes, increase in use ofjoint ventures


Hope Springs Eternal

Hope springs eternal in the human breast;Man never is, but always to be blessed:

The soul, uneasy and confined from home,Rests and expatiates in a life to come.

– Alexander Pope, An Essay on Man

https://en.wikipedia.org/wiki/Alexander_Pope

https://en.wikipedia.org/wiki/An_Essay_on_Man

EY | Assurance | Tax | Transactions | Advisory

About EYEY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.

EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com.

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