Foster Wheeler CEO Discusses Q3 2010 Results – Earnings Call Transcript

Nov. 6.10 | About: Amec Foster (AMFW)

Foster Wheeler AG (FWLT) Q3 2010 Earnings Call Transcript November 4, 2010 11:00 AM ET

Executives

Scott Lamb – VP, IR

Umberto della Sala – President, Interim CEO & COO

Franco Baseotto – CFO, EVP, & Treasurer

Gary Nedelka – President & CEO of Global Power Group

Roberto Penno – MD of Global Sales, Marketing and Strategic Planning, E&C Group

Michael Liebelson – EVP & Chief Development Officer

Analysts

Will Gabrielski – Gleacher

Andy Kaplowitz – Barclays Capital

Steven Fisher – UBS

Joe Ritchie – Goldman Sachs

Jamie Cook – Credit Suisse

Michael Dudas – Jefferies

Avi Fisher – BMO Capital Markets

Barry Bannister – Stifel Nicolaus

Rob Norfleet – BB&T Capital Markets

John Rogers – D. A. Davidson

Mark Caruso – Millennium Partners

Operator

Good morning. My name is Julianne and I will be your conference facilitator today. At this time, I would like to welcome everyone to the Foster Wheeler third quarter 2010 investor call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer period. Thank you.

It is now my pleasure to turn the floor over to Scott Lamb, Vice President of Investor Relations.

Scott Lamb

Thanks. Good day everyone and thank you for joining us. Our news release announcing financial results for the third quarter was issued this morning and has been posted to our website at fwc.com.

The presentation we'll use has also been posted to the website. Before turning to our discussion today, I need to remind you that any comments made about future operating results or other future events are forward-looking statements under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.

Actual results may defer substantially from such forward-looking statements. A discussion of factors that could cause actual results to vary is contained in Foster Wheeler's annual and quarterly reports filed with the SEC. The company's Form 10-Q is being filed with the SEC later today.

Joining us on the call today from our office here in Zug are Umberto della Sala, our Chief Executive Officer; Franco Baseotto, who is Executive VP, CFO, and Treasurer; Gary Nedelka, CEO of our Global Power Group; Roberto Penno, who is Managing Director of Global Sales and Marketing for the E&C Group; and Executive VP and Chief Development Officer, Michael Liebelson. After our prepared remarks, we'll have time to take your questions.

I'll turn it over to Umberto.

Umberto della Sala

Okay. Thank you, Scott, and good day everybody. Thank you for joining us on the call today. Now, this is my first time to lead the investor call and we are going to do things a little bit differently today.

After my introductory comments, Roberto and Gary will talk about new orders and market conditions in their respective businesses. And then, I will ask Franco to talk about the financial results for the company and for each business group.

So, let's start with slide number three, where you see the highlights of the quarter. Key message on this slide is the first bullet. Both of our business units had very good operating performance during the quarter. Now, despite the good operating performance, our net income and EBITDA declined in the third quarter of 2010 as compared to the average quarter of 2009. Now, the primary reason for the decline is the weak market conditions that we saw coming into the third quarter.

However, if we look beyond the financial results of the third quarter, we can see some very encouraging news, which is summarized here.

We are definitely experiencing an increase in the level of proposal activity and client inquiries in many regions of the world. It appears to us as though this activity has returned to levels we had not seen since the markets turned down in 2008. This activity as a result got two very large and very strategically important awards early in the fourth quarter.

And I will let Roberto and Gary describe those awards to you in a few moments.

Now, this activity level also helps explain why, in the third quarter, we had the sequential quarter increases in scope backlog in each business group. And why we reported the third consecutive quarterly increase in man hours in the clock in E&C group. So again, we are seeing some signs where demand is improving.

Another highlight to the third quarter, as you see here on this slide, was the repurchase of shares. Now, to be specific, we went – spent almost $100 million to buy 4.3 million shares. And while we were doing this, we also managed to increase our cash position to more than $1 billion by the end of the third quarter.

So, those are the highlights of the quarter. Now, I'll ask Roberto to talk about E&C new orders and market conditions. Roberto?

Roberto Penno

Thanks, Umberto and good day, everyone. Please turn to slide number four, which is about new orders reported in this quarter for the E&C Group. And I'll give you the key takeaways.

We had another solid booking quarter, which reflects a balanced mix of studies, FEED, FEED for EPC contracts and PMC awards. The third quarter bookings reflect a global market presence, with awards in North and South America, Europe, Middle East, Africa, and Asia across all our key E&C markets, which are oil and gas, both onshore and offshore, refining petrochemicals, chemicals, and pharmaceuticals.

The contract making after our third quarter bookings were a mix of small-to-medium projects and we were not reliant on any single large project to deliver the quarter. I ask you now to turn to slide number five and you see here some of our key third quarter wins. The first three awards on this list are for upstream projects, where we have further strengthened our capabilities through our position.

First, is a project in Iraq. This is an important upstream booking that includes both onshore and offshore components. We’ve been involved with the Al Basrah Terminal since 2008, initially working on studies (inaudible). We will now secure the PMC, which is our second major award in Iraq this year. The other being in the Nasiriyah Refinery study in FEED, which we booked last quarter.

Next on the list, is the pre-FEED and FEED for the Cardon IV Perla Field development. This is an offshore development by Eni and Repsol in the Gulf of Venezuela. Again, another very good upstream award for us.

The third upstream project we booked in the third quarter was the EPCm contract for a gas compression station in Europe. This is a relatively new and strategically important client for us and the gas compression station represents our second award from this client.

Turning to another market segment, you see next on the list the clean fuels project for a refinery in Asia, where we have received a full and final release. Again, we’ve been working on this project for some time, first executing the front-end, then working on initial EPC releases award. The client has now made the final investment decision. So we booked the main release of the work.

Moving down the list, we have made an additional booking on a major FEED contract for a very large petrochemical complex in the Middle East. This third quarter bookings fully reflects the complete scope of the work we have been asked to perform.

In Europe, we have won a refinery revamp contract. We did the front-end work for the (inaudible) revamp, and now have won the engineering procurement service contract. We are in discussion with the client about the construction management portion. Also, you see here that we have won the EPCm for a biotech facility in Europe. This is a repeat business with a major international client for whom we have built similar facilities both in Europe and in Asia.

In East Europe, we have won a contract for the supply of coker heaters critical equipment and for three crude heaters as well. Finally on the list, you see a full PMC award for a new floating LNG receiving terminal in Sumatra, Indonesia, which we had announced just yesterday.

So, this list of awards reinforces the point I made on my first slide. Essentially, these wins together with other wins during the quarter, including FEED for our North African upstream project and FEED EPC for a chemical facility in China, reflect our strong position in a wide range of market across both business lines and geographies.

I’m also very pleased to say that we have been told we have been selected for a major front-end design contract for a very large downstream project in South America. South America is strategically important for us in terms of establishing a relationship with a new client in a high-growth country.

The contract signing is imminent and we hope to be able to announce additional details on this within the next couple of weeks. This would be a fourth quarter booking. We turn now to slide number six and you will see our current view of the market. The first bullet, the global economy continues to recover, broadly in line with expectations. Product demand is also recovering and this is helping to bolster client confidence in progressing their investment plans.

As I've already described, we had a solid booking quarter in the third quarter and also have a good pipeline of prospects. Although it is true that clients are in some cases still taking longer to reach final investment decisions or are releasing projects in phases. Certainly, client activity in terms of inquiries and proposal activity has picked up in recent months, particularly in South America, in the Middle East, and in Asia.

We do have a number of projects, particularly in these regions, which are going through the final investment decision-making process and for which we believe we are well positioned.

As I already described, our clients have, during the third quarter, given the go-ahead for some key investments, such the clean fuels project (inaudible) and this is a very encouraging sign.

Last, we have seen new opportunities continue to emerge, particularly in Asia, the Middle East, and South America. And as we have said before, competition remains strong everywhere. We are focusing on those opportunities where we believe that we have (inaudible), such as our technologies, our client relationships, and our proven track record of safely delivering technically complex projects.

Gary, I turn the call to you.

Gary Nedelka

Okay. Thanks, Roberto. If you look at slide seven, you see the new orders for the Global Power Group. If nothing else, this chart really highlights how lumpy the new order flow can be in this business.

In terms of the dollar value of the awards in the third quarter, we’re relatively flat with Q2. However, we've already had a very large contract award early in the fourth quarter, and that's going to give a boost to this chart when we report our results for the fourth quarter in 2010.

On slide eight, you see a recap of the key awards in the third quarter. What's interesting here is that each award represents a key strength or key initiative for us. The CFB award in Indonesia, of course, is perfect confirmation of the market-leading position we have with our CFB boiler technology and our market strength in Asia.

The solar award was relatively small in dollar value, but is an example of our continued successful efforts to penetrate this market. We have tremendous expertise in the design of heat exchangers that typically make up an integral part of thermal solar power systems.

And to the extent that utility companies around the world continue to add thermal solar power, we will continue to have opportunities to participate in this growing segment of the market. The licensing agreement with Saraswati is part of our goal of continuing to strengthen our position in the very important Indian power market.

As India's need for electric power continues to increase, the Foster Wheeler Saraswati team will be ideally placed to add value by providing the Indian power generators with high-quality advanced technology. Finally, here on this slide, you see the listing of the very large fourth quarter award I mentioned earlier. This project will add 600 megawatts to the economic development in Thanh Hoa province in the northern central region of Vietnam.

This is a country where we have strong relationships and a significant track record of successful projects. The award is further evidence of the strength of our global presence and the very strong technical capabilities we bring to the market.

Turning to slide nine, you see our current view of the market. There aren't many surprises here. Global demand for solid fuel boilers continued to be weak over the third quarter. This is due in part to the macroeconomic environment and, as Roberto said earlier, we do see signs of recovery, but clearly, many key economic indicators remain below where they were in 2007.

Another contributor to weak boiler demand has been the big push by renewable energy policies in the U.S. and Western Europe. In many instances, these policies are driving the addition of unneeded capacity in the developed countries, further displacing the need for new conventional power.

On the other hand, we're seeing a growing need for capacity additions in a number of developing countries and in these countries, there is often a preference for solid fuel boilers. I'm talking here about countries and regions such as Vietnam, South Korea, Turkey, and Eastern Europe.

The good news is that these are all areas where we have a strong presence. And the further good news here is that our CFB technology continues to be the preferred solid fuel technology when a client has a hard-to-burn fuel or needs flexibility in fuel type. In addition, CFBs are very clean-burning technology and that's a part of its appeal as well.

On that note, I'll turn this back over to Umberto.

Umberto della Sala

Thank you, Gary. Now that we have heard the practical inventory of our awards, I'll ask Franco to assess the financial results for the quarter.

Franco?

Franco Baseotto

Thank you, Umberto. And I would ask you now turn on slide 10 and we summarize here the financial results for the third quarter. Adjusted net income was equal to $50.1 million or $0.40 per share. We were below the average quarter of 2009. And as we indicate on the slide, it is primarily due to market-related declines from the volume of work executed in both of our business groups, coupled with lower realized EBITDA margin in our Engineering and Construction Group.

Now, the impact of lower volumes and lower E&C margins was partially offset by the after-tax benefit of two separate items. As we call out in the third bullet on the slide, the settlement fee for a power plant development project and recognition of business interruption insurance on our equity investment in Chile.

I'll describe each of these items in the following slides.

Lastly, our effective tax rate for the quarter was equal to 24.8%, up from the 20.6% effective tax rate for full year 2009. And the tax rate was higher in the quarter, primarily due to geographic mix of pre-tax earnings. Year-to-date 2010, our effective tax rate is equal to 22.3%, which is in the range of the guidance that we have provided. And we still expect to maintain an effective tax rate going forward, in the low 20% range.

If you turn on slide 11, you will see the EBITDA performance of our Global Engineering and Construction Group. Third quarter EBITDA, equal to $69.3 million, was below the average quarter of 2009, as I mentioned, due to lower volumes of work and lower margins.

Now, results, as we highlight on the second bullet, include favorable impact of the settlement fee that I mentioned before and this benefit was almost equal to 11 million on a pre-tax basis. And it resulted from a decision by a third party not to proceed with the power plant development project and related prospective EPC contract.

This profit is resulting from the ongoing development activities of our Italian subsidiary, and it's a good example of our commercial excellence and I just want to make 100% clear that this prospect was not included in our backlog and, therefore, there is absolutely no backlog impact in this respect.

Our EBITDA/scope margin in Engineering and Construction was equal to 17.4% for the quarter and this compares to 22% for the average quarter of 2009. And for the first nine months of 2010, our margin in the group was 20.1%, which is at the top end of the range of guidance we have previously provided on full year Engineering and Construction margins.

Turning now to slide 12, you can see the backlog number for the E&C Group. And due to the very solid level of new orders that Roberto has just mentioned, our scope backlog reached its highest level since the second quarter of 2009 and we expect this backlog to further increase by the end of 2010.

On slide 13, you'll see a corresponding increase in the number of man-hours in backlog and, in particular, we are reporting, as you can see, the third consecutive quarter increase in man-hours in backlog. And I think this illustrates the continued strength of our prospect list. We would expect this number to increase further by the end of 2010 and which would mirror the increase in the dollar value of scope backlog.

Turning now to Global Power Group, slide 14 shows the EBITDA performance of this business. EBITDA was equal to $40.4 million, which is below the average quarter of 2009, primarily due to lower volume of work executed, which was partially offset by the recognition of business interruption insurance for our equity interest in a power plant project in Chile.

And the amount of this business interruption included in the third quarter EBITDA is equal to 11.2 million. However, you should bear in mind that this covers lost profit from Q3 and from the previous quarter. And if you want to think about how much of this 11.2 million would be allocated to the third quarter on a run rate basis, it would be roughly half of this amount.

We expect a similar level of the run rate amount of business interruption insurance to be recognized in the fourth quarter of this year and we expect the plan to return to full commercial operation during the first quarter of 2011.

Our EBITDA/scope revenue margin in the Power Group was 26.5% during the third quarter as compared to 19.3% for the average quarter of 2009. And, clearly, the business interruption issue as that I just mentioned contributed to the increase in the margin in the third quarter for the year.

For the first nine months of 2010, EBITDA margin in the Power business was equal to 20.3%, which is a bit above the range of guidance that we had previously provided for the full year. And again, this reflects the impact of the business interruption insurance.

On slide 15, you see scope backlog numbers for our Global Power Group, which reached the highest level since the fourth quarter of 2008, when backlog was more than 1 billion. And again, we expect this backlog figure to increase even further from the third quarter level by year-end 2010 and this expectation is based in part on the large boiler order in Vietnam that we have already booked as well as other prospects that we see coming in the fourth quarter.

On slide 16, you’ll see a summary of our cash position and share repurchase program. Our cash position has clearly continued to grow, even at the time when we spent almost 100 million on stock repurchases. And the bullets on the left of the slide show you what we have done and where we are with our stock repurchases.

We began the third quarter of 2010 with about 265 million available under our existing authorization. During the quarter, we did utilized 99.2 million to buy 4.3 million shares paying an average of about $33 per share. That left us with about 165 million available at the end of the third quarter. And today, the company's Board of Directors has authorized an additional share repurchases up to 335 million.

So, summing up, in total, we now have an authorization that amounts to 500 million. And this covers the financial portion of the presentation and I will turn back to Umberto at this point.

Umberto della Sala

Okay. Thank you, Franco. Now, moving to slide 17, you will see the key takeaways. Again, it is important to say that both our operating units performed very well in the third quarter.

Now, as for the margin outlook for each business group, in our Global E&C Group, we expect the full year 2010 EBITDA margin to be in the range of 18 to 20%. It is unchanged from what we told you in our second quarter conference call.

In addition, we expect to end this year with scope backlog in E&C that is materially above the level of the third quarter.

In the Global Power Group, we now expect that the full year 2010 EBITDA margin will be in the range of 19 to 21%, which is a bit of an increase from our previous guidance. In terms of scope backlog in the Power Group, as Franco said earlier, we expect to end the year with the level of these materially above what we have reported in third quarter.

Now, as for the broader market outlook, you see our view here. It's clear that we felt the impact of competitive pressure coming into the third quarter. However, as I mentioned earlier, increasing the activity level of proposals and client inquiries in many regions of the world confirms our view that markets have bottomed and that demand has improved.

Now, we are also providing today, preliminary guidance for 2011. As you see on this slide, in 2011, we are likely to see a decline in EBITDA margins in both operating groups, as compared to the full year margins of 2010.

As of revenue guidance for 2011, if proposal activities and client inquiry levels continue to remain high, we believe that we could see an increase in scope revenues in both groups versus full year 2010.

Now, at this point, we'd be happy to take your questions.

Question-and-Answer Session

Operator

(Operator instructions) Your first question is from the line of Will Gabrielski with Gleacher.

Will Gabrielski – Gleacher

Thanks. Good afternoon, guys.

Umberto della Sala

Good afternoon.

Will Gabrielski – Gleacher

I was just wondering if you could talk about – it sounds like maybe you're even a little bit more confident than you were on your last call a week or so ago about what you're seeing in terms of activity within the E&C market. I'm wondering as to what particularly is making you more confident. And on the projects where you're seeing full releases on work, is that scheduled or are you seeing things now get released that maybe you thought would take a little bit longer to see full release? Thank you.

Roberto Penno

Okay. Now, I don't believe that we have really given you a market perception for E&C substantially different from what we told you earlier. Now, in terms of releases, I believe that we have seen projects which have been on hold for a while, which are now getting released.

We see some higher activities in proposals, as we said, which is certainly a good sign and the awards that we have listed give us a lot of confidence that the market has finally bottomed and is recovering. So – and honestly also, the award which we mentioned – the potential award that which we mentioned in South America is another good sign that the market is picking up and I believe, we are really well positioned to take advantage of this market recovery.

Will Gabrielski – Gleacher

Okay. Thanks. And just one follow-up, if you don't mind. The project you’re talking about in Latin America, the downstream project, I'm just curious, competitively, what that market was like to potentially win a project like that versus some of the other markets and how you feel about the terms on the contract and what the competition can also bring to the table there in terms of financing and cheap labor? How you feel about those types of projects right now?

Roberto Penno

Well, we are not yet in a position to disclose too many details about the booking. However, I can tell you that this was a project which was competitive bid. I think the contract conditions – terms of conditions are acceptable and they certainly meet our requirements.

And certainly, we have to rely also on some good level of local execution, which by the way is not a surprise, because when you work in these high-growth countries, you always have to perform a portion of the services in countries. This is a growing demand from our client. We know how to manage it. We have done it in the past and this is why, I believe, we’ve been successful.

Will Gabrielski – Gleacher

Great. Thank you, very much.

Roberto Penno

You're welcome.

Operator

Your next question is from the line of Andy Kaplowitz with Barclays Capital.

Andy Kaplowitz – Barclays Capital

Good afternoon, guys.

Umberto della Sala

Hi, Andy.

Andy Kaplowitz – Barclays Capital

Umberto, can I follow up on Will's question in the following sense? If you go back to last quarter, Bob had talked about steady new awards in E&C instead of accelerating. Are you hinting that maybe awards can accelerate here in the E&C versus the levels that they're at or should we still think steady?

Umberto della Sala

No, Andy, as you know, we don't make the market. We set the market. Now – and what I can tell you for sure, is that, certainly we have seen a pick-up in activities. Certainly, we see a good third quarter in terms of booking. I will not though, at this point, speculate about what they're going to book in 2011 and beyond. But, as we said, both these factors are indications that the market seems to have changed.

Andy Kaplowitz – Barclays Capital

Okay. That’s fair. Let me shift gears for a second and talk about margins. The margins in E&C, we know, are historically lumpy. If you look at the margins excluding the settlement gain, they were relatively low in the quarter. What I'm trying to figure out, is how much of that is a function of the very low scope revenue in the quarter versus price competition. Is it sort of half the problem? Is it a small problem versus the price competition? How do we think about utilization? And if revenues can improve, can margins improve because utilization gets better?

Umberto della Sala

May be Franco is an expert about margins and will give you an answer.

Franco Baseotto

Andy, I'll take the call. First off, I would like to say, certainly I don't want to opine on the way you normalize the number. But I wouldn't really normalize for the second (inaudible), because that's really part of our activities. We have ongoing development activities. The way I view it is not terribly dissimilar from some of the profit upsides that do occur on our contracting backlog and our (inaudible). So, that would be my first remark.

Even without that increase to the quarter at a softer margin compared to, certainly, 2009 and to the average, I think in large part that's really reflecting the lower booking margin that we had experienced in prior quarters. Clearly, when revenues are going to pick up in 2011, we are going to have some operating leverage, which is going to improve the margin in terms – and provide a boost for the bottom line, because as we have said, our SG&A costs still remain at the level that is going to support material topline growth without increasing revenue.

So we will have a positive impact both from the point of your operating leverage and some additional efficiencies in terms of liquidation.

Andy Kaplowitz – Barclays Capital

Franco, that's fair. Let me follow up on one thing regarding the 3Q margins. The fearful side of me thinks about this margin ex the settlement and looks at your guidance for next year somewhat below the margins of this year and says, oh, can the margins be 15% or below next year? But I think what you're trying to say is that the margins are below the 18 and 20% this year and they don't necessarily have to be 14.5 like you did ex the settlement and is that fair?

Franco Baseotto

Again, we are not trying to give quantitative guidance at this point in time and we will it on the next call, but at the same time, we don’t want – I mean margin – we expect margin to go down, but we don't want that you get the impression that we are having a material decline in margin that is further going to accelerate going forward.

So, in that respect, you are correct. But again, you will need to wait a few months to get a more precise guidance in terms of where 2011 is going to end up, which is going to be a function also of market activity and what is the topline generation. But in the end, we feel confident we are going to flow through the Engineering and Construction Group during next year.

Andy Kaplowitz – Barclays Capital

Thank you. That's helpful. I'll get back in queue.

Umberto della Sala

Thank you.

Operator

Your next question is from the line of Steven Fisher with UBS.

Steven Fisher – UBS

Hi, good afternoon. Just a follow-up on the margins. If my math is correct, now the 2010 margin guidance implies wide Q4 ranges at the E&C of 12 to 20% and Power of about 15 to 23%. So, I'm wondering, was it intentional that the ranges were that wide or is it the fact that you just kind of felt it appropriate to leave the previous guidance in place and that's just what falls out of it?

Franco Baseotto

I think it's definitely the latter and not the former. And again, we tried to avoid giving guidance on a quarterly basis, because we think that's not a good way of looking at the business. We, obviously, if we look at Q3 margins for E&C, they are a bit on the lower end of the range and that's why we decided to keep the range and change for Global Power, instead.

If you look at that recent margin activity, we are definitely towards the high-end and that's the reason why we decided to change that range. But it's definitely not to imply that this is, again, our Power – onto our forecast for Q4. It's just as you said, the latter and not be former.

Steven Fisher – UBS

Okay, so we shouldn't assume that when you give guidance in a few months, we could see such wide ranges of that it would be a narrower set.

Franco Baseotto

I think when we provide guidance in 2011 for margin, certainly there may be – there will be a different center point, but then I’m not expecting any material differences in the overall range of downside or upside.

Steven Fisher – UBS

Okay. Now looking down the road a bit on this project in South America, what do you think the prospects are for EPC work on it at this point?

Umberto della Sala

As I said, at this stage, I cannot really tell you more than that there will be opportunities for us to do more work beyond the FEED. But I don't believe at this stage I can tell you more than that, but certainly, there will be opportunities for more work.

Roberto Penno

Here, we are talking about very, very large investments.

Steven Fisher – UBS

Okay. And I guess, even though backlog sounds like it's going to continue growing pretty nicely, it sounds like you aren't sure yet if scope revenues are going to grow next year. I'm wondering what is driving that uncertainty. Do you still think you need a healthy book and burn pace to make it higher year-over-year for next year?

Franco Baseotto

I think, again, that’s directional guidance and in terms of direction, I think we feel very comfortable that we are going to see a revenue increase in 2011. I think in terms of giving a more precise indication, once again, we still have a few months to book that are going to impact the way revenues are going to be flowing in 2011. And that's probably one of the reasons why we have been a bit cautious in our revenue – direction of revenue guidance at this time.

Steven Fisher – UBS

Okay. Thanks a lot.

Operator

Your next question is from the line of Joe Ritchie with Goldman Sachs.

Joe Ritchie – Goldman Sachs

Good afternoon, guys.

Umberto della Sala

Good morning.

Joe Ritchie – Goldman Sachs

My first question is really regarding your revenue trajectory going forward, both in your E&C Group and your Power Group. It looks like your backlog is continuing to increase in both your segments. Is it fair to say that this quarter represents a trough in revenue for both of your E&C and your Power Group?

Franco Baseotto

I think with Power Group, Gary, in the previous call, indicated that it would be reasonable to expect topline growth in Q4 and I think we still hold to that statement. So Q4 should start to show some of the positive bookings that we had in Q1 flow through the topline and it's probably going to be a bit more pronounced in Power than in E&C. But in E&C, it's possible that we are going to see some revenue growth in Q4, as well.

Joe Ritchie – Goldman Sachs

Okay. So, I guess, going back in the commentary from before regarding what was driving the lower recurring margins in your E&C scope business, if we look at the E&C business, the margins that we've calculated something closer to 14.7%, excluding the one-time gain, if you start to see revenue pick up in the fourth quarter and beyond, is it fair to say that your margins should also improve from the 14.7% level or is that largely going to be offset from the fact that you are booking projects today that are lower in margin than were previously in your backlog?

Franco Baseotto

I think, once again, that's certainly a possibility and we are not venturing at this stage in quantitative margin guidance. I would also point out just until I spoke to you of statistical analysis, that if we look at the previous bottom of the cycle, and it's very likely we are close to the bottom of the cycle, margin in 2005 were very similar to the 15% that we are recording now. So that's, again, just not guidance. It's not a forecast, but it's purely statistical evidence based on available information.

And again, as we said, we have had wins, which is the lower booking margin than we have recorded in the past quarter and we are going to have a tailwind that is going to be driven by topline. And we are going to be pretty soon being formal what is our view of margin when we release Q4.

Joe Ritchie – Goldman Sachs

Okay, great. And then switching over to your Power Group, obviously the margins were boosted this quarter by the business interruption insurance. If you take that out, you still saw fairly strong margins at about 18% is my calculation. Given that business is continuing to grow backlog, can you feel fairly comfortable that you can maintain margins at the 18% level? Now, that is below your 19 to 21% guidance for this year, but it would seem to me that if you're growing backlog in that business, you would get increased utilization and the margins should at least remain firm at 18%. I’m just curious to hear your thoughts on that.

Franco Baseotto

I’ll give a shot to the answer, and then Gary can add to it. First, I believe if we just normalize, just to be clear on the number – if you normalize Q3 number in terms of margin, the 26.4% for the business interruption and we take 50% of it, the margin would be more in the 22, 22.5%, which is the margin that we have recorded in Q3.

I think a factor that we need to take into consideration is the fact that margin this year for Global Power has been positively impacted still by the impact of lower commodity prices for contracts that were booked in time ago in a different market environment. And that has certainly contributed in addition, against the good execution and risk management and continuous conversion.

But cost saving has been a factor that also in Q3 has favorably impacted the business, and it's likely that this factor can be expected to continue in 2011 with the same type of order of magnitude. And therefore, that's why I wouldn't necessarily conclude that this margin level in Q3 can be sustained on a run rate going forward. Gary?

Gary Nedelka

Yeah, I would agree with that, Franco. If we look at most of the large projects that are anywhere from, let's say, 30 to 42 months in duration, a lot of the stuff that would be flowing through our revenue this year was booked back in 2077, 2008. And if we dial back to that period and look at the volatility in commodity prices, raw material prices, the bookings we had back then reflected what the reality was in the commodity markets.

Now, we look on a going-forward basis, and there's a lot more stability at this point right now, which gives us an advantage as we work off the old backlog. But the risk and the opportunity in the future is not there when we have more stability in the raw material pricing.

Franco Baseotto

And another comment that I would just like to add, because I don't want the positive of this year becomes, in your mind, the negative. Part of the positive impact on margin that has been resulting from commodity prices, market driven, but part and not the minor part is really due to our contract execution and the business adapting really, contract execution in terms of placement of purchase order and shipping activities, so that we could have maximized the impact on P&L of reducing proprietary.

So, I don't want you to think that the same way that the commodity prices has been lifted materially margin in 2010, that can reverse in future years, you mean that commodity prices go above what we have in our cost estimates, just to be clear.

Joe Ritchie – Goldman Sachs

Got it. And I guess just one point of clarification and so and I must have missed this earlier, you booked half of the $11.2 million benefit in Q3 and you're going to book the other half in Q4?

Franco Baseotto

We have recorded 11.2 in Q3, but the 11.2 is referring to business interruption for really, two quarters, second and third quarter. And we will book an equivalent amount. So 50% of 11.2, 5.6 million approximately in Q4. So, if you want to normalize for that, that 's why I was saying don't take out 11.2, take 50% of it, because 50% is related to Q3.

Joe Ritchie – Goldman Sachs

Great. Thank you very much.

Franco Baseotto

You're welcome.

Operator

Your next question is from the line of Jamie Cook with Credit Suisse.

Jamie Cook – Credit Suisse

Hi, good morning. A couple questions.

Umberto della Sala

Hi.

Jamie Cook – Credit Suisse

One, on 2011, most of the questions were asked with regard to segment margins. Are there any other cost headwinds just we should be aware of as we think bigger picture, whether it's tax, whether it's, I don’t know, any incremental costs, currency, bidding costs, anything that we should be aware of in 2011, because we all can make our own market assumptions?

And then my other question is on the – you quoted – you talked about the higher level of proposal or bidding, or client inquiries, can you just give us a sense of where that is, how much that's improved sort of sequentially in year-over-year or where we are relative to prior peaks?

Franco Baseotto

Jamie, I will maybe take the first part of the question and I will ask Roberto handle the market-related one. I don't see any headwinds in 2011 on the cost side. And in terms of currency, actually if the current trend continues, I would see that as a positive in terms of 2011 rather than a headwind. So, on the cost side, you shouldn't be factoring any material increases in cost during 2011.

Roberto Penno

Jamie, your question regarding increased number of proposals and inquiries from clients, I think I could give you a multiple answer. Number one, we have diversified our portfolio in different markets. We are very active in South America. We’ve been active in Asia, the Middle East, and beyond, for example, in East Europe. So the diversification increases the opportunities.

Second, as we said, we see clients entering into the more aggressive the release of projects and/or parts of projects. And all this is extremely positive.

Third, is we are very leveraging our upstream skills, for example, and we are booking more and more business in that business line. So altogether, the activities are increasing and we have a certain level of optimism.

Umberto della Sala

Let me add a few comments, Jamie. Now, I believe that I’m onto side line of the business winning. So, because I can get involved in all major proposals review and so I know exactly what's going on in the operation in terms of bidding and winning.

Now, Power Group, I think 2009 was a bad market, because simply we did not see major proposals. And the second half of 2009 for E&C was not really much better. We have started to see increasing activities, first in the Global Power market and then in E&C, which is not a surprise, because typically (inaudible) first of all, you have power demand and then you start with more strategic investments.

So – and this has been – this is started in Asia. We started to see proposal pick-up activity in Asia. Then, in Latin America and in Middle East, honestly, I've not seen yet, at least when it comes to our virtual market a major pick-up in activity. Europe, all opportunistic at this time.

Jamie Cook – Credit Suisse

Okay. And then, sorry, just one final follow-up question, which you're probably not going to like, but I'll ask it anyway. When I think about 2011, and who cares about 2011 if awards are picking up, but is there any scenario in your mind where we would have to take the third quarter, adjusting for the benefits that we had and multiply by four? Is there a scenario in your mind where earnings could be that Draconian? So are we looking at like 1.50 relative to where the street is today, which I think is 2, I don’t know, 2.29 or something like that?

Franco Baseotto

Jamie, I think it's a very good question and you're going to have the answer when we release Q4.

Jamie Cook – Credit Suisse

All right, I tried. Thank you.

Franco Baseotto

All right.

Operator

Your next question is from the line of Michael Dudas with Jefferies.

Michael Dudas – Jefferies

Good afternoon, everybody.

Umberto della Sala

Hi, Mike.

Michael Dudas – Jefferies

Maybe this one for Gary. Just maybe a little more interest in your opportunities in India, what kind of power market is that? Is that something that Foster Wheeler can make a significant splash in over the next few years? Because it seems like there's quite a bit of solid fuel investment that's heading into that region.

Gary Nedelka

Sure. Well, the Indian power market is probably the second largest in the world following China. There is still large pockets of India that are suffering power shortages. There's actually a shortage of home-grown manufacturing still in India to support their own market domestically.

So what our opportunity in there is, is joining up with this group, Saraswati, who actually is a licensee of ours for some other products, as well, in India. So, they're well known to us and a very reputable company. And we would support them, initially, and mostly in the pulverized coal arena inside of India.

We look at that as a market for us to go into directly. It's not as good a market as it would be going in with a local licensee and partner. That's why we took the past that we did. Most of India's power over the short term will come from coal and solid fuel as they then start to work their way into, eventually a larger nuclear program.

Michael Dudas – Jefferies

And will we see any benefits to Foster Wheeler's business over the next couple years that we'll see in the numbers?

Gary Nedelka

We certainly should. That's the whole reason we would do this, for sure. So there would be a combination of the technology piece we would receive from the license as well as direct engineering support and material fabrication support. And the exact amount that we would give a very particular project would vary project by project. But absolutely, this would start to fit into our numbers as this begins to incubate and take hold.

Michael Dudas – Jefferies

Terrific. And my follow-up question, I guess, is for Umberto. You've had a very long tenure so far as CEO of Foster Wheeler, or interim. What has been the first – first couple weeks, what’s your message been to your Management and people relative to what's happened over the past couple weeks? And what's your message and what are you looking to put forth to the business in this interim basis until new leadership is found?

Umberto della Sala

That's a very good question. Now the first message, we believe, is to the organization is that they should not be concerned. From the point of view of the operation, it's business as usual. Nothing is going to change.

We will continue to focus on our clients, on our commercial and execution (inaudible). So, this is a must and we have to (inaudible) message for our clients. Nothing is going to change.

Now, in terms of my role in this position through the interim period, now, I think I’m lucky, because I have a very good team of competent people, very well aligned. So and we will work as a team. So, I certainly count on the support of the team to help us manage in this transition.

Honestly, based on the feedback I got from the operating unit, people are not concerned. People see that the company is stable and steady. We continue to do what we were supposed to do. And then I should say, last but not least, I had a very good consultant on board, he is Ray. And so Ray is still available to provide consultancy services to give me advice and give us advice, actually, on whenever we believe that we need to get some advice.

So 37 years, so yes, I know this company very, very, very well. And I still have the same enthusiasm and energy I had when I joined the company as a processing engineer 37 years ago. So, I think we are going to manage well through this period. I have no doubts.

Michael Dudas – Jefferies

All right. I appreciate that comment. Just one final question, relative to the share repurchase in the third quarter, was that timed somewhere after the announcement of a couple weeks ago or was that something that was done throughout the third quarter?

Franco Baseotto

That was done throughout the third quarter and completely unrelated with the recent events.

Michael Dudas – Jefferies

Terrific. Thank you.

Umberto della Sala

You're welcome.

Operator

Your next question is from the line of Avi Fisher with BMO Capital Markets.

Avi Fisher – BMO Capital Markets

Hi, good afternoon. Thanks for taking my questions.

Umberto della Sala

Hi.

Avi Fisher – BMO Capital Markets

The CF Group costs, excluding the asbestos, was up sequentially, up year-over-year. What's driving that? What could be the outlook on that going forward? How much of that included severance costs?

Franco Baseotto

I think we have, in part, the impact of the relocation of Corporate Center to Switzerland. We had impacted cost, as you can imagine. And in part in that segment, we also record the costs that are associated to our strategy review and that has impacted, in part as well, our C&F segment. .

Avi Fisher – BMO Capital Markets

Okay. Do the costs of the move continue forward? Does the strategy review, I guess, that takes one more quarter?

Franco Baseotto

Again, as I indicated to Jamie, I would not expect material increases of cost in 2011 compared with 2010.

Avi Fisher – BMO Capital Markets

Does it come down?

Franco Baseotto

They could come down, but once again, that I believe is part of the margin guidance that we are going to be giving in Q4 and we will be giving EBITDA guidance. And I don’t believe we're going to give guidance on single P&L line

Avi Fisher – BMO Capital Markets

Okay. In one – you announced a two by 300 megawatt pulverized coal award in Vietnam. It’s about 600-megawatts in total. In 1Q ‘07, you had a similar 1,000-megawatt award in the U.S., roughly 400 million in scope bookings. Should we think about that ratio for the size of the award in 4Q ‘10?

Gary Nedelka

Avi, actually, if we look at that, the award in the United States was for circulating fluid-bed boilers and included a substantial scope for air pollution control equipment and a lot larger scope than what we would have on most of the processes we have in Vietnam. So it would not be a good idea to just translate the revenue from a U.S.-based project to an Asian-based project because of the scope differences.

Avi Fisher – BMO Capital Markets

Okay. And just finally, one last question just on the tax rate. Obviously, it does jump around a lot. I'm just trying to get a sense of why it's jumped around so much of this quarter, and how to think about it on a quarterly basis. I know you don't think about it that way, but we do. Thank you.

Franco Baseotto

Again, it was, as we said, really, this quarter was primarily geography and the mix of the pre-tax earning in different geographies. That's what has driven the increase in the tax rate. Once again, we are very confident about our guidance of the low 20s. And I would say I would be very confident in maintaining similar tax rate in 2011 on a full year basis.

Now, you will have quarter-to-quarter variation and we could have some discrete also that could impact that. But on average, I still think a low 20 tax rate is a good benchmark for us.

Operator

Your next question is from the line of Barry Bannister with Stifel Nicolaus.

Barry Bannister – Stifel Nicolaus

Hi. We agree with you that there's been an upturn in global hydrocarbon processing awards based on the HBI [ph] box score. But one of the things we're trying to quantify is the amount of pre-contract spend that you've engaged in, that's not billable and not associated with any revenues and how that could be temporarily displacing margins. Can you give us a figure on what you're spending on pursuit costs versus a year ago?

Umberto della Sala

Barry, you're talking proposal cost?

Barry Bannister – Stifel Nicolaus

Yeah, your proposal preparation.

Umberto della Sala

Okay. I believe that we are not much different from previous year. Now you should consider that if (inaudible), could make a difference. Because it can cost us up to around $1 million. So, but overall, proposal budget and the proposal act will cost this year not much different from last year.

Barry Bannister – Stifel Nicolaus

Foster Wheeler has a fairly rapid burn rate and right now with spare capacity to produce engineering work, you must have the ability to burn bookings into revenue more quickly. Just to be clear, earlier you said that revenue would be up, potentially, in 2011 and the margins might come down a little bit in E&C. But can you give us an idea of how rapidly you could ramp revenues up in terms of a burn rate assumption?

Umberto della Sala

Franco, do you want to…?

Franco Baseotto

Again, I think how rapidly revenue can grow in 2011 is really more a function of how rapidly new bookings are going to be flowing into our books and how early those new bookings are going to materialize in 2011, rather than really an acceleration of execution on existing portfolio.

We can certainly have that, but I would say an acceleration in revenue would be more a function of booking in the early part of the year and significant momentum in those bookings. That would really lead to revenue in 2011.

Barry Bannister – Stifel Nicolaus

While holding overhead flat and essentially generating operating leverage.

Franco Baseotto

Yes, as I said, we have a structure now that can certainly sustain more topline growth than what we are currently put into our books.

Barry Bannister – Stifel Nicolaus

And lastly, Gary, you're doing design and supply, but who is the engineer on the two PC boilers in Vietnam? And secondly, are you increasing your after-market penetration through any sort of organized plan given your historically low penetration of after-market service?

Gary Nedelka

Yeah, I think, the first question, Barry, is our contract in Vietnam was bid to Marubeni Power Corporation. They're the EPC contractor for this. They have the overall head contract for the entire power plant, we're supplying the steam generators. And for…

Umberto della Sala

Go ahead.

Gary Nedelka

Does that answer?

Barry Bannister – Stifel Nicolaus

Yeah, and even though your after-market is part of an organized plan, it seems to be a good way of reduced margins.

Gary Nedelka

Yeah, on the after-market side, we're actually doing a lot of different things, both from a product and from a geography standpoint. Looking at different products in the environmental side, because we see that as a coming market when whatever replaces the old Ozone Transport Act gets enacted in the United States.

And then certainly the aging fleet in places like Eastern Europe and all, where we're gearing up a lot more for the Brownfield opportunities that will be there. The U.S. after-market has been slow, to be frank and that's consistent with the decreased levels of U.S. power generation and a lot of the uncertainty over carbon and the Ozone Transport regulations.

But in other parts of the world, we are actually establishing new service centers in places in Asia, in Europe, and in South America. So, hopefully, those will begin to bear a fruit for a lot of us in 2011.

Barry Bannister – Stifel Nicolaus

Hey, great. Thanks.

Umberto della Sala

Thank you.

Operator

Your next question is from the line of Rob Norfleet with BB&T Capital Markets.

Rob Norfleet – BB&T Capital Markets

Good afternoon. Most of my questions have been asked, but just a few. If I look at your composition backlog right now, it's about 33% fixed price. The work that you're booking currently, would it still be in that range or are we seeing more fixed price work being put out to bid, especially, as we move out into 2011?

Umberto della Sala

Okay. Let me just – let me say that, number one, all work which is awarded to the Power Group is a lump sum basis, okay? The majority of which is lump sum design and supply of materials are a little different. Sometimes we also take on board the (inaudible). When it comes to engineering and construction, the majority of the work is reversible, some of which is lump sum services.

Today, we don't have lump sum turnkeys in our backlog. And I don't expect, honestly, the portfolio mix to substantially change going forward.

Rob Norfleet – BB&T Capital Markets

Okay. And I guess, my next question, I know you've gotten a number of questions on margin, especially as it relates to your initial guide. I'm just wondering why being so opaque as it relates to the 2011 guidance being slightly down? I think the confusing aspect here is people are looking at the E&C margin for this quarter, taking out obviously the settlement fee and in one rating they are extremely low, 14.5, which is a 10% margin.

I would just think at this juncture you would have a little more clarity on how margins would look at least within 100, 200 basis point with that to be able to say whether that would be even in the ballpark or that's being extremely too aggressive. I'm just curious as to why you're being so opaque? Is that you just don't know or you just want to wait till the end of the year, beginning of next year, to have a better feel?

Franco Baseotto

Because, usually we provide guidance on full year when we complete our plan preparation and then client review. And, again, we have the full visibility on the booking portfolio for entering the year. That's why we have traditionally provided guidance in February and I think it's a prudent way of proceeding, because, again, with a quarter of booking activity can make a difference in terms of shaping the prospects for the following year.

Umberto della Sala

Yes, as to just support what Franco said, we have just tested the planning process for 2011. And so I think it 's too early to give you any better guidance at this stage.

Rob Norfleet – BB&T Capital Markets

I mean, definitely, one, you’re not going – I’m not going to harp on this, but if you go back to this point in time last year, would you have been able to project where margins in the E&C segment would have shaken out for the year?

Gary Nedelka

Rob, I think the point that Umberto was trying to make, is that our normal pattern has been to provide quantitative guidance on EBITDA margins in February of each year. And that in a fact – and that reflects the fact that by that time, we've done our plan. So what we tried to do this year is give you a little bit of a preview by providing some qualitative guidance. But, we won't have the quantitative guidance for you until February and that is very typical for the way we've provided guidance in past years.

Rob Norfleet – BB&T Capital Markets

Okay, that's fine. My last question is on buyback. Obviously, you've done 100 million. How should we view the remaining authorization in terms of how you're viewing stock at these levels and continuing to fulfill that buyback obligation?

Franco Baseotto

Again, I don't think our approach with respect to utilization of excess cash has changed. And I believe we have said on the last call that first and foremost, we want to maintain a strong balance sheet to support the operation. And then we want to invest excess cash in the business, because we do see some good growth opportunities for us and they are part of the work that is ongoing and that we will be completing pretty soon for our Engineering and Construction Group.

And share repurchases is certainly part of the way we want to allocate capital for any excess cash and I think we have been doing it in the past. The new authorization that we have obtained today from the Board and the size of the share repurchase, I think, should be a clear indication that we are serious about buybacks and that we will continue to look at it and execute it in a balanced manner. And so I don't think you should expect any material changes in the way we are approaching this going forward.

Rob Norfleet – BB&T Capital Markets

Okay. Thank you for your time.

Umberto della Sala

You're welcome.

Operator

Your next question is from the line of John Rogers with D. A. Davidson.

John Rogers – D. A. Davidson

Hi, good afternoon.

Umberto della Sala

Good afternoon – good morning, sorry.

John Rogers – D. A. Davidson

Umberto, when you talked about the business or implied that, hopefully, we're at the bottom here in terms of margins and prospect activity, and then in reference of the comments about proposal costs and lack of lump sum work, in the past – sometimes in these past cycles coming out of it, we have seen a lot of volatility quarter-to-quarter in terms of earnings. Is it your sense or expectation that we'll avoid that this time?

Umberto della Sala

No. I believe that this is a part of our business. It's part of our business and depending on how the projects proceed, we always look at the projects, we look at the opportunities for profit improvement. And so I believe that I would not see any substantial change with respect to the past.

This is the physiology of our projects and I believe there is nothing we can do to change the physiology of the project. Typically, when the project reaches completion, we could release some contingency if we had been able to manage the risks. Many times we have incentives, which can be accrued only when the project is over. Many times we have a safety incentive and you cannot certainly do much with the safety incentive until you are done, because you might have an incident. So, I believe you are going to see still the same behavior.

John Rogers – D. A. Davidson

Okay, especially than as the cycle starts to turn.

Umberto della Sala

Yes. Yes.

John Rogers – D. A. Davidson

And then second thing is, can you give us an update on your thoughts on acquisitions, kind of where you are in that process and what you're thinking now?

Umberto della Sala

Yes. I would like Michael Liebelson to give you the answer on this point.

Michael Liebelson

Yes. Thanks for your question, John. With respect to M&A, as we've said before, we're going through our strategic renewal initiative that we're going to have complete by February. But in the interim period, we've had a number of initiatives that have been ongoing and historical that may, in fact, result in potential M&A opportunities, because that's part of what you would execute as part of these strategic activities.

John Rogers – D. A. Davidson

And your number or scale of opportunities, any change there? And when you talk a lot in the past of the upstream side of it, that’s still the focus?

Michael Liebelson

Well, I think upstream continues to be a big focus. But we also have a number of potential opportunities with respect to broadening our geographic markets as well as our product markets.

John Rogers – D. A. Davidson

Okay. Thank you.

Umberto della Sala

You're welcome.

Operator

Your next question is from the line of Andrew Byington with Millennium Partners.

Mark Caruso – Millennium Partners

Hi. Good morning. It’s actually – I guess at this point, good afternoon. It's Mark Caruso. I had a quick question extending on your comment in the press release about downstream. It's my understanding that you guys are looking at the opportunity to potentially offer your clients a dual package of your coking technology along with potentially boilers, since I know petcoke is a nice powering option depending on some of the clients around the world. And I wanted to see if that's something you guys are really exploring or it's just something in the conceptual stage at this point.

Umberto della Sala

I'd like Michael to answer your question.

Michael Liebelson

Yeah, I think the first answer to that is that this is not a new opportunity. In the mid-1990s, we had a very and still have a very successful project, Petropower in Chile, where we have combined our delayed coking technology and our CFB boiler technology. And, in fact, we owned 85% of that project. It's been very successful for us.

And we would like to look at additional opportunities that combine those two technology packages. We think we're a world leader in both delayed coking and in CFB technology. And that's a natural fit for us.

Mark Caruso – Millennium Partners

And is it something where you – since you've already done in the past, there's already an acceptance in the marketplace or is it kind of a renewal and reeducation of that possibility with your clients?

Michael Liebelson

Well, I think delayed coking technology is very accepted. CFB technology is very accepted and I think what we are seeing with potential new downstream opportunities and defining opportunities, especially in Latin America and other developing nations, is that they would like their refineries to be relatively secure from a power supply point of view and not to be totally dependent on the grid.

So, to the extent that they don't, in some cases have readily available natural gas. It 's a very good fit for us to put in the coker and then put in the CFB boiler power supply island as well. And then that is the way that they can self-generate their own power.

Mark Caruso – Millennium Partners

And is that something where you have multiple boilers, because some of the big refineries that are being proposed, I would imagine you would need at least two boilers. Am I thinking about that correctly?

Michael Liebelson

I think we're a leader in the large CFB boilers and we're certainly even more of a leader in the large CFB boilers that burn petroleum coke. Now, whether it's one boiler or several boilers, that's going to be a function of the specific design requirements of the particular downstream customer.

Mark Caruso – Millennium Partners

Got you. And in terms of scale, I guess, I'm trying to be pretty broad about this, is this something where it could be several hundred million dollars or it could be some $1 billion if someone were to accept a combined package? I'm just trying to think about the scale opportunity there, given the build-out of someone like a Petrobras and some of the others have put forth.

Michael Liebelson

Well, I think it 's very dependent upon scope. The total investment by the client in a combined DCU and CFB boiler package – or the combined DCU and CFB-based power plant for some of these large refineries that are looking to be going in, that could be in the billions of dollars range. Now, to what extent we participate in that is a function of what our scope is, right? That could be anywhere from equipment supply and licensing or it could be all the way towards EPC.

Mark Caruso – Millennium Partners

And then one last question. I know it was asked earlier by Rob Norfleet, but I guess in terms of the buyback, is this sort of a good run rate or is it really dependent on the opportunity you see fit on any given quarter?

Franco Baseotto

I think we are going to be dependent on opportunity set.

Mark Caruso – Millennium Partners

Got you. Great. Thank you.

Umberto della Sala

You're welcome.

Operator

Your next question is from the line of Andy Kaplowitz with Barclays Capital.

Andy Kaplowitz – Barclays Capital

Hi, guys, just a couple quick follow-ups. I know it's been a long call. I know the markets are uncertain and we will want to not be so clear about talking about 2011 yet. But if you do the share repurchase at the rate like you did this quarter, you've already talked about revenues being up probably in both segments next year. I mean, as I look at the run rates, somebody asked a question about this quarter being a run rate for next year. That seems super conservative to me. Is that fair to say that statement or I mean how do you feel about that?

Franco Baseotto

I want to be politically correct, because we told Jamie at the beginning it was a very good question and would have been very good answer in February. And I think we should be politically correct and the answer is the same for you, Andy.

Andy Kaplowitz – Barclays Capital

All right. I tried, just like Jamie tried, I guess. So and then the other question is on the petrochemical markets. I mean, I know you have one big project, which have been winning FEED work on, but those markets have been basically dead for you over the last two years. Are you seeing any signs that that market is picking up, even in the last few months, given may be increasing global confidence?

Franco Baseotto

Well, we see some increasing confidence in one region, which is Asia. We see only very few actually – yeah, very few prospects in the Middle East and probably it's too early for Latin America.

Andy Kaplowitz – Barclays Capital

Okay. That's fine. Thank you.

Umberto della Sala

You're welcome.

Operator

Your next question is from the line of Barry Bannister with Stifel Nicolaus.

Barry Bannister – Stifel Nicolaus

Hi, all. When I look at the Chilean power plant in Global Power, it contributed about 39 million of net profit in ‘08 and about 27 million in ’09, just net profit. Could you tell us when you think it will be back to that sort of 7 million a quarter net contribution run rate, again?

Franco Baseotto

Barry, I think we are giving some more precise indication in the Q of the actual earning generation from the Chilean project and your numbers are a bit on the high side. The numbers that we are reporting in the quarter are, again, 11.2 million in Q3 and 14 million for full year 2010.

And these numbers are approximately 7 million higher than 2009 reported numbers. So that’s to put – for the quarter, just to put an indication on where 2009 was. In terms of actual reported earnings, let's not forget that those earnings are really a function of electricity rates in Chile. So that's really what's driving the earning and those rates have fluctuated very significantly, which explains the volatility in those reported earnings.

But again, 2009 full year based on this guidance that you will see the numbers that you will see in the Q was 16 million on a net earnings basis for just this project in Chile.

Barry Bannister – Stifel Nicolaus

Oh, I don't happen to have a Chilean electricity pricing report lying around. Have you noticed a bottoming-out in Chile of the electric pricing environment? Because that's a fairly important project to you.

Franco Baseotto

I'll ask Gary to take this question.

Gary Nedelka

Yeah, Barry, historically, and just as much this year pre-earthquake, those rates follow the availability of hydro and are seasonable more than being able to peg them to any other real given variable, economically or otherwise.

Now after the earthquake, of course, rates went up through the roof. But what we're seeing already right now in Q3, is a return to the levels that we saw in 2009. We would expect to see that same type of volatility over maybe the next 12 to 24 months, at least, while Chile starts to bring other new power plants online.

Barry Bannister – Stifel Nicolaus

And lastly, crude spreads don't really justify it right now, but that's where the market is going. Do you think your delayed coker business is seeing a pick-up in bidding interest and activity?

Umberto della Sala

I wouldn't say that we see a pick-up, but, honestly, the delayed coking market never really went too much down in terms of opportunity. And certainly, it's still a feasible market. And I believe if we look at certain countries, like Latin America and Asia, we still see opportunities for – and also, Europe, honestly, Southern Europe, we have opportunities for delayed cokers. In Southern Europe, recently we got an award for delayed cokers.

So, but as I said, I really feel really a major slowdown in delayed coking opportunities over the last couple of years. So, there is no indication that we'll not see opportunities going forward.

Barry Bannister – Stifel Nicolaus

Great. Thanks.

Umberto della Sala

You're welcome.

Operator

There are no further questions at this time. I'll now turn the floor back over to Umberto for any final comments.

Umberto della Sala

Well, okay. Thank you, everybody, for joining this call. And I look forward to talking to you in the fourth quarter. Thank you, very much. Good-bye.

Operator

Thank you all for participating in today's Foster Wheeler third quarter 2010 investor call. You may now disconnect.

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