Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Andy Kaplowitz from Barclays Capital.
Andy Kaplowitz - Barclays Capital
Good morning, guys. How are you doing? Can you hear me okay?
Ray Milchovich
Yes. Good morning, Andy.
Andy Kaplowitz - Barclays Capital
So, Ray, in E&C, I recognized some unusual items there. I guess looking at the scope margins, one thing that you had talked about on previous calls was maybe the potential for more incentive fees and some performance milestone payments at some point over this year. Have those been pushed off? Did we not get some of them? Some color on the E&C margins would be helpful.
Ray Milchovich
I am going to defer to Franco.
Franco Baseotto
Andy, about the investment margin; I think the first remark that I would make is that the margin change in Q3 '08 is actually very similar in terms of volatility compared to the yearly average to what we experienced in Q4 of last year. As we have seen in the 2008 activity, Q4 of 2007 was not the indication of a new trend there. It's a quarter-to-quarter volatility and the same is true for Q3 '08.
Again, portfolio made some contract with respect to incentives. We didn't have any material accrual of incentive either in Q2 as we reported, or in Q3. This does not mean that we have lost an incentive in this period, simply that the timing of those incentives did not allow us to book them in this quarter. As we have said, some of the projects on which we have material incentive schemes did well in the project execution in 2009.
Ray Milchovich
Andy, the only thing I would say to add to Franco's comments is that having gone through a pretty deep dive to close the quarter with the businesses when they were in here a couple of weeks ago and looking at the performance on all of the contracts, the material nature, and the portfolio, I can say, there was only one contract that I would say Umberto and I weren't totally happy with our performance on. However, if you look at the impact of that on the overall margin and EBITDA, the amount just didn't move the needle. It just wasn't a material amount.
So my view is that we have a degree of cyclicality in our earnings, which is the reason why we have suggested that we look at things on an average quarter basis. All-in-all, we are bullish about the way E&C is operating and we are also cautiously bullish about what we think our '09 can look like.
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