FLR – No Traded CDS, Base Case iCDS 158bps, Negative Case iCDS 314bps, 2024 3.500% Bond YTW of 3.273%, iYTW of 1.953%, Ba1 Rating from Moody’s, IG4+ (equivalent to Baa1) Rating from Valens, Low Refinancing Need

• Credit markets are overstating FLR’s credit risk with a YTW of 3.273%, relative to an Intrinsic YTW of 1.953% and an Intrinsic CDS of 158bps. Moody’s is also overstating the firm’s fundamental credit risk, with its non-investment grade speculative Ba1 credit rating three notches lower than Valens’ IG4+ (Baa1) credit rating
  
  
• Incentives Dictate Behavior™ analysis highlights mostly positive signals for FLR credit holders. Management’s compensation framework should drive them to focus on all three value drivers; asset efficiency, margin expansion and revenue growth, which may lead to Uniform ROA improvement and higher cash flows available for servicing obligations. In addition, management members are not well-compensated in a change-in-control scenario, indicating they are unlikely to pursue a sale or accept a buyout of the firm, limiting event risk
  
  
• Earnings Call Forensics™ of the firm’s Q4 2020 earnings call (02/26) highlights that management generated an excitement marker when stating their strategic plan will lead to sales flatness in 2021, before picking up in 2022 and 2023. Additionally, management is confident they are focused on engaging with customers and ensuring their strategic priorities line up