Engineering and procurement giant Fluor said Tuesday morning it would not sell its government contracting business, which serves clients such as the Department of Energy and the Defense Department.
The Irving, Texas-based company announced the planned sale in September. However, belt-tightening over the past year, along with the anticipated sale later in 2020 of the AMECO business, are relieving Fluor of the need to divest government services, CEO Carlos Hernandez said during a quarterly earnings call with Wall Street analysts.
“As Fluor worked through the fourth quarter and realized some of the early benefits of its restructuring plan, the Company gained confidence in its solid liquidity position and its viable options for generating cash flow such that the Company no longer deemed it advisable or necessary to proceed with the sale of this business,” Hernandez said.
Management knew government contracting is a valuable business with good cash flow, Hernandez said, adding that Fluor was approached by several viable buyers during the time the unit was on the market.
Fluor is not reporting final quarterly and 2019 yearly earnings numbers at this time because it is under a Securities and Exchange Commission (SEC) investigation of its accounting and financial reporting for the second quarter of 2019.
“We do not believe at this time that we have material errors,” Fluor Executive Chairman Alan Boeckmann said during the call. But the books remain open, he added.
Full year new awards for the government segment were nearly halved, from $4.1 billion in 2018 to $2.2 billion in 2019.
In December, the Energy Department issued the potential 10-year, $10 billion award for Hanford Central Plateau Cleanup Contract in Washington state to a group comprised of Amentum, Fluor, and Atkins. However, a competing team has protested the award.
A Fluor team is also in the running for the contract to manage radioactive waste at Hanford, the CEO said.
Fluor’s 2019 ending backlog is expected to be $3.8 billion for government services, compared to $4.6 billion a year ago for that business.
Editor’s note: Article modified Feb. 18 to clarify last paragraph.
