Fluor’s stock lost nearly a quarter of its value in trading Tuesday after the company released partial earnings numbers because it is under investigation by the Securities and Exchange Commission (SEC) for 2019 accounting practices.
The stock closed the day at $14.79 per share, roughly 24% lower than its Friday closing price of $19.54 per share. Wall Street was closed Monday in observance of Presidents Day.
Over the past year, Fluor stock has sold as high as $41.91 per share and as low as $14.30 per share.
Prior to the start of trading, the Irving, Texas-based engineering multinational announced it would not divest its government contracting business, which includes work for the Departments of Energy and Defense.
A handful of industry sources Tuesday expressed surprise at Fluor’s decision to call off the sale announced last September.
On Jan. 31, Los Angeles-based AECOM closed the $2.4 billion sale of its government contracting branch to affiliates of two New York investment firms. The new company is Amentum. “I fully expected that Fluor would follow suit,” one industry source said by phone.
“I was surprised because it seemed they [Fluor] needed the money,” said a second industry official.
Some sources said the combination of the SEC probe and the about-face on government services might have spooked investors. The agency has requested documents and information about projects that the company recorded charges in the second quarter of 2019. Company management believes the probe won’t find any “material” errors.
Fluor stock also dropped from about $21 to slightly more than $18 per share in late September immediately after management announced plans to sell the government contracting outfit. The announcement came about two months after Fluor suffered a $555 million loss in the second quarter of 2019.
While CEO Carlos Hernandez told Wall Street analysts during a conference call that Fluor attracted a number of viable suitors for the government business, some industry sources questioned whether the prospective buyers’ offers were lower than management wanted. Hernandez said the sale of a separate Fluor subsidiary and other austerity measures – such as cutting the dividend to shareholders – improved the company’s financial health.
