Fluor Corporation (NYSE: FLR) recently announced significant changes as the result of its strategic review and operational review. The sale of assets, reductions in staff and closing of offices has led to much speculation about the future of Fluor’s 2,000 plus employees in Greenville, SC. While the company may sell its campus, Fluor plans to remain in Greenville.
“Fluor is considering the possibility of selling its Greenville campus and relocating to a new address,” Fluor spokesman Brian Mershon said in a statement. “While our office physical address could change, Fluor remains committed to having an execution presence in Greenville, South Carolina.”
Fluor concluded that the divestitures of select businesses will improve the financial stability of the company and allow the remaining businesses to refocus on engineering, construction and maintenance services in core markets. The company is initiating plans to sell its Greenville, SC-based construction equipment rental company (AMECO) and its government business, and to monetize surplus real estate and non-core investments.
The strategic review evaluated the entire portfolio of businesses including Stork, COOEC-Fluor Heavy Industries and NuScale. The company has taken deliberate and constructive action on these investments:
- Stork continues to implement its restructuring plan and is expected to emerge as a stronger and more profitable business in early 2020.
- The company is in discussions with its COOEC-Fluor Heavy Industries partner to improve the financial performance of the fabrication yard.
- NuScale has the only small modular reactor (SMR) technology being reviewed by the Nuclear Regulatory Commission and it expects final approval of its SMR by the end of 2020. Commitments from new investors Doosan Heavy Industries & Construction and Sargent & Lundy, subject to regulatory approval, are expected to allow the funding of NuScale activities for the remainder of this year. Recent milestones achieved by NuScale have generated additional investor interest that is expected to offset 2020 funding requirements.
“Together with our Board of Directors and outside advisors, we took an extensive and comprehensive look at our broader business to determine the best strategic path to return the company to consistent profitable growth,” said Carlos Hernandez, chief executive officer, Fluor Corporation.
“The strategic direction we are pursuing as a result of this process builds upon Fluor’s premier competitive position in our core markets in which we expect to deliver sustainable growth, strong cash flow and attractive returns to investors. With this review behind us, we are focusing more than ever before on long-term value creation and operational excellence, and we remain dedicated to moving Fluor forward for the benefit of all of our stakeholders.”
Fluor anticipates these actions will generate long-term value to shareholders through its best-in-class expertise in all aspects of project execution while using a disciplined project and portfolio risk management approach. This renewed focus should result in a strengthening of the balance sheet, improving the company’s credit rating and ensuring adequate liquidity for ongoing operations.
The results of the operational review led to key leadership changes, the development of improved pursuit criteria and a new organizational structure. The company will shift to a model in which business groups have direct control over the functions that support operations. These actions are expected to improve the speed of decision making and drive greater accountability within the businesses. As a result of these and other changes, the company anticipates overhead reductions of $100 million.
Lead director Peter Fluor has stepped down as chair of the organization and compensation committee and has informed the company that he will not stand for re-election next year. He has served the company as a director since 1984. A separate press release is available on fluor.com.
Collectively, these actions build on historical successes and position the company to repair Fluor’s balance sheet and restore investor confidence.