Shares of Fluor (FLR 3.27%) tumbled more than 12% by 11:15 a.m. EST on Friday. Weighing on the engineering and construction services company was its disappointing fourth-quarter results and a weak outlook for 2021.
Last year was another challenging one for Fluor due to the impact the COVID-19 outbreak had on the global economy. The company reported a loss of $115 million, or $0.92 per share, during the fourth quarter. That pushed its full-year loss to $293 million, or $2.09 per share. While that was an improvement from 2019's $1.5 billion or $10.89-per-share loss, it missed the analysts' consensus estimate by $0.59 per share. The main issues were the impact of weak commodity prices and the COVID-19 outbreak on its businesses, which led it to record $358 million of non-cash impairment charges.
While Fluor expects 2021 to be a better year as the pandemic-related headwinds fade, it will be a "bridge year" for the company, according to CEO David Constable. Because of that, the company only expects its adjusted earnings to range between $0.50 to $0.80 per share, well below the analysts' consensus that it would earn $1.10 per share. Longer-term, the company anticipates that its earnings will grow to between $3 and $3.50 per share by 2024. Fueling that forecast is a shift in its strategy to generate 70% of its sales from non-traditional energy like low-carbon oil and gas and hydrogen.
Fluor is working to transition its company to create value for shareholders. It's exiting businesses that didn't make money while refocusing its efforts on the energy transition to low-carbon sources. While that strategy makes sense, Fluor has had problems executing in the past. Because of that, investors should keep a close eye on its ability to deliver on this game plan so that it doesn't repeat its past mistakes.