Department of Energy contractor Fluor moved up its quarterly earnings call by several hours Thursday to announce that David Seaton had stepped down as CEO and board member effective May 1.
Executive Vice President and Chief Legal Officer Carlos Hernandez is stepping in as “interim” CEO, although there is no leadership search planned, Alan Boeckmann, a former Fluor CEO and current executive chairman of its Board of Directors, said during the morning conference call. “Make no mistake about it, Carlos will be running the company,” he added.
“I can tell you that we are not doing a search, the board has given Carlos full authority to go forward in leading this company as CEO and to get in and do the – and to drive, I would say, some dramatic improvement in risk assessment, bidding processes and project execution,” Boeckmann said.
Seaton had been CEO since 2011 and chairman since 2012. He joined the company in 1984, and worked in operations and global management before becoming chief executive.
As chief legal officer since 2007, Hernandez has taken larger role in operations over the years, according to Boeckmann.
“I want to thank David for his 34 years of service and dedication to Fluor,” Hernandez said. “He led significant transformation of the company including the rebuilding of our self-perform construction capabilities,” and other improvements.
Fluor said in a press release that Seaton would stay on through an unspecified transition period and assist management “as requested.”
Executives did not discuss specifics during the call about the reasons for Seaton’s departure. A Fluor spokesman pointed to the company press release, which said only that Seaton was stepping down.
News reports Thursday suggested Seaton’s departure is tied to worse-than-expected financial numbers in the latest quarter.
Boeckmann said Thursday the company was clearly “disappointed” about its performance. During the first quarter, Fluor recorded a net loss of $58 million, or $0.42 per diluted share, compared to a net loss of $18 million, or $0.13 per diluted share, a year ago.
Fluor’s first-quarter revenue was $4.2 billion, compared to $4.8 billion during the first three months of 2018.
Pre-tax charges and problems with an unspecified offshore Energy & Chemicals segment project hurt Fluor in the first quarter.
Fluor’s government segment, which includes its work for the Energy Department Office of Environmental Management recorded a profit drop to $17 million from $48 million a year ago. The group’s revenue declined to $785 million, from $1.3 billion. This reflects expiration of a post-hurricane electricity restoration contract in Puerto Rico, as well as expenses connected to development of NuScale small modular nuclear reactors, according to the release.
Thanks in part to $331 million in new awards during the quarter, the government sector has a backlog of $4.2 billion, up from $2.4 billion a year ago.
Fluor is a major player in the Energy Department weapons complex.
Among other jobs, the company leads the potential $3.4 billion, 10-year contract decommissioning at the Portsmouth Site in Ohio, which runs through March 2021. It is also the lead partner in the operations and management team at the Savannah River Site in South Carolina, under a 10-year, $11 billion contract, which has been extended through July of this year. In addition, Fluor is an integrated subcontractor to Triad National Security, which in 2018 secured the potential $20 billion, 10-year contract to manage the Los Alamos National Laboratory in New Mexico.
