Responding to what it called an unexpected and unwarranted plunge in its stock price, Fluor Corp. said Thursday it will buy as many as 4 million of its shares to take advantage of the lower price.
Flour’s stock fell 17%, or $13 a share, Wednesday after the engineering and construction services company’s first-quarter earnings fell below analysts’ expectations.
The stock gained back $2.125 on Thursday to close at $64.125, as almost 3 million shares changed hands. But that still is far below the $75 high the stock hit Tuesday--the day before Fluor said its profit for the first quarter grew by only 8% and fell short of the 77 cents a share analysts had expected. Fluor reported a $62-million profit, equal to 73 cents a share.
A Fluor spokesman said Thursday that the company expected the stock to rebound somewhat but still intends to start buying shares.
The impact will be to prop up the market price and increase the company’s future earnings per share by reducing the number of shares in investors’ hands. As of Thursday, the company said, there were 84.7 million shares outstanding.
If Fluor were to purchase all the shares it is authorized to buy under a 1984 stock buyback plan, it would reduce the amount of common stock outstanding by almost 5%. The cost to the company, at Thursday’s closing price, would be $256.5 million.
Separately, Fluor filed a shelf registration statement with the Securities and Exchange Commission for the periodic sale of up to $400 million in unsecured corporate bonds--essentially interest-bearing IOUs. The company said in its filing it intended to use funds raised by any bond sales for ongoing operational purposes, which could include acquiring other businesses or financing joint ventures.
A company spokesman said that this week’s events had not altered Fluor’s plans for the bond registration.
In a statement issued Thursday, Fluor Chairman Leslie McCraw said the company’s first-quarter results were affected by isolated problems and that Fluor’s “global market position and basic earning power are intact.”
Fluor blamed its first-quarter performance on cost overruns at two power plant projects and higher-than-expected expenses incurred in bidding on projects and traveling to visit the far-flung sites of potential jobs.