Short Seller Says Textura Corp Is Cooking The Books

Textura Corp TXTR fell nearly 9 percent Monday after a short seller claimed the company is cooking its books.

Andrew Left's Citron Research claimed the Chicago-based company, which provides software for construction management, has reported gross margins that are "utterly fraudulent" and said Textura's claims of a potential $28 billion market are "riddled with lies and exaggerations."

Much of the market cited by Textura consists of “heavy” and “civil engineering” construction projects that don't use Textura services, Citron said.

Regarding gross margins, Textura says it charges general contractors four basis points of the gross value of construction contracts, while charging subcontractors an additional 12 basis points for using its system.

"This is a complete lie," Citron said. "The company has never booked even half this level of basis points."

As an example, Citron cited a $544 million Denver Airport project under construction using Textura software and from which Textura charges no fees directly to subcontractors.

Textura didn't offer a public response to Citron's claims Monday. Its auditing firm for the year ending September 30 is PricewaterhouseCoopers LLP.

A number of companies targeted by Los Angeles-based Citron have become subjects of regulatory action, and although its reports have been frequently called unfair, Citron says it has never been successfully sued.

Textura closed Monday at $25.71 per share, down nearly 9 percent.