Chicago Bridge & Iron Company N.V
) reported second quarter of fiscal 2012 results. Second quarter
earnings were 74 cents, which was 2.8% above the Zacks Consensus
Estimate of 72 cents and was up 19.4% compared to the prior year
earnings of 62 cents a share. The company delivered a solid
Total Revenue & Order
Revenue for the quarter grew 18.2% year over year to $1.3
billion, as the company benefited from the rising demand worldwide
for energy infrastructure, especially in the LNG, gas processing
and oil sands markets.
In the reported quarter, new awards totaled $1.8 billion, which
increased the company's backlog to above $10 billion with a good
mix between reimbursable and lump sum contracts. In addition to the
new contract awards Chicago Bridge & Iron Company had scope
adjustments on existing projects in excess of $750 million.
The company reported revenue growth across all the three of its
CB&I Steel Plate Structures
reported revenue growth of 9.5% to $500 million. The increase was
primarily driven by higher activity in the large LNG tank and
mechanical erection projects in the Asia Pacific region.
Project Engineering and Construction Segment
reported a robust revenue growth of 31.3% year over year mainly due
to the increased activities at the REFICAR refinery project and the
construction of gas processing plants in the U.S.
revenue for the quarter grew 2% driven by strong growth in the
global petrochemical market. During the quarter, the company also
licensed its first paraxylene license to Reliance Industries of
Reliance licensed a suite of three technologies from Lummus to
build the world's largest paraxylene plant. In relation to other
technologies, the value of this licensed package and catalyst sale
is higher, therefore generating strong growth.
Gross profit for the quarter grew 13.4% year over year while
gross margin for the reported quarter declined 70 basis points
(bps) to 12.2% year over year. The decline in gross margin reflects
the changing relative revenue contribution of the company's
Like for example, revenue growth from the Project Engineering
and Construction sector, accounted for 55% of the consolidated
revenue during the second quarter of 2012 compared to 50% in the
same period in 2011.
Operating margin in the quarter was 7.9% compared to 8.1% in the
second quarter of 2011.
Balance Sheet & Cash Flow
Chicago Bridge & Iron's balance sheet liquidity remains
strong with a cash balance of $553 million and a net of debt of
$513 million. During the quarter, the company returned $23 million
to its shareholders through $5 million in dividends and stock
repurchases worth $18 million. Capital expenditures in the second
quarter totaled $23 million.
Concurrent with the earnings release, the company has reaffirmed
its new awards guidance for the year while has narrowed its revenue
and earnings guidance for fiscal 2012.
Chicago Bridge & Iron reaffirms its new guidance in the
range of $5.5 billion to $7.0 billion. Revenue is now expected to
be in the range of $5.4 billion to $5.6 billion while earnings are
expected in the range of $2.85 to $3.05 a share.
Although, the company has a huge order backlog this includes the
value of new award commitments also until work is performed and
revenue is recognized or until cancellation. Therefore, backlog may
fluctuate with currency moments or cancellations. Hence, Chicago
Bridge & Iron currently wants to take a cautious approach and
has narrowed its revenue and earnings guidance.
However, the company is upbeat about its performance for the
rest of fiscal 2012, on the back of current backlog and potential
new awards. The company started its third quarter with a new award
of contract worth $225 million for a peak sharing facility in
Tomago in New South Wales, Australia.
Chicago Bridge & Iron currently has a Zacks Rank of #4
implying a strong Sell on short-term basis.
CHICAGO BRIDGE (CBI): Free Stock Analysis
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