Chicago Bridge & Iron Company N.V. (CBI): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

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Summary:
Chicago Bridge & Iron Company is the world's leading provider of integrated engineering, procurement and construction services. We are maintaining our Neutral recommendation with a target price of $86.00. The company delivered another strong quarter with earnings up 12.0% year over year and top-line growth of 30.0%. CBI's diligent operational execution, while focusing on safety, and its unique business model are the key growth drivers. CBI is benefiting from rising worldwide demand for energy infrastructure, especially in the LNG, gas processing and oil sands markets. Exiting the year, the company had a strong backlog driven by significant new order wins. CBI is positive about increasing orders in the LNG division, especially for LNG/low temperature storage systems (petrochemicals). However, unfavorable currency translation remains a drag.

Overview:

Chicago Bridge & Iron Company N.V. (CB&I) is among the world's leading integrated engineering, procurement and construction service provider and major process technology licensors, providing comprehensive solutions to customers primarily in the energy and natural resource industries. For fiscal 2013, the company reported consolidated revenues of $11.1 billion growing a robust 102% versus fiscal 2012.

In fiscal 2013, Chicago Bridge formally completed the acquisition of The Shaw Group Inc for $3.4 billion. This acquisition will expand its portfolio of engineering and construction projects and is also expected to boost its nuclear building services. The Shaw Group primarily serves sectors like energy, chemicals, power, environmental, infrastructure and emergency response industries.

Following this acquisition, the company now since the beginning of 2013, offers services under four operating groups:

Engineering, Construction and Maintenance: This segment provides engineering, procurement and construction (EPC) services for major energy infrastructure facilities. This segment also offers comprehensive and integrated maintenance services and includes the company's Oil and Gas business unit (formerly the Project Engineering and Construction segment) and Shaw's former Power and Plant Services segments. Projects for this operating group primarily comprise nuclear, fossil and renewable electric generating plants for the power industry and upstream and downstream process facilities for the oil and gas industry, such as refinery process units and petrochemical facilities, as well as Liquefied Natural Gas liquefaction and regasification terminals.

Fabrication Services: Fabrication Services provides fabrication of piping systems, process and nuclear modules, and fabrication and erection of storage tanks and pressure vessels for the oil and gas, petrochemicals, water and wastewater, mining, mineral processing and power generation industries. This operating group includes the Steel Plate Structures business unit (formerly the Steel Plate Structures segment) and Shaw's former F&M segment. Projects for this operating group include above ground storage tanks, LNG tanks, pressure vessels, elevated water storage tanks, other specialty structures, such as nuclear containment vessels and process and nuclear modules, as well as fabrication of piping and structural steel, induction bending and module prefabrication and assembly.

Technology: Technology provides licensed process technologies, catalysts, specialized equipment and engineered products for use in petrochemical facilities, oil refineries, coal gasification plants and gas processing plants and offers process planning and project development services, and a comprehensive program of aftermarket support. This operating group primarily consists of the company's former Lummus Technology segment.

Government Solutions: Government Solutions provides design-build infrastructure projects for federal, state and local governments, design-build services for marine and transportation projects and full-scale environmental services for government and private sector clients, including remediation and restoration of contaminated sites, emergency response, and disaster recovery. This operating group primarily consists of Shaw's former E&I segment.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



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