Q2 Earnings, Revs Up YoY for CBI - Analyst Blog

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Engineering company Chicago Bridge & Iron Company N.V. ( CBI ) reported second-quarter 2013 adjusted earnings of $112.3 million or $1.04 per share, in line with the Zacks Consensus Estimate. However, adjusted net income was up 38.6% year over year on the back of strong project activities and robust backlog during the quarter.  

On GAAP basis, the company reported earnings of $106.0 million or 98 cents a share, up 32.4% year over year. GAAP earnings included an acquisition-related cost of $6.3 million or 6 cents per share.

Total Revenue & Contracts

Revenues for the quarter grew a robust 119% year over year to $2.9 billion, driven by healthy revenue growth across all the three legacy business units of the company due to the rising demand for energy infrastructure, especially in the LNG, gas processing and oil and gas markets across the world.

The company's acquired business units drove the majority of the revenue growth. However, the reported revenues were in line with the Zacks Consensus Estimate.

In the reported quarter, new contracts totaled $2.5 billion (up 38.9% year over year), led by new deals penned by the Project Engineering and Construction Segment. However, the company's backlog fell quarter over quarter to $24.5 billion from $25.5 billion due to unfavorable currency effects.

Segment Revenue

The company reported revenue growth across all four segments.

The Project Engineering and Construction segment's revenues grew 118.7% year over year to $1.7 billion. About two-third of the increase was due to greater number of acquisitions.

Additionally, the company's oil and gas business unit reported healthy growth with significant revenue increase related to increased activities in LNG and gas processing work in the Asia-Pacific. Continued significant activities at its REFICAR refinery project and power and nuclear projects buoyed the revenue.

Fabrication Services reported second-quarter 2013 revenues of $675.5 million, reflecting a healthy 49.8% increase year over year. The rise was driven by robust domestic and international markets strengthened by shale gas, petrochemical and LNG development.  

Lummus Technology recorded revenues of $161.3 million, compared with $88.6 million in the second quarter of 2012. The increase in segment revenues was due to higher backlog generated over the past two years.

Moreover, the segment achieved a milestone in the quarter by successfully acquiring E-Gas technology. The segment also effectively commissioned two new products and completed the major upgradation of the Pasadena site during this quarter.

Government Solutions segment reported revenues of $353 million or 12% of total revenue and an operating income of $10.7 million. This segment benefited from a large number of projects ranging from small environmental compliance projects to large EPC (Engineering, procurement and construction) projects for the federal government.

Additionally, management is taking strategic initiatives including restructuring of business units and consolidating financial resources into a central location to support future growth for this segment. However, the segment continues to remain plagued by uncertainties related to government funding and spending.

Margin

Gross profit for the quarter grew 86.9% year over to $297.1 million. Operating profit was $185.4 million, up 79.8% year over year. The increase in operating profit was primarily driven by accretive acquisitions and higher revenues from oil and gas and technology business units. However, operating profit margin fell 140 basis points due to change  in volume mix of the legacy business units and acquisition costs.

Balance Sheet & Cash Flow

At the quarter-end, the company had shareholders' equity of more than $2 billion, for the first time since its inception, along with long-term debt of $1.7 billion  

Outlook

Along with quarterly earnings, the company updated its guidance for full year 2013 and now expects revenues to be in the range of $10.7-$11.2 billion, with adjusted EPS in the range of $4.00-$4.35. The company expects new contracts in the range of $11.0-$15.0 billion.

ChicagoBridgecurrently carries a Zacks Rank #1(Strong Buy). Stocks in the same sector that are worth reckoning include Lennox International, Inc. ( LII ), MDC Holdings Inc. ( MDC ) and Meritage Homes Corp. ( MTH ), each  carrying a Zacks Rank #1 (Strong Buy) each.



CHICAGO BRIDGE (CBI): Free Stock Analysis Report

LENNOX INTL INC (LII): Free Stock Analysis Report

MDC HLDGS (MDC): Free Stock Analysis Report

MERITAGE HOMES (MTH): Free Stock Analysis Report

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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.



This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: CBI , LII , MDC , MTH

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