Chicago Bridge & Iron N.V. (CBI)
Q4 2012 Earnings Call
February 27, 2013 5:00 pm ET
Philip K. Asherman - Chief Executive Officer, President and Supervisory Director
Lasse Petterson - Chief Operating Officer and Executive Vice President
Daniel M. McCarthy - Executive Vice President and President of Lummus Technology
Ronald A. Ballschmiede - Chief Financial Officer and Executive Vice President
Michael S. Dudas - Sterne Agee & Leach Inc., Research Division
Andy Kaplowitz - Barclays Capital, Research Division
Martin W. Malloy - Johnson Rice & Company, L.L.C., Research Division
Steven Fisher - UBS Investment Bank, Research Division
Jamie L. Cook - Crédit Suisse AG, Research Division
Will Gabrielski - Lazard Capital Markets LLC, Research Division
Tahira Afzal - KeyBanc Capital Markets Inc., Research Division
John B. Rogers - D.A. Davidson & Co., Research Division
George O'Leary - Tudor, Pickering, Holt & Co. Securities, Inc., Research Division
Robert F. Norfleet - BB&T Capital Markets, Research Division
Robert V. Connors - Stifel, Nicolaus & Co., Inc., Research Division
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Now I would like to turn the call over to Mr. Philip Asherman, President and CEO of CB&I. Please go ahead.
Philip K. Asherman
Good afternoon, and thank you for joining us as we report Chicago Bridge & Iron's Fourth Quarter and Year End 2012 Results. With me today are CB&I's Chief Operating Officer, Lasse Petterson, who will report on project backlog and steel plate structures; Dan McCarthy, President of Lummus Technology; and our Chief Financial Officer, Ron Ballschmiede, who will discuss our overall financial performance.
We're very pleased to report a very strong quarter and a great year. A metric we're exceptionally proud of this year is achievement of 0 lost time accidents in our project in engineering and construction group. This 0 represents nearly 40 million man-hours, both direct and subcontract, on projects from Canada to Serbia, Colombia to Papua New Guinea and everywhere in between. This is an outstanding achievement by all of those responsible for our projects and offices around the world.
Our Steel Plate Structure business also had an extraordinary safety record with only 4 lost time accidents in 30 million man-hours, including all of our field and fabrication sites. As CB&I in total has not had a single fatality in over 2.5 years and 170 million man-hours work, we thank everyone for their dedication to the basic principle that nobody gets hurt at CB&I, and proving 0 accidents is certainly possible.
Now we remain very confident that with our focus in LNG, gas processing, petrochemicals, offshore and other engineering construction opportunities, combined with the great returns we are seeing from our technology sector and our global market position in the fabrication erection of steel plate structures, we are entering 2013 in an extremely strong position to capitalize on the continuing development of energy infrastructure in the U.S. and around the world. And as Ron will reaffirm, our 2013 guidance for CB&I, which we provided in December, is unchanged.
Some of the new business we were awarded in the fourth quarter include: Aramco storage tanks and spheres in Saudi Arabia, spheres in Equador, a Co2 removal plant for Exxon Australia, offshore marine field developments for DSME and Statoil in the North Sea, technology awards from Shell in Singapore and Westlake in the U.S., plus a petrochemical owner in Korea. And the last one, Dan will provide the detail, but I wanted to highlight the broad diversity in our new awards and the fact that we entered 2013 with $11 billion of backlog.
And while each of our business sectors experienced substantial growth over the last year in revenue income from operations and new business, we should highlight that Lummus Technology exceeded all of our prior forecasts and posted record numbers in earnings and new awards, but I'll let Dan tell that story in a moment.
Looking forward, we're confident in our end markets, producing results that can potentially exceed our expectations, particularly if one or more of the mega LNG projects we're currently involved with in the early works receive final go-ahead for an EPC contract.
We're also seeing the continuation of the petrochemical and gas processing projects being developed in the U.S., and the global storage market continues to be strong in most geographic areas. While technology sales are increasing in the fast pace as the U.S., Russia, Asia Pacific drive global petrochemical growth in ethylene and derivatives.
But before we report the details of CB&I year-end results, I want to briefly mention the new CB&I, which as you know, reached financial close on the Shaw acquisition on February 13, following the achievement of all of the conditions specified in our agreement and approved by well over 90% of the shareholders. So until we get all the numbers merged and forecasted, leading up to our Investor Day guidance on March 28, it's premature to say much at this point, except that the immediate transition was virtually seamless, as offices, with all of 250,000 employees up on CB&I email, CB&I signs on the offices and at the project sites and in our fabrication facilities, 26,000 new CB&I hard hats issued and much more, and all happened on Day 1. Many thanks go to those at both companies who worked so hard to ensure that we became one CB&I on February 13.
The integration continues. And if you've noted the organization announcements that were released the first day, beginning in the first quarter, we'll be reporting to you results in 4 operating groups: technology; ECM, or engineering construction and maintenance; fabrication services; and government solutions.
The name should be fairly self-explanatory, but it continues our goal of scaling our business model by grouping like businesses together to leverage the talent and the unique commercial aspects of each unit. Again, the overall mix of the combined company will be a better geographical balance of 50-50 U.S. to international backlog, 50-50 between fixed-price and reimbursable or hybrid contracts and most important is that over 75% -- 70% of our total earnings will come from a much more diverse and predictable revenue stream than in a model that is solely dependent on engineering and construction projects.
So I'll pause here and turn it over to Lasse, Dan and Ron for the quarter 4 and year-end results. Lasse?