Chicago Bridge & Iron N.V. (CBI)
Q1 2013 Earnings Call
May 02, 2013 5:00 pm ET
Philip K. Asherman - Chief Executive Officer, President and Supervisory Director
Lasse J. Petterson - Chief Operating Officer and Executive Vice President
Daniel M. McCarthy - Executive Vice President and President of Lummus Technology
Edgar Chip Ray - Executive Vice President and Group President of Government Solutions
Luke V. Scorsone - Executive Vice President and Group President of Fabrication Services
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
Jamie L. Cook - Crédit Suisse AG, Research Division
Jerry Revich - Goldman Sachs Group Inc., Research Division
John D. Ellison - BB&T Capital Markets, Research Division
Steven Fisher - UBS Investment Bank, Research Division
Previous Statements by CBI
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Any statements made or discussed today that do not constitute or are not historical facts, particularly comments regarding the company's future plans and expected performance, are forward-looking statements that are based on assumptions the company believes are reasonable, but are subject to a range of uncertainties and risks that are summarized in the company's press release and the SEC filing.
While forward-looking statements represent management's best current judgment as to what may occur in the future, the actual outcome or result may differ materially from what is expressed or implied at any such statements.
Now I would like to turn the call over to Mr. Philip Asherman, President and CEO of CB&I.
Philip K. Asherman
Good afternoon, and thank you for joining us, as we report Chicago Bridge & Iron's results for the first quarter 2013. With me today is CB&I's Chief Financial Officer, Ron Ballschmiede, who will discuss the company's overall financial performance. We'll also have reports from CB&I's 4 operating group presidents: Lasse Petterson, for engineering, construction and maintenance, or ECM; Luke Scorsone, fabrication and services; Dan McCarthy, technology; and Chip Ray, government solutions. The operating executives will individually provide the narrative for each of our reporting segments, followed by Ron, who will summarize our financial results for the quarter. Then, of course, the entire group will address your questions following these opening remarks.
First let me express how pleased we are with the pace of integration of the 2 companies and how quickly the organizational lines are blurring into truly 1 CB&I. Although it's only been weeks since the financial close of the transactions for Shaw, the amount of work and dedication to ensure that we immediately capitalize on the strength of our consolidation is impressive by all measures.
Safety performance is always one of our leading indicators, and I can report that with over 27 million hours we expended in the quarter, our safety record on projects, in shops, labs and offices around the world remains in the top tier of companies against any relevant index or measure. Our results reflect some seasonality of the new backlog we acquired as it relates to maintenance and outage work in our plant services business. The political headwinds associated with government contracts, as we saw recently with the postponement of the large Browse LNG project in Australia, the timing of new awards for very large capital projects.
But our end markets are strong, and for the first quarter, I'm pleased to report that the income from these operations was nearly $148 million and delivered $0.82 of earnings to the bottom line before adjustments. We also remain confident of our guidance for the year.
Now we frequently refer to the total amount of what we term as underpaying work we report as part of our annualized awards revenue projections. With the addition of new maintenance contracts, fabrication work, as well as a growing demand in engineering projects and offshore production plus new technology awards and a variety of opportunities for our Steel Plate Structure business, this quarter is a good example of how this work is growing to almost 70% of our total earnings resulting from lower risk and a more predictable backlog.
Now today, we've asked the leader of each of the operating groups to discuss their businesses. And if you attended our Investor Day in March, you'll have additional context from which to base your understanding.
So with that, I'll turn the call over to our first report, from Lasse Petterson, who leads all of our engineering, construction and maintenance work around the world. Lasse?
Lasse J. Petterson
Thank you, Phil. I'll comment on some trends in our key markets for major engineering, construction and maintenance projects, including new awards this quarter and a brief update on some of our larger ongoing projects.
The EC&M operating unit includes the projects and operations within oil and gas, power and plant services EC&M employs more than 38,000 people and more than 350 active projects, representing a backlog exceeding USD 18 billion.
During the quarter, we have started alignment and integration activities throughout CB&I, with our priority on safety as a core value and common operational standards, our CMSs, that have greatly enhanced our performance and set CB&I as a best in class performer in the energy infrastructure arena. As part of this process, we continue to identify opportunities for collaboration across our operating groups to leverage our position as an integrated solutions provider.
Trends remain positive in our key end markets, new awards in the quarter included the Aasta Hansteen detailed engineering for Statoil, Anadarko's Mozambique LNG FEED study and the multi unit nuclear fleet-wide maintenance contract.