Chicago Bridge & Iron Company N.V. (CBI)

CBI 
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Chicago Bridge & Iron Co. (CBI)

F2Q12 Earnings Call

July 21, 2011 17:00 p.m. ET

Executives

Philip K. Asherman - President and CEO

Lasse Petterson - COO

Daniel M. McCarthy - President of Lummus Technology

Ronald A. Ballschmiede - CFO

Analysts

Will Gabrielski – Gleacher & Company

Joe Ritchie -Goldman Sachs

Scott Levine – JP Morgan

Alan Fleming - Barclays Capital

Jamie Cook – Credit Suisse

Rob Norfleet - BB&T Capital Markets

John Rogers - D.A. Davidson

Martin Malloy – Johnson Rice

Chase Jacobson – William Blair

Scott Shireen

Steven Fisher – UBS

Matt Wilson – Lazard Capital Markets

Presentation

Operator

Before beginning today’s call, the company would like to caution you regarding forward-looking statements. 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 filings. While forward-looking statements represent management’s best current judgment as to what may occur in the future, the actual outcome or results may differ materially from what is expressed or implied in any such statements.

Now, I would like to turn the call over to Mr. Philip Asherman, President and CEO of CB&I.

Philip Asherman

Good afternoon and thank you for joining our call to review the Company’s performance for the second quarter. With me today are Lasse Petterson, CB&I’s Chief Operating Officer; Dan McCarthy, President of Lummus Technology and Ron Ballschmiede, CB&I’s Chief Financial Officer who will report our financial results for the quarter. Following our remarks, we will open the call for your questions.

But first, let me just briefly say that we’re very pleased with the Company’s performance in the second quarter and with the new awards we announced, its not a best start to Q3. We’ve backlog now over the $10 billion mark. The new awards covered with continuing great performance by our current backlog in each sector, certainly support our confidence in our business model and our ability to continue to drive solid (rains).

Therefore, we are ranging our guidance range for new awards to $6.8 billion to $7.2 billion ranging our earnings per share guidance to the range of $2.35 to $2.45 and maintaining our current outlook on revenue to be in the range of $4.3 billion $4.7 billion for the year.

Now, I’m going to pass here next Lasse and Dan to provide the color around the markets and operations for CB&I Lummus, Steel Plate Structures and Lummus Technology followed by Ron, who will highlight the financial results. So, Lasse I must begin with you.

Lasse Petterson

Okay, good afternoon. I will beginning my comments with new awards for the year and then give a brief update on our main ongoing projects. A second quarter awards total $1.2 billion which include a $300 million gas processing plant in North Eastern US. The plant process natural gas from new shale gas production.

CB&I is providing the process technology for the plant, we’re executing the EPC process work and we’re delivering the plant storage vessels. This award demonstrates the advantage we can deliver to our clients by combining capabilities across our three business sectors. We see more opportunities in this market for similar projects as shale gas production ramps up over the next few years.

Other second quarter awards include a $150 million detailed engineering contract for the top size facilities for an offshore field development in the UK sector of the North Sea for Nexen Petroleum. We also announced storage tanks projects in the Canadian oil sands and in the Bahamas during the second quarter.

Last week we signed a $2.3 billion contract with Chevron for the mechanical, electrical and instrumentation work on the Gorgon LNG project in Australia. As you are aware, we’re already working on the Barrow Island sites as the EPC contractor for the projects to LNG tanks.

The Gorgon project has three LNG trains each designed to produce 5 million tons of LNG per year. The Gorgon (MBI) contracts scope of work is to receive, install, hook up and complete the process modules for the Gorgon LNG trains on Barrow Island. The 270,000 tons of process modules are being fabricated at various yards in the region.

Construction of LNG trains has been CB&I’s core business for many years throughout the world and particularly in Australia where we’re currently engaged on the Pluto project and where we have previously completed Woodside trains IV and V.

Our product management personnel in Perth will start immediately to plan and prepare for the execution of the project with the main volume of construction work to be performed between 2012 and 2014.

The 400 process modules will be delivered to the Island starting in 2012. At peak, who will hire some 2,000 people engaged on the project, the majority of the project staff and crafts will come from our current Australia organization with some additional resource coming from (inaudible) of experienced LNG project personnel.

Just a few more facts about the award. We’ve formed a joint venture with Kentz and with CB&I as the leader with a 65% share. This is reimbursable contract with the incentives focused on safety, quality, cost and schedule.

This is a great win for CB&I, we’ve been working in Australia for more than 75 years and this award position us well to continue to be Australia’s leading energy contractor and major participant on future project in Australia’s promising LNG resource developments.

Finally, on new awards, today we announced a $500 million EPC contract for 260,000 cubic meter tanks on another LNG project in Asia Pacific region and a $60 million tank project in Saudi Arabia for Ma’aden Bauxite and Alumina Company. These three contracts will be in the third quarter awards.

So again, it was a good second quarter and a great month. We’ve been saying that we see our markets building momentum and the awards we have received year-to-date are certainly proving that to be the case.

Now, let me provide an update on our major project currently underway. We have two LNG projects on a development for Russia where the FEED engineering work for the Shtokman and Yamal project is ongoing in our London office. Through our joint venture which are on site, we are participating in the field work on the Barrow’s LNG development for Western Australia. The field work is on schedule for completion in the first half for 2012 and it will include the submission of an EPC contract price for the full LNG plan development. We’re also engaged in several studies for LNG like a fashion trains in the US and Africa. All of these studies on FEED projects offer us encouraging opportunities for additional EPC work in 2012 and onwards.

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