Chicago Bridge and Iron Company NV (CBI)
Q4 2011 Earnings Conference Call
February 23, 2012 5:00 PM ET
Philip Asherman – President and Chief Executive Officer
Lasse Petterson – EVP and Chief Operating Officer
Dan McCarthy – President, Lummus Technology
Ron Ballschmiede – EVP and Chief Financial Officer
Joe Ritchie – Goldman Sachs
Michael Dudas – Sterne Agee
Rob Norfleet – BB&T Capital Markets
Jamie Cook – Credit Suisse
Alan Fleming – Barclays Capital
Will Gabrielski – Lazard Capital Markets
Avi Fisher – BMO Capital Markets
Scott Levine – JP Morgan
Previous Statements by CBI
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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 filing.
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 at CB&I. Sir?
Good morning, and thank you for joining us as we report Chicago Bridge and Iron's results for the fourth quarter of 2011 and our full year's performance.
With me today are CB&I's Chief Operating Officer Lasse Petterson, who will report on the activities in our Project Engineering and Construction, as well as our Steel Plate Structures sectors; Dan McCarthy, President of Lummus Technology, reporting on that sector's results and outlook; and our Chief Financial Officer Ron Ballschmiede, who will summarize our fourth quarter and year-end financial results. After some brief comments by each of us, we will open the call for your questions.
But before we get into our operational and financial results, a metric which is equally important and which speaks to the qualitative aspects of our company, is CB&I's relentless focus on the safety of our technical and engineering staff, our project management, our craft labor and subcontractors on all of our projects in our fabrication facilities, offices, and laboratories around the world.
For 2011, I'm very proud to report that we continue to have an outstanding safety record. We executed more than 57 million man hours and achieved a lost-time incident rate of 0.02, which means statistically that we experienced only a single lost-time incident for every 12 million hours worked and that's in some of the most remote regions and challenging circumstances around the world.
And we strongly believe that this is important to our shareholders, because it's not only the right thing to do, but gives us a tremendous competitive advantage in exceeding customer expectations, recruiting and retaining talent, and essentially setting a rigorous standard by which our customers, and certainly our employees measure our performance.
So in summarizing 2011 results and as my colleagues will now discuss in further detail, I'm pleased to report that our year ended with backlog up over 30% from 2010, revenue is up 25%, and earnings are up 25% as well. Cash balances increased significantly and debt was reduced by $40 million.
Overall, margin levels performed as expected last year and we are very encouraged by the new awards in the fourth quarter and during the past two months, in setting the pace for what we expect to be a solid year in the development of energy projects, the continuing demand for additional storage capacity, and our strong position in providing proprietary technology solutions for oil and gas customers around the world.
We also remain confident in the guidance we provided during our Investor Day last November and anticipate another solid year ahead for Chicago Bridge & Iron Company.
I'll now turn the call over to Lasse to give you the color around the current backlog and new awards for our Project Engineering and Construction sector, as well as our Steel Plate Structures businesses. Lasse?
Thank you, Phil. Good afternoon. As in the last earnings call, I'll give my comments on new awards this quarter and then provide a brief update on some of our larger ongoing projects. But first, I'd like to, as Phil, start with safety.
Safety is our first priority and our safety culture is founded on our goal of nobody gets hurt at CB&I. We executed more than 57 million work hours last year with a lost-time incident rate of 0.02, which means we just had one lost-time incident for every 12 million hours worked, and these numbers are commendable and comes as a result of diligent work from all our employees on all CB&I projects and location. And again, our goal is and will always be to have no one hurt working on any of our project sites, fabrication yards, labs, or offices.
Now, let me turn the focus to new awards. Our fourth quarter new awards totaled approximately $775 million, which included several contracts for conventional storage tanks in the U.S. and Canada, in addition to a number of smaller and medium-sized engineering construction projects. Typically, we book between $2 billion and $2.5 billion per year of these smaller and medium-sized projects, which provide us with a steady and reoccurring revenues year-over-year.
In addition, we announced earlier in the first quarter of this year the award of the Kearl expansion contract in Canada, valued in excess of $750 million. We were also awarded a Freeport LNG FEED contract for two 4.4 million tons per annum process trains at the existing Freeport LNG import facility, which brings our current active LNG FEED and pre-FEED studies to five, including the previously announced Browse, Arrow, Yamal, and Shtokman studies.