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Earnings Miss for Chicago Bridge & Iron - Analyst Blog
5/6/2013 1:15:00 PM
Chicago Bridge & Iron Company N.V. ( CBI ) reported first quarter 2013 results with earnings per share of 82 cents, down 20.4% from the Zacks Consensus Estimate of $1.03. However, earnings were up 36.7% year over year, driven by strong project activities and robust backlog during the reported quarter.
On a GAAP basis, the company reported earnings of 32 cents a share which was way below the Zacks Consensus Estimate and the year-ago estimate of 60 cents a share. GAAP earnings include an acquisition-related cost of $51.2 million or 50 cents per share.
Total Revenue & Order
Revenue for the quarter grew a robust 87.4% year over year to $2.3 billion, driven by the rising demand for energy infrastructure, especially in the LNG, gas processing and oil sands markets across the world.
In the reported quarter, new awards totaled $1.95 billion (up 14.8% year over year), which increased the company's backlog to $25.5 billion with a good mix of reimbursable and lump sum contracts.
The company reported revenue growth across four of its segments.
Project Engineering and Construction reported year-over-year revenue growth of 101.5% to $1.4 billion. About $374 million of the total increase was driven by the Shaw acquisition. Remaining growth came from the oil and gas business unit, which increased its revenues to $1.1 billion or 50%.
The significant revenue increase was also related to increased activities of the LNG and gas processing work in the Asia Pacific region, petrochemical work in the United States and continued significant activities at its REFICAR refinery project.
Fabrication Services reported first quarter 2013 revenues of $495 million, reflecting a 26.5% increase. Fabrication manufacturing revenues were $77 million, with operating income of $9 million. Steel plate structures revenues increased 7% to $418 million on higher activity for LNG tank projects in Asia and storage tank work in North America, partially offset by the substantial completion of the GASCO project in the Middle East.
Lummus Technology had another strong quarter, reporting revenue of $150 million compared to $100 million in the first quarter of 2012. The increase in revenues reflects a greater volume of heat transfer and licensing revenue from a higher beginning-of-the-year backlog.
Government Solutions sector reported revenues of $175 million and operating income of $4 million or 2.3% of revenues. The post-acquisition half quarter of operating activities were negatively impacted by the current uncertainties with respect to government funding and spending.
Gross profit for the quarter grew 60.6% year over year with gross margin contracting 190 basis points (bps) to 10.9% year over year. The increase in gross profit was primarily driven by the acquisition and higher revenues from the oil and gas and technology business units, which totaled $246 million. However, the decline in margin primarily reflects the changing relative revenue volume of the legacy business units and the acquisition.
Selling and administrative expenses increased to $94 million from $63 million in 2012. The increase primarily relates to the acquisition, which accounted for approximately 75% of the dollar increase.
Balance Sheet & Cash Flow
Exiting the quarter, the company had shareholders' equity of $2 billion, long-term debt of $1.7 billion and a debt-to-capitalization ratio of 46%.
During the quarter, the company funded the $3.3 billion Shaw acquisition with $500 million of equity, $1.8 billion of debt and the balance plus transaction costs and Shaw-related debt repayments from our combined cash balances.
Chicago Bridge & Iron currently has a Zacks Rank #3 (Hold). However, some companies that you would like to consider at the moment and operating in the same industry include; Quanta Services Inc. ( PWR ) having a Zacks #1 (Strong Buy), CDI Corp .( CDI ) and Orion Marine Group ( ORN ) having Zacks Rank #2 (Buy).
CHICAGO BRIDGE (CBI): Free Stock Analysis Report
CDI CORP (CDI): Free Stock Analysis Report
ORION MARINE GP (ORN): Free Stock Analysis Report
QUANTA SERVICES (PWR): Free Stock Analysis Report
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