Chicago Bridge & Iron Company N.V (CBI) reported third quarter of fiscal 2012 results, with earnings per share of 82 cents, up 1.2% from the Zacks Consensus Estimate of 81 cents and 13.9% from the prior-year earnings of 72 cents a share. The company registered solid quarterly performance driven by strong order activity during the quarter.
Total Revenue & Order
Revenue for the quarter grew 15% year over year to $1.4 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 $930 million, which increased the company’s backlog to $9.5 billion with a good mix of reimbursable and lump sum contracts. In addition to the new contract awards, Chicago Bridge & Iron Company had scope adjustments on existing projects in excess of $500 million.
Segment Revenue
The company reported revenue growth in two of its three segments. Project Engineering and Construction Segment reported a year-over-year revenue growth of 27.0%, mainly attributable to the increased activities at the REFICAR refinery project and the construction of gas processing plants in the U.S.
Lummus Technology revenue for the quarter grew 32% year over year, driven by strong growth in the global petrochemical market. The robust growth was attributable to increased revenue volume and higher margins on licensing activities.
CB&I Steel Plate Structures reported a revenue decline of 2.9% year over year to $496 million, due to the completion of the company’s large projects in the Middle East and in the Caribbean. This was, however, offset by the ramp up in the Australian LNG projects.
Margin
Gross profit for the quarter grew 28.6% year over year with gross margin expanding 140 basis points (bps) to 13.1% year over year. The increase in gross margin reflects the high level of license sales. Moreover, overhead and S&A expenses have also declined. Operating margin in the quarter was 8.9% compared with 7.4% in the second quarter of 2011.
Balance Sheet & Cash Flow
Year to date, Chicago Bridge & Iron had a cash balance of $655 million and a debt of about $615 million. For the first nine months of 2012, the company repurchased shares worth $138 million. Capital expenditures for the third quarter were $51 million.
The company primarily competes with EMCOR Group (EME), a leader in mechanical and electrical construction services, energy infrastructure and facilities services. Chicago Bridge currently has a Zacks Rank of #3, implying a short-term Hold rating on the stock.
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