CB&I Reports 2015 Second Quarter Results

THE WOODLANDS, Texas, July 23, 2015 /PRNewswire/ -- CB&I (NYSE: CBI) today reported the second quarter resulted in strong earnings, improved cash flow and consistent operating performance. Net income for the second quarter was $169.5 million, or $1.55 per diluted share, an increase of 14 percent from adjusted net income for the comparable period in 2014. Revenues were $3.2 billion, including a $240 million negative impact attributable to the translation effect of the strong dollar. Net cash provided by operating activities during the second quarter was $95 million. New awards for the second quarter totaled $2.8 billion, and new awards for the first six months totaled $5.9 billion. Backlog remained fairly constant at nearly $29.4 billion, including an adverse foreign exchange impact of $270 million year to date.

During the quarter, CB&I and its joint venture partners Chiyoda Corporation and Saipem were selected by Anadarko Petroleum Corporation to design and construct process and ancillary infrastructure associated with its LNG development program in Mozambique. CB&I expects to book its share of the initial phase of the project in the fourth quarter.

"We continue to deliver solid performance despite a volatile commodity market and geopolitical issues that create instability in many of the traditional international energy markets," said Philip K. Asherman, CB&I's President and Chief Executive Officer. "The U.S. remains a great opportunity for us particularly in LNG, petrochemicals and fossil power generation markets. East Africa will be a source of solid backlog for many years as Anadarko and other owners develop these tremendous assets. Additionally, we continue to produce significant profitability from not only our insourcing capabilities but also the diverse portfolio of new opportunities in our facilities maintenance, engineered products, steel plate storage, pipe fabrication, technology licensing and catalyst businesses."

Other significant awards for the second quarter include a combined-cycle gas turbine power project in the U.S., multiple maintenance services awards in North and South America, engineered products in Russia and Mexico, scope increases for our large nuclear projects in the U.S., and a variety of technology and fabrication awards globally.

Earnings Conference Call

CB&I will host a webcast on July 23 at 4:00 p.m. Central time (5:00 p.m. Eastern time) to discuss financial and operating results and answer questions from investors. The webcast will be available on the Investor Relations page of www.cbi.com.

About CB&I

CB&I (NYSE:CBI) is the most complete energy infrastructure focused company in the world. With 125 years of experience and the expertise of approximately 54,000 employees, CB&I provides reliable solutions while maintaining a relentless focus on safety and an uncompromising standard of quality. For more information, visit www.cbi.com.

Important Information For Investors And Shareholders

Cautionary Statement Regarding Forward-Looking Statements

This press release contains forward-looking statements regarding CB&I and represents our expectations and beliefs concerning future events. These forward-looking statements are intended to be covered by the safe harbor for forward-looking statements provided by the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties. When considering any statements that are predictive in nature, depend upon or refer to future events or conditions, or use or contain words, terms, phrases or expressions such as "achieve," "forecast," "plan," "propose," "strategy," "envision," "hope," "will," "continue," "potential," "expect," "believe," "anticipate," "project," "estimate," "predict," "intend," "should," "could," "may," "might" or similar forward-looking statements, we refer you to the cautionary statements concerning risk factors and "Forward-Looking Statements" described under "Risk Factors" in Item 1A of our Annual Report filed on Form 10-K filed with the SEC for the year ended December 31, 2014, and any updates to those risk factors or "Forward-Looking Statements" included in our subsequent Quarterly Reports on Form 10-Q filed with the SEC, which cautionary statements are incorporated herein by reference.

Chicago Bridge & Iron Company N.V.
Consolidated Statements of Operations
(in thousands, except per share data)
				Three Months								Six Months
				Ended June 30,								Ended June 30,
				2015				2014				2015				2014
Revenue				$	3,207,113			$	3,294,379			$	6,332,858			$	6,222,511
Cost of revenue				2,823,990				2,913,204				5,579,564				5,539,934
Gross profit				383,123				381,175				753,294				682,577
% of Revenue				11.9		%		11.6		%		11.9		%		11.0		%
Selling and administrative expense				85,153				98,031				194,254				217,198
% of Revenue				2.7		%		3.0		%		3.1		%		3.5		%
Intangibles amortization				14,942				16,822				30,594				33,056
Equity earnings				(394)				(3,165)				(4,596)				(7,330)
Other operating (income) expense, net				(685)				(261)				2,137				(645)
Integration related costs				—				9,537				—				17,604
Income from operations				284,107				260,211				530,905				422,694
% of Revenue				8.9		%		7.9		%		8.4		%		6.8		%
Interest expense				(21,114)				(21,675)				(43,400)				(40,562)
Interest income				2,184				1,477				4,232				3,537
Income before taxes				265,177				240,013				491,737				385,669
Income tax expense				(79,289)				(72,947)				(149,100)				(115,857)
Net income				185,888				167,066				342,637				269,812
Less: Net income attributable to noncontrolling interests				(16,373)				(24,662)				(40,894)				(38,457)
Net income attributable to CB&I				$	169,515			$	142,404			$	301,743			$	231,355
Net income attributable to CB&I per share:
Basic				$	1.56			$	1.32			$	2.78			$	2.14
Diluted				$	1.55			$	1.31			$	2.76			$	2.12
Weighted average shares outstanding:
Basic				108,700				108,096				108,450				107,888
Diluted				109,533				109,110				109,386				109,058
Cash dividends on shares:
Amount				$	7,610			$	7,567			$	15,207			$	15,126
Per share				$	0.07			$	0.07			$	0.14			$	0.14
Non-GAAP Supplemental Information
(amounts adjusted to exclude integration related costs) (1)
Adjusted income from operations								$	269,748							$	440,298
Adjusted % of Revenue								8.2		%						7.1		%
Adjusted net income attributable to CB&I								$	148,317							$	242,754
Adjusted net income attributable to CB&I per share (diluted)								$	1.36							$	2.23

(1) The exclusion of integration related costs is a non-GAAP financial measure, which we believe provides users a better indication of our operating performance. See "Reconciliation of Non-GAAP Supplemental Information" table.

 

Chicago Bridge & Iron Company N.V.
Segment Information
(in thousands)
			Three Months Ended June 30,												Six Months Ended June 30,
			2015						2014						2015						2014
							% of						% of						% of						% of
NEW AWARDS (1), (2)							Total						Total						Total						Total
Engineering & Construction			$	1,305,951			46%		$	2,056,812			49%		$	2,515,358			43%		$	6,551,649			66%
Fabrication Services			844,715				30%		564,388				13%		1,772,089				30%		1,081,117				11%
Technology			81,087				3%		152,397				4%		158,109				3%		229,843				2%
Capital Services			612,763				21%		1,429,480				34%		1,430,143				24%		2,137,957				21%
Total			$	2,844,516					$	4,203,077					$	5,875,699					$	10,000,566
							% of						% of						% of						% of
REVENUE (2)							Total						Total						Total						Total
Engineering & Construction			$	1,916,122			60%		$	1,939,898			59%		$	3,734,708			59%		$	3,626,079			58%
Fabrication Services			611,330				19%		694,295				21%		1,249,139				20%		1,366,206				22%
Technology			92,975				3%		102,387				3%		192,336				3%		204,960				3%
Capital Services			586,686				18%		557,799				17%		1,156,675				18%		1,025,266				17%
Total			$	3,207,113					$	3,294,379					$	6,332,858					$	6,222,511
INCOME FROM OPERATIONS (2)							% of						% of						% of						% of
							Revenue						Revenue						Revenue						Revenue
Engineering & Construction			$	176,467			9.2%		$	132,648			6.8%		$	312,885			8.4%		$	217,284			6.0%
Fabrication Services			55,937				9.2%		78,267				11.3%		108,336				8.7%		125,182				9.2%
Technology			36,741				39.5%		37,242				36.4%		84,765				44.1%		71,911				35.1%
Capital Services			14,962				2.6%		21,591				3.9%		24,919				2.2%		25,921				2.5%
Total operating groups			$	284,107			8.9%		$	269,748			8.2%		$	530,905			8.4%		$	440,298			7.1%
Integration related costs			—						(9,537)						—						(17,604)
Total			$	284,107			8.9%		$	260,211			7.9%		$	530,905			8.4%		$	422,694			6.8%

(1) New awards represent the value of new project commitments received by the Company during a given period, as well as scope growth on existing commitments.

(2) During the three months ended March 31, 2015, we realigned our reportable segments to reflect the present management oversight of our operations. Our maintenance business that was previously reported within our Engineering & Construction operating group (formerly Engineering, Construction & Maintenance) is now reported within our Capital Services operating group (formerly Environmental Solutions), and our engineered products business that was previously reported within our Technology operating group is now reported within our Fabrication Services operating group. Our segment results for the three and six months ended June 30, 2014 were reclassified to reflect the reportable segment realignment.

 

Chicago Bridge & Iron Company N.V.
Condensed Consolidated Balance Sheets
(in thousands)
		June 30,				December 31,
		2015				2014
ASSETS
Current assets		$	4,477,485			$	3,530,459
Equity investments		132,480				107,984
Property and equipment, net		741,469				771,651
Goodwill and other intangibles, net		4,694,842				4,751,685
Other non-current assets		240,586				219,252
Total assets		$	10,286,862			$	9,381,031
LIABILITIES AND SHAREHOLDERS' EQUITY
Current maturities of long-term debt and other borrowings		$	727,836			$	270,738
Other current liabilities		4,247,719				4,051,492
Long-term debt		1,486,085				1,564,158
Other non-current liabilities		641,832				618,340
Shareholders' equity		3,183,390				2,876,303
Total liabilities and shareholders' equity		$	10,286,862			$	9,381,031
Chicago Bridge & Iron Company N.V.
Condensed Consolidated Statements of Cash Flows and Other Financial Data
(in thousands)
		Six Months
		Ended June 30,
		2015				2014
CASH FLOWS
Cash flows from operating activities		$	(194,704)			$	(374,363)
Cash flows from investing activities		(189,644)				(49,148)
Cash flows from financing activities		422,223				357,283
Effect of exchange rate changes on cash and cash equivalents		(34,110)				20,039
Increase (decrease) in cash and cash equivalents		3,765				(46,189)
Cash and cash equivalents, beginning of the year		351,323				420,502
Cash and cash equivalents, end of the period		$	355,088			$	374,313
OTHER FINANCIAL DATA
Increase in receivables, net		$	(20,291)			$	(121,013)
Change in contracts in progress, net		(626,450)				(797,126)
(Increase) decrease in inventory		(6,089)				10,897
(Decrease) increase in accounts payable		(77,798)				95,955
Change in contract capital		$	(730,628)			$	(811,287)
Depreciation and amortization		$	86,699			$	89,870
Capital expenditures		$	63,717			$	58,179
		June 30, 2015				December 31, 2014
Backlog (1)		$	29,432,933			$	30,363,269

(1) Backlog includes the value of new award commitments until work is performed and revenue is recognized or until cancellation. Backlog may also fluctuate with currency movements.

 

Chicago Bridge & Iron Company N.V.
Reconciliation of Non-GAAP Supplemental Information
(in thousands, except per share data)
				Three Months				Six Months
				Ended June 30,				Ended June 30,
				2014				2014
Adjusted income from operations
Income from operations				$	260,211			$	422,694
Integration related costs					9,537				17,604
Adjusted income from operations				$	269,748			$	440,298
Adjusted % of Revenue				8.2		%		7.1		%
Adjusted net income attributable to CB&I
Net income attributable to CB&I				$	142,404			$	231,355
Integration related costs, net of tax (1)				5,913				11,399
Adjusted net income attributable to CB&I				$	148,317			$	242,754
Adjusted net income attributable to CB&I per share
Net income attributable to CB&I				$	1.31			$	2.12
Integration related costs, net of tax (1)				0.05				0.11
Adjusted net income attributable to CB&I				$	1.36			$	2.23

(1) The three and six month periods ended June 30, 2014 include $9,537 and $17,604, respectively, of integration related costs, less the tax impact of $3,624 and $6,205, respectively. The per share amount for the three and six month periods are based upon diluted weighted average shares of 109,110 and 109,058, respectively.

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