Shares of Chicago Bridge & Iron (CBI) surged 14.2% to close at $47.65 on Feb 25 after it released its fourth-quarter 2014 results. The company’s adjusted earnings of $1.47 per share for fourth-quarter 2014 modestly surpassed the Zacks Consensus Estimate of $1.43 by 2.8%. However, the bottom line suffered a 23% decline over the year-ago tally of $1.91 per share.
On a GAAP basis, earnings per share came in at $1.37 per share, decreasing 23.9% from the year-ago quarter.
For full year 2014, adjusted EPS stood at $5.21 per share compared with $4.91 per share in 2013.
Total Revenues
The company reported fourth-quarter 2014 revenues of $3,371.7 million, representing a 12.4% rise from the year-ago quarter. The top line however missed the Zacks Consensus Estimate of $3,447 million. Revenue growth in the current quarter was mainly driven by excellent performance in the engineering, construction and maintenance operating segment. Notable progress was observed in expansion of plant maintenance activities and development of nuclear projects, while the number of cost-reimbursable projects in the Asia Pacific region and Colombia increased.
For full year 2014, revenues totaled $12,974.9 million, a 16.9% rise over the 2013 value. Net bookings for the full year increased 33% to $16.3 billion.
The company’s commitment toward operational efficiency and stringent cost control has been driving growth throughout the year. Additionally, excellent performance of Gulf Coast projects as well as ethylene cracker project in Texas supported the revenue growth.
Segment Revenues
Revenues from the Engineering, Construction and Maintenance segment grew 20.9% year over year to $2,372.1 million. Robust performance of the U.S. nuclear business, coupled with cost-reimbursable projects and a rise in revenues from plant maintenance, prompted the superior results. The segment received new awards worth $2,430.0 million in the quarter.
Fabrication Services’ fourth-quarter 2014 revenues totaled $618.5 million, down 11.4% year over year. Lower storage tank work in Asia Pacific and the Middle East were responsible for the decline. The U.S. business segment, however, slightly compensated the fall. New awards totaled $455.7 million in the quarter.
Technology revenues rose 21.1% to $158.0 million, mainly driven by growth in engineering products. This segment won over $176.4 million of new contracts in the quarter.
The Environmental Solutions revenues climbed 6% year over year to $223.1 million, primarily on higher margin work mix and cost-reduction schemes. The segment received new contracts worth $226.5 million in the quarter.
Margin
Gross profit for the quarter increased 15.2% year over to $390.6 million, while gross margin recorded an increase of 30 basis points (bps) year over year to 11.6%. Operating profit came in at $273.8 million, up 30.1 % year over year. Operating margin grew 110 bps to 8.1%.
Other Financial Details
Chicago Bridge & Iron’s current assets totaled $3,530.5 million as on Dec 31, 2014, a modest increase of $140.9 million compared with the year-ago period. The company had a shareholders' equity of nearly $2,876.3 million compared with $2,507.4 million in the year-ago period. Long-term debt of the company was $1,564.2 million as of Dec 31, 2014 compared with $1,625 million as of Dec 31, 2013.
Cash flow from operating activities for the twelve-month period ended Dec 31, 2014 was $264.0 million, marking a remarkable turnaround from cash utilized in operating activities of $112.8 million in the prior-year period.
Outlook
For fiscal 2015, management expects revenues in the range of $14.4–$15.2 billion and earnings per share within $5.55–$6.05. Decline in oil prices are unlikely to affect new bookings of the company as only 5% of its business is exposed to upstream end markets. Backlog growth, fueled by new awards, is expected to continue throughout 2015.
Zacks Rank
Chicago Bridge & Iron currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the sector include Dycom Industries Inc. (DY), Danaher Corp. (DHR), AO Smith Corp. (AOS). While Dycom Industries Inc sports a Zacks Rank #1(Strong Buy), both Danaher Corp. (DHR) and AO Smith Corp. (AOS) carry a Zacks Rank #2 (Buy) each.
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