Chicago Bridge & Iron (CBI) posted second-quarter 2014 adjusted earnings of $1.36 per share, surpassing the Zacks Consensus Estimate of $1.27 per share by 7.1%. The adjusted earnings marked an increase of 30.8% from $1.04 a share reported in the prior-year quarter. On a GAAP basis, earnings per share increased 33.7% year over year to $1.31.
Key factors, which drove the year–over–year growth are increased backlog, growing demand for energy across the globe, diligent operational execution coupled with increased focus on safety and its unique business model.
Total Revenue & Contracts
Revenues for the quarter rose 15.6% year over year to $3.3 billion. The rise was buoyed by the strong performance of its Engineering, Construction and Maintenance segment on the back of increased demand for energy infrastructure, especially in the LNG, gas processing as well as oil and gas markets throughout the world. Revenues were in line with the Zacks Consensus Estimate.
In the second quarter of 2014, new contracts totaled $4.2 billion (up 67.3% year over year), driven by new deals penned by the Engineering, Construction and Maintenance segments. At the end of the quarter, the backlog level stood at $31.5 billion.
Segment Revenues
The Engineering, Construction and Maintenance segment’s revenues increased 27.5% year over year to $2.3 billion. The increase was driven by a significant improvement in the end-markets. At the end of the quarter the segment had backlog level of approximately $20 billion.
Fabrication Services reported second-quarter 2014 revenues of $641.2 million, reflecting a decline of 5.1% year over year.
Technology segment’s revenues also decreased 3.6% to $155.5 million. However, the segment had over $500 million worth new contracts in the quarter.
TheEnvironmental Solutions segment reported a revenue decline of 4.8% to $206.9 million in the quarter. In the quarter, the segment had new contracts worth $280 million.
Margin
Gross profit for the quarter improved 28.3% year over to $381.2 million while gross margin increased 120 basis points year over year to 11.6%. Operating income was $260.2 million, up 40.3% year over year. Operating margin also increased 140 basis points to 7.9%.
Balance Sheet & Cash Flow
Exiting the quarter, the company had cash and cash equivalents of $374.3 million, down from $426.6 million in the prior-year quarter. The company had shareholders' equity of more than $2.7 billion, along with long-term debt of about $1.6 billion. Cash flow from operating activities was negative $374.4 million compared with negative $300.7 million in the prior-year quarter.
Zacks Rank
Chicago Bridge & Iron currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the sector include CLARCOR Inc. (CLC), China Merchants Holdings (International) Company Limited (CMHHY) and Macquarie Infrastructure Company LLC (MIC). All three stocks carry a Zacks Rank #2 (Buy).
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