Chicago Bridge & Iron Company N.V. CBI reported fourth-quarter 20Array5 adjusted earnings of $Array.56 per share, which came in line with the Zacks Consensus Estimate. Notably, the bottom line exceeded the year-ago figure of $Array.47 by about 6.Array%.
For full-year 20Array5, the company’s adjusted net income per share came in at $5.86, up Array2.5% on a year-over-year basis.
Year-over-year improvement in quarterly and full-year earnings was largely attributable to diligent execution strategies undertaken by the company as well as its competitive business model. However, top-line fall, coupled with increased selling and administrative expenses, weighed on quarterly earnings to some extent.
Inside the Headlines
The company reported fourth-quarter 20Array5 revenues of $3,274.9 million, a 2.9% year-over-year decline and missing the Zacks Consensus Estimate of $3,427 million. Lackluster top-line performance during the quarter was largely responsible for sales decline in three out of four sub-segments of the company.
For full-year 20Array5, the company recorded revenues of $Array2,929.5 million, down marginally from the year-ago tally of $Array2,974.9 million. Currency headwinds proved to be a major headwind, adversely impacting total revenue by $890 million.
Gross profit decreased 2.4% year over year to $38Array.3 million, while gross margin remained flat year over year at ArrayArray.6%. Loss from operations came in at $66.Array million compared with income from operations of $273.8 million.
The company booked new awards worth $3,262.4 million during fourth-quarter 20Array5; while for full year, new awards totaled $Array3,Array38.4 million. The robust level of new awards was largely attributable to impressive booking in multiple segments. These include two ethane crackers on the U.S. Gulf Coast in the engineering and construction segment, a liquid ethane cracker and associated units in the Middle East and an additional liquefaction train for an existing LNG project in Texas.
In addition, awards for a combined-cycle gas turbine plant on the Gulf Coast and construction services for a petrochemical derivatives plant in the U.S. were included under new awards for the quarter. The company won notable projects in key geographies including the U.S., the Middle East, Gulf Coast, Asia, North America and Africa, which clearly indicates its bright prospects. Notable awards include fabrication of low-temperature storage tanks and spheres, pipe fabrication for petrochemical and LNG facilities, engineered products for a refinery and so on.
Segmental Revenues
During fourth-quarter 20Array5, Chicago Bridge & Iron realigned its business segment. Its Maintenance business, previously reported under Engineering & Construction operating group (formerly Engineering, Construction & Maintenance) will henceforth be reported under Capital Services operating group. Moreover, the engineered products business that was previously reported under Technology operating group will hereafter be reported under the company’s Fabrication Services operating group.
Revenues from Engineering and Construction segment came in at $2,0Array6.5 million, an increase of 2.Array% on a year-over-year basis. Revenues were supported by increased activities in LNG projects in the U.S., partially offset by a fall in revenues related to projects in the Asia-Pacific region and Colombia as well as currency translation effects. Nevertheless, new awards in this segment declined 9.2% to $Array,786.7 million in the quarter.
Fabrication Services’ fourth-quarter 20Array5 revenues totaled $553.3 million, down Array9.4% year over year. Completion of storage tank-related work in the Asia-Pacific region, coupled with $Array40 million of foreign currency translation effect, proved to be a major drag on revenues. Also, new awards received by this segment declined ArrayArray.4% to $493.8 million in the quarter.
Technology revenues were down 2% year over year to $88.4 million, largely on account of currency headwinds. This segment won over $32Array.8 million of new contracts in the quarter, reflecting colossal growth of 329.8%, largely aided by Chicago Bridge & Iron’s new awards from the Chevron Lummus Global equity venture.
Capital Services revenues remained relatively flat year over year at $6Array6.6 million (down meager 0.6%). Also, new contracts received by this segment declined 4.2% to $660.Array million in the quarter.
Liquidity
Chicago Bridge & Iron’s cash and cash equivalents for the Array2-month period ended Dec 3Array, 20Array5 was $550.2 million compared with $35Array.3 million in the prior-year period.
Long-term debt was $Array,800.0 million as of Dec 3Array, 20Array5 compared with $Array,564.Array million as of Dec 3Array, 20Array4.
Outlook
Chicago Bridge & Iron had previously offered guidance for full-year 20Array6 on its Investor Day held few weeks back. The company has reiterated its outlook and expects full-year revenues in a range of $ArrayArray.4–$Array2.2 billion. Earnings per share are expected within $5.00– $5.50 per share.
To Conclude
Chicago Bridge & Iron is currently experiencing solid growth in most of its markets and hopes to keep its growth momentum alive on the back of lucrative prospects, going forward. We believe the company’s diversity in the energy project spectrum, coupled with its robust award wins, will drive growth for full-year 20Array6. Despite these strengths, strong foreign currency headwinds proved to be a major negative over the past few quarters, stunting the company’s profitability and may pose a major concern in the near future as well.
Chicago Bridge & Iron currently has a Zacks Rank #3 (Hold). Better-ranked stocks include Exar Corp. EXAR, FormFactor Inc. FORM and Dycom Industries Inc. DY. While both Exar and FormFactor sport a Zacks Rank #Array (Strong Buy), Dycom holds a Zacks Rank #2 (Buy).
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