CB&I Reports Record New Business in Second Quarter; Net Income Up 33%; Revenues Up 37%; Backlog Up 45%.Business Editors THE WOODLANDS Woodlands refers to several places:
CB&I (NYSE NYSE See: New York Stock Exchange :CBI CBI abbr. cumulative book index CBI Confederation of British Industry CBI n abbr (= Confederation of British Industry) → C.E.O.E. ) today reported net income increased 33% to $16.5 million or $0.35 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share for the three months ended June June: see month. 30, 2003, compared with $12.4 million or $0.28 per diluted share for the second quarter of 2002. Net income for the first half of 2003 increased 29% to $29.2 million or $0.63 per diluted share, compared with $22.7 million or $0.52 per diluted share for the first six months of 2002. For the three months ended June 30, 2003, new business taken increased 31% to a record $539 million compared with $411 million in 2002. Significant new contracts during the quarter included the previously announced liquefied natural gas liquefied natural gas: see under natural gas. Liquefied natural gas (LNG) A product of natural gas which consists primarily of methane. Its properties are those of liquid methane, slightly modified by minor constituents. (LNG LNG (liquefied natural gas): see under natural gas. ) terminal projects in Russia Russia, officially the Russian Federation, Rus. Rossiya, republic (2005 est. pop. 143,420,000), 6,591,100 sq mi (17,070,949 sq km). and the southeastern United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , three clean fuels projects in the U.S. and refrigerated re·frig·er·ate tr.v. re·frig·er·at·ed, re·frig·er·at·ing, re·frig·er·ates 1. To cool or chill (a substance). 2. To preserve (food) by chilling. storage projects in Australia Australia (ôstrāl`yə), smallest continent, between the Indian and Pacific oceans. With the island state of Tasmania to the south, the continent makes up the Commonwealth of Australia, a federal parliamentary state (2005 est. pop. and Qatar Qatar or Katar (both: kŭ`tər, gŭ–, kətär`), officially State of Qatar, independent emirate (2005 est. pop. 863,000), c. . New business taken for the first half of 2003 was $863 million compared with $836 million for the same period last year. Backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. at June 30, 2003, stood at $1.6 billion compared with $1.1 billion at the end of the second quarter 2002 and $1.3 billion at year end 2002. "We're we're Contraction of we are. we're we are pleased to report another very successful quarter for CB&I," said Gerald M. Glenn, CB&I's Chairman, President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. . "In addition to achieving record sales and exceeding our revenue target, we completed two acquisitions that expand the capabilities of our Process & Technology group and that will be accretive for the full year. And we introduced CB&I's new brand architecture that better reflects our expanded capabilities and global presence." Revenues for the second quarter of 2003 grew 37% to $389.3 million from $284.7 million in the second quarter of 2002. Revenues more than doubled in the Company's Europe, Africa, Middle East (EAME n. 1. Uncle. ) and Asia Pacific (AP) segments, due primarily to the strong backlog going into the year, with large projects now under way in Saudi Arabia Saudi Arabia (sä  `dē ərā`bēə, sou`–, sô–), officially Kingdom of Saudi Arabia, kingdom (2005 est. pop. ,
Nigeria and Australia. Revenues increased in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. , due mainly
to a higher volume of process-related work, but declined in the Central
and South America South America, fourth largest continent (1991 est. pop. 299,150,000), c.6,880,000 sq mi (17,819,000 sq km), the southern of the two continents of the Western Hemisphere. (CSA (1) (Canadian Standards Association, Toronto, Ontario, www.csa.ca) A standards-defining organization founded in 1919. It is involved in many industries, including electronics, communications and information technology. ) segment as a result of lower new awards during
2002 and early 2003 in certain Latin American markets. Revenues for the
first half of 2003 increased 31% to $711.6 million compared with $544.0
million for the comparable 2002 period.Gross profit for the three months ended June 30, 2003 increased 29% to $49.4 million or 12.7% of revenues compared with 12.3% of revenues in the first quarter of 2003 and 13.4% of revenues for the comparable period in 2002. Gross margin performance was consistent with as-sold margins and better than plan but was slightly lower than the previous year due to the mix of projects being executed in the period. For the first half of 2003, gross profit increased 22% to $89.0 million compared with $73.2 million in the first six months of 2002. Second quarter 2003 income from operations increased 28% to $25.2 million compared with $19.6 million in second quarter 2002. North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. results increased primarily due to the significantly higher volume of engineering, procurement and construction  The introduction to this article is vague. To comply with Wikipedia's guidelines, it should be improved. (EPC (1) (Entertainment PC) See HTPC.(2) (Electronic Product Code) A standard code for RFID tags administered by EPCglobal Inc. (www.epcglobalinc.org). ) projects for the hydrocarbon hydrocarbon (hī'drōkär`bən), any organic compound composed solely of the elements hydrogen and carbon. The hydrocarbons differ both in the total number of carbon and hydrogen atoms in their molecules and in the proportion of hydrogen industry. Higher revenues and project cost savings led to improved operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. in the EAME segment, while the AP segment benefited from several significant projects currently under way in Australia. Operating income declined in the CSA segment due to lower revenues and a lack of comparable project cost savings that were generated in the prior year period when several major contracts were nearing completion. For the first half of 2003, income from operations increased 27% to $45.1 million compared with $35.4 million in the comparable 2002 period. No exit costs or other special charges were recorded in the second quarter or first half of 2003. In 2002, the Company reported exit costs of $1.1 million in the second quarter and $2.3 million for the first six months. The Company used approximately $49 million of its cash during the second quarter to fund the acquisitions of Petrofac Limited's U.S. EPC business and John Brown Hydrocarbons hydrocarbons (hīˈ·drō·kärˑ·b  nz),n. Limited. Following these expenditures, CB&I ended the quarter with cash and cash equivalents of $57.4 million. Capital expenditures in the second quarter of 2003, including $7.7 million for the new administrative office building, were $11.8 million compared with $9.9 million for the year-earlier period. Capital expenditures for the first half of 2003 were $20.4 million compared with $12.6 million in the comparable 2002 period. CB&I had net debt (total debt less cash and cash equivalents) of $24.3 million at June 30, 2003, compared with $40.1 million at the end of second quarter 2002. The Company recently completed a 9.9 million share follow-on equity offering, including 1.3 million shares sold as a result of the underwriters exercising their over-allotment option. CB&I sold 1 million primary shares in this offering, receiving the proceeds in the third quarter. "We continue to be gratified grat·i·fy tr.v. grat·i·fied, grat·i·fy·ing, grat·i·fies 1. To please or satisfy: His achievement gratified his father. See Synonyms at please. 2. by customer interest in our expanded EPC capabilities -- as well as our traditional storage systems -- and by investor confidence in our future prospects," Glenn added. "Our strong sales of more than a half billion dollars in the quarter are indicative of our success in selectively pursuing and winning process and storage projects worldwide in a very competitive marketplace. Our recent equity offering has significantly broadened our institutional shareholder base. We are confident that CB&I's growing technical competence technical competence, n the ability of the practitioner, during the treatment phase of dental care and with respect to those procedures combining psychomotor and cognitive skills, consistently to provide services at a professionally acceptable level. and geographic reach -- bolstered bol·ster n. A long narrow pillow or cushion. tr.v. bol·stered, bol·ster·ing, bol·sters 1. To support or prop up with or as if with a long narrow pillow or cushion. 2. by our acquisitions of Petrofac's U.S. EPC business and John Brown -- will enable us to better serve our customers and lead to continued growth in shareholder value." Any statements made in this release that are not based on historical fact are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. and represent management's best judgment as to what may occur in the future. The actual outcome and results are not guaranteed, are subject to risks, uncertainties and assumptions and may differ materially from what is expressed. A variety of factors could cause business conditions and results to differ materially from what is contained in the forward-looking statements including, but not limited to, the Company's ability to realize cost savings from its expected execution performance of contracts; the uncertain timing and the funding of new contract awards, and project cancellations Project cancellation hits around half of U.S. software development projects, whether developed for in-house corporate use or for sale as retail software. When a project is cancelled early on, it has little financial impact but if project sponsors wait until the project has gone and operating risks Operating risk The inherent or fundamental risk of a firm, without regard to financial risk. The risk that is created by operating leverage. Also called business risk. ; cost overruns Noun 1. cost overrun - excess of cost over budget; "the cost overrun necessitated an additional allocation of funds in the budget" cost - the total spent for goods or services including money and time and labor on fixed priced contracts; increased competition; fluctuating fluc·tu·ate v. fluc·tu·at·ed, fluc·tu·at·ing, fluc·tu·ates v.intr. 1. To vary irregularly. See Synonyms at swing. 2. To rise and fall in or as if in waves; undulate. v. revenues resulting from a number of factors, including the cyclic cyclic /cyc·lic/ (sik´lik) pertaining to or occurring in a cycle or cycles; applied to chemical compounds containing a ring of atoms in the nucleus. cy·clic or cy·cli·cal adj. 1. nature of the individual markets in which the Company's customers operate; lower than expected activity in the hydrocarbon industry, demand from which is the largest component of the Company's revenue, or lower than expected growth in the Company's other primary end markets; the Company's ability to integrate and successfully operate acquired businesses and the risks associated with those businesses; and the ultimate outcome or effect of the pending FTC FTC See Federal Trade Commission (FTC). proceeding on the Company's business, financial condition and results of operations. Additional factors which could cause actual results to differ from such forward-looking statements are set forth in the Company's Registration Statement on Form S-3 (No. 333-103972) filed with the SEC on June 26, 2003. The Company does not undertake to update any forward-looking statements contained herein, whether as a result of new information, future events or otherwise. CB&I is a global specialty engineering In systems engineering, Specialty Engineering includes the engineering domains that are not typical of the main engineering effort. Hardware engineering, software engineering, and human factors engineering may be used as major elements in a majority of systems engineering efforts , procurement The fancy word for "purchasing." The procurement department within an organization manages all the major purchases. and construction (EPC) company serving customers in several primary end markets, including hydrocarbon refining refining, any of various processes for separating impurities from crude or semifinished materials. It includes the finer processes of metallurgy, the fractional distillation of petroleum into its commercial products, and the purifying of cane, beet, and maple sugar , natural gas, water and the energy sector in general. We offer a complete package of design, engineering, fabrication fabrication (fab´rikā´sh  n),n the construction or making of a restoration. , procurement, construction and maintenance services. Our projects include hydrocarbon processing plants, LNG terminals Liquefied natural gas is used to transport natural gas over long distances, often by sea. In most cases, LNG terminals are purpose built ports used exclusively to export or import LNG. and peak shaving plants, bulk liquid terminals, water storage and treatment facilities, and other steel structures and their associated systems. Information about CB&I is available at www.CBIepc.com.
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CHICAGO BRIDGE & IRON COMPANY N.V. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
Three Months Six Months
Ended June 30, Ended June 30,
2003 2002 2003 2002
Revenues $389,309 $284,686 $711,618 $543,958
Cost of revenues 339,954 246,548 622,602 470,730
------- ------- ------- -------
Gross profit 49,355 38,138 89,016 73,228
% of Revenues 12.7% 13.4% 12.5% 13.5%
Selling and
administrative
expenses 23,887 16,915 43,085 34,822
% of Revenues 6.1% 5.9% 6.1% 6.4%
Intangibles amortization 649 588 1,287 1,214
Other operating income,
net (345) (104) (481) (523)
Exit costs - 1,115 - 2,274
------- ------- ------- -------
Income from operations 25,164 19,624 45,125 35,441
% of Revenues 6.5% 6.9% 6.3% 6.5%
Interest expense (1,558) (1,829) (3,245) (3,642)
Interest income 510 338 976 684
------- ------- ------- -------
Income before
taxes and minority
interest 24,116 18,133 42,856 32,483
Income tax expense (7,307) (5,077) (12,918) (9,095)
------- ------- ------- -------
Income before
minority interest 16,809 13,056 29,938 23,388
Minority interest in
income (345) (662) (710) (736)
------- ------- ------- -------
Net income $ 16,464 $ 12,394 $ 29,228 $ 22,652
======= ======= ======= =======
Net income per share
Basic $ 0.37 $ 0.29 $ 0.66 $ 0.54
Diluted $ 0.35 $ 0.28 $ 0.63 $ 0.52
Weighted average shares
outstanding
Basic 44,604 42,202 44,500 42,116
Diluted 46,863 43,954 46,557 43,756
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CHICAGO BRIDGE & IRON COMPANY N.V. AND SUBSIDIARIES
SEGMENT INFORMATION
(in thousands)
Three Months Ended
June 30, June 30,
2003 2002
NEW BUSINESS TAKEN* % of % of
Total Total
North America $322,140 60% $236,901 58%
Europe/Africa/Middle East 151,286 28% 62,347 15%
Asia Pacific 41,173 8% 53,330 13%
Central & South America 23,975 4% 58,756 14%
------- -------
Total $538,574 $411,334
======= =======
REVENUES % of % of
Total Total
North America $239,046 62% $210,277 71%
Europe/Africa/Middle East 77,688 20% 32,275 11%
Asia Pacific 51,574 13% 20,771 7%
Central & South America 21,001 5% 30,363 11%
------- -------
Total $389,309 $284,686
======= =======
INCOME (LOSS) FROM OPERATIONS % of % of
Excluding Exit Costs Revenues Revenues
North America $ 18,150 7.6% $ 12,734 6.3%
Europe/Africa/Middle East 2,343 3.0% 501 1.6%
Asia Pacific 2,986 5.8% 269 1.3%
Central & South America 1,685 8.0% 7,235 23.8%
------- -------
Total $ 25,164 6.5% $ 20,739 7.3%
======= =======
EXIT COSTS $ - $ 1,115
======= =======
INCOME (LOSS) FROM OPERATIONS
North America $ 18,150 $ 11,930
Europe/Africa/Middle East 2,343 383
Asia Pacific 2,986 189
Central & South America 1,685 7,122
------- -------
Total $ 25,164 $ 19,624
======= =======
Six Months Ended
June 30, June 30,
2003 2002
NEW BUSINESS TAKEN* % of % of
Total Total
North America $553,724 64% $442,637 53%
Europe/Africa/Middle East 198,217 23% 221,348 26%
Asia Pacific 69,739 8% 96,643 12%
Central & South America 41,638 5% 74,947 9%
------- -------
Total $863,318 $835,575
======= =======
REVENUES % of % of
Total Total
North America $443,196 62% $396,576 73%
Europe/Africa/Middle East 136,641 19% 55,595 10%
Asia Pacific 92,606 13% 31,771 6%
Central & South America 39,175 6% 60,016 11%
------- -------
Total $711,618 $543,958
======= =======
INCOME (LOSS) FROM OPERATIONS % of % of
Excluding Exit Costs Revenues Revenues
North America $ 29,650 6.7% $ 23,252 5.9%
Europe/Africa/Middle East 5,903 4.3% 849 1.5%
Asia Pacific 4,299 4.6% (192) (0.6%)
Central & South America 5,273 13.5% 13,806 23.0%
------- -------
Total $ 45,125 6.3% $ 37,715 6.9%
======= =======
EXIT COSTS $ - $ 2,274
======= =======
INCOME (LOSS) FROM OPERATIONS
North America $ 29,650 $ 21,706
Europe/Africa/Middle East 5,903 495
Asia Pacific 4,299 (321)
Central & South America 5,273 13,561
------- -------
Total $ 45,125 $ 35,441
======= =======
* New business taken represents the value of new project
commitments received by the Company during a given period. Such
commitments are included in backlog until work is performed and
revenue recognized or until cancellation. Backlog may also
fluctuate with currency movements.
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CHICAGO BRIDGE & IRON COMPANY N.V. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
June 30, December 31,
2003 2002
ASSETS
Current assets $398,661 $382,423
Property and equipment, net 126,371 109,271
Goodwill and other intangibles, net 236,735 191,459
Other non-current assets 71,725 57,283
------- -------
Total assets $833,492 $740,436
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities $337,660 $287,070
Long-term debt 75,000 75,000
Other non-current liabilities 107,513 96,219
Shareholders' equity 313,319 282,147
------- -------
Total liabilities
and shareholders' equity $833,492 $740,436
======= =======
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CHICAGO BRIDGE & IRON COMPANY N.V. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
AND OTHER FINANCIAL DATA
(in thousands)
Six Months
Ended June 30,
2003 2002
CASH FLOWS
Cash flows from operating activities $ 25,011 $ 5,906
Cash flows from investing activities (67,966) (14,345)
Cash flows from financing activities (2,136) (6,679)
------- -------
Decrease in cash and cash equivalents (45,091) (15,118)
Cash and cash equivalents,
beginning of the year 102,536 50,478
------- -------
Cash and cash equivalents,
end of the period $ 57,445 $ 35,360
======= =======
OTHER FINANCIAL DATA
Depreciation and amortization expense $ 9,770 $ 9,893
Capital expenditures 20,363 12,618
Decrease/(increase) in receivables, net 6,414 (7,116)
Increase in contracts in progress, net (35,066) (889)
Increase/(decrease) in accounts payable 33,272 (9,063)
------- -------
Change in contract capital $ 4,620 $(17,068)
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