CB&I Reports Second Quarter Results; Income from Continuing Operations Up 60%; Backlog Grows 36% from Year-End 2001.Business Editors THE WOODLANDS Woodlands refers to several places:
Chicago Chicago, city, United States Chicago (shĭkä`gō, shĭkô`gō), city (1990 pop. 2,783,726), seat of Cook co., NE Ill., on Lake Michigan; inc. 1837. Bridge & Iron Company N.V. (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 from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the increased 60% to $13.1 million or $0.60 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, 2002, compared with $8.2 million or $0.34 per diluted share for 2001, excluding special charges for both periods. Net income from continuing operations for the first half of 2002 was $24.2 million or $1.10 per diluted share, compared with $14.1 million or $0.62 per diluted share for 2001, excluding special charges for both periods. Net income for the second quarter of 2002 was $12.4 million or $0.56 per diluted share, compared with a net loss of $3.1 million or $0.13 per diluted share in the prior year period. The 2001 period included a $10.3 million loss (net of tax) related to discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. . For the three months ended June 30, 2002, new business taken increased 36% to $411 million compared with $302 million in 2001. The most significant new contracts in the quarter were the previously announced hydrotreater project in Australia and a nuclear waste treatment facility in Washington. In another example of synergy The enhanced result of two or more people, groups or organizations working together. In other words, one and one equals three! It comes from the Greek "synergia," which means joint work and cooperative action. from the Company's acquisition of Howe-Baker International, CB&I and Howe-Baker Engineers were jointly awarded a natural gas project in Trinidad during the quarter. 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, 2002 grew to $1.1 billion compared with $870 million at the end of the second quarter 2001 and $835 million at year-end 2001. "We continue to deliver solid operating results," said Gerald M. Glenn, 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. . "Ongoing improvement in project execution, coupled with a higher margin mix of business and lower operating costs operating costs npl → gastos mpl operacionales , have enabled us to boost income from operations even though revenues were slightly lower than anticipated. The record level of new business booked in the first half of 2002 included only one award in excess of $100 million, indicative of our success in winning traditional work, as well as project awards that draw upon the synergistic synergistic /syn·er·gis·tic/ (sin?er-jis´tik) 1. acting together. 2. enhancing the effect of another force or agent. syn·er·gis·tic adj. 1. capabilities of CB&I and Howe-Baker together. Our growing backlog positions us well for the balance of the year and into 2003." Revenues for the second quarter of 2002 grew 8% to $284.7 million compared with $263.9 million in 2001. Revenues were higher in the 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. , Europe/Africa/Middle East (EAME n. 1. Uncle. ) and Asia Pacific (AP) areas, but were lower 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. ) region, as several large contracts neared completion in Venezuela. Revenues for the first half of 2002 increased 9% to $544.0 million compared with $499.2 million in 2001. Gross profit for the three months ended June 30, 2002 was $38.1 million or 13.4% of revenues compared with $32.7 million or 12.4% of revenues in 2001. The improvement in gross margin was due primarily to a mix of higher margin work, ongoing cost reduction and continuing improvements in project execution. Gross profit for the first half of 2002 was $73.2 million or 13.5% of revenues compared with $61.0 million or 12.2% of revenues in the comparable 2001 period. During the second quarter of 2002 CB&I incurred previously announced special charges of $1.1 million, consisting primarily of moving-related and severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when costs in conjunction with the relocation RELOCATION, Scotch law, contracts. To let again to renew a lease, is called a relocation. 2. When a tenant holds over after the expiration of his lease, with the consent of his landlord, this will amount to a relocation. of the Company's administrative office. Special charges through the first half of 2002 totaled $2.3 million, essentially the same as those recorded in the prior year period. The Company expects to incur To become subject to and liable for; to have liabilities imposed by act or operation of law. Expenses are incurred, for example, when the legal obligation to pay them arises. An individual incurs a liability when a money judgment is rendered against him or her by a court. additional special charges of less than $1 million for the remainder of the year. Excluding special charges, second quarter 2002 income from operations increased 41% to $20.7 million compared with $14.7 million in the prior-year quarter. 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 higher volume and project cost savings in U.S. operations. Modestly higher revenues in EAME, combined with cost control and strong project execution, enabled the region to post 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. . Higher volumes in the AP region produced an operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. versus a year-earlier loss, and new business taken has improved, mainly in Australia. The CSA region continued to be profitable due to the existing backlog of work and recognition of project cost savings. The Company's adoption of Financial Accounting Standard No. 142 "Goodwill and Other Intangible Assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. " as of Jan. 1, 2002 benefited second quarter income from operations by $0.9 million. For the first six months of 2002, income from operations excluding special charges was $37.7 million compared with $26.2 million for the first half of 2001. CB&I reported net debt (total debt less cash and cash equivalents) at June 30, 2002 of $40.1 million compared with $30.4 million at year-end 2001. Cash and cash equivalents totaled $35.4 million at the end of the second quarter compared with $50.5 million at year-end 2001. Capital expenditures during the quarter were $9.9 million compared with $2.0 million in the year-earlier period and included $7.1 million for the initial land acquisition and development costs of the Company's new administrative office in The Woodlands. Capital expenditures for the first six months of 2002 were $12.6 million compared with $3.8 million for the first half of 2001. Cash usage during the second quarter also included the payment of a $5.7 million note acquired with the Howe-Baker acquisition. The Company is contesting the administrative complaint filed during the fourth quarter of 2001 by the U.S. Federal Trade Commission (FTC FTC See Federal Trade Commission (FTC). ) challenging the Company's acquisition of certain assets of Pitt-Des Moines, Inc. The Company continues to believe the FTC complaint is without substantive merit. The Company presently expects the case will be brought to trial before an administrative law judge administrative law judge n. a professional hearing officer who works for the government to preside over hearings and appeals involving governmental agencies. They are generally experienced in the particular subject matter of the agency involved or of several agencies. by year end. CB&I expects the impact of the FTC proceeding on its earnings will be minimal in 2002. "As our numbers indicate, CB&I's management team and employees are delivering the results we expected -- and then some," Glenn added. "Rationalization rationalization, in psychology: see defense mechanism. of facilities and the implementation of best practices in our standard storage tank product lines are improving fabrication fabrication (fab´rikā´sh  n),n the construction or making of a restoration. plant and construction equipment utilization, increasing field erection erection /erec·tion/ (e-rek´shun) the condition of being rigid and elevated, as erectile tissue when filled with blood. e·rec·tion n. 1. productivity and lowering our costs of doing business. The CB&I/Howe-Baker combination offers our customers in the 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 , petrochemical petrochemical, any one of a large group of chemicals derived from a component of petroleum or natural gas. The cracking processes for manufacturing gasoline produce vast quantities of gaseous hydrocarbons. and natural gas industries an attractive range of solutions on a lump-sum, turnkey See turnkey system. basis from companies that are skilled in managing the risks of fixed-price contracting. The drivers in our primary end markets remain strong, and we continue to track a significant number of large projects worldwide. We are actively pursuing acquisitions that will expand our engineering and technical capacity. "We want to assure our shareholders and investors that CB&I adheres to conservative accounting practices in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with U.S. generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting . We believe the effects of commercial decisions should be transparent in our financial reporting and pledge to continue to provide full and frequent management access to Deloitte & Touche LLP LLP - Lower Layer Protocol , our independent auditors Independent Auditor An external auditor with a certified public accounting designation that qualifies him or her to provide an auditor's report. Notes: These auditors aren't affiliated with the company being audited. , to ensure this goal is realized for our shareholders. We stand firmly behind the accuracy and integrity of our financial reporting." 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 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, 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 Federal Trade Commission 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 Amendment No. 3 to Registration Statement on Form S-3 (No. 333-86960) filed with the SEC on June 17, 2002. 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 and construction company offering a complete package of design, engineering, fabrication, construction and maintenance services. Our products 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.chicagobridge.com.
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,
2002 2001 2002 2001
Revenues $284,686 $263,857 $543,958 $499,225
Cost of revenues 246,548 231,200 470,730 438,273
------- ------- ------- -------
Gross profit 38,138 32,657 73,228 60,952
% of Revenues 13.4% 12.4% 13.5% 12.2%
Selling and
administrative
expenses 16,915 16,663 34,822 32,531
% of Revenues 5.9% 6.3% 6.4% 6.5%
Intangibles amortization 588 1,321 1,214 2,510
Other operating income,
net (104) (7) (523) (266)
Special charges 1,115 1,480 2,274 2,252
------- ------- ------- -------
Income from operations 19,624 13,200 35,441 23,925
% of Revenues 6.9% 5.0% 6.5% 4.8%
Interest expense (1,829) (2,133) (3,642) (4,493)
Interest income 338 448 684 951
------- ------- ------- -------
Income before taxes
and minority interest 18,133 11,515 32,483 20,383
Income tax expense (5,077) (3,499) (9,095) (6,032)
------- ------- ------- -------
Income before
minority interest 13,056 8,016 23,388 14,351
Minority interest in
income (662) (810) (736) (1,740)
------- ------- ------- -------
Income from
continuing operations 12,394 7,206 22,652 12,611
------- ------- ------- -------
Discontinued operations:
Loss from
discontinued operations,
net of taxes -- (382) -- (2,321)
Loss on disposal of
discontinued operations,
net of taxes -- (9,898) -- (9,898)
------- ------- ------- -------
Net income (loss) $ 12,394 $ (3,074) $ 22,652 $ 392
======= ======= ======= =======
Net income (loss) per share Basic:
Income from
continuing
operations $ 0.59 $ 0.31 $ 1.08 $ 0.57
Loss from
discontinued
operations -- (0.44) -- (0.55)
------- ------- ------- -------
Net income (loss) $ 0.59 $ (0.13) $ 1.08 $ 0.02
======= ======= ======= =======
Diluted:
Income from
continuing
operations $ 0.56 $ 0.30 $ 1.04 $ 0.55
Loss from
discontinued
operations -- (0.43) -- (0.53)
------- ------- ------- -------
Net income (loss) $ 0.56 $ (0.13) $ 1.04 $ 0.02
======= ======= ======= =======
Weighted average shares
outstanding
Basic 21,101 23,068 21,058 22,054
Diluted 21,977 24,039 21,878 22,805
Excluding special charges:
Income from
continuing
operations $ 13,130 $ 8,183 $ 24,153 $ 14,097
Net income (loss) per
share - diluted:
Income from
continuing
operations $ 0.60 $ 0.34 $ 1.10 $ 0.62
Loss from
discontinued
operations -- (0.43) -- (0.54)
------- ------- ------- -------
Net income (loss) $ 0.60 $ (0.09) $ 1.10 $ 0.08
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CHICAGO BRIDGE & IRON COMPANY N.V. AND SUBSIDIARIES
SEGMENT INFORMATION
(in thousands)
Three Months Ended
June 30, June 30,
2002 2001
NEW BUSINESS TAKEN % of % of
Total Total
North America $236,901 58% $240,572 79%
Europe/Africa/Middle East 62,347 15% 12,514 4%
Asia Pacific 53,330 13% 10,905 4%
Central & South America 58,756 14% 38,233 13%
------- -------
Total $411,334 $302,224
======= =======
REVENUES % of % of
Total Total
North America $201,277 71% $178,368 68%
Europe/Africa/Middle East 32,275 11% 29,239 11%
Asia Pacific 20,771 7% 8,043 3%
Central & South America 30,363 11% 48,207 18%
------- -------
Total $284,686 $263,857
======= =======
INCOME (LOSS) FROM OPERATIONS % of % of
Excluding Special Charges Revenues Revenues
North America $ 12,734 6.3% $ 9,691 5.4%
Europe/Africa/Middle East 501 1.6% (785) (2.7%)
Asia Pacific 269 1.3% (208) (2.6%)
Central & South America 7,235 23.8% 5,982 12.4%
------- -------
Total $ 20,739 7.3% $ 14,680 5.6%
======= =======
INCOME (LOSS) FROM OPERATIONS
North America $ 11,930 $ 8,849
Europe/Africa/Middle East 383 (1,056)
Asia Pacific 189 (253)
Central & South America 7,122 5,660
------- -------
Total $ 19,624 $ 13,200
======= =======
Six Months Ended
June 30, June 30,
2002 2001
NEW BUSINESS TAKEN % of % of
Total Total
North America $442,637 53% $447,489 73%
Europe/Africa/Middle East 221,348 26% 29,300 5%
Asia Pacific 96,643 12% 15,931 3%
Central & South America 74,947 9% 118,233 19%
------- -------
Total $835,575 $610,953
======= =======
REVENUES % of % of
Total Total
North America $396,576 73% $326,401 65%
Europe/Africa/Middle East 55,595 10% 64,472 13%
Asia Pacific 31,771 6% 16,140 3%
Central & South America 60,016 11% 92,212 19%
------- -------
Total $543,958 $499,225
======= =======
INCOME (LOSS) FROM OPERATIONS % of % of
Excluding Special Charges Revenues Revenues
North America $ 23,252 5.9% $ 17,634 5.4%
Europe/Africa/Middle East 849 1.5% (710) (1.1%)
Asia Pacific (192) (0.6%) (387) (2.4%)
Central & South America 13,806 23.0% 9,640 10.5%
------- -------
Total $ 37,715 6.9% $ 26,177 5.2%
======= =======
INCOME (LOSS) FROM OPERATIONS
North America $ 21,706 $ 16,633
Europe/Africa/Middle East 495 (1,349)
Asia Pacific (321) (467)
Central & South America 13,561 9,108
------- -------
Total $ 35,441 $ 23,925
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CHICAGO BRIDGE & IRON COMPANY N.V. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
June 30, December 31,
2002 2001
ASSETS
Current assets $307,685 $307,053
Property and equipment, net 107,221 105,998
Goodwill and other intangibles, net 183,178 173,953
Other non-current assets 65,232 61,261
------- -------
Total assets $663,316 $648,265
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities $248,766 $257,271
Long-term debt 75,000 75,000
Other non-current liabilities 106,448 103,771
Shareholders' equity 233,102 212,223
------- -------
Total liabilities
and shareholders' equity $663,316 $648,265
======= =======
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CHICAGO BRIDGE & IRON COMPANY N.V. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Six Months
Ended June 30,
2002 2001
Cash flows from operating activities $ 5,906 $ 36,612
Cash flows from investing activities (14,345) 5,960
Cash flows from financing activities (6,679) (22,805)
------- -------
(Decrease)/increase in cash
and cash equivalents (15,118) 19,767
Cash and cash equivalents,
beginning of the year 50,478 7,451
------- -------
Cash and cash equivalents,
end of the period $ 35,360 $ 27,218
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