CB&I Reports Second Quarter Results; Operating Income Doubles for Quarter; Backlog Increases 46% from Year-End 2000.Business Editors PLAINFIELD Plainfield, city (1990 pop. 46,567), Union co., NE N.J.; settled 1684 by Friends, inc. as a city 1869. Formerly a residential city in the New York metropolitan area, it has become the urban center of 10 closely allied municipalities, with diversified industries, , Ill.--(BUSINESS WIRE)--Aug. 2, 2001 Chicago 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 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 of $8.2 million or $0.34 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 excluding special charges for the three months ended June 30, 2001 compared with $3.9 million or $0.41 per diluted share for the second quarter of 2000. The 110% increase in comparable income from continuing operations from quarter to quarter was offset at the per share level by the more than 150% increase in shares outstanding resulting from the Company's recent acquisitions. Weighted average shares outstanding increased to 24.0 million in the second quarter from 9.4 million in the comparable 2000 period. Income from continuing operations for the first six months of 2001 was $14.1 million or $0.62 per diluted share excluding special charges, compared with $8.0 million or $0.83 per diluted share for the first half of 2000. For the three months ended June 30, 2001, new business taken increased 90% to $302 million compared with $159 million in 2000. The most significant new contracts in the quarter were awarded to Howe-Baker and its subsidiaries in the U.S. and included a clean fuels revamp re·vamp tr.v. re·vamped, re·vamp·ing, re·vamps 1. To patch up or restore; renovate. 2. To revise or reconstruct (a manuscript, for example). 3. To vamp (a shoe) anew. n. project valued in excess of $40 million, a refinery 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. project and a gas-to-liquids demonstration plant project. In an 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 awarded a joint natural gas project in 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. 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, 2001 was $870 million compared with $549 million at the end of the second quarter 2000 and $597 million at year-end 2000. "Looking at our base business for the quarter, CB&I continued to deliver solid operating results, with earnings that were in line with Street expectations," 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. . "The integration of our acquired companies is largely complete in many areas, and results are exceeding our expectations, with costs lower and savings higher than anticipated. Our performance in project execution continues to improve, with a resulting positive impact on operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: , and our growth in backlog is driven by new business taken which is outpacing our current revenue stream. "In addition to the upturn in capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. by the major oil producers, we are now seeing a convergence of market drivers that should prove genuinely exciting for E&C companies. These drivers include the growing demand for power, and the infrastructure and fuel to generate it, which in turn drives growth in demand for natural gas from processing plants and new 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. . Clean fuels requirements are driving refinery retrofit ret·ro·fit v. ret·ro·fit·ted or ret·ro·fit, ret·ro·fit·ting, ret·ro·fits v.tr. 1. To provide (a jet, automobile, computer, or factory, for example) with parts, devices, or equipment not in and optimization optimization Field of applied mathematics whose principles and methods are used to solve quantitative problems in disciplines including physics, biology, engineering, and economics. projects. At the same time, basic infrastructure projects are filling the construction pipeline. The sum of all these factors together, particularly 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. , is leading to a situation where we may soon see capacity constraints CONSTRAINTS - A language for solving constraints using value inference. ["CONSTRAINTS: A Language for Expressing Almost-Hierarchical Descriptions", G.J. Sussman et al, Artif Intell 14(1):1-39 (Aug 1980)]. for E&C resources. CB&I, with the capabilities obtained through our recent acquisitions, is well positioned to take maximum advantage of the opportunities the marketplace has to offer." As previously reported, CB&I has decided to exit its high purity Purity: see Pearl, The. Purity See also Modesty. almond symbol of the Virgin Mary’s innocence. [O.T.: Numbers 17: 1–11; Art: Hall, 14] crystal its transparency symbolizes pureness. piping business, UltraPure Systems. Effective in the second quarter, this business is being treated as a discontinued operation discontinued operation A segment of a business that has been abandoned or sold or for which plans for one or another of these actions have been approved. See also continuing operations. . In addition, as previously announced, the Company incurred special charges in the second quarter of $1.5 million related to integration and rationalization rationalization, in psychology: see defense mechanism. of facilities, including 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 the following discussion of second quarter and six month results, the 2000 periods have been restated to reclassify Verb 1. reclassify - classify anew, change the previous classification; "The zoologists had to reclassify the mollusks after they found new species" class, classify, sort out, assort, sort, separate - arrange or order by classes or categories; "How would you results to conform with the current year presentation. Inclusive of inclusive of prep. Taking into consideration or account; including. discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. and special charges, the net loss for the second quarter of 2001 was $3.1 million or $0.13 per diluted share, compared with net income of $2.0 million or $0.21 per diluted share for the second quarter of 2000. Net income for the first six months of 2001 was $0.4 million or $0.02 per diluted share, compared with net income of $4.4 million or $0.46 per diluted share for the first half of 2000. Second quarter revenues were $263.9 million compared with $153.7 million in 2000. Revenues for the first half of 2001 were $499.2 million compared with $307.6 million in 2000. Gross profit for the three months ended June 30, 2001 was $32.7 million or 12.4% of revenues compared with $16.4 million or 10.7% of revenues in 2000. The improvement in gross margin was due primarily to the inclusion of higher margin work from Howe-Baker International and continuing improvements in project execution. Gross profit for the first half of 2001 was $61.0 million or 12.2% of revenues compared with $33.7 million or 10.9% of revenues in the comparable 2000 period. Second quarter 2001 income from operations excluding special charges more than doubled to $14.7 million compared with $7.2 million in the prior-year quarter. Income from operations excluding special charges for the first six months of 2001 was $26.2 million compared with $14.4 million for the first half of 2000. Strong cash flow during the quarter resulted in net debt (total debt less cash and cash equivalents) being reduced to $74.5 million at June 30, 2001 from $96.8 million at the end of the first quarter. The reduction in debt was accomplished even as the Company purchased $35 million of its common stock from Pitt-Des Moines, Inc. during the quarter, as anticipated under the terms of the purchase agreement. The Company funded the purchase in part from the proceeds of the sale and leaseback sale and leaseback The sale of a fixed asset that is then leased by the former owner from the new owner. A sale and leaseback permits a firm to withdraw its equity in an asset without giving up use of the asset. Also called leaseback. of its administrative office. Capital expenditures during the quarter were $2.0 million compared with $1.5 million in the prior year period. Capital expenditures for the first six months of 2001 were $3.8 million compared with $3.6 million for the first half of 2000. Subsequent to the end of the second quarter, CB&I completed a $75 million private placement of senior notes to a group of institutional investors Institutional Investor A non-bank person or organization that trades securities in large enough share quantities or dollar amounts that they qualify for preferential treatment and lower commissions. . The notes carry an interest rate of 7.34% and are due in 2007, with principal reductions annually from 2005 through 2007. Proceeds were used to reduce floating rate debt under the Company's existing $200 million revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facility. "In anticipation of growing demand in our major end markets, during the second quarter we decided to sharpen sharp·en tr. & intr.v. sharp·ened, sharp·en·ing, sharp·ens To make or become sharp or sharper. sharp our business focus and to relocate re·lo·cate v. re·lo·cat·ed, re·lo·cat·ing, re·lo·cates v.tr. To move to or establish in a new place: relocated the business. v.intr. our administrative headquarters to the Houston area in order to be closer to many of our major multinational customers 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," Glenn added. "We also acted to strengthen our balance sheet, ensuring that we maintain the financial resources and bonding capacity to bid and execute projects worldwide. With ongoing consolidation in the E&C industry, we continue to enhance CB&I's leadership position through execution of a growth strategy based on delivering solid value to our customers and shareholders alike." 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; the uncertain timing and the funding of new contract awards; 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 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; and the Company's ability to integrate and successfully operate acquired businesses, including Howe-Baker International, L.L.C. and the Engineered Construction Division and the Water Division of Pitt- Des Moines Des Moines, city, United States Des Moines (dĭ moin`), city (1990 pop. 193,187), state capital and seat of Polk co., S central Iowa, at the junction of the Des Moines and Raccoon rivers; inc. , Inc., and the risks associated with those businesses. In addition, while all mandatory waiting periods for antitrust Antitrust The antitrust laws apply to virtually all industries and to every level of business, including manufacturing, transportation, distribution, and marketing. They prohibit a variety of practices that restrain trade. review have passed, the Federal Trade Commission continues to review certain aspects of the CB&I acquisition of PDM's assets and CB&I continues to cooperate with the FTC FTC See Federal Trade Commission (FTC). . Additional factors are set forth and described in the Company's most recent Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. which could cause actual results to differ from such forward-looking statements, as well as in any of the Company's other filings with the Securities and Exchange Commission. The Company does not undertake to update any forward-looking statements contained herein, whether as a result of new information, future events or otherwise. Chicago Bridge & Iron is a global engineering and construction company specializing in the design and engineering, fabrication fabrication (fab´rikā´sh  n),n the construction or making of a restoration. , 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. and repair of bulk liquid terminals, storage tanks, process vessels, 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 and process systems, water storage and wastewater treatment facilities, and other steel plate structures and their associated systems. Howe-Baker International, L.L.C., a CB&I subsidiary, is a global technology company specializing in the engineering and construction of hydrocarbon processing plants for 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. Information about CB&I is available at www.chicagobridge.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,
2001 2000 2001 2000
Revenues $263,857 $153,711 $499,225 $307,603
Cost of revenues 231,200 137,277 438,273 273,940
------- ------- ------- -------
Gross profit 32,657 16,434 60,952 33,663
% of Revenues 12.4% 10.7% 12.2% 10.9%
Selling and
administrative expenses 16,663 10,562 32,531 21,021
% of Revenues 6.3% 6.9% 6.5% 6.8%
Intangibles amortization 1,321 152 2,510 294
Other operating income,
net (7) (1,436) (266) (2,069)
Special charges 1,480 748 2,252 1,518
------- ------- ------- -------
Income from operations 13,200 6,408 23,925 12,899
% of Revenues 5.0% 4.2% 4.8% 4.2%
Interest expense (2,133) (1,466) (4,493) (2,437)
Interest income 448 170 951 265
------- ------- ------- -------
Income before taxes
and minority interest 11,515 5,112 20,383 10,727
Income tax expense (3,499) (1,286) (6,032) (2,904)
------- ------- ------- -------
Income before
minority interest 8,016 3,826 14,351 7,823
Minority interest in
(income) loss (810) (425) (1,740) (867)
------- ------- ------- -------
Income from
continuing operations 7,206 3,401 12,611 6,956
------- ------- ------- -------
Discontinued operations:
Loss from discontinued
operations, net of taxes (382) (1,448) (2,321) (2,551)
Loss on disposal of
discontinued operations,
net of taxes (9,898) -- (9,898) --
Net (loss) income $ (3,074) $ 1,953 $ 392 $ 4,405
======= ======= ======= =======
Net income (loss) per share Basic:
Income from
continuing operations $ 0.31 $ 0.37 $ 0.57 $ 0.74
(Loss) from
discontinued
operations (0.44) (0.16) (0.55) (0.27)
------- ------- ------- -------
Net (loss) income $ (0.13) $ 0.21 $ 0.02 $ 0.47
======= ======= ======= =======
Diluted:
Income from
continuing operations $ 0.30 $ 0.36 $ 0.55 $ 0.72
(Loss) from
discontinued
operations (0.43) (0.15) (0.53) (0.26)
------- ------- ------- -------
Net (loss) income $ (0.13) $ 0.21 $ 0.02 $ 0.46
======= ======= ======= =======
Weighted average shares
outstanding
Basic 23,068 9,198 22,054 9,363
Diluted 24,039 9,447 22,805 9,630
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CHICAGO BRIDGE & IRON COMPANY N.V. AND SUBSIDIARIES
SEGMENT INFORMATION
(in thousands)
Three Months Ended
June 30, June 30,
2001 2000
NEW BUSINESS TAKEN % of % of
Total Total
North America $240,572 79% $127,759 80%
Europe/Africa/Middle East 12,514 4% 6,330 4%
Asia Pacific 10,905 4% 15,123 10%
Central & South America 38,233 13% 9,479 6%
------- -------
Total $302,224 $158,691
======= =======
REVENUES % of % of
Total Total
North America $178,368 68% $ 70,150 46%
Europe/Africa/Middle East 29,239 11% 50,613 33%
Asia Pacific 8,043 3% 15,809 10%
Central & South America 48,207 18% 17,139 11%
------- -------
Total $263,857 $153,711
======= =======
INCOME (LOSS) FROM OPERATIONS
Excluding Special Charges % of % of
Revenues Revenues
North America $ 9,691 5.4% $ 3,638 5.2%
Europe/Africa/Middle East (785) (2.7%) 1,866 3.7%
Asia Pacific (208) (2.6%) 781 4.9%
Central & South America 5,982 12.4% 871 5.1%
------- -------
Total $ 14,680 5.6% $ 7,156 4.7%
======= =======
INCOME (LOSS) FROM OPERATIONS
North America $ 8,849 $ 3,320
Europe/Africa/Middle East (1,056) 1,593
Asia Pacific (253) 699
Central & South America 5,660 796
------- -------
Total $ 13,200 $ 6,408
======= =======
Six Months Ended
June 30, June 30,
2001 2000
NEW BUSINESS TAKEN % of % of
Total Total
North America $447,489 73% $230,630 62%
Europe/Africa/Middle East 29,300 5% 46,518 13%
Asia Pacific 15,931 3% 29,126 8%
Central & South America 118,233 19% 62,017 17%
------- -------
Total $610,953 $368,291
======= =======
REVENUES % of % of
Total Total
North America $326,401 65% $142,783 46%
Europe/Africa/Middle East 64,472 13% 93,823 31%
Asia Pacific 16,140 3% 31,976 10%
Central & South America 92,212 19% 39,021 13%
------- -------
Total $499,225 $307,603
======= =======
INCOME (LOSS) FROM OPERATIONS
Excluding Special Charges % of % of
Revenues Revenues
North America $ 17,634 5.4% $ 7,137 5.0%
Europe/Africa/Middle East (710) (1.1%) 4,253 4.5%
Asia Pacific (387) (2.4%) 211 0.7%
Central & South America 9,640 10.5% 2,816 7.2%
------- -------
Total $ 26,177 5.2% $ 14,417 4.7%
======= =======
INCOME (LOSS) FROM OPERATIONS
North America $ 16,633 $ 6,451
Europe/Africa/Middle East (1,349) 3,765
Asia Pacific (467) 49
Central & South America 9,108 2,634
------- -------
Total $ 23,925 $ 12,899
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CHICAGO BRIDGE & IRON COMPANY N.V. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
June 30, December 31,
2001 2000
ASSETS
Current assets $298,564 $240,760
Property and equipment, net 108,187 98,723
Goodwill and other intangibles, net 172,841 137,436
Other non-current assets 63,010 61,496
------- -------
Total assets $642,602 $538,415
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities $239,667 $183,847
Long-term debt 96,000 101,800
Other non-current liabilities 99,040 97,021
Shareholders' equity 207,895 155,747
------- -------
Total liabilities
and shareholders' equity $642,602 $538,415
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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,
2001 2000
Cash flows from operating activities $ 36,612 $ (6,446)
Cash flows from investing activities 5,960 (14,822)
Cash flows from financing activities (22,805) 10,650
------- -------
(Decrease)/increase in cash
and cash equivalents 19,767 (10,618)
Cash and cash equivalents,
beginning of the year 7,451 18,407
------- -------
Cash and cash equivalents,
end of the period $ 27,218 $ 7,789
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