Chicago Bridge and Iron reported earnings on May 2nd,
2013 after the market closed. Earnings beat consensus by reporting an EPS of
$.82, up 12.8% against expected earnings. Revenue was reported at $2.3 billion,
higher than consensus of $2.18 billion and a surprise of 5%.
Safety has been a priority of CBI and they have shown
excellence in this field, with not a single fatality having occurred in over
2.5 years. CBI showed improvement and growth in essential components this past
quarter, highlighted by their Lummus technology. Lummus technology, the main
revenue driver, posted an annual record of $727 million in revenue, up 35% on
the year-over-year. With projects being awarded in the fourth quarter including
Aramco storage tanks and spheres in Saudi Arabia, technology awards from Shell
in Singapore and West Lake in the US, backlog is continuously increasing. With
the purchasing of Shaw Group on February 13th, the company is
looking to restructure and completely integrate the environmental and plant
services that Shaw provided.
For the future, Lummus technology looks to continue to be a
main contributor to revenue growth. If awards are going to be continuously
given to Lummus, it could be contributing over $1 billion annually. CBI closed
on Friday at $55.22, up 2.96% on the day after being marginally down in
after-hour trading following earnings being released. With a strong backlog and
a possibility of awards coming in that could return up to $10 billion annually,
I reiterate our BUY rating for Chicago Bridge and Iron.
- Peter Rodrigues Industrial Junior Analyst
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