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Chicago Bridge & Iron (CBI) Beats Q3 Earnings, Keeps View
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Chicago Bridge & Iron Company N.V. reported third-quarter 2016 adjusted earnings of $1.20 per share, which beat the Zacks Consensus Estimate of $1.17 by 2.6%. It had reported a loss of $7.02 per share in the year-ago quarter.
Adjusted earnings (excluding divested businesses) for the quarter came in at $1.28 per diluted share.
Inside the Headlines
The company reported third-quarter 2016 revenues of $2,776 million, marginally beating the Zacks Consensus Estimate of $2,771 million. However, revenues fell 16.4% year over year.
The lackluster top-line performance during the quarter was largely a result of revenue declines across all of the company’s segments. Also, absence of revenues from the previously divested nuclear operations compounded the fall.
Gross profit decreased 13.5% year over year to $326.6 million, while gross margin contracted 40 basis points to 11.8%.
The company booked new awards worth $2,716 million during third-quarter 2016, compared with $4 billion in the prior-year quarter. The decline in new award wins was largely attributable to cautionary spending on part of the large clients who continue to defer investments due to softness in energy markets.
Noteworthy new awards for third-quarter 2016 included a maintenance award for two landfills and a major oil sands producer in Northern Alberta, Canada. This was followed by a $350 million EPC contract from a renowned electric power holding company.
Segmental Revenues
Revenues from the Engineering and Construction segment came in at $1,660 million, down 14.7% on a year-over-year basis, largely due to the absence of revenues from the divested nuclear operations business line. New awards in this segment were $1,492 million in the quarter, reflecting a decline of 38% from the comparable quarter last year.
Fabrication Services quarterly revenues totaled $513 million, declining 19.9% year over year owing to the winding down of several storage tank projects in the U.S., South America and the Asia-Pacific region, along with lowered engineered projects activity. Moreover, unfavorable timing of new awards aggravated the revenue fall in this segment. Also, new awards received by this segment plummeted drastically (down 73%) to $226 million at the end of the third quarter compared with $841 million in the prior-year quarter.
Technology revenues were down 23.5% year over year to $90.5 million, dragged primarily by lower catalyst volume and the timing of new awards. However, this segment won over $119 million of new contracts in the quarter, reflecting growth of nearly 22.4%.
Capital Services revenues declined 16.9% year over year to $513 million, reflecting lower construction services activity in the U.S. However, new contracts received by this segment rose 34.3% to $879 million in the quarter. Significant new awards included power plant services, refinery maintenance services, landfill services and military base services, all within North America.
Liquidity
Chicago Bridge & Iron’s cash and cash equivalents as of Sep 30, 2016 was $615 million, compared with $423.9 million a year ago. Net cash generated from operating activities in the nine–month period ended Sep 30, 2016 was $495 million, a remarkable turnaround from the net cash used in operating activities of $173.4 million in the comparable period last year.
Long-term debt was $1,456 million as of Sep 30, 2016, compared with $1,792 million as of Dec 31, 2015.
Chicago Bridge & Iron purchased approximately 5.5 million shares to date for $198 million.
Guidance
Chicago Bridge & Iron reiterated both its top and bottom-line guidance for full-year 2016. The company expects full-year revenues in the range of $10.6–$11.0 billion. Also, earnings per share are projected to come in the range of $4.70–$5.00.
To Conclude
Chicago Bridge & Iron’s third-quarter earnings took a beating from macroeconomic uncertainties and prolonged softness in the energy markets. These conditions might sustain in the foreseeable future, which will affect client spending, and consequently Chicago Bridge & Iron’s operations.
Despite these headwinds, Chicago Bridge & Iron is confident about the strong rebound in new awards in the Technology and Capital Services operating groups. Also, diligent cost-cutting strategies as well as the company’s competitive business model are expected to offset some of the weaknesses.
Chicago Bridge & Iron currently carries a Zacks Rank #4 (Sell).
Stocks to Consider
Some better-ranked stocks in the broader construction sector include MasTec, Inc. (MTZ - Free Report) , DR Horton Inc. (DHI - Free Report) and Orion Group Holdings, Inc. (ORN - Free Report) .
MasTec, carrying a Zacks Rank #1 (Strong Buy), has registered a remarkable positive average surprise of over 51.5% over the four trailing quarters, driven by three huge beats. You can see the complete list of today’s Zacks #1 Rank stocks here.
DR Horton carries a Zacks Rank #2 (Buy) and has a decent earnings beat history, having surpassed estimates twice over the trailing four quarters for an average beat of 3.5%
Orion Group, also carrying a Zacks Rank #2, has registered a remarkable positive average surprise of over 101.2% over the four trailing quarters, driven by a massive beat.
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Chicago Bridge & Iron (CBI) Beats Q3 Earnings, Keeps View
Chicago Bridge & Iron Company N.V. reported third-quarter 2016 adjusted earnings of $1.20 per share, which beat the Zacks Consensus Estimate of $1.17 by 2.6%. It had reported a loss of $7.02 per share in the year-ago quarter.
Adjusted earnings (excluding divested businesses) for the quarter came in at $1.28 per diluted share.
Inside the Headlines
The company reported third-quarter 2016 revenues of $2,776 million, marginally beating the Zacks Consensus Estimate of $2,771 million. However, revenues fell 16.4% year over year.
The lackluster top-line performance during the quarter was largely a result of revenue declines across all of the company’s segments. Also, absence of revenues from the previously divested nuclear operations compounded the fall.
Gross profit decreased 13.5% year over year to $326.6 million, while gross margin contracted 40 basis points to 11.8%.
The company booked new awards worth $2,716 million during third-quarter 2016, compared with $4 billion in the prior-year quarter. The decline in new award wins was largely attributable to cautionary spending on part of the large clients who continue to defer investments due to softness in energy markets.
Noteworthy new awards for third-quarter 2016 included a maintenance award for two landfills and a major oil sands producer in Northern Alberta, Canada. This was followed by a $350 million EPC contract from a renowned electric power holding company.
Segmental Revenues
Revenues from the Engineering and Construction segment came in at $1,660 million, down 14.7% on a year-over-year basis, largely due to the absence of revenues from the divested nuclear operations business line. New awards in this segment were $1,492 million in the quarter, reflecting a decline of 38% from the comparable quarter last year.
Fabrication Services quarterly revenues totaled $513 million, declining 19.9% year over year owing to the winding down of several storage tank projects in the U.S., South America and the Asia-Pacific region, along with lowered engineered projects activity. Moreover, unfavorable timing of new awards aggravated the revenue fall in this segment. Also, new awards received by this segment plummeted drastically (down 73%) to $226 million at the end of the third quarter compared with $841 million in the prior-year quarter.
Technology revenues were down 23.5% year over year to $90.5 million, dragged primarily by lower catalyst volume and the timing of new awards. However, this segment won over $119 million of new contracts in the quarter, reflecting growth of nearly 22.4%.
Capital Services revenues declined 16.9% year over year to $513 million, reflecting lower construction services activity in the U.S. However, new contracts received by this segment rose 34.3% to $879 million in the quarter. Significant new awards included power plant services, refinery maintenance services, landfill services and military base services, all within North America.
Liquidity
Chicago Bridge & Iron’s cash and cash equivalents as of Sep 30, 2016 was $615 million, compared with $423.9 million a year ago. Net cash generated from operating activities in the nine–month period ended Sep 30, 2016 was $495 million, a remarkable turnaround from the net cash used in operating activities of $173.4 million in the comparable period last year.
Long-term debt was $1,456 million as of Sep 30, 2016, compared with $1,792 million as of Dec 31, 2015.
CHICAGO BRIDGE Price, Consensus and EPS Surprise
CHICAGO BRIDGE Price, Consensus and EPS Surprise | CHICAGO BRIDGE Quote
Share Repurchase
Chicago Bridge & Iron purchased approximately 5.5 million shares to date for $198 million.
Guidance
Chicago Bridge & Iron reiterated both its top and bottom-line guidance for full-year 2016. The company expects full-year revenues in the range of $10.6–$11.0 billion. Also, earnings per share are projected to come in the range of $4.70–$5.00.
To Conclude
Chicago Bridge & Iron’s third-quarter earnings took a beating from macroeconomic uncertainties and prolonged softness in the energy markets. These conditions might sustain in the foreseeable future, which will affect client spending, and consequently Chicago Bridge & Iron’s operations.
Despite these headwinds, Chicago Bridge & Iron is confident about the strong rebound in new awards in the Technology and Capital Services operating groups. Also, diligent cost-cutting strategies as well as the company’s competitive business model are expected to offset some of the weaknesses.
Chicago Bridge & Iron currently carries a Zacks Rank #4 (Sell).
Stocks to Consider
Some better-ranked stocks in the broader construction sector include MasTec, Inc. (MTZ - Free Report) , DR Horton Inc. (DHI - Free Report) and Orion Group Holdings, Inc. (ORN - Free Report) .
MasTec, carrying a Zacks Rank #1 (Strong Buy), has registered a remarkable positive average surprise of over 51.5% over the four trailing quarters, driven by three huge beats. You can see the complete list of today’s Zacks #1 Rank stocks here.
DR Horton carries a Zacks Rank #2 (Buy) and has a decent earnings beat history, having surpassed estimates twice over the trailing four quarters for an average beat of 3.5%
Orion Group, also carrying a Zacks Rank #2, has registered a remarkable positive average surprise of over 101.2% over the four trailing quarters, driven by a massive beat.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>