Chicago Bridge & Iron Lags

Chicago Bridge & Iron Company (CBI - Analyst Report) reported earnings per share from continuing operations of 51 cents for the first quarter of 2011, falling below the Zacks Consensus Estimate of 54 cents.

Revenue for the first quarter 2011 was $954.3 million, representing a $84.9 million increase (10%) from the corresponding prior-year period. This was below the Zacks Consensus Estimate of $1.03 billion.

During the first quarter 2011, new awards, were $1.0 billion, compared with $560.2 million for the comparable 2010 period. Backlog at Mar 31, 2011 was approximately $7.0 billion, compared with $6.9 billion at Dec 31, 2010.

Segment Results

CB&I Steel Plate Structures

During the first quarter 2011, new awards were $291.5 million, compared with $187.4 million for the comparable prior year period. Revenue was $368.7 million for the first quarter 2011, representing an increase of 10% over the comparable prior year period. Income from operations for the first quarter 2011 was $36.9 million (10.0% of revenue) versus $32.1 million (9.6% of revenue) for the comparable 2010 period.

CB&I Lummus

During the first quarter 2011, new awards were $586.7 million, versus $273.7 million for the comparable prior year period. Revenue was $464.6 million for the first quarter 2011, consistent with the comparable prior year period. Income from operations for the first quarter 2011 was $15.0 million (3.2% of revenue) versus $19.3 million (4.1% of revenue) for the comparable 2010 period.

Lummus Technology

During the first quarter of 2011, new awards were $133.3 million, versus $99.1 million for the comparable prior year period. Revenue was $121.0 million for the first quarter of 2011, representing an increase of 77% over the comparable prior year period. Income from operations for the first quarter 2011 was $23.1 million (19.1% of revenue) versus $17.1 million (25.1% of revenue) for the comparable 2010 period.

Gross profit was $136.7 million (14.3% of revenue) for the first quarter 2011 compared with $122.3 million (14.1% of revenue) for the first quarter 2010. 2011 results generally benefited from an increase in revenue and a higher percentage of such revenue being derived from higher margin Lummus Technology business.

Income from operations for the first quarter 2011 was $75.0 million (7.9% of revenue) versus $68.5 million (7.9% of revenue) for the comparable 2010 period.

The company exited the quarter with cash and cash equivalents totaling $430.3 million.

During the first quarter of 2011, net cash utilised in operations totaled $39.4 million, as cash generated from earnings was offset by an overall increase in working capital levels. This was due to an increase in accounts receivable ($122.9 million) for increased project activities in each sector, partly offset by an increase in accounts payable ($39.3 million) for major projects in CB&I Steel Plate Structures and CB&I Lummus sectors.

CB&I designs, engineers and constructs some of the world’s largest energy infrastructure projects, providing a full spectrum of EPC solutions and proven process technologies. Matrix Service Company (MTRX - Snapshot Report) is a major competitor.

We currently have a Neutral recommendation on Chicago Bridge & Iron Company.

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