CB&I Reports Income from Continuing Operations Up 60%; Backlog Grows 36% from Year-End 2001
Chicago Bridge & Iron Company N.V. (NYSE:CBI) today reported net income from continuing operations increased 60% to $13.1 million or $0.60 per diluted share for the three months ended June 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.
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 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 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. "Ongoing improvement in project execution, coupled with a higher margin mix of business and lower operating costs, 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 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, Europe/Africa/Middle East (EAME) and Asia Pacific (AP) areas, but were lower in the Central and South America (CSA) 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.
The Company is contesting the administrative complaint filed during the fourth quarter of 2001 by the U.S. 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 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 of facilities and the implementation of best practices in our standard storage tank product lines are improving fabrication plant and construction equipment utilization, increasing field erection productivity and lowering our costs of doing business. The CB&I/Howe-Baker combination offers our customers in the refining, petrochemical and natural gas industries an attractive range of solutions on a lump-sum, turnkey 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.
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