EXHIBIT 99.2
NEWS RELEASE
CHICAGO BRIDGE & IRON COMPANY N.V.
FOR IMMEDIATE RELEASE: FOR FURTHER INFORMATION CONTACT:
NOVEMBER 1, 2001 MEDIA: BRUCE STEIMLE (281) 774-2293
ANALYSTS: MARIO VALAPERTA (832) 513-1242
OR (815) 439-4074
CB&I REPORTS THIRD QUARTER RESULTS
OPERATING INCOME HIGHEST SINCE IPO; NEW BUSINESS INCREASES 46% FROM PRIOR YEAR
THE WOODLANDS, TEXAS -- Nov. 1, 2001 -- Chicago Bridge & Iron Company N.V.
(NYSE: CBI) -- combining the results of its recent acquisitions -- today
reported net income from continuing operations excluding special charges more
than tripled to $11.5 million -- the highest quarterly total since the Company's
initial public offering in March 1997 -- or $0.52 per diluted share for the
three months ended September 30, 2001 compared with $3.1 million or $0.33 per
diluted share for the third quarter of 2000. As a result of recent acquisitions,
weighted average shares outstanding were 22.3 million in the third quarter
compared with 9.4 million in the comparable 2000 period. Net income from
continuing operations excluding special charges for the first nine months of
2001 increased 132% to $25.6 million or $1.13 per diluted share, compared with
$11.1 million or $1.16 per diluted share for the first nine months of 2000.
For the three months ended September 30, 2001, new business taken increased
46% to $247 million compared with $169 million in 2000. The most significant new
contract in the quarter was the previously announced award of an oil sands
project in Canada valued in excess of $40 million. In addition, Howe-Baker
Engineers was awarded another natural gas project in South America during the
quarter that resulted from a joint sales effort with CB&I. For the first nine
months of 2001, new business taken increased 61% to $858 million compared with
$534 million in the comparable 2000 period. Backlog at September 30, 2001 was
$843 million compared with $564 million at the end of the third quarter 2000 and
$597 million at year-end 2000.
"We are pleased to report that CB&I delivered another solid quarter, with
earnings that were slightly better than Street expectations," said Gerald M.
Glenn, Chairman, President and CEO. "Our operating results remain strong, thanks
to sustained improvements in project execution and the successful integration of
our acquisitions, in particular efficiencies gained from the combination of CB&I
and the Water and Engineered Construction Divisions of Pitt-Des Moines, Inc. Our
cost structure has improved and selling and administrative expenses as a percent
of revenues continue to decline. We are seeing excellent operating performance
in our base business, and our four current elephant projects that are well under
way in Nigeria and Latin America are exceeding our original expectations.
"CB&I has experienced no significant financial impacts from the tragic
events of September 11th. While we are seeing some near-term slowness in the
timing of the release of new awards, we do not expect any significant revenue or
earnings impact, and we remain on track to achieve new business taken in excess
of $1 billion this year. We continue to follow a significant number of LNG
prospects worldwide, and we expect that with our streamlined cost structure and
solid level of base business, any elephant projects that we win will provide
attractive incremental operating earnings in future years."
In the following discussion of third quarter and nine month results, the
2000 periods have been restated to reclassify results to conform with the
current year presentation. Inclusive of discontinued operations and special
charges, net income for the third quarter of 2001 was $8.0 million or $0.36 per
diluted share, compared with net income of $1.2 million or $0.13 per diluted
share for the third quarter of 2000. Net income for the first nine months of
2001 was $8.4 million or $0.37 per diluted share, compared with net income of
$5.6 million or $0.59 per diluted share for the comparable 2000 period.
Third quarter revenues increased 86% to $277.8 million from $149.6 million
in 2000. Revenues for the first nine months of 2001 increased 70% to $777.0
million from $457.2 million in 2000.
Gross profit for the three months ended September 30, 2001 was $34.0
million or 12.2% of revenues compared with $15.4 million or 10.3% of revenues in
2000. The improvement in gross margin was due primarily to the inclusion of
higher margin work from Howe-Baker International and sustained improvements in
project execution. Gross profit for the first nine months of 2001 was $95.0
million or 12.2% of revenues compared with $49.0 million or 10.7 % of revenues
in the comparable 2000 period.
During the third quarter the Company incurred special charges of $5.3
million related primarily to the relocation of the Company's administrative
office to The Woodlands, Texas, including costs associated with the separation
of senior executives who have elected not to relocate, as well as other
moving-related and severance expenses.
Third quarter 2001 operating income excluding special charges more than
tripled to $18.3 million compared with $5.4 million in the prior-year quarter.
Operating income excluding special charges for the first nine months of 2001
increased 124% to $44.5 million from $19.8 million for the comparable 2000
period.
Continued strong cash flow during the quarter resulted in net debt (total
debt less cash and cash equivalents) of $45.1 million at September 30, 2001,
down from $96.6 million at the end of the first quarter. Capital expenditures
during the quarter were $2.3 million compared with $1.5 million in the prior
year period. Capital expenditures for the first nine months of 2001 were $6.2
million compared with $5.1 million for the comparable 2000 period. The Company
is drawing upon its cash flows to support its previously announced modest stock
buyback program.
During the third quarter, CB&I completed a $75 million private placement of
senior notes to a group of institutional investors. 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 revolving credit facility.
Subsequent to the end of the third quarter on October 25, the U.S. Federal
Trade Commission (FTC) filed an administrative complaint challenging the
Company's acquisition of certain assets of one of the two divisions acquired
from Pitt-Des Moines, Inc. (PDM) -- the Engineered Construction Division. The
FTC's challenge covers the following field erected specialty industrial storage
tank product lines in the United States: LNG tanks, LNG peakshaving plants, LNG
import terminals, LPG tanks, LIN/LOX/LAR tanks and thermal vacuum chambers. U.S.
demand for these products constitutes a small percentage of the capacity that
was acquired in the PDM transaction. The product lines challenged by the FTC do
not represent (or constitute) commercially viable markets in the United States.
For example, the Company is unaware of any thermal vacuum chamber projects in
the U.S. in recent years.
The Company believes the FTC complaint is without substantive merit and
intends to defend the action. "We are dismayed with the Commission's decision,
and disappointed with the message that bringing this case sends to industry,"
said Glenn. "We intend to pursue appropriate legal recourse to defend our
acquisition. We expect the impact of the FTC proceeding on CB&I's earnings will
be minimal in the current year and in 2002."
"With each quarter that passes, we are experiencing more and more benefits
from our successful integration of the Howe-Baker and the PDM acquisitions,"
Glenn added. "Howe-Baker is winning work outside the U.S. by leveraging the
talents of our international sales team. Our product offering is much more
comprehensive for both our hydrocarbon and water customers, at a time when
demand in these end markets is growing. And we have streamlined our cost
structure and strengthened our management team, enabling us to execute our work
with more consistent profitability. We are optimistic about our future
prospects, and we will continue to focus on the task at hand: providing optimal
solutions to our customers and increasing value to our shareholders."
Any statements made in this release that are not based on historical fact
are forward-looking statements 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 of contracts; the uncertain
timing and the funding of new contract awards, and project cancellations and
operating risks; cost overruns on fixed priced contracts; increased competition;
fluctuating revenues resulting from a number of factors, including the cyclic
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, or lower than expected growth in the
Company's other primary end markets; the Company's ability to integrate and
successfully operate acquired businesses and the risks associated with those
businesses; and the ultimate outcome or effect of the FTC proceeding on the
Company's business, financial condition and results of operations. Additional
factors which could cause actual results to differ from such forward-looking
statements are set forth in Amendment No. 1 to the Company's Form S-3
Registration Statement filed with the SEC on November 1, 2001. The Company does
not undertake to update any forward-looking statements contained herein, whether
as a result of new information, future events or otherwise.
CB&I is a global specialty engineering and construction company offering a
complete package of design, engineering, fabrication, construction and
maintenance services. Our products include hydrocarbon processing plants, LNG
terminals and peakshaving plants, bulk liquid terminals, water storage and
wastewater treatment facilities, and other steel structures and their associated
systems. Information about CB&I is available at www.chicagobridge.com.
# # #
CHICAGO BRIDGE & IRON COMPANY N.V. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
2001 2000 2001 2000
Revenues $ 277,774 $ 149,552 $ 776,999 $ 457,155
Cost of revenues 243,759 134,194 682,032 408,134
--------- --------- --------- ---------
Gross profit 34,015 15,358 94,967 49,021
% OF REVENUES 12.2% 10.3% 12.2% 10.7%
Selling and administrative expenses 15,159 10,085 47,690 31,106
% OF REVENUES 5.5% 6.7% 6.1% 6.8%
Intangibles amortization 1,309 148 3,819 442
Other operating income, net (801) (297) (1,067) (2,366)
Special charges 5,288 473 7,540 1,991
--------- --------- --------- ---------
Income from operations 13,060 4,949 36,985 17,848
% OF REVENUES 4.7% 3.3% 4.8% 3.9%
Interest expense (2,011) (1,338) (6,504) (3,775)
Interest income 517 64 1,468 329
--------- --------- --------- ---------
Income before taxes and minority interest 11,566 3,675 31,949 14,402
Income tax expense (2,920) (1,117) (8,952) (4,020)
--------- --------- --------- ---------
Income before minority interest 8,646 2,558 22,997 10,382
Minority interest in (income) loss (626) 232 (2,366) (636)
--------- --------- --------- ---------
Income from continuing operations 8,020 2,790 20,631 9,746
--------- --------- --------- ---------
Discontinued operations:
Loss from discontinued operations,
net of taxes -- (1,572) (2,321) (4,123)
Loss on disposal of discontinued operations,
net of taxes -- -- (9,898) --
--------- --------- --------- ---------
Net income $ 8,020 $ 1,218 $ 8,412 $ 5,623
========= ========= ========= =========
Net income per share
Basic:
Income from continuing operations $ 0.38 $ 0.30 $ 0.95 $ 1.05
(Loss) from discontinued operations -- (0.17) (0.56) (0.45)
--------- --------- --------- ---------
Net income $ 0.38 $ 0.13 $ 0.39 $ 0.60
========= ========= ========= =========
Diluted:
Income from continuing operations $ 0.36 $ 0.30 $ 0.91 $ 1.02
(Loss) from discontinued operations -- (0.17) (0.54) (0.43)
--------- --------- --------- ---------
Net income $ 0.36 $ 0.13 $ 0.37 $ 0.59
========= ========= ========= =========
Weighted average shares outstanding
Basic 21,382 9,235 21,829 9,320
Diluted 22,295 9,432 22,634 9,563
Excluding special charges:
Net income from continuing operations $ 11,509 $ 3,102 $ 25,607 $ 11,060
Net income per share - diluted:
Income from continuing operations $ 0.52 $ 0.33 $ 1.13 $ 1.16
(Loss) from discontinued operations -- (0.17) (0.54) (0.43)
--------- --------- --------- ---------
Net income $ 0.52 $ 0.16 $ 0.59 $ 0.73
========= ========= ========= =========
CHICAGO BRIDGE & IRON COMPANY N.V. AND SUBSIDIARIES
SEGMENT INFORMATION
(IN THOUSANDS)
THREE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
2001 2000
NEW BUSINESS TAKEN % OF % OF
TOTAL TOTAL
North America $ 204,217 83% $ 67,817 40%
Europe, Africa & Middle East 24,151 10% 10,241 6%
Asia Pacific 7,370 3% 13,908 8%
Central & South America 10,908 4% 77,092 46%
--------- ---------
Total $ 246,646 $ 169,058
========= =========
REVENUES % OF % OF
TOTAL TOTAL
North America $ 194,122 70% $ 85,345 57%
Europe, Africa & Middle East 28,399 10% 37,505 25%
Asia Pacific 9,863 4% 12,716 9%
Central & South America 45,390 16% 13,986 9%
--------- ---------
Total $ 277,774 $ 149,552
========= =========
INCOME FROM OPERATIONS % OF % OF
EXCLUDING SPECIAL CHARGES REVENUES REVENUES
North America $ 13,447 6.9% $ 3,799 4.5%
Europe, Africa & Middle East (67) (0.2%) 401 1.1%
Asia Pacific (615) (6.2%) 1,683 13.2%
Central & South America 5,583 12.3% (461) (3.3%)
--------- ----------
Total $ 18,348 6.6% $ 5,422 3.6%
========= =========
INCOME FROM OPERATIONS
North America $ 9,939 $ 3,694
Europe, Africa & Middle East (810) 169
Asia Pacific (775) 1,629
Central & South America 4,706 (543)
--------- ----------
Total $ 13,060 $ 4,949
========= =========
CHICAGO BRIDGE & IRON COMPANY N.V. AND SUBSIDIARIES
SEGMENT INFORMATION
(IN THOUSANDS)
NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
2001 2000
NEW BUSINESS TAKEN % OF % OF
TOTAL TOTAL
North America $ 651,706 76% $ 298,447 56%
Europe, Africa & Middle East 53,451 6% 56,759 11%
Asia Pacific 23,301 3% 39,440 7%
Central & South America 129,141 15% 139,109 26%
--------- ---------
Total $ 857,599 $ 533,755
========= =========
REVENUES % OF % OF
TOTAL TOTAL
North America $ 520,523 67% $ 228,128 50%
Europe, Africa & Middle East 92,871 12% 131,328 29%
Asia Pacific 26,003 3% 44,692 10%
Central & South America 137,602 18% 53,007 11%
--------- ---------
Total $ 776,999 $ 457,155
========= =========
INCOME FROM OPERATIONS % OF % OF
EXCLUDING SPECIAL CHARGES REVENUES REVENUES
North America $ 31,081 6.0% $ 10,936 4.8%
Europe, Africa & Middle East (777) (0.8%) 4,654 3.5%
Asia Pacific (1,002) (3.9%) 1,894 4.2%
Central & South America 15,223 11.1% 2,355 4.4%
--------- ----------
Total $ 44,525 5.7% $ 19,839 4.3%
========= ==========
INCOME FROM OPERATIONS
North America $ 26,572 $ 10,145
Europe, Africa & Middle East (2,159) 3,934
Asia Pacific (1,242) 1,678
Central & South America 13,814 2,091
---------- ----------
Total $ 36,985 $ 17,848
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CHICAGO BRIDGE & IRON COMPANY N.V. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
SEPTEMBER 30, DECEMBER 31,
2001 2000
ASSETS
Current assets $293,428 $240,760
Property and equipment, net 105,129 98,723
Goodwill and other intangibles, net 172,504 137,436
Other non-current assets 64,021 61,496
-------- --------
Total assets $635,082 $538,415
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities $247,451 $183,847
Long-term debt 75,000 101,800
Other non-current liabilities 102,173 97,021
Shareholders' equity 210,458 155,747
-------- --------
Total liabilities and shareholders' equity $635,082 $538,415
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CHICAGO BRIDGE & IRON COMPANY N.V. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
NINE MONTHS
ENDED SEPTEMBER 30,
2001 2000
Cash flows from operating activities $ 69,305 $ (3,977)
Cash flows from investing activities 7,251 (17,433)
Cash flows from financing activities (48,111) 10,404
-------- --------
(Decrease)/increase in cash and cash equivalents 28,445 (11,006)
Cash and cash equivalents, beginning of the year 7,491 18,639
-------- --------
Cash and cash equivalents, end of the period $ 35,936 $ 7,633
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