EXHIBIT 99.1
CB&I Reports Second Quarter Results;
Earnings in Line with Revised Guidance;
Revenue Continues on Record Pace
THE WOODLANDS, Texas--(BUSINESS WIRE)--July 29, 2004--CB&I
(NYSE:CBI) today reported net income of $4.9 million or $0.10 per
diluted share for the second quarter ended June 30, 2004, which is in
line with previous guidance as revised. The Company reported $16.5
million or $0.35 per diluted share for the comparable period in 2003.
Net income for the first half of 2004 was $19.5 million or $0.40 per
diluted share, compared with $29.2 million or $0.63 per diluted share
for the first six months of 2003.
For the quarter ended June 30, 2004, new business taken was $398
million, compared with a record $539 million in the second quarter of
2003. New business during the quarter included an LNG terminal
expansion project and hydrogen plant projects in North America, as
previously announced. New business taken for the first half of 2004
was $746 million, compared with $863 million for the same period last
year. The Company continues to anticipate full-year 2004 new business
taken in the range of $1.8 billion to $1.9 billion. Backlog at June
30, 2004, stood at $1.5 billion, which was the same as the closing
backlog at the end of the prior quarter, indicating that sales of new
business were approximately equivalent to work performed for the
period.
"Consistent with the announcement we made on June 4, 2004, second
quarter earnings were impacted by the recognition of potentially
unrecoverable costs on two projects," said Gerald M. Glenn, CB&I's
Chairman, President and CEO. "One of these projects is complete, CB&I
personnel and equipment are off the job site, and the facility has
been turned over to the owner. The other project is scheduled to be
completed in a matter of weeks. We do not expect to see further
deterioration in the Company's financial performance related to these
two projects. Meanwhile, project performance has been solid across the
rest of the Company, our revenue continues to grow, cash flow has been
very strong, and we are anticipating a significant upturn in new
awards in the remainder of 2004."
Revenue for the second quarter of 2004 increased 7% to $415.4
million from $389.3 million in the second quarter of 2003. Revenue
grew 2% in the North America segment and increased 44% in the
Company's Europe, Africa, Middle East (EAME) segment, which includes
revenue from CB&I John Brown acquired May 30, 2003. Revenue declined
17% in the Asia Pacific (AP) segment and 16% in the Central and South
America (CSA) segment, primarily due to the timing of project
execution in the field. Revenue for the first half of 2004 increased
21% to $858.9 million, compared with $711.6 million in the
year-earlier period, and is on pace to reach a record level for
full-year 2004.
Second quarter 2004 gross profit decreased 40% to $29.6 million or
7.1% of revenue, compared with $49.4 million or 12.7% of revenue for
the same period in 2003. As explained in the press release issued June
4, 2004, the decrease was attributable to the recognition of
potentially unrecoverable costs on the two projects mentioned above,
one in the EAME segment's Saudi Arabia region that is nearing
completion and the other in the North America segment that has been
completed. In the second quarter the Company increased its estimate of
all costs expected to be incurred to complete these projects. As both
projects are currently forecasted to result in losses, provision for
such losses was made during the second quarter. As of the end of the
quarter, the Company has not recognized revenue for unapproved change
orders or claims associated with these projects. For the first half of
2004, gross profit was $76.3 million, compared with $89.0 million in
the first six months of 2003.
Income from operations in the second quarter of 2004 was $5.5
million, compared with $25.2 million in the year-earlier period,
primarily due to the impact of the provisions discussed above. For the
first half of 2004, income from operations was $28.0 million, compared
with $45.1 million in the first half of 2003.
At June 30, 2004, CB&I had cash and cash equivalents of $116.9
million, compared with $57.4 million at the end of the second quarter
2003. Cash exceeded debt by $40.9 million at the end of the second
quarter. Capital expenditures for the second quarter were $4.8
million, compared with $11.8 million in the year- earlier period.
Capital expenditures for the first half of 2004 were $7.6 million,
compared with $20.4 million in the first six months of 2003.
"We want to assure our shareholders and investors that the
problems we experienced on the two projects mentioned above were
isolated and attributable to unique circumstances specific to the
projects in question," Glenn added. "I continue to have high
confidence in our team and our execution model. We see growing demand
in our major end markets and our prospect list is as strong as it's
ever been. Our financial position is solid, and we have the resources
to take advantage of the right opportunities to complement the slate
of services we can offer to our customers."
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; changes in the costs or
availability of or delivery schedule for components and materials;
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; political and economic conditions
including, but not limited to, war, conflict or civil or economic
unrest in countries in which we operate; 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 pending 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 the Company's Form 10-K filed with the SEC for the
year ended Dec. 31, 2003. 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 one of the world's leading engineering, procurement and
construction (EPC) companies, specializing in lump-sum turnkey
projects for customers that produce, process, store and distribute the
world's natural resources. With more than 60 locations and
approximately 10,000 employees throughout the world, CB&I capitalizes
on its global expertise and local knowledge to safely and reliably
deliver projects virtually anywhere. Information about CB&I is
available at www.CBIepc.com.
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CHICAGO BRIDGE & IRON COMPANY N.V. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
Three Months Six Months
Ended June 30, Ended June 30,
2004 2003 2004 2003
Revenue $415,373 $389,309 $858,926 $711,618
Cost of revenue 385,808 339,954 782,598 622,602
------- ------- ------- -------
Gross profit 29,565 49,355 76,328 89,016
% of Revenue 7.1% 12.7% 8.9% 12.5%
Selling and
administrative
expenses 23,616 23,887 47,463 43,085
% of Revenue 5.7% 6.1% 5.5% 6.1%
Intangibles amortization 519 649 1,025 1,287
Other operating
income, net (97) (345) (120) (481)
------- ------- ------- -------
Income from
operations 5,527 25,164 27,960 45,125
% of Revenue 1.3% 6.5% 3.3% 6.3%
Interest expense (1,734) (1,558) (3,460) (3,245)
Interest income 243 510 449 976
------- ------- ------- -------
Income before taxes and
minority interest 4,036 24,116 24,949 42,856
Income tax expense (1,292) (7,307) (7,984) (12,918)
------- ------- ------- -------
Income before
minority interest 2,744 16,809 16,965 29,938
Minority interest in
loss (income) 2,200 (345) 2,583 (710)
------- ------- ------- -------
Net income $ 4,944 $ 16,464 $ 19,548 $ 29,228
======= ======= ======= =======
Net income per share
Basic $ 0.10 $ 0.37 $ 0.41 $ 0.66
Diluted $ 0.10 $ 0.35 $ 0.40 $ 0.63
Weighted average shares
outstanding
Basic 47,566 44,604 47,294 44,500
Diluted 49,491 46,863 49,403 46,557
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CHICAGO BRIDGE & IRON COMPANY N.V. AND SUBSIDIARIES
SEGMENT INFORMATION
(in thousands)
Three Months Ended
June 30, June 30,
2004 2003
NEW BUSINESS TAKEN(1) % of % of
Total Total
North America $332,969 83% $322,140 60%
Europe/Africa/Middle East 35,310 9% 151,286 28%
Asia Pacific 14,349 4% 41,173 8%
Central & South America 15,654 4% 23,975 4%
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Total $398,282 $538,574
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REVENUE % of % of
Total Total
North America $242,752 59% $239,046 62%
Europe/Africa/Middle East 112,236 27% 77,688 20%
Asia Pacific 42,694 10% 51,574 13%
Central & South America 17,691 4% 21,001 5%
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Total $415,373 $389,309
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INCOME/(LOSS) FROM OPERATIONS % of % of
Revenue Revenue
North America $ 10,155 4.2% $ 18,150 7.6%
Europe/Africa/Middle East (8,150) (7.3%) 2,343 3.0%
Asia Pacific 870 2.0% 2,986 5.8%
Central & South America 2,652 15.0% 1,685 8.0%
------- -------
Total $ 5,527 1.3% $ 25,164 6.5%
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Six Months Ended
June 30, June 30,
2004 2003
NEW BUSINESS TAKEN(1) % of % of
Total Total
North America $500,441 66% $553,724 64%
Europe/Africa/Middle East 132,549 18% 198,217 23%
Asia Pacific 79,364 11% 69,739 8%
Central & South America 33,660 5% 41,638 5%
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Total $746,014 $863,318
======= =======
REVENUE % of % of
Total Total
North America $499,802 58% $ 443,196 62%
Europe/Africa/Middle East 218,148 25% 136,641 19%
Asia Pacific 101,332 12% 92,606 13%
Central & South America 39,644 5% 39,175 6%
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Total $858,926 $711,618
======= =======
INCOME/(LOSS) FROM OPERATIONS % of % of
Revenue Revenue
North America $ 24,855 5.0% $ 29,650 6.7%
Europe/Africa/Middle East (4,699) (2.2%) 5,903 4.3%
Asia Pacific 2,550 2.5% 4,299 4.6%
Central & South America 5,254 13.3% 5,273 13.5%
------- -------
Total $ 27,960 3.3% $ 45,125 6.3%
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(1) New business taken represents the value of new project commitments
received by the Company during a given period. These commitments
are included in backlog until work is performed and revenue is
recognized or until cancellation. Backlog may also fluctuate with
currency movements.
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CHICAGO BRIDGE & IRON COMPANY N.V. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
June 30, Dec. 31,
2004 2003
ASSETS
Current assets $530,241 $512,427
Property and equipment, net 121,371 124,505
Goodwill and other intangibles, net 265,649 249,982
Other non-current assets 38,827 45,448
------- -------
Total assets $956,088 $932,362
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities $355,992 $376,252
Long-term debt 75,000 75,000
Other non-current liabilities 108,321 91,946
Shareholders' equity 416,775 389,164
------- -------
Total liabilities
and shareholders' equity $956,088 $932,362
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CHICAGO BRIDGE & IRON COMPANY N.V. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
AND OTHER FINANCIAL DATA
(in thousands)
Six Months
Ended June 30,
2004 2003
CASH FLOWS
Cash flows from operating activities $ 7,013 $ 25,011
Cash flows from investing activities (8,883) (67,966)
Cash flows from financing activities 5,891 (2,136)
------- -------
Increase/(decrease) in cash and cash
equivalents 4,021 (45,091)
Cash and cash equivalents,
beginning of the year 112,918 102,536
------- -------
Cash and cash equivalents,
end of the period $116,939 $ 57,445
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OTHER FINANCIAL DATA
Depreciation and amortization expense $ 10,814 $ 9,770
Capital expenditures 7,554 20,363
(Increase)/decrease in receivables, net (45,368) 5,390
Decrease/(increase) in contracts in
progress, net 35,513 (29,719)
Decrease/(increase) in non-current
contract retentions 2,738 (4,323)
(Decrease)/increase in accounts payable (15,353) 33,272
------- -------
Change in contract capital $(22,470) $ 4,620
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CONTACT: CB&I
Bruce Steimle, 832-513-1111 (Media)
or
Marty Spake, 832-513-1245 (Analysts)