CB&I Announces Third Quarter 2017 Results
THE WOODLANDS, Texas, Oct. 30, 2017 /PRNewswire/ -- CB&I (NYSE:CBI) today announced financial results for the third quarter of 2017.
CB&I reported net income of $10 million, or $0.10 per diluted share, in the third quarter of 2017, compared to net income of $121.8 million, or $1.20 per diluted share, in the third quarter of 2016.
Net income for the third quarter of 2017 was impacted by restructuring charges of $27 million, or $0.17 per share, related to the company's cost reduction program, and excess interest expense of $22 million, or $0.14 per share, due to accelerated amortization of debt issuance costs.
Continuing operations consist of CB&I's Engineering & Construction (E&C) and Fabrication Services businesses. The results of the company's Technology and former Engineered Products and Capital Services operations have been classified as discontinued operations for all periods presented.
"We have made significant progress on the decisive actions we announced last quarter, including our cost reduction program, the continued improvement of our project execution and risk management processes, and the intended sale of our Technology operations," said Patrick K. Mullen, President and Chief Executive Officer of CB&I. "Our cost reduction program is on track, with a positive impact on our financial performance already apparent. We are also extremely pleased with the sale process for our Technology operations and the interest from bidders on developing a long-term strategic alliance with CB&I.
"Our results this quarter were impacted by unusual items totaling $49 million, or $0.31 per share. We experienced continued cost pressure during the quarter, primarily on the IPL and Calpine power projects, with execution on our other projects continuing as planned. New awards were lower than expected, primarily within E&C, due to the delay of certain key projects. However, we have a significant pipeline and anticipate a strong fourth quarter and first half of 2018 for new awards."
Continuing Operations
Revenue for the third quarter of 2017 was $1.7 billion, compared to revenue of $2.1 billion in the third quarter of 2016.
New awards in the third quarter of 2017 totaled $437 million, compared to $1.7 billion in the third quarter of last year. Backlog at September 30, 2017, was $10.7 billion, compared to backlog of $13.2 billion at September 30, 2016.
Engineering & Construction Operating Group
E&C operating group revenue was $1.3 billion in the third quarter of 2017, compared to $1.7 billion in the year-ago quarter. The E&C group reported operating income of $13.1 million, compared to $126.8 million in the third quarter of 2016. Results were impacted by changes in estimated margins on two U.S. gas turbine power projects of $38 million and additional costs on U.S. LNG projects of approximately $16 million due in part to the direct effects of Hurricane Harvey. The E&C group's new awards in the third quarter totaled $65.2 million, compared with $1.5 billion in the third quarter of 2016, and backlog as of September 30, 2017, was $9.2 billion.
Fabrication Services Operating Group
Fabrication Services operating group revenue was $389.7 million compared to $467.0 million in the year-ago quarter. The Fabrication Services group reported operating income of $26.1 million compared to $27.8 million in the third quarter of 2016. The Fabrication Services group's new awards in the third quarter were $371.8 million, compared with $215.3 million in the third quarter of 2016. Backlog as of September 30, 2017, was $1.5 billion.
Discontinued Operations
The Technology operations revenue was $170.1 million, compared to $183.3 million in the year-ago quarter. Technology operations reported operating income of $61.2 million compared to $55.9 million in the third quarter of 2016.
Guidance
The company currently expects revenue for the fourth quarter of 2017 to be between $1.8 and $2.0 billion and diluted earnings per share in the range of $0.50 to $0.60. The company's updated guidance for the fourth quarter of 2017 includes continuing and discontinued operations but excludes the continuation of incremental interest expense and any additional restructuring charge that may be required. Guidance also excludes any significant benefits from the cost reduction program, which are expected to be fully realized in 2018.
Earnings Conference Call
CB&I will host a conference call and webcast October 30, 2017, at 4:00 p.m. CDT (5:00 p.m. EDT) to discuss financial and operating results and answer questions from investors. The webcast will be available on the Investor Relations page of www.CBI.com, and the conference call can be accessed by telephone at 1-800-301-8321 (U.S.) or 1-706-634-2259 (outside the U.S.) with conference ID # 6097289.
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