CB&I Reports First Quarter 2017 Financial Results

Significant Increase in New Awards for 2017

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May 08, 2017, 16:15 ET

THE WOODLANDS, Texas, May 8, 2017 /PRNewswire/ -- CB&I (NYSE:CBI) today reported net income of $25 million, or $0.24 per diluted share, for the first quarter of 2017, as compared to $107 million, or $1.01 per diluted share, for the first quarter of 2016. First quarter 2017 revenue was $2.4 billion, as compared to $2.7 billion in the first quarter of 2016.

New awards for the first quarter were $3.3 billion, as compared to $1.2 billion for the first quarter of 2016. The company's backlog at the end of the first quarter of 2017 was $19.3 billion.

"Each of our operating groups reported solid earnings for the quarter with the exception of Engineering & Construction, which was negatively impacted by underperformance on two union construction projects. Overall, new awards exceeded our expectations, indicating the rebound of opportunities in our end markets, specifically in the United States, Middle East and China," said Philip K. Asherman, CB&I's President and Chief Executive Officer. "I'm especially proud of our outstanding safety record, having performed more than 51 million work hours with zero lost-time incidents in the past six months."

New awards for the quarter include an engineering, procurement and construction contract valued at $1.3 billion with Total Petrochemicals & Refining USA for an ethane cracker project in Texas, CB&I's fourth new ethane construction project on the U.S. Gulf Coast; a $600 million contract by a leading integrated energy company for the engineering, procurement, construction and commissioning of a combined-cycle power plant in the southern United States; and multiple multi-technology and licensing awards in China.

The company is adjusting its 2017 guidance as follows:

Revenue: $9.5 billion - $10.5 billion (no change)
Earnings Per Share (diluted): $3.50 - $4.00

Earnings Conference Call
CB&I will host a webcast on May 8 at 4:00 p.m. Central time (5:00 p.m. Eastern time) 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.

About CB&I
CB&I (NYSE:CBI) is a leading provider of technology and infrastructure for the energy industry. With over 125 years of experience and the expertise of more than 40,000 employees, CB&I provides reliable solutions to our customers around the world while maintaining a relentless focus on safety and an uncompromising standard of quality. For more information, visit www.CBI.com.

Important Information For Investors And Shareholders

Cautionary Statement Regarding Forward-Looking Statements

This press release contains forward-looking statements regarding CB&I and represents our expectations and beliefs concerning future events. These forward-looking statements are intended to be covered by the safe harbor for forward-looking statements provided by the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties. When considering any statements that are predictive in nature, depend upon or refer to future events or conditions, or use or contain words, terms, phrases or expressions such as "achieve," "forecast," "plan," "propose," "strategy," "envision," "hope," "will," "continue," "potential," "expect," "believe," "anticipate," "project," "estimate," "predict," "intend," "should," "could," "may," "might" or similar forward-looking statements, we refer you to the cautionary statements concerning risk factors and "Forward-Looking Statements" described under "Risk Factors" in Item 1A of our Annual Report filed on Form 10-K filed with the SEC for the year ended December 31, 2016, and any updates to those risk factors or "Forward-Looking Statements" included in our subsequent Quarterly Reports on Form 10-Q filed with the SEC, which cautionary statements are incorporated herein by reference.

Non-GAAP Financial Measures

To supplement CB&I's consolidated financial statements, which are prepared and presented in accordance with U.S. generally accepted accounting principles (GAAP), this press release and the accompanying tables contain certain non-GAAP financial measures, including the presentation of our financial results, consolidated statements of operations and segment data, excluding the impact of the classification of our Capital Services operations as a discontinued operation. These non-GAAP financial measures are presented to provide a better indication of our operating results prior to the sale of our Capital Services operations.

Non-GAAP financial measures are presented for supplemental informational purposes only to aid an understanding of the company's operating results. The presentation of these non-GAAP financial measures and key metrics is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP, and may be different from non-GAAP financial measures presented by other companies. For more information on these non-GAAP financial measures and key metrics, please see the tables captioned "Non-GAAP Supplemental Adjusted Segment Data," "Non-GAAP Supplemental Adjusted Financial Data," "Reconciliation of Non-GAAP Supplemental Adjusted Segment Data" and "Reconciliation of Non-GAAP Supplemental Adjusted Financial Data," which are included in this release.

Investors: Scott Lamb, +1 832 513 1068, [email protected]
Media: Gentry Brann, +1 832 513 1031, [email protected]

Chicago Bridge & Iron Company N.V.
Non-GAAP Supplemental Adjusted Segment Data
(amounts adjusted to exclude impact of classifying our Capital Services Operations as a discontinued operation) ⁽¹⁾
(in thousands)

	Three Months Ended March 31,
	2017			2016

NEW AWARDS			% of			% of
NEW AWARDS			Total			Total
Engineering & Construction	$	2,239,799	68%	$	323,418	27%
Fabrication Services	446,260		13%	373,689		31%
Technology	160,354		5%	83,620		7%
Capital Services	468,732		14%	416,672		35%
Total	$	3,315,145		$	1,197,399

REVENUE			% of			% of
REVENUE			Total			Total
Engineering & Construction	$	1,285,589	54%	$	1,516,328	57%
Fabrication Services	476,580		20%	517,576		19%
Technology	68,027		3%	64,562		3%
Capital Services	534,209		23%	569,267		21%
Total	$	2,364,405		$	2,667,733

INCOME FROM OPERATIONS			% of			% of
INCOME FROM OPERATIONS			Revenue			Revenue
Engineering & Construction	$	9,676	0.8%	$	111,920	7.4%
Fabrication Services	53,861		11.3%	38,249		7.4%
Technology	21,740		32.0%	26,281		40.7%
Capital Services	12,755		2.4%	11,490		2.0%
Total	$	98,032	4.1%	$	187,940	7.0%

BACKLOG	March 31,		% of	December 31,		% of
BACKLOG	2017		Total	2016		Total
Engineering & Construction	$	10,824,815	56%	$	9,916,948	54%
Fabrication Services	2,058,874		11%	2,114,550		11%
Technology	1,095,801		6%	1,025,723		6%
Capital Services	5,296,059		27%	5,398,012		29%
Total	$	19,275,549		$	18,455,233

⁽¹⁾											New awards, revenue, and income from operations for the three months ended March 31, 2017 and 2016, and backlog at March 31, 2017 and December 31, 2016, are presented excluding the impact of the classification of our Capital Services Operations as a discontinued operation. This presentation is considered a non-GAAP financial measure, which we believe provides a better indication of our operating results prior to the sale of our Capital Services Operations. See "Reconciliation of Non-GAAP Supplemental Adjusted Segment Data".

Chicago Bridge & Iron Company N.V.
Segment Information
(in thousands)

	Three Months Ended March 31,
	2017			2016

NEW AWARDS ⁽¹⁾			% of			% of
NEW AWARDS ⁽¹⁾			Total			Total
Engineering & Construction	$	2,236,173	79%	$	341,665	43%
Fabrication Services	446,260		16%	374,139		47%
Technology	160,354		5%	83,620		10%
Total	$	2,842,787		$	799,424

REVENUE			% of			% of
REVENUE			Total			Total
Engineering & Construction	$	1,280,753	70%	$	1,536,361	72%
Fabrication Services	478,572		26%	533,706		25%
Technology	68,027		4%	64,562		3%
Total	$	1,827,352		$	2,134,629

INCOME FROM OPERATIONS			% of			% of
INCOME FROM OPERATIONS			Revenue			Revenue
Engineering & Construction	$	5,414	0.4%	$	108,073	7.0%
Fabrication Services	52,059		10.9%	37,110		7.0%
Technology	21,515		31.6%	26,149		40.5%
Total	$	78,988	4.3%	$	171,332	8.0%

BACKLOG ⁽¹⁾	March 31,		% of	December 31,		% of
BACKLOG ⁽¹⁾	2017		Total	2016		Total
Engineering & Construction	$	10,792,597	77%	$	9,871,208	76%
Fabrication Services	2,060,384		15%	2,117,567		16%
Technology	1,095,801		8%	1,025,723		8%
Total	$	13,948,782		$	13,014,498

⁽¹⁾

New awards represent the value of new project commitments received by the Company during a given period, as well as scope growth on existing commitments. Backlog includes the value of new awards until work is performed and revenue is recognized or until cancellation. Backlog may fluctuate with currency movements.

Chicago Bridge & Iron Company N.V.
Non-GAAP Supplemental Adjusted Financial Data
(amounts adjusted to exclude impact of classifying our Capital Services Operations as a discontinued operation) ⁽¹⁾
(in thousands, except per share data)

	Three Months
	Ended March 31,
	2017			2016

Revenue	$	2,364,405		$	2,667,733
Cost of revenue	2,179,194			2,380,128
Gross profit	185,211			287,605
% of Revenue	7.8		%	10.8		%

Selling and administrative expense	86,095			92,597
% of Revenue	3.6		%	3.5		%

Intangibles amortization	9,036			11,277
Equity earnings	(7,875)			(3,990)
Other operating income, net	(77)			(219)
Income from operations	98,032			187,940
% of Revenue	4.1		%	7.0		%

Interest expense	(30,964)			(25,898)
Interest income	1,237			2,489
Income before taxes	68,305			164,531

Income tax expense	(16,400)			(44,569)
Net income	51,905			119,962

Less: Net income attributable to noncontrolling interests	(27,250)			(13,037)
Net income attributable to CB&I	$	24,655		$	106,925

Net income attributable to CB&I per share:
Basic	$	0.25		$	1.02
Diluted	$	0.24		$	1.01

Weighted average shares outstanding:
Basic	100,451			104,803
Diluted	101,360			105,785

⁽¹⁾

The three months ended March 31, 2017 and 2016 are presented excluding the impact of the classification of our Capital Services Operations as a discontinued operation. This presentation is considered a non-GAAP financial measure, which we believe provides a better indication of our operating results prior to the sale of our Capital Services Operations. See "Reconciliation of Non-GAAP Supplemental Adjusted Financial Data".

Chicago Bridge & Iron Company N.V.
Consolidated Statements of Operations
(in thousands, except per share data)

	Three Months
	Ended March 31,
	2017			2016

Revenue	$	1,827,352		$	2,134,629
Cost of revenue	1,676,401			1,879,059
Gross profit	150,951			255,570
% of Revenue	8.3		%	12.0		%

Selling and administrative expense	73,057			80,946
% of Revenue	4.0		%	3.8		%

Intangibles amortization	6,486			7,077
Equity earnings	(7,611)			(3,605)
Other operating expense (income), net	31			(180)
Operating Income from continuing operations	78,988			171,332
% of Revenue	4.3		%	8.0		%

Interest expense	(24,101)			(20,065)
Interest income	1,228			2,180
Income from continuing operations before taxes	56,115			153,447

Income tax expense	(13,704)			(39,524)
Net income from continuing operations	42,411			113,923
Net income from discontinued operations	9,494			6,039
Net income	51,905			119,962

Less: Net income attributable to noncontrolling interests ($413 and $448 related to discontinued operations)	(27,250)			(13,037)
Net income attributable to CB&I	$	24,655		$	106,925

Net income attributable to CB&I per share (Basic):
Continuing operations	$	0.16		$	0.97
Discontinued operations	0.09			0.05
Total	$	0.25		$	1.02

Net income attributable to CB&I per share (Diluted):
Continuing operations	$	0.15		$	0.96
Discontinued operations	0.09			0.05
Total	$	0.24		$	1.01

Weighted average shares outstanding:
Basic	100,451			104,803
Diluted	101,360			105,785

Chicago Bridge & Iron Company N.V.
Condensed Consolidated Balance Sheets
(in thousands)

	March 31,		December 31,
	2017		2016
ASSETS

Current assets	$	2,316,459	$	2,127,020
Equity investments	171,605		165,256
Property and equipment, net	500,187		505,944
Goodwill and other intangibles, net	3,029,439		3,033,212
Assets of discontinued operations	915,324		876,876
Other non-current assets	1,130,957		1,131,112
Total assets	$	8,063,971	$	7,839,420

LIABILITIES AND SHAREHOLDERS' EQUITY

Current maturities of long-term debt and other borrowings, net	$	1,141,329	$	911,410
Other current liabilities	3,334,470		3,377,370
Long-term debt, net	1,266,027		1,287,923
Liabilities of discontinued operations	258,817		252,857
Other non-current liabilities	445,576		448,523

Shareholders' equity	1,617,752		1,561,337
Total liabilities and shareholders' equity	$	8,063,971	$	7,839,420


Condensed Consolidated Statements of Cash Flows and Other Financial Data
(in thousands)

	Three Months
	Ended March 31,
	2017		2016
CASH FLOWS

Cash flows from operating activities	$	(290,682)	$	141,850
Cash flows from investing activities	(43,296)		(47,499)
Cash flows from financing activities	227,585		(11,392)
Effect of exchange rate changes on cash and cash equivalents	21,316		8,305
(Decrease) increase in cash and cash equivalents	(85,077)		91,264
Cash and cash equivalents, beginning of the year	505,156		550,221
Cash and cash equivalents, end of the period	420,079		641,485
Cash and cash equivalents, end of period - discontinued operations	(17,782)		(20,563)
Cash and cash equivalents, end of period - continuing operations	$	402,297	$	620,922

OTHER FINANCIAL DATA

Increase in receivables, net	$	(217,122)	$	(57,207)
Change in contracts in progress, net	(6,057)		58,361
(Increase) decrease in inventory	(12,346)		27,477
Decrease in accounts payable	(95,117)		(87,753)
Change in contract capital	$	(330,642)	$	(59,122)

Depreciation and amortization	$	26,264	$	31,801
Capital expenditures	$	12,274	$	11,180

Chicago Bridge & Iron Company N.V.
Reconciliation of Non-GAAP Supplemental Adjusted Segment Data
(in thousands)

	Three Months Ended March 31,
	2017						2016
	As Reported		Adjustment		Adjusted ⁽¹⁾		As Reported		Adjustment		Adjusted ⁽¹⁾

NEW AWARDS
NEW AWARDS
Engineering & Construction	$	2,236,173	$	3,626	$	2,239,799	$	341,665	$	(18,247)	$	323,418
Fabrication Services	446,260		—		446,260		374,139		(450)		373,689
Technology	160,354		—		160,354		83,620		—		83,620
Capital Services	—		468,732		468,732		—		416,672		416,672
Total	$	2,842,787	$	472,358	$	3,315,145	$	799,424	$	397,975	$	1,197,399

REVENUE
REVENUE
Engineering & Construction	$	1,280,753	$	4,836	$	1,285,589	$	1,536,361	$	(20,033)	$	1,516,328
Fabrication Services	478,572		(1,992)		476,580		533,706		(16,130)		517,576
Technology	68,027		—		68,027		64,562		—		64,562
Capital Services	—		534,209		534,209		—		569,267		569,267
Total	$	1,827,352	$	537,053	$	2,364,405	$	2,134,629	$	533,104	$	2,667,733

INCOME FROM OPERATIONS
INCOME FROM OPERATIONS
Engineering & Construction	$	5,414	$	4,262	$	9,676	$	108,073	$	3,847	$	111,920
Fabrication Services	52,059		1,802		53,861		37,110		1,139		38,249
Technology	21,515		225		21,740		26,149		132		26,281
Capital Services	—		12,755		12,755		—		11,490		11,490
Total	$	78,988	$	19,044	$	98,032	$	171,332	$	16,608	$	187,940

	March 31, 2017						December 31, 2016
	As Reported		Adjustment		Adjusted⁽¹⁾		As Reported		Adjustment		Adjusted⁽¹⁾
BACKLOG
BACKLOG
Engineering & Construction	$	10,792,597	$	32,218	$	10,824,815	$	9,871,208	$	45,740	$	9,916,948
Fabrication Services	2,060,384		(1,510)		2,058,874		2,117,567		(3,017)		2,114,550
Technology	1,095,801		—		1,095,801		1,025,723		—		1,025,723
Capital Services	—		5,296,059		5,296,059		—		5,398,012		5,398,012
Total	$	13,948,782	$	5,326,767	$	19,275,549	$	13,014,498	$	5,440,735	$	18,455,233

⁽¹⁾

The summary unaudited adjusted segment data is presented excluding the impact of the classification of our Capital Services Operations as a discontinued operation. This presentation is considered a non-GAAP financial measure, which we believe provides a better indication of our operating results prior to the sale of our Capital Services Operations.

Chicago Bridge & Iron Company N.V.
Reconciliation of Non-GAAP Supplemental Adjusted Financial Data
(in thousands, except per share data)

	Three Months Ended March 31,
	2017								2016
	As Reported			Adjustment		Adjusted ⁽¹⁾			As Reported			Adjustment		Adjusted ⁽¹⁾

Revenue	$	1,827,352		$	537,053	$	2,364,405		$	2,134,629		$	533,104	$	2,667,733
Cost of revenue	1,676,401			502,793		2,179,194			1,879,059			501,069		2,380,128
Gross profit	150,951			34,260		185,211			255,570			32,035		287,605
% of Revenue	8.3		%			7.8		%	12.0		%			10.8		%

Selling and administrative expense	73,057			13,038		86,095			80,946			11,651		92,597
% of Revenue	4.0		%			3.6		%	3.8		%			3.5		%

Intangibles amortization	6,486			2,550		9,036			7,077			4,200		11,277
Equity earnings	(7,611)			(264)		(7,875)			(3,605)			(385)		(3,990)
Other operating expense (income), net	31			(108)		(77)			(180)			(39)		(219)
Income from operations	78,988			19,044		98,032			171,332			16,608		187,940
% of Revenue	4.3		%			4.1		%	8.0		%			7.0		%

Interest expense	(24,101)			(6,863)		(30,964)			(20,065)			(5,833)		(25,898)
Interest income	1,228			9		1,237			2,180			309		2,489
Income before taxes	56,115			12,190		68,305			153,447			11,084		164,531

Income tax expense	(13,704)			(2,696)		(16,400)			(39,524)			(5,045)		(44,569)
Net income from continuing operations	42,411			9,494		51,905			113,923			6,039		119,962
Net income from discontinued operations	9,494			(9,494)		—			6,039			(6,039)		—
Net income	51,905			—		51,905			119,962			—		119,962

Less: Net income attributable to noncontrolling interests ($413 and $448 related to discontinued operations)	(27,250)			—		(27,250)			(13,037)			—		(13,037)
Net income attributable to CB&I	$	24,655		$	—	$	24,655		$	106,925		$	—	$	106,925

Net income attributable to CB&I per share (Basic):
Continuing operations	$	0.16		$	0.09	$	0.25		$	0.97		$	0.05	$	1.02
Discontinued operations	0.09			(0.09)		—			0.05			(0.05)		—
Total	$	0.25		$	—	$	0.25		$	1.02		$	—	$	1.02

Net income attributable to CB&I per share (Diluted):
Continuing operations	$	0.15		$	0.09	$	0.24		$	0.96		$	0.05	$	1.01
Discontinued operations	0.09			(0.09)		—			0.05			(0.05)		—
Total	$	0.24		$	—	$	0.24		$	1.01		$	—	$	1.01

Weighted average shares outstanding:
Basic	100,451					100,451			104,803					104,803
Diluted	101,360					101,360			105,785					105,785

⁽¹⁾

The summary unaudited adjusted financial data is presented excluding the impact of the classification of our Capital Services Operations as a discontinued operation. This presentation is considered a non-GAAP financial measure, which we believe provides a better indication of our operating results prior to the sale of our Capital Services Operations.

SOURCE CB&I