The old joke about Chicago Bridge & Iron (NYSE:CBI) is that the company is not in Chicago, doesn't build bridges, and doesn't use iron. Instead, CBI -- which is run from Texas and taxed in the Netherlands -- is a leading designer and builder of energy infrastructure. The company did get its start as a Chicago bridge builder in 1899, but soon shifted to the construction of liquid storage tanks for railroads and the oil industry. Now its projects run the gamut from liquefied natural gas (LNG) export and import terminals to refineries and nuclear reactor containment vessels.
With capital spending on energy infrastructure around the world now topping $1 trillion a year, and $95 billion projects currently on the drawing board, Chicago Bridge & Iron is uniquely positioned to capitalize on the technological and economic changes transforming the industry. CBI gambled heavily last year on a pricey takeover of power plant builder Shaw Group, a company of similar size. The merger balanced CBI's mostly international footprint with Shaw's largely domestic exposure, diversified the client roster to include many U.S. utilities, and gave the combined company the extra heft it craved to become an indispensable partner on many of the coming mega-projects.
CBI has said the acquisition will boost earnings per share 10% this year. The acquisition doubled CBI's workforce to 50,000, amid an infrastructure building boom that is demanding ever-rising numbers of skilled workers. It offers the chance to sell Shaw's construction expertise to CBI clients in the petrochemical industry. And it added the predictably recurring revenue from Shaw's plant services and environmental contracting units, lessening CBI's reliance on lumpy construction contract awards.
Revenue rose 21% last year and earnings per share jumped 20%, both in excess of expectations. The contract backlog swelled 21% as well, thanks to a strong $7.3 billion of new business. That included $2.9 billion in the most recent quarter for storage tanks and spheres in Saudi Arabia and Ecuador, a carbon dioxide removal plant for Exxon Australia, offshore marine work in the North Sea, and petrochemical technology in Singapore, South Korea, and the U.S. CBI is projecting another 19% sales increase this year, excluding the Shaw acquisition. On the same basis, the midpoint of the earnings per share guidance assumes a 14% increase in 2013.
Shaw has attractive niche businesses, such as its pipe-making business, a natural fit with CBI's storage expertise. And its government environmental contracting business -- potentially including a lucrative contract at a plant that will convert weapons-grade plutonium into reactor fuel -- contributed nearly as much revenue before the merger as the powerplant building unit. Meanwhile, CBI's expertise in liquefied gas storage places it on the leading edge of a rapidly growing transcontinental trade in this increasingly attractive fuel. Contracts are due to be awarded this year for a $30 billion LNG export terminal to ship Australian natural gas to east Asia, and another such facility near a huge gas field on the Arctic coast of Russian Siberia.
Rapid advances in drilling and transportation technologies mean that the locations of energy sources and the methods for converting them to power are changing faster than ever, stoking huge demand for new energy infrastructure. The newly enlarged CBI stands out as a major beneficiary. We're adding it to our Growth Portfolio.