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Executives

Chris Sammons – Vice President, Investor Relations

Jim Bernard – Chairman of the Board, President, Chief Executive Officer

Brian Ferraioli – Executive Vice President, Chief Financial Officer

Analysts

Andy Kaplowtiz – Barclays Capital

Barry Bannister – Stifel Nicolaus

Scott Levine – J.P. Morgan

Jamie Cook – Credit Suisse

Justin Hawk – Robert W. Baird

[Brian Omer – Pritchard Capital]

Shaw Group Inc. (SHAW) Q2 1010 Earnings Call April 7, 2010 5:00 PM ET

Operator

Welcome to the Shaw Group’s second quarter 2010 conference call. (Operator Instructions) I will now turn the call over to Mr. Chris Sammons.

Chris Sammons

Good afternoon everyone. Thanks for joining us today. First of all, I’d like to remind everyone that we posted a slide presentation to our website as usual. You can access that at shawgrt.com. The slides are available on home page or the investor relations page. We’ll reference those slide during the call today by number as we proceed.

Leading the call today are Jim Bernhard – Chairman of the Board, President and Chief Executive Officer of Shaw and Brian Ferraiolo, Executive Vice President and Chief Financial Officer.

Now I’d like to refer everyone to Slide 2 which addresses the use of forward-looking statements on our call today, and the Regulation G reconciliations for non-GAAP items. Please consider this cautionary information appropriately with respect to today’s presentation.

We’ll have a question and answer period at the end of our prepared remarks and the operator will give you instructions for the Q&A session. Now I will refer you to Slide 3, and turn the call over to Jim Bernhard, our Chairman.

Jim Bernhard

We had a good quarter. Earnings were driven by strong execution particular in environmental infrastructure group. We continue to have volatility in the Westinghouse segment. This quarter we have a gain with the increase with the Yen/Dollar denomination, $24 million after taxes.

Again, we had strong quarterly operating cash flow of $106 million, bringing us to a record cash balance of $1.7 billion. Quarterly bookings remain slow in the Petrochemicals business and the international domestic nuclear projects remain as we have planned.

Let me turn over the financial review to Brian.

Brian Ferraioli

Looking at Slide 5, shows the new work for the quarter just under $900 million. As Jim mentioned some of the markets we’ve been serving remain a bit slow as expected. We did not expect a large booking quarter.

You look at our backlog, it remains healthy at $21.3 billion and at the bottom you can see the work off over the next 12 months of approximately $5.5 billion which has remained fairly consistent with some of our prior periods.

Turning to Slide 6, looking at the financial summary, revenues were relatively flat from a year ago. You see that gross profit was up rather significantly from the prior year’s quarter when we had some charges. Gross profit percentage as well is up. The EBITDA at $86 million, net income for Shaw $42 million and $0.49 on a diluted EPS basis.

As we routinely do, we look at the numbers excluding the Westinghouse segment as Jim mentioned continues to have volatility in the marking to market of the Yen denominated bonds. This quarter we had a $36 million pretax and $24 million after tax gain due to the strengthening of the U.S. dollar versus the Japanese Yen, and I’ll talk a little bit about that later on in the presentation.

Turning to Slide 7, looking at the segment results, again in total our revenues excluding flow through our customer supplied materials on which we gain no profit or loss, we were flat, and again the gross profit up as I mentioned, significantly from a year ago.

Looking at the individual segments, the Fossil, Renewables and Nuclear segment, the revenues were flat compared to a year ago, but the mix is significantly different than it was in the prior year. We have $150 million less in revenues relating to air quality control projects, primarily referred to as scrubbers, than we had a year ago.

That was made up by a similar increase in new builds of power plants, particularly gas and the beginning of the nuclear EBBC power plant. Our gross profit you see is up significantly from a year ago, but the group did suffer from some weather related delays. A lot of rain in the southeast over the quarter which delays progress on contracts and increases the cost on some of those contracts as well, and that’s reflected in the Fossil, Renewable and Nuclear segment results.

E&C had a very strong quarter. You see the revenues relatively flat from a year, which considering the slowdown in bookings in that industry in general is quite good. You see the earnings are still strong, albeit down from a year ago where they were having record earnings. You see the gross profit percentage remains quite healthy at 20.5%.

Maintenance continues to perform well, as well. Their revenues were relatively flat from a year ago, but their earnings are up and the gross profit percentage is up which is encouraging. They are performing more work based upon performance, so work fees, and if they perform well, they earn more, and that’s indicative in the quarter’s results.

I remind everyone that typically, the second quarter is a relatively slow quarter for them. They have the seasonal outages in the power plants where they are very busy typically in our first and third fiscal quarters.

Moving on to E&I, they continue to perform extremely well. You see their revenues are up from a year ago reflecting the continued spending from the U.S. Federal Government. You see earnings continue to rise and the gross profit percentage is also up. And that again, is driven a lot by performance. They have many of their contracts have award fees based upon their performance, and if they perform well, they earn more.

Moving on the Fabrication and Manufacturing group, as we’ve been signaling for some time, their volume of business is down from a year ago, and that’s primarily related to the process industry, is refining, petrochemical etc., which are slow and therefore the pipe fabrication, steel fabrication for that business has dropped off. But you see the earnings remain quite strong at $24 million of gross profit and a gross profit percentage of 20%.

Moving on to Slide 8, talk a little bit more about Westinghouse. If you look at the blue bar all the way to the right, it shows that we have a pretax gain of $39 million for the quarter, and that was with a Yen/Dollar exchange rate of 88.9 which occurred at that point in time.

Contrast that with the blue bar all the way to the left at the end of our first quarter when the rate was 86.6 Yen to the Dollar, we recorded $102 million in foreign exchange currency loss. In between, I plotted here at various points in time what the exchange rate was in an attempt to show the volatility that our reported GAAP earnings have just as a result of marking to market the Yen associated with our Westinghouse bond.

When I looked at the rate this morning, it was approximately 93.7%. If that were the rate at the end of our third quarter, we would record a $75 million gain. So hopefully you see from the chart here that the volatility of earnings is pretty significant just as the movement of the Yen/Dollar exchange rate moves around, and hence why we look at all our internal data excluding the impact of the Westinghouse foreign exchange gains and losses.

Moving on to Slide 9, looking at the cash balance, as Jim mentioned we’re just a hair under $1.7 billion in cash balance. That’s after generating operating cash flow of a little over $100 million and CapEx for our second quarter was approximately $41 million. So again, we are spending some of this money but we continue to build our cash balance and we continue to evaluate the best way we can redeploy that cash in order to generate shareholder value.

With that, I’ll pass the call back over to Jim. He’ll talk about the operations on market aspects of the presentation.

Jim Bernhard

Turn your attention to Page 11 on power. We continue to execute our existing nuclear contract and the markets remain as expected, very, very robust on nuclear upgrades. We expect to build several of those this year. Gas builds is certainly several projects out there we are currently expect to be awarded over the next 12 to 18 months as opposed to coal plants as we have pictured to the left.

International nuclear prospects, regions, Pacific, China Europe, Brazil are expected to bear fruit in the next 18 to 24 months, so those prospects are prospects that we’re actively bidding on and pursuing at this time. The nuclear market remains about as we expected. I wouldn’t say any better, but our expectations are pretty robust.

The fossil market of course beside the maintenance market is pretty slow, particularly in coal and we wouldn’t expect much if any activity except for scrubber projects for the next 24 months.

If we look on Page 12, on the upgrades to utilities, we expect that in our C application for power upgrades, as you see in the graph, and you multiply by $250 million to $300 million for the SBU’s you expect that a lot of this falls right into our bailiwick so to speak because of our maintenance contracts.

We have about 40% to 50% of all the nuclear units in the United States, so this is a big part of our growth over the next three to five years, and one that we have done a lot of this work in the past, and we feel particularly because we have the maintenance contracts at existing utilities.

Turning to Page 13, a lot of our clients are waiting for the new rules, CARE rules to come out this month, Mercury will be next year. We’re certainly one of the market leaders in the quality control business and in the past 10 years, about one-third of the domestic coal fired power plants were scrubbed, exists two-thirds of these plants have to be scrubbed or converted to gas, etc., they would have to quit producing at some period of time in the future.

I think what’s happening here in the market for the next six months, our clients are waiting to see exactly what the parameters are going to be to, under the air quality rules under the new administration before they go forward on these major investments.

On Page 14, we anticipate strong rebound for gas combined cycle plants. The picture there is current one we’re doing in Allen Station in Nevada. I believe we have currently three or four plants that we’re building today. The markets have slowed but we expect awards at least as strong going forward to 2011 and beyond.

On Page 15, Southern Company was awarded the loan guarantees for Plant Vogel. If you look to the right at the top of the slide, $3.4 million of loan guarantee certainly is a significant step and accelerating new domestic nuclear construction and corresponding job growth and it just gives you some of the activity that we have ongoing at Plant Vogel.

On Page 16, again more pictures of activities that we began back in 2009. To date we’ve moved over 6.5 million cubic yards of earth and 1.5 million man hours have been worked on this project, so a significant undertaking has occurred on this first nuclear plant that we’re building in the U.S.

On Page 17, much the same activity. We signed the APC contract in May of ’08. We’re performing site preparation. The construction will have up to 3,500 employees here. To date, over 6.9 million cubic yards of earth moved, approximately 1.3 million man hours worked on the project. So these projects are well underway and millions of man hours have already been spent on the building of these nuclear power plants.

On the Progress project, we had previously announced that commercial operations has been delayed. We continue to provide field engineering work to support the licensing and permanent process and over the next 12 to 18 months we’ll have further definition on the time frame of the execution of these two particular contracts.

Page 19, you see the progress we are making on [Sanying] and [HaiYang]. The containment vessel is being placed in the picture to the left and the setting of the CA modules for completion in February. These units are about two years ahead of the ones we’re doing in the U.S.

Page 20, Energy and Chemicals market overview certainly contains solid execution of our ethylene plants in Asia and the Middle East to emerge as the world’s largest ethylene producing regions at the completion of the building of the plants under construction. Project proposals continue to be reviewed by clients, but the timing of firm investment decisions remain uncertain at this time, but certainly can see that we do very well on existing work.

Market overview of the Fab and Manufacturing, continued solid backlog, especially with the nuclear work beginning in our fabrication facilities. To the right is our newest facility that has just been completed and the nuclear work is expected to begin impacting our financial results in late ’10 and early fiscal 2011.

We’re commencing building a new plant in the Middle East under our new international joint venture partner which at this time we can’t disclose until six months from now, but the plant is under construction which is a major activity for us in that part of the world.

Moving to Environmental Infrastructures, certainly we continue to have solid execution in this area of our business. On the bottom on Page 22 is over 2.2 miles that we’re building the largest project ever by the engineering and construction by the Core of Engineers. It’s on the inner harbor navigational cannel which is due to prevent storm surges in the New Orleans area.

At the top of the page you’ll see the MOX project. This project is over $5 billion, a project that we’re doing at Savannah River. This fuel fabrication facility takes spent fuel from weapons that have been dismantled and processes the fuel into fuel for operating nuclear power plants, so those are very big projects and Environmental Engineering continues to benefit from the excess spending of government spending acceleration projects to this space.

If we look at Page 23, our guidance going forward remains the same with one exception. Operating cash flow of $375 million, and that includes the, we’re going to use $150 million that we have in excess, $375 million disbursement for voluntary early procurement program. There’s some soft places in the market that we’re going to take opportunities using our cash to buy on an accelerated basis, which should turn into profit next year and the following year.

In conclusion, on Page 24, our Q2 produced solid results with good execution. We continue to record cash flow. Eight nuclear reactors continue as planned throughout the world. Client initiated progress, our levy continues to be manageable at this point.

Market activities increased in nearly all our business segments and as we spoke earlier, our guidance will remain unchanged.

At this time we’ll open up the lines for questions.

Question-and-Answer Session

Operator

(Operator Instructions) Your first question comes from Andy Kaplowtiz – Barclays Capital.

Andy Kaplowtiz – Barclays Capital

Is it possible to give us a little more detail on the nuclear margins. I know you mentioned weather. I know the margins ticked down obviously from last quarter. You know we saw that you gave a [inaudible] to the customer and we know Excel Comanche is out there still. How much of the lower margin was these legacy projects and how much was weather and how much do we bounce back as we go forward?

Brian Ferraioli

The short answer on the legacy projects is very little of the legacy projects. If you’re considering [Klicko] and Comanche, I think you mentioned, very little. Very little impact on the quarter.

In terms of the weather delays, I’m not going to quantify how much we could have earned, because you don’t really know. I don’t want to be anticipating what the profit would have been if the weather were normal or good, but it was driven more by the weather and those related costs on those existing projects not on the legacy ones.

Andy Kaplowtiz – Barclays Capital

I guess the struggle for us is that you were able to do 7% or 8% margins before you started having issues as the so called legacy projects started to end, and now we have much lower than that, so we’re just trying to figure out what the margins can look like over the next year. I assume better than what you did in the quarter, but I just don’t know how much better.

Brian Ferraioli

What I can tell you is basically we’re talking single digits in terms of the millions of dollars. We’re not talking tens of millions of dollars.

Andy Kaplowtiz – Barclays Capital

One thing, referring to the E&C space, you had talked about over the last couple of quarters that there’s a bunch of bids that were out there that you were hoping you would get rebid at some point in 2010 and you didn’t really mention that today, so I’m wondering has your tone maybe gotten more slightly muted around these customers who sort of drag their feet or are you saying you’re still hopeful that things will go forward, but timing is still uncertain?

Jim Bernhard

I think it would the latter that timing is still uncertain and our position hasn’t changed. I don’t think it’s more muted at all. I think that we’re encouraged that the customer is still active and looking at these proposals and we hope that in our next quarters they’ll become projects.

Andy Kaplowtiz – Barclays Capital

Obviously it’s been very public the Obama administration is said and done around nuclear. Have you seen any change in the mentality of your customers? Have they said, okay it looks like it’s safer to spend in nuclear? Is it kind of slow but steady wins the race?

Jim Bernhard

Maybe a little pick up on the upside but I think a lot of the customers maybe knew that was coming and these guys are pretty politically savvy and saw that coming for a good period of time, that $18 million wouldn’t nearly be enough. I think with the influence of the organized labor in the political arena today, that’s a big component of nuclear power. We feel pretty comfortable that that’s going to be part of the mix going forward.

Operator

You're next question comes from Barry Bannister – Stifel Nicolaus.

Barry Bannister – Stifel Nicolaus

Of the $1.65 billion of cash, you mentioned $300 million is restricted or escrowed, but can you give us an idea net of contract capital what would be the free portion of cash that you could spend on any number of things?

Brian Ferraioli

First of all, let me correct one point. The restricted cash that’s on our balance sheet if that’s what you’re referring to, the big number primarily relates to cash that we are using, the cash collateralized letters of credit I can get that cash anytime I want. It’s just economically beneficial to use to avoid the fees associated with having a letter of credit issued, versus the return that we would get by just simply investing the cast in some short term type instrument.

So the amount of cash on our balance sheet that’s restricted is nominal. It’s virtually measured in $10 million or $20 million.

Barry Bannister – Stifel Nicolaus

Net of billing and net of payables, what would you free cash be then?

Brian Ferraioli

Again, we come back to this question frequently on these calls. We don’t have any advance payment from our clients first of all, so we don’t have to send any money back to any client if a project were to stop for any reason. Now we do have cash that’s in excess of our earnings, so we have favorable working capital movement. That’s what we always try to do.

So to answer your question, it’s really dependent upon what you think future bookings will be. If we continue to book work there’s no reason why this cash balance should do anything but go up. If you assume you don’t book anything else, obviously some of that money would go back till you arrive at the profit on the individual projects as the cash exceeds the profit on the budget. But then we’d have much bigger problems.

Barry Bannister – Stifel Nicolaus

You’ve moved a lot of dirt. You’ve done a lot of design, but you really need to COL to proceed in would think on some of the nuclear work that you have ongoing so how much of a lull is there between the anticipated COL date and the amount of work that you can do and have already completed?

Jim Bernhard

We’re beginning to do nuclear off site building modules. We’re going to be shipping modules the later part of this year. We’re beginning piping the later part of this year, so we’ve bought equipment etc., so our schedules calls for us to blend right in with the execution of the COLA in early middle of 11 I believe it is.

Barry Bannister – Stifel Nicolaus

F&M is around 20% in first half with the nuclear and the Mexico costs I would expect it to get back to 24% to 24%. Is that your anticipation that over time the margin would go up or are we stuck at 20% as the new normal?

Jim Bernhard

That’s a little bit more difficult to answer because the mix on the nuclear work, it may increase somewhat because most of that is labor components only, so therefore the percentage on sales will be increased and I don’t have that exact mix.

Operator

You're next question comes from Scott Levine – J.P. Morgan.

Scott Levine – J.P. Morgan

You had a slide in the deck last time, and you indicated you were adding a number of options on the uses of cash and you mentioned the purchase of equipment as one option. Should we assume that others are off the table? Are you still actively considering other uses of excess cash including returning cash to shareholders at this point?

Jim Bernhard

Nothing has changed from the last presentation. We’re still considering all of our options. It’s just that we’re further along in the process now on the procurement activities that we had mentioned previously, and now we’re actually starting to place orders with vendors.

Scott Levine – J.P. Morgan

Regarding scrubbers, you mentioned depending on what the new regulation looks like you should have that visibility in three to six months. Depending on how that turns out as your thought process that you could see scrubber and bidding activity pick up by the end of the fiscal year, this calendar year? What are your thought?

Jim Bernhard

Two-thirds of the coal plants are going to have it. They’re either going to have scrubbers put on them, they’re going to be decommissioned or they’re going to go converted to gas. So in all three cases, it’s activity with work for us to do.

Once the rules become clear, we’ll proceed. Our clients will proceed with what’s most economical for them. So it’s the next 36 months are important decision making process for our customers.

Scott Levine – J.P. Morgan

When you gave initial guidance for this fiscal year in the fourth quarter ’09 fiscal call, you indicated you thought backlog would be up year over year at the end of this year versus Q4 ’09. Is that still your anticipation?

Jim Bernhard

Yes, we think so.

Operator

You're next question comes from Jamie Cook – Credit Suisse.

Jamie Cook – Credit Suisse

On the Fossil and Nuclear side, I’m just trying to get a feel for how you guys [inaudible] revenues in the back half of the year relative to the first half, if that should be comparable or if it should be down, because I’m just trying to think about that relative to where your backlog is outside of nuclear. The Fossil component keeps sort of compression so I’m wondering if the revenue is going down in that area. And then just trying to figure out how you’re thinking about your – you mentioned in your press release you expect to increase contribution from your nuclear project. Is that a signal that things are moving quickly and that has a bigger contribution to 2010 EPS and how we think about your – historically you put out an EBITDA target for the next three years or so, how we think about that. Has that changed at all?

Jim Bernhard

I think I got all that. The first question?

Jamie Cook – Credit Suisse

The first question was on the Fossil and Nuclear about how to think that revenues in the back half relative to the first half.

Jim Bernhard

If anything, we think revenue should increase. As we mentioned with the weather delays, we didn’t have the progress that we thought we could achieve and assuming that we don’t have some adverse weather conditions going forward, we would think that revenues would be able to increase.

Regarding the nuclear projects, they are proceed pretty much as expected with the projects in China as well as the southern and the project and progress, the situation has remained pretty much the same for quite a number of quarters now, so we don’t anticipate any change from any of the guidance that was previously given related to this work.

Operator

You're next question comes from Justin Hawk – Robert W. Baird.

Justin Hawk – Robert W. Baird

A quick question on the guidance. Is it fair to assume that if new order hover at the level they have in the first two quarters of 2010 that we can still hit the guidance or do we have to see the orders increase in the second half?

Jim Bernhard

The short answer is the majority of the work we’re going to do this year is all coming from work that’s already in backlog. So yes, booking new work is always helpful. It always has some contribution, but the bulk of the activity of our forecast for the year is based on work that we already have and have had for some time.

Justin Hawk – Robert W. Baird

So in other words if we continue to book about $1 billion a quarter, that would be consistent with what your current guidance is?

Jim Bernhard

We would hope to be booking more than that, but booking at reduced levels would have more of an impact in 2011 and beyond than it would on 2010. We’re half way through the year. By time you book a job, you start to execute work, you start to get your percent completed is small in the beginning, particularly when you’re doing the engineering work which in itself is a relatively low component from a weighted average perspective of the overall project. You don’t achieve a lot of earnings from new bookings within the first three to six months of a project.

Justin Hawk – Robert W. Baird

In the E&C segment with the margins picking up pretty nicely sequentially I’m just wondering, are these levels sustainable or was there anything kind of one time in the quarter that maybe we should back out when we’re thinking about going forward?

Jim Bernhard

They’ve just been performing well. There’s no significant one time event or unusual event. They performed well. They have some incentives in their contract. They achieved the incentives. They accrue the earnings.

The question is more related to what booking would be and the targets say those bookings in the future going forward, to actually book them.

Justin Hawk – Robert W. Baird

In the E&I business, I know some of your peers had talked about some of the Army Corp of Engineers’ work being slow to move forward. Just any update on what you’re seeing in terms of the activity there and what your expectations are?

Jim Bernhard

They’re moving forward as we expected. Expectation of the compensation and there’s a lot of other work we’re looking at with the Core. Core historically has been our biggest client.

Operator

You're next question comes from Barry Bannister – Stifel Nicolaus.

Barry Bannister – Stifel Nicolaus

If I look at the news releases in the last six months for the old legacy work, one thing that I haven’t resolved yet is that it says that Shaw Group was suing Excel Energy for $55 million for breach for breach of contract on the construction on Comanche Three and I’ve never seen a resolution of that. Is that still outstanding and is that job finished?

Jim Bernhard

Yes.

Barry Bannister – Stifel Nicolaus

It’s outstanding, the job’s finished, both?

Jim Bernhard

Yes.

Barry Bannister – Stifel Nicolaus

Have you accrued that amount and it’s just pending reimbursement from the client or is it something else?

Jim Bernhard

What I suggest is you take a look at the Q which should be filed, if not filed already, it should be filed momentarily and we have some disclosure in there about that litigation.

Barry Bannister – Stifel Nicolaus

You were awaiting the U.K. in particular was awaiting the revised Westinghouse design before deciding to go forward with Westinghouse 18,100 units for some of the nuclear projects in the U.K., at least that’s what I was gathering from the readings. Have you from the Health and Safety Executive, the HSC, have you heard that as well and where do we stand on that revision of the containment structure?

Jim Bernhard

It’s a revision that’ in process. It’s not a major obstacle to contracts in work.

Barry Bannister – Stifel Nicolaus

There was an article that China plans to build its own fourth co-called generation nuc and they referred to the Westinghouse AP 1000 in the article as a third generation. I’m not sure I’d say that they’re really ready to roll out something better than what you have, but be that as it may, do you think that you’ll be able to proceed with and receive a good number of future Chinese nuclear awards or were these first two really more of a test bed proof of concept for both you and them, and we wouldn’t expect too many more on the backend?

Jim Bernhard

A lot of these international magazines and articles are more fantasy than facts and are discretions to convey information that may or may not be accurate and quite frankly, we don’t really keep up with that sort of comments or those type of articles. I will say that we do anticipate as we’ve said all along on the new projects that Westinghouse want to take in China, we anticipate participating but to a less extent on each one that goes forward.

Operator

You're next question comes from Andy Kaplowtiz – Barclays Capital.

Andy Kaplowtiz – Barclays Capital

So this extra $150 million in cash disbursements, this is essentially, I don’t know, is it sort of raising the guidance from $375 million and extra $150 million is you’re still going to do $375 million. Am I reading it right?

Brian Ferraioli

You are. That $150 million is still being developed. It really an opportunistic target that we have looking to as Jim mentioned take advantage of some softness in the market so either taking advantage of price discounts or at the minimum having price certainty.

Andy Kaplowtiz – Barclays Capital

So you didn’t change your guidance, but you’re essentially getting gross of inventory that we didn’t know about last quarter.

Brian Ferraioli

We had mentioned this, at least last quarter. I don’t remember how many quarters that we’ve talked about the possibility. It’s just that we’ve now actually started to place some of the orders or are getting more and more confident about being able to place additional orders as we go forward. So all we’re trying to do is update what we had tried to indicate in the past.

There is an uptick though in the total amount of cash available when you consider $375 million plus we may do up to $150 million of these early procurement activities.

Operator

You're next question comes from [Brian Omer – Pritchard Capital]

[Brian Omer – Pritchard Capital]

I wanted to hone in a little bit on the E&C segment. The slide is talking about ethylene and ethylene projects moving forward. I was just curious what kind of growth do you think we can put in on the oil rate or is it E&C and do you expect that to be a driver for the business in the future going out?

Jim Bernhard

Ethylene is one of our core technologies. It’s always a driver for our energy and chemical and while we’re talking about the completion of plants in Asia, there are activities on new plants that we’re proposing in the Far East. So we do consider that to be an important part of our business over the next 12 months as it always is.

[Brian Omer – Pritchard Capital]

I’m trying to look at that segment with a flat order rate sequentially, is that, where should we anticipate the next couple of quarters or do you think there’s some growth beyond that?

Jim Bernhard

I think we would hope the bookings pick up. If you’re asking us to project how much of that will be ethylene versus something else, that’s a little bit more difficult and we’ve haven’t gotten into that level of detail.

Clearly with oil at $85 plus and the economy picking up on a global basis, we think it’s more a matter of when rather than if the bookings will pick up.

Chris Sammons

Before we end the call today I’d like to make a few comments. Glad to have everyone on the call. We appreciate that.

We are announcing today that, or tomorrow morning that Shaw will be hosting an analyst and investor meeting at the end of the month. The analyst and investor meeting will be held in Augusta, Georgia at the Marriott Hotel on Thursday afternoon, April 29 starting around 1:30. Afterwards we’ll host a reception and dinner and we’ll have presentations on Shaw operations and businesses.

The meeting will be led by Jim Bernhard and Brian Ferraioli with business unit presentation from business unit executives and Gary Graphia, our Chief Operating Officer. As usual, we’ll have a live webcast of the meeting and the presentation materials will be available on the website.

So while we have the meeting in Augusta, Georgia, three weeks after the Master’s Tournament, I’m sorry to say, but the reason is that we have arranged with Southern Company, our client for a Friday morning visit to the Vogel Nuclear Power Plant site. This is the site of the Shaw/Westinghouse AC 1000 APC project that you all know about. After the site tour, we’ll have a brief presentation and discussion about the progress on the project and you’ll see where these pictures that are in today’s presentation were made.

You’ll be receiving notice of this meeting by press release or email tomorrow morning, and if you’d like to attend, please respond through that mechanism and we look forward to seeing many of you there. Please respond quickly. We’ll have some logistical issues because security clearance is required for visits to the nuclear plant site.

Again, thank you for being on the call today, and if you have any questions about the earnings call or the upcoming meeting, please give me a call. You all have my number, or by email. Thank you very much.

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Source: Shaw Group Inc. Q2 2010 Earnings Call Transcript
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