Is There Enough Gas In The Tank To Take CB&I Back Up?
Stephen Simpson, CFA • 15 Comments
Stephen Simpson, CFA • 15 Comments
Chicago Bridge: The 2 Sweetest Words
Bumbershoot Holdings • 41 Comments
Bumbershoot Holdings • 41 Comments
Yesterday, 11:53 AM
- Chicago Bride & Iron (CBI -2.1%) is downgraded to Neutral from Buy with a $38 price target, cut from $48, at Citigroup, following Friday's news that CBI had sued Westinghouse Electric to protect itself from a potential $2B claim related to the sale of its nuclear construction business to Westinghouse in 2015 and a subsequent downgrade from analysts at Baird.
- In its downgrade, Citi says it had expected strong and potentially better than expected cash generation after the signed nuclear deal with Westinghouse would drive CBI’s valuation higher over time, but "contrary to expectations, the deal does not allow for 100% indemnification of the company, associated with any future earnings or cash impact from 'troublesome' new nuclear construction projects."
- "Despite our view that CBI likely has good ground to stand on that it shouldn’t owe WEC anything, we move to the sidelines for now," Citi writes.
Fri, Jul. 22, 3:56 PM
- CB&I (CBI -7.1%) is downgraded to Neutral from Outperform with a $40 price target, cut from $45, at Robert W. Baird, as newly filed litigation between CBI and Westinghouse, the company's former EPC consortium partner for U.S. nuclear projects, highlights a ~$2.4B difference in opinion on working capital adjustments associated with last year's nuclear transaction.
- Baird believes the merits of Westinghouse's claims appear without merit but the nuclear overhang for investor has now returned, derailing what was supposed to be a cleaner story.
- The firm says that the news, when combined with fewer fundamental catalysts, caps upside potential and moves it to the sidelines.
Wed, Apr. 20, 5:37 PM
Tue, Mar. 29, 10:50 AM
- Ecopetrol (EC -5.1%) has started legal proceedings in a Colombian court against contractor Chicago Bridge & Iron (CBI -0.8%) for $2B over claims related to its Reficar refinery in Colombia.
- EC has said bad management at CBI increased spending on the project by $4B, double the original $3.99B price tag.
- The Reficar refinery, part of EC's operations near the northern coast of Colombia, reopened late last year after an overhaul meant to more than double capacity to 165K bbl/day.
Thu, Mar. 3, 12:59 PM
- Chicago Bridge & Iron (CBI +2.4%) is named as J.P. Morgan's Top Pick in the engineering and construction sector, with the firm maintaining its Overweight rating and $52 price target while pointing out attractive valuation as well as the robust upside potential.
- JPM believes CBI offers strong risk-reward potential for patient value investors, citing shares trading at 7x near-term EPS, removal of the nuclear overhang, and strong momentum in new business across industries and geographies.
- CBI is among the few fully integrated companies in the E&C sector that could independently execute on large and complex projects, the firm says.
- JPM also points out that 75% of the company's 2016 revenue already is in backlog.
Wed, Feb. 10, 12:38 PM
- Colombia's government is preparing a complaint against contractor CB&I (CBI -3.2%), which directed construction on the newly renovated Reficar refinery, after accusations that poor management sent the project ~$4B over budget, Reuters reports.
- The refinery, part of state-run Ecopetrol (EC +1.8%), reopened late last year after a multi-billion-dollar overhaul meant to increase its capacity to 165K bbl/day from 80K bbl/day to 165,000.
- Colombia's comptroller estimates final costs came in at $8B vs. the original $4B projection, although EC says the total is still being calculated.
Oct. 28, 2015, 3:50 PM
- Chicago Bridge & Iron (NYSE:CBI), which jumped after hours yesterday on news it was selling its nuclear construction business, is up 15.9% today as Credit Suisse says it's time to buy.
- Shares had fallen 22% in the past six months prior to the move.
- Credit Suisse has upgraded shares to Outperform, from Neutral, and raised its price target to $51 from $45. Shares had closed at $38.96, implying 31% upside.
- The Vogle and Summer construction projects had been a significant overhang on CB&I, says Credit Suisse's Jamie Cook, over concerns about fixed-price contracts with delays and overruns. A charge of $1-$1.2B is "large," says Cook, but "we see this as a positive catalyst as the charge is now known, over, and non-cash.”
- As previously noted, CB&I's deal with Westinghouse excludes a variety of CB&I's businesses, including fosil power generation, nuclear/industrial maintenance, the MOX project and Fed decommissioning.
- Previously: Westinghouse picks Fluor to manage nuclear builds; CB&I now up 10.4% (Oct. 27 2015)
- Previously: CB&I selling nuclear construction business to Westinghouse Electric (Oct. 27 2015)
Oct. 28, 2015, 9:12 AM
Oct. 27, 2015, 5:49 PM
- Chicago Bridge & Iron (CBI -3.8%) is selling all of its nuclear construction business to partner Westinghouse Electric (OTCPK:TOSYY -2.1%).
- The deal -- in which Westinghouse will fully take over facilities including South Carolina's V.C. Summer project, Georgia's Vogle project and various projects in China -- is expected to close in Q4 and includes CBI's nuclear integrated services.
- "For CB&I shareholders, it provides clarity and increased predictability from our growing backlog of work in markets that are more strategic to our future growth," says CEO Philip Asherman.
- CB&I expects to receive $229M in cash -- $161M on the substantial completion of nuclear projects and $68M on other milestones tied to CB&I's continuing supply contract. CB&I also expects a noncash charge after taxes of $1B-$1.2B from a loss on the transaction.
- The company also said in preliminary Q3 numbers it expects new awards of about $4B, revenues of $3.3B and positive operating cash flow. It reports earnings Nov. 5.
Jul. 7, 2015, 10:41 AM
Jun. 24, 2015, 3:19 PM
- Chicago Bridge & Iron (CBI -1.9%) is maintained with an Underperform rating and $30 price target by Macquarie, which sees news on nuclear flow continuing to be negative with the likelihood of further project delays.
- The firm notes that milestone activities related to Southern's (NYSE:SO) Vogtle nuclear plant have continued to slip, with only 23.7% of construction completed as of April; CBI CFO Michael Taff has said cost overruns would be borne by partner Westinghouse, but Macquarie thinks that is unlikely and CBI will be held partially responsible.
- While some delays may be related to reactor design amendments, the project schedule also is impacted by "required repair work on... legacy modules from Lake Charles," which the firm says "further confirms that CBI will be held partially responsible."
May 15, 2015, 11:57 AM
- CB&I (CBI +9.3%) soars following a Bloomberg report that Anadarko Petroleum (APC -0.1%) is poised to select it as the main contractor for construction of a potential $15B liquefied natural gas export project in Mozambique.
- The decision is a milestone for one of the few energy mega-projects around the world to move forward after crude prices collapsed last year; APC believes as much as 75T cf of natural gas may lie in the Area 1 prospect off Mozambique’s shores.
- Shares of Fluor (FLR -1.4%), which had been considered a contender for the project, are lower.
May 13, 2015, 3:59 PM
- CB&I (CBI +5.5%) is up sharply following news of a contract award with NextDecade LLC for front end engineering and design services related to the Rio Grande liquefied natural gas export project in Brownsville, Tex.
- Financial terms are not disclosed, but the scope of work includes all design and engineering activities required for the FERC permitting process, as well as for preparation for procurement of critical equipment prior to the final investment decision.
- The project includes plans for up to six liquefaction trains with a nominal output capacity of 4.5M metric tons/year of LNG.
May 8, 2015, 12:59 PM
- Weakness in CB&I (CBI -1.7%) is attributed to news that Toshiba (OTCPK:TOSBF -11.3%), the parent of the company's partner on a nuclear plant construction project, says it will launch an independent investigation committee to examine its accounting for some infrastructure-related projects.
- Toshiba had previously disclosed the formation of a special committee to conduct an internal investigation but has decided instead to have an independent committee further investigate the matter after finding improper accounting on some projects.
- Total capital costs for the nuclear plant project are estimated at $5.2B, or $6.8B including escalation and allowance for funds used during construction.
Mar. 13, 2015, 12:38 PM
- Today's weakness in CBI (CBI -4.6%) appears to be mostly related to news from Scana Corp. (SCG -1.7%) regarding delays and costs related to the construction of nuclear units in South Carolina that CBI is building.
- SCE&G, Scana’s electric utility, said last night that the cost for completing the new nuclear units at the Jenkinsville plant in South Carolina are likely to rise to $11B from its initial $9.8B price tag, and completion of the Unit 2 reactor will be pushed out three years to 2019.
- SCG says the delays and related cost increases are due to design and fabrication issues associated with the production of submodules used in construction of the units, and that it is negotiating with CBI and Westinghouse regarding the responsibility for delay costs.
- Earlier: CB&I's Ballschmiede out as CFO, to be replaced by Flowserve's Taff
Mar. 13, 2015, 10:28 AM
- CB&I (CBI -7.5%) appoints Michael Taff as CFO and executive VP, effective April 1, succeeding the retiring Ronald Ballschmiede.
- Taff has more than 30 years' experience of financial experience, and joins CBI from Flowserve (FLS -3.5%), where he served as senior VP and CFO, after previously serving as CFO of McDermott.
- Ballschmiede had been CBI's CFO and executive VP since 2006, and no reason was given for his retirement.
Chicago Bridge & Iron Co. NV engages in the provision of conceptual design, technology, engineering, procurement, fabrication, construction, and commissioning services to the energy, petrochemical, and natural resource industries. It operates through the following segments: Engineering,... More
Sector: Industrial Goods
Industry: General Contractors
Country: United States
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