Thursday, The Shaw Group Inc. (SGR), a provider of engineering, technology, construction and industrial services, reported a loss for the first quarter, hurt by foreign exchange translation losses due to appreciation of the Japanese yen. Excluding the losses, quarterly earnings nearly doubled from last year, reflecting strong growth in operating segments.
The Baton Rouge, Louisiana-based company's first-quarter net loss was $39.92 million or $0.48 per share, compared to net income of $2.23 million or $0.03 per share in the year-ago quarter. The Westinghouse segment, which continues to reflect significant non-cash foreign exchange translation losses due to appreciation of the Japanese yen against the U.S. dollar, posted a net loss $102.7 million or $1.23 per share during the quarter, wider than loss of $35.5 million or $0.42 per share a year ago.
Excluding the Westinghouse segment, total net income climbed to $62.8 million or $0.75 per share from $37.7 million or $0.45 per share in the year-ago quarter.
On average, 14 analysts polled by First Call/Thomson Financial expected the company to report earnings of $0.66 per share for the quarter. Analysts' estimates typically exclude special items.
Shaw, a Fortune 500 company, recorded 11% increase in revenues to $1.90 billion from $1.71 billion in the year-ago quarter, but missed Wall Street estimate of $1.91 billion.
In its preceding fourth quarter, Shaw reported net income of $82.58 million or $0.98 per share, while excluding the Westinghouse segment, net income was $64.7 million or $0.77 per share, on revenues of $1.83 billion.
Among others in the industry, URS Corp. (URS) in early November reported a 70% increase in third-quarter earnings to $65.8 million, helped by higher performance-based fees and incentives on various projects and a 104% increase in revenues.
Commenting on the first-quarter results, Bernhard Jr., chairman, president and chief executive officer of Shaw, stated, "Our operating results exceeded our plan for the first quarter. In spite of the current economic environment, Shaw's operating segments are performing well, and we remain positive about the activity within the markets Shaw serves."
In the United States, Shaw, with about 26,000 employees worldwide, generated revenues of $1.53 billion, representing 80% of total revenues, higher than last year's $1.34 billion last year. Asia/Pacific Rim revenues were $204.8 million, more than double from the previous year, while revenues from Middle East fell to $107.1 million.
First-quarter gross profit increased to $188.09 million from $135.02 million a year ago, and gross margin went up to 9.9% from prior year's 7.9%. Operating income also surged to $114.99 million from last year's $66.13 million. However, the company recorded foreign currency translation losses on Japanese Yen-denominated bonds of $161.20 million, significantly wider than losses of $57.24 million in the prior year.
The company's new awards for the quarter were $1.1 billion, driven primarily by a large combined cycle, natural gas-fired power plant contract within the Fossil Division of the Power Group.
As of November 30, 2008, backlog of unfilled orders was $14.82 billion compared to $14.0 billion at November 30, 2007. The company expects about $6.0 billion, or 41%, of the current backlog to be converted to revenues during the next 12 months.
Net cash used by operating activities totaled $98.9 million during the first quarter compared to net cash provided by operating activities of $108.6 million last year. The company's previous forecast for cash provided by operating activities for fiscal year 2009 remains unchanged at $250 million-$300 million.
Bernhard added, "We continue to experience significant bookings, including the engineering, procurement and construction contract to construct two Westinghouse AP1000 nuclear power units for Progress Energy at its Levy County, Florida site, which we announced earlier this week."
On January 6, Shaw said that it has received an additional commitment from an existing lender to extend $45 million of the lender's commitment under Shaw's credit facility for an additional year. The company noted that with the extension, it maintains the current $1.053 billion of commitments under the credit facility through April 25, 2010, and $874 million through April 25, 2011.
SGR closed Wednesday's regular trading session at $22.17, down $1.45, on a volume of 3.2 million shares. In the past 52 weeks, shares have been trading in a broad range of $11.47 - $69.25.
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