Chicago Bridge & Iron N.V. (NYSE: CBI) is a provider of technology and infrastructure for the energy industry. With more than 125 years of experience, the Company provides services, such as conceptual design, technology, engineering, procurement, fabrication, modularization, construction, commissioning, maintenance, program management and environmental services.
President Donald Trump called on the U.S. Congress on Tuesday, Jan 30th to pass legislation to stimulate at least $1.5 trillion in new infrastructure spending. Even If Congress pass a fraction of the amount that Donald Trump is requesting, it could still be a windfall for Chicago Bridge & Iron. Trump claims this program will be the biggest reinvestment back into America since Eisenhower’s interstate highway program, and if he can convince Congress into approving his plan, it could send sales, profits, and share prices surging at Chicago Bridge & Iron and other infrastructure related Stocks.
As a federal and commercial contractor, CB&I’s procurement practices comply with the Federal Acquisition Regulations Uniform Commercial Code, state and local government regulations and established CB&I policies and procedures. CB&I has received continued Contractor Purchasing System Review approval since 1994, demonstrating their commitment to compliance with government procurement requirements.
About the company
Chicago Bridge & Iron Company N.V. provides services to customers in energy infrastructure market. From liquefied natural gas, gas processing, refining, petrochemicals, offshore, oil sands, power, storage, fabrication and technology.
CB&I helps upstream and downstream energy companies to complete projects by performing engineering, procurement, and construction services. The company’s fabrication business makes its money by building steel-plate structures, such as piping systems. Its various projects include liquefied natural gas terminals, electric power-plant projects, and drinking and wastewater pipelines.
Technology
CB&I is a leading licensor of proprietary petrochemicals, refining, gasification and gas processing technologies, and a supplier of proprietary catalysts and related engineering. These technologies are critical in the gasification of coal into syngas, the refining of crude oil into gasoline, diesel, jet fuel and lubricants, and the processing of natural gas into various chemicals and polymers.
Engineering
CB&I offer comprehensive engineering services from conceptual design through startup and operation. CB&I approach each project with seamless processes that link engineering, procurement, fabrication, material management and construction.
Procurement / Supply Chain Management
CB&I span the entire supply chain, from sourcing, purchasing and transportation logistics to inventory control, inspection and quality assurance. In addition to their procurement offices, they maintain fabrication facilities for manufacturing needed components and lay-down yards for storing steel and equipment.
Fabrication Services
CB&I is a leading provider of piping solutions and the world’s largest supplier of storage tanks and vessels for the oil and gas, water and wastewater, and power generation industries. Their fabrication capabilities encompass piping and module prefabrication and assembly, and they also design and build modular gas processing, gas recovery, and hydrogen and synthesis gas production units.
Construction
Field Construction
CB&I provide value-added construction services for their customers. Their projects can be found on all seven continents and include many construction industry “firsts”—the first floating roof tank for storing oil, the first double-wall LNG storage tank and the first LNG peak shaving plant, among others.
Modular Construction
Modular construction offers a number of advantages over conventional “stick-built” construction. The bulk of the fabrication and assembly are performed at CB&I facilities, which allows them to ensure all work is performed according to our high standards, under controlled working conditions.
Startup, Commissioning & Operations
Startup of today’s complex process units and power plants is demanding and requires careful planning and preparation of both the plant equipment and the operating organization. Each activity must be meticulously planned and then executed in the right sequence to avoid expensive delays during commissioning and initial operation.
Major commissioning site activities include:
- Interfacing with the construction team and acceptance of completed systems
- Pre-commissioning activities
- Training and qualification of customer O&M personnel
- Preparation of detailed operating/technical manuals
- Commissioning activities
- Conducting or assisting the customer with startup activities
- Demonstration of all personnel safety devices
- Participating in ramp-up, optimization and performance testing
- Operating services during the warranty period
Market:
Markets Served
Oil, Gas & Chemicals
- Upstream—Offshore oil and gas production systems, pipelines, gas processing
- Downstream—Refining, petrochemicals, hydrogen and syngas production, sulfur processing, gasification
- LNG—Gas liquefaction plants, regasification terminals, peak shaving facilities
Power
- Gas-fired combined-cycle and simple-cycle generating plants
- Clean coal generating plants
- Air quality control services
- New technologies for CO2 capture
Industrial Storage
- Bulk storage terminals, atmospheric and refrigerated storage tanks and vessels, water storage tanks
Analysts Rating and Target price
Analysts mean recommendation for the stock is $19.07 and Chicago Bridge & Iron presently has a consensus rating of “Hold” (where 3 assigned a Buy, 11 assigned a hold and 4 is Sell).
- Jefferies Group set a $15.00 price objective on shares and a “hold” rating in a research report on October 31st.
- Robert W. Baird set a $17.00 price target on shares and a “hold” rating in a research report on January 3rd.
- MKM Partners lowered shares from a “buy” rating to a “neutral” rating in a research report on January 3rd.
- Deutsche Bank cut shares from a “buy” rating to a “hold” rating on December 20th.
- DA Davidson lowered shares from a “buy” rating to a “neutral” rating on December 19th.
Latest Quarter Financial position:
CB&I announced financial results for the fourth quarter and full year of 2017 on Feb. 20, 2018.
New awards for 2017 were $5.8 billion, a 17.0 percent increase over 2016. For the fourth quarter of 2017, new awards were $1.3 billion, an increase of 37.8 percent compared to the fourth quarter of 2016. Backlog was $11.4 billion at the end of 2017 compared to $13.0 billion at December 31, 2016.
For the fourth quarter, revenue was $1.7 billion, compared to revenue of $2.0 billion for the same period of 2016. For the year, revenue was $6.7 billion, compared to revenue of $8.6 billion in 2016.
Stock Influences and Risk Factors:
“CB&I has an attractive prospect list for 2018, and we expect to see good order flow over the course of the year,” said Mr. Mullen.
- LNG – CB&I and its joint venture partners continue to be well positioned in the U.S. Gulf Coast and East African regions to capitalize on the strengthening LNG market. The company is confident that final investment decisions (FIDs) for projects will be made in 2018 because of continued robust growth in global gas demand, more serious offtake discussions between its clients and potential LNG buyers, and the company’s continued active support of developing these projects with its clients.
- Petrochemicals – The company anticipates the strong rebound in the global petrochemicals market experienced in 2017 will continue in 2018 for the Technology group due to growth in ethylene, propylene, and various derivatives, especially in China, Southeast Asia, India and the Middle East. The company also expects new EPC projects will be developed in the U.S., Middle East, Russia and Central Europe regions in 2018, including key ammonia and methanol projects in the U.S. that CB&I is developing through front-end engineering work.
- Refining – The Technology group continues to be well positioned for heavy oil upgrading and octane enhancement opportunities, with the Chevron Lummus Global joint venture coming off a particularly strong 2017, driven by the outstanding technology portfolio CB&I has in upgrading heavy oils to clean fuels. For the other operating groups, CB&I is developing capacity expansion projects in the Middle East, Caspian region and Russia. Specifically, CB&I’s ethylene cracker technology, CLG’s hydroprocessing technologies and Saudi Aramco’s proprietary Thermal to Crude Chemicals (TC2C™) technology will provide the platform for this joint development.
- Gas Fired Power Plants – CB&I’s portfolio of projects with Entergy and Duke continue to be executed very well, and the company continues to focus on other opportunities where strong development work and client collaboration enable bidding and execution on such projects. This year will also be a critical year for demonstrating the commercial viability of the NET Power technology, which the company expects to be a game changer in the power market.
Stock Chart:
CBI’s 52 Week Range is 9.55 – 34.30
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