BATON ROUGE, La.--(BUSINESS WIRE)--July 11, 2003--
Revises Earnings Guidance for Fourth Quarter and Fiscal 2004
The Shaw Group Inc. (NYSE: SGR) today announced earnings of $3.1
million or $0.08 per diluted share for the third quarter ended May 31,
2003 after recording an after-tax charge of $8.3 million. Excluding
the charge, earnings for the period were $11.4 million or $0.30 per
diluted share compared to $26.7 million, or $0.61 per diluted share
for the three months ended May 31, 2002.
The charge relates to the after-tax write-off of investments in
marketable securities and accounts and claims receivable from Orion
Refining Corporation (Orion) of $7.8 million and other receivables of
approximately $500,000. Shaw provided construction services at Orion's
Norco, Louisiana refinery in 1998. Orion declared bankruptcy on May
13, 2003. Given the bankruptcy filings, Shaw believes there is minimal
chance of recovery.
Revenues for the third quarter of fiscal 2003 were $824.0 million
versus $902.6 million in the prior year's third quarter. The decline
in revenues for the quarter is primarily due to a downturn in the
market for the construction of gas-fired power plants, partially
offset by an increase in revenues generated by the Company's
Environmental and Infrastructure division.
Shaw booked approximately $500 million in new awards during the
third quarter. Backlog for the third quarter totaled approximately
$5.0 billion, comparable with the second quarter ended February 28,
2003, with approximately 91% of total backlog relating to projects for
the domestic market. Approximately 40% of the Company's backlog is
expected to be completed within 12 months beginning May 31, 2003.
J. M. Bernhard, Jr., Shaw's Chairman, President and Chief
Executive Officer, commented, "Weak demand for new power plant
capacity in the U.S. has created a highly competitive marketplace,
which has resulted in a more selective approach to securing work in
this sector. We have identified numerous opportunities in air
emissions and in nuclear maintenance and modifications. Additionally,
we are pursuing new EPC power projects including grassroots facilities
in certain markets where capacity is needed. Our strong competitive
position and performance track record in these segments bode well for
our ability to capitalize on these projects."
"We are also pleased with the robust bidding and booking activity
for our Environmental and Infrastructure segment across all business
lines, especially the growing federal services platforms of Facilities
Management and Military Housing Privatization," Bernhard concluded.
For the nine months ended May 31, 2003, the Company reported
earnings of $11.7 million, or $0.30 per diluted share. This compares
to earnings of $67.0 million, or $1.56 per diluted share, for the nine
months ended May 31, 2002. In addition to the charge taken in the
third quarter, earnings for the first nine months of fiscal 2003 were
negatively impacted by a $19 million after-tax charge recorded in the
second quarter relating to the settlement of claims on the completion
of two EPC projects.
Revenues for the nine months ended May 31, 2003 increased
approximately 32% to $2.5 billion compared to $1.9 billion in revenues
for the same period one year ago. This increase in revenues primarily
reflects the acquisition of The IT Group, Inc., which the Company
acquired in May 2002. The IT Group acquisition significantly enhanced
Shaw's revenues from environmental and infrastructure services and
further expanded the Company's capabilities and client base.
The Company also announced revisions to its earnings and cash flow
guidance for the fourth quarter and fiscal year 2004. Earnings for the
Company's fourth quarter are estimated to be $0.23 to $0.25 per share,
bringing full year guidance to $0.53 to $0.55 per share. For fiscal
2004, diluted earnings per share are expected to be in the range of
$1.15 to $1.25.
"The protracted weakness in the domestic power market and the
resultant downturn in our fabrication and manufacturing businesses
have adversely affected our margins, which has necessitated a revision
to our earnings guidance for the fourth quarter and fiscal 2004,"
stated Robert L. Belk, Executive Vice President and Chief Financial
Officer. "In order to improve cash flow and to achieve greater
operational efficiency going forward, we are continuing with the
integration of our operations and have identified certain non-core
assets for future disposition."
For fiscal year 2003, Shaw expects earnings before interest,
taxes, depreciation and amortization ("EBITDA") to be in the range of
$140 to $145 million. The Company also expects to use free cash in the
range of $230 to $240 million. For fiscal year 2004, Shaw expects
EBITDA to be in the range of $140 to $150 million for fiscal year 2004
and expects to generate free cash in the range of $90 to $110 million.
This press release contains non-GAAP financial measures within the
meaning of Regulation G promulgated by the Securities and Exchange
Commission. Included at the end of this press release is a
reconciliation of these non-GAAP financial measures to their most
directly comparable financial measures calculated in accordance with
generally accepted accounting principles as well as certain Regulation
G disclosures.
The Shaw Group Inc. is a leading global provider of engineering,
procurement, construction, maintenance, fabrication, manufacturing,
consulting, remediation, and facilities management services for the
power, process, environmental, infrastructure and homeland defense
markets. The Company is headquartered in Baton Rouge, Louisiana and
employs approximately 17,000 people at its offices and operations in
North America, South America, Europe, the Middle East and the
Asia-Pacific region. For further information, please visit the
Company's website at www.shawgrp.com.
The Private Securities Litigation Reform Act of 1995 provides a
"safe harbor" for certain forward-looking statements. The statements
contained herein that are not historical facts (including without
limitation statements to the effect that the Company or its management
"believes," "expects," "anticipates," "plans," or other similar
expressions) and statements related to revenues, earnings, backlog, or
other financial information or results are forward-looking statements
based on the Company's current expectations and beliefs concerning
future developments and their potential effects on the Company. There
can be no assurance that future developments affecting the Company
will be those anticipated by the Company. These forward-looking
statements involve significant risks and uncertainties (some of which
are beyond our control) and assumptions and are subject to change
based upon various factors. Should one or more of such risks or
uncertainties materialize, or should any of our assumptions prove
incorrect, actual results may vary in material respects from those
projected in the forward-looking statements. The Company undertakes no
obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or
otherwise. A description of some of the risks and uncertainties that
could cause actual results to differ materially from such
forward-looking statements can be found in the Company's reports and
registration statements filed with the Securities and Exchange
Commission, including its Form 10-K and Form 10-Q reports, and on the
Company's web-site under the heading "Forward Looking Statement".
These documents are also available from the Securities and Exchange
Commission or from the Investor Relations department of Shaw. For more
information on the company and announcements it makes from time to
time on a regional basis visit our web site at www.shawgrp.com.
REVENUE AND BACKLOG BY INDUSTRY AND GEOGRAPHY
Revenue by Industry
-------------------
(Third Quarter Ended May 31, 2003)
Power Generation $ 379.4 million 46 %
Environmental & Infrastructure $ 298.8 million 36 %
Process Industries $ 126.0 million 15 %
Other Industries $ 19.8 million 3 %
----------------- ------
Total $ 824.0 million 100 %
Revenue by Geography
--------------------
(Third Quarter Ended May 31, 2003)
United States $ 705.4 million 86 %
Asia/Pacific Rim $ 52.3 million 6 %
Europe $ 22.3 million 3 %
Other North American $ 34.7 million 4 %
Other $ 5.8 million 1 %
South America $ 2.3 million --%
Middle East $ 1.2 million --%
----------------- ------
Total $ 824.0 million 100 %
Backlog by Industry
-------------------
(At May 31, 2003)
Environmental & Infrastructure $ 2,723.0 million 55 %
Power Generation
Nuclear Power $ 1,142.5 million 23 %
Fossil Fuel EPC $ 347.2 million 7 %
Other Power $ 101.5 million 2 %
Process Industries $ 571.1 million 12 %
Other Industries $ 70.0 million 1 %
----------------- ------
Total $ 4,955.3 million 100 %
Backlog by Geography
--------------------
(At May 31, 2003)
Domestic $ 4,525.1 million 91 %
International $ 430.2 million 9 %
----------------- ------
Total $ 4,955.3 million 100 %
The Shaw Group Inc.
Consolidated Statements of Operations
(In thousands, except per share amounts)
Three Months Ended Nine Months Ended
May 31, May 31,
----------------- ---------------------
2003 2002 2003 2002
-------- -------- ---------- ----------
Income:
Revenues $823,984 902,640 $2,541,348 1,922,476
Cost of revenues 749,348 816,679 2,342,433 1,706,063
-------- -------- ---------- ----------
Gross profit 74,636 85,961 198,915 216,413
General and administrative
expenses 50,360 42,400 149,482 106,334
-------- -------- ---------- ----------
Operating income 24,276 43,561 49,433 110,079
Interest expense (9,597) (5,872) (21,130) (17,108)
Interest income 918 3,972 4,522 9,393
Other income (expense) (11,159) (661) (11,126) (217)
-------- -------- ---------- ----------
(19,838) (2,561) (27,734) (7,932)
-------- -------- ---------- ----------
Income before income taxes
and earnings (losses) from
unconsolidated entities 4,438 41,000 21,699 102,147
Provision for income taxes 1,465 14,754 7,161 36,773
-------- -------- ---------- ----------
Income before earnings
(losses) from
unconsolidated entities 2,973 26,246 14,538 65,374
Earnings from unconsolidated
entities (net of taxes) 110 484 (2,874) 1,648
-------- -------- ---------- ----------
Net Income $ 3,083 26,730 $ 11,664 67,022
======== ======== ========== ==========
Basic income per common
share:
Net income available to
common shareholders $ 3,083 26,730 $ 11,664 67,022
======== ======== ========== ==========
Weighted average common
shares 37,743 40,694 37,967 40,638
======== ======== ========== ==========
Net income per common
share $ 0.08 0.66 $ 0.31 1.65
======== ======== ========== ==========
Diluted income per common
share:
Net income available to
common shareholders $ 3,083 26,730 $ 11,664 67,022
Interest on convertible
debt, net of taxes -- 2,661 -- 7,944
-------- -------- ---------- ----------
Net income for diluted
computation $ 3,083 29,391 $ 11,664 74,966
======== ======== ========== ==========
Weighted average common
shares 38,111 48,257 38,405 48,088
======== ======== ========== ==========
Diluted income per common
share $ 0.08 0.61 $ 0.30 1.56
======== ======== ========== ==========
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND REGULATION G
DISCLOSURE
This press release contains non-GAAP financial measures within the
meaning of Regulation G promulgated by the Securities and Exchange
Commission. A reconciliation of these non-GAAP financial measures to
their most directly comparable financial measures calculated in
accordance with generally accepted accounting principles in the United
States ("GAAP") follows. Although Shaw believes that these non-GAAP
financial measures provide useful information to investors about its
financial condition and results of operations, this information should
be considered supplemental in nature and not as a substitute for
financial information prepared in accordance with GAAP. Management's
statements regarding the reasons why it believes the presentation of
the non-GAAP financial information in this press release provides
useful information to its investors, and any other material purposes
for which management uses this non-GAAP financial information, are set
forth in Shaw's Current Report on Form 8-K to which this press release
is attached as an exhibit.
The ranges of forecasted financial information presented in this
press release are based on management's current estimates of those
amounts and are subject to change once actual amounts are recorded.
EBITDA
The Company computes EBITDA as earnings before interest expense,
income taxes, depreciation and amortization, earnings (losses) from
unconsolidated entities, extraordinary items and the cumulative
effects of accounting changes. EBITDA may also exclude certain charges
which are considered non-cash charges for the period presented. EBITDA
is not a measure of financial performance or liquidity under GAAP and
should not be considered as a substitute for net income, operating
income, net cash provided by operating activities or any other
operating or liquidity measure prepared in accordance with GAAP. Other
companies may define EBITDA differently and, as a result, Shaw's
EBITDA computation may not be comparable to EBITDA or similarly titled
measures of other companies. The following table reconciles EBITDA to
net income for the periods presented:
EBITDA PROJECTIONS
(in millions)
Fiscal 2003 Fiscal 2003
Low Range High Range
------------- -------------
Net income $20 $21
Add (deduct):
Excluded non-cash charges 32 32
Interest expense 31 33
Provision for income taxes 10 10
Depreciation and amortization 44 46
(Earnings) losses from
unconsolidated entities 3 3
------------- -------------
EBITDA $140 $145
============= =============
Fiscal 2004 Fiscal 2004
Low Range High Range
------------- -------------
Net income $44 48
Add (deduct):
Excluded non-cash charges - -
Interest expense 39 41
Provision for income taxes 25 27
Depreciation and amortization 33 35
(Earnings) losses from
unconsolidated entities (1) (1)
------------- -------------
EBITDA $140 $150
============= =============
Shaw has not provided a reconciliation of EBITDA to net cash
provided by operating activities due to the difficulty in identifying
changes in the individual working capital components that comprise net
cash provided by operating activities.
Free Cash Flow
In addition to measuring its cash flow generation and usage based
on operating, investing and financing activities classifications
established under GAAP, Shaw measures its free cash flow. Shaw defines
its free cash flow as cash flow from operating activities, less
capital expenditures and cash paid for acquisitions, plus proceeds
from sales of assets. Free cash flow should not be considered a
substitute for cash flow from operating activities, net cash provided
by operating activities or any other liquidity measure prepared in
accordance with GAAP. Other companies may calculate free cash flow
differently; therefore, Shaw's calculation of free cash flow may not
be comparable to similarly titled measures of other companies.
The following table reconciles free cash flow to cash flow from
operating activities for the periods presented:
FREE CASH FLOW PROJECTIONS
(in millions)
Fiscal 2003 Fiscal 2003
Low Range High Range
------------- -------------
Net cash provided by (used in) operating
activities $(195) $(191)
Purchases of property and equipment (27) (25)
Proceeds from sale of assets 5 9
Investment in subsidiaries, net of cash
received (23) (23)
------------- -------------
Free cash flow $(240) $(230)
============= =============
Fiscal 2004 Fiscal 2004
Low Range High Range
------------- -------------
Net cash provided by (used in) operating
activities $55 $65
Purchases of property and equipment (22) (18)
Proceeds from sale of assets 57 63
Investment in subsidiaries, net of cash
received - -
------------- -------------
Free cash flow $90 $110
============= =============
CONTACT: The Shaw Group Inc., Baton Rouge
Laurie LaChiusa, 225-932-2500
SOURCE: The Shaw Group Inc.
