| Shaw Group Announces Record Earnings and Backlog for the Third Quarter Fiscal 2007 |
-- Diluted earnings per share rise to $0.67
-- Backlog totals $13.3 billion
-- Operating cash flow remains strong
BATON ROUGE, La.–(BUSINESS WIRE)–Oct. 10, 2007–The Shaw Group Inc. (NYSE: SGR) today reported record net income for the three months ended May 31, 2007, of $54.6 million, or $0.67 per diluted share. The reported results include $5.7 million of net income, or $0.07 per diluted share, related to Shaw’s investment in the Westinghouse segment. Excluding the Westinghouse segment, net income was $48.9 million, or $0.60 per diluted share. Earnings before interest expense, income taxes, depreciation and amortization (EBITDA) for the third quarter of 2007 with the Westinghouse segment was $92.2 million, and $74.2 million excluding the Westinghouse segment. In comparison for the three months ended May 31, 2006, which was prior to the Westinghouse investment, Shaw reported a net loss before interest expense, taxes, depreciation and amortization of $15.7 million and a net loss of $16.7 million, or $0.21 per diluted share. Third quarter operating cash flow totaled $131 million, bringing the nine months’ operating cash flow to $285 million. Revenues for third quarter 2007 were $1.6 billion, compared to $1.2 billion in the corresponding 2006 period. Shaw’s backlog of unfilled orders at May 31, 2007, was a record $13.3 billion, up from approximately $8 billion at May 31, 2006. Approximately $5.6 billion, or 42 percent, of the backlog is expected to be converted to revenues during the next 12 months. Shaw also expects its backlog to grow to approximately $14.3 billion at August 31, 2007. “Our business segments experienced strong revenue and profit growth compared to 2006, with the exception of the Environmental & Infrastructure Group, which executed significant amounts of disaster relief and emergency response services in 2006,” said J.M. Bernhard Jr., Shaw’s chairman, president and chief executive officer. “Our solid results were fueled by continued strength in the global markets for power generation capacity and petrochemicals processing. “Our record backlog positions us well for fiscal 2008 and we believe the global markets we serve will remain strong throughout the year,” said Bernhard. “Our operating segments are well positioned to benefit from this continued global economic expansion and we continue to believe there will be significant long-term growth in the developing nuclear power markets. “By filing our third quarter 10-Q with the SEC, we are ‘current’ with the reporting of our fiscal 2007 financial results,” Bernhard said. “Brian K. Ferraioli assumed the responsibility of chief financial officer today, and together with our entire financial reporting team, will continue improving our financial reporting processes.” A conference call to discuss the company’s third quarter fiscal 2007 financial results will be held today, October 10, 2007, at 9:00 a.m. Eastern Time (8:00 a.m. Central Time). During that call, the company also intends to discuss guidance for fourth quarter fiscal 2007 as well as for fiscal 2008. A slide presentation outlining the third quarter fiscal 2007 earnings will be posted on the Investor Relations page of the Shaw Web site (www.shawgrp.com) approximately one hour before the conference call. A live audio webcast of the conference call will be available on the Investor Relations page of the company’s Web site at www.shawgrp.com. A replay of the webcast will be available via the Company’s Web site approximately one hour after the call has been completed. Interested individuals may also access a replay by dialing 800-633-8284 and using the reservation number: 2135-2483. Calculation of EBITDA The Shaw Group Inc. defines EBITDA as earnings before interest expense, income taxes, depreciation and amortization. EBITDA is an important financial measure used by The Shaw Group Inc. to assess performance. Although it is calculated using components derived from our GAAP financial statements, EBITDA itself is not a GAAP measure. A table reconciling EBITDA to its most directly comparable GAAP measure is included in the summarized financial information included in this release. Calculations of EBITDA should not be viewed as a substitute for calculations under GAAP, including cash flow from operations, operating income and net income. In addition, EBITDA calculations by one company may not be comparable to EBITDA calculations made by another company. The Shaw Group Inc. is a leading global provider of engineering, procurement, construction, technology, maintenance, fabrication, manufacturing, consulting, remediation and facilities management services for government and private sector clients in the energy, chemical, environmental, infrastructure and emergency response markets. Headquartered in Baton Rouge, La., with nearly $5 billion in annual revenues, Shaw employs approximately 23,000 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 Shaw’s Web site 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 Statements.” 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.
THE SHAW GROUP INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share amounts)
Three Months Ended May Nine Months Ended May
31, 31,
-----------------------------------------------
2007 2006 2007 2006
----------- ----------- ----------- -----------
Revenues $1,601,436 $1,226,784 $4,080,347 $3,601,077
Cost of revenues 1,465,940 1,192,869 3,827,521 3,361,165
----------- ----------- ----------- -----------
Gross profit 135,496 33,915 252,826 239,912
General and
administrative
expenses 68,455 52,248 204,073 162,052
----------- ----------- ----------- -----------
Operating income
(loss) 67,041 (18,333) 48,753 77,860
Interest expense (3,079) (4,897) (10,859) (13,261)
Interest expense on
Japanese Yen-
denominated bonds
including accretion
and amortization (8,543) - (21,992) -
Interest income 3,006 794 7,896 4,273
Foreign currency
translation gains on
Japanese Yen-
denominated bonds,
net 15,457 - 18,448 -
Other foreign currency
translation gains
(losses), net (301) (1,735) (5,007) (918)
Other income
(expense), net 384 589 (1,019) (291)
----------- ----------- ----------- -----------
6,924 (5,249) (12,533) (10,197)
Income (loss) before
income taxes,
minority interest,
earnings (losses)
from unconsolidated
entities and loss
from and impairment
of discontinued
operations 73,965 (23,582) 36,220 67,663
Provision (benefit)
for income taxes 15,707 (12,238) 18,013 19,151
----------- ----------- ----------- -----------
Income (loss) before
minority interest,
earnings (losses)
from unconsolidated
entities and loss
from and impairment
of discontinued
operations 58,258 (11,344) 18,207 48,512
Minority interest (4,357) (4,207) (12,868) (10,154)
Income from 20%
Investment in
Westinghouse, net of
income taxes 1,625 - 1,457 -
Earnings (losses) from
unconsolidated
entities, net of
income taxes (787) (463) (25,596) 674
----------- ----------- ----------- -----------
Income (loss) from
continuing operations 54,739 (16,014) (18,800) 39,032
Loss from and
impairment of
discontinued
operations, net of
income taxes (121) (659) (3,156) (1,154)
----------- ----------- ----------- -----------
Net income (loss) $ 54,618 $ (16,673) $ (21,956) $ 37,878
=========== =========== =========== ===========
Net income (loss) per
common share:
Basic:
Income (loss) from
continuing
operations $ 0.68 $ (0.20) $ (0.24) $ 0.49
Loss from and
impairment of
discontinued
operations, net of
income taxes (0.00) (0.01) (0.04) (0.01)
----------- ----------- ----------- -----------
Net income (loss) $ 0.68 $ (0.21) $ (0.28) $ 0.48
=========== =========== =========== ===========
Diluted:
Income (loss) from
continuing
operations $ 0.67 $ (0.20) $ (0.24) $ 0.48
Loss from and
impairment of
discontinued
operations, net of
income taxes (0.00) (0.01) (0.04) (0.01)
----------- ----------- ----------- -----------
Net income (loss) $ 0.67 $ (0.21) $ (0.28) $ 0.47
=========== =========== =========== ===========
THE SHAW GROUP INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
May 31, 2007 August 31, 2006
(Unaudited)
----------------------------
ASSETS
Current assets:
Cash and cash equivalents $ 179,963 $ 154,837
Restricted and escrowed cash 38,178 43,409
Accounts receivable, including
retainage, net 707,485 740,920
Inventories 153,187 101,337
Costs and estimated earnings in
excess of billings on uncompleted
contracts, including claims 403,048 455,819
Deferred income taxes 95,476 83,085
Prepaid expenses and other current
assets 47,867 99,253
------------ ---------------
Total current assets 1,625,204 1,678,660
Investments in and advances to
unconsolidated entities, joint ventures
and limited partnerships 40,182 52,048
Investment in Westinghouse 1,093,478 -
Property and equipment, less accumulated
depreciation of $190,541 at May 31, 2007
and $166,220 at August 31, 2006 198,188 175,431
Goodwill 512,360 506,592
Other assets 141,114 116,403
------------ ---------------
$3,610,526 $2,529,134
============ ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 491,312 $ 483,002
Accrued liabilities 315,389 211,162
Advanced billings and billings in
excess of costs and estimated
earnings on uncompleted contracts 415,577 316,674
Contract liability adjustments 840 3,361
Deferred revenue 5,104 14,772
Current maturities of long-term debt 8,790 2,456
Short-term revolving lines of credit 2,838 5,526
Short term debt 3,106 1,895
Current portion of obligations under
capital leases 2,194 1,811
------------ ---------------
Total current liabilities 1,245,150 1,040,659
Revolving line of credit - 145,517
Long-term debt, less current maturities 8,566 24,584
Japanese Yen-denominated long-term bonds
secured by Investment in Westinghouse,
net 1,033,914 -
Obligations under capital leases, less
current portion 2,226 3,433
Deferred income taxes 15,333 18,664
Interest rate swap contract on Japanese
Yen-denominated bonds 1,335 -
Other liabilities 41,752 39,662
Minority interest 19,766 13,408
Shareholders' equity
Preferred Stock, no par value,
20,000,000 shares authorized; no
shares issued and outstanding - -
Common Stock, no par value,
86,676,410 and 85,866,727 shares
issued, respectively; and
81,171,629 and 80,475,928 shares
outstanding, respectively 1,097,875 1,074,106
Retained earnings 274,006 295,962
Accumulated other comprehensive loss (24,831) (25,363)
Treasury stock, 5,504,781 shares and
5,390,799 shares, respectively (104,566) (101,498)
------------ ---------------
Total shareholders' equity 1,242,484 1,243,207
------------ ---------------
$3,610,526 $2,529,134
============ ===============
REVENUES BY GEOGRAPHY
(In millions)
Three Months Ended May 31, 2007 % 2006 %
--------- ---- ---------- ----
United States $ 1,266.5 79 $1,062.0 87
Asia/Pacific Rim 62.0 4 45.5 4
Middle East 214.0 14 95.7 8
Canada 4.6 - 3.8 -
Europe 47.1 3 11.2 1
South America and Mexico 5.1 - 6.4 -
Other 2.1 - 2.2 -
--------- ---- ---------- ----
Total revenues $ 1,601.4 100% $1,226.8 100%
========= ==== ========== ====
Nine Months Ended May 31, 2007 % 2006 %
--------- ---- ---------- ----
United States $ 3,252.8 80 $3,237.1 90
Asia/Pacific Rim 161.9 4 123.1 4
Middle East 514.0 13 167.4 5
Canada 11.3 - 10.5 -
Europe 116.7 3 41.9 1
South America and Mexico 14.8 - 13.0 -
Other 8.8 - 8.1 -
--------- ---- ---------- ----
Total revenues $ 4,080.3 100% $3,601.1 100%
========= ==== ========== ====
BACKLOG BY SEGMENT
(In millions)
May 31, August 31,
2007 % 2006 %
--------- ---- ---------- ----
Fossil and Nuclear $ 5,549.1 42 $3,238.4 35
E&I; 2,740.9 21 2,765.1 30
E&C; 2,457.1 18 1,412.3 16
Maintenance 1,880.1 14 1,250.9 14
F&M; 701.4 5 408.9 5
--------- ---- ---------- ----
Total backlog $13,328.6 100% $9,075.6 100%
========= ==== ========== ====
REVENUES AND GROSS PROFIT BY SEGMENT
(In thousands, except percentages)
Three Months Ended Nine Months Ended
May 31, May 31,
------------------------ ------------------------
2007 2006 2007 2006
----------- ------------ ----------- ------------
Revenues
Fossil and Nuclear $ 441,424 $ 180,213 $1,046,184 $ 589,816
E&I; 381,146 513,419 1,079,831 1,700,478
E&C; 293,267 163,615 753,589 387,638
Maintenance 363,197 296,448 867,596 702,186
F&M; 122,402 73,089 333,147 220,959
----------- ------------ ----------- ------------
Total revenues $1,601,436 $1,226,784 $4,080,347 $3,601,077
=========== ============ =========== ============
Gross profit
Fossil and Nuclear $ 33,838 $ (54,569) $ 36,581 $ (20,308)
E&I; 29,038 45,577 66,647 168,807
E&C; 25,160 14,682 55,713 15,677
Maintenance 16,917 10,625 13,417 30,780
F&M; 30,543 17,600 80,468 44,956
----------- ------------ ----------- ------------
Total gross
profit $ 135,496 $ 33,915 $ 252,826 $ 239,912
=========== ============ =========== ============
Gross profit
percentage
Fossil and Nuclear 7.7% (30.3%) 3.5% (3.4%)
E&I; 7.6% 8.9% 6.2% 9.9%
E&C; 8.6% 9.0% 7.4% 4.0%
Maintenance 4.7% 3.6% 1.5% 4.4%
F&M; 25.0% 24.1% 24.2% 20.3%
Total gross
profit
percentage 8.5% 2.8% 6.2% 6.7%
The Company believes it is important that we discuss our operating
results excluding the Investment in Westinghouse segment. We acquired
a 20% interest in Westinghouse in October 2006. We have classified
the Investment in Westinghouse as a separate operating segment. The
majority of the activity related to this segment will be recorded
below the operating income line. During the quarter, we have recorded
interest expense as well as other significant non-cash charges
related to the investment. We believe that presenting our financial
results excluding the Investment in Westinghouse segment is important
to investors and management to order to demonstrate the profitability
of our other segments as well as to point out certain non-cash
charges related to this investment.
The Shaw Group Inc.
Reconciliation of Shaw Consolidated Results to Shaw Excluding
Investment in
Westinghouse Segment for the three months ended May 31, 2007
(in millions, except per share Q3 FY 2007
data)
-------------------------------------
Quarter ended May 31, 2007
-------------------------------------
Actuals
Westinghouse Excluding
As Reported Segment Westinghouse
----------- ------------ ------------
Revenues $1,601.4 $ 0.0 $1,601.4
Cost of revenues 1,465.9 0.0 1,465.9
----------- ------------ ------------
Gross profit 135.5 0.0 135.5
General and administrative
expenses 68.5 0.1 68.4
----------- ------------ ------------
Operating income (loss) 67.0 (0.1) 67.1
Interest expense (3.1) 0.0 (3.1)
Interest expense on JPY-
denominated bonds including
accretion and amortization (8.5) (8.5) 0.0
Interest income 3.0 0.0 3.0
Foreign currency translation
gains (losses) on JPY-
denominated bonds, net 15.4 15.4 0.0
Other foreign currency
transaction gains (losses), net (0.3) 0.0 (0.3)
Other income (expense), net 0.4 0.0 0.4
----------- ------------ ------------
6.9 6.9 0.0
Income (loss) before income
taxes, minority interest,
earnings (losses) from
unconsolidated entities and
loss from and impairment of
discontinued operations 73.9 6.8 67.1
Provision (benefit) for income
taxes 15.7 2.7 13.0
----------- ------------ ------------
Income (loss) before minority
interest, earnings (losses)
from unconsolidated entities
and loss from and impairment of
discontinued operations 58.2 4.1 54.1
Minority interest (4.3) 0.0 (4.3)
Income from 20% Investment in
Westinghouse, net of income
taxes 1.6 1.6 0.0
Earnings (losses) from
unconsolidated entities, net of
income taxes (0.8) 0.0 (0.8)
----------- ------------ ------------
Income (loss) from continuing
operations 54.7 5.7 49.0
Loss from and impairment of
discontinued operations, net of
income taxes (0.1) 0.0 (0.1)
----------- ------------ ------------
Net income (loss) $ 54.6 $ 5.7 $ 48.9
=========== ============ ============
Net income (loss) per common
share:
Basic income (loss) per
common share $ 0.68 $0.07 $ 0.61
=========== ============ ============
Diluted income (loss) per
common share $ 0.67 $0.07 $ 0.60
=========== ============ ============
Weighted average shares
outstanding:
Basic: 80.1 80.1 80.1
Diluted: 81.9 81.9 81.9
The Shaw Group Inc. defines EBITDA as earnings before interest
expense, income taxes, depreciation and amortization. EBITDA is an
important financial measure used by The Shaw Group Inc. to assess
performance. Although it is calculated using components derived from
our GAAP financial statements, EBITDA itself is not a GAAP measure.
The following table reflects the Company's calculation of EBITDA and
EBITDA percentage. Calculations of EBITDA should not be viewed as a
substitute for calculations under GAAP, including cash flow from
operations, operating income and net income. In addition, EBITDA
calculations by one company may not be comparable to EBITDA
calculations made by another company.
Q3 FY 2007 Q3 FY
2006
------------------------------------ ---------
Actuals
As Westinghouse Excluding
(in millions) Reported Segment Westinghouse Actuals
--------- ------------ ------------- ---------
Net Income (Loss) $ 54.6 $ 5.7 $ 48.9 $ (16.7)
----------------------- --------- ------------ ------------- ---------
Interest Expense 11.6 8.5 3.1 4.9
Depreciation and
Amortization 10.1 - 10.1 8.3
Provision for Income
Taxes 15.7 2.7 13.0 (12.2)
Income Taxes on
Unconsolidated Subs 0.3 1.1 (0.8) 0.2
Income Taxes on
Discontinued Ops (0.1) - (0.1) (0.2)
----------------------- ----------------------------------------------
EBITDA $ 92.2 $18.0 $ 74.2 $ (15.7)
======================= ==============================================
Revenue 1,601.4 N/A 1,601.4 1,227.0
----------------------- --------- ------------ ------------- ---------
EBITDA % 5.8% N/A 4.6% -1.3%
======================= ========= ============ ============= =========
CONTACT: The Shaw Group Inc. |
 |
| “Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding SHAW GROUP INC’s business which are not historical facts are “forward-looking statements” that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see “Risk Factors” in the Company’s Annual Report or Form 10-K for the most recently ended fiscal year. |