RadMan24 Posted August 7, 2017 Share Posted August 7, 2017 Call delayed to Wednesday due to scheduling conflicts. I presume 10Q will come out ahead of call? Link to comment Share on other sites More sharing options...
clutch Posted August 9, 2017 Share Posted August 9, 2017 http://investors.cbi.com/news/press-release-details/2017/CBI-Announces-Second-Quarter-2017-Results/default.aspx Another bad quarter, dividend cut, and the intended sale of their technology division... What are your reacitons? Link to comment Share on other sites More sharing options...
racemize Posted August 9, 2017 Share Posted August 9, 2017 They expect the tech sale to be $2 billion, so that's something. Link to comment Share on other sites More sharing options...
clutch Posted August 9, 2017 Share Posted August 9, 2017 They expect the tech sale to be $2 billion, so that's something. Which is greater than the current (after-hours) market cap... :o Link to comment Share on other sites More sharing options...
racemize Posted August 9, 2017 Share Posted August 9, 2017 They expect the tech sale to be $2 billion, so that's something. Which is greater than the current (after-hours) market cap... :o well it needs to be compared to the EV, which I'm having trouble with calculating from the Q while listening to the call. Link to comment Share on other sites More sharing options...
undervalued Posted August 9, 2017 Share Posted August 9, 2017 down 18% after hours Link to comment Share on other sites More sharing options...
racemize Posted August 9, 2017 Share Posted August 9, 2017 Back of the envelope: I've got EV at somewhere around $3 billion, after hours. If they get $2 billion for tech, that's remaining EV at $1 billion. They said somewhere around $6 billion in revenue for ongoing business after tech sale (I think I heard that). Applying a 5% net margin gets you $300 million for $1 billion. Seems like if they make it, it has a lot of upside. Please correct if you disagree somewhere. Link to comment Share on other sites More sharing options...
undervalued Posted August 9, 2017 Share Posted August 9, 2017 xazp mentioned a few threads ago that they worth more together than separate. I think the market agrees or maybe because of the size of loss? Link to comment Share on other sites More sharing options...
racemize Posted August 9, 2017 Share Posted August 9, 2017 xazp mentioned a few threads ago that they worth more together than separate. I think the market agrees or maybe because of the size of loss? Operationally, it is better together I think. However, at this debt level and at these market prices, I think it makes sense to forcibly unlock the value, and if they can't, then they were just wrong about the value. Link to comment Share on other sites More sharing options...
RadMan24 Posted August 9, 2017 Share Posted August 9, 2017 They keep losing value through those 4 projects. They have to execute or there is no upside. Plain and simple. Link to comment Share on other sites More sharing options...
indirect Posted August 10, 2017 Share Posted August 10, 2017 Inability to execute projects or marketing or busniess plans etc makes a company un-investable for me. This has been painfully learned over the years. Please learn this without paying costly tuition (loses) Link to comment Share on other sites More sharing options...
mike Posted August 10, 2017 Share Posted August 10, 2017 Question: And then my second question is, appreciating some of the changes you guys noted, some of these problems – these problem projects were under your watch as you, obviously, ran the E&C business. So how do we get comfort that things are really going to change? And has there been any other sort of changes in the employee – any other people that have been let go because of this, or fired, or anything else, to sort of give a confidence that things are really changing here? CEO: And regarding your question about these jobs being done on my watch, obviously I did run E&C for two-and-a-half to three years, and you could debate when and who made what decisions, but I don't want to go there. What's important are the actions we're taking to improve our execution going forward. ------------------------------------------------------- He didn't seem admit it was his mistake .......... Link to comment Share on other sites More sharing options...
racemize Posted August 10, 2017 Share Posted August 10, 2017 Question: And then my second question is, appreciating some of the changes you guys noted, some of these problems – these problem projects were under your watch as you, obviously, ran the E&C business. So how do we get comfort that things are really going to change? And has there been any other sort of changes in the employee – any other people that have been let go because of this, or fired, or anything else, to sort of give a confidence that things are really changing here? CEO: And regarding your question about these jobs being done on my watch, obviously I did run E&C for two-and-a-half to three years, and you could debate when and who made what decisions, but I don't want to go there. What's important are the actions we're taking to improve our execution going forward. ------------------------------------------------------- He didn't seem admit it was his mistake .......... Yeah, I couldn't quite tell. Either he is of the opinion it wasn't his mistake and didn't want to throw the old CEO under the bus, or he's not taking responsibility. Link to comment Share on other sites More sharing options...
kab60 Posted August 10, 2017 Share Posted August 10, 2017 Ouch. A sale of the technology segment was always the downside protection, but it's not something one hopes for. Hrmmm. There has probably never been a better environment for M&A (as a seller) considering the amount of dry powder at PE shops, but it means CBI loses its nicest business, which made it attractive compared to usual EPC contractors, which is not really a space I like. Link to comment Share on other sites More sharing options...
Spekulatius Posted August 10, 2017 Share Posted August 10, 2017 The technology business generated $21.5M in operating income last quarter and that number has been falling. I don't think it will fetch $2B - my guess would it half that. $1B would be enough to get rid of most of the debt. The problem is really that the business is not all that good. The contracts they get are mostly fixed price nowadays, which means they make a little if they are right and lose a lot they are not. I think we will see single digits with this stock, possibly today. I bought some a while ago after the verdict regarding the Westinghouse ligitation, but sold when I heard the news about the Sempra CC (Sempra stated that they are well protected against cost overruns in the contract with CBI) - that was a tell tale sign. Link to comment Share on other sites More sharing options...
DTEJD1997 Posted August 10, 2017 Share Posted August 10, 2017 Ouch. A sale of the technology segment was always the downside protection, but it's not something one hopes for. Hrmmm. There has probably never been a better environment for M&A (as a seller) considering the amount of dry powder at PE shops, but it means CBI loses its nicest business, which made it attractive compared to usual EPC contractors, which is not really a space I like. Yeah, I always thought their tech segment was their "crown jewel". If they sell that, put a fork in them, they are done. What are you left with when the transaction is done? A contracting company with a bunch of terrible contracts and a CEO who is clearly outgunned and not capable of running the company. I think this thing is a zero, or gets bought out in distress. Any way you slice it, the current shareholders are going to lose. Only question is if they lose everything or just 80%? Link to comment Share on other sites More sharing options...
racemize Posted August 10, 2017 Share Posted August 10, 2017 Ouch. A sale of the technology segment was always the downside protection, but it's not something one hopes for. Hrmmm. There has probably never been a better environment for M&A (as a seller) considering the amount of dry powder at PE shops, but it means CBI loses its nicest business, which made it attractive compared to usual EPC contractors, which is not really a space I like. Yeah, I always thought their tech segment was their "crown jewel". If they sell that, put a fork in them, they are done. What are you left with when the transaction is done? A contracting company with a bunch of terrible contracts and a CEO who is clearly outgunned and not capable of running the company. I think this thing is a zero, or gets bought out in distress. Any way you slice it, the current shareholders are going to lose. Only question is if they lose everything or just 80%? So all their other competitors are worth virtually nothing too? You are left with an EPC company and fabricator with no debt, no more, no less. It is a viable business. Yes, it requires they execute, but so does every other EPC company that exists. Link to comment Share on other sites More sharing options...
sleepydragon Posted August 10, 2017 Share Posted August 10, 2017 Given this is a former TT/Web position, I wondered if the management had ask Web for a bailout. I am glad TT sold it and there appear no "bail out" so far. No position. Link to comment Share on other sites More sharing options...
undervalued Posted August 10, 2017 Share Posted August 10, 2017 Senior Notes—We have a series of senior notes totaling $800.0 million in aggregate principal amount outstanding as of June 30, 2017 (the “Senior Notes”). The Senior Notes include Series A through D and contained the following terms at June 30, 2017: • Series A—Interest due semi-annually at a fixed rate of 4.65%, with principal of $150.0 million due in December 2017 • Series B—Interest due semi-annually at a fixed rate of 5.07%, with principal of $225.0 million due in December 2019 • Series C—Interest due semi-annually at a fixed rate of 5.65%, with principal of $275.0 million due in December 2022 • Series D—Interest due semi-annually at a fixed rate of 5.80%, with principal of $150.0 million due in December 2024 On July 28, 2017, we utilized $211.8 million of the proceeds from the sale of the Capital Services Operations to repay a portion of each series of senior notes in the following amounts: (Series A - $44.6 million, Series B - $58.2 million, Series C - $78.5 million and Series D - $30.5 million). The repayment dates for the remaining principal amounts remained the same. Any good reason on why management not pay the 2017 first before the other series since it's due soon? Link to comment Share on other sites More sharing options...
kab60 Posted August 11, 2017 Share Posted August 11, 2017 Senior Notes—We have a series of senior notes totaling $800.0 million in aggregate principal amount outstanding as of June 30, 2017 (the “Senior Notes”). The Senior Notes include Series A through D and contained the following terms at June 30, 2017: • Series A—Interest due semi-annually at a fixed rate of 4.65%, with principal of $150.0 million due in December 2017 • Series B—Interest due semi-annually at a fixed rate of 5.07%, with principal of $225.0 million due in December 2019 • Series C—Interest due semi-annually at a fixed rate of 5.65%, with principal of $275.0 million due in December 2022 • Series D—Interest due semi-annually at a fixed rate of 5.80%, with principal of $150.0 million due in December 2024 On July 28, 2017, we utilized $211.8 million of the proceeds from the sale of the Capital Services Operations to repay a portion of each series of senior notes in the following amounts: (Series A - $44.6 million, Series B - $58.2 million, Series C - $78.5 million and Series D - $30.5 million). The repayment dates for the remaining principal amounts remained the same. Any good reason on why management not pay the 2017 first before the other series since it's due soon? Because there's no refi risk. Smooth sailing. It's aaaaaaall good. (people say volatility has gone into hiding, but not in my portfolio. Unfortunately it has been mostly downwards. Luckily the weather has been alright). Link to comment Share on other sites More sharing options...
Artha158 Posted August 11, 2017 Share Posted August 11, 2017 - I am under water and time to get scuba gear. - Board of directors and management failed on strategy and execution. - No accountability and in denial mode now facing the reality of their past actions. - If they sell technology unit then eps of $3 - 4 range will be very hard to achieve. Link to comment Share on other sites More sharing options...
flesh Posted August 11, 2017 Share Posted August 11, 2017 This is getting tempting, I put this in my too hard pile awhile ago. Any reason I should re-evaluate? Link to comment Share on other sites More sharing options...
RadMan24 Posted August 17, 2017 Share Posted August 17, 2017 Idk...I was hoping for a spinoff/investors to get some portion of the tech business. But given that it's being sold, anything below $2 b really pressures their business given the ongoing loss positions. The LNG projects should be ok going forward (again, assuming execution) and the gas turbine projects keep getting pushed back, which is killing cbi At this point, my out of the money calls due in 18' and 19' are only in the money on a prayer and miracle. cbi's trackrecord speaks for itself. There was hope with the new ceo and end of westinghouse litigation. However, poor execution and cost overruns have eaten into all the upside. I also don't think previous ceo was honest about shit and sold his shares at $35. That was my mistake, thinking he had shareholders interests in mind. If the new ceo buys shares and is honest, you have a chance at a company becoming close to debt free and normalized earnings of $2-3 per share, likely toward bottom range. There's a lot of wait and see here because they have to 1. Sell tech business 2. End loss position gas turbine projects 3. prove lng projects will experience no more delays Until then, upside is extremely limited. High risk and high uncertainty investment, in my opinion. Fyi, fluor is also getting its ass kicked in these gas turbine projects, just not as severe as Cbi. Something to look at as well. Link to comment Share on other sites More sharing options...
LR1400 Posted August 17, 2017 Share Posted August 17, 2017 I know a few people who work on their epc side as well as other epc, they aren't overly optimistic with regards to awards, adding backlog, etc. All of these epc companies are getting squeezed hard by their customers. There is a lot of excess capacity in this sector and the demand isn't what it has been. Industrial and construction has been in somewhat of a recession. Their "lack of execution" is often times poor contract management/early contract negotiation. This is often the case for all epc. They are being pushed hard by their customers and their is too much competition for too little work. I wouldn't invest, personally. Just too much competition, too little margin, and very difficult contracts. Link to comment Share on other sites More sharing options...
Picasso Posted September 1, 2017 Share Posted September 1, 2017 For what it's worth I closed out my position at a nice loss. One would have thought it'd be pretty tough to trip covenants after cleaning up the biggest overhangs but they sure managed to outdo themselves yet again. Link to comment Share on other sites More sharing options...
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