Fat Pitch Posted December 15, 2014 Share Posted December 15, 2014 http://finance.yahoo.com/news/cb-announces-placement-ca05-module-155000268.html Anyone knows if that's the major milestone that will generate cash flow from their nuclear power plant contracts? I may need to listen to the investor day conference call again. Link to comment Share on other sites More sharing options...
KCLarkin Posted December 15, 2014 Share Posted December 15, 2014 http://finance.yahoo.com/news/cb-announces-placement-ca05-module-155000268.html Anyone knows if that's the major milestone that will generate cash flow from their nuclear power plant contracts? I may need to listen to the investor day conference call again. If they issue a press release, I assume it is a billable milestone. Link to comment Share on other sites More sharing options...
HJ Posted December 15, 2014 Share Posted December 15, 2014 Someone on another board looked back on the past two years of contract awards and only saw something like a $50mm platform award on an oil project. I listened to the Investor's Day webcast yesterday. Indeed management commented that for the next year, the opportunities are in LNG, petrochemicals, and gas-fired power plants. Some federally funded environmental cleanup work as well. The cheap oil price is especially beneficial for the petrochem industry which uses the byproducts of crude as the feedstock. Management also commented that for capital allocation, the priority is to pursue share repurchases. They have an authorization in place equal to 10% of the outstanding shares. They seem confident that they will be FCF+ for Q4 2014 and for 2015. Goldman had a report out a while ago talking about LNG contract cycle having peaked. There is also a theory that says few LNG projects are economic at $90 oil, so look for that to drop off at some point. Link to comment Share on other sites More sharing options...
MrB Posted December 17, 2014 Share Posted December 17, 2014 http://finance.yahoo.com/news/cb-announces-placement-ca05-module-155000268.html Anyone knows if that's the major milestone that will generate cash flow from their nuclear power plant contracts? I may need to listen to the investor day conference call again. Investor Day "Philip Ackerman Well, there's major milestones ahead of us. There's a major milestone in terms of a module erection called CA-O1. And the reason that's - and you guys can add to this - but the reason that wouldn't be important from our standpoint - but once that module is erected, then it opens up a lot of work fronts on those projects. So CA-O1 is a major milestone that when we talk about that, you'll know the progress will really ramp up because it opens up so many work fronts in both those projects. There's a [shield] building which is a major milestone, both a little bit farther downstream. That's a major milestone as well. So there are major milestones. Our final milestone for [those] projects tend to be an activity called fuel load. And then the owner takes over and commissions are planned, in very simple terms. So those are the kind of milestones to think about." "Unidentified Audience Member OK. So the CA-O1, that's a 2015 event. Out of Lake Charles is 2015. Is it right for investors to think risk of further delays and cost overruns after that will [seep into this]? Philip Asherman - Chicago Bridge & Iron NV - Pres, CEO Yes. I think there's another element of this that - getting back to some of Jaime's questions, too. When you look at the first installation, the first reactor, and all the trials and tribulations of a new technology, a new methodology for construction, a lot of the cost of incremental schedule misses perhaps is because it was the first. When you look at the subsequent installations, the difference in the documentation and the drawings associated with that, you're talking about documentation on the first something like this, you're talking about a book for the second one like this. If that makes any sense. So if you take that logic to another step or for another nuclear plant, you've got design done. You've got technology determined. You've got methodologies prescribed. So that economically becomes much more interest for furthering your investment. Because we see that as we go further and more economies of scale as we go forward in the job. So that's a big difference." Link to comment Share on other sites More sharing options...
MrB Posted December 17, 2014 Share Posted December 17, 2014 CA-05 timelapse Link to comment Share on other sites More sharing options...
MrB Posted December 17, 2014 Share Posted December 17, 2014 See slide 17 to get an idea how the different modules fit http://www.sec.gov/Archives/edgar/data/788816/000110465914023650/a14-9130_1ex99d1.htm CA-01 is important, because it allows a lot of other work to go ahead. Link to comment Share on other sites More sharing options...
muscleman Posted January 28, 2015 Share Posted January 28, 2015 Can anyone find a link to the short seller's report? I found one from google but it no longer works. I am curious to see what kind of problems they pointed out. Link to comment Share on other sites More sharing options...
Guest Schwab711 Posted January 28, 2015 Share Posted January 28, 2015 Can anyone find a link to the short seller's report? I found one from google but it no longer works. I am curious to see what kind of problems they pointed out. I think it has quite a bit to do with alleged accounting irregularities. I'm not well versed in CBI, but I'm pretty sure it has to do with excessive write-offs on acquisitions that can be used as a piggy bank for future earnings. Accounting for engineering firms in general can be complicated due to payments being released throughout long-term complex contracts. They definitely have some wiggle-room to release deferred revs or writing off the value of contracts to fudge numbers to their benefit. I don't think this is as serious of a problem as the media will lead you to believe for various reasons, unless you think the big 4 accounting firms are also in on this. http://www3.nd.edu/~carecob/Workshops/07-08%20Workshops/Leone%20Paper.pdf http://www.forbes.com/sites/danielfisher/2014/03/26/merger-mania-fueled-by-accounting-rules-that-can-make-a-bad-deal-look-good/ O&G Exposure: http://seekingalpha.com/article/2748385-chicago-bridge-and-iron-falls-with-oil-prices-despite-having-virtually-no-oil-exposure Although CBI definitely has more O&G exposure than what has been stated in the forum so far, it is not very high in comparison to most engineering firms (http://seekingalpha.com/news/2242216-cb-and-i-announces-another-plant-services-contract-renewal). Link to comment Share on other sites More sharing options...
dbuch Posted January 28, 2015 Share Posted January 28, 2015 These guys look pretty interesting here. Free cash flow looks volatile and doesn't seem to indicate true earnings power given the reinvestment in working capital but if you look at book value per share growth, they've compounded book at 16% a year since 1996. ROE has averaged 14% a year since 1996 while the last five years has been more like 18% a year. Revenues have grown 20% plus over the last 15 years. If you assume a $30 book value x 14% ROE that gives your $4.20 earnings and it has been growing over 20% a year for a long time. If you assume 2015 book value is closer to $35 and they can continue to earn 18% ROE maybe earnigns are closer to $6.30. I think you have to assume the Shaw cost overruns are going to do them in or CapEx is on permanent hold. Link to comment Share on other sites More sharing options...
KCLarkin Posted January 29, 2015 Share Posted January 29, 2015 The original shorts closed their position at around $37.50. Link to comment Share on other sites More sharing options...
muscleman Posted January 29, 2015 Share Posted January 29, 2015 Found the original short report here: http://www.presciencepoint.com/reports/cbi_report_6-17-2014.pdf Link to comment Share on other sites More sharing options...
philly value Posted January 30, 2015 Share Posted January 30, 2015 Anyone know why this is down 10% today? Link to comment Share on other sites More sharing options...
Buffetteer Posted January 30, 2015 Share Posted January 30, 2015 Anyone know why this is down 10% today? I can't find any news on it. Link to comment Share on other sites More sharing options...
LakesideB Posted January 30, 2015 Share Posted January 30, 2015 Southern company filed to state delays in Vogtle 3 and 4 by 18months... stating it will cost roughly $750m. Their implication is contractor consortium is on hook ....which means CBI and Westinghouse will likely be splitting the amount amongst themselves. Link to comment Share on other sites More sharing options...
Buffetteer Posted January 30, 2015 Share Posted January 30, 2015 Thanks for the info. Where did you find it? Link to comment Share on other sites More sharing options...
philly value Posted January 30, 2015 Share Posted January 30, 2015 Here is a news article: http://abcnews.go.com/Business/wireStory/builder-projects-18-month-delay-nuclear-plant-georgia-28594816 Link to comment Share on other sites More sharing options...
bbarberayr Posted January 30, 2015 Share Posted January 30, 2015 This also contains some info on the delay and DB's comments: http://www.streetinsider.com/Analyst+Comments/Chicago+Bridge+%26+Iron+%28CBI%29+Declines+on+Vogtle+Project+Delays%3B+Deutsche+Bank+Comments/10211194.html Link to comment Share on other sites More sharing options...
Buffetteer Posted January 30, 2015 Share Posted January 30, 2015 Thank You! Link to comment Share on other sites More sharing options...
Buffetteer Posted January 30, 2015 Share Posted January 30, 2015 Here is a news article: http://abcnews.go.com/Business/wireStory/builder-projects-18-month-delay-nuclear-plant-georgia-28594816 Great article. So worst case scenario is CBI pays half the cost, best case they may not pay anything as contract states certain excess costs can be paid by Westinghouse. Either way Deutsche Bank sees liquidity risk from this as being low due to CBI's backlog orders over the next 4 yrs, as well as $1.3B of revolving credit currently available. Perhaps 12% dip is a slight overreaction? Link to comment Share on other sites More sharing options...
philly value Posted January 30, 2015 Share Posted January 30, 2015 Well at least mathematically, it appears so. Market cap has declined over $500M for what looks to be a worst case <$400M issue. That said, I am new to analyzing CBI so would like to hear what others think about possible ramifications. Link to comment Share on other sites More sharing options...
mvalue Posted January 30, 2015 Share Posted January 30, 2015 I don't think this is necessarily an overreaction and assume this will affect the planned milestones from this project and thus hit FCF hard. Could be wrong Link to comment Share on other sites More sharing options...
muscleman Posted January 30, 2015 Share Posted January 30, 2015 This sucks........ :( How will this affect the existing expectation of the FCF from the nuclear projects? Link to comment Share on other sites More sharing options...
Valueguy134 Posted January 30, 2015 Share Posted January 30, 2015 I'd be curious to see if the number that CBI has to pay up includes liquidated damages, and if there is a cap, not just schedule overruns. My experience working in the EPC world points to this being quite a large number. Link to comment Share on other sites More sharing options...
HWWProject Posted January 30, 2015 Share Posted January 30, 2015 This sucks........ How true. At the 2009 low CBI sold for 1 x book value. Right now we're at 1.3 x BV. This has got to be value territory for the stock. The US nuclear industry needs CBI, it will survive. Link to comment Share on other sites More sharing options...
muscleman Posted January 30, 2015 Share Posted January 30, 2015 This sucks........ How true. At the 2009 low CBI sold for 1 x book value. Right now we're at 1.3 x BV. This has got to be value territory for the stock. The US nuclear industry needs CBI, it will survive. I built a 15% two days ago and this down so much right after I bought. It sucks in terms of that. :'( Link to comment Share on other sites More sharing options...
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