Shaw Group Shows Steady Growth in Fiscal Year 2010

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Researched by Industrial Info Resources (Sugar Land, Texas)--On Thursday, EPC giant The Shaw Group Incorporated (NYSE:SHAW) (Baton Rouge, Louisiana) reported operating results for the company's fourth quarter and fiscal year 2010, which ended August 31, 2010. Excluding the company's Westinghouse segment, Shaw's net income for fiscal year 2010 was $187.7 million, up 10% from the 2009 fiscal year. Net income in the fourth quarter was $47.5 million, up from $40.5 million in 4Q09. Revenues for the year were $7 billion.

Quarterly revenues in the company's business segments were as follows:

• Power - $592.7 million, down 16% from 4Q09
• Plant Services - $157.5 million, up 26% year over year
• Environmental & Infrastructure (E&I) - $630.6 million, up 18%
• Energy & Chemicals (E&C) - $221.4 million, down 41% from the same period last year
• Fabrication & Manufacturing (F&M) - $126.5 million, up 7%

In a conference call regarding the earnings, Executive Vice President and Chief Financial Officer Brian Ferraioli spoke of the changes in business segment earnings. "The E&I group continues to generate strong quarterly revenues, and that is due primarily from increased U.S. government spending. The Power business on the other hand, its volume of business was down year over year, primarily due to its decline in the air emissions projects that we had been executing in 2009. As you know, there's legislation pending on changes in air emissions, and we expect that business to pick up as we move forward in 2011 and 2012," said Ferraioli.

About 57% ($11.4 billion) of Shaw's backlog at the end of August 2010 was in the Power Industry. Chairman, President and CEO J.M. Bernhard Jr. spoke of upcoming Power Industry trends. "The Domestic nuclear uprates market truly remains strong. The domestic market for nuclear uprates continues to be an area in which Shaw can win more awards. We've already helped our clients add more than 30,000 megawatts (MW) in the U.S. power grid, and we'll continue to provide the services to fit their needs. We expect to book several uprate contracts in the very near future," said Bernhard.

Shaw anticipates increased construction of gas-fired power plants. "We're anticipating a strong domestic new-build gas market moving forward. The gas market is expected to strengthen in 2011, with gas prices continuing to be low. We estimate that 10,000 MW of gas plants may be awarded this year... Our targeted market is approximately $5 billion, which we should have a significant part of that market going forward," said Bernhard.

Despite the increasing construction of gas-fired power plants, one of the major projects for which Shaw is providing engineering and construction services is the 600-MW grassroot coal-fired power plant in Fulton, Arkansas, belonging to Southwestern Electric Power Company, a subsidiary of American Electric Power Company Incorporated (NYSE:AEP) (Columbus, Ohio). Construction on the estimated $1.7 billion John W. Turk Jr. Power Station began in late 2008 and is expected to be completed in the fourth quarter of 2012. Information on this and more than $90 billion in active projects involving the Shaw Group can be found in Industrial Info's International and North American Industrial Databases.

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