Shaw Group's Third-Quarter Earnings Show Little Movement from Last Year

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Researched by Industrial Info Resources (Sugar Land, Texas)--The Shaw Group (NYSE:SHAW) (Baton Rouge, Louisiana) recently reported earnings results for the third quarter of the 2010 fiscal year. Excluding the company's yen-dominated Westinghouse segment, Shaw's earnings and net income were relatively flat compared to the same period last year. Net income for 3Q10 was $49.3 million, compared with $48.2 million in the same quarter last year. EBITDA was $97.3 million, compared to $98.3 million.

Quarterly revenues from Shaw's Fossil, Renewables & Nuclear business segment fell 10.9% from third-quarter 2009, falling from $644.5 million to $574.1 million. "Fossil, Renewable & Nuclear were down from a year ago," said Executive Vice President and Chief Financial Officer Brian K. Ferraioli in a conference call regarding the earnings. "That's primarily due to lower activity in the air-quality control business. As you might recall, we were very active in the scrubber market a year ago, and with the uncertainty around air emissions, that business has slowed throughout the second half of 2009 and so far in 2010."

The company's other business segments showed various changes from 3Q09:

• Maintenance - revenues of $252.9 million, up 8.8% from the previous year
• Environmental & Infrastructure (E&I) - revenues of $568 million, up 25.7%
• Energy & Chemicals (E&C) - revenues of $266.7 million, down 21.3% from 3Q09
• Fabrication & Manufacturing (F&M) - revenues of $127.6 million, down 28.9%

Ferraioli said that the E&C segment was down because the chemical and petrochemical sectors had "remained relatively flat." The Maintenance segment was up due to an increased number of nuclear outages, while government contracts had boosted the company's E&I segment.

In the conference call, President, Chairman and CEO J.M. Bernhard Jr. spoke of Shaw's current projects and future prospects in the Power Industry. Discussing two of Shaw's larger nuclear projects, SCANA Corporation's (NYSE:SCG) 2,200-megawatt (MW) addition to the Summer nuclear power station near Jenkinsville, South Carolina, and The Southern Company's (NYSE:SO) (Atlanta, Georgia) 2,234-MW addition to the Vogtle nuclear power plant near Waynesboro, Georgia, Bernhard said: "These projects remain on-time and on-schedule and running on-budget and are very major projects going forward in our nuclear part of the business." Site preparation for both projects is under way. Shaw currently employs 700 people at the SCANA site, while 1,100 employees are present at the Vogtle plant. Each site is expected to employee 3,000 to 3,500 people at peak construction.

Bernhard expressed optimism about Shaw's future role in other Power Industry sectors, noting that approximately 180 power plants, or an estimated 25,000 to 50,000 MW of power, could need air-quality retrofits after the passage of environmental legislation. Shaw has participated in approximately 40% of air-quality projects in the U.S. in the past few years. Bernhard also holds high hopes for gas-fired power plant construction. "There's going to be many new gas turbines built because of the continuing low price of natural gas," he said. "We think that over the next five years, that market is probably $20 billion to $30 billion," Bernhard said, emphasizing Shaw's willingness to participate in this new construction.

Industrial Info is tracking more than $82 billion of industrial projects involving Shaw, including the additions at the Summer and Vogtle nuclear power plants, which have an estimated combined value of $31 billion. Information on these and other Shaw projects can be found in Industrial Info's North American and Global project databases.

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