While Economy Falters, Shaw Group's Future Looks Strong

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Researched by Industrial Info Resources (Sugar Land, Texas)--While many U.S. companies and institutions are struggling in the face of the slowing economy, notable exceptions exist. One of these is The Shaw Group Incorporated (NYSE:SGR) (Baton Rouge, Louisiana), which reported significant growth in profits in its first-quarter 2009 earnings report. While many companies have had to lay off increasing numbers of employees, the Shaw Group has continued growth and new hiring for the past several quarters. Shaw provides engineering, design, construction, maintenance, consulting and other services across business segments: Fossil & Nuclear Power, Power Maintenance, Energy & Chemicals, Fabrication & Manufacturing, and Environmental & Infrastructure.

The company's first fiscal quarter of 2009 ended November 30, 2008. Gross profit was up 39% from the same period last year, moving from $135 million in 1Q08 to $188.1 million this quarter. More impressively, net income, at $62.8 million was up more than 69% from 1Q08's $37.7 million. Of the company's five business segments Energy & Chemical brought in the largest amount in terms of gross profit. The five segments' gross quarterly profits were as follows:

• Fossil & Nuclear - $51.8 million, up from $42.9 million last year
• Energy & Chemicals - $52.4 million, up from $16.4 million
• Maintenance - $11.7 million, down from $14.8 million
• Environmental & Infrastructure - $35.7 million, up from $35.1 million
• Fabrication & Manufacturing - $35.7 million, up from $35.1 million last year

The future continues to look quite rosy for Shaw. Within the Environmental & Infrastructure segment, 93% of the infrastructure is with the U.S. Federal Government, which not only provides current lucrative contracts, but places Shaw in a good position to benefit from the upcoming economic stimulus package discussed by the new administration. Additionally, Shaw and partner Westinghouse recently signed a engineering, construction and procurement contract with Progress Energy (NYSE:PGN) (Raleigh, North Carolina) for the establishment of two Westinghouse AP1000 nuclear units in Florida. While the value of the contract remains undisclosed, Shaw is stating that this represents the largest contract ever in the company's history.

Industrial Info recently reported that The Shaw Group topped the list in terms of value of projects for engineering and construction firms with $48.9 billion of industrial projects in North America. For more information, see December 22, 2008, news article - Shaw Group Leads Top 10 E&C Firm List for Active Project Development in North America.

One of Shaw's larger conventional power projects currently under way is the $2.4 billion addition of an 800-MW coal-fired unit at the Cliffside Steam Station in Cliffside, North Carolina, which is owned by Duke Energy Carolinas LLC (Charlotte, North Carolina), a subsidiary of Duke Energy Corporation (NYSE:DUK) (Charlotte). Construction of the addition began in February 2008 and is expected to be complete in mid-2012. The Shaw Group is acting as both engineering contractor and general contractor for the project. Information on this and other projects is available in Industrial Info's North American Industrial Database.

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Industrial Info Resources (IIR) is a marketing information service specializing in industrial process, energy and financial related markets with products and services ranging from industry news, analytics, forecasting, plant and project databases, as well as multimedia services.