Cost overruns at several large projects contributed to a $90.3 million loss for The Shaw Group Inc. in its 2011 fourth quarter, and the company said it is considering selling its energy and chemicals segment.
The fourth quarter loss amounted to $1.25 per share, which compares with a loss of 28 cents per share, or $24 million, in the same period last year. Excluding its Westinghouse segment, which Shaw does because of foreign currency rates, the loss was $31.9 million, or 44 cents per share, compared with a profit a year earlier of $42.4 million, or 49 cents per share.
“It’s been a bad quarter, and quite frankly, we’ve had a bad year,” said Brian Ferraioli, executive vice president and chief financial officer for Shaw, to analysts in a conference call Monday, announcing the fourth-quarter and annual earnings.
For the year, the publicly traded Baton Rouge engineering, fabrication and construction company lost $175.0 million, or $2.18 per share, compared with 2010 net income of $82.0 million, or 96 cents per share.
Revenue for the fourth quarter totaled $1.48 billion, compared with $1.72 billion earned in the same quarter in 2010. Shaw’s full-year revenue for 2011 was $5.94 billion, compared with $6.98 billion for 2010.
In addition to cost overruns at an ethylene project in Asia and two coal-fired power plants, Shaw was also weighed down by a multimillion-dollar settlement in its fabrication and manufacturing segment.
“We’re putting those items behind us and moving forward,” remarked J.M. Bernhard Jr., chairman, president and CEO for Shaw.
“This was a tough quarter - tough year,” Bernhard said. “I believe we will excel in fiscal year 2012. Our backlog will grow.”
Shaw said its backlog of unfilled orders stands at $20 billion.
Shaw said it is in the process of evaluating strategic alternatives for its energy and chemicals segment and that “the company has received multiple written indications of interest from potential acquirers and is exploring options related to this business.”
Shaw already is selling back its stake in nuclear power plant company Westinghouse to Toshiba Corp. to cut debt and strengthen its balance sheet.
Shaw lowered its expectations for 2012 net income to a range of $2 to $2.10 per share, excluding Westinghouse, from a previously projected range of $2.20 to $2.50 per share.
It is forecasting 2012 revenue of $5.5 billion to $6 billion, down from previous expectations of $6.2 billion to $6.5 billion.
Bernhard said the company will continue to be heavily focused in energy projects, like nuclear or natural gas-fueled power plants.
Shaw expects to have “strong opportunities in the gas market,” he added. Final licensing for nuclear power units in the United States is also forthcoming, Bernhard added. Shaw is involved in the construction of six AP100 power units in the United States, which includes two reactors each in Georgia, South Carolina and Florida. These projects represent the first contracts awarded in nearly 30 years for new nuclear power plants in the country.
“Once the licenses are issued, we expect the new projects to have a significant positive impact on our earnings for fiscal (20)12 and beyond,” Bernhard said. “They are a few weeks behind what we had originally thought, but nevertheless they are moving along, pretty close to as anticipated.”
Shaw stock closed Monday at $23.26, up $1.08, or 4.9 percent.