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Chicago Bridge & Iron Building on Growth Foundation With More Deals


NEW YORK (TheStreet) -- After spectacular performance in 2013, including triple-digit growth in revenue, Chicago Bridge & Iron Company (CBI) recently announced new contracts worth more than $6 billion.

Building on its strong foundation, the company is also in a good position for growth thanks to its massive $27 billion backlog and a favorable business environment. Its shares, currently trading around $83, have risen by 42% in the last 12 months, easily outperforming its peers in the broader Engineering and Construction industry ETF (FLM), which has risen by 19% in the same period.

The company's performance las year included record revenue that more than doubled to $11.09 billion from $5.48 billion in the prior year. Meanwhile, CB&I's net income increased to $454 million in 2013 from $301 million in 2012.

CB&I earnings have risen from $1.79 per share in 2009 to $4.23 per share in the previous fiscal year. Analysts think CB&I's earnings could grow to $5.96 per share in 2015.

Although the company reported a drop in gross profit margin in its previous quarter -- from 12.9% in 2012 to 11.3% in 2013 -- the company's margins have improved by 70 basis points sequentially. Moreover, CB&I is far more profitable than its peers Fluor Corporation (FLR) and KBR (KBR), which reported gross margins of 5.34% and 4.87%, respectively.

CB&I's backlog has risen by a massive 154% $27.8 billion by the end of 2013 after it received new contracts worth $12.3 billion. Some of the new projects include the Freeport LNG plant, construction on ethylene plant for Occidental Petroleum  (OXY) and a nuclear power generation project in China.

The huge increase in CB&I's backlog is in stark contrast to its competitors Fluor and KBR. By the end of 2013, Fluor's backlog shrunk 3.5% from the prior year to $14.4 billion while the size of KBR's backlog fell by 8.6% to $34.9 billion.

In short, this was the best year for the CB&I in its 125 years of operations.

On March 18, CB&I announced two new contracts, worth more than $725 million, with the oil pipeline company Enterprise Product Partners (EPD) and with the construction company Bechtel. The contract with Enterprise is worth more than $100 million and involves fabrication of a new propane dehydrogenation unit in Mont Belvieu, Texas. The contract with Bechtel, valued at $625 million, is related to the Wheatstone Project in Western Australia operated by Chevron (CVX).

These contracts came just a day after a massive $6 billion deal in which CB&I, working with Japanese engineering giant Chiyoda Corp. (CHYCY), will construct Cameron LNG's Cameron Liquefaction Project in Hackberry, Louisiana. This deal will significantly enhance the company's footprint at the Gulf Coast.

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