Shaw revenue near $7 billion

• By GARY PERILLOUX
• Advocate business writer
• Published: Oct 31, 2008 - Page: 1D - UPDATED: 12:05 a.m.

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The Shaw Group Inc. ended its 2008 financial year on the cusp of $7 billion in revenue, a 22 percent gain from 2007, and with nearly three times more cash on hand than a year ago, the Baton Rouge company reported Thursday.

Still, analysts who track the firm questioned whether Shaw’s record $15.6 billion backlog of construction and engineering projects would be waylaid by a global economic crisis, a theory Shaw executives said has no basis in reality.

Shaw’s fourth-quarter profit came in at $82.6 million — or 98 cents a share — compared with $600,000, or 1 cent, in the final 2007 quarter. Shaw’s fiscal year ends Aug. 31.

For the year, Shaw earned $141 million, or $1.67 a share, a big turnaround from the 2007 fiscal year when Shaw recorded a $19 million net loss as it struggled through accounting problems and project overruns.

The company gave what it called a conservative forecast for 2009 of $7 billion to $7.3 billion in revenue and earnings about 15 percent higher than in 2008.

Jamie Cook, a Credit Suisse analyst, said she’s hearing across the board that many utility companies are cutting back on major capital expenditures. Shaw’s largest operating unit, its fossil and nuclear segment, accounted for 40 percent of company revenue in the fourth quarter and focuses on utility plant maintenance and construction.

“A lot of people think that even the regulated utilities might hold off on these projects in light of the economic environment, in light of the ability to finance these projects,” Cook said in a Shaw conference call with analysts.

Shaw Chairman Jim Bernhard and the company’s chief financial officer, Brian Ferraioli, countered the theory.

Bernhard said Shaw’s focus on regulated electric utilities, which typically can recover construction costs from their ratepayers, and on international and nationalized petrochemical companies and U.S. government projects “should help shield us from any major economic downturn.”

Those three categories make up 84 percent of the company’s business.

“We feel very secure,” Bernhard said.

David Yuschak, an SMH Capital analyst, pressed Bernhard on whether Shaw’s 2009 financial forecast is conservative because some of its customers may push back projects.

“It would be a lot easier for me to say, ‘We got this project delayed,’ and everybody would say, ‘Well, we expect that,’” Bernhard said. “We tried to find something to write down out of our backlog. … It just hasn’t been the case.”