ShawCor Ltd. Reports First Quarter Results (Canada)

* First quarter revenue of $279 million increased by 24% from the $225 million reported in the first quarter of 2010 but was lower than the $292 million reported in the fourth quarter of 2010.

* EBITDA in the first quarter increased by 36% to $41.4 million from $30.4 million in the first quarter of 2010 but was lower by 38% over the $66.8 million reported in the fourth quarter of 2010.

* Net income in the first quarter was $20.5 million (or $0.29 per share diluted) compared with $11.7 million (or $0.16 per share diluted) in the first quarter of the prior year and compared with $49.7 million (or $0.70 per share diluted) in the fourth quarter of 2010, which included the recording of a $18 million gain (or $0.25 per share diluted) from the revaluation of the Company’s investment in its Brazil pipe coating business following the acquisition of an additional 50 % interest, and after giving effect to IFRS restatements.

* Subsequent to March 31, 2011, the Company announced the completion of the acquisition of CSI Coating Services, a business that delivers coating services to the oil and gas industry from a modern facility in Nisku, Alberta and through mobile units that perform field coatings throughout Western Canada.

Bill Buckley, President and CEO of ShawCor Ltd. stated: “ShawCor’s first quarter financial results reflect a significant improvement over the first quarter of 2010 as a result of improved small diameter market conditions in Canada and the United States and higher project volumes in our EMAR region. Results were, however, negatively impacted by reduced project activity in Mexico and Brazil and delays in production on the PNG LNG project in our Asia Pacific region. We expect that this level of activity will continue in the second quarter with a gradual improvement in the second half of this year based on the deferred PNG LNG production and the launch of major projects in Brazil, the Gulf of Mexico, and Asia Pacific.”

Mr. Buckley added, “The Company’s long term outlook continues to be supported by the level of outstanding firm bids in the range of $1.5 billion and by the progress we are making on key strategic initiatives including the mobilization of our new Brigden mobile coating technology in Beaumont, Texas and the commissioning of our new Subsea Test Facility in Toronto.”

Effective January 1, 2011, ShawCor Ltd.  began reporting its financial results in accordance with Internal Financial Reporting Standards (“IFRS”). Prior year comparative amounts have been changed to reflect results as if the Company had always prepared its financial results using IFRS. Additional disclosure regarding the transition to IFRS is contained in Section 4 of this news release.

OUTLOOK

The outlook for market activity in the Company’s Pipeline and Pipe Services Segment and in the Petrochemical and Industrial Segment is outlined below:

Pipeline Segment – North America

The Company has experienced improving small diameter market conditions in both Canada and the USA through 2010 and in the first quarter of 2011. This improvement has been related to increased well drilling and completions throughout North America, and has bolstered demand for small diameter pipe coating, composite pipe, and joint protection products. The trend of improvement is expected to continue once the seasonal impact of spring break up in Western Canada is complete. During the second quarter, the Company will be in production on a number of large diameter pipe coating projects that should offset the spring break up impact. In the third quarter, 2 of 11 the Company will launch production on the $40 million Jack St. Malo project at the Brigden site in Beaumont, Texas, with this project reaching full production in the fourth quarter and continuing through the first quarter of 2012.

Pipeline Segment – Latin America

The Latin America region, consisting primarily of the Company’s operations in Mexico and Brazil, had very weak revenues in the first quarter. The absence of project activity in Mexico is believed to be temporary as Pemex have a number of pipeline developments that are planned for the second half of 2011. In Brazil, the Company has secured a $20 million contract to provide pipe coating services for the P55 Risers project. This project is currently completing product validation and should commence production in the third quarter.

Pipeline Segment – EMAR

Project activity in the Europe, Middle East, Africa, Russia (“EMAR”) region was an area of notable strength for ShawCor in the first quarter with several major projects in production including the U.S. $93 million Total Laggan-Tormore project. The Laggan project is being executed in stages with the 18” pipe portion of the project now complete and the 30” pipe portion not scheduled to reach full production until the summer. The result will be a short term reduction in activity in the second quarter but a return to first quarter levels of production in the fourth quarter.

Pipeline Segment – Asia Pacific

During 2010, revenue generated from the Asia Pacific region reached a record level due to the execution of a portion of the $185.0 million PNG LNG and $40.0 million Epic Energy QSN3 projects plus a number of other projects. The Epic Energy project was completed in the first quarter of 2011 and revenue from the PNG LNG project declined by approximately $26 million compared with the fourth quarter of 2010 as a result of deferred pipe deliveries. As a result of disruption to port facilities in Japan due to the March, 2011 earthquake and tsunami, these deferred pipe deliveries are not expected to be made until the third quarter of 2011. As full production on the PNG LNG project is resumed, and several other large projects in South East Asia anticipated for the second half of 2011 commence, revenue in the region should strengthen with full year revenue in line with the prior year.

Petrochemical and Industrial Segment

The Company continues to expect that the gradual recovery in the global economy following the economic recession of 2008 and 2009 will generate ongoing improvements in the Petrochemical and Industrial segment’s markets throughout 2011.

Order Backlog

The Company’s order backlog, representing customer orders expected to be completed within one year, declined in the first quarter to $333 million from a total of $375 million at December 31, 2010.The Company has in recent months submitted firm project bids totaling in excess of $1.5 billion. These bids relate to projects that are progressing towards client investment approval decisions, at which time the bids will translate into firm production orders, which, if several are awarded to the Company, offer the potential to increase ShawCor’s backlog during 2011.

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Source: shawcor ,May 13, 2011;