The Shaw Group Inc. (NYSE: SHAW) announced financial results for the second quarter of fiscal year 2012, which ended Feb. 29, 2012.
Second Quarter Fiscal Year 2012 Overview:
– Plant Services segment awarded a new contract with Arizona Public Service Co. (APS) to provide maintenance and construction services to eight fossil power plants. This follows Shaw’s award in the first quarter to service APS’s nuclear power units.
– Southern Company awarded combined license (COL) for Plant Vogtle from the Nuclear Regulatory Commission (NRC) on Feb. 9, 2012. The NRC is scheduled to conduct its affirmation meeting on SCANA’s V.C. Summer COL on March 30, 2012.
– Regulatory-required design changes and COL delays for nuclear projects increased total forecast project costs, which decreased overall project percent complete calculated for revenue recognition purposes. While the percentage of completion impact is merely timing related, it adversely impacted the quarter by approximately $8.3 million pre-tax or $0.08 per share. Shaw believes increased forecast costs are recoverable from its clients and has reached a preliminary agreement on these costs with SCANA.
– Power segment negatively impacted by net cost increases of approximately $17.6 million pre-tax, or $0.16 per share, on two coal projects that are nearing completion.
– Shaw continues to evaluate strategic alternatives for our Energy & Chemicals segment and has received offers from potential acquirers. We expect to render a decision during the third quarter of fiscal year 2012.
“Results for the quarter were driven by strong operational performance in our Plant Services, Environmental & Infrastructure and Fabrication & Manufacturing segments, as well as our nuclear power contracts. Our Power segment was impacted by increased field construction costs on coal projects that are nearing completion and a change in the overall project completion schedule for the nuclear projects driven by delays in receiving the COLs. However, work is ramping up significantly on the nuclear projects, and we expect a positive impact for the remainder of the fiscal year from those projects,” said J.M. Bernhard Jr., chairman, president and chief executive officer of Shaw.
Because of the non-cash, non-operational impact on reported earnings resulting solely from movement in exchange rates between the U.S. dollar and the Japanese yen, Shaw uses financial results excluding its Investment in Westinghouse segment to measure and communicate financial performance internally and externally. As previously announced, Shaw’s subsidiary, Nuclear Energy Holdings (NEH), intends to exercise put options to sell its investment in Westinghouse back to Toshiba.
For the second quarter of fiscal year 2012, Shaw’s Westinghouse segment includes a non-cash, non-operating foreign exchange translation gain of $51.5 million pre-tax, or $31.6 million after tax. The prior year’s period included a non-cash foreign exchange translation loss of $46.9 million pre-tax, or $28.7 million after tax.