New CEO, New Approach for Chicago Bridge & Iron
We expect his plan to include reducing risk and improving execution.
No-moat global engineering and construction firm Chicago Bridge & Iron (CBI) has announced that Patrick Mullen will replace Philip Asherman as CEO effective June 30. We believe new leadership will begin to reverse negative sentiment following a rocky stretch of poor execution, cash shortfalls, nagging lawsuits, and sizable share price declines.
Asherman has been CEO for 12 years, but in recent years he had become something of a lightning rod for investors, in our opinion. His growth-first approach to project bidding and capital deployment has had mixed success. His $3.9 billion acquisition of Shaw Group in 2013 ($2.2 billion net) led to a $1 billion write-down and high-profile lawsuits involving the sale of Shaw’s nuclear construction unit to Westinghouse. Project execution has been erratic as well, as reliance on subcontractor-heavy workforces boosted revenue at the cost of weak productivity, including multiple upward cost revisions on certain projects.
David Silver does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.