The 11 Companies That Will Rebuild America’s Aging Infrastructure

A report this week from the American Society of Civil Engineers shows just how bad the state of infrastructure in the United States is and how much spending is needed in the next decade to get it back up to par. According to the report, $2.75 trillion needs to be invested in America’s infrastructure by 2020. The ASCE believes that the spending shortfall in this period will come to $1.1 trillion, and will have dire consequences: some $3.1 trillion in lost gross domestic product; about $3,100 annually lost in disposable income per household; some $1.1 trillion lost in total trade; about $2.4 trillion lost in consumer spending; and, worst of all, a loss of about 3.5 million jobs.

24/7 Wall St. wants to know which American companies could stand to benefit if a real infrastructure investment were made. The ASCE says that the spending gap will only get worse over time, with a $4.7 trillion shortfall by 2040. This leaves a massive opportunity for U.S. and North American infrastructure firms for capital investments in airports, seaports and waterways, road and rail, and electricity. The ASCE projected that, unless we invest another $157 billion per year for the next seven years, the cost to U.S. GDP over that period will be $3.1 trillion. That total opportunity would generate close to a 3:1 return on investments, versus expenses using simple math.

While members of ASCE, which represents 140,000 engineers, would benefit from an increase in infrastructure spending, that does not change the fact that the U.S. infrastructure is crumbling. A review of the country’s roads, bridges, highways, water systems, power grids makes that clear. Whether or not the ASCE is fluffing its feathers, it is obvious that America’s infrastructure is nowhere near where it needs to be.

As far as which companies will win, there are many. It has been almost two years since our last review of this issue and much has changed. The old Build America Bonds program from 2009 to 2010 has effectively come and gone. But what if a new program could somehow be kicked off? Printing money has not exactly added millions of jobs, but spending on infrastructure projects surely would.

With close to a 3:1 ratio in gains versus expenses, these existing infrastructure giants could reap huge rewards if any of this investment shortfall is targeted. We do question how much can be spent in the age of austerity, and when the U.S. debt clock now stands at $16.5 trillion, but political math is often very different from the real economic math you may have learned in college. Our outlook on key infrastructure players has ranked 11 companies in alphabetical order. Revenue projections have been taken from Thomson Reuters for the calendar or fiscal year 2013. We have also included notable projects and shown whether these companies pay a dividend for income investors.

If investors are looking for an infrastructure play, these are the American companies that could benefit most from rebuilidng America. While there are many more companies in the industry, they are either too diversified or too focused for the scope of a broad infrastructure review.

These are the 11 companies that will rebuild America’s aging infrastructure.

1. AECOM Technology Corp. (NYSE: ACM)
> Notable Project: part of rebuilding World Trade Center NYC
> 2013 Revenue: $8.3 billion
> Employees: 45,000
> Dividend Yield: N/A

AECOM offers architecture and engineering design services. It services the transportation, environmental and energy sectors, and it also serves key infrastructure projects such as highways, airports, bridges, wastewater facilities and power transmission and distribution. AECOM has a market value of about $2.7 billion, which is lower than the $3.5 billion featured in 2011. Its expected 2013 revenues are about $8.3 billion and it has roughly 45,000 employees around the world.

2. The Babcock & Wilcox Co. (NYSE: BWC)
> Notable Project: DOE Small Modular Reactor Licensing Technical Support Program
> 2013 Revenue: $3.5 billion
> Employees: 13,000
> Dividend Yield: 1.2%

B&W is based in Charlotte, North Carolina, has close to 13,000 employees, and designs, engineers and offers other services to power generation and environmental control systems for large utility and industrial customers. It also manufactures and supplies nuclear components and fuels for government and commercial uses and supplies services for building and maintaining power facilities. B&W is worth $3.1 billion in market capitalization, and its revenue is expected to be about $3.5 billion this year.

3. Chicago Bridge & Iron Co. N.V. (NYSE: CBI)
> Notable Projects: Georgia Power nuclear containment vessels, Valero Energy Diesel, Chevron Cabinda Gas Processing Complex Hydrotreater in Angola
> 2013 Revenue: $6.5 billion
> Employees: 18,000
> Dividend Yield: 0.4%

CB&I is about to be transformed. What was technically a Dutch company is spending about $3 billion to acquire the Shaw Group Inc. (NYSE: SHAW). CB&I is a key infrastructure player, with about 18,000 employees worldwide and a focus in oil and gas infrastructure, steel plate structures and plant manufacturing. Shaw Group is a vertically integrated player in energy, chemicals, environmental, infrastructure and emergency response industries, with about 25,000 employees. After this combination is finalized, the combined outfit may have about 40,000 employees after accounting for redundancies.

CB&I has a market value of about $4.7 billion and its sales are expected to be about $6.5 billion this year. Shaw has a market value of about $3.1 billion and is expected to have about $5.4 billion in annual sales. If America is going to get serious on its energy infrastructure ahead, CB&I stands to greatly win.

4. Emerson Electric Co. (NYSE: EMR)
> Notable Project: UCB’s $228 million construction of biopharma project in Switzerland
> 2013 Revenue: $25 billion
> Employees: 135,000
> Dividend Yield: 3.0%

Emerson is based in St. Louis, Missouri, and offers engineering and project management services for many industries and many government agencies. It manufactures major equipment for utilities and industry, power and telecom, heating and air-conditioning, network power, climate technologies and more. Emerson’s headcount is about 135,000 employees globally.

Emerson has a market value of roughly $39 billion, and it is expected to have $25 billion in sales in 2013, but the company projected that sales of $32 billion to $35 billion were possible in 2015.

5. Fluor Corp. (NYSE: FLR)
> Notable Project: DOE environmental cleanup of 586-square-mile Hanford site near Richland, Washington
> 2013 Revenue: $29.5 billion
> Employees: 43,000
> Dividend Yield: 1.0%

Fluor is based in Irving, Texas, and provides engineering, procurement, construction, maintenance and project management services to the oil and gas industries, industrial and infrastructure segments and the government. It has some 43,000 employees. Fluor has a market value of $10.4 billion, and it is projected to have annual sales of about $29.5 billion.

6. Great Lakes Dredge & Dock Corp. (NASDAQ: GLDD)
> Notable Project: Baltimore Harbor maintenance dredging
> 2013 Revenue: $800 million
> Employees: 396 full-time (2011)
> Dividend Yield: 0.9%

GLD&D is based in Oak Brook, Illinois, and is smaller than most infrastructure players. This company still has larger scale importance and could have real growth opportunities ahead due to its marine construction with dredging and commercial and industrial demolition operations. It supports the construction of breakwaters, jetties, canals and other marine structures, and it then gets ongoing maintenance of these projects.

GLD&D is the smallest of these potential winners, with a market value of only $570 million or so. Its annual revenues are expected to grow to almost $800 million this year.

7. Jacobs Engineering Group Inc. (NYSE: JEC)
> Notable Project: NASA testing/operations support services Kennedy Space Center
> 2013 Revenue: $13.1 billion
> Employees: 48,000
> Dividend Yield: N/A

Jacobs is based in Pasadena, California, and provides professional, technical and construction services for government, NASA, oil and gas, building projects, infrastructure and more. The company has about 48,000 workers and much of its effort is international. The market value of Jacobs is $5.9 billion and it is expected to have revenues of roughly $13.1 billion this year.

8. KBR Inc. (NYSE: KBR)
> Notable Project: Hull design and support for BP Atlantis rig
> 2013 Revenue: $8.5 billion
> Employees: 27,000
> Dividend Yield: 0.7%

KBR is based in Houston and has been thought of by some of the public as a war-support and disaster-support company. The company’s Government and Infrastructure business offers services to civilian authorities and private clients outside of the military, and it has been able to mobilize workers for disaster assistance perhaps in a faster manner than any other company.

KBR has about 27,000 employees and has historically been able to mobilize far more workers under its network of companies that subcontract and offer support. KBR has a market capitalization of about $4.4 billion, and its expected revenues are about $8.5 billion.

9. McDermott International Inc. (NYSE: MDR)
> Notable Project: Freeport Sulphur Main Pass Mine Complex
> 2013 Revenue: $3.2 billion
> Employees: 13,500
> Dividend Yield: N/A

McDermott went through a separation of sorts with Babcock & Wilcox a couple of years ago. It is a Houston-based engineering and construction company with operations around the globe. Its workforce of about 13,500 mainly serves offshore oil and gas construction, and it installs marine pipelines and subsea production systems. Sales are expected to be close to $3.2 billion this year.

10. Tetra Tech Inc. (NASDAQ: TTEK)
> Notable Projects: USAID Liberia Municipal Water Project, USACE hurricane risk reduction project in New Orleans, Engineering services to upgrade flood protection in the United States capital region
> 2013 Revenue: $2.4 billion
> Employees: 14,000
> Dividend Yield: N/A

Tetra Tech is based in Pasadena, California, and is considered one of the greats when it comes to consulting, engineering, construction, technical services and project management in water infrastructure and resource management. It has about 14,000 employees and operates in water resources, groundwater services and watershed management. It is also into remediation and environmental planning, disaster management and sustainability projects around climate change and carbon management.

The biggest boost is also the biggest potential snag for Tetra Tech: it relies heavily on contracts from federal, state and local government agencies. The company has a market value of $1.8 billion, and it is expected to have revenues of about $2.4 billion this year.

11. URS Corp. (NYSE: URS)
> Notable Projects: $3.6 billion Central Texas Turnpike, technical design and construction oversight of Denver International Airport
> 2013 Revenue: not released
> Employees: 57,000
> Dividend Yield: 2.0%

URS is based in San Francisco and offers engineering, construction and technical services for public agencies and private sector companies around the world with the following: program management; planning, design and engineering; systems engineering and technical assistance; construction and construction management; operations and maintenance; information technology; and decommissioning and closure.

URS clients are the federal government, as well as oil and gas, infrastructure, power, and industrial projects and programs. The company has 57,000 employees worldwide and has a market capitalization of about $3.1 billion.

As you can see, there are many engineering and construction services companies that could win in the race to service the massive infrastructure that needs to be built and repaired. It is not uncommon for more than one of these to work on a project simultaneously, even if these companies do all bid against each other for business. This is a solid list of companies that could all stand to win if the rebuilding of America’s infrastructure is ever allowed to occur.

The post The 11 Companies That Will Rebuild America’s Aging Infrastructure appeared first on 24/7 Wall St..