"Build it and they will come" sounds good, but "build it and they will pay promptly" would sound even better to engineering and construction firm Shaw Group
Expectations aside, you might have thought this was a pretty good quarter. Revenues were up 38%, the company reversed a year-ago loss (if you exclude a charge), and its backlog was up 21% to more than $8 billion (nearly seven quarters of revenue at this quarter's run rate).
But it's not all good news. The government canceled about $100 million in hurricane recovery work. What's worse, a change in government policy is harming the company's cash flows, and ultimately its bottom line. Because the government now chooses to audit before paying (it used to work in reverse), more than $400 million in bills remain unpaid. To compensate, the company has been forced to borrow money, which costs Shaw a few million dollars in interest every quarter.
Annoying as this is, what choice does Shaw have? After all, if it doesn't want government work, rivals like Washington Group
If investors want to buy infrastructure companies, believing that the United States and the governments of emerging nations will begin to spend money to upgrade roads, power, and water systems, I'm cool with that. Shop around, though, because with others like Washington Group, McDermott
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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).