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Wednesday, August 09, 2006

Shaw Gets Another FEMA Pact

The Shaw Group Inc. (SGR) today announced its Environmental & Infrastructure business unit has been awarded an Individual Assistance Technical Assistance Contract (IA-TAC) by the Federal Emergency Management Agency (FEMA). The $250 million indefinite delivery/indefinite quantity contract will be in effect over a 2-year period starting in August 2006. The IA-TAC, which was awarded through a full and open competitive process, is intended to support FEMA's implementation of the Agency's Individual Assistance programs. The work to be performed would include consulting, technical, and project management services in response to small, mid-size, large, and catastrophic disasters in the United States. Specific tasks would include site assessments, inspections, planning, staging operations, design, construction, installation, and maintenance of temporary housing areas. The scope of services would also include the establishment and operation of a disaster-specific, toll-free call center and supporting other FEMA disaster operations.

So here is the deal, the company suffered after last quarter's earnings because of some issues where it did not win as much FEMA business as it hoped. With all the employees it carries, that was a blow. This is far short of the old $1 Billion amount if it covers the same issue, but it is at least a start. It is still toward the lower-end of its 52-week trading range of $16.14 to $36.08. SGR has been up all day, and shares are now up 1.5% at $21.71.

We'll see if this is enough of a FEMA order to generate any analyst actions. Because of the size it likely isn't, but we'll see. This translates to about $31+ million addition to each of the next 8 quarters if this is spread out equally, and if you assume no overruns to the amount. With it doing over $1 billion in revenues, this may be just another day at the office.

The company is still trying to make its tractions and get back what it lost. With all of the problems in piplelines and in the power grid, you have to wonder if the market is treating this stock too harshly.

Jon C. Ogg
August 9, 2006

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