CH2M HILL's name is a bit tricky, but the engineering and construction firm is all up front. The firm (named for its founders Cornell, Howland, Hayes, and Merryfield) operates two divisions: Energy, Water and Facilities; and Government, Environment and Infrastructure. Federal projects are a significant source of revenue. Public sector clients include the US Department of Energy and the Department of Defense. CH2M HILL also works for state and local governments building water and wastewater systems, airports, highways, and other transportation projects. Its energy and water division targets private sector clients, utilities and local and state governments. Founded in 1946, the firm is owned by its employees.
The US accounts for more than two-thirds of Colorado-based CH2M HILL's business. The remainder comes from some Asia, Australia/New Zealand, Canada, Europe, Latin America, and the Middle East and Africa: some 120 countries in all.
Following a reorganization in 2012, CH2M HILL operates two business segments. The larger of the two, Energy, Water and Facilities (EWF), accounts for about 55% of sales, while Government, Environment and Infrastructure (GEI) represents the rest. The firm's EWF business is comprised of the energy and chemicals, industrial and advanced technologies, operations management, and power and water businesses. Services include consulting, design, engineering, design-build, operations and maintenance, construction management, and program management, among others. GEI houses the environmental services, government facilities and infrastructure, nuclear, and transportation businesses. The US government is the division's #1 client. Indeed, US federal contracts accounted for 28% of the company's revenue in 2012, compared with about 35% of revenue in 2011.
CH2M HILL 2012 overall revenue was up 11% versus 2011, while net income fell 22% over the same period. The firm's Energy, Water and Facilities (EWF) segment outperformed Government, Environment and Infrastructure (GEI), posting a 25% increase in revenue in 2012 relative to 2011, compared with a 3% decrease for GEI over the same period. The strong performance by EWF was driven the acquisition of Halcrow Holdings (in late 2011), and four new EPC power projects awarded in late 2011. The annual decline at GEI was due to lower volumes in its nuclear markets due to decreased funding levels for large Department of Energy projects, as well as lower design-build volumes in the Middle East.
The company's international business (up 40% in 2012 versus 2011), offset the lackluster performance in the US (up 1%). Indeed, growth in its international markets, including Australia and the United Arab Emirates (where it has worked on water desalination plants), has had a hand in spurring increased revenues in its civil infrastructure group.
The company is expanding in core markets overseas to make up for weakness at home, particularly the downward trend in federal spending. To that end, it is investing in the UK following a major acquisition there in late 2011. Also, transportation remains a growing segment in the public sector and the company has focused its resources there.
HC2M HILL also expects to see continued growth in its industrial segment, partially due to key acquisitions of two energy services companies; troubled Alaskan oil and gas services firm VECO and Colorado pipeline contractor Trigon EPC. The industrial segment also is being driven by several engineering, procurement, and construction contracts with major US utility companies to build power generation facilities.
Mergers and Acquisitions
In November 2011 the company acquired Halcrow Group, a London-based specialist in environmental, infrastructure and transport projects for an estimated $192 million. The deal helped boost CH2M HILL's facilities and infrastructure revenues and expanded the company's global reach, adding Halcrow's extensive client list and about 100 offices worldwide.
In 2011 CH2M HILL expanded its public transit business when it acquired the state and local government transit consulting business of Booz Allen Hamilton.
The company is owned by its employees.