Babcock & Wilcox Co : Babcock & Wilcox Announces First Quarter 2012 Results
05/09/2012| 04:05pm US/Eastern
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Earnings per share of $0.39
Revenues of $766 million increased 10.8%
Record Backlog of $6.0 billion
The Babcock & Wilcox Company (NYSE: BWC) ("B&W" or the "Company") today
reported first quarter 2012 revenues of $765.9 million, an increase of
$74.6 million, or 10.8%, from the first quarter of 2011. Earnings per
share for the first quarter of 2012 were $0.39 compared to $0.11 in the
first quarter of 2011. In the first quarter of 2011, earnings per share
included approximately $0.17 of charges related to loss contracts.
Excluding the impact of these prior year charges, earnings per share in
the first quarter of 2012 increased 39.3% compared to the first quarter
of 2011.
Recent Highlights
Named to MIT Technology Review's 2012 TR50 List of the World's Most
Innovative Companies
Received Full Notice to Proceed on West Palm Beach Waste-to-Energy
Facility Contract, Added $676 Million to Backlog
Awarded $1.3 Billion, Ten-Year Waste Isolation Pilot Plant
Management Contract
Awarded $150 Million Environmental Equipment and Construction
Contract for Alliant Energy
Awarded $130 Million Naval Nuclear Component Contract
Awarded $30 Million Design and Engineering Selective Catalytic
Reduction (SCR) System Contract for Xcel Energy
Awarded $20 Million EPC Industrial Environmental Control Systems
Contract
Announced Retirement of Brandon C. Bethards and Appointment of E.
James Ferland as President and Chief Executive Officer
Results of Operations
Consolidated revenues for the first quarter of 2012 were $765.9 million,
an increase of $74.6 million, or 10.8%, from the first quarter of 2011.
The Power Generation and Nuclear Energy segments increased 16.3% and
32.6%, respectively, while the combined government segments declined
1.3%. The double-digit growth rate in consolidated revenues is primarily
due to strong environmental control equipment and services sales, growth
in new renewable steam generation systems, and higher nuclear services
revenues.
Operating income for the first quarter of 2012 was $65.7 million, an
increase of $43.8 million from the first quarter of 2011. Included in
operating earnings in the first quarter of 2011 were charges related to
loss contracts totaling $32.7 million. Excluding the impact of these
charges in the prior year, operating earnings in the first quarter of
2012 increased $11.1 million or 20.3% compared to the first quarter of
2011.
The increase in operating income (excluding these 2011 charges) was
primarily due to improvements in operational performance in the
Government segments, partially offset by an increase in research and
development expenses related to the Company's small modular reactor
program and lower equity income contributions from the Company's
unconsolidated steam boiler joint venture in China.
"In the first quarter, the Company performed well above prior year
levels, and in-line with expectations," said E. James Ferland, President
and Chief Executive Officer of B&W. "Importantly, strong bookings in the
first quarter of 2012 resulted in an ending backlog of $6.0 billion, the
highest quarter-end backlog the Company has ever reported. Bookings in
the quarter include the impact of the full notice to proceed received
for the West Palm Beach waste-to-energy plant, $249 million of
environmental awards and a new $130 million contract for advanced naval
reactor designs. Over the last few quarters, the Company has realized a
significant increase in environmental control systems bookings as a
result of legislative requirements in the United States to generate
electricity with fewer emissions. At the end of the first quarter, the
Power Generation segment had more than $4 billion of bids outstanding or
in progress, which includes more than $2 billion for environmental
control systems and services," Ferland concluded.
Liquidity
The Company's cash and investments position, net of debt, was $418.7
million at the end of the first quarter of 2012, a decrease of $125
million compared to $543.7 million at the end of the fourth quarter of
2011. During the quarter, the Company contributed $91.6 million to its
pension plans. In addition to net cash, the Company maintains a $700.0
million revolving credit agreement with $483.8 million of availability
as of the end of the first quarter. The Company believes it maintains
adequate liquidity to fund operations, which could include increased
working capital requirements to fund internal growth, R&D programs, and
product and geographic expansion opportunities.
Reconciliation of Non-GAAP Earnings Per Share and Operating Income (in
$ millions, except per share amounts)
Q1 2012
Q1 2011
GAAP operating income
$65.7
$21.9
NFS material processing loss contracts
-
11.1
Nuclear Energy loss contract
-
21.6
Non-GAAP operating income
$65.7
$54.6
Reported earnings per share
$0.39
$0.11
NFS material processing loss contracts
-
.06
Nuclear Energy loss contract
-
.11
Non-GAAP earnings per share
$0.39
$0.28
B&W is providing non-GAAP information regarding certain of its
historical results to supplement the results provided in accordance with
GAAP and it should not be considered superior to, or as a substitute
for, the comparable GAAP measures. B&W believes the non-GAAP measures
provide meaningful insight in the Company's operational performance and
provides these measures to investors to help facilitate comparisons of
operating results with prior periods and to assist them in understanding
B&W's ongoing operations.
Conference Call to Discuss First Quarter 2012 Results
B&W cautions that this release contains forward-looking statements,
including, without limitation, statements relating to our belief
regarding the opportunity from environmental control systems and
backlog, it the extent backlog may be viewed as an indicator of future
revenues. These forward-looking statements are based on management's
current expectations and involve a number of risks and uncertainties,
including, among other things, adverse changes in the timing, scope or
enforcement of U.S. Environmental Protection Agency environmental rules
affecting our customers and delays, changes or termination of contracts
in backlog. If one or more of these or other risks materialize, actual
results may vary materially from those expressed. For a more complete
discussion of these and other risk factors, see B&W's filings with the
Securities and Exchange Commission, including its annual report on Form
10-K for the year ended December 31, 2011. B&W cautions not to place
undue reliance on these forward-looking statements, which speak only as
of the date hereof, and undertakes no obligation to update or revise any
forward-looking statement, except to the extent required by applicable
law.
About B&W
The Babcock & Wilcox Company is a leader in clean energy technology and
services, primarily for the nuclear, fossil and renewable power markets
as well as a premier advanced technology and mission critical defense
contractor. B&W has locations worldwide and employs approximately 12,700
people, in addition to approximately 10,400 joint venture employees. A
company overview presentation, which will be presented at investor
conferences and meetings throughout this quarter, is available on the
Investor Relations section of our website. For additional information
please visit our website at www.babcock.com.
TABLES TO FOLLOW
THE BABCOCK & WILCOX COMPANY CONDENSED
CONSOLIDATED BALANCE SHEETS
ASSETS
March 31,
December 31,
2012
2011
(Unaudited)
(In thousands)
Current Assets:
Cash and cash equivalents
$
249,620
$
415,209
Restricted cash and cash equivalents
59,040
61,190
Investments
111,237
68,805
Accounts receivable - trade, net
329,336
305,832
Accounts receivable - other
76,375
77,505
Contracts in progress
336,731
315,286
Inventories
114,025
107,298
Deferred income taxes
88,770
102,022
Other current assets
44,105
33,929
Total Current Assets
1,409,239
1,487,076
Property, Plant and Equipment
1,038,586
1,017,422
Less accumulated depreciation
611,529
595,131
Net Property, Plant and Equipment
427,057
422,291
Investments
4,006
3,775
Goodwill
276,824
276,180
Deferred Income Taxes
236,080
241,739
Investments in Unconsolidated Affiliates
178,427
163,568
Other Assets
204,864
194,482
TOTAL
$
2,736,497
$
2,789,111
THE BABCOCK & WILCOX COMPANY CONDENSED
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
March 31,
December 31,
2012
2011
(Unaudited)
(In thousands)
Current Liabilities:
Notes payable and current maturities of long-term debt
$
4,650
$
4,653
Accounts payable
224,659
237,494
Accrued employee benefits
236,138
303,803
Accrued liabilities - other
77,820
71,079
Advance billings on contracts
430,789
438,753
Accrued warranty expense
98,413
97,209
Income taxes payable
2,549
1,816
Total Current Liabilities
1,075,018
1,154,807
Long-Term Debt
597
633
Accumulated Postretirement Benefit Obligation
79,031
80,663
Environmental Liabilities
44,857
44,069
Pension Liability
539,225
586,045
Other Liabilities
88,808
87,921
Commitments and Contingencies
Stockholders' Equity:
Common stock, par value $0.01 per share, authorized 325,000,000
shares; issued 119,020,291 and 118,458,911 shares at March 31,
2012 and December 31, 2011, respectively
1,190
1,185
Preferred stock, par value $0.01 per share, authorized 75,000,000
shares; No shares issued
-
-
Capital in excess of par value
1,116,544
1,106,971
Retained earnings
313,069
266,325
Treasury stock at cost, 457,747 and 351,876 shares at March 31, 2012
and December 31, 2011, respectively
(12,889
)
(10,059
)
Accumulated other comprehensive loss
(518,809
)
(538,628
)
Stockholders' Equity - The Babcock & Wilcox Company
899,105
825,794
Noncontrolling interest
9,856
9,179
Total Stockholders' Equity
908,961
834,973
TOTAL
$
2,736,497
$
2,789,111
THE BABCOCK & WILCOX COMPANY CONDENSED CONSOLIDATED STATEMENTS
OF INCOME
Three Months Ended
March 31,
2012
2011
(Unaudited)
(In thousands, except share and per share amounts)
Revenues
$
765,892
$
691,277
Costs and Expenses:
Cost of operations
582,739
564,806
Research and development costs
29,036
17,308
Gains on asset disposals and impairments - net
(260
)
(10
)
Selling, general and administrative expenses
106,023
102,633
Total Costs and Expenses
717,538
684,737
Equity in Income of Investees
17,357
15,361
Operating Income
65,711
21,901
Other Income (Expense):
Interest income
233
459
Interest expense
(623
)
(455
)
Other expense - net
(1,102
)
(2,994
)
Total Other Expense
(1,492
)
(2,990
)
Income before Provision for Income Taxes
64,219
18,911
Provision for Income Taxes
20,357
5,244
Net Income
$
43,862
$
13,667
Net Loss (Income) Attributable to Noncontrolling Interest
2,882
(157
)
Net Income Attributable to The Babcock & Wilcox Company
$
46,744
$
13,510
Earnings per Common Share:
Basic:
Net Income Attributable to The Babcock & Wilcox Company
$
0.40
$
0.12
Diluted:
Net Income Attributable to The Babcock & Wilcox Company
$
0.39
$
0.11
Shares used in the computation of earnings per share:
Basic
118,255,346
116,968,275
Diluted
118,859,141
117,957,245
THE BABCOCK & WILCOX COMPANY CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended
March 31,
2012
2011
(Unaudited)
(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income
$
43,862
$
13,667
Non-cash items included in net income:
Depreciation and amortization
17,715
19,315
Income of investees, net of dividends
(6,893
)
(3,832
)
Gain on asset disposals - net
(260
)
(10
)
In-kind research and development costs
3,644
-
Amortization of pension and postretirement costs
21,524
20,474
Stock-based compensation expense
3,983
4,853
Excess tax benefits from stock-based compensation
(1,406
)
(4,031
)
Changes in assets and liabilities, net of effects of acquisitions:
Accounts receivable
(28,497
)
(31,213
)
Net contracts in progress and advance billings on contracts
(30,997
)
(44,328
)
Accounts payable
(10,159
)
6,016
Inventories
(6,066
)
1,536
Current and deferred income taxes
21,306
21,479
Accrued and other current liabilities
4,378
8,535
Pension liability, accumulated postretirement benefit obligation and
accrued employee benefits
(118,205
)
(71,633
)
Other, net
(17,163
)
(22,401
)
NET CASH USED IN OPERATING ACTIVITIES
(103,234
)
(81,573
)
CASH FLOWS FROM INVESTING ACTIVITIES:
Decrease (increase) in restricted cash and cash equivalents
2,150
(284
)
Purchases of property, plant and equipment
(21,441
)
(20,753
)
Purchases of available-for-sale securities
(64,802
)
(48,791
)
Sales and maturities of available-for-sale securities
22,015
48,577
Investment in equity and cost method investees
(6,572
)
(4,716
)
Proceeds from asset disposals
19
17
NET CASH USED IN INVESTING ACTIVITIES
(68,631
)
(25,950
)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of short-term borrowing and long-term debt
(52
)
(797
)
Payment of debt issuance costs
-
(70
)
Excess tax benefits from stock-based compensation
1,406
4,031
Exercise of stock options
1,329
3,105
Other
(97
)
-
NET CASH PROVIDED BY FINANCING ACTIVITIES
2,586
6,269
EFFECTS OF EXCHANGE RATE CHANGES ON CASH
3,690
2,293
NET DECREASE IN CASH AND CASH EQUIVALENTS
(165,589
)
(98,961
)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
415,209
391,142
CASH AND CASH EQUIVALENTS AT END OF PERIOD
$
249,620
$
292,181
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest (net of amount capitalized)
$
618
$
892
Income taxes (net of refunds)
$
6,853
$
13,903
The Babcock & Wilcox Company
Business Segment Information
For the Periods Ended March 31, 2012 and 2011
(In thousands of U.S. dollars)
THREE MONTHS ENDED
3/31/12
3/31/11
REVENUES:
Power Generation
$
414,273
$
356,184
Nuclear Operations
250,178
250,455
Technical Services
24,973
28,360
Nuclear Energy
86,586
65,262
Adjustments and Eliminations
(10,118
)
(8,984
)
TOTAL
$
765,892
$
691,277
SEGMENT INCOME:
Power Generation
$
27,979
$
26,633
Nuclear Operations
48,002
30,450
Technical Services
14,618
12,142
Nuclear Energy
(16,827
)
(37,478
)
SUBTOTAL
73,772
31,747
Corporate
(8,061
)
(9,846
)
TOTAL
$
65,711
$
21,901
EQUITY IN INCOME OF INVESTEES:
Power Generation
$
3,822
$
6,010
Nuclear Operations
0
0
Technical Services
13,535
9,351
Nuclear Energy
0
0
TOTAL
$
17,357
$
15,361
PENSION EXPENSE:
Power Generation
$
16,439
$
15,928
Nuclear Operations
10,371
8,946
Technical Services
698
634
Nuclear Energy
1,225
1,181
Corporate
1,946
1,680
TOTAL
$
30,679
$
28,369
DEPRECIATION AND AMORTIZATION:
Power Generation
$
4,588
$
4,720
Nuclear Operations
8,489
10,391
Technical Services
74
66
Nuclear Energy
1,545
1,181
Corporate
3,019
2,957
TOTAL
$
17,715
$
19,315
RESEARCH AND DEVELOPMENT, NET:
Power Generation
$
4,839
$
2,994
Nuclear Operations
119
11
Technical Services
215
0
Nuclear Energy
23,863
14,303
TOTAL
$
29,036
$
17,308
CAPITAL EXPENDITURES:
Power Generation
$
5,731
$
4,139
Nuclear Operations
12,774
11,766
Technical Services
0
0
Nuclear Energy
865
2,463
Corporate
2,071
2,385
TOTAL
$
21,441
$
20,753
BACKLOG:
Power Generation
$
2,650,767
$
1,500,655
Nuclear Operations
2,931,859
2,931,001
Technical Services
21,783
3,009
Nuclear Energy
350,068
471,897
TOTAL
$
5,954,477
$
4,906,562
The Babcock & Wilcox Company Investor Contact: Michael P.
Dickerson, Vice President and Investor Relations Officer, 704-625-4944 investors@babcock.com or Media
Contact: Jud Simmons, Public Relations Manager, 434-522-6462 hjsimmons@babcock.com
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