Babcock & Wilcox Announces First Quarter 2012 Results *Earnings per share of $0.39 *Revenues of $766 million increased 10.8% *Record Backlog of $6.0 billion Business Wire CHARLOTTE, N.C. -- May 09, 2012 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 Date: Thursday, May 10, 2012, at 8:30 a.m. ET Live Webcast: Investor Relations section of website at www.babcock.com Forward-Looking Statements 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 $ 4,650 $ 4,653 long-term debt 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 1,190 1,185 119,020,291 and 118,458,911 shares at March 31, 2012 and December 31, 2011, respectively 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, (12,889 ) (10,059 ) 2011, respectively Accumulated other comprehensive loss (518,809 ) (538,628 ) Stockholders’ Equity – The Babcock & Wilcox 899,105 825,794 Company 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 (260 ) (10 ) – net Selling, general and administrative 106,023 102,633 expenses 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 2,882 (157 ) Noncontrolling Interest Net Income Attributable to The Babcock & $ 46,744 $ 13,510 Wilcox Company Earnings per Common Share: Basic: Net Income Attributable to The Babcock & $ 0.40 $ 0.12 Wilcox Company Diluted: Net Income Attributable to The Babcock & $ 0.39 $ 0.11 Wilcox Company 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 (30,997 ) (44,328 ) contracts 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 (118,205 ) (71,633 ) benefit obligation and accrued employee benefits 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 2,150 (284 ) equivalents 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 22,015 48,577 securities 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 (52 ) (797 ) debt 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 Contact: The Babcock & Wilcox Company Investor Contact: Michael P. Dickerson, Vice President and Investor Relations Officer, 704-625-4944 firstname.lastname@example.org or Media Contact: Jud Simmons, Public Relations Manager, 434-522-6462 email@example.com
Babcock & Wilcox Announces First Quarter 2012 Results
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