Babcock & Wilcox Announces First Quarter 2012 Results

  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
investors@babcock.com
or
Media Contact:
Jud Simmons, Public Relations Manager, 434-522-6462
hjsimmons@babcock.com