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  
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