News Column

B&W Announces Second Quarter 2014 Results

August 11, 2014



ENP Newswire - 11 August 2014

Release date- 08082014 - CHARLOTTE, N.C. - The Babcock & Wilcox Company (NYSE: BWC) today reported first quarter 2014 revenues of $662.0 million, a decrease of $143.4 million, or 17.8% from the first quarter of 2013.

GAAP earnings per share for the first quarter of 2014 were $0.41 unchanged from $0.41 in the first quarter of 2013. Adjusted earnings per share for the first quarter 2014, which excludes the impact of $2.7 million of restructuring charges, were $0.42, a decrease of 8.7% from adjusted earnings per share of $0.46 for the first quarter of 2013.

During the first quarter of 2014, the Company repurchased 0.5 million shares of its common stock at a total cost of $15.7 million. Through March 31, 2014, the Company had repurchased a total of 10.0 million shares at a cost of $269.3 million, leaving $480.7 million of capacity remaining under its previously announced $750 million share repurchase authorizations.

Recent Highlights

Awarded $195 Million in Naval Reactors Contracts and Orders

Awarded Steam Generator Services Contract from American Electric Power

Awarded $302 Million in Contracts for Naval Reactors Fuel and Materials Services

Awarded U.S. Department of Energy Funding for Carbon Dioxide Capture Technology

Received Extension of Management and Operating Contract at Idaho National Laboratory

Announced Plans to Restructure mPower Small Modular Reactor Program

Results of Operations

Consolidated revenues for the first quarter of 2014 were $662.0 million, a decrease of $143.4 million, or 17.8%, from the first quarter of 2013. The Nuclear Operations segment revenues were $286.2 million, an increase of $25.1 million over the corresponding period in 2013, primarily due to strong execution and increased activity in the manufacturing of nuclear components for U.S. Government programs.

Revenues in the Power Generation segment decreased by $149.4 million, to$312.1 million in the first quarter of 2014 compared to $461.5 million in 2013, primarily attributable to an $85.7 million decrease in new build environmental revenue due to lower levels of activity as projects related to the previously enacted environmental rules and regulations near completion and uncertainties continued regarding the outcome of other environmental regulations.

Power Generation segment revenues from the new build steam and aftermarket services businesses decreased by $25.0 million and $34.6 million, respectively, primarily due to completion of several large projects in the past year. Revenues from the Nuclear Energy segment were $47.8 million compared to $63.5 million in the first quarter of 2013, a decrease of $15.7 million, due in part to the decision to discontinue the U.S. projects business.

Operating income for the first quarter of 2014 was $53.6 million, a decrease of $6.6 million compared to $60.2 million in the first quarter of 2013. Nuclear Operations segment operating income was $59.5 million in the first quarter of 2014, compared with$54.7 million in the same period last year. Power Generation segment operating income was $10.5 million in the first quarter of 2014, a decrease of $22.8 million from $33.3 million in the prior year period.

Results included an additional $7.6 million charge related to a biomass power plant project, all of which we expect will be added to the customer claim. Operating income in the Technical Services segment during the first quarter 2014 increased by $0.6 million, to $14.8 million, compared to $14.2 million in the first quarter of 2013.

Nuclear Energy segment operating income in the first quarter of 2014 decreased by $1.8 million, to$0.5 million, compared to $2.3 million in the corresponding period of 2013. The $26.7 million operating loss in the mPower segment in the first quarter of 2014 compares to a $26.9 million loss in the corresponding period in 2013.

Operating income for the first quarter of 2014 includes $2.7 million of special charges for restructuring activities related to the Global Competitiveness Initiative (GCI) and other cost reduction efforts. Excluding the restructuring charges, adjusted operating income for the first quarter of 2014 was $56.3 million, a 17.9% decrease compared adjusted operating income of $68.6 million in the first quarter of 2013.

'With strong performance in both the nuclear components and fuels businesses, the Nuclear Operations segment posted record first quarter revenue and earnings this period,' said E. James Ferland, President and Chief Executive Officer of B&W. 'Healthy bookings in the Nuclear Energy segment in the first quarter reflect several important awards in Canada and the U.S.

While bookings in our Power Generation segment were modest this quarter, we expect to book a couple of significant international boiler projects over the next three or four months and are seeing improvement in the domestic bid pipeline, particularly for environmental activity. We've had a slow start in Power Generation this year, but we expect performance will improve sequentially as the year progresses.'

Ferland continued, 'We are making significant progress on the key objectives we set forth for 2014. Actions have been initiated to reduce mPower spending to an annual rate of approximately $15 million and we continue to work with the Department of Energy and our other stakeholders to confirm the best path forward for this technology.

Plans to drive the improvement of operating margins in our commercial businesses are underway, with more than $50 million of additional opportunities identified and the end of 2015 target still sharply in focus. We also remain committed to increasing share buyback activity in the balance of 2014.'

Quarterly Dividend

On May 9, 2014, the Company declared a regular quarterly cash dividend of $0.10 per common share. The dividend will be payable on June 13, 2014 to shareholders of record on May 23, 2014.

Liquidity

The Company's cash and investments position, net of debt, was $234.4 million at the end of the first quarter of 2014, a decrease of $167.9 million compared to $402.3 million at the end of the fourth quarter of 2013. First quarter 2014 net cash flow from operations was a use of $113.5 million, primarily due to a decrease in accounts payable and an increase in net work in progress due largely to timing of project milestones.

During the quarter, the Company repurchased common shares totaling$15.7 million, paid dividends of $11.1 million, and contributed $5.3 million to its pension plans. In addition to net cash, the Company maintains a $700.0 million revolving credit agreement with $527.0 million of availability as of the end of the first quarter.

Outlook for the Remainder of 2014

The Company reaffirms its guidance that 2014 consolidated revenues will be between $2.90 billion and $3.10 billion and adjusted earnings per share for the full year 2014 will be between $2.00 and $2.20. Adjusted earnings per share exclude any mark-to-market adjustment for pension and post-retirement benefits and restructuring charges.

B&W is providing non-GAAP information regarding certain of its historical results and guidance on future earnings per share 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.

Forward-Looking Statements

B&W cautions that this release contains forward-looking statements, including, without limitation, statements relating to expected performance and bookings in our Power Generation Segment, to the extent bookings may be viewed as an indicator of future revenues, and our 2014 outlook. 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 industries in which we operate and delays, changes or termination of contracts in backlog.

If one or more of these risks 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, 2013 and subsequent quarterly reports on Form 10-Q. B&W cautions not to place undue reliance on these forward-looking statements, which speak only as of the date of this release, 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 11,000 people, in addition to approximately 10,200 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

Investor Contact:

Jenny L. Apker

Vice President

Tel: 704-625-4944

Email: investors@babcock.com

Media Contact:

Aimee Mills

Tel: 980-365-4583

Email: aemills@babcock.com


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Source: ENP Newswire


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