Babcock & Wilcox Announces First Quarter 2013 Results and Announces Share Repurchase Authorization I
Babcock & Wilcox Announces First Quarter 2013 Results and Announces Share Repurchase Authorization Increased to $500 Million
Adjusted Earnings per Share of $0.46, GAAP EPS of $0.41
Revenues of $805.4 million, Increased 5.2%
Announces Quarterly Dividend
CHARLOTTE, N.C.--(BUSINESS WIRE)-- The Babcock & Wilcox Company (NYS: BWC) ("B&W" or the "Company") today reported first quarter 2013 revenues of $805.4 million, an increase of $39.5 million, or 5.2% from the first quarter of 2012. GAAP earnings per share for the first quarter of 2013 were $0.41 compared to $0.50 in the first quarter of 2012. Adjusted earnings per share for the first quarter 2013, which excludes the impact of $8.4 million of restructuring charges, were $0.46, a decrease of 8.0% from earnings per share of $0.50 for the first quarter of 2012.
During the first quarter of 2013, the Company repurchased 2.2 million shares of its common stock at a total cost of $57.1 million. Through May 7, 2013, the Company has repurchased a total of 7.5 million shares at a cost of $193.5 million, leaving approximately $56.5 million of capacity remaining under its previously announced $250 million share repurchase authorization. On May 3, 2013, the Board approved an increase of $250 million, to $500 million, to the authorization to repurchase the Company's outstanding common stock during a two-year period.
Recent Highlights
GAO Sustained B&W's Protest of Procurement Decision for Combined Y-12/Pantex Management and Operating Contract
Signed Cooperative Agreement with Department of Energy (DOE) for Small Modular Reactor Funding
Signed Contract to Begin Second Phase of FutureGen 2.0 Carbon Capture Project
Funding Authorization for Second Virginia-Class Submarine Included in 2013 Continuing Resolution
Results of Operations
Consolidated revenues for the first quarter of 2013 were $805.4 million, an increase of $39.5 million, or 5.2%, from the first quarter of 2012. Revenues for the Power Generation and Nuclear Operations segments increased $47.2 million and $11.0 million, respectively. These increases were driven by an increase in new build environmental equipment and increased manufacturing activity for US Government programs, respectively. Revenues for the Nuclear Energy segment decreased $23.0 million following the completion of several large contracts that were ongoing in the same period of the prior year.
Operating income for the first quarter of 2013 was $60.2 million, a decrease of $26.2 million, or 30.3%, compared to $86.4 million in the first quarter of 2012. Power Generation segment operating income was $33.3 million in the first quarter of 2013, a decrease of $6.2 million from the prior year period. Nuclear Operations segment operating income was $54.7 million in the first quarter of 2013, compared with $54.8 million in the same period last year. Operating income in the Technical Services segment during the first quarter 2013 decreased by $0.9 million, to $14.2 million, compared to $15.1 million in the first quarter of 2012. Nuclear Energy segment operating income in the first quarter of 2013 decreased by $9.4 million, to $2.3 million, compared to $11.7 million in the corresponding period of 2012. The $26.9 million operating loss in the mPower segment in the first quarter of 2013 does not reflect the benefit of the DOE cost-share program; under the terms of the Cooperative Agreement, reimbursement of approximately $21.5 million of qualified costs incurred from October 1, 2012 through March 31, 2013 is expected to be recorded in the second quarter of 2013.
Operating income for the first quarter of 2013 includes $8.4 million of special charges for restructuring activities related to our Global Competitiveness Initiative (GCI). Excluding the restructuring charges, adjusted operating income for the first quarter of 2013 was $68.6 million, a 20.6% decrease compared to the same period in 2012.
"We are pleased with revenue growth this quarter in both our Power Generation and Nuclear Operations segments. The contributions to operating income from Nuclear Operations and Technical Services remain strong and are meeting our expectations. Operating results in Power Generation this quarter reflect both the competitive environmental market and seasonal conditions that produce fewer project closeout opportunities. We expect full year results for this segment will meet previously discussed operating income margins," said E. James Ferland, President and Chief Executive Officer of B&W. "Further, we believe the GAO decision to sustain the protest filed in regard to the combined Y-12/Pantex procurement decision supports our concerns about the initial award of this contract. While we await a final decision on a path forward from NNSA, B&W remains focused on operating both sites safely and securely."
"We remain committed to returning capital to shareholders, as we have demonstrated by completing more than $193 million of share repurchase activity in only six months' time. The increase in the repurchase authorization to $500 million will allow us to continue with our opportunistic buyback program."
Reporting Segments
Beginning in 2013, the Company operates in five reportable segments: Power Generation, Nuclear Operations, Technical Services, Nuclear Energy and mPower. The small modular reactor business previously included in our Nuclear Energy segment is now being reported as a separate segment, mPower, in order to assist the assessment of the operating performance and capital allocation. The change in reportable segments has been applied to previously reported historical financial information and related disclosures.
Quarterly Dividend
On May 3, 2013, the Company declared a quarterly cash dividend of $0.08 per common share. The dividend will be payable on June 7, 2013 to shareholders of record on May 17, 2013.
Liquidity
The Company's cash and investments position, net of debt, was $414.9 million at the end of the first quarter of 2013, a decrease of $118.0 million compared to $532.9 million at the end of the fourth quarter of 2012. During the quarter, the Company repurchased common shares totaling $57.1 million, contributed $21.9 to its pension plans and paid dividends of $9.1 million. In addition to net cash, the Company maintains a $700.0 million revolving credit agreement with $548.1 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, capital distribution programs, and product and geographic expansion opportunities.
Outlook for the Remainder of 2013
The Company reaffirms its expectation that 2013 consolidated revenues will be between $3.40 billion and $3.55 billion and adjusted earnings per share for the full year 2013 will be between $2.25 and $2.45. Adjusted earnings per share exclude the mark-to-market adjustment for pension and post-retirement benefits and GCI restructuring charges.
Reconciliation of Non-GAAP Operating Income and Earnings Per Share
GCI | ||||||||||||
Q1 2013 | Restructuring | Q1 2013 | ||||||||||
GAAP* | Charges | Adjusted* | ||||||||||
Operating Income | $ | 60.2 | $ | 8.4 | $ | 68.6 | ||||||
Other Income / (Expense) | 0.9 | - | 0.9 | |||||||||
Provision for Income Taxes | (16.3 | ) | (2.9 | ) | (19.2 | ) | ||||||
Net Income | 44.9 | 5.5 | 50.4 | |||||||||
Net Loss (Income) Attributable to Non-Controlling Interest | 2.3 | - | 2.3 | |||||||||
Net Income Attributable to The Babcock & Wilcox Company | $ | 47.2 | $ | 5.5 | $ | 52.7 | ||||||
Diluted Earnings per Common Share | $ | 0.41 | $ | 0.05 | $ | 0.46 | ||||||
Effective Tax Rate | 26.6 | % | 27.6 | % | ||||||||
GCI | ||||||||||||
Q1 2012 | Restructuring | Q1 2012 | ||||||||||
GAAP* | Charges | Adjusted* | ||||||||||
Operating Income | $ | 86.4 | $ | - | $ | 86.4 | ||||||
Other Income / (Expense) | (1.5 | ) | - | (1.5 | ) | |||||||
Provision for Income Taxes | (27.9 | ) | - | (27.9 | ) | |||||||
Net Income | 57.1 | - | 57.1 | |||||||||
Net Loss (Income) Attributable to Non-Controlling Interest | 2.9 | - | 2.9 | |||||||||
Net Income Attributable to The Babcock & Wilcox Company | $ | 60.0 | $ | - | $ | 60.0 | ||||||
Diluted Earnings per Common Share | $ | 0.50 | $ | - | $ | 0.50 | ||||||
Effective Tax Rate | 32.8 | % | 32.8 | % | ||||||||
* Amounts may not foot due to rounding | ||||||||||||
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.
Conference Call to Discuss First Quarter 2013 Results
Date: | Wednesday, May 8, 2013, at 8:30 a.m. EDT | |
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 expected revenues, adjusted earnings per share for full year 2013 and reimbursement under the Cooperative Agreement. 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, changes in management plans and commitments, our inability to execute on contracts in backlog and our inability to receive reimbursement and cost-share funding under the Cooperative Agreement with the DOE. 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, 2012 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 14,000 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, | |||||||
2013 | 2012 | |||||||
(Unaudited) | ||||||||
(In thousands) | ||||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ | 261,116 | $ | 383,547 | ||||
Restricted cash and cash equivalents | 60,601 | 60,961 | ||||||
Investments | 93,382 | 88,769 | ||||||
Accounts receivable - trade, net | 374,296 | 364,960 | ||||||
Accounts receivable - other | 72,312 | 61,682 | ||||||
Contracts in progress | 332,911 | 316,518 | ||||||
Inventories | 117,115 | 124,218 | ||||||
Deferred income taxes | 74,765 | 78,573 | ||||||
Other current assets | 53,590 | 41,858 | ||||||
Total Current Assets | 1,440,088 | 1,521,086 | ||||||
Property, Plant and Equipment | 1,107,273 | 1,099,040 | ||||||
Less accumulated depreciation | 661,902 | 652,019 | ||||||
Net Property, Plant and Equipment | 445,371 | 447,021 | ||||||
Investments | 4,206 | 4,090 | ||||||
Goodwill | 280,289 | 280,780 | ||||||
Deferred Income Taxes | 216,444 | 227,215 | ||||||
Investments in Unconsolidated Affiliates | 189,383 | 186,354 | ||||||
Intangible Assets | 87,367 | 87,686 | ||||||
Other Assets | 86,244 | 86,123 | ||||||
TOTAL | $ | 2,749,392 | $ | 2,840,355 | ||||
THE BABCOCK & WILCOX COMPANY | |||||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||
March 31, | December 31, | ||||||||||
2013 | 2012 | ||||||||||
(Unaudited) | |||||||||||
(In thousands) | |||||||||||
Current Liabilities: | |||||||||||
Notes payable and current maturities of long-term debt | $ | 4,069 | $ | 4,062 | |||||||
Accounts payable | 280,521 | 264,798 | |||||||||
Accrued employee benefits | 147,548 | 186,495 | |||||||||
Accrued liabilities - other | 77,354 | 57,991 | |||||||||
Advance billings on contracts | 417,109 | 472,287 | |||||||||
Accrued warranty expense | 82,865 | 83,682 | |||||||||
Income taxes payable | - | 9,973 | |||||||||
Total Current Liabilities | 1,009,466 | 1,079,288 | |||||||||
Long-Term Debt | 365 | 430 | |||||||||
Accumulated Postretirement Benefit Obligation | 69,299 | 71,208 | |||||||||
Environmental Liabilities | 46,790 | 46,497 | |||||||||
Pension Liability | 579,334 | 579,165 | |||||||||
Other Liabilities | 58,491 | 60,851 | |||||||||
Stockholders' Equity: | |||||||||||
Common stock, par value $0.01 per share, authorized 325,000,000 shares; issued 119,951,145 and 119,608,026 shares at March 31, 2013 and December 31, 2012, respectively | 1,200 | 1,196 | |||||||||
Preferred stock, par value $0.01 per share, authorized 75,000,000 shares; No shares issued | - | - | |||||||||
Capital in excess of par value | 721,289 | 713,257 | |||||||||
Retained earnings | 387,087 | 349,063 | |||||||||
Treasury stock at cost, 6,596,570 and 4,372,143 shares at March 31, 2013 and December 31, 2012, respectively | (168,809 | ) | (109,809 | ) | |||||||
Accumulated other comprehensive income | 27,780 | 32,728 | |||||||||
Stockholders' Equity - The Babcock & Wilcox Company | 968,547 | 986,435 | |||||||||
Noncontrolling interest | 17,100 | 16,481 | |||||||||
Total Stockholders' Equity | 985,647 | 1,002,916 | |||||||||
TOTAL | $ | 2,749,392 | $ | 2,840,355 | |||||||
