Babcock & Wilcox Announces Second Quarter 2013 Results
Babcock & Wilcox Announces Second Quarter 2013 Results
- Revenues of $886.1 million, Increased 3.9%
- GAAP Earnings per Share of $0.65, Adjusted Earnings per Share of $0.72
- Quarterly Dividend of $0.08 per share
CHARLOTTE, N.C.--(BUSINESS WIRE)-- The Babcock & Wilcox Company (NYS: BWC) ("B&W" or the "Company") today reported second quarter 2013 revenues of $886.1 million, an increase of $33.5 million, or 3.9%, from the second quarter of 2012. GAAP earnings per share for the second quarter of 2013 were $0.65 compared to $0.65 in the second quarter of 2012. Adjusted earnings per share for the second quarter of 2013, which excludes the impact of $12.2 million of restructuring charges, were $0.72, an increase of $0.07, or 10.8%, versus the second quarter of 2012.
During the second quarter of 2013, the Company repurchased 2.5 million shares of its common stock at a cost of $68.8 million. Through June 30, 2013, the Company has repurchased a total of 8.5 million shares at a cost of $222.4 leaving approximately $277.6 million of capacity remaining under its previously announced $500 million share repurchase authorization.
Recent Highlights
Announced $366 Million Contract for Naval Reactors Materials Procurement
Awarded Contract for 2nd Virginia Class Submarine in 2013
Awarded $154 Million Contract for an Environmental Systems Project for a Western U.S. Utility
Project Joint Venture Awarded $110 Million Contract to Replace Equipment at Iowa Power Plant
Awarded $40 Million Contract for Denmark Waste-to-Energy Plant
Results of Operations
Consolidated revenues for the second quarter of 2013 were $886.1 million, an increase of $33.5 million, or 3.9%, from the second quarter of 2012. Revenues in the Nuclear Operations segment increased by $65.6 million compared to the prior year period, primarily driven by the timing of activity in the manufacturing of nuclear components for US government programs. Second quarter 2013 revenues of the Power Generation segment decreased by $25.8 million versus the same period in 2012, largely as a result of revised percentage-of-completion estimates for a project on which we recognized contract losses during the quarter. Bookings for the 2013 second quarter totaled $766.2 million, an increase of 25.4% compared to $610.8 million booked in the prior year period.
Operating income for the second quarter of 2013 was $98.7 million, a decrease of $11.4 million from the second quarter of 2012. Compared to the prior year, the mPower and Nuclear Operations segments reported increases in operating income of $31.6 million and $10.3 million, respectively, which were offset by decreases in the operating income of the Power Generation, Nuclear Energy and Technical Services segments of $27.6 million, $12.4 million and $3.7 million, respectively. The mPower segment improvement was attributable to the recognition of the cost-sharing award from the Department of Energy (DOE) under the Cooperative Agreement. The decrease in the Power Generation segment operating income was driven by the recognition of $30.2 million of additional contract losses related to revised estimated costs to complete a biomass boiler project largely due to unforeseen worksite conditions, for which losses previously were recorded in the fourth quarter of 2012. The decrease in operating income of the Nuclear Energy segment was primarily attributable to an $18.1 million gain from a contract settlement agreement recognized in the prior year quarter.
Included in operating income for the second quarter 2013 were $12.2 million of special charges for restructuring activities related to our Global Competitiveness Initiative (GCI). Excluding the restructuring charges, adjusted operating income for the second quarter of 2013 was $110.9 million, an increase of $0.8 million compared to the same period in 2012.
"Overall, B&W's second quarter results reflect solid performances across our business units, highlighted by improved bookings and revenue, as well as the benefit of the DOE grant," said E. James Ferland, President and Chief Executive Officer of B&W. "What would have been an exceptionally strong quarter for operating income and margin was impacted by the recognition of significant losses on a single project. Claims against the customer are substantial in value and any recovery of these additional losses will be realized in future periods."
"In addition, we have made outstanding progress on our GCI initiatives and now believe this program will exceed our initial expectations of $40 million to $50 million in total annual cost savings as we continue to identify opportunities to streamline operations and reduce overhead expenses," Ferland concluded.
Quarterly Dividend
On August 6, 2013, the Company declared a quarterly cash dividend of $0.08 per common share. The dividend will be payable on September 10, 2013 to shareholders of record on August 20, 2013.
Liquidity
The Company's cash and investments position, net of debt, was $358.7 million at the end of the second quarter of 2013, a decrease of $56.2 million compared to $414.9 million at the end of the first quarter of 2013. During the quarter, the Company repurchased common shares totaling $68.8 million, contributed $15.0 million to its pension plans and paid dividends of $9.0 million. In addition to net cash, the Company maintains a $700.0 million revolving credit agreement with $552.2 million of availability as of the end of the second quarter.
Outlook for the Remainder of 2013
The Company now expects 2013 consolidated revenues to be between $3.4 billion and $3.5 billion. The Company reaffirms its expectation that adjusted earnings per share for the full year 2013 will be between $2.25 and $2.45. Adjusted earnings per share exclude GCI restructuring charges and the year-end mark-to-market adjustment for pension and post-retirement benefits.
Reconciliation of Non-GAAP Earnings Per Share and Operating Income | ||||||||||||||||||||||||
(in $ millions, except per share amounts) | ||||||||||||||||||||||||
Three Months Ended June 30, 2013 | Six Months Ended June 30, 2013 | |||||||||||||||||||||||
GAAP | GCI Impact | Non-GAAP | GAAP | GCI Impact | Non-GAAP | |||||||||||||||||||
Operating Income | $ | 98.7 | $ | 12.2 | $ | 110.9 | $ | 158.9 | $ | 20.7 | $ | 179.6 | ||||||||||||
Other Income / (Expense) | 0.5 | - | 0.5 | 1.5 | - | 1.5 | ||||||||||||||||||
Provision for Income Taxes | (29.5 | ) | (4.1 | ) | (33.6 | ) | (45.8 | ) | (7.0 | ) | (52.8 | ) | ||||||||||||
Net Income | 69.7 | 8.1 | 77.8 | 114.6 | 13.7 | 128.3 | ||||||||||||||||||
Net Loss (Income) Attributable to Non-Controlling Interest | 3.2 | - | 3.2 | 5.5 | - | 5.5 | ||||||||||||||||||
Net Income Attributable to The Babcock & Wilcox Company | $ | 72.9 | $ | 8.1 | $ | 81.0 | $ | 120.0 | $ | 13.7 | $ | 133.7 | ||||||||||||
Diluted Earnings per Common Share | $ | 0.65 | $ | 0.07 | $ | 0.72 | $ | 1.06 | $ | 0.12 | $ | 1.18 | ||||||||||||
Effective Tax Rate | 29.8 | % | 34.0 | % | 30.2 | % | 28.6 | % | 34.0 | % | 29.2 | % | ||||||||||||
Three Months Ended June 30, 2012 | Six Months Ended June 30, 2012 | |||||||||||||||||||||
GAAP | GCI Impact | Non-GAAP | GAAP | GCI Impact | Non-GAAP | |||||||||||||||||
Operating Income | $ | 110.1 | $ | - | $ 110.1 | $ | 196.5 | $ | - | $ | 196.5 | |||||||||||
Other Income / (Expense) | 3.7 | - | 3.7 | 2.3 | - | 2.3 | ||||||||||||||||
Provision for Income Taxes | (39.5 | ) | - | (39.5 | ) | (67.4 | ) | - | (67.4 | ) | ||||||||||||
Net Income | 74.3 | - | 74.3 | 131.4 | - | 131.4 | ||||||||||||||||
Net Loss (Income) Attributable to Non-Controlling Interest | 2.9 | - | 2.9 | 5.8 | - | 5.8 | ||||||||||||||||
Net Income Attributable to The Babcock & Wilcox Company | $ | 77.2 | $ | - | $ 77.2 | $ | 137.2 | $ | - | $ | 137.2 | |||||||||||
Diluted Earnings per Common Share | $ | 0.65 | $ | - | $ 0.65 | $ | 1.15 | $ | - | $ | 1.15 | |||||||||||
Effective Tax Rate | 34.7 | % | 34.7 | % | 33.9 | % | 33.9 | % | ||||||||||||||
B&W is providing non-GAAP information regarding certain of its historical results and guidance on future earnings per share to supplement the financial information 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 Second Quarter 2013 Results
Date: Thursday, August 8, 2013, at 8:30 a.m. ET
Live Webcast: Investor Relations section of website at www.babcock.com
Forward-Looking Statements
The Company cautions that this release contains forward-looking statements, including, without limitation, statements relating to our quarterly dividend; expected revenues and adjusted earnings per share for full-year 2013; our expectations with respect to the savings and benefits associated with our Global Competitiveness Initiative; and claims for project losses, to the extent such claims may be viewed as an indicator of future earnings. 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 our liquidity position or the industries in which we operate, our inability to execute on contracts in backlog, delays or other difficulties implementing our Global Competitiveness Initiative and our inability to obtain recovery on our project claims. 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 12,000 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 | ||||||
June 30, | December 31, | |||||
2013 | 2012 | |||||
(Unaudited) | ||||||
(In thousands) | ||||||
Current Assets: | ||||||
Cash and cash equivalents | $ | 242,205 | $ | 383,547 | ||
Restricted cash and cash equivalents | 48,281 | 60,961 | ||||
Investments | 69,118 | 88,769 | ||||
Accounts receivable - trade, net | 407,323 | 364,960 | ||||
Accounts receivable - other | 61,772 | 61,682 | ||||
Contracts in progress | 344,938 | 316,518 | ||||
Inventories | 111,583 | 124,218 | ||||
Deferred income taxes | 81,826 | 78,573 | ||||
Other current assets | 50,056 | 41,858 | ||||
Total Current Assets | 1,417,102 | 1,521,086 | ||||
Property, Plant and Equipment | 1,114,500 | 1,099,040 | ||||
Less accumulated depreciation | 670,923 | 652,019 | ||||
Net Property, Plant and Equipment | 443,577 | 447,021 | ||||
Investments | 4,196 | 4,090 | ||||
Goodwill | 280,239 | 280,780 | ||||
Deferred Income Taxes | 209,803 | 227,215 | ||||
Investments in Unconsolidated Affiliates | 201,121 | 186,354 | ||||
Intangible Assets | 85,441 | 87,686 | ||||
Other Assets | 83,830 | 86,123 | ||||
TOTAL | $ | 2,725,309 | $ | 2,840,355 | ||
THE BABCOCK & WILCOX COMPANY | ||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
June 30, | December 31, | |||||||
2013 | 2012 | |||||||
(Unaudited) | ||||||||
(In thousands, except share and per share amounts) | ||||||||
Current Liabilities: | ||||||||
Notes payable and current maturities of long-term debt | $ | 4,764 | $ | 4,062 | ||||
Accounts payable | 265,391 | 264,798 | ||||||
Accrued employee benefits | 172,809 | 186,495 | ||||||
Accrued liabilities - other | 77,196 | 57,991 | ||||||
Advance billings on contracts | 419,013 | 472,287 | ||||||
Accrued warranty expense | 74,487 | 83,682 | ||||||
Income taxes payable | 963 | 9,973 | ||||||
Total Current Liabilities | 1,014,623 | 1,079,288 | ||||||
Long-Term Debt | 319 | 430 | ||||||
Accumulated Postretirement Benefit Obligation | 67,491 | 71,208 | ||||||
