- First Quarter GAAP EPS of $0.20, Adjusted EPS
of $0.27
- Global Power Gross Profit Increased 19.3%
- Reaffirm Guidance Range of $1.25 - $1.45
Adjusted EPS for 2016
Babcock & Wilcox Enterprises, Inc. (B&W) (NYSE:BW)
announced today first quarter 2016 revenues of $404.1 million, an
increase of $7.0 million, or 1.8%, from the first quarter of 2015.
GAAP earnings per share for the first quarter of 2016 were $0.20
compared to $0.21 in the first quarter of 2015. Adjusted earnings
per share, which excludes the impact of spin-off transaction costs
and restructuring for the quarter, were $0.27 for the three months
ended March 31, 2016 compared to $0.26 in the prior year
period.
"First quarter performance exceeded our internal projections and
provided a solid start to 2016," said Mr. E. James Ferland,
Chairman and Chief Executive Officer. "Strong performance in Global
Power is expected to offset challenges in Industrial Environmental
throughout the year as the soft climate for U.S. industrial markets
persists in the near-term. We are reaffirming our 2016 guidance
range of $1.25 to $1.45 adjusted EPS."
Results of Operations
Consolidated revenues for the first quarter of 2016 were $404.1
million, an increase of 1.8%, compared to $397.2 million for the
first quarter of 2015 due to increased revenues in Global Power and
Global Services more than offsetting a decrease in Industrial
Environmental revenues. GAAP operating income for the first quarter
of 2016 and 2015 was $17.3 million in both years even with
approximately $3.0 million of additional costs as a stand-alone
company in the 2016 period. In the first quarter 2016, strong
performance in Global Power and improved equity income from our
Asian joint ventures offset an unfavorable revenue mix in Global
Services and slower sales in Industrial Environmental. Adjusted
operating income in the first quarter of 2016 was $21.3 million, an
increase of $0.2 million, compared to adjusted operating income of
$21.1 million in the first quarter of 2015.
First quarter 2016 revenues for the Global Power segment
increased 5.3% to $130.5 million in the quarter compared to $123.9
million in revenues in the prior year period driven by an increase
in new build steam projects that was partially offset by a decline
in new build environmental projects. Gross profit in the Global
Power segment was $24.4 million, a 19.3% increase compared to $20.4
million for the same period in 2015 due to increased volume and a
higher amount of net project improvements from favorable milestone
achievements.
Revenues in the Global Services segment were $241.2 million in
the three months ended March 31, 2016, versus $232.2 million
in the corresponding period in 2015, an increase of $9.0 million
primarily related to increased construction work partially offset
by lower projects and parts revenues. The Global Services segment
reported a gross profit of $48.2 million in the first quarter of
2016, which was $5.1 million less than the gross profit of $53.3
million in the prior year first quarter primarily due to the mix of
construction and services activities.
The Industrial Environmental segment contributed $32.5 million
in revenues this period compared to $41.1 million in the first
quarter of 2015, a decrease of $8.6 million due to lower
environmental solutions product sales. Gross profit in the
Industrial Environmental segment was $7.6 million in the first
quarter of 2016, a $2.1 million decrease compared to $9.7 million
in the prior year period primarily due to lower revenue as a result
of the soft U.S. industrial market.
"Beyond our strong core operations, we continue to expect to
announce one to two acquisitions this year. We remain engaged in
multiple promising opportunities," Mr. Ferland said. "Our balanced
capital allocation strategy favors acquisitions to diversify the
business, but has allowed us to put in place a meaningful share
repurchase program while we work to complete transactions that we
expect will provide long-term earnings growth."
Liquidity
The Company’s cash and cash equivalents balance, net of
restricted cash, decreased $78.4 million to $286.8 million at the
end of the first quarter of 2016, reflecting project timing and the
impact of the share repurchase program. The consolidated cash
position includes $210.8 million in non-U.S. cash. The Company
continues to expect the free cash flow conversion rate will be
between 75% and 100% of net income for the full year 2016.
Share Repurchase Program
The Company repurchased 1.8 million shares of our common stock
for $34.7 million during the first quarter of 2016 under a $100
million share repurchase program that was authorized in 2015 by the
Board of Directors. The Company expects to repurchase the remaining
$34.1 million of our common stock authorized by the current program
by the end of the third quarter of 2016.
The Company may utilize various methods to effect the
repurchases and the timing of repurchases will depend upon several
factors, including market and business conditions, and repurchases
may be discontinued at any time. The pace of buy-backs beyond the
first quarter of 2016 will be determined based on the status of
potential acquisitions as well as market conditions.
Conference Call to Discuss First Quarter 2016 Results
Date:
Wednesday, May 11, 2016, 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
backlog, to the extent they may be viewed as an indicator of future
revenues; management’s expectations regarding the industries in
which we operate; our guidance and forecasts for 2016; our
projected operating margin improvements, savings and restructuring
costs; and growth through acquisitions. These forward-looking
statements are based on management’s current expectations and
involve a number of risks and uncertainties, including, among other
things, disruptions experienced with customers and suppliers; the
inability to successfully operate independently following the
spin-off; the inability to retain key personnel; adverse changes in
the industries in which we operate and delays, changes or
termination of contracts in backlog; the timing and amount of
repurchases of our common stock, if any; and the inability to grow
and diversify through acquisitions. 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 the our annual report on Form 10-K
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
Headquartered in Charlotte, N.C., Babcock & Wilcox is a
global leader in energy and environmental technologies and services
for the power and industrial markets. B&W companies employ
approximately 5,700 people around the world. Follow us on Twitter
@BabcockWilcox and learn more at www.babcock.com.
Exhibit 1Babcock & Wilcox
Enterprises, Inc.Reconciliation of Non-GAAP Operating Income
and Earnings Per Share(1)(2)(In millions, except per
share amounts)
Three Months Ended March 31, 2016 GAAP
Restructuring Spin Costs
Non-GAAP Operating income (loss) $ 17.3 $ 2.1
$ 1.9 $ 21.3 Income tax (expense) benefit (6.6 )
(0.8 ) 0.6 (6.8 )
Net income (loss) $ 10.6 $ 1.3 $ 2.5 $ 14.4 Net loss attributable
to non-controlling interest (0.1 ) —
— (0.1 ) Net income (loss)
attributable to B&W shareholders $ 10.5 $ 1.3
$ 2.5 $ 14.3 Diluted EPS
- continuing operations $ 0.20 $ 0.02 $ 0.05 $ 0.27 Income
tax rate 38.5 % 32.2 %
Three Months Ended
March 31, 2015 GAAP Restructuring
NE segmentallocation
Non-GAAP Operating income (loss) $ 17.3 $ 2.4 $ 1.4 $
21.1 Other income (expense) (0.3 ) — — (0.3 ) Income tax (expense)
benefit (5.7 ) (0.9 ) (0.4 )
(6.9 ) Net income (loss) $ 11.4 $ 1.5 $ 1.0 $ 13.8
Net loss attributable to non-controlling interest (0.1 )
— — (0.1 )
Net income (loss) attributable to B&W shareholders $ 11.3
$ 1.5 $ 1.0 $ 13.8
Diluted EPS - continuing operations $ 0.21 $ 0.03 $ 0.02 $
0.26 Income tax rate 33.4 % 33.4 % (1) Figures
may not be clerically accurate due to rounding. (2) B&W
is providing non-GAAP information, particularly adjusted EPS and
adjusted operating income, 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 into 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.
Exhibit 2Babcock & Wilcox
Enterprises, Inc.Condensed Consolidated and Combined
Statements of Operations(1)(In millions, except per
share amounts)
Three Months Ended March 31, 2016
2015 Revenues $ 404.1 $
397.2 Costs and expenses: Cost of operations 324.0 313.8
Research and development costs 2.8 4.5 Selling, general and
administrative expenses 58.7 57.1 Restructuring activities and
spin-off transaction costs 4.0 2.4 Total costs
and expenses 389.5 377.7 Equity in income (loss) of investees 2.7
(2.1 )
Operating income 17.3
17.3 Other income (expense): Interest income 0.3 0.2
Interest expense (0.4 ) (0.1 ) Other – net 0.1 (0.3 )
Total other income (expense) 0.0 (0.3 ) Income before
income tax expense 17.2 17.0 Income tax expense 6.6
5.7 Income from continuing operations 10.6 11.4 Income from
discontinued operations, net of tax — 1.4 Net
income 10.6 12.7 Net income attributable to noncontrolling interest
(0.1 ) (0.1 )
Net Income attributable to shareholders
$ 10.5 $ 12.7
Amounts attributable to shareholders: Income from continuing
operations $ 10.5 $ 11.3 Income from discontinued operations, net
of tax — 1.4 Net Income attributable to
shareholders $ 10.5 $ 12.7 Basic
earnings per share - continuing operations $ 0.20 $ 0.21 Basic
earnings per share - discontinued operations — 0.03
Basic earnings per share $ 0.20 $ 0.24
Diluted earnings per share - continuing operations
$
0.20 $ 0.21 Diluted earnings per share -
discontinued operations — 0.03 Diluted
earnings per share $ 0.20 $ 0.24 Shares
used in the computation of earnings per share: Basic 51,627 53,388
Diluted 52,221 53,573 (1) Figures may not be clerically
accurate due to rounding.
Exhibit 3Babcock & Wilcox
Enterprises, Inc.Condensed Consolidated and Combined Balance
Sheets(1)(In millions, except per share amounts)
March 31, 2016 December 31, 2015 Cash
and cash equivalents $ 286.8 $ 365.2 Restricted cash and cash
equivalents 37.2 37.1 Accounts receivable – trade, net 272.9 291.2
Accounts receivable – other 50.2 44.8 Contracts in progress 158.0
128.2 Inventories 91.0 90.1 Other current assets 28.1 21.5
Total current assets 924.3 978.2 Property, plant and
equipment - gross 335.3 330.0 Accumulated depreciation (186.8 )
(184.3 ) Net property, plant and equipment 148.5 145.7 Goodwill
201.8 201.1 Deferred income taxes 187.7 190.7 Investments in
unconsolidated affiliates 92.8 92.2 Intangible assets 36.7 37.8
Other assets 18.3 17.4
Total assets $
1,610.1 $ 1,663.0
Short-term line of credit $ 3.1 $ 2.0 Accounts payable 164.3 175.2
Accrued employee benefits 40.2 51.5 Advance billings on contracts
213.1 229.4 Accrued warranty expense 42.2 39.8 Other accrued
liabilities 63.0 63.5 Total current liabilities 526.0
561.4 Accumulated postretirement benefit obligations 28.4 27.8
Pension liabilities 279.1 282.1 Other liabilities 45.7 43.4
Total liabilities 879.1 914.6
Commitments and contingencies Stockholders' equity: Common stock,
par value $0.01 per share, authorized 200.0 million shares; issued
50.9 million and 52.5 million shares at March 31, 2016 and December
31, 2015, respectively 0.5 0.5 Capital in excess of par value 795.4
790.5 Treasury stock at cost, 3.2 million and 1.4 million shares at
March 31, 2016 and December 31, 2015, respectively (61.7 ) (25.4 )
Retained earnings 11.5 1.0 Accumulated other comprehensive income
(loss) (15.5 ) (18.9 ) Stockholders' equity attributable to
shareholders 730.2 747.7 Noncontrolling interest 0.8 0.7
Total stockholders' equity 731.0
748.4 Total liabilities and stockholders'
equity $ 1,610.1 $ 1,663.0
(1) Figures may not be clerically accurate due to
rounding.
Exhibit 4Babcock & Wilcox
Enterprises, Inc.Condensed Consolidated and Combined
Statements of Cash Flows(1)(In millions)
Three Months Ended March 31, 2016
2015 Cash flows from operating activities: Net Income
$ 10.6 $ 12.7 Non-cash items included in net income: Depreciation
and amortization 6.3 11.6 (Income) loss of equity method investees,
net of dividends (2.7 ) 2.1 Provision for (benefit from) deferred
taxes — 4.3 Recognition of (gains) losses for pension and
postretirement plans — 0.1 Stock-based compensation charges 4.9 —
Changes in assets and liabilities: Accounts receivable 17.5 18.3
Accounts payable (16.0 ) (21.6 ) Contracts in progress and advance
billings on contracts (46.1 ) 33.2 Inventories (1.0 ) (0.6 ) Income
taxes (0.4 ) (6.1 ) Accrued and other current liabilities 1.3 1.4
Pension, accrued postretirement and employee benefits (15.0 ) (7.0
) Other, net 2.6 4.0 Net cash from operating
activities (37.9 ) 52.4 Cash flows from investing
activities: Decrease (increase) in restricted cash and cash
equivalents (0.1 ) 2.2 Purchases of property, plant and equipment
(4.0 ) (5.8 ) Intangible asset additions (0.3 ) — Purchases of
available-for-sale securities (8.0 ) (4.4 ) Sales and maturities of
available-for-sale securities 6.5 0.3 Proceeds from (cost of) asset
disposals (0.3 ) — Net cash from investing activities (6.2 )
(7.7 ) Cash flows from financing activities Increase in short-term
borrowing 1.1 — Net transfers from former Parent — (25.1 )
Repurchase of shares of common stock (36.3 ) — Other — —
Net cash from financing activities (35.2 ) (25.1 ) Effects
of exchange rate changes on cash 1.0 (6.9 ) Cash flows from
continuing operations (78.4 ) 12.7 Cash flows from
discontinued operations: Operating cash flows from discontinued
operations, net — (4.7 ) Investing cash flows from discontinued
operations, net — (0.1 ) Net cash flows from discontinued
operations — (4.8 ) Net increase (decrease) in cash and
equivalents (78.4 ) 7.9 Cash and equivalents, beginning of period
365.2 218.7 Cash and equivalents, end of period $
286.8 $ 226.6 (1) Figures may not be
clerically accurate due to rounding.
Exhibit 5Babcock & Wilcox
Enterprises, Inc.Segment Information(1)(In
millions)
SEGMENT RESULTS: Three Months Ended March 31,
2016 2015 REVENUES: Global Power $ 130.5 $
123.9 Global Services 241.2 232.2 Industrial Environmental 32.5
41.1 404.1 397.2 GROSS PROFIT: Global
Power 24.4 20.4 Global Services 48.2 53.3 Industrial Environmental
7.6 9.7 $ 80.2 $ 83.4
BOOKINGS: Three Months Ended March 31, 2016
2015 Global Power $ 195.5 $ 453.7 Global Services
172.5 221.6 Industrial Environmental 32.5 55.8 $
400.5 $ 731.1
BACKLOG: As of
March 31, 2016 2015 Global Power $ 1,184 $
1,281 Global Services 1,073 1,213 Industrial Environmental 67
87 $ 2,324 $ 2,581 (1) Figures
may not be clerically accurate due to rounding.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160510006818/en/
Babcock & WilcoxInvestor Contact:Leslie Kass,
704-625-4944Vice President, Investor Relations and
Communicationsinvestors@babcock.comorMedia Contact:Ryan Cornell,
330-860-1345Public Relationsrscornell@babcock.com
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