THE WOODLANDS, Texas,
Aug. 9, 2017 /PRNewswire/ -- CB&I
(NYSE:CBI) today announced financial results for the second quarter
of 2017.
Unless otherwise indicated, results reported are for continuing
operations, which consist of CB&I's Engineering &
Construction (E&C), Fabrication Services and Technology
businesses. The results of our former Capital Services business
have been classified as a discontinued operation for all periods
presented. CB&I also announced in a separate news release today
that it is initiating the process to sell its Technology
business.
Revenue was $1.3 billion in the
second quarter of 2017, compared to revenue of $2.2 billion in the second quarter of 2016.
CB&I reported a net loss of $304.1
million, or $3.02 per diluted
share, in the second quarter of 2017, compared to net income of
$115.6 million, or $1.09 per diluted share, in the second quarter of
2016.
New awards in the second quarter of 2017 totaled $1.1 billion, compared to $1.3 billion in the second quarter of last year.
Backlog at June 30, 2017, was
$13.6 billion, compared to backlog of
$14.7 billion at June 30, 2016.
"Although our second quarter results are disappointing, we are
taking decisive actions to improve our operating performance and
strengthen the company's financial position," said Patrick K. Mullen, President and Chief Executive
Officer of CB&I. "We have initiated a comprehensive cost
reduction program and suspended our dividend. We are injecting
additional rigor and discipline into our execution and risk
management processes, further strengthening the integration between
our E&C and Fabrication Services operating groups, and
accelerating the implementation of innovative practices and
technologies. We remain committed to our integrated self-perform
model, which we believe will enable us to generate attractive
earnings and cash flows over time.
"Additionally, we announced today that we are pursuing a sale of
our Technology business, which we believe will unlock significant
value for stakeholders. We plan to use the proceeds from the sale
to significantly enhance CB&I's financial strength and
flexibility by eliminating the majority of our debt and reinvesting
in our E&C and Fabrication Services businesses. We envision a
bright future for CB&I as a highly focused company with tightly
integrated EPC and fabrication capabilities serving the LNG,
petrochemical, refining and gas power generation
markets."
E&C Operating Group
E&C operating group
revenue was $702.2 million in the
second quarter of 2017, compared to $1.5
billion in the year-ago quarter, due to the wind-down of a
large cost-reimbursable LNG mechanical erection project in the
Asia-Pacific region and lower
revenue on two U.S. LNG projects. The E&C group reported an
operating loss of $525.7 million due
to forecasted increases in costs on four fixed-price contracts
amounting to $548.0 million, as well
as an additional $50 million from the
current-quarter impact of a lower margin percentage recognized on
work performed during the period on the projects. The projects that
incurred these cost increases were two gas turbine projects and two
LNG export facility projects, all of which are being executed in
the U.S. The E&C group's new awards in the second quarter
totaled $398.4 million, and backlog
as of June 30, 2017, was $10.4 billion.
Fabrication Services Operating Group
Fabrication
Services operating group revenue was $508.5
million compared to $547.7
million in the year-ago quarter. The Fabrication Services
group reported operating income of $57.6
million compared to $67.4
million in the second quarter of 2016, which had benefited
from $11 million in net savings on
project costs. Operating income margin was 11.3 percent, compared
to 12.3 percent in the year-ago quarter. The Fabrication Services
group's new awards in the second quarter were $521.4 million, more than double the new award
level in the second quarter of 2016. Backlog as of June 30, 2017, was $2.0
billion.
Technology Operating Group
Technology operating group
revenue was $72.8 million, an
increase of 13 percent from the year-ago quarter due to increased
petrochemical licensing. The Technology group reported operating
income of $21.5 million compared to
$23.1 million in second quarter of
2016. Operating income margin was 29.5 percent, down from 35.7
percent in the year-ago quarter, due largely to mix. The Technology
group's new awards in the second quarter were $148.5 million, up 38 percent from the year-ago
quarter. Backlog as of June 30, 2017,
was $1.2 billion.
Corporate and Other
The company also announced today
that it is initiating a comprehensive corporate and operating
expense reduction program expected to generate cost savings of
approximately $100 million on an
annualized basis.
CB&I's Supervisory Board has elected to suspend the
company's quarterly common stock dividend effective immediately.
The suspension of the dividend is expected to result in annual cash
savings of $28 million to $30
million.
The company reported a use of cash from operations in the second
quarter of 2017 of approximately $157
million, driven primarily by the net loss partially offset
by an increase in our contract capital liability
position.
Using the cash proceeds from the June 30,
2017, sale of Capital Services, the company reduced its
total debt to $1.8 billion at the end
of the second quarter of 2017, as compared to $2.4 billion at the end of the first quarter of
2017.
Amended Credit Agreements
As of June 30, 2017, the company would not have been in
compliance with certain covenants required under CB&I's credit
agreements without amending the agreements. Effective
August 9, the company amended its
credit agreements, which are subject to final
documentation, to waive its current non-compliance and to
revise future covenants. The company continues to maintain adequate
liquidity with borrowing capacity of approximately $1.4 billion at the end of the second
quarter.
Guidance
Based on the market conditions and operating
environment that CB&I has encountered through the first six
months of 2017, the company has revised its outlook for the
second half of the year. The company currently expects second-half
revenue to be between $3.7 and $4.0
billion and diluted earnings per share in the range of
$1.00 to $1.25. The company's
earnings guidance does not include any benefits from the cost
reduction program, which are likely to be realized in 2018.
Earnings Conference Call
CB&I will host a
conference call and webcast August 9
at 4:00 p.m. CDT (5:00 p.m. EDT) to discuss financial and operating
results and answer questions from investors. The webcast will be
available on the Investor Relations page of www.CBI.com, and the
conference call can be accessed by telephone at 1-800-301-8321
(U.S.) or 1-706-634-2259 (outside the U.S.) with conference ID #
51193998.
About CB&I
CB&I (NYSE:CBI) is a leading provider of technology and
infrastructure for the energy industry. With more than 125 years of
experience, CB&I provides reliable solutions to our customers
around the world while maintaining a relentless focus on safety and
an uncompromising standard of quality. For more information, visit
www.CBI.com.
Important Information For Investors And Shareholders
Cautionary Statement Regarding Forward-Looking Statements
This press release contains forward-looking statements regarding
CB&I and represents our expectations and beliefs concerning
future events. These forward-looking statements are intended to be
covered by the safe harbor for forward-looking statements provided
by the Private Securities Litigation Reform Act of 1995.
Forward-looking statements involve known and unknown risks and
uncertainties. The forward looking statements in this press release
include: statements about CB&I's new awards and backlog, to the
extent these may be indicators of future revenue or profitability;
the intended sale of the Technology operating group, including the
timing with respect to the completion of that sale; the execution
of activities on and completion of specific projects, including
timing to complete, future productivity and cost to complete;
estimates of percentage of completion and contract profits or
losses; and guidance for the second half of 2017, with respect to
revenue, earnings and cash flow.
When considering these and any other statements that are
predictive in nature, depend upon or refer to future events or
conditions, or use or contain words, terms, phrases or expressions
such as "achieve," "forecast," "plan," "propose," "strategy,"
"envision," "hope," "will," "continue," "potential," "expect,"
"believe," "anticipate," "project," "estimate," "predict,"
"intend," "should," "could," "may," "might" or similar
forward-looking statements, we refer you to the cautionary
statements concerning risk factors and "Forward-Looking Statements"
described under "Risk Factors" in Item 1A of our Annual Report
filed on Form 10-K filed with the SEC for the year ended
December 31, 2016, and any updates to
those risk factors or "Forward-Looking Statements" included in our
subsequent Quarterly Reports on Form 10-Q filed with the SEC, which
cautionary statements are incorporated herein by reference.
Investors: Scott Lamb,
+1 832 513 1068, Scott.Lamb@CBI.com
Media: Gentry Brann, +1 832 513 1031, Gentry.Brann@CBI.com
|
Chicago Bridge
& Iron Company N.V.
|
|
Consolidated
Statements of Operations
|
|
(in thousands, except
per share data)
|
|
|
|
|
|
|
|
|
|
Three
Months
|
|
Six
Months
|
|
|
Ended June
30,
|
|
Ended June
30,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
1,283,477
|
|
|
$
|
2,161,164
|
|
|
$
|
3,110,829
|
|
|
$
|
4,295,793
|
|
|
Cost of
revenue
|
|
1,661,534
|
|
|
1,903,209
|
|
|
3,337,935
|
|
|
3,782,268
|
|
|
Gross (loss)
profit
|
|
(378,057)
|
|
|
257,955
|
|
|
(227,106)
|
|
|
513,525
|
|
|
% of
Revenue
|
|
(29.5)
|
%
|
|
11.9
|
%
|
|
(7.3)
|
%
|
|
12.0
|
%
|
|
|
|
|
|
|
|
|
|
|
Selling and
administrative expense
|
|
67,167
|
|
|
69,195
|
|
|
140,224
|
|
|
150,141
|
|
|
% of
Revenue
|
|
5.2
|
%
|
|
3.2
|
%
|
|
4.5
|
%
|
|
3.5
|
%
|
|
|
|
|
|
|
|
|
|
|
Intangibles
amortization
|
|
6,377
|
|
|
6,464
|
|
|
12,863
|
|
|
13,541
|
|
|
Equity
earnings
|
|
(8,655)
|
|
|
(2,059)
|
|
|
(16,266)
|
|
|
(5,664)
|
|
|
Other operating
expense, net
|
|
3,637
|
|
|
1,107
|
|
|
3,668
|
|
|
927
|
|
|
Operating (loss)
income from continuing operations
|
|
(446,583)
|
|
|
183,248
|
|
|
(367,595)
|
|
|
354,580
|
|
|
% of
Revenue
|
|
(34.8)
|
%
|
|
8.5
|
%
|
|
(11.8)
|
%
|
|
8.3
|
%
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
(34,714)
|
|
|
(20,196)
|
|
|
(58,815)
|
|
|
(40,261)
|
|
|
Interest
income
|
|
882
|
|
|
2,754
|
|
|
2,110
|
|
|
4,934
|
|
|
(Loss) income from
continuing operations before taxes
|
|
(480,415)
|
|
|
165,806
|
|
|
(424,300)
|
|
|
319,253
|
|
|
|
|
|
|
|
|
|
|
|
Income tax benefit
(expense)
|
|
178,752
|
|
|
(41,937)
|
|
|
165,048
|
|
|
(81,461)
|
|
|
Net (loss) income
from continuing operations
|
|
(301,663)
|
|
|
123,869
|
|
|
(259,252)
|
|
|
237,792
|
|
|
Net (loss) income
from discontinued operations
|
|
(120,847)
|
|
|
8,679
|
|
|
(111,353)
|
|
|
14,718
|
|
|
Net (loss)
income
|
|
(422,510)
|
|
|
132,548
|
|
|
(370,605)
|
|
|
252,510
|
|
|
|
|
|
|
|
|
|
|
|
Less: Net income
attributable to noncontrolling interests ($457, $437, $870 and $885
related to discontinued operations)
|
|
(2,909)
|
|
|
(8,709)
|
|
|
(30,159)
|
|
|
(21,746)
|
|
|
Net (loss) income
attributable to CB&I
|
|
$
|
(425,419)
|
|
|
$
|
123,839
|
|
|
$
|
(400,764)
|
|
|
$
|
230,764
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
attributable to CB&I per share (Basic):
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$
|
(3.02)
|
|
|
$
|
1.10
|
|
|
$
|
(2.87)
|
|
|
$
|
2.07
|
|
|
Discontinued
operations
|
|
(1.20)
|
|
|
0.08
|
|
|
(1.11)
|
|
|
0.13
|
|
|
Total
|
|
$
|
(4.22)
|
|
|
$
|
1.18
|
|
|
$
|
(3.98)
|
|
|
$
|
2.20
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
attributable to CB&I per share (Diluted):
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$
|
(3.02)
|
|
|
$
|
1.09
|
|
|
$
|
(2.87)
|
|
|
$
|
2.05
|
|
|
Discontinued
operations
|
|
(1.20)
|
|
|
0.08
|
|
|
(1.11)
|
|
|
0.13
|
|
|
Total
|
|
$
|
(4.22)
|
|
|
$
|
1.17
|
|
|
$
|
(3.98)
|
|
|
$
|
2.18
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
100,866
|
|
|
105,298
|
|
|
100,660
|
|
|
105,051
|
|
|
Diluted
|
|
100,866
|
|
|
106,091
|
|
|
100,660
|
|
|
105,925
|
|
|
Chicago Bridge
& Iron Company N.V.
|
|
Condensed
Consolidated Balance Sheets
|
|
(in
thousands)
|
|
|
|
|
|
|
|
June
30,
|
|
December
31,
|
|
|
2017
|
|
2016
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
Current
assets
|
|
$
|
2,072,447
|
|
|
$
|
2,127,020
|
|
|
Equity
investments
|
|
174,561
|
|
|
165,256
|
|
|
Property and
equipment, net
|
|
502,426
|
|
|
505,944
|
|
|
Goodwill and other
intangibles, net
|
|
3,037,602
|
|
|
3,033,212
|
|
|
Assets of
discontinued operations
|
|
—
|
|
|
876,876
|
|
|
Other non-current
assets
|
|
1,359,243
|
|
|
1,131,112
|
|
|
Total
assets
|
|
$
|
7,146,279
|
|
|
$
|
7,839,420
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
Current maturities of
long-term debt and other borrowings, net
|
|
$
|
1,843,320
|
|
|
$
|
911,410
|
|
|
Other current
liabilities
|
|
3,634,960
|
|
|
3,377,370
|
|
|
Long-term debt,
net
|
|
—
|
|
|
1,287,923
|
|
|
Liabilities of
discontinued operations
|
|
—
|
|
|
252,857
|
|
|
Other non-current
liabilities
|
|
447,789
|
|
|
448,523
|
|
|
|
|
|
|
|
Shareholders'
equity
|
|
1,220,210
|
|
|
1,561,337
|
|
|
Total liabilities and
shareholders' equity
|
|
$
|
7,146,279
|
|
|
$
|
7,839,420
|
|
|
|
|
Condensed
Consolidated Statements of Cash Flows and Other Financial
Data
|
|
(in
thousands)
|
|
|
|
|
|
Six
Months
|
|
|
Ended June
30,
|
|
|
2017
|
|
2016
|
|
CASH
FLOWS
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
operating activities
|
|
$
|
(466,110)
|
|
|
$
|
319,264
|
|
|
Cash flows from
investing activities
|
|
653,341
|
|
|
(115,668)
|
|
|
Cash flows from
financing activities
|
|
(394,507)
|
|
|
(137,736)
|
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
|
57,040
|
|
|
(13,169)
|
|
|
(Decrease) increase
in cash and cash equivalents
|
|
(150,236)
|
|
|
52,691
|
|
|
Cash and cash
equivalents, beginning of the year
|
|
505,156
|
|
|
550,221
|
|
|
Cash and cash
equivalents, end of the period
|
|
354,920
|
|
|
602,912
|
|
|
Cash and cash
equivalents, end of period - discontinued operations
|
|
—
|
|
|
(16,596)
|
|
|
Cash and cash
equivalents, end of period - continuing operations
|
|
$
|
354,920
|
|
|
$
|
586,316
|
|
|
|
|
|
|
|
OTHER FINANCIAL
DATA
|
|
|
|
|
|
|
|
|
|
|
Increase in
receivables, net
|
|
$
|
(164,655)
|
|
|
$
|
(113,662)
|
|
|
Change in contracts
in progress, net
|
|
298,677
|
|
|
87,405
|
|
|
Decrease in
inventory
|
|
32,988
|
|
|
15,334
|
|
|
Decrease in accounts
payable
|
|
(57,913)
|
|
|
(53,637)
|
|
|
Change in contract
capital
|
|
$
|
109,097
|
|
|
$
|
(64,560)
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
$
|
48,898
|
|
|
$
|
62,853
|
|
|
Capital
expenditures
|
|
$
|
34,300
|
|
|
$
|
25,276
|
|
|
Chicago Bridge
& Iron Company N.V.
|
|
Segment
Information
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NEW AWARDS
(1)
|
|
|
|
%
of
|
|
|
|
%
of
|
|
|
|
%
of
|
|
|
|
%
of
|
|
|
|
Total
|
|
|
|
Total
|
|
|
|
Total
|
|
|
|
Total
|
|
Engineering &
Construction
|
|
$
|
398,421
|
|
|
37%
|
|
$
|
977,911
|
|
|
73%
|
|
$
|
2,634,594
|
|
|
67%
|
|
$
|
1,319,576
|
|
|
62%
|
|
Fabrication
Services
|
|
521,447
|
|
|
49%
|
|
253,633
|
|
|
19%
|
|
967,707
|
|
|
25%
|
|
627,772
|
|
|
29%
|
|
Technology
|
|
148,507
|
|
|
14%
|
|
107,769
|
|
|
8%
|
|
308,861
|
|
|
8%
|
|
191,389
|
|
|
9%
|
|
Total
|
|
$
|
1,068,375
|
|
|
|
|
$
|
1,339,313
|
|
|
|
|
$
|
3,911,162
|
|
|
|
|
$
|
2,138,737
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REVENUE
|
|
|
|
%
of
|
|
|
|
%
of
|
|
|
|
%
of
|
|
|
|
%
of
|
|
|
|
Total
|
|
|
|
Total
|
|
|
|
Total
|
|
|
|
Total
|
|
Engineering &
Construction
|
|
$
|
702,150
|
|
|
55%
|
|
$
|
1,548,994
|
|
|
72%
|
|
$
|
1,982,903
|
|
|
64%
|
|
$
|
3,085,355
|
|
|
72%
|
|
Fabrication
Services
|
|
508,518
|
|
|
39%
|
|
547,658
|
|
|
25%
|
|
987,090
|
|
|
32%
|
|
1,081,364
|
|
|
25%
|
|
Technology
|
|
72,809
|
|
|
6%
|
|
64,512
|
|
|
3%
|
|
140,836
|
|
|
4%
|
|
129,074
|
|
|
3%
|
|
Total
|
|
$
|
1,283,477
|
|
|
|
|
$
|
2,161,164
|
|
|
|
|
$
|
3,110,829
|
|
|
|
|
$
|
4,295,793
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING (LOSS)
INCOME FROM CONTINUING OPERATIONS
|
|
|
|
%
of
|
|
|
|
%
of
|
|
|
|
%
of
|
|
|
|
%
of
|
|
|
|
Revenue
|
|
|
|
Revenue
|
|
|
|
Revenue
|
|
|
|
Revenue
|
|
Engineering &
Construction
|
|
$
|
(525,682)
|
|
|
(74.9)%
|
|
$
|
92,809
|
|
|
6.0%
|
|
$
|
(520,268)
|
|
|
(26.2)%
|
|
$
|
200,882
|
|
|
6.5%
|
|
Fabrication
Services
|
|
57,639
|
|
|
11.3%
|
|
67,385
|
|
|
12.3%
|
|
109,698
|
|
|
11.1%
|
|
104,495
|
|
|
9.7%
|
|
Technology
|
|
21,460
|
|
|
29.5%
|
|
23,054
|
|
|
35.7%
|
|
42,975
|
|
|
30.5%
|
|
49,203
|
|
|
38.1%
|
|
Total
|
|
$
|
(446,583)
|
|
|
(34.8)%
|
|
$
|
183,248
|
|
|
8.5%
|
|
$
|
(367,595)
|
|
|
(11.8)%
|
|
$
|
354,580
|
|
|
8.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BACKLOG
(1)
|
|
June 30,
2017
|
|
% of
Total
|
|
December 31,
2016
|
|
% of
Total
|
|
Engineering &
Construction
|
|
$
|
10,445,699
|
|
|
77%
|
|
$
|
9,871,208
|
|
|
76%
|
|
Fabrication
Services
|
|
2,001,355
|
|
|
15%
|
|
2,117,567
|
|
|
16%
|
|
Technology
|
|
1,160,453
|
|
|
8%
|
|
1,025,723
|
|
|
8%
|
|
Total
|
|
$
|
13,607,507
|
|
|
|
|
|
|
$
|
13,014,498
|
|
|
|
|
|
|
|
|
(1)
|
New awards represent
the value of new project commitments received by the Company during
a given period, as well as scope growth on existing
commitments. Backlog includes the value of new awards
until work is performed and revenue is recognized or until
cancellation. Backlog may fluctuate with currency
movements.
|
View original content with
multimedia:http://www.prnewswire.com/news-releases/cbi-announces-second-quarter-2017-results-300502243.html
SOURCE CB&I