Foster Wheeler Ltd. (Nasdaq: FWLT) today reported record net income
for the first quarter of 2008 of $138.1 million, or $0.95 per
diluted share, compared with $114.8 million, or $0.80 per diluted
share, in the first quarter of 2007. Net income in the first
quarter of 2008 was aided by a net asbestos-related gain of $14.2
million. Excluding the gain, net income in the first quarter of
2008 was a record $123.9 million, or $0.85 per diluted share.
First-quarter 2008 consolidated EBITDA (earnings before interest
expense, income taxes, depreciation and amortization) was a record
$195.3 million, compared with $162.3 million in the first quarter
of 2007. Excluding the net asbestos-related gain noted above,
consolidated EBITDA in the first quarter of 2008 was a record
$181.1 million. The following tables present average quarterly data
for 2007. The company believes that such figures provide meaningful
comparative relevance for certain key metrics in light of the
significant quarter-to-quarter variability that is inherent in the
company�s financial results. � � Q1 2008 � Q1 2007 � Average Qtr of
2007 Net income � $138 million � $115 million � $98 million Net
income, as adjusted � $124 million � $115 million � $97 million
Consolidated EBITDA � $195 million � $162 million � $148 million
Consolidated EBITDA, as adjusted � $181 million � $162 million �
$146 million Commenting on the company�s quarterly results, Foster
Wheeler�s Chairman and Chief Executive Officer, Raymond J.
Milchovich, said, �Our net income, as adjusted, in the first
quarter of 2008 was a record and was up markedly from the average
quarter of 2007. The results were largely attributable to the
sharply improved performance of our Global Power Group and
continued operational and commercial excellence in our Global
Engineering and Construction Group.� Global Engineering and
Construction (E&C) Group � � Q1 2008 � Q1 2007 � Average Qtr of
2007 New orders booked (FW Scope) � $613 million � $533 million �
$538 million Operating revenues (FW Scope) � $547 million � $530
million � $536 million Segment EBITDA � $135 million � $141 million
� $126 million EBITDA Margin � 24.6% � 26.6% � 23.6% Segment EBITDA
was $134.5 million in the first quarter of 2008, an increase of 7%
compared with the average quarter of 2007. EBITDA margin on scope
revenue was 24.6% in the first quarter of 2008, compared with 23.6%
for the full-year 2007. Operating revenues in Foster Wheeler Scope
were $547.2 million in the first quarter of 2008, an increase of 2%
compared with scope revenue for the average quarter of 2007. New
orders booked in Foster Wheeler Scope were $612.5 million in the
first quarter of 2008, an increase of 14% compared with the average
quarter of 2007. Backlog in Foster Wheeler Scope was a record $1.8
billion at the end of the first quarter of 2008, up 13% compared
with the year-ago period. At the end of the first quarter of 2008,
the number of man-hours in backlog amounted to 14.2 million, an
increase of 15% compared with the year-ago period. Global Power
Group (GPG) � � Q1 2008 � Q1 2007 � Average Qtr of 2007 New orders
booked (FW Scope) � $533 million � $541 million � $499 million
Operating revenues (FW Scope) � $402 million � $325 million � $354
million Segment EBITDA � $64 million � $37 million � $35 million
EBITDA Margin � 16% � 11.4% � 9.8% Segment EBITDA was $64.4 million
in the first quarter of 2008, an increase of 83% compared with the
average quarter of 2007. The results were driven by the company�s
commercial and operational improvement initiatives. Results in the
first quarter of 2008 were also aided by a commitment fee of $7.5
million and a $4.9 million increase in equity earnings due largely
to higher electricity rates for a partially owned power plant in
Chile. EBITDA margin on scope revenue was 16% in the first quarter
of 2008, as compared to 9.8% for the full-year 2007. Excluding the
2007 impact of a $30 million reserve for a legacy power project,
the average quarterly EBITDA was $42 million and the average EBITDA
margin on scope revenue was 12%. Operating revenues in Foster
Wheeler Scope were $401.7 million in the first quarter of 2008, an
increase of 14% compared with the average quarter of 2007. New
orders booked in Foster Wheeler Scope were $533.3 million in the
first quarter of 2008, an increase of 7% compared with the average
quarter of 2007. Backlog in Foster Wheeler Scope was a record $1.8
billion at the end of the first quarter of 2008, an increase of 55%
compared with scope backlog at the end of the year-ago quarter.
Milchovich noted, �Our businesses witnessed very strong market
demand during the quarter, and we expect both groups to have a very
good year. In our E&C business, the market segments we serve
continue to be very robust. Demand in the refining and
petrochemical sectors is very strong. And in the LNG market, where
demand continues to grow strongly and where we have a strong
presence, we signed pre-FEED contracts in the first quarter for two
significant planned LNG liquefaction investments. Our Global Power
Group had a terrific quarter and, overall, the markets we serve
remain strong. However, of late we have noticed a change in the
tone of the solid-fuel boiler market, primarily in North America.
We are beginning to see instances of delays in certain projects
that we view as prospects. Environmental considerations have
imposed restraints on clients regarding the progress of some
projects. In addition, and to varying degrees, clients have
expressed concerns regarding cost inflation and slower economic
growth in the North American market.� Foster Wheeler Ltd. is a
global company offering, through its subsidiaries, a broad range of
engineering, procurement, construction, manufacturing, project
development and management, research and plant operation services.
Foster Wheeler serves the upstream oil and gas, LNG and
gas-to-liquids, refining, petrochemicals, chemicals, power,
pharmaceuticals, biotechnology and healthcare industries. The
company is based in Hamilton, Bermuda, and its operational
headquarters are in Clinton, New Jersey, USA. For more information
about Foster Wheeler, please visit our Web site at www.fwc.com.
Calculation of EBITDA EBITDA is a supplemental financial measure
not defined in generally accepted accounting principles or GAAP.
The Company defines EBITDA as income before interest expense,
income taxes, depreciation and amortization. The Company has
presented EBITDA because it believes it is an important
supplemental measure of operating performance. EBITDA, after
adjustment for certain unusual and infrequent items specifically
excluded in the terms of the Company's current and prior senior
credit agreements, is used for certain covenants under its current
and prior senior credit agreements. The Company believes that the
line item on its consolidated statements of operations and
comprehensive income entitled "net income" is the most directly
comparable GAAP financial measure to EBITDA. Since EBITDA is not a
measure of performance calculated in accordance with GAAP, it
should not be considered in isolation of, or as a substitute for,
net income as an indicator of operating performance or any other
GAAP financial measure. EBITDA, as calculated by the Company, may
not be comparable to similarly titled measures employed by other
companies. In addition, this measure does not necessarily represent
funds available for discretionary use, and is not necessarily a
measure of the Company's ability to fund its cash needs. As EBITDA
excludes certain financial information that is included in net
income, users of this financial information should consider the
type of events and transactions that are excluded. The Company's
non-GAAP performance measure, EBITDA, has certain material
limitations as follows: It does not include interest expense.
Because the Company has borrowed money to finance some of its
operations, interest is a necessary and ongoing part of its costs
and has assisted the Company in generating revenue. Therefore, any
measure that excludes interest has material limitations; It does
not include taxes. Because the payment of taxes is a necessary and
ongoing part of the Company's operations, any measure that excludes
taxes has material limitations; and It does not include
depreciation and amortization. Because the Company must utilize
property, plant and equipment and intangible assets in order to
generate revenues in its operations, depreciation and amortization
are necessary and ongoing costs of its operations. Therefore, any
measure that excludes depreciation and amortization has material
limitations. Calculation of EBITDA Margin Segment EBITDA margin is
calculated by dividing business unit operating revenues in Foster
Wheeler Scope into business unit EBITDA. Foster Wheeler Scope
Foster Wheeler Scope represents that portion of unfilled orders,
new orders booked and operating revenues on which profit can be
earned. Foster Wheeler Scope excludes revenues relating to
third-party costs incurred by the company as agent or principal on
a reimbursable basis. The Company began comprehensively reporting
Foster Wheeler Scope as of 2005. Conference Call Information Foster
Wheeler Ltd. plans to hold a conference call today, Wednesday, May
7, at 11:00 a.m. (Eastern) to discuss its financial results for the
first quarter of 2008. The call will be accessible to the public by
telephone or webcast, and the company will post an accompanying
slide presentation in the investor relations section of its web
site (www.fwc.com). To listen to the call by telephone, dial
973-935-8752 (conference I.D. No. 40820119#) approximately ten
minutes before the call. The conference call will also be available
over the Internet at www.fwc.com or through StreetEvents at
www.streetevents.com. A replay of the call will be available on the
company's web site as well as by telephone. To listen to the replay
by telephone, dial 706-645-9291 (replay passcode 40820119#
required) starting one hour after the conclusion of the call
through 8:00 p.m. (Eastern) on Friday, June 6, 2008. The replay can
also be accessed on the company's web site for four weeks following
the call. Safe Harbor Statement Foster Wheeler news releases may
contain forward-looking statements that are based on management�s
assumptions, expectations and projections about the Company and the
various industries within which the Company operates. These include
statements regarding the Company�s expectations regarding revenues
(including as expressed by its backlog), its liquidity, the outcome
of litigation and legal proceedings and recoveries from customers
for claims, and the costs of current and future asbestos claims,
and the amount and timing of related insurance recoveries. Such
forward-looking statements by their nature involve a degree of risk
and uncertainty. The Company cautions that a variety of factors,
including but not limited to the factors described in Part I, Item
1A �Risk Factors� of the Company�s most recent annual report on
Form 10-K and the following, could cause the Company�s business
conditions and results to differ materially from what is contained
in forward-looking statements: changes in the rate of economic
growth in the United States and other major international
economies, changes in investment by the oil and gas, oil refining,
chemical/petrochemical and power industries, changes in the
financial condition of its customers, changes in regulatory
environments, changes in project design or schedules, contract
cancellations, changes in estimates made by the Company of costs to
complete projects, changes in trade, monetary and fiscal policies
worldwide, compliance with laws and regulations relating to its
global operations, currency fluctuations, war and/or terrorist
attacks on facilities either owned or where equipment or services
are or may be provided, interruptions to shipping lanes or other
methods of transport, outcomes of pending and future litigation,
including litigation regarding the Company�s liability for damages
and insurance coverage for asbestos exposure, protection and
validity of its patents and other intellectual property rights,
increasing competition by foreign and domestic companies,
compliance with its debt covenants, recoverability of claims
against its customers and others by the Company and claims by third
parties against the Company, and changes in estimates used in its
critical accounting policies. Other factors and assumptions not
identified above were also involved in the formation of these
forward-looking statements and the failure of such other
assumptions to be realized, as well as other factors, may also
cause actual results to differ materially from those projected.
Most of these factors are difficult to predict accurately and are
generally beyond the Company�s control. You should consider the
areas of risk described above in connection with any
forward-looking statements that may be made by the Company. The
Company undertakes no obligation to publicly update any
forward-looking statements, whether as a result of new information,
future events or otherwise. You are advised, however, to consult
any additional disclosures the Company makes in proxy statements,
quarterly reports on Form 10-Q, annual reports on Form 10-K and
current reports on Form 8-K filed with the Securities and Exchange
Commission. Foster Wheeler Ltd. and Subsidiaries Condensed
Consolidated Statement of Operations (in thousands of dollars,
except share data and per share amounts) (unaudited) � � Three
months ended � March 28, 2008 March 30, 2007 � Backlog $ 8,951,400
$ 5,706,500 New orders booked � 1,243,700 � 1,416,500 � Operating
revenues $ 1,795,724 $ 1,152,122 Cost of operating revenues �
(1,578,753) � (944,610) Contract profit 216,971 207,512 � Selling,
general & administrative expenses (64,896) (55,088) Other
income 19,534 5,764 Other deductions (11,891) (8,172) Interest
income 10,531 5,752 Interest expense (6,151) (4,725) Minority
interest in income of consolidated affiliates (473) (2,309) Net
asbestos-related gain 14,188 - � � Income before income taxes
177,813 148,734 Provision for income taxes � (39,750) � (33,909)
Net income $ 138,063 $ 114,825 � � Shares Outstanding:
Weighted-average number of common shares outstanding for basic
earnings per common share 143,917,790 139,507,752 �
Weighted-average number of common shares outstanding for diluted
earnings per common share 145,298,514 143,531,056 � � � � Earnings
per common share: Basic $ 0.96 $ 0.82 Diluted $ 0.95 $ 0.80 Foster
Wheeler Ltd. and Subsidiaries Condensed Consolidated Balance Sheet
(in thousands of dollars) (unaudited) � March 28, � December 28,
2008 2007 ASSETS Current Assets: Cash and cash equivalents $
1,160,191 $ 1,048,544 Accounts and notes receivable, net: Trade
575,171 580,883 Other 134,113 98,708 Contracts in process 239,918
239,737 Prepaid, deferred and refundable income taxes 39,162 36,532
Other current assets � 44,798 � 39,979 Total current assets �
2,193,353 � 2,044,383 � Land, buildings and equipment, net 349,903
337,485 Restricted cash 36,183 20,937 Notes and accounts receivable
� long-term 2,564 2,941 Investments in and advances to
unconsolidated affiliates 220,748 198,346 Goodwill, net 62,672
53,345 Other intangible assets, net 64,869 61,190 Asbestos-related
insurance recovery receivable 307,053 324,588 Other assets 94,781
93,737 Deferred income taxes � 110,946 � 112,036 TOTAL ASSETS $
3,443,072 $ 3,248,988 � LIABILITIES, TEMPORARY EQUITY AND
SHAREHOLDERS� EQUITY Current Liabilities: Current installments on
long-term debt $ 19,520 $ 19,368 Accounts payable 327,591 372,531
Accrued expenses 308,153 331,814 Billings in excess of costs and
estimated earnings on uncompleted contracts 835,542 744,236 Income
taxes payable � 79,655 � 55,824 Total current liabilities �
1,570,461 � 1,523,773 � Long-term debt 193,386 185,978 Deferred
income taxes 81,998 81,008 Pension, postretirement and other
employee benefits 285,915 290,741 Asbestos-related liability
359,429 376,803 Other long-term liabilities and minority interest
213,303 216,916 Commitments and contingencies � � TOTAL LIABILITIES
� 2,704,492 � 2,675,219 � Temporary Equity: Non-vested restricted
awards subject to redemption � 2,425 � 2,728 TOTAL TEMPORARY EQUITY
� 2,425 � 2,728 � Shareholders' Equity: Preferred shares - - Common
shares 1,441 1,439 Paid-in capital 1,389,952 1,385,311 Accumulated
deficit (416,532) (554,595) Accumulated other comprehensive loss �
(238,706) � (261,114) TOTAL SHAREHOLDERS� EQUITY � 736,155 �
571,041 TOTAL LIABILITIES, TEMPORARY EQUITY � � AND SHAREHOLDERS�
EQUITY $ 3,443,072 $ 3,248,988 Foster Wheeler Ltd. and Subsidiaries
Business Segments (in thousands of dollars) (unaudited) � � Three
months ended March 28, 2008 March 30, 2007 Global Engineering &
Construction Group Backlog - in future revenues $ 7,177,900 $
4,554,700 New orders booked - in future revenues 707,300 872,700
Operating revenues 1,391,001 824,169 EBITDA 134,460 141,133 �
Foster Wheeler Scope (1): Backlog - in Foster Wheeler Scope
1,803,600 1,601,500 New orders booked - in Foster Wheeler Scope
612,500 533,300 Operating revenues - in Foster Wheeler Scope
547,208 529,631 � Global Power Group Backlog - in future revenues
1,773,500 1,151,800 New orders booked - in future revenues 536,400
543,800 Operating revenues 404,723 327,953 EBITDA 64,416 37,024 �
Foster Wheeler Scope (1): Backlog - in Foster Wheeler Scope
1,760,600 1,138,500 New orders booked - in Foster Wheeler Scope
533,300 540,700 Operating revenues - in Foster Wheeler Scope
401,663 324,822 � Corporate & Finance Group (2) EBITDA (3,556)
(15,860) � Consolidated Backlog - in future revenues 8,951,400
5,706,500 New orders booked - in future revenues 1,243,700
1,416,500 Operating revenues 1,795,724 1,152,122 EBITDA 195,320
162,297 � Foster Wheeler Scope (1): Backlog - in Foster Wheeler
Scope 3,564,200 2,740,000 New orders booked - in Foster Wheeler
Scope 1,145,800 1,074,000 Operating revenues - in Foster Wheeler
Scope 948,871 854,453 (1) Foster Wheeler Scope represents that
portion of backlog, new orders booked and operating revenues on
which profit can be earned. Foster Wheeler Scope excludes revenues
relating to third-party costs incurred by the company as agent or
principal on a reimbursable basis. � (2) Includes intersegment
eliminations. Foster Wheeler Ltd. and Subsidiaries Reconciliations
of EBITDA and Foster Wheeler Scope (in thousands of dollars)
(unaudited) � � � Three months ended Twelve months ended March 28,
2008 March 30, 2007 December 28, 2007 Reconciliation of EBITDA to
Net Income EBITDA: Global Engineering & Construction Group $
134,460 $ 141,133 $ 505,647 Global Power Group 64,416 37,024
139,177 Corporate & Finance Group � (3,556) � (15,860) �
(52,984) Consolidated EBITDA 195,320 162,297 591,840 Less: Interest
expense (6,151) (4,725) (19,855) Less: Depreciation/amortization
(1) � (11,356) � (8,838) � (41,691) Income before income taxes
177,813 148,734 530,294 Provision for income taxes � (39,750) �
(33,909) � (136,420) Net income $ 138,063 $ 114,825 $ 393,874 �
Reconciliation of Foster Wheeler Scope Operating Revenues to
Operating Revenues � Global Engineering & Construction Group �
Operating revenues - in Foster Wheeler Scope $ 547,208 $ 529,631 $
2,144,199 Flow-through revenues � 843,793 � 294,538 � 1,537,060
Operating revenues � 1,391,001 � 824,169 � 3,681,259 � Global Power
Group � Operating revenues - in Foster Wheeler Scope 401,663
324,822 1,413,462 Flow-through revenues � 3,060 � 3,131 � 12,522
Operating revenues � 404,723 � 327,953 � 1,425,984 � Consolidated �
Operating revenues - in Foster Wheeler Scope 948,871 854,453
3,557,661 Flow-through revenues � 846,853 � 297,669 � 1,549,582
Operating revenues $ 1,795,724 $ 1,152,122 $ 5,107,243 � (1)The
depreciation / amortization by business segment: Three months ended
Twelve months ended March 28, 2008 March 30, 2007 December 28, 2007
Global Engineering & Construction Group $ (5,635) $ (3,478) $
(17,485) Global Power Group (5,378) (5,019) (22,835) Corporate
& Finance Group � (343) � (341) � (1,371) Total depreciation /
amortization $ (11,356) $ (8,838) $ (41,691) Foster Wheeler Ltd.
and Subsidiaries EBITDA and Diluted Earnings Per Common Share
Reconciliation (in thousands of dollars, except per share amounts)
(unaudited) � � � Three Months Ended March 28, 2008 � Diluted
Earnings EBITDA � Net Income Per Common Share As adjusted $ 181,132
$ 123,875 $ 0.85 � Add back: Net asbestos-related gain 14,188
14,188 0.10 � � � � As reported $ 195,320 � $ 138,063 $ 0.95 � �
Twelve Months Ended December 28, 2007 � Diluted Earnings EBITDA �
Net Income Per Common Share As adjusted $ 585,695 $ 387,729 $ 2.68
� Add back: Net asbestos-related gain 6,145 6,145 0.04 � � � � As
reported $ 591,840 � $ 393,874 $ 2.72 Foster Wheeler Ltd. and
Subsidiaries Average Quarter of 2007 Calculation (in thousands of
dollars) (unaudited) � � 2007 Full Year Amount � 2007 Quarterly
Average Amount * � Consolidated Net income $ 393,874 $ 98,469 Net
income, as adjusted 387,729 96,932 Consolidated EBITDA 591,840
147,960 Consolidated EBITDA, as adjusted 585,695 146,424 � � Global
Engineering & Construction Group New orders booked - in Foster
Wheeler Scope $ 2,150,800 $ 537,700 Operating revenues - in Foster
Wheeler Scope 2,144,199 536,050 Segment EBITDA 505,647 126,412
EBITDA margin 23.6% 23.6% � � Global Power Group New orders booked
- in Foster Wheeler Scope $ 1,996,000 $ 499,000 Operating revenues
- in Foster Wheeler Scope 1,413,462 353,366 Segment EBITDA 139,177
34,794 EBITDA margin 9.8% 9.8% * To calculate the quarterly average
dollar amounts, the company divided reported annual figures by
four.
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