Foster Wheeler AG (Nasdaq: FWLT) today reported net income for
the fourth quarter of 2011 of $39.2 million, or $0.34 per diluted
share, compared with $32.8 million, or $0.26 per diluted share, in
the fourth quarter of 2010.
Net income in both quarterly periods was impacted by
asbestos-related provisions as detailed in an attached table.
Excluding such items from both quarterly periods, net income in the
fourth quarter of 2011 was $44.8 million, or $0.39 per diluted
share, compared with $38.3 million, or $0.31 per diluted share, in
the year-ago quarter.
For the full-year 2011, net income was $162.4 million, or $1.35
per diluted share, compared with $215.4 million, or $1.70 per
diluted share, for the full-year 2010. The full-year net income for
2011 and 2010 included asbestos-related provisions as detailed in
the attached table.
The following tables present quarterly and average quarterly
data, both as reported and as adjusted (as detailed in an attached
table). The company believes that quarterly averages 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.
(in
millions)
Q4 2011
Qtrly Avg. 2011 Q4 2010
Qtrly Avg. 2010 Net income $39.2
$40.6 $32.8
$53.9 Net income, as adjusted $44.8
$43.1 $38.3
$55.2 Consolidated revenues (FW Scope) $734.4
$655.8 $653.3
$599.1
Foster Wheeler’s Chief Executive Officer, Kent Masters, said,
“Net income for the fourth quarter of 2011 was down relative to the
average quarter of 2010, due primarily to lower EBITDA in the
company’s Global Engineering and Construction Group.”
Global Engineering and Construction
(E&C) Group
(in millions)
Q4
2011 Qtrly Avg. 2011
Q4 2010
Qtrly Avg. 2010 New orders booked (FW Scope)
$375.8 $361.8
$561.5 $484.8
Operating revenues (FW Scope) $453.1
$398.8 $418.8
$421.4 Segment EBITDA
$55.4 $52.6
$41.5 $74.1 EBITDA Margin (FW
Scope) 12.2% 13.2%
9.9% 17.6%
- EBITDA in the fourth quarter of 2011
was below the average quarter of 2010 due to lower realized margins
on work executed and the impact of an unfavorable utilization
rate.
- Scope operating revenues in the fourth
quarter of 2011 were above the average quarter of 2010 due largely
to the mix of contracts executed.
- New orders booked in Foster Wheeler
scope in the fourth quarter of 2011 were below the level of the
average quarter of 2010, composed of a mix of small and medium
awards.
Global Power Group (GPG)
(in
millions)
Q4 2011
Qtrly Avg. 2011 Q4 2010
Qtrly Avg. 2010 New orders booked (FW Scope)
$460.3 $313.0
$419.8 $298.2 Operating revenues (FW
Scope) $281.3 $257.0
$234.5 $177.7 Segment EBITDA
$55.0 $46.1
$67.1 $35.5* EBITDA Margin (FW Scope)
19.5% 17.9% 28.6%
20.0%*
*excluding gain from third-party debt payment of $21.9 million;
including this payment, EBITDA and EBITDA margin (FW Scope) were
$41.0 million and 23.0%, respectively.
- EBITDA in the fourth quarter of 2011
was well above the average quarter of 2010 due to a higher volume
of work, the favorable impact of license fees and increased equity
earnings from a partially owned power plant.
- Scope operating revenues in the fourth
quarter of 2011 were above the average quarter of 2010 due largely
to the volume impact mentioned above.
- Scope new orders in the fourth quarter
of 2011 were above the average quarter of 2010 due in part to the
booking of a large order for the company’s circulating fluidized
bed (CFB) technology.
In commenting on the outlook for each group, Masters said, “We
expect both our Global E&C Group and our Global Power Group to
generate increased scope revenues in 2012 as compared to 2011. We
expect E&C to generate a full-year EBITDA margin on scope
revenues within a range of 12% to 14%. We expect GPG to generate a
full-year EBITDA margin on scope revenues within a range of 16% to
18%.”
Masters said, “Comparing 2012 to 2011, we expect that higher
volume combined with the positive impact of a reduced share count
will result in a material increase in the company’s earnings per
share in 2012.”
Share Repurchase Program
The company repurchased 8,998,475 shares during the fourth
quarter of 2011 for approximately $169 million, and an additional
564,100 shares for approximately $10.9 million in January 2012.
Yesterday, the company’s board of directors approved an increase in
the authorized share repurchase program that raises the total
availability to $500 million. Foster Wheeler intends to seek
shareholder approval of the increase in the authorization at its
next annual general meeting of shareholders in May 2012, although
the company has flexibility to utilize a portion of the newly
authorized amount prior to receiving shareholder approval.
Net Income Attributable to Foster Wheeler AG
All references to net income in this news release indicate net
income attributable to Foster Wheeler AG.
Calculation of EBITDA
EBITDA is a supplemental financial measure not defined in
generally accepted accounting principles, or GAAP. The company
defines EBITDA as net income attributable to Foster Wheeler AG
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.
Certain covenants under our U.S. senior secured credit agreement
use an adjusted form of EBITDA such that in the covenant
calculations the EBITDA as presented herein is adjusted for certain
unusual and infrequent items specifically excluded in the terms of
our U.S. senior secured credit agreement. The company believes that
the line item on its consolidated statement of operations entitled
"net income attributable to Foster Wheeler AG" 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 attributable to Foster Wheeler AG 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
attributable to Foster Wheeler AG, 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 expense 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 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.
Conference Call Information
Foster Wheeler AG plans to hold a conference call today,
Thursday, February 23, at 4:30 p.m. Central European Time (10:30
a.m. Eastern Daylight Time in the U.S.) to discuss its financial
results for the fourth quarter ended December 31, 2011.
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 website
(www.fwc.com).
To listen to the call by telephone, dial 973-935-8752
(conference I.D. No. 44557511) 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
for four weeks following the call.
Foster Wheeler AG is a global engineering and construction
contractor and power equipment supplier delivering technically
advanced, reliable facilities and equipment. The company employs
approximately 12,000 talented professionals with specialized
expertise dedicated to serving its clients through one of its two
primary business groups. The company’s Global Engineering and
Construction Group designs and constructs leading-edge processing
facilities for the upstream oil and gas, LNG and gas-to-liquids,
refining, chemicals and petrochemicals, power, mining and metals,
environmental, pharmaceuticals, biotechnology and healthcare
industries. The company’s Global Power Group is a world leader in
combustion and steam generation technology that designs,
manufactures and erects steam generating and auxiliary equipment
for power stations and industrial facilities and also provides a
wide range of aftermarket services. The company is based in Zug,
Switzerland, and its operational headquarters office is in Geneva,
Switzerland. For more information about Foster Wheeler, please
visit our Web site at www.fwc.com.
Safe Harbor Statement
Foster Wheeler AG 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 about 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 the Company’s most recent Annual Report on
Form 10-K, which was filed with the U.S. Securities and Exchange
Commission and the following, could cause the Company’s business
conditions and results to differ materially from what is contained
in forward-looking statements: benefits, effects or results of the
Company’s redomestication or the relocation of our principal
executive offices to Geneva, Switzerland; the benefits, effects or
results of our strategic renewal initiative; further deterioration
in global economic condition;, changes in investment by the oil and
gas, oil refining, chemical/petrochemical and power generation
industries; changes in the financial condition of our 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 our global operations; currency fluctuations; war,
terrorist attacks and/or natural disasters affecting facilities
either owned by the Company or where equipment or services are or
may be provided by the Company; interruptions to shipping lanes or
other methods of transit; 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 global competition; compliance with
debt covenants; recoverability of claims against customers and
others by the Company and claims by third parties against the
Company; and changes in estimates used in our 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 or furnished with
the Securities and Exchange Commission.
Foster Wheeler AG
and Subsidiaries
Consolidated
Statement of Operations
(in thousands of
dollars, except share data and per share amounts)
(unaudited)
Quarter Ended December 31, Twelve Months Ended
December 31, 2011 2010 2011 2010
Operating revenues $ 1,128,743
$ 1,211,941 $ 4,480,729 $
4,067,719 Cost of operating revenues
976,219 1,073,017
3,939,274 3,468,933 Contract
profit 152,524 138,924 541,455
598,786 Selling, general and administrative
expenses 80,666 89,888 309,996
303,330 Other income, net (9,293 )
(24,496 ) (51,607 ) (60,444
) Other deductions, net 22,192 14,090
43,969 41,221 Interest income (5,657
) (3,657 ) (18,922 )
(11,581 ) Interest expense 2,491
2,685 12,876 15,610 Net asbestos-related
provision 5,514 5,478
9,901 5,410 Income
before income taxes 56,611 54,936 235,242
305,240 Provision for income taxes
15,685 18,819
58,514 74,531 Net income
40,926 36,117 176,728 230,709 Less:
Net income attributable to noncontrolling interests
1,681 3,348 14,345
15,302 Net income attributable to
Foster Wheeler AG $ 39,245 $
32,769 $ 162,383 $
215,407 Shares Outstanding:
Weighted-average number of
shares outstanding for basic earnings per
share
114,843,970 123,721,667 120,085,704
126,032,130
Weighted-average number of
shares outstanding for diluted earnings per
share
114,940,513 124,399,275 120,504,483
126,576,855 Earnings per share:
Basic $ 0.34 $ 0.26
$ 1.35 $ 1.71
Diluted $ 0.34 $ 0.26
$ 1.35 $ 1.70
Foster Wheeler AG
and Subsidiaries
Consolidated
Balance Sheet
(in thousands of
dollars)
(unaudited)
December 31,
December 31, 2011 2010 ASSETS
Current Assets: Cash and cash equivalents $
718,049 $ 1,057,163 Short-term
investments 1,294 - Accounts and notes
receivable, net: Trade 428,433 577,400
Other 97,495 96,758 Contracts in
process 166,648 165,389 Prepaid, deferred and
refundable income taxes 62,616 59,977 Other
current assets 49,181 37,813
Total current assets 1,523,716
1,994,500 Land, buildings and equipment,
net 341,987 362,087 Restricted cash
44,094 27,502 Notes and accounts receivable –
long-term 6,210 2,648 Investments in and
advances to unconsolidated affiliates 211,109
217,071 Goodwill 104,654 88,917
Other intangible assets, net 74,386 66,070
Asbestos-related insurance recovery receivable
157,127 194,570 Other assets 118,178
84,078 Deferred tax assets 25,482
23,034 TOTAL ASSETS $
2,606,943 $ 3,060,477
LIABILITIES, TEMPORARY EQUITY AND EQUITY Current
Liabilities: Current installments on long-term debt
$ 12,683 $ 11,996 Accounts
payable 250,171 239,071 Accrued expenses
237,089 240,894 Billings in excess of costs and
estimated earnings on uncompleted contracts 547,732
684,090 Income taxes payable 39,645
34,623 Total current liabilities
1,087,320 1,210,674
Long-term debt 136,428 152,574
Deferred tax liabilities 41,349 42,179
Pension, postretirement and other employee benefits
171,065 166,362 Asbestos-related liability
269,520 307,619 Other long-term liabilities
160,596 160,785 Commitments and contingencies
TOTAL LIABILITIES 1,866,278
2,040,193 Temporary
Equity: Non-vested share-based compensation awards subject
to redemption 4,993 4,935
TOTAL TEMPORARY EQUITY 4,993
4,935 Equity: Registered
shares 321,181 334,052 Paid-in capital
606,053 659,739 Retained earnings
699,971 537,588 Accumulated other comprehensive
loss (530,068 ) (464,504 )
Treasury shares (409,390 )
(99,182 ) TOTAL FOSTER WHEELER AG SHAREHOLDERS’
EQUITY 687,747 967,693
Noncontrolling interests 47,925
47,656 TOTAL EQUITY
735,672 1,015,349 TOTAL
LIABILITIES, TEMPORARY EQUITY AND EQUITY $
2,606,943 $ 3,060,477
Foster Wheeler AG
and Subsidiaries
Business
Segments
(in thousands of
dollars)
(unaudited)
Quarter Ended December 31,
Twelve Months Ended December 31, 2011 2010
2011 2010
Global
Engineering & Construction Group
Backlog - in future revenues $ 2,420,200
$ 2,937,700 $ 2,420,200 $
2,937,700 New orders booked - in future revenues
1,052,100 896,600 3,024,900 2,902,100
Operating revenues 845,193 974,656
3,443,079 3,346,050 EBITDA 55,416
41,508 210,541 296,240 Foster
Wheeler Scope (1): Backlog - in Foster Wheeler
Scope 1,365,900 1,611,300 1,365,900
1,611,300 New orders booked - in Foster Wheeler Scope
375,800 561,500 1,447,200 1,939,100
Operating revenues - in Foster Wheeler Scope 453,052
418,839 1,594,992 1,685,778
Global Power
Group
Backlog - in future revenues 1,205,900
1,041,800 1,205,900 1,041,800 New orders
booked - in future revenues 462,200 422,600
1,260,900 1,203,700 Operating revenues
283,550 237,285 1,037,650 721,669
EBITDA 54,956 67,116 184,467
163,825 Foster Wheeler Scope
(1): Backlog - in Foster Wheeler Scope
1,196,400 1,031,900 1,196,400 1,031,900
New orders booked - in Foster Wheeler Scope 460,300
419,800 1,251,800 1,192,900 Operating
revenues - in Foster Wheeler Scope 281,301
234,452 1,028,176 710,827
Corporate &
Finance Group (2)
EBITDA (40,893 ) (37,590 )
(111,779 ) (100,362 )
Consolidated
Backlog - in future revenues 3,626,100
3,979,500 3,626,100 3,979,500 New orders
booked - in future revenues 1,514,300 1,319,200
4,285,800 4,105,800 Operating revenues
1,128,743 1,211,941 4,480,729 4,067,719
EBITDA 69,479 71,034 283,229
359,703 Foster Wheeler Scope
(1): Backlog - in Foster Wheeler Scope
2,562,300 2,643,200 2,562,300 2,643,200
New orders booked - in Foster Wheeler Scope 836,100
981,300 2,699,000 3,132,000 Operating
revenues - in Foster Wheeler Scope 734,353
653,291 2,623,168 2,396,605 (1)
Foster Wheeler Scope represents the 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 AG
and Subsidiaries
Reconciliations
of EBITDA and Foster Wheeler Scope
(in thousands of
dollars)
(unaudited)
Quarter Ended December 31, Twelve
Months Ended December 31, 2011 2010 2011
2010
Reconciliation of
EBITDA to Net Income (1)
EBITDA:
Global Engineering & Construction Group $
55,416 $ 41,508 $ 210,541
$ 296,240 Global Power Group 54,956
67,116 184,467 163,825 Corporate &
Finance Group (40,893 )
(37,590 ) (111,779 )
(100,362 ) Consolidated EBITDA 69,479
71,034 283,229 359,703 Less: Interest
expense 2,491 2,685 12,876 15,610
Less: Depreciation/amortization (2) 12,058
16,761 49,456 54,155 Less: Provision for
income taxes 15,685 18,819
58,514 74,531
Net income (1) $ 39,245 $
32,769 $ 162,383 $
215,407
Reconciliation of
Foster Wheeler Scope Operating
Revenues to
Operating Revenues
Global
Engineering & Construction Group
Foster Wheeler Scope operating revenues $
453,052 $ 418,839 $ 1,594,992
$ 1,685,778 Flow-through revenues
392,141 555,817
1,848,087 1,660,272 Operating
revenues 845,193 974,656
3,443,079 3,346,050
Global Power
Group
Foster Wheeler Scope operating revenues 281,301
234,452 1,028,176 710,827 Flow-through
revenues 2,249 2,833
9,474 10,842 Operating
revenues 283,550 237,285
1,037,650 721,669
Consolidated
Foster Wheeler Scope operating revenues 734,353
653,291 2,623,168 2,396,605 Flow-through
revenues 394,390 558,650
1,857,561 1,671,114
Operating revenues $ 1,128,743
$ 1,211,941 $ 4,480,729
$ 4,067,719 ____________________
(1)Net income attributable to
Foster Wheeler AG.
(2)The depreciation /
amortization by business segment:
Quarter Ended December 31, Twelve Months Ended December
31, 2011 2010 2011 2010 Global
Engineering & Construction Group $ 5,861
$ 10,375 $ 24,867 $
30,523 Global Power Group 5,569 5,414
22,116 21,273 Corporate & Finance Group
628 972
2,473 2,359 Total
depreciation / amortization $ 12,058
$ 16,761 $ 49,456
$ 54,155
Foster Wheeler AG
and Subsidiaries
EBITDA, Net
Income* and Diluted Earnings Per Share
Reconciliation
(in thousands of
dollars, except per share amounts)
(unaudited)
Quarter
Ended December 31, 2011 2010
DilutedEarnings
DilutedEarnings
EBITDA Net Income* Per Share EBITDA
Net Income* Per Share As adjusted $
74,993 $ 44,759 $ 0.39 $
76,512 $ 38,247 $ 0.31
Adjustments:
Net
asbestos-related provision
(5,514 ) (5,514 ) (0.05 )
(5,478 ) (5,478 ) (0.05 )
As reported
$ 69,479 $ 39,245
$ 0.34 $ 71,034 $
32,769 $ 0.26
Twelve Months Ended December 31, 2011 2010
Diluted
Earnings
Diluted
Earnings
EBITDA Net Income* Per Share EBITDA
Net Income* Per Share As adjusted $
293,130 $ 172,284 $ 1.43
$ 365,113 $ 220,817 $
1.74 Adjustments:
Net
asbestos-related provision
(9,901 ) (9,901 ) (0.08 )
(5,410 ) (5,410 ) (0.04 )
As reported
$ 283,229 $ 162,383
$ 1.35 $ 359,703 $
215,407 $ 1.70
____________________ *Net income attributable to Foster
Wheeler AG.
Foster Wheeler AG
and Subsidiaries
Average
Calculations
(in thousands of
dollars)
(unaudited)
2010
Full Year
2010
Quarterly
Average(1)
2011
Full Year
2011
Quarterly
Average(1)
Consolidated
Operating revenues - in Foster Wheeler Scope $
2,396,605 $ 599,151 $ 2,623,168 $ 655,792
Net income (2) 215,407 53,852
162,383 40,596 Adjusted net income (2)
220,817 55,204 172,284 43,071
Consolidated EBITDA 359,703 89,926
283,229 70,807 Consolidated EBITDA, as
adjusted 365,113 91,278 293,130
73,282
Global
Engineering & Construction Group
New orders booked - in Foster Wheeler Scope $
1,939,100 $ 484,775 $ 1,447,200 $ 361,800
Operating revenues - in Foster Wheeler Scope
1,685,778 421,445 1,594,992 398,748
Segment EBITDA 296,240 74,060 210,541
52,635 EBITDA margin 17.6% 17.6%
13.2% 13.2%
Global Power
Group
New orders booked - in Foster Wheeler Scope $
1,192,900 $ 298,225 $ 1,251,800 $ 312,950
Operating revenues - in Foster Wheeler Scope 710,827
177,707 1,028,176 257,044 Segment
EBITDA (3) 163,825 40,956 184,467
46,117 Third-party debt payment (21,866)
(5,466) - - Segment EBITDA excluding
third-party debt payment 141,959 35,490
184,467 46,117 EBITDA margin (3)
23.0% 23.0% 17.9% 17.9% EBITDA
margin excluding third-party debt payment 20.0%
20.0% 17.9% 17.9%
____________________ (1) To calculate the
quarterly average dollar amounts, the company divided reported
annual figures by four. (2) Net income attributable
to Foster Wheeler AG.
(3) The 2010 Full Year and 2010
Quarterly Average EBITDA balances include the impact of a $21,866
gain related to a
third-party
debt payment.
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