- Continued progress toward completion of
Renewable projects, despite increased estimated costs- $62 million
in cost savings program underway; initial benefits realized in
third quarter- Strategic divestitures closed, for $190 million in
combined gross proceeds
Babcock & Wilcox Enterprises, Inc. ("B&W") (NYSE: BW)
announced today third quarter 2018 revenues of $295.0 million, a
decrease of $61.9 million, or 17.3%, compared to the third quarter
of 2017. GAAP net loss, inclusive of discontinued operations, in
third quarter 2018 was $105.7 million compared to $114.3 million in
third quarter 2017; GAAP net loss from continuing operations in
third quarter 2018 was $104.1 million compared to $114.6 million in
third quarter 2017. Adjusted EBITDA was negative $26.4 million
compared to negative $14.4 million in the prior year period. All
numbers referred to in this release are on a continuing operations
basis, unless otherwise noted. A reconciliation of adjusted EBITDA
to the most directly comparable GAAP measure is provided in the
exhibits to this release.
"We have continued to make progress toward completing our
Renewable loss projects. While we recognized increased estimated
costs in the third quarter, at the end of October we turned over
one of the projects, a biomass plant in Denmark, to the customer
and anticipate turning over four more of the projects by the end of
this year, shortly after completing trial operations," said Leslie
C. Kass, President and Chief Executive Officer. "We intend to
provide updates when the remaining projects are turned over as we
continue to drive toward their completion."
"In addition, after concluding our strategic planning process,
we have increased our previous cost savings target of $54 million
in annualized savings to a new target of $62 million, $38 million
of which we began to implement in the second and third quarters,"
Kass continued. "We are already seeing the benefits of our initial
cost savings program and expect to implement additional cost
savings initiatives for $24 million beginning in the fourth
quarter. Finally, recent amendments to our revolving credit
facility, in conjunction with completed divestitures and ongoing
strategic actions, are designed to provide adequate liquidity as we
finish construction on the Renewable loss projects. As we look
forward, we continue to target adjusted EBITDA of approximately
$100 million for our Power segment in 2019, and we expect the
combined impact of our strategic actions, cost reductions and
completion of the Renewable loss projects to drive improved
profitability and cash flow next year. "
Results of Operations
Consolidated revenues in third quarter 2018 were $295.0 million,
down 17.3% compared to third quarter 2017. The GAAP operating loss
in third quarter 2018 was $45.1 million compared to an operating
loss of $110.9 million in third quarter 2017. Excluding $86.9
million of goodwill impairments recorded in the third quarter of
2017 and $7.2 million of financial advisory services required under
the terms of the revolving credit facility in the third quarter of
2018, operating losses increased, primarily due to a higher level
of charges on the Renewable loss contracts and increased support
costs to progress these contracts to completion. In addition, the
effect of lower volume in the Renewable segment's other
equipment-only contracts and aftermarket lines of business, as well
as increased estimated costs to complete new build cooling systems
sold under a previous strategy in the Industrial segment adversely
impacted the quarter results. These were partly offset by lower
SG&A costs, reflecting the benefits of restructuring
initiatives and active discretionary spending reductions. Adjusted
EBITDA was negative $26.4 million compared to negative $14.4
million in third quarter 2017.
There were several non-cash items that affected GAAP results in
the quarter, including:
- a $99.6 million non-cash income tax
charge to record a valuation allowance against remaining net
deferred tax assets;
- a $4.9 million foreign currency loss
from the strengthening of the U.S. dollar on unhedged intercompany
loans denominated in European currencies that were used to fund
foreign operations; and
- a $4.2 million actuarial mark-to-market
gain due to the status change of Palm Beach Resource Recovery
Corporation participants in the domestic pension plan, from the
sale of the business.
Power segment revenues decreased 5.5% to $191.1 million
in the third quarter of 2018 compared to $202.2 million in the
prior-year period. Revenues decreased mainly as the result of the
anticipated lower volume on retrofit contracts in the U.S., mainly
due to delays in projects caused by uncertainty in U.S.
environmental regulations, such as Coal Combustion Residue
regulations. Gross profit in the Power segment in third quarter
2018 was $34.3 million, compared to $35.4 million in the prior-year
period, primarily due to lower volume of revenue, partly offset by
benefits of restructuring and active reductions in discretionary
spending. Gross profit margin was 18.0%, compared to 17.5% in the
same period last year. Adjusted EBITDA in third quarter 2018 was
$21.9 million, in line with expectations, compared to $21.6 million
in last year's quarter, mainly attributable to reductions in
SG&A costs, which more than offset the decrease in gross
profit. Adjusted EBITDA margin was 11.5% compared to 10.7% in the
same period last year.
Industrial segment revenues decreased 26.6% to $34.8
million in third quarter 2018 compared to $47.5 million in third
quarter 2017, mainly due to lower volume of new build cooling
systems services following a 2017 change in strategy to improve
profitability by focusing on core geographies and products. Gross
profit in the Industrial segment was negative $5.5 million in third
quarter 2018, compared to a gross profit of negative $2.6 million
in the prior-year period, primarily due to increases in estimated
costs to complete new build cooling systems contracts sold under
the previous strategy and lower volume of aftermarket cooling
system services. Adjusted EBITDA was negative $11.2 million
compared to negative $7.6 million in the same period last year,
primarily due to increases in estimated costs to complete new build
cooling systems contracts and a bad debt reserve for a bankrupt
customer. New build cooling systems contracts that were sold under
the previous strategy are mostly expected to be complete by the end
of 2018. The Industrial segment's third quarter results consist of
the SPIG business line; results for MEGTEC and Universal are
reported in discontinued operations.
Revenues in the Renewable segment were $76.5 million for
third quarter 2018, compared to $108.6 million in third quarter
2017. Revenues were lower due to several of the European Renewable
contracts being in late stages of completion, when fewer costs are
incurred relative to the main construction phases that were
underway in the year ago quarter, as well as lower volume in other
equipment-only contracts and aftermarket lines of business. The
Renewable segment gross profit was negative $17.1 million in third
quarter 2018, compared to gross profit of $0.2 million reported in
third quarter 2017. Gross profit decreased due to changes in the
estimated revenues and costs to complete the six loss contracts as
well as increased support costs to progress these contracts to
completion, and the effect of lower volume in the segment's other
equipment-only contracts and aftermarket lines of business.
Adjusted EBITDA in the quarter was negative $25.8 million compared
to negative $10.6 million in the third quarter last year, mainly
due to the decrease in gross profit, partly offset by lower
SG&A costs, which reflects the benefits of restructuring, lower
proposal costs and active reductions in discretionary spending. The
segment's portfolio of other equipment-only contracts and
aftermarket lines of business was profitable during both third
quarters of 2018 and 2017.
In the third quarter of 2018, management identified $19.1
million of additional estimated costs to complete its Renewable
energy loss projects in Europe, mainly due to differences in actual
and estimated costs and issues encountered during commissioning,
start-up and trial operations.
Status Summary of Renewable Loss Projects
- The first project, a waste-to-energy
plant in Denmark, was approximately 97% complete as of
September 30, 2018. Construction is complete, the plant is fully
operational with a high capacity factor and trial operations and
takeover activities are ongoing. Complete turnover is expected in
the fourth quarter of 2018.
- The second project, a biomass plant in
the United Kingdom, was approximately 93% complete as of
September 30, 2018. Commissioning activities began on the project
in first quarter 2018, construction is substantially complete and
startup activities are underway. Trial operations and turnover are
expected to occur in the fourth quarter of 2018.
- The third project, a biomass plant
in Denmark, was approximately 97% complete as of September 30,
2018. The project was turned over to the customer at the end of
October 2018 and is now in the warranty phase.
- The fourth project, a biomass plant in
the United Kingdom, was approximately 95% complete as of
September 30, 2018. Construction is substantially complete,
commissioning began in first quarter 2018, start-up began in May
2018 and synchronization to the electrical grid occurred in July
2018. Trial operations began in November 2018 and turnover is
expected to occur in the fourth quarter of 2018.
- The fifth project, a biomass plant in
the United Kingdom, was approximately 70% complete as of
September 30, 2018. Construction activities are ongoing, and
turnover is expected to be complete in the third quarter of
2019.
- The sixth project, a waste-to-energy
plant in the United Kingdom, was approximately 92% complete as
of September 30, 2018. Construction is substantially complete,
commissioning began in first quarter 2018, and start-up occurred in
July 2018. Trial operations and turnover are expected to occur in
the fourth quarter of 2018.
In connection with the above-mentioned projects, B&W is
pursuing potential insurance recoveries relating to a variety of
claims and will also seek additional relief from its customers and
other claims. However, there can be no assurance as to the amounts,
if any, that B&W may recover. The $19.1 million of additional
renewable project costs recognized in third quarter 2018 do not
take into account any potential recoveries to mitigate these
losses.
Implementing Cost Savings Measures Targeting $62 Million In
Annual Savings
B&W’s strategic planning process, completed in the third
quarter of 2018, identified additional savings and increased the
previous target of $54 million in annualized savings to a new
target of $62 million. Costs to achieve the total $62 million in
savings are estimated to be approximately $12 million in the
aggregate. Approximately $8 million of the cost savings were
realized in the third quarter, with $11 million expected to be
realized in the fourth quarter and the balance being realized in
2019. Costs savings have been identified across all three segments
and at the corporate level.
Strategic Actions
In July 2018, B&W completed the sale of its investment in
its joint venture in India, Thermax Babcock & Wilcox Energy
Solutions Private Limited (TBWES), settled related contractual
claims and received $15.0 million in cash, of which $7.7 million
related to our investment in TBWES and $7.3 million of proceeds
were used to pay outstanding claims.
On September 17, 2018, B&W closed the sale of its
subsidiary, Palm Beach Resource Recovery Corporation (PBRRC), to a
subsidiary of Covanta Holding Corporation (NYSE: CVA) for $45
million, subject to adjustment. PBRRC provides operations for two
waste-to-energy facilities located in West Palm Beach, Florida.
PBRRC was previously included in the Renewable segment. Operations
& maintenance remains a focus for B&W outside of the United
States.
On October 5, 2018, B&W closed the sale of its MEGTEC and
Universal businesses to Dürr AG for $130 million, subject to
adjustment. The MEGTEC and Universal businesses, which were
previously included in the Industrial segment, are classified as
discontinued operations in the third quarter.
B&W continues to evaluate further dispositions and
additional opportunities for cost savings, as well as other
alternatives to increase its financial flexibility as it works to
complete the Renewable loss projects.
Balance Sheet
B&W’s cash and cash equivalents balance, net of restricted
cash, related to continuing operations was $32.5 million at
September 30, 2018. At September 30, 2018, outstanding
balances under bank credit facilities totaled $194.0 million.
In the third quarter and October of 2018, B&W made a number
of amendments to its revolving credit facility. The amendments
modify financial covenants and requirements, Renewable loss project
completion milestones, and the timeline for concessions from the
counterparties on these projects, among other things. In addition,
in the third quarter, B&W received $20 million of net cash
proceeds from its last out term loan and in October 2018, received
an additional $10 million of net cash proceeds from the same last
out term loan.
Conference Call to Discuss Third Quarter 2018 Results
Date:
Thursday, November 8, 2018, at 5:00 p.m. ET
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
our strategic objectives; our business execution model;
management’s expectations regarding the industries in which we
operate; our guidance and forecasts; our projected operating margin
improvements, savings and restructuring costs; covenant compliance;
and project execution. These forward-looking statements are based
on management’s current expectations and involve a number of risks
and uncertainties, including, among other things, our ability to
continue as a going concern; our ability to obtain and maintain
sufficient financing to provide liquidity to meet our business
objectives, surety bonds, letters of credit and similar financing;
our ability to satisfy the liquidity and other requirements under
U.S. revolving credit facility as recently amended, including our
ability to receive concessions from customers on our Renewable
energy loss contracts; the highly competitive nature of our
businesses; general economic and business conditions, including
changes in interest rates and currency exchange rates; general
developments in the industries in which we are involved;
cancellations of and adjustments to backlog and the resulting
impact from using backlog as an indicator of future earnings; our
ability to perform contracts on time and on budget, in accordance
with the schedules and terms established by the applicable
contracts with customers; failure by third-party subcontractors,
joint venture partners or suppliers to perform their obligations on
time and as specified; our ability to realize anticipated savings
and operational benefits from our restructuring plans, and other
cost-savings initiatives; our ability to successfully address
productivity and schedule issues in our Renewable segment,
including the ability to complete our Renewable energy projects
within the expected time frame and the estimated costs; our ability
to successfully partner with third parties to win and execute
renewable contracts; changes in our effective tax rate and tax
positions; our ability to maintain operational support for our
information systems against service outages and data corruption, as
well as protection against cyber-based network security breaches
and theft of data; our ability to protect our intellectual property
and renew licenses to use intellectual property of third parties;
our use of the percentage-of-completion method of accounting; our
ability to successfully manage research and development projects
and costs, including our efforts to successfully develop and
commercialize new technologies and products; the operating risks
normally incident to our lines of business, including professional
liability, product liability, warranty and other claims against us;
changes in, or our failure or inability to comply with, laws and
government regulations; actual or anticipated changes in
governmental regulation, including trade and tariff policies;
difficulties we may encounter in obtaining regulatory or other
necessary permits or approvals; changes in, and liabilities
relating to, existing or future environmental regulatory matters;
changes in actuarial assumptions and market fluctuations that
affect our net pension liabilities and income; potential violations
of the Foreign Corrupt Practices Act; our ability to successfully
compete with current and future competitors; the loss of key
personnel and the continued availability of qualified personnel;
our ability to negotiate and maintain good relationships with labor
unions; changes in pension and medical expenses associated with our
retirement benefit programs; social, political, competitive and
economic situations in foreign countries where we do business or
seek new business; the possibilities of war, other armed conflicts
or terrorist attacks; the willingness of customers and suppliers to
continue to do business with us on reasonable terms and conditions;
and our ability to successfully consummate strategic alternatives
for non-core assets, if we determine to pursue them. 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 our most recent
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 Barberton, Ohio, Babcock & Wilcox is a
global leader in energy and environmental technologies and services
for the power and industrial markets. Follow us on Twitter
@BabcockWilcox and learn more at www.babcock.com.
Exhibit 1 Babcock & Wilcox
Enterprises, Inc.
Condensed Consolidated Statements of
Operations(1)
(In millions, except per share
amounts)
Three months ended Nine months ended
September 30, September 30, 2018
2017 2018 2017 Revenues $
295.0 $ 356.9 $ 839.5
$ 1,011.2 Costs and expenses: Cost of
operations 284.5 326.1 894.2 1,000.4 Selling, general and
administrative expenses 52.3 50.4 167.0 164.4 Goodwill impairment
0.0 86.9 37.5 86.9 Restructuring activities and spin-off
transaction costs 2.9 3.7 13.6 8.6 Research and development costs
0.5 1.9 2.9 6.1 Losses (gains) on asset disposals, net 0.0
0.1 1.4 0.1 Total costs and
expenses 340.1 469.0 1,116.6 1,266.5 Equity in income and
impairment of investees 0.0 1.2 (11.8 )
(13.4 )
Operating loss (45.1 ) (110.9
) (288.9 ) (268.8 ) Other income
(expense): Interest income 0.2 0.1 0.4 0.4 Interest expense (10.4 )
(7.3 ) (35.7 ) (15.2 ) Gain on sale of business 39.7 — 39.7 — Loss
on debt extinguishment — — (49.2 ) — Benefit plans, net 10.8 5.2
24.8 14.7 Foreign exchange (4.9 ) (6.9 ) (22.7 ) (4.6 ) Other – net
0.0 (0.2 ) 0.2 (0.2 ) Total other
income (expense) 35.3 (9.0 ) (42.4 ) (4.9 )
Loss before income tax expense (benefit) (9.9 ) (119.9 )
(331.4 ) (273.7 ) Income tax expense (benefit) 94.3
(5.3 ) 99.3 (5.0 )
Net loss from continuing
operations (104.1 ) (114.6 )
(430.7 ) (268.7 ) Income (loss) from
discontinued operations, net of tax (1.4 ) 0.5 (60.9
) (3.1 )
Net Loss (105.6 ) (114.1 ) (491.5 ) (271.8 )
Net income attributable to noncontrolling interest (0.1 )
(0.2 ) (0.4 ) (0.6 )
Net loss attributable to B&W
shareholders $ (105.7 ) $
(114.3 ) $ (491.9 )
$ (272.3 ) Basic and diluted loss per
common share:
Continuing operations $ (0.62
) $ (2.49 ) $ (3.81
) $ (5.62 ) Discontinued operations
(0.01 ) 0.01 (0.54 ) (0.07 ) Basic and diluted
loss per common share $ (0.63 ) $ (2.48 ) $ (4.35 ) $
(5.69 ) Shares used in the computation of earnings per
share: Basic and Diluted 168.7 46.1 113.1 47.9 (1) Figures
may not be clerically accurate due to rounding.
Exhibit 2 Babcock & Wilcox Enterprises,
Inc.
Condensed Consolidated Balance
Sheets(1)
(In millions, except per share amount)
September 30,
2018 December 31, 2017 Cash and cash
equivalents $ 32.5 $ 43.7 Restricted cash and cash equivalents 19.7
26.0 Accounts receivable – trade, net 206.4 252.5 Accounts
receivable – other 58.6 78.8 Contracts in progress 141.6 135.8
Inventories 64.7 72.9 Other current assets 36.9 34.0 Current assets
of discontinued operations 90.2 88.5
Total current assets 650.4 732.3 Net property, plant and equipment
96.9 114.7 Goodwill 47.2 85.7 Deferred income taxes — 97.5
Investments in unconsolidated affiliates 0.7 43.3 Intangible assets
35.1 42.1 Other assets 29.7 25.7 Noncurrent assets of discontinued
operations 109.3 181.0
TOTAL
ASSETS $ 969.4 $
1,322.2 Foreign revolving credit facility $
3.4 $ 9.2 Second lien term loan facility — 160.1 Accounts payable
194.7 205.4 Accrued employee benefits 25.6 27.1 Advance billings on
contracts 127.8 172.0 Accrued warranty expense 52.2 33.5 Other
accrued liabilities 83.2 89.5 Current liabilities of discontinued
operations 56.5 47.5 Total current
liabilities 543.4 744.3 U. S. revolving credit facility 190.6 94.3
Last out term loan 20.0 — Pension and other accumulated
postretirement benefit liabilities 217.0 250.0 Other noncurrent
liabilities 37.0 29.9 Noncurrent liabilities of discontinued
operations 8.1 13.0
TOTAL
LIABILITIES 1,016.1 1,131.5 Commitments
and contingencies — — Stockholders’ (deficit) equity: Common stock,
par value $0.01 per share, authorized 200,000 shares; issued and
outstanding 168,681 and 44,065 shares at September 30, 2018 and
December 31, 2017, respectively 1.7 0.5 Capital in excess of par
value 1,046.8 801.0 Treasury stock at cost, 5,839 and 5,681 shares
at September 30, 2018 and December 31, 2017, respectively (105.6 )
(104.8 ) Accumulated deficit (984.5 ) (492.2 ) Accumulated other
comprehensive loss (14.0 ) (22.4 ) Stockholders'
(deficit) equity attributable to shareholders (55.5 ) 182.1
Noncontrolling interest 8.8 8.6
TOTAL STOCKHOLDERS' (DEFICIT) EQUITY (46.8 )
190.7 TOTAL LIABILITIES AND
STOCKHOLDERS' (DEFICIT) EQUITY $ 969.4
$ 1,322.2 (1) Figures may
not be clerically accurate due to rounding.
Exhibit 3 Babcock & Wilcox Enterprises, Inc.
Condensed Consolidated Statements of
Cash Flows(1)
(In millions)
Nine months ended September 30, 2018
2017 Cash flows from operating activities:
Net loss $ (491.5 ) $ (271.8 ) Adjustments to reconcile net
loss to net cash provided by (used in) operating activities:
Depreciation and amortization of long-lived assets 24.5 31.0
Amortization of debt issuance cost, debt discount and
payment-in-kind interest 10.1 3.2 Gain on sale of business (39.7 )
— Loss on debt extinguishment 49.2 — Goodwill impairment of
discontinued operations 72.3 — Goodwill impairment 37.5 86.9 Income
from equity method investees (6.6 ) (4.8 ) Other than temporary
impairment of equity method investment in TBWES 18.4 18.2 Losses on
asset disposals and impairments 1.9 0.5 Reserve for claims
receivable 15.5 — Provision for (benefit from) deferred income
taxes, including valuation allowances 97.7 (2.1 ) Mark to market
gains and prior service cost amortization for pension and
postretirement plans (6.6 ) (1.2 ) Stock-based compensation, net of
associated income taxes 2.0 8.5 Changes in assets and liabilities:
Accounts receivable 45.4 1.4 Contracts in progress and advance
billings on contracts (41.2 ) 6.7 Inventories 5.2 2.7 Income taxes
(6.9 ) 9.2 Accounts payable (12.3 ) 5.5 Accrued and other current
liabilities 30.2 (16.0 ) Pension liabilities, accrued
postretirement and employee benefits (29.3 ) (28.0 ) Other, net
10.7 (0.8 )
Net cash from operating
activities (213.5 ) (150.8 ) Cash flows from
investing activities: Purchase of property plant and equipment (5.0
) (10.7 ) Acquisition of business, net of cash acquired — (52.5 )
Proceeds from sale of business 43.9 — Proceeds from sale of equity
method investment in a joint venture 28.8 — Purchases of
available-for-sale securities (17.8 ) (22.9 ) Sales and maturities
of available-for-sale securities 18.2 27.0 Other, net (0.4 )
0.1
Net cash from investing activities 67.7
(59.0 ) (1) Figures may not be
clerically accurate due to rounding.
Exhibit 3
Babcock & Wilcox Enterprises, Inc.
Condensed Consolidated Statements of
Cash Flows(1)
(In millions)
Nine months ended September 30, 2018
2017 Cash flows from financing activities:
Borrowings under our U.S. revolving credit facility 446.4
511.4 Repayments of our U.S. revolving credit facility (350.1 )
(462.3 ) Borrowings under out last out term loan 20.0 — Proceeds
from our second lien term loan facility, net of $34.2 million
discount — 141.7 Repayments of our second lien term loan facility
(212.6 ) — Repayments of our foreign revolving credit facilities
(5.6 ) (3.3 ) Common stock repurchase from related party — (16.7 )
Proceeds from rights offering 247.1 — Costs related to rights
offering (3.3 ) — Debt issuance costs (8.1 ) (14.0 ) Issuance of
common stock 1.2 — Shares of our common stock returned to treasury
stock (0.8 ) (0.9 ) Other, net — (0.3 )
Net
cash from financing activities 134.3 155.5
Effects of exchange rate changes on cash (1.4 )
5.4
Net decrease in cash, cash equivalents and
restricted cash (12.8 ) (48.9 ) Less net increase (decrease) in
cash and cash equivalents of discontinued operations 4.7
2.3
Net decrease in cash, cash equivalents
and restricted cash of continuing operations (17.5 )
(51.1 ) Cash, cash equivalents and restricted cash of
continuing operations, beginning of period 69.7
115.2
Cash, cash equivalents and restricted cash
of continuing operations, end of period $ 52.2
$ 64.1 (1) Figures may not be clerically
accurate due to rounding.
Exhibit
4 Babcock & Wilcox Enterprises, Inc.
Segment Information(1)
(In millions)
Three months ended Nine months ended
SEGMENT RESULTS September 30, September 30,
2018 2017 2018 2017
REVENUES: Power $ 191.1 $ 202.2 $ 547.9 $ 612.3
Renewable 76.5 108.6 191.4 262.2 Industrial 34.8 47.5 117.6 143.3
Eliminations (7.4 ) (1.4 ) (17.5 ) (6.5 ) $ 295.0
$ 356.9 $ 839.5 $ 1,011.2
GROSS PROFIT: Power $ 34.3 $ 35.4 $ 95.2 $ 117.0 Renewable
(17.1 ) 0.2 (136.9 ) (100.1 ) Industrial (5.5 ) (2.6 ) (8.2 ) 2.3
Intangible asset amortization included in cost of operations (1.2 )
(2.3 ) (4.9 ) (8.4 ) ADJUSTED EBITDA: Power $ 21.9 $ 21.6 $
49.5 $ 66.4 Renewable (25.8 ) (10.6 ) (166.2 ) (133.0 ) Industrial
(11.2 ) (7.6 ) (24.7 ) (13.0 ) Corporate (5.8 ) (8.8 ) (23.6 )
(28.2 ) Research and development costs (0.5 ) (1.9 ) (2.9 ) (6.1 )
Foreign exchange (4.9 ) (6.9 ) (22.7 ) (4.6 ) Other - net 0.0
(0.2 ) 0.2 (0.2 ) $ (26.4 ) $
(14.4 ) $ (190.3 ) $ (118.6 ) AMORTIZATION EXPENSE:
Power $ 0.2 $ 0.3 $ 0.5 $ 0.9 Renewable 0.2 0.2 0.6 0.6 Industrial
1.0 1.9 4.2 7.3 $ 1.3
$ 2.4 $ 5.4 $ 8.7
DEPRECIATION EXPENSE: Power $ 4.1 $ 3.2 $ 10.5 $ 9.8 Renewable 0.9
1.0 2.8 2.9 Industrial 0.5 0.5 1.4 1.4 Corporate 0.3
0.2 0.9 0.6 $ 5.8 $ 4.8
$ 15.6 $ 14.7 BOOKINGS: Power $
131 $ 122 $ 535 $ 476
Renewable (2)
(440 ) 35 (417 ) 86 Industrial 5 28 51 172 Other/Eliminations 0
(2 ) (2 ) (40 ) $ (304 ) $ 183 $
167 $ 694
As of September 30,
BACKLOG:
2018 2017 Power $ 440 $ 482 Renewable
400 1,064 Industrial 109 202 Other/Eliminations (28 ) (37 )
$ 921 $ 1,711 (1) Figures may not be
clerically accurate due to rounding. (2) Renewable bookings in the
three months ended September 30, 2018 includes a reduction of
approximately $467 million from the sale of PBRRC, as described in
Note 4 to the condensed consolidated financial statements.
Renewable bookings also include the revaluation of backlog
denominated in currency other than U.S. dollars, which was $0.8
million and $22.6 million, in the three months ended September 30,
2018, and 2017, respectively, and $(11.5) million and $61.8 million
in the nine months ended September 30, 2018 and 2017, respectively.
Exhibit 5 Babcock &
Wilcox Enterprises, Inc.
Reconciliation of Adjusted
EBITDA(1)
(In millions)
Three months ended Nine months ended
September 30, September 30, 2018
2017 2018 2017
Adjusted EBITDA (2) Power segment(3) $
21.9 $ 21.6 $ 49.5 $ 66.4 Renewable segment (25.8 ) (10.6 ) (166.2
) (133.0 ) Industrial segment (11.2 ) (7.6 ) (24.7 ) (13.0 )
Corporate(4) (5.8 ) (8.8 ) (23.6 ) (28.2 ) Research and development
costs (0.5 ) (1.9 ) (2.9 ) (6.1 ) Foreign exchange (4.9 ) (6.9 )
(22.7 ) (4.6 ) Other - net 0.0 (0.2 )
0.2 (0.2 )
Total Adjusted EBITDA (26.4 ) (14.4
) (190.3 ) (118.6 ) Gain on sale of business 39.7 — 39.7 —
Gain on sale of equity method investment (BWBC) — — 6.5 — Other
than temporary impairment of equity method investment in TBWES — —
(18.4 ) (18.2 ) Loss on debt extinguishment — — (49.2 ) — Loss on
asset disposal — (0.1 ) (1.5 ) (0.1 ) MTM gain(loss) from benefit
plans 4.2 — 4.7 (1.1 ) Financial advisory services included in
SG&A (7.2 ) (0.4 ) (15.5 ) (0.4 ) Acquisition and integration
costs included in SG&A — (0.1 ) — (1.6 ) Goodwill impairment —
(86.9 ) (37.5 ) (86.9 ) Restructuring activities and spin-off
transaction costs (2.9 ) (3.7 ) (13.6 ) (8.6 ) Depreciation &
amortization (7.1 ) (7.2 ) (21.0 ) (23.4 ) Interest expense, net
(10.2 ) (7.1 ) (35.3 ) (14.9 )
Loss
before income tax expense (9.9 ) (119.9
) (331.4 ) (273.7 ) Income tax
expense (benefit) 94.3 (5.3 ) 99.3
(5.0 )
Loss from continuing operations (104.1
) (114.6 ) (430.7 ) (268.7 ) Loss from discontinued operations, net
of tax (1.4 ) 0.5 (60.9 ) (3.1 )
Net loss (105.6 ) (114.1 ) (491.5 ) (271.8 ) Net income
attributable to noncontrolling interest (0.1 ) (0.2 )
(0.4 ) (0.6 )
Net loss attributable to
stockholders $ (105.7 ) $
(114.3 ) $ (491.9
) $ (272.3 ) (1) Figures
may not be clerically accurate due to rounding. (2) Adjusted
EBITDA is not a calculation based on generally accepted accounting
principles (GAAP). The amounts included in Adjusted EBITDA,
however, are derived from amounts included in the Consolidated
Statements of Earnings. Adjusted EBITDA should not be considered an
alternative to net earnings (loss), operating profit (loss) or
operating cash flows. B&W has presented adjusted EBITDA as it
is regularly used by many of our investors and is presented as a
convenience to them. Adjusted EBITDA, as presented in this
calculation however, differs from the EBITDA calculation used to
compute our leverage ratio and interest coverage ratio as defined
by our Amended Credit Agreement. (3) Power adjusted EBITDA
includes pension benefit, excluding mark-to-market (MTM)
adjustments of $6.4 million, $5.0 million, $19.5 million and $15.1
million in the three months ended September 30, 2018, September 30,
2017 and nine months ended September 30, 2018 and September 30,
2017, respectively. (4) Allocations are not eligible for
presentation as discontinued operations. Accordingly, allocations
previously absorbed by the MEGTEC and Universal businesses in the
Industrial segment have been included with other unallocated costs
in Corporate, and total $2.9 million and $2.2 million in the three
months ended September 30, 2018 and 2017, respectively, and $8.6
million and $6.6 million in the nine months ended September 30,
2018 and 2017, respectively.
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version on businesswire.com: https://www.businesswire.com/news/home/20181108005977/en/
Babcock & WilcoxInvestor Contact:Megan Wilson,
704-625-4944Vice President, Corporate Development & Investor
Relationsinvestors@babcock.comorMedia
Contact:Ryan Cornell, 330-860-1345Public
Relationsrscornell@babcock.com
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