Babcock & Wilcox Announces Fourth Quarter 2017 Results
March 01, 2018
(CHARLOTTE, N.C. – March 1, 2018) – Babcock
& Wilcox Enterprises, Inc. ("B&W") (NYSE: BW) announced today
fourth quarter 2017 revenues of $408.1 million, an increase of $28.1 million, or 7%,
compared to the fourth quarter of 2016. GAAP earnings per share in fourth
quarter 2017 were a loss of $2.44 compared to a loss per share of $1.47 in
fourth quarter 2016. Included in the fourth quarter 2017 GAAP loss was a $62.4
million charge, or $1.42 per share, for the revaluation of deferred tax assets
as the result of tax reform under the Tax Cuts and Jobs Act (TCJA). Adjusted
earnings per share were a loss of $0.95 for the three months ended
December 31, 2017 compared to an adjusted loss per share of $1.48 in the
prior year period. Adjusted EBITDA was $(17.0) million compared to $(55.3)
million in the prior year period. A reconciliation of historical non-GAAP
results is provided in the exhibits to this release.
“Our progress toward completion of the Renewable
projects and ongoing initiatives to improve our global cost structure and
business mix positions us well for improved financial results in 2018 and
beyond,” said Leslie Kass, President and Chief Executive Officer. “We are
making substantial progress on the construction of the U.K. Renewable new-build
loss projects. Three of the projects are on track to be construction complete
in first half 2018, with two of the projects currently in start-up
commissioning phases, and despite incremental delays at one project resulting
from the steel beam issue identified in late September 2017, construction is
expected to be complete by the end of the year. While these delays increased
our estimated costs to complete the projects, we expect to be able to offset
some of these costs through agreements with our customers for bonus
opportunities and liquidated damage relief in 2018.”
“Additionally, we have received substantial
interest in our MEGTEC and Universal business lines and expect to close a
transaction in mid-2018,” said Kass. “We are committed to driving efficiencies
throughout the organization and serving our customers with high-quality
engineered equipment, parts and services. To more efficiently lead our efforts
to improve our cost structure and profitability, we will be hiring a Chief
Implementation Officer who will serve alongside our senior management team.”
New Financing Arrangements
On March 1, 2018, the Company entered into a
fifth amendment to its first-lien revolving credit facility and received a
commitment letter from Vintage Capital Management, LLC to backstop a rights
offering of common stock of at least $182 million. The rights offering
will be available to all shareholders on a pro rata basis and will be initiated
as promptly as practical, subject to compliance with applicable SEC rules. The
rights offering will be priced at $3.00 per share. The net proceeds from
the rights offering, along with additional borrowings under the revolving
credit facility, will be used to repay in full the Company's second-lien term
loan. The Company is currently in default under its second-lien term loan
agreement. The intercreditor agreement in place between the Company’s
first lien lenders and second lien lenders restricts the second lien lenders
from exercising rights against the collateral securing their second-lien term
loans during a 180-day standstill period. The Company’s first-lien revolving
credit facility has been amended to, among other things, provide for borrowings
up to $35 million to be used along with the net proceeds of the rights offering
to repay the second-lien term loan, waive certain financial covenant defaults,
amend the financial covenants and other provisions and waive any cross-default
as a result of any defaults existing under the second-lien term loan agreement
or any acceleration related thereto. B. Riley Financial, Inc. served as
financial advisor to the Company on this transaction.
“Babcock & Wilcox is a venerable name in the
power industry and is positioned for significantly improved financial
performance as the Renewable loss-projects are nearing completion of
construction. All except one loss-project is expected to be completed before
the end of second quarter 2018, and one last loss-project expected to
construction complete by the end of 2018,” said Brian Kahn, Managing Member of
Vintage Capital Management and a Director of B&W. "It is my opinion
that the second-lien term loan could have become a significant impediment to
shareholders realizing the benefits of the value creation opportunities that
lie ahead for the Company. A rights offering removes the second-lien term loan
and provides the best opportunity for shareholders to reap value creation. I am
grateful to our Revolving Credit Facility group of lenders for their continued
support, exemplified by this partnership with Vintage to achieve the Company’s
goals. Removal of the second-lien term loan will save the Company approximately
$20 million of annual interest expense and increase its strategic and financial
flexibility, including facilitation of the expected divestiture of MEGTEC and
Universal.”
As part of the overall financial transaction,
the composition of the Board will change. E. James Ferland, Brian K. Ferraioli,
Stephen G. Hanks, and Larry W. Weyers have voluntarily submitted their
resignations as members of B&W's Board of Directors, effective March 2,
2018. Two new Directors recommended by Vintage will be appointed in the
coming weeks in accordance with the Company’s normal Governance Committee
nominations and vetting process, reducing the size of the Board to nine members
from the current eleven members.
Results of Operations
Consolidated revenues in
fourth quarter 2017 were $408.1 million, an increase of $28.1 million compared
to $380.0 million in fourth quarter 2016, as higher revenue in the Renewable
and Industrial segments was offset modestly lower revenue in the Power segment.
The GAAP operating loss in fourth quarter 2017 was $23.4 million compared to an
operating loss of $58.6 million in fourth quarter 2016. The adjusted operating
loss in fourth quarter 2017 was $21.1 million, compared to an adjusted
operating loss of $57.0 million in fourth quarter 2016, due mainly to a higher
level of charges on contracts within the Renewable segment last year. Adjusted
EBITDA was $(17.0) million compared to $(55.3) million in the prior year
period.
Fourth quarter 2017 revenues for the Power
segment decreased 5.0% to $208.8 million compared to $219.7 million in
the prior year period. Revenues decreased mainly as the result of lower
activities on new-build utility and environmental projects and lower sales of
industrial steam generation systems, partially mitigated by an increase in
retrofit services contracts. Gross profit in the Power segment in fourth
quarter 2017 was $59.3 million, compared to $62.6 million in the prior year
period. Gross profit margin was 28.4% in fourth quarter 2017, compared to 28.5%
in fourth quarter 2016, as the benefits of cost savings and good execution
mitigated the impact of lower volume.
In early 2018, the Company sold all of its joint
venture interest in Babcock & Wilcox Beijing Company, Ltd. (BWBC), its
Chinese joint venture company, for approximately $21 million, in addition to
the $41 million dividend (net of taxes) received in fourth quarter 2017. This
action is consistent with the Company's strategy to shift its focus more toward
aftermarket parts and service and retrofit opportunities in the coal-fired
power market and away from large international new-build projects, and its
strategy to optimize its business mix for the current market environment. The
Company will continue a relationship with BWBC through an expanded technology
license.
Industrial segment revenues increased 9.1% to
$116.1 million in fourth quarter 2017 compared to $106.3 million in fourth
quarter 2016, as the addition of Universal and organic growth at MEGTEC were
partially offset by lower revenue at SPIG. Gross profit in the Industrial
segment was $7.1 million in fourth quarter 2017, compared to $17.2 million in
the prior year period. Gross profit margin was 6.2%, compared to 16.2% last
year, as higher volume was offset by overall business mix and lower profitability
on certain cooling systems projects.
Revenues in the Renewable segment were
$85.0 million for fourth quarter 2017, compared to $55.6 million in fourth
quarter 2016, mainly due to progress on new-build renewable energy projects
currently in backlog. The Renewable segment gross loss was $28.1 million in
fourth quarter 2017, compared to a gross loss of $82.6 million reported in fourth quarter
2016.
In September 2017, the Company identified and
announced the failure of a structural steel beam at a renewable new-build
project in the U.K. Efforts to stabilize the structure are ongoing at the site
to allow for completion of the project. A similar design was used on two other
new-build projects in the U.K., and although no structural failure occurred on
these projects, work was also stopped for a short period of time, while the
structures were reinforced. Progress was made at the projects during fourth
quarter; however, the schedule impact resulting from corrective actions, mostly
at the site where the failure occurred, was longer than previously anticipated.
As a result, the Company increased its cost estimates related to the structural
steel design issue by $22.0 million during the quarter. These costs were
partially offset by an increase in project revenue of approximately $4.0
million in the quarter related to agreements with customers related to design
changes for increase power output and partial liquidated damage relief.
Balance Sheet
The Company’s cash and cash
equivalents balance, net of restricted cash, was $56.7 million at
December 31, 2017. During the quarter, the Company utilized the $20
million delayed draw option associated with its second-lien term loan
agreement. At December 31, 2017, outstanding balances under revolving credit
facilities totaled $103.5 million.
Introducing 2018 Outlook
On
a consolidated basis, the Company is providing 2018 guidance as follows:
•
Revenue in the range of $1.5 billion to $1.7 billion
•
Adjusted EBITDA to be in the range of $75 million to $95 million(1)
(1) As more fully
described in Exhibit 2, management is unable to reconcile without unreasonable
effort the Company's forecasted range of adjusted EBITDA for the full year to a
comparable GAAP range.
The Company is providing 2018
revenue and gross margin guidance by segment(2) as follows:
• Power: revenue down 5% to
flat compared to 2017; gross margin approximately 20%
• Renewable: revenue up 5% to
10% compared to 2017; gross margin greater than 10%
• Industrial: revenue up 14% to
19% compared to 2017; gross margin approaching 20%
(2) Segment gross margin guidance is presented
on a pro forma basis, reflecting the adoption of FASB ASU 2017-07, under which
the non-service cost components of net periodic benefit cost will be presented
in other income rather than in cost of operations. The Company will adopt this
standard in 2018. The impact of the new standard will primarily impact the
Company's Power segment. On a pro forma basis, Power segment gross margin guidance
would compare to 20.8% in 2017. For a reconciliation of changes in the
classification of the historical components of net periodic benefit cost please
see the appendix in the March 2018 Company Overview Presentation which can be
located on the investors page of our website at www.babcock.com, and in our
annual report on Form 10-K for the year ended December 31, 2017 filed with the
SEC.
Conference Call to Discuss Fourth Quarter 2017
Results
Date: Wednesday, March 1, 2018, at 5:00 p.m. EST
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 successfully complete our rights offering and repay our second-lien term loan; our ability to maintain sufficient sources of liquidity to fund our operations, including sufficient bonding and surety capacity to meet customer requirements; our ability to realize anticipated savings and operational benefits from our restructuring plans, and other cost-savings initiatives; our ability to successfully capitalize on the strategic alternative evaluation of our MEGTEC and Universal business lines; our ability to successfully integrate and realize the expected synergies from acquisitions; our ability to realize the benefits of expected cross-selling opportunities from acquisitions; our ability to successfully address productivity and schedule issues in our Renewable segment, including our efforts to enhance its resources and infrastructure; timely completion of engineering work; productivity of subcontractors; our ability to successfully refine our the execution model of our Renewable segment; our ability to meet performance guarantees; our ability to successfully partner with third parties to win and execute renewable projects; changes in the jurisdictional mix of our income and losses; disruptions experienced with customers and suppliers; claims by third parties; the inability to retain key personnel; adverse changes in the industries in which we operate; and delays, changes or termination of contracts in backlog. 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.
Babcock & Wilcox
Enterprises, Inc.
Reconciliation of Non-GAAP
Operating Income and Earnings Per Share(1)(2)
(In
millions, except per share amounts)
|
Three Months Ended December 31,
2017 |
|||||||||
|
GAAP |
Restructuring and spin-off
transaction costs |
Acquisition and integration
costs |
Pension & OPEB MTM
(gain) / loss |
Litigation |
Financial advisory services |
Revaluation of deferred tax
assets and other |
Non-GAAP |
Intangible amortization |
Non-GAAP excluding intangible amortization |
Operating
income (loss) |
$(23.4) |
$6.5 |
$0.2 |
$(9.8) |
$(0.8) |
$2.3 |
$— |
$(24.9) |
$3.8 |
$(21.1) |
Other expense |
(11.4) |
— |
— |
— |
(0.7) |
— |
— |
(12.1) |
— |
(12.1) |
Income tax
expense (benefit) |
72.5 |
1.5 |
0.1 |
(3.6) |
(0.6) |
0.8 |
(63.7) |
7.0 |
1.2 |
8.2 |
Net income
(loss) |
$(107.2) |
$5.0 |
$0.1 |
$(6.2) |
$(1.0) |
$1.5 |
$63.7 |
$(44.0) |
$2.6 |
$(41.4) |
Net loss
attributable to non-controlling interest |
(0.2) |
— |
— |
— |
— |
— |
— |
(0.2) |
— |
(0.2) |
Net income
(loss) attributable to shareholders |
$(107.5) |
$5.0 |
$0.1 |
$(6.2) |
$(1.0) |
$1.5 |
$63.7 |
$(44.3) |
$2.6 |
$(41.7) |
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS -
continuing operations |
$(2.44) |
$0.11 |
$— |
$(0.14) |
$(0.02) |
$0.03 |
$1.45 |
$(1.01) |
$0.06 |
$(0.95) |
|
|
|
|
|
|
|
|
|
|
|
Income tax rate |
(208.4)% |
|
|
|
|
|
|
(18.8)% |
|
(24.7)% |
|
Three Months Ended December 31,
2016 |
||||||||
|
GAAP |
Restructuring costs and
spin-off transaction costs |
Acquisition and integration
costs |
Pension & OPEB MTM
(gain) / loss |
Sale of equity method
investment |
Litigation |
Non-GAAP |
Intangible amortization |
Non-GAAP excluding intangible amortization |
Operating
income (loss) |
$(58.6) |
$2.8 |
$2.4 |
$(6.4) |
$(8.3) |
$3.2 |
$(65.0) |
$8.0 |
$(57.0) |
Other expense |
(5.0) |
— |
— |
— |
— |
— |
(5.0) |
— |
(5.0) |
Income tax
expense (benefit) |
7.7 |
1.0 |
0.2 |
(2.7) |
— |
1.2 |
7.4 |
2.5 |
10.0 |
Net income
(loss) |
$(71.3) |
$1.8 |
$2.1 |
$(3.8) |
$(8.3) |
$2.0 |
$(77.4) |
$5.5 |
$(71.9) |
Net loss
attributable to non-controlling interest |
(0.3) |
— |
— |
— |
— |
— |
(0.3) |
— |
(0.3) |
Net income
(loss) attributable to shareholders |
$(71.6) |
$1.8 |
$2.1 |
$(3.8) |
$(8.3) |
$2.0 |
$(77.7) |
$5.5 |
$(72.2) |
|
|
|
|
|
|
|
|
|
|
Diluted EPS -
continuing operations |
$(1.47) |
$0.04 |
$0.04 |
$(0.08) |
$(0.17) |
$0.04 |
$(1.60) |
$0.11 |
$(1.48) |
|
|
|
|
|
|
|
|
|
|
Income tax rate |
(12.2)% |
|
|
|
|
|
(10.6)% |
|
(16.1)% |
|
Year Ended December 31, 2017 |
|||||||||||||
|
GAAP |
Impairment of equity method
investment |
Restructuring and spin-off
transaction costs |
Acquisition and integration
costs |
Pension & OPEB MTM
(gain) / loss |
Litigation |
Financial advisory services |
Goodwill impairment |
Revaluation of deferred tax
assets and other |
Non-GAAP |
Intangible amortization |
Non-GAAP excluding intangible amortization |
||
Operating
income (loss) |
$(281.6) |
$18.2 |
$15.4 |
$3.3 |
$(8.7) |
$(0.8) |
$2.7 |
$86.9 |
$ |
— |
|
$(164.6) |
$18.3 |
$(146.3) |
Other income
(expense) |
(32.6) |
— |
— |
— |
— |
3.0 |
— |
— |
— |
|
(29.6) |
— |
(29.6) |
|
Income tax
expense (benefit) |
64.8 |
— |
3.7 |
0.8 |
(3.3) |
0.8 |
1.0 |
1.1 |
(63.7 |
) |
5.2 |
5.8 |
10.9 |
|
Net income
(loss) |
$(379.0) |
$18.2 |
$11.8 |
$2.5 |
$(5.4) |
$1.4 |
$1.7 |
$85.8 |
$63.7 |
$(199.4) |
$12.5 |
$(186.8) |
||
Net loss
attributable to non-controlling interest |
(0.8) |
— |
— |
— |
— |
— |
— |
— |
— |
|
(0.8) |
— |
(0.8) |
|
Net income
(loss) attributable to shareholders |
$(379.8) |
$18.2 |
$11.8 |
$2.5 |
$(5.4) |
$1.4 |
$1.7 |
$85.8 |
$63.7 |
$(200.2) |
$12.5 |
$(187.6) |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Diluted EPS -
continuing operations |
$(8.09) |
$0.39 |
$0.25 |
$0.05 |
$(0.11) |
$0.03 |
$0.04 |
$1.83 |
$ |
1.36 |
|
$(4.26) |
$0.27 |
$(4.00) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Income tax rate |
(20.6)% |
|
|
|
|
|
|
|
|
(2.7)% |
|
(6.2)% |
|
Year Ended December 31, 2016 |
||||||||
|
GAAP |
Restructuring costs and
spin-off transaction costs |
Acquisition and integration
costs |
Pension & OPEB MTM
(gain) / loss |
Sale of equity method
investment |
Litigation |
Non-GAAP |
Intangible amortization |
Non-GAAP excluding intangible amortization |
Operating
income (loss) |
$(102.8) |
$40.8 |
$5.1 |
$24.1 |
$(8.3) |
$3.2 |
$(37.9) |
$19.9 |
$(18.0) |
Other income
(expense) |
(5.4) |
— |
— |
— |
— |
|
(5.4) |
— |
(5.4) |
Income tax
expense (benefit) |
6.9 |
0.3 |
0.8 |
8.4 |
— |
1.2 |
17.7 |
6.4 |
24.1 |
Net income
(loss) |
$(115.1) |
$40.5 |
$4.3 |
$15.7 |
$(8.3) |
$2.0 |
$(60.9) |
$13.5 |
$(47.4) |
Net loss
attributable to non-controlling interest |
(0.6) |
— |
— |
— |
— |
— |
(0.6) |
— |
(0.6) |
Net income
(loss) attributable to shareholders |
$(115.6) |
$40.5 |
$4.3 |
$15.7 |
$(8.3) |
$2.0 |
$(61.5) |
$13.5 |
$(48.0) |
|
|
|
|
|
|
|
|
|
|
Diluted EPS - continuing
operations |
$(2.31) |
$0.81 |
$0.09 |
$0.31 |
$(0.17) |
$0.04 |
$(1.23) |
$0.27 |
$(0.96) |
|
|
|
|
|
|
|
|
|
|
Income tax rate |
(6.4)% |
|
|
|
|
|
(40.9)% |
|
(103.3)% |
(1) Figures may not be clerically accurate due to
rounding.
(2) B&W is providing non-GAAP information regarding certain of its historical results to supplement the results provided in accordance with GAAP, and it should not be considered superior to, or as a substitute for, the comparable GAAP measures. B&W believes the non-GAAP measures provide meaningful insight into the Company’s operational performance and provides these measures to investors to help facilitate comparisons of operating results with prior periods and to assist them in understanding B&W’s ongoing operations.
Babcock & Wilcox
Enterprises, Inc.
Reconciliation of Adjusted
EBITDA(1)
(In millions)
Reconciliation of Adjusted EBITDA |
Three
Months Ended December
31, |
Twelve
Months Ended December
31, |
||||||||||
|
2017 |
2016 |
2017 |
2016 |
||||||||
|
|
|
|
|
||||||||
Net Income - GAAP |
$ |
(107.5 |
) |
$ |
(71.6 |
) |
$ |
(379.8 |
) |
$ |
(115.7 |
) |
Income tax
expense (benefit) |
72.5 |
|
7.7 |
|
64.9 |
|
6.9 |
|
||||
Interest
expense, net |
10.6 |
|
2.5 |
|
25.7 |
|
3.0 |
|
||||
Depreciation
and amortization expense |
9.0 |
|
12.4 |
|
40.0 |
|
39.3 |
|
||||
Restructuring
costs |
6.4 |
|
2.4 |
|
14.3 |
|
37.0 |
|
||||
Spin costs |
0.2 |
|
0.4 |
|
1.2 |
|
3.8 |
|
||||
Acquisition and
integration costs |
0.2 |
|
2.4 |
|
3.3 |
|
5.1 |
|
||||
Financial
advisory services |
2.3 |
|
— |
|
2.7 |
|
— |
|
||||
(Gain) loss on
sale of assets |
— |
|
(8.3 |
) |
— |
|
(8.3 |
) |
||||
Goodwill and
other impairments |
— |
|
— |
|
86.9 |
|
— |
|
||||
Litigation
Settlement (Gain) |
(0.8 |
) |
3.2 |
|
(0.8 |
) |
3.2 |
|
||||
Pension &
OPEB MTM |
(9.8 |
) |
(6.4 |
) |
(8.7 |
) |
24.1 |
|
||||
Other than
temporary impairment of equity method investment in TBWES |
— |
|
— |
|
18.2 |
|
— |
|
||||
|
|
|
|
|
||||||||
EBITDA -
Adjusted (3) |
$ |
(17.0 |
) |
$ |
(55.3 |
) |
$ |
(132.1 |
) |
$ |
(1.6 |
) |
(3) EBITDA is not a calculation based on upon
generally accepted accounting principles (GAAP). The amounts included Adjusted
EBITDA however, are derived from amounts included in the Consolidated
Statements of Earnings. EBITDA should not be considered an alternative to
net earnings (loss), operating profit (loss) or operating cash flows. B&W
has presented EBITDA as it 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.
2018 Outlook
Management has provided full year adjusted EBITDA guidance of $75 million to $95 million. It is not possible for management to identify the amount or significance of future adjustments associated with potential mark to market adjustments to our pension and other postretirement benefit plan liabilities or other non-routine costs that we adjust in our presentation of adjusted EBITDA . These items are dependent on future events and/or market inputs that are not reasonably estimable at this time. Accordingly, management is unable to reconcile without unreasonable effort the Company's forecasted range of adjusted EBITDA for the full year included in the 2018 Outlook section of this earnings release to a comparable GAAP range. However, items excluded from our adjusted EBITDA guidance include the historical adjustments noted in the tables above, and our adjusted EBITDA guidance also excludes future estimable adjusting items, charges relating to previously announced restructuring initiatives of approximately $7 million, financial advisory services costs of approximately $2 million, the gain on the sale of BWBC of $3.4 million, and additional spin and acquisitions and integration costs of less than $1 million.
Babcock & Wilcox
Enterprises, Inc.
Condensed Consolidated
Statements of Operations(1)
(In
millions, except per share amounts)
|
Three Months Ended December
31, |
|
Year
Ended December
31, |
||||||||||
|
2017 |
2016 |
|
2017 |
2016 |
||||||||
Revenues |
$ |
408.1 |
|
$ |
380.0 |
|
|
$ |
1,557.7 |
|
$ |
1,578.3 |
|
Costs and
expenses: |
|
|
|
|
|
||||||||
Cost
of operations |
362.6 |
|
380.8 |
|
|
1,457.9 |
|
1,399.1 |
|
||||
Selling,
general and administrative expenses |
64.0 |
|
64.4 |
|
|
259.8 |
|
247.1 |
|
||||
Goodwill
impairment charges |
0.0 |
|
0.0 |
|
|
86.9 |
|
0.0 |
|
||||
Restructuring
activities and spin-off transaction costs |
6.5 |
|
2.8 |
|
|
15.4 |
|
40.8 |
|
||||
Research
and development costs |
2.0 |
|
2.1 |
|
|
9.4 |
|
10.4 |
|
||||
Losses
(gains) on asset disposals, net |
0.0 |
|
0.0 |
|
|
0.0 |
|
0.0 |
|
||||
Total
costs and expenses |
435.0 |
|
450.1 |
|
|
1,829.4 |
|
1,697.5 |
|
||||
Equity in
income (loss) and impairment of investees |
3.5 |
|
11.6 |
|
|
(9.9 |
) |
16.4 |
|
||||
Operating income (loss) |
(23.4 |
) |
(58.6 |
) |
|
(281.6 |
) |
(102.8 |
) |
||||
Other income (expense): |
|
|
|
|
|
||||||||
Interest
income |
0.2 |
|
0.2 |
|
|
0.5 |
|
0.8 |
|
||||
Interest
expense |
(10.7 |
) |
(2.6 |
) |
|
(26.3 |
) |
(3.8 |
) |
||||
Other
– net |
(0.8 |
) |
(2.5 |
) |
|
(6.8 |
) |
(2.4 |
) |
||||
Total
other income (expense) |
(11.4 |
) |
(5.0 |
) |
|
(32.6 |
) |
(5.4 |
) |
||||
Income
(loss) before income tax expense |
(34.8 |
) |
(63.6 |
) |
|
(314.2 |
) |
(108.1 |
) |
||||
Income tax
expense (benefit) |
72.5 |
|
7.7 |
|
|
64.8 |
|
6.9 |
|
||||
Net income
(loss) |
(107.2 |
) |
(71.3 |
) |
|
(379.0 |
) |
(115.1 |
) |
||||
Net
income attributable to noncontrolling interest |
(0.2 |
) |
(0.3 |
) |
|
(0.8 |
) |
(0.6 |
) |
||||
Net income (loss) attributable to shareholders |
$ |
(107.5 |
) |
$ |
(71.6 |
) |
|
$ |
(379.8 |
) |
$ |
(115.6 |
) |
|
|
|
|
|
|
||||||||
Basic earnings
(loss) per share |
$ |
(2.44 |
) |
$ |
(1.47 |
) |
|
$ |
(8.09 |
) |
$ |
(2.31 |
) |
|
|
|
|
|
|
||||||||
Diluted
earnings (loss) per share |
$ |
(2.44 |
) |
$ |
(1.47 |
) |
|
$ |
(8.09 |
) |
$ |
(2.31 |
) |
|
|
|
|
|
|
||||||||
Shares used in
the computation of earnings per share: |
|
|
|
|
|
||||||||
Basic |
44.1 |
|
48.7 |
|
|
46.9 |
|
50.1 |
|
||||
Diluted |
44.1 |
|
48.7 |
|
|
46.9 |
|
50.1 |
|
(1) Figures may not be clerically accurate due to
rounding.
Babcock & Wilcox
Enterprises, Inc.
Condensed Consolidated
Balance Sheets(1)
(In millions, except per share amount)
|
December 31, 2017 |
December 31, 2016 |
||||
Cash and cash
equivalents |
$ |
56.7 |
|
$ |
95.9 |
|
Restricted cash
and cash equivalents |
26.0 |
|
27.8 |
|
||
Accounts
receivable – trade, net |
291.7 |
|
282.3 |
|
||
Accounts
receivable – other |
79.0 |
|
73.8 |
|
||
Contracts in
progress |
161.2 |
|
166.0 |
|
||
Inventories |
82.2 |
|
85.8 |
|
||
Other current
assets |
35.6 |
|
46.0 |
|
||
Total current
assets |
732.3 |
|
777.5 |
|
||
Net property,
plant and equipment |
141.9 |
|
133.6 |
|
||
Goodwill |
204.4 |
|
267.4 |
|
||
Deferred income
taxes |
97.8 |
|
163.4 |
|
||
Investments in
unconsolidated affiliates |
43.3 |
|
98.7 |
|
||
Intangible
assets |
76.8 |
|
71.0 |
|
||
Other assets |
25.8 |
|
17.5 |
|
||
Total assets |
$ |
1,322.2 |
|
$ |
1,529.1 |
|
|
||||||
Foreign
revolving credit facilities |
$ |
9.2 |
|
$ |
14.2 |
|
Second lien
term loan facility |
160.1 |
|
— |
|
||
Accounts
payable |
225.2 |
|
220.7 |
|
||
Accrued
employee benefits |
30.2 |
|
35.5 |
|
||
Advance
billings on contracts |
181.1 |
|
210.6 |
|
||
Accrued
warranty expense |
39.0 |
|
40.5 |
|
||
Other accrued
liabilities |
99.5 |
|
96.0 |
|
||
Total current
liabilities |
744.3 |
|
617.5 |
|
||
United States
revolving credit facility |
94.3 |
|
9.8 |
|
||
Pension and
other accumulated postretirement benefit liabilities |
256.4 |
|
301.3 |
|
||
Other
noncurrent liabilities |
36.5 |
|
39.6 |
|
||
Total liabilities |
1,131.5 |
|
968.2 |
|
||
Commitments and
contingencies |
|
|
||||
Stockholders'
equity: |
|
|
||||
Common stock,
par value $0.01 per share, authorized 200.0 shares; issued 44.0 and
48.7 shares at December 31, 2017 and December 31, 2016,
respectively |
0.5 |
|
0.5 |
|
||
Capital in
excess of par value |
801.0 |
|
806.6 |
|
||
Treasury stock
at cost, 5.7 and 5.6 shares at December 31, 2017 and December 31,
2016, respectively |
(104.8 |
) |
(103.8 |
) |
||
Retained
deficit |
(492.2 |
) |
(114.7 |
) |
||
Accumulated
other comprehensive loss |
(22.4 |
) |
(36.5 |
) |
||
Stockholders'
equity attributable to shareholders |
182.1 |
|
552.1 |
|
||
Noncontrolling
interest |
8.6 |
|
8.8 |
|
||
Total stockholders' equity |
190.7 |
|
561.0 |
|
||
Total liabilities and stockholders' equity |
$ |
1,322.2 |
|
$ |
1,529.1 |
|
(1) Figures may not be clerically accurate due to
rounding.
Exhibit 5
Babcock & Wilcox
Enterprises, Inc.
Condensed Consolidated
Statements of Cash Flows(1)
(In
millions)
|
Year Ended December 31, |
||||||||
|
2017 |
2016 |
2015 |
||||||
Cash flows from
operating activities: |
|
|
|
||||||
Net income
(loss) |
$ |
(379.0 |
) |
$ |
(115.1 |
) |
$ |
19.3 |
|
Non-cash
items included in net income (loss): |
|
|
|
||||||
Depreciation
and amortization of long-lived assets |
40.1 |
|
39.6 |
|
34.9 |
|
|||
Amortization
of debt issuance cost and debt discount |
6.4 |
|
1.2 |
|
0.6 |
|
|||
(Income)
loss of equity method investees |
(8.3 |
) |
(16.4 |
) |
0.2 |
|
|||
Goodwill
impairment charges |
86.9 |
|
— |
|
— |
|
|||
Other
than temporary impairment of investment in TBWES |
18.2 |
|
— |
|
— |
|
|||
Losses
on asset disposals and impairments |
0.8 |
|
14.9 |
|
16.9 |
|
|||
Write-off
of accrued claims receivable, net |
— |
|
— |
|
7.8 |
|
|||
Provision
for (benefit from) deferred income taxes |
50.3 |
|
(9.0 |
) |
(32.1 |
) |
|||
Mark
to market losses (gains) and prior service cost amortization for pension and
postretirement plans |
(11.6 |
) |
36.3 |
|
40.6 |
|
|||
Stock-based
compensation, net of associated income taxes |
11.8 |
|
16.1 |
|
7.8 |
|
|||
Changes in
assets and liabilities: |
|
|
|
||||||
Accounts
receivable |
9.4 |
|
46.8 |
|
(54.8 |
) |
|||
Dividends
from equity method investees |
50.1 |
|
12.2 |
|
20.8 |
|
|||
Accrued
insurance receivable |
— |
|
(15.0 |
) |
— |
|
|||
Contracts
in progress and advance billings on contracts |
(24.0 |
) |
(13.3 |
) |
63.0 |
|
|||
Inventories |
11.9 |
|
2.9 |
|
6.1 |
|
|||
Income
taxes |
26.6 |
|
22.6 |
|
9.3 |
|
|||
Accounts
payable |
(14.7 |
) |
4.5 |
|
17.9 |
|
|||
Accrued
and other current liabilities |
(12.5 |
) |
25.1 |
|
11.5 |
|
|||
Pension
liabilities, accrued postretirement and employee benefits |
(44.6 |
) |
(47.0 |
) |
(2.3 |
) |
|||
Other,
net |
(7.8 |
) |
(4.2 |
) |
3.0 |
|
|||
Net cash from operating activities |
(189.8 |
) |
2.3 |
|
170.4 |
|
|||
Cash flows from
investing activities: |
|
|
|
||||||
Decrease in
restricted cash and cash equivalents |
(2.3 |
) |
9.4 |
|
6.3 |
|
|||
Investment in
equity method investees |
— |
|
(26.3 |
) |
(7.4 |
) |
|||
Purchase of
property plant and equipment |
(14.3 |
) |
(22.5 |
) |
(35.4 |
) |
|||
Acquisition of
business, net of cash acquired |
(52.5 |
) |
(144.8 |
) |
— |
|
|||
Proceeds from
sale of equity method investment in a joint venture |
— |
|
18.0 |
|
— |
|
|||
Purchases of
available-for-sale securities |
(29.3 |
) |
(45.2 |
) |
(14.0 |
) |
|||
Sales and
maturities of available-for-sale securities |
35.5 |
|
29.8 |
|
5.3 |
|
|||
Other, net |
0.7 |
|
0.6 |
|
(0.6 |
) |
|||
Net cash from investing activities |
(62.1 |
) |
(180.8 |
) |
(45.9 |
) |
(1) Figures may not be clerically accurate due to
rounding.
Exhibit 5
Babcock & Wilcox Enterprises,
Inc.
Condensed Consolidated
Statements of Cash Flows(1)
(In
millions)
|
Year Ended December 31, |
||||||||
|
2017 |
2016 |
2015 |
||||||
Cash flows from
financing activities: |
|
|
|
||||||
Borrowings
under our United States revolving credit facility |
629.7 |
|
205.6 |
|
— |
|
|||
Repayments of
our United States revolving credit facility |
(545.2 |
) |
(195.8 |
) |
— |
|
|||
Proceeds from
our second lien term loan facility, net of $34.2 million discount |
161.7 |
|
— |
|
— |
|
|||
Borrowings
under our foreign revolving credit facilities |
0.3 |
|
5.7 |
|
— |
|
|||
Repayments of
our foreign revolving credit facilities |
(6.6 |
) |
(20.2 |
) |
(1.1 |
) |
|||
Common stock
repurchase from related party |
(16.7 |
) |
— |
|
— |
|
|||
Net transfers
from our former Parent |
— |
|
— |
|
80.6 |
|
|||
Shares of our
common stock returned to treasury stock |
(1.0 |
) |
(78.4 |
) |
(25.4 |
) |
|||
Debt issuance
costs |
(15.0 |
) |
— |
|
— |
|
|||
Other |
(1.1 |
) |
(0.2 |
) |
(0.5 |
) |
|||
Net cash from financing activities |
208.0 |
|
(83.4 |
) |
53.6 |
|
|||
Effects of
exchange rate changes on cash |
6.6 |
|
(7.3 |
) |
(6.4 |
) |
|||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS |
(39.2 |
) |
(269.3 |
) |
146.5 |
|
|||
CASH AND CASH
EQUIVALENTS AT BEGINNING OF PERIOD |
95.9 |
|
365.2 |
|
218.7 |
|
|||
CASH AND CASH EQUIVALENTS AT END OF PERIOD |
$ |
56.7 |
|
$ |
95.9 |
|
$ |
365.2 |
|
(1) Figures may not be clerically accurate due to
rounding.
Babcock & Wilcox Enterprises,
Inc.
Segment Information(1)
(In millions)
SEGMENT RESULTS: |
Three
Months Ended December
31, |
Twelve
Months Ended December
31, |
||||||||||
|
2017 |
2016 |
2017 |
2016 |
||||||||
REVENUES: |
|
|
|
|
||||||||
Power |
$ |
208.8 |
|
$ |
219.6 |
|
$ |
821.1 |
|
$ |
982.0 |
|
Renewable |
85.0 |
|
55.6 |
|
347.2 |
|
349.2 |
|
||||
Industrial |
116.1 |
|
106.3 |
|
397.8 |
|
253.6 |
|
||||
Eliminations |
(1.8 |
) |
(1.6 |
) |
(8.3 |
) |
(6.5 |
) |
||||
|
$ |
408.1 |
|
$ |
379.9 |
|
$ |
1,557.7 |
|
$ |
1,578.3 |
|
|
|
|
|
|
||||||||
GROSS PROFIT: |
|
|
|
|
||||||||
Power |
$ |
59.3 |
|
$ |
62.6 |
|
$ |
192.0 |
|
$ |
233.6 |
|
Renewable |
(28.1 |
) |
(82.6 |
) |
(128.2 |
) |
(68.1 |
) |
||||
Industrial |
7.1 |
|
17.2 |
|
41.4 |
|
50.7 |
|
||||
Intangible
asset amortization included in cost of operations |
(2.8 |
) |
(7.0 |
) |
(14.3 |
) |
(15.8 |
) |
||||
Mark to market adjustment included
in cost of operations |
9.9 |
|
8.9 |
|
9.0 |
|
(21.2 |
) |
|
Three
Months Ended December
31, |
Twelve
Months Ended December
31, |
||||||||||
|
2017 |
2016 |
2017 |
2016 |
||||||||
AMORTIZATION
EXPENSE |
|
|
|
|
||||||||
Power |
0.3 |
|
$ |
0.3 |
|
$ |
1.1 |
|
$ |
1.1 |
|
|
Renewable |
0.2 |
|
0.4 |
|
0.8 |
|
1.3 |
|
||||
Industrial |
0.6 |
|
7.3 |
|
16.3 |
|
17.5 |
|
||||
|
$ |
1.0 |
|
$ |
8.0 |
|
$ |
18.3 |
|
$ |
19.9 |
|
DEPRECIATION
EXPENSE |
|
|
|
|
||||||||
Power |
$ |
1.7 |
|
$ |
2.5 |
|
$ |
8.1 |
|
$ |
10.2 |
|
Renewable |
0.6 |
|
0.4 |
|
2.4 |
|
1.4 |
|
||||
Industrial |
1.0 |
|
0.5 |
|
4.0 |
|
1.6 |
|
||||
Corporate |
2.0 |
|
0.7 |
|
7.4 |
|
6.6 |
|
||||
|
$ |
5.3 |
|
$ |
4.2 |
|
$ |
21.9 |
|
$ |
19.7 |
|
BOOKINGS: |
Three
Months Ended December
31, |
Twelve
Months Ended December
31, |
||||||||||