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8-K - THE BABCOCK & WILCOX COMPANY 8-K - BWX Technologies, Inc. | a50186838.htm |
Exhibit 99.1
Babcock & Wilcox Announces Fourth Quarter 2011 Results
- Earnings per share of $0.54
- Revenues of $800.8 million increased 13.6%
- Ending backlog of more than $5.3 billion
CHARLOTTE, N.C.--(BUSINESS WIRE)--February 29, 2012--The Babcock & Wilcox Company (NYSE: BWC) (“B&W” or the “Company”) today reported fourth quarter 2011 revenues of $800.8 million, an increase of $95.6 million, or 13.6%, from the fourth quarter of 2010. Earnings per share for the fourth quarter of 2011 were $0.54, an increase of 20.0% from the $0.45 reported in the fourth quarter of 2010. Revenues for the full year of 2011 were $2,952.0 million, an increase of $263.2 million, or 9.8% from the full year of 2010. Earnings per share for the full year of 2011 were $1.43, an increase of 10.0% from the $1.30 reported in 2010.
Recent Highlights
- Awarded $600 Million Naval Nuclear Component Contract
- Awarded $115 Million Naval Nuclear Fuel and Support Contract
- Awarded $75 Million Environmental Construction Contract for NIPSCO
- Selected as Preferred Environmental Technology Provider for Luminant and Awarded $65 Million Environmental Technology Supply and Construction Contracts
- Awarded Environmental Technology Supply Contract for Xcel Energy
- Awarded $44 Million Environmental Technology Supply Contract for a Midwest Utility
- Awarded $43 Million Environmental Technology Supply Contract for Interstate Power & Light
- Awarded Fleet-Wide Nuclear Services Contract for Progress Energy
- Awarded Preliminary Design Contract for Ohio Class Replacement Nuclear Components
- Acquired German Material Handling Business; Operating as Loibl Allen-Sherman-Hoff GmbH
Results of Operations
Consolidated revenues for the fourth quarter of 2011 were $800.8 million, an increase of $95.6 million, or 13.6%, from the fourth quarter of 2010. Nuclear Energy segment revenues increased $52.9 million, or 110.5%, primarily due to a significant CANDU nuclear reactor services project started during the quarter. Power Generation segment revenues increased $48.2 million, or 13.3%, primarily due to increased activity for environmental equipment projects and waste-to-energy and biomass new-build steam generation systems. Technical Services segment revenues increased $4.6 million, or 16.7%, principally due to new environmental remediation, decontamination and decommissioning contracts, primarily for the U.S. Department of Energy (DOE), that were ramping up during 2011. Nuclear Operations segment revenues declined $5.5 million, or 2.0%.
Operating income for the fourth quarter of 2011 was $93.3 million, an increase of $18.8 million, or 25.2%, compared to $74.5 million in the fourth quarter of 2010. The increase in operating income was primarily due to improvements in revenues and operating margins in the Power Generation, Technical Services and Nuclear Operations segments, partially offset by an increase in research and development expenses related to the Company’s small modular reactor program.
“Recently, the Company undertook a bottoms-up review of the environmental opportunity given the recent finalization of the Mercury and Air Toxics Rule (MATS) in December of 2011. We believe that our environmental opportunity remains significant over the next several years as the industry is beginning to convert bidding activity noted in prior quarters into awards. In that regard, the Power Generation segment reported environmental bookings during the fourth quarter of approximately $278 million,” said Brandon C. Bethards, President and Chief Executive Officer of B&W. “As we look forward to 2012, on a consolidated basis, we expect double-digit, year-over-year revenue growth. We expect revenues and operating income in our combined government-related segments to remain stable at approximately current record levels. We expect the combined power-related segments to continue to improve, driven principally by the investment cycle related to recent U.S. Environmental Protection Agency rules, strong project execution and further U.S. nuclear services activity. Partially offsetting consolidated growth expectations is a cyclical reduction in equity income from the Company’s Asian joint ventures. Additionally, the Company expects somewhat higher pension expense in 2012 and an effective tax rate in the 32% to 35% range,” Bethards concluded.
Liquidity
The Company’s cash and investments position, net of debt, was $543.7 million at the end of the fourth quarter of 2011, an increase of $186.6 million compared to $357.1 million at the end of the third quarter of 2011. Seasonally, the fourth quarter typically represents the highest cash flow quarter of the year. In the fourth quarter of 2011, free cash flow was the result of strong operating income, the timing of payments from the U.S. Government related to fees earned, dividends received from joint ventures, and an improvement in working capital levels in the Nuclear Operations and Power Generation segments. In addition to net cash, the Company maintains a $700.0 million revolving credit agreement with $488.6 million of availability as of the end of the fourth quarter. The Company believes it maintains adequate liquidity to fund operations, which could include increased working capital requirements to fund internal growth, R&D programs and product and geographic expansion opportunities.
Conference Call to Discuss Fourth Quarter 2011 Results
Date: |
Thursday, March 1, 2012, at 8:30 a.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 belief regarding a meaningful environmental opportunity over the next several years, our expectations regarding 2012 consolidated revenue growth, 2012 revenue and operating income levels for our government-related segments and 2012 improvements for our power-related segments, and our belief that the Company maintains adequate liquidity to fund its operations. These forward-looking statements are based on management’s current expectations and involve a number of risks and uncertainties, including, among other things, adverse changes in: the demand or competitiveness of nuclear power, government funding for the defense or energy programs in which we are involved and the timing, scope or enforcement of U.S. Environmental Protection Agency environmental rules affecting our customers. 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 its annual report on Form 10-K for the year ended December 31, 2011. B&W cautions not to place undue reliance on these forward-looking statements, which speak only as of the date hereof, and undertakes no obligation to update or revise any forward-looking statement, except to the extent required by applicable law.
About B&W
The Babcock & Wilcox Company is a leader in clean energy technology and services, primarily for the nuclear, fossil and renewable power markets as well as a premier advanced technology and mission critical defense contractor. B&W has locations worldwide and employs approximately 12,700 people, in addition to approximately 10,400 joint venture employees. A company overview presentation, which will be presented at investor conferences and meetings throughout this quarter, is available on the Investor Relations section of our website. For additional information please visit our website at www.babcock.com.
TABLES TO FOLLOW
THE BABCOCK & WILCOX COMPANY |
|||||||||||||
CONSOLIDATED BALANCE SHEETS | |||||||||||||
December 31, | |||||||||||||
2011 |
2010 |
||||||||||||
(In thousands) | |||||||||||||
ASSETS | |||||||||||||
Current Assets: | |||||||||||||
Cash and cash equivalents | $ | 415,209 | $ | 391,142 | |||||||||
Restricted cash and cash equivalents | 61,190 | 12,267 | |||||||||||
Investments | 68,805 | 234 | |||||||||||
Accounts receivable – trade, net | 305,832 | 289,374 | |||||||||||
Accounts receivable – other | 77,505 | 64,231 | |||||||||||
Contracts in progress | 315,286 | 225,448 | |||||||||||
Inventories | 107,298 | 100,932 | |||||||||||
Deferred income taxes | 102,022 | 90,620 | |||||||||||
Other current assets | 33,929 | 34,868 | |||||||||||
Total Current Assets | 1,487,076 | 1,209,116 | |||||||||||
Property, Plant and Equipment | 1,017,422 | 968,712 | |||||||||||
Less accumulated depreciation | 595,131 | 550,400 | |||||||||||
Net Property, Plant and Equipment | 422,291 | 418,312 | |||||||||||
Investments | 3,775 | 74,863 | |||||||||||
Goodwill | 276,180 | 269,424 | |||||||||||
Deferred Income Taxes | 241,739 | 236,504 | |||||||||||
Investments in Unconsolidated Affiliates | 163,568 | 100,811 | |||||||||||
Other Assets | 194,482 | 191,480 | |||||||||||
TOTAL | $ | 2,789,111 | $ | 2,500,510 | |||||||||
THE BABCOCK & WILCOX COMPANY | |||||||
CONSOLIDATED BALANCE SHEETS | |||||||
December 31, | |||||||
2011 | 2010 | ||||||
(In thousands) | |||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current Liabilities: | |||||||
Notes payable and current maturities of long-term debt | $ | 4,653 | $ | 4,790 | |||
Accounts payable | 237,494 | 185,240 | |||||
Accrued employee benefits | 303,803 | 235,856 | |||||
Accrued liabilities – other | 71,079 | 71,242 | |||||
Advance billings on contracts | 438,753 | 369,644 | |||||
Accrued warranty expense | 97,209 | 109,588 | |||||
Income taxes payable | 1,816 | 5,467 | |||||
Total Current Liabilities | 1,154,807 | 981,827 | |||||
Long-Term Debt | 633 | 855 | |||||
Accumulated Postretirement Benefit Obligation | 80,663 | 84,100 | |||||
Environmental Liabilities | 44,069 | 40,889 | |||||
Pension Liability | 586,045 | 579,000 | |||||
Other Liabilities | 87,921 | 100,314 | |||||
Commitments and Contingencies | |||||||
Stockholders’ Equity: | |||||||
Common stock, par value $0.01 per share, authorized 325,000,000 shares; issued 118,458,911 and 116,963,664 shares at December 31, 2011 and December 31, 2010, respectively |
1,185 | 1,170 | |||||
Preferred stock, par value $0.01 per share, authorized 75,000,000 shares; no shares issued |
- |
- |
|||||
Capital in excess of par value | 1,106,971 | 1,067,414 | |||||
Retained earnings | 266,325 | 96,671 | |||||
Treasury stock at cost, 351,876 and 101,649 shares at December 31, 2011 and December 31, 2010, respectively |
(10,059 | ) | (2,397 | ) | |||
Accumulated other comprehensive loss | (538,628 | ) | (449,999 | ) | |||
Stockholders’ Equity – The Babcock & Wilcox Company | 825,794 | 712,859 | |||||
Noncontrolling interest | 9,179 | 666 | |||||
Total Stockholders’ Equity | 834,973 | 713,525 | |||||
TOTAL | $ | 2,789,111 | $ | 2,500,510 | |||
THE BABCOCK & WILCOX COMPANY | |||||||||||||||
CONSOLIDATED AND COMBINED STATEMENTS OF INCOME | |||||||||||||||
Three Months Ended | Year Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
2011 |
2010 |
2011 |
2010 |
||||||||||||
(Unaudited) | |||||||||||||||
(In thousands) | |||||||||||||||
Revenues |
$ | 800,789 | $ | 705,162 |
$ |
2,952,040 |
$ |
2,688,811 |
|||||||
Costs and Expenses: | |||||||||||||||
Cost of operations | 589,999 | 525,497 | 2,278,208 | 2,024,034 | |||||||||||
Research and development costs | 31,878 | 18,458 | 106,396 | 69,167 | |||||||||||
(Gains) losses on asset disposals and Impairments – net |
(3,713 | ) | (50 | ) | (3,087 | ) | 38 | ||||||||
Selling, general and administrative expenses | 111,497 | 112,405 | 413,210 | 405,682 | |||||||||||
Total Costs and Expenses | 729,661 | 656,310 | 2,794,727 | 2,498,921 | |||||||||||
Equity in Income of Investees | 22,131 | 25,642 | 78,655 | 74,082 | |||||||||||
Operating Income | 93,259 | 74,494 | 235,968 | 263,972 | |||||||||||
Other Income (Expense): | |||||||||||||||
Interest income | 331 | 295 | 1,342 | 1,187 | |||||||||||
Interest expense | (2,021 | ) | (1,610 | ) | (4,543 | ) | (12,939 | ) | |||||||
Other income (expense) – net | (1,971 | ) | (2,914 | ) | 2,168 | (16,400 | ) | ||||||||
Total Other Expense | (3,661 | ) | (4,229 | ) | (1,033 | ) | (28,152 | ) | |||||||
Income before Provision for Income Taxes | 89,598 | 70,265 | 234,935 | 235,820 | |||||||||||
Provision for Income Taxes | 27,558 | 17,231 | 72,982 | 82,294 | |||||||||||
Net Income |
$ | 62,040 | $ | 53,034 |
$ |
161,953 |
$ |
153,526 |
|||||||
Net Loss (Income) Attributable to Noncontrolling Interest |
2,232 | (142 | ) | 7,701 | (264 | ) | |||||||||
Net Income Attributable to The Babcock & Wilcox Company |
$ | 64,272 | $ | 52,892 |
$ |
169,654 |
$ |
153,262 |
|||||||
Earnings per Common Share: | |||||||||||||||
Basic: | |||||||||||||||
Net Income Attributable to | |||||||||||||||
The Babcock & Wilcox Company | $ | 0.54 | $ | 0.45 | $ | 1.44 | $ | 1.32 | |||||||
Diluted: | |||||||||||||||
Net Income Attributable to | |||||||||||||||
The Babcock & Wilcox Company | $ | 0.54 | $ | 0.45 | $ | 1.43 | $ | 1.30 | |||||||
Shares used in the computation of earnings per share |
|||||||||||||||
Basic | 117,998,268 | 116,615,156 | 117,560,594 | 116,260,425 | |||||||||||
Diluted | 118,716,916 | 118,008,894 | 118,404,597 | 117,626,065 | |||||||||||
THE BABCOCK & WILCOX COMPANY | |||||||||||
CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS | |||||||||||
Year Ended December 31, | |||||||||||
2011 |
2010 |
2009 |
|||||||||
(In thousands) | |||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||
Net Income | $ | 161,953 | $ | 153,526 | $ | 147,920 | |||||
Non-cash items included in net income: | |||||||||||
Depreciation and amortization | 73,003 | 71,633 | 72,712 | ||||||||
Income of investees, net of dividends | (20,854 | ) | (20,449 | ) | (4,450 | ) | |||||
(Gains) losses on asset disposals and impairments – net | (3,087 | ) | 38 | 1,226 | |||||||
In-kind research and development costs | 16,584 | - | - | ||||||||
Provision for deferred taxes | 29,902 | 33,457 | 29,535 | ||||||||
Amortization of pension and postretirement costs | 79,070 | 79,935 | 86,637 | ||||||||
Stock-based compensation expense | 17,927 | 16,308 | 25,891 | ||||||||
Excess tax benefits from stock-based compensation | (4,083 | ) | (5,276 | ) | 1,813 | ||||||
Changes in assets and liabilities, net of effects from acquisitions: | |||||||||||
Accounts receivable | (26,887 | ) | 101,260 | 71,316 | |||||||
Accounts payable | 48,246 | 19,882 | (40,555 | ) | |||||||
Net contracts in progress and advance billings | (28,746 | ) | (153,933 | ) | (63,879 | ) | |||||
Income taxes | 31,961 | 9,239 | 10,740 | ||||||||
Accrued and other current liabilities | (23,106 | ) | (9,761 | ) | (52,556 | ) | |||||
Pension liability and accrued postretirement and employee benefits | (144,802 | ) | (85,371 | ) | (378 | ) | |||||
Other | (33,490 | ) | (18,082 | ) | (33,149 | ) | |||||
NET CASH PROVIDED BY OPERATING ACTIVITIES | 173,591 | 192,406 | 252,823 | ||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||
(Increase) decrease in restricted cash and cash equivalents | (48,923 | ) | 3,038 | (8,189 | ) | ||||||
Purchases of property, plant and equipment | (63,874 | ) | (63,649 | ) | (93,725 | ) | |||||
Acquisition of businesses, net of cash acquired | (11,907 | ) | (29,962 | ) | (8,497 | ) | |||||
Net decrease in available-for-sale securities | - | - | 45,230 | ||||||||
Purchases of available-for-sale securities | (145,198 | ) | (135,135 | ) | - | ||||||
Sales and maturities of available-for-sale securities | 147,288 | 134,276 | - | ||||||||
Proceeds from asset disposals | 6,468 | 753 | 245 | ||||||||
Investments, net of return of capital, in equity and cost method investees | (38,176 | ) | (42,912 | ) | (2,700 | ) | |||||
Decrease in note receivable from affiliate | - | 43,277 | - | ||||||||
Other | - | - | 1 | ||||||||
NET CASH USED IN INVESTING ACTIVITIES | (154,322 | ) | (90,314 | ) | (67,635 | ) | |||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||
Payment of short-term borrowings and long-term debt | (1,782 | ) | (29,914 | ) | (6,155 | ) | |||||
Payment of debt issuance costs | (82 | ) | (9,994 | ) | - | ||||||
Increase in short-term borrowing | 1,254 | 25,000 | - | ||||||||
Dividend paid to McDermott International, Inc. | - | (100,000 | ) | - | |||||||
Capital contribution from McDermott International, Inc. | - | 12,501 | - | ||||||||
Distribution to McDermott International, Inc. | - | (43,334 | ) | - | |||||||
(Decrease) Increase in notes payable to affiliates | - | (43,386 | ) | 2,368 | |||||||
Exercise of stock options | 4,463 | 211 | - | ||||||||
Excess tax benefits from stock-based compensation | 4,083 | 5,276 | (1,813 | ) | |||||||
Other | (401 | ) | (93 | ) | - | ||||||
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | 7,535 | (183,733 | ) | (5,600 | ) | ||||||
EFFECTS OF EXCHANGE RATE CHANGES ON CASH | (2,737 | ) | 3,315 | 10,234 | |||||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 24,067 | (78,326 | ) | 189,822 | |||||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 391,142 | 469,468 | 279,646 | ||||||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 415,209 | $ | 391,142 | $ | 469,468 | |||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | |||||||||||
Cash paid (received) during the period for: | |||||||||||
Interest (net of amount capitalized) | $ | 4,525 | $ | 3,746 | $ | 24,728 | |||||
Income taxes (net of refunds) | $ | 33,505 | $ | 27,227 | $ | (29,663 | ) | ||||
The Babcock & Wilcox Company | ||||||||||||||||
Business Segment Information | ||||||||||||||||
For the Periods Ended December 31, 2011 and 2010 | ||||||||||||||||
(In thousands of U.S. dollars) | ||||||||||||||||
THREE MONTHS ENDED | YEAR ENDED | |||||||||||||||
12/31/11 | 12/31/10 | 12/31/11 | 12/31/10 | |||||||||||||
REVENUES: |
||||||||||||||||
Power Generation | $ | 411,420 | $ | 363,203 | $ | 1,541,509 | $ | 1,424,574 | ||||||||
Nuclear Operations | 265,703 | 271,159 | 1,043,185 | 995,969 | ||||||||||||
Technical Services | 32,113 | 27,521 | 119,711 | 90,147 | ||||||||||||
Nuclear Energy | 100,736 | 47,855 | 321,406 | 196,282 | ||||||||||||
Adjustments and Eliminations | (9,183 | ) | (4,576 | ) | (73,771 | ) | (18,161 | ) | ||||||||
TOTAL |
$ | 800,789 | $ | 705,162 | $ | 2,952,040 | $ | 2,688,811 | ||||||||
SEGMENT INCOME: |
||||||||||||||||
Power Generation | $ | 46,372 | $ | 33,869 | $ | 140,029 | $ | 128,278 | ||||||||
Nuclear Operations | 43,702 | 38,186 | 171,554 | 147,235 | ||||||||||||
Technical Services | 20,884 | 12,465 | 68,239 | 45,614 | ||||||||||||
Nuclear Energy | (10,407 | ) | (2,677 | ) | (118,748 | ) | (27,560 | ) | ||||||||
100,551 | 81,843 | 261,074 | 293,567 | |||||||||||||
Corporate | (7,292 | ) | (7,349 | ) | (25,106 | ) | (29,595 | ) | ||||||||
TOTAL |
$ | 93,259 | $ | 74,494 | $ | 235,968 | $ | 263,972 | ||||||||
EQUITY IN INCOME OF INVESTEES: |
||||||||||||||||
Power Generation | $ | 5,866 | $ | 11,665 | $ | 25,778 | $ | 30,788 | ||||||||
Nuclear Operations | 0 | 0 | 0 | 0 | ||||||||||||
Technical Services | 16,265 | 13,977 | 52,877 | 43,294 | ||||||||||||
Nuclear Energy | 0 | 0 | 0 | 0 | ||||||||||||
TOTAL | $ | 22,131 | $ | 25,642 | $ | 78,655 | $ | 74,082 | ||||||||
PENSION EXPENSE: |
||||||||||||||||
Power Generation | $ | 14,901 | $ | 15,517 | $ | 60,710 | $ | 62,047 | ||||||||
Nuclear Operations | 8,075 | 9,672 | 34,219 | 40,687 | ||||||||||||
Technical Services | 617 | 653 | 2,468 | 2,613 | ||||||||||||
Nuclear Energy | 1,128 | 924 | 4,472 | 3,547 | ||||||||||||
Corporate | 2,031 | 1,876 | 7,182 | 15,326 | ||||||||||||
TOTAL | $ | 26,752 | $ | 28,642 | $ | 109,051 | $ | 124,220 | ||||||||
DEPRECIATION AND AMORTIZATION: |
||||||||||||||||
Power Generation | $ | 3,892 | $ | 5,579 | $ | 17,264 | $ | 18,564 | ||||||||
Nuclear Operations | 9,103 | 8,400 | 38,169 | 36,955 | ||||||||||||
Technical Services | 65 | 65 | 262 | 263 | ||||||||||||
Nuclear Energy | 1,393 | 1,246 | 5,346 | 4,988 | ||||||||||||
Corporate | 3,057 | 3,343 | 11,962 | 10,863 | ||||||||||||
TOTAL | $ | 17,510 | $ | 18,633 | $ | 73,003 | $ | 71,633 | ||||||||
RESEARCH AND DEVELOPMENT, NET: |
||||||||||||||||
Power Generation | $ | 6,907 | $ | 5,903 | $ | 21,325 | $ | 25,715 | ||||||||
Nuclear Operations | 178 | 123 | 234 | 147 | ||||||||||||
Technical Services | 1,232 | 2,953 | 1,878 | 4,791 | ||||||||||||
Nuclear Energy | 23,561 | 9,479 | 82,959 | 38,514 | ||||||||||||
TOTAL | $ | 31,878 | $ | 18,458 | $ | 106,396 | $ | 69,167 | ||||||||
CAPITAL EXPENDITURES: |
||||||||||||||||
Power Generation | $ | 5,173 | $ | 3,589 | $ | 15,788 | $ | 13,627 | ||||||||
Nuclear Operations | 10,315 | 7,488 | 32,082 | 24,718 | ||||||||||||
Technical Services | 0 | 15 | 0 | 15 | ||||||||||||
Nuclear Energy | 928 | 3,032 | 7,257 | 4,480 | ||||||||||||
Corporate | 3,461 | 742 | 8,747 | 20,809 | ||||||||||||
TOTAL | $ | 19,877 | $ | 14,866 | $ | 63,874 | $ | 63,649 | ||||||||
BACKLOG: |
||||||||||||||||
Power Generation | $ | 1,947,274 | $ | 1,564,351 | $ | 1,947,274 | $ | 1,564,351 | ||||||||
Nuclear Operations | 2,995,364 | 3,151,353 | 2,995,364 | 3,151,353 | ||||||||||||
Technical Services | 13,756 | 1,181 | 13,756 | 1,181 | ||||||||||||
Nuclear Energy | 382,638 | 485,005 | 382,638 | 485,005 | ||||||||||||
TOTAL | $ | 5,339,032 | $ | 5,201,890 | $ | 5,339,032 | $ | 5,201,890 |
CONTACT:
The Babcock & Wilcox Company
Investor Contact
Michael
P. Dickerson, Vice President and Investor Relations Officer, 704-625-4944
investors@babcock.com
or
Media
Contact
Jud Simmons, Public Relations Manager, 434-522-6462
hjsimmons@babcock.com