BWX Technologies, Inc. - FORM 8-K - EX-99.1 - EXHIBIT 99.1

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8-K - THE BABCOCK & WILCOX COMPANY 8-K - BWX Technologies, Inc.	a50686931.htm

Exhibit 99.1

Babcock & Wilcox Announces Second Quarter 2013 Results

- Revenues of $886.1 million, Increased 3.9%
- GAAP Earnings per Share of $0.65, Adjusted Earnings per Share of $0.72
- Quarterly Dividend of $0.08 per share

CHARLOTTE, N.C.--(BUSINESS WIRE)--August 7, 2013--The Babcock & Wilcox Company (NYSE: BWC) (“B&W” or the “Company”) today reported second quarter 2013 revenues of $886.1 million, an increase of $33.5 million, or 3.9%, from the second quarter of 2012. GAAP earnings per share for the second quarter of 2013 were $0.65 compared to $0.65 in the second quarter of 2012. Adjusted earnings per share for the second quarter of 2013, which excludes the impact of $12.2 million of restructuring charges, were $0.72, an increase of $0.07, or 10.8%, versus the second quarter of 2012.

During the second quarter of 2013, the Company repurchased 2.5 million shares of its common stock at a cost of $68.8 million. Through June 30, 2013, the Company has repurchased a total of 8.5 million shares at a cost of $222.4 leaving approximately $277.6 million of capacity remaining under its previously announced $500 million share repurchase authorization.

Recent Highlights

Announced $366 Million Contract for Naval Reactors Materials Procurement
Awarded Contract for 2nd Virginia Class Submarine in 2013
Awarded $154 Million Contract for an Environmental Systems Project for a Western U.S. Utility
Project Joint Venture Awarded $110 Million Contract to Replace Equipment at Iowa Power Plant
Awarded $40 Million Contract for Denmark Waste-to-Energy Plant

Results of Operations

Consolidated revenues for the second quarter of 2013 were $886.1 million, an increase of $33.5 million, or 3.9%, from the second quarter of 2012. Revenues in the Nuclear Operations segment increased by $65.6 million compared to the prior year period, primarily driven by the timing of activity in the manufacturing of nuclear components for US government programs. Second quarter 2013 revenues of the Power Generation segment decreased by $25.8 million versus the same period in 2012, largely as a result of revised percentage-of-completion estimates for a project on which we recognized contract losses during the quarter. Bookings for the 2013 second quarter totaled $766.2 million, an increase of 25.4% compared to $610.8 million booked in the prior year period.

Operating income for the second quarter of 2013 was $98.7 million, a decrease of $11.4 million from the second quarter of 2012. Compared to the prior year, the mPower and Nuclear Operations segments reported increases in operating income of $31.6 million and $10.3 million, respectively, which were offset by decreases in the operating income of the Power Generation, Nuclear Energy and Technical Services segments of $27.6 million, $12.4 million and $3.7 million, respectively. The mPower segment improvement was attributable to the recognition of the cost-sharing award from the Department of Energy (DOE) under the Cooperative Agreement. The decrease in the Power Generation segment operating income was driven by the recognition of $30.2 million of additional contract losses related to revised estimated costs to complete a biomass boiler project largely due to unforeseen worksite conditions, for which losses previously were recorded in the fourth quarter of 2012. The decrease in operating income of the Nuclear Energy segment was primarily attributable to an $18.1 million gain from a contract settlement agreement recognized in the prior year quarter.

Included in operating income for the second quarter 2013 were $12.2 million of special charges for restructuring activities related to our Global Competitiveness Initiative (GCI). Excluding the restructuring charges, adjusted operating income for the second quarter of 2013 was $110.9 million, an increase of $0.8 million compared to the same period in 2012.

“Overall, B&W’s second quarter results reflect solid performances across our business units, highlighted by improved bookings and revenue, as well as the benefit of the DOE grant,” said E. James Ferland, President and Chief Executive Officer of B&W. “What would have been an exceptionally strong quarter for operating income and margin was impacted by the recognition of significant losses on a single project. Claims against the customer are substantial in value and any recovery of these additional losses will be realized in future periods.”

“In addition, we have made outstanding progress on our GCI initiatives and now believe this program will exceed our initial expectations of $40 million to $50 million in total annual cost savings as we continue to identify opportunities to streamline operations and reduce overhead expenses,” Ferland concluded.

Quarterly Dividend

On August 6, 2013, the Company declared a quarterly cash dividend of $0.08 per common share. The dividend will be payable on September 10, 2013 to shareholders of record on August 20, 2013.

Liquidity

The Company’s cash and investments position, net of debt, was $358.7 million at the end of the second quarter of 2013, a decrease of $56.2 million compared to $414.9 million at the end of the first quarter of 2013. During the quarter, the Company repurchased common shares totaling $68.8 million, contributed $15.0 million to its pension plans and paid dividends of $9.0 million. In addition to net cash, the Company maintains a $700.0 million revolving credit agreement with $552.2 million of availability as of the end of the second quarter.

Outlook for the Remainder of 2013

The Company now expects 2013 consolidated revenues to be between $3.4 billion and $3.5 billion. The Company reaffirms its expectation that adjusted earnings per share for the full year 2013 will be between $2.25 and $2.45. Adjusted earnings per share exclude GCI restructuring charges and the year-end mark-to-market adjustment for pension and post-retirement benefits.


Reconciliation of Non-GAAP Earnings Per Share and Operating Income
(in $ millions, except per share amounts)

	Three Months Ended June 30, 2013									Six Months Ended June 30, 2013
	GAAP			GCI Impact			Non-GAAP			GAAP			GCI Impact			Non-GAAP
Operating Income	$	98.7		$	12.2		$	110.9		$	158.9		$	20.7		$	179.6
Other Income / (Expense)		0.5			-			0.5			1.5			-			1.5
Provision for Income Taxes		(29.5	)		(4.1	)		(33.6	)		(45.8	)		(7.0	)		(52.8	)
Net Income		69.7			8.1			77.8			114.6			13.7			128.3
Net Loss (Income) Attributable to Non-Controlling Interest		3.2			-			3.2			5.5			-			5.5
Net Income Attributable to The Babcock & Wilcox Company	$	72.9		$	8.1		$	81.0		$	120.0		$	13.7		$	133.7

Diluted Earnings per Common Share	$	0.65		$	0.07		$	0.72		$	1.06		$	0.12		$	1.18
Effective Tax Rate		29.8	%		34.0	%		30.2	%		28.6	%		34.0	%		29.2	%


	Three Months Ended June 30, 2012							Six Months Ended June 30, 2012
	GAAP			GCI Impact		Non-GAAP		GAAP			GCI Impact		Non-GAAP
Operating Income	$	110.1		$	-	$ 110.1		$	196.5		$	-	$	196.5
Other Income / (Expense)		3.7			-	3.7			2.3			-		2.3
Provision for Income Taxes		(39.5	)		-	(39.5	)		(67.4	)		-		(67.4	)
Net Income		74.3			-	74.3			131.4			-		131.4
Net Loss (Income) Attributable to Non-Controlling Interest		2.9			-	2.9			5.8			-		5.8
Net Income Attributable to The Babcock & Wilcox Company	$	77.2		$	-	$ 77.2		$	137.2		$	-	$	137.2

Diluted Earnings per Common Share	$	0.65		$	-	$ 0.65		$	1.15		$	-	$	1.15
Effective Tax Rate		34.7	%			34.7	%		33.9	%				33.9	%

B&W is providing non-GAAP information regarding certain of its historical results and guidance on future earnings per share to supplement the financial information 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 in 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.

Conference Call to Discuss Second Quarter 2013 Results

Date: Thursday, August 8, 2013, at 8:30 a.m. ET

Live Webcast: Investor Relations section of website at www.babcock.com

Forward-Looking Statements

The Company cautions that this release contains forward-looking statements, including, without limitation, statements relating to our quarterly dividend; expected revenues and adjusted earnings per share for full-year 2013; our expectations with respect to the savings and benefits associated with our Global Competitiveness Initiative; and claims for project losses, to the extent such claims may be viewed as an indicator of future earnings. 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 our liquidity position or the industries in which we operate, our inability to execute on contracts in backlog, delays or other difficulties implementing our Global Competitiveness Initiative and our inability to obtain recovery on our project claims. 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, 2012 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

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 12,000 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
CONDENSED CONSOLIDATED BALANCE SHEETS


ASSETS

	June 30,		December 31,
	2013		2012
	(Unaudited)
	(In thousands)


Current Assets:
Cash and cash equivalents	$	242,205	$	383,547
Restricted cash and cash equivalents		48,281		60,961
Investments		69,118		88,769
Accounts receivable – trade, net		407,323		364,960
Accounts receivable – other		61,772		61,682
Contracts in progress		344,938		316,518
Inventories		111,583		124,218
Deferred income taxes		81,826		78,573
Other current assets		50,056		41,858

Total Current Assets		1,417,102		1,521,086

Property, Plant and Equipment		1,114,500		1,099,040
Less accumulated depreciation		670,923		652,019

Net Property, Plant and Equipment		443,577		447,021

Investments		4,196		4,090

Goodwill		280,239		280,780

Deferred Income Taxes		209,803		227,215

Investments in Unconsolidated Affiliates		201,121		186,354

Intangible Assets		85,441		87,686

Other Assets		83,830		86,123

TOTAL	$	2,725,309	$	2,840,355


THE BABCOCK & WILCOX COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS’ EQUITY

	June 30,			December 31,
	2013			2012
	(Unaudited)
	(In thousands, except share and per share amounts)


Current Liabilities:
Notes payable and current maturities of long-term debt	$	4,764		$	4,062
Accounts payable		265,391			264,798
Accrued employee benefits		172,809			186,495
Accrued liabilities – other		77,196			57,991
Advance billings on contracts		419,013			472,287
Accrued warranty expense		74,487			83,682
Income taxes payable		963			9,973

Total Current Liabilities		1,014,623			1,079,288

Long-Term Debt		319			430

Accumulated Postretirement Benefit Obligation		67,491			71,208

Environmental Liabilities		47,536			46,497

Pension Liability		548,631			579,165

Other Liabilities		59,358			60,851

Commitments and Contingencies

Stockholders’ Equity:
Common stock, par value $0.01 per share, authorized 325,000,000 shares;
issued 120,160,512 and 119,608,026 shares at June 30, 2013 and
December 31, 2012, respectively		1,202			1,196
Preferred stock, par value $0.01 per share, authorized 75,000,000 shares;
No shares issued		-			-
Capital in excess of par value		730,733			713,257
Retained earnings		450,960			349,063
Treasury stock at cost, 9,075,764 and 4,372,143 shares at June 30, 2013
and December 31, 2012, respectively		(237,582	)		(109,809	)
Accumulated other comprehensive income		23,985			32,728
Stockholders’ Equity – The Babcock & Wilcox Company		969,298			986,435
Noncontrolling interest		18,053			16,481
Total Stockholders’Equity		987,351			1,002,916

TOTAL	$	2,725,309		$	2,840,355


THE BABCOCK & WILCOX COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2013			2012			2013			2012
	(Unaudited)
	(In thousands, except share and per share amounts)

Revenues	$	886,136		$	852,585		$	1,691,559		$	1,618,477

Costs and Expenses:
Cost of operations		686,043			619,547			1,305,740			1,183,435
Research and development costs		837			34,150			29,183			63,186
(Gains) Losses on asset disposals and impairments – net		156			(622	)		87			(882	)
Selling, general and administrative expenses		106,937			106,121			210,537			210,286
Special charges for restructuring activities		12,232			-			20,655			-
Total Costs and Expenses		806,205			759,196			1,566,202			1,456,025

Equity in Income of Investees		18,775			16,687			33,562			34,044

Operating Income		98,706			110,076			158,919			196,496

Other Income (Expense):
Interest income		323			504			655			737
Interest expense		(789	)		(1,152	)		(1,607	)		(1,775	)
Other – net		1,005			4,365			2,411			3,299
Total Other Income		539			3,717			1,459			2,261

Income before Provision for Income Taxes		99,245			113,793			160,378			198,757

Provision for Income Taxes		29,544			39,457			45,801			67,352

Net Income		69,701			74,336			114,577			131,405

Net Loss Attributable to Noncontrolling Interest		3,169			2,894			5,467			5,776

Net Income Attributable to The Babcock & Wilcox Company	$	72,870		$	77,230		$	120,044		$	137,181

Earnings per Common Share:
Basic:
Net Income Attributable to The Babcock & Wilcox Company	$	0.65		$	0.65		$	1.06		$	1.16
Diluted:
Net Income Attributable to The Babcock & Wilcox Company	$	0.65		$	0.65		$	1.06		$	1.15

Shares used in the computation of earnings per share:
Basic		111,898,819			118,648,459			112,998,066			118,451,903
Diluted		112,662,563			119,257,911			113,699,859			119,058,527


THE BABCOCK & WILCOX COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	Six Months Ended
	June 30,
	2013			2012
	(Unaudited)
	(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income	$	114,577		$	131,405
Non-cash items included in net income:
Depreciation and amortization		33,856			35,530
Income of investees, net of dividends		(18,824	)		(17,757	)
(Gains) Losses on asset disposals and impairments – net		87			(882	)
In-kind research and development costs		7,369			8,740
Amortization of pension and postretirement costs		1,511			1,557
Stock-based compensation expense		9,076			9,048
Excess tax benefits from stock-based compensation		(3	)		(1,436	)
Changes in assets and liabilities, net of effects of acquisitions:
Accounts receivable		(37,429	)		(42,582	)
Contracts in progress and advance billings on contracts		(81,571	)		(45,882	)
Accounts payable		5,972			18,360
Inventories		11,608			(10,031	)
Current and deferred income taxes		4,067			58,620
Accrued and other current liabilities		9,541			(11,404	)
Pension liability, accumulated postretirement benefit obligation and accrued employee benefits		(44,056	)		(189,882	)
Other, net		(4,005	)		(18,086	)
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		11,776			(74,682	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Decrease in restricted cash and cash equivalents		12,680			4,428
Purchases of property, plant and equipment		(33,433	)		(41,548	)
Proceeds from sale of unconsolidated affiliate		-			2,091
Purchase of intangible assets		(2,200	)		-
Purchases of available-for-sale securities		(72,156	)		(155,979	)
Sales and maturities of available-for-sale securities		91,749			68,532
Investment in equity and cost method investees		(2,913	)		(6,572	)
Proceeds from asset disposals		454			132
NET CASH USED IN INVESTING ACTIVITIES		(5,819	)		(128,916	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of short-term borrowing and long-term debt		(104	)		(101	)
Increase in short-term borrowing		651			-
Payment of debt issuance costs		-			(4,747	)
Repurchase of common shares		(125,829	)		-
Dividends paid to common shareholders		(18,142	)		-
Excess tax benefits from stock-based compensation		3			1,436
Exercise of stock options		1,888			1,424
Other		(326	)		(284	)
NET CASH USED IN FINANCING ACTIVITIES		(141,859	)		(2,272	)
EFFECTS OF EXCHANGE RATE CHANGES ON CASH		(5,440	)		(2,569	)
NET DECREASE IN CASH AND CASH EQUIVALENTS		(141,342	)		(208,439	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		383,547			415,209
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	242,205		$	206,770
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest (net of amount capitalized)	$	1,597		$	2,153
Income taxes (net of refunds)	$	38,851		$	17,440
SCHEDULE OF NONCASH INVESTING ACTIVITY:
Accrued capital expenditures included in accounts payable	$	3,445		$	4,760


THE BABCOCK & WILCOX COMPANY
BUSINESS SEGMENT INFORMATION

	Three Months Ended							Six Months Ended
	June 30,							June 30,
	2013			2012				2013			2012
	(Unaudited)
	(In thousands)
REVENUES:
Power Generation	$	471,191		$497,037				$932,654			$911,310
Nuclear Operations		330,986		265,398				592,125			515,576
Technical Services		27,432		28,269				52,661			53,242
Nuclear Energy		63,185		67,353				126,701			153,910
mPower		333		39				637			68
Adjustments and Eliminations		(6,991	)	(5,511			)	(13,219		)	(15,629			)

TOTAL	$	886,136		$852,585				$1,691,559			$1,618,477

SEGMENT INCOME:
Power Generation	$	30,535		$58,105				$63,865			$97,610
Nuclear Operations		65,737		55,366				120,461			110,193
Technical Services		15,235		18,875				29,414			33,957
Nuclear Energy		7,922		20,276				10,180			32,011
mPower		(1,104	)	(32,686			)	(28,051		)	(60,612			)
SUBTOTAL		118,325		119,936				195,869			213,159
Corporate		(7,387	)	(9,860			)	(16,295		)	(16,663			)
Special Charges for Restructuring Activities		(12,232	)	0				(20,655		)	0
TOTAL	$	98,706		$110,076				$158,919			$196,496

EQUITY IN INCOME (LOSS) OF INVESTEES:
Power Generation	$	5,202		$3,054				$7,309			$6,876
Nuclear Operations		0		0				0			0
Technical Services		13,699		13,633				26,532			27,168
Nuclear Energy		(126	)	0				(279		)	0
mPower		0		0				0			0

TOTAL	$	18,775		$16,687				$33,562			$34,044

PENSION EXPENSE:
Power Generation	$	775		$4,933				$1,490			$9,756
Nuclear Operations		1,133		3,671				2,266			7,340
Technical Services		72		234				144			468
Nuclear Energy		1,076		488				2,139			1,077
mPower		0		0				0			0
Corporate		505		707				1,010			1,416

TOTAL	$	3,561		$10,033				$7,049			$20,057

DEPRECIATION AND AMORTIZATION:
Power Generation	$4,945					$4,903			$10,799			$	9,491
Nuclear Operations	6,724					8,414			13,413				16,903
Technical Services	48					54			96				128
Nuclear Energy	1,617					1,463			3,184				3,008
mPower	121					0			243				0
Corporate	3,043					2,981			6,121				6,000

TOTAL	$16,498					$17,815			$33,856			$	35,530

RESEARCH AND DEVELOPMENT, NET:
Power Generation	$5,872					$5,810			$11,543			$	10,649
Nuclear Operations	13					0			13				119
Technical Services	13					110			39				325
Nuclear Energy	1,029					858			2,200				1,678
mPower	(6,090				)	27,372			15,388				50,415

TOTAL	$837					$34,150			$29,183			$	63,186

CAPITAL EXPENDITURES:
Power Generation	$6,091					$4,516			$11,850			$	10,247
Nuclear Operations	5,696					10,582			13,412				23,356
Technical Services	0					0			0				0
Nuclear Energy	1,556					1,068			2,978				1,933
mPower	478					667			1,414				667
Corporate	813					3,274			3,779				5,345

TOTAL	$14,634					$20,107			$33,433			$	41,548

BACKLOG:
Power Generation	$2,320,515					$2,528,575			$2,320,515			$	2,528,575
Nuclear Operations	2,831,270					2,859,748			2,831,270				2,859,748
Technical Services	8,856					14,070			8,856				14,070
Nuclear Energy	202,723					309,158			202,723				309,158
mPower	2,564					1,102			2,564				1,102

TOTAL	$5,365,928					$5,712,653			$5,365,928			$	5,712,653

CONTACT:
The Babcock & Wilcox Company
Investor Contact:
Jenny L. Apker, 704-625-4944
Vice President, Treasurer and Investor Relations
investors@babcock.com
or
Media Contact:
Aimee Mills, 980-365-4583
Media Relations Lead
aemills@babcock.com

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