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.	a50863704.htm

Exhibit 99.1

Babcock & Wilcox Announces First Quarter 2014 Results

- GAAP Earnings per Share of $0.41, Adjusted Earnings per Share of $0.42
- Declared Regular Quarterly Dividend of $0.10 per share

CHARLOTTE, N.C.--(BUSINESS WIRE)--May 12, 2014--The Babcock & Wilcox Company (NYSE: BWC) (“B&W” or the “Company”) today reported first quarter 2014 revenues of $662.0 million, a decrease of $143.4 million, or 17.8% from the first quarter of 2013. GAAP earnings per share for the first quarter of 2014 were $0.41 unchanged from $0.41 in the first quarter of 2013. Adjusted earnings per share for the first quarter 2014, which excludes the impact of $2.7 million of restructuring charges, were $0.42, a decrease of 8.7% from adjusted earnings per share of $0.46 for the first quarter of 2013.

During the first quarter of 2014, the Company repurchased 0.5 million shares of its common stock at a total cost of $15.7 million. Through March 31, 2014, the Company had repurchased a total of 10.0 million shares at a cost of $269.3 million, leaving $480.7 million of capacity remaining under its previously announced $750 million share repurchase authorizations.

Recent Highlights

Awarded $195 Million in Naval Reactors Contracts and Orders
Awarded Steam Generator Services Contract from American Electric Power
Awarded $302 Million in Contracts for Naval Reactors Fuel and Materials Services
Awarded U.S. Department of Energy Funding for Carbon Dioxide Capture Technology
Received Extension of Management and Operating Contract at Idaho National Laboratory
Announced Plans to Restructure mPower Small Modular Reactor Program

Results of Operations

Consolidated revenues for the first quarter of 2014 were $662.0 million, a decrease of $143.4 million, or 17.8%, from the first quarter of 2013. The Nuclear Operations segment revenues were $286.2 million, an increase of $25.1 million over the corresponding period in 2013, primarily due to strong execution and increased activity in the manufacturing of nuclear components for U.S. Government programs. Revenues in the Power Generation segment decreased by $149.4 million, to $312.1 million in the first quarter of 2014 compared to $461.5 million in 2013, primarily attributable to an $85.7 million decrease in new build environmental revenue due to lower levels of activity as projects related to the previously enacted environmental rules and regulations near completion and uncertainties continued regarding the outcome of other environmental regulations. Power Generation segment revenues from the new build steam and aftermarket services businesses decreased by $25.0 million and $34.6 million, respectively, primarily due to completion of several large projects in the past year. Revenues from the Nuclear Energy segment were $47.8 million compared to $63.5 million in the first quarter of 2013, a decrease of $15.7 million, due in part to the decision to discontinue the U.S. projects business.

Operating income for the first quarter of 2014 was $53.6 million, a decrease of $6.6 million compared to $60.2 million in the first quarter of 2013. Nuclear Operations segment operating income was $59.5 million in the first quarter of 2014, compared with $54.7 million in the same period last year. Power Generation segment operating income was $10.5 million in the first quarter of 2014, a decrease of $22.8 million from $33.3 million in the prior year period. Results included an additional $7.6 million charge related to a biomass power plant project, all of which we expect will be added to the customer claim. Operating income in the Technical Services segment during the first quarter 2014 increased by $0.6 million, to $14.8 million, compared to $14.2 million in the first quarter of 2013. Nuclear Energy segment operating income in the first quarter of 2014 decreased by $1.8 million, to $0.5 million, compared to $2.3 million in the corresponding period of 2013. The $26.7 million operating loss in the mPower segment in the first quarter of 2014 compares to a $26.9 million loss in the corresponding period in 2013.

Operating income for the first quarter of 2014 includes $2.7 million of special charges for restructuring activities related to the Global Competitiveness Initiative (GCI) and other cost reduction efforts. Excluding the restructuring charges, adjusted operating income for the first quarter of 2014 was $56.3 million, a 17.9% decrease compared adjusted operating income of $68.6 million in the first quarter of 2013.

“With strong performance in both the nuclear components and fuels businesses, the Nuclear Operations segment posted record first quarter revenue and earnings this period,” said E. James Ferland, President and Chief Executive Officer of B&W. “Healthy bookings in the Nuclear Energy segment in the first quarter reflect several important awards in Canada and the U.S. While bookings in our Power Generation segment were modest this quarter, we expect to book a couple of significant international boiler projects over the next three or four months and are seeing improvement in the domestic bid pipeline, particularly for environmental activity. We’ve had a slow start in Power Generation this year, but we expect performance will improve sequentially as the year progresses.”

Ferland continued, “We are making significant progress on the key objectives we set forth for 2014. Actions have been initiated to reduce mPower spending to an annual rate of approximately $15 million and we continue to work with the Department of Energy and our other stakeholders to confirm the best path forward for this technology. Plans to drive the improvement of operating margins in our commercial businesses are underway, with more than $50 million of additional opportunities identified and the end of 2015 target still sharply in focus. We also remain committed to increasing share buyback activity in the balance of 2014.”

Quarterly Dividend

On May 9, 2014, the Company declared a regular quarterly cash dividend of $0.10 per common share. The dividend will be payable on June 13, 2014 to shareholders of record on May 23, 2014.

Liquidity

The Company’s cash and investments position, net of debt, was $234.4 million at the end of the first quarter of 2014, a decrease of $167.9 million compared to $402.3 million at the end of the fourth quarter of 2013. First quarter 2014 net cash flow from operations was a use of $113.5 million, primarily due to a decrease in accounts payable and an increase in net work in progress due largely to timing of project milestones. During the quarter, the Company repurchased common shares totaling $15.7 million, paid dividends of $11.1 million, and contributed $5.3 million to its pension plans. In addition to net cash, the Company maintains a $700.0 million revolving credit agreement with $527.0 million of availability as of the end of the first quarter.

Outlook for the Remainder of 2014

The Company reaffirms its guidance that 2014 consolidated revenues will be between $2.90 billion and $3.10 billion and adjusted earnings per share for the full year 2014 will be between $2.00 and $2.20. Adjusted earnings per share exclude any mark-to-market adjustment for pension and post-retirement benefits and restructuring charges.

Reconciliation of Non-GAAP Operating Income and Earnings Per Share

	Q1 2014 GAAP*			GCI & Other Restructuring Charges			Q1 2014 Adjusted*
Operating Income	$	53.6		$	2.7		$	56.3
Other Income		0.8			-			0.8
Provision for Income Taxes		(13.3	)		(1.0	)		(14.3	)
Net Income		41.2			1.7			42.9
Net Loss Attributable to Non-Controlling Interest		3.9			-			3.9
Net Income Attributable to The Babcock & Wilcox Company	$	45.0		$	1.7		$	46.7

Diluted Earnings per Common Share	$	0.41		$	0.02		$	0.42
Effective Tax Rate		24.5	%					25.0	%

	Q1 2013 GAAP*			GCI & Other Restructuring Charges			Q1 2013 Adjusted*
Operating Income	$	60.2		$	8.4		$	68.6
Other Income		0.9			-			0.9
Provision for Income Taxes		(16.3	)		(2.9	)		(19.2	)
Net Income		44.9			5.5			50.4
Net Loss Attributable to Non-Controlling Interest		2.3			-			2.3
Net Income Attributable to The Babcock & Wilcox Company	$	47.2		$	5.5		$	52.7

Diluted Earnings per Common Share	$	0.41		$	0.05		$	0.46
Effective Tax Rate		26.6	%					27.6	%

* Amounts may not foot due to rounding

B&W is providing non-GAAP information regarding certain of its historical results and guidance on future earnings per share 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 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 First Quarter 2014 Results

				Date:			Tuesday, May 13, 2014, at 8:30 a.m. EDT
				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 expected performance and bookings in our Power Generation Segment, to the extent bookings may be viewed as an indicator of future revenues, and our 2014 outlook. 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 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 its annual report on Form 10-K for the year ended December 31, 2013 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 11,000 people, in addition to approximately 10,200 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.



THE BABCOCK & WILCOX COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS ASSETS

	March 31,		December 31,
	2014		2013
	(Unaudited)
	(In thousands)


Current Assets:
Cash and cash equivalents	$	208,055	$	346,116
Restricted cash and cash equivalents		35,667		45,945
Investments		6,348		10,748
Accounts receivable – trade, net		328,197		360,323
Accounts receivable – other		66,906		45,480
Contracts in progress		425,202		370,820
Inventories		109,544		113,058
Deferred income taxes		97,401		97,170
Other current assets		61,724		47,764

Total Current Assets		1,339,044		1,437,424

Property, Plant and Equipment		1,138,908		1,126,683
Less accumulated depreciation		690,878		679,604

Net Property, Plant and Equipment		448,030		447,079

Investments		4,424		4,426

Goodwill		281,701		281,708

Deferred Income Taxes		119,018		127,076

Investments in Unconsolidated Affiliates		185,814		184,831

Intangible Assets		80,081		81,521

Other Assets		41,518		45,088

TOTAL	$	2,499,630	$	2,609,153



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

	March 31,			December 31,
	2014			2013
	(Unaudited)
	(In thousands, except share and per share amounts)


Current Liabilities:
Notes payable and current maturities of long-term debt	$	5,083		$	4,671
Accounts payable		233,765			319,774
Accrued employee benefits		157,072			163,833
Accrued liabilities – other		64,496			58,192
Advance billings on contracts		288,317			317,771
Accrued warranty expense		54,524			56,436
Income taxes payable		5,196			6,551

Total Current Liabilities		808,453			927,228

Long-Term Debt		15,000			225

Accumulated Postretirement Benefit Obligation		45,022			43,194

Environmental Liabilities		54,753			53,391

Pension Liability		320,093			336,878

Other Liabilities		59,169			65,296

Commitments and Contingencies

Stockholders’ Equity:
Common stock, par value $0.01 per share, authorized 325,000,000 shares; issued 121,090,224 and 120,536,910 shares at March 31, 2014 and December 31, 2013, respectively		1,211			1,205
Preferred stock, par value $0.01 per share, authorized 75,000,000 shares; No shares issued		-			-
Capital in excess of par value		754,274			747,189
Retained earnings		690,840			656,916
Treasury stock at cost, 10,682,307 and 10,068,731 shares at March 31, 2014 and December 31, 2013, respectively		(289,425	)		(268,971	)
Accumulated other comprehensive income		21,822			28,348
Stockholders’ Equity – The Babcock & Wilcox Company		1,178,722			1,164,687
Noncontrolling interest		18,418			18,254
Total Stockholders’ Equity		1,197,140			1,182,941

TOTAL	$	2,499,630		$	2,609,153



THE BABCOCK & WILCOX COMPANY CONDENSED CONSOLIDATED STATEMENTS OF INCOME

	Three Months Ended
	March 31,
	2014			2013
	(Unaudited)
	(In thousands, except share and per share amounts)

Revenues	$	662,017		$	805,423
Costs and Expenses:
Cost of operations		502,307			619,697
Research and development costs		23,996			28,346
Gains on asset disposals and impairments, net		-			(69	)
Selling, general and administrative expenses		94,685			103,600
Special charges for restructuring activities		2,658			8,423
Total Costs and Expenses		623,646			759,997

Equity in Income of Investees		15,269			14,787

Operating Income		53,640			60,213

Other Income (Expense):
Interest income		419			332
Interest expense		(899	)		(818	)
Other – net		1,322			1,406
Total Other Income		842			920

Income before Provision for Income Taxes		54,482			61,133

Provision for Income Taxes		13,328			16,257

Net Income	$	41,154		$	44,876

Net Loss Attributable to Noncontrolling Interest		3,890			2,298

Net Income Attributable to The Babcock & Wilcox Company	$	45,044		$	47,174

Earnings per Common Share:
Basic:
Net Income Attributable to The Babcock & Wilcox Company	$	0.41		$	0.41
Diluted:
Net Income Attributable to The Babcock & Wilcox Company	$	0.41		$	0.41

Shares used in the computation of earnings per share:
Basic		110,439,415			114,097,313
Diluted		110,886,043			114,737,154



THE BABCOCK & WILCOX COMPANY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	Three Months Ended
	March 31,
	2014			2013
	(Unaudited)
	(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income	$	41,154		$	44,876
Non-cash items included in net income:
Depreciation and amortization		17,013			17,358
Income of investees, net of dividends		(4,694	)		(7,585	)
Gains on asset disposals		-			(69	)
In-kind research and development costs		4,173			3,020
Recognition of losses for pension and postretirement plans		594			801
Stock-based compensation expense		1,704			4,274
Excess tax benefits from stock-based compensation		(760	)		(13	)
Changes in assets and liabilities:
Accounts receivable		17,528			(13,757	)
Accounts payable		(82,164	)		20,305
Contracts in progress and advance billings on contracts		(83,797	)		(70,775	)
Inventories		3,082			5,864
Income taxes		(6,766	)		3,827
Accrued and other current liabilities		(31	)		17,508
Pension liability, accrued postretirement benefit obligation and employee benefits		(20,913	)		(38,666	)
Other, net		360			(13,283	)
NET CASH USED IN OPERATING ACTIVITIES		(113,517	)		(26,315	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Decrease in restricted cash and cash equivalents		10,278			360
Purchases of property, plant and equipment		(21,214	)		(18,799	)
Purchase of intangible assets		-			(2,200	)
Purchases of available-for-sale securities		(19,926	)		(47,933	)
Sales and maturities of available-for-sale securities		24,390			43,268
Proceeds from asset disposals		3			726
Investment in equity and cost method investees		(4,900	)		(2,730	)
NET CASH USED IN INVESTING ACTIVITIES		(11,369	)		(27,308	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of short-term borrowing and long-term debt		(441	)		(52	)
Increase in short-term borrowing		733			-
Borrowings under the Credit Agreement		15,000			-
Repurchase of common shares		(15,665	)		(57,074	)
Dividends paid to common shareholders		(11,099	)		(9,145	)
Exercise of stock options		2,191			813
Excess tax benefits from stock-based compensation		760			13
Other		(112	)		(102	)
NET CASH USED IN FINANCING ACTIVITIES		(8,633	)		(65,547	)
EFFECTS OF EXCHANGE RATE CHANGES ON CASH		(4,542	)		(3,261	)
NET DECREASE IN CASH AND CASH EQUIVALENTS		(138,061	)		(122,431	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		346,116			383,547
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	208,055		$	261,116
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Income taxes (net of refunds)	$	15,088		$	11,239
SCHEDULE OF NON-CASH INVESTING ACTIVITY:
Accrued capital expenditures included in accounts payable	$	4,854		$	4,035



THE BABCOCK & WILCOX COMPANY
BUSINESS SEGMENT INFORMATION

	Three Months Ended
	March 31,
	2014			2013
	(Unaudited)
	(In thousands)
REVENUES:
Power Generation	$	312,078		$	461,463
Nuclear Operations		286,214			261,139
Technical Services		24,455			25,229
Nuclear Energy		47,780			63,516
mPower		278			304
Adjustments and Eliminations		(8,788	)		(6,228	)

TOTAL	$	662,017		$	805,423

SEGMENT INCOME:
Power Generation	$	10,542		$	33,330
Nuclear Operations		59,528			54,724
Technical Services		14,789			14,179
Nuclear Energy		523			2,258
mPower		(26,709	)		(26,947	)
SUBTOTAL		58,673			77,544
Unallocated Corporate		(2,375	)		(8,908	)
Special Charges for Restructuring Activities		(2,658	)		(8,423	)
TOTAL	$	53,640		$	60,213

EQUITY IN INCOME (LOSS) OF INVESTEES:
Power Generation	$	2,366		$	2,107
Nuclear Operations		0			0
Technical Services		12,901			12,833
Nuclear Energy		2			(153	)
mPower		0			0

TOTAL	$	15,269		$	14,787

PENSION EXPENSE:
Power Generation	$	530		$	715
Nuclear Operations		872			1,133
Technical Services		48			72
Nuclear Energy		1,292			1,063
mPower		0			0
Corporate		488			505

TOTAL	$	3,230		$	3,488

DEPRECIATION AND AMORTIZATION:
Power Generation	$	5,567		$	5,854
Nuclear Operations		6,358			6,689
Technical Services		1			48
Nuclear Energy		1,794			1,567
mPower		187			122
Corporate		3,106			3,078

TOTAL	$	17,013		$	17,358

RESEARCH AND DEVELOPMENT, NET:
Power Generation	$	4,011		$	5,671
Nuclear Operations		4			0
Technical Services		12			26
Nuclear Energy		495			1,171
mPower		19,474			21,478

TOTAL	$	23,996		$	28,346

CAPITAL EXPENDITURES:
Power Generation	$	3,185		$	5,759
Nuclear Operations		8,290			7,716
Technical Services		0			0
Nuclear Energy		6,142			1,422
mPower		1,492			936
Corporate		2105			2,966

TOTAL	$	21,214		$	18,799

BACKLOG:
Power Generation	$	1,982,373		$	2,304,783
Nuclear Operations		2,849,585			2,931,322
Technical Services		1,363			9,010
Nuclear Energy		172,758			239,237
mPower		1,392			2,897

TOTAL	$	5,007,471		$	5,487,249

BOOKINGS:
Power Generation	$	219,339		$	282,439
Nuclear Operations		763,444			207,319
Technical Services		20,735			29,201
Nuclear Energy		76,037			24,357
mPower		0			(59	)

TOTAL	$	1,079,555		$	543,257

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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