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| 8-K - FORM 8-K - CHICAGO BRIDGE & IRON CO N V | a201709308-kpressrelease.htm |
Exhibit 99.1
NEWS RELEASE
For Immediate Release:
October 30, 2017
Investors: Scott Lamb, +1 832 513 1068, Scott.Lamb@CBI.com
Media: Gentry Brann, +1 832 513 1031, Gentry.Brann@CBI.com
CB&I Announces Third Quarter 2017 Results
THE WOODLANDS, Texas - October 30, 2017 - CB&I (NYSE:CBI) today announced financial results for the third quarter of 2017.
CB&I reported net income of $10 million, or $0.10 per diluted share, in the third quarter of 2017, compared to net income of $121.8 million, or $1.20 per diluted share, in the third quarter of 2016.
Net income for the third quarter of 2017 was impacted by restructuring charges of $27 million, or $0.17 per share, related to the company’s cost reduction program, and excess interest expense of $22 million, or $0.14 per share, due to accelerated amortization of debt issuance costs.
Continuing operations consist of CB&I’s Engineering & Construction (E&C) and Fabrication Services businesses. The results of the company’s Technology and former Engineered Products and Capital Services operations have been classified as discontinued operations for all periods presented.
“We have made significant progress on the decisive actions we announced last quarter, including our cost reduction program, the continued improvement of our project execution and risk management processes, and the intended sale of our Technology operations,” said Patrick K. Mullen, President and Chief Executive Officer of CB&I. “Our cost reduction program is on track, with a positive impact on our financial performance already apparent. We are also extremely pleased with the sale process for our Technology operations and the interest from bidders on developing a long-term strategic alliance with CB&I.
“Our results this quarter were impacted by unusual items totaling $49 million, or $0.31 per share. We experienced continued cost pressure during the quarter, primarily on the IPL and Calpine power projects, with execution on our other projects continuing as planned. New awards were lower than expected, primarily within E&C, due to the delay of certain key projects. However, we have a significant pipeline and anticipate a strong fourth quarter and first half of 2018 for new awards.”
Continuing Operations
Revenue for the third quarter of 2017 was $1.7 billion, compared to revenue of $2.1 billion in the third quarter of 2016.
New awards in the third quarter of 2017 totaled $437 million, compared to $1.7 billion in the third quarter of last year. Backlog at September 30, 2017, was $10.7 billion, compared to backlog of $13.2 billion at September 30, 2016.
Engineering & Construction Operating Group
E&C operating group revenue was $1.3 billion in the third quarter of 2017, compared to $1.7 billion in the year-ago quarter. The E&C group reported operating income of $13.1 million, compared to $126.8 million in the third quarter of 2016. Results were impacted by changes in estimated margins on two U.S. gas
turbine power projects of $38 million and additional costs on U.S. LNG projects of approximately $16 million due in part to the direct effects of Hurricane Harvey. The E&C group’s new awards in the third quarter totaled $65.2 million, compared with $1.5 billion in the third quarter of 2016, and backlog as of September 30, 2017, was $9.2 billion.
Fabrication Services Operating Group
Fabrication Services operating group revenue was $389.7 million compared to $467.0 million in the year-ago quarter. The Fabrication Services group reported operating income of $26.1 million compared to $27.8 million in the third quarter of 2016. The Fabrication Services group’s new awards in the third quarter were $371.8 million, compared with $215.3 million in the third quarter of 2016. Backlog as of September 30, 2017, was $1.5 billion.
Discontinued Operations
The Technology operations revenue was $170.1 million, compared to $183.3 million in the year-ago quarter. Technology operations reported operating income of $61.2 million compared to $55.9 million in the third quarter of 2016.
Guidance
The company currently expects revenue for the fourth quarter of 2017 to be between $1.8 and $2.0 billion and diluted earnings per share in the range of $0.50 to $0.60. The company's updated guidance for the fourth quarter of 2017 includes continuing and discontinued operations but excludes the continuation of incremental interest expense and any additional restructuring charge that may be required. Guidance also excludes any significant benefits from the cost reduction program, which are expected to be fully realized in 2018.
Earnings Conference Call
CB&I will host a conference call and webcast October 30, 2017, at 4:00 p.m. CDT (5:00 p.m. EDT) to discuss financial and operating results and answer questions from investors. The webcast will be available on the Investor Relations page of www.CBI.com, and the conference call can be accessed by telephone at 1-800-301-8321 (U.S.) or 1-706-634-2259 (outside the U.S.) with conference ID # 6097289.
About CB&I
CB&I (NYSE:CBI) is a leading provider of technology and infrastructure for the energy industry. With more than 125 years of experience, CB&I provides reliable solutions to our customers around the world while maintaining a relentless focus on safety and an uncompromising standard of quality. For more information, visit www.CBI.com.
Important Information For Investors And Shareholders
Cautionary Statement Regarding Forward-Looking Statements
This press release contains forward-looking statements regarding CB&I and represents our expectations and beliefs concerning future events. These forward-looking statements are intended to be covered by the safe harbor for forward-looking statements provided by the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties. The forward looking statements in this press release include: statements about CB&I’s new awards and backlog, to the extent these may be indicators of future revenue or profitability; the intended sale of the Technology operating group, including the timing with respect to the completion of that sale; the execution of activities on and completion of specific projects, including timing to complete, future productivity and cost to complete; estimates of percentage of completion and contract profits or losses.
When considering these and any other statements that are predictive in nature, depend upon or refer to future events or conditions, or use or contain words, terms, phrases or expressions such as “achieve,” “forecast,” “plan,” “propose,” “strategy,” “envision,” “hope,” “will,” “continue,” “potential,” “expect,” “believe,” “anticipate,” “project,” “estimate,” “predict,” “intend,” “should,” “could,” “may,” “might” or similar forward-looking statements, we refer you to the cautionary statements concerning risk factors and “Forward-Looking Statements” described under “Risk Factors” in Item 1A of our Annual Report filed on Form 10-K filed with the SEC for the year ended December 31, 2016, and any updates to those risk factors or “Forward-Looking Statements” included in our subsequent Quarterly Reports on Form 10-Q filed with the SEC, which cautionary statements are incorporated herein by reference.
Chicago Bridge & Iron Company N.V. | ||||||||||||||||||||||
Consolidated Statements of Operations | ||||||||||||||||||||||
(in thousands, except per share data) | ||||||||||||||||||||||
Three Months | Nine Months | |||||||||||||||||||||
Ended September 30, | Ended September 30, | |||||||||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||||||||
Revenue | $ | 1,737,764 | $ | 2,137,877 | $ | 4,668,690 | $ | 6,200,713 | ||||||||||||||
Cost of revenue | 1,655,002 | 1,920,894 | 4,919,206 | 5,591,393 | ||||||||||||||||||
Gross profit (loss) | 82,762 | 216,983 | (250,516 | ) | 609,320 | |||||||||||||||||
% of Revenue | 4.8 | % | 10.1 | % | (5.4 | )% | 9.8 | % | ||||||||||||||
Selling and administrative expense | 51,458 | 62,913 | 173,594 | 190,207 | ||||||||||||||||||
% of Revenue | 3.0 | % | 2.9 | % | 3.7 | % | 3.1 | % | ||||||||||||||
Intangibles amortization | 1,891 | 1,937 | 5,771 | 6,451 | ||||||||||||||||||
Equity earnings | (9,727 | ) | (2,632 | ) | (21,210 | ) | (1,875 | ) | ||||||||||||||
Restructuring related costs | 26,882 | — | 30,882 | — | ||||||||||||||||||
Other operating (income) expense, net | (53 | ) | 189 | (415 | ) | 1,112 | ||||||||||||||||
Operating income (loss) from continuing operations | 12,311 | 154,576 | (439,138 | ) | 413,425 | |||||||||||||||||
% of Revenue | 0.7 | % | 7.2 | % | (9.4 | )% | 6.7 | % | ||||||||||||||
Interest expense | (5,288 | ) | (1,586 | ) | (9,036 | ) | (4,666 | ) | ||||||||||||||
Interest income | 574 | 2,292 | 2,684 | 7,187 | ||||||||||||||||||
Income (loss) from continuing operations before taxes | 7,597 | 155,282 | (445,490 | ) | 415,946 | |||||||||||||||||
Income tax (expense) benefit | (3,112 | ) | (22,206 | ) | 177,347 | (83,280 | ) | |||||||||||||||
Net income (loss) from continuing operations | 4,485 | 133,076 | (268,143 | ) | 332,666 | |||||||||||||||||
Net income (loss) from discontinued operations | 7,061 | 35,343 | (90,916 | ) | 88,263 | |||||||||||||||||
Net income (loss) | 11,546 | 168,419 | (359,059 | ) | 420,929 | |||||||||||||||||
Less: Net income attributable to noncontrolling interests ($0, $930, $870 and $1,815 related to discontinued operations) | (1,507 | ) | (46,659 | ) | (31,666 | ) | (68,405 | ) | ||||||||||||||
Net income (loss) attributable to CB&I | $ | 10,039 | $ | 121,760 | $ | (390,725 | ) | $ | 352,524 | |||||||||||||
Net income (loss) attributable to CB&I per share (Basic): | ||||||||||||||||||||||
Continuing operations | $ | 0.03 | $ | 0.86 | $ | (2.96 | ) | $ | 2.57 | |||||||||||||
Discontinued operations | 0.07 | 0.34 | (0.91 | ) | 0.83 | |||||||||||||||||
Total | $ | 0.10 | $ | 1.20 | $ | (3.87 | ) | $ | 3.40 | |||||||||||||
Net income (loss) attributable to CB&I per share (Diluted): | ||||||||||||||||||||||
Continuing operations | $ | 0.03 | $ | 0.86 | $ | (2.96 | ) | $ | 2.54 | |||||||||||||
Discontinued operations | 0.07 | 0.34 | (0.91 | ) | 0.83 | |||||||||||||||||
Total | $ | 0.10 | $ | 1.20 | $ | (3.87 | ) | $ | 3.37 | |||||||||||||
Weighted average shares outstanding: | ||||||||||||||||||||||
Basic | 101,177 | 101,102 | 100,834 | 103,725 | ||||||||||||||||||
Diluted | 101,736 | 101,863 | 100,834 | 104,555 | ||||||||||||||||||
Chicago Bridge & Iron Company N.V. | |||||||||||||||||||||||||||
Segment Information | |||||||||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||||||||||||||
NEW AWARDS (1) | % of | % of | % of | % of | |||||||||||||||||||||||
Total | Total | Total | Total | ||||||||||||||||||||||||
Engineering & Construction | $ | 65,181 | 15% | $ | 1,508,301 | 88% | $ | 2,787,690 | 71% | $ | 2,839,032 | 78% | |||||||||||||||
Fabrication Services | 371,769 | 85% | 215,254 | 12% | 1,121,137 | 29% | 819,962 | 22% | |||||||||||||||||||
Total | $ | 436,950 | $ | 1,723,555 | $ | 3,908,827 | $ | 3,658,994 | |||||||||||||||||||
REVENUE | % of | % of | % of | % of | |||||||||||||||||||||||
Total | Total | Total | Total | ||||||||||||||||||||||||
Engineering & Construction | $ | 1,348,033 | 78% | $ | 1,670,879 | 78% | $ | 3,409,081 | 73% | $ | 4,794,000 | 77% | |||||||||||||||
Fabrication Services | 389,731 | 22% | 466,998 | 22% | 1,259,609 | 27% | 1,406,713 | 23% | |||||||||||||||||||
Total | $ | 1,737,764 | $ | 2,137,877 | $ | 4,668,690 | $ | 6,200,713 | |||||||||||||||||||
OPERATING INCOME (LOSS) FROM CONTINUING OPERATIONS | % of | % of | % of | % of | |||||||||||||||||||||||
Revenue | Revenue | Revenue | Revenue | ||||||||||||||||||||||||
Engineering & Construction | $ | 13,051 | 1.0% | $ | 126,824 | 7.6% | $ | (505,855 | ) | (14.8)% | $ | 323,891 | 6.8% | ||||||||||||||
Fabrication Services | 26,142 | 6.7% | 27,752 | 5.9% | 97,599 | 7.7% | 89,534 | 6.4% | |||||||||||||||||||
Total operating groups | 39,193 | 2.3% | 154,576 | 7.2% | (408,256 | ) | (8.7)% | 413,425 | 6.7% | ||||||||||||||||||
Restructuring related costs | (26,882 | ) | — | (30,882 | ) | — | |||||||||||||||||||||
Total | $ | 12,311 | 0.7% | $ | 154,576 | 7.2% | $ | (439,138 | ) | (9.4)% | $ | 413,425 | 6.7% | ||||||||||||||
BACKLOG (1) | September 30, 2017 | % of Total | December 31, 2016 | % of Total | |||||||||||||||||||||||
Engineering & Construction | $ | 9,190,401 | 86% | $ | 9,998,322 | 85% | |||||||||||||||||||||
Fabrication Services | 1,482,218 | 14% | 1,818,963 | 15% | |||||||||||||||||||||||
Total | $ | 10,672,619 | $ | 11,817,285 | |||||||||||||||||||||||
(1) New awards represent the value of new project commitments received by the Company during a given period, as well as scope growth on existing commitments. Backlog includes the value of new awards until work is performed and revenue is recognized or until cancellation. Backlog may fluctuate with currency movements. | |||||||||||||||||||||||||||
Chicago Bridge & Iron Company N.V. | ||||||||||||||||||||||||||||||
Discontinued Operations Statements of Operations | ||||||||||||||||||||||||||||||
(in thousands, except per share data) | ||||||||||||||||||||||||||||||
Three Months Ended September 30, | ||||||||||||||||||||||||||||||
2017 | 2016 | |||||||||||||||||||||||||||||
Capital Services | Technology | Total | Capital Services | Technology | Total | |||||||||||||||||||||||||
Revenue | $ | — | $ | 170,143 | $ | 170,143 | $ | 530,912 | $ | 183,321 | $ | 714,233 | ||||||||||||||||||
Cost of revenue | — | 103,345 | 103,345 | 490,758 | 113,890 | 604,648 | ||||||||||||||||||||||||
Gross profit | — | 66,798 | 66,798 | 40,154 | 69,431 | 109,585 | ||||||||||||||||||||||||
% of Revenue | — | % | 39.3 | % | 39.3 | % | 7.6 | % | 37.9 | % | 15.3 | % | ||||||||||||||||||
Selling and administrative expense | — | 8,991 | 8,991 | 14,312 | 10,589 | 24,901 | ||||||||||||||||||||||||
% of Revenue | — | % | 5.3 | % | 5.3 | % | 2.7 | % | 5.8 | % | 3.5 | % | ||||||||||||||||||
Intangibles amortization | — | 1,520 | 1,520 | 4,030 | 4,518 | 8,548 | ||||||||||||||||||||||||
Equity earnings | — | (4,879 | ) | (4,879 | ) | — | (1,609 | ) | (1,609 | ) | ||||||||||||||||||||
Other operating expense (income), net | — | 8 | 8 | (1,201 | ) | — | (1,201 | ) | ||||||||||||||||||||||
Operating income from discontinued operations | — | 61,158 | 61,158 | 23,013 | 55,933 | 78,946 | ||||||||||||||||||||||||
% of Revenue | — | % | 35.9 | % | 35.9 | % | 4.3 | % | 30.5 | % | 11.1 | % | ||||||||||||||||||
Interest expense | — | (55,512 | ) | (55,512 | ) | (5,989 | ) | (18,858 | ) | (24,847 | ) | |||||||||||||||||||
Interest income | — | — | — | 302 | 14 | 316 | ||||||||||||||||||||||||
Income from discontinued operations before taxes | — | 5,646 | 5,646 | 17,326 | 37,089 | 54,415 | ||||||||||||||||||||||||
Income tax benefit (expense) | 5,166 | (3,751 | ) | 1,415 | (6,236 | ) | (12,836 | ) | (19,072 | ) | ||||||||||||||||||||
Net income from discontinued operations | 5,166 | 1,895 | 7,061 | 11,090 | 24,253 | 35,343 | ||||||||||||||||||||||||
Less: Net income from discontinued operations attributable to noncontrolling interests | — | — | — | (930 | ) | — | (930 | ) | ||||||||||||||||||||||
Net income from discontinued operations attributable to CB&I | $ | 5,166 | $ | 1,895 | $ | 7,061 | $ | 10,160 | $ | 24,253 | $ | 34,413 | ||||||||||||||||||
Nine Months Ended September 30, | ||||||||||||||||||||||||||||||
2017 | 2016 | |||||||||||||||||||||||||||||
Capital Services | Technology | Total | Capital Services | Technology | Total | |||||||||||||||||||||||||
Revenue | $ | 1,114,655 | $ | 454,840 | $ | 1,569,495 | $ | 1,655,583 | $ | 491,858 | $ | 2,147,441 | ||||||||||||||||||
Cost of revenue | 1,047,614 | 281,870 | 1,329,484 | 1,546,823 | 301,239 | 1,848,062 | ||||||||||||||||||||||||
Gross profit | 67,041 | 172,970 | 240,011 | 108,760 | 190,619 | 299,379 | ||||||||||||||||||||||||
% of Revenue | 6.0 | % | 38.0 | % | 15.3 | % | 6.6 | % | 38.8 | % | 13.9 | % | ||||||||||||||||||
Selling and administrative expense | 29,541 | 27,079 | 56,620 | 39,499 | 33,436 | 72,935 | ||||||||||||||||||||||||
% of Revenue | 2.7 | % | 6.0 | % | 3.6 | % | 2.4 | % | 6.8 | % | 3.4 | % | ||||||||||||||||||
Intangibles amortization | 2,550 | 10,503 | 13,053 | 12,260 | 13,545 | 25,805 | ||||||||||||||||||||||||
Equity earnings | — | (9,662 | ) | (9,662 | ) | — | (8,030 | ) | (8,030 | ) | ||||||||||||||||||||
Loss on net assets sold | 64,817 | — | 64,817 | — | — | — | ||||||||||||||||||||||||
Other operating expense (income), net | 504 | 38 | 542 | (1,505 | ) | 4 | (1,501 | ) | ||||||||||||||||||||||
Operating (loss) income from discontinued operations | (30,371 | ) | 145,012 | 114,641 | 58,506 | 151,664 | 210,170 | |||||||||||||||||||||||
% of Revenue | (2.7 | )% | 31.9 | % | 7.3 | % | 3.5 | % | 30.8 | % | 9.8 | % | ||||||||||||||||||
Interest expense | (13,440 | ) | (110,579 | ) | (124,019 | ) | (17,699 | ) | (56,039 | ) | (73,738 | ) | ||||||||||||||||||
Interest income | 16 | — | 16 | 916 | 53 | 969 | ||||||||||||||||||||||||
(Loss) income from discontinued operations before taxes | (43,795 | ) | 34,433 | (9,362 | ) | 41,723 | 95,678 | 137,401 | ||||||||||||||||||||||
Income tax expense | (62,392 | ) | (19,162 | ) | (81,554 | ) | (15,915 | ) | (33,223 | ) | (49,138 | ) | ||||||||||||||||||
Net (loss) income from discontinued operations | (106,187 | ) | 15,271 | (90,916 | ) | 25,808 | 62,455 | 88,263 | ||||||||||||||||||||||
Less: Net income from discontinued operations attributable to noncontrolling interests | (870 | ) | — | (870 | ) | (1,815 | ) | — | (1,815 | ) | ||||||||||||||||||||
Net (loss) income from discontinued operations attributable to CB&I | $ | (107,057 | ) | $ | 15,271 | $ | (91,786 | ) | $ | 23,993 | $ | 62,455 | $ | 86,448 | ||||||||||||||||
Chicago Bridge & Iron Company N.V. | ||||||||||
Condensed Consolidated Balance Sheets | ||||||||||
(in thousands) | ||||||||||
September 30, | December 31, | |||||||||
2017 | 2016 | |||||||||
ASSETS | ||||||||||
Current assets | $ | 1,816,413 | $ | 1,937,976 | ||||||
Equity investments | 66,164 | 35,541 | ||||||||
Property and equipment, net | 393,015 | 434,252 | ||||||||
Goodwill and other intangibles, net | 2,413,419 | 2,395,474 | ||||||||
Assets of discontinued operations | 1,103,888 | 1,986,480 | ||||||||
Other non-current assets | 1,284,114 | 1,049,697 | ||||||||
Total assets | $ | 7,077,013 | $ | 7,839,420 | ||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||
Current maturities of long-term debt and other borrowings, net | $ | 2,079,913 | $ | 911,410 | ||||||
Other current liabilities | 2,981,531 | 3,062,222 | ||||||||
Long-term debt, net | — | 1,287,923 | ||||||||
Liabilities of discontinued operations | 349,340 | 600,907 | ||||||||
Other non-current liabilities | 407,383 | 415,621 | ||||||||
Shareholders' equity | 1,258,846 | 1,561,337 | ||||||||
Total liabilities and shareholders’ equity | $ | 7,077,013 | $ | 7,839,420 | ||||||
Condensed Consolidated Statements of Cash Flows and Other Financial Data | ||||||||||
(in thousands) | ||||||||||
Nine Months | ||||||||||
Ended September 30, | ||||||||||
2017 | 2016 | |||||||||
CASH FLOWS | ||||||||||
Cash flows from operating activities | $ | (687,998 | ) | $ | 495,041 | |||||
Cash flows from investing activities | 747,038 | (151,686 | ) | |||||||
Cash flows from financing activities | (298,735 | ) | (268,422 | ) | ||||||
Effect of exchange rate changes on cash and cash equivalents | 76,408 | (10,188 | ) | |||||||
(Decrease) increase in cash and cash equivalents | (163,287 | ) | 64,745 | |||||||
Cash and cash equivalents, beginning of the year | 505,156 | 550,221 | ||||||||
Cash and cash equivalents, end of the period | 341,869 | 614,966 | ||||||||
Cash and cash equivalents, end of period - discontinued operations | — | (16,412 | ) | |||||||
Cash and cash equivalents, end of period - continuing operations | $ | 341,869 | $ | 598,554 | ||||||
OTHER FINANCIAL DATA | ||||||||||
(Increase) decrease in receivables, net | $ | (197,532 | ) | $ | 46,418 | |||||
Change in contracts in progress, net | 34,994 | (252,857 | ) | |||||||
Decrease in inventory | 65,841 | 49,473 | ||||||||
(Decrease) increase in accounts payable | (48,801 | ) | 11,830 | |||||||
Change in contract capital | $ | (145,498 | ) | $ | (145,136 | ) | ||||
Depreciation and amortization | $ | 65,637 | $ | 93,285 | ||||||
Capital expenditures | $ | 40,089 | $ | 37,855 | ||||||
