Babcock & Wilcox Enterprises, Inc. - FORM 8-K - EX-99.2 - EXHIBIT 99.2 - October 9, 2018

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8-K - 8-K - Babcock & Wilcox Enterprises, Inc.a20188-kprojectorionseptem.htm
EX-99.1 - EXHIBIT 99.1 - Babcock & Wilcox Enterprises, Inc.exhibit9918-k.htm


UNAUDITED PRO FORMA FINANCIAL INFORMATION

The following unaudited pro forma condensed consolidated financial information, which is based upon estimates by our management, is presented for informational purposes only. It is not intended to be indicative of the actual consolidated results of operations or the actual consolidated financial position that would have been achieved had the transactions or adjustments been consummated as of the dates indicated below, and it does not purport to indicate results that may be attained in the future.

BABCOCK & WILCOX ENTERPRISES, INC.
INDEX TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    
 
PAGE
Unaudited Pro Forma Condensed Consolidated Balance Sheet as of June 30, 2018
Unaudited Pro Forma Condensed Consolidated Statement of Operations for the Year Ended December 31, 2017
Unaudited Pro Forma Condensed Consolidated Statement of Operations for the Year Ended December 31, 2016
Unaudited Pro Forma Condensed Consolidated Statement of Operations for the Year Ended December 31, 2015
Notes to the Pro Forma Condensed Consolidated Balance Sheet as of June 30, 2018
Notes to the Pro Forma Condensed Consolidated Statement of Operations for the Years Ended December 31, 2017, 2016 and 2015
























1



BABCOCK & WILCOX ENTERPRISES, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

On October 5, 2018, Babcock & Wilcox Enterprises, Inc. (the “Company”) completed the previously announced sale of the Company’s MEGTEC and Universal businesses to Dürr (as defined below) for $130 million, subject to certain adjustments, pursuant to the stock purchase agreement (the “Agreement”), dated June 5, 2018, with Dürr AG and its wholly owned subsidiary Dürr Inc. (collectively, "Dürr").

The following presents our unaudited pro forma condensed consolidated statements of operations for the year ending December 31, 2017, 2016 and 2015, respectively, and are based on the historical consolidated financial statements of the Company after giving effect to the Company’s transaction with Dürr. The pro forma statements of operations give effect that the transaction had occurred at the beginning of each period presented. The unaudited pro forma condensed consolidated balance sheet as of June 30, 2018 has been prepared as if the Transaction had occurred on that date.

The unaudited pro forma condensed consolidated financial statements are presented for illustrative purposes only and are not necessarily indicative of the operating results that would have occurred if these transactions actually occurred on the dates presented or to project our results of operations or financial position for any future period. The information below should be read in conjunction with the Company's consolidated financial statements as of and for six months ended June 30, 2018 and as of and for the year ended December 31, 2017, and the Agreement which was included as Exhibit 2.1 to the Company's quarterly report on Form 10-Q for the the quarter ended June 30, 2018.





2




Babcock & Wilcox Enterprises, Inc.
Unaudited Pro Forma Condensed Consolidated Balance Sheet as of June 30, 2018
(in thousands, except per share amount)
Company Historical
Pro Forma Adjustments
Condensed Consolidated Pro Forma
Cash and cash equivalents
$
28,512

$
—

$
28,512

Restricted cash and cash equivalents
32,302

—

32,302

Accounts receivable – trade, net
236,718

—

236,718

Accounts receivable – other
37,807

—

37,807

Contracts in progress
149,040

—

149,040

Inventories
67,274

—

67,274

Other current assets
37,787

—

37,787

Current assets of discontinued operations
83,331

(83,331
)
—

Total current assets
672,771

(83,331
)
589,440

Net property, plant and equipment
105,765

—

105,765

Goodwill
47,179

—

47,179

Deferred income taxes
99,080

713

99,793

Investments in unconsolidated affiliates
8,421

—

8,421

Intangible assets
36,368

—

36,368

Other assets
28,013

—

28,013

Noncurrent assets of discontinued operations
106,510

(106,510
)
—

Total assets
$
1,104,107

$
(189,128
)
$
914,979

 
 
 
 
Foreign revolving credit facilities
$
4,124

$
—

4,124

Accounts payable
191,664

—

191,664

Accrued employee benefits
27,072

—

27,072

Advance billings on contracts
149,768

—

149,768

Accrued warranty expense
53,138

—

53,138

Other accrued liabilities
88,351

—

88,351

Current liabilities of discontinued operations
57,316

(57,316
)
—

Total current liabilities
571,433

(57,316
)
514,117

U.S. revolving credit facility
196,300

(123,840
)
72,460

Pension and other accumulated postretirement benefit liabilities
235,369

—

235,369

Other noncurrent liabilities
37,214

264

37,478

Noncurrent liabilities of discontinued operations
8,236

(8,236
)
—

Total liabilities
1,048,552

(189,128
)
859,424

Commitments and contingencies
 
 
 
Stockholders' equity:
 
 
 
Common stock, par value $0.01 per share, authorized 200,000 shares; issued and outstanding 168,660 shares at June 30, 2018
1,746

—

1,746

Capital in excess of par value
1,045,901

—

1,045,901

Treasury stock at cost, 5,830 shares at June 30, 2018
(105,531
)
—

(105,531
)
Retained deficit
(878,823
)
(931
)
(879,754
)
Accumulated other comprehensive loss
(16,536
)
931

(15,605
)
Stockholders' equity attributable to shareholders
46,757

—

46,757

Noncontrolling interest
8,798

 
8,798

Total stockholders' equity
55,555

—

55,555

Total liabilities and stockholders' equity
$
1,104,107

$
(189,128
)
$
914,979


See accompanying notes to unaudited pro forma condensed consolidated financial information





3



Babcock & Wilcox Enterprises, Inc.
Unaudited Pro Forma Condensed Consolidated Statement of Operations For The Year Ended December 31, 2017
(in thousands, except per share amounts)
Company Historical
Pro Forma Adjustments
Condensed Consolidated Pro Forma
Revenues
$
1,557,735

$
(216,306
)
$
1,341,429

Costs and expenses:
 
 
 
Cost of operations
1,457,857

(170,610
)
1,287,247

Selling, general and administrative expenses
259,799

(38,380
)
221,419

Goodwill impairment
86,903

—

86,903

Restructuring activities and spin-off transaction costs
15,447

(408
)
15,039

Research and development costs
9,412

(1,798
)
7,614

Losses (gains) on asset disposals, net
15

(2
)
13

Total costs and expenses
1,829,433

(211,198
)
1,618,235

Equity in income and impairment of investees
(9,867
)
—

(9,867
)
Operating loss
(281,565
)
(5,108
)
(286,673
)
Other income (expense):
 
 
 
Interest income
510

(3
)
507

Interest expense
(26,305
)
8,996

(17,309
)
Other – net
(6,839
)
1,388

(5,451
)
Total other income (expense)
(32,634
)
10,381

(22,253
)
Loss before income tax expense (benefit)
(314,199
)
5,273

(308,926
)
Income tax expense (benefit)
64,816

(1,107
)
63,709

Net loss
(379,015
)
6,380

(372,635
)
Net income attributable to noncontrolling interest
(809
)
—

(809
)
Net loss attributable to stockholders
$
(379,824
)
$
6,380

$
(373,444
)
 
 
 
 
Basic and diluted loss per share
$
(8.09
)
 
$
(7.96
)
 
 
 
 
Shares used in the computation of earnings per share:
 
 
 
Basic and diluted
46,935

 
46,935


See accompanying notes to unaudited pro forma condensed consolidated financial information


4



Babcock & Wilcox Enterprises, Inc.
Unaudited Pro Forma Condensed Consolidated Statement of Operations For The Year Ended December 31, 2016
(in thousands, except per share amounts)
Company Historical
Pro Forma Adjustments
Condensed Consolidated Pro Forma
Revenues
$
1,578,263

$
(157,322
)
$
1,420,941

Costs and expenses:
 
 
 
Cost of operations
1,399,146

(115,271
)
1,283,875

Selling, general and administrative expenses
247,149

(27,113
)
220,036

Restructuring activities and spin-off transaction costs
40,807

(1,994
)
38,813

Research and development costs
10,406

(1,557
)
8,849

Losses (gains) on asset disposals, net
(32
)
7

(25
)
Total costs and expenses
1,697,476

(145,928
)
1,551,548

Equity in income and impairment of investees
16,440

—

16,440

Operating loss
(102,773
)
(11,394
)
(114,167
)
Other income (expense):
 
 
 
Interest income
810

(8
)
802

Interest expense
(3,796
)
94

(3,702
)
Other – net
(2,380
)
(180
)
(2,560
)
Total other income (expense)
(5,366
)
(94
)
(5,460
)
Loss before income tax expense (benefit)
(108,139
)
(11,488
)
(119,627
)
Income tax expense (benefit)
6,943

(4,237
)
2,706

Net loss
(115,082
)
(7,251
)
(122,333
)
Net income attributable to noncontrolling interest
(567
)
—

(567
)
Net loss attributable to stockholders
$
(115,649
)
$
(7,251
)
$
(122,900
)
 
 
 
 
Basic and diluted loss per share
$
(2.31
)
 
$
(2.45
)
 
 
 
 
Shares used in the computation of earnings per share:
 
 
 
Basic and diluted
50,129

 
50,129


See accompanying notes to unaudited pro forma condensed consolidated financial information


5



Babcock & Wilcox Enterprises, Inc.
Unaudited pro forma condensed consolidated statement of operations for the year ended December 31, 2015
(in thousands, except per share amounts)
Company Historical
Pro Forma Adjustments
Condensed Consolidated Pro Forma
Revenues
$
1,757,295

$
(183,695
)
$
1,573,600

Costs and expenses:
 
 
 
Cost of operations
1,449,138

(135,002
)
1,314,136

Selling, general and administrative expenses
239,968

(33,827
)
206,141

Restructuring activities and spin-off transaction costs
14,946

—

14,946

Research and development costs
16,543

(1,886
)
14,657

Losses (gains) on asset disposals, net
14,597

17

14,614

Total costs and expenses
1,735,192

(170,698
)
1,564,494

Equity in income and impairment of investees
(242
)
—

(242
)
Operating loss
21,861

(12,997
)
8,864

Other income (expense):
 
 
 
Interest income
618

(8
)
610

Interest expense
(2,338
)
146

(2,192
)
Other – net
64

(840
)
(776
)
Total other income (expense)
(1,656
)
(702
)
(2,358
)
Income before income tax expense (benefit)
20,205

(13,699
)
6,506

Income tax expense (benefit)
3,671

(3,180
)
491

Net income from continuing operations
16,534

(10,519
)
6,015

Income from discontinued operations, net of tax
2,803

—

2,803

Net income
19,337

(10,519
)
8,818

Net income attributable to noncontrolling interest
(196
)
—

(196
)
Net income attributable to stockholders
$
19,141

$
(10,519
)
$
8,622

 
 
 
 
Basic earnings per share - continuing operations
$
0.31

 
$
0.11

Basic earnings per share - discontinued operations
0.05

 
0.05

        Basic earnings per share
$
0.36

 
$
0.16

 
 
 
 
Diluted earnings per share - continuing operations
$
0.30

 
$
0.11

Diluted earnings per share - discontinued operations
0.06

 
0.06

        Diluted earnings per share
$
0.36

 
$
0.17

 
 
 
 
Shares used in the computation of earnings per share:
 
 
 
Basic
53,487

 
53,487

Diluted
53,709

 
53,709


See accompanying notes to unaudited pro forma condensed consolidated financial information


6



NOTES TO THE PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 2018

(1)
The balance sheet of the Company as of June 30, 2018 reflected the assets and liabilities of Babcock & Wilcox Enterprises, Inc. and the assets and liabilities of discontinued operations. Upon completion of the transaction, substantially all of the discontinued assets and liabilities would be eliminated. Included in the Pro Forma Adjustments column are the sold assets and liabilities, the liabilities to be paid at closing plus the estimated net cash proceeds from the transaction.


NOTES TO THE PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2015, 2016 AND 2017

(1)
The statement of operations for the years ended December 31, 2015, 2016 and 2017 reflected the revenue, costs and other income (expenses) of the Company. Upon completion of the transaction with Dürr, substantially all of the revenue, costs and other income (expenses) would be eliminated, except for those costs and other income (expense) related to retained assets and liabilities not assumed by the buyer.

(2)
The Pro Forma Condensed Consolidated Statement of Operations were prepared based on the following
assumptions:
▪
All revenue and cost of sales will be eliminated with these transactions.
▪
All selling, general and administrative expenses, research and development costs and
corporate allocations will be eliminated with the exception of corporate allocations.
▪
All other income (expense) items will be eliminated.


7

Babcock & Wilcox Enterprises, Inc. Reports