- Continued progress toward completion of Renewable projects, despite
increased estimated costs
- $62 million in cost savings program
underway; initial benefits realized in third quarter
- Strategic
divestitures closed, for $190 million in combined gross proceeds
BARBERTON, Ohio--(BUSINESS WIRE)--
Babcock & Wilcox Enterprises, Inc. ("B&W") (NYSE: BW) announced today
third quarter 2018 revenues of $295.0 million, a decrease of $61.9
million, or 17.3%, compared to the third quarter of 2017. GAAP net loss,
inclusive of discontinued operations, in third quarter 2018 was $105.7
million compared to $114.3 million in third quarter 2017; GAAP net loss
from continuing operations in third quarter 2018 was $104.1 million
compared to $114.6 million in third quarter 2017. Adjusted EBITDA was
negative $26.4 million compared to negative $14.4 million in the prior
year period. All numbers referred to in this release are on a continuing
operations basis, unless otherwise noted. A reconciliation of adjusted
EBITDA to the most directly comparable GAAP measure is provided in the
exhibits to this release.
"We have continued to make progress toward completing our Renewable loss
projects. While we recognized increased estimated costs in the third
quarter, at the end of October we turned over one of the projects, a
biomass plant in Denmark, to the customer and anticipate turning over
four more of the projects by the end of this year, shortly after
completing trial operations," said Leslie C. Kass, President and Chief
Executive Officer. "We intend to provide updates when the remaining
projects are turned over as we continue to drive toward their
completion."
"In addition, after concluding our strategic planning process, we have
increased our previous cost savings target of $54 million in annualized
savings to a new target of $62 million, $38 million of which we began to
implement in the second and third quarters," Kass continued. "We are
already seeing the benefits of our initial cost savings program and
expect to implement additional cost savings initiatives for $24 million
beginning in the fourth quarter. Finally, recent amendments to our
revolving credit facility, in conjunction with completed divestitures
and ongoing strategic actions, are designed to provide adequate
liquidity as we finish construction on the Renewable loss projects. As
we look forward, we continue to target adjusted EBITDA of approximately
$100 million for our Power segment in 2019, and we expect the combined
impact of our strategic actions, cost reductions and completion of the
Renewable loss projects to drive improved profitability and cash flow
next year. "
Results of Operations
Consolidated revenues in third quarter 2018 were $295.0 million, down
17.3% compared to third quarter 2017. The GAAP operating loss in third
quarter 2018 was $45.1 million compared to an operating loss of $110.9
million in third quarter 2017. Excluding $86.9 million of goodwill
impairments recorded in the third quarter of 2017 and $7.2 million of
financial advisory services required under the terms of the revolving
credit facility in the third quarter of 2018, operating losses
increased, primarily due to a higher level of charges on the Renewable
loss contracts and increased support costs to progress these contracts
to completion. In addition, the effect of lower volume in the Renewable
segment's other equipment-only contracts and aftermarket lines of
business, as well as increased estimated costs to complete new build
cooling systems sold under a previous strategy in the Industrial segment
adversely impacted the quarter results. These were partly offset by
lower SG&A costs, reflecting the benefits of restructuring initiatives
and active discretionary spending reductions. Adjusted EBITDA was
negative $26.4 million compared to negative $14.4 million in third
quarter 2017.
There were several non-cash items that affected GAAP results in the
quarter, including:
-
a $99.6 million non-cash income tax charge to record a valuation
allowance against remaining net deferred tax assets;
-
a $4.9 million foreign currency loss from the strengthening of the
U.S. dollar on unhedged intercompany loans denominated in European
currencies that were used to fund foreign operations; and
-
a $4.2 million actuarial mark-to-market gain due to the status change
of Palm Beach Resource Recovery Corporation participants in the
domestic pension plan, from the sale of the business.
Power segment
revenues decreased 5.5% to $191.1 million in
the third quarter of 2018 compared to $202.2 million in the prior-year
period. Revenues decreased mainly as the result of the anticipated lower
volume on retrofit contracts in the U.S., mainly due to delays in
projects caused by uncertainty in U.S. environmental regulations, such
as Coal Combustion Residue regulations. Gross profit in the Power
segment in third quarter 2018 was $34.3 million, compared to $35.4
million in the prior-year period, primarily due to lower volume of
revenue, partly offset by benefits of restructuring and active
reductions in discretionary spending. Gross profit margin was 18.0%,
compared to 17.5% in the same period last year. Adjusted EBITDA in third
quarter 2018 was $21.9 million, in line with expectations, compared to
$21.6 million in last year's quarter, mainly attributable to reductions
in SG&A costs, which more than offset the decrease in gross profit.
Adjusted EBITDA margin was 11.5% compared to 10.7% in the same period
last year.
Industrial segment
revenues decreased 26.6% to $34.8
million in third quarter 2018 compared to $47.5 million in third quarter
2017, mainly due to lower volume of new build cooling systems services
following a 2017 change in strategy to improve profitability by focusing
on core geographies and products. Gross profit in the Industrial segment
was negative $5.5 million in third quarter 2018, compared to a gross
profit of negative $2.6 million in the prior-year period, primarily due
to increases in estimated costs to complete new build cooling systems
contracts sold under the previous strategy and lower volume of
aftermarket cooling system services. Adjusted EBITDA was negative $11.2
million compared to negative $7.6 million in the same period last year,
primarily due to increases in estimated costs to complete new build
cooling systems contracts and a bad debt reserve for a bankrupt
customer. New build cooling systems contracts that were sold under the
previous strategy are mostly expected to be complete by the end of 2018.
The Industrial segment's third quarter results consist of the SPIG
business line; results for MEGTEC and Universal are reported in
discontinued operations.
Revenues in the Renewable segment were $76.5 million for
third quarter 2018, compared to $108.6 million in third quarter 2017.
Revenues were lower due to several of the European Renewable contracts
being in late stages of completion, when fewer costs are incurred
relative to the main construction phases that were underway in the year
ago quarter, as well as lower volume in other equipment-only contracts
and aftermarket lines of business. The Renewable segment gross profit
was negative $17.1 million in third quarter 2018, compared to gross
profit of $0.2 million reported in third quarter 2017. Gross profit
decreased due to changes in the estimated revenues and costs to complete
the six loss contracts as well as increased support costs to progress
these contracts to completion, and the effect of lower volume in the
segment's other equipment-only contracts and aftermarket lines of
business. Adjusted EBITDA in the quarter was negative $25.8 million
compared to negative $10.6 million in the third quarter last year,
mainly due to the decrease in gross profit, partly offset by lower SG&A
costs, which reflects the benefits of restructuring, lower proposal
costs and active reductions in discretionary spending. The segment's
portfolio of other equipment-only contracts and aftermarket lines of
business was profitable during both third quarters of 2018 and 2017.
In the third quarter of 2018, management identified $19.1 million of
additional estimated costs to complete its Renewable energy loss
projects in Europe, mainly due to differences in actual and estimated
costs and issues encountered during commissioning, start-up and trial
operations.
Status Summary of Renewable Loss Projects
-
The first project, a waste-to-energy plant in Denmark, was
approximately 97% complete as of September 30, 2018. Construction is
complete, the plant is fully operational with a high capacity factor
and trial operations and takeover activities are ongoing. Complete
turnover is expected in the fourth quarter of 2018.
-
The second project, a biomass plant in the United Kingdom, was
approximately 93% complete as of September 30, 2018. Commissioning
activities began on the project in first quarter 2018, construction is
substantially complete and startup activities are underway. Trial
operations and turnover are expected to occur in the fourth quarter of
2018.
-
The third project, a biomass plant in Denmark, was approximately 97%
complete as of September 30, 2018. The project was turned over to the
customer at the end of October 2018 and is now in the warranty phase.
-
The fourth project, a biomass plant in the United Kingdom, was
approximately 95% complete as of September 30, 2018. Construction is
substantially complete, commissioning began in first quarter 2018,
start-up began in May 2018 and synchronization to the electrical grid
occurred in July 2018. Trial operations began in November 2018 and
turnover is expected to occur in the fourth quarter of 2018.
-
The fifth project, a biomass plant in the United Kingdom, was
approximately 70% complete as of September 30, 2018. Construction
activities are ongoing, and turnover is expected to be complete in the
third quarter of 2019.
-
The sixth project, a waste-to-energy plant in the United Kingdom, was
approximately 92% complete as of September 30, 2018. Construction is
substantially complete, commissioning began in first quarter 2018, and
start-up occurred in July 2018. Trial operations and turnover are
expected to occur in the fourth quarter of 2018.
In connection with the above-mentioned projects, B&W is pursuing
potential insurance recoveries relating to a variety of claims and will
also seek additional relief from its customers and other claims.
However, there can be no assurance as to the amounts, if any, that B&W
may recover. The $19.1 million of additional renewable project costs
recognized in third quarter 2018 do not take into account any potential
recoveries to mitigate these losses.
Implementing Cost Savings Measures Targeting $62 Million In Annual
Savings
B&W’s strategic planning process, completed in the third quarter of
2018, identified additional savings and increased the previous target of
$54 million in annualized savings to a new target of $62 million. Costs
to achieve the total $62 million in savings are estimated to be
approximately $12 million in the aggregate. Approximately $8 million of
the cost savings were realized in the third quarter, with $11 million
expected to be realized in the fourth quarter and the balance being
realized in 2019. Costs savings have been identified across all three
segments and at the corporate level.
Strategic Actions
In July 2018, B&W completed the sale of its investment in its joint
venture in India, Thermax Babcock & Wilcox Energy Solutions Private
Limited (TBWES), settled related contractual claims and received $15.0
million in cash, of which $7.7 million related to our investment in
TBWES and $7.3 million of proceeds were used to pay outstanding claims.
On September 17, 2018, B&W closed the sale of its subsidiary, Palm Beach
Resource Recovery Corporation (PBRRC), to a subsidiary of Covanta
Holding Corporation (NYSE: CVA) for $45 million, subject to adjustment.
PBRRC provides operations for two waste-to-energy facilities located in
West Palm Beach, Florida. PBRRC was previously included in the Renewable
segment. Operations & maintenance remains a focus for B&W outside of the
United States.
On October 5, 2018, B&W closed the sale of its MEGTEC and Universal
businesses to Dürr AG for $130 million, subject to adjustment. The
MEGTEC and Universal businesses, which were previously included in the
Industrial segment, are classified as discontinued operations in the
third quarter.
B&W continues to evaluate further dispositions and additional
opportunities for cost savings, as well as other alternatives to
increase its financial flexibility as it works to complete the Renewable
loss projects.
Balance Sheet
B&W’s cash and cash equivalents balance, net of restricted cash, related
to continuing operations was $32.5 million at September 30, 2018. At
September 30, 2018, outstanding balances under bank credit facilities
totaled $194.0 million.
In the third quarter and October of 2018, B&W made a number of
amendments to its revolving credit facility. The amendments modify
financial covenants and requirements, Renewable loss project completion
milestones, and the timeline for concessions from the counterparties on
these projects, among other things. In addition, in the third quarter,
B&W received $20 million of net cash proceeds from its last out term
loan and in October 2018, received an additional $10 million of net cash
proceeds from the same last out term loan.
Conference Call to Discuss Third Quarter 2018 Results
|
Date:
|
|
|
|
Thursday, November 8, 2018, at 5:00 p.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 strategic
objectives; our business execution model; management’s expectations
regarding the industries in which we operate; our guidance and
forecasts; our projected operating margin improvements, savings and
restructuring costs; covenant compliance; and project execution. These
forward-looking statements are based on management’s current
expectations and involve a number of risks and uncertainties, including,
among other things, our ability to continue as a going concern; our
ability to obtain and maintain sufficient financing to provide liquidity
to meet our business objectives, surety bonds, letters of credit and
similar financing; our ability to satisfy the liquidity and other
requirements under U.S. revolving credit facility as recently amended,
including our ability to receive concessions from customers on our
Renewable energy loss contracts; the highly competitive nature of our
businesses; general economic and business conditions, including changes
in interest rates and currency exchange rates; general developments in
the industries in which we are involved; cancellations of and
adjustments to backlog and the resulting impact from using backlog as an
indicator of future earnings; our ability to perform contracts on time
and on budget, in accordance with the schedules and terms established by
the applicable contracts with customers; failure by third-party
subcontractors, joint venture partners or suppliers to perform their
obligations on time and as specified; our ability to realize anticipated
savings and operational benefits from our restructuring plans, and other
cost-savings initiatives; our ability to successfully address
productivity and schedule issues in our Renewable segment, including the
ability to complete our Renewable energy projects within the expected
time frame and the estimated costs; our ability to successfully partner
with third parties to win and execute renewable contracts; changes in
our effective tax rate and tax positions; our ability to maintain
operational support for our information systems against service outages
and data corruption, as well as protection against cyber-based network
security breaches and theft of data; our ability to protect our
intellectual property and renew licenses to use intellectual property of
third parties; our use of the percentage-of-completion method of
accounting; our ability to successfully manage research and development
projects and costs, including our efforts to successfully develop and
commercialize new technologies and products; the operating risks
normally incident to our lines of business, including professional
liability, product liability, warranty and other claims against us;
changes in, or our failure or inability to comply with, laws and
government regulations; actual or anticipated changes in governmental
regulation, including trade and tariff policies; difficulties we may
encounter in obtaining regulatory or other necessary permits or
approvals; changes in, and liabilities relating to, existing or future
environmental regulatory matters; changes in actuarial assumptions and
market fluctuations that affect our net pension liabilities and income;
potential violations of the Foreign Corrupt Practices Act; our ability
to successfully compete with current and future competitors; the loss of
key personnel and the continued availability of qualified personnel; our
ability to negotiate and maintain good relationships with labor unions;
changes in pension and medical expenses associated with our retirement
benefit programs; social, political, competitive and economic situations
in foreign countries where we do business or seek new business; the
possibilities of war, other armed conflicts or terrorist attacks; the
willingness of customers and suppliers to continue to do business with
us on reasonable terms and conditions; and our ability to successfully
consummate strategic alternatives for non-core assets, if we determine
to pursue them. 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 our
most recent annual report on Form 10-K 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
Headquartered in Barberton, Ohio, Babcock & Wilcox is a global leader
in energy and environmental technologies and services for the power and
industrial markets. Follow us on Twitter @BabcockWilcox and learn more
at
www.babcock.com
.
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|
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|
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|
|
Exhibit 1
|
|
Babcock & Wilcox Enterprises, Inc.
|
|
Condensed Consolidated Statements of Operations
(1)
|
|
(In millions, except per share amounts)
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
Nine months ended
|
|
|
September 30,
|
|
|
September 30,
|
|
|
2018
|
|
2017
|
|
|
2018
|
|
2017
|
|
Revenues
|
|
$
|
295.0
|
|
|
$
|
356.9
|
|
|
|
$
|
839.5
|
|
|
$
|
1,011.2
|
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
Cost of operations
|
|
284.5
|
|
|
326.1
|
|
|
|
894.2
|
|
|
1,000.4
|
|
|
Selling, general and administrative expenses
|
|
52.3
|
|
|
50.4
|
|
|
|
167.0
|
|
|
164.4
|
|
|
Goodwill impairment
|
|
0.0
|
|
|
86.9
|
|
|
|
37.5
|
|
|
86.9
|
|
|
Restructuring activities and spin-off transaction costs
|
|
2.9
|
|
|
3.7
|
|
|
|
13.6
|
|
|
8.6
|
|
|
Research and development costs
|
|
0.5
|
|
|
1.9
|
|
|
|
2.9
|
|
|
6.1
|
|
|
Losses (gains) on asset disposals, net
|
|
0.0
|
|
|
0.1
|
|
|
|
1.4
|
|
|
0.1
|
|
|
Total costs and expenses
|
|
340.1
|
|
|
469.0
|
|
|
|
1,116.6
|
|
|
1,266.5
|
|
|
Equity in income and impairment of investees
|
|
0.0
|
|
|
1.2
|
|
|
|
(11.8
|
)
|
|
(13.4
|
)
|
|
Operating loss
|
|
(45.1
|
)
|
|
(110.9
|
)
|
|
|
(288.9
|
)
|
|
(268.8
|
)
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
0.2
|
|
|
0.1
|
|
|
|
0.4
|
|
|
0.4
|
|
|
Interest expense
|
|
(10.4
|
)
|
|
(7.3
|
)
|
|
|
(35.7
|
)
|
|
(15.2
|
)
|
|
Gain on sale of business
|
|
39.7
|
|
|
—
|
|
|
|
39.7
|
|
|
—
|
|
|
Loss on debt extinguishment
|
|
—
|
|
|
—
|
|
|
|
(49.2
|
)
|
|
—
|
|
|
Benefit plans, net
|
|
10.8
|
|
|
5.2
|
|
|
|
24.8
|
|
|
14.7
|
|
|
Foreign exchange
|
|
(4.9
|
)
|
|
(6.9
|
)
|
|
|
(22.7
|
)
|
|
(4.6
|
)
|
|
Other – net
|
|
0.0
|
|
|
(0.2
|
)
|
|
|
0.2
|
|
|
(0.2
|
)
|
|
Total other income (expense)
|
|
35.3
|
|
|
(9.0
|
)
|
|
|
(42.4
|
)
|
|
(4.9
|
)
|
|
Loss before income tax expense (benefit)
|
|
(9.9
|
)
|
|
(119.9
|
)
|
|
|
(331.4
|
)
|
|
(273.7
|
)
|
|
Income tax expense (benefit)
|
|
94.3
|
|
|
(5.3
|
)
|
|
|
99.3
|
|
|
(5.0
|
)
|
|
Net loss from continuing operations
|
|
(104.1
|
)
|
|
(114.6
|
)
|
|
|
(430.7
|
)
|
|
(268.7
|
)
|
|
Income (loss) from discontinued operations, net of tax
|
|
(1.4
|
)
|
|
0.5
|
|
|
|
(60.9
|
)
|
|
(3.1
|
)
|
|
Net Loss
|
|
(105.6
|
)
|
|
(114.1
|
)
|
|
|
(491.5
|
)
|
|
(271.8
|
)
|
|
Net income attributable to noncontrolling interest
|
|
(0.1
|
)
|
|
(0.2
|
)
|
|
|
(0.4
|
)
|
|
(0.6
|
)
|
|
Net loss attributable to B&W shareholders
|
|
$
|
(105.7
|
)
|
|
$
|
(114.3
|
)
|
|
|
$
|
(491.9
|
)
|
|
$
|
(272.3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted loss per common share:
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
$
|
(0.62
|
)
|
|
$
|
(2.49
|
)
|
|
|
$
|
(3.81
|
)
|
|
$
|
(5.62
|
)
|
|
Discontinued operations
|
|
(0.01
|
)
|
|
0.01
|
|
|
|
(0.54
|
)
|
|
(0.07
|
)
|
|
Basic and diluted loss per common share
|
|
$
|
(0.63
|
)
|
|
$
|
(2.48
|
)
|
|
|
$
|
(4.35
|
)
|
|
$
|
(5.69
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in the computation of earnings per share:
|
|
|
|
|
|
|
|
|
|
|
Basic and Diluted
|
|
168.7
|
|
|
46.1
|
|
|
|
113.1
|
|
|
47.9
|
|
|
(1)
|
|
Figures may not be clerically accurate due to rounding.
|
|
|
|
|
|
|
|
|
|
|
Exhibit 2
|
|
Babcock & Wilcox Enterprises, Inc.
|
|
Condensed Consolidated Balance Sheets
(1)
|
|
|
|
|
|
|
|
(In millions, except per share amount)
|
|
September 30, 2018
|
|
|
December 31, 2017
|
|
Cash and cash equivalents
|
|
$
|
32.5
|
|
|
|
$
|
43.7
|
|
|
Restricted cash and cash equivalents
|
|
19.7
|
|
|
|
26.0
|
|
|
Accounts receivable – trade, net
|
|
206.4
|
|
|
|
252.5
|
|
|
Accounts receivable – other
|
|
58.6
|
|
|
|
78.8
|
|
|
Contracts in progress
|
|
141.6
|
|
|
|
135.8
|
|
|
Inventories
|
|
64.7
|
|
|
|
72.9
|
|
|
Other current assets
|
|
36.9
|
|
|
|
34.0
|
|
|
Current assets of discontinued operations
|
|
90.2
|
|
|
|
88.5
|
|
|
Total current assets
|
|
650.4
|
|
|
|
732.3
|
|
|
Net property, plant and equipment
|
|
96.9
|
|
|
|
114.7
|
|
|
Goodwill
|
|
47.2
|
|
|
|
85.7
|
|
|
Deferred income taxes
|
|
—
|
|
|
|
97.5
|
|
|
Investments in unconsolidated affiliates
|
|
0.7
|
|
|
|
43.3
|
|
|
Intangible assets
|
|
35.1
|
|
|
|
42.1
|
|
|
Other assets
|
|
29.7
|
|
|
|
25.7
|
|
|
Noncurrent assets of discontinued operations
|
|
109.3
|
|
|
|
181.0
|
|
|
TOTAL ASSETS
|
|
$
|
969.4
|
|
|
|
$
|
1,322.2
|
|
|
|
|
Foreign revolving credit facility
|
|
$
|
3.4
|
|
|
|
$
|
9.2
|
|
|
Second lien term loan facility
|
|
—
|
|
|
|
160.1
|
|
|
Accounts payable
|
|
194.7
|
|
|
|
205.4
|
|
|
Accrued employee benefits
|
|
25.6
|
|
|
|
27.1
|
|
|
Advance billings on contracts
|
|
127.8
|
|
|
|
172.0
|
|
|
Accrued warranty expense
|
|
52.2
|
|
|
|
33.5
|
|
|
Other accrued liabilities
|
|
83.2
|
|
|
|
89.5
|
|
|
Current liabilities of discontinued operations
|
|
56.5
|
|
|
|
47.5
|
|
|
Total current liabilities
|
|
543.4
|
|
|
|
744.3
|
|
|
U. S. revolving credit facility
|
|
190.6
|
|
|
|
94.3
|
|
|
Last out term loan
|
|
20.0
|
|
|
|
—
|
|
|
Pension and other accumulated postretirement benefit liabilities
|
|
217.0
|
|
|
|
250.0
|
|
|
Other noncurrent liabilities
|
|
37.0
|
|
|
|
29.9
|
|
|
Noncurrent liabilities of discontinued operations
|
|
8.1
|
|
|
|
13.0
|
|
|
TOTAL LIABILITIES
|
|
1,016.1
|
|
|
|
1,131.5
|
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
—
|
|
|
|
—
|
|
|
Stockholders’ (deficit) equity:
|
|
|
|
|
|
|
Common stock, par value $0.01 per share, authorized 200,000 shares;
issued and outstanding 168,681 and 44,065 shares at September 30,
2018 and December 31, 2017, respectively
|
|
1.7
|
|
|
|
0.5
|
|
|
Capital in excess of par value
|
|
1,046.8
|
|
|
|
801.0
|
|
|
Treasury stock at cost, 5,839 and 5,681 shares at September 30, 2018
and December 31, 2017, respectively
|
|
(105.6
|
)
|
|
|
(104.8
|
)
|
|
Accumulated deficit
|
|
(984.5
|
)
|
|
|
(492.2
|
)
|
|
Accumulated other comprehensive loss
|
|
(14.0
|
)
|
|
|
(22.4
|
)
|
|
Stockholders' (deficit) equity attributable to shareholders
|
|
(55.5
|
)
|
|
|
182.1
|
|
|
Noncontrolling interest
|
|
8.8
|
|
|
|
8.6
|
|
|
TOTAL STOCKHOLDERS' (DEFICIT) EQUITY
|
|
(46.8
|
)
|
|
|
190.7
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY
|
|
$
|
969.4
|
|
|
|
$
|
1,322.2
|
|
|
(1)
|
|
Figures may not be clerically accurate due to rounding.
|
|
|
|
|
|
|
|
Exhibit 3
|
|
Babcock & Wilcox Enterprises, Inc.
|
|
Condensed Consolidated Statements of Cash Flows
(1)
|
|
(In millions)
|
|
|
|
|
|
Nine months ended September 30,
|
|
|
2018
|
|
|
2017
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
Net loss
|
|
$
|
(491.5
|
)
|
|
|
$
|
(271.8
|
)
|
|
Adjustments to reconcile net loss to net cash provided by (used in)
operating activities:
|
|
|
|
|
|
|
Depreciation and amortization of long-lived assets
|
|
24.5
|
|
|
|
31.0
|
|
|
Amortization of debt issuance cost, debt discount and
payment-in-kind interest
|
|
10.1
|
|
|
|
3.2
|
|
|
Gain on sale of business
|
|
(39.7
|
)
|
|
|
—
|
|
|
Loss on debt extinguishment
|
|
49.2
|
|
|
|
—
|
|
|
Goodwill impairment of discontinued operations
|
|
72.3
|
|
|
|
—
|
|
|
Goodwill impairment
|
|
37.5
|
|
|
|
86.9
|
|
|
Income from equity method investees
|
|
(6.6
|
)
|
|
|
(4.8
|
)
|
|
Other than temporary impairment of equity method investment in TBWES
|
|
18.4
|
|
|
|
18.2
|
|
|
Losses on asset disposals and impairments
|
|
1.9
|
|
|
|
0.5
|
|
|
Reserve for claims receivable
|
|
15.5
|
|
|
|
—
|
|
|
Provision for (benefit from) deferred income taxes, including
valuation allowances
|
|
97.7
|
|
|
|
(2.1
|
)
|
|
Mark to market gains and prior service cost amortization for pension
and postretirement plans
|
|
(6.6
|
)
|
|
|
(1.2
|
)
|
|
Stock-based compensation, net of associated income taxes
|
|
2.0
|
|
|
|
8.5
|
|
|
Changes in assets and liabilities:
|
|
|
|
|
|
|
Accounts receivable
|
|
45.4
|
|
|
|
1.4
|
|
|
Contracts in progress and advance billings on contracts
|
|
(41.2
|
)
|
|
|
6.7
|
|
|
Inventories
|
|
5.2
|
|
|
|
2.7
|
|
|
Income taxes
|
|
(6.9
|
)
|
|
|
9.2
|
|
|
Accounts payable
|
|
(12.3
|
)
|
|
|
5.5
|
|
|
Accrued and other current liabilities
|
|
30.2
|
|
|
|
(16.0
|
)
|
|
Pension liabilities, accrued postretirement and employee benefits
|
|
(29.3
|
)
|
|
|
(28.0
|
)
|
|
Other, net
|
|
10.7
|
|
|
|
(0.8
|
)
|
|
Net cash from operating activities
|
|
(213.5
|
)
|
|
|
(150.8
|
)
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
Purchase of property plant and equipment
|
|
(5.0
|
)
|
|
|
(10.7
|
)
|
|
Acquisition of business, net of cash acquired
|
|
—
|
|
|
|
(52.5
|
)
|
|
Proceeds from sale of business
|
|
43.9
|
|
|
|
—
|
|
|
Proceeds from sale of equity method investment in a joint venture
|
|
28.8
|
|
|
|
—
|
|
|
Purchases of available-for-sale securities
|
|
(17.8
|
)
|
|
|
(22.9
|
)
|
|
Sales and maturities of available-for-sale securities
|
|
18.2
|
|
|
|
27.0
|
|
|
Other, net
|
|
(0.4
|
)
|
|
|
0.1
|
|
|
Net cash from investing activities
|
|
67.7
|
|
|
|
(59.0
|
)
|
|
(1)
|
|
Figures may not be clerically accurate due to rounding.
|
|
|
|
|
|
|
|
Exhibit 3
|
|
Babcock & Wilcox Enterprises, Inc.
|
|
Condensed Consolidated Statements of Cash Flows
(1)
|
|
(In millions)
|
|
|
|
|
|
Nine months ended September 30,
|
|
|
2018
|
|
|
2017
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
Borrowings under our U.S. revolving credit facility
|
|
446.4
|
|
|
|
511.4
|
|
|
Repayments of our U.S. revolving credit facility
|
|
(350.1
|
)
|
|
|
(462.3
|
)
|
|
Borrowings under out last out term loan
|
|
20.0
|
|
|
|
—
|
|
|
Proceeds from our second lien term loan facility, net of $34.2
million discount
|
|
—
|
|
|
|
141.7
|
|
|
Repayments of our second lien term loan facility
|
|
(212.6
|
)
|
|
|
—
|
|
|
Repayments of our foreign revolving credit facilities
|
|
(5.6
|
)
|
|
|
(3.3
|
)
|
|
Common stock repurchase from related party
|
|
—
|
|
|
|
(16.7
|
)
|
|
Proceeds from rights offering
|
|
247.1
|
|
|
|
—
|
|
|
Costs related to rights offering
|
|
(3.3
|
)
|
|
|
—
|
|
|
Debt issuance costs
|
|
(8.1
|
)
|
|
|
(14.0
|
)
|
|
Issuance of common stock
|
|
1.2
|
|
|
|
—
|
|
|
Shares of our common stock returned to treasury stock
|
|
(0.8
|
)
|
|
|
(0.9
|
)
|
|
Other, net
|
|
—
|
|
|
|
(0.3
|
)
|
|
Net cash from financing activities
|
|
134.3
|
|
|
|
155.5
|
|
|
Effects of exchange rate changes on cash
|
|
(1.4
|
)
|
|
|
5.4
|
|
|
Net decrease in cash, cash equivalents and restricted cash
|
|
(12.8
|
)
|
|
|
(48.9
|
)
|
|
Less net increase (decrease) in cash and cash equivalents of
discontinued operations
|
|
4.7
|
|
|
|
2.3
|
|
|
Net decrease in cash, cash equivalents and restricted cash of
continuing operations
|
|
(17.5
|
)
|
|
|
(51.1
|
)
|
|
Cash, cash equivalents and restricted cash of continuing operations,
beginning of period
|
|
69.7
|
|
|
|
115.2
|
|
|
Cash, cash equivalents and restricted cash of continuing
operations, end of period
|
|
$
|
52.2
|
|
|
|
$
|
64.1
|
|
|
(1)
|
|
Figures may not be clerically accurate due to rounding.
|
|
|
|
|
|
|
|
|
|
|
Exhibit 4
|
|
Babcock & Wilcox Enterprises, Inc.
|
|
Segment Information
(1)
|
|
(In millions)
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
Nine months ended
|
|
SEGMENT RESULTS
|
|
September 30,
|
|
|
September 30,
|
|
|
2018
|
|
2017
|
|
|
2018
|
|
2017
|
|
REVENUES:
|
|
|
|
|
|
|
|
|
|
|
Power
|
|
$
|
191.1
|
|
|
$
|
202.2
|
|
|
|
$
|
547.9
|
|
|
$
|
612.3
|
|
|
Renewable
|
|
76.5
|
|
|
108.6
|
|
|
|
191.4
|
|
|
262.2
|
|
|
Industrial
|
|
34.8
|
|
|
47.5
|
|
|
|
117.6
|
|
|
143.3
|
|
|
Eliminations
|
|
(7.4
|
)
|
|
(1.4
|
)
|
|
|
(17.5
|
)
|
|
(6.5
|
)
|
|
|
$
|
295.0
|
|
|
$
|
356.9
|
|
|
|
$
|
839.5
|
|
|
$
|
1,011.2
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS PROFIT:
|
|
|
|
|
|
|
|
|
|
|
Power
|
|
$
|
34.3
|
|
|
$
|
35.4
|
|
|
|
$
|
95.2
|
|
|
$
|
117.0
|
|
|
Renewable
|
|
(17.1
|
)
|
|
0.2
|
|
|
|
(136.9
|
)
|
|
(100.1
|
)
|
|
Industrial
|
|
(5.5
|
)
|
|
(2.6
|
)
|
|
|
(8.2
|
)
|
|
2.3
|
|
|
Intangible asset amortization included in cost of operations
|
|
(1.2
|
)
|
|
(2.3
|
)
|
|
|
(4.9
|
)
|
|
(8.4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
ADJUSTED EBITDA:
|
|
|
|
|
|
|
|
|
|
|
Power
|
|
$
|
21.9
|
|
|
$
|
21.6
|
|
|
|
$
|
49.5
|
|
|
$
|
66.4
|
|
|
Renewable
|
|
(25.8
|
)
|
|
(10.6
|
)
|
|
|
(166.2
|
)
|
|
(133.0
|
)
|
|
Industrial
|
|
(11.2
|
)
|
|
(7.6
|
)
|
|
|
(24.7
|
)
|
|
(13.0
|
)
|
|
Corporate
|
|
(5.8
|
)
|
|
(8.8
|
)
|
|
|
(23.6
|
)
|
|
(28.2
|
)
|
|
Research and development costs
|
|
(0.5
|
)
|
|
(1.9
|
)
|
|
|
(2.9
|
)
|
|
(6.1
|
)
|
|
Foreign exchange
|
|
(4.9
|
)
|
|
(6.9
|
)
|
|
|
(22.7
|
)
|
|
(4.6
|
)
|
|
Other - net
|
|
0.0
|
|
|
(0.2
|
)
|
|
|
0.2
|
|
|
(0.2
|
)
|
|
|
$
|
(26.4
|
)
|
|
$
|
(14.4
|
)
|
|
|
$
|
(190.3
|
)
|
|
$
|
(118.6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
AMORTIZATION EXPENSE:
|
|
|
|
|
|
|
|
|
|
|
Power
|
|
$
|
0.2
|
|
|
$
|
0.3
|
|
|
|
$
|
0.5
|
|
|
$
|
0.9
|
|
|
Renewable
|
|
0.2
|
|
|
0.2
|
|
|
|
0.6
|
|
|
0.6
|
|
|
Industrial
|
|
1.0
|
|
|
1.9
|
|
|
|
4.2
|
|
|
7.3
|
|
|
|
$
|
1.3
|
|
|
$
|
2.4
|
|
|
|
$
|
5.4
|
|
|
$
|
8.7
|
|
|
|
|
|
|
|
|
|
|
|
|
DEPRECIATION EXPENSE:
|
|
|
|
|
|
|
|
|
|
|
Power
|
|
$
|
4.1
|
|
|
$
|
3.2
|
|
|
|
$
|
10.5
|
|
|
$
|
9.8
|
|
|
Renewable
|
|
0.9
|
|
|
1.0
|
|
|
|
2.8
|
|
|
2.9
|
|
|
Industrial
|
|
0.5
|
|
|
0.5
|
|
|
|
1.4
|
|
|
1.4
|
|
|
Corporate
|
|
0.3
|
|
|
0.2
|
|
|
|
0.9
|
|
|
0.6
|
|
|
|
$
|
5.8
|
|
|
$
|
4.8
|
|
|
|
$
|
15.6
|
|
|
$
|
14.7
|
|
|
|
|
|
|
|
|
|
|
|
|
BOOKINGS:
|
|
|
|
|
|
|
|
|
|
|
Power
|
|
$
|
131
|
|
|
$
|
122
|
|
|
|
$
|
535
|
|
|
$
|
476
|
|
|
Renewable (2)
|
|
(440
|
)
|
|
35
|
|
|
|
(417
|
)
|
|
86
|
|
|
Industrial
|
|
5
|
|
|
28
|
|
|
|
51
|
|
|
172
|
|
|
Other/Eliminations
|
|
0
|
|
|
(2
|
)
|
|
|
(2
|
)
|
|
(40
|
)
|
|
|
$
|
(304
|
)
|
|
$
|
183
|
|
|
|
$
|
167
|
|
|
$
|
694
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of September 30,
|
|
|
|
|
|
|
BACKLOG:
|
|
2018
|
|
2017
|
|
|
|
|
|
|
Power
|
|
$
|
440
|
|
|
$
|
482
|
|
|
|
|
|
|
|
Renewable
|
|
400
|
|
|
1,064
|
|
|
|
|
|
|
|
Industrial
|
|
109
|
|
|
202
|
|
|
|
|
|
|
|
Other/Eliminations
|
|
(28
|
)
|
|
(37
|
)
|
|
|
|
|
|
|
|
$
|
921
|
|
|
$
|
1,711
|
|
|
|
|
|
|
|
(1)
|
|
Figures may not be clerically accurate due to rounding.
|
|
(2)
|
|
Renewable bookings in the three months ended September 30, 2018
includes a reduction of approximately $467 million from the sale of
PBRRC, as described in Note 4 to the condensed consolidated
financial statements. Renewable bookings also include the
revaluation of backlog denominated in currency other than U.S.
dollars, which was $0.8 million and $22.6 million, in the three
months ended September 30, 2018, and 2017, respectively, and $(11.5)
million and $61.8 million in the nine months ended September 30,
2018 and 2017, respectively.
|
|
|
|
|
|
|
|
|
|
|
Exhibit 5
|
|
Babcock & Wilcox Enterprises, Inc.
|
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Reconciliation of Adjusted EBITDA
(1)
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(In millions)
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Three months ended
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Nine months ended
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September 30,
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September 30,
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2018
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2017
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2018
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2017
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Adjusted EBITDA
(2)
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Power segment(3) |
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$
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21.9
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$
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21.6
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|
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$
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49.5
|
|
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$
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66.4
|
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Renewable segment
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(25.8
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)
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(10.6
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)
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(166.2
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)
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(133.0
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)
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Industrial segment
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(11.2
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)
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(7.6
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)
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(24.7
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)
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(13.0
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)
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Corporate(4) |
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(5.8
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)
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(8.8
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)
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(23.6
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)
|
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(28.2
|
)
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Research and development costs
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(0.5
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)
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(1.9
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)
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|
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(2.9
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)
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(6.1
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)
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Foreign exchange
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(4.9
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)
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(6.9
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)
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(22.7
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)
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(4.6
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)
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Other - net
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0.0
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(0.2
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)
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0.2
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(0.2
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)
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Total Adjusted EBITDA
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(26.4
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)
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(14.4
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)
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|
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(190.3
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)
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(118.6
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)
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Gain on sale of business
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39.7
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—
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39.7
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—
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Gain on sale of equity method investment (BWBC)
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—
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—
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6.5
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—
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Other than temporary impairment of equity method investment in TBWES
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—
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—
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(18.4
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)
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(18.2
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)
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Loss on debt extinguishment
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—
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—
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(49.2
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)
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—
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Loss on asset disposal
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—
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(0.1
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)
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(1.5
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)
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(0.1
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)
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MTM gain(loss) from benefit plans
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4.2
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—
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4.7
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(1.1
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)
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Financial advisory services included in SG&A
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(7.2
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)
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(0.4
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)
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(15.5
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)
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(0.4
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)
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Acquisition and integration costs included in SG&A
|
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—
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(0.1
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)
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—
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(1.6
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)
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Goodwill impairment
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—
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(86.9
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)
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(37.5
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)
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(86.9
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)
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Restructuring activities and spin-off transaction costs
|
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(2.9
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)
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(3.7
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)
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|
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(13.6
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)
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(8.6
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)
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Depreciation & amortization
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(7.1
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)
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(7.2
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)
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(21.0
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)
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(23.4
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)
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Interest expense, net
|
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(10.2
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)
|
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(7.1
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)
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(35.3
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)
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(14.9
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)
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Loss before income tax expense
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(9.9
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)
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(119.9
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)
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(331.4
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)
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(273.7
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)
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Income tax expense (benefit)
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94.3
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(5.3
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)
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99.3
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(5.0
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)
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Loss from continuing operations
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(104.1
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)
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(114.6
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)
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(430.7
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)
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(268.7
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)
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Loss from discontinued operations, net of tax
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(1.4
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)
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0.5
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(60.9
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)
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(3.1
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)
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Net loss
|
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(105.6
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)
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(114.1
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)
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(491.5
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)
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(271.8
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)
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Net income attributable to noncontrolling interest
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(0.1
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)
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(0.2
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)
|
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(0.4
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)
|
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(0.6
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)
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Net loss attributable to stockholders
|
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$
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(105.7
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)
|
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$
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(114.3
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)
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$
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(491.9
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)
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$
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(272.3
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)
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(1)
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Figures may not be clerically accurate due to rounding.
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(2)
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Adjusted EBITDA is not a calculation based on generally accepted
accounting principles (GAAP). The amounts included in Adjusted
EBITDA, however, are derived from amounts included in the
Consolidated Statements of Earnings. Adjusted EBITDA should not be
considered an alternative to net earnings (loss), operating profit
(loss) or operating cash flows. B&W has presented adjusted EBITDA as
it is regularly used by many of our investors and is presented as a
convenience to them. Adjusted EBITDA, as presented in this
calculation however, differs from the EBITDA calculation used to
compute our leverage ratio and interest coverage ratio as defined by
our Amended Credit Agreement.
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(3)
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Power adjusted EBITDA includes pension benefit, excluding
mark-to-market (MTM) adjustments of $6.4 million, $5.0 million,
$19.5 million and $15.1 million in the three months ended September
30, 2018, September 30, 2017 and nine months ended September 30,
2018 and September 30, 2017, respectively.
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(4)
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Allocations are not eligible for presentation as discontinued
operations. Accordingly, allocations previously absorbed by the
MEGTEC and Universal businesses in the Industrial segment have been
included with other unallocated costs in Corporate, and total $2.9
million and $2.2 million in the three months ended September 30,
2018 and 2017, respectively, and $8.6 million and $6.6 million in
the nine months ended September 30, 2018 and 2017, respectively.
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View source version on businesswire.com:
https://www.businesswire.com/news/home/20181108005977/en/
Babcock & Wilcox
Investor Contact:
Megan Wilson,
704-625-4944
Vice President, Corporate Development & Investor
Relations
investors@babcock.com
or
Media
Contact:
Ryan Cornell, 330-860-1345
Public Relations
rscornell@babcock.com
Source: Babcock & Wilcox Enterprises, Inc.