- Babcock & Wilcox segment nearly doubled
adjusted EBITDA to $19.0 million - All business segments showed
improved results - Consolidated operating loss improved by $133.1
million to a loss of $4.3 million; generated consolidated adjusted
EBITDA of $8.0 million - Equitization transactions substantially
de-levered Company
Babcock & Wilcox Enterprises, Inc. ("B&W Enterprises")
(NYSE: BW) announced today second quarter 2019 GAAP net loss from
continuing operations improved by $181.3 million to $28.3 million
compared to $209.7 million in second quarter 2018. Adjusted EBITDA
also improved by $90.4 million to a positive $8.0 million compared
to negative $82.4 million in the prior year period, returning the
Company to profitability on an adjusted EBITDA basis.
"Our performance in the second quarter of 2019 shows we are
continuing to gain steam following our recent strategic actions and
cost-saving efforts. Our consolidated business improved operating
margins significantly and returned to profitability on an adjusted
EBITDA basis of $8.0 million. Our Babcock & Wilcox segment
continued its strong performance and across the Company we are
making steady progress on our strategy to improve profitability by
focusing on our core technologies and businesses," said Kenneth
Young, B&W Enterprises Chief Executive Officer. "With our
equitization transactions complete, we are preparing to re-finance
as planned to support our ongoing financial recovery. As 2019
continues, we look forward to demonstrating the underlying core
strengths of our businesses to our customers and shareholders."
"This quarter we identified more cost efficiencies and as a
result we've begun to implement $19 million in additional savings
initiatives, for a total of $119 million in annualized savings,"
Young continued. "We expect to see improvement each quarter as our
cost-savings measures continue to translate to bottom-line results
and the effects of the EPC loss contracts continue to decline. We
are committed to our ongoing transformation, confident in our
dedicated employees and world-class technologies, and optimistic
about our strategic path to sustained profitability."
The Company's recent dispositions and changes in strategy to
focus on core technologies and profitability were the primary
drivers, as expected, of a 15% decline in revenue compared to the
second quarter of 2018, to consolidated revenues of $248.1 million.
Revenue in the Babcock & Wilcox segment increased slightly due
to increased construction volume, partly offset by lower retrofit
activity. In the Vølund & Other Renewable segment, revenue
declined as expected primarily due to the sale of Palm Beach
Resource Recovery Corporation ("PBRRC") in the third quarter of
2018, a lower level of activity in the EPC loss and other
contracts, and a shift to a core technology business model rather
than bidding EPC scope (partially offset by the startup of two
operations and maintenance contracts in the U.K. that followed
turnover of certain of the EPC contracts to the customers). In the
SPIG segment, revenue declined as expected due to a lower level of
activity on SPIG legacy loss contracts and an anticipated lower
volume of new build cooling system services following a change in
strategy to improve profitability.
Results of Operations
Consolidated revenues in second quarter 2019 were $248.1
million, down 15% compared to second quarter 2018. Factors
contributing to this decline included the sale of Palm Beach
Resource Recovery Corporation ("PBRRC") in the third quarter of
2018; a lower level of activity in the Vølund & Other Renewable
segment's EPC loss and other contracts, and a shift to a core
technology business model in the segment rather than bidding EPC
scope, partially offset by the startup of two operations and
maintenance contracts in the U.K.; and a lower level of activity on
SPIG legacy loss contracts and lower volume of new build cooling
system services in the SPIG segment following a change in strategy
to improve profitability. The GAAP operating loss in second quarter
2019 was $4.3 million, inclusive of restructuring costs and
advisory fees of $5.7 million, compared to an operating loss of
$137.4 million in second quarter 2018. The improvement in operating
losses was primarily driven by improvements in gross profit in all
segments, led by a lower level of losses on the European EPC loss
contracts, the absence of goodwill impairment charges and the
SG&A benefits of restructuring and cost-control initiatives.
Adjusted EBITDA was positive $8.0 million compared to negative
$82.4 million in second quarter 2018. All amounts 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.
Babcock & Wilcox segment revenues increased 1.6% to
$201.0 million in the second quarter of 2019 compared to $197.8
million in the prior-year period, mainly driven by large
construction new build projects, including industrial projects,
partially offset by a decrease in parts and retrofit sales. Gross
profit in the Babcock & Wilcox segment in second quarter 2019
was $37.9 million, compared to $30.0 million in the prior-year
period, primarily due to higher construction volume and lower
warranty costs. Gross profit margin was 18.8%, compared to 15.2% in
the same period last year. Adjusted EBITDA in second quarter 2019
increased 92% to $19.0 million, compared to $9.9 million in last
year's quarter; adjusted EBITDA margin was 9.5% compared to 5.0% in
the same period last year.
SPIG segment revenues decreased 50.4% as expected to
$22.8 million in the second quarter of 2019 compared to $46.0
million in second quarter 2018, mainly due to a lower level of
activity on legacy loss contracts and lower volume of new build
cooling system projects as anticipated following the change in
strategy to more selectively bid and focus on core geographies and
products to improve profitability, and a lower volume of
aftermarket services. Gross profit improved to $2.4 million in
second quarter 2019, compared to $0.1 million in the prior-year
period, primarily due to the effects of the new strategy. SPIG's
gross profit in the second quarter of 2018 was affected by
increases in estimated costs to complete remaining legacy new build
cooling systems contracts; these contracts that were sold under the
previous strategy were mostly complete as of December 31, 2018;
however, included in these few remaining contracts is a loss
contract to engineer, procure materials and construct a dry cooling
system for a gas-fired power plant in the U.S., which continued
through the second quarter of 2019. Adjusted EBITDA improved by
$6.1 million to negative $0.1 million compared to negative $6.2
million in the same period last year, driven by the improvement in
gross profit and the benefits of cost-savings initiatives.
Vølund & Other Renewable segment revenues were $33.7
million for the second quarter of 2019, compared to $55.0 million
in second quarter 2018. As expected, second quarter revenues were
lower compared to the prior year quarter due to the third quarter
2018 sale of PBRRC, a lower level of activity in the EPC loss
contracts and a shift to a core technology business model rather
than bidding EPC scope, partially offset by the startup of two
operations and maintenance contracts in the U.K. that followed
turnover of the related EPC contracts to the customers. The segment
gross profit improved $74.4 million to positive $5.1 million in
second quarter 2019, compared to negative $69.3 million reported in
second quarter 2018, primarily due to a lower level of losses on
the European EPC loss contracts. In the second quarter of 2018, the
segment recorded $57.3 million in net losses resulting from changes
in the estimated revenues and costs to complete the six European
EPC loss contracts, compared to $3.2 million of equivalent losses
recorded in the second quarter of 2019, inclusive of warranty
expense. Beyond the effect of the EPC loss contracts, the second
quarter 2019 gross profit also included lower levels of direct
overhead support and warranty expense, offset by the absence of
gross profit from PBRRC due to its sale in the third quarter of
2018. Adjusted EBITDA in the quarter was negative $0.8 million
compared to negative $78.6 million in the second quarter last year,
mainly due to improved gross profit as well as lower SG&A,
reflecting the benefits of restructuring and cost reductions.
European EPC Loss Projects
As of June 30, 2019, five of the six European EPC loss contracts
had been turned over to the customers, with only punch list items,
agreed remediation and performance testing remaining, some of which
are expected to be completed during the customers' scheduled
maintenance outages. Turnover is not applicable to the fifth loss
contract as a result of the previously disclosed March 29, 2019
settlement agreement, under which the Company's remaining
performance obligations were limited to supporting completion of
certain key systems of the plant. As of June 30, 2019, remaining
activities relate primarily to finalization of these key systems
under the terms of the settlement.
The Company is continuing to pursue cost recoveries under
various applicable insurance policies and from responsible
subcontractors for the European EPC loss contracts. In June 2019,
the Company agreed to a full settlement related to a portion of the
losses on the first project, under which the insurer paid DKK 37
million ($5.6 million) in July 2019. Also in June 2019, the Company
agreed in principle to a settlement agreement under one insurance
policy to recover GBP 2.8 million ($3.5 million) of certain losses
on the fifth project. The Company is continuing to pursue other
potential insurance recoveries and claims where appropriate and
available.
Financing, Liquidity and Balance Sheet
As previously disclosed, on April 5, 2019, the Company amended
its credit agreement to provide $150.0 million of Tranche A-3
last-out term loans from B. Riley as well as an uncommitted
incremental facility of up to $15.0 million, and entered into an
agreement with B. Riley and Vintage Capital Management, LLC to
effect a series of equitization transactions for a portion of the
last-out term loans, subject to, among other things, stockholder
approval. These transactions included a $50 million rights offering
at $0.30 per share; an exchange of all of the principal of Tranche
A-1 of the last-out term loan for common stock at $0.30 per share;
and the issuance of approximately 1.7 million warrants (after
giving effect to a one-for-ten reverse stock split), each to
purchase one share of common stock at $0.01 per share, to B. Riley
(or its designee) as further consideration under Tranche A-3 of the
last-out term loans.
These equitization transactions were completed on July 23, 2019.
On July 24, 2019, the Company effected a one-for-ten reverse stock
split that took effect immediately after completion of the
equitization transactions.
The rights offering resulted in the issuance of 13.9 million
common shares (after giving effect to the reverse stock split).
Gross proceeds from the rights offering were $41.8 million, of
which $10.3 million was used to fully repay Tranche A-2 of the
last-out term loans and the remaining $31.5 million was used to
reduce outstanding borrowings under Tranche A-3 of the last-out
term loans. Concurrently with the closing of the rights offering,
and in satisfaction of B. Riley's related backstop commitment, the
Company issued an aggregate of 2.7 million common shares (after
giving effect to the reverse stock split) in exchange for a portion
of the Tranche A-3 last-out term loans totaling $8.2 million. In
addition, all $38.2 million of outstanding principal of Tranche A-1
of the last-out term loans including accrued paid in kind interest
was exchanged for 12.7 million shares of common stock (after giving
effect to the reverse stock split).
After completion of the equitization transactions, Tranches A-1
and A-2 of the last-out term loans were fully extinguished, and the
balance on the Tranche A-3 last-out term loans was reduced to
$114.0 million inclusive of accrued paid in kind interest. In the
aggregate, $88.2 million of debt was converted to equity through
the equitization transactions. After giving effect to the reverse
stock split, the transactions resulted in the issuance of 29.4
million shares of additional common stock, for total outstanding
shares of 46.3 million. Further detail regarding the equitization
transactions and the reverse stock split can be found in the
Company's 10-Q.
At June 30, 2019, the Company had a cash and cash equivalents
balance of $35.2 million and borrowing availability of $18.6
million. The Company's credit agreement requires it to terminate
its credit facility on or prior to March 15, 2020. The Company
intends to refinance the revolving credit facility as required.
Sale of Loibl GmbH
Effective May 31, 2019, the Company sold all of the issued and
outstanding capital stock of Loibl, a material handling business in
Germany, to Lynx Holding GmbH for €10.0 million (approximately
$11.4 million), subject to adjustment. The Company received $7.4
million in cash proceeds at closing on June 24, 2019, which were
primarily used to reduce outstanding balances under the credit
facility. The sale also facilitated the release of performance
letters of credit totaling $8.5 million, which improved the
Company's borrowing capacity. In July 2019, the revolving credit
facility was reduced by $7.0 million due to the sale, in accordance
with the terms of the Company's credit agreement. The Company
continues to evaluate potential dispositions.
Increased Cost-Savings Measures Target $119 Million In Annual
Savings
In the second quarter, the Company identified $19 million in
annualized cost savings in addition to the approximately $100
million previously identified. Roughly three quarters of the
aggregate $119 million in savings measures have been implemented to
date with the majority of the balance to be implemented in 2019 and
the remainder in 2020. Cost savings have been identified across all
segments and at the Corporate level, and the implementation plan
and savings are progressing in line with expectations. The Company
continues to evaluate additional opportunities for cost
savings.
NYSE Listing Standards
On November 27, 2018, the Company received notification from the
New York Stock Exchange (NYSE) that the Company has fallen below
its continued listing criteria based on the price of the Company's
common stock. The Company completed a one-for-ten reverse stock
split on July 24, 2019 to regain compliance. The Company expects to
regain compliance with the NYSE's continued listing standards
relating to minimum price per share if the Company's share price
remains at or above $1.00 for 30 trading days after the reverse
stock split effective date.
Forward-Looking Statements
B&W Enterprises 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 the Company operates; our guidance and forecasts; our
projected operating margin improvements, savings and restructuring
costs; our U.S. revolving credit facility; 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 our revolving credit
facility as recently amended; our ability to refinance said
facility in a timely manner, if at all; 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 the Company is
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 Vølund
and Other Renewable segment, including the ability to complete our
European EPC 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 the
Company 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 the Company does
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; our ability to successfully consummate
strategic alternatives for non-core assets, if the Company
determines to pursue them; and our ability to maintain the listing
of our common stock on the NYSE. 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 Enterprise’s filings with the Securities
and Exchange Commission, including our most recent annual report on
Form 10-K. B&W Enterprises 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 Enterprises
Headquartered in Barberton, Ohio, Babcock & Wilcox
Enterprises 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.
Exhibit 1 Babcock & Wilcox Enterprises, Inc. Condensed
Consolidated Statements of Operations(1) (In millions, except
per share amounts)
Three months ended June
30,
Six months ended June
30,
2019
2018
2019
2018
Revenues
$
248.1
$
291.3
$
480.1
$
544.5
Costs and expenses:
Cost of operations
203.8
332.4
404.9
609.7
Selling, general and administrative
expenses
42.1
47.1
84.5
106.5
Goodwill impairment
—
37.5
—
37.5
Advisory fees and settlement costs
4.8
5.1
18.4
8.2
Restructuring activities and spin-off
transaction costs
0.9
3.8
7.0
10.7
Research and development costs
0.7
1.3
1.5
2.4
Loss on asset disposals, net
0.0
1.4
0.0
1.4
Total costs and expenses
252.4
428.7
516.3
776.5
Equity in loss of investees
—
—
—
(11.8
)
Operating loss
(4.3
)
(137.4
)
(36.2
)
(243.8
)
Other income (expense):
Interest expense
(26.8
)
(11.9
)
(38.0
)
(25.3
)
Interest income
0.2
0.1
0.8
0.3
Loss on debt extinguishment
(4.0
)
(49.2
)
(4.0
)
(49.2
)
Loss on sale of business
(3.6
)
0.0
(3.6
)
0.0
Benefit plans, net
2.5
7.1
5.5
14.1
Foreign exchange
9.5
(20.2
)
(0.6
)
(17.7
)
Other – net
0.0
(0.1
)
0.5
0.3
Total other expense
(22.2
)
(74.3
)
(39.5
)
(77.7
)
Loss before income tax expense
(26.4
)
(211.6
)
(75.7
)
(321.5
)
Income tax expense (benefit)
1.9
(1.9
)
2.5
5.0
Loss from continuing operations
(28.3
)
(209.7
)
(78.2
)
(326.5
)
Income (loss) from discontinued
operations, net of tax
0.7
(55.9
)
0.7
(59.4
)
Net loss
(27.6
)
(265.6
)
(77.5
)
(385.9
)
Net income (loss) attributable to
noncontrolling interest
—
(0.2
)
0.1
(0.3
)
Net loss attributable to
stockholders
$
(27.6
)
$
(265.8
)
$
(77.4
)
$
(386.2
)
Basic and diluted loss per common
share:
Continuing operations
$
(1.54
)
$
(15.41
)
$
(4.26
)
$
(35.39
)
Discontinued operations
0.04
(4.11
)
0.04
(6.43
)
Basic and diluted loss per common
share
$
(1.50
)
$
(19.52
)
$
(4.22
)
$
(41.82
)
Shares used in the computation of earnings
per share:
Basic and Diluted(2)
18.4
13.6
18.4
9.2
(1) Figures may not be clerically accurate due to rounding. (2)
Basic and diluted shares reflect the bonus element for the 2019
Rights Offering on July 23, 2019 and the one-for-ten reverse stock
split on July 24, 2019 as described in Note 2 and Note 1,
respectively, in the Company's 10-Q.
Exhibit 2 Babcock & Wilcox Enterprises, Inc. Condensed
Consolidated Balance Sheets(2)
(In millions, except per share amount)
June 30, 2019
December 31, 2018
Cash and cash equivalents
$
35.2
$
43.2
Restricted cash and cash equivalents
9.2
17.1
Accounts receivable – trade, net
200.6
197.2
Accounts receivable – other
62.8
44.7
Contracts in progress
150.4
144.7
Inventories
63.8
61.3
Other current assets
64.6
41.4
Total current assets
586.6
549.6
Net property, plant and equipment
78.0
90.9
Goodwill
47.1
47.1
Intangible assets
28.4
30.8
Right-of-use assets
13.1
—
Other assets
18.8
27.1
Total assets
$
772.0
$
745.5
Revolving credit facilities
184.4
145.5
Last out term loans
183.1
30.6
Accounts payable
167.1
199.9
Accrued employee benefits
27.4
19.3
Advance billings on contracts
102.3
149.4
Accrued warranty expense
39.6
45.1
Lease liabilities
4.2
—
Other accrued liabilities
97.1
122.1
Total current liabilities
805.1
712.0
Pension and other accumulated
postretirement benefit liabilities
275.1
281.6
Noncurrent lease liabilities
8.8
—
Other noncurrent liabilities
26.0
29.2
Total liabilities
1,115.1
1,022.8
Commitments and contingencies
Stockholders' deficit:
Common stock, par value $0.01 per share,
authorized 500,000 shares at June 30, 2019 and 200,000 shares at
December 31, 2018, respectively; issued and outstanding 16,888 and
16,879 shares at June 30, 2019 and December 31, 2018, respectively
(1)
1.7
1.7
Capital in excess of par value
1,055.8
1,047.1
Treasury stock at cost, 593 and 587 shares
at June 30, 2019 and December 31, 2018, respectively (1)
(105.6
)
(105.6
)
Accumulated deficit
(1,295.3
)
(1,217.9
)
Accumulated other comprehensive loss
(8.0
)
(11.4
)
Stockholders' deficit attributable to
shareholders
(351.4
)
(286.1
)
Noncontrolling interest
8.4
8.8
Total stockholders' deficit
(343.0
)
(277.3
)
Total liabilities and stockholders'
deficit
$
772.0
$
745.5
(1) Issued and outstanding common shares and treasury stock
shares reflect the one-for-ten reverse stock split on July 24, 2019
as described in Note 1 in the Company's 10-Q. (2) Figures may not
be clerically accurate due to rounding.
Exhibit 3 Babcock & Wilcox Enterprises, Inc. Condensed
Consolidated Statements of Cash Flows(1) (In millions)
Six months ended June
30,
2019
2018
Cash flows from operating activities:
Net loss
$
(77.5
)
$
(385.9
)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Depreciation and amortization of
long-lived assets
13.8
16.9
Amortization of deferred financing costs,
debt discount and payment-in-kind interest
23.1
7.2
Amortization of right of use assets
2.9
—
Loss on sale of business
3.6
—
Loss on debt extinguishment
4.0
49.2
Goodwill impairment of discontinued
operations
—
72.3
Goodwill impairment
—
37.5
Income from equity method investees
—
(6.6
)
Other-than-temporary impairment of equity
method investment in TBWES
—
18.4
Losses on asset disposals and
impairments
0.0
1.9
Reserve for claims receivable
—
15.5
Benefit from deferred income taxes,
including valuation allowances
(0.8
)
(1.5
)
Mark to market losses (gains) and prior
service cost amortization for pension plans
0.4
(1.1
)
Stock-based compensation, net of
associated income taxes
0.6
1.0
Changes in assets and liabilities:
Accounts receivable
(5.8
)
40.6
Contracts in progress and advance billings
on contracts
(53.6
)
(30.5
)
Inventories
(4.0
)
5.9
Income taxes
1.3
(4.0
)
Accounts payable
(31.7
)
(15.1
)
Accrued and other current liabilities
(15.7
)
20.3
Accrued contract loss
(45.8
)
9.7
Pension liabilities, accrued
postretirement benefits and employee benefits
(0.1
)
(17.6
)
Other, net
(7.9
)
15.0
Net cash used operating
activities
(193.0
)
(150.6
)
Cash flows from investing activities:
Purchase of property, plant and
equipment
(0.4
)
(4.4
)
Proceeds from sale of business
7.4
5.1
Proceeds from sale of equity method
investments in joint venture
—
21.1
Purchases of available-for-sale
securities
(4.2
)
(11.4
)
Sales and maturities of available-for-sale
securities
2.9
13.6
Other, net
(0.5
)
0.2
Net cash from investing
activities
5.2
24.2
Cash flows from financing activities:
Borrowings under our U.S. revolving credit
facility
179.7
307.3
Repayments of our U.S. revolving credit
facility
(140.2
)
(205.3
)
Repayments of our second lien term loan
facility
—
(212.6
)
Borrowings under Last Out Term Loan
Tranche A-2 from related party
10.0
—
Borrowings under Last Out Term Loan
Tranche A-3 from related party
141.4
—
Repayments under our foreign revolving
credit facilities
(0.6
)
(5.0
)
Shares of our common stock returned to
treasury stock
0.0
(0.7
)
Proceeds from rights offering
—
248.4
Costs related to rights offering
(0.7
)
(3.2
)
Debt issuance costs
(14.4
)
(6.7
)
Net cash from financing
activities
175.1
122.1
Effects of exchange rate changes on
cash
(3.3
)
(7.0
)
Net decrease in cash, cash equivalents
and restricted cash
(15.9
)
(11.4
)
Less net increase in cash and cash
equivalents of discontinued operations
—
(2.5
)
Net decrease in cash, cash equivalents
and restricted cash of continuing operations
(15.9
)
(8.9
)
Cash, cash equivalents and restricted cash
of continuing operations, beginning of period
60.3
69.7
Cash, cash equivalents and restricted
cash of continuing operations, end of period
$
44.4
$
60.8
(1) Figures may not be clerically accurate due to rounding.
Exhibit 4 Babcock & Wilcox Enterprises, Inc. Segment
Information(1) (In millions)
SEGMENT RESULTS
Three months ended June
30,
Six months ended June
30,
2019
2018
2019
2018
REVENUES:
Babcock & Wilcox segment
$
201.0
$
197.8
$
389.5
$
356.9
Vølund & Other Renewable segment
33.7
55.0
63.2
115.0
SPIG segment
22.8
46.0
51.7
82.8
Eliminations
(9.4
)
(7.4
)
(24.4
)
(10.1
)
$
248.1
$
291.3
$
480.1
$
544.5
GROSS PROFIT (LOSS):
Babcock & Wilcox segment
$
37.9
$
30.0
$
69.0
$
60.9
Vølund & Other Renewable segment
5.1
(69.3
)
2.2
(119.8
)
SPIG segment
2.4
0.1
6.1
(2.7
)
Intangible asset amortization included in
cost of operations
(1.0
)
(1.8
)
(2.1
)
(3.7
)
ADJUSTED EBITDA:
Babcock & Wilcox segment
$
19.0
$
9.9
$
28.0
$
14.1
Vølund & Other Renewable segment
(0.8
)
(78.6
)
(9.6
)
(140.4
)
SPIG segment
(0.1
)
(6.2
)
0.5
(13.5
)
Corporate
(9.4
)
(6.2
)
(14.4
)
(17.8
)
Research and development costs
(0.7
)
(1.3
)
(1.5
)
(2.4
)
$
8.0
$
(82.4
)
$
3.1
$
(160.1
)
AMORTIZATION EXPENSE:
Babcock & Wilcox segment
$
0.2
$
0.2
$
0.3
$
0.4
Vølund & Other Renewable segment
0.2
0.2
0.3
0.4
SPIG segment
0.8
1.6
1.7
3.3
$
1.1
$
2.0
$
2.3
$
4.1
DEPRECIATION EXPENSE:
Babcock & Wilcox segment
$
4.3
$
3.2
$
9.2
$
6.3
Vølund & Other Renewable segment
0.6
0.9
1.4
1.9
SPIG segment
0.5
0.5
1.0
1.0
Corporate
—
0.3
—
0.6
$
5.4
$
4.9
$
11.5
$
9.8
BOOKINGS:
Babcock & Wilcox segment
$
140
$
132
$
327
$
403
Vølund & Other Renewable segment
(2)(3)
(78
)
(23
)
(59
)
23
SPIG segment
18
18
30
45
Other/Eliminations
(13
)
(1
)
(15
)
(2
)
$
67
$
126
$
283
$
469
As of June 30,
BACKLOG:
2019
2018
Babcock & Wilcox segment
$
323
$
500
Vølund & Other Renewable segment
205
916
SPIG segment
65
137
Other/Eliminations
(8
)
(35
)
$
585
$
1,518
(1) Figures may not be clerically accurate due to rounding. (2)
Vølund & Other Renewable bookings includes the revaluation of
backlog denominated in currency other than U.S. dollars. The
foreign exchange impact on Vølund & Other Renewable bookings in
the three months ended June 30, 2019 and 2018 was $(4.0) million
and $(30.3) million, respectively, and the foreign exchange impact
on Vølund & Other Renewable bookings in the six months ended
June 30, 2019 and 2018 was $(0.5) million and $(12.3) million,
respectively. (3) In the three and six months ended June 30, 2019,
Vølund & Other Renewable includes debookings of $19 million
related to the sale of Loibl and $72 million related to a 15-year
operations and maintenance contract previously expected to follow
completion of the fifth European Vølund EPC loss contract, which
was canceled following the settlement agreement.
Exhibit 5 Babcock & Wilcox Enterprises, Inc.
Reconciliation of Adjusted EBITDA(1) (In millions)
Three months ended June
30,
Six months ended June
30,
2019
2018
2019
2018
Adjusted EBITDA (2)
Babcock & Wilcox segment(3)
$
19.0
$
9.9
$
28.0
$
14.1
Vølund & Other Renewable segment
(0.8
)
(78.6
)
(9.6
)
(140.4
)
SPIG segment
(0.1
)
(6.2
)
0.5
(13.5
)
Corporate(4)
(9.4
)
(6.2
)
(14.4
)
(17.8
)
Research and development costs
(0.7
)
(1.3
)
(1.5
)
(2.4
)
Total Adjusted EBITDA
8.0
(82.4
)
3.1
(160.1
)
Restructuring activities and spin-off
transaction costs
(0.9
)
(3.8
)
(7.0
)
(10.7
)
Financial advisory services
(3.2
)
(5.1
)
(7.2
)
(8.2
)
Settlement cost to exit Vølund
contract(5)
—
—
(6.6
)
—
Advisory fees for settlement costs and
liquidity planning
(1.6
)
—
(4.7
)
—
Goodwill impairment
—
(37.5
)
—
(37.5
)
Impairment of equity method investment in
TBWES
—
—
—
(18.4
)
Gain on sale of equity method investment
in BWBC
—
—
—
6.5
Depreciation & amortization
(6.5
)
(6.9
)
(13.8
)
(13.9
)
Loss on asset disposal
0.0
(1.5
)
0.0
(1.5
)
Operating loss
(4.3
)
(137.4
)
(36.2
)
(243.8
)
Interest expense, net
(26.6
)
(11.8
)
(37.2
)
(25.1
)
Loss on debt extinguishment
(4.0
)
(49.2
)
(4.0
)
(49.2
)
Loss on sale of business
(3.6
)
—
(3.6
)
—
Net pension benefit before MTM
3.3
6.5
6.8
13.5
MTM (gain) loss from benefit plans
(0.9
)
0.5
(1.3
)
0.5
Foreign exchange
9.5
(20.2
)
(0.6
)
(17.7
)
Other – net
0.0
(0.1
)
0.5
0.3
Loss before income tax expense
(26.4
)
(211.6
)
(75.7
)
(321.5
)
Income tax expense (benefit)
1.9
(1.9
)
2.5
5.0
Loss from continuing operations
(28.3
)
(209.7
)
(78.2
)
(326.5
)
Gain (loss) from discontinued operations,
net of tax
0.7
(55.9
)
0.7
(59.4
)
Net loss
(27.6
)
(265.6
)
(77.5
)
(385.9
)
Net income (loss) attributable to
noncontrolling interest
0.0
(0.2
)
0.1
(0.3
)
Net loss attributable to
stockholders
$
(27.6
)
$
(265.8
)
$
(77.4
)
$
(386.2
)
(1) Figures may not be clerically accurate due to rounding. (2)
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. (3) The Babcock &
Wilcox segment adjusted EBITDA for the three and six months ended
June 30, 2018 excludes $6.5 million and $13.5 million,
respectively, of net benefit from pension and other postretirement
benefit plans, excluding MTM adjustments, that were previously
included in the segment results. Beginning in 2019, Net pension
benefits are no longer allocated to the segments, and prior periods
have been adjusted to be presented on a comparable basis. (4)
Allocations are excluded from discontinued operations. Accordingly,
allocations previously absorbed by the MEGTEC and Universal
businesses in the SPIG segment have been included with other
unallocated costs in Corporate, and total $2.9 million and $5.7
million in the three and six months ended June 30, 2018,
respectively. (5) In March 2019, we entered into a settlement in
connection with an additional European waste-to-energy EPC
contract, for which notice to proceed was not given and the
contract was not started. The settlement eliminates our obligations
and our risk related to acting as the prime EPC should the project
move forward.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190808005202/en/
Investors: Megan Wilson Vice President, Corporate
Development & Investor Relations Babcock & Wilcox
Enterprises 704.625.4944 | investors@babcock.com
Media: Ryan Cornell Public Relations Babcock & Wilcox
Enterprises 330.860.1345 | rscornell@babcock.com
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