BW Babcock and Wilcox Enterprises Inc

- Consolidated Revenues up 33.6%

- GAAP EPS of $0.08, Adjusted EPS of $0.27

- Affirms 2015 Guidance

Babcock & Wilcox Enterprises, Inc. (B&W) (NYSE:BW) announced today second quarter 2015 revenues of $437.5 million, an increase of $110.1 million, or 33.6%, from the second quarter of 2014. GAAP earnings per share from continuing operations for the second quarter of 2015 were $0.08 compared to $0.03 in the second quarter of 2014. Adjusted earnings per share, which excludes the impact of impairment, restructuring and spin-related costs for the quarter, were $0.27 for the three months ended June 30, 2015 compared to $0.14 in the prior year period.

“As we begin operations as a stand-alone company, B&W continues to deliver on our strategy and build a solid track record of performance,” said Mr. E. James Ferland, Chairman and Chief Executive Officer. “We are pleased that all three business segments ended the quarter at or above target with a significant increase in revenues in Global Power driven by the new international project awards in line with our growth strategy.”

In addition the Board has authorized a share repurchase program of up to $100 million over the next two years. “The new program will allow opportunistic share repurchases as part of our broader capital allocation strategy,” continued Mr. Ferland.

Results of Operations

Consolidated revenues for the second quarter of 2015 were $437.5 million, an increase of 33.6%, compared to $327.4 million for the second quarter of 2014. The Global Power segment had the largest increase with revenues of $157.4 million in the quarter, which was a 43.5% increase over the $109.7 million in revenues in the prior year period driven by an increase in new build steam projects. Revenues in the Global Services segment were $236.7 million in the three months ending June 30, 2015, versus $214.1 million in the corresponding period in 2014, an increase of $22.6 million primarily related to increased activity in service projects and construction. The Industrial Environmental segment contributed $43.4 million in revenue this period compared to $3.6 million in the second quarter of 2014 due to the acquisition of MEGTEC on June 20, 2014.

GAAP operating income for the second quarter of 2015 increased $1.7 million to $4.9 million compared to $3.2 million in the prior year period primarily due to increased revenues. GAAP operating income for the second quarter of 2015 also included $9.0 million of non-cash facility and equipment impairments primarily related to the close-out of a carbon capture and storage research program, as well as $5.3 million of restructuring costs related to margin improvement and $0.9 million in spin-related costs. Excluding these charges and a $1.3 million allocation for the discontinued Nuclear Energy operation that was transferred to BWX Technologies as part of the spin, adjusted operating income increased 71% in the second quarter of 2015 to $21.4 million, compared to adjusted operating income of $12.5 million in the second quarter of 2014.

Second quarter 2015 gross profit in the Global Power segment increased $7.2 million from the same period last year to $26.7 million, attributable to the increased segment revenues. The Global Services segment reported a gross profit of $46.3 million in the second quarter of 2015, which was $2.0 million less than the gross profit of $48.4 million in the prior year second quarter due to the effects of operations and maintenance activities. Gross profit in the Industrial Environmental segment was $8.9 million in the second quarter of 2015 as a result of the MEGTEC acquisition.

“With the spin behind us, we will increase our focus on execution of our strategy to improve profitability and grow the company,” continued Mr. Ferland. “We will continue to drive margins, expand globally and look for smart acquisitions. We have teams working each of the three elements of our strategy while our day-to-day operations work to exceed customer expectations.”

Liquidity and Debt

The Company’s cash and investments position, net of restricted cash, was $307.6 million at the end of the second quarter of 2015. This consolidated cash position includes $175.7 million in non-U.S. cash. On June 30, 2015, the Company closed on a new $600 million credit facility. At June 30, 2015, we had no borrowings outstanding under the revolving credit facility, and after giving effect to the leverage ratio and $109.1 million in letters of credit issued under the new credit agreement, we had approximately $383.9 million available for borrowings or to meet letter of credit requirements.

Share Repurchase Program

As noted above, the Board has authorized the repurchase of up to $100 million of common stock. The Company may utilize various methods to effect the repurchases, and the timing of repurchases will depend upon several factors, including market and business conditions, and repurchases may be discontinued at any time.

2015 Outlook

The Company affirmed its guidance for key financial benchmarks for 2015:

• Consolidated revenue is expected to increase to approximately $1.7 billion through a combination of core growth and the full year of the MEGTEC acquisition;
• Adjusted EPS of $1.10 to $1.30 excluding mark-to-market adjustment for pension and post-retirement benefits, spin-related transaction costs and restructuring charges; and
• Adjusted tax rate for 2015 is expected to be in the range of 32% to 34%.

Conference Call to Discuss Second Quarter 2015 Results

Date:

  Wednesday, August 5, 2015, at 8:30 a.m. EDT

Live Webcast:

Investor Relations section of website at www.babcock.com

Forward-Looking Statements

B&W cautions that this release contains forward-looking statements, including, without limitation, statements relating to backlog, to the extent they may be viewed as an indicator of future revenues; management’s expectations regarding the industries in which we operate; our guidance and forecasts for 2015; and our projected operating margin improvements, savings and restructuring costs. These forward-looking statements are based on management’s current expectations and involve a number of risks and uncertainties, including, among other things, disruptions experienced with customers and suppliers; the inability to successfully operate independently following the spin-off; the inability to retain key personnel; adverse changes in the industries in which we operate and delays, changes or termination of contracts in backlog; and the timing and amount of repurchases of our common stock, if any. 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 the information statement on Form 10 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 Charlotte, N.C., Babcock & Wilcox is a global leader in energy and environmental technologies and services for the power and industrial markets. B&W companies employ approximately 6,000 people around the world. Follow us on Twitter @BabcockWilcox and learn more at www.babcock.com.

  Exhibit 1 Babcock & Wilcox Enterprises, Inc.

Reconciliation of Non-GAAP Operating Income and Earnings Per Share(1)(2)

(in $ millions, except per share amounts)

          Three Months Ended June 30, 2015 NE Sgmt GAAP   Impairments   Restructuring   Allocation   Spin Costs   Non-GAAP   Operating Income (Loss) $ 4.9 $ 9.0 $ 5.3 $ 1.3 $ 0.9 $ 21.4 Other Income / (Expense) 0.2 - - - - 0.2 Income Tax (Expense) / Benefit   (0.9 )     (3.4 )     (1.9 )     (0.3 )     (0.3 )     (6.9 ) Net Income (Loss) $ 4.1 $ 5.6 $ 3.5 $ 1.0 $ 0.6 $ 14.7 Net Loss Attributable to Non-Controlling Interest   (0.1 )     -       -       -       -       (0.1 ) Net Income from Continuing Operations $ 4.1     $ 5.6     $ 3.5     $ 1.0     $ 0.6     $ 14.6     Diluted EPS - Continuing Operations $ 0.08 $ 0.10 $ 0.06 $ 0.02 $ 0.01 $ 0.27   Tax Rate 18.2 %   31.9 %     Three Months Ended June 30, 2014 MEGTEC NE Sgmt Acquisition GAAP   Restructuring   Allocation   Costs   Non-GAAP   Operating Income (Loss) $ 3.2 $ 7.5 $ 1.3 $ 0.5 $ 12.5 Other Income / (Expense) 0.3 - - - 0.3 Income Tax (Expense) / Benefit   (1.8 )     (2.6 )     (0.5 )     (0.2 )     (5.0 ) Net Income (Loss) $ 1.6 $ 5.0 $ 0.9 $ 0.3 7.8 Net Loss Attributable to Non-Controlling Interest   (0.1 )     -       -       -       (0.1 ) Net Income from Continuing Operations $ 1.5     $ 5.0     $ 0.9     $ 0.3       7.7     Diluted EPS - Continuing Operations $ 0.03 $ 0.09 $ 0.02 $ 0.01 $ 0.14   Tax Rate 53.3 %   39.2 %     Six Months Ended June 30, 2015 NE Sgmt GAAP   Impairments   Restructuring   Allocation   Spin Costs   Non-GAAP   Operating Income (Loss) $ 22.2 $ 9.0 $ 7.7 $ 2.7 $ 0.9 $ 42.4 Other Income / (Expense) (0.1 ) - - - - (0.1 ) Income Tax (Expense) / Benefit   (6.6 )     (3.4 )     (2.7 )     (0.7 )     (0.3 )     (13.8 ) Net Income (Loss) $ 15.5 $ 5.6 $ 4.9 $ 2.0 $ 0.6 $ 28.5 Net Loss Attributable to Non-Controlling Interest   (0.1 )     -       -       -       -       (0.1 ) Net Income from Continuing Operations $ 15.4     $ 5.6     $ 4.9     $ 2.0     $ 0.6     $ 28.4     Diluted EPS - Continuing Operations $ 0.29 $ 0.10 $ 0.09 $ 0.04 $ 0.01 $ 0.53   Tax Rate 29.9 %   32.6 %     Six Months Ended June 30, 2014 MEGTEC NE Sgmt Acquisition GAAP   Restructuring   Allocation   Costs   Non-GAAP   Operating Income (Loss) $ 7.7 $ 9.0 $ 2.7 $ 0.5 $ 19.8 Other Income / (Expense) 2.0 - - - 2.0 Income Tax (Expense) / Benefit   (0.8 )     (3.1 )     (0.9 )     (0.2 )     (5.0 ) Net Income (Loss) $ 8.9 $ 5.9 $ 1.8 $ 0.3 16.9 Net Loss Attributable to Non-Controlling Interest   (0.2 )     -       -       -       (0.2 ) Net Income from Continuing Operations $ 8.7     $ 5.9     $ 1.8     $ 0.3       16.7     Diluted EPS - Continuing Operations $ 0.16 $ 0.11 $ 0.03 $ 0.01 $ 0.30   Tax Rate 8.6 %   22.7 %

(1) May not foot due to rounding.

(2) B&W is providing non-GAAP information regarding certain of its historical results and guidance on future earnings per share to supplement the results provided in accordance with GAAP and it should not be considered superior to, or as a substitute for, the comparable GAAP measures. B&W believes the non-GAAP measures provide meaningful insight into the Company’s operational performance and provides these measures to investors to help facilitate comparisons of operating results with prior periods and to assist them in understanding B&W’s ongoing operations.

    Exhibit 2 Babcock & Wilcox Enterprises, Inc. Condensed Consolidated and Combined Statements of Operations   Three Months Ended Six Months Ended June 30, June 30, 2015   2014   2015   2014 (Unaudited) (In thousands, except per share amounts)     Revenues $ 437,485 $ 327,379 $ 834,640 $ 639,457 Costs and expenses: Cost of operations 355,601 258,351 669,359 513,578 Research and development costs 3,962 4,281 8,480 8,293 Losses on asset disposals and impairments, net 9,009 1,457 9,027 1,457 Selling, general and administrative expenses 59,709 53,040 116,802 102,252 Special charges for restructuring activities and spin-off costs     5,312       7,513       7,666       8,991   Total costs and expenses 433,593 324,642 811,334 634,571 Equity in income of investees     967       433       (1,104 )     2,799    

Operating income

4,859

3,170

22,202

7,685

 

Other income (expense):

Interest income 126 48 282 677 Interest expense (144 ) (84 ) (284 ) (204 ) Other – net     201       323       (110 )     1,554   Total other income (expense) 183 287 (112 ) 2,027  

Income from continuing operations before provision for income taxes

5,042

3,457

22,090

9,712

Provision for income taxes     919       1,841       6,611       833   Income from continuing operations 4,123 1,616 15,479 8,879 Income from discontinued operations, net of tax     1,418       3,397       2,803       7,339   Net income 5,541 5,013 18,282 16,218  

Net income attributable to noncontrolling interest

   

(54

)

   

(77

)

   

(106

)

   

(193

)

Net Income attributable to Babcock & Wilcox Enterprises, Inc.   $ 5,487     $ 4,936     $ 18,176     $ 16,025     Amounts attributable to Babcock & Wilcox Enterprises, Inc. Income from continuing operations $ 4,069 $ 1,539 $ 15,373 $ 8,686 Income from discontinued operations, net of tax     1,418       3,397       2,803       7,339   Net income attributable to Babcock & Wilcox Enterprises, Inc.   $ 5,487     $ 4,936     $ 18,176     $ 16,025     Basic earnings per common share: Continuing operations $ 0.08 $ 0.03 $ 0.29 $ 0.16 Discontinued operations     0.02       0.06       0.05       0.13   Basic earnings per common share   $ 0.10     $ 0.09     $ 0.34     $ 0.29   Diluted earnings per common share: Continuing operations $ 0.08 $ 0.03 $ 0.29 $ 0.16 Discontinued operations     0.02       0.06       0.05       0.13   Diluted earnings per common share   $ 0.10     $ 0.09     $ 0.34     $ 0.29     Shares used in the computation of earnings per common share: Basic 53,560 54,883 53,474 55,051 Diluted 53,787 55,058 53,680 55,251       Exhibit 3 Babcock & Wilcox Enterprises, Inc. Condensed Consolidated and Combined Balance Sheets   June 30, December 31, 2015   2014 (Unaudited) (In thousands) ASSETS   Current assets: Cash and cash equivalents $ 307,562 $ 218,659 Restricted cash and cash equivalents 35,538 26,311 Investments 5,098 1,607 Accounts receivable – trade, net 233,836 265,456 Accounts receivable – other 40,385 36,147 Contracts in progress 125,160 107,751 Inventories 97,113 98,711 Deferred income taxes 36,568 36,601 Other current assets 16,391 11,347 Current assets of discontinued operations     -       46,177   Total current assets 897,651 848,767   Property, plant and equipment 324,165 335,761 Less accumulated depreciation     (179,916 )     (200,525 ) Net property, plant and equipment 144,249 135,236   Investments 1,111 214 Goodwill 202,398 209,277 Deferred income taxes 123,576 115,111 Investments in unconsolidated affiliates 100,804 109,248 Intangible assets 40,915 50,646 Other assets 26,695 9,227 Non-current assets of discontinued operations     -       38,828   TOTAL ASSETS   $ 1,537,399     $ 1,516,554         Exhibit 3 Babcock & Wilcox Enterprises, Inc. Condensed Consolidated and Combined Balance Sheets (continued)   June 30, December 31, 2015   2014 (Unaudited) (In thousands, except share and per share amounts) LIABILITIES AND STOCKHOLDERS’ EQUITY   Current liabilities: Notes payable and current maturities of long-term debt $ 3,222 $ 3,215 Accounts payable 147,885 160,606 Accrued employee benefits 41,627 39,464 Advance billings on contracts 168,946 148,098 Accrued warranty expense 36,995 37,735 Accrued liabilities – other 49,216 54,827 Current liabilities of discontinued operations     -       44,145 Total current liabilities 447,891 488,090   Accumulated postretirement benefit obligation 29,103 28,347 Pension liability 246,366 253,763 Other liabilities 40,097 42,929 Non-current liabilities of discontinued operations     -       15,988 Total liabilities $ 763,457 $ 829,117   Commitments and contingencies - -   Stockholders’ Equity:

Common stock, par value $0.01 per share, authorized 200,000,000 shares; issued 53,719,878 and 0 shares at June 30, 2015 and December 31, 2014, respectively

537 -

Preferred stock, par value $0.01 per share, authorized 20,000,000 shares; No shares issued

-

- Capital in excess of par value 782,692 - Retained earnings - - Accumulated other comprehensive income (10,407 ) 10,374 Former net parent investment     -       676,036

Stockholders’ equity – Babcock & Wilcox Enterprises, Inc.

772,822 686,410  

Noncontrolling interest

    1,120       1,027 Total Stockholders’ equity     773,942       687,437 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY   $ 1,537,399     $ 1,516,554     Exhibit 4 Babcock & Wilcox Enterprises, Inc. Condensed Consolidated and Combined Statements of Cash Flows   Six Months Ended June 30, 2015   2014 (Unaudited) (In thousands) CASH FLOWS FROM OPERATING ACTIVITIES:   Net Income $ 18,282 $ 16,218 Non-cash items included in net income: Depreciation and amortization 21,458 11,307 Income of equity method investees, net of dividends 2,292 (240 ) Losses on asset disposals and impairments 10,607 1,457 Recognition of losses for pension and postretirement plans 200 250 Excess tax benefits from stock-based compensation - (12 ) Changes in assets and liabilities, net of effects of acquisitions: Accounts receivable 31,332 30,400 Accounts payable (11,369 ) (50,150 ) Contracts in progress and advance billings on contracts 5,170 (69,580 ) Inventories 663 4,503 Income taxes (2,075 ) 5,911 Accrued and other current liabilities (7,735 ) 4,360 Pension liability, accrued postretirement benefit obligation and employee benefits (7,237 ) (14,745 ) Other, net     (5,958 )     (2,390 ) NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES   $ 55,630     $ (57,931 )   CASH FLOWS FROM INVESTING ACTIVITIES: Decrease in restricted cash and cash equivalents 1,307 4,420 Purchases of property, plant and equipment (15,215 ) (5,499 ) Acquisition of business, net of cash acquired - (127,098 ) Purchase of intangible assets - (722 ) Purchases of available-for-sale securities (4,919 ) (2,844 ) Sales and maturities of available-for-sale securities 1,647 7,247 Proceeds from asset disposals - (6 ) Investment in equity method investees     -       (4,900 ) NET CASH USED IN INVESTING ACTIVITIES   $ (17,180 )   $ (129,402 )   CASH FLOWS FROM FINANCING ACTIVITIES: Payment of short-term borrowing and long-term debt - (1,815 ) Increase in short-term borrowing - 733 Net transfers (to) from parent 75,587 215,262 Excess tax benefits from stock-based compensation - 12 Other     (38 )     (223 ) NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES   $ 75,549     $ 213,969     EFFECTS OF EXCHANGE RATE CHANGES ON CASH     (4,881 )     (4,123 ) CASH FLOWS FROM CONTINUING OPERATIONS     109,118       22,513             CASH FLOWS FROM DISCONTINUED OPERATIONS:         Operating cash flows from discontinued operations, net (20,192 ) (10,302 ) Investing cash flows from discontinued operations, net     (23 )     (115 ) NET CASH FLOWS PROVIDED BY (USED IN) DISCONTINUED OPERATIONS   $ (20,215 )   $ (10,417 )           NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 88,903 12,096 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD     218,659       191,318   CASH AND CASH EQUIVALENTS AT END OF PERIOD   $ 307,562     $ 203,414            

Exhibit 5

Babcock & Wilcox Enterprises, Inc.

Segment Information(1)

  Three Months Ended June 30, Six Months Ended June 30, 2015   2014       2015   2014 (Unaudited) (In thousands) REVENUES:     Global Power $ 157,373 $ 109,693 $ 281,259 $ 219,985 Global Services 236,720 214,086 468,894 415,872 Industrial Environmental     43,392     3,600         84,487     3,600     $ 437,485   $ 327,379       $ 834,640   $ 639,457 GROSS PROFIT: Global Power $ 26,676 $ 19,472 $ 47,104 $ 34,719 Global Services 46,308 48,356 99,595 89,960 Industrial Environmental     8,900     1,200         18,582     1,200     $ 81,884   $ 69,028       $ 165,281   $ 125,879     Three Months Ended June 30, Six Months Ended June 30, 2015   2014       2015   2014 (Unaudited) (In millions) BOOKINGS: Global Power $ 60.3 $ 261.7 $ 514.0 $ 312.1 Global Services 186.9 211.3 408.5 383.3 Industrial Environmental     52.2     N/A         108.0     N/A     $ 299.4   $ 473.0       $ 1,030.5   $ 695.3     As of June 30, 2015 2014 (Unaudited) (In millions) BACKLOG: Global Power $ 1,185.0 $ 868.8 Global Services 1,162.9 $ 1,263.5 Industrial Environmental     95.7   $ 83.0     $ 2,443.5   $ 2,215.3

(1) May not foot due to rounding.

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Babcock & WilcoxInvestor Contact:Leslie Kass, Vice President Investor Relations and Communications, 704-625-4944investors@babcock.comorBabcock & WilcoxMedia Contact:Ryan Cornell, Public Relations, 330-860-1345rscornell@babcock.com