Q4 2019 Highlights:
- GAAP consolidated operating income improved by $147.7 million
quarter-over-quarter to positive income of $10.0 million
- Company generated earnings per share of $0.26 and consolidated
adjusted EBITDA of $19.3 million
- Vølund segment returned to profitability on an adjusted EBITDA
basis
Full Year 2019 Highlights:
- GAAP consolidated operating income improved by $397.2 million
year-over-year to a loss of $29.4 million
- Company generated consolidated adjusted EBITDA of $33.3
million, returning to full-year profitability on an adjusted EBITDA
basis
- All segments generated positive adjusted gross profit for the
year
Babcock & Wilcox Enterprises, Inc. ("B&W Enterprises")
(NYSE: BW) announced today fourth quarter 2019 GAAP income from
continuing operations of $5.5 million, an improvement of $232.8
million compared to a loss of $227.4 million in fourth quarter
2018. Adjusted EBITDA was a positive $19.3 million, an improvement
of $133.5 million compared to negative adjusted EBITDA of $114.2
million in the prior year period, resulting in the Company's third
consecutive quarter of profitability in 2019 on an adjusted EBITDA
basis.
Full year 2019 GAAP income from continuing operations was a loss
of $129.7 million, an improvement of $528.3 million compared to a
loss of $658.0 million in 2018. Adjusted EBITDA was a positive
$33.3 million, an improvement of $331.0 million compared to
negative adjusted EBITDA of $297.7 million in the prior year,
returning the Company to full-year profitability in 2019 on an
adjusted EBITDA basis.
"Our solid performance in the fourth quarter of 2019 shows we
have turned the corner toward profitability and demonstrates the
strength of our improved operational performance and cost-savings
efforts. Our GAAP operating income of $10.0 million and
consolidated adjusted EBITDA of $19.3 million in the quarter
directly reflect the value of underlying assets within our core
business," said Kenneth Young, B&W Enterprises Chief Executive
Officer. "Before we began to feel the effects of COVID-19, the
business was progressing as planned in the first quarter of 2020.
However, like many companies around the world, the global COVID-19
pandemic and the many measures taken by local and national
governments to control its spread continue to impact our
operations, and we are not able to fully predict the extent or
timing of the impact. Many projects are delayed or deferred as our
customers are also following local or national restrictions. We
have implemented work-at-home mandates in many locations and we are
deemed an essential business, so we can continue operations and
support when requested."
"We are in continual contact with our employees, customers,
suppliers and government officials to collaborate on approaches to
the challenges the pandemic presents," Young continued. "The work
we do is essential to the U.S. and global power generation
infrastructure, and our technologies are also used by several
hospitals and pulp and paper industrial customers. We are committed
to supporting our customers during this crisis."
"We ended 2019 having made significant progress with the
implementation of previously announced cost-savings initiatives, to
reach approximately $119 million in annualized savings, as the
first step toward optimizing our business while maintaining our
high standards of quality and service," said Louis Salamone,
B&W Enterprises Chief Financial Officer. "We have a proven and
experienced management and employee team that engineered the
turnaround of our business, and they are even more determined as we
plan and implement changes throughout our operations in response to
the unprecedented impacts of COVID-19. We are focused on managing
our costs and cash flow through this crisis, while continually
evaluating the effects of the financial market disruption on our
business, to support our customers in the long-term."
Q4 2019 Financial Summary
The Company's focus on core technologies and profitability was
the primary driver, as expected, of a decline in revenue in the
fourth quarter of 2019 compared to the fourth quarter of 2018.
Consolidated revenues in fourth quarter 2019 were $180.4 million,
down 19% compared to fourth quarter 2018. Lower volume in the
B&W segment related to the periodic nature of large
construction new build projects, 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, also drove the decline in revenue. The
GAAP operating income in fourth quarter 2019 was $10.0 million,
inclusive of restructuring and settlement costs and advisory fees
of $7.2 million, compared to an operating loss of $137.7 million in
fourth quarter 2018. The improvement in operating income was
primarily due to improved gross margins in the Babcock & Wilcox
segment, the absence of losses on the six European EPC loss
contracts and the change in strategy in the SPIG segment to improve
profitability by focusing on more selective bidding in core
geographies and products. Adjusted EBITDA improved to a positive
$19.3 million compared to negative $114.2 million in fourth quarter
2018. All amounts referred to in this release are on a continuing
operations basis, unless otherwise noted. Reconciliations of
operating income, the most directly comparable GAAP measure, to
adjusted EBITDA, as well as to adjusted gross profit for the
Company's segments, are provided in the exhibits to this
release.
Babcock & Wilcox segment revenues were $137.0 million
in the fourth quarter of 2019, a decrease of 33.7% compared to
$206.6 million in the prior-year period, primarily attributable to
lower volume related to the periodic nature of large construction
new build projects. Adjusted EBITDA in fourth quarter 2019 was
$19.1 million, a decrease of 33.6% compared to $28.8 million in
last year's quarter, primarily due to the effects of lower volume
and increases in overhead being absorbed by the segment previously
absorbed by other segments; adjusted EBITDA margin was 13.9% in the
quarter and in the same period last year. Adjusted gross profit in
the Babcock & Wilcox segment in fourth quarter 2019 was $39.0
million, a 15.0% decrease compared to $45.9 million in the
prior-year period, primarily related to decreased volume as
described above, partially offset by the benefits of cost
reductions; gross profit margin was 28.4%, compared to 22.2% in the
same period last year, primarily due to an improved revenue mix
with an increased proportion of higher-margin parts sales and the
benefits of cost savings initiatives.
SPIG segment revenues were $18.7 million in the fourth
quarter of 2019, a decrease of 48.1% compared to $36.0 million in
fourth quarter 2018, mainly due to the shift in strategy
implemented in 2018 to more selectively bid and focus on core
geographies and products to improve profitability. Adjusted EBITDA
was negative $0.6 million, a $28.1 million improvement compared to
negative $28.7 million in the same period last year, driven by the
new strategy, the benefits of restructuring, SG&A cost savings
and operating cost reductions. Adjusted gross profit improved to
positive $1.0 million in fourth quarter 2019, compared to negative
$16.9 million in the prior-year period, primarily due to the
effects of the new strategy. SPIG's performance in the fourth
quarter of 2018 was negatively affected by increases in estimated
costs to complete remaining legacy new build cooling systems
contracts and related bad debt expenses; the negative impact of
these charges and reserves in the fourth quarter of 2018 was $32.8
million. These contracts that were sold under the previous strategy
were substantially complete as of December 31, 2018. At December
31, 2019, SPIG's U.S. entity had two remaining significant loss
contracts; the first was 99% complete at the end of the fourth
quarter of 2019 and is expected be fully complete in the first
quarter of 2020 and the second was 87% complete at the end of the
fourth quarter of 2019 and is expected to be fully complete in the
third quarter of 2020. The losses from these contracts have been
reflected in the fourth quarter 2019 financial statements.
Vølund & Other Renewable segment revenues were $26.3
million for the fourth quarter of 2019, compared to negative $10.3
million in fourth quarter 2018. Fourth quarter revenues were higher
compared to the prior year quarter due to the impact of the
previously disclosed settlement related to certain EPC loss
projects on 2018 revenues, as well as increased volume in the
segment's operations & maintenance, licensing and environmental
lines, partially offset by the sale of Loibl, which generated
revenues of approximately $7.6 million in the prior year quarter.
Adjusted EBITDA in the quarter improved to positive $2.0 million
compared to negative $110.0 million in the fourth quarter last
year, returning the segment to profitability on an adjusted EBITDA
basis, primarily due to the absence of losses on the European EPC
loss contracts and the impact of the settlement on fourth quarter
2018 results. In the fourth quarter of 2019, the segment recorded a
gain of $1.2 million on the European EPC loss contracts as compared
to $104.0 million of losses recorded in the fourth quarter of 2018,
inclusive of warranty expense. The segment had one remaining
extended scope contract which turned into a small loss in the
fourth quarter of 2019 due to an increase in its estimate to
complete; this contract was turned over to the customer in October
2019. Beyond the effect of the settlement on 2018 results and
absence of losses on the EPC loss contracts, fourth quarter 2019
adjusted EBITDA included lower levels of direct overhead support
and lower SG&A, partially offset by the absence of gross profit
from Loibl due to its sale. The segment adjusted gross profit was
positive $5.6 million in fourth quarter 2019, an improvement of
$106.8 million compared to negative $101.2 million reported in
fourth quarter 2018.
Full Year 2019 Financial Summary
Consolidated revenues in 2019 were $859.1 million, down 19%
compared to 2018 as expected, primarily driven by the Company's
focus on core technologies and profitability across all segments,
as well as resolution of the European EPC loss contracts. The GAAP
operating loss in 2019 was $29.4 million, inclusive of
restructuring and settlement costs and advisory fees of $39.7
million, compared to an operating loss of $426.6 million in 2018.
The improvement in operating income was primarily due to improved
gross margins in the Babcock & Wilcox segment, a significantly
lower level of losses on the European EPC loss contracts and the
shift in strategy in the SPIG segment to improve profitability by
focusing on more selective bidding in core geographies and
products. Adjusted EBITDA improved to a positive $33.3 million
compared to negative $297.7 million in 2018.
Babcock & Wilcox segment revenues were $688.3 million
in 2019, a decrease of 8.8% compared to $754.6 million in the prior
year, primarily attributable to lower volume related to the
periodic nature of large construction new build projects. Adjusted
EBITDA in 2019 was $66.6 million, an increase of 11.9% compared to
$59.5 million in the prior year, primarily due to cost savings
associated with cost reduction initiatives, partially offset by the
effects of lower volume and increases in overhead being absorbed by
the segment previously absorbed by other segments; adjusted EBITDA
margin was 9.7% for the year compared to 7.9% in 2018. Adjusted
gross profit in the Babcock & Wilcox segment in 2019 was $148.9
million, a 5.6% increase compared to $141.1 million in the prior
year, primarily due to the benefits of cost savings initiatives,
partially offset by the effect of lower volume as described above.
Gross profit margin was 21.6%, compared to 18.7% in the last
year.
SPIG segment revenues were $80.7 million in 2019, a
decrease of 47.5% compared to $153.6 million in 2018, as expected,
mainly due to the shift in strategy implemented in 2018 to more
selectively bid and focus on core geographies and products to
improve profitability. Adjusted EBITDA was negative $2.4 million, a
$50.9 million improvement compared to negative $53.3 million in the
prior year, driven by the new strategy, the benefits of
restructuring, SG&A cost savings and operating cost reductions.
Adjusted gross profit improved to positive $6.1 million in 2019,
compared to negative $25.1 million in the prior year, primarily due
to the effects of the new strategy. SPIG's performance in 2018 was
negatively affected by increases in estimated costs to complete
remaining legacy new build cooling systems contracts and related
bad debt expenses, as previously discussed in the segment's fourth
quarter 2019 results; the negative impact of these charges and
reserves in 2018 was $45.0 million.
Vølund & Other Renewable segment revenues were $121.9
million in 2019, a decrease of 32.7% compared to $181.2 million in
2018, primarily due to lower volume on the European EPC loss
contracts; the sales of PBRRC and Loibl, which contributed $44.5
million and $29.9 million of revenue, respectively, in 2018; and
the effects of a shift to a core technology business model and a
prior decision to limit bidding while the EPC loss contracts were
being completed, partially offset by increased volume in the
segment's operations & maintenance, licensing, environmental
and aftermarket lines. Adjusted EBITDA improved to negative $10.5
million compared to negative $275.9 million in the prior year,
primarily due to a lower level of losses on the European EPC loss
contracts and the impact of the previously discussed settlement on
2018 results. In 2019, the segment recorded $6.9 million in net
losses as compared to $233.0 million of equivalent losses recorded
in 2018, inclusive of warranty expense. Beyond the effect of the
settlement on 2018 results and significantly reduced losses on the
EPC loss contracts, 2019 adjusted EBITDA included lower levels of
direct overhead support and lower SG&A, partially offset by the
absence of gross profit from PBRRC and Loibl due to their sales.
The segment adjusted gross profit was positive $9.0 million in
2019, an improvement of $247.2 million compared to negative $238.1
million in 2018.
COVID-19 Impact
The global COVID-19 pandemic has disrupted business operations,
trade, commerce, financial and credit markets, and daily life
throughout the world. The Company's business has been adversely
impacted by the measures taken by local governments and others to
control the spread of this virus. Its headquarters and the
headquarters of the Babcock & Wilcox segment in Akron, Ohio,
the headquarters of the Vølund & Other Renewable segment in
Denmark and the headquarters of the SPIG segment in Italy (among
other locations where the Company and its customers, vendors and
suppliers operate) are currently subject to lock-down or
shelter-in-place orders under local ordinances, with employees
continuing to work remotely if possible. While some employees can
work remotely, many customers and projects require B&W's
employees to travel to customer and project worksites. Certain
customers and significant projects are located in areas where
travel restrictions have been imposed, certain customers have
closed or reduced on-site activities, and timelines for completion
of certain projects have also been extended into next year. The
resulting uncertainty concerning, among other things, the spread
and economic impact of the virus have also caused significant
volatility and, at times, illiquidity in global equity and credit
markets. At the time of this release, it is impossible to predict
the overall impact the pandemic will have on the Company's
business, liquidity, capital resources or financial results.
However, the Company continues to face uncertainty regarding its
liquidity and ability to refinance its Credit Agreement on the
terms required.
Liquidity and Balance Sheet
As discussed above, the Company continues to face uncertainty
regarding its liquidity as a result of the global COVID-19
pandemic.
At December 31, 2019, the Company had a cash and cash
equivalents balance of $43.8 million and borrowing availability of
$26.0 million.
The Company is continuing to pursue cost recoveries under
various applicable insurance policies and from responsible
subcontractors for the Vølund & Other Renewable segment's
European EPC loss contracts.
Cost-Savings Measures Progressing
The Company has implemented nearly $119 million of annualized
cost-savings initiatives previously identified. Roughly 97% of the
aggregate $119 million in savings measures have been implemented to
date with the balance to be implemented in the first half of 2020.
The Company continues to evaluate additional opportunities for cost
savings and continues to evaluate potential dispositions as
appropriate.
Non-GAAP Financial Measures
The Company uses non-GAAP financial measures internally to
evaluate its performance and in making financial and operational
decisions. When viewed in conjunction with GAAP results and the
accompanying reconciliation, the Company believes that its
presentation of these measures provides investors with greater
transparency and a greater understanding of factors affecting our
financial condition and results of operations than GAAP measures
alone.
This release presents adjusted gross profit for each business
segment and adjusted EBITDA, which are non-GAAP financial measures.
Adjusted EBITDA on a consolidated basis is defined as the sum of
the adjusted EBITDA for each of the segments, further adjusted for
corporate allocations and research and development costs. At a
segment level, the adjusted EBITDA presented is consistent with the
way the Company's chief operating decision maker reviews the
results of operations and makes strategic decisions about the
business and is calculated as earnings before interest, tax,
depreciation and amortization adjusted for items such as gains or
losses on asset sales, mark to market ("MTM") pension adjustments,
restructuring and spin costs, impairments, losses on debt
extinguishment, costs related to financial consulting required
under the U.S. Revolving Credit Facility and other costs that may
not be directly controllable by segment management and are not
allocated to the segment. The Company presented consolidated
Adjusted EBITDA because it believes it is useful to investors to
help facilitate comparisons of the ongoing, operating performance
before corporate overhead and other expenses not attributable to
the operating performance of the Company's revenue generating
segments.
This release also presents adjusted gross profit by segment. The
Company believes that adjusted gross profit by segment is useful to
investors to help facilitate comparisons of the ongoing, operating
performance of the segments by excluding expenses related to, among
other things, activities related to the spin-off, activities
related to various restructuring activities the Company has
undertaken, corporate overhead (such as SG&A expenses and
research and development costs) and certain non-cash expenses such
as intangible amortization and goodwill impairments that are not
allocated by segment.
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.
Differences between actual results and any future performance
suggested in our forward-looking statements could result from a
variety of factors, including the following: our ability to
continue as a going concern; the risks of pandemics or other public
health emergencies, including the continued spread and impact of,
and the governmental and third party response to, the recent
COVID-19 outbreak; the impact of social distancing,
shelter-in-place, border closings, travel restrictions, remote work
requirements and similar governmental and private measures taken to
combat the spread of COVID-19; our recognition of any asset
impairments as a result of any decline in the value of our assets
or our efforts to dispose of any assets in the future; our ability
to refinance the credit agreement governing our revolving credit
facility and term loans in accordance with its terms on or prior to
May 11, 2020; 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, or if required, obtain waivers of the requirements
under the credit agreement governing our revolving credit facility
and term loans; our ability to refinance our obligations under such
credit agreement in a timely manner, if at all; our ability to
obtain waivers of required pension contributions beginning with
contributions for fiscal year 2019; the highly competitive nature
of our businesses, and our ability to successfully compete with our
current and future competitors; general economic and business
conditions, including changes in interest rates and currency
exchange rates; fluctuations and volatility in global financial
markets, such as the recent substantial decline in oil prices;
technological and regulatory developments in the energy industry
and our ability to evolve with these trends; 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, partners or suppliers to
perform their obligations on time and as specified; our ability to
successfully resolve claims by vendors for goods and services
provided and claims by customers for items under warranty; 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 & 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 contracts within our
SPIG and Vølund & Other Renewable segments; changes in our
effective tax rate and tax positions, including the limitation on
our ability to use our net operating loss carryforwards and other
tax assets as a result of our recent ownership change under Section
382 of the Internal Revenue Code; 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 to recognize revenue
over time; 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; the loss
of key personnel and the continued availability of qualified
personnel; the timing and ability to obtain project related
insurance recoveries against certain of our subcontractors and
other counterparties; 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 decide
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 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 Akron, 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
December 31,
Year ended
December 31,
2019
2018
2019
2018
Revenues
$
180.4
$
222.9
$
859.1
$
1,062.4
Costs and expenses:
Cost of operations
135.7
297.8
698.9
1,192.0
Selling, general and administrative
expenses
30.6
53.2
151.1
204.7
Goodwill and other intangible asset
impairment
—
2.5
—
40.0
Advisory fees and settlement costs
5.1
3.2
27.9
18.6
Restructuring activities and spin-off
transaction costs
2.1
3.2
11.7
16.8
Research and development costs
0.6
0.9
2.9
3.8
(Gain) loss on asset disposals, net
(3.7
)
—
(3.9
)
1.4
Total costs and expenses
170.4
360.7
888.5
1,477.4
Equity in income and impairment of
investees
—
0.2
—
(11.6
)
Operating income (loss)
10.0
(137.7
)
(29.4
)
(426.6
)
Other (expense) income:
Interest expense
(27.5
)
(13.9
)
(94.9
)
(49.6
)
Interest income
0.1
(0.2
)
0.9
0.2
Loss on debt extinguishment
—
—
(4.0
)
(49.2
)
Gain (loss) on sale of business
—
0.1
(3.6
)
39.8
Benefit plans, net
13.7
(67.0
)
22.8
(42.1
)
Foreign exchange
10.8
(5.9
)
(16.6
)
(28.5
)
Other – net
0.1
0.0
0.3
0.3
Total other expense
(2.8
)
(86.8
)
(95.1
)
(129.2
)
Income (loss) before income tax
expense
7.2
(224.4
)
(124.4
)
(555.8
)
Income tax expense
1.7
2.9
5.3
102.2
Income (loss) from continuing
operations
5.5
(227.4
)
(129.7
)
(658.0
)
Income (loss) from discontinued
operations, net of tax
—
(6.0
)
0.7
(66.8
)
Net income (loss)
5.5
(233.3
)
(129.0
)
(724.9
)
Net loss (income) attributable to
non-controlling interest
6.9
(0.1
)
7.1
(0.4
)
Net income (loss) attributable to
stockholders
$
12.4
$
(233.4
)
$
(122.0
)
$
(725.3
)
Basic and diluted earnings (loss) per
common share:
Continuing operations
$
0.26
$
(12.40
)
$
(3.89
)
$
(47.62
)
Discontinued operations
—
(0.32
)
0.02
(4.83
)
Basic and diluted earnings (loss) per
common share
$
0.26
$
(12.72
)
$
(3.87
)
$
(52.45
)
Shares used in the computation of earnings
per share:
Basic and Diluted(2)
48.0
18.4
31.5
13.8
(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 as described in Note 3, in the
Company's 10-K and the one-for-ten reverse stock split on July 24,
2019 as described in Note 1, in the Company's 10-K.
Exhibit 2 Babcock & Wilcox Enterprises, Inc.
Condensed Consolidated Balance Sheets(2)
(In millions, except per share amount)
December 31, 2019
December 31, 2018
Cash and cash equivalents
$
43.8
$
43.2
Restricted cash and cash equivalents
13.2
17.1
Accounts receivable – trade, net
142.2
197.2
Accounts receivable – other
23.3
44.7
Contracts in progress
91.6
144.7
Inventories
63.1
61.3
Other current assets
27.0
41.4
Current assets held for sale
8.1
—
Total current assets
412.2
549.6
Net property, plant and equipment, and
finance lease
97.1
90.9
Goodwill
47.2
47.1
Intangible assets
25.3
30.8
Right-of-use assets
12.5
—
Other assets
25.0
27.1
Non-current assets held for sale
7.3
—
Total assets
$
626.5
$
745.5
Revolving credit facilities
179.0
145.5
Last out term loans
104.0
30.6
Accounts payable
109.9
199.9
Accrued employee benefits
18.3
19.3
Advance billings on contracts
75.3
149.4
Accrued warranty expense
33.4
45.1
Operating lease liabilities
4.3
—
Other accrued liabilities
68.8
122.1
Current liabilities held for sale
9.5
—
Total current liabilities
602.5
712.0
Pension and other accumulated
postretirement benefit liabilities
259.3
281.6
Non-current finance lease liabilities
30.5
—
Non-current operating lease
liabilities
8.4
—
Other non-current liabilities
20.9
29.2
Total liabilities
921.5
1,022.8
Commitments and contingencies
Stockholders' deficit:
Common stock, par value $0.01 per share,
authorized shares of 500,000 and 200,000 at December 31, 2019 and
2018, respectively; issued and outstanding shares of 46,374 and
16,879 at December 31, 2019 and 2018, respectively (1)
4.7
1.7
Capital in excess of par value
1,142.6
1,047.1
Treasury stock at cost, 616 and 587 shares
at December 31, 2019 and 2018, respectively(1)
(105.7
)
(105.6
)
Accumulated deficit
(1,339.9
)
(1,217.9
)
Accumulated other comprehensive income
(loss)
1.9
(11.4
)
Stockholders' deficit attributable to
shareholders
(296.4
)
(286.1
)
Non-controlling interest
1.4
8.8
Total stockholders' deficit
(294.9
)
(277.3
)
Total liabilities and stockholders'
deficit
$
626.5
$
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-K. (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)
Year ended December
31,
2019
2018
Cash flows from operating activities:
Net loss
$
(129.0
)
$
(724.9
)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Depreciation and amortization of
long-lived assets
23.6
32.0
Amortization of deferred financing costs,
debt discount and payment-in-kind interest
61.2
25.7
Non-cash operating lease expense
5.4
—
Loss (gain) on sale of business
3.6
(33.9
)
Loss on debt extinguishment
4.0
49.2
Goodwill impairment of discontinued
operations
—
72.3
Goodwill and other intangible asset
impairment
—
40.0
Income from equity method investees
—
(6.8
)
Other-than-temporary impairment of equity
method investment in TBWES
—
18.4
(Gains) losses on asset disposals and
impairments
(3.9
)
1.3
(Benefit from) provision for deferred
income taxes, including valuation allowances
(0.9
)
98.1
Mark to market losses (gains) and prior
service cost amortization for pension plans
(10.7
)
63.5
Stock-based compensation, net of
associated income taxes
3.1
2.3
Changes in assets and liabilities:
Accounts receivable
63.9
80.4
Dividends from equity method investees
—
0.9
Accrued insurance receivable
—
12.3
Contracts in progress
48.5
(6.3
)
Advance billings on contracts
(71.3
)
(22.3
)
Inventories
(4.1
)
10.3
Income taxes
1.3
(5.3
)
Accounts payable
(80.5
)
(4.4
)
Accrued and other current liabilities
(23.1
)
38.7
Accrued contract loss
(50.7
)
21.5
Pension liabilities, accrued
postretirement benefits and employee benefits
(16.3
)
(39.0
)
Other, net
(0.3
)
(6.0
)
Net cash used in operating
activities
(176.3
)
(281.9
)
Cash flows from investing activities:
Purchase of property, plant and
equipment
(3.8
)
(5.5
)
Proceeds from sale of business
7.4
155.0
Proceeds from sale of equity method
investments in joint venture
—
28.8
Purchases of available-for-sale
securities
(8.9
)
(34.8
)
Sales and maturities of available-for-sale
securities
11.5
35.2
Other, net
2.5
0.5
Net cash from investing
activities
8.8
179.2
Exhibit 3 Babcock & Wilcox Enterprises, Inc.
Condensed Consolidated Statements of Cash Flows(1) (In
millions)
Year ended December
31,
2019
2018
Cash flows from financing activities:
Borrowings under our U.S. revolving credit
facility
291.6
565.2
Repayments of our U.S. revolving credit
facility
(257.5
)
(514.6
)
Repayments of our second lien term loan
facility
—
(212.6
)
Borrowings under Last Out Term Loan
Tranche A-1
—
30.0
Borrowings under Last Out Term Loan
Tranche A-2
10.0
—
Repayments under Last Out Term Loan
Tranche A-2
(10.3
)
—
Borrowings under Last Out Term Loan
Tranche A-3
141.4
—
Repayments under Last Out Term Loan
Tranche A-3
(31.5
)
—
Repayments under our foreign revolving
credit facilities
(0.6
)
(7.3
)
Shares of our common stock returned to
treasury stock
(0.1
)
(0.8
)
Proceeds from rights offering
40.4
247.1
Costs related to rights offering
(0.8
)
(3.3
)
Debt issuance costs
(16.6
)
(22.4
)
Issuance of common stock
1.4
1.2
Other, net
(0.3
)
—
Net cash from financing
activities
167.0
82.6
Effects of exchange rate changes on
cash
(2.8
)
(2.3
)
Net decrease in cash, cash equivalents
and restricted cash
(3.3
)
(22.4
)
Less net increase in cash and cash
equivalents of discontinued operations
—
(13.0
)
Net decrease in cash, cash equivalents
and restricted cash of continuing operations
(3.3
)
(9.4
)
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
$
56.9
$
60.3
(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
December 31,
Twelve months ended
December 31,
2019
2018
2019
2018
REVENUES:
Babcock & Wilcox segment
$
137.0
$
206.6
$
688.3
$
754.6
Vølund & Other Renewable segment
26.3
(10.3
)
121.9
181.2
SPIG segment
18.7
36.0
80.7
153.6
Eliminations
(1.5
)
(9.5
)
(31.8
)
(27.0
)
$
180.4
$
222.9
$
859.1
$
1,062.4
ADJUSTED EBITDA:
Babcock & Wilcox segment
$
19.1
$
28.8
$
66.6
$
59.5
Vølund & Other Renewable segment
2.0
(110.0
)
(10.5
)
(275.9
)
SPIG segment
(0.6
)
(28.7
)
(2.4
)
(53.3
)
Corporate
(0.6
)
(3.4
)
(17.6
)
(24.2
)
Research and development costs
(0.6
)
(0.9
)
(2.9
)
(3.8
)
$
19.3
$
(114.2
)
$
33.3
$
(297.7
)
AMORTIZATION EXPENSE:
Babcock & Wilcox segment
$
0.2
$
0.1
$
0.6
$
0.7
Vølund & Other Renewable segment
0.1
0.2
0.5
0.8
SPIG segment
0.7
1.0
3.1
5.2
$
1.0
$
1.3
$
4.3
$
6.7
DEPRECIATION EXPENSE:
Babcock & Wilcox segment
$
2.5
$
4.7
$
15.1
$
15.3
Vølund & Other Renewable segment
0.5
0.7
2.4
3.5
SPIG segment
0.5
0.5
1.8
1.9
Corporate
—
0.3
—
1.1
$
3.5
$
6.2
$
19.3
$
21.8
As of December 31,
BACKLOG:
2019
2018
Babcock & Wilcox segment
$
220
$
386
Vølund & Other Renewable segment
(2)
188
327
SPIG segment
39
87
Other/Eliminations
(6
)
(18
)
$
441
$
782
(1) Figures may not be clerically accurate due to rounding. (2)
Vølund & Other Renewable backlog at December 31, 2019, includes
$171.8 million related to long-term operation and maintenance
contracts for renewable energy plants, with remaining durations
extending until 2034. Generally, such contracts have a duration of
10-20 years and include options to extend.
Exhibit 5 Babcock & Wilcox Enterprises, Inc.
Reconciliation of Adjusted EBITDA(5) (In millions)
Three months ended
December 31,
Twelve months ended
December 31,
2019
2018
2019
2018
Adjusted EBITDA (1)
Babcock & Wilcox segment (2)
$
19.1
$
28.8
$
66.6
$
59.5
Vølund & Other Renewable segment
2.0
(110.0
)
(10.5
)
(275.9
)
SPIG segment
(0.6
)
(28.7
)
(2.4
)
(53.3
)
Corporate (3)
(0.6
)
(3.4
)
(17.6
)
(24.2
)
Research and development costs
(0.6
)
(0.9
)
(2.9
)
(3.8
)
19.3
(114.2
)
33.3
(297.7
)
Restructuring activities and spin-off
transaction costs
(2.1
)
(3.2
)
(11.7
)
(16.8
)
Financial advisory services
(0.7
)
(3.2
)
(9.1
)
(18.6
)
Settlement cost to exit Vølund contract
(4)
—
—
(6.6
)
—
Reserve for strategic change in China
—
(7.3
)
—
(7.3
)
Advisory fees for settlement costs and
liquidity planning
(4.4
)
—
(11.8
)
—
Litigation settlement
—
—
(0.5
)
—
Stock compensation
(1.3
)
0.1
(3.4
)
(4.4
)
Goodwill and other intangible asset
impairment
—
(2.5
)
—
(40.0
)
Impairment of equity method investment in
TBWES
—
—
—
(18.4
)
Gain on sale of equity method investment
in BWBC
—
—
—
6.5
Depreciation & amortization
(4.5
)
(7.5
)
(23.6
)
(28.5
)
Gain (loss) on asset disposals, net
3.7
—
3.9
(1.5
)
Operating income (loss)
10.0
(137.7
)
(29.4
)
(426.6
)
Interest expense, net
(27.4
)
(14.1
)
(94.0
)
(49.4
)
Loss on debt extinguishment
—
—
(4.0
)
(49.2
)
(Loss) gain on sale of business
—
0.1
(3.6
)
39.8
Net pension benefit before MTM
3.6
5.3
14.0
25.4
MTM gain (loss) from benefit plans
10.1
(72.2
)
8.8
(67.5
)
Foreign exchange
10.8
(5.9
)
(16.6
)
(28.5
)
Other – net
0.1
—
0.3
0.3
Income (loss) before income tax
expense
$
7.2
$
(224.4
)
$
(124.4
)
$
(555.8
)
(1) Adjusted EBITDA, for the three and twelve months ended
December 31, 2018, excludes stock compensation that was previously
included in segment results and totals $(0.1) million and $1.3
million, respectively in the Babcock & Wilcox segment, $0.1
million and $0.4 million, respectively in the Vølund & Other
Renewable segment, $0.0 million and $0.1 million, respectively in
the SPIG segment, and $(0.2) million and $2.6 million, respectively
in Corporate. Beginning in the third quarter of 2019, stock
compensation is no longer considered in Adjusted EBITDA for
purposes of managing the business, and prior periods have been
adjusted to be presented on a comparable basis.
(2) The Babcock & Wilcox segment adjusted EBITDA, for the
three and twelve months ended December 31, 2018, excludes $6.6
million and $25.4 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.
(3) 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
$11.4 million, respectively for the three and twelve months ended
December 31, 2018.
(4) 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 to act, and our risk
related to acting, as the prime EPC should the project have moved
forward.
(5) Figures may not be clerically accurate due to rounding.
Exhibit 6 Babcock & Wilcox Enterprises, Inc.
Reconciliation of Adjusted Gross Profit (Loss)(2) (In
millions)
Three months ended
December 31,
Twelve months ended
December 31,
2019
2018
2019
2018
Adjusted gross profit (loss)
(1)
Operating income (loss)
$
10.0
$
(137.7
)
$
(29.4
)
$
(426.6
)
Selling, general and administrative
("SG&A") expenses
30.5
47.2
150.6
198.2
Advisory fees and settlement costs
5.1
3.2
27.9
18.6
Inventory reserve in Cost of Operations
for strategic change in China
—
1.4
—
1.4
Trade receivable reserve in SG&A for
Chinese operations
—
5.8
—
5.8
Intangible amortization expense
1.0
1.3
4.3
6.7
Goodwill impairment
—
2.5
—
40.0
Restructuring activities and spin-off
transaction costs
2.1
3.2
11.7
16.8
Research and development costs
0.6
0.9
2.9
3.8
(Gain) loss on asset disposals, net
(3.7
)
—
(3.9
)
1.4
Equity in income and impairment of
investees
—
(0.2
)
—
11.6
Adjusted gross profit (loss)
45.6
(72.3
)
164.0
(122.2
)
Adjusted gross profit by segment is as follows:
Three months ended
December 31,
Twelve months ended
December 31,
2019
2018
2019
2018
Adjusted gross profit (loss)
(1)
Babcock & Wilcox segment
39.0
45.9
148.9
141.1
Vølund & Other Renewable segment
5.6
(101.2
)
9.0
(238.1
)
SPIG segment
1.0
(16.9
)
6.1
(25.1
)
Adjusted gross profit (loss)
45.6
(72.3
)
164.0
(122.2
)
(1) Intangible amortization is not allocated to the segments'
adjusted gross profit, but depreciation is allocated to the
segments' adjusted gross profit. (2) Figures may not be clerically
accurate due to rounding.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200330005712/en/
Investor Contact: Megan Wilson Vice President, Corporate
Development & Investor Relations Babcock & Wilcox
Enterprises 704.625.4944 | investors@babcock.com
Media Contact: Ryan Cornell Public Relations Babcock
& Wilcox Enterprises 330.860.1345 | rscornell@babcock.com
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