Babcock & Wilcox Ends 2014 on High Note with Solid Bookings, $5.3 Billion Backlog

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Researched by Industrial Info Resources (Sugar Land, Texas)--Energy services provider The Babcock & Wilcox Company (NYSE:BWC) (B&W) (Charlotte, North Carolina) ended a shaky 2014 with a strong fourth quarter, as the Nuclear Operations segment reported record revenues and profits, and the Power Generation segment improved its international bookings. B&W's income totaled $220.7 million for the year, a 13.55% decrease from 2013, when excluding numerous one-time and extraordinary charges; for the fourth quarter alone, income stood at $68.4 million, a 17.12% increase from the same period last year.

Without the exclusions, net income stood at $29.39 million for the year, compared with $346.08 million in 2013, while the fourth quarter saw a net loss of $103.31 million, compared with net income of $165.59 million in fourth-quarter 2013. The one-time and extraordinary charges include costs related to the impending spin-off of the Power Generation segment; about $152 million in pension and other post-employment benefits, compared with a $142.5 million gain in 2013; and various restructuring, impairment and acquisition costs. B&W also took at $16.1 million hit from a jury verdict, after Areva Incorporated (Paris, France) alleged that B&W failed to pay royalties under a contract.

Industrial Info is tracking $6.62 billion in active projects involving B&W, including two major retrofits in the U.S. South: the $389.9 million retrofit of the 558-megawatt (MW) Unit 1 at the Flint Creek Power Station in Gentry, Arkansas, and the $300 million retrofit of the 884-MW Unit 5 at the Ernest C. Gaston Power Station in Wilsonville, Alabama. The Flint Creek project is intended to reduce sulfur dioxide, mercury and other particulate emissions, while the Gaston project will include the installation of a B&W pulse-jet baghouse to serve a B&W pulverizing coal tangential dry-bottom boiler. The projects are expected to be completed in May 2016 and March 2016, respectively.

Total revenues stood at $2.92 billion for the year, a 10.59% decrease from 2013, and $837.09 million for the fourth quarter, a 4.27% increase from fourth-quarter 2013. The Nuclear Operations segment saw stronger demand for nuclear fuel, particularly in the fourth quarter, while the Power Generation segment benefited from B&W's June 2014 acquisition of MEGTEC, an industrial processes solutions provider. The Nuclear Energy segment reported a fourth-quarter revenue drop of more than 60%, following the company's decision to abandon the nuclear projects business, which had been yielding low margins.

Capital expenditures were reported to total $76.03 million in 2014, compared with $64.95 million in 2013. In the fourth quarter, capital expenditures totaled $20.15 million, compared with $19.66 million in fourth-quarter 2013.

"The Power Generation Group reported its strongest bookings quarter in almost three years, driven by new international coal and renewable waste energy projects that were awarded during the fourth quarter," said E. James Ferland, the president, director and chief executive officer of B&W, in a conference call. "Further, we've announced an additional $200 million award in the [United Kingdom] for a renewable waste energy plant that will be booked in the first quarter of 2015. These plants will be constructed over the next two years to three years."

B&W ended 2014 with a backlog of $5.29 billion, compared with a backlog of $4.59 billion at the end of 2013.

By mid-summer, the current B&W is expected to be two independent, publicly traded companies: Babcock & Wilcox, which will comprise the Power Generation business, and BWX Technologies, which will comprise the Government & Nuclear Operations business and include the Nuclear Operations, Technical Services, Nuclear Energy and mPower businesses. The new Babcock & Wilcox is expected to benefit from the first full year of revenues from B&W's acquisition of MEGTEC; BWX Technologies is to benefit from the record levels in the Nuclear Operations segment over the last two years.

Earlier this month, the Nuclear Operations segment (specifically, subsidiary Babcock & Wilcox Nuclear Operations Group Incorporated) was awarded about $535.1 million in contracts for the construction of naval nuclear reactor components for U.S. Navy submarines and aircraft carriers. These contracts, which began in January 2015, primarily relate to nuclear propulsion components for Virginia-class submarines and Ford-class aircraft carriers. Other work includes the disassembly and recovery of highly enriched uranium materials.

"[Nuclear Operations Group] bookings in the fourth quarter included the release of our annual award, as well as new missile tube work we won through a competitive process," Ferland said in the conference call. "We will continue to see adjacent growth opportunities, like the missile tube work, where we can use our precision manufacturing capabilities for other government applications."

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.