Babcock & Wilcox Hits $2.44 Billion Backlog as EPC, Other Contracts Roll in from Around the World

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Researched by Industrial Info Resources (Sugar Land, Texas)--In its first quarterly release as a stand-alone company, energy services provider Babcock & Wilcox Enterprises Incorporated (NYSE:BW) (B&W) (Charlotte, North Carolina) benefited from a slew of new international project awards that drove growth in the Global Power segment and boosted the company's backlog to $2.44 billion. Industrial Info is tracking $7.4 billion in active projects involving Babcock, including $2.86 billion in the U.S. and $1.67 billion in China.

Among the company's largest U.S. projects are two retrofits at coal-fired plants in the South: American Electric Power Company's (NYSE:AEP) (AEP) (Columbus, Ohio) $389.9 million retrofit of Unit 1 at the Flint Creek Power Station in Gentry, Arkansas, and Southern Company's (NYSE:SO) (Atlanta, Georgia) $330 million retrofit of units 8, 9 and 10 at the William Crawford Gorgas Power Station in Parrish, Alabama. At the Flint Creek station's 558-megawatt (MW) Unit 1, AEP plans to install an Alstom dry flue gas-desulfurization scrubber onto a B&W coal opposed-fired, dry-bottom boiler to reduce SO2 and particulate matter. B&W is serving as contractor.

B&W also is performing engineering, procurement and construction (EPC) services for the retrofit at the William Crawford Gorgas station. Southern Company plans to install a B&W pulse-jet baghouse to serve two pulverizing coal tangential-fired dry bottom boilers, one from B&W and another from Alstom, to comply with state and U.S. Environmental Protection Agency (EPA) regulations. Both projects are set to be completed in second-quarter 2016.

B&W became its own company after its predecessor, The Babcock and Wilcox Company, shifted focus to its government-related and nuclear-related businesses and formed BWX Technologies (NYSE:BWXT) (Charlotte), and then spun off its power generation-related businesses to form B&W. The change became effective June 30.

Net income was reported to be $5.49 million, an 11.16% increase from second-quarter 2014, while total revenues stood at $437.49 million, a 33.63% increase. (Comparisons are made with the power generation-related businesses that were part of The Babcock & Wilcox Company in 2014.) International orders for new-build steam projects drove much of the growth in the Global Power segment, which led B&W in revenue, profit and backlog gains. Although the Global Services segment reported stronger revenues from service and construction-related projects, it saw a slight decline in profits due to operational and maintenance costs.

B&W's income also accounted for $9 million in non-cash facility and equipment impairments, largely due to the close-out of a carbon capture and storage (CCS) research program, and $5.3 million of restructuring costs related to margin improvement.

B&W executives expect consolidated revenues for full-year 2015 to reach $1.7 billion, partly due to a full year of results from MEGTEC, an industrial processes solutions provider that was acquired in June 2014. They also said that the company's growing backlog--up 10.3% year-over-year to $2.44 billion--is evidence of a global growth in Power Industry spending; among the largest projects signed since the beginning of the year are a $220 million contract for a biomass power plant in England; a $200 million contract for a biomass power plant in Wales; and a $230 million contract for a waste-to-energy power plant in Scotland.

About 55% of full-year 2015's estimated revenues are expected to come from aftermarket coal, while about 65% will be found in North America.

"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 E. James Ferland, the chairman and chief executive officer of B&W, in a quarterly press release. "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."

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five 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.