BWX (BWXT) 8-K Babcock & Wilcox Announces Third Quarter 2013 Results

Exhibit 99.1

Babcock & Wilcox Announces Third Quarter 2013 Results

- GAAP Earnings per Share of $0.54, Adjusted Earnings per Share of $0.57

- Quarterly Dividend Increased by 25% to $0.10 per share

CHARLOTTE, N.C.--(BUSINESS WIRE)--November 12, 2013--The Babcock & Wilcox Company (NYSE: BWC) (“B&W” or the “Company”) today reported GAAP earnings per share for the third quarter of 2013 of $0.54 compared to $0.43 in the third quarter of 2012. Adjusted earnings per share for the third quarter of 2013, which excludes the impact of $4.8 million of restructuring charges, were $0.57, an increase of $0.11, or 23.9%, versus adjusted earnings per share in the third quarter of 2012. Revenue for the third quarter of 2013 was $774.8 million, a decrease of 4.1%, from the third quarter of 2012.

The Company declared a quarterly cash dividend of $0.10 per common share on November 8, 2013. This declaration represents a 25% increase in the quarterly cash dividend, the first increase since a dividend was initiated in November 2012. The dividend will be payable on December 13, 2013 to shareholders of record on November 25, 2013.

During the third quarter of 2013, the Company repurchased nearly 0.5 million shares of its common stock at a cost of $14.3 million. Through September 30, 2013, the Company has repurchased a total of 9.0 million shares at a cost of $236.7 million leaving approximately $263.3 million of capacity remaining under its previously announced $500 million share repurchase authorization. Over the past twelve months, between the dividend and share repurchase programs, B&W has returned to its shareholders more than $273 million, approximately 73% of the free cash flow generated since B&W became a public company in August 2010.

Recent Highlights

• Selected to the Barron’s 400 Index in September 2013
• Awarded contract to supply natural gas boilers to a Virginia manufacturing facility
• Awarded front-end engineering and design work for FutureGen 2.0 carbon capture project
• Awarded nuclear inspection and repair services contract for a U.S. utility
• Shipped steam generators to FirstEnergy’s Davis-Besse Nuclear Power Station
• Announced collaboration with Lightbridge Corporation on metallic nuclear fuel pilot fabrication facility
• Completed construction of a new “state-of-the-art” manufacturing facility in China for the manufacture of boiler auxiliary equipment

Results of Operations

Consolidated revenues for the third quarter of 2013 were $774.8 million, a decrease of $32.8 million from the third quarter of 2012. Revenues in the Power Generation segment were flat compared to the prior year. Nuclear Operations segment revenues decreased by $2.4 million compared to the third quarter of 2012, primarily attributable to the mix and timing of work related to nuclear components manufacturing, partially offset by increased volume of naval nuclear fuel and downblending activities. Third quarter 2013 revenues for the Nuclear Energy segment decreased by $22.5 million versus the corresponding period of 2012, primarily reflecting the completion of several large nuclear services and equipment contracts that were ongoing in the prior year.

Bookings for the 2013 third quarter totaled $317.0 million, a decrease of 41.2% compared to $538.9 million booked in the prior year period, primarily due to lower environmental bookings in the Power Generation segment, lower services bookings in the Nuclear Energy segment, and favorable contract performance in the Nuclear Operations segment that had the effect of adjusting the value of contracts in the backlog and consequently reducing previous bookings on our cost-reimbursable contracts.

Operating income for the third quarter of 2013 was $82.1 million, a decrease of $2.3 million from the third quarter of 2012. Compared to the prior year, the Nuclear Operations, Technical Services, and mPower segments reported increases in operating income of $6.9 million, $6.7 million, and $2.0 million, respectively, which were offset by decreases in the operating income of the Power Generation and Nuclear Energy segments of $2.3 million and $9.5 million, respectively. The Nuclear Operations segment improvement was primarily attributable to increased income associated with its naval nuclear fuel and downblending business and from improved contract performance associated with contract cost reductions in the manufacturing of nuclear components. Improvement in the Technical Services segment primarily reflects improved contract performance resulting in higher estimated award fees at several managed sites. The decrease in the Power Generation segment operating income was driven by lower margins on construction and outage maintenance services and a lower level of net favorable close-outs as compared to the prior period, largely offset by lower overhead and selling, general, and administrative expenses due to ongoing cost reduction initiatives. The decrease in operating income of the Nuclear Energy segment was primarily attributable to lower revenue, which was partially offset by favorable warranty experience.

Included in operating income for the third quarter 2013 were $4.8 million of special charges for restructuring activities related to our Global Competitiveness Initiative (GCI). Excluding the restructuring charges, adjusted operating income for the third quarter of 2013 was $86.9 million, compared to adjusted operating income of $87.0 million for the same period in 2012.

“B&W’s Government businesses again produced strong results this quarter, reflecting their focus on delivering high quality products and services to our Government customer. Soft bookings in our Commercial segments, primarily due to regulatory uncertainty that continues to delay investment spending for many of our commercial utility customers, impacted revenues and operating income for both our Power Generation and Nuclear Energy segments. Cost reductions from our Global Competitiveness Initiative partially mitigated the impact of lower volume on operating income,” said E. James Ferland, President and Chief Executive Officer of B&W. “We continue to look for ways to drive revenue, reduce costs, and improve operating income across all of our businesses, and in particular in our commercial business units. This will remain an area of intense focus.”

Liquidity

The Company’s cash and investments position, net of debt, was $311.2 million at the end of the third quarter of 2013, a decrease of $47.5 million compared to $358.7 million at the end of the second quarter of 2013. During the quarter, the Company repurchased common shares totaling $14.3 million, contributed $25.5 million to its pension plans, and paid dividends of $8.9 million. In addition to net cash, the Company maintains a $700.0 million revolving credit agreement with $553.8 million of availability as of the end of the third quarter.

Outlook for the Remainder of 2013

The Company narrowed the range of expectations for adjusted earnings per share for the full year 2013 to between $2.30 and $2.40, from the previous range of $2.25 to $2.45. Adjusted earnings per share exclude GCI restructuring charges and the year-end mark-to-market adjustment for pension and other post-retirement benefits. The Company expects 2013 consolidated revenues to be approximately $3.3 billion, a reduction from the previous guidance of $3.4 billion to $3.5 billion.

Reconciliation of Non-GAAP Earnings Per Share and Operating Income
(in $ millions, except per share amounts)

	Three Months Ended September 30, 2013
				Impairment			Tax Benefit
	GAAP			Charges			Recognized			GCI Impact			Non-GAAP
Operating Income	$	82.1		$	-		$	-		$	4.8		$	86.9
Other Income / (Expense)		(0.7	)		-			-			-			(0.7	)
Provision for Income Taxes		(24.4	)		-			-			(1.6	)		(26.0	)
Net Income		57.0			-			-			3.2			60.2
Net Loss (Income) Attributable to Non-Controlling Interest		3.4			-			-			-			3.4
Net Income Attributable to The Babcock & Wilcox Company	$	60.4		$	-		$	-		$	3.2		$	63.6
Diluted Earnings per Common Share	$	0.54		$	-		$	-		$	0.03		$	0.57
Effective Tax Rate		30.0	%											30.2	%
	Three Months Ended September 30, 2012
				Impairment			Tax Benefit
	GAAP			Charges			Recognized			GCI Impact			Non-GAAP
Operating Income	$	84.4		$	2.6		$	-		$	-		$	87.0
Other Income / (Expense)		(27.9	)		27.0			-			-			(0.9	)
Provision for Income Taxes		(7.3	)		(1.0	)		(25.3	)		-			(33.6	)
Net Income		49.3			28.6			(25.3	)		-			52.5
Net Loss (Income) Attributable to Non-Controlling Interest		2.2			-			-			-			2.2
Net Income Attributable to The Babcock & Wilcox Company	$	51.4		$	28.6		$	(25.3	)	$	-		$	54.7
Diluted Earnings per Common Share	$	0.43		$	0.24		$	(0.21	)	$	-		$	0.46
Effective Tax Rate		12.8	%											39.0	%
	Nine Months Ended September 30, 2013
				Impairment			Tax Benefit
	GAAP			Charges			Recognized			GCI Impact			Non-GAAP
Operating Income	$	241.0		$	-		$	-		$	25.5		$	266.5
Other Income / (Expense)		0.8			-			-			-			0.8
Provision for Income Taxes		(70.2	)		-			-			(8.7	)		(78.9	)
Net Income		171.6			-			-			16.8			188.4
Net Loss (Income) Attributable to Non-Controlling Interest		8.9			-			-			-			8.9
Net Income Attributable to The Babcock & Wilcox Company	$	180.5		$	-		$	-		$	16.8		$	197.3
Diluted Earnings per Common Share	$	1.60		$	-		$	-		$	0.15		$	1.75
Effective Tax Rate		29.0	%											29.5	%
	Nine Months Ended September 30, 2012
				Impairment			Tax Benefit
	GAAP			Charges			Recognized			GCI Impact			Non-GAAP
Operating Income	$	280.9		$	2.6		$	-		$	-		$	283.5
Other Income / (Expense)		(25.6	)		27.0			-			-			1.4
Provision for Income Taxes		(74.6	)		(1.0	)		(25.3	)		-			(100.9	)
Net Income		180.7			28.6			(25.3	)		-			183.9
Net Loss (Income) Attributable to Non-Controlling Interest		8.0			-			-			-			8.0
Net Income Attributable to The Babcock & Wilcox Company	$	188.6		$	28.6		$	(25.3	)	$	-		$	191.9
Diluted Earnings per Common Share	$	1.58		$	0.24		$	(0.21	)	$	-		$	1.61
Effective Tax Rate		29.2	%											35.4	%

B&W is providing non-GAAP information regarding certain of its historical results and guidance on future earnings per share to supplement the financial information 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 in 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.

Conference Call to Discuss Third Quarter 2013 Results

Date:	Wednesday, November 13, 2013, at 8:30 a.m. ET
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 expected adjusted earnings per share and revenues. These forward-looking statements are based on management’s current expectations and involve a number of risks and uncertainties, including, among other things, adverse changes in the industries in which we operate, our ability to successfully identify and leverage new business opportunities and our ability to execute on contracts in backlog. 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 its annual report on Form 10-K for the year ended December 31, 2012 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

The Babcock & Wilcox Company is a leader in clean energy technology and services, primarily for the nuclear, fossil and renewable power markets as well as a premier advanced technology and mission critical defense contractor. B&W has locations worldwide and employs approximately 12,000 people, in addition to approximately 10,400 joint venture employees. A company overview presentation, which will be presented at investor conferences and meetings throughout this quarter, is available on the Investor Relations section of our website. For additional information please visit our website at www.babcock.com.

TABLES TO FOLLOW

THE BABCOCK & WILCOX COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
	September 30,		December 31,
	2013		2012
	(Unaudited)
	(In thousands)
Current Assets:
Cash and cash equivalents	$	219,828	$	383,547
Restricted cash and cash equivalents		46,292		60,961
Investments		45,837		88,769
Accounts receivable – trade, net		414,984		364,960
Accounts receivable – other		64,356		61,682
Contracts in progress		379,510		316,518
Inventories		113,895		124,218
Deferred income taxes		100,147		78,573
Other current assets		45,312		41,858
Total Current Assets		1,430,161		1,521,086
Property, Plant and Equipment		1,111,538		1,099,040
Less accumulated depreciation		667,597		652,019
Net Property, Plant and Equipment		443,941		447,021
Investments		4,288		4,090
Goodwill		281,205		280,780
Deferred Income Taxes		213,400		227,215
Investments in Unconsolidated Affiliates		201,789		186,354
Intangible Assets		82,383		87,686
Other Assets		82,497		86,123
TOTAL	$	2,739,664	$	2,840,355

THE BABCOCK & WILCOX COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS’ EQUITY
	September 30,			December 31,
	2013			2012
	(Unaudited)
	(In thousands, except share and per share amounts)
Current Liabilities:
Notes payable and current maturities of long-term debt	$	4,793		$	4,062
Accounts payable		268,256			264,798
Accrued employee benefits		165,534			186,495
Accrued liabilities – other		72,325			57,991
Advance billings on contracts		395,251			472,287
Accrued warranty expense		67,492			83,682
Income taxes payable		18,113			9,973
Total Current Liabilities		991,764			1,079,288
Long-Term Debt		276			430
Accumulated Postretirement Benefit Obligation		66,364			71,208
Environmental Liabilities		48,186			46,497
Pension Liability		532,805			579,165
Other Liabilities		59,715			60,851
Commitments and Contingencies
Stockholders’ Equity:
Common stock, par value $0.01 per share, authorized 325,000,000 shares; issued 120,361,748 and 119,608,026 shares at September 30, 2013 and December 31, 2012, respectively		1,204			1,196
Preferred stock, par value $0.01 per share, authorized 75,000,000 shares; No shares issued		-			-
Capital in excess of par value		740,143			713,257
Retained earnings		502,468			349,063
Treasury stock at cost, 9,542,087 and 4,372,143 shares at September 30, 2013 and December 31, 2012, respectively		(251,997	)		(109,809	)
Accumulated other comprehensive income		30,317			32,728
Stockholders’ Equity – The Babcock & Wilcox Company		1,022,135			986,435
Noncontrolling interest		18,419			16,481
Total Stockholders’ Equity		1,040,554			1,002,916
TOTAL	$	2,739,664		$	2,840,355

THE BABCOCK & WILCOX COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2013			2012			2013			2012
	(Unaudited)
	(In thousands, except share and per share amounts)
Revenues	$	774,834		$	807,586		$	2,466,393		$	2,426,063
Costs and Expenses:
Cost of operations		578,394			603,876			1,884,134			1,787,311
Research and development costs		23,787			27,893			52,970			91,079
Losses on asset disposals and impairments – net		1,258			2,620			1,345			1,738
Selling, general and administrative expenses		102,576			103,343			313,113			313,629
Special charges for restructuring activities		4,849			-			25,504			-
Total Costs and Expenses		710,864			737,732			2,277,066			2,193,757
Equity in Income of Investees		18,151			14,546			51,713			48,590
Operating Income		82,121			84,400			241,040			280,896
Other Income (Expense):
Interest income		480			417			1,135			1,154
Interest expense		(631	)		(996	)		(2,238	)		(2,771	)
Other – net		(533	)		(27,306	)		1,878			(24,007	)
Total Other Income (Expense)		(684	)		(27,885	)		775			(25,624	)
Income before Provision for Income Taxes		81,437			56,515			241,815			255,272
Provision for Income Taxes		24,416			7,259			70,217			74,611
Net Income		57,021			49,256			171,598			180,661
Net Loss Attributable to Noncontrolling Interest		3,425			2,187			8,892			7,963
Net Income Attributable to The Babcock & Wilcox Company	$	60,446		$	51,443		$	180,490		$	188,624
Earnings per Common Share:
Basic:
Net Income Attributable to The Babcock & Wilcox Company	$	0.54		$	0.43		$	1.61		$	1.59
Diluted:
Net Income Attributable to The Babcock & Wilcox Company	$	0.54		$	0.43		$	1.60		$	1.58
Shares used in the computation of earnings per share:
Basic		110,931,376			118,843,829			112,309,170			118,582,544
Diluted		111,749,381			119,452,881			113,049,700			119,189,977

THE BABCOCK & WILCOX COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
	Nine Months Ended
	September 30,
	2013			2012
	(Unaudited)
	(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income	$	171,598		$	180,661
Non-cash items included in net income:
Depreciation and amortization		51,341			52,818
Income of investees, net of dividends		(18,419	)		(26,455	)
Losses on asset disposals and impairments		1,345			1,738
Impairment of USEC investment		-			27,000
Recognition of uncertain tax positions		-			(25,305	)
In-kind research and development costs		11,289			13,477
Amortization of pension and postretirement costs		2,265			2,531
Stock-based compensation expense		13,072			13,555
Excess tax benefits from stock-based compensation		(64	)		(1,441	)
Changes in assets and liabilities, net of effects of acquisitions:
Accounts receivable		(44,663	)		(61,828	)
Contracts in progress and advance billings on contracts		(140,862	)		(104,832	)
Accounts payable		5,305			37,631
Inventories		10,559			(24,727	)
Current and deferred income taxes		(1,284	)		44,099
Accrued and other current liabilities		(3,588	)		(19,024	)
Pension liability, accumulated postretirement benefit obligation and accrued employee benefits		(69,842	)		(178,953	)
Other, net		5,921			(10,182	)
NET CASH USED IN OPERATING ACTIVITIES		(6,027	)		(79,237	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Decrease (Increase) in restricted cash and cash equivalents		14,669			(752	)
Purchases of property, plant and equipment		(45,288	)		(58,780	)
Proceeds from sale of unconsolidated affiliate		-			2,091
Purchase of intangible assets		(2,200	)		-
Purchases of available-for-sale securities		(79,747	)		(234,577	)
Sales and maturities of available-for-sale securities		122,677			163,203
Investment in equity and cost method investees		(2,807	)		(6,437	)
Proceeds from asset disposals		586			149
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES		7,890			(135,103	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of short-term borrowing and long-term debt		(157	)		(4,592	)
Increase in short-term borrowing		649			2,532
Payment of debt issuance costs		-			(4,850	)
Repurchase of common shares		(140,143	)		-
Dividends paid to common shareholders		(27,082	)		-
Excess tax benefits from stock-based compensation		64			1,441
Exercise of stock options		3,756			2,474
Other		(414	)		(395	)
NET CASH USED IN FINANCING ACTIVITIES		(163,327	)		(3,390	)
EFFECTS OF EXCHANGE RATE CHANGES ON CASH		(2,255	)		2,820
NET DECREASE IN CASH AND CASH EQUIVALENTS		(163,719	)		(214,910	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		383,547			415,209
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	219,828		$	200,299
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Income taxes (net of refunds)	$	70,602		$	61,617
SCHEDULE OF NONCASH INVESTING ACTIVITY:
Accrued capital expenditures included in accounts payable	$	6,040		$	5,406

THE BABCOCK & WILCOX COMPANY
BUSINESS SEGMENT INFORMATION
	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2013			2012			2013			2012
	(Unaudited)
	(In thousands)
REVENUES:
Power Generation	$	426,960		$	426,363		$	1,359,614		$	1,337,673
Nuclear Operations		282,120			284,450			874,245			800,026
Technical Services		25,242			26,023			77,903			79,265
Nuclear Energy		52,470			75,006			179,171			228,916
mPower		343			39			980			107
Adjustments and Eliminations		(12,301	)		(4,295	)		(25,520	)		(19,924	)
TOTAL	$	774,834		$	807,586		$	2,466,393		$	2,426,063
SEGMENT INCOME:
Power Generation	$	38,348		$	40,600		$	102,213		$	138,210
Nuclear Operations		63,819			56,919			184,280			167,112
Technical Services		18,398			11,657			47,812			45,614
Nuclear Energy		21			9,517			10,201			41,528
mPower		(25,576	)		(27,602	)		(53,627	)		(88,214	)
SUBTOTAL		95,010			91,091			290,879			304,250
Corporate		(8,040	)		(6,691	)		(24,335	)		(23,354	)
Special Charges for Restructuring Activities		(4,849	)		0			(25,504	)		0
TOTAL	$	82,121		$	84,400		$	241,040		$	280,896
EQUITY IN INCOME (LOSS) OF INVESTEES:
Power Generation	$	3,287		$	4,214		$	10,596		$	11,090
Nuclear Operations		0			0			0			0
Technical Services		15,063			10,332			41,595			37,500
Nuclear Energy		(199	)		0			(478	)		0
mPower		0			0			0			0
TOTAL	$	18,151		$	14,546		$	51,713		$	48,590
PENSION EXPENSE:
Power Generation	$	750		$	2,816		$	2,240		$	12,572
Nuclear Operations		1,133			2,834			3,399			10,174
Technical Services		72			178			216			646
Nuclear Energy		899			516			3,038			1,593
mPower		0			0			0			0
Corporate		505			615			1,515			2,031
TOTAL	$	3,359		$	6,959		$	10,408		$	27,016
DEPRECIATION AND AMORTIZATION:
Power Generation	$	5,720		$	4,821		$	16,519		$	14,312
Nuclear Operations		6,769			7,776			20,182			24,679
Technical Services		48			61			144			189
Nuclear Energy		1,648			1,396			4,832			4,404
mPower		122			158			365			158
Corporate		3,178			3,076			9,299			9,076
TOTAL	$	17,485		$	17,288		$	51,341		$	52,818
RESEARCH AND DEVELOPMENT, NET:
Power Generation	$	4,585		$	5,611		$	16,128		$	16,260
Nuclear Operations		54			0			67			119
Technical Services		17			14			56			339
Nuclear Energy		879			1,050			3,079			2,728
mPower		18,252			21,218			33,640			71,633
TOTAL	$	23,787		$	27,893		$	52,970		$	91,079
CAPITAL EXPENDITURES:
Power Generation	$	1,553		$	5,874		$	13,403		$	16,121
Nuclear Operations		8,187			7,146			21,599			30,502
Technical Services		66			0			66			0
Nuclear Energy		1,163			1,314			4,141			3,247
mPower		331			420			1,745			1,087
Corporate		555			2,478			4,334			7,823
TOTAL	$	11,855		$	17,232		$	45,288		$	58,780
BACKLOG:
Power Generation	$	2,176,110		$	2,487,822		$	2,176,110		$	2,487,822
Nuclear Operations		2,530,159			2,630,206			2,530,159			2,630,206
Technical Services		15,388			4,119			15,388			4,119
Nuclear Energy		185,632			321,307			185,632			321,307
mPower		2,221			1,800			2,221			1,800
TOTAL	$	4,909,510		$	5,445,254		$	4,909,510		$	5,445,254

CONTACT:
The Babcock & Wilcox Company
Investor Contact:
Jenny L. Apker, Vice President, Treasurer and Investor Relations, 704-625-4944
investors@babcock.com
or
Media Contact:
Aimee Mills, Media Relations Lead, 980-365-4583
aemills@babcock.com