|
x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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DELAWARE
|
|
47-2783641
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(State or other Jurisdiction of Incorporation or Organization)
|
|
(I.R.S. Employer Identification No.)
|
|
||
20 SOUTH VAN BUREN AVENUE
|
|
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BARBERTON, OHIO
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44203
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(Address of Principal Executive Offices)
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(Zip Code)
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Large accelerated filer
|
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¨
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Accelerated filer
|
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x
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Non-accelerated filer
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¨
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Smaller reporting company
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¨
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Emerging growth company
|
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¨
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Title of each class
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Trading Symbol(s)
|
Name of each exchange on which registered
|
Common Stock, $0.01 par value
|
BW
|
New York Stock Exchange
|
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PAGE
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||
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|
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|
Three months ended March 31,
|
|||||
(in thousands, except per share amounts)
|
2019
|
2018
|
||||
Revenues
|
$
|
231,936
|
|
$
|
253,176
|
|
Costs and expenses:
|
|
|
||||
Cost of operations
|
201,067
|
|
277,345
|
|
||
Selling, general and administrative expenses
|
42,399
|
|
59,409
|
|
||
Advisory fees and settlement costs
|
13,610
|
|
3,089
|
|
||
Restructuring activities and spin-off transaction costs
|
6,079
|
|
6,862
|
|
||
Research and development costs
|
743
|
|
1,142
|
|
||
Total costs and expenses
|
263,898
|
|
347,847
|
|
||
Equity in income and impairment of investees
|
—
|
|
(11,757
|
)
|
||
Operating loss
|
(31,962
|
)
|
(106,428
|
)
|
||
Other income (expense):
|
|
|
||||
Interest expense
|
(11,134
|
)
|
(13,452
|
)
|
||
Interest income
|
559
|
|
153
|
|
||
Benefit plans, net
|
3,030
|
|
6,997
|
|
||
Foreign exchange
|
(10,153
|
)
|
2,457
|
|
||
Other – net
|
420
|
|
397
|
|
||
Total other expense
|
(17,278
|
)
|
(3,448
|
)
|
||
Loss before income tax expense
|
(49,240
|
)
|
(109,876
|
)
|
||
Income tax expense
|
626
|
|
6,963
|
|
||
Loss from continuing operations
|
(49,866
|
)
|
(116,839
|
)
|
||
Loss from discontinued operations, net of tax
|
—
|
|
(3,496
|
)
|
||
Net loss
|
(49,866
|
)
|
(120,335
|
)
|
||
Net income (loss) attributable to noncontrolling interest
|
101
|
|
(98
|
)
|
||
Net loss attributable to stockholders
|
$
|
(49,765
|
)
|
$
|
(120,433
|
)
|
|
|
|
||||
Basic and diluted loss per share - continuing operations
|
$
|
(0.29
|
)
|
$
|
(2.65
|
)
|
Basic and diluted (loss) earnings per share - discontinued operations
|
—
|
|
(0.08
|
)
|
||
Basic and diluted loss per share
|
$
|
(0.29
|
)
|
$
|
(2.73
|
)
|
|
|
|
|
|
||
Shares used in the computation of earnings per share:
|
|
|
||||
Basic and diluted
|
168,812
|
|
44,187
|
|
|
Three months ended March 31,
|
|||||
(in thousands)
|
2019
|
2018
|
||||
Net loss
|
$
|
(49,866
|
)
|
$
|
(120,335
|
)
|
Other comprehensive income (loss):
|
|
|
||||
Currency translation adjustments (CTA), net of taxes
|
10,260
|
|
3,223
|
|
||
|
|
|
||||
Reclassification of CTA to net loss
|
—
|
|
(2,044
|
)
|
||
|
|
|
||||
Derivative financial instruments:
|
|
|
||||
Unrealized (losses) gains on derivative financial instruments
|
(1,311
|
)
|
1,601
|
|
||
Income tax (benefit) expense
|
(133
|
)
|
377
|
|
||
Unrealized (losses) gains on derivative financial instruments, net of taxes
|
(1,178
|
)
|
1,224
|
|
||
Derivative financial instrument gains (losses) reclassified into net income
|
289
|
|
(1,628
|
)
|
||
Income tax expense (benefit)
|
65
|
|
(356
|
)
|
||
Reclassification adjustment for gains (losses) included in net loss, net of taxes
|
224
|
|
(1,272
|
)
|
||
|
|
|
||||
Benefit obligations:
|
|
|
||||
Unrealized losses on benefit obligations, net of taxes
|
—
|
|
(55
|
)
|
||
|
|
|
||||
Amortization of benefit plan benefits
|
(356
|
)
|
(384
|
)
|
||
|
|
|
||||
Other comprehensive income
|
8,950
|
|
692
|
|
||
Total comprehensive loss
|
(40,916
|
)
|
(119,643
|
)
|
||
Comprehensive income (loss) attributable to noncontrolling interest
|
122
|
|
463
|
|
||
Comprehensive loss attributable to stockholders
|
$
|
(40,794
|
)
|
$
|
(119,180
|
)
|
(in thousands, except per share amount)
|
March 31, 2019
|
December 31, 2018
|
||||
Cash and cash equivalents
|
$
|
43,527
|
|
$
|
43,214
|
|
Restricted cash and cash equivalents
|
6,959
|
|
17,065
|
|
||
Accounts receivable – trade, net
|
203,244
|
|
197,203
|
|
||
Accounts receivable – other
|
56,982
|
|
44,662
|
|
||
Contracts in progress
|
136,407
|
|
144,727
|
|
||
Inventories
|
63,789
|
|
61,323
|
|
||
Other current assets
|
45,861
|
|
41,425
|
|
||
Total current assets
|
556,769
|
|
549,619
|
|
||
Net property, plant and equipment
|
84,952
|
|
90,892
|
|
||
Goodwill
|
47,131
|
|
47,108
|
|
||
Intangible assets
|
29,116
|
|
30,793
|
|
||
Right-of-use assets
|
15,067
|
|
—
|
|
||
Other assets
|
31,842
|
|
27,085
|
|
||
Total assets
|
$
|
764,877
|
|
$
|
745,497
|
|
|
|
|
||||
Revolving credit facilities
|
$
|
175,300
|
|
$
|
145,506
|
|
Last out term loans
|
42,413
|
|
30,649
|
|
||
Accounts payable
|
202,938
|
|
199,882
|
|
||
Accrued employee benefits
|
23,092
|
|
19,319
|
|
||
Advance billings on contracts
|
155,279
|
|
149,367
|
|
||
Accrued warranty expense
|
44,824
|
|
45,117
|
|
||
Lease liabilities
|
4,895
|
|
—
|
|
||
Other accrued liabilities
|
117,150
|
|
122,149
|
|
||
Total current liabilities
|
765,891
|
|
711,989
|
|
||
Pension and other accumulated postretirement benefit liabilities
|
277,773
|
|
281,647
|
|
||
Noncurrent lease liabilities
|
9,976
|
|
—
|
|
||
Other noncurrent liabilities
|
29,089
|
|
29,158
|
|
||
Total liabilities
|
1,082,729
|
|
1,022,794
|
|
||
Commitments and contingencies
|
|
|
||||
Stockholders' (deficit) equity:
|
|
|
||||
Common stock, par value $0.01 per share, authorized 200,000 shares; issued and outstanding 168,862 and 168,791 shares at March 31, 2019 and December 31, 2018, respectively
|
1,748
|
|
1,748
|
|
||
Capital in excess of par value
|
1,047,466
|
|
1,047,062
|
|
||
Treasury stock at cost, 5,924 and 5,872 shares at March 31, 2019 and December 31, 2018, respectively
|
(105,612
|
)
|
(105,590
|
)
|
||
Accumulated deficit
|
(1,267,679
|
)
|
(1,217,914
|
)
|
||
Accumulated other comprehensive loss
|
(2,482
|
)
|
(11,432
|
)
|
||
Stockholders' deficit attributable to shareholders
|
(326,559
|
)
|
(286,126
|
)
|
||
Noncontrolling interest
|
8,707
|
|
8,829
|
|
||
Total stockholders' deficit
|
(317,852
|
)
|
(277,297
|
)
|
||
Total liabilities and stockholders' deficit
|
$
|
764,877
|
|
$
|
745,497
|
|
|
Common Stock
|
Capital In
Excess of Par Value |
Treasury Stock
|
Accumulated Deficit
|
Accumulated
Other Comprehensive (Loss) Income |
Noncontrolling
Interest |
Total
Stockholders’ Equity (Deficit) |
||||||||||||||||
|
|||||||||||||||||||||||
|
Shares
|
Par Value
|
|||||||||||||||||||||
|
|
(in thousands, except share and per share amounts)
|
|||||||||||||||||||||
December 31, 2017 Balance
|
44,065
|
|
$
|
499
|
|
$
|
800,968
|
|
$
|
(104,785
|
)
|
$
|
(492,150
|
)
|
$
|
(22,429
|
)
|
$
|
8,600
|
|
$
|
190,703
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Net loss
|
—
|
|
—
|
|
—
|
|
—
|
|
(120,433
|
)
|
—
|
|
98
|
|
(120,335
|
)
|
|||||||
Revenue recognition standard adoption
|
—
|
|
—
|
|
—
|
|
—
|
|
(472
|
)
|
—
|
|
—
|
|
(472
|
)
|
|||||||
Currency translation adjustments
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1,179
|
|
(25
|
)
|
1,154
|
|
|||||||
Derivative financial instruments
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(48
|
)
|
—
|
|
(48
|
)
|
|||||||
Defined benefit obligations
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(439
|
)
|
—
|
|
(439
|
)
|
|||||||
Available-for-sale investments
|
—
|
|
—
|
|
—
|
|
—
|
|
38
|
|
(38
|
)
|
—
|
|
—
|
|
|||||||
Stock-based compensation charges
|
316
|
|
4
|
|
149
|
|
(720
|
)
|
—
|
|
—
|
|
—
|
|
(567
|
)
|
|||||||
March 31, 2018 Balance
|
44,381
|
|
$
|
503
|
|
$
|
801,117
|
|
$
|
(105,505
|
)
|
$
|
(613,017
|
)
|
$
|
(21,775
|
)
|
$
|
8,673
|
|
$
|
69,996
|
|
|
Common Stock
|
Capital In
Excess of Par Value |
Treasury Stock
|
Accumulated Deficit
|
Accumulated
Other Comprehensive (Loss) Income |
Noncontrolling
Interest |
Total
Stockholders’ (Deficit) Equity |
||||||||||||||||
|
|||||||||||||||||||||||
|
Shares
|
Par Value
|
|||||||||||||||||||||
|
|
(in thousands, except share and per share amounts)
|
|||||||||||||||||||||
December 31, 2018 Balance
|
168,791
|
|
$
|
1,748
|
|
$
|
1,047,062
|
|
$
|
(105,590
|
)
|
$
|
(1,217,914
|
)
|
$
|
(11,432
|
)
|
$
|
8,829
|
|
$
|
(277,297
|
)
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Net loss
|
—
|
|
—
|
|
—
|
|
—
|
|
(49,765
|
)
|
—
|
|
(101
|
)
|
(49,866
|
)
|
|||||||
Currency translation adjustments
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
10,260
|
|
(21
|
)
|
10,239
|
|
|||||||
Derivative financial instruments
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(954
|
)
|
—
|
|
(954
|
)
|
|||||||
Defined benefit obligations
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(356
|
)
|
—
|
|
(356
|
)
|
|||||||
Stock-based compensation charges
|
71
|
|
—
|
|
404
|
|
(22
|
)
|
—
|
|
—
|
|
—
|
|
382
|
|
|||||||
March 31, 2019 Balance
|
168,862
|
|
$
|
1,748
|
|
$
|
1,047,466
|
|
$
|
(105,612
|
)
|
$
|
(1,267,679
|
)
|
$
|
(2,482
|
)
|
$
|
8,707
|
|
$
|
(317,852
|
)
|
|
|
Three months ended March 31,
|
|||||
(in thousands)
|
|
2019
|
2018
|
||||
Cash flows from operating activities:
|
|
|
|||||
Net loss
|
|
$
|
(49,866
|
)
|
$
|
(120,335
|
)
|
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
|
|
|
|
||||
Depreciation and amortization of long-lived assets
|
|
7,306
|
|
9,070
|
|
||
Amortization of deferred financing costs, debt discount and payment-in-kind interest
|
|
5,695
|
|
4,951
|
|
||
Amortization of right of use assets
|
|
1,543
|
|
—
|
|
||
Income from equity method investees
|
|
—
|
|
(6,605
|
)
|
||
Other-than-temporary impairment of equity method investment in TBWES
|
|
—
|
|
18,362
|
|
||
Losses on asset disposals and impairments
|
|
—
|
|
527
|
|
||
(Benefit from) provision for deferred income taxes, including valuation allowances
|
|
(175
|
)
|
1,056
|
|
||
Mark to market losses (gains) and prior service cost amortization for pension and postretirement plans
|
|
42
|
|
(439
|
)
|
||
Stock-based compensation, net of associated income taxes
|
|
404
|
|
153
|
|
||
Changes in assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
|
192
|
|
17,337
|
|
||
Contracts in progress and advance billings on contracts
|
|
9,894
|
|
(18,331
|
)
|
||
Inventories
|
|
(3,239
|
)
|
4,266
|
|
||
Income taxes
|
|
(49
|
)
|
10,126
|
|
||
Accounts payable
|
|
4,594
|
|
(3,038
|
)
|
||
Accrued and other current liabilities
|
|
6,480
|
|
(3,785
|
)
|
||
Accrued contract loss
|
|
(30,903
|
)
|
6,923
|
|
||
Pension liabilities, accrued postretirement benefits and employee benefits
|
|
(594
|
)
|
(9,640
|
)
|
||
Other, net
|
|
10,980
|
|
4,565
|
|
||
Net cash used operating activities
|
|
(37,696
|
)
|
(84,837
|
)
|
||
Cash flows from investing activities:
|
|
|
|
||||
Purchase of property, plant and equipment
|
|
(288
|
)
|
(3,204
|
)
|
||
Proceeds from sale of business
|
|
—
|
|
5,105
|
|
||
Proceeds from sale of equity method investments in joint venture
|
|
—
|
|
21,078
|
|
||
Purchases of available-for-sale securities
|
|
(6,036
|
)
|
(9,612
|
)
|
||
Sales and maturities of available-for-sale securities
|
|
957
|
|
9,451
|
|
||
Other, net
|
|
95
|
|
167
|
|
||
Net cash (used) from investing activities
|
|
(5,272
|
)
|
22,985
|
|
|
|
Three months ended March 31,
|
|||||
(in thousands)
|
|
2019
|
2018
|
||||
Cash flows from financing activities:
|
|
|
|
||||
Borrowings under our U.S. revolving credit facility
|
|
71,200
|
|
157,100
|
|
||
Repayments of our U.S. revolving credit facility
|
|
(40,800
|
)
|
(74,356
|
)
|
||
Borrowings under our last out term loan from related party
|
|
10,000
|
|
—
|
|
||
Repayments under our foreign revolving credit facilities
|
|
(600
|
)
|
(5,022
|
)
|
||
Shares of our common stock returned to treasury stock
|
|
(22
|
)
|
(720
|
)
|
||
Debt issuance costs
|
|
(6,675
|
)
|
(5,441
|
)
|
||
Other, net
|
|
—
|
|
(78
|
)
|
||
Net cash from financing activities
|
|
33,103
|
|
71,483
|
|
||
Effects of exchange rate changes on cash
|
|
72
|
|
(5,210
|
)
|
||
Net (decrease) increase in cash, cash equivalents and restricted cash
|
|
(9,793
|
)
|
4,421
|
|
||
Less net increase in cash and cash equivalents of discontinued operations
|
|
—
|
|
1,279
|
|
||
Net (decrease) increase in cash, cash equivalents and restricted cash of continuing operations
|
|
(9,793
|
)
|
3,142
|
|
||
Cash, cash equivalents and restricted cash of continuing operations, beginning of period
|
|
60,279
|
|
69,697
|
|
||
Cash, cash equivalents and restricted cash of continuing operations, end of period
|
|
$
|
50,486
|
|
$
|
72,839
|
|
•
|
received
$150.0 million
in gross proceeds from Tranche A-3 of the Last Out Term Loans before original issuance discount and fees, as described in
Note 18
, from B. Riley FBR, Inc., a related party, on April 5, 2019
;
|
•
|
received
$10.0 million
in net proceeds from Tranche A-2 of the Last Out Term Loans, described in
Note 18
, from B. Riley Financial, Inc. (together with its affiliates, including B. Riley FBR, Inc., "B. Riley"), a related party, on March 20, 2019
;
|
•
|
reduced uncertainty and provided better visibility into our future liquidity requirements by turning over four of the six European Vølund EPC loss contracts to the customers by the end of the first quarter of 2019 and negotiated a settlement of the remaining two loss contracts as described in
Note 5
, which was funded with the proceeds from Tranche A-3 of the Last Out Term Loans
;
|
•
|
entered into an additional settlement as described in
Note 5
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, whereby our obligations and our risk from acting as the prime EPC should the project move forward was eliminated
; and
|
•
|
entered into several amendments and waivers to avoid default and improve our liquidity under the terms of our Amended Credit Agreement as described in
Note 17
and
Note 18
, the most recent of which was Amendment No. 16 dated April 5, 2019,
which provided Tranche A-3 of the Last Out Term Loans described above and in
Note 18
, reset the financial and other covenants, increased borrowing capacity under the U.S. Revolving Credit Facility by reducing the minimum liquidity requirement, allowed for the issuance of a limited amount of new letters of credit with respect to any future Vølund project, and permitted other letters of credit to expire up to one year after the maturity of the U.S. Revolving Credit Facility.
|
|
Three months ended March 31,
|
|||||
(in thousands, except per share amounts)
|
2019
|
2018
|
||||
Loss from continuing operations
|
$
|
(49,765
|
)
|
$
|
(116,937
|
)
|
Loss from discontinued operations, net of tax
|
—
|
|
(3,496
|
)
|
||
Net loss attributable to shareholders
|
$
|
(49,765
|
)
|
$
|
(120,433
|
)
|
|
|
|
||||
Weighted average shares used to calculate basic and diluted earnings per share
|
168,812
|
|
44,187
|
|
||
|
|
|
||||
Basic and diluted loss per share - continuing operations
|
$
|
(0.29
|
)
|
$
|
(2.65
|
)
|
Basic and diluted loss per share - discontinued operations
|
—
|
|
(0.08
|
)
|
||
Basic and diluted loss per share
|
$
|
(0.29
|
)
|
$
|
(2.73
|
)
|
|
Three months ended March 31,
|
||
(in thousands)
|
2018
|
||
Revenue
|
$
|
58,181
|
|
Cost of operations
|
44,668
|
|
|
Selling, general and administrative
|
9,427
|
|
|
Research and development
|
365
|
|
|
Operating income
|
3,721
|
|
|
Income tax expense
|
7,118
|
|
|
Net loss
|
(3,496
|
)
|
|
Three months ended March 31,
|
||
(in thousands)
|
2018
|
||
Depreciation and amortization
|
$
|
2,089
|
|
Provision for deferred income taxes
|
3,033
|
|
|
Purchase of property, plant equipment
|
(65
|
)
|
•
|
Babcock & Wilcox segment
:
focused on the supply of, and aftermarket services, for steam-generating, environmental and auxiliary equipment for power generation and other industrial applications. This segment was formerly named the Power segment.
|
•
|
Vølund & Other Renewable segment
:
focused on the supply of steam-generating systems, environmental and auxiliary equipment and operations and maintenance services for the waste-to-energy and biomass power generation industries. This segment was formerly named the Renewable segment.
|
•
|
SPIG segment
:
focused on the supply of custom-engineered cooling systems for steam applications along with related aftermarket services. This segment was formerly part of the Industrial segment.
|
|
Three months ended March 31,
|
|||||
(in thousands)
|
2019
|
2018
|
||||
Revenues:
|
|
|
||||
Babcock & Wilcox segment
|
|
|
||||
Retrofits
|
$
|
30,674
|
|
$
|
61,983
|
|
New build utility and environmental
|
68,907
|
|
12,847
|
|
||
Aftermarket parts and field engineering services
|
63,087
|
|
73,073
|
|
||
Industrial steam generation
|
47,010
|
|
14,906
|
|
||
Eliminations
|
(21,120
|
)
|
(3,683
|
)
|
||
|
188,558
|
|
159,126
|
|
||
Vølund & Other Renewable segment
|
|
|
||||
Renewable new build and services
|
29,533
|
|
44,711
|
|
||
Operations and maintenance services
|
560
|
|
15,247
|
|
||
Eliminations
|
(561
|
)
|
—
|
|
||
|
29,532
|
|
59,958
|
|
||
SPIG segment
|
|
|
||||
New build cooling systems
|
21,006
|
|
29,045
|
|
||
Aftermarket cooling system services
|
8,171
|
|
7,699
|
|
||
Eliminations
|
(275
|
)
|
—
|
|
||
|
28,902
|
|
36,744
|
|
||
|
|
|
||||
Eliminations
|
(15,056
|
)
|
(2,652
|
)
|
||
|
$
|
231,936
|
|
$
|
253,176
|
|
|
Three months ended March 31,
|
|||||
(in thousands)
|
2019
|
2018
|
||||
Gross profit (loss)
(1)
:
|
|
|
||||
Babcock & Wilcox segment
|
$
|
31,106
|
|
$
|
30,863
|
|
Vølund & Other Renewable segment
|
(2,856
|
)
|
(50,449
|
)
|
||
SPIG segment
|
3,676
|
|
(2,751
|
)
|
||
Intangible amortization expense included in cost of operations
|
(1,057
|
)
|
(1,832
|
)
|
||
|
30,869
|
|
(24,169
|
)
|
||
|
|
|
||||
Selling, general and administrative ("SG&A") expenses
|
(42,269
|
)
|
(59,172
|
)
|
||
Advisory fees and settlement costs
|
(13,610
|
)
|
(3,089
|
)
|
||
Intangible amortization expense included in SG&A
|
(130
|
)
|
(237
|
)
|
||
Restructuring activities and spin-off transaction costs
|
(6,079
|
)
|
(6,862
|
)
|
||
Research and development costs
|
(743
|
)
|
(1,142
|
)
|
||
Equity in income and impairment of investees
|
—
|
|
(11,757
|
)
|
||
Operating loss
|
$
|
(31,962
|
)
|
$
|
(106,428
|
)
|
|
Three months ended March 31,
|
|||||
(in thousands)
|
2019
|
2018
|
||||
Adjusted EBITDA
|
|
|
|
|
||
Babcock & Wilcox segment
(1)
|
$
|
8,964
|
|
$
|
4,177
|
|
Vølund & Other Renewable segment
|
(8,863
|
)
|
(61,754
|
)
|
||
SPIG segment
|
659
|
|
(7,310
|
)
|
||
Corporate
(2)
|
(4,984
|
)
|
(11,614
|
)
|
||
Research and development costs
|
(743
|
)
|
(1,142
|
)
|
||
|
(4,967
|
)
|
(77,643
|
)
|
||
|
|
|
|
|
||
Restructuring activities and spin-off transaction costs
|
(6,079
|
)
|
(6,862
|
)
|
||
Financial advisory services
|
(3,958
|
)
|
(3,089
|
)
|
||
Settlement cost to exit Vølund contract
(3)
|
(6,575
|
)
|
—
|
|
||
Advisory fees for settlement costs and liquidity planning
|
(3,077
|
)
|
—
|
|
||
Impairment of equity method investment in TBWES
|
—
|
|
(18,362
|
)
|
||
Gain on sale of equity method investment in BWBC
|
—
|
|
6,509
|
|
||
Depreciation & amortization
|
(7,306
|
)
|
(6,981
|
)
|
||
Operating loss
|
(31,962
|
)
|
(106,428
|
)
|
||
Interest expense, net
|
(10,575
|
)
|
(13,299
|
)
|
||
Net pension benefit before MTM
|
3,428
|
|
6,997
|
|
||
MTM loss from benefit plans
|
(398
|
)
|
—
|
|
||
Foreign exchange
|
(10,153
|
)
|
2,457
|
|
||
Other – net
|
420
|
|
397
|
|
||
Loss before income tax expense
|
(49,240
|
)
|
(109,876
|
)
|
||
Income tax expense
|
626
|
|
6,963
|
|
||
Loss from continuing operations
|
(49,866
|
)
|
(116,839
|
)
|
||
Loss from discontinued operations, net of tax
|
—
|
|
(3,496
|
)
|
||
Net loss
|
(49,866
|
)
|
(120,335
|
)
|
||
Net income (loss) attributable to noncontrolling interest
|
101
|
|
(98
|
)
|
||
Net loss attributable to stockholders
|
$
|
(49,765
|
)
|
$
|
(120,433
|
)
|
(1)
|
The Babcock & Wilcox segment adjusted EBITDA for the
three
months ended
March 31, 2018
excludes
$7.0 million
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.
|
(2)
|
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
in the three months ended
March 31, 2018
.
|
(3)
|
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 and our risk related to acting as the prime EPC should the project move forward.
|
(in thousands)
|
March 31, 2019
|
December 31, 2018
|
$ Change
|
% Change
|
|||||||
Contract assets - included in contracts in progress:
|
|
|
|
|
|||||||
Costs incurred less costs of revenue recognized
|
$
|
45,394
|
|
$
|
49,910
|
|
$
|
(4,516
|
)
|
(9
|
)%
|
Revenues recognized less billings to customers
|
91,013
|
|
94,817
|
|
(3,804
|
)
|
(4
|
)%
|
|||
Contracts in progress
|
$
|
136,407
|
|
$
|
144,727
|
|
$
|
(8,320
|
)
|
(6
|
)%
|
Contract liabilities - included in advance billings on contracts:
|
|
|
|
|
|||||||
Billings to customers less revenues recognized
|
$
|
152,416
|
|
$
|
140,933
|
|
$
|
11,483
|
|
8
|
%
|
Costs of revenue recognized less cost incurred
|
2,863
|
|
8,434
|
|
(5,571
|
)
|
(66
|
)%
|
|||
Advance billings on contracts
|
$
|
155,279
|
|
$
|
149,367
|
|
$
|
5,912
|
|
4
|
%
|
|
|
|
|
|
|||||||
Net contract balance
|
$
|
(18,872
|
)
|
$
|
(4,640
|
)
|
$
|
(14,232
|
)
|
307
|
%
|
|
|
|
|
|
|||||||
Accrued contract losses
|
$
|
25,890
|
|
$
|
61,651
|
|
$
|
(35,761
|
)
|
(58
|
)%
|
|
Three months ended March 31,
|
|||||
(in thousands)
|
2019
|
2018
|
||||
Increases in gross profits for changes in estimates for over time contracts
|
$
|
9,525
|
|
$
|
5,337
|
|
Decreases in gross profits for changes in estimates for over time contracts
|
(9,396
|
)
|
(54,865
|
)
|
||
Net changes in gross profits for changes in estimates for over time contracts
|
$
|
129
|
|
$
|
(49,528
|
)
|
(in thousands)
|
|
||
Three months ended March 31, 2019
|
Total severance and related costs
|
||
Babcock & Wilcox segment
|
$
|
3,947
|
|
Vølund & Other Renewable segment
|
578
|
|
|
SPIG segment
|
144
|
|
|
Corporate
|
1,410
|
|
|
|
$
|
6,079
|
|
(in thousands)
|
|
|
|
|
||||||||
Three months ended March 31, 2018
|
Severance and related costs
|
Exit costs
|
Spin-off transaction costs
|
Total
|
||||||||
Babcock & Wilcox segment
|
$
|
1,093
|
|
$
|
143
|
|
$
|
—
|
|
$
|
1,236
|
|
Vølund & Other Renewable segment
|
494
|
|
—
|
|
—
|
|
494
|
|
||||
SPIG segment
|
383
|
|
—
|
|
—
|
|
383
|
|
||||
Corporate
|
4,374
|
|
—
|
|
375
|
|
4,749
|
|
||||
|
$
|
6,344
|
|
$
|
143
|
|
$
|
375
|
|
$
|
6,862
|
|
|
Three months ended March 31,
|
|||||
(in thousands)
|
2019
|
2018
|
||||
Balance at beginning of period
|
$
|
7,359
|
|
$
|
2,244
|
|
Restructuring expense
|
6,079
|
|
5,888
|
|
||
Payments
|
(3,242
|
)
|
(2,218
|
)
|
||
Balance at March 31
|
$
|
10,196
|
|
$
|
5,914
|
|
(in thousands)
|
Currency translation (loss) gain
|
Net unrealized gain (loss) on derivative instruments
(1)
|
Net unrecognized (loss) gain related to benefit plans (net of tax)
|
Total
|
||||||||
Balance at December 31, 2018
|
$
|
(10,834
|
)
|
$
|
1,362
|
|
$
|
(1,960
|
)
|
$
|
(11,432
|
)
|
Other comprehensive income (loss) before reclassifications
|
10,260
|
|
(1,178
|
)
|
—
|
|
9,082
|
|
||||
Reclassified from AOCI to net income (loss)
|
—
|
|
224
|
|
(356
|
)
|
(132
|
)
|
||||
Net other comprehensive income (loss)
|
10,260
|
|
(954
|
)
|
(356
|
)
|
8,950
|
|
||||
Balance at March 31, 2019
|
$
|
(574
|
)
|
$
|
408
|
|
$
|
(2,316
|
)
|
$
|
(2,482
|
)
|
(in thousands)
|
Currency translation (loss) gain
|
Net unrealized gain (loss) on investments (net of tax)
|
Net unrealized gain (loss) on derivative instruments
|
Net unrecognized gain (loss) related to benefit plans (net of tax)
|
Total
|
||||||||||
Balance at December 31, 2017
|
$
|
(27,837
|
)
|
$
|
38
|
|
$
|
1,737
|
|
$
|
3,633
|
|
$
|
(22,429
|
)
|
ASU 2016-1 cumulative adjustment
(1)
|
—
|
|
(38
|
)
|
—
|
|
—
|
|
(38
|
)
|
|||||
Other comprehensive income (loss) before reclassifications
|
3,223
|
|
—
|
|
1,224
|
|
(55
|
)
|
4,392
|
|
|||||
Reclassified from AOCI to net income (loss)
|
(2,044
|
)
|
—
|
|
(1,272
|
)
|
(384
|
)
|
(3,700
|
)
|
|||||
Net other comprehensive income (loss)
|
1,179
|
|
(38
|
)
|
(48
|
)
|
(439
|
)
|
654
|
|
|||||
Balance at March 31, 2018
|
$
|
(26,658
|
)
|
$
|
—
|
|
$
|
1,689
|
|
$
|
3,194
|
|
$
|
(21,775
|
)
|
AOCI component
|
Line items in the Condensed Consolidated Statements of Operations affected by reclassifications from AOCI
|
Three months ended March 31,
|
|||||
2019
|
2018
|
||||||
Release of currency translation gain with the sale of equity method investment
|
Equity in income and impairment of investees
|
$
|
—
|
|
$
|
2,044
|
|
|
Provision for income taxes
|
—
|
|
—
|
|
||
|
Net loss
|
$
|
—
|
|
$
|
2,044
|
|
|
|
|
|
||||
Derivative financial instruments
|
Revenues
|
$
|
—
|
|
$
|
1,616
|
|
|
Cost of operations
|
—
|
|
12
|
|
||
|
Other
|
(289
|
)
|
—
|
|
||
|
Total before tax
|
(289
|
)
|
1,628
|
|
||
|
Provision (benefit) for income taxes
|
(65
|
)
|
356
|
|
||
|
Net income
|
$
|
(224
|
)
|
$
|
1,272
|
|
|
|
|
|
||||
Amortization of prior service cost on benefit obligations
|
Benefit plans, net
|
$
|
356
|
|
$
|
384
|
|
|
Provision (benefit) for income taxes
|
—
|
|
—
|
|
||
|
Net income (loss)
|
$
|
356
|
|
$
|
384
|
|
(in thousands)
|
March 31, 2019
|
December 31, 2018
|
||||
Raw materials and supplies
|
$
|
45,303
|
|
$
|
44,833
|
|
Work in progress
|
6,091
|
|
5,348
|
|
||
Finished goods
|
12,395
|
|
11,142
|
|
||
Total inventories
|
$
|
63,789
|
|
$
|
61,323
|
|
(in thousands)
|
Babcock & Wilcox
|
||
Balance at December 31, 2018
|
$
|
47,108
|
|
Currency translation adjustments
|
23
|
|
|
Balance at March 31, 2019
|
$
|
47,131
|
|
(in thousands)
|
March 31, 2019
|
December 31, 2018
|
||||
Definite-lived intangible assets
|
|
|
||||
Customer relationships
|
$
|
24,638
|
|
$
|
24,764
|
|
Unpatented technology
|
14,887
|
|
15,098
|
|
||
Patented technology
|
2,601
|
|
2,616
|
|
||
Tradename
|
12,407
|
|
12,566
|
|
||
Backlog
|
17,760
|
|
17,760
|
|
||
All other
|
9,749
|
|
9,728
|
|
||
Gross value of definite-lived intangible assets
|
82,042
|
|
82,532
|
|
||
Customer relationships amortization
|
(17,608
|
)
|
(17,219
|
)
|
||
Unpatented technology amortization
|
(4,139
|
)
|
(3,760
|
)
|
||
Patented technology amortization
|
(2,380
|
)
|
(2,348
|
)
|
||
Tradename amortization
|
(3,820
|
)
|
(3,672
|
)
|
||
Acquired backlog amortization
|
(17,760
|
)
|
(17,760
|
)
|
||
All other amortization
|
(8,524
|
)
|
(8,285
|
)
|
||
Accumulated amortization
|
(54,231
|
)
|
(53,044
|
)
|
||
Net definite-lived intangible assets
|
$
|
27,811
|
|
$
|
29,488
|
|
Indefinite-lived intangible assets
|
|
|
||||
Trademarks and trade names
|
$
|
1,305
|
|
$
|
1,305
|
|
Total intangible assets, net
|
$
|
29,116
|
|
$
|
30,793
|
|
|
Three months ended March 31,
|
|||||
(in thousands)
|
2019
|
2018
|
||||
Balance at beginning of period
|
$
|
30,793
|
|
$
|
42,065
|
|
Amortization expense
|
(1,187
|
)
|
(2,069
|
)
|
||
Currency translation adjustments and other
|
(490
|
)
|
400
|
|
||
Balance at end of the period
|
$
|
29,116
|
|
$
|
40,396
|
|
|
Amortization expense
|
|
Three months ending June 30, 2019
|
1,000
|
|
Three months ending September 30, 2019
|
1,000
|
|
Three months ending December 31, 2019
|
987
|
|
Twelve months ending December 31, 2020
|
3,453
|
|
Twelve months ending December 31, 2021
|
3,231
|
|
Twelve months ending December 31, 2022
|
3,165
|
|
Twelve months ending December 31, 2023
|
3,158
|
|
Twelve months ending December 31, 2024
|
3,044
|
|
Thereafter
|
8,773
|
|
(in thousands)
|
March 31, 2019
|
December 31, 2018
|
||||
Land
|
$
|
3,552
|
|
$
|
3,575
|
|
Buildings
|
106,405
|
|
106,238
|
|
||
Machinery and equipment
|
181,134
|
|
181,825
|
|
||
Property under construction
|
2,244
|
|
2,290
|
|
||
|
293,335
|
|
293,928
|
|
||
Less accumulated depreciation
|
208,383
|
|
203,036
|
|
||
Net property, plant and equipment
|
$
|
84,952
|
|
$
|
90,892
|
|
|
Three months ended March 31,
|
|||||
(in thousands)
|
2019
|
2018
|
||||
Balance at beginning of period
|
$
|
45,117
|
|
$
|
33,514
|
|
Additions
|
1,991
|
|
4,726
|
|
||
Expirations and other changes
|
(385
|
)
|
(1,356
|
)
|
||
Payments
|
(1,271
|
)
|
(2,739
|
)
|
||
Translation and other
|
(628
|
)
|
583
|
|
||
Balance at end of period
|
$
|
44,824
|
|
$
|
34,728
|
|
|
Three Months Ended
|
||
(in thousands)
|
March 31, 2019
|
||
Operating lease expense
|
$
|
1,909
|
|
Short-term lease expense
|
2,861
|
|
|
Variable lease expense
|
112
|
|
|
Sublease income
(1)
|
(10
|
)
|
|
Total lease expense
|
$
|
4,872
|
|
|
Three Months Ended
|
||
(in thousands, except lease term and discount rate)
|
March 31, 2019
|
||
Cash paid for amounts included in the measurement of lease liabilities:
|
|
||
Operating cash flows from leases
|
$
|
2,101
|
|
Right-of-use assets obtained in exchange for lease liabilities:
|
|
||
Operating leases
|
$
|
201
|
|
Weighted-average remaining lease term:
|
|
||
Operating leases (in years)
|
3.5
|
|
|
Weighted-average discount rate:
|
|
||
Operating leases
|
9.50
|
%
|
(in thousands)
|
March 31, 2019
|
||
Right-of-use assets
|
$
|
15,067
|
|
|
|
||
Liabilities:
|
|
||
Lease liabilities
|
$
|
4,895
|
|
Noncurrent lease liabilities
|
9,976
|
|
|
Total lease liabilities
|
$
|
14,871
|
|
|
Pension Benefits
|
|
Other Benefits
|
||||||||||
|
Three Months Ended March 31,
|
|
Three Months Ended March 31,
|
||||||||||
(in thousands)
|
2019
|
2018
|
|
2019
|
2018
|
||||||||
Interest cost
|
$
|
10,860
|
|
$
|
9,757
|
|
|
$
|
121
|
|
$
|
97
|
|
Expected return on plan assets
|
(13,920
|
)
|
(16,230
|
)
|
|
—
|
|
—
|
|
||||
Amortization of prior service cost
|
50
|
|
25
|
|
|
(539
|
)
|
(646
|
)
|
||||
Recognized net actuarial loss (gain)
|
398
|
|
—
|
|
|
—
|
|
—
|
|
||||
Benefit plans, net
(1)
|
(2,612
|
)
|
(6,448
|
)
|
|
(418
|
)
|
(549
|
)
|
||||
Service cost included in COS
(2)
|
217
|
|
189
|
|
|
4
|
|
4
|
|
||||
Net periodic benefit cost (benefit)
|
$
|
(2,395
|
)
|
$
|
(6,259
|
)
|
|
$
|
(414
|
)
|
$
|
(545
|
)
|
(1)
|
Benefit plans, net, which is presented separately in the Condensed Consolidated Statements of Operations, is not allocated to the segments.
|
(2)
|
Service cost related to a small group of active participants is presented within cost of sales in the Condensed Consolidated Statement of Operations and is allocated to the Babcock & Wilcox segment.
|
(in thousands)
|
March 31, 2019
|
December 31, 2018
|
||||
United States
|
$
|
175,300
|
|
$
|
144,900
|
|
Foreign
|
—
|
|
606
|
|
||
Total revolving debt
|
$
|
175,300
|
|
$
|
145,506
|
|
(in thousands)
|
March 31, 2019
|
December 31, 2018
|
||||
Proceeds
|
$
|
40,000
|
|
$
|
30,000
|
|
Discount and fees
|
5,111
|
|
5,111
|
|
||
Paid-in-kind interest
|
1,306
|
|
132
|
|
||
Principal
|
46,417
|
|
35,243
|
|
||
Unamortized discount and fees
|
(4,004
|
)
|
(4,594
|
)
|
||
Net debt balance
|
$
|
42,413
|
|
$
|
30,649
|
|
(in thousands)
|
|
|
|
|
||||||||
Available-for-sale securities
|
March 31, 2019
|
Level 1
|
Level 2
|
Level 3
|
||||||||
Corporate notes and bonds
|
$
|
16,838
|
|
$
|
16,838
|
|
$
|
—
|
|
$
|
—
|
|
Mutual funds
|
1,283
|
|
—
|
|
1,283
|
|
—
|
|
||||
United States Government and agency securities
|
2,383
|
|
2,383
|
|
—
|
|
—
|
|
||||
Total fair value of available-for-sale securities
|
$
|
20,504
|
|
$
|
19,221
|
|
$
|
1,283
|
|
$
|
—
|
|
(in thousands)
|
|
|
|
|
||||||||
Available-for-sale securities
|
December 31, 2018
|
Level 1
|
Level 2
|
Level 3
|
||||||||
Corporate notes and bonds
|
$
|
13,028
|
|
$
|
13,028
|
|
|
|
$
|
—
|
|
|
Mutual funds
|
1,283
|
|
—
|
|
1,283
|
|
—
|
|
||||
United States Government and agency securities
|
1,437
|
|
1,437
|
|
—
|
|
—
|
|
||||
Total fair value of available-for-sale securities
|
$
|
15,748
|
|
$
|
14,465
|
|
$
|
1,283
|
|
$
|
—
|
|
(in thousands)
|
|
|||||||
Derivatives
|
March 31, 2019
|
December 31, 2018
|
||||||
Forward contracts to purchase/sell foreign currencies
|
$
|
—
|
|
$
|
546
|
|
•
|
Cash and cash equivalents and restricted cash and cash equivalents
. The carrying amounts that we have reported in the accompanying Condensed Consolidated Balance Sheets for cash and cash equivalents and restricted cash and cash equivalents approximate their fair values due to their highly liquid nature.
|
•
|
Revolving debt and Last Out Term Loans
. We base the fair values of debt instruments on quoted market prices. Where quoted prices are not available, we base the fair values on Level 2 inputs such as the present value of future cash flows discounted at estimated borrowing rates for similar debt instruments or on estimated prices based on current yields for debt issues of similar quality and terms. The fair value of our debt instruments approximated their carrying value at
March 31, 2019
and
December 31, 2018
.
|
|
Three months ended March 31,
|
|||||
(in thousands)
|
2019
|
2018
|
||||
Accrued capital expenditures in accounts payable
|
$
|
24
|
|
$
|
300
|
|
Accreted interest expense on our Second Lien Term Loan Facility
|
$
|
—
|
|
$
|
2,369
|
|
|
Three months ended March 31,
|
|||||
(in thousands)
|
2019
|
2018
|
||||
Income tax payments (refunds), net
|
$
|
(78
|
)
|
$
|
1,822
|
|
Interest payments on our U.S. Revolving Credit Facility
|
2,403
|
|
1,687
|
|
||
Interest payments on our Last Out Term Loans
|
540
|
|
—
|
|
||
Interest payments on our Second Lien Term Loan Facility
|
—
|
|
5,303
|
|
|
Three months ended March 31,
|
|||||
(in thousands)
|
2019
|
2018
|
||||
Components associated with borrowings from:
|
|
|
||||
U.S. Revolving Credit Facility
|
$
|
3,550
|
|
$
|
2,345
|
|
Second Lien Term Loan Facility
|
—
|
|
5,269
|
|
||
Last Out Term Loans - cash interest
|
513
|
|
—
|
|
||
Last Out Term Loans - paid-in-kind interest
|
1,060
|
|
—
|
|
||
Foreign revolving credit facilities
|
—
|
|
134
|
|
||
|
5,123
|
|
7,748
|
|
||
Components associated with amortization or accretion of:
|
|
|
||||
U.S. Revolving Credit Facility - deferred financing fees and commitment fees
|
5,270
|
|
3,201
|
|
||
Second Lien Term Loan Facility - discount and financing fees
|
—
|
|
2,369
|
|
||
Last Out Term Loans - discount and financing fees
|
590
|
|
—
|
|
||
|
5,860
|
|
5,570
|
|
||
|
|
|
||||
Other interest expense
|
151
|
|
134
|
|
||
|
|
|
||||
Total interest expense
|
$
|
11,134
|
|
$
|
13,452
|
|
(in thousands)
|
March 31, 2019
|
December 31, 2018
|
March 31, 2018
|
December 31, 2017
|
||||||||
Held by foreign entities
|
$
|
26,746
|
|
$
|
35,522
|
|
$
|
23,077
|
|
$
|
42,490
|
|
Held by United States entities
|
16,781
|
|
7,692
|
|
76
|
|
1,227
|
|
||||
Cash and cash equivalents of continuing operations
|
43,527
|
|
43,214
|
|
23,153
|
|
43,717
|
|
||||
|
|
|
|
|
||||||||
Reinsurance reserve requirements
|
2,841
|
|
11,768
|
|
22,445
|
|
21,061
|
|
||||
Restricted foreign accounts
|
4,118
|
|
5,297
|
|
6,975
|
|
4,919
|
|
||||
Sale proceeds held in escrow
|
—
|
|
—
|
|
20,266
|
|
—
|
|
||||
Restricted cash and cash equivalents
|
6,959
|
|
17,065
|
|
49,686
|
|
25,980
|
|
||||
|
|
|
|
|
||||||||
Total cash, cash equivalents and restricted cash of continuing operations shown in the Condensed Consolidated Statements of Cash Flows
|
$
|
50,486
|
|
$
|
60,279
|
|
$
|
72,839
|
|
$
|
69,697
|
|
|
|
|
|
|
||||||||
Total cash and cash equivalents of discontinued operations
|
$
|
—
|
|
$
|
—
|
|
$
|
14,229
|
|
$
|
12,950
|
|
•
|
$6.1 million
and
$6.9 million
of restructuring and spin-off costs were recognized in the first quarter of 2019 and 2018, respectively. In the first quarter of 2019, restructuring costs primarily related to severance and the first quarter of 2018 restructuring costs related primarily to executive severance and the remaining severance costs of prior restructuring initiatives.
|
•
|
$4.0 million
and
$3.1 million
of financial advisory services are in included in SG&A in the first quarters of 2019 and 2018, respectively. These services are requirements of the U.S. Revolving Credit Facility.
|
•
|
$6.6 million
of cost was recognized in the first quarter of 2019 for costs of 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 limits our obligations to our core scope activities and eliminates risk related to acting as the prime EPC should the project move forward.
|
•
|
$3.1 million
of legal and other advisory fees related to the contract settlements described above and in
Note 5
and for liquidity planning.
|
•
|
$2.0 million
of accelerated depreciation expense in the first quarter of 2019 for fixed assets affected by our September 2018 announcement to consolidate office space and relocate our global headquarters to Akron, Ohio in mid-2019.
|
•
|
$0.4 million
of actuarially determined mark to market ("MTM") loss from our Canadian pension plan was recognized in the first quarter of 2019. MTM losses are further described in
Note 16
.
|
•
|
$18.4 million
of other-than-temporary impairment in the first quarter of 2018 of our interest in TWBES, an equity method investment in India based on an agreement to sell. See further discussion in
Note 10
.
|
•
|
$6.5 million
of gain on sale was recognized in the first quarter of 2018 of our equity method investment in China and is included in Equity in income and impairment of investees. See further discussion in
Note 10
.
|
•
|
received
$150.0 million
in gross proceeds from Tranche A-3 of the Last Out Term Loans before original issuance discount and fees, as described in
Note 18
, from B. Riley FBR, Inc., a related party, on April 5, 2019
;
|
•
|
received
$10.0 million
in net proceeds from Tranche A-2 of the Last Out Term Loans, described in
Note 18
, from B. Riley Financial, Inc. (together with its affiliates, including B. Riley FBR, Inc., "B. Riley"), a related party, on March 20, 2019
;
|
•
|
reduced uncertainty and provided better visibility into our future liquidity requirements by turning over four of the six European Vølund EPC loss contracts to the customers by the end of the first quarter of 2019 and negotiated a settlement of the remaining two loss contracts as described in
Note 5
, which was funded with the proceeds from Tranche A-3 of the Last Out Term Loans
;
|
•
|
entered into an additional settlement as described in
Note 5
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, whereby our obligations and our risk from acting as the prime EPC should the project move forward was eliminated
; and
|
|
Three months ended March 31,
|
||||||||
(In thousands)
|
2019
|
2018
|
$ Change
|
||||||
Revenues:
|
|
|
|
||||||
Babcock & Wilcox segment
|
$
|
188,558
|
|
$
|
159,126
|
|
$
|
29,432
|
|
Vølund & Other Renewable segment
|
29,532
|
|
59,958
|
|
(30,426
|
)
|
|||
SPIG segment
|
28,902
|
|
36,744
|
|
(7,842
|
)
|
|||
Eliminations
|
(15,056
|
)
|
(2,652
|
)
|
(12,404
|
)
|
|||
|
231,936
|
|
253,176
|
|
(21,240
|
)
|
|||
Gross profit (loss)
(1)
:
|
|
|
|
|
|||||
Babcock & Wilcox segment
|
31,106
|
|
30,863
|
|
243
|
|
|||
Vølund & Other Renewable segment
|
(2,856
|
)
|
(50,449
|
)
|
47,593
|
|
|||
SPIG segment
|
3,676
|
|
(2,751
|
)
|
6,427
|
|
|||
Intangible amortization expense included in cost of operations
|
(1,057
|
)
|
(1,832
|
)
|
775
|
|
|||
|
30,869
|
|
(24,169
|
)
|
55,038
|
|
|||
Selling, general and administrative ("SG&A") expenses
|
(42,269
|
)
|
(59,172
|
)
|
16,903
|
|
|||
Advisory fees and settlement costs
|
(13,610
|
)
|
(3,089
|
)
|
(10,521
|
)
|
|||
Intangible amortization expense included in SG&A
|
(130
|
)
|
(237
|
)
|
107
|
|
|||
Restructuring activities and spin-off transaction costs
|
(6,079
|
)
|
(6,862
|
)
|
783
|
|
|||
Research and development costs
|
(743
|
)
|
(1,142
|
)
|
399
|
|
|||
Equity in income and impairment of investees
|
—
|
|
(11,757
|
)
|
11,757
|
|
|||
Operating loss
|
$
|
(31,962
|
)
|
$
|
(106,428
|
)
|
$
|
74,466
|
|
|
Three months ended March 31,
|
||||||||
(in thousands)
|
2019
|
2018
|
$ Change
|
||||||
Adjusted EBITDA
|
|
|
|
|
|
||||
Babcock & Wilcox segment
(1)
|
$
|
8,964
|
|
$
|
4,177
|
|
$
|
4,787
|
|
Vølund & Other Renewable segment
|
(8,863
|
)
|
(61,754
|
)
|
52,891
|
|
|||
SPIG segment
|
659
|
|
(7,310
|
)
|
7,969
|
|
|||
Corporate
(2)
|
(4,984
|
)
|
(11,614
|
)
|
6,630
|
|
|||
Research and development costs
|
(743
|
)
|
(1,142
|
)
|
399
|
|
|||
|
(4,967
|
)
|
(77,643
|
)
|
72,676
|
|
|||
|
|
|
|
|
|
||||
Restructuring activities and spin-off transaction costs
|
(6,079
|
)
|
(6,862
|
)
|
783
|
|
|||
Financial advisory services
|
(3,958
|
)
|
(3,089
|
)
|
(869
|
)
|
|||
Settlement cost to exit Vølund contract
(3)
|
(6,575
|
)
|
—
|
|
(6,575
|
)
|
|||
Advisory fees for settlement costs and liquidity planning
|
(3,077
|
)
|
—
|
|
(3,077
|
)
|
|||
Impairment of equity method investment in TBWES
|
—
|
|
(18,362
|
)
|
18,362
|
|
|||
Gain on sale of equity method investment in BWBC
|
—
|
|
6,509
|
|
(6,509
|
)
|
|||
Depreciation & amortization
|
(7,306
|
)
|
(6,981
|
)
|
(325
|
)
|
|||
Operating loss
|
(31,962
|
)
|
(106,428
|
)
|
74,466
|
|
|||
Interest expense, net
|
(10,575
|
)
|
(13,299
|
)
|
2,724
|
|
|||
Net pension benefit before MTM
|
3,428
|
|
6,997
|
|
(3,569
|
)
|
|||
MTM loss from benefit plans
|
(398
|
)
|
—
|
|
(398
|
)
|
|||
Foreign exchange
|
(10,153
|
)
|
2,457
|
|
(12,610
|
)
|
|||
Other – net
|
420
|
|
397
|
|
23
|
|
|||
Loss before income tax expense
|
(49,240
|
)
|
(109,876
|
)
|
60,636
|
|
|||
Income tax expense
|
626
|
|
6,963
|
|
(6,337
|
)
|
|||
Loss from continuing operations
|
(49,866
|
)
|
(116,839
|
)
|
66,973
|
|
|||
Loss from discontinued operations, net of tax
|
—
|
|
(3,496
|
)
|
3,496
|
|
|||
Net loss
|
(49,866
|
)
|
(120,335
|
)
|
70,469
|
|
|||
Net income (loss) attributable to noncontrolling interest
|
101
|
|
(98
|
)
|
199
|
|
|||
Net loss attributable to stockholders
|
$
|
(49,765
|
)
|
$
|
(120,433
|
)
|
$
|
70,668
|
|
(3)
|
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 and our risk related to acting as the prime EPC should the project move forward.
|
|
Three months ended March 31,
|
||||||||
(In thousands)
|
2019
|
2018
|
$ Change
|
||||||
Revenues
|
$
|
28,902
|
|
$
|
36,744
|
|
$
|
(7,842
|
)
|
Gross profit (loss)
|
$
|
3,676
|
|
$
|
(2,751
|
)
|
$
|
6,427
|
|
Adjusted EBITDA
|
$
|
659
|
|
$
|
(7,310
|
)
|
$
|
7,969
|
|
Gross profit %
|
12.7
|
%
|
(7.5
|
)%
|
|
|
Three months ended March 31,
|
|||||
(In millions)
|
2019
|
2018
|
||||
Babcock & Wilcox
|
$
|
187
|
|
$
|
271
|
|
Vølund & Other Renewable
(1)
|
19
|
|
46
|
|
||
SPIG
|
12
|
|
27
|
|
||
Other/eliminations
|
(2
|
)
|
(1
|
)
|
||
Bookings
|
$
|
216
|
|
$
|
343
|
|
(1)
|
Vølund & Other Renewable bookings includes the revaluation of backlog denominated in currency other than U.S. dollars, which was $3.5 million and $18.1 million, for the three months ended March 31, 2019 and 2018, respectively.
|
|
Three months ended March 31,
|
|||||
(In approximate millions)
|
2019
|
2018
|
||||
Babcock & Wilcox
|
$
|
384
|
|
$
|
565
|
|
Vølund & Other Renewable
(1)
|
317
|
|
994
|
|
||
SPIG
|
70
|
|
165
|
|
||
Other/eliminations
|
(5
|
)
|
(42
|
)
|
||
Backlog
|
$
|
766
|
|
$
|
1,682
|
|
(1)
|
Vølund & Other Renewable backlog at March 31, 2019, includes $246 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.
|
(In approximate millions)
|
2019
|
2020
|
Thereafter
|
Total
|
||||||||
Babcock & Wilcox
|
$
|
287
|
|
$
|
80
|
|
$
|
17
|
|
$
|
384
|
|
Vølund & Other Renewable
|
66
|
|
24
|
|
227
|
|
317
|
|
||||
SPIG
|
35
|
|
12
|
|
23
|
|
70
|
|
||||
Other/eliminations
|
(5
|
)
|
—
|
|
—
|
|
(5
|
)
|
||||
Expected revenue from backlog
|
$
|
383
|
|
$
|
116
|
|
$
|
267
|
|
$
|
766
|
|
|
Three months ended March 31,
|
||||||||
(In thousands, except for percentages)
|
2019
|
2018
|
$ Change
|
||||||
Loss before income taxes
|
$
|
(49,240
|
)
|
$
|
(109,876
|
)
|
$
|
60,636
|
|
Income tax expense (benefit)
|
$
|
626
|
|
$
|
6,963
|
|
$
|
6,337
|
|
Effective tax rate
|
(1.3
|
)%
|
(6.3
|
)%
|
|
|
Three months ended March 31,
|
|||||
(in thousands)
|
2019
|
2018
|
||||
United States
|
$
|
(12,224
|
)
|
$
|
(41,635
|
)
|
Other than the United States
|
(37,016
|
)
|
(68,241
|
)
|
||
Income (loss) before provision for (benefit from) income taxes
|
$
|
(49,240
|
)
|
$
|
(109,876
|
)
|
•
|
received
$150.0 million
in gross proceeds from Tranche A-3 of the Last Out Term Loans before original issuance discount and fees, as described in
Note 18
, from B. Riley FBR, Inc., a related party, on April 5, 2019
;
|
•
|
received
$10.0 million
in net proceeds from Tranche A-2 of the Last Out Term Loans, described in
Note 18
, from B. Riley Financial, Inc. (together with its affiliates, including B. Riley FBR, Inc., "B. Riley"), a related party, on March 20, 2019
;
|
•
|
reduced uncertainty and provided better visibility into our future liquidity requirements by turning over four of the six European Vølund EPC loss contracts to the customers by the end of the first quarter of 2019 and negotiated a settlement of the remaining two loss contracts as described in
Note 5
, which was funded with the proceeds from Tranche A-3 of the Last Out Term Loans
;
|
•
|
entered into an additional settlement as described in
Note 5
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, whereby our obligations and our risk from acting as the prime EPC should the project move forward was eliminated
; and
|
•
|
entered into several amendments and waivers to avoid default and improve our liquidity under the terms of our Amended Credit Agreement as described in
Note 17
and
Note 18
, the most recent of which was Amendment No. 16 dated April 5, 2019,
which provided Tranche A-3 of the Last Out Term Loans described above and in
Note 18
, reset the financial and other covenants, increased borrowing capacity under the U.S. Revolving Credit Facility by reducing the minimum liquidity requirement, allowed for the issuance of a limited amount of new letters of credit with respect to any future Vølund project, and permitted other letters of credit to expire up to one year after the maturity of the U.S. Revolving Credit Facility.
|
Period
|
|
Total number of shares purchased
(1)
|
Average price paid per share
|
Total number of shares purchased as part of publicly announced plans or programs
|
Approximate dollar value of shares that may yet be purchased under the plans or programs
|
|||||||
January 2019
|
|
118
|
|
$
|
0.59
|
|
—
|
|
$
|
—
|
|
|
February 2019
|
|
756
|
|
$
|
0.63
|
|
—
|
|
$
|
—
|
|
|
March 2019
|
|
38,120
|
|
$
|
0.56
|
|
—
|
|
$
|
—
|
|
|
Total
|
|
38,994
|
|
$
|
0.57
|
|
—
|
|
$
|
—
|
|
|
Amendment No. 14 dated January 15, 2019 to Credit Agreement, dated as of May 11, 2015, among Babcock & Wilcox Enterprises, Inc., as the borrower, Bank of America, N.A., as Administrative Agent, and the other lenders party thereto (incorporated by reference to the Babcock & Wilcox Enterprises, Inc. Annual Report on Form 10-K for the year ended December 31, 2018 (File No. 001-36876)).
|
|
|
|
|
|
Amendment No. 15 and Limited Waiver dated March 19, 2019 to Credit Agreement, dated as of May 11, 2015, among Babcock & Wilcox Enterprises, Inc., as the borrower, Bank of America, N.A., as Administrative Agent, and the other lenders party thereto (incorporated by reference to the Babcock & Wilcox Enterprises, Inc. Annual Report on Form 10-K for the year ended December 31, 2018 (File No. 001-36876)).
|
|
|
|
|
|
Rule 13a-14(a)/15d-14(a) certification of Chief Executive Officer
|
|
|
|
|
|
Rule 13a-14(a)/15d-14(a) certification of Chief Financial Officer
|
|
|
|
|
|
Section 1350 certification of Chief Executive Officer
|
|
|
|
|
|
Section 1350 certification of Chief Financial Officer
|
|
|
|
|
101.INS
|
|
XBRL Instance Document
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
*
|
The Company has omitted certain information contained in this exhibit pursuant to Rule 601(b)(10) of Regulation S-K. The omitted information is not material and, if publicly disclosed, would likely cause competitive harm to the Company.
|
May 9, 2019
|
|
BABCOCK & WILCOX ENTERPRISES, INC.
|
|
|
|
|
By:
|
/s/ Daniel W. Hoehn
|
|
|
Daniel W. Hoehn
|
|
|
Vice President, Controller and Chief Accounting Officer
(Principal Accounting Officer and Duly Authorized Representative)
|
|
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Babcock & Wilcox Enterprises, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
|
a.
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
May 9, 2019
|
/s/ Kenneth M. Young
|
|
Kenneth M. Young
|
|
President and Chief Executive Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Babcock & Wilcox Enterprises, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
|
a.
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
May 9, 2019
|
/s/ Louis Salamone
|
|
Louis Salamone
|
|
Chief Financial Officer
|
(1)
|
the Company’s quarterly Report on Form 10-Q for the quarter ended
March 31, 2019
(the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of B&W as of the dates and for the periods expressed in the Report.
|
Dated: May 9, 2019
|
/s/ Kenneth M. Young
|
|
Kenneth M. Young
|
|
President and Chief Executive Officer
|
(1)
|
the Company’s Quarterly Report on Form 10-Q for the quarter ended
March 31, 2019
(the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of B&W as of the dates and for the periods expressed in the Report.
|
Dated: May 9, 2019
|
/s/ Louis Salamone
|
|
Louis Salamone
|
|
Chief Financial Officer
|