|
x
|
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
|
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
|
|
|
BARBERTON, OHIO
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|
44203
|
(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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x
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Emerging growth company
|
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¨
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Title of each class
|
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 June 30,
|
Six months ended June 30,
|
||||||||||
(in thousands, except per share amounts)
|
2019
|
2018
|
2019
|
2018
|
||||||||
Revenues
|
$
|
248,115
|
|
$
|
291,337
|
|
$
|
480,051
|
|
$
|
544,513
|
|
Costs and expenses:
|
|
|
|
|
||||||||
Cost of operations
|
203,831
|
|
332,403
|
|
404,898
|
|
609,748
|
|
||||
Selling, general and administrative expenses
|
42,076
|
|
47,106
|
|
84,475
|
|
106,515
|
|
||||
Goodwill impairment
|
—
|
|
37,540
|
|
—
|
|
37,540
|
|
||||
Advisory fees and settlement costs
|
4,778
|
|
5,142
|
|
18,388
|
|
8,231
|
|
||||
Restructuring activities and spin-off transaction costs
|
936
|
|
3,826
|
|
7,015
|
|
10,688
|
|
||||
Research and development costs
|
710
|
|
1,287
|
|
1,453
|
|
2,429
|
|
||||
Loss on asset disposals, net
|
42
|
|
1,384
|
|
42
|
|
1,384
|
|
||||
Total costs and expenses
|
252,373
|
|
428,688
|
|
516,271
|
|
776,535
|
|
||||
Equity in loss of investees
|
—
|
|
—
|
|
—
|
|
(11,757
|
)
|
||||
Operating loss
|
(4,258
|
)
|
(137,351
|
)
|
(36,220
|
)
|
(243,779
|
)
|
||||
Other income (expense):
|
|
|
|
|
||||||||
Interest expense
|
(26,837
|
)
|
(11,877
|
)
|
(37,971
|
)
|
(25,329
|
)
|
||||
Interest income
|
201
|
|
107
|
|
760
|
|
260
|
|
||||
Loss on debt extinguishment
|
(3,969
|
)
|
(49,241
|
)
|
(3,969
|
)
|
(49,241
|
)
|
||||
Loss on sale of business
|
(3,601
|
)
|
—
|
|
(3,601
|
)
|
—
|
|
||||
Benefit plans, net
|
2,471
|
|
7,086
|
|
5,501
|
|
14,083
|
|
||||
Foreign exchange
|
9,506
|
|
(20,198
|
)
|
(647
|
)
|
(17,741
|
)
|
||||
Other – net
|
43
|
|
(131
|
)
|
463
|
|
266
|
|
||||
Total other expense
|
(22,186
|
)
|
(74,254
|
)
|
(39,464
|
)
|
(77,702
|
)
|
||||
Loss before income tax expense
|
(26,444
|
)
|
(211,605
|
)
|
(75,684
|
)
|
(321,481
|
)
|
||||
Income tax expense (benefit)
|
1,891
|
|
(1,934
|
)
|
2,517
|
|
5,029
|
|
||||
Loss from continuing operations
|
(28,335
|
)
|
(209,671
|
)
|
(78,201
|
)
|
(326,510
|
)
|
||||
Income (loss) from discontinued operations, net of tax
|
694
|
|
(55,932
|
)
|
694
|
|
(59,428
|
)
|
||||
Net loss
|
(27,641
|
)
|
(265,603
|
)
|
(77,507
|
)
|
(385,938
|
)
|
||||
Net income (loss) attributable to noncontrolling interest
|
1
|
|
(165
|
)
|
102
|
|
(263
|
)
|
||||
Net loss attributable to stockholders
|
$
|
(27,640
|
)
|
$
|
(265,768
|
)
|
$
|
(77,405
|
)
|
$
|
(386,201
|
)
|
|
|
|
|
|
||||||||
Basic and diluted loss per share - continuing operations
|
$
|
(1.54
|
)
|
$
|
(15.41
|
)
|
$
|
(4.26
|
)
|
$
|
(35.39
|
)
|
Basic and diluted earnings (loss) per share - discontinued operations
|
0.04
|
|
(4.11
|
)
|
0.04
|
|
(6.43
|
)
|
||||
Basic and diluted loss per share
|
$
|
(1.50
|
)
|
$
|
(19.52
|
)
|
$
|
(4.22
|
)
|
$
|
(41.82
|
)
|
|
|
|
|
|
|
|
||||||
Shares used in the computation of earnings per share:
|
|
|
|
|
|
|
|
|
||||
Basic and diluted
(1)
|
18,366
|
|
13,616
|
|
18,362
|
|
9,235
|
|
|
Three months ended June 30,
|
Six months ended June 30,
|
||||||||||
(in thousands)
|
2019
|
2018
|
2019
|
2018
|
||||||||
Net loss
|
$
|
(27,641
|
)
|
$
|
(265,603
|
)
|
$
|
(77,507
|
)
|
$
|
(385,938
|
)
|
Other comprehensive (loss) income:
|
|
|
|
|
||||||||
Currency translation adjustments (CTA)
|
(7,979
|
)
|
8,517
|
|
2,281
|
|
11,740
|
|
||||
|
|
|
|
|
||||||||
Reclassification of CTA to net loss
|
3,176
|
|
—
|
|
3,176
|
|
(2,044
|
)
|
||||
|
|
|
|
|
||||||||
Derivative financial instruments:
|
|
|
|
|
||||||||
Unrealized (losses) gains on derivative financial instruments
|
(189
|
)
|
(602
|
)
|
(1,367
|
)
|
999
|
|
||||
Income tax (benefit) expense
|
—
|
|
(89
|
)
|
—
|
|
288
|
|
||||
Unrealized (losses) gains on derivative financial instruments, net of taxes
|
(189
|
)
|
(513
|
)
|
(1,367
|
)
|
711
|
|
||||
Derivative financial instrument (losses) gains reclassified into net loss
|
(22
|
)
|
489
|
|
202
|
|
(1,139
|
)
|
||||
Income tax expense (benefit)
|
—
|
|
108
|
|
—
|
|
(248
|
)
|
||||
Reclassification adjustment for (losses) gains included in net loss, net of taxes
|
(22
|
)
|
381
|
|
202
|
|
(891
|
)
|
||||
|
|
|
|
|
||||||||
Benefit obligations:
|
|
|
|
|
||||||||
Unrealized gains on benefit obligations, net of taxes
|
—
|
|
112
|
|
—
|
|
57
|
|
||||
|
|
|
|
|
|
|
|
|
||||
Amortization of benefit plan benefits
|
(514
|
)
|
(1,366
|
)
|
(870
|
)
|
(1,750
|
)
|
||||
Income tax expense
|
—
|
|
1,892
|
|
|
|
1,892
|
|
||||
Amortization of benefit plan benefits, net of taxes
|
(514
|
)
|
(3,258
|
)
|
(870
|
)
|
(3,642
|
)
|
||||
|
|
|
|
|
||||||||
Other
|
—
|
|
—
|
|
—
|
|
(38
|
)
|
||||
|
|
|
|
|
||||||||
Other comprehensive (loss) income
|
(5,528
|
)
|
5,239
|
|
3,422
|
|
5,893
|
|
||||
Total comprehensive loss
|
(33,169
|
)
|
(260,364
|
)
|
(74,085
|
)
|
(380,045
|
)
|
||||
Comprehensive income (loss) attributable to noncontrolling interest
|
307
|
|
(125
|
)
|
429
|
|
(198
|
)
|
||||
Comprehensive loss attributable to stockholders
|
$
|
(32,862
|
)
|
$
|
(260,489
|
)
|
$
|
(73,656
|
)
|
$
|
(380,243
|
)
|
(in thousands, except per share amount)
|
June 30, 2019
|
December 31, 2018
|
||||
Cash and cash equivalents
|
$
|
35,190
|
|
$
|
43,214
|
|
Restricted cash and cash equivalents
|
9,180
|
|
17,065
|
|
||
Accounts receivable – trade, net
|
200,586
|
|
197,203
|
|
||
Accounts receivable – other
|
62,822
|
|
44,662
|
|
||
Contracts in progress
|
150,422
|
|
144,727
|
|
||
Inventories
|
63,828
|
|
61,323
|
|
||
Other current assets
|
64,566
|
|
41,425
|
|
||
Total current assets
|
586,594
|
|
549,619
|
|
||
Net property, plant and equipment
|
78,005
|
|
90,892
|
|
||
Goodwill
|
47,113
|
|
47,108
|
|
||
Intangible assets
|
28,395
|
|
30,793
|
|
||
Right-of-use assets
|
13,121
|
|
—
|
|
||
Other assets
|
18,811
|
|
27,085
|
|
||
Total assets
|
$
|
772,039
|
|
$
|
745,497
|
|
|
|
|
|
|
||
Revolving credit facilities
|
$
|
184,400
|
|
$
|
145,506
|
|
Last out term loans
|
183,056
|
|
30,649
|
|
||
Accounts payable
|
167,081
|
|
199,882
|
|
||
Accrued employee benefits
|
27,393
|
|
19,319
|
|
||
Advance billings on contracts
|
102,284
|
|
149,367
|
|
||
Accrued warranty expense
|
39,589
|
|
45,117
|
|
||
Lease liabilities
|
4,229
|
|
—
|
|
||
Other accrued liabilities
|
97,097
|
|
122,149
|
|
||
Total current liabilities
|
805,129
|
|
711,989
|
|
||
Pension and other accumulated postretirement benefit liabilities
|
275,136
|
|
281,647
|
|
||
Noncurrent lease liabilities
|
8,816
|
|
—
|
|
||
Other noncurrent liabilities
|
25,993
|
|
29,158
|
|
||
Total liabilities
|
1,115,074
|
|
1,022,794
|
|
||
Commitments and contingencies
|
|
|
||||
Stockholders' deficit:
|
|
|
||||
Common stock, par value $0.01 per share, authorized 500,000 shares at June 30, 2019 and 200,000 shares at December 31, 2018, respectively; issued and outstanding 16,888 and 16,879 shares at June 30, 2019 and December 31, 2018, respectively
(1)
|
1,748
|
|
1,748
|
|
||
Capital in excess of par value
|
1,055,759
|
|
1,047,062
|
|
||
Treasury stock at cost, 593 and 587 shares at June 30, 2019 and December 31, 2018, respectively
(1)
|
(105,613
|
)
|
(105,590
|
)
|
||
Accumulated deficit
|
(1,295,319
|
)
|
(1,217,914
|
)
|
||
Accumulated other comprehensive loss
|
(8,010
|
)
|
(11,432
|
)
|
||
Stockholders' deficit attributable to shareholders
|
(351,435
|
)
|
(286,126
|
)
|
||
Noncontrolling interest
|
8,400
|
|
8,829
|
|
||
Total stockholders' deficit
|
(343,035
|
)
|
(277,297
|
)
|
||
Total liabilities and stockholders' deficit
|
$
|
772,039
|
|
$
|
745,497
|
|
|
Common Stock
|
Capital In
Excess of Par Value |
Treasury Stock
|
Accumulated Deficit
|
Accumulated
Other Comprehensive Loss |
Noncontrolling
Interest |
Total
Stockholders’ Deficit |
||||||||||||||||
|
|||||||||||||||||||||||
|
Shares
(1)
|
Par Value
|
|||||||||||||||||||||
|
|
(in thousands, except share and per share amounts)
|
|||||||||||||||||||||
Balance at December 31, 2018
|
16,879
|
|
$
|
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
|
7
|
|
—
|
|
404
|
|
(22
|
)
|
—
|
|
—
|
|
—
|
|
382
|
|
|||||||
Balance at March 31, 2019
|
16,886
|
|
$
|
1,748
|
|
$
|
1,047,466
|
|
$
|
(105,612
|
)
|
$
|
(1,267,679
|
)
|
$
|
(2,482
|
)
|
$
|
8,707
|
|
$
|
(317,852
|
)
|
Net loss
|
—
|
|
—
|
|
—
|
|
—
|
|
(27,640
|
)
|
—
|
|
(1
|
)
|
(27,641
|
)
|
|||||||
Currency translation adjustments
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(4,803
|
)
|
(306
|
)
|
(5,109
|
)
|
|||||||
Derivative financial instruments
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(211
|
)
|
—
|
|
(211
|
)
|
|||||||
Defined benefit obligations
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(514
|
)
|
—
|
|
(514
|
)
|
|||||||
Stock-based compensation charges
|
2
|
|
—
|
|
205
|
|
(1
|
)
|
—
|
|
—
|
|
—
|
|
204
|
|
|||||||
Issuance of beneficial conversion option of Last Out Term Loan Tranche A-3
|
—
|
|
—
|
|
2,022
|
|
—
|
|
—
|
|
—
|
|
—
|
|
2,022
|
|
|||||||
Warrants
|
—
|
|
—
|
|
6,066
|
|
—
|
|
—
|
|
—
|
|
—
|
|
6,066
|
|
|||||||
Balance at June 30, 2019
|
16,888
|
|
$
|
1,748
|
|
$
|
1,055,759
|
|
$
|
(105,613
|
)
|
$
|
(1,295,319
|
)
|
$
|
(8,010
|
)
|
$
|
8,400
|
|
$
|
(343,035
|
)
|
|
Common Stock
|
Capital In
Excess of Par Value |
Treasury Stock
|
Accumulated Deficit
|
Accumulated
Other Comprehensive Loss |
Noncontrolling
Interest |
Total
Stockholders’ Equity (Deficit) |
||||||||||||||||
|
|||||||||||||||||||||||
|
Shares
(1)
|
Par Value
|
|||||||||||||||||||||
|
|
(in thousands, except share and per share amounts)
|
|||||||||||||||||||||
Balance at December 31, 2017
|
4,407
|
|
$
|
499
|
|
$
|
800,968
|
|
$
|
(104,785
|
)
|
$
|
(492,150
|
)
|
$
|
(22,429
|
)
|
$
|
8,600
|
|
$
|
190,703
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Net income
|
—
|
|
—
|
|
—
|
|
—
|
|
(120,433
|
)
|
—
|
|
98
|
|
(120,335
|
)
|
|||||||
Revenue recognition
|
—
|
|
—
|
|
—
|
|
—
|
|
(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
|
—
|
|
4
|
|
149
|
|
(720
|
)
|
—
|
|
—
|
|
—
|
|
(567
|
)
|
|||||||
Balance at March 31, 2018
|
4,407
|
|
$
|
503
|
|
$
|
801,117
|
|
$
|
(105,505
|
)
|
$
|
(613,017
|
)
|
$
|
(21,775
|
)
|
$
|
8,673
|
|
$
|
69,996
|
|
Net income
|
—
|
|
—
|
|
—
|
|
—
|
|
(265,768
|
)
|
—
|
|
165
|
|
(265,603
|
)
|
|||||||
Currency translation adjustments
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
8,517
|
|
(40
|
)
|
8,477
|
|
|||||||
Derivative financial instruments
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(132
|
)
|
—
|
|
(132
|
)
|
|||||||
Defined benefit obligations
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(3,146
|
)
|
—
|
|
(3,146
|
)
|
|||||||
Available-for-sale investments
|
—
|
|
—
|
|
—
|
|
—
|
|
(38
|
)
|
—
|
|
—
|
|
(38
|
)
|
|||||||
Rights offering, net
|
12,426
|
|
1,243
|
|
243,907
|
|
—
|
|
—
|
|
—
|
|
—
|
|
245,150
|
|
|||||||
Stock-based compensation charges
|
34
|
|
—
|
|
877
|
|
(26
|
)
|
—
|
|
—
|
|
—
|
|
851
|
|
|||||||
Balance at June 30, 2018
|
16,867
|
|
$
|
1,746
|
|
$
|
1,045,901
|
|
$
|
(105,531
|
)
|
$
|
(878,823
|
)
|
$
|
(16,536
|
)
|
$
|
8,798
|
|
$
|
55,555
|
|
|
Six months ended June 30,
|
|||||
(in thousands)
|
2019
|
2018
|
||||
Cash flows from operating activities:
|
|
|||||
Net loss
|
$
|
(77,507
|
)
|
$
|
(385,938
|
)
|
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
|
|
|
||||
Depreciation and amortization of long-lived assets
|
13,842
|
|
16,938
|
|
||
Amortization of deferred financing costs, debt discount and payment-in-kind interest
|
23,115
|
|
7,236
|
|
||
Amortization of right of use assets
|
2,861
|
|
—
|
|
||
Loss on sale of business
|
3,601
|
|
—
|
|
||
Loss on debt extinguishment
|
3,969
|
|
49,241
|
|
||
Goodwill impairment of discontinued operations
|
—
|
|
72,309
|
|
||
Goodwill impairment
|
—
|
|
37,540
|
|
||
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
|
42
|
|
1,934
|
|
||
Reserve for claims receivable
|
—
|
|
15,523
|
|
||
Benefit from deferred income taxes, including valuation allowances
|
(776
|
)
|
(1,477
|
)
|
||
Mark to market losses (gains) and prior service cost amortization for pension and postretirement plans
|
390
|
|
(1,149
|
)
|
||
Stock-based compensation, net of associated income taxes
|
609
|
|
1,030
|
|
||
Changes in assets and liabilities:
|
|
|
||||
Accounts receivable
|
(5,765
|
)
|
40,641
|
|
||
Contracts in progress and advance billings on contracts
|
(53,571
|
)
|
(30,494
|
)
|
||
Inventories
|
(3,951
|
)
|
5,925
|
|
||
Income taxes
|
1,295
|
|
(4,036
|
)
|
||
Accounts payable
|
(31,688
|
)
|
(15,103
|
)
|
||
Accrued and other current liabilities
|
(15,670
|
)
|
20,331
|
|
||
Accrued contract loss
|
(45,779
|
)
|
9,720
|
|
||
Pension liabilities, accrued postretirement benefits and employee benefits
|
(110
|
)
|
(17,579
|
)
|
||
Other, net
|
(7,918
|
)
|
15,008
|
|
||
Net cash used operating activities
|
(193,011
|
)
|
(150,643
|
)
|
||
Cash flows from investing activities:
|
|
|
||||
Purchase of property, plant and equipment
|
(434
|
)
|
(4,350
|
)
|
||
Proceeds from sale of business
|
7,445
|
|
5,105
|
|
||
Proceeds from sale of equity method investments in joint venture
|
—
|
|
21,078
|
|
||
Purchases of available-for-sale securities
|
(4,187
|
)
|
(11,383
|
)
|
||
Sales and maturities of available-for-sale securities
|
2,880
|
|
13,578
|
|
||
Other, net
|
(462
|
)
|
189
|
|
||
Net cash from investing activities
|
5,242
|
|
24,217
|
|
|
Six months ended June 30,
|
|||||
(in thousands)
|
2019
|
2018
|
||||
Cash flows from financing activities:
|
|
|
||||
Borrowings under our U.S. revolving credit facility
|
179,700
|
|
307,300
|
|
||
Repayments of our U.S. revolving credit facility
|
(140,200
|
)
|
(205,300
|
)
|
||
Repayments of our second lien term loan facility
|
—
|
|
(212,590
|
)
|
||
Borrowings under Last Out Term Loan Tranche A-2 from related party
|
10,000
|
|
—
|
|
||
Borrowings under Last Out Term Loan Tranche A-3 from related party
|
141,350
|
|
—
|
|
||
Repayments under our foreign revolving credit facilities
|
(605
|
)
|
(5,022
|
)
|
||
Shares of our common stock returned to treasury stock
|
(23
|
)
|
(746
|
)
|
||
Proceeds from rights offering
|
—
|
|
248,375
|
|
||
Costs related to rights offering
|
(682
|
)
|
(3,225
|
)
|
||
Debt issuance costs
|
(14,400
|
)
|
(6,736
|
)
|
||
Net cash from financing activities
|
175,140
|
|
122,056
|
|
||
Effects of exchange rate changes on cash
|
(3,280
|
)
|
(7,026
|
)
|
||
Net decrease in cash, cash equivalents and restricted cash
|
(15,909
|
)
|
(11,396
|
)
|
||
Less net increase in cash and cash equivalents of discontinued operations
|
—
|
|
(2,513
|
)
|
||
Net decrease in cash, cash equivalents and restricted cash of continuing operations
|
(15,909
|
)
|
(8,883
|
)
|
||
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
|
$
|
44,370
|
|
$
|
60,814
|
|
•
|
completed equitization transactions on July 23, 2019 as described in
Note 18
and
Note 17
, which included an exchange of all of the outstanding balance of Tranche A-1 of the Last Out Term Loans for equity and a rights offering to raise
$50.0 million
that was used to fully repay Tranche A-2 of the Last Out Term Loans and to reduce a portion of the outstanding principal under Tranche A-3 of the Last Out Term Loans;
|
•
|
executed a
one-for-ten
reverse stock split of our issued and outstanding common stock, which became effective on July 24, 2019;
|
•
|
completed the sale of a non-core materials handling business in Germany, Loibl GmbH ("Loibl") effective May 31, 2019 for
€10.0 million
(approximately
$11.4 million
)
, subject to adjustment, resulting in net receipt of
$7.4 million
;
|
•
|
received
$150.0 million
in face value from Tranche A-3 of the Last Out Term Loans before original issuance discount and fees, as described in
Note 14
, 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 14
, 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 five of the six European Vølund EPC loss contracts to the customers by the end of second quarter of 2019, partly facilitated by a settlement related to the second and fifth loss contracts as described in
Note 4
, which was funded with proceeds from Tranche A-3 of the Last Out Term Loans
;
|
•
|
entered into an additional settlement as described in
Note 4
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
;
|
•
|
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 13
and
Note 14
, the most recent of which were Amendments No. 16 and No. 17, dated April 5, 2019 and August 7, 2019, respectively,
which provided Tranche A-3 of the Last Out Term Loans described above and in
Note 14
, reset the financial and other covenants, adjusted the interest rate of the
|
•
|
filed and plan to file for waiver of required minimum contributions to the U.S. Pension Plan as described in
Note 12
,
that if granted, would reduce cash funding requirements in 2019 by approximately
$15 million
and a similar or greater amount in 2020 and would increase contributions over the following five years. The waiver request for the first plan year remains under review by the IRS and the waiver request for the second plan year is expected to be filed later in 2019 or early 2020.
|
|
Three months ended June 30,
|
Six months ended June 30,
|
||||||||||
(in thousands, except per share amounts)
|
2019
|
2018
|
2019
|
2018
|
||||||||
Loss from continuing operations
|
$
|
(28,334
|
)
|
$
|
(209,836
|
)
|
$
|
(78,099
|
)
|
$
|
(326,773
|
)
|
Loss from discontinued operations, net of tax
|
694
|
|
(55,932
|
)
|
694
|
|
(59,428
|
)
|
||||
Net loss attributable to shareholders
|
$
|
(27,640
|
)
|
$
|
(265,768
|
)
|
$
|
(77,405
|
)
|
$
|
(386,201
|
)
|
|
|
|
|
|
||||||||
Weighted average shares used to calculate basic and diluted earnings per share
(1)
|
18,366
|
|
13,616
|
|
18,362
|
|
9,235
|
|
||||
|
|
|
|
|
||||||||
Basic and diluted loss per share - continuing operations
|
$
|
(1.54
|
)
|
$
|
(15.41
|
)
|
$
|
(4.26
|
)
|
$
|
(35.39
|
)
|
Basic and diluted earnings (loss) per share - discontinued operations
|
0.04
|
|
(4.11
|
)
|
0.04
|
|
(6.43
|
)
|
||||
Basic and diluted loss per share
|
$
|
(1.50
|
)
|
$
|
(19.52
|
)
|
$
|
(4.22
|
)
|
$
|
(41.82
|
)
|
•
|
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 June 30,
|
Six months ended June 30,
|
||||||||||
(in thousands)
|
2019
|
2018
|
2019
|
2018
|
||||||||
Revenues:
|
|
|
|
|
||||||||
Babcock & Wilcox segment
|
|
|
|
|
||||||||
Retrofits
|
$
|
44,923
|
|
$
|
69,344
|
|
$
|
75,597
|
|
$
|
131,327
|
|
New build utility and environmental
|
55,377
|
|
42,194
|
|
124,284
|
|
55,041
|
|
||||
Aftermarket parts and field engineering services
|
64,308
|
|
63,299
|
|
127,395
|
|
136,372
|
|
||||
Industrial steam generation
|
49,357
|
|
28,464
|
|
96,367
|
|
43,370
|
|
||||
Eliminations
|
(13,001
|
)
|
(5,549
|
)
|
(34,121
|
)
|
(9,232
|
)
|
||||
|
200,964
|
|
197,752
|
|
389,522
|
|
356,878
|
|
||||
Vølund & Other Renewable segment
|
|
|
|
|
||||||||
Renewable new build and services
|
31,553
|
|
40,077
|
|
61,086
|
|
84,788
|
|
||||
Operations and maintenance services
|
2,313
|
|
14,925
|
|
2,873
|
|
30,172
|
|
||||
Eliminations
|
(171
|
)
|
—
|
|
(732
|
)
|
—
|
|
||||
|
33,695
|
|
55,002
|
|
63,227
|
|
114,960
|
|
||||
SPIG segment
|
|
|
|
|
||||||||
New build cooling systems
|
17,385
|
|
33,699
|
|
38,391
|
|
62,744
|
|
||||
Aftermarket cooling system services
|
7,303
|
|
12,316
|
|
15,474
|
|
20,015
|
|
||||
Eliminations
|
(1,854
|
)
|
—
|
|
(2,129
|
)
|
—
|
|
||||
|
22,834
|
|
46,015
|
|
51,736
|
|
82,759
|
|
||||
|
|
|
|
|
||||||||
Eliminations
|
(9,378
|
)
|
(7,432
|
)
|
(24,434
|
)
|
(10,084
|
)
|
||||
|
$
|
248,115
|
|
$
|
291,337
|
|
$
|
480,051
|
|
$
|
544,513
|
|
|
Three months ended June 30,
|
Six months ended June 30,
|
||||||||||
(in thousands)
|
2019
|
2018
|
2019
|
2018
|
||||||||
Gross profit (loss)
(1)
:
|
|
|
|
|
||||||||
Babcock & Wilcox segment
|
$
|
37,853
|
|
$
|
30,013
|
|
$
|
68,959
|
|
$
|
60,876
|
|
Vølund & Other Renewable segment
|
5,057
|
|
(69,329
|
)
|
2,201
|
|
(119,778
|
)
|
||||
SPIG segment
|
2,388
|
|
79
|
|
6,064
|
|
(2,672
|
)
|
||||
Intangible amortization expense included in cost of operations
|
(1,014
|
)
|
(1,829
|
)
|
(2,071
|
)
|
(3,661
|
)
|
||||
|
44,284
|
|
(41,066
|
)
|
75,153
|
|
(65,235
|
)
|
||||
|
|
|
|
|
||||||||
Selling, general and administrative ("SG&A") expenses
|
(41,948
|
)
|
(46,948
|
)
|
(84,217
|
)
|
(106,120
|
)
|
||||
Advisory fees and settlement costs
|
(4,778
|
)
|
(5,142
|
)
|
(18,388
|
)
|
(8,231
|
)
|
||||
Intangible amortization expense included in SG&A
|
(128
|
)
|
(158
|
)
|
(258
|
)
|
(395
|
)
|
||||
Goodwill impairment
|
—
|
|
(37,540
|
)
|
—
|
|
(37,540
|
)
|
||||
Restructuring activities and spin-off transaction costs
|
(936
|
)
|
(3,826
|
)
|
(7,015
|
)
|
(10,688
|
)
|
||||
Research and development costs
|
(710
|
)
|
(1,287
|
)
|
(1,453
|
)
|
(2,429
|
)
|
||||
Loss on asset disposals, net
|
(42
|
)
|
(1,384
|
)
|
(42
|
)
|
(1,384
|
)
|
||||
Equity in income and impairment of investees
|
—
|
|
—
|
|
—
|
|
(11,757
|
)
|
||||
Operating loss
|
$
|
(4,258
|
)
|
$
|
(137,351
|
)
|
$
|
(36,220
|
)
|
$
|
(243,779
|
)
|
|
Three months ended June 30,
|
Six months ended June 30,
|
||||||||||
(in thousands)
|
2019
|
2018
|
2019
|
2018
|
||||||||
Adjusted EBITDA
|
|
|
|
|
|
|
||||||
Babcock & Wilcox segment
(1)
|
$
|
19,032
|
|
$
|
9,897
|
|
$
|
27,996
|
|
$
|
14,074
|
|
Vølund & Other Renewable segment
|
(779
|
)
|
(78,603
|
)
|
(9,642
|
)
|
(140,357
|
)
|
||||
SPIG segment
|
(142
|
)
|
(6,222
|
)
|
517
|
|
(13,532
|
)
|
||||
Corporate
(2)
|
(9,367
|
)
|
(6,194
|
)
|
(14,351
|
)
|
(17,808
|
)
|
||||
Research and development costs
|
(710
|
)
|
(1,287
|
)
|
(1,453
|
)
|
(2,429
|
)
|
||||
|
8,034
|
|
(82,409
|
)
|
3,067
|
|
(160,052
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||
Restructuring activities and spin-off transaction costs
|
(936
|
)
|
(3,826
|
)
|
(7,015
|
)
|
(10,688
|
)
|
||||
Financial advisory services
|
(3,197
|
)
|
(5,142
|
)
|
(7,155
|
)
|
(8,231
|
)
|
||||
Settlement cost to exit Vølund contract
(3)
|
—
|
|
—
|
|
(6,575
|
)
|
—
|
|
||||
Advisory fees for settlement costs and liquidity planning
|
(1,581
|
)
|
—
|
|
(4,658
|
)
|
—
|
|
||||
Goodwill impairment
|
—
|
|
(37,540
|
)
|
—
|
|
(37,540
|
)
|
||||
Impairment of equity method investment in TBWES
|
—
|
|
—
|
|
—
|
|
(18,362
|
)
|
||||
Gain on sale of equity method investment in BWBC
|
—
|
|
—
|
|
—
|
|
6,509
|
|
||||
Depreciation & amortization
|
(6,536
|
)
|
(6,921
|
)
|
(13,842
|
)
|
(13,902
|
)
|
||||
Loss on asset disposal
|
(42
|
)
|
(1,513
|
)
|
(42
|
)
|
(1,513
|
)
|
||||
Operating loss
|
(4,258
|
)
|
(137,351
|
)
|
(36,220
|
)
|
(243,779
|
)
|
||||
Interest expense, net
|
(26,636
|
)
|
(11,770
|
)
|
(37,211
|
)
|
(25,069
|
)
|
||||
Loss on debt extinguishment
|
(3,969
|
)
|
(49,241
|
)
|
(3,969
|
)
|
(49,241
|
)
|
||||
Loss on sale of business
|
(3,601
|
)
|
—
|
|
(3,601
|
)
|
—
|
|
||||
Net pension benefit before MTM
|
3,333
|
|
6,542
|
|
6,761
|
|
13,539
|
|
||||
MTM (gain) loss from benefit plans
|
(862
|
)
|
544
|
|
(1,260
|
)
|
544
|
|
||||
Foreign exchange
|
9,506
|
|
(20,198
|
)
|
(647
|
)
|
(17,741
|
)
|
||||
Other – net
|
43
|
|
(131
|
)
|
463
|
|
266
|
|
||||
Loss before income tax expense
|
(26,444
|
)
|
(211,605
|
)
|
(75,684
|
)
|
(321,481
|
)
|
||||
Income tax expense (benefit)
|
1,891
|
|
(1,934
|
)
|
2,517
|
|
5,029
|
|
||||
Loss from continuing operations
|
(28,335
|
)
|
(209,671
|
)
|
(78,201
|
)
|
(326,510
|
)
|
||||
Gain (loss) from discontinued operations, net of tax
|
694
|
|
(55,932
|
)
|
694
|
|
(59,428
|
)
|
||||
Net loss
|
(27,641
|
)
|
(265,603
|
)
|
(77,507
|
)
|
(385,938
|
)
|
||||
Net income (loss) attributable to noncontrolling interest
|
1
|
|
(165
|
)
|
102
|
|
(263
|
)
|
||||
Net loss attributable to stockholders
|
$
|
(27,640
|
)
|
$
|
(265,768
|
)
|
$
|
(77,405
|
)
|
$
|
(386,201
|
)
|
(1)
|
The Babcock & Wilcox segment adjusted EBITDA for the three and six months ended
June 30, 2018
excludes
$6.5 million
and
$13.5 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.
|
(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
and
$5.7 million
in the three months and six months ended
June 30, 2018
, respectively.
|
(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)
|
June 30, 2019
|
December 31, 2018
|
$ Change
|
% Change
|
|||||||
Contract assets - included in contracts in progress:
|
|
|
|
|
|||||||
Costs incurred less costs of revenue recognized
|
$
|
33,155
|
|
$
|
49,910
|
|
$
|
(16,755
|
)
|
(34
|
)%
|
Revenues recognized less billings to customers
|
117,267
|
|
94,817
|
|
22,450
|
|
24
|
%
|
|||
Contracts in progress
|
$
|
150,422
|
|
$
|
144,727
|
|
$
|
5,695
|
|
4
|
%
|
Contract liabilities - included in advance billings on contracts:
|
|
|
|
|
|||||||
Billings to customers less revenues recognized
|
$
|
99,317
|
|
$
|
140,933
|
|
$
|
(41,616
|
)
|
(30
|
)%
|
Costs of revenue recognized less cost incurred
|
2,967
|
|
8,434
|
|
(5,467
|
)
|
(65
|
)%
|
|||
Advance billings on contracts
|
$
|
102,284
|
|
$
|
149,367
|
|
$
|
(47,083
|
)
|
(32
|
)%
|
|
|
|
|
|
|||||||
Net contract balance
|
$
|
48,138
|
|
$
|
(4,640
|
)
|
$
|
52,778
|
|
(1,137
|
)%
|
|
|
|
|
|
|||||||
Accrued contract losses
|
$
|
11,014
|
|
$
|
61,651
|
|
$
|
(50,637
|
)
|
(82
|
)%
|
|
Three months ended June 30,
|
Six months ended June 30,
|
||||||||||
(in thousands)
|
2019
|
2018
|
2019
|
2018
|
||||||||
Increases in gross profits for changes in estimates for over time contracts
|
$
|
8,088
|
|
$
|
6,019
|
|
$
|
15,894
|
|
$
|
13,946
|
|
Decreases in gross profits for changes in estimates for over time contracts
|
(16,051
|
)
|
(50,327
|
)
|
(23,728
|
)
|
(110,498
|
)
|
||||
Net changes in gross profits for changes in estimates for over time contracts
|
$
|
(7,963
|
)
|
$
|
(44,308
|
)
|
$
|
(7,834
|
)
|
$
|
(96,552
|
)
|
(in thousands)
|
June 30, 2019
|
December 31, 2018
|
||||
Raw materials and supplies
|
$
|
45,931
|
|
$
|
44,833
|
|
Work in progress
|
6,142
|
|
5,348
|
|
||
Finished goods
|
11,755
|
|
11,142
|
|
||
Total inventories
|
$
|
63,828
|
|
$
|
61,323
|
|
(in thousands)
|
June 30, 2019
|
December 31, 2018
|
||||
Land
|
$
|
3,568
|
|
$
|
3,575
|
|
Buildings
|
106,182
|
|
106,238
|
|
||
Machinery and equipment
|
176,928
|
|
181,825
|
|
||
Property under construction
|
2,381
|
|
2,290
|
|
||
|
289,059
|
|
293,928
|
|
||
Less accumulated depreciation
|
211,054
|
|
203,036
|
|
||
Net property, plant and equipment
|
$
|
78,005
|
|
$
|
90,892
|
|
(in thousands)
|
Babcock & Wilcox
|
||
Balance at December 31, 2018
|
$
|
47,108
|
|
Currency translation adjustments
|
5
|
|
|
Balance at June 30, 2019
|
$
|
47,113
|
|
(in thousands)
|
June 30, 2019
|
December 31, 2018
|
||||
Definite-lived intangible assets
|
|
|
||||
Customer relationships
|
$
|
24,544
|
|
$
|
24,764
|
|
Unpatented technology
|
15,098
|
|
15,098
|
|
||
Patented technology
|
2,611
|
|
2,616
|
|
||
Tradename
|
12,514
|
|
12,566
|
|
||
All other
|
9,938
|
|
9,728
|
|
||
Gross value of definite-lived intangible assets
|
64,705
|
|
64,772
|
|
||
Customer relationships amortization
|
(17,968
|
)
|
(17,219
|
)
|
||
Unpatented technology amortization
|
(4,507
|
)
|
(3,760
|
)
|
||
Patented technology amortization
|
(2,412
|
)
|
(2,348
|
)
|
||
Tradename amortization
|
(3,968
|
)
|
(3,672
|
)
|
||
All other amortization
|
(8,760
|
)
|
(8,285
|
)
|
||
Accumulated amortization
|
(37,615
|
)
|
(35,284
|
)
|
||
Net definite-lived intangible assets
|
$
|
27,090
|
|
$
|
29,488
|
|
Indefinite-lived intangible assets
|
|
|
||||
Trademarks and trade names
|
$
|
1,305
|
|
$
|
1,305
|
|
Total intangible assets, net
|
$
|
28,395
|
|
$
|
30,793
|
|
|
Six months ended June 30,
|
|||||
(in thousands)
|
2019
|
2018
|
||||
Balance at beginning of period
|
$
|
30,793
|
|
$
|
42,065
|
|
Amortization expense
|
(2,331
|
)
|
(4,056
|
)
|
||
Currency translation adjustments and other
|
(67
|
)
|
(1,641
|
)
|
||
Balance at end of the period
|
$
|
28,395
|
|
$
|
36,368
|
|
|
Amortization Expense
|
||
Three months ending September 30, 2019
|
$
|
940
|
|
Three months ending December 31, 2019
|
940
|
|
|
Twelve months ending December 31, 2020
|
3,487
|
|
|
Twelve months ending December 31, 2021
|
3,261
|
|
|
Twelve months ending December 31, 2022
|
3,200
|
|
|
Twelve months ending December 31, 2023
|
3,197
|
|
|
Twelve months ending December 31, 2024
|
3,085
|
|
|
Thereafter
|
8,980
|
|
(in thousands)
|
Three months ended June 30, 2019
|
Six months ended June 30, 2019
|
||||
Operating lease expense
|
$
|
1,589
|
|
$
|
3,498
|
|
Short-term lease expense
|
2,335
|
|
5,196
|
|
||
Variable lease expense
|
871
|
|
983
|
|
||
Sublease income
(1)
|
(14
|
)
|
(24
|
)
|
||
Total lease expense
|
$
|
4,781
|
|
$
|
9,653
|
|
(in thousands)
|
Three months ended June 30, 2019
|
Six months ended June 30, 2019
|
||||
Cash paid for amounts included in the measurement of lease liabilities:
|
|
|
||||
Operating cash flows from leases
|
$
|
1,560
|
|
$
|
3,661
|
|
Right-of-use assets obtained in exchange for lease liabilities:
|
|
|
|
|||
Operating leases
|
$
|
812
|
|
$
|
1,013
|
|
(in thousands, except lease term and discount rate)
|
June 30, 2019
|
||
Right-of-use assets
|
$
|
13,121
|
|
|
|
||
Liabilities:
|
|
||
Lease liabilities
|
$
|
4,229
|
|
Noncurrent lease liabilities
|
8,816
|
|
|
Total lease liabilities
|
$
|
13,045
|
|
|
|
||
Weighted-average remaining lease term:
|
|
||
Operating leases (in years)
|
3.61
|
|
|
Weighted-average discount rate:
|
|
|
|
Operating leases
|
9.47
|
%
|
|
Six months ended June 30,
|
|||||
(in thousands)
|
2019
|
2018
|
||||
Balance at beginning of period
|
$
|
45,117
|
|
$
|
33,514
|
|
Additions
|
2,717
|
|
28,008
|
|
||
Expirations and other changes
|
(4,412
|
)
|
(1,592
|
)
|
||
Payments
|
(3,641
|
)
|
(5,791
|
)
|
||
Translation and other
|
(192
|
)
|
(1,001
|
)
|
||
Balance at end of period
|
$
|
39,589
|
|
$
|
53,138
|
|
(in thousands)
|
|
||
Three months ended June 30, 2019
|
Total severance and related costs
|
||
Babcock & Wilcox segment
|
$
|
127
|
|
Vølund & Other Renewable segment
|
437
|
|
|
SPIG segment
|
258
|
|
|
Corporate
|
114
|
|
|
|
$
|
936
|
|
(in thousands)
|
|
||
Six months ended June 30, 2019
|
Total severance and related costs
|
||
Babcock & Wilcox segment
|
$
|
4,075
|
|
Vølund & Other Renewable segment
|
1,015
|
|
|
SPIG segment
|
401
|
|
|
Corporate
|
1,524
|
|
|
|
$
|
7,015
|
|
(in thousands)
|
|
|
|
|
||||||||
Three months ended June 30, 2018
|
Severance and related costs
|
Exit costs
|
Spin-off transaction costs
|
Total
|
||||||||
Babcock & Wilcox segment
|
$
|
2,768
|
|
$
|
6
|
|
$
|
—
|
|
$
|
2,774
|
|
Vølund & Other Renewable segment
|
(53
|
)
|
—
|
|
—
|
|
(53
|
)
|
||||
SPIG segment
|
366
|
|
—
|
|
—
|
|
366
|
|
||||
Corporate
|
785
|
|
—
|
|
(46
|
)
|
739
|
|
||||
|
$
|
3,866
|
|
$
|
6
|
|
$
|
(46
|
)
|
$
|
3,826
|
|
(in thousands)
|
|
|
|
|
||||||||
Six months ended June 30, 2018
|
Severance and related costs
|
Exit costs
|
Spin-off transaction costs
|
Total
|
||||||||
Babcock & Wilcox segment
|
$
|
3,860
|
|
$
|
150
|
|
$
|
—
|
|
$
|
4,010
|
|
Vølund & Other Renewable segment
|
441
|
|
—
|
|
—
|
|
441
|
|
||||
SPIG segment
|
750
|
|
—
|
|
—
|
|
750
|
|
||||
Corporate
|
5,157
|
|
—
|
|
330
|
|
5,487
|
|
||||
|
$
|
10,208
|
|
$
|
150
|
|
$
|
330
|
|
$
|
10,688
|
|
|
Three months ended June 30,
|
Six months ended June 30,
|
||||||||||
(in thousands)
|
2019
|
2018
|
2019
|
2018
|
||||||||
Balance at beginning of period
|
10,196
|
|
5,914
|
|
$
|
7,359
|
|
$
|
2,320
|
|
||
Restructuring expense
|
936
|
|
4,276
|
|
7,015
|
|
10,164
|
|
||||
Payments
|
(4,158
|
)
|
(2,308
|
)
|
(7,400
|
)
|
(4,602
|
)
|
||||
Balance at June 30
|
$
|
6,974
|
|
$
|
7,882
|
|
$
|
6,974
|
|
$
|
7,882
|
|
|
Pension Benefits
|
|
Other Benefits
|
||||||||||||||||||||||
|
Three months ended June 30,
|
Six months ended June 30,
|
|
Three months ended June 30,
|
Six months ended June 30,
|
||||||||||||||||||||
(in thousands)
|
2019
|
2018
|
2019
|
2018
|
|
2019
|
2018
|
2019
|
2018
|
||||||||||||||||
Interest cost
|
$
|
10,965
|
|
$
|
9,741
|
|
$
|
21,822
|
|
$
|
19,498
|
|
|
$
|
119
|
|
$
|
95
|
|
$
|
239
|
|
$
|
192
|
|
Expected return on plan assets
|
(13,905
|
)
|
(16,215
|
)
|
(27,799
|
)
|
(32,445
|
)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||||
Amortization of prior service cost
|
27
|
|
25
|
|
55
|
|
50
|
|
|
(539
|
)
|
(188
|
)
|
(1,078
|
)
|
(834
|
)
|
||||||||
Recognized net actuarial loss (gain)
|
862
|
|
(544
|
)
|
1,260
|
|
(544
|
)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||||
Benefit plans, net
(1)
|
(2,051
|
)
|
(6,993
|
)
|
(4,662
|
)
|
(13,441
|
)
|
|
(420
|
)
|
(93
|
)
|
(839
|
)
|
(642
|
)
|
||||||||
Service cost included in COS
(2)
|
150
|
|
187
|
|
300
|
|
376
|
|
|
4
|
|
4
|
|
8
|
|
8
|
|
||||||||
Net periodic benefit (benefit) cost
|
$
|
(1,901
|
)
|
$
|
(6,806
|
)
|
$
|
(4,362
|
)
|
$
|
(13,065
|
)
|
|
$
|
(416
|
)
|
$
|
(89
|
)
|
$
|
(831
|
)
|
$
|
(634
|
)
|
(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)
|
June 30, 2019
|
December 31, 2018
|
||||
United States
|
$
|
184,400
|
|
$
|
144,900
|
|
Foreign
|
—
|
|
606
|
|
||
Total revolving debt
|
$
|
184,400
|
|
$
|
145,506
|
|
|
June 30, 2019
|
|||||||||||
(in thousands)
|
A-1
|
A-2
|
A-3
|
Total
|
||||||||
Proceeds
(1)
|
$
|
37,256
|
|
$
|
10,000
|
|
$
|
141,350
|
|
$
|
188,606
|
|
Discount and fees
|
—
|
|
—
|
|
8,650
|
|
8,650
|
|
||||
Paid-in-kind interest
|
696
|
|
257
|
|
2,800
|
|
3,753
|
|
||||
Principal
|
37,952
|
|
10,257
|
|
152,800
|
|
201,009
|
|
||||
Unamortized discount and fees
|
(14
|
)
|
—
|
|
(17,939
|
)
|
(17,953
|
)
|
||||
Net debt balance
|
$
|
37,938
|
|
$
|
10,257
|
|
$
|
134,861
|
|
$
|
183,056
|
|
|
December 31, 2018
|
|||||||||||
(in thousands)
|
A-1
|
A-2
|
A-3
|
Total
|
||||||||
Proceeds
|
$
|
30,000
|
|
$
|
—
|
|
$
|
—
|
|
$
|
30,000
|
|
Discount and fees
|
5,111
|
|
—
|
|
—
|
|
5,111
|
|
||||
Paid-in-kind interest
|
132
|
|
—
|
|
—
|
|
132
|
|
||||
Principal
|
35,243
|
|
—
|
|
—
|
|
35,243
|
|
||||
Unamortized discount and fees
|
(4,594
|
)
|
—
|
|
—
|
|
(4,594
|
)
|
||||
Net debt balance
|
$
|
30,649
|
|
$
|
—
|
|
$
|
—
|
|
$
|
30,649
|
|
Stock price
|
$
|
0.385
|
|
Exercise price
|
$
|
0.010
|
|
Time to expiration
|
3 years
|
|
|
Annualized volatility
|
121.00
|
%
|
|
Annual rate of quarterly dividends
|
—
|
%
|
|
Discount rate - bond equivalent rate
|
2.30
|
%
|
|
Expiration of option
|
April 5, 2022
|
|
|
Warrant value
|
$
|
0.38
|
|
•
|
A
$50.0 million
rights offering ("2019 Rights Offering") as described in
Note 17
, for which B. Riley FBR, Inc. agreed to act as a backstop, by purchasing from us, at a price of
$0.30
per share, all unsubscribed shares in the 2019 Rights Offering for cash or by exchanging an equal principal amount of outstanding Tranche A-2 or Tranche A-3 Last Out Term Loans (the "Backstop Commitment"). Under the 2019 Rights Offering,
166,666,667
shares of common stock were issued (
16,666,666
shares of common stock after the reverse stock split), of which
125,891,701
shares (
12,589,170
shares after the reverse stock split) were purchased through the exercise of rights in the rights offering generating
$37.8 million
of cash,
13,333,333
shares (
1,333,333
shares after the reverse stock split) were issued through assigned portions of the Backstop Commitment generating an additional
$4.0 million
of cash, and the final
27,441,633
shares (
2,744,163
shares after the reverse split) were exchanged for
$8.2 million
of principal value
|
•
|
$10.3 million
of the proceeds of 2019 Rights Offering were used to fully repay Tranche A-2 of the Last Out Term Loans including accrued paid-in-kind interest.
|
•
|
$31.5 million
of the proceeds of the 2019 Rights Offering were used to partially prepay Tranche A-3 of the Last Out Term Loans including paid-in-kind interest. The total prepayment of principal of Tranche A-3 of the Last Out Term Loans was
$39.7 million
inclusive of the
$8.2 million
of principal value exchanged for common shares under the Backstop Commitment described above.
|
•
|
All
$38.2 million
of outstanding principal of Tranche A-1 of the Last Out Term Loans including accrued paid-in-kind interest was exchanged for
127,207,856
shares (
12,720,785
shares after the reverse stock split) of common stock (
107,207,856
shares (
10,720,785
shares after the reverse stock split) to Vintage and
20,000,000
shares (
2,000,000
shares after the reverse stock split) to affiliates of B. Riley) at a price of
$0.30
per share (the "Debt Exchange"). Prior to the Debt Exchange,
$6.0 million
of Tranche A-1 was held by affiliates of B. Riley and the remainder was held by Vintage. Shares issued under the Debt Exchange were then subject to the one-for-ten reverse stock split described in
Note 1
and
Note 16
.
|
•
|
16,666,667
warrants, each to purchase one share of our common stock at an exercise price of
$0.01
per share were issued to B. Riley. The warrants were subsequently adjusted for the one-for-ten reverse stock split described in
Note 1
, which adjusted the number of warrants to
1,666,666
and the exercise price remained
$0.01
.
|
|
Six months ended June 30,
|
|||||
(in thousands)
|
2019
|
2018
|
||||
Accrued capital expenditures in accounts payable
|
$
|
—
|
|
$
|
123
|
|
Accreted interest expense on our Second Lien Term Loan Facility
|
$
|
—
|
|
$
|
3,202
|
|
|
Six months ended June 30,
|
|||||
(in thousands)
|
2019
|
2018
|
||||
Income tax payments (refunds), net
|
$
|
32
|
|
$
|
2,938
|
|
|
|
|
||||
Interest payments on our U.S. Revolving Credit Facility
|
$
|
6,921
|
|
$
|
4,599
|
|
Interest payments on our Last Out Term Loans
|
1,022
|
|
—
|
|
||
Interest payments on our Second Lien Term Loan Facility
|
—
|
|
7,627
|
|
||
Total cash paid for interest
|
$
|
7,943
|
|
$
|
12,226
|
|
|
Three months ended June 30,
|
Six months ended June 30,
|
||||||||||
(in thousands)
|
2019
|
2018
|
2019
|
2018
|
||||||||
Components associated with borrowings from:
|
|
|
|
|
||||||||
U.S. Revolving Credit Facility
|
$
|
3,801
|
|
$
|
3,434
|
|
$
|
7,351
|
|
$
|
5,779
|
|
Last Out Term Loans - cash interest
|
3,606
|
|
—
|
|
4,119
|
|
—
|
|
||||
Last Out Term Loans - paid-in-kind interest
|
3,881
|
|
—
|
|
4,941
|
|
—
|
|
||||
Second Lien Term Loan Facility
|
—
|
|
2,191
|
|
—
|
|
7,460
|
|
||||
Foreign Revolving Credit Facilities
|
—
|
|
145
|
|
—
|
|
279
|
|
||||
|
11,288
|
|
5,770
|
|
16,411
|
|
13,518
|
|
||||
Components associated with amortization or accretion of:
|
|
|
|
|
||||||||
U.S. Revolving Credit Facility - deferred financing fees and commitment fees
|
8,880
|
|
5,113
|
|
14,149
|
|
8,314
|
|
||||
U.S. Revolving Credit Facility - contingent consent fee for Amendment 16
(1)
|
4,674
|
|
—
|
|
4,674
|
|
—
|
|
||||
Last Out Term Loans - discount and financing fees
|
1,479
|
|
—
|
|
2,069
|
|
—
|
|
||||
Second Lien Term Loan Facility - discount and financing fees
|
—
|
|
833
|
|
—
|
|
3,202
|
|
||||
|
15,033
|
|
5,946
|
|
20,892
|
|
11,516
|
|
||||
|
|
|
|
|
||||||||
Other interest expense
|
516
|
|
161
|
|
668
|
|
295
|
|
||||
|
|
|
|
|
||||||||
Total interest expense
|
$
|
26,837
|
|
$
|
11,877
|
|
$
|
37,971
|
|
$
|
25,329
|
|
(1)
|
As described in
Note 13
, in connection with Amendment No. 16, a contingent consent fee of
$13.9 million
(
4.0%
of total availability) is payable on December 15, 2019, but will be waived if certain actions are undertaken to refinance the facility by that date. We recorded the contingent consent fee as part of deferred financing fees in other current assets in the Condensed Consolidated Balance Sheets because it has been earned but may be waived, and it is being amortized to interest expense through December 15, 2019. Amendment No. 16 to the U.S. Revolving Credit Facility also established a deferred ticking fee of
1.0%
of total availability that is payable if certain actions are not undertaken to refinance the facility by December 15, 2019, in addition to an incremental monthly fee of
1.0%
of total availability of the U.S. Revolving Credit Facility after December 15, 2019. No expense has been recognized for the deferred ticking fee because the company believes it is not probable of being earned by the lenders.
|
(in thousands)
|
June 30, 2019
|
December 31, 2018
|
June 30, 2018
|
December 31, 2017
|
||||||||
Held by foreign entities
|
$
|
30,932
|
|
$
|
35,522
|
|
$
|
27,955
|
|
$
|
42,490
|
|
Held by United States entities
|
4,258
|
|
7,692
|
|
557
|
|
1,227
|
|
||||
Cash and cash equivalents of continuing operations
|
35,190
|
|
43,214
|
|
28,512
|
|
43,717
|
|
||||
|
|
|
|
|
||||||||
Reinsurance reserve requirements
|
5,350
|
|
11,768
|
|
25,269
|
|
21,061
|
|
||||
Restricted foreign accounts
|
3,830
|
|
5,297
|
|
6,442
|
|
4,919
|
|
||||
Sale proceeds held in escrow
|
—
|
|
—
|
|
591
|
|
—
|
|
||||
Restricted cash and cash equivalents
|
9,180
|
|
17,065
|
|
32,302
|
|
25,980
|
|
||||
Total cash, cash equivalents and restricted cash of continuing operations shown in the Condensed Consolidated Statements of Cash Flows
|
$
|
44,370
|
|
$
|
60,279
|
|
$
|
60,814
|
|
$
|
69,697
|
|
|
|
|
|
|
||||||||
Total cash and cash equivalents of discontinued operations
|
$
|
—
|
|
$
|
—
|
|
$
|
10,437
|
|
$
|
12,950
|
|
(in thousands)
|
Currency translation (loss) gain
|
Net unrealized gain (loss) on derivative instruments
(1)
|
Net unrecognized loss 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
|
)
|
Other comprehensive loss before reclassifications
|
(7,979
|
)
|
(189
|
)
|
—
|
|
(8,168
|
)
|
||||
Reclassified from AOCI to net income (loss)
|
3,176
|
|
(22
|
)
|
(514
|
)
|
2,640
|
|
||||
Net other comprehensive (loss) income
|
(4,803
|
)
|
(211
|
)
|
(514
|
)
|
(5,528
|
)
|
||||
Balance at June 30, 2019
|
$
|
(5,377
|
)
|
$
|
197
|
|
$
|
(2,830
|
)
|
$
|
(8,010
|
)
|
(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 (loss) income
|
(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
|
)
|
Other comprehensive income (loss) before reclassifications
|
8,517
|
|
—
|
|
(513
|
)
|
112
|
|
8,116
|
|
|||||
Reclassified from AOCI to net income (loss)
|
—
|
|
—
|
|
381
|
|
(427
|
)
|
(46
|
)
|
|||||
Amounts reclassified from AOCI to pension, other accumulated postretirement benefit liabilities and deferred income taxes
|
—
|
|
—
|
|
—
|
|
(2,831
|
)
|
(2,831
|
)
|
|||||
Net other comprehensive income (loss)
|
8,517
|
|
—
|
|
(132
|
)
|
(3,146
|
)
|
5,239
|
|
|||||
Balance at June 30, 2018
|
$
|
(18,141
|
)
|
$
|
—
|
|
$
|
1,557
|
|
$
|
48
|
|
$
|
(16,536
|
)
|
AOCI component
|
Line items in the Condensed Consolidated Statements of Operations affected by reclassifications from AOCI
|
Three months ended June 30,
|
Six months ended June 30,
|
||||||||||
2019
|
2018
|
2019
|
2018
|
||||||||||
Release of currency translation gain with the sale of equity method investment and the sale of business
|
Equity in income and impairment of investees
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
2,044
|
|
|
Loss on sale of business
|
(3,176
|
)
|
—
|
|
(3,176
|
)
|
—
|
|
||||
|
Net (loss) income
|
$
|
(3,176
|
)
|
$
|
—
|
|
$
|
(3,176
|
)
|
$
|
2,044
|
|
|
|
|
|
|
|
||||||||
Derivative financial instruments
|
Revenues
|
$
|
—
|
|
$
|
(478
|
)
|
$
|
—
|
|
$
|
1,138
|
|
|
Cost of operations
|
—
|
|
(11
|
)
|
—
|
|
1
|
|
||||
|
Other
|
22
|
|
—
|
|
(202
|
)
|
—
|
|
||||
|
Total before tax
|
22
|
|
(489
|
)
|
(202
|
)
|
1,139
|
|
||||
|
(Benefit) provision for income taxes
|
—
|
|
(108
|
)
|
—
|
|
248
|
|
||||
|
Net income (loss)
|
$
|
22
|
|
$
|
(381
|
)
|
$
|
(202
|
)
|
$
|
891
|
|
|
|
|
|
|
|
||||||||
Amortization of prior service cost on benefit obligations
|
Benefit plans, net
|
$
|
514
|
|
$
|
427
|
|
$
|
870
|
|
$
|
811
|
|
|
Net income
|
$
|
514
|
|
$
|
427
|
|
$
|
870
|
|
$
|
811
|
|
(in thousands)
|
|
|
|
|
||||||||
Available-for-sale securities
|
June 30, 2019
|
Level 1
|
Level 2
|
Level 3
|
||||||||
Corporate notes and bonds
|
$
|
12,844
|
|
$
|
12,844
|
|
$
|
—
|
|
$
|
—
|
|
Mutual funds
|
593
|
|
—
|
|
593
|
|
—
|
|
||||
United States Government and agency securities
|
3,296
|
|
3,296
|
|
—
|
|
—
|
|
||||
Total fair value of available-for-sale securities
|
$
|
16,733
|
|
$
|
16,140
|
|
$
|
593
|
|
$
|
—
|
|
(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
|
June 30, 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
June 30, 2019
and
December 31, 2018
.
|
•
|
Warrants.
The fair value of the warrants was established using the Black-Scholes option pricing model value approach.
|
(in thousands)
|
Three months ended June 30, 2018
|
Six months ended June 30, 2018
|
||||
Revenue
|
$
|
58,257
|
|
$
|
116,439
|
|
Cost of operations
|
45,521
|
|
90,189
|
|
||
Selling, general and administrative
|
7,597
|
|
17,024
|
|
||
Goodwill impairment
|
72,309
|
|
72,309
|
|
||
Research and development
|
390
|
|
756
|
|
||
Operating income (loss)
|
(67,560
|
)
|
(63,839
|
)
|
||
Net loss
|
(55,932
|
)
|
(59,428
|
)
|
(in thousands)
|
Six months ended June 30, 2018
|
||
Depreciation and amortization
|
$
|
3,036
|
|
Goodwill impairment
|
72,309
|
|
|
Provision for deferred income taxes
|
(815
|
)
|
|
Purchase of property, plant equipment
|
77
|
|
•
|
$3.6 million
of loss on sale of business was recognized in the three months ended June 30, 2019 for a non-core materials handling business in Germany, Loibl GmbH, as described in
Note 25
.
|
•
|
$0.9 million
and
$7.0 million
of restructuring and spin-off costs were recognized in the three and six months ended June 30, 2019, respectively, compared to
$3.8 million
and
$10.7 million
of restructuring and spin-off costs recognized in the three and six months ended June 30, 2018. The actions in the first six months of 2019 primarily related to severance. In the first six months of 2018 restructuring costs related primarily to executive severance and the remaining severance costs of prior restructuring initiatives.
|
•
|
$3.2 million
and
$7.2 million
of financial advisory services were recorded in the three and six months ended June 30, 2019, respectively, as compared to
$5.1 million
and
$8.2 million
in the corresponding periods of 2018. These services are requirements of the U.S. Revolving Credit Facility.
|
•
|
$6.6 million
of cost was recognized in the six months ended June 30, 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 have moved forward.
|
•
|
$1.6 million
and
$4.7 million
of legal and other advisory fees were recognized in the three and six months ended June 30, 2019, respectively, related to the contract settlements described above and in
Note 4
and for liquidity planning.
|
•
|
$2.0 million
and
$4.0 million
of accelerated depreciation expense in the three and six months ended June 30, 2019, respectively, for fixed assets affected by our September 2018 announcement to consolidate office space and relocate our global headquarters to Akron, Ohio expected in the fourth quarter 2019.
|
•
|
$0.9 million
and
$1.3 million
of actuarially determined mark to market ("MTM") losses from our Canadian pension plan was recognized in the three and six months ended June 30, 2019, respectively, compared to
$0.5 million
of MTM gains from our Canadian pension plan in the three months ended June 30, 2018. MTM losses are further described in
Note 12
.
|
•
|
$37.5 million
to fully impair goodwill related to our SPIG reporting unit in the second quarter of 2018.
|
•
|
$18.4 million
of other-than-temporary impairment was recognized in the six months ended June 30, 2018 for our interest in TWBES, an equity method investment in India based on an agreement to sell our ownership interest.
|
•
|
$6.5 million
of gain on sale was recognized during the first quarter 2018 for our equity method investment in China and is included in Equity in income and impairment of investees.
|
•
|
completed equitization transactions on July 23, 2019 as described in
Note 18
and
Note 17
, which included an exchange of all of the outstanding balance of Tranche A-1 of the Last Out Term Loans for equity and a rights offering to raise
$50.0 million
that was used to fully repay Tranche A-2 of the Last Out Term Loans and to reduce a portion of the outstanding principal under Tranche A-3 of the Last Out Term Loans;
|
•
|
executed a
one-for-ten
reverse stock split of our issued and outstanding common stock, which became effective on July 24, 2019;
|
•
|
completed the sale of a non-core materials handling business in Germany, Loibl GmbH ("Loibl") effective May 31, 2019 for
€10.0 million
(approximately
$11.4 million
)
, subject to adjustment, resulting in net receipt of
$7.4 million
;
|
•
|
received
$150.0 million
in face value from Tranche A-3 of the Last Out Term Loans before original issuance discount and fees, as described in
Note 14
, 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 14
, 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 five of the six European Vølund EPC loss contracts to the customers by the end of second quarter of 2019, partly facilitated by a settlement related to the second and fifth loss contracts as described in
Note 4
, which was funded with proceeds from Tranche A-3 of the Last Out Term Loans
;
|
•
|
entered into an additional settlement as described in
Note 4
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
;
|
•
|
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 13
and
Note 14
, the most recent of which were Amendments No. 16 and No. 17, dated April 5, 2019 and August 7, 2019, respectively,
which provided Tranche A-3 of the Last Out Term Loans described above and in
Note 14
, reset the financial and other covenants, adjusted the interest rate of the Last Out Term Loans, reset the maturity date of the Last Out Term Loans to December 31, 2020, 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, permitted other letters of credit to expire up to one year after the maturity of the U.S. Revolving Credit Facility, clarifies (Amendment No. 17) the definition cumulatively through Amendment No. 16 of the amounts that can be used in calculating the loss basket for certain Vølund contracts, and resets the loss basket for certain Vølund contracts to
$15.0 million
to align with the clarification commencing with the quarter ending March 31, 2019; and
|
•
|
filed and plan to file for waiver of required minimum contributions to the U.S. Pension Plan as described in
Note 12
,
that if granted, would reduce cash funding requirements in 2019 by approximately
$15 million
and a similar or greater amount in 2020 and would increase contributions over the following five years. The waiver request for the first plan year remains under review by the IRS and the waiver request for the second plan year is expected to be filed later in 2019 or early 2020.
|
|
Three months ended June 30,
|
Six months ended June 30,
|
||||||||||||||||
(In thousands)
|
2019
|
2018
|
$ Change
|
2019
|
2018
|
$ Change
|
||||||||||||
Revenues:
|
|
|
|
|
|
|
||||||||||||
Babcock & Wilcox segment
|
$
|
200,964
|
|
$
|
197,752
|
|
$
|
3,212
|
|
$
|
389,522
|
|
$
|
356,878
|
|
$
|
32,644
|
|
Vølund & Other Renewable segment
|
33,695
|
|
55,002
|
|
(21,307
|
)
|
63,227
|
|
114,960
|
|
(51,733
|
)
|
||||||
SPIG segment
|
22,834
|
|
46,015
|
|
(23,181
|
)
|
51,736
|
|
82,759
|
|
(31,023
|
)
|
||||||
Eliminations
|
(9,378
|
)
|
(7,432
|
)
|
(1,946
|
)
|
(24,434
|
)
|
(10,084
|
)
|
(14,350
|
)
|
||||||
|
248,115
|
|
291,337
|
|
(43,222
|
)
|
480,051
|
|
544,513
|
|
(64,462
|
)
|
||||||
Gross profit (loss)
(1)
:
|
|
|
|
|
|
|
|
|||||||||||
Babcock & Wilcox segment
|
37,853
|
|
30,013
|
|
7,840
|
|
68,959
|
|
60,876
|
|
8,083
|
|
||||||
Vølund & Other Renewable segment
|
5,057
|
|
(69,329
|
)
|
74,386
|
|
2,201
|
|
(119,778
|
)
|
121,979
|
|
||||||
SPIG segment
|
2,388
|
|
79
|
|
2,309
|
|
6,064
|
|
(2,672
|
)
|
8,736
|
|
||||||
Intangible amortization expense included in cost of operations
|
(1,014
|
)
|
(1,829
|
)
|
815
|
|
(2,071
|
)
|
(3,661
|
)
|
1,590
|
|
||||||
|
44,284
|
|
(41,066
|
)
|
85,350
|
|
75,153
|
|
(65,235
|
)
|
140,388
|
|
||||||
Selling, general and administrative ("SG&A") expenses
|
(41,948
|
)
|
(46,948
|
)
|
5,000
|
|
(84,217
|
)
|
(106,120
|
)
|
21,903
|
|
||||||
Advisory fees and settlement costs
|
(4,778
|
)
|
(5,142
|
)
|
364
|
|
(18,388
|
)
|
(8,231
|
)
|
(10,157
|
)
|
||||||
Intangible amortization expense included in SG&A
|
(128
|
)
|
(158
|
)
|
30
|
|
(258
|
)
|
(395
|
)
|
137
|
|
||||||
Goodwill impairment
|
—
|
|
(37,540
|
)
|
37,540
|
|
—
|
|
(37,540
|
)
|
37,540
|
|
||||||
Restructuring activities and spin-off transaction costs
|
(936
|
)
|
(3,826
|
)
|
2,890
|
|
(7,015
|
)
|
(10,688
|
)
|
3,673
|
|
||||||
Research and development costs
|
(710
|
)
|
(1,287
|
)
|
577
|
|
(1,453
|
)
|
(2,429
|
)
|
976
|
|
||||||
Loss on asset disposals, net
|
(42
|
)
|
(1,384
|
)
|
1,342
|
|
(42
|
)
|
(1,384
|
)
|
1,342
|
|
||||||
Equity in income and impairment of investees
|
—
|
|
—
|
|
—
|
|
—
|
|
(11,757
|
)
|
11,757
|
|
||||||
Operating loss
|
$
|
(4,258
|
)
|
$
|
(137,351
|
)
|
$
|
133,093
|
|
$
|
(36,220
|
)
|
$
|
(243,779
|
)
|
$
|
207,559
|
|
|
Three months ended June 30,
|
Six months ended June 30,
|
||||||||||||||||
(in thousands)
|
2019
|
2018
|
$ Change
|
2019
|
2018
|
$ Change
|
||||||||||||
Adjusted EBITDA
|
|
|
|
|
|
|
||||||||||||
Babcock & Wilcox segment
(1)
|
$
|
19,032
|
|
$
|
9,897
|
|
$
|
9,135
|
|
$
|
27,996
|
|
$
|
14,074
|
|
$
|
13,922
|
|
Vølund & Other Renewable segment
|
(779
|
)
|
(78,603
|
)
|
77,824
|
|
(9,642
|
)
|
(140,357
|
)
|
130,715
|
|
||||||
SPIG segment
|
(142
|
)
|
(6,222
|
)
|
6,080
|
|
517
|
|
(13,532
|
)
|
14,049
|
|
||||||
Corporate
(2)
|
(9,367
|
)
|
(6,194
|
)
|
(3,173
|
)
|
(14,351
|
)
|
(17,808
|
)
|
3,457
|
|
||||||
Research and development costs
|
(710
|
)
|
(1,287
|
)
|
577
|
|
(1,453
|
)
|
(2,429
|
)
|
976
|
|
||||||
|
8,034
|
|
(82,409
|
)
|
90,443
|
|
3,067
|
|
(160,052
|
)
|
163,119
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Restructuring activities and spin-off transaction costs
|
(936
|
)
|
(3,826
|
)
|
2,890
|
|
(7,015
|
)
|
(10,688
|
)
|
3,673
|
|
||||||
Financial advisory services
|
(3,197
|
)
|
(5,142
|
)
|
1,945
|
|
(7,155
|
)
|
(8,231
|
)
|
1,076
|
|
||||||
Settlement cost to exit Vølund contract
(3)
|
—
|
|
—
|
|
—
|
|
(6,575
|
)
|
—
|
|
(6,575
|
)
|
||||||
Advisory fees for settlement costs and liquidity planning
|
(1,581
|
)
|
—
|
|
(1,581
|
)
|
(4,658
|
)
|
—
|
|
(4,658
|
)
|
||||||
Goodwill impairment
|
—
|
|
(37,540
|
)
|
37,540
|
|
—
|
|
(37,540
|
)
|
37,540
|
|
||||||
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
|
(6,536
|
)
|
(6,921
|
)
|
385
|
|
(13,842
|
)
|
(13,902
|
)
|
60
|
|
||||||
Loss on asset disposal
|
(42
|
)
|
(1,513
|
)
|
1,471
|
|
(42
|
)
|
(1,513
|
)
|
1,471
|
|
||||||
Operating loss
|
(4,258
|
)
|
(137,351
|
)
|
133,093
|
|
(36,220
|
)
|
(243,779
|
)
|
207,559
|
|
||||||
Interest expense, net
|
(26,636
|
)
|
(11,770
|
)
|
(14,866
|
)
|
(37,211
|
)
|
(25,069
|
)
|
(12,142
|
)
|
||||||
Loss on debt extinguishment
|
(3,969
|
)
|
(49,241
|
)
|
45,272
|
|
(3,969
|
)
|
(49,241
|
)
|
45,272
|
|
||||||
Loss on sale of business
|
(3,601
|
)
|
—
|
|
(3,601
|
)
|
(3,601
|
)
|
—
|
|
(3,601
|
)
|
||||||
Net pension benefit before MTM
|
3,333
|
|
6,542
|
|
(3,209
|
)
|
6,761
|
|
13,539
|
|
(6,778
|
)
|
||||||
MTM (gain) loss from benefit plans
|
(862
|
)
|
544
|
|
(1,406
|
)
|
(1,260
|
)
|
544
|
|
(1,804
|
)
|
||||||
Foreign exchange
|
9,506
|
|
(20,198
|
)
|
29,704
|
|
(647
|
)
|
(17,741
|
)
|
17,094
|
|
||||||
Other – net
|
43
|
|
(131
|
)
|
174
|
|
463
|
|
266
|
|
197
|
|
||||||
Loss before income tax expense
|
(26,444
|
)
|
(211,605
|
)
|
185,161
|
|
(75,684
|
)
|
(321,481
|
)
|
245,797
|
|
||||||
Income tax expense (benefit)
|
1,891
|
|
(1,934
|
)
|
3,825
|
|
2,517
|
|
5,029
|
|
(2,512
|
)
|
||||||
Loss from continuing operations
|
(28,335
|
)
|
(209,671
|
)
|
181,336
|
|
(78,201
|
)
|
(326,510
|
)
|
248,309
|
|
||||||
Gain (loss) from discontinued operations, net of tax
|
694
|
|
(55,932
|
)
|
56,626
|
|
694
|
|
(59,428
|
)
|
60,122
|
|
||||||
Net loss
|
(27,641
|
)
|
(265,603
|
)
|
237,962
|
|
(77,507
|
)
|
(385,938
|
)
|
308,431
|
|
||||||
Net income (loss) attributable to noncontrolling interest
|
1
|
|
(165
|
)
|
166
|
|
102
|
|
(263
|
)
|
365
|
|
||||||
Net loss attributable to stockholders
|
$
|
(27,640
|
)
|
$
|
(265,768
|
)
|
$
|
238,128
|
|
$
|
(77,405
|
)
|
$
|
(386,201
|
)
|
$
|
308,796
|
|
(1)
|
The Babcock & Wilcox segment adjusted EBITDA for the three and six months ended
June 30, 2018
excludes
$6.5 million
and
$13.5 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.
|
(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
and
$5.7 million
in the three months and six months ended
June 30, 2018
, respectively.
|
(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 June 30,
|
Six months ended June 30,
|
||||||||||||||||
(In thousands)
|
2019
|
2018
|
$ Change
|
2019
|
2018
|
$ Change
|
||||||||||||
Revenues
|
$
|
200,964
|
|
$
|
197,752
|
|
$
|
3,212
|
|
$
|
389,522
|
|
$
|
356,878
|
|
$
|
32,644
|
|
Gross profit
|
$
|
37,853
|
|
$
|
30,013
|
|
$
|
7,840
|
|
$
|
68,959
|
|
$
|
60,876
|
|
$
|
8,083
|
|
Adjusted EBITDA
|
$
|
19,032
|
|
$
|
9,897
|
|
$
|
9,135
|
|
$
|
27,996
|
|
$
|
14,074
|
|
$
|
13,922
|
|
Gross profit %
|
18.8
|
%
|
15.2
|
%
|
|
17.7
|
%
|
17.1
|
%
|
|
|
Three months ended June 30,
|
Six months ended June 30,
|
||||||||||||||||
(in thousands)
|
2019
|
2018
|
$ Change
|
2019
|
2018
|
$ Change
|
||||||||||||
Revenues
|
$
|
33,695
|
|
$
|
55,002
|
|
$
|
(21,307
|
)
|
$
|
63,227
|
|
$
|
114,960
|
|
$
|
(51,733
|
)
|
Gross profit (loss)
|
$
|
5,057
|
|
$
|
(69,329
|
)
|
$
|
74,386
|
|
$
|
2,201
|
|
$
|
(119,778
|
)
|
$
|
121,979
|
|
Adjusted EBITDA
|
$
|
(779
|
)
|
$
|
(78,603
|
)
|
$
|
77,824
|
|
$
|
(9,642
|
)
|
$
|
(140,357
|
)
|
$
|
130,715
|
|
Gross profit %
|
15.0
|
%
|
(126.0
|
)%
|
|
3.5
|
%
|
(104.2
|
)%
|
|
|
Three months ended June 30,
|
Six months ended June 30,
|
||||||||||||||||
(In thousands)
|
2019
|
2018
|
$ Change
|
2019
|
2018
|
$ Change
|
||||||||||||
Revenues
|
$
|
22,834
|
|
$
|
46,015
|
|
$
|
(23,181
|
)
|
$
|
51,736
|
|
$
|
82,759
|
|
$
|
(31,023
|
)
|
Gross profit (loss)
|
$
|
2,388
|
|
$
|
79
|
|
$
|
2,309
|
|
$
|
6,064
|
|
$
|
(2,672
|
)
|
$
|
8,736
|
|
Adjusted EBITDA
|
$
|
(142
|
)
|
$
|
(6,222
|
)
|
$
|
6,080
|
|
$
|
517
|
|
$
|
(13,532
|
)
|
$
|
14,049
|
|
Gross profit %
|
10.5
|
%
|
0.2
|
%
|
|
11.7
|
%
|
(3.2
|
)%
|
|
|
Three months ended June 30,
|
Six months ended June 30,
|
||||||||||
(In millions)
|
2019
|
2018
|
2019
|
2018
|
||||||||
Babcock & Wilcox
|
$
|
140
|
|
$
|
132
|
|
$
|
327
|
|
$
|
403
|
|
Vølund & Other Renewable
(1)(2)
|
(78
|
)
|
(23
|
)
|
(59
|
)
|
23
|
|
||||
SPIG
|
18
|
|
18
|
|
30
|
|
45
|
|
||||
Other/eliminations
|
(13
|
)
|
(1
|
)
|
(15
|
)
|
(2
|
)
|
||||
Bookings
|
$
|
67
|
|
$
|
126
|
|
$
|
283
|
|
$
|
469
|
|
(1)
|
Vølund & Other Renewable bookings includes the revaluation of backlog denominated in currency other than U.S. dollars. The foreign exchange impact on Vølund & Other Renewable bookings in the three months ended June 30, 2019 and 2018 was $(4.0) million and $(30.3) million, respectively, and the foreign exchange impact on Vølund & Other Renewable bookings in the six months ended June 30, 2019 and 2018 was $(0.5) million and $(12.3) million, respectively.
|
|
Six months ended June 30,
|
|||||
(In approximate millions)
|
2019
|
2018
|
||||
Babcock & Wilcox
|
$
|
323
|
|
$
|
500
|
|
Vølund & Other Renewable
(1)
|
205
|
|
916
|
|
||
SPIG
|
65
|
|
137
|
|
||
Other/eliminations
|
(8
|
)
|
(35
|
)
|
||
Backlog
|
$
|
585
|
|
$
|
1,518
|
|
(1)
|
Vølund & Other Renewable backlog at June 30, 2019, includes $169 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
|
$
|
173
|
|
$
|
82
|
|
$
|
68
|
|
$
|
323
|
|
Vølund & Other Renewable
|
28
|
|
22
|
|
155
|
|
205
|
|
||||
SPIG
|
21
|
|
14
|
|
30
|
|
65
|
|
||||
Other/eliminations
|
(2
|
)
|
—
|
|
(6
|
)
|
(8
|
)
|
||||
Expected revenue from backlog
|
$
|
220
|
|
$
|
118
|
|
$
|
247
|
|
$
|
585
|
|
|
Three months ended June 30,
|
Six months ended June 30,
|
|||||||||||||
(In thousands, except for percentages)
|
2019
|
2018
|
$ Change
|
2019
|
2018
|
$ Change
|
|||||||||
Loss before income taxes
|
(26,444
|
)
|
(211,605
|
)
|
$
|
185,161
|
|
$
|
(75,684
|
)
|
(321,481
|
)
|
$
|
245,797
|
|
Income tax expense (benefit)
|
1,891
|
|
(1,934
|
)
|
$
|
3,825
|
|
$
|
2,517
|
|
5,029
|
|
$
|
(2,512
|
)
|
Effective tax rate
|
(7.2
|
)%
|
0.9
|
%
|
|
(3.3
|
)%
|
(1.6
|
)%
|
|
|
Three months ended June 30,
|
Six months ended June 30,
|
||||||||||
(in thousands)
|
2019
|
2018
|
2019
|
2018
|
||||||||
United States
|
$
|
(25,281
|
)
|
$
|
(66,146
|
)
|
$
|
(37,505
|
)
|
$
|
(91,170
|
)
|
Other than the United States
|
(1,163
|
)
|
(145,459
|
)
|
(38,179
|
)
|
(230,311
|
)
|
||||
Loss before provision for (benefit from) income taxes
|
$
|
(26,444
|
)
|
$
|
(211,605
|
)
|
$
|
(75,684
|
)
|
$
|
(321,481
|
)
|
•
|
completed equitization transactions on July 23, 2019 as described in
Note 18
and
Note 17
, which included an exchange of all of the outstanding balance of Tranche A-1 of the Last Out Term Loans for equity and a rights offering to raise
$50.0 million
that was used to fully repay Tranche A-2 of the Last Out Term Loans and to reduce a portion of the outstanding principal under Tranche A-3 of the Last Out Term Loans;
|
•
|
executed a
one-for-ten
reverse stock split of our issued and outstanding common stock, which became effective on July 24, 2019;
|
•
|
completed the sale of a non-core materials handling business in Germany, Loibl GmbH ("Loibl") effective May 31, 2019 for
€10.0 million
(approximately
$11.4 million
)
, subject to adjustment, resulting in net receipt of
$7.4 million
;
|
•
|
received
$150.0 million
in face value from Tranche A-3 of the Last Out Term Loans before original issuance discount and fees, as described in
Note 14
, 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 14
, 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 five of the six European Vølund EPC loss contracts to the customers by the end of second quarter of 2019, partly facilitated by a settlement related to the second and fifth loss contracts as described in
Note 4
, which was funded with proceeds from Tranche A-3 of the Last Out Term Loans
;
|
•
|
entered into an additional settlement as described in
Note 4
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
;
|
•
|
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 13
and
Note 14
, the most recent of which were Amendments No. 16 and No. 17, dated April 5, 2019 and August 7, 2019, respectively,
which provided Tranche A-3 of the Last Out Term Loans described above and in
Note 14
, reset the financial and other covenants, adjusted the interest rate of the Last Out Term Loans, reset the maturity date of the Last Out Term Loans to December 31, 2020, 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, permitted other letters of credit to expire up to one year after the maturity of the U.S. Revolving Credit Facility, clarifies (Amendment No. 17) the definition cumulatively through Amendment No. 16 of the amounts that can be used in calculating the loss basket for certain Vølund contracts, and resets the loss basket for certain Vølund contracts to
$15.0 million
to align with the clarification commencing with the quarter ending March 31, 2019; and
|
•
|
filed and plan to file for waiver of required minimum contributions to the U.S. Pension Plan as described in
Note 12
,
that if granted, would reduce cash funding requirements in 2019 by approximately
$15 million
and a similar or greater amount in 2020 and would increase contributions over the following five years. The waiver request for the first plan year remains under review by the IRS and the waiver request for the second plan year is expected to be filed later in 2019 or early 2020.
|
•
|
A
$50.0 million
rights offering ("2019 Rights Offering") as described in
Note 17
, for which B. Riley FBR, Inc. agreed to act as a backstop, by purchasing from us, at a price of
$0.30
per share, all unsubscribed shares in the 2019 Rights Offering for cash or by exchanging an equal principal amount of outstanding Tranche A-2 or Tranche A-3 Last Out Term Loans (the "Backstop Commitment"). Under the 2019 Rights Offering,
166,666,667
shares of common stock were issued (
16,666,666
shares of common stock after the reverse stock split), of which
125,891,701
shares (
12,589,170
shares after the reverse stock split) were purchased through the exercise of rights in the rights offering generating
$37.8 million
of cash,
13,333,333
shares (
1,333,333
shares after the reverse stock split) were issued through assigned portions of the Backstop Commitment generating an additional
$4.0 million
of cash, and the final
27,441,633
shares (
2,744,163
shares after the reverse split) were exchanged for
$8.2 million
of principal value including accrued paid-in-kind interest of Tranche A-3 Last Out Term Loans. Shares issued in the 2019 Rights Offering and under the Backstop Commitment were then subject to the one-for-ten reverse stock split described in
Note 1
and
Note 16
.
|
•
|
$10.3 million
of the proceeds of 2019 Rights Offering were used to fully repay Tranche A-2 of the Last Out Term Loans including accrued paid-in-kind interest.
|
•
|
$31.5 million
of the proceeds of the 2019 Rights Offering were used to partially prepay Tranche A-3 of the Last Out Term Loans including paid-in-kind interest. The total prepayment of principal of Tranche A-3 of the Last Out Term Loans was
$39.7 million
inclusive of the
$8.2 million
of principal value exchanged for common shares under the Backstop Commitment described above.
|
•
|
All
$38.2 million
of outstanding principal of Tranche A-1 of the Last Out Term Loans including accrued paid-in-kind interest was exchanged for
127,207,856
shares (
12,720,785
shares after the reverse stock split) of common stock (
107,207,856
shares (
10,720,785
shares after the reverse stock split) to Vintage and
20,000,000
shares (
2,000,000
shares after the reverse stock split) to affiliates of B. Riley) at a price of
$0.30
per share (the "Debt Exchange"). Prior to the Debt Exchange,
$6.0 million
of Tranche A-1 was held by affiliates of B. Riley and the remainder was held by Vintage. Shares issued under the Debt Exchange were then subject to the one-for-ten reverse stock split described in
Note 1
and
Note 16
.
|
•
|
16,666,667
warrants, each to purchase one share of our common stock at an exercise price of
$0.01
per share were issued to B. Riley. The warrants were subsequently adjusted for the one-for-ten reverse stock split described in
Note 1
, which adjusted the number of warrants to
1,666,666
and the exercise price remained
$0.01
.
|
Period
|
Total number of shares purchased
(1) (2)
|
Average price paid per share
(2)
|
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
|
||||||
April 2019
|
59
|
|
$
|
4.40
|
|
—
|
|
$
|
—
|
|
May 2019
|
126
|
|
$
|
3.10
|
|
—
|
|
$
|
—
|
|
June 2019
|
—
|
|
$
|
—
|
|
—
|
|
$
|
—
|
|
Total
|
185
|
|
$
|
3.52
|
|
—
|
|
$
|
—
|
|
|
Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Babcock & Wilcox Enterprises, Inc. Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 (File No. 001-36876))
|
|
|
|
|
|
Certificate of Amendment of the Amended and Restated Certificate of Incorporation of Babcock & Wilcox Enterprises, Inc., as filed with the Secretary of State of the State of Delaware on June 14, 2019 (incorporated by reference to the Babcock & Wilcox Enterprises, Inc. Current Report on Form 8-K filed on June 17, 2019 (File No. 001-36876))
|
|
|
|
|
|
Certificate of Amendment of the Restated Certificate of Incorporation, as amended, of Babcock & Wilcox Enterprises, Inc., as filed with the Secretary of State of the State of Delaware on July 23, 2019 (incorporated by reference to the Babcock & Wilcox Enterprises, Inc. Current Report on Form 8-K filed on July 24, 2019 (File No. 001-36876))
|
|
|
|
|
10.1
*
|
|
Amendment No. 16, dated April 5, 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. Current Report on Form 8-K filed on April 5, 2019 (File No. 001-36876))
|
|
|
|
|
Letter Agreement, dated April 5, 2019, among Babcock & Wilcox Enterprises, Inc., B. Riley FBR, Inc. and Vintage Capital Management, LLC (incorporated by reference to the Babcock & Wilcox Enterprises, Inc. Current Report on Form 8-K filed on April 5, 2019 (File No. 001-36876))
|
|
|
|
|
|
Backstop Exchange Agreement, dated as of April 30, 2019, by and among Babcock & Wilcox Enterprises, Inc. and B. Riley FBR, Inc. (incorporated by reference to the Babcock & Wilcox Enterprises, Inc. Current Report on Form 8-K filed on April 30, 2019 (File No. 001-36876))
|
|
|
|
|
|
Investor Rights Agreement, dated as of April 30, 2019, by and among Babcock & Wilcox Enterprises, Inc., B. Riley FBR, Inc. and Vintage Capital Management, LLC (incorporated by reference to the Babcock & Wilcox Enterprises, Inc. Current Report on Form 8-K filed on April 30, 2019 (File No. 001-36876))
|
|
|
|
|
|
Registration Rights Agreement, dated as of April 30, 2019, by and among Babcock & Wilcox Enterprises, Inc., and certain investors party thereto (incorporated by reference to the Babcock & Wilcox Enterprises, Inc. Current Report on Form 8-K filed on April 30, 2019 (File No. 001-36876))
|
|
|
|
|
|
Form of Warrant (incorporated by reference to the Babcock & Wilcox Enterprises, Inc. Current Report on Form 8-K filed on July 24, 2019 (File No. 001-36876))
|
|
|
|
|
|
Babcock & Wilcox Enterprises, Inc. Amended and Restated 2015 Long-Term Incentive Plan (Amended and Restated as of June 14, 2019) (incorporated by reference to Appendix G to the Babcock & Wilcox Enterprises, Inc. Definitive Proxy Statement filed with the Securities and Exchange Commission on May 13, 2019).
|
|
|
|
|
|
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.
|
|
|
BABCOCK & WILCOX ENTERPRISES, INC.
|
|
|
|
August 8, 2019
|
By:
|
/s/ Louis Salamone
|
|
|
Louis Salamone
|
|
|
Executive Vice President, Chief Financial Officer and Chief Accounting Officer
(Principal Financial and 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.
|
August 8, 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.
|
August 8, 2019
|
/s/ Louis Salamone
|
|
Louis Salamone
|
|
Executive Vice President, Chief Financial Officer and Chief Accounting Officer
(Principal Financial and Accounting Officer)
|
(1)
|
the Company’s quarterly Report on Form 10-Q for the quarter ended
June 30, 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: August 8, 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
June 30, 2019
(the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
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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.
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Dated: August 8, 2019
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/s/ Louis Salamone
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Louis Salamone
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Executive Vice President, Chief Financial Officer and Chief Accounting Officer
(Principal Financial and Accounting Officer)
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