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Babcock & Wilcox announces results for 4Q20 and full year

Published by
World Coal,


Babcock & Wilcox Enterprises, Inc. (B&W) has announced results for 4Q20 and full year (FY20).

4Q20 highlights

  • Revenues of US$149.9 million.
  • Net income of US$4.6 million.
  • Earnings per share of US$0.09.
  • Consolidated adjusted EBITDA of US$16.1 million.
  • Bookings of US$167 million.

FY20 highlights

  • Revenues of US$566.3 million.
  • Net income of US$(10.3) million.
  • Earnings per share of US$(0.21).
  • Consolidated adjusted EBITDA of US$45.1 million.
  • Bookings of US$645 million.
  • Minimum required pension funding contributions reduced by US$107 million or 75%.

"Our results for 4Q20 and FY20 reflect the ongoing positive impact of our strategic actions, cost savings initiatives, and strong management and operational effectiveness, despite the impacts of COVID-19 across our segments, and we are confident in our ability to achieve our previously stated adjusted EBITDA targets of US$70 – US$80 million and US$95 – US$105 million, in 2021 and 2022, respectively," said Kenneth Young, B&W's Chairman and CEO.

"Our actions in 2020 and year-to-date, which included launching new segments, expanding internationally, implementing additional cost savings initiatives, and most recently closing successful common stock and senior notes offerings, have provided a strong foundation for the continued execution of our growth strategy."

"The proceeds from our offerings significantly reduced our secured debt by US$274 million and reduced future cash interest payments by approximately US$16 million annually. Combined with a reduction in our required pension contributions, we expect to save more than US$40 million annually in cash expenses on a pro-forma basis, while also providing capital to support the expansion of our clean energy technologies portfolio as we continue to pursue more than US$5 billion of identified pipeline opportunities over the next 3 years, in addition to our high-margin parts and services business," Young added. "Looking forward, we remain focused on growing our B&W Renewable and B&W Environmental segments, including deploying our waste-to-energy and carbon capture technologies to help meet the increasing global demand for carbon and methane reductions. The next-generation B&W is positioned to power the global energy and environmental transformation."

4Q20 financial summary

Consolidated revenues in 4Q20 were US$149.9 million, down 17% compared to 4Q19. Revenues in all segments were adversely impacted by COVID-19 as customers delayed projects and travel restrictions limited the ability of the company's workforce to be on site. The completion of large projects in all three segments in the prior year quarter also contributed to the decline in revenue. The GAAP operating income in 4Q20 was US$2.2 million, inclusive of restructuring and settlement costs and advisory fees of US$7.9 million, compared to an operating income of US$10 million in 4Q19. The decline in operating income was primarily due to lower volume as a result of the impacts of COVID-19, partially offset by the effects of improved gross margin in the B&W Thermal segment. Adjusted EBITDA was US$16.1 million compared to US$22.8 million in 4Q19. Bookings in 4Q20 were US$167 million. All amounts referred to in this release are on a continuing operations basis, unless otherwise noted.

Babcock & Wilcox Renewable segment

Revenues were US$37.6 million for 4Q20, compared to US$46.7 million in 4Q19. The decline in revenue was primarily due to the completion of the European EPC loss projects in 2019 and the negative impacts of COVID-19 on projects and parts sales. Adjusted EBITDA in the quarter was US$3 million compared to US$5.8 million in 4Q19, primarily due to the lower volume. In 4Q20, the segment recorded losses of US$2.4 million on the European EPC loss contracts as compared to a gain of US$1.2 million in 4Q19, inclusive of warranty expense. The segment adjusted gross profit was US$10.4 million in 4Q20 compared to adjusted gross profit of US$10.7 million reported in 4Q19; despite COVID-19's impact on revenue, the gross profit margin improved to 27.7% in 4Q20, compared to 22.9% in 4Q19 as a result of emphasis on higher margin projects and cost savings initiatives.

Babcock & Wilcox Environmental segment

Revenues were US$31.6 million in 4Q20, compared to US$41.2 million in 4Q19, primarily due to the impacts of COVID-19 and the completion of a large submerged grind conveyor project and a large construction project in the prior year quarter. Adjusted EBITDA was US$2.4 million, compared to US$6.3 million in the same period last year, driven by the lower volume. Adjusted gross profit was US$6.9 million in 4Q20, compared to US$11.2 million in the prior-year period.

Babcock & Wilcox Thermal segment

Revenues were US$81 million in 4Q20 compared to US$94.2 million in the prior-year period, primarily due to the impacts of COVID-19 and the completion of a large maintenance project in the prior-year quarter. Adjusted EBITDA in 4Q20 was US$12.8 million, an increase of 6.9% compared to US$11.9 million in last year's quarter, primarily due to favourable product mix and the benefits of a full period of cost savings and restructuring initiatives, partially offset by the effects of lower volume and increases in overhead being allocated to the segment; adjusted EBITDA margin was 15.7% in the quarter compared to 12.7% in the same period last year. Adjusted gross profit in the Babcock & Wilcox Thermal segment in 4Q20 improved to US$27.4 million, a 6.8% increase compared to US$25.6 million in the prior-year period, primarily due to favourable product mix and the benefits of a full period of cost savings and restructuring initiatives, offset by lower volume; gross profit margin improved to 33.8%, compared to 27.2% in the same period last year.

FY20 financial summary

Consolidated revenues in 2020 were US$566.3 million, down 34% compared to 2019. Revenues in all segments were adversely impacted by COVID-19, including the postponement and delay of several projects. The GAAP operating loss in 2020 was US$1.7 million, inclusive of an insurance loss recovery of US$26 million offset by restructuring and settlement costs and advisory fees of US$24.7 million, compared to an operating loss of US$29.4 million in 2019. The improvement in operating loss was primarily due to the insurance loss recovery, the positive impact of cost savings initiatives and a lower level of losses on the EPC loss contracts, partially offset by the divestiture of Loibl and the impacts of COVID-19 on revenue in all three segments. Adjusted EBITDA improved to US$45.1 million compared to US$45 million in 2019. Total bookings in 2020 were US$645 million, and backlog at 31 December 2020 was US$535 million, a 21.3% increase compared to 31 December 2019.

Babcock & Wilcox Renewable segment

Revenues were US$156.2 million in 2020, a decrease of 24% compared to US$205.6 million in 2019, primarily due to the advanced completion of activities on the European EPC loss contracts in the prior year as well as new anticipated projects and parts orders being deferred due to COVID-19 and the divestiture of Loibl, a materials handling business in Germany that generated revenues of approximately US$14.3 million in 2019, partially offset by a higher level of activities on two operations and maintenance contracts in the UK which followed the turnover of the EPC loss contracts to the customers. Adjusted EBITDA improved to US$25 million compared to US$1.6 million in the prior year, primarily due to the loss recovery of US$26 million recognised in 2020 under a 10 October 2020 settlement agreement with an insurer in connection with five of the six European EPC loss contracts, as well as lower costs related to the loss contracts. In 2020, the segment recorded US$3.7 million in net losses as compared to US$6.9 million of equivalent losses recorded in 2019, inclusive of warranty expense. The adjusted EBITDA improvement was also partially offset by the divestiture of Loibl and lower volume, as described above. The segment adjusted gross profit was US$58.8 million in 2020, an improvement of US$28.8 million compared to US$30 million in 2019.

Babcock & Wilcox Environmental segment

Revenues were US$108 million in 2020, a decrease of 60.8% compared to US$275.6 million in 2019, primarily due to the completion of large construction projects in 2019 and a lower level of activity due to the postponement of new projects by several customers as a result of COVID-19. Adjusted EBITDA declined to US$3.5 million compared to US$12.5 million in the prior year, primarily attributable to the impacts of lower volume, partially offset by a lower percentage of overhead being allocated to the segment. Adjusted gross profit was US$23.5 million in 2020, compared to US$48.4 million in the prior year. At 31 December 2020, the B&W Environmental segment had two significant loss contracts, with net losses of US$1.3 million and US$5.6 million in 2020 and 2019, respectively. As of 31 December 2020, the first contract was approximately 100% complete with only warranty obligations remaining and the second contract was approximately 99% complete with final completion expected in 1Q21.

Babcock & Wilcox Thermal segment

Revenues were US$305 million in 2020, a decrease of 25.6% compared to US$409.7 million in the prior year, primarily due to the adverse impacts of COVID-19 resulting in lower parts, construction, package boilers and international service orders, as well as the completion of large construction projects in the prior year. Adjusted EBITDA in 2020 declined to US$35.4 million compared to US$51.4 million in the prior year, primarily due to lower volume and a higher percentage of overhead being allocated to the segment that was previously allocated to other segments, partially offset by favourable product mix and a full period of cost savings and restructuring initiatives benefiting 2020; adjusted EBITDA margin was 11.6% for the year compared to 12.5% in 2019. Gross profit margin in the segment was 29.9% in 2020, compared to 22.3% in the prior year; adjusted gross profit in the segment in 2020 was US$91.2 million, which was flat compared to the prior year primarily due to favourable product mix and the effects of a full period of cost savings and restructuring initiatives benefiting 2020, offset by lower volume.

Read the article online at: https://www.worldcoal.com/special-reports/09032021/babcock-wilcox-announces-results-for-4q20-and-full-year/

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