A $150m contract to provide environmental equipment to Alliant Energy (NYSE: LNT) was one of the recent highlights mentioned by The Babcock & Wilcox Co. (NYSE: BWC) in its May 9 first-quarter earnings report.
Other recent highlights included:
- received full notice to proceed on the West Palm Beach waste-to-energy facility contract;
- awarded $30m design and engineering selective catalytic reduction (SCR) system contract for Xcel Energy (NYSE: XEL); and
- awarded $20 Million EPC industrial environmental control systems contract.
Consolidated revenues for B&W for the first quarter of 2012 were $765.9m, an increase of $74.6m, or 10.8%, from the first quarter of 2011. The Power Generation and Nuclear Energy segments increased 16.3% and 32.6%, respectively, while the combined government segments declined 1.3%. The double-digit growth rate in consolidated revenues is primarily due to strong environmental control equipment and services sales, growth in new renewable steam generation systems, and higher nuclear services revenues.
Operating income for the first quarter of 2012 was $65.7m, an increase of $43.8m from the first quarter of 2011. The increase in operating income (excluding 2011 charges) was primarily due to improvements in operational performance in the government segments, partially offset by an increase in research and development expenses related to the company’s small modular reactor program and lower equity income contributions from the company’s unconsolidated steam boiler joint venture in China.
“In the first quarter, the Company performed well above prior year levels, and in-line with expectations,” said B&WE President and CEO James Ferland. “Importantly, strong bookings in the first quarter of 2012 resulted in an ending backlog of $6.0 billion, the highest quarter-end backlog the Company has ever reported. Bookings in the quarter include the impact of the full notice to proceed received for the West Palm Beach waste-to-energy plant, $249 million of environmental awards and a new $130 million contract for advanced naval reactor designs. Over the last few quarters, the Company has realized a significant increase in environmental control systems bookings as a result of legislative requirements in the United States to generate electricity with fewer emissions. At the end of the first quarter, the Power Generation segment had more than $4 billion of bids outstanding or in progress, which includes more than $2 billion for environmental control systems and services.”
In its May 9 quarterly Form 10-Q report, B&W reported that ongoing litigation over a nuclear plant is close to settlement. “On October 21, 2011, Babcock & Wilcox Nuclear Energy, Inc. (‘B&W NE’) filed a complaint in U.S. District Court, Eastern District of Washington against Energy Northwest for breach of contract and other claims relating to a contract for the removal and replacement of the main plant condenser and related parts at Energy Northwest’s Columbia Generating Station. B&W NE seeks unspecified monetary damages, attorney’s fees and costs against Energy Northwest resulting from its failure to make payments for work B&W NE performed under the contract. Energy Northwest asserted claims against B&W NE alleging claims including breach of contract.”
The Form 10-Q added: “The matter has been stayed by the U.S. District Court pending a mediation between the parties, which occurred on April 30 and May 1, 2012. At the mediation, the parties negotiated the principal terms of a settlement that, if ratified, would resolve all claims between the parties in consideration of a lump sum payment to B&W NE. A binding settlement remains subject to ratification by Energy Northwest’s Executive Board (a requirement under Washington state law for public entities), which is scheduled to take place on May 10, 2012. Once the conditions precedent have been satisfied, the parties plan to seek dismissal of the lawsuit pending in U.S. District Court. We have not recognized any of the settlement amount in our financial statements.”