CB&I Announces Third Quarter 2017 Results
THE WOODLANDS, Texas, Oct. 30, 2017 /PRNewswire/ -- CB&I (NYSE:CBI) today announced financial results for the third quarter of 2017.
CB&I reported net income of $10 million, or $0.10 per diluted share, in the third quarter of 2017, compared to net income of $121.8 million, or $1.20 per diluted share, in the third quarter of 2016.
Net income for the third quarter of 2017 was impacted by restructuring charges of $27 million, or $0.17 per share, related to the company's cost reduction program, and excess interest expense of $22 million, or $0.14 per share, due to accelerated amortization of debt issuance costs.
Continuing operations consist of CB&I's Engineering & Construction (E&C) and Fabrication Services businesses. The results of the company's Technology and former Engineered Products and Capital Services operations have been classified as discontinued operations for all periods presented.
"We have made significant progress on the decisive actions we announced last quarter, including our cost reduction program, the continued improvement of our project execution and risk management processes, and the intended sale of our Technology operations," said Patrick K. Mullen, President and Chief Executive Officer of CB&I. "Our cost reduction program is on track, with a positive impact on our financial performance already apparent. We are also extremely pleased with the sale process for our Technology operations and the interest from bidders on developing a long-term strategic alliance with CB&I.
"Our results this quarter were impacted by unusual items totaling $49 million, or $0.31 per share. We experienced continued cost pressure during the quarter, primarily on the IPL and Calpine power projects, with execution on our other projects continuing as planned. New awards were lower than expected, primarily within E&C, due to the delay of certain key projects. However, we have a significant pipeline and anticipate a strong fourth quarter and first half of 2018 for new awards."
Continuing Operations
Revenue for the third quarter of 2017 was $1.7 billion, compared to revenue of $2.1 billion in the third quarter of 2016.
New awards in the third quarter of 2017 totaled $437 million, compared to $1.7 billion in the third quarter of last year. Backlog at September 30, 2017, was $10.7 billion, compared to backlog of $13.2 billion at September 30, 2016.
Engineering & Construction Operating Group
E&C operating group revenue was $1.3 billion in the third quarter of 2017, compared to $1.7 billion in the year-ago quarter. The E&C group reported operating income of $13.1 million, compared to $126.8 million in the third quarter of 2016. Results were impacted by changes in estimated margins on two U.S. gas turbine power projects of $38 million and additional costs on U.S. LNG projects of approximately $16 million due in part to the direct effects of Hurricane Harvey. The E&C group's new awards in the third quarter totaled $65.2 million, compared with $1.5 billion in the third quarter of 2016, and backlog as of September 30, 2017, was $9.2 billion.
Fabrication Services Operating Group
Fabrication Services operating group revenue was $389.7 million compared to $467.0 million in the year-ago quarter. The Fabrication Services group reported operating income of $26.1 million compared to $27.8 million in the third quarter of 2016. The Fabrication Services group's new awards in the third quarter were $371.8 million, compared with $215.3 million in the third quarter of 2016. Backlog as of September 30, 2017, was $1.5 billion.
Discontinued Operations
The Technology operations revenue was $170.1 million, compared to $183.3 million in the year-ago quarter. Technology operations reported operating income of $61.2 million compared to $55.9 million in the third quarter of 2016.
Guidance
The company currently expects revenue for the fourth quarter of 2017 to be between $1.8 and $2.0 billion and diluted earnings per share in the range of $0.50 to $0.60. The company's updated guidance for the fourth quarter of 2017 includes continuing and discontinued operations but excludes the continuation of incremental interest expense and any additional restructuring charge that may be required. Guidance also excludes any significant benefits from the cost reduction program, which are expected to be fully realized in 2018.
Earnings Conference Call
CB&I will host a conference call and webcast October 30, 2017, at 4:00 p.m. CDT (5:00 p.m. EDT) to discuss financial and operating results and answer questions from investors. The webcast will be available on the Investor Relations page of www.CBI.com, and the conference call can be accessed by telephone at 1-800-301-8321 (U.S.) or 1-706-634-2259 (outside the U.S.) with conference ID # 6097289.
About CB&I
CB&I (NYSE:CBI) is a leading provider of technology and infrastructure for the energy industry. With more than 125 years of experience, CB&I provides reliable solutions to our customers around the world while maintaining a relentless focus on safety and an uncompromising standard of quality. For more information, visit www.CBI.com.
Important Information For Investors And Shareholders
Cautionary Statement Regarding Forward-Looking Statements
This press release contains forward-looking statements regarding CB&I and represents our expectations and beliefs concerning future events. These forward-looking statements are intended to be covered by the safe harbor for forward-looking statements provided by the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties. The forward looking statements in this press release include: statements about CB&I's new awards and backlog, to the extent these may be indicators of future revenue or profitability; the intended sale of the Technology operating group, including the timing with respect to the completion of that sale; the execution of activities on and completion of specific projects, including timing to complete, future productivity and cost to complete; estimates of percentage of completion and contract profits or losses.
When considering these and any other statements that are predictive in nature, depend upon or refer to future events or conditions, or use or contain words, terms, phrases or expressions such as "achieve," "forecast," "plan," "propose," "strategy," "envision," "hope," "will," "continue," "potential," "expect," "believe," "anticipate," "project," "estimate," "predict," "intend," "should," "could," "may," "might" or similar forward-looking statements, we refer you to the cautionary statements concerning risk factors and "Forward-Looking Statements" described under "Risk Factors" in Item 1A of our Annual Report filed on Form 10-K filed with the SEC for the year ended December 31, 2016, and any updates to those risk factors or "Forward-Looking Statements" included in our subsequent Quarterly Reports on Form 10-Q filed with the SEC, which cautionary statements are incorporated herein by reference.
Investors: Scott Lamb, +1 832 513 1068, Scott.Lamb@CBI.com
Media: Gentry Brann, +1 832 513 1031, Gentry.Brann@CBI.com
Chicago Bridge & Iron Company N.V.
Consolidated Statements of Operations
(in thousands, except per share data)
Three Months Nine Months
Ended September 30, Ended September 30,
2017 2016 2017 2016
---- ----
Revenue $1,737,764 $2,137,877 $4,668,690 $6,200,713
Cost of revenue 1,655,002 1,920,894 4,919,206 5,591,393
--------- --------- --------- ---------
Gross profit (loss) 82,762 216,983 (250,516) 609,320
% of Revenue 4.8% 10.1% (5.4)% 9.8%
Selling and administrative expense 51,458 62,913 173,594 190,207
% of Revenue 3.0% 2.9% 3.7% 3.1%
Intangibles amortization 1,891 1,937 5,771 6,451
Equity earnings (9,727) (2,632) (21,210) (1,875)
Restructuring related costs 26,882 - 30,882 -
Other operating (income) expense, net (53) 189 (415) 1,112
--- --- ---- -----
Operating income (loss) from continuing operations 12,311 154,576 (439,138) 413,425
% of Revenue 0.7% 7.2% (9.4)% 6.7%
Interest expense (5,288) (1,586) (9,036) (4,666)
Interest income 574 2,292 2,684 7,187
--- ----- ----- -----
Income (loss) from continuing operations before taxes 7,597 155,282 (445,490) 415,946
Income tax (expense) benefit (3,112) (22,206) 177,347 (83,280)
------ ------- ------- -------
Net income (loss) from continuing operations 4,485 133,076 (268,143) 332,666
Net income (loss) from discontinued operations 7,061 35,343 (90,916) 88,263
----- ------ ------- ------
Net income (loss) 11,546 168,419 (359,059) 420,929
Less: Net income attributable to noncontrolling interests ($0, $930, $870 (1,507) (46,659) (31,666) (68,405)
and $1,815 related to discontinued operations)
Net income (loss) attributable to CB&I $10,039 $121,760 $(390,725) $352,524
======= ======== ========= ========
Net income (loss) attributable to CB&I per share (Basic):
Continuing operations $0.03 $0.86 $(2.96) $2.57
Discontinued operations 0.07 0.34 (0.91) 0.83
---- ---- ----- ----
Total $0.10 $1.20 $(3.87) $3.40
Net income (loss) attributable to CB&I per share (Diluted):
Continuing operations $0.03 $0.86 $(2.96) $2.54
Discontinued operations 0.07 0.34 (0.91) 0.83
---- ---- ----- ----
Total $0.10 $1.20 $(3.87) $3.37
Weighted average shares outstanding:
Basic 101,177 101,102 100,834 103,725
Diluted 101,736 101,863 100,834 104,555
Chicago Bridge & Iron Company N.V.
Segment Information
(in thousands)
Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
NEW AWARDS (1) % of % of % of % of
Total Total Total Total
Engineering & Construction $65,181 15% $1,508,301 88% $2,787,690 71% $2,839,032 78%
Fabrication Services 371,769 85% 215,254 12% 1,121,137 29% 819,962 22%
Total $436,950 $1,723,555 $3,908,827 $3,658,994
======== ========== ========== ==========
REVENUE % of % of % of % of
Total Total Total Total
Engineering & Construction $1,348,033 78% $1,670,879 78% $3,409,081 73% $4,794,000 77%
Fabrication Services 389,731 22% 466,998 22% 1,259,609 27% 1,406,713 23%
Total $1,737,764 $2,137,877 $4,668,690 $6,200,713
========== ========== ========== ==========
OPERATING INCOME % of % of % of % of
(LOSS) FROM CONTINUING Revenue Revenue Revenue Revenue
OPERATIONS
Engineering & Construction $13,051 1.0% $126,824 7.6% $(505,855) (14.8)% $323,891 6.8%
Fabrication Services 26,142 6.7% 27,752 5.9% 97,599 7.7% 89,534 6.4%
Total operating groups 39,193 2.3% 154,576 7.2% (408,256) (8.7)% 413,425 6.7%
Restructuring related costs (26,882) - (30,882) -
Total $12,311 0.7% $154,576 7.2% $(439,138) (9.4)% $413,425 6.7%
======= ======== ========= ========
BACKLOG (1) September 30, 2017 % of Total December 31, 2016 % of Total
------------------ ---------- ----------------- ----------
Engineering & Construction $9,190,401 86% $9,998,322 85%
Fabrication Services 1,482,218 14% 1,818,963 15%
--------- ---------
Total $10,672,619 $11,817,285
=========== ===========
(1) New awards represent
the value of new
project commitments
received by the
Company during a
given period, as
well as scope growth
on existing
commitments.
Backlog includes the
value of new awards
until work is
performed and
revenue is
recognized or until
cancellation.
Backlog may
fluctuate with
currency movements.
Chicago Bridge & Iron Company N.V.
Discontinued Operations Statements of Operations
(in thousands, except per share data)
Three Months Ended September 30,
2017 2016
Capital Technology Total Capital Technology Total
Services Services
Revenue $ - $170,143 $170,143 $530,912 $183,321 $714,233
Cost of revenue - 103,345 103,345 490,758 113,890 604,648
--- ------- ------- ------- ------- -------
Gross profit - 66,798 66,798 40,154 69,431 109,585
% of Revenue - % 39.3% 39.3% 7.6% 37.9% 15.3%
Selling and administrative expense - 8,991 8,991 14,312 10,589 24,901
% of Revenue - % 5.3% 5.3% 2.7% 5.8% 3.5%
Intangibles amortization - 1,520 1,520 4,030 4,518 8,548
Equity earnings - (4,879) (4,879) - (1,609) (1,609)
Other operating expense (income), net - 8 8 (1,201) - (1,201)
--- --- --- ------ --- ------
Operating income from discontinued - 61,158 61,158 23,013 55,933 78,946
operations
% of Revenue - % 35.9% 35.9% 4.3% 30.5% 11.1%
Interest expense - (55,512) (55,512) (5,989) (18,858) (24,847)
Interest income - - - 302 14 316
--- --- --- --- --- ---
Income from discontinued operations - 5,646 5,646 17,326 37,089 54,415
before taxes
Income tax benefit (expense) 5,166 (3,751) 1,415 (6,236) (12,836) (19,072)
----- ------ ----- ------ ------- -------
Net income from discontinued operations 5,166 1,895 7,061 11,090 24,253 35,343
Less: Net income from discontinued operations - - - (930) - (930)
attributable to noncontrolling interests
Net income from discontinued operations $5,166 $1,895 $7,061 $10,160 $24,253 $34,413
attributable to CB&I
Nine Months Ended September 30,
2017 2016
Capital Technology Total Capital Technology Total
Services Services
-------- --------
Revenue $1,114,655 $454,840 $1,569,495 $1,655,583 $491,858 $2,147,441
Cost of revenue 1,047,614 281,870 1,329,484 1,546,823 301,239 1,848,062
--------- ------- --------- --------- ------- ---------
Gross profit 67,041 172,970 240,011 108,760 190,619 299,379
% of Revenue 6.0% 38.0% 15.3% 6.6% 38.8% 13.9%
Selling and administrative expense 29,541 27,079 56,620 39,499 33,436 72,935
% of Revenue 2.7% 6.0% 3.6% 2.4% 6.8% 3.4%
Intangibles amortization 2,550 10,503 13,053 12,260 13,545 25,805
Equity earnings - (9,662) (9,662) - (8,030) (8,030)
Loss on net assets sold 64,817 - 64,817 - - -
Other operating expense (income), net 504 38 542 (1,505) 4 (1,501)
--- --- --- ------ --- ------
Operating (loss) income from discontinued (30,371) 145,012 114,641 58,506 151,664 210,170
operations
% of Revenue (2.7)% 31.9% 7.3% 3.5% 30.8% 9.8%
Interest expense (13,440) (110,579) (124,019) (17,699) (56,039) (73,738)
Interest income 16 - 16 916 53 969
--- --- --- --- --- ---
(Loss) income from discontinued (43,795) 34,433 (9,362) 41,723 95,678 137,401
operations before taxes
Income tax expense (62,392) (19,162) (81,554) (15,915) (33,223) (49,138)
------- ------- ------- ------- ------- -------
Net (loss) income from discontinued (106,187) 15,271 (90,916) 25,808 62,455 88,263
operations
Less: Net income from discontinued operations (870) - (870) (1,815) - (1,815)
attributable to noncontrolling interests
Net (loss) income from discontinued $(107,057) $15,271 $(91,786) $23,993 $62,455 $86,448
operations attributable to CB&I
Chicago Bridge & Iron Company N.V.
Condensed Consolidated Balance Sheets
(in thousands)
September 30, December 31,
2017 2016
---- ----
ASSETS
Current assets $1,816,413 $1,937,976
Equity investments 66,164 35,541
Property and equipment, net 393,015 434,252
Goodwill and other intangibles, net 2,413,419 2,395,474
Assets of discontinued operations 1,103,888 1,986,480
Other non-current assets 1,284,114 1,049,697
---------
Total assets $7,077,013 $7,839,420
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current maturities of long-term debt and other borrowings, net $2,079,913 $911,410
Other current liabilities 2,981,531 3,062,222
Long-term debt, net - 1,287,923
Liabilities of discontinued operations 349,340 600,907
Other non-current liabilities 407,383 415,621
Shareholders' equity 1,258,846 1,561,337
Total liabilities and shareholders' equity $7,077,013 $7,839,420
========== ==========
Condensed Consolidated Statements of Cash Flows and Other Financial Data
(in thousands)
Nine Months
Ended September 30,
2017 2016
---- ----
CASH FLOWS
Cash flows from operating activities $(687,998) $495,041
Cash flows from investing activities 747,038 (151,686)
Cash flows from financing activities (298,735) (268,422)
Effect of exchange rate changes on cash and cash equivalents 76,408 (10,188)
(Decrease) increase in cash and cash equivalents (163,287) 64,745
Cash and cash equivalents, beginning of the year 505,156 550,221
Cash and cash equivalents, end of the period 341,869 614,966
Cash and cash equivalents, end of period - discontinued operations - (16,412)
Cash and cash equivalents, end of period - continuing operations $341,869 $598,554
======== ========
OTHER FINANCIAL DATA
(Increase) decrease in receivables, net $(197,532) $46,418
Change in contracts in progress, net 34,994 (252,857)
Decrease in inventory 65,841 49,473
(Decrease) increase in accounts payable (48,801) 11,830
Change in contract capital $(145,498) $(145,136)
========= =========
Depreciation and amortization $65,637 $93,285
Capital expenditures $40,089 $37,855
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SOURCE CB&I
