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