Foster Wheeler Reports Results for Fourth Quarter of 2012
Record levels of quarterly and annual scope new orders in Global E&C
Group
Record level of scope backlog in Global E&C Group
Global Power Group reports second-highest level of annual EBITDA in
its history
ZUG, Switzerland--(BUSINESS WIRE)--
Foster Wheeler AG (Nasdaq: FWLT) today reported net income for the
fourth quarter of 2012 of $6.3 million, or $0.06 per diluted share,
compared with $39.2 million, or $0.34 per diluted share, in the fourth
quarter of 2011.
Net income in both quarterly periods was impacted by net
asbestos-related provisions as detailed in an attached table. Excluding
such items from both quarterly periods, net income in the fourth quarter
of 2012 was $28.9 million, or $0.27 per diluted share, compared with
$44.8 million, or $0.39 per diluted share, in the year-ago quarter. For
the full year 2012, net income was $136.0 million, or $1.27 per diluted
share, compared with $162.4 million, or $1.35 per diluted share, for
2011. Excluding the net asbestos-related provisions from both years, net
income for 2012 was $165.9 million, or $1.54 per diluted share, as
compared with $172.3 million, or $1.43 per diluted share, in 2011.
The fourth quarter of 2012 also included a non-cash after-tax impairment
charge of $11.5 million, or $0.11 per diluted share, on a non-core asset.
The following tables present quarterly and average quarterly data, both
as reported and as adjusted (as detailed in an attached table). The
company believes that quarterly averages provide meaningful comparative
relevance for certain key metrics in light of the significant
quarter-to-quarter variability that is inherent in the company’s
financial results.
(in millions)
Q4 2012
Qtrly Avg. 2012
Q4 2011
Qtrly Avg. 2011
Net income
$6
$34
$39
$41
Net income, as adjusted
$29
$41
$45
$43
EBITDA
$55
$70
$70
$71
EBITDA, as adjusted
$78
$77
$75
$73
Foster Wheeler’s Chief Executive Officer, Kent Masters, said, “Both of
our business groups reported solid operating results. In addition, our
Global E&C Group reported several record-level numbers in connection
with scope new orders and scope backlog. However, adjusted fully diluted
earnings per share of $0.27 were $0.09 below the average quarter of 2011
due largely to the impairment charge on a non-core asset, which in turn
contributed to a higher effective tax rate during the quarter.”
Global Engineering and Construction (E&C) Group
(dollars in millions)
Q4 2012
Qtrly Avg. 2012
Q4 2011
Qtrly Avg. 2011
New orders booked (FW Scope)
$866
$599
$376
$362
Operating revenues (FW Scope)
$424
$397
$453
$399
Segment EBITDA
$53
$48
$55
$53
EBITDA Margin (FW Scope)
12.6%
12.1%
12.2%
13.2%
Scope new orders in the fourth quarter of 2012 reached a record level
due in part to the booking of a large PMC (project management
consultancy) contract for a clean fuels project in Kuwait. The robust
level of new orders contributed to a record level of scope backlog of
$2.2 billion at the end of the quarter.
Scope operating revenues in the fourth quarter of 2012 were above the
average quarter of 2011 due to an increased volume of work executed.
EBITDA in the fourth quarter of 2012 was in line with the average
quarter of 2011.
Global Power Group (GPG)
(dollars in millions)
Q4 2012
Qtrly Avg. 2012
Q4 2011
Qtrly Avg. 2011
New orders booked (FW Scope)
$122
$145
$460
$313
Operating revenues (FW Scope)
$228
$246
$281
$257
Segment EBITDA
$47
$52
$55
$46
EBITDA Margin (FW Scope)
20.5%
21.1%
19.5%
17.9%
Scope new orders in the fourth quarter of 2012 were below the average
quarter of 2011, as slippage of award dates for committed key
prospects resulted in a lack of boiler orders.
Scope operating revenues in the fourth quarter of 2012 were below the
average quarter of 2011, primarily as a result of lower volume of
boiler work executed.
EBITDA in the fourth quarter of 2012 was in line with the average
quarter of 2011.
Outlook/Guidance
Masters said, “As we look ahead to the balance of 2013, we anticipate a
continuation of a mild economic recovery globally. In such an
environment, we expect adjusted diluted earnings per share in 2013 to be
flat to moderately down as compared to 2012 adjusted diluted earnings
per share excluding the impairment charge. We expect an increase in
EBITDA in the Global E&C Group in 2013. In addition, we expect a decline
in EBITDA in the Global Power Group in 2013, reflecting the lower level
of new orders in 2012. EBITDA margins on scope revenues in both business
groups are likely to be noticeably weaker in the first half of 2013 than
in the second half of the year.”
In commenting on the company’s Global E&C Group, Masters said, “We
expect scope revenues in 2013 to be up materially as compared with 2012,
and we expect the full-year 2013 EBITDA margin on scope revenues in this
business to be in the range of 10% to 12%.”
Masters said, “In our Global Power Group, we expect full-year scope
revenues in 2013 to be flat to modestly down as compared with 2012, and
we expect the full-year 2013 EBITDA margin on scope revenues to be in
the range of 15% to 17%.”
Masters added, “Taking a longer-term view of the company’s prospects, we
believe Foster Wheeler is poised for significant earnings growth in the
years ahead, aided by the strategic actions we have taken – and are
taking – to strengthen and expand each of our business groups, for
example the 2012 reorganization of our E&C Group, our continued focus on
business line diversification and the penetration of our products and
services into new geographies.”
Share Repurchase Program
The company repurchased 1,751,119 shares during the fourth quarter of
2012 for approximately $40 million. As of December 31, 2012, the company
had approximately $420 million remaining under its authorized share
repurchase program.
Conference Call Information
Foster Wheeler AG plans to hold a conference call today, Friday, March
1, at 2:00 p.m. Central European Time (8:00 a.m. Eastern Standard Time
in the U.S.) to discuss its financial results for the fourth quarter
ended December 31, 2012. The call will be accessible to the public by
telephone or webcast, and the company will post an accompanying slide
presentation in the investor relations section of its website (www.fwc.com).
To listen to the call by telephone, dial 973-935-8752 (conference I.D.
No. 81934805) approximately ten minutes before the call. The conference
call will also be available over the Internet at www.fwc.com
or through StreetEvents at www.streetevents.com.
A replay of the call will be available on the company's web site for
four weeks following the call.
Net Income
All references to net income in this news release refer to “Net income
attributable to Foster Wheeler AG” as reported in our consolidated
financial statements.
Calculation of EBITDA
EBITDA is a supplemental financial measure not defined in generally
accepted accounting principles, or GAAP. The company defines EBITDA as
net income attributable to Foster Wheeler AG before interest expense,
income taxes, depreciation and amortization. The company has presented
EBITDA because it believes it is an important supplemental measure of
operating performance. Certain covenants under our senior unsecured
credit agreement use an adjusted form of EBITDA such that in the
covenant calculations the EBITDA as presented herein is adjusted for
certain unusual and infrequent items specifically excluded in the terms
of our senior unsecured credit agreement. The company believes that the
line item on its consolidated statement of operations entitled "net
income attributable to Foster Wheeler AG" is the most directly
comparable GAAP financial measure to EBITDA. Since EBITDA is not a
measure of performance calculated in accordance with GAAP, it should not
be considered in isolation of, or as a substitute for, net income
attributable to Foster Wheeler AG as an indicator of operating
performance or any other GAAP financial measure.
EBITDA, as calculated by the company, may not be comparable to similarly
titled measures employed by other companies. In addition, this measure
does not necessarily represent funds available for discretionary use,
and is not necessarily a measure of the company's ability to fund its
cash needs. As EBITDA excludes certain financial information that is
included in net income attributable to Foster Wheeler AG, users of this
financial information should consider the type of events and
transactions that are excluded.
The company's non-GAAP performance measure, EBITDA, has certain material
limitations as follows:
• It does not include interest expense. Because the company has borrowed
money to finance some of its operations, interest is a necessary and
ongoing part of its costs and has assisted the company in generating
revenue. Therefore, any measure that excludes interest expense has
material limitations;
• It does not include taxes. Because the payment of taxes is a necessary
and ongoing part of the company's operations, any measure that excludes
taxes has material limitations; and
• It does not include depreciation and amortization. Because the company
must utilize property, plant and equipment and intangible assets in
order to generate revenues in its operations, depreciation and
amortization are necessary and ongoing costs of its operations.
Therefore, any measure that excludes depreciation and amortization has
material limitations.
Calculation of EBITDA Margin
Segment EBITDA margin is calculated by dividing business unit operating
revenues in Foster Wheeler Scope into business unit EBITDA.
Foster Wheeler Scope
Foster Wheeler Scope represents that portion of backlog, new orders
booked and operating revenues on which profit can be earned. Foster
Wheeler Scope excludes revenues relating to third-party costs incurred
by the company as agent or principal on a reimbursable basis.
Foster Wheeler AG is a global engineering and construction company and
power equipment supplier delivering technically advanced, reliable
facilities and equipment. The company employs approximately 13,000
talented professionals with specialized expertise dedicated to serving
its clients through one of its two primary business groups. The
company’s Global Engineering and Construction Group designs and
constructs leading-edge processing facilities for the upstream oil and
gas, LNG and gas-to-liquids, refining, chemicals and petrochemicals,
power, mining and metals, environmental, pharmaceuticals, biotechnology
and healthcare industries. The company’s Global Power Group is a world
leader in combustion and steam generation technology that designs,
manufactures and erects steam generating and auxiliary equipment for
power stations and industrial facilities and also provides a wide range
of aftermarket services. The company is based in Zug, Switzerland, and
its operational headquarters office is in Reading, United Kingdom. For
more information about Foster Wheeler, please visit our Web site at www.fwc.com.
Safe Harbor Statement
Foster Wheeler AG news releases may contain forward-looking statements
that are based on management’s assumptions, expectations and projections
about the Company and the various industries within which the Company
operates. These include statements regarding the Company’s expectations
about revenues (including as expressed by its backlog), its liquidity,
the outcome of litigation and legal proceedings and recoveries from
customers for claims and the costs of current and future asbestos claims
and the amount and timing of related insurance recoveries. Such
forward-looking statements by their nature involve a degree of risk and
uncertainty. The Company cautions that a variety of factors, including
but not limited to the factors described in the Company’s most recent
Annual Report on Form 10-K, which was filed with the U.S. Securities and
Exchange Commission, and the following, could cause the Company’s
business conditions and results to differ materially from what is
contained in forward-looking statements: benefits, effects or results of
the Company’s redomestication to Switzerland, benefits, effects or
results of the Company’s strategic renewal initiative, further
deterioration in global economic conditions, changes in investment by
the oil and gas, oil refining, chemical/petrochemical and power
generation industries, changes in the financial condition of its
customers, changes in regulatory environments, changes in project design
or schedules, contract cancellations, the changes in estimates made by
the Company of costs to complete projects, changes in trade, monetary
and fiscal policies worldwide, compliance with laws and regulations
relating to the Company’s global operations, currency fluctuations, war,
terrorist attacks and/or natural disasters affecting facilities either
owned by the Company or where equipment or services are or may be
provided by the Company, interruptions to shipping lanes or other
methods of transit, outcomes of pending and future litigation, including
litigation regarding the Company’s liability for damages and insurance
coverage for asbestos exposure, protection and validity of the Company’s
patents and other intellectual property rights, increasing global
competition, compliance with its debt covenants, recoverability of
claims against the Company’s customers and others by the Company and
claims by third parties against the Company, and changes in estimates
used in its critical accounting policies. Other factors and assumptions
not identified above were also involved in the formation of these
forward-looking statements and the failure of such other assumptions to
be realized, as well as other factors, may also cause actual results to
differ materially from those projected. Most of these factors are
difficult to predict accurately and are generally beyond the Company’s
control. You should consider the areas of risk described above in
connection with any forward-looking statements that may be made by the
Company. The Company undertakes no obligation to publicly update any
forward-looking statements, whether as a result of new information,
future events or otherwise. You are advised, however, to consult any
additional disclosures the Company makes in proxy statements, quarterly
reports on Form 10-Q, annual reports on Form 10-K and current reports on
Form 8-K filed or furnished with to the Securities and Exchange
Commission.
Foster Wheeler AG and Subsidiaries Consolidated
Statement of Operations (in
thousands of dollars, except share data and per share amounts) (unaudited)
Quarter Ended December 31,
Twelve Months Ended December 31,
2012
2011
2012
2011
Operating revenues
$
735,281
$
1,128,743
$
3,414,635
$
4,480,729
Cost of operating revenues
590,709
976,219
2,837,317
3,939,274
Contract profit
144,572
152,524
577,318
541,455
Selling, general and administrative expenses
88,278
80,666
334,617
309,996
Other income, net
(4,540
)
(9,293
)
(37,683
)
(51,607
)
Other deductions, net
9,564
22,192
34,726
43,969
Interest income
(2,219
)
(5,657
)
(10,807
)
(18,922
)
Interest expense
2,935
2,491
13,797
12,876
Net asbestos-related provision
22,795
5,514
30,505
9,901
Income before income taxes
27,759
56,611
212,163
235,242
Provision for income taxes
18,302
15,685
62,267
58,514
Net income
9,457
40,926
149,896
176,728
Less: Net income attributable to noncontrolling interests
3,162
1,681
13,874
14,345
Net income attributable to Foster Wheeler AG
$
6,295
$
39,245
$
136,022
$
162,383
Shares Outstanding:
Weighted-average number of shares
outstanding for basic earnings per share
105,552,630
114,843,970
107,054,284
120,085,704
Weighted-average number of shares
outstanding for diluted earnings per share
105,970,858
114,940,513
107,313,539
120,504,483
Earnings per share:
Basic
$
0.06
$
0.34
$
1.27
$
1.35
Diluted
$
0.06
$
0.34
$
1.27
$
1.35
Foster Wheeler AG and Subsidiaries Consolidated
Balance Sheet (in
thousands of dollars) (unaudited)
December 31, 2012
December 31, 2011
ASSETS
Current Assets:
Cash and cash equivalents
$
582,322
$
718,049
Short-term investments
-
1,294
Accounts and notes receivable, net:
Trade
610,695
427,984
Other
86,981
97,495
Contracts in process
228,979
166,648
Prepaid, deferred and refundable income taxes
57,404
62,616
Other current assets
47,161
49,101
Total current assets
1,613,542
1,523,187
Land, buildings and equipment, net
334,141
341,987
Restricted cash
63,029
44,094
Notes and accounts receivable – long-term
14,119
6,210
Investments in and advances to unconsolidated affiliates
205,476
211,109
Goodwill
133,518
112,120
Other intangible assets, net
105,100
74,386
Asbestos-related insurance recovery receivable
132,438
157,127
Other assets
90,509
118,178
Deferred tax assets
42,052
25,482
TOTAL ASSETS
$
2,733,924
$
2,613,880
LIABILITIES, TEMPORARY EQUITY AND EQUITY
Current Liabilities:
Current installments on long-term debt
$
13,672
$
12,683
Accounts payable
300,225
250,821
Accrued expenses
232,197
237,089
Billings in excess of costs and estimated earnings on uncompleted
contracts
565,101
550,746
Income taxes payable
64,992
39,645
Total current liabilities
1,176,187
1,090,984
Long-term debt
124,034
136,428
Deferred tax liabilities
40,889
44,622
Pension, postretirement and other employee benefits
177,345
171,065
Asbestos-related liability
259,350
269,520
Other long-term liabilities
190,132
160,596
Commitments and contingencies
TOTAL LIABILITIES
1,967,937
1,873,215
Temporary Equity:
Non-vested share-based compensation awards subject to redemption
8,594
4,993
TOTAL TEMPORARY EQUITY
8,594
4,993
Equity:
Registered shares
269,633
321,181
Paid-in capital
266,943
606,053
Retained earnings
835,993
699,971
Accumulated other comprehensive loss
(567,603
)
(530,068
)
Treasury shares
(90,976
)
(409,390
)
TOTAL FOSTER WHEELER AG SHAREHOLDERS’ EQUITY
713,990
687,747
Noncontrolling interests
43,403
47,925
TOTAL EQUITY
757,393
735,672
TOTAL LIABILITIES, TEMPORARY EQUITY AND EQUITY
$
2,733,924
$
2,613,880
Foster Wheeler AG and Subsidiaries Business
Segments (in thousands of
dollars) (unaudited)
Quarter Ended December 31,
Twelve Months Ended December 31,
2012
2011
2012
2011
Global Engineering & Construction Group
Backlog - in future revenues
$
2,884,700
$
2,420,200
$
2,884,700
$
2,420,200
New orders booked - in future revenues
852,900
1,052,100
2,860,400
3,024,900
Operating revenues
504,240
845,193
2,419,327
3,443,079
EBITDA
53,399
55,416
192,208
210,541
Foster Wheeler Scope (1):
Backlog - in Foster Wheeler Scope
2,196,700
1,365,900
2,196,700
1,365,900
New orders booked - in Foster Wheeler Scope
866,500
375,800
2,397,600
1,447,200
Operating revenues - in Foster Wheeler Scope
$
423,870
$
453,052
$
1,586,198
$
1,594,992
Global Power Group
Backlog - in future revenues
$
763,300
$
1,205,900
$
763,300
$
1,205,900
New orders booked - in future revenues
125,300
462,200
589,100
1,260,900
Operating revenues
231,041
283,550
995,308
1,037,650
EBITDA
46,548
54,956
207,862
184,467
Foster Wheeler Scope (1):
Backlog - in Foster Wheeler Scope
753,500
1,196,400
753,500
1,196,400
New orders booked - in Foster Wheeler Scope
121,500
460,300
579,000
1,251,800
Operating revenues - in Foster Wheeler Scope
$
227,586
$
281,301
$
985,488
$
1,028,176
Corporate & Finance Group (2)
EBITDA
$
(45,055
)
$
(40,893
)
$
(121,453
)
$
(111,779
)
Consolidated
Backlog - in future revenues
$
3,648,000
$
3,626,100
$
3,648,000
$
3,626,100
New orders booked - in future revenues
978,200
1,514,300
3,449,500
4,285,800
Operating revenues
735,281
1,128,743
3,414,635
4,480,729
EBITDA
54,892
69,479
278,617
283,229
Foster Wheeler Scope (1):
Backlog - in Foster Wheeler Scope
2,950,200
2,562,300
2,950,200
2,562,300
New orders booked - in Foster Wheeler Scope
988,000
836,100
2,976,600
2,699,000
Operating revenues - in Foster Wheeler Scope
$
651,456
$
734,353
$
2,571,686
$
2,623,168
____________________
(1)
Foster Wheeler Scope represents the portion of backlog, new
orders booked and operating revenues on which profit can be earned.
Foster Wheeler Scope excludes revenues relating to third-party
costs incurred by the company as agent or principal on a
reimbursable basis.
(2)
Includes intersegment eliminations.
Foster Wheeler AG and Subsidiaries Reconciliations
of EBITDA and Foster Wheeler Scope (in
thousands of dollars) (unaudited)
Quarter Ended December 31,
Twelve Months Ended December 31,
2012
2011
2012
2011
Reconciliation of EBITDA to Net Income (1)
EBITDA:
Global Engineering & Construction Group
$
53,399
$
55,416
$
192,208
$
210,541
Global Power Group
46,548
54,956
207,862
184,467
Corporate & Finance Group
(45,055
)
(40,893
)
(121,453
)
(111,779
)
Consolidated EBITDA
54,892
69,479
278,617
283,229
Less: Interest expense
2,935
2,491
13,797
12,876
Less: Depreciation/amortization (2)
27,360
12,058
66,531
49,456
Less: Provision for income taxes
18,302
15,685
62,267
58,514
Net income (1)
$
6,295
$
39,245
$
136,022
$
162,383
Reconciliation of Foster Wheeler Scope
Operating
Revenues to Operating Revenues
Global Engineering & Construction Group
Foster Wheeler Scope operating revenues
$
423,870
$
453,052
$
1,586,198
$
1,594,992
Flow-through revenues
80,370
392,141
833,129
1,848,087
Operating revenues
$
504,240
$
845,193
$
2,419,327
$
3,443,079
Global Power Group
Foster Wheeler Scope operating revenues
$
227,586
$
281,301
$
985,488
$
1,028,176
Flow-through revenues
3,455
2,249
9,820
9,474
Operating revenues
$
231,041
$
283,550
$
995,308
$
1,037,650
Consolidated
Foster Wheeler Scope operating revenues
$
651,456
$
734,353
$
2,571,686
$
2,623,168
Flow-through revenues
83,825
394,390
842,949
1,857,561
Operating revenues
$
735,281
$
1,128,743
$
3,414,635
$
4,480,729
____________________
(1) Net income attributable to Foster Wheeler
AG.
(2) The depreciation / amortization by
business segment:
Quarter Ended December 31,
Twelve Months Ended December 31,
2012
2011
2012
2011
Global Engineering & Construction Group
$
6,363
$
5,861
$
23,115
$
24,867
Global Power Group
18,466
5,569
38,934
22,116
Corporate & Finance Group
2,531
628
4,482
2,473
Total depreciation / amortization
$
27,360
$
12,058
$
66,531
$
49,456
Foster Wheeler AG and Subsidiaries EBITDA,
Net Income* and Diluted Earnings Per Share Reconciliation (in
thousands of dollars, except per share amounts) (unaudited)
Quarter Ended December 31,
2012
2011
EBITDA
Net Income*
Diluted
Earnings
Per Share
EBITDA
Net Income*
Diluted
Earnings
Per Share
As adjusted
$ 77,687
$ 28,944
$ 0.27
$ 74,993
$ 44,759
$ 0.39
Adjustments:
Net asbestos-related
provision
(22,795)
(22,649)
(0.21)
(5,514)
(5,514)
(0.05)
As reported
$ 54,892
$ 6,295
$ 0.06
$ 69,479
$ 39,245
$ 0.34
Twelve Months Ended December 31,
2012
2011
EBITDA
Net Income*
Diluted
Earnings
Per Share
EBITDA
Net Income*
Diluted
Earnings
Per Share
As adjusted
$ 309,122
$ 165,944
$ 1.54
$ 293,130
$ 172,284
$ 1.43
Adjustments:
Net asbestos-related
provision
(30,505)
(29,922)
(0.27)
(9,901)
(9,901)
(0.08)
As reported
$ 278,617
$ 136,022
$ 1.27
$ 283,229
$ 162,383
$ 1.35
____________________
*Net income attributable to Foster Wheeler AG.
Foster Wheeler AG and Subsidiaries Average
Calculations (in
thousands of dollars, except per share amounts) (unaudited)
2011
Full Year
2011
Quarterly
Average(1)
2012
Full Year
2012
Quarterly
Average(1)
Consolidated
Operating revenues - in Foster Wheeler Scope
$ 2,623,168
$ 655,792
$ 2,571,686
$ 642,922
Net income (2)
$ 162,383
$ 40,596
$ 136,022
$ 34,006
Adjusted net income (2)
$ 172,284
$ 43,071
$ 165,944
$ 41,486
Consolidated EBITDA
$ 283,229
$ 70,807
$ 278,617
$ 69,654
Consolidated EBITDA, as adjusted
$ 293,130
$ 73,283
$ 309,122
$ 77,281
Adjusted diluted earnings per share
$ 1.43
$ 0.36
$ 1.54
$ 0.38
Global Engineering & Construction Group
New orders booked - in Foster Wheeler Scope
$ 1,447,200
$ 361,800
$ 2,397,600
$ 599,400
Operating revenues - in Foster Wheeler Scope
$ 1,594,992
$ 398,748
$ 1,586,198
$ 396,550
Segment EBITDA
$ 210,541
$ 52,635
$ 192,208
$ 48,052
EBITDA margin
13.2%
13.2%
12.1%
12.1%
Global Power Group
New orders booked - in Foster Wheeler Scope
$ 1,251,800
$ 312,950
$ 579,000
$ 144,750
Operating revenues - in Foster Wheeler Scope
$ 1,028,176
$ 257,044
$ 985,488
$ 246,372
Segment EBITDA
$ 184,467
$ 46,117
$ 207,862
$ 51,966
EBITDA margin
17.9%
17.9%
21.1%
21.1%
____________________
(1) To calculate the quarterly average dollar
amounts, the company divided reported annual figures by four.
(2) Net income attributable to Foster Wheeler
AG.
Foster Wheeler AG Media Julie Stanisz 908-730-4047 julie_stanisz@fwc.com or Investor
Relations Scott Lamb 908-730-4155 scott_lamb@fwc.com or Other
Inquiries 908-730-4000 fw@fwc.com
Source: Foster Wheeler AG
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About
Foster Wheeler AG operates as an engineering, construction, and project management contractor; and power equipment supplier worldwide. The company
Press Release $FWLT Foster Wheeler AG
ZUG, Switzerland--(BUSINESS WIRE)-- Foster Wheeler AG (Nasdaq: FWLT) today reported net income for the fourth quarter of 2012 of $6.3 million, or $0.06 per diluted share, compared with $39.2 million, or $0.34 per diluted share, in the fourth quarter of 2011.
Net income in both quarterly periods was impacted by net asbestos-related provisions as detailed in an attached table. Excluding such items from both quarterly periods, net income in the fourth quarter of 2012 was $28.9 million, or $0.27 per diluted share, compared with $44.8 million, or $0.39 per diluted share, in the year-ago quarter. For the full year 2012, net income was $136.0 million, or $1.27 per diluted share, compared with $162.4 million, or $1.35 per diluted share, for 2011. Excluding the net asbestos-related provisions from both years, net income for 2012 was $165.9 million, or $1.54 per diluted share, as compared with $172.3 million, or $1.43 per diluted share, in 2011.
The fourth quarter of 2012 also included a non-cash after-tax impairment charge of $11.5 million, or $0.11 per diluted share, on a non-core asset.
The following tables present quarterly and average quarterly data, both as reported and as adjusted (as detailed in an attached table). The company believes that quarterly averages provide meaningful comparative relevance for certain key metrics in light of the significant quarter-to-quarter variability that is inherent in the company’s financial results.
Foster Wheeler’s Chief Executive Officer, Kent Masters, said, “Both of our business groups reported solid operating results. In addition, our Global E&C Group reported several record-level numbers in connection with scope new orders and scope backlog. However, adjusted fully diluted earnings per share of $0.27 were $0.09 below the average quarter of 2011 due largely to the impairment charge on a non-core asset, which in turn contributed to a higher effective tax rate during the quarter.”
Global Engineering and Construction (E&C) Group
Global Power Group (GPG)
Outlook/Guidance
Masters said, “As we look ahead to the balance of 2013, we anticipate a continuation of a mild economic recovery globally. In such an environment, we expect adjusted diluted earnings per share in 2013 to be flat to moderately down as compared to 2012 adjusted diluted earnings per share excluding the impairment charge. We expect an increase in EBITDA in the Global E&C Group in 2013. In addition, we expect a decline in EBITDA in the Global Power Group in 2013, reflecting the lower level of new orders in 2012. EBITDA margins on scope revenues in both business groups are likely to be noticeably weaker in the first half of 2013 than in the second half of the year.”
In commenting on the company’s Global E&C Group, Masters said, “We expect scope revenues in 2013 to be up materially as compared with 2012, and we expect the full-year 2013 EBITDA margin on scope revenues in this business to be in the range of 10% to 12%.”
Masters said, “In our Global Power Group, we expect full-year scope revenues in 2013 to be flat to modestly down as compared with 2012, and we expect the full-year 2013 EBITDA margin on scope revenues to be in the range of 15% to 17%.”
Masters added, “Taking a longer-term view of the company’s prospects, we believe Foster Wheeler is poised for significant earnings growth in the years ahead, aided by the strategic actions we have taken – and are taking – to strengthen and expand each of our business groups, for example the 2012 reorganization of our E&C Group, our continued focus on business line diversification and the penetration of our products and services into new geographies.”
Share Repurchase Program
The company repurchased 1,751,119 shares during the fourth quarter of 2012 for approximately $40 million. As of December 31, 2012, the company had approximately $420 million remaining under its authorized share repurchase program.
Conference Call Information
Foster Wheeler AG plans to hold a conference call today, Friday, March 1, at 2:00 p.m. Central European Time (8:00 a.m. Eastern Standard Time in the U.S.) to discuss its financial results for the fourth quarter ended December 31, 2012. The call will be accessible to the public by telephone or webcast, and the company will post an accompanying slide presentation in the investor relations section of its website (www.fwc.com). To listen to the call by telephone, dial 973-935-8752 (conference I.D. No. 81934805) approximately ten minutes before the call. The conference call will also be available over the Internet at www.fwc.com or through StreetEvents at www.streetevents.com. A replay of the call will be available on the company's web site for four weeks following the call.
Net Income
All references to net income in this news release refer to “Net income attributable to Foster Wheeler AG” as reported in our consolidated financial statements.
Calculation of EBITDA
EBITDA is a supplemental financial measure not defined in generally accepted accounting principles, or GAAP. The company defines EBITDA as net income attributable to Foster Wheeler AG before interest expense, income taxes, depreciation and amortization. The company has presented EBITDA because it believes it is an important supplemental measure of operating performance. Certain covenants under our senior unsecured credit agreement use an adjusted form of EBITDA such that in the covenant calculations the EBITDA as presented herein is adjusted for certain unusual and infrequent items specifically excluded in the terms of our senior unsecured credit agreement. The company believes that the line item on its consolidated statement of operations entitled "net income attributable to Foster Wheeler AG" is the most directly comparable GAAP financial measure to EBITDA. Since EBITDA is not a measure of performance calculated in accordance with GAAP, it should not be considered in isolation of, or as a substitute for, net income attributable to Foster Wheeler AG as an indicator of operating performance or any other GAAP financial measure.
EBITDA, as calculated by the company, may not be comparable to similarly titled measures employed by other companies. In addition, this measure does not necessarily represent funds available for discretionary use, and is not necessarily a measure of the company's ability to fund its cash needs. As EBITDA excludes certain financial information that is included in net income attributable to Foster Wheeler AG, users of this financial information should consider the type of events and transactions that are excluded.
The company's non-GAAP performance measure, EBITDA, has certain material limitations as follows:
• It does not include interest expense. Because the company has borrowed money to finance some of its operations, interest is a necessary and ongoing part of its costs and has assisted the company in generating revenue. Therefore, any measure that excludes interest expense has material limitations;
• It does not include taxes. Because the payment of taxes is a necessary and ongoing part of the company's operations, any measure that excludes taxes has material limitations; and
• It does not include depreciation and amortization. Because the company must utilize property, plant and equipment and intangible assets in order to generate revenues in its operations, depreciation and amortization are necessary and ongoing costs of its operations. Therefore, any measure that excludes depreciation and amortization has material limitations.
Calculation of EBITDA Margin
Segment EBITDA margin is calculated by dividing business unit operating revenues in Foster Wheeler Scope into business unit EBITDA.
Foster Wheeler Scope
Foster Wheeler Scope represents that portion of backlog, new orders booked and operating revenues on which profit can be earned. Foster Wheeler Scope excludes revenues relating to third-party costs incurred by the company as agent or principal on a reimbursable basis.
Foster Wheeler AG is a global engineering and construction company and power equipment supplier delivering technically advanced, reliable facilities and equipment. The company employs approximately 13,000 talented professionals with specialized expertise dedicated to serving its clients through one of its two primary business groups. The company’s Global Engineering and Construction Group designs and constructs leading-edge processing facilities for the upstream oil and gas, LNG and gas-to-liquids, refining, chemicals and petrochemicals, power, mining and metals, environmental, pharmaceuticals, biotechnology and healthcare industries. The company’s Global Power Group is a world leader in combustion and steam generation technology that designs, manufactures and erects steam generating and auxiliary equipment for power stations and industrial facilities and also provides a wide range of aftermarket services. The company is based in Zug, Switzerland, and its operational headquarters office is in Reading, United Kingdom. For more information about Foster Wheeler, please visit our Web site at www.fwc.com.
Safe Harbor Statement
Foster Wheeler AG news releases may contain forward-looking statements that are based on management’s assumptions, expectations and projections about the Company and the various industries within which the Company operates. These include statements regarding the Company’s expectations about revenues (including as expressed by its backlog), its liquidity, the outcome of litigation and legal proceedings and recoveries from customers for claims and the costs of current and future asbestos claims and the amount and timing of related insurance recoveries. Such forward-looking statements by their nature involve a degree of risk and uncertainty. The Company cautions that a variety of factors, including but not limited to the factors described in the Company’s most recent Annual Report on Form 10-K, which was filed with the U.S. Securities and Exchange Commission, and the following, could cause the Company’s business conditions and results to differ materially from what is contained in forward-looking statements: benefits, effects or results of the Company’s redomestication to Switzerland, benefits, effects or results of the Company’s strategic renewal initiative, further deterioration in global economic conditions, changes in investment by the oil and gas, oil refining, chemical/petrochemical and power generation industries, changes in the financial condition of its customers, changes in regulatory environments, changes in project design or schedules, contract cancellations, the changes in estimates made by the Company of costs to complete projects, changes in trade, monetary and fiscal policies worldwide, compliance with laws and regulations relating to the Company’s global operations, currency fluctuations, war, terrorist attacks and/or natural disasters affecting facilities either owned by the Company or where equipment or services are or may be provided by the Company, interruptions to shipping lanes or other methods of transit, outcomes of pending and future litigation, including litigation regarding the Company’s liability for damages and insurance coverage for asbestos exposure, protection and validity of the Company’s patents and other intellectual property rights, increasing global competition, compliance with its debt covenants, recoverability of claims against the Company’s customers and others by the Company and claims by third parties against the Company, and changes in estimates used in its critical accounting policies. Other factors and assumptions not identified above were also involved in the formation of these forward-looking statements and the failure of such other assumptions to be realized, as well as other factors, may also cause actual results to differ materially from those projected. Most of these factors are difficult to predict accurately and are generally beyond the Company’s control. You should consider the areas of risk described above in connection with any forward-looking statements that may be made by the Company. The Company undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. You are advised, however, to consult any additional disclosures the Company makes in proxy statements, quarterly reports on Form 10-Q, annual reports on Form 10-K and current reports on Form 8-K filed or furnished with to the Securities and Exchange Commission.
Foster Wheeler AG and Subsidiaries
Consolidated Statement of Operations
(in thousands of dollars, except share data and per share amounts)
(unaudited)
outstanding for basic earnings per share
outstanding for diluted earnings per share
Foster Wheeler AG and Subsidiaries
Consolidated Balance Sheet
(in thousands of dollars)
(unaudited)
2012
2011
Foster Wheeler AG and Subsidiaries
Business Segments
(in thousands of dollars)
(unaudited)
Global Engineering & Construction Group
Global Power Group
Corporate & Finance Group (2)
Consolidated
(1)
Foster Wheeler Scope excludes revenues relating to third-party costs incurred by the company as agent or principal on a reimbursable basis.
(2)
Foster Wheeler AG and Subsidiaries
Reconciliations of EBITDA and Foster Wheeler Scope
(in thousands of dollars)
(unaudited)
Reconciliation of EBITDA to Net Income (1)
EBITDA:
Reconciliation of Foster Wheeler Scope Operating
Revenues to Operating Revenues
Global Engineering & Construction Group
Global Power Group
Consolidated
(1) Net income attributable to Foster Wheeler AG.
(2) The depreciation / amortization by business segment:
Foster Wheeler AG and Subsidiaries
EBITDA, Net Income* and Diluted Earnings Per Share Reconciliation
(in thousands of dollars, except per share amounts)
(unaudited)
Diluted
Earnings
Per Share
Diluted
Earnings
Per Share
provision
Diluted
Earnings
Per Share
Diluted
Earnings
Per Share
provision
Foster Wheeler AG and Subsidiaries
Average Calculations
(in thousands of dollars, except per share amounts)
(unaudited)
Full Year
Quarterly
Average(1)
Full Year
Quarterly
Average(1)
Consolidated
Global Engineering & Construction Group
Global Power Group
Foster Wheeler AG
Media
Julie Stanisz
908-730-4047
julie_stanisz@fwc.com
or
Investor Relations
Scott Lamb
908-730-4155
scott_lamb@fwc.com
or
Other Inquiries
908-730-4000
fw@fwc.com
Source: Foster Wheeler AG