UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): October 5, 2018 BABCOCK & WILCOX ENTERPRISES, INC. (Exact name of registrant as specified in its charter) DELAWARE
001-36876
47-2783641
(State or other jurisdiction of incorporation)
(Commission File Number)
(IRS Employer Identification No.)
20 SOUTH VAN BUREN AVENUE BARBERTON, OHIO
44203
(Address of principal executive offices)
(Zip Code)
Registrant’s telephone number, including area code:
(330) 753-4511
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: ¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) ¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) ¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) ¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company ¨ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Item 2.01.
Completion of Acquisition or Disposition of Assets.
On October 5, 2018, Babcock & Wilcox Enterprises, Inc. (the “ Company ”) completed the previously announced sale of the Company’s MEGTEC and Universal businesses to Dürr (as defined below) for $130 million, subject to certain adjustments, pursuant to the stock purchase agreement (the “ Agreement ”), dated June 5, 2018, with Dürr AG and its wholly owned subsidiary Dürr Inc. (collectively, "Dürr"). The Agreement is attached hereto as Exhibit 2.1 and is incorporated herein by reference. The foregoing description of the Agreement does not purport to be complete and is subject to, and qualified in its entirety by, reference to Exhibit 2.1. The filed copy of the Agreement is intended to provide investors and security holders with information regarding its terms. It is not intended to provide any other financial information about the Company or its subsidiaries or affiliates. The representations, warranties, and covenants contained in such agreement were made only for purposes of such agreement and as of specific dates, are solely for the benefit of the parties to such agreement, may be subject to limitations agreed upon by the parties, including being qualified by confidential disclosures made for the purposes of allocating contractual risk among the parties thereto instead of establishing these matters as facts, and may be subject to standards of materiality applicable to the parties that differ from those applicable to investors. Investors should not rely on the representations, warranties, or covenants or any description thereof as characterizations of the actual state of facts or condition of the Company or any of its subsidiaries or affiliates. Moreover, information concerning the subject matter of the representations, warranties, and covenants may change after the date of such agreement, which subsequent information may or may not be fully reflected in the Company’s public disclosures. Item 7.01.
Regulation FD Disclosure.
On October 8, 2018, the Company issued a press release announcing the completion of the sale of its MEGTEC and Universal businesses to Dürr on October 5, 2018. The full text of this press release is attached to this report as Exhibit 99.1 and is incorporated herein by reference. Pursuant to the rules and regulations of the SEC, the information furnished pursuant to Item 7.01 of this report is deemed to have been furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section. Such information shall not be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing. Item 9.01. Financial Statements and Exhibits. (b)
Pro Forma Financial Information. Unaudited Pro Forma Consolidated Financial Information of the Company is attached hereto as Exhibit 99.2 and is incorporated by reference herein.
(d) Exhibit No.
Exhibits Description
2.1*
Stock Purchase Agreement, dated June 5, 2018, by and among Babcock & Wilcox Enterprises, Inc. and Dürr AG and its wholly owned subsidiary Durr Inc. (incorported by reference to Exhibit 2.1 to the Babcock & Wilcox Enterprises, Inc. Quarterly Report on Form 10-Q for the quarter ended June 30, 2018 (File No. 001-36876))
99.1
Press Release of Babcock & Wilcox Enterprises, Inc. dated October 8, 2018.
99.2 Pro Forma Financial Information *Certain schedules have been omitted and the Company agrees to furnish supplementally to the Securities and Exchange Commission a copy of any omitted schedules upon request.
SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
BABCOCK & WILCOX ENTERPRISES, INC.
October 9, 2018
By:
/s/ Daniel W. Hoehn Daniel W. Hoehn Vice President, Controller and Chief Accounting Officer
News Release
B&W Closes Sale of MEGTEC and Universal Businesses (BARBERTON, Ohio – October 8, 2018) – Babcock & Wilcox Enterprises, Inc. (NYSE:BW) announced today that it has closed the sale of its MEGTEC and Universal industrial services business to Dürr AG for $130 million, subject to adjustment. Net proceeds from the sale will largely be used to reduce outstanding balances under the Company’s bank credit facilities, and to improve its balance sheet and financial flexibility. B&W’s strategic focus will continue to be on optimizing its market-leading portfolio of equipment, technology and services for power generation and industrial applications, and implementing efficiencies and cost reductions throughout the organization. About B&W Headquartered in Barberton, Ohio, Babcock & Wilcox is a global leader in energy and environmental technologies and services for the power and industrial markets, and has been transforming our world for 151 years. Follow us on Twitter @BabcockWilcox and learn more at www.babcock.com . Forward-Looking Statements B&W cautions that this release contains forward-looking statements, including, without limitation, statements relating to our strategic objectives; our business execution model; management’s expectations regarding the industries in which we operate; our guidance and forecasts; our projected operating margin improvements, savings and restructuring costs; covenant compliance; and project execution. These forward-looking statements are based on management’s current expectations and involve a number of risks and uncertainties, including, among other things, our ability to continue as a going concern; our ability to obtain and maintain sufficient financing to provide liquidity to meet our business objectives, surety bonds, letters of credit and similar financing; our ability to satisfy the liquidity and other requirements under U.S. revolving credit facility as recently amended, including our ability to successfully enter into and borrow under a new term loan and receive concessions from customers on our Renewable energy loss contracts; the highly competitive nature of our businesses; general economic and business conditions, including changes in interest rates and currency exchange rates; general developments in the industries in which we are involved; cancellations of and adjustments to backlog and the resulting impact from using backlog as an indicator of future earnings; our ability to perform contracts on time and on budget, in accordance with the schedules and terms established by the applicable contracts with customers; failure by third-party subcontractors, joint venture partners or suppliers to perform their obligations on time and as specified; our ability to realize anticipated savings and operational benefits from our restructuring plans, and other cost-savings initiatives; our ability to successfully integrate and realize the expected synergies from acquisitions; our ability to successfully address productivity and schedule issues in our Renewable segment, including the ability to complete our Renewable energy projects within the expected time frame and the estimated costs; willingness of customers to waive liquidated damages or agree to bonus opportunities; our ability to successfully partner with third parties to win and execute renewable projects; changes in our effective tax rate and tax positions; our ability to maintain operational support for our information systems against service outages and data corruption, as well as protection against cyber-based network security breaches and theft of data; our ability to protect our intellectual property and renew licenses to use intellectual property of third parties; our use of the percentage-of-completion method of accounting; the risks associated with integrating businesses we acquire; our ability to successfully manage research and development projects and costs, including our efforts to successfully develop and commercialize new technologies and products; the operating risks normally incident to our lines of business, including professional liability, product liability, warranty and other claims against us; changes in, or our failure or inability to comply with, laws and government regulations; difficulties we may encounter in obtaining regulatory or other necessary permits or approvals; changes in, and liabilities relating to, existing or future environmental regulatory matters; our limited ability to influence and direct the operations of our joint ventures; potential violations of the Foreign Corrupt Practices Act; our ability to successfully compete with current and future competitors; the loss of key personnel and the continued availability of qualified personnel; our ability to negotiate and maintain good relationships with labor unions; changes in pension and medical expenses associated with our retirement benefit programs; social, political, competitive and economic situations in foreign countries where we do business or seek new business; the possibilities of war, other armed conflicts or terrorist attacks; the willingness of customers and suppliers to continue to do business with us on reasonable terms and conditions; and our ability to successfully consummate the sale of any assets as we deem necessary. If one or more of these risks or other risks materialize, actual results may vary materially from those expressed. For a more complete discussion of these and other risk factors, see B&W’s filings with the Securities and Exchange Commission, including our most recent annual report on Form 10-K and subsequent quarterly reports on Form 10-Q. B&W cautions not to place undue reliance on these forward-looking statements, which speak only as of the date of this release, and undertakes no obligation to update or revise any forward-looking statement, except to the extent required by applicable law.
### Investor Contact: Media Contact: Megan Wilson
Ryan Cornell
Vice President, Corporate Development and Investor RelationsPublic Relations Babcock & Wilcox
Babcock & Wilcox 704.625.4944 |
[email protected] 330.860.1345 |
[email protected]
UNAUDITED PRO FORMA FINANCIAL INFORMATION The following unaudited pro forma condensed consolidated financial information, which is based upon estimates by our management, is presented for informational purposes only. It is not intended to be indicative of the actual consolidated results of operations or the actual consolidated financial position that would have been achieved had the transactions or adjustments been consummated as of the dates indicated below, and it does not purport to indicate results that may be attained in the future. BABCOCK & WILCOX ENTERPRISES, INC. INDEX TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS PAGE Unaudited Pro Forma Condensed Consolidated Balance Sheet as of June 30, 2018
3
Unaudited Pro Forma Condensed Consolidated Statement of Operations for the Year Ended December 31, 2017
4
Unaudited Pro Forma Condensed Consolidated Statement of Operations for the Year Ended December 31, 2016
5
Unaudited Pro Forma Condensed Consolidated Statement of Operations for the Year Ended December 31, 2015
6
Notes to the Pro Forma Condensed Consolidated Balance Sheet as of June 30, 2018
7
Notes to the Pro Forma Condensed Consolidated Statement of Operations for the Years Ended December 31, 2017, 2016 and 2015
7
1
BABCOCK & WILCOX ENTERPRISES, INC. UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS On October 5, 2018, Babcock & Wilcox Enterprises, Inc. (the “ Company ”) completed the previously announced sale of the Company’s MEGTEC and Universal businesses to Dürr (as defined below) for $130 million, subject to certain adjustments, pursuant to the stock purchase agreement (the “ Agreement ”), dated June 5, 2018, with Dürr AG and its wholly owned subsidiary Dürr Inc. (collectively, "Dürr"). The following presents our unaudited pro forma condensed consolidated statements of operations for the year ending December 31, 2017, 2016 and 2015, respectively, and are based on the historical consolidated financial statements of the Company after giving effect to the Company’s transaction with Dürr. The pro forma statements of operations give effect that the transaction had occurred at the beginning of each period presented. The unaudited pro forma condensed consolidated balance sheet as of June 30, 2018 has been prepared as if the Transaction had occurred on that date. The unaudited pro forma condensed consolidated financial statements are presented for illustrative purposes only and are not necessarily indicative of the operating results that would have occurred if these transactions actually occurred on the dates presented or to project our results of operations or financial position for any future period. The information below should be read in conjunction with the Company's consolidated financial statements as of and for six months ended June 30, 2018 and as of and for the year ended December 31, 2017, and the Agreement which was included as Exhibit 2.1 to the Company's quarterly report on Form 10-Q for the the quarter ended June 30, 2018.
2
Babcock & Wilcox Enterprises, Inc. Unaudited Pro Forma Condensed Consolidated Balance Sheet as of June 30, 2018
(in thousands, except per share amount)
Company Historical
Cash and cash equivalents
$
Restricted cash and cash equivalents Accounts receivable – trade, net Accounts receivable – other
Condensed Consolidated Pro Forma
Pro Forma Adjustments
28,512 $
— $
32,302
—
28,512 32,302
236,718
—
236,718
37,807
—
37,807
149,040
—
149,040
Inventories
67,274
—
67,274
Other current assets
37,787
—
37,787
Current assets of discontinued operations
83,331
(83,331)
—
672,771
(83,331)
589,440
Contracts in progress
Total current assets Net property, plant and equipment
105,765
—
105,765
Goodwill
47,179
—
47,179
Deferred income taxes
99,080
713
99,793
8,421
—
8,421
36,368
—
36,368
—
28,013
Investments in unconsolidated affiliates Intangible assets Other assets
28,013
Noncurrent assets of discontinued operations
106,510
Total assets
$
Foreign revolving credit facilities
$
Accounts payable Accrued employee benefits
1,104,107 $ 4,124 $
(106,510) (189,128) $
— 914,979
—
4,124
191,664
—
191,664
27,072
—
27,072
149,768
—
149,768
Accrued warranty expense
53,138
—
53,138
Other accrued liabilities
88,351
—
88,351
Current liabilities of discontinued operations
57,316
(57,316)
—
Total current liabilities
571,433
(57,316)
514,117
U.S. revolving credit facility
196,300
(123,840)
72,460
Pension and other accumulated postretirement benefit liabilities
235,369
—
235,369
37,214
264
37,478
Advance billings on contracts
Other noncurrent liabilities Noncurrent liabilities of discontinued operations Total liabilities
8,236
(8,236)
—
1,048,552
(189,128)
859,424
Commitments and contingencies Stockholders' equity: Common stock, par value $0.01 per share, authorized 200,000 shares; issued and outstanding 168,660 shares at June 30, 2018 Capital in excess of par value
1,746
—
1,746
1,045,901
—
1,045,901
Treasury stock at cost, 5,830 shares at June 30, 2018
(105,531)
—
(105,531)
Retained deficit
(878,823)
(931)
(879,754)
(16,536)
931
(15,605)
46,757
—
46,757
Accumulated other comprehensive loss Stockholders' equity attributable to shareholders Noncontrolling interest
8,798
Total stockholders' equity
55,555
Total liabilities and stockholders' equity
$
See accompanying notes to unaudited pro forma condensed consolidated financial information
3
1,104,107 $
8,798 — (189,128) $
55,555 914,979
Babcock & Wilcox Enterprises, Inc. Unaudited Pro Forma Condensed Consolidated Statement of Operations For The Year Ended December 31, 2017 Company Historical
(in thousands, except per share amounts)
Revenues
$
Pro Forma Adjustments
Condensed Consolidated Pro Forma
1,557,735 $
(216,306) $
1,341,429
1,457,857
(170,610)
1,287,247
259,799
(38,380)
221,419
Costs and expenses: Cost of operations Selling, general and administrative expenses Goodwill impairment
86,903
—
86,903
Restructuring activities and spin-off transaction costs
15,447
(408)
15,039
9,412
(1,798)
7,614
15
(2)
13
1,829,433
(211,198)
1,618,235
Research and development costs Losses (gains) on asset disposals, net Total costs and expenses Equity in income and impairment of investees
(9,867)
Operating loss
(281,565)
—
(9,867)
(5,108)
(286,673)
Other income (expense): Interest income
510
Interest expense Other – net Total other income (expense) Loss before income tax expense (benefit)
Basic and diluted loss per share
(26,305)
8,996
(17,309)
(6,839)
1,388
(5,451)
(32,634)
10,381
(22,253)
5,273
(308,926)
64,816
(1,107)
63,709
(379,015)
6,380
(372,635)
(809)
—
(809)
Net income attributable to noncontrolling interest Net loss attributable to stockholders
507
(314,199)
Income tax expense (benefit) Net loss
(3)
$
(379,824) $
$
(8.09)
6,380 $
(373,444)
$
(7.96)
Shares used in the computation of earnings per share: Basic and diluted
46,935
See accompanying notes to unaudited pro forma condensed consolidated financial information 4
46,935
Babcock & Wilcox Enterprises, Inc. Unaudited Pro Forma Condensed Consolidated Statement of Operations For The Year Ended December 31, 2016 Company Historical
(in thousands, except per share amounts)
Revenues
$
Pro Forma Adjustments
Condensed Consolidated Pro Forma
1,578,263 $
(157,322) $
1,420,941
1,399,146
(115,271)
1,283,875
Costs and expenses: Cost of operations Selling, general and administrative expenses
247,149
(27,113)
220,036
Restructuring activities and spin-off transaction costs
40,807
(1,994)
38,813
Research and development costs
10,406
(1,557)
8,849
Losses (gains) on asset disposals, net
(32)
Total costs and expenses
1,697,476
Equity in income and impairment of investees
16,440
Operating loss
(102,773)
7
(25)
(145,928)
1,551,548
—
16,440
(11,394)
(114,167)
Other income (expense): Interest income
810
(8)
802
Interest expense
(3,796)
94
(3,702)
Other – net
(2,380)
(180)
(2,560)
(5,366)
(94)
(5,460)
(108,139)
(11,488)
(119,627)
Total other income (expense) Loss before income tax expense (benefit) Income tax expense (benefit)
6,943
Net loss
(115,082)
Net income attributable to noncontrolling interest Net loss attributable to stockholders Basic and diluted loss per share
(567) $
(115,649) $
$
(2.31)
(4,237)
2,706
(7,251)
(122,333)
—
(567)
(7,251) $
(122,900)
$
(2.45)
Shares used in the computation of earnings per share: Basic and diluted
50,129
See accompanying notes to unaudited pro forma condensed consolidated financial information 5
50,129
Babcock & Wilcox Enterprises, Inc. Unaudited pro forma condensed consolidated statement of operations for the year ended December 31, 2015 Company Historical
(in thousands, except per share amounts)
Revenues
$
Pro Forma Adjustments
Condensed Consolidated Pro Forma
1,757,295 $
(183,695) $
1,573,600
1,449,138
(135,002)
1,314,136
239,968
(33,827)
206,141
Costs and expenses: Cost of operations Selling, general and administrative expenses Restructuring activities and spin-off transaction costs
14,946
Research and development costs
16,543
Losses (gains) on asset disposals, net
14,597
Total costs and expenses
1,735,192
Equity in income and impairment of investees
(242)
Operating loss
21,861
—
14,946
(1,886)
14,657
17
14,614
(170,698)
1,564,494
—
(242)
(12,997)
8,864
Other income (expense): Interest income
618
Interest expense
(2,338)
Other – net
64
Total other income (expense)
(1,656)
Income before income tax expense (benefit) Income tax expense (benefit) Net income from continuing operations Income from discontinued operations, net of tax
Net income attributable to stockholders Basic earnings per share - continuing operations Basic earnings per share Diluted earnings per share - continuing operations
(2,358) 6,506
(3,180)
491
16,534
(10,519)
6,015
$
19,141 $
$
0.31
—
2,803
(10,519)
8,818
—
(196)
(10,519) $
8,622
$
0.11
0.05
0.05
$
0.36
$
0.16
$
0.30
$
0.11
Diluted earnings per share - discontinued operations Diluted earnings per share
(776)
(702) (13,699)
(196)
Basic earnings per share - discontinued operations
(840)
3,671
19,337
Net income attributable to noncontrolling interest
610 (2,192)
20,205
2,803
Net income
(8) 146
0.06 $
0.36
0.06 $
0.17
Shares used in the computation of earnings per share: Basic
53,487
53,487
Diluted
53,709
53,709
See accompanying notes to unaudited pro forma condensed consolidated financial information 6
NOTES TO THE PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 2018 (1) The balance sheet of the Company as of June 30, 2018 reflected the assets and liabilities of Babcock & Wilcox Enterprises, Inc. and the assets and liabilities of discontinued operations. Upon completion of the transaction, substantially all of the discontinued assets and liabilities would be eliminated. Included in the Pro Forma Adjustments column are the sold assets and liabilities, the liabilities to be paid at closing plus the estimated net cash proceeds from the transaction.
NOTES TO THE PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2015, 2016 AND 2017 (1) The statement of operations for the years ended December 31, 2015, 2016 and 2017 reflected the revenue, costs and other income (expenses) of the Company. Upon completion of the transaction with Dürr, substantially all of the revenue, costs and other income (expenses) would be eliminated, except for those costs and other income (expense) related to retained assets and liabilities not assumed by the buyer. (2) The Pro Forma Condensed Consolidated Statement of Operations were prepared based on the following assumptions: ▪ All revenue and cost of sales will be eliminated with these transactions. ▪ All selling, general and administrative expenses, research and development costs and corporate allocations will be eliminated with the exception of corporate allocations. ▪ All other income (expense) items will be eliminated. 7
