Babcock & Wilcox(US:BW)2020-08-12 21:13Financial Performance - The company recorded operating losses of $7.7 million and $18.0 million for the three and six months ended June 30, 2020, respectively, compared to losses of $4.3 million and $36.2 million in the same periods of 2019[205]. - Revenues decreased by $112.7 million to $135.4 million in Q2 2020, down from $248.1 million in Q2 2019, primarily due to COVID-19 impacts[221]. - Total revenues for the six months ended June 30, 2020, decreased by $196.1 million to $284.0 million compared to $480.1 million for the same period in 2019[224]. - Operating losses improved by $18.2 million to $(18.0) million in the first half of 2020 from $(36.2) million in the same period of 2019, driven by the absence of losses on EPC contracts and cost savings[225]. - The company reported a loss before income taxes of $17.3 million for Q2 2020, an improvement of $9.2 million from a loss of $26.4 million in Q2 2019[276]. Segment Performance - Adjusted EBITDA for the Babcock & Wilcox segment was $9.5 million and $20.2 million for the three and six months ended June 30, 2020, down from $19.1 million and $28.2 million in 2019, primarily due to decreased revenue volume impacted by COVID-19[206]. - The Vølund & Other Renewable segment reported adjusted EBITDA of $(0.5) million and $(3.8) million for the three and six months ended June 30, 2020, showing improvement from $(0.7) million and $(9.5) million in 2019[207]. - The SPIG segment experienced adjusted EBITDA losses of $(2.5) million and $(3.7) million for the three and six months ended June 30, 2020, compared to $(0.1) million and $0.5 million in 2019, affected by COVID-19[211]. - Babcock & Wilcox segment revenue fell by 48%, or $96.2 million, to $104.8 million in Q2 2020 compared to $201.0 million in Q2 2019, attributed to project completions and customer concerns related to COVID-19[230]. - Revenues in the Babcock & Wilcox segment decreased 42%, or $162.8 million, to $226.7 million in the six months ended June 30, 2020, compared to $389.5 million in the same period in 2019[234]. - Revenues in the Vølund & Other Renewable segment decreased 40%, or $13.4 million, to $20.3 million in Q2 2020 compared to $33.7 million in Q2 2019[238]. - Revenues in the SPIG segment decreased 52%, or $12.0 million, to $10.9 million in Q2 2020 from $22.8 million in Q2 2019[245]. Cost Management - The company expects ongoing cost-savings measures to translate into bottom-line results, with top-line growth driven by core technologies and support services across its segments globally[213]. - Restructuring costs amounted to $2.4 million and $4.3 million for the three and six months ended June 30, 2020, compared to $0.9 million and $7.0 million in the same periods of 2019[215]. - The company has identified additional initiatives to further reduce costs and improve cash generation, including evaluating non-core asset sales[214]. - SG&A expenses decreased by $7.4 million to $34.5 million in Q2 2020 compared to $41.9 million in Q2 2019[228]. - Corporate costs decreased by $5.5 million to $3.8 million in Q2 2020 compared to $9.3 million in Q2 2019, and decreased by $6.0 million to $8.0 million for the six months ended June 30, 2020 compared to $13.9 million in the same period in 2019[259]. Cash Flow and Liquidity - As of June 30, 2020, the company had unrestricted cash and cash equivalents totaling $36.8 million and total debt of $338.0 million[288]. - Cash used in operations was $49.3 million for the six months ended June 30, 2020, a significant decrease from $193.0 million in the same period of 2019[289]. - Cash flows from financing activities provided net cash of $35.7 million in the six months ended June 30, 2020, primarily due to $60.0 million in borrowings from Last Out Term Loans[291]. - The company has projected sufficient liquidity to fund future operations for at least one year following the issuance of the financial statements[286]. - The U.S. Revolving Credit Facility provides for a senior secured revolving credit facility of up to $326.9 million as of June 30, 2020[292]. Debt and Financing - The company received $30.0 million in additional gross borrowings on January 31, 2020, under a new Tranche A-4 of Last Out Term Loans[283]. - The company filed for a waiver of required minimum contributions to the U.S. Pension Plan, which could reduce cash funding requirements in 2020 by approximately $25.0 million[283]. - The interest rate for the revolving credit facility will be reduced to LIBOR plus 7.0% or base rate plus 6.0% under the A&R Credit Agreement[295]. - The A&R Credit Agreement extends the maturity date of the revolving credit facility to June 30, 2022, and the Last Out Term Loans to December 30, 2022[319]. - The minimum required liquidity condition remains at $30.0 million, modified to exclude cash of non-loan parties exceeding $25.0 million[320]. Market and Operational Risks - The COVID-19 pandemic has disrupted business operations and caused significant volatility in global equity and credit markets[340]. - Adverse public health developments could materially affect the company's financial condition and results of operations[341]. - The duration and severity of the COVID-19 outbreak remain uncertain, impacting the global economy and financial markets[342]. - Continued interest rate volatility may complicate financing or refinancing of debt obligations[342]. - The company may face challenges in maintaining operations as a going concern due to the pandemic's effects[342].