The Babcock & Wilcox Company ( BWC) Q4 2011 Earnings Conference Call March 01, 2012, 08:30 a.m. ET Executi ve s Michael Dickerson - VP and IR Officer Brandon Bethards - President and CEO Mary Pat Salomone - SVP and COO Tony Colatrella - SVP and CFO James Canafax - SVP, General Counsel and Corporate Secretary Analysts Brandon Verblow - UBS Alan Fleming - Barclays Capital Scott Levine - JPMorgan Linda Yuan - Credit Suisse Saagar Parikh - Keybanc Capital Markets John Rogers - D.A. Davidson Chase Jacobson - William Blair & Company Rob Norfleet - BB&T Capital Markets Greg Elek - Goldman Sachs Presentation Operator
Many of you have already seen the copy of our press release issued last night. For those of you that have not it is available on First Call and on our website at babcock.com. During this call, certain statements we make will be forward-looking. I want to call your attention to our Safe Harbor provision for forward-looking statements that can be found at the end of our press release. The Safe Harbor provision identifies risk factors that may cause actual results to differ materially from the content of our forward-looking statements. Our Annual Report on Form 10-K and quarterly reports on Form 10-Q on file with the SEC provide further detail about the risk factors related to our business. Additionally, I want to remind you that except as required by law, B&W undertakes no obligation to update any forward-looking statement to reflect events or circumstances that may arise after the date of this call.The format for today’s call will begin with some remarks by Brandon about the current business conditions and overall results for the quarter. Second, Mary Pat will take you through the performance of each of our business segments, followed by Tony who will provide some additional financial details about the quarter. Lastly, Brandon will conclude with some final remarks. With that I’d now like to turn the call over to Brandon. Brandon Bethards Thank you, Mike, and good morning everyone. Let me start by describing my view of our performance this quarter and by making a few comments about the current business environment we are experiencing. I’m pleased to report the company ended the year on a very strong note. Revenues of 800.8 million were up 95.6 million or 13.6% in the fourth quarter compared to the year ago quarter. This is the fifth quarter in a row of positive year-over-year consolidated revenue growth. Equally important on a full year basis each of our four business segments reported year-over-year growth. Also I think it is important to note that our consolidated quarterly growth rate has accelerated throughout the year.
Our reported revenue growth rates over the corresponding prior-year periods in 2011 were 4.4% in the first quarter; 9.3% in the second quarter; 11.8% in Q3; and as I mentioned previously, 13.6% in Q4. This is principally a result of higher customer demand for fossil and nuclear power generation parts, service and construction projects, as well as our success winning decommissioning and decontamination contracts from the environmental management programs of the Department of Energy.This quarter’s ending backlog of $5.34 billion represents an increase of 137 million or 2.6% from the fourth quarter ending backlog of 2010 and a 14.9% improvement over the third quarter of 2011. The increase in backlog on a year-over-year basis was driven primarily by a 24.5% increase in the Power Generation segment which Mary Pat will cover in more detail later. Consolidated operating income for the fourth quarter of 2011 was 93.3 million compared to 74.5 million in the fourth quarter of 2010. The increase in operating income was primarily due to improvements in revenues and operating margins in the Power Generation segment. Margin improvement at PGG was aided by the closeout of a large OEM new coal-fired power plant project that contributed approximately 5.7 million of incremental operating income in the quarter. Additionally, strong execution of the company’s M&O sites in 2011 resulted in the achievement of record performance scores and therefore, additional fee earned across the company’s National Nuclear Security Administration sites. Safety, as you may know, is one of the key metrics we use to measure our performance and in that regard, B&W has performed very well in 2011. I personally see a direct correlation to good safety performance and profitability. I also correlate good safety performance to effective leadership in our operations. For 2011, the company reported safety metrics better than our 2011 targets. In 2011, we achieved a loss time frequency rate 42% below the prior year. Result of such favorable performance is a workers’ comp rate that we estimate to be approximately 40% below the average industrial workers’ comp rates generating real returns to the bottom line.
Before we move on to the individual segment discussion, I want to mention a couple of recent developments that are relative to our business. Specifically, EPA regulations and comments recently made by the Department of Defense related to the 2013 it's important to note that's the 2013not 2012, budget planning process.Read the rest of this transcript for free on seekingalpha.com