The Babcock & Wilcox Company (BWC)

Q1 2012 Earnings Call

May 10, 2012 8:30 am ET


Michael P. Dickerson – Vice President and Investor Relations Officer

E. James Ferland – President, Chief Executive Officer & Senior Vice President

Mary Pat Salomone – Chief Operating Officer

Anthony S. Colatrella – Chief Financial Officer & Senior Vice President


Joe Ritchie – Goldman Sachs

Tahira Afzal – Keybanc Capital Markets

Chase Jacobson – William Blair & Company, LLC

Will Gabrielski – Lazard Capital Markets

Jamie Cook – Credit Suisse

Scott Levine – JP Morgan

Steven Fisher – UBS

Andy Kaplowitz – Barclays

Martin Malloy – Johnson Rice & Company

John Rogers – D.A. Davidson & Co.

Randy Bhatia – Capital One Southcoast, Inc.



Welcome to The Babcock & Wilcox Company first quarter 2012 earnings conference call. At this time all participants are in a listen only mode. Following the company’s prepared remarks we will conduct a question and answer session and instructions will be given at that time. I would now like to turn the call over to our host Mr. Michael Dickerson, B&W’s Vice President and Investor Relations Officer.

Michael P. Dickerson

Welcome to The Babcock & Wilcox Company first quarter 2012 earnings conference call. I’m Mike Dickerson, Vice President and Investor Relations Officer at B&W. Joining me this morning are Jim Ferland, B&W’s President and Chief Executive Officer, Mary Pat Salomone, Chief Operating Officer, and Tony Colatrella, our Chief Financial Officer.

Many of you have already seen a 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 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 10K and quarterly reports on 10Q 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. Also on today’s call the company provides non-GAAP information regarding certain of its historical results to supplement the results provided in accordance with GAAP and it should not be considered superior to or as a substitute for the comparable GAAP measures.

B&W believes the non-GAAP measures provide meaningful insight into the company’s operational performance and provides these measures to investors to help facilitate comparisons of operating results with prior periods and to assist B&W [inaudible]. A reconciliation of these non-GAAP measures can be found in our first quarter earnings release issued last night and in our company overview presentation posted on the investor relations’ section of our website at

Due to the number of participants on today’s call I would ask that you limit yourself to one question and perhaps one follow up. You are of course, welcome to get back in the queue. With that, I would now like to turn the call over to Jim.

E. James Ferland

I’m pleased to be able to report a solid first quarter for the company in terms of revenue and earnings. All of our business units performed well and in line with our expectations. Bookings were also very strong moving our backlog to record levels. As I’ve only been here for a couple of weeks it’s appropriate for me to have Mary Pat and Tony take you through the performance of the business over the first quarter and we’ll get to that in just a minute.

I thought I’d spend a little time describing to you my initial thoughts on coming into the company. At a high level B&W is, as advertised, a solid business with industry leading positions. If any of you have not been through the [investors’] day presentation from September I encourage you to do so as it provides a good overview. As it relates to our government segment I’ve known for a long time that B&W held valuable and important positions as it relates to the US Naval Reactor Program but over the last several years the B&W technical services unit has also set itself apart as an industry leader in management and operation as well as the environmental cleanup of government sites, many with a high consequence nuclear mission. In these two business segments, B&W is well positioned from a competitive standpoint going forward.

In the nuclear energy segment, reentry into the nuclear services market in the US while not without some challenges has been a success combined with a state of the art manufacturing facility and nuclear clean room in Ontario Canada, this business has doubled in size over the last few years. With word of our successful outage work beginning to spread around the industry the emerging opportunities as a result of the aging US nuclear fleet and post Fukushima modifications and my background, we should be able to continue to grow the top and bottom line over the next several years.

The opportunity in the power gen segment as a result of the drive to minimize the environmental impact of coal is providing significant lift in both the power generation group’s backlog and financial results. I was pleasantly surprised by the environmental market projections that I’ve seen. You saw some of the impact of this in the press release issued last night. Today, the power generation group has more than $4 billion in bids outstanding or in progress. More importantly, more than $2 billion of these bids are environmental system and services where we have historically maintained a strong market position.

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