Foster Wheeler AG
) reported fourth-quarter 2013 adjusted income (excluding the
impact of one-time items) of $2.8 million or 3 cents per share.
Earnings were 92.7% below the Zacks Consensus Estimate of 41
cents. In the prior year, the company had reported an income of
$41.3 million or 39 cents per share. On a GAAP basis, the company
reported a loss of $37.2 million or 38 cents per share, compared
with an income of $18.6 million or 18 cents per share in
The earnings in the quarter were impacted by the additional
charges comprising of pretax impairments and charges owing to
ongoing restructuring initiatives and a provision for the
non-U.S. jurisdiction tax audit.
For full-year 2013, the company reported adjusted income of
$127.1 million or $1.25 per share compared with $179.1 million or
$1.66 per share reported in 2012.
Despite missing estimates, investors remain optimistic given
the company's strong order growth and backlog levels. This
translated to a rise in share price by 0.2% to close at $32.12 on
The company's operating revenues in the quarter were $851.1
million, up 16.6% year over year. Strong growth in the Global
Engineering and Construction group and an ongoing recovery in the
Global Power group aided the year-over-year improvement. However
revenues were well below the Zacks Consensus Estimate of $867
Global Engineering and Construction
(E&C) group's operating revenues stood at $646.9 million,
while its operating revenues (FW scope) were $500.0 million, up
17.9% from $424.0 million in the prior-year period. Revenue
growth was driven by increased volume of work and a healthy
Global Power Group
(GPG) operating revenues stood at $204.2 million, while its
operating revenues (FW Scope) were $201.8 million, down 9.2% from
$222.3 million in the year-ago quarter. The decline was
attributable to lower volume of boiler orders. New orders in the
segment were up 88.5% year over year to $230 million from $122
million in the fourth quarter of 2012. Orders were driven by the
booking of the large circulating fluidized bed boiler contract in
Income & Expenses
Contract profit in the quarter was $132.5 million, down 15.5%
from the prior-year quarter, primarily due to higher costs of
operating revenues. SG&A expense was $92.0 million, up 4.3%
from $88.2 million in the year-ago quarter.
E&C's earnings before interest, taxes, depreciation, and
amortization (EBITDA) was $26.6 million in the quarter, down from
$53.4 million in the prior-year quarter. GPG's EBITDA was $31.5
million down from $46.2 million in the prior-year quarter.
Exiting the year, the company's cash and cash equivalents were
$556.2 million, down from $582 million at the end of Dec 31,
2012. Long-term debt was $113.7 million, down from $124.0 million
at the end of Dec 31, 2012. Shareholders' equity was $750.0
million, down from $713.9 million at the end of Dec 31, 2012.
The company remains positive about its growth in 2014 owing to
the healthy backlog and new wins, especially, the performance of
its E&C segment. However, it expects the first-quarter 2014
earnings to be negatively impacted by the existing volatility in
Foster Wheeler signed a definitive sell-off agreement
recently, on Feb 13, with a U.K. based company AMEC. Per the
agreement, AMEC will be acquiring all the issued and to-be-issued
share capital of Foster Wheeler for about $3.3 billion or $32.69
per share. The company's existing shareholders will have a 23%
stake in the combined entity.
Foster Wheeler's board of directors has also proposed a cash
dividend of 40 cents per share to be paid around May 21, 2014, to
shareholders of record as of May 7, 2014.
Foster currently carries a Zacks Rank #3 (Hold).
Performance of Other Stocks in the Same Sector
Chicago Bridge & Iron Co. N.V.
) posted fourth-quarter adjusted earnings of $230.0 million or
$1.91 per share, which easily beat the Zacks Consensus Estimate
of $1.17 per share.
Quanta Services Inc.
) reported fourth-quarter 2013 non-GAAP earnings of 50 cents per
share, beating the Zacks Consensus Estimate by 22%.
) fourth-quarter 2013 net earnings of $167 million or $1.01 per
share surpassed the Zacks Consensus Estimate of 98 cents by
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