Credit: Shutterstock photoFoster Wheeler AG ( FWLT ) 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 fourth-quarter 2012.
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 Feb 28.
Total Revenue
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 million.
Segment Results
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 backlog level.
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 South Korea.
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.
Balance Sheet
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.
Looking Ahead
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 the business.
Business Update
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.
Cash Dividend
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.
Zacks Rank
Foster currently carries a Zacks Rank #3 (Hold).
Performance of Other Stocks in the Same Sector
Chicago Bridge & Iron Co. N.V. ( CBI ) 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. ( PWR ) reported fourth-quarter 2013 non-GAAP earnings of 50 cents per share, beating the Zacks Consensus Estimate by 22%.
Fluor Corporation 's ( FLR ) fourth-quarter 2013 net earnings of $167 million or $1.01 per share surpassed the Zacks Consensus Estimate of 98 cents by 3.1%.
CHICAGO BRIDGE (CBI): Free Stock Analysis Report
FLUOR CORP-NEW (FLR): Free Stock Analysis Report
FOSTER WHELR AG (FWLT): Free Stock Analysis Report
QUANTA SERVICES (PWR): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
