Babcock & Wilcox Issues Profit Warning; To Restructure Power Business

(RTTNews) - Babcock & Wilcox Enterprises, Inc. (BW) announced its revised fiscal year earnings guidance for adjusted EPS of $0.63 to $0.83, primarily due to the effects of the renewable energy project and the timing shift of the Canadian oil sands project. The company will incur a charge related to an engineering design error on a new build renewable energy plant in Europe resulting in a full-year $0.51 EPS impact.

The company said its full year revenue guidance remains unchanged at $1.8 billion as the incremental revenue from the SPIG acquisition, which is anticipated to close early in third quarter, is expected to approximately offset the other revenue impacts.

The company updated its 2016 guidance for 2016 to reflect: the net impact of the restructuring and decreased coal-related revenue in the second half of 2016; a charge to correct an engineering design error on a new build renewable energy plant in Europe; and the shift of $38 million in 2016 expected revenue from a Canadian oil sands project that was delayed.

B&W said it is restructuring traditional power business that serves coal-fired power generation to reduce overhead and improve efficiency. As part of these changes, B&W will eliminate over 200 positions in North America immediately and undertake other cost-savings measures across the enterprise.

B&W said the company is consolidating aftermarket and global new build activities for coal-fired generation into one segment that will be led by Mark Low, Senior Vice President of the new Power segment. All renewable energy projects, including the B&W Vølund subsidiary, will be consolidated into another segment, led by Paul Scavuzzo, Senior Vice President of the new Renewable segment.

Shares of the company were down more than 8 percent, in premarket trading, following the announcement.