CB&I Reports 2016 Fourth Quarter and Full-Year Financial Results

Chicago Bridge & Iron Company N.V.

Non-GAAP Supplemental Adjusted Segment Information

(amounts adjusted to exclude non-cash charges related to goodwill impairment, loss on net assets sold and intangible assets
impairment, and the results of our former nuclear operations) ⁽¹⁾

(in thousands)

Three Months Ended December 31,

Twelve Months Ended December 31,

2016

2015

2016

2015

NEW AWARDS

% of

% of

% of

% of

Total

Total

Total

Total

Engineering & Construction

$

325,636

24%

$

1,778,520

55%

$

3,104,874

44%

$

6,037,499

48%

Fabrication Services

421,588

30%

493,816

15%

1,273,971

18%

3,106,563

25%

Technology

168,672

12%

321,892

10%

479,409

7%

577,540

5%

Capital Services

475,600

34%

660,118

20%

2,205,903

31%

2,744,531

22%

Total

$

1,391,496

$

3,254,346

$

7,064,157

$

12,466,133

REVENUE

% of

% of

% of

% of

Total

Total

Total

Total

Engineering & Construction

$

1,385,885

55%

$

1,510,891

55%

$

6,105,488

57%

$

5,636,517

52%

Fabrication Services

553,338

22%

553,350

20%

2,110,310

20%

2,442,690

22%

Technology

64,863

2%

88,494

3%

284,424

3%

399,099

4%

Capital Services

535,947

21%

616,570

22%

2,179,336

20%

2,390,031

22%

Total

$

2,540,033

$

2,769,305

$

10,679,558

$

10,868,337

INCOME (LOSS) FROM OPERATIONS

% of

% of

% of

% of

Revenue

Revenue

Revenue

Revenue

Engineering & Construction

$

(34,652)

(2.5)%

$

112,484

7.4%

$

306,852

5.0%

$

415,380

7.4%

Fabrication Services

22,415

4.1%

55,523

10.0%

183,141

8.7%

225,267

9.2%

Technology

28,575

44.1%

34,201

38.6%

105,293

37.0%

150,877

37.8%

Capital Services

18,297

3.4%

25,068

4.1%

62,944

2.9%

74,060

3.1%

Total

$

34,635

1.4%

$

227,276

8.2%

$

658,230

6.2%

$

865,584

8.0%

⁽¹⁾ 

The three and twelve months ended December 31, 2016, exclude a $655,000 goodwill impairment charge within our Capital Services operating group and a $148,148 charge within our Engineering & Construction operating group resulting from the establishment of a reserve for a receivable balance associated with the deferred transaction consideration (the "Transaction Receivable") recorded in connection with the sale of our former nuclear operations on December 31, 2015. The three and twelve months ended December 31, 2015, exclude the results of our former nuclear operations and charges of $345,371 and $1,505,851, respectively, within our Engineering & Construction operating group related to the disposition of the nuclear operations. The exclusion of these items are non-GAAP financial measures, which we believe provides users a better indication of our operating performance. See "Reconciliation of Non-GAAP Supplemental Adjusted Financial Data" table.

Chicago Bridge & Iron Company N.V.

Segment Information

(in thousands)

Three Months Ended December 31,

Twelve Months Ended December 31,

2016

2015

2016

2015

NEW AWARDS⁽¹⁾

% of

% of

% of

% of

Total

Total

Total

Total

Engineering & Construction

$

325,636

24%

$

1,786,671

55%

$

3,104,874

44%

$

6,709,864

51%

Fabrication Services

421,588

30%

493,816

15%

1,273,971

18%

3,106,563

24%

Technology

168,672

12%

321,892

10%

479,409

7%

577,540

4%

Capital Services

475,600

34%

660,118

20%

2,205,903

31%

2,744,531

21%

Total

$

1,391,496

$

3,262,497

$

7,064,157

$

13,138,498

REVENUE

% of

% of

% of

% of

Total

Total

Total

Total

Engineering & Construction

$

1,385,885

55%

$

2,016,550

61%

$

6,105,488

57%

$

7,697,684

60%

Fabrication Services

553,338

22%

553,350

17%

2,110,310

20%

2,442,690

19%

Technology

64,863

2%

88,494

3%

284,424

3%

399,099

3%

Capital Services

535,947

21%

616,570

19%

2,179,336

20%

2,390,031

18%

Total

$

2,540,033

$

3,274,964

$

10,679,558

$

12,929,504

(LOSS) INCOME FROM OPERATIONS

% of

% of

% of

% of

Revenue

Revenue

Revenue

Revenue

Engineering & Construction ⁽²⁾

$

(182,800)

(13.2)%

$

(180,852)

(9.0)%

$

158,704

2.6%

$

(875,321)

(11.4)%

Fabrication Services

22,415

4.1%

55,523

10.0%

183,141

8.7%

225,267

9.2%

Technology

28,575

44.1%

34,201

38.6%

105,293

37.0%

150,877

37.8%

Capital Services ⁽³⁾

(636,703)

(118.8)%

25,068

4.1%

(592,056)

(27.2)%

74,060

3.1%

Total

$

(768,513)

(30.3)%

$

(66,060)

(2.0)%

$

(144,918)

(1.4)%

$

(425,117)

(3.3)%

BACKLOG ⁽¹⁾

December 31, 2016

% of Total

December 31, 2015

% of Total

Engineering & Construction

$

9,916,948

54%

$

12,892,804

57%

Fabrication Services

2,114,550

11%

3,107,500

14%

Technology

1,025,723

6%

963,058

4%

Capital Services

5,398,012

29%

5,680,577

25%

Total

$

18,455,233

$

22,643,939

⁽¹⁾

New awards represent the value of new project commitments received by the Company during a given period, as well as scope growth on existing commitments.  Backlog includes the value of new awards until work is performed and revenue is recognized or until cancellation. Backlog may fluctuate with currency movements.

⁽²⁾

The three and twelve months ended December 31, 2016, include a $148,148 charge related to the establishment of a reserve for the Transaction Receivable associated with the sale of our former nuclear operations on December 31, 2015. Additionally, the three and twelve months ended December 31, 2015, include charges of $345,371 and $1,505,851, respectively, related to the disposition of the nuclear operations.

⁽³⁾

The three and twelve months ended December 31, 2016, include a $655,000 goodwill impairment charge.

Chicago Bridge & Iron Company N.V.

Reconciliation of Non-GAAP Supplemental Adjusted Financial Data

(amounts adjusted to exclude non-cash charges related to goodwill impairment and loss on net assets sold)

(in thousands, except per share data)

Three Months Ended December 31, 2016 ⁽¹⁾

As Reported

Goodwill
Impairment

Transaction
Receivable
Reserve

Excluding
Charges

Engineering & Construction

Loss from operations

$

(182,800)

$

—

$

148,148

$

(34,652)

Capital Services

(Loss) income from operations

$

(636,703)

$

655,000

$

—

$

18,297

CB&I Consolidated

(Loss) income from operations

$

(768,513)

$

655,000

$

148,148

$

34,635

Net (loss) income attributable to CB&I

$

(665,693)

$

655,000

$

96,296

$

85,603

Net (loss) income attributable to CB&I per share (diluted) ⁽²⁾

$

(6.65)

$

6.55

$

0.95

$

0.85

Twelve Months Ended December 31, 2016 ⁽¹⁾

As Reported

Goodwill
Impairment

Transaction
Receivable
Reserve

Excluding
Charges

Engineering & Construction

Income from operations

$

158,704

$

—

$

148,148

$

306,852

Capital Services

(Loss) income from operations

$

(592,056)

$

655,000

$

—

$

62,944

CB&I Consolidated

(Loss) income from operations

$

(144,918)

$

655,000

$

148,148

$

658,230

Net (loss) income attributable to CB&I

$

(313,169)

$

655,000

$

96,296

$

438,127

Net (loss) income attributable to CB&I per share (diluted) ⁽²⁾

$

(3.05)

$

6.35

$

0.93

$

4.23

⁽¹⁾

The summary unaudited adjusted financial information for both the three and twelve months ended December 31, 2016, reflects the removal of a goodwill impairment charge within our Capital Services operating group and a charge within our Engineering & Construction operating group resulting from the establishment of a reserve for the Transaction Receivable associated with the sale of our former nuclear operations on December 31, 2015. The exclusion of these items are non-GAAP financial measures, which we believe provides users a better indication of our operating performance. The summary unaudited adjusted financial information is for illustrative purposes only. The above should be read together with the historical financial statements, including the related notes thereto, included in CB&I's Annual Report on Form 10-K for the year ended December 31, 2016.

⁽²⁾

The unadjusted per share amounts for the three and twelve months ended December 31, 2016, are based upon diluted weighted average shares that are equivalent to our basic weighted average shares of 100,090 and 102,811, respectively, due to the net loss for the periods, and the adjusted per share amounts are based upon diluted weighted average shares of 100,991 and 103,662, respectively.

Chicago Bridge & Iron Company N.V.

Reconciliation of Non-GAAP Supplemental Adjusted Financial Data

(amounts adjusted to exclude non-cash charges related to goodwill impairment, loss on net assets sold and intangible assets impairment, and
the results of our former nuclear operations)

(in thousands, except per share data)

Three Months Ended December 31, 2015 ⁽¹⁾

As Reported

Disposition
Charges

Removal of
Divested
Business

Excluding
Divested
Business

Engineering & Construction

Revenue

$

2,016,550

$

—

$

(505,659)

$

1,510,891

(Loss) income from operations

$

(180,852)

$

345,371

$

(52,035)

$

112,484

New Awards

$

1,786,671

$

—

$

(8,151)

$

1,778,520

CB&I Consolidated

Revenue

$

3,274,964

$

—

$

(505,659)

$

2,769,305

(Loss) income from operations

$

(66,060)

$

345,371

$

(52,035)

$

227,276

Net (loss) income attributable to CB&I

$

(65,725)

$

230,910

$

(31,741)

$

133,444

Net (loss) income attributable to CB&I per share (diluted) ⁽²⁾

$

(0.63)

$

2.19

$

(0.30)

$

1.26

New Awards

$

3,262,497

$

—

$

(8,151)

$

3,254,346

Operating Cash Flows

$

117,208

$

—

$

252,865

$

370,073

Twelve Months Ended December 31, 2015 ⁽¹⁾

As Reported

Disposition
Charges

Removal of
Divested
Business

Excluding
Divested
Business

Engineering & Construction

Revenue

$

7,697,684

$

—

$

(2,061,167)

$

5,636,517

(Loss) income from operations

$

(875,321)

$

1,505,851

$

(215,150)

$

415,380

New Awards

$

6,709,864

$

—

$

(672,365)

$

6,037,499

CB&I Consolidated

Revenue

$

12,929,504

$

—

$

(2,061,167)

$

10,868,337

(Loss) income from operations

$

(425,117)

$

1,505,851

$

(215,150)

$

865,584

Net (loss) income attributable to CB&I

$

(504,415)

$

1,135,140

$

(131,241)

$

499,484

Net (loss) income attributable to CB&I per share (diluted) ⁽²⁾

$

(4.72)

$

10.58

$

(1.22)

$

4.64

New Awards

$

13,138,498

$

—

$

(672,365)

$

12,466,133

Operating Cash Flows

$

(56,214)

$

—

$

1,133,350

$

1,077,136

⁽¹⁾

The summary unaudited adjusted financial information for the three and twelve months ended December 31, 2015, reflects the removal of the results of our former nuclear operations sold on December 31, 2015, and reflects the removal of the related disposition charges, within our Engineering & Construction operating group. The exclusion of these items are non-GAAP financial measures, which we believe provides users a better indication of our operating performance. The summary unaudited adjusted financial information is for illustrative purposes only. The removal of the results of the former nuclear operations is based on assumptions and estimates considered appropriate by CB&I management; however, it is not necessarily indicative of what CB&I's consolidated financial position or results of operations actually would have been assuming the transaction was completed on January 1, 2015, and does not purport to represent CB&I's consolidated financial position or results of operations for future periods. The above should be read together with the historical financial statements, including the related notes thereto, included in CB&I's Annual Report on Form 10-K for the year ended December 31, 2015.

⁽²⁾

The unadjusted per share amounts for the three and twelve months ended December 31, 2015, are based upon diluted weighted average shares that are equivalent to our basic weighted average shares of 104,763 and 106,766, respectively, due to the net loss for the periods, and the adjusted per share amounts are based upon diluted weighted average shares of 105,926 and 107,719, respectively.

Chicago Bridge & Iron Company N.V.

Consolidated Statements of Operations

(in thousands, except per share data)

Three Months

Twelve Months

Ended December 31,

Ended December 31,

2016

2015

2016

2015

Revenue

$

2,540,033

$

3,274,964

$

10,679,558

$

12,929,504

Cost of revenue

2,422,676

2,893,659

9,653,502

11,417,188

Gross profit

117,357

381,305

1,026,056

1,512,316

% of Revenue

4.6

%

11.6

%

9.6

%

11.7

%

Selling and administrative expense

86,732

99,101

349,874

387,027

% of Revenue

3.4

%

3.0

%

3.3

%

3.0

%

Intangibles amortization

10,183

12,083

42,439

57,625

Equity earnings

(15,457)

(9,939)

(26,826)

(15,689)

Goodwill impairment

655,000

—

655,000

453,100

Loss on net assets sold and intangible assets impairment

148,148

345,371

148,148

1,052,751

Other operating expense, net

1,264

749

2,339

2,619

Loss from operations

(768,513)

(66,060)

(144,918)

(425,117)

% of Revenue

(30.3)

%

(2.0)

%

(1.4)

%

(3.3)

%

Interest expense

(26,945)

(25,935)

(105,349)

(94,360)

Interest income

4,848

1,995

13,004

8,285

Loss before taxes

(790,610)

(90,000)

(237,263)

(511,192)

Income tax benefit (expense)

129,858

42,956

81,231

Net loss

(660,752)

(47,044)

(239,823)

(429,961)

Less: Net income attributable to noncontrolling interests

(4,941)

(18,681)

(73,346)

(74,454)

Net loss attributable to CB&I

$

(665,693)

$

(65,725)

$

(313,169)

$

(504,415)

Net loss attributable to CB&I per share:

Basic

$

(6.65)

$

(0.63)

$

(3.05)

$

(4.72)

Diluted

$

(6.65)

$

(0.63)

$

(3.05)

$

(4.72)

Weighted average shares outstanding:

Basic

100,090

104,763

102,811

106,766

Diluted

100,090

104,763

102,811

106,766

Cash dividends on shares:

Amount

$

7,007

$

7,307

$

28,733

$

29,847

Per share

$

0.07

$

0.07

$

0.28

$

0.28

Non-GAAP Supplemental Adjusted Financial Data

(amounts adjusted to exclude non-cash charges related to goodwill impairment, loss on net assets sold and intangible assets
impairment, and the results of our former nuclear operations) ⁽¹⁾

Adjusted income from operations

$

34,635

$

227,276

$

658,230

$

865,584

Adjusted % of Revenue

1.4

%

8.2

%

6.2

%

8.0

%

Adjusted net income attributable to CB&I

$

85,603

$

133,444

$

438,127

$

499,484

Adjusted net income attributable to CB&I per share (diluted)

$

0.85

$

1.26

$

4.23

$

4.64

⁽¹⁾

The three and twelve months ended December 31, 2016, exclude a $655,000 goodwill impairment charge and a $148,148 ($96,296 after tax) charge resulting from the establishment of a reserve for the Transaction Receivable associated with the sale of our former nuclear operations on December 31, 2015. The three and twelve months ended December 31, 2015, exclude $52,035 and $215,150, respectively ($31,741 and $131,241 after tax, respectively) of income related to our former nuclear operations and charges of $345,371 and $1,505,851, respectively ($230,910 and $1,135,140 after tax, respectively) related to the disposition of the nuclear operations. The exclusion of these items are non-GAAP financial measures, which we believe provides users a better indication of our operating performance. See "Reconciliation of Non-GAAP Supplemental Adjusted Financial Data" table.

Chicago Bridge & Iron Company N.V.

Condensed Consolidated Balance Sheets

(in thousands)

December 31,

December 31,

2016

2015

ASSETS

Current assets

$

2,541,752

$

3,367,299

Equity investments

175,277

136,845

Property and equipment, net

565,690

604,043

Goodwill and other intangibles, net

3,411,259

4,122,455

Other non-current assets

1,145,442

961,418

Total assets

$

7,839,420

$

9,192,060

LIABILITIES AND SHAREHOLDERS' EQUITY

Current maturities of long-term debt and other borrowings, net

$

911,410

$

800,871

Other current liabilities

3,624,839

4,056,077

Long-term debt, net

1,287,923

1,791,832

Other non-current liabilities

453,911

379,690

Shareholders' equity

1,561,337

2,163,590

Total liabilities and shareholders' equity

$

7,839,420

$

9,192,060

Condensed Consolidated Statements of Cash Flows and Other Financial Data

(in thousands)

Twelve Months

Ended December 31,

2016

2015

CASH FLOWS

Cash flows from operating activities

$

654,458

$

(56,214)

Cash flows from investing activities

(169,289)

(381,676)

Cash flows from financing activities

(482,170)

697,404

Effect of exchange rate changes on cash and cash equivalents

(48,064)

(60,616)

(Decrease) increase in cash and cash equivalents

198,898

Cash and cash equivalents, beginning of the year

550,221

351,323

Cash and cash equivalents, end of the year

$

505,156

$

550,221

OTHER FINANCIAL DATA

Decrease (increase) in receivables, net

$

603,558

$

(213,508)

Change in contracts in progress, net

(360,486)

(939,608)

Decrease (increase) in inventory

95,528

(6,091)

(Decrease) increase in accounts payable

(56,501)

105,856

Change in contract capital

$

282,099

$

(1,053,351)

Depreciation and amortization

$

122,522

$

161,135

Capital expenditures

$

52,462

$

78,852