Babcock & Wilcox Enterprises Inc., a nuclear power company, saw its stock price drop by nearly 18 percent after missing on revenue expectations and reporting a loss in the fourth quarter, according to a filing Thursday with the Securities and Exchange Commission.
The Charlotte-based company saw its stock drop 17.9 percent in after-hours trading after reporting fourth-quarter revenues of $408.1 million. Revenues are up 7 percent year-over-year but missed Wall Street estimates of $431 million.
Babcock & Wilcox also reported earnings per share at a loss of $2.44 compared to a loss of $1.47 in the fourth quarter of 2016.
Adjusted earnings per share were a loss of 95 cents for the three months ending Dec. 31 compared to a loss of $1.48 per share the prior fourth quarter. Analysts were expecting a loss of 6 cents per share.
“We are committed to driving efficiencies throughout the organization and serving our customers with high-quality engineered equipment, parts and services,” said Chief Executive Officer Leslie Kass in a statement. “To more efficiently lead our efforts to improve our cost structure and profitability, we will be hiring a chief implementation officer who will serve alongside our senior management team.”
The company also said it would issue a rights offering of common stock of at least $182 million, available to shareholders in proportion to shares they already own at $3 a share. Vintage Capital Management LLC has agreed to purchase the remainder of shares not sold in this offering.
The money raised from this issuance will be used to repay its second lien debt, meaning should Babcock & Wilcox fail to repay, the lender can only collect collateral after the company’s first creditor collects collateral. The company is in default on its second lien loan.
Babcock & Wilcox has also been permitted to borrow up to $35 million on its first line of credit, along with the proceeds from the issuance, to repay the second lien debt.
“We are making substantial progress on the construction of the U.K. Renewable new-build loss projects,” said Kass.
“Three of the projects are on track to be construction complete in first half 2018, with two of the projects currently in start-up commissioning phases, and despite incremental delays at one project resulting from the steel beam issue identified in late September 2017, construction is expected to be complete by the end of the year.”
Kass said the company is also expecting to sell its MEGTEC and Universal business lines by mid-2018.
MEGTEC designs and supplies environmental systems and services for businesses to achieve regulatory compliance. Universal produces equipment that helps supply power to power generation, oil, gas, and industrial processing and rail transportation markets.
The growth in revenue year-over-year can be attributed to higher growth in the industrial and renewable segments that offset lower revenue in the power segment.
Industrial segment revenues increased 9.1 percent year-over-year to $116.1 million in fourth quarter 2017 while renewable segment revenues increased 52.8 percent to $85 million in 2017.
Power segment revenues decreased 5 percent year-over-year to $208.8 million in the fourth quarter.
The company saw a turnover of executives in 2018, as Kass took over as chief executive officer. Prior to her new role, Kass served as senior vice president of industrial at Babcock & Wilcox since May 2017.
Former chief executive officer and chairman, James Ferland, resigned along with other board members Brian Ferraioli, Stephen Hanks and Larry Weyers.
Babcock & Wilcox is trading at $5, down 17.9 percent in after-hours trading on Thursday.
