CB&I Reports Third-Quarter 2016 Financial Results

Chicago Bridge & Iron Company N.V.

Segment Information

(in thousands)

Three Months Ended September 30,

Nine Months Ended September 30,

2016

2015

2015

NEW AWARDS ⁽¹⁾

% of

% of

% of

% of

Total

Total

Total

Total

Engineering & Construction

$

1,492,429

55%

$

2,407,835

60%

$

2,779,238

49%

$

4,923,193

50%

Fabrication Services

225,716

8%

840,658

21%

852,383

15%

2,612,747

26%

Technology

119,348

5%

97,539

3%

310,737

5%

255,648

3%

Capital Services

878,930

32%

654,270

16%

1,730,303

31%

2,084,413

21%

Total

$

2,716,423

$

4,000,302

$

5,672,661

$

9,876,001

REVENUE

% of

% of

% of

% of

Total

Total

Total

Total

Engineering & Construction

$

1,660,149

60%

$

1,946,426

59%

$

4,719,603

58%

$

5,681,134

59%

Fabrication Services

512,772

19%

640,201

19%

1,556,972

19%

1,889,340

20%

Technology

90,487

3%

118,269

3%

219,561

3%

310,605

3%

Capital Services

512,769

18%

616,786

19%

1,643,389

20%

1,773,461

18%

Total

$

2,776,177

$

3,321,682

$

8,139,525

$

9,654,540

INCOME (LOSS) FROM OPERATIONS

% of

% of

% of

% of

Revenue

Revenue

Revenue

Revenue

Engineering & Construction ⁽²⁾

$

133,946

8.1%

$

(1,007,354)

(51.8)%

$

341,504

7.2%

$

(694,469)

(12.2)%

Fabrication Services

55,624

10.8%

61,408

9.6%

160,726

10.3%

169,744

9.0%

Technology

27,310

30.2%

31,911

27.0%

76,718

34.9%

116,676

37.6%

Capital Services

16,642

3.2%

24,073

3.9%

44,647

2.7%

48,992

2.8%

Total

$

233,522

8.4%

$

(889,962)

(26.8)%

$

623,595

7.7%

$

(359,057)

(3.7)%

BACKLOG ⁽³⁾

September 30, 2016

% of Total

December 31, 2015

% of Total

Engineering & Construction

$

11,070,405

56%

$

12,892,804

57%

Fabrication Services

2,309,333

12%

3,107,500

14%

Technology

940,960

5%

963,058

4%

Capital Services

5,451,159

27%

5,680,577

25%

Total

$

19,771,857

$

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.

⁽²⁾

During the three months ended September 30, 2015, we recorded a non-cash pre-tax charge of $1,160,480 within our Engineering & Construction operating group related to the disposition of our nuclear operations.

⁽³⁾

Backlog includes the value of new award commitments until work is performed and revenue is recognized or until cancellation. Backlog may also fluctuate with currency movements.

Chicago Bridge & Iron Company N.V.

Consolidated Statements of Operations

(in thousands, except per share data)

Three Months

Nine Months

Ended September 30,

Ended September 30,

2016

2015

2016

2015

Revenue

$

2,776,177

$

3,321,682

$

8,139,525

$

9,654,540

Cost of revenue

2,449,609

2,943,965

7,230,826

8,523,529

Gross profit

326,568

377,717

908,699

1,131,011

% of Revenue

11.8%

11.4%

11.2%

11.7%

Selling and administrative expense

87,814

93,672

263,142

287,926

% of Revenue

3.2%

2.8%

3.2%

3.0%

Intangibles amortization

10,485

14,948

32,256

45,542

Equity earnings

(5,394)

(1,154)

(11,369)

(5,750)

Goodwill impairment

—

453,100

—

453,100

Loss on net assets held for sale and intangible assets impairment

—

707,380

—

707,380

Other operating expense (income), net

141

(267)

1,075

1,870

Income (loss) from operations

233,522

(889,962)

623,595

(359,057)

% of Revenue

8.4%

(26.8)%

7.7%

(3.7)%

Interest expense

(26,433)

(25,025)

(78,404)

(68,425)

Interest income

2,608

2,058

8,156

6,290

Income (loss) before taxes

209,697

(912,929)

553,347

(421,192)

Income tax (expense) benefit

(41,278)

187,375

(132,418)

38,275

Net income (loss)

168,419

(725,554)

420,929

(382,917)

Less: Net income attributable to noncontrolling interests

(46,659)

(14,879)

(68,405)

(55,773)

Net income (loss) attributable to CB&I

$

121,760

$

(740,433)

$

352,524

$

(438,690)

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

Basic

$

1.20

$

(7.02)

$

3.40

$

(4.08)

Diluted

$

1.20

$

(7.02)

$

3.37

$

(4.08)

Weighted average shares outstanding:

Basic

101,102

105,454

103,725

107,440

Diluted

101,863

105,454

104,555

107,440

Cash dividends on shares:

Amount

$

6,995

$

7,333

$

21,726

$

22,540

Per share

$

0.07

$

0.07

$

0.21

$

0.21

Chicago Bridge & Iron Company N.V.

Condensed Consolidated Balance Sheets

(in thousands)

September 30,

December 31,

2016

2015

ASSETS

Current assets

$

3,464,952

$

3,367,299

Equity investments

159,326

136,845

Property and equipment, net

578,371

604,043

Goodwill and other intangibles, net

4,092,186

4,122,455

Other non-current assets

874,464

Total assets

$

9,169,299

9,192,060

LIABILITIES AND SHAREHOLDERS' EQUITY

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

$

941,686

$

800,871

Other current liabilities

4,046,085

4,056,077

Long-term debt, net

1,456,114

1,791,832

Other non-current liabilities

378,558

379,690

Shareholders' equity

2,346,856

2,163,590

Total liabilities and shareholders' equity

$

9,169,299

$

9,192,060

Condensed Consolidated Statements of Cash Flows and Other Financial Data

(in thousands)

Nine Months

Ended September 30,

2016

2015

CASH FLOWS

Cash flows from operating activities

$

495,041

$

(173,422)

Cash flows from investing activities

(151,686)

(317,868)

Cash flows from financing activities

(268,422)

621,883

Effect of exchange rate changes on cash and cash equivalents

(10,188)

(58,016)

Increase in cash and cash equivalents

64,745

72,577

Cash and cash equivalents, beginning of the year

550,221

351,323

Cash and cash equivalents, end of the period

$

614,966

$

423,900

OTHER FINANCIAL DATA

Decrease (increase) in receivables, net

$

46,418

$

(157,645)

Change in contracts in progress, net

(252,857)

(783,027)

Decrease (increase) in inventory

49,473

(13,111)

Increase (decrease) in accounts payable

11,830

(28,671)

Change in contract capital

$

(145,136)

$

(982,454)

Depreciation and amortization

$

93,285

$

128,261

Capital expenditures

$

37,855

$

53,894

Chicago Bridge & Iron Company N.V.

Non-GAAP Supplemental Adjusted Financial Data

(amounts adjusted to exclude the results of our nuclear operations and non-cash charges related to the disposition of our nuclear operations)

(in thousands, except per share data)

Three Months Ended March 31, 2015 ⁽¹⁾

As Reported

Disposition
Charges

Removal of
Divested
Business

Excluding
Divested
Business

Revenue

$

3,125,745

$

—

$

(488,259)

$

2,637,486

Income from operations

$

246,798

$

—

$

(45,600)

$

201,198

Net income attributable to CB&I

$

132,228

$

—

$

(27,816)

$

104,412

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

$

1.21

$

—

$

(0.25)

$

0.96

New Awards

$

3,031,183

$

—

$

(5,206)

$

3,025,977

Backlog

$

29,934,182

$

—

$

(8,193,792)

$

21,740,390

Operating Cash Flows

$

(289,871)

$

—

$

303,600

$

13,729

Three Months Ended June 30, 2015 ⁽¹⁾

As Reported

Disposition
Charges

Removal of
Divested
Business

Excluding
Divested
Business

Revenue

$

3,207,113

$

—

$

(564,327)

$

2,642,786

Income from operations

$

284,107

$

—

$

(71,800)

$

212,307

Net income attributable to CB&I

$

169,515

$

—

$

(43,798)

$

125,717

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

$

1.55

$

—

$

(0.40)

$

1.15

New Awards

$

2,844,516

$

—

$

(574,719)

$

2,269,797

Backlog

$

29,432,933

$

—

$

(8,204,184)

$

21,228,749

Operating Cash Flows

$

95,167

$

—

$

271,200

$

366,367

Three Months Ended September 30, 2015 ⁽¹⁾

As Reported

Disposition
Charges

Removal of
Divested
Business

Excluding
Divested
Business

Revenue

$

3,321,682

$

—

$

(502,922)

$

2,818,760

(Loss) income from operations

$

(889,962)

$

1,160,480

$

(45,715)

$

224,803

Net (loss) income attributable to CB&I

$

(740,433)

$

904,230

$

(27,886)

$

135,911

Net (loss) income attributable to CB&I per share (diluted) ⁽³⁾

$

(7.02)

$

8.56

$

(0.26)

$

1.28

New Awards

$

4,000,302

$

—

$

(84,289)

$

3,916,013

Backlog

$

29,928,616

$

—

$

(7,785,551)

$

22,143,065

Operating Cash Flows

$

21,282

$

—

$

305,685

$

326,967

Three Months Ended December 31, 2015 ⁽¹⁾

As Reported

Disposition
Charges

Removal of
Divested
Business

Excluding
Divested
Business

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) ⁽³⁾

$

(0.63)

$

2.19

$

(0.30)

$

1.26

New Awards

$

3,262,497

$

—

$

(8,151)

$

3,254,346

Backlog

$

22,643,939

$

—

$

—

$

22,643,939

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

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) ⁽³⁾

$

(4.72)

$

10.58

$

(1.22)

$

4.64

New Awards

$

13,138,498

$

—

$

(672,365)

$

12,466,133

Backlog

$

22,643,939

$

—

$

—

$

22,643,939

Operating Cash Flows

$

(56,214)

$

—

$

1,133,350

$

1,077,136

⁽¹⁾

The summary unaudited adjusted financial information presented in the tables above is for illustrative purposes only and 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, and its Quarterly Reports on Form 10-Q for the quarters ended March 31, 2015, June 30, 2015, and September 30, 2015.

⁽²⁾

The unadjusted and adjusted per share amounts for the three months ended March 31, 2015, and June 30, 2015, are based upon diluted weighted average shares of 109,261 and 109,533, respectively.

⁽³⁾

The unadjusted per share amounts for the three months ended September 30, 2015, and December 31, 2015, and twelve months ended December 31, 2015, are based upon diluted weighted average shares that are equivalent to our basic weighted average shares of 105,454, 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 106,322,105,926 and 107,719, respectively.

Chicago Bridge & Iron Company N.V.

Non-GAAP Supplemental Adjusted Segment Information

(amounts adjusted to exclude the results of our nuclear operations and non-cash charges related to the disposition of our nuclear operations)

(in thousands)

Three Months Ended

Twelve Months Ended

March 31, 2015 ⁽¹⁾

June 30, 2015 ⁽¹⁾

September 30, 2015 ⁽¹⁾

December 31, 2015 ⁽¹⁾

December 31, 2015 ⁽¹⁾

NEW AWARDS

% of

% of

% of

% of

% of

Total

Total

Total

Total

Total

Engineering & Construction

$

1,204,201

40%

$

731,232

32%

$

2,323,546

60%

$

1,778,520

55%

$

6,037,499

48%

Fabrication Services

927,374

31%

844,715

37%

840,658

21%

493,816

15%

3,106,563

25%

Technology

77,022

2%

81,087

4%

97,539

2%

321,892

10%

577,540

5%

Capital Services

817,380

27%

612,763

27%

654,270

17%

660,118

20%

2,744,531

22%

Total

$

3,025,977

$

2,269,797

$

3,916,013

$

3,254,346

$

12,466,133

REVENUE

% of

% of

% of

% of

% of

Total

Total

Total

Total

Total

Engineering & Construction

$

1,330,327

50%

$

1,351,795

51%

$

1,443,504

51%

$

1,510,891

55%

$

5,636,517

52%

Fabrication Services

637,809

24%

611,330

23%

640,201

23%

553,350

20%

2,442,690

22%

Technology

99,361

4%

92,975

4%

118,269

4%

88,494

3%

399,099

4%

Capital Services

569,989

22%

586,686

22%

616,786

22%

616,570

22%

2,390,031

22%

Total

$

2,637,486

$

2,642,786

$

2,818,760

$

2,769,305

$

10,868,337

INCOME FROM OPERATIONS

% of

% of

% of

% of

% of

Revenue

Revenue

Revenue

Revenue

Revenue

Engineering & Construction

$

90,818

6.8%

$

104,667

7.7%

$

107,411

7.4%

$

112,484

7.4%

$

415,380

7.4%

Fabrication Services

52,399

8.2%

55,937

9.2%

61,408

9.6%

55,523

10.0%

225,267

9.2%

Technology

48,024

48.3%

36,741

39.5%

31,911

27.0%

34,201

38.6%

150,877

37.8%

Capital Services

9,957

1.7%

14,962

2.6%

24,073

3.9%

25,068

4.1%

74,060

3.1%

Total

$

201,198

7.6%

$

212,307

8.0%

$

224,803

8.0%

$

227,276

8.2%

$

865,584

8.0%

⁽¹⁾  

The summary unaudited adjusted financial information reflects the removal of the results of our nuclear power construction business sold on December 31, 2015, and reflects the removal of the related disposition charges incurred as a result of the sale, as quantified below. The information presented in the tables above is for illustrative purposes only. The exclusion of our nuclear power construction business and the $1,160,480 and $345,371 of charges related to the disposition of our nuclear operations for the three months ended September 30, 2015, and December 31, 2015, respectively, are non-GAAP financial measures, which we believe provides users a better indication of our operating performance. See "Reconciliation of Non-GAAP Supplemental Adjusted Segment Information to GAAP Information" table.

Chicago Bridge & Iron Company N.V.

Reconciliation of Non-GAAP Supplemental Adjusted Segment Information to GAAP Information

(in thousands)

Three Months Ended

Twelve Months Ended

March 31, 2015

June 30, 2015

September 30, 2015

December 31, 2015

December 31, 2015

NEW AWARDS

Engineering & Construction

$

1,204,201

$

731,232

$

2,323,546

$

1,778,520

$

6,037,499

Nuclear Operations

5,206

574,719

84,289

8,151

672,365

Total

$

1,209,407

$

1,305,951

$

2,407,835

$

1,786,671

$

6,709,864

CB&I

Excluding Nuclear Operations

$

3,025,977

$

2,269,797

$

3,916,013

$

3,254,346

$

12,466,133

Nuclear Operations

5,206

574,719

84,289

8,151

672,365

Total

$

3,031,183

$

2,844,516

$

4,000,302

$

3,262,497

$

13,138,498

REVENUE

Engineering & Construction

Excluding Nuclear Operations

$

1,330,327

$

1,351,795

$

1,443,504

$

1,510,891

$

5,636,517

Nuclear Operations

488,259

564,327

502,922

505,659

2,061,167

Total

$

1,818,586

$

1,916,122

$

1,946,426

$

2,016,550

$

7,697,684

CB&I

Excluding Nuclear Operations

$

2,637,486

$

2,642,786

$

2,818,760

$

2,769,305

$

10,868,337

Nuclear Operations

488,259

564,327

502,922

505,659

2,061,167

Total

$

3,125,745

$

3,207,113

$

3,321,682

$

3,274,964

$

12,929,504

INCOME (LOSS) FROM OPERATIONS

% of

% of

% of

% of

% of

Revenue

Revenue

Revenue

Revenue

Revenue

Engineering & Construction

Excluding Nuclear Operations

$

90,818

6.8%

$