U.S. coal-fired power plants will provide the growth platform for Babcock & Wilcox’s Power Generation Group for the next couple of years, top executives of the Charlotte, N.C.-based energy industry manufacturer said Wednesday.
That’s significant for Barberton, where B&W’s Power Generation Group has its headquarters on a campus that employs a couple of thousand people. The Power Generation Group, including the Barberton facilities, accounts for more than half of B&W’s total revenue; it designs, builds and services massive coal-fired boilers and related environmental control systems for electric utilities around the world.
The Power Generation Group segment had a strong second quarter, the company said in its latest earnings report released after the stock market closed Tuesday. Executives discussed the report with industry analysts in a conference call Wednesday morning.
“Consolidated revenues of $852 million increased by 13 percent compared to the prior year’s second quarter. As expected, this growth is being driven by our Power Generation segment,” E. James Ferland, president and chief executive officer, said in opening statements during the call.
In addition to helping B&W grow in the United States, executives say that they expect the Power Generation Group will also be growing internationally as it builds new coal-fired power plants and provides pollution control upgrades in the Asian and Indian markets. Coal-fired power plants in the U.S. are coming under increased pressure from tightening environmental controls and also increased price competition in the United States from inexpensive shale-derived natural gas.
B&W shares on Wednesday rose 5 cents to $26.25. Shares are up 9 percent since Jan. 1 and are up 28 percent from a year ago.
The company reported earning $64 million, or 54 cents per share for the second quarter ending June 30, up from $46.2 million or 39 cents a share for the second quarter a year ago. Revenue was up $100.2 million from $752.3 million a year ago.
Power Generation revenue increased to $497 million in the quarter, up from $388.6 million last year. Nuclear Operations income fell to $265.4 million from $272.6 million a year ago; Technical Services revenue fell to $28.3 million from $30.7 million; and Nuclear Energy revenue fell to $67.4 million from $93.9 million last year.
For the first half of the year, B&W said it had net income of $155.1 million on revenue of $1.6 billion, up from net income of $85.2 million on revenue of $1.4 billion for the first six months of 2011.
B&W’s board is looking into whether the company should start paying a dividend or repurchase shares, Ferland said.
In addition, the company has started a “global competitiveness initiative,” Ferland said.
“The goal is to enhance profitability and shareholder returns through lower cost of execution in structural and efficiency improvement. This program will involve a review of all functions and business units within the company, including corporate functions,” he said. “I believe that now, while the company is enjoying strong cash flows in earnings and is not under financial stress is exactly the right time to be looking at optimizing our cost structure.”
Executives also touted a new agreement announced last month with Akron-based FirstEnergy Corp. to keep developing B&W’s new, small modular nuclear reactor, called mPower. B&W envisions strong demand for mPower nuclear power plants overseas.
Jim Mackinnon can be reached at 330-996-3544 or jmackinnon@thebeaconjournal.com.