(FWLT) Foster Wheeler AG Misses Earnings Estimate

Foster Wheeler AG (FWLT ) reported earnings of $13.0 million or 12 cents per share in the first quarter of 2013 compared to $40.6 million or 38 cents per share. Earnings were 29.4% below the Zacks Consensus Estimate of 17 cents. In the first quarter of 2012 earnings were $40.6 million, or $0.38 per diluted share.

.        Adjusted earnings per share in the quarter came in at 14 cents a    share versus 40 cents in the year-ago quarter.

Total Revenue

Consolidated operating revenue in the quarter was $796.3 million, down 14.7% year over year as compared to $933.1 million in the prior-year quarter. The decline in the top line was primarily due to lower revenues across both its operating segments.

Segment Results

Global Engineering and Construction(E&C) Group’s operating revenue was $587.97. million, down 12.4% from $670.9 million in the prior-year period. However, the segment reported a 30% decline in new orders bookings during the quarter. The orders mainly consist of many small and medium-sized contracts. In addition, the results were adversely affected by a $10.5 million loss arising from mark-to-market foreign currency losses. The segment ended the quarter with a backlog in future revenues of $2.7 billion.

Global Power Group’s (GPG) operating revenue was $208.3 million, down 20.5% from $262.2 million in the year-ago quarter. New orders in the segment were $198.9 million, 23% udown versus $161.7 million in the prior-year quarter. The decline was attributable to a lack of boiler orders.  The segment ended the quarter with a backlog of $740.9 million.

Income & Expenses

Contract profit in the quarter was $115.7 million, down 16.96% from the prior-year quarter’s level of $139.3 million, primarily due to lower orders in the GPG segment and higher sales and overhead expenses in the E&C segment. Also, the small and medium sized orders had lower margins and, hence, resulted in a less favorable utilization rate. SG&A expense was $90.5 million, up 8.5% from $83.3 million in the year-ago quarter.

E&C EBTDA was $35.2 million in the quarter compared with $46.9 million in the year-ago quarter. GPG EBITDA was $24.7 million in the quarter versus $52.3 million in the year-ago quarter.

Balance Sheet 

Cash and cash equivalents at the end of Mar 31, 2013 were $475.7 million, down from $582.3 million at the end of Dec 31, 2012. Long-term debt was $121.3 million, down from $124 million at the end of Dec 31, 2012. Shareholders’ equity was $688.3 million, down from $714.0 million at the end of Dec 31, 2012.

During the reported quarter, the company repurchased 1.5 million shares for about $34 million. Subsequent to the quarter-end the company also repurchased 2,972,700 shares for approximately $66 million. As of May 2, 2013, the company had approximately $320 million remaining under its authorized share repurchase program.


Looking ahead to the balance of 2013, the company expects the economy to revive globally. Consequently, the company expects adjusted earnings per share in 2013 to be flat to marginally down compared to 2012, excluding the impairment charge.

EBITDA in the Global E&C Group in 2013 is expected to increase year over year. Adjusted EBITDA margin is expected to be in the range of 10% to 12%. However, Foster expects a marginal decline in EBITDA in the Global Power Group in 2013, due to the lower level of new orders. EBITDA margins in both the business groups are expected to be weaker in the second quarter of 2013.

Foster currently has a Zacks Rank #5 (Strong Sell). Some other players in the industry that can be considered are CDI Corp. (CDI), Fluor Corporation (FLR) and Harris & Harris Group, Inc. (TINY), all of which currently have a Zacks Rank #2 (Buy).

CDI CORP (CDI): Free Stock Analysis Report

FLUOR CORP-NEW (FLR): Free Stock Analysis Report

FOSTER WHELR AG (FWLT): Free Stock Analysis Report

HARRIS & HARRIS (TINY): Get Free Report

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