Business NEWS

A review on Foster Wheeler Earnings for Third Quarter of 2008; Raymond J. Milchovich CEO for next 3 years

By Amarendra Bhushan for CEOWORLD Magazine Updated:November 5, 2008

Foster Wheeler Ltd. today announced that Raymond J. Milchovich, 59, chairman and chief executive officer of Foster Wheeler Ltd., has signed a new three-year agreement, effective November 4, 2008, to continue to lead the company.

James D. Woods, who serves as Foster Wheeler’s lead independent director and is Chairman Emeritus and retired Chief Executive Officer of Baker Hughes Incorporated, stated, “We are absolutely delighted that Ray has elected to defer his previously announced retirement plans. In light of the changes in macro-economic conditions that we have all witnessed over the past several months, the board believes that the company is best served by continuity in senior leadership. In times like these, it is important that leadership is decisive and acts with a high level of velocity. Ray has proven that he provides that for Foster Wheeler.”

Milchovich said, “When I announced my retirement plans earlier this year, I had every reason to believe that it was a good time for a senior leadership transition. I also told the board that I would do whatever was necessary to ensure a successful leadership transition. However, at that time, no one could have foreseen the extraordinary changes in the world economy and the uncertainty that has created. As a result of those changes, I told the board that ‘doing whatever was necessary’ would include my willingness to continue in my current role. I am pleased that we have reached agreement on a new contract, and I am as eager and as motivated as I ever have been to lead the company forward.”

Foster Wheeler Reports Strong Earnings and Record Level of Man-Hours in E&C Backlog for Third Quarter of 2008

# $127.9 million of net income
# $0.88 earnings per fully diluted share
# $165.2 million consolidated EBITDA
# $1.3 billion total cash and cash equivalents

Foster Wheeler Ltd. (Nasdaq: FWLT) today reported net income for the third quarter of 2008 of $127.9 million, or $0.88 per diluted share, compared with $129.1 million, or $0.89 per diluted share, in the third quarter of 2007. Net income in the third quarters of 2008 and 2007 included asbestos-related items, as detailed in a table accompanying this release. Excluding such items from both periods, net income in the third quarter of 2008 was $129.6 million, or $0.89 per share, as compared with $120.5 million, or $0.83 per share in the year-ago quarter.

Third-quarter 2008 consolidated EBITDA (earnings before interest expense, income taxes, depreciation and amortization) was $165.2 million, compared with $179.0 million in the third quarter of 2007. Excluding the items cited above, consolidated EBITDA in the third quarter of 2008 was $167.0 million, compared with $170.3 million in the year-ago quarter.

For the first nine months of 2008, net income was $426.7 million, or $2.94 per diluted share, compared with $315.8 million, or $2.18 per diluted share, for the first nine months of 2007. Consolidated EBITDA for the first nine months of 2008 was $581.0 million, compared with $459.9 million for the first nine months of 2007.

* Segment EBITDA was $122.8 million in the third quarter of 2008, modestly below the average quarter of 2007, due in part to timing and mix of contracts. In addition, results in the third quarter of 2008 were unfavorably impacted by $5.5 million due to an increase in the tax rate on partially owned Italian power projects, an impairment charge of $2.2 million on a minority interest in a power project development in Italy, and a $6.1 million reversal of previous exchange-rate gains. These factors contributed to a reduction in EBITDA margin on scope revenue, relative to the average margin of 2007.
* New orders booked in Foster Wheeler Scope were $664.3 million in the third quarter of 2008, 24% above the average quarter of 2007.
* Backlog in Foster Wheeler Scope was $1.8 billion at the end of the third quarter of 2008, up modestly compared with the year-ago period.
* At the end of the third quarter of 2008, the number of man-hours in backlog amounted to 14.4 million, an all-time record for this Group.

Milchovich noted, “In 2008, Foster Wheeler expects to have its third consecutive year of record-setting net income, with record performance in both of our two business groups.

“In the third quarter, our E&C Group reported that new orders in Foster Wheeler scope were 24% above the average quarter of 2007 – and the Group had a record-level of man-hours in backlog, despite the absence of any mega contracts signed in the quarter. Moreover, in light of the prospects the company is currently tracking, we are cautiously optimistic that E&C could end 2008 with additional growth in the number of man-hours in backlog.

“In our Global Power Group, new orders rebounded from the level of the second quarter of this year, but were 13% below the average quarter of 2007, reflecting ongoing delays in North American prospects and sporadic schedule slippage in some European prospects. We expect GPG to generate a record level of EBITDA in 2008, but current market conditions are likely to challenge EBITDA performance in GPG in 2009,” said Milchovich.

Share Repurchase Program

On September 12, 2008, the Company announced that its board of directors had authorized a $750 million program. Under this authorization, the company purchased 1.3 million common shares during the third quarter of 2008, and 9.2 million common shares in October. The Company has approximately $412 million remaining under the existing authorization.

Like this article! ‹ Akesis Pharmaceuticals Appoints Carl LeBel as CEO and Jay Lichter as Executive Chairman Former Silver State Bancorp’s Mike Thorell to lead Pinnacle Bank as CEO ›
Share this Post: Get It Delivered To Your Inbox