Babcock & Wilcox is moving ahead with a plan to separate its power generation business from its government and nuclear operations group, the company said yesterday as it released its third quarter financial earnings. The split is expected to be completed by mid-2015, and will result in the creation of two companies: Charlotte-headquartered Babcock & Wilcox and Lynchburg, Va.-headquartered BWX Technologies. “After an extensive and thorough evaluation, we concluded that this is the logical next step to enhance the success of our business and create greater value for our shareholders,” Babcock & Wilcox President and CEO Jim Ferland said in a message to employees. “In operating independently, each organization will be able to increase its focus on their distinct businesses and will have more flexibility to deploy and execute a focused capital structure consistent with the strategic priorities of each business.”
Ferland will be the President and CEO of Babcock & Wilcox, while Sandy Baker will serve as the President and CEO of BWXT, with John Fees serving as BWXT’s executive chairman. BWXT will encompass its nuclear operations, technical services, nuclear energy, and mPower businesses. In a Frequently Asked Questions document distributed to employees, B&W said neither of the businesses is for sale, though analysts have suggested that separating the companies could position both well to be acquired.
B&W also announced its third quarter earnings, revealing that operating income for the period was $85.6 million, with consolidated revenues of $737.9 million. Net income during the quarter was $61.2 million, up from $60.5 million during the same period a year ago. “Our Nuclear Operations Group is continuing to perform at a high level, and the Power Generation Group is turning the corner, with improved revenue and operating margin,” Ferland said.
