Babcock & Wilcox Enterprises, Inc.
Period: Jul 1, 2015 to Feb 28, 2017
Lead Plaintiff Deadline: May 2, 2017
Summary of Case:
A securities class action has been filed against Babcock & Wilcox Enterprises, Inc. (NYSE: BW) on behalf of purchasers of Babcock & Wilcox Enterprises, Inc. ("B&W") (NYSE: BW) common stock during the period between July 1, 2015 through February 28, 2017 . This case has been filed in the USDC - W.D.N.C.
The complaint alleges that the Company operates in three reportable segments: Power, Renewable, and Industrial. Through Power, the Company provides the supply and aftermarket services for steam-generating and auxiliary equipment for power generation and other industrial applications. Through its Renewable segment, B&W supplies steam-generating systems, environmental, and auxiliary equipment for the waste-to-energy and biomass power generation industries. The Company's Industrial segment provides custom-engineered environmental solutions, industrial equipment, and aftermarket parts and services through Babcock & Wilcox MEGTEC Holdings, Inc., and provides custom-engineered comprehensive dry and wet cooling solutions and aftermarket services to the power generation industry, including natural gas-fired and renewable energy power plants, as well as downstream oil and gas, petrochemical, and other industrial end-markets through SPIG S.p.A., which B&W acquired on July 1, 2016.
On July 1, 2015, B&W began trading independently as a public company after spinning off from The Babcock & Wilcox Company by way of distribution of shares of B&W common stock to holders of the Company's former parent. The distribution of B&W common stock was made on June 30, 2015, and consisted of one share of B&W common stock for every two shares of the former parent's common stock as of the record date, June 18, 2015. Cash was paid in lieu of any fractional shares of B&W common stock.
The complaint alleges that throughout the Class Period, the Company was experiencing significant, undisclosed problems in its Renewable segment. Although defendants disclosed issues with a single project in the Renewable business on June 28, 2016, the complaint alleges they failed to disclose that similar problems were significantly and negatively impacting other projects in the Company's Renewable segment, instead assuring investors during a business update call that the problems were "a single project issue." In response to this partial disclosure, as well as lowered financial guidance for 2016, the price of B&W stock declined by 21% on June 28, 2016.
Then, after the market closed on February 28, 2017, the Company announced its fourth quarter and full year 2016 financial results. Missing earnings expectations by a wide margin, the Company lost $71.6 million, or ($1.47) per share, in the fourth quarter on revenue totaling $380 million. Accounting for one-time gains and losses, the announcement was even worse, with the Company losing an adjusted $77.7 million, or ($1.60) per share, on continuing operations - a full $1.97 per share lower than the average analyst's projection for adjusted earnings per share ("EPS") of positive $0.37. The Company also revealed that it took charges in the fourth quarter 2016 resulting from its Renewable business, which reduced margins, and also increased its contingencies for several of its Renewable projects, which also negatively impacted the Company's financial condition.
On this news, the price of B&W stock dropped rapidly. After closing at $16.50 per share on February 28, 2017, the stock opened at $11.09 on March 1, 2017, and ultimately dropped 37% to close at $10.33 per share on abnormally high trading volume.
If you purchased this company's shares during the Class Period and suffered a loss or for further information about the case, please review the links below.