FABRIC
FILTER       ^NEWSLETTER  

August 2019, No. 526

MARKETS

·         India Will Be A Major Purchaser of Dry Scrubbers

·         Selling To the 500 Coal Plant Owners Who Make 99 Percent of the Purchases

METALS

·         Sail Durgapur Awards SMS Group with Turnkey Modernization for New Converters and Environmental Facilities

·         SMS Group Successfully Commissioned the Compact Cold Mill at Aisha Steel Mills Ltd.

·         NioCorp Files its Elk Creek Project Construction Air Permit Application with the State of Nebraska

·         Primetals Technologies Develops Break-through Technology for Carbon-free, Hydrogen-based Direct Reduction for Iron Ore Fines

·         Nordic Air Introduces Pleated Bag Filters Cartridges for Ultra-Low Emission Projects

COAL-FIRED BOILERS

·         Gore to Reduce Mercury Emissions from Combined Heat and Power Plant in the Czech Republic

3D PRINTING

·         Nederman Participating In Additive Manufacturing Research Laboratory

COMPANY NEWS

·         CECO Reports Strong Bookings and Growing Backlog

·         Parker Reports All Time Quarterly Record

·         Babcock & Wilcox Segment Nearly Doubled Adjusted EBITA to $19.0 Million

·         Lydall Second Quarter Results Show Improvement

·         Black & Veatch Announces New Global Power Structure to Enhance Focus on Integrated Generation and Grid Modernization 

MARKETS

 India Will Be A Major Purchaser of Dry Scrubbers 

India is predicted to purchase dry scrubbers to clean 180 million cfm over the next five years. This is the latest forecast in N027 FGD Market and Strategies. The bulk of the investment will be for coal-fired power plants. There will be some installations in waste to energy, cement, steel and other industrial applications.

India will join China and the U.S. as the leading three dry scrubber purchasers. Dry scrubbing includes semi dry scrubbers, circulating dry scrubbers and direct sorbent injection. United Conveyor Corp. has an order for 4 x 250-MW direct sorbent injection systems at the Dadri plant of NTPC.

The market surge will be due to new rules that allow older smaller power plants to discharge higher levels of SO₂ than others. It is anticipated that 50,000 MW of Indian power plans will be fitted with dry scrubbers over the next three years.

Dry scrubbers are more economical than wet scrubbers when the emission rates are higher and the sulfur in the fuel is lower. Dry scrubbers use higher cost lime or sodium compounds whereas wet scrubbers utilize ground limestone. However, the capital cost of wet scrubbers is more than twice that of CDS and semi dry scrubbers. Direct sorbent injection is very low in capital cost but very high in reagent cost.

Direct sorbent injection can be used to supplement other systems. DSI can be used in conjunction with semi dry systems to maintain efficiency at higher sulfur levels. DSI can also be used ahead of the air heater to react with SO₃ and allow the air heater to be operated to extract more heat without corrosion.

For more information on this report click on N027 FGD Market and Strategies.

Bob McIlvaine can answer your questions at office 847-784-0013 cell 847-226-f2391 or email him at rmcilvaine@mcilvainecompany.com.

Selling To the 500 Coal Plant Owners Who Make 99 Percent of the Purchases

Suppliers of Combust, Flow, and Treat (CFT) products and services for coal-fired power can now develop sales programs focused on each individual owner. Coal-fired power represents one of the largest markets for CFT product suppliers. In the last 20 years an average of 50,000 MW per year of new coal fired power plants have been added to the world generation capacity. Over the next ten years 40,000 MW per year of new capacity will be added. This will be partially offset by retirement of 13,000 MW per year of existing capacity. 

Annual new plant investment will exceed $160 billion per year. The installed base of plants has now reached 2 million MW and will increase by 270,000 MW over the next decade. The investment in the installed base exceeds $4 trillion. Potential for third party upgrades, repair, service, and remote operation will exceed $200 billion per year. This includes major environmental upgrades in India and other countries in Asia, Eastern Europe, and Africa.

McIlvaine has compiled enough information on each process at each plant to enable relatively precise forecasting as per the following example for valves.

Corporate Name: EVN	Unit size: MW 660
Plant Name: Genco 3 Vinh Tan 2	Vĩnh Tân commune, Tuy Phong district, Bình Thuận province. Vietnam
Unit #   1	Specific product purchases 2019 $1000
Forecasts can be supplied for sixteen types of valves, four types of pumps, actuators, limestone, lime, precipitator internals, dust bags, gas instrumentation, liquid instrumentation, controls, treatment chemicals, ammonia, urea, catalyst, cartridges, dewatering filter belts, membrane modules, linings, nozzles, mist eliminators, fans, air compressors, oxidation compressors, motors, VFD, seals, packing, hose, couplings, compressed air filters, lubrication filters	Ball valves $170,000
	Butterfly Valves: $120,000
	Globe Valves $190,000
	Plug Valves: $100,000
	Gate Valves: $150,000

 Seventy percent of the purchasing decisions for existing plants are made by 27 companies with more than 10,000 MW of capacity. However, 150 owners are making the decisions for 70 percent of the new plants. Five hundred owners will purchase 99 percent of CFT products for new and existing plants.

Coal Fired Capacity for Individual Owners
Above MW	Planned Cumulative #	Operating Cumulative #
80,000		1
60,000		2
50,000		3
40,000		3
30,000		8
20,000	2	10
10,000	8	27
5000	25	63
3000	50	110
2000	70	164
1500	90	196
1000	150	255
700	200	307
500	250	379
300	300	491
200	350	570
100	400	710
˂ 100		900

Country Forecasts are based on aggregating forecasts for individual owners.

Coal Plants by Country (MW) Installed Base
Country	2018	2019	2020	2021	2022	2023	2024
Albania	0	0	0	0	0	0	0
Argentina	350	350	350	350	350	350	350
Australia	24,442	24,442	24,442	24,442	24,442	24,442	24,442
Austria	635	635	635	635	635	635	635
Bangladesh	525	1,200	2,500	5,500	8,000	10,000	12,000
Belarus	0	0	0	0	0	0	0
Belgium	0	0	0	0	0	0	0
Bosnia & Herzegovina	2,073	2,073	2,073	2,073	2,073	3,000	4,000
Botswana	600	600	732	732	732	1,200	1,200
Brazil	2,804	2,804	2,804	2,804	2,804	3,400	3,400
EON
EDP
Electrobas

Brazil Plant Details

Unit	Sponsor	Parent	Capacity (MW)	Year	City	State
MPX Itaqui power project	Eneva	E.ON, EBX Group	360	2013	Itaqui	Maranhão
Porto do Pecém I Unit 1	Eneva, EDP Energias do Brasil	Eneva, EDP	365	2012	São Gonçalo do Amarante	Ceará
Porto do Pecém I Unit 2	Eneva, EDP Energias do Brasil	Eneva, EDP	365	2013	São Gonçalo do Amarante	Ceará
Porto do Pecém II Unit 1	Eneva	E.ON, Eneva	365	2013	São Gonçalo do Amarante	Ceará
Porto do Pecém-1Unit 1	EDP Energias do Brasil	EDP	365	2012	São Goncalo do Amarante	Ceará
Porto do Pecém-1 Unit 2	EDP Energias do Brasil	EDP	365	2013	São Goncalo do Amarante	Ceará
Porto do Pecém-2 Unit 1	Eneva	E.ON, EBX Group	365	2013	São Goncalo do Amarante	Ceará
Presidente Médici-A Unit 1	Companhia de Geração Térmica de Energia Elétrica	Eletrobras	63	1974	Candiota	Rio Grande do Sul
Presidente Médici-A Unit 2	Companhia de Geração Térmica de Energia Elétrica	Eletrobras	63	1974	Candiota	Rio Grande do Sul
Presidente Médici-B Unit 1	Companhia de Geração Térmica de Energia Elétrica	Eletrobras	160	1986	Candiota	Rio Grande do Sul
Presidente Médici-B Unit 2	Companhia de Geração Térmica de Energia Elétrica	Eletrobras	160	1987	Candiota	Rio Grande do Sul
Presidente Médici-C Unit 1	Companhia de Geração Térmica de Energia Elétrica	Electrobras	350	2010	Candiota	Rio Grande do Sul

High quality forecasts now allow a supplier to project purchases for each owner. A large percentage of coal plant CFT products are purchased based on decisions of a group and a consensus built up over time. Therefore, the continuous pursuit rather than response to a sales lead is more productive. Larger purchasers can be pursued differently than those in the middle or those at the bottom. Here are utilities in the middle with 6000 – 9000 MW range of existing and planned capacity. J Power is the only company appearing on both lists.

Planned Coal Fired
Company	MW
Power Finance Corporation	8,000
Egyptian Electricity Holding Company	7,920
KEPCO	7,698
China Resources	7,035
NLC India	6,700
TANGEDCO	6,640
J-POWER	6,356
Eskom	6,352
UPRVUNL	6,270

 

Operating Coal Fired
Company	MW
E.ON	8,772
J-POWER	8,482
Inter RAO	8,372
Vedanta Resources	8,327
Xcel Energy	7,915
Henan Investment Group	7,840
Beijing Energy Group	7,772
Engie	7,387
Damodar Valley Corporation	7,240
AES	7,025

The CFT purchases can all be related to existing and new MW. Details on each process for each owner also are important. McIlvaine has details on FGD, SCR, precipitators, fabric filters, and other components in databases which have been compiled and augmented since the 1970s.

The combustion segmentations are by boiler design, e.g., fluid bed or pulverized coal. Also, the efficiency division: subcritical, supercritical, and ultra-supercritical is important. China is upgrading more than 100,000 MW of subcritical and supercritical to ultra-supercritical.

Intake water, boiler feedwater, type of cooling, wet FGD, and wastewater treatment can be identified. A number of plants are improving their wastewater treatment and often opting for zero liquid discharge and maximum water reuse.

Solid waste is a challenge due to increasingly stringent standards. Switching from wet to dry flyash handling and dewatering ponded flyash are major opportunities. By-product sales potential is also a driver.

Various air pollution control approaches are used for reducing SO₂, NO_x, particulate, mercury, VOCs and even CO₂ (sequestering). It is impossible to make precise determinations for each plant because of variations in the fuel and other site-specific factors. Rules of thumb provide a relatively accurate way of forecasting as per the following sorbent example.

The coal-fired power industry is unique in that relatively few companies make nearly all the purchases. Details on their operations are available. This means that a CFT supplier can structure his sales program around these specific companies and pursue the most profitable markets. This program is explained at www.mcilvainecompany.com.

Details on coal plants by country and on the individual plants are tabulated in 42EI Utility Tracking System.

Bob McIlvaine can answer your questions at 847-784-0013, cell 847-226-2391, email rmcilvaine@mcilvainecompany.com.

METALS

Sail Durgapur Awards SMS Group with Turnkey Modernization for New Converters and Environmental Facilities

Steel Authority of India Limited (SAIL) Durgapur, India, has awarded SMS group a turnkey contract for the supply of three new 110-ton converters for its steelmaking plant No. 2 to replace the converters SMS group supplied 25 years ago. The new converters will be rated for ten percent more volume.

Moreover, SMS group will supply secondary dust collecting systems for the three converters. The new systems will be installed in the works for the first time and will more than meet the relevant environmental requirements.

Commissioning of the complete plant is scheduled for September 2020.

SMS Group Successfully Commissioned the Compact Cold Mill at Aisha Steel Mills Ltd 

By rolling the first coil, SMS group has successfully put into operation the new CCM^® (Compact Cold Mill) of Aisha Steel Mills Limited (ASML) in Karachi, Pakistan. Since 2015, this has already been the third successful installation of the two-stand type of cold rolling mill by SMS group in Pakistan.

The CCM^® at ASML is designed for an annual cold strip production capacity of 500,000 tons. The new facility enables ASML to supply the local market with high-grade cold strip according to international standards and helps the company to make its contribution to reducing the country`s dependency on high-quality cold strip imports. The products rolled on the CCM^® are up to 1,250 millimeters wide and down to 0.15 millimeters thin.

The CCM^® features two mill stands in four-high design with the proven roll shifting technology CVC^®plus (Continuously Variable Crown) by SMS group. CVC^®plus is supplemented by further actuators to infinitely adjust the roll gap, for example positive and negative work roll bending. The quality-determining technical highlights of the plant include two X-Shape flatness measurement rolls, installed at the entry and exit sides, together with multi-zone cooling system and automatic flatness control.

The highly-productive CCM^® is equipped with the holistic X-Pact^® electrical and automation system from SMS group. SMS group supplied the complete plant with all auxiliary equipment, such as modern technological instrumentation, emulsion plant, high- and low-pressure hydraulics as well as the fume exhaust system.

With this CCM^® from SMS group, ASML operates a high-quality and modern plant technology suited to meet present and future requirements.

NioCorp Files its Elk Creek Project Construction Air Permit Application with the State of Nebraska

NioCorp is developing a superalloy materials project in Southeast Nebraska that will produce Niobium, Scandium, and Titanium. Niobium is used to produce superalloys as well as High Strength, Low Alloy (“HSLA”) steel, which is a lighter, stronger steel used in automotive, structural, and pipeline applications. Scandium is a superalloy material that can be combined with Aluminum to make alloys with increased strength and improved corrosion resistance.  Scandium also is a critical component of advanced solid oxide fuel cells.  Titanium is used in various superalloys and is a key component of pigments used in paper, paint and plastics and is also used for aerospace applications, armor and medical implants.

NioCorp Developments Ltd announced it has submitted a State Construction Air Permit application for its Elk Creek Superalloy Materials Project (the “Project”) with the Nebraska Department of Environmental and Energy (“NDEE”).

The permit review process will be led by NDEE personnel.  The advanced emissions control technologies included as part of the planned Project are expected to result in prospective air emissions that are below levels that trigger the need for a permit under the Prevention of Significant Deterioration (“PSD”) program.  As a result, the Project is expected to be able to navigate a more efficient permitting process than is typically encountered under the PSD process.

The Project’s relatively low planned emissions profile resulted from NioCorp’s early efforts to recycle process reagents and its plans to deploy various emissions control technologies, such as baghouses, scrubbers, low nitrogen oxide (NOx) combustion systems, state-of-the-art acid regeneration, and other technologies.

Primetals Technologies Develops Break-through Technology for Carbon-free, Hydrogen-based Direct Reduction for Iron Ore Fines

Primetals Technologies has developed the world's first direct reduction process for iron-ore concentrates from ore beneficiation not requiring any preprocessing like sintering or pelletizing. Primetals can resort to the comprehensive experience from the earlier Finmet development and plant installations. The new technology can be applied to all types of beneficiated ore and particle sizes of 100 percent smaller than 0.15 mm. As primary reduction agent, the new process uses H2 from renewable energy or alternatively H2 rich gases from conventional steam reformers or H2 rich waste gases. This results in a low or even a zero CO₂ footprint. The direct reduction plant comes in a modular design with a rated capacity of 250,000 tons per year and module, making it available for all sizes of steel plants. A pilot plant for testing purposes will be set up at voestalpine Stahl Donawitz, Austria and is due to be commissioned in the second quarter of 2020.

The use of DRI/HBI is expected to continue to grow due to the need to reduce greenhouse gas emissions and the growing number of electric arc furnaces in service worldwide. Currently, all available technologies require agglomeration, like pelletizing to produce DRI or HBI. An additional challenge steel producers face, is the reduced quality of iron ore, resulting in the need to beneficiate the iron ores. In order to progress to a CO₂-free steel production, a process using mainly H2 is most desirable. The solution developed by Primetals Technologies takes care of all the above considerations.

The pilot plant will consist of three parts: a preheating-oxidation unit, a gas treatment plant and the actual reduction unit. In the preheating-oxidation unit, fine ore concentrate is heated to approx. 900° C and fed to the reduction unit. The reduction gas H₂ is supplied over the fence from a gas supplier. A waste heat recovery system from the off-gas ensures optimal energy use and a dry dedusting system takes care of dust emissions from the processes involved. The hot direct reduced iron (HDRI) leaves the reduction unit at a temperature of approx. 600° C, which can be subsequently used in an electric arc furnace or to produce Hot Briquetted Iron. The aim of the pilot plant is to verify the break-through process and to serve as a testing facility to provide the data basis for setting up an industrial scale size plant at a later date.

Nordic Air Introduces Pleated Bag Filters Cartridges for Ultra-Low Emission Projects

The theme of the forum was "New Beginning of Green Development of China Steel & Ultra-Low Emissions Leading Revolution.” The forum, the leaders and experts of the conference focused on a series of issues such as ultra-low emission regulations within the steel industry, carbon emissions and the improvement of green and low carbon development capacity of steel enterprises, sharing advanced environmental protection, energy-saving technologies, and successful experiences.

Ultra-low emissions are a new starting point for the green development of the steel industry. This will inevitably require further innovation in technology and will also lead to revolutionary changes in the traditional steel manufacturing industry.

Bona Bo, IAF Sales Director of Nordic Filter Systems (Kunshan) Co., Ltd., was invited to talk about the plan against heavy pollution within steel enterprise in 2019. He shared his experience about air pollution curbing and controlling concerning steel enterprise in key cities, by introducing the pleated bag filter cartridges usage in the ultra-low emission projects for iron and steel industry.

COAL-FIRED BOILERS

Gore to Reduce Mercury Emissions from Combined Heat and Power Plant in the Czech Republic

New EU regulations limiting mercury and SO₂ emissions are due to come into force by 2021, and for operators of coal-fired power plants, it’s time to act.

The Czech Republic, like many other countries in Central and Eastern Europe, will rely on coal for power production for many more years. A proven, reliable and low cost technology to reduce emissions is needed to meet current and future regulations and to minimize negative environmental impact.

An innovative system made by W. L. Gore & Associates (Gore), is providing the solution.

In the CEZ Group’s Mělník I plant, which supplies heat and power to Prague, GORE^® Mercury Control Modules will be installed in one of the plant's desulphurization scrubbers as a demonstration project, treating approximately 1,000,000 Nm³/h of flue gas.

Additional modules can be added to that unit and to a second line, bringing both lines into compliance with EU Industrial Emissions Directive regulations.

This is part of an overall strategy of CEZ to reduce emissions according to EU standards and to be fully compliant with all of their plants in the Czech Republic and other countries in the EU.

The GORE Mercury and SO₂ Control System (GMCS) is a passive system for flue gas cleaning that consists of modules installed in a plant’s wet scrubber.

The Gore system eliminates the need to add chemical additives, and the modules are designed for a service life of several years without maintenance. This eliminates many of the undesirable complications and high operating costs associated with traditional mercury control systems.

The GORE Mercury and SO₂ Control System has already been proven for four years in several US coal-fired power plants. Mělník is the fifth power plant in Europe to test or apply the Gore technology. It joins two plants in Poland (Belchatow and Patnow) and two in Germany (Schkopau and Chemnitz).

CEZ is confident that Mělník will again confirm the suitability of the system, especially for European lignite-based power plants.

3D PRINTING

Nederman Participating in Additive Manufacturing Research Laboratory

As more and more companies use 3D printing in their operations, questions have been raised regarding associated health and safety issues. There is a concern about the fumes, dust and odors created during the printing and post processes. With 3D printing being a relatively young industry, scientists have only recently begun to investigate this. And there are studies indicating potential health risks associated with using the technologies. This is the case regardless if you are using the printing process of, for example, material extrusion, binder jetting or powder bed fusion. Study results show that printers emit a significant amount of ultrafine particles (UFPs) and hazardous volatile organic compounds (VOCs). Post processes of gluing, grinding and painting the product have also been shown to generate potentially hazardous pollutants.

Depending on which material and printing process you are working with, the pollutants can be both combustible and cause various health problems if inhaled. This applies especially in cases of large-scale manufacturing where several machines run simultaneously. Good ventilation and customized fume and dust extraction systems are therefore important to ensure a safe work environment.

As a provider of clean air solutions, Nederman is participating in the construction of an additive manufacturing research laboratory at Swerea IVF. The Swedish research institute conducts research for industrial renewal and sustainable development. One of their current projects is to set up a production line for additive manufacturing of metallic materials. The aim is to facilitate the industrialization of additive manufacturing by creating a platform for innovative products, materials and processes. In addition, the research laboratory will function as a showroom to display 3D printing applications to interested parties.

The Additive Manufacturing Research Laboratory includes desktop 3D printers as well as a system for large-scale manufacturing. Nederman is providing air filtration and fume extraction solutions for both of these areas. As for now, we have installed benchtop extraction kits for the desktop 3D printers. The kits include a fan, filter, fan speed controller, hoses, table brackets and connectors. Next, they will provide a fume and dust extraction solution for the large-scale manufacturing system. Their solution will extract fumes during the printing process and dust during the machining process. This is done using the same vacuum unit. 

COMPANY NEWS

CECO Reports Strong Bookings and Growing Backlog

CECO Environmental Corp. reported its financial results for the 2^nd quarter and first six months of 2019.

Revenue in the 2^nd quarter of 2019 was $81.2 million, up $0.1 from $81.1 million in the prior-year period. Excluding revenue of $1.2 million attributable to the businesses divested in 2018, organic revenues increased 1.6 percent.

Operating income was $2.0 million for the 2^nd quarter of 2019, compared with $2.6 million in the prior-year period. Non-GAAP operating income was $4.4 million for the 2^nd quarter of 2019 (5.4 percent margin), compared with $5.2 million in the prior-year period (6.4 percent margin).

Net income was $5.5 million for the 2^nd quarter of 2019, compared with net loss of $0.9 million in the prior-year period. Net income on a non-GAAP basis was $3.0 million for the 2^nd quarter of 2019, compared with $1.8 million in the prior-year period.

Net income per diluted share was $0.15 for the 2^nd quarter of 2019, compared with net loss per diluted share of $0.03 in the prior-year period. Non-GAAP net income per diluted share was $0.08 for the 2^nd quarter of 2019, compared with $0.05 for the prior-year period.

Cash and cash equivalents were $28.8 million and bank debt was $77.0 million as of June 30, 2019, compared with $43.7 million and $76.1 million, respectively, as of December 31, 2018.

Total backlog at June 30, 2019 was $208.8 million as compared with $182.1 million on December 31, 2018 and $200.0 million on June 30, 2018. During the 2^nd quarter of 2019, the company removed $6.7 million of orders that were previously disclosed as backlog in prior quarters, due to cancellations by customers. In the 2^nd quarter of 2018, $9.0 million of backlog was attributable to the divested businesses. Adjusted for divestitures, backlog increased $17.8 million from 2^nd quarter 2018 to 2^nd quarter 2019.

Bookings were $103.0 million for the 2^nd quarter of 2019, compared with $100.4 million in the prior-year period. Excluding bookings of $1.3 million attributable to the businesses divested in 2018, 2019 organic bookings increased $3.9 million, or 3.9 percent. Bookings were $200.3 million for the first six months of 2019 compared with $195.4 million for the prior-year period. Excluding the impact of divestitures, bookings increased $10.9 million during the first six months of 2019.

CECO's Chief Executive Officer Dennis Sadlowski commented, "CECO continues to execute well in the market as new orders once again exceeded $100 million driving backlog up to near record levels. Unfortunately, several customer driven project delays dampened revenue in the quarter which led to second quarter profitability below expectations. Going forward, our strong backlog, solid margins, and a growing sales pipeline are expected to generate improved results in the second half of 2019."

Mr. Sadlowski added, "We remain committed and on track to deliver our 2021 financial targets. Our investments in sales and innovation have us well positioned to take advantage of the healthy demand across our growing end markets. We are building a reputation as the go to resource in the expanding low carbon economy with solutions that deliver efficiency and sustainability for our customers."

Parker Reports All Time Quarterly Record

Parker Hannifin Corp. reported results for the fiscal 2019 4^th quarter and full year ended June 30, 2019. Fiscal 2019 4^th quarter sales were $3.68 billion, compared with $3.82 billion in the prior year quarter. Net income increased 17 percent  to an all-time quarterly record of $413.7 million, compared with $353.3 million in the 4^th quarter of fiscal 2018. Fiscal 2019 4^th quarter earnings per share increased 21 percent to $3.17, compared with $2.62 in the prior year quarter. Fiscal 2019 4^th quarter adjusted earnings per share were $3.31, compared with adjusted earnings per share of $3.22 in the prior year quarter. 

For the full year, fiscal 2019 sales increased to a record $14.32 billion, compared with $14.30 billion in fiscal year 2018. Organic growth of 3 percent was offset by currency translation and a divestiture in fiscal year 2018. Net income was a record at $1.51 billion, a 43 percent  increase, compared with $1.06 billion in fiscal 2018. Earnings per share increased 47 percent to a record of $11.48, compared with $7.83 per share in the prior year. Adjusted earnings per share increased 14 percent to $11.85, compared with $10.42 per share in fiscal 2018. 

Cash flow from operations for fiscal 2019 was a record at $1.73 billion or 12.1 percent of sales, compared with $1.60 billion or 11.2 percent of sales in the prior year period. Excluding a discretionary pension contribution, cash flow from operations for fiscal 2019 was 13.5 percent of sales.

“Our strong 4^th quarter results contributed to what was an outstanding year for Parker, as we delivered record sales, EPS, net income, total segment operating margin and cash flow from operations," said Chairman and Chief Executive Officer, Tom Williams. "The actions we have taken under The Win Strategy™ to strengthen our business and simplify our operations are driving record financial performance and positions Parker to generate sustainable long-term shareholder value. With the dedication of our global team members, in fiscal 2019 we achieved 17.0 percent as reported total segment operating margin for the first time in our history, which was a full year ahead of our original target."

Diversified Industrial Segment: North American 4^th quarter sales decreased 3 percent to $1.7 billion, and operating income increased 2 percent to $318.2 million, compared with $313.5 million in the same period a year ago. International 4^th quarter sales decreased 9 percent to $1.3 billion, while operating income decreased 1 percent to $201.0 million, compared with $203.3 million in the same period a year ago.

Babcock & Wilcox Segment Nearly Doubled Adjusted EBITA to $19.0 Million

Babcock & Wilcox Enterprises, Inc. ("B&W Enterprises") announced 2^nd quarter 2019 GAAP net loss from continuing operations improved by $181.3 million to $28.3 million compared to $209.7 million in 2^nd quarter 2018. Adjusted EBITDA also improved by $90.4 million to a positive $8.0 million compared to negative $82.4 million in the prior year period, returning the company to profitability on an adjusted EBITDA basis.

"Our performance in the 2^nd quarter of 2019 shows we are continuing to gain steam following our recent strategic actions and cost-saving efforts. Our consolidated business improved operating margins significantly and returned to profitability on an adjusted EBITDA basis of $8.0 million. Our Babcock & Wilcox segment continued its strong performance and across the company we are making steady progress on our strategy to improve profitability by focusing on our core technologies and businesses," said Kenneth Young, B&W Enterprises Chief Executive Officer. "With our equitization transactions complete, we are preparing to re-finance as planned to support our ongoing financial recovery. As 2019 continues, we look forward to demonstrating the underlying core strengths of our businesses to our customers and shareholders."

"This quarter we identified more cost efficiencies and as a result we've begun to implement $19 million in additional savings initiatives, for a total of $119 million in annualized savings," Young continued. "We expect to see improvement each quarter as our cost-savings measures continue to translate to bottom-line results and the effects of the EPC loss contracts continue to decline. We are committed to our ongoing transformation, confident in our dedicated employees and world-class technologies, and optimistic about our strategic path to sustained profitability."

Babcock & Wilcox segment revenues increased 1.6 percent to $201.0 million in the 2^nd quarter of 2019 compared to $197.8 million in the prior-year period, mainly driven by large construction new build projects, including industrial projects, partially offset by a decrease in parts and retrofit sales. Gross profit in the Babcock & Wilcox segment in second quarter 2019 was $37.9 million, compared to $30.0 million in the prior-year period, primarily due to higher construction volume and lower warranty costs. Gross profit margin was 18.8 percent, compared to 15.2 percent in the same period last year. Adjusted EBITDA in 2^nd quarter 2019 increased 92 percent to $19.0 million, compared to $9.9 million in last year's quarter; adjusted EBITDA margin was 9.5 percent compared to 5.0 percent in the same period last year.

Lydall Second Quarter Results Show Improvement

Dale G. Barnhart, President and Chief Executive Officer, stated, “Second quarter results showed improvement, with organic sales growth in all segments and consolidated growth of nearly 4 percent. Adjusted gross margin improved 60 basis points quarter-on-quarter and was at the highest level since 1^st quarter 2018. Sequentially, adjusted EBITDA margin improved 150 basis points since 1^st quarter 2019 driven by higher margin sealing product sales in the Performance Materials segment, and productivity and price increases in the Technical Nonwovens segment. Cash generation continued to be healthy in the quarter, enabling us to pay down $18 million of outstanding borrowings, while continuing to invest in capital to fund growth initiatives."

2^nd Quarter 2019 Results

Net sales increased by $34.4 million, or 18.5 percent, to $220.8 million, compared to $186.4 million in the 2^nd quarter of 2018 primarily from the acquisition of Interface Performance Materials ("Interface"), which increased Performance Materials ("PM") segment net sales by $32.7 million. Organic sales growth was 2.0 percent in the PM segment driven by improved sales of filtration products. The Thermal Acoustical Solutions ("TAS") segment reported 4.8 percent organic sales growth primarily from increased parts sales in North America. The Technical Nonwovens ("TNW") segment reported organic sales growth of 2.6 percent from improved demand for industrial filtration products, partially offset by lower advanced materials sales.

Gross margin was 20.5 percent, an improvement of 110 basis points from the 2^nd quarter of 2018 but excluding the impact of TNW segment restructuring related expenses from both periods, consolidated adjusted gross margin improved 60 basis points. The PM segment reported improved gross margin from sealing product sales, while increased pricing improved the TNW segment's gross margin. The TAS segment reported lower gross margin primarily due to increased costs at the company's European automotive facilities.

The company reported income tax benefit of $8.2 million in the 2^nd quarter, including a tax benefit of $10.5 million associated with the Plan settlement. The company's effective tax rate excluding the Plan settlement was 22.7 percent, compared to 13.7 percent in the 2^nd quarter of 2018. The 2^nd quarter 2018 effective tax rate was positively impacted by discretionary Plan contributions and geographical mix of earnings.

Net loss was ($6.9) million, or ($0.40) per diluted share, compared to net income of $10.5 million, or $0.60 per diluted share in the 2^nd quarter of 2018. Adjusted earnings per share were $0.41, including incremental intangibles amortization of $0.18 per share, compared to $0.70 per share in the 2^nd quarter of 2018.

Mr. Barnhart concluded, "As we enter the third quarter, in the Performance Materials segment, we are experiencing favorable conditions in filtration markets and demand consistent with the first half of the year for sealing products. In the Thermal Acoustical Solutions segment, demand remains generally steady in the North American Market but the segment is expected to be impacted by typical seasonal customer shut-downs, as well as softness in the European automotive market. We expect demand to be steady in the Technical Nonwovens segment. Overall, we continue to focus on margin improvement and cash flow generation."

Black & Veatch Announces New Global Power Structure to Enhance Focus on Integrated Generation and Grid Modernization

“Re-Powering” of Power industry is key to meeting dynamic energy transition needs. In response to growing client demand for tailored solutions balancing conventional and renewable generation sources, as well as more distributed, resilient power sources and grid infrastructure, Black & Veatch announced the reorganization of its global power business.  The new organization elevates focus on Black & Veatch Power’s Renewables business and launches a Distributed Energy operating group, strictly focused on distributed energy resources (DERs) and power distribution as emerging fuel sources continue to transform the industry. The structure also enhances global focus on Black & Veatch’s traditional conventional and power transmission businesses.

The changes, led by Mario Azar, President of Black & Veatch’s global power business, re-align the company’s core generation, renewables, transmission and distributed energy teams to more nimbly address client demand in critical and diverse global geographies. They will also help grow the company’s decades-long leadership position in North America and Southeast Asia, where population growth and grid reliability demands are calling for a variety of power solutions from zero-carbon generation sources to conventional technologies. These diverse and fundamental changes are forcing a “re-powering” of the more-than-century-old power industry.

“Working with clients of differing scale and development it’s become clear that generation, transmission and distribution can no longer operate in isolation,” said Azar. “Demand for renewable energy continues to grow, with its generation now impacting the operations of the traditional transmission and distribution sectors. Investments in distributed energy require a more flexible grid to ensure reliability and offer clients a greater choice of power generation solutions.”

Utilities must also turn to new technologies that improve their efficiencies and respond to savvy customers increasingly wanting a digital, always-on experience with their utility, including apps that enable consumers to manage in the palm of their hands their energy usage and accounts.

“In this complex, multifaceted energy ecosystem where there’s no one-size-fits-all dynamic, the industry must become more flexible and nimbler,” said Azar. “Renewable energy from solar and wind is providing an increasing share of power generation production while conventional resources remain the backbone of the balanced generation portfolio mix across most of the globe. Similarly, millions of electric vehicles (EVs) are expected to transform the transportation sector over the next several years creating pressure for power providers to accommodate charging needs that are both distributed and concentrated.”

Black & Veatch’s Power business offers a range of services to full EPC in conventional, renewable, and distributed power generation, transmission and distribution, microgrids, and behind the meter services. The re-alignment also centralizes sales and marketing and global project services resources forming an agile, collaborative team. 

Fabric Filter Newsletter No. 526 Table of Contents