Babcock & Wilcox Enterprises (BW) 8 Aug 242024 Q2 Earnings call transcript

Good evening. My name is Makaia, and I will be your conference operator today. At this time, I would like to welcome everyone to the conference call. [Operator Instructions] Sharyn, you may begin your conference call at this time.

Thank you, Makaia, and thanks to everyone for joining us on Babcock & Wilcox Enterprises Second Quarter 2024 Earnings Conference Call. of Director Brooks, Sharyn Communications. I'm

results. today Joining and to Young, quarter Chairman Kenny Executive the discuss Officer; second Officer, call Chief Financial and B&W's Chief are Lou our Salamone,

our will During be the be to this found and those harbor the filed Form and at our also in including end forth Form uncertainties, this statements statements provision our file call, we for afternoon risks was the forward-looking. further and to statements that earnings forward-looking and release press are certain business. These subject in with safe XX-K set XX-Q our of on risks make is provide that that our SEC detail related can about

to forward-looking except update any by as no Additionally, required statements. law, we obligation undertake

of to with information GAAP. substitute as the and regarding provide results targeted also superior supplement This for accordance comparable information measures. non-GAAP considered results or We in be our historical provided GAAP a the not certain should to

measures filed A presentation quarter Investor of and at overview reconciliation company on of historical and this in our posted this our can be release afternoon section published earnings babcock.com. the in Form afternoon X-K second on Relations our found website non-GAAP

the to call will I turn now Kenny. over

and Thanks, quarter us on thanks XXXX Sharyn, our earnings and and Makaia, everyone, good second thanks, afternoon, for joining call.

robust We continue to result quarter second a all to our across our strong with build on XXXX of businesses. start

solutions, with to opportunities and energy and increased of capitalize reflect positioned capture growth for generation technologies quarter energy Our portfolio B&W the efficient support utility demand clean globally conversions, natural of gas continued and the is industrial fuel results regardless second the customers. environmental in sustainable in the carbon that on our source, well and of

gasification decarbonization are including or innovative excited hydrogen energy our system technologies ClimateBright advance we're revolutionary without about that incineration support transition. to to the creates We BrightLoop making our world's progress the

hydrogen call. of bookings capture and this generation new this for we'll projects types year exciting We discuss for these see new opportunities during some and continue to carbon later developments

worked margins as we reduce Additionally, market overall and opportunities. and more teams benefits to projects selective costs, have approach our higher-value our hard target are the our of of seeing improve our

paid FEED various also capture design seen front-end hydrogen studies engineering regarding in opportunities. biomass, and or increase an carbon We've

We these are opportunities FEED expect looking of the that a these the will engineering studies to studies. to few our teams expanding and years, demand lead due for we at increased booking coming over

on As by and and strong bookings quarter expectations QX, generated mentioned, targets. to we exceeded achieve strong customer our XXXX, of our Based EBITDA adjusted during full of adjusted completed year results the our keeps million of track million operating the us second another during EBITDA quarter. year parks Renewable we the EBITDA through thermal Danish to that activities, and highlighted adjusted combination $XXX are on new of second better-than-expected sale $XXX of reiterating our adjusted target subsidiary, the despite services full quarter was which EBITDA

execution demonstrates improved our certain intent stated from sell this our businesses. balance proceeds sale to the nonstrategic and The sheet of

the our to nonstrategic proceeds significantly assets improve to expected related debt sale negotiations in of reduce support remain and we Importantly, capital. working liquidity other growth obligations with

savings. $XX to our reduction our efforts date the continue quarter, on cost make $XX of achieving we million We annualized over of during to target second also progress toward million work as cost

produced the of positive its in EBITDA improved solar operations, which cash second significantly now million in cash $X quarter classification. results generating and is have We despite the our

of improved later creating will actions up in that utilizing to continue margins margins the of allow and The this These and a cash lead debt. as are opportunities BrightLoop we margins our and should our liquidity pipeline ramp we in anticipated our In improve carbon continued technologies our our to continue technology developing BrightLoop hydrogen focus expected also low on reducing long-term parallel, bookings to our future. growth we higher as ClimateBright investment the ClimateBright anticipate year. higher us pathway and and decarbonization

like our expectations. in for would quarter strong now strong second set exceeded the the and combined adjusted adjusted our EBITDA results, performance operating EBITDA year These to our reiterate I year-to-date, bookings target discuss company's to us with stage which range. full

of the second adjusted as strategic expanded quarter seeing the already of plan basis are to We XXXX, second during XXX quarter the margins of benefits points they our improvement EBITDA compared representing 'XX. of

are to the reliance shift from new low-margin Our projects. margins benefiting interest, build reduce on high

From across EBITDA compared aftermarket to been by compared have expand, continue businesses. margins of the a total perspective, of during revenue performer the our to and the further XXXX. increase second quarter our in was a with XX% services parts quarter segment that second standout to margins adjusted and Our XXXX a increasing drove XX% which strength supported quarter business second environmental

mix treatment of with gas favorable along flu These closeout by driven product margin project. results the the were primarily higher

revenue the renewable the be to as segment a increased to projects the of XX% quarter benefiting second the new of of selective reduce efforts our low-margin shift our While strategic that reduction in declined restructuring result number build pursue, we compared year-over-year cost last of and EBITDA renewable related business. year, our from to more adjusted

compared as large declined project a completion of a to construction quarter a the XXXX. in XXXX revenues result of second Thermal of

of and recent our by XXXX. we projects segment anticipate of that for previously the exceeded demonstrated products in period in strong bookings. half However, first bookings a bookings demand and gas services on QX remain parts And service conversion same customer XXXX, and as the a based Thermal announced strong

production underlying of energy over global of identified power expanding to global pipeline clean with industry opportunities These converting for $X.X strong to our considerable XXXX billion make as foundational beyond over of and project we this BrightLoop continue drivers security trends and bookings. outlook progress which for and billion opportunities ClimateBright trends a includes business alone. into for are and demand see $X continue pipeline We in

bookings anticipate new performance. continued of Moving financial second prospects and for XXXX, strong we through the half

applied bookings, of a second in the quarter but backlog $XXX second million, backlog end compared implied backlog increase to the Our and of decrease $XXX of XXXX. the of respectively, was backlog at end slight an and quarter at the million and representing XX%

we as awarded and under better a As demand. well as figure last includes not backlog provides performance quarter, projects of and those customer fully our introduced for the have contract implied been released representation

coal Many have Looking the biomass is ahead, of us EPA with for within are design to value very given proposal requirements, seeing B&W. opportunities coal which the for to $XX $XXX in and revenue final for natural and into projects million or are remainder XXXX. gas we either United look new million the in States, the and projects ranges to exciting of of increasing we as these XXXX under stage in development to

million visibility target increasing XXXX customer $XXX range year of and which adjusted and full $XXX our With excludes our demand near-term of our BrightLoop ClimateBright. EBITDA success, million reiterating booking are to we

Importantly, we continue spending advancement, XXXX of to opportunities invest our million the million including CapEx. anticipate BrightLoop BrightLoop $XX in to in and in $XX projects our range and technology

produce continue existing development progress overall further effectiveness our the BrightLoop the are commercial of efforts Our hydrogen. forward these as to operational low-cost, working improve technologies and of moving projects we intensity low-carbon to

Gillette, announced work projects engineering to Rouge, with continuing BrightLoop previously our progress in for are Baton Massillon, Louisiana Wyoming. We Ohio. and

Massillon, announce developments regarding Ohio excited project. we today, few are In key a our to fact,

As prove production commercial which for syngas fuels. used both of other or we as synthetic stated, aviation fuel as as important the can to well it's demonstration have production, BrightLoop previously be or sustainable hydrogen SAF,

International for with a CGI signed agreement day tendered per hydrogen of up the offtake COX. XX-year have sequestering We tonnes X to while

for terms construction to anticipate immediately and financing production the do XXXX. hydrogen letters the reaching with construction XX as indicative for site the of reached of signing of leaseback the well. goal begin have early or end by We financing and XXXX SPV years we intent the of up

as technologies BrightLoop significant as facility or commercial is will development efforts in have are in raise projects around have as and bright we our readiness now Louisiana world. studies bankable loop technology will a This level engaged near the Virginia demonstration opportunities a FEED into potentially Wyoming, This continue projects West as we towards discussions we for in Ohio. our headquarters where well the our our other

outlook small, visibility reach by current XXXX, billion about the to identified combination $X in by pipeline. the We and medium driven and with in for of our BrightLoop that large excited remain BrightLoop a platform bookings are prospects projects

I As billion pipeline includes this approximately of $X.X mentioned opportunities ClimateBright earlier, BrightLoop alone. and

believe still only spend this level XXXX, $X X% by activity to of roughly continue total share lead the represent We XXXX. hydrogen for billion would to market the revenues potential in to global which of by has

solutions. scale our engineering and Within advance exciting process watch suite BrightLoop, to been it's technologies deploying and team these our expanding further at carbon the of the capture business towards extremely

to margin new and United for opportunities which in see decarbonization our leverage States, waste platform climate prospects. enable to should related continue also higher additional energy We us projects the to presents

turn Lou I'll to the now Lou? quarter call financial the the details of to for second XXXX. over discuss

pleased Thanks, Kenny. which I'm in results. details Further SEC. be XX-Q that's quarter with on second file review the can to on found really the

of were $XXX.X through quarter in completion strategic is which a Kenny second large is reducing a second project second compared the projects the to mentioned, million of as approach quarter. and quarter on of decrease Our consolidated revenues our XXXX. very attributable, primarily decrease reliance lower-margin construction This

quarter income the and XXXX to second selling, Operating XXXX. on general of our was operating income attributable million exceeded and operating compared decrease and subsidiary second of Our of income a of expectations in quarter is sale the expenses. gain the a $XX.X to $XX.X primarily administrative Denmark-based in in million well an

million, quarter expectations backlog million. million the implied ClimateBright ending expenses, adjusted XXXX bookings Our and were $XXX was quarter. Implied which and $XX.X second of the in excluding $XXX.X BrightLoop was was EBITDA, book ahead of for

Our as a earnings compared second quarter $X.XX positive to a $X.XX per in second in the of of share share quarter XXXX. loss per the were

due This segment Within our to decrease second we the reporting projects segment results. to to Babcock be million new the quarter is quarterly turn primarily pursue. $XX selective for strategic now quarter to will second and of of revenue revenues XXXX. that more our revenue reduce decrease lower number compared I'll margin shift Wilcox the XXXX were and of a and our build was the

reliance due initiatives second XX% low-margin and selling $X.X projects in general our million quarter Adjusted an the expenses second to build million, of on and the primarily cost-saving new renewable compared related restructuring the is reduction This of the EBITDA administrative in increase a was to XXXX. of the our of in decrease and of XXXX business. $X.X to quarter

XXXX. to compared increase by Within projects Environmental the Bobcock compared were of an the EBITDA quarter is the for quarter. adjusted of offset to second segment, is by second increase volumes XX% million of of technology quarter $X.X This of gas year. was the in same in $XX.X primarily flue revenues lower This and Wilcox million $XX.X partially million for cooling last $X.X quarter overall million and projects volumes treatment higher the driven

this adjusted segment and our gas mix nearly by So that in product and was improved driven treatment primarily doubled, projects. favorable EBITDA flu

the which to is Revenues XXXX, segment. the to of were decrease The the second Wilcox a the was in in the XXXX line expectations project -- large construction quarter attributable compared not second in Babcock completion despite of decrease Turning quarter. to revenue and the to XXXX. company primarily $XXX the quarter Thermal that million compared with is fully XXXX of replaced in

to that the in compared to due which and of quarter quarter slight the million, second is with in decrease was and of our large of a the projects. XXXX, second mentioned EBITDA $XX primarily previously XXXX expectations completion Adjusted line

debt to and June restricted cash XXXX, and turn balance now million, was cash, company $XXX.X liquidity. of Total had cash at sheet, $XXX.X I'll flow cash and up XX, our equivalents million. the

closed the significantly neutral anticipate and projects solar As Kenny positive we've out previously being to cash legacy forward. use mentioned, going

execute the previously our sale stated nonstrategic quarter, our noted, demonstrated strategy balance our improved Denmark-based businesses. we during to to the sheet subsidiary against As completed which and the sell certain of ability

other to will are as primarily pay and The sales sell existing processes business be capital. Additionally, of nonstrategic announced, for down previously working we assets to proceeds these initiating debt used assets. certain and

I'll are we million $XX year over it the confident now concerns and to a to projects turn we invest previous have our accelerate result overcome and ClimateBright to continue As back in the that Kenny. actions, these growth. of liquidity future BrightLoop annually a

in we driving plan our Thanks, sales in Lou. to and further drive our closing, position executing improvements we Well, businesses focused intently specifically, improvements on More of sheet. balance and in strategic ratio. additional nonstrategic liquidity our leverage anticipate remain cash further

and momentum continue project As we from customers. our schedules and expect the services ahead of second XXXX, our look to half we Environmental driven operating increased by with segments Thermal to

opportunities stronger project second identified we performance in anticipate throughout billion $X bookings half of business segments, healthy over remains financial of across pipeline global Our XXXX. the for our and prospects all new

with and believe with sources, technology-driven our energy carbon industry continue to capture of customers. positions traditional well clean in expertise deep environmentally our conscious long to our coupled to global We deliver technologies, solutions energy history us

as always, dedicated world. the our would of the efforts employees lastly, recognize And around I like and to talented

We B&W energy our world's for focused to their our have meet Wilcox. suppliers hard that's in and need a continued great for for and now profitable team Babcock safely clean, help deliver growth to of future. would I consistent the working on like base & at reliable support shareholders and the thank also global customer and

being and XXXX capitalize on And about the advocate for future. leveraging forward, the leader, strong are we innovator on a remain an leading And excited clean solutions we looking prospects environmental ahead a focused for and of our to remainder an growth beyond. and energy power

back turn now who assist with call over will questions. will your to Makaia? Makaia, the I us

[Operator Rob Street Markets. question line with Instructions] Capital comes The from Brown the first of Lake

question on First is Ohio. projects the BrightLoop in

how an economic got give you model a you? some works there ramps how and offtake the You've agreement sense us financing. Can on that for in

Yes.

over a there'll construction on months. period to project. XX to the basically, build XX next projects So the be

the leaseback the of when the there part primary of of produced cash company being the the offtake during agreement. the are to So a construction the offset amount will used off period for revenues will financing a by offtake be then And being site period. be significant

offset that on standpoint. each XX-year the that other revenue period, cash and over So

is a a own to demonstration build a using great project us for it first significant without commercial capital amount build of So way our commercial a plan.

both agreement the period. hydrogen during excited the the pretty and buy to that offtake on So financing opportunity also

but how Okay. work. I you the engineering have on development, know think you move to forward by progress? expectations the Great. update And well, you along. talked of us then give the some those of year, and are And projects Wyoming as the Rouge how larger this you a talked about getting Baton some of an I those about just under projects Could that sense coming

doing engineering in on with been Yes. engineering, right now and engineering Wyoming have with a mode project on-site of the in of civil that. conjunction We're working those -- works, activities lot full type the

Energy parallel. their would as they're As the on previously stated, particular we're project, Hills in the who Wyoming working user that Black closely inside of with ] considerations hydrogen be through rate-based [ working

out. continue supporting efforts we particular more them other can activities this on later and anticipate year So and that those developments put around that, hopefully, we

On per there the the -- I that are this contemplate we initial to the primarily are in per Baton public Rouge are but project, tonne and in name site. discussions NDA, particular under developer project in we although that them we XXX investor point, but full with follow-on day can't up since tonnes XX we at day

we're full so project And moving them in with forward. that discussions on

that and other for than would we're coming Rouge. the to that investment the announce in tonne now the projects case. certainty in. particular So day developments considerations per full both discussions that, and Baton in using that that of be right And again, biomass XX on early in too XXX any But

Okay. Congratulations progress. the all on

next The is B. line Alex from the Rygiel Riley. of question with

A lot couple here. questions. of things A of great

the at guess I to great that yet are or of the EBITDA First, if backlog you of high variables your be portion there? to can end Kenny, risk some end guidance, of reiterating at of your and/or hear that what range? kind is all, that to any that guidance, not maybe my low guidance. you're it near help in guidance, sort is it's your relates as Or question what's

on some would gas of all larger primarily, say, I really And -- projects, on activities. is margin larger exact projects, timing And conversion the announced based that especially mainly of timing projects couple our a our of we it's It's on and those starting the just recognition. previously. Yes. it's the of revenue project, anything cost point

the timeliness the the of the and the of some or lower through those of range the on projects that, just just end get hit we that range of that. end it's orders So on higher and could how of timing

our So considerations the that's main there. but are always those challenge,

see the here. on Any Excellent. And to update non-core timing then your asset great of debt sales? down additional net

just that. much it's we're on X negotiations in we're I continue And on that's probably for the those. year X those this But anticipate discussions on and and yes, it this -- or and year, anticipate those, we I or as X as it to want on call. get hopefully, into since would yet We're probably at do that and obviously, X, in discussions leave now,

coming project, And to get help Or understand then of that back have and Loop does is much construction? Bright you time front there BW paid the to capital so the Excellent. end on on? leaseback for to frame? And to that what's up put exactly me again? the Ohio How can back going when sort

can We it Lou. go ahead, more, into go but

No, up. go then And I'll follow ahead, Kenny.

Okay.

what anticipating, just build roughly say So or $XX range the the we're total should be $XX to X I mean that, it $XX I Initially, we'll we particular project in will year range mentioned, call project in know, to I project the we're BrightLoop. million what million investing $XX let's out million, spending probably to a about have, we're is XX build XX roughly million as don't that anticipating. to

Some project. investment of that that goes towards

duplicative want that. not incremental that. or just to it's of on add top I So

anticipate as overall. to then with portion aspects long rest would really particular the in for lead that for would come the the do hydrogen start from hydrogen, place And $X some end financed that that orders about that 'XX be B&W would first project. So and particular with out revenues construction do project $XX data the time of start to million to and producing the associated we million the equipment other we of can of we're which 'XX, the

you that's rough the but add it. we of portion that's think Lou, order a -- B&W's want that, of if to know about So I to and it in how of terms don't magnitude

would ourselves that to and excited R&D project to first think get our much or is that commercial the I the in agreement have level. sell because need through associated TRL we're in where case, to excited like of that about. us ground off to invest on we it that particular a have into we're offtake commercial cover doing we affordable itself. that. So receiving the project to do costs that for so a we're environment more increase we In and the an this about the almost it way what facility. build can this based Normally, commercial ourselves out, demonstration And with offtake we're will revenues hydrogen the be that that revenues actually

great So a that a way tendered we that's this ground the get do great low we the over a us offset financing of the offtake think to period corruptly and for a cash amount long-term agreement day. X to versus requirements by B&W, times it to it's of way off and the costs with had

So that part seems like to do color? want add a win-win for us. But you Lou, some

your of we'll completed, incur. offtake to call that construction have go where for phase, we amortize those a construction really a it's Alex, what period the loan for is Just One bit, and be the we costs the be long-term the would have be construction basic construction offtake a with financing. once phase X will the to with where to entity -- will out remainder there period lease construction amplify an to what then we'll little X the

the a cash cash So keep we're the starts project when then sheet, construction financing revenue. as good use balance us, lease it's Kenny on because the our financing offtake and to really flow able agreement for use producing said,

questions currently are There registered. no

at to management for So like the time, further back this pass would conference the remarks. any to I over team

That be website limited today. A Thank conference time joining a you, our call. Makaia, for will later and us. on thanks, everyone, replay available for concludes our

now and today's a again, disconnect conclude Once you We today's you participation. call. now your tuning day, you This have thank may We wonderful appreciate all will for conference lines. your hope call.