Babcock & Wilcox Enterprises (BW) 12 Nov 242024 Q3 Earnings call transcript

Good afternoon. Thank you for attending the Babcock & Wilcox Enterprises Third Quarter 2024 Conference Call. [Operator Instructions] I would like to turn the conference over to your host, Sharyn Brooks, B&W's Director of Communications. Thank you.

You may proceed, Ms. Brooks.

thanks Enterprises for Conference Third and Babcock us Call. Victoria, Wilcox & Quarter you, to joining everyone on Thank XXXX Earnings

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

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

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

the this of in non-GAAP as and GAAP information and historical results reconciliation in published accordance certain We with supplement measures. considered presentation also to results regarding third be can X-K the measures This on be our our the non-GAAP provide comparable Relations Investor overview our afternoon of website found company at Form and quarter this to earnings substitute not on for in superior provided historical of posted GAAP. section A our filed information release afternoon targeted a should babcock.com. or

will over now Kenny. I turn call the to

in adjusted and and was of quarter reducing margin for on in XXXX of year. as XXXX, thank an when our from operating this which sold revenue quarter period to project strategic was everyone, We afternoon, you Thanks, costs. the on asset net during income operating well EBITDA, and by good BWRS, earnings in lower-margin of the increases highlighted us avoiding recent same we basis second our the a compared quarter as excluding performance improvement Sharyn. call. projects actions our Well, This joining improving strong generated reflecting income significant our year-over-year third third XXXX

we significant XXXX, of quarter recorded third items. the onetime X During

associated $X.X The a second plant just the in us. historical O&M settlement $XX closed had a the to a the losses over XX and a this sale the the biomass to And $X.X asset, the of we for for noncash in biomass first related exit fourth was higher million multiyear potential of remaining maintenance million of quarter over year. U.K. which and was XXXX remarkable SPIG losses our This of we plants settlement recently impairment one contract contract from over the with X the This was million years, anticipated years. last has last

This income onetime expectation. have on would have which track provisions, our $XX.X with [ the million, performance. and company's improved of operating demonstrates by Excluding overall margin we net been income these improved would ] both really

-- We oil and to evaluating industrial The economies and and meet clients, technologies believe [ utilizing along broad increasing broad businesses, North We increase generation considerable the meter, hydrogen from significant further through technology and by clients, centers intelligence, of gas energy increased sector, from the in including for range the And industrial design even from energy drivers demand behind our to to are gas, continuing our range while energy baseload for providing to augmentation world. to our help power our grid seeing believe that biomass, the need and natural technologies. electricity key across we demand. demand data capacity, of increase in in cars and are we our be with ] fuels expanding that opportunities for electric install needs and us or for from fueled expertise contribute and large power the are utility and greater fuels, in either growth demand and will leverage around a fossil artificial America utility from synthetic large natural position core renewable the and our generation consumers, unique gas. Ares

for tailwinds as increase and early these in and tailwinds are utility potential are a provide to move customers, continue world's technologies of strong across pipeline. third carbon growth drive solutions, we we our diverse $X that technologies to beyond conversions, the these XX billion results in in our B&W fuel cash have BrightLoop clean gas expect of to reflect studies on rebuild energy or design XXXX Ohio the forward this We source. for and progressing believe continuing support transition sustainable in opportunities reshape natural continued of margins flows. on FEED to portfolio higher opportunities revenues the demand that foundation engineering a support suite the efficient of target represent to And environmental company or grown. Massillon, XX amount that years ClimateBright our in generation foundation over well. project capture strong of for to B&W globally of in Overall, of decarbonization capitalize projects improved to with coming our grow active investments our Today, hydrogen regardless a roughly XX% industrial We energy have FEED the industry the as the quarter to and expected XXXX. studies and developed strong -- and and front-end XX% with energy producing our notably, has by we in

COX our as capture combustion carbon working We well. opportunities also oxy utilize are post-combustion on our that capture and SolveBright several

waste-to-energy that recently FEED we Sweden utilize a post-combustion a will facility. study announced in technology addition, with In

Louisiana, further and are with Canada Ohio, BrightLoop globe. are engaged projects Wyoming, customers the in developing FEED for around and BrightLoop studies in We in various

last bookings of $XXX the the to at quarter. and customer technologies implied at over compared continue period year third the drive see our divestitures, for our XX% end same We of implied third higher the help strong excluding million backlog our that demand increased end quarter, to to

pleased have notice we fourth will PUC quarter obtained We gas $XXX our Indiana just proceed. in natural full This are year. announce to in has numbers this of the recently, approval, be backlog that in the project and million our conversion now received to

We all we pipeline a opportunities $X.X amount expertise as and fuel to technology and the billion of sources, of solid continue have and billion trends ahead including FEED BrightLoop a opportunities X more range the than we X across we momentum continue will and alone. broad industries serve positive grow, over years, next in see believe the of the opportunities ClimateBright year of and the in in

we to continue on our progress quarter assets balance strategy divest to nonstrategic third our stated our to made respect results, sheet. further to With improve

of the Specifically, $XXX And importantly, we remain $XX.X GMAB To sale have SPIG raised for over net million. businesses and we from completed proceeds date, in million in the divestiture we of of XXXX. assets and negotiations our other our nonstrategic capital are debt with to growth support of or the further sale debt related refinancing obligations, growth to balance refinance expected strengthen and proceeds opportunities. evaluating working sheet or our assets reduce

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

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

higher our continue as technologies in ramp the we future in the BrightLoop and margins continue ClimateBright growth pipeline developing low-carbon investment expected continued margins opportunities. parallel, to BrightLoop we our lead anticipated of to In hydrogen should technology decarbonization and higher and of future. our The ClimateBright

results. meaningful I'd our improvement like quarter million This quarter even came increase from now a excluding operating year-over-year in adjusted third saw last impact compared EBITDA, significant which to was after at more million our quarter $XX.X to And $XX of business BWRS the recently discuss of we divested this our the third XXXX. strong in performance. year's

in BWRS, XXXX adjusted quarter $XX.X of EBITDA the XXXX. in was of last Excluding million XX% year-over-year increased third year quarter and third

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

divestitures, driven we historically sale period a strong businesses. ahead, Environmental quarter has operating strong businesses, B&W range from year strong $XX to segments continue our of for fourth is and XXXX into operating ClimateBright looking million a target our recent sorry, I'm excluding and $XX to expenses. the alongside revised -- Thermal achieved and And to have expect XX our after recent EBITDA as taking and full SPIG account BrightLoop been the momentum of GMAB we performance million, by This

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

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

BrightLoop orders announced long previously and our for we our In Louisiana Baton to Massillon work for engineering with in progress to continue government negotiation this project. to our for Massillon, time continuing and potential Wyoming, we are begun Ohio. have grants We financing Gillette, releasing to and purchase finalize items, regards projects related project, lead Rouge,

and to implementation COX plant. air support forward to will minor project local wells We of look source the existing submitting officially permits, our BrightLoop we to this and -- be and first demonstration convert will convert commercial our launch plan excited sequestration. to We're

million Virginia an the development days forgivable that would of in well BrightLoop today us, will we coal. Justice with that expect for reached of and West we of coming project be we we a staff of signed state and the Virginia the West utilizing Also, loan to provide Governor that greatly state his biomass and the develop Virginia. like a This construct support agreement will as exciting a announce have as West support $XX tentative local is to in and the appreciate

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

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

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

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

the will XXXX. I'll financial who of Lou, to call over the the quarter third now of details Lou? discuss turn

further results, in review found pleased details quarter XX-Q that is third on Kenny. the SEC. Thanks, to be -- file with the I'm can that on which was our

and million, quarter of the excluded primarily of were was Our quarter BWRS XXXX. XXXX in domestic increased third revenues, -- our divested they segment well million, quarter which of million revenues our which the European thermal driven inclusion increased businesses consolidated and the compared in to $X.X $X.X natural revenues XXXX to as by environmental of the the related growth parts decrease during the project that volume is is by benefits is $XXX.X second asset BWRS XXXX a increased third from by XXXX. year. decrease as large to in This a gas is revenues When in in of the attributable

onetime compared operating million We million of quarter XXXX. of as the of loss noncash maintenance saw quarter to third BWRS of previously million loss in long-term the divestiture $X.X earlier. attributable operating settlement XXXX third the the impairment a of $X.X generating income an X to This charges is sale of the as in and mentioned mentioned primarily of which $X.X related Kenny subsidiary to to contract, our million exit $X.X a loss SPIG well

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

quarter third the the $X.XX loss we of of as had of compared $X.XX share share quarter In a a to per of XXXX. in loss per third

quarter. segment This compared I'll revenue in million decrease million bookings the XX% quarter $X Adjusted Again, current to is third revenues to of Babcock primarily Renewables due from third the to compared third previously decrease third from which $XX.X of divestiture third third period quarter we results. quarter million of our Wilcox for now XXXX. the was $XX.X decrease BWRS, XXXX. of million, to EBITDA the the included quarter this and during of in $XX.X a XXXX of bookings partially mentioned. offset total million of XXXX were of XXXX the in was quarter by the XXXX in in BWRS, quarter the project the was favorable the million to of which the third our with closeouts quarter exceeded & turn quarter third third XXXX. XXXX, quarter $XX.X Bookings $X.X segment, in of of Within a XXXX the increasing same in

addition quarter Within of is XXXX. compared of the increase EBITDA year. forecast the and of business. in decrease despite was to primarily our for to compared the the our third revenues This quarter, industrial Babcock the $X.X environmental Adjusted & Wilcox electrostatic the precipitator same million were an business in $XX.X domestic being which in Environmental favorable in is to our to $XX.X million quarter in XX% million last driven $X slight million growth which period a growth European segment, XXXX, the increase third by of is

increase. in the increase and $XX.X quarter increased of large is project which million Turning mentioned Babcock segment. project, XXXX. construction of favorable third compared XXXX. gas in volume an quarter increase of third $XX.X million a XXXX is quarter third natural driven accounted the of The to of which & XXXX, by primarily million revenue Wilcox the primarily revenue $X.X XX% million, Thermal was increase an EBITDA and Adjusted for an third million, to margins in business. our This were by which $XXX.X is Revenues accounted quarter drivers our the of parts, the of result in the $X.X for previously of of

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

demonstrated for our and quarter, previously, ability execute to million As against strategy sheet sell the noted $XX.X stated businesses. to of completed proceeds GMAB we continue improved to the our of nonstrategic our sale balance SPIG and businesses which during certain net our

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

turn over back to the now I'll Kenny. call

further Thanks, strategic in on sheet. against execute intently we balance our Lou. improvements plan Well, and driving in closing, continue remain our focused to

with and quarter, project expect strong and our to fourth customers. we Environmental from schedules seasonal the As look increased momentum and ahead segments we by continue Thermal to driven results operating our services

Our XXXX. global despite our the bookings fourth business for opportunities identified heading across project prospects quarter performance and stronger our pipeline anticipate financial of and all of over we billion $X into healthy remains divestitures, and new through segments

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

and as every we by the around to day and like would I recognizing and we the the today technologies the increasing world. our way to as excited wrap load employees, the up safe forward, meet in for looking future. hard proven diverse who customers the energy unique position America both globe challenges thanking a about work in our to and to demand well need North remain generation base clean provide demand meet our of And support solutions, the energy across world's hold now in portfolio of

With questions. Victoria? that, the help can Victoria, to back our turn with over I'll who call

B. line the from comes today question of Riley. first Alex Our Instructions] [Operator Rygiel with

Nice of questions, quick Kenny. couple quarter. A

First, to talk guidance of to divestitures, guidance, $XX new that's all? maybe million million, base of these to exclude range adjusted, can at to some relates guidance as was adjusted where you if recognizing to that relative $XX and EBITDA sort your your past business it

Yes.

and you it some XXX with if SPIG, quarter GMAB XXX. takes the I guidance, associated down If at million, that million we various past to If you to scenario. results that particular mean, for -- think look the bridge expenses piece, the $XX $XX I we're you

the divestitures mean then actually SPIG on it. the just So area. -- primary that's aspect for completed that just reset around in GMAB based the that on based the I we And primarily quarter were and

noise, between the new would bridges just the be but and target. gap target it it the So the old rest of

Very active And helpful. of to this backlog? your or these? of the And then billion, is portion XX $X in studies traditional of kind what's XX conversion FEED already implied worth on over backlog what rate

the are the vary $X right? study million typical depending $X size So FEED smaller, or most -- those be studies million of the So in FEED the of revenue would from study. FEED on can

backlog it. So high. as in is once or on revenue a the usually rates we're not conversion But pretty a material study, FEED in rate standpoint to they're engaged

hiring before on It a FEED active imagine, But then It do an could be years converted. or As XX% no could customers our a or X time into they're XX% could study there. at to you would with FEED converted necessarily full can any a inside say us a given study X range be year. active element. rate There projects from be could on timing you and be follow-on. are roughly, of not probably conversion

we us, the lot around leverage and clients -- areas have for this I BrightLoop mean, to obtain But carbon driven position part move it. to the engineering to exciting these that study our and we've for we and A of FEED really capture something into is changed. strong more obviously other

So the these a for obtaining studies including number reflective exciting us. studies technologies, FEED And FEED I think of also we're newer that BrightLoop. lot of on it's are

got And I right in now so Canada, elsewhere mentioned, and of been with FEED BrightLoop developing. up couple that of ones we've clients the a studies that as are we've active outside

clients development concept think in pretty we us some ways hold, as produce really as say, energy that's these take going the of forward. of utilizing BrightLoop so I technology exciting at would And alternative to starting a a they're to larger for looking industrial

of Our next with from line the Aaron Spychalla question comes Craig-Hallum.

you is there of and to are behind of other of FEED there. just First, notice a the of just couple with years? Can for And cadence mean on the that studies then about gas the amount kind Or conversions? of that? good next pipeline a there I work talk bit order, to timing just little kind that maybe good over the coal revenue give to full proceed. detail see of

seeing or looking Let me a latter actually coal let's out but natural we're but U.S. of just several natural say the relates the on in They're looking that there, that we're on we around than is all baseload of of to the vary those. to using in continue big, that at. to Again, but obviously, dozen a long give on. gas those continuing continuity prospects size lot have use would number, a there utilities -- gas first. it a are either greater answer -- pipeline conversions. number term in as have we Yes, I not the hate But -- opportunities. here And generation the do

as -- the would goes far on As project why revenues that, the proceed. as kick just of revenue we that. we're to -- notice and excited obviously, conversion on on the that. 'XX start the received 'XX also well but to the 'XX in, into announcing it little today on gas about and But That's call in full natural a we really

be will period over longer that time it on spread So of it.

-- full notice to longer So obviously than to or late the a Came now. notice we finally we get but to expected, little excited it have we're -- full proceed. but the in

in full guess, to into here and here, we'll full it going it's backlog November, work move quarter. So I on this the start

stand of outlook then of flow, there up just appreciate time I on right. then free freeing kind cash into just you color as for the where we about credit and and today kind head some on And the can And balance off XXXX. there. letters sheet, liquidity? talk rolling line the those the of All maybe

ahead. go Yes,

Yes.

in right X.X now the $XX They years. credit roll off will over the are range. million of Letters next

win to credits credit Aaron, was... of not letters the we've come business, on percentage are as same able in letter of Then new the of but we question, required. been that second happen, the part but will will decrease the what extent, new Now to of

Yes.

free Just look thinking like. conversion of cash flow about towards what thoughts as look kind on XXXX can we

Yes.

in preferred think through on range, I million stock. free walked the cash flow is we dividends there including -- the the EBITDA, conversion, is interest the as $XX expense the the

of XX million $XX XX% -- about and $XXX BrightLoop a talking So capitalized that cost the cost million. -- you're talking rate million about of the after the plus on you're about to BrightLoop probably of conversion probably $XX interest

few we impact there's over new it add GMAB, probably go I that of the off and SPIG the And of obviously, take will that mean -- quarter credit should credit. but over a the will take letters letter of owner fourth those company, away but to or months million a to will roughly those that's wind convert XX time. those,

the X. letters of we'll over the month or next that credit reduce So by amount

really sales, and is as decrease the some So is into take $XX business. that will XX off we I really those And quoted back and account roll XX. said, come million will when as will that I you win new the

Street line Our Rob next Capital Brown with question of Lake Markets. comes from the

First on project. Massillon the question is

in talked And start about sort to of items. operate I kind you think you facility? generate again or when remind does you some When to full? lead us of long that could that ramp start

now. of that So those items other some are is order and in orders, like aspects. Obviously, full time lead compressors air material long

production 'XX, in of which the XXXX. early, then early of the the we're able as be go 'XX. early QX with of QX commercial obviously that to full Some should 'XX somewhere engineering ramp-up following hydrogen be state. right QX, in with and down. of drawings, submit what -- quarter now. into piece. in well critical will along is early selling on That's early would as right permits plan we've ramp-up of QX that I this, occur with a the to it period, hydrogen, is the by move heavy outside of -- of diagrams full now, 'XX of then The to part wind element. -- probably in of construction the to part into ready cost -- around firms part it And it's civil sides to real that for the and got will targeting of construction the requirements some hydrogen we'll And start targeting commercial the in But on We QX, kind then year, the produce state we'll begin then on mean, as we're the that of next the soon

to -- I think Yes, because the positive, ahead, go Rob. just add it's go that ahead.

I talk would get kind West of for be project a launched? was or that Virginia guarantee little maybe other of the the loan going and to sort guess, alone. What dependencies about that, loan, bit that to I there of sort

Yes.

here have coming So that. next X that state we X the and work they've wonderful that the to and day or We've in agreement sign should supportive project. or with very on group, full economic of been reached with

So the that when to we to there aspect the be for has of that will site will create of forgivable ramp caveat really that plan target by project will operation. is there's particular would on-site the loan is and a is be small limited that in facility And up that to midsize BrightLoop of that XXXX tied project. the a that then the jobs part ongoing obviously of number construction operations is

on So the running and plant XXXX target up that by is to that. have

contemplated got in agreement. that's we've -- what the we So

Thank for at this call. are questions no of day. rest you the That additional participation, of time. and is your the your There conclusion today's enjoy