8-K
Babcock & Wilcox Enterprises, Inc. (BW)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 8, 2022
| BABCOCK & WILCOX ENTERPRISES, INC. | ||||||
|---|---|---|---|---|---|---|
| (Exact name of registrant as specified in its charter) | ||||||
| Delaware | 001-36876 | 47-2783641 | ||||
| --- | --- | --- | ||||
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | 1200 East Market Street | |||
| --- | --- | --- | ||||
| Suite 650 | ||||||
| Akron, | Ohio | 44305 | ||||
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s Telephone Number, including Area Code: (330) 753-4511
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol | Name of Each Exchange on which Registered |
|---|---|---|
| Common stock, $0.01 par value per share | BW | New York Stock Exchange |
| 8.125% Senior Notes due 2026 | BWSN | New York Stock Exchange |
| 6.50% Senior Notes due 2026 | BWNB | New York Stock Exchange |
| 7.75% Series A Cumulative Perpetual Preferred Stock | BW PRA | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Item 2.02 Results of Operations and Financial Condition
On November 8, 2022, the Company issued a press release announcing our financial results for the third quarter ended September 30, 2022. A copy of the press release is attached as Exhibit 99.1, and the information contained in Exhibit 99.1 is incorporated herein by reference.
The information furnished pursuant to this Item 2.02, including Exhibit 99.1, shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 7.01 Regulation FD Disclosure.
On November 8, 2022, the Company posted a company overview presentation on the investor relations section of its website at babcock.com. A copy of the presentation is attached as Exhibit 99.2, and the information contained in Exhibit 99.2 is incorporated herein by reference.
The information furnished pursuant to this Item 7.01, including Exhibit 99.2, shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or incorporated by reference in any filing under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
| Exhibit No. | Description |
|---|---|
| 99.1 | Press Release datedNovember 8, 2022. |
| 99.2 | Company Overview |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| BABCOCK & WILCOX ENTERPRISES, INC. | ||
|---|---|---|
| November 8, 2022 | By: | /s/ Louis Salamone |
| Louis Salamone | ||
| Executive Vice President, Chief Financial Officer and Chief Accounting Officer<br>(Principal Accounting Officer and Duly Authorized Representative) |
3
Document
| Exhibit 99.1 |
|---|
| News Release |
| --- |
Babcock & Wilcox Enterprises Reports Third Quarter 2022 Results
Q3 2022 Highlights and Outlook:
–Revenues of $214.9 million, a 34% improvement compared to the third quarter of 2021
–Net loss of $20.6 million, compared to a net income of $13.6 million in the third quarter of 2021
–Changes in year over year net income primarily relate to several non-recurring and non-operational items which account for $25 million of the change from 2021
–Loss per share of $0.24, compared to earnings per share of $0.12 in the third quarter of 2021
–Bookings of $227 million, a 31% improvement compared to third quarter bookings in 2021
–Ending backlog of $730 million, a 35% increase compared to backlog at the end of the third quarter of 2021
–Expanded pipeline to $7.8 billion of identified global project and upgrade opportunities
–Consolidated adjusted EBITDA of $13.1 million, compared to $18.9 million in the third quarter of 2021
–Fourth Quarter 2022 Adjusted EBITDA target of $25 million to $30 million
–Full Year 2023 Adjusted EBITDA target of $100 million to $120 million
(AKRON, Ohio – November 8, 2022) – Babcock & Wilcox Enterprises, Inc. ("B&W" or the "Company") (NYSE: BW) announced results for the third quarter of 2022.
"While we continue to see rising demand, supported by a strong backlog and favorable increase in bookings for the third quarter driven by our renewable, environmental and thermal segments, our third quarter results reflect the current industry challenges and the negative impacts of the global supply chain pressures and shortages driven by geopolitical issues and the war in Ukraine,” said Kenneth Young, B&W’s Chairman and Chief Executive Officer. “Despite our initiatives to mitigate the ongoing issues impacting the timing of revenue recognition on certain projects, these supply chain headwinds continued to affect both B&W and its customers during the quarter. More specifically, we are experiencing industry-wide bottlenecks with respect to the availability of raw materials, fabrication capabilities and labor shortages, among a broad range of other factors. Importantly, our operational performance on projects remains high and on target and our recently revised expectations are not reflective of any project performance-related issues. In addition, we are seeing strong demand across all our business segments that reinforces our conviction for improved fourth quarter performance followed by continued growth in 2023.”
“Our current visibility for new booking opportunities is expected to drive growth throughout 2023 and beyond, and we anticipate that full year 2023 Adjusted EBITDA will range from $100 million to $120 million, given the current global supply chain challenges,” Young added. “We continue to see a robust pipeline, which has expanded to over $7.8 billion of identified global project opportunities and remain steadfast in positioning the company to be a front-runner in the global clean energy transition.”
Q3 2022 Financial Summary
Consolidated revenues in the third quarter of 2022 were $214.9 million, a 34% improvement compared to the third quarter of 2021, primarily attributable to previously announced acquisitions and higher overall volumes, while partially offset by a lower level of construction activity in our Thermal segment. The negative impacts on the global economy as a result of the ongoing Russia-Ukraine military conflict and other supply chain pressures, including tariffs and other geopolitical issues, continue to adversely impact each of our segments, causing shortages of supplies and materials and affecting the timing of revenue on several projects. Net loss in the third quarter of 2022 was $(20.6) million, a decrease of $(34.2) million compared to net income of $13.6 million in the third quarter of 2021, primarily related to several non-recurring and non-operational items such as, a non-cash impairment on our solar business of $7.2 million, a gain on a sale of an asset of $13.8 million in the prior year, higher interest costs in the current year of $3 million, as well as a number of smaller items. Loss per share in the third quarter of 2022 was $(0.24) compared to earnings per share of $0.12 in the third quarter of 2021.GAAP operating loss in the third quarter of 2022 was $10.3 million compared to operating income of $14.8 million in the third quarter of 2021. Adjusted EBITDA was $13.1 million compared to $18.9 million in the third quarter of 2021. Bookings in the third quarter of 2022 were $227 million, a 31% increase compared to third quarter bookings in 2021. Ending backlog was $730 million, a 35% increase compared to backlog at the end of the third quarter of 2021. All amounts referred to in this release are on a continuing operations basis, unless otherwise noted. Reconciliations of net income, the most directly comparable GAAP measure, to adjusted EBITDA for the Company's segments, are provided in the exhibits to this release.
Babcock & Wilcox Renewable segment revenues were $81.7 million for the third quarter of 2022, an increase of 115% compared to $38.0 million in the third quarter of 2021. The increase in revenue is primarily due to higher volumes of new-build projects and revenues from acquisitions which closed on September 30 and November 30, 2021, respectively. Adjusted EBITDA in the quarter was $4.5 million compared to $11.4 million in the third quarter of 2021, due to a large project improvement of $6.5 million increasing Adjusted EBITDA in 2021 as well as a $4 million negative impact to 2022 primarily from a higher percentage of allocated expenses based upon this segment's revenue growth. Various challenges associated with the negative impact of global supply chain and geopolitical issues also resulted in certain projects being delayed into future quarters. These delays resulted not only in revenue being less than anticipated but negatively affected gross margin and adjusted EBITDA as a result of higher costs which were partially offset, where possible, by various recoveries from customers. In addition, as a result of purchasing the remaining non-controlling interest in our solar business at a discount, we also impaired our existing goodwill value.
Babcock & Wilcox Environmental segment revenues were $44.6 million in the third quarter of 2022, an increase of 17% compared to $38.2 million in the third quarter of 2021. The increase is primarily driven by higher overall volume in our system product lines, offset partially by lower service volume in the current quarter. Adjusted EBITDA was $3.1 million, compared to $3.5 million in the same period last year, primarily driven by the completion of higher margin projects in the prior period along with higher levels of shared overhead and SG&A allocated to the segment being partially offset by higher revenue volume, as described above. Revenue and adjusted EBITDA were lower than anticipated in the segment due to the negative impact of global supply chain challenges and geopolitical issues. These various challenges resulted in certain projects being delayed into future quarters and higher costs all of which could not be recovered from our customers.
Babcock & Wilcox Thermal segment revenues were $91.3 million in the third quarter of 2022, an increase of 9% compared to $83.8 million in the third quarter of 2021. The revenue increase is attributable to two acquisitions closed in February 2022. Adjusted EBITDA in the third quarter of 2022 was $10.8 million, an increase of 15% compared to $9.3 million in the third quarter of 2021, primarily attributable to the same two acquisitions that closed in February 2022. Revenue and adjusted EBITDA were lower than anticipated in the segment due to the negative impact of global supply chain challenges
and geopolitical issues. These various challenges resulted in certain projects being delayed into future quarters and the delay of this segment to deliver parts and services in certain of its international markets as anticipated.
Liquidity and Balance Sheet
At September 30, 2022, the Company had total debt of $336.3 million and a cash, cash equivalents and restricted cash balance of $69.5 million.
Impacts of Market Conditions
Management continues to adapt to macroeconomic conditions, including rising inflation, higher interest rates, foreign exchange rate fluctuations and the impact of the ongoing conflict in Ukraine and the COVID-19 pandemic, all of which impacted the Company during the first nine months of 2022. The COVID-19 pandemic has continued to create challenges for us in countries that have significant outbreak mitigation strategies, namely, countries in our Asia-Pacific region, which led to temporary project postponements and has continued to impact results in this region. Additionally, the Company has experienced negative impacts to its global supply chains as a result of COVID-19, the war in Ukraine, Russia-related supply chain shortages and other factors, including disruptions to the manufacturing, supply, distribution, transportation and delivery of its products. The Company has also observed significant delays and disruptions of its service providers and negative impacts to pricing of certain of its products. These delays and disruptions have had, and could continue to have, an adverse impact on the Company’s ability to meet customers’ demands. We are continuing to actively monitor the impact of these market conditions on current and future periods and actively manage costs and our liquidity position to provide additional flexibility while still supporting our customers and their specific needs. The duration and scope of these conditions cannot be predicted, and therefore, any anticipated negative financial impact to the Company’s operating results cannot be reasonably estimated.
Earnings Call Information
B&W plans to host a conference call and webcast on Tuesday, November 8, 2022 at 5 p.m. EST to discuss the Company’s third quarter 2022 results. The listen-only audio of the conference call will be broadcast live via the Internet on B&W’s Investor Relations site. The dial-in number for participants in the U.S. is (844) 200-6205; the dial-in number for participants in Canada is (833) 950-0062; the dial-in number for participants in all other locations is (929) 526-1599. The conference ID for all participants is 544177. A replay of this conference call will remain accessible in the investor relations section of the Company’s website for a limited time.
Non-GAAP Financial Measures
The Company uses non-GAAP financial measures internally to evaluate its performance and in making financial and operational decisions. When viewed in conjunction with GAAP results and the accompanying reconciliation, the Company believes that its presentation of these measures provides investors with greater transparency and a greater understanding of factors affecting its financial condition and results of operations than GAAP measures alone. Additionally, the Company redefined its definition of adjusted EBITDA to eliminate the effects of certain items including the loss from a non-strategic business, interest on letters of credit included in cost of operations and loss on business held for sale.
Prior period results have been revised to conform with the revised definition and present separate reconciling items in our reconciliation, including business transition costs. The presentation of non-GAAP financial measures should not be considered in isolation or as a substitute for the Company’s related financial results prepared in accordance with GAAP.
Adjusted EBITDA on a consolidated basis is defined as the sum of the Adjusted EBITDA for each of the segments, further adjusted for corporate allocations and research and development costs. At a segment level, the adjusted EBITDA presented is consistent with the way the Company's chief operating decision maker reviews the results of operations and makes strategic decisions about the business and is calculated as earnings before interest expense, tax, depreciation and amortization adjusted for items such as gains or losses arising from the sale of non-income producing assets, net pension benefits, restructuring costs, impairments, gains and losses on debt extinguishment, costs related to financial consulting, research and development costs and other costs that may not be directly controllable by segment management and are not allocated to the segment. The Company presented consolidated Adjusted EBITDA because it believes it is useful to investors to help facilitate comparisons of the ongoing, operating performance before corporate overhead and other expenses not attributable to the operating performance of the Company's revenue generating segments. This release also presents certain targets for our Adjusted EBITDA in the future; these targets are not intended as guidance regarding how the Company believes the business will perform. The Company is unable to reconcile these targets to their GAAP counterparts without unreasonable effort and expense.
Bookings and Backlog
Bookings and backlog are our measure of remaining performance obligations under our sales contracts. It is possible that our methodology for determining bookings and backlog may not be comparable to methods used by other companies.
We generally include expected revenue from contracts in our backlog when we receive written confirmation from our customers authorizing the performance of work and committing the customers to payment for work performed. Backlog may not be indicative of future operating results, and contracts in our backlog may be canceled, modified or otherwise altered by customers. Backlog can vary significantly from period to period, particularly when large new build projects or operations and maintenance contracts are booked because they may be fulfilled over multiple years. Because we operate globally, our backlog is also affected by changes in foreign currencies each period. We do not include orders of our unconsolidated joint ventures in backlog.
Bookings represent changes to the backlog. Bookings include additions from booking new business, subtractions from customer cancellations or modifications, changes in estimates of liquidated damages that affect selling price and revaluation of backlog denominated in foreign currency. We believe comparing bookings on a quarterly basis or for periods less than one year is less meaningful than for longer periods, and that shorter-term changes in bookings may not necessarily indicate a material trend.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical or current fact included in the release are forward-looking statements. You should not place undue reliance on these statements. Forward-looking statements include words such as “expect,” “intend,” “plan,” “likely,” “seek,” “believe,” “project,” “forecast,” “target,” “goal,” “potential,” “estimate,” “may,” “might,” “will,” “would,” “should,” “could,” “can,” “have,” “due,” “anticipate,” “assume,” “contemplate,” “continue” and other words and terms of
similar meaning in connection with any discussion of the timing or nature of future operational performance or other events.
These forward-looking statements are based on management’s current expectations and involve a number of risks and uncertainties, including, among other things, the impact of COVID-19 or other similar global health crises; the impact of the ongoing conflict in Ukraine; the impact of global macroeconomic conditions, including inflation and volatility in the capital markets; the Company's ability to integrate acquired businesses and the impact of those acquired businesses on the Company's cash flows, results of operations and financial condition, including the Company's acquisitions of Fosler Construction, VODA, FPS and Optimus; the Company’s recognition of any asset impairments as a result of any decline in the value of its assets or efforts to dispose of any assets in the future; the Company’s ability to obtain and maintain sufficient financing to provide liquidity to meet its business objectives, including surety bonds, letters of credit and similar financing; the Company’s ability to comply with the requirements of, and to service the indebtedness under, our debt facility agreements; our ability to pay dividends on our 7.75% Series A Cumulative Perpetual Preferred Stock; our ability to make interest payments on our 8.125% senior notes due 2026 and our 6.50% notes due 2026; the highly competitive nature of the Company’s businesses and ability to win work, including identified project opportunities in the pipeline; general economic and business conditions, including changes in interest rates and currency exchange rates; cancellations of and adjustments to backlog and the resulting impact from using backlog as an indicator of future earnings; the Company’s ability to perform contracts on time and on budget, in accordance with the schedules and terms established by the applicable contracts with customers; failure by third-party subcontractors, partners or suppliers to perform their obligations on time and as specified; delays initiated by our customers; the Company’s ability to successfully resolve claims by vendors for goods and services provided and claims by customers for items under warranty; the Company’s ability to realize anticipated savings and operational benefits from its restructuring plans, and other cost-saving initiatives; the Company’s ability to successfully address productivity and schedule issues in its B&W Renewable, B&W Environmental and B&W Thermal segments; the Company’s ability to successfully partner with third parties to win and execute contracts within its B&W Renewable, B&W Environmental and B&W Thermal segments; changes in the Company’s effective tax rate and tax positions, including any limitation on its ability to use its net operating loss carryforwards and other tax assets; the Company’s ability to successfully manage research and development projects and costs, including its efforts to successfully develop and commercialize new technologies and products; the operating risks normally incident to its lines of business, including professional liability, product liability, warranty and other claims against the Company; difficulties the Company may encounter in obtaining regulatory or other necessary permits or approvals; changes in actuarial assumptions and market fluctuations that affect its net pension liabilities and income; the Company’s ability to successfully compete with current and future competitors; the Company’s ability to negotiate and maintain good relationships with labor unions; changes in pension and medical expenses associated with its retirement benefit programs; social, political, competitive and economic situations in foreign countries where it does business or seeks new business; and the other factors specified and set forth under "Risk Factors" in the Company’s periodic reports filed with the Securities and Exchange Commission, including the Company’s most recent annual report on Form 10-K and its quarterly report on Form 10-Q for the quarter ended September 30, 2022.
These forward-looking statements are made based upon detailed assumptions and reflect management’s current expectations and beliefs. While the Company believes that these assumptions underlying the forward-looking statements are reasonable, the Company cautions that it is very difficult to predict the impact of known factors, and it is impossible for the Company to anticipate all factors that could affect actual results. The forward-looking statements included herein are made only as of the date hereof. The Company undertakes no obligation to publicly update or revise any forward-looking statement as a result of new information, future events, or otherwise, except as required by law.
About B&W Enterprises, Inc.
Headquartered in Akron, Ohio, Babcock & Wilcox Enterprises, Inc. is a leader in energy and environmental products and services for power and industrial markets worldwide. Follow us on LinkedIn and learn more at babcock.com.
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| Investor Contact: | Media Contact: | |
|---|---|---|
| Lou Salamone, CFO | Ryan Cornell | |
| Babcock & Wilcox Enterprises, Inc. | Public Relations | |
| 704.625.4944 | investors@babcock.com | Babcock & Wilcox Enterprises, Inc. |
| 330.860.1345 | rscornell@babcock.com |
Exhibit 1
Babcock & Wilcox Enterprises, Inc.
Condensed Consolidated Statements of Operations(1)
(In millions, except per share amounts)
| Three Months Ended September 30, | Nine months ended September 30, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | 2022 | 2021 | |||||
| Revenues | $ | 214.9 | $ | 160.0 | $ | 639.9 | $ | 531.1 |
| Costs and expenses: | ||||||||
| Cost of operations | 176.1 | 114.6 | 512.5 | 404.8 | ||||
| Selling, general and administrative expenses | 39.4 | 38.2 | 127.4 | 112.4 | ||||
| Goodwill impairment | 7.2 | — | 7.2 | — | ||||
| Advisory fees and settlement costs | 1.2 | 1.8 | 10.3 | 9.7 | ||||
| Restructuring activities | 0.4 | 4.6 | 0.4 | 8.0 | ||||
| Research and development costs (benefit) | 1.0 | (0.2) | 2.9 | 1.0 | ||||
| Gain on asset disposals, net | — | (13.8) | (7.2) | (15.8) | ||||
| Total costs and expenses | 225.2 | 145.2 | 653.4 | 520.0 | ||||
| Operating (loss) income | (10.3) | 14.8 | (13.4) | 11.1 | ||||
| Other expense: | ||||||||
| Interest expense | (11.3) | (8.3) | (33.2) | (30.6) | ||||
| Interest income | 0.1 | 0.1 | 0.3 | 0.4 | ||||
| Gain on debt extinguishment | — | — | — | 6.5 | ||||
| Gain (loss) on sale of business | — | — | — | (2.2) | ||||
| Benefit plans, net | 7.4 | 9.9 | 22.3 | 24.9 | ||||
| Foreign exchange | (2.0) | (1.7) | (3.2) | (1.1) | ||||
| Other income (expense) – net | 0.5 | (0.8) | (0.2) | (1.0) | ||||
| Total other expense | (5.3) | (0.8) | (14.0) | (3.1) | ||||
| (Loss) income before income tax expense | (15.7) | 13.9 | (27.5) | 8.0 | ||||
| Income tax expense | 4.9 | 0.3 | 4.8 | 6.7 | ||||
| Net (loss) income | (20.6) | 13.6 | (32.2) | 1.3 | ||||
| Net loss (income) attributable to non-controlling interest | 2.8 | — | 3.6 | — | ||||
| Net (loss) income attributable to stockholders | (17.8) | 13.6 | (28.6) | 1.3 | ||||
| Less: Dividend on Series A preferred stock | 3.7 | 3.7 | 11.1 | 5.4 | ||||
| Net (loss) income attributable to stockholders of common stock | $ | (21.5) | $ | 10.0 | $ | (39.7) | $ | (4.1) |
| Basic (loss) earnings per share | $ | (0.24) | $ | 0.12 | $ | (0.45) | $ | (0.05) |
| Diluted (loss) earnings per share | $ | (0.24) | $ | 0.11 | $ | (0.45) | $ | (0.05) |
| Shares used in the computation of earnings (loss) per share: | ||||||||
| Basic | 88.3 | 86.0 | 88.1 | 81.1 | ||||
| Diluted | 88.3 | 87.0 | 88.1 | 81.1 |
(1) Figures may not be clerically accurate due to rounding
Exhibit 2
Babcock & Wilcox Enterprises, Inc.
Condensed Consolidated Balance Sheets(1)
| (In millions, except per share amount) | September 30, 2022 | December 31, 2021 | ||
|---|---|---|---|---|
| Cash and cash equivalents | $ | 48.5 | $ | 224.9 |
| Current restricted cash and cash equivalents | 9.6 | 1.8 | ||
| Accounts receivable – trade, net | 146.5 | 132.1 | ||
| Accounts receivable – other | 46.5 | 34.6 | ||
| Contracts in progress | 125.0 | 80.2 | ||
| Inventories, net | 97.8 | 79.5 | ||
| Other current assets | 24.6 | 29.4 | ||
| Total current assets | 498.6 | 582.4 | ||
| Net property, plant and equipment, and finance lease | 81.7 | 85.6 | ||
| Goodwill | 155.2 | 116.5 | ||
| Intangible assets, net | 59.8 | 43.8 | ||
| Right-of-use assets | 30.4 | 30.2 | ||
| Long-term restricted cash | 11.4 | — | ||
| Other assets | 44.4 | 54.8 | ||
| Total assets | $ | 881.6 | $ | 913.3 |
| Accounts payable | $ | 122.1 | $ | 85.9 |
| Accrued employee benefits | 12.1 | 13.0 | ||
| Advance billings on contracts | 98.0 | 68.4 | ||
| Accrued warranty expense | 10.6 | 12.9 | ||
| Financing lease liabilities | 1.1 | 2.4 | ||
| Operating lease liabilities | 3.8 | 4.0 | ||
| Other accrued liabilities | 69.5 | 54.4 | ||
| Loans payable | 2.3 | 12.4 | ||
| Total current liabilities | 319.5 | 253.4 | ||
| Senior notes | 333.5 | 326.4 | ||
| Long term loans payable | 0.5 | 1.5 | ||
| Pension and other postretirement benefit liabilities | 156.5 | 182.7 | ||
| Non-current finance lease liabilities | 27.8 | 29.4 | ||
| Non-current operating lease liabilities | 27.3 | 26.7 | ||
| Other non-current liabilities | 33.5 | 34.6 | ||
| Total liabilities | 898.7 | 854.6 | ||
| Commitments and contingencies | ||||
| Stockholders' (deficit) equity: | ||||
| Preferred stock, par value $0.01 per share, authorized shares of 20,000; issued and outstanding shares of 7,669 and 7,669 at September 30, 2022 and December 31, 2021, respectively | 0.1 | 0.1 | ||
| Common stock, par value $0.01 per share, authorized shares of 500,000; issued and outstanding shares of 88,633 and 86,286 at September 30, 2022 and December 31, 2021, respectively | 5.1 | 5.1 | ||
| Capital in excess of par value | 1,533.9 | 1,518.9 | ||
| Treasury stock at cost, 1,867 and 1,525 shares at September 30, 2022 and December 31, 2021, respectively | (113.7) | (110.9) | ||
| Accumulated deficit | (1,360.9) | (1,321.2) | ||
| Accumulated other comprehensive loss | (82.5) | (58.8) | ||
| Stockholders' (deficit) equity attributable to shareholders | (18.0) | 33.1 | ||
| Non-controlling interest | 0.9 | 25.5 | ||
| Total stockholders' (deficit) equity | (17.1) | 58.6 | ||
| Total liabilities and stockholders' (deficit) equity | $ | 881.6 | $ | 913.3 |
(1) Figures may not be clerically accurate due to rounding.
Exhibit 3
Babcock & Wilcox Enterprises, Inc.
Condensed Consolidated Statements of Cash Flows(1)
| (In millions) | Nine Months Ended September 30, | |||
|---|---|---|---|---|
| 2022 | 2021 | |||
| Cash flows from operating activities: | ||||
| Net (loss) income | $ | (32.2) | $ | 1.3 |
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||
| Depreciation and amortization of long-lived assets | 13.2 | 12.7 | ||
| Goodwill impairment | 7.2 | — | ||
| Change in fair value of contingent consideration | (9.6) | — | ||
| Amortization of deferred financing costs and debt discount | 3.9 | 7.2 | ||
| Amortization of guaranty fee | 0.5 | 1.4 | ||
| Non-cash operating lease expense | 5.7 | 3.2 | ||
| Loss on sale of business | — | 2.2 | ||
| Gain on debt extinguishment | — | (6.5) | ||
| Gain on asset disposals | (7.0) | (15.8) | ||
| (Benefit from) provision for deferred income taxes | (2.6) | 2.6 | ||
| Prior service cost amortization for pension and postretirement plans | 0.6 | (1.7) | ||
| Stock-based compensation, net of associated income taxes | 6.5 | 6.6 | ||
| Foreign exchange | 3.2 | 1.1 | ||
| Changes in assets and liabilities: | ||||
| Accounts receivable | (26.2) | 1.5 | ||
| Contracts in progress | (48.2) | (9.4) | ||
| Advance billings on contracts | 28.9 | (20.6) | ||
| Inventories | (15.1) | (4.7) | ||
| Income taxes | (2.1) | (4.2) | ||
| Accounts payable | 39.6 | 7.4 | ||
| Accrued and other current liabilities | (10.8) | (44.8) | ||
| Accrued contract loss | 3.5 | (0.3) | ||
| Pension liabilities, accrued postretirement benefits and employee benefits | (27.1) | (47.1) | ||
| Other, net | 0.8 | 0.1 | ||
| Net cash used in operating activities | (67.4) | (107.8) | ||
| Cash flows from investing activities: | ||||
| Purchase of property, plant and equipment | (8.9) | (4.2) | ||
| Acquisition of business, net of cash acquired | (64.9) | (27.2) | ||
| Proceeds from sale of business and assets, net | 2.5 | 23.8 | ||
| Purchases of available-for-sale securities | (5.0) | (9.6) | ||
| Sales and maturities of available-for-sale securities | 8.5 | 11.4 | ||
| Other, net | 0.3 | — | ||
| Net cash used in investing activities | (67.6) | (5.9) |
| (In millions) | Nine Months Ended September 30, | |||
|---|---|---|---|---|
| 2022 | 2021 | |||
| Cash flows from financing activities: | ||||
| Issuance of senior notes | 5.5 | 151.2 | ||
| Borrowings on loan payable | 1.3 | 3.5 | ||
| Repayments on loan payable | (13.9) | — | ||
| Repayments under last out term loans | — | (75.4) | ||
| Borrowings under U.S. revolving credit facility | — | 14.5 | ||
| Repayments of U.S. revolving credit facility | — | (178.8) | ||
| Issuance of preferred stock, net | — | 111.9 | ||
| Payment of preferred stock dividends | (11.1) | (5.4) | ||
| Shares of common stock returned to treasury stock | (2.8) | (4.9) | ||
| Issuance of common stock, net | — | 160.9 | ||
| Debt issuance costs | 0.2 | (16.7) | ||
| Other, net | 1.8 | (1.6) | ||
| Net cash (used in) provided by financing activities | (19.1) | 159.2 | ||
| Effects of exchange rate changes on cash | (3.2) | 2.8 | ||
| Net (decrease) increase in cash, cash equivalents and restricted cash | (157.2) | 48.3 | ||
| Cash, cash equivalents and restricted cash at beginning of period | 226.7 | 67.4 | ||
| Cash, cash equivalents and restricted cash at end of period | $ | 69.5 | $ | 115.7 |
(1) Figures may not be clerically accurate due to rounding.
Exhibit 4
Babcock & Wilcox Enterprises, Inc.
Segment Information(1)
(In millions)
| SEGMENT RESULTS | Three Months Ended September 30, | Nine Months Ended September 30, | ||||||
|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | 2022 | 2021 | |||||
| REVENUES: | ||||||||
| Babcock & Wilcox Renewable | $ | 81.7 | $ | 38.0 | $ | 224.9 | $ | 105.2 |
| Babcock & Wilcox Environmental | 44.6 | 38.2 | 111.2 | 97.8 | ||||
| Babcock & Wilcox Thermal | 91.3 | 83.8 | 309.9 | 328.4 | ||||
| Other | (2.8) | (0.1) | (6.0) | (0.3) | ||||
| $ | 214.9 | $ | 160.0 | $ | 639.9 | $ | 531.1 | |
| ADJUSTED EBITDA: | ||||||||
| Babcock & Wilcox Renewable (5) | $ | 4.5 | $ | 11.4 | $ | 14.8 | $ | 15.0 |
| Babcock & Wilcox Environmental | 3.1 | 3.5 | 5.1 | 7.3 | ||||
| Babcock & Wilcox Thermal | 10.8 | 9.3 | 41.3 | 32.4 | ||||
| Corporate | (4.4) | (5.9) | (13.0) | (11.5) | ||||
| Research and development costs | (0.9) | 0.5 | (2.5) | (0.6) | ||||
| $ | 13.1 | $ | 18.9 | $ | 45.7 | $ | 42.6 | |
| AMORTIZATION EXPENSE: | ||||||||
| Babcock & Wilcox Renewable (2) | $ | 0.3 | $ | 0.3 | $ | 1.2 | $ | 0.6 |
| Babcock & Wilcox Environmental | 0.7 | 0.8 | 2.5 | 2.4 | ||||
| Babcock & Wilcox Thermal (3) | 0.4 | 1.0 | 2.3 | 2.3 | ||||
| $ | 1.4 | $ | 2.0 | $ | 6.1 | $ | 5.3 | |
| DEPRECIATION EXPENSE: | ||||||||
| Babcock & Wilcox Renewable | $ | 0.6 | $ | 0.7 | $ | 1.8 | $ | 2.2 |
| Babcock & Wilcox Environmental | 0.2 | 0.4 | 0.6 | 1.2 | ||||
| Babcock & Wilcox Thermal | 1.5 | 1.2 | 4.8 | 4.0 | ||||
| $ | 2.3 | $ | 2.3 | $ | 7.1 | $ | 7.4 | |
| As of September 30, | ||||||||
| BACKLOG: | 2022 | 2021 | ||||||
| Babcock & Wilcox Renewable (4) | $ | 374 | $ | 313 | ||||
| Babcock & Wilcox Environmental | 121 | 101 | ||||||
| Babcock & Wilcox Thermal | 233 | 130 | ||||||
| Other/Eliminations | 2 | (4) | ||||||
| $ | 730 | $ | 540 |
(1) Figures may not be clerically accurate due to rounding.
(2) Amortization expense in the Babcock & Wilcox Renewable segment includes $0.3 million and $0.7 million in finance lease amortization for the three and nine months ended September 30, 2022, respectively. Amortization expense in the Babcock & Wilcox Renewable segment includes $0.3 million and $0.6 million in finance lease amortization for the three and nine months ended September 30, 2021, respectively.
(3) Amortization expense in the Babcock & Wilcox Thermal segment includes $0.7 million and $2.2 million in finance lease amortization for the three and six months ended September 30, 2022, respectively. Amortization expense in the Babcock & Wilcox Thermal segment includes $0.9 million and $2.2 million in finance lease amortization for the three and nine months ended September 30, 2021, respectively.
(4) Babcock & Wilcox Renewable backlog at September 30, 2022, includes $129.7 million related to long-term operation and maintenance contracts for renewable energy plants, with remaining durations extending until 2034. Generally, such contracts have a duration of 10-20 years and include options to extend.
(5) Adjusted EBITDA for the nine months ended September 30, 2022 includes a $7.0 million non-recurring gain on sale related to development rights of a future solar project that was sold as well as the reduction to Selling, General and Administrative Costs of $9.6 million for the three and nine months ended September 30, 2022 that resulted from the reversal of the contingent consideration related to an acquisition.
Exhibit 5
Babcock & Wilcox Enterprises, Inc.
Reconciliation of Adjusted EBITDA(3)
(In millions)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | 2022 | 2021 | |||||
| Net (loss) income | $ | (20.6) | $ | 13.6 | $ | (32.2) | $ | 1.3 |
| Interest expense | 12.8 | 8.9 | 37.2 | 31.8 | ||||
| Income tax (benefit) expense | 4.9 | 0.3 | 4.8 | 6.7 | ||||
| Depreciation & amortization | 4.8 | 4.3 | 16.8 | 12.7 | ||||
| EBITDA | 1.9 | 27.2 | 26.4 | 52.5 | ||||
| Benefit plans, net | (7.4) | (9.9) | (22.3) | (24.9) | ||||
| (Gain) loss on sales, net | — | (13.8) | (0.2) | (13.6) | ||||
| Stock compensation | 3.4 | 0.2 | 5.2 | 8.0 | ||||
| Restructuring activities and business services transition costs | 1.7 | 4.6 | 6.2 | 8.0 | ||||
| Advisory fees for settlement costs and liquidity planning | — | 1.0 | 1.9 | 5.0 | ||||
| Settlement and related legal costs | 0.8 | 0.6 | 7.2 | 2.1 | ||||
| Gain on debt extinguishment | — | — | — | (6.5) | ||||
| Acquisition pursuit and related costs | 2.6 | 4.0 | 4.8 | 4.0 | ||||
| Product development (1) | 0.8 | 2.4 | 2.6 | 2.7 | ||||
| Foreign exchange | 2.0 | 1.7 | 3.2 | 1.1 | ||||
| Financial advisory services | 0.4 | 0.3 | 1.1 | 2.6 | ||||
| Contract step-up purchase price adjustment | — | — | 1.7 | — | ||||
| Goodwill impairment | 7.2 | — | 7.2 | — | ||||
| Loss from business held for sale | — | — | — | 0.5 | ||||
| Other - net | (0.4) | 0.7 | 0.7 | 1.2 | ||||
| Adjusted EBITDA(2) | $ | 13.1 | $ | 18.9 | $ | 45.7 | $ | 42.6 |
(1) Costs associated with development of commercially viable products that are ready to go to market.
(2) Adjusted EBITDA for the nine months ended September 30, 2022 includes a $7.0 million non-recurring gain on sale related to development rights of a future solar project that was sold as well as the reduction to Selling, General and Administrative Costs of $9.6 million for the three and nine months ended September 30, 2022 that resulted from the reversal of the contingent consideration related to an acquisition.
(3) Figures may not be clerically accurate due to rounding.
bwircompanyoverview-nove
B A B C O C K & W I L C O X E N T E R P R I S E S , I N C .© 2022 Babcock & Wilcox Enterprises, Inc. All rights reserved. 1 Company Overview November 8, 2022
B A B C O C K & W I L C O X E N T E R P R I S E S , I N C .© 2022 Babcock & Wilcox Enterprises, Inc. All rights reserved. 2 B&W Enterprises cautions that this presentation contains forward-looking statements within the meaning of federal securities laws. All statements other than statements of historical or current fact included in this presentation are forward-looking statements, including, without limitation, statements relating to the company's business outlook and expected financial performance, including adjusted EBITDA and sales targets, expectations regarding future growth, expansion and profitability, as well as statements about B&W’s future pipeline of new projects and business within its Renewable, Environmental and Thermal operating segments and their impact on future shareholder value. These forward-looking statements are based on management’s current expectations and involve a number of risks and uncertainties, including, among other things, the impact of COVID-19 or other similar global health crises; the impact of the ongoing conflict in Ukraine; the impact of global macroeconomic conditions, including inflation and volatility in the capital markets; our ability to integrate acquired businesses and the impact of those acquired businesses on our cash flows, results of operations and financial condition, including our acquisitions of Fosler Construction Company Inc., VODA A/S, Fossil Power Systems, Inc., and Optimus Industries, LLC; our recognition of any asset impairments as a result of any decline in the value of our assets or our efforts to dispose of any assets in the future; our ability to obtain and maintain sufficient financing to provide liquidity to meet our business objectives, surety bonds, letters of credit and similar financing; our ability to comply with the requirements of, and to service the indebtedness under, our debt facility agreements; our ability to pay dividends on our 7.75% Series A Cumulative Perpetual Preferred Stock; our ability to make interest payments on our 8.125% senior notes due 2026 and our 6.50% notes due 2026; the highly competitive nature of our businesses and our ability to win work, including identified project opportunities in our pipeline; general economic and business conditions, including changes in interest rates and currency exchange rates; cancellations of and adjustments to backlog and the resulting impact from using backlog as an indicator of future earnings; our ability to perform contracts on time and on budget, in accordance with the schedules and terms established by the applicable contracts with customers; failure by third-party subcontractors, partners or suppliers to perform their obligations on time and as specified; our ability to successfully resolve claims by vendors for goods and services provided and claims by customers for items under warranty; our ability to realize anticipated savings and operational benefits from our restructuring plans, and other cost-savings initiatives; our ability to successfully address productivity and schedule issues in our B&W Renewable, B&W Environmental and B&W Thermal segments; our ability to successfully partner with third parties to win and execute contracts within our B&W Renewable, B&W Environmental and B&W Thermal segments; changes in our effective tax rate and tax positions, including any limitation on our ability to use our net operating loss carryforwards and other tax assets; our ability to successfully manage research and development projects and costs, including our efforts to successfully develop and commercialize new technologies and products; the operating risks normally incident to our lines of business, including professional liability, product liability, warranty and other claims against us; difficulties we may encounter in obtaining regulatory or other necessary permits or approvals; changes in actuarial assumptions and market fluctuations that affect our net pension liabilities and income; our ability to successfully compete with current and future competitors; our ability to negotiate and maintain good relationships with labor unions; changes in pension and medical expenses associated with our retirement benefit programs; social, political, competitive and economic situations in foreign countries where we do business or seek new business; and the other factors specified and set forth under "Risk Factors" in our periodic reports filed with the Securities and Exchange Commission, including, without limitation, the risks described in the Company's Annual Report on Form 10-K for the year ended December 31, 2021 and Quarterly Report on Form 10-Q for the quarter ended September 30, 2022 under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" (as applicable). These factors should be considered carefully, and B&W Enterprises cautions you not to place undue reliance on these forward-looking statements, which speak only as of the date of this presentation, and undertakes no obligation to update or revise any forward-looking statement, except to the extent required by applicable law. Non-GAAP Financial Measures This presentation contains information regarding our adjusted EBITDA, which is a non-GAAP financial measure. Adjusted EBITDA on a consolidated basis is defined as the sum of the adjusted EBITDA for each of the segments, further adjusted for corporate allocations and research and development costs. At a segment level, adjusted EBITDA presented is consistent with the way our chief operating decision maker reviews the results of operations and makes strategic decisions about the business and is calculated as earnings before interest expense, tax, depreciation and amortization adjusted for items such as gains or losses arising from the sale of non-income producing assets, net pension benefits, restructuring costs, impairments, gains and losses on debt extinguishment, costs related to financial consulting, research and development costs and other costs that may not be directly controllable by segment management and are not allocated to the segment. We present consolidated Adjusted EBITDA because we believe it is useful to investors to help facilitate comparisons of our ongoing, operating performance before corporate overhead and other expenses not attributable to the operating performance of our revenue generating segments. In this presentation, we also present certain targets for our adjusted EBITDA in the future; these targets are not intended as guidance regarding how we believe the business will perform. We are unable to reconcile these targets to their GAAP counterparts without unreasonable effort and expense due to the aspirational nature of these targets. Safe Harbor Statement
B A B C O C K & W I L C O X E N T E R P R I S E S , I N C .© 2022 Babcock & Wilcox Enterprises, Inc. All rights reserved. 3 Next Generation B&W The next generation Babcock & Wilcox is providing innovative environmental, renewable and energy transition solutions, generating recurring revenues from a broad thermal installed base and expanding globally Global Brand Equity Supporting a Circular Economy For our economy and future generations, we continually develop ecologically sound ways of utilizing and recycling valuable resources like biomass, municipal waste, and solar energy to create clean, renewable baseload power while reducing greenhouse gas emissions. The Clear Choice for Our Climate As an industry leader in providing advanced air emissions control, energy recovery, carbon capture and hydrogen production technologies, our engineered solutions are designed to reduce the environmental impact of industrial processes. Efficient. Safe. Reliable. From the initial patent for the water-tube safety boiler to the world’s first supercritical boiler to technologies using the latest advanced steam cycles, our robust thermal energy designs deliver availability and long-term operation. B&W FOUNDATION DRIVES GROWTH STRATEGY Research & Innovation Vast Installed Base Advanced Technologies High-Growth End Markets
B A B C O C K & W I L C O X E N T E R P R I S E S , I N C .© 2022 Babcock & Wilcox Enterprises, Inc. All rights reserved. 4 Waste-to-energy and biomass-to-energy baseload power, chemical recovery boilers for pulp & paper, long duration energy storage, solar power installation & services Technologies for Renewable Power & Resource Recovery Emissions control, ash handling systems for bottom and fly ash, wet/dry/hybrid cooling systems, energy recovery, ClimateBrightTM hydrogen production and decarbonization technologies Technologies for a Clean Environment Boilers, ancillary equipment and global aftermarket parts, service and upgrade offerings to effectively utilize a wide range of fuels for power or industrial applications Technologies for Efficient Steam Generation Delivering value to our customers through technology-driven products and services, with 600 active patents worldwide; continual product improvement and research and development to support future energy needs, including carbon capture What We Do ENVIRONMENTAL THERMAL RENEWABLE
B A B C O C K & W I L C O X E N T E R P R I S E S , I N C .© 2022 Babcock & Wilcox Enterprises, Inc. All rights reserved. 5 B&W is positioned to capitalize on global trends driving the need for environmental and renewable solutions Key Market Drivers & Opportunities U.S. Inflation Reduction Act increases the investment into emerging technologies for low carbon intensity solutions Water scarcity and regulations drive need for custom cooling solutions A strong utility boiler installed base drives stable aftermarket in the U.S. while growth in international power generation continues Increasing global regulatory restrictions on landfilling and methane benefit waste-to-energy Global drive toward renewable and reusable energy sources to limit carbon and methane emissions Increasing global investment in clean energy infrastructure, including solar, energy storage, and the hydrogen economy
B A B C O C K & W I L C O X E N T E R P R I S E S , I N C .© 2022 Babcock & Wilcox Enterprises, Inc. All rights reserved. 6 Key Growth Strategies Core growth strategies focused on driving innovative environmental, renewable and energy transition technologies, growing aftermarket sales by leveraging the installed base, and expanding internationally in key regions Leverage a vast installed base and stable U.S. market to drive aftermarket parts and service sales and generate strong cash flow Provide best-in-class environmental technologies to customers across a broad array of markets to meet growing environmental regulations Meet the global need for carbon reduction with patented renewable waste-to-energy, biomass, hydrogen production, solar and carbon-capture solutions Accelerate growth by expanding sales, service and business development teams in key international regions to serve the broad renewable, environmental and thermal markets
B A B C O C K & W I L C O X E N T E R P R I S E S , I N C .© 2022 Babcock & Wilcox Enterprises, Inc. All rights reserved. 7 A vast global installation of B&W’s core technologies at utility and industrial plants, renewable plants and pulp & paper facilities create a large growth opportunity for parts, services and retrofits Installed & Proven Technologies Nearly 2,000 wet, dry and hybrid cooling system units (10,000+ cells) installed across the globe More than 300 operating baseload power generation boilers in the U.S. and nearly 200 operating utility and industrial boiler units across 38 countries outside of North America (excluding waste- to-energy and biomass) More than 500 waste-to-energy and biomass-to-energy units at more than 300 facilities in more than 30 countries, serving a wide range of utility, waste management, municipality and investment firm customers More than 5,000 industrial water-tube package boilers and other waste heat recovery products installed in a variety of facilities, including refining, petrochemical, food processing, metals and mining, carbon black and wood products Large worldwide installed base of wet and dry scrubbers, particulate control equipment, NOx reduction technologies, and mercury control systems to meet environmental regulations at a wide range of utility and industrial installations More than 100 MW of clean solar power production installed
B A B C O C K & W I L C O X E N T E R P R I S E S , I N C .© 2022 Babcock & Wilcox Enterprises, Inc. All rights reserved. 8 Company Profile Babcock & Wilcox is a global leader in advanced environmental, renewable and thermal technologies and services for power and industrial applications. B&W Renewable Power Generation 72% Industrial 28% Aftermarket & Upgrades 12% Parts & Services 49% North America 41% Europe 48% Asia & Other 11% New Build 39% Industrial 34% Power Generation 66% Aftermarket & Upgrades 32% Parts & Services 44% North America 62% Europe 20% New Build 24% Asia & Other 18% Headquarters: Akron OH, USA Founded: 1867 Ownership: Public (NYSE:BW) Employees: ~2150 LTM Revenue September 2022: ~$832M 2023 EBITDA Target: $100M to $120M Corporate Snapshot Notes: All charts based on LTM September 30, 2022 revenues, unless otherwise noted. 1. Backlog does not include shorter lead-time parts and services Consolidated B&W Thermal Industrial 36% Power Generation 64% Aftermarket & Upgrades 46% Parts & Services 43% North America 82% Europe 2% Asia & Other 16% New Build 11% B&W Environmental Industrial 37% Power Generation 63% Aftermarket & Upgrades 31% Parts & Services 37% North America 44% Europe 21% New Build 32% Asia & Other 35% 33% 17% 50% LTM Revenue Backlog1 as of September 30, 2022 51% 17% 27% B&W Renewable B&W Environmental B&W Thermal
B A B C O C K & W I L C O X E N T E R P R I S E S , I N C .© 2022 Babcock & Wilcox Enterprises, Inc. All rights reserved. 9 60-70% 10-15% 15-25% Global Expansion Europe More than $8B 2022-2024 Addressable Market Americas Solar: More than $27B Other: More than $8B 2022-2024 Addressable Market Middle East & Africa More than $4B 2022-2024 Addressable Market Asia-Pacific More than $8B 2022-2024 Addressable Market Manufacturing Service Facilities Construction Sales/Support Future Sales/Support Sales Reps Future Sales Reps Future Service Facilities Americas APAC Europe ME/A $435 $218 $534 $118 $ M IL LI O N S Americas APAC Europe ME/A $1,364 $1,131 $2,153 $449$ M IL LI O N S Americas APAC Europe ME/A $940 $147 $2 $539 $ M IL LI O N S B&W RENEWABLE B&W ENVIRONMENTAL B&W THERMAL 3- Ye ar P ip el in e Global footprint and ongoing expansion positions B&W to leverage market trends around the world Disclaimer: B&W Enterprises cautions not to place undue reliance on any forward-looking statements, which speak only as of the date of this presentation and may be impacted by the risks described in our SEC reports including, without limitation, the impact of COVID-19 on us and the capital markets and global economic climate generally. We undertake no obligation to update or revise any forward-looking statement, except to the extent required by applicable law. Total pipeline more than $7.8 billion over the next 3 years excluding parts & services Target Revenue Split 2023
B A B C O C K & W I L C O X E N T E R P R I S E S , I N C .© 2022 Babcock & Wilcox Enterprises, Inc. All rights reserved. 10 BrightLoop Hydrogen Production Solid Fuels can be used as the feedstock Low Carbon Intensity from >95+% pure CO2 stream Low-Cost Hydrogen production due to efficient process
B A B C O C K & W I L C O X E N T E R P R I S E S , I N C .© 2022 Babcock & Wilcox Enterprises, Inc. All rights reserved. 11 BrightLoop Evolution 1994 - 2004 2008 2014 2023 Laboratory Scale Sub-Pilot with The Ohio State University and B&W 25 Kilowatts Thermal Industrial Commercial 2.5 to 25 Megawatts Thermal 1.5 to 15 Tons Per Day Hydrogen Output Utility Commercial 100 – 550 Megawatts Thermal 60 – 320 Tons Per Day Hydrogen Output COMPLETED Steam & Hydrogen 250 Kilowatts Thermal 2024 BrightLoop Hydrogen Production Progress (National Carbon Capture Center in Alabama) SUB-PILOT SCALE PILOT SCALERESEARCH STAGE
B A B C O C K & W I L C O X E N T E R P R I S E S , I N C .© 2022 Babcock & Wilcox Enterprises, Inc. All rights reserved. 12 Global Leader in Clean Power Production Technologies B&W’s portfolio of clean power production solutions continues to evolve to reach customers at all stages of their energy transition. B&W is at the forefront of developing CO2 capturing technologies Multiple technologies ready for commercial demonstration 93 active patents related to carbon capture technology Positioned to provide critical solutions to meet global climate goals BrightLoop™ HYDROGEN PRODUCTION OxyBright™ OXYGEN-FUEL COMBUSTION SolveBright™ POST-COMBUSTION CARBON CAPTURE BrightGen™ HYDROGEN COMBUSTION Long Duration Energy Storage Green Steam Direct Air Capture HOT SAND SILO COLD SAND SILO ClimateBright™ EMERGING TECHNOLOGIES
B A B C O C K & W I L C O X E N T E R P R I S E S , I N C .© 2022 Babcock & Wilcox Enterprises, Inc. All rights reserved. 13 B&W is actively deploying technology that curbs the global warming impact of methane B&W’s Waste-to-Energy Technology Reduces Methane Emissions Methane has 84 times the Global Warming Potential (GWP) of CO2 i Annual additions to landfills in the U.S.ii produce emissions equivalent to 10 million cars Landfills in the U.S.iii emit more than 330 million tons of 20-year basis GWP each year, roughly equal to 70 million carsiv Waste-to-Energy (WTE) avoids landfilling while producing baseload clean energy WTE Technologies Boiler/steam generation island DynaGrate® combustion grate Fuel handling systems Emissions control equipment B&W’s state-of-the-art technology has been installed in more than 500 units in more than 30 countries, including: • The most recent WTE facility in the U.S. (Palm Beach Renewable Energy Facility, Florida) • One of the world’s largest waste treatment facilities in the world (Shenzhen East, China) i Anthropogenic and Natural Radiative Forcing. In: Climate Change 2013: The Physical Science Basis. Contribution of Working Group I to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change [Stocker, T.F., D. Qin, G.-K. Plattner, M. Tignor, S.K. Allen, J. Boschung, A. Nauels, Y. Xia, V. Bex and P.M. Midgley (eds.)]. Cambridge University Press, Cambridge, United Kingdom and New York, NY, USA. https://www.ipcc.ch/site/assets/uploads/2018/02/WG1AR5_Chapter08_FINAL.pdf; 20-year basis ii EIA Biomass Explained: Waste-to-energy (Municipal Solid Waste), November 29, 2020 https://www.eia.gov/energyexplained/biomass/waste-to-energy.php iii EPA Landfill Methane Outreach Program: Project and Landfill Data by State; https://www.epa.gov/lmop/project-and-landfill-data-state#:~:text=The%20LMOP%20Landfill%20and%20Landfill,more%20than%202%2C600%20MSW%20landfills and EPA U.S. Greenhouse Gas Inventory 2020, Chapter 7: Waste, Section 7.1 Landfills (CRF Source Category 5A1) iv Equivalent car emissions calculated using EPA metric of 4.6 metric tons of CO2 per year per passenger car
B A B C O C K & W I L C O X E N T E R P R I S E S , I N C .© 2022 Babcock & Wilcox Enterprises, Inc. All rights reserved. 14 Financial Information
B A B C O C K & W I L C O X E N T E R P R I S E S , I N C .© 2022 Babcock & Wilcox Enterprises, Inc. All rights reserved. 15 ($ in Millions) Twelve Months Ended September 30, 2022 Twelve Months Ended December 31, 2021 Twelve Months Ended December 31, 2020 Reported Pro Forma Exc. Non-Recurring Insurance Revenue $ 832.2 $ 723.4 $ 566.3 $ 566.3 Operating Income (Loss) $ ( 3.7) $ 20.8 $ (1.7) $ (27.7) Net Income (loss) $ (2.0) $ 31.5 $ (10.3) $ (36.3) Net income (loss) attributable to stockholders of common stock $ (2.7) $ 21.8 $ (10.3) $ (36.3) Adjusted EBITDA $ 73.6 $ 70.6 $ 45.7 $ 19.7 Adjusted EBITDA Margin % 8.8% 9.8% 8.1% 3.5% Positioning for improved performance and growth in 2023 Consolidated Financial Summary Note: 2020 Reported results include the recognition in Q3 2020 of a $26.0 million non-recurring loss recovery settlement related to certain historical EPC loss contracts; 2020 Pro Forma results exclude the non-recurring $26.0 million loss recovery settlement; figures may not be clerically accurate due to rounding; see SEC financial filings and/or slides in Appendix for reconciliation of non-GAAP measures; COVID-19 adversely impacted all segments in 2020 and 2021.
B A B C O C K & W I L C O X E N T E R P R I S E S , I N C .© 2022 Babcock & Wilcox Enterprises, Inc. All rights reserved. 16 Capital Structure Note: Figures may not be clerically accurate due to rounding. (1) See SEC financial filings and/or slides in Appendix for reconciliation of non-GAAP measures. (2) Net Debt compared to LTM 9/30/2022 Adjusted EBITDA
B A B C O C K & W I L C O X E N T E R P R I S E S , I N C .© 2022 Babcock & Wilcox Enterprises, Inc. All rights reserved. 17 Appendix
B A B C O C K & W I L C O X E N T E R P R I S E S , I N C .© 2022 Babcock & Wilcox Enterprises, Inc. All rights reserved. 18 Leadership Team Chairman and Chief Executive Officer Kenny Young General Counsel John Dziewisz Chief Operating Officer Jimmy Morgan Chief Financial Officer Lou Salamone Clean Energy, SVP Joe Buckler Chief Strategy and Technology Officer Brandy Johnson Sarah Serafin VP, Corporate Development Chris Riker Thermal, SVPVP, Corporate Operations Gillianne Hetrick
B A B C O C K & W I L C O X E N T E R P R I S E S , I N C .© 2022 Babcock & Wilcox Enterprises, Inc. All rights reserved. 19 Joseph Tato Philip MoellerAlan Howe Rebecca Stahl Corporate Governance Board of Directors Advisory Board Chairman and Chief Executive Officer Kenny Young Henry Bartoli Rod O’Connor Phillip Piddington Peter O’Keefe Eric Powell Homaira Akbari
B A B C O C K & W I L C O X E N T E R P R I S E S , I N C .© 2022 Babcock & Wilcox Enterprises, Inc. All rights reserved. 20 Twelve Months Ended Twelve Months ended Sep 30, 2022 (4) Dec 31, 2021 Dec 31, 2020 (3) Net income (loss) $ (2.1) $31.5 $ (10.3) Interest expense 46.8 41.4 60.7 Income tax (benefit) expense (4.1) (2.2) 8.2 Depreciation & amortization 22.4 18.3 16.8 EBITDA 63.0 89.0 75.4 Goodwill impairment 7.2 — — Benefit plans, net (45.5) (48.1) (5.6) Gain on sales, net (0.6) (14.0) (3.2) (Gain) loss on debt extinguishment — (6.5) 6.2 Stock compensation 7.7 10.5 4.6 Restructuring activities and business services transition costs 8.9 10.7 11.8 Advisory fees for settlement costs and liquidity planning 2.4 5.5 6.4 Litigation legal costs 10.0 4.9 2.1 Acquisition pursuit and related costs 5.6 4.8 — Product development (2) 4.6 4.7 — Foreign exchange 6.5 4.3 (58.8) Financial advisory services 1.3 2.7 4.4 Contract step-up purchase price adjustment 1.7 — — Loss from business held for sale — 0.5 0.5 Other – net 0.8 1.6 3.7 Income from discontinued operations — — (1.8) Adjusted EBITDA $73.6 $70.6 $45.7 Adjusted EBITDA Reconciliation(1) $ in Millions 1) Figures may not be clerically accurate due to rounding 2) Cost associated with development of commercially viable products that are ready to go to market 3) 4) Adjusted EBITDA for the twelve months ended December 31, 2020, include the recognition of a $26.0 million loss recovery settlement related to certain historical EPC loss contracts in the third quarter, as previously disclosed. Adjusted EBITDA for the twelve months ended September 30, 2022 include a $7.0 million non-recurring gain on sale related to development rights of a future solar project that was sold.
B A B C O C K & W I L C O X E N T E R P R I S E S , I N C .© 2022 Babcock & Wilcox Enterprises, Inc. All rights reserved. 21 Key Technologies
B A B C O C K & W I L C O X E N T E R P R I S E S , I N C .© 2022 Babcock & Wilcox Enterprises, Inc. All rights reserved. 22 Reduces dependency on landfills and reduces methane gas emissions Fuels: MSW, RDF Waste-to-Energy Boilers Single-drum, industry-standard unit for improved mill operation Fuels: Black liquor Process Recovery Boilers High pressure, high efficiency, high capacity, low emissions Fuel: Coal, oil, natural gas, multi-fuel Utility Boilers Bottom- or top-supported, shop- or field-assembled Fuel: Natural gas, oil, CO, waste heat and gases Natural Gas-Fired and Other Industrial Water-Tube and Fire-Tube Boilers Carbon-neutral technology Fuels: Wood, wood waste, straw, sludge Biomass-Fired Boilers Key Technologies: Steam Generation Pressure parts, casing, ducting, drums, housing and frames Fuel: Waste heat and gases Heat Recovery Steam Generator Components
B A B C O C K & W I L C O X E N T E R P R I S E S , I N C .© 2022 Babcock & Wilcox Enterprises, Inc. All rights reserved. 23 Large installed base with diverse set of customers Grate design allows for high availability and long operational time, leading to reduced O&M cost High thermal efficiency and low emissions Fuel flexibility Factory assembled modules reduce field construction A Market Leader with Differentiating Technology in Waste-to-Energy Solutions DynaGrate® Pivoting Combustion Grate Key Technologies: Renewable Combustion Grates
B A B C O C K & W I L C O X E N T E R P R I S E S , I N C .© 2022 Babcock & Wilcox Enterprises, Inc. All rights reserved. 24 Emission Technology Solution Particulate Control Pulse Jet Fabric Filters (PJFF) / Baghouses Wet and Dry Electrostatic Precipitators (ESPs) Wet Particulate Scrubbers Multiclone® Dust Collectors Selective Catalytic and Non-catalytic Reduction (SCR/SNCR) Low NOX Burners and Combustion Systems NOx Control Wet or Seawater Flue Gas Desulfurization (FGD) Systems Semi-dry FGDs (Spray Dry Absorbers, Circulating Dry Scrubbers) Wet ESPs Dry Sorbent Injection (DSI) SO2 / Acid Gas Control Wet ESPs Dry Sorbent Injection (DSI)SO3 / Acid Mist Control Powdered Activated Carbon Injection Absorption Plus™, MercPlus™, Mitagent™ Additives GMAB™ ADIOX® and MERCOX® technologies Mercury, Dioxins, Furans Wastewater Evaporation System (WES) via Spray Drying Air-Cooled CondensersWastewater Elimination Key Technologies: Emissions Controls
B A B C O C K & W I L C O X E N T E R P R I S E S , I N C .© 2022 Babcock & Wilcox Enterprises, Inc. All rights reserved. 25 Field Services Component & System Upgrades Control Systems Replacement & Spare Parts Operation & Maintenance DynaGrate® combustion grate DynaDischarger® ash removal Water-cooled wear zones and Inconel® corrosion protection VoluMix® system for improved combustion Fabric filter baghouse Wet scrubber with ADIOX® including energy recovery On-line boiler washing system Selective non-catalytic reduction (SNCR) NOx control DynaFeeder® waste fuel feeder system Dry cooling systems Energy storage systems Carbon capture solutions Key Technologies: Comprehensive Waste-to-Energy Solutions
B A B C O C K & W I L C O X E N T E R P R I S E S , I N C .© 2022 Babcock & Wilcox Enterprises, Inc. All rights reserved. 26 An innovative solution to eliminate ash ponds Key Technologies: Submerged Grind Conveyor Ash Handling Designed to meet current and future U.S. regulatory requirements for ash handling with: Lower equipment cost Lower installation cost • Utilize existing hoppers and gate valves • No modification to hopper Short outage required Short lead time Available redundancy under the boiler Lower O&M costs
B A B C O C K & W I L C O X E N T E R P R I S E S , I N C .© 2022 Babcock & Wilcox Enterprises, Inc. All rights reserved. 27 Proven technologies with installations in more than 70 countries, including more than 11,000 ignitors Key Technologies: Ignitors, Flame Scanners and Controls Designed for safety, reliability and fuel flexibility Natural gas conversions from oil or coal-firing Alternative energy fuels such as hydrogen, bio-diesel, methanol and bio-gas Burner management and controls for complete turnkey system capability Flame scanning capability can be effectively implemented on any industrial application New construction or retrofit projects Safety standards conforming to National Fire Protection Association (NFPA) classes
B A B C O C K & W I L C O X E N T E R P R I S E S , I N C .© 2022 Babcock & Wilcox Enterprises, Inc. All rights reserved. 28 Proven experience in heat transfer and steam generating equipment for use in a wide range of applications. Key Technologies: Engineered Products and HRSG Components Engineered products and solutions, quality manufacturing Comprehensive mechanical and process design upgrades Chanute, Kansas, manufacturing facility has produced more HRSG components than any other facility in North America • Pressure part modules and coils, superheaters, economizers • Finned tubing • Casing • Ducting • Steam drums • Housing and frames Firetube and watertube package boilers Sulfuric acid plant capabilities
B A B C O C K & W I L C O X E N T E R P R I S E S , I N C .© 2022 Babcock & Wilcox Enterprises, Inc. All rights reserved. 29 Benefits of a solar addition: 1. Powering up/down operations 2. Supplemental/plant energy source 3. Additional MW/GW output Key Technologies: Solar Installation High efficiency. Low emissions. Integrated solutions for clean power production. Engineering & Procurement • Project Cost Analysis • Grid Integration and Interconnection • Technical Evaluation • AC and DC Engineering Industry-leading EPC Services Construction • Subcontractor Management • On-Site Construction Management • Coordination and Supervision of Projects • Utility Interconnections • Quality and Commissioning Control • Electrical and Structural QA/QC • Permitting and AHJ Permissions • Logistics • Strategic Procurement of Structural Components and Electrical BOE
B A B C O C K & W I L C O X E N T E R P R I S E S , I N C .© 2022 Babcock & Wilcox Enterprises, Inc. All rights reserved. 30 Key Technologies: Long Duration Energy Storage Long duration energy storage smooths renewable energy peaks and bridges weather events NREL Enduring: (8-100 hours storage) Electric heater (stores heat in sand) Air Brayton Combined Cycle B&W offers Pressurized or Atmospheric Fluidized Bed technology for long duration energy storage B&W also has an exclusive option to license NREL’s Enduring long duration energy storage technology
B A B C O C K & W I L C O X E N T E R P R I S E S , I N C .© 2022 Babcock & Wilcox Enterprises, Inc. All rights reserved. 31 Specialized services to maximize plant performance and minimize costs and maintenance Optimization Services Water preservation technology customized for high-performance, long-life, low noise, corrosion-resistant applications Air-Cooled Condensers Cost-effective designs using embedded or wrapped tubes to meet required thermal, mechanical, noise and space requirements Air Fin Coolers Counterflow for cost-effective thermal performance; crossflow for low energy consumption and operating costs Mechanical Draft Fanless design provides low power, noise and maintenance, as well as long operating lifecycle Natural Draft/Hyperbolic WET MATERIAL OPTIONS: WOOD | CONCRETE | FIBER-REINFORCED POLYMER (FRP) Key Technologies: Cooling Systems DRY
B A B C O C K & W I L C O X E N T E R P R I S E S , I N C .© 2022 Babcock & Wilcox Enterprises, Inc. All rights reserved. 32 Key Technologies: Global Parts & Service Upgrades & Retrofits Replacement Parts Optimization Systems Engineering Services Adding value through constructability: Safe execution of new installation, retrofits, system maintenance/repair, plant modifications Construction Evaluating options for improved performance: Expert people, tools and processes to measure, model, design, deliver, train and project manage Enhancing efficiency with proven technology: Diagnostic, monitoring, tuning and control systems for combustion, cleaning and cooling equipment Supplying components for system reliability: High-quality standard or custom-engineered pressure and non-pressure parts Maintaining/improving plant operation: Projects for extending the life of power, process and environmental equipment
B A B C O C K & W I L C O X E N T E R P R I S E S , I N C .© 2022 Babcock & Wilcox Enterprises, Inc. All rights reserved. 33 Key Technologies: Steam Generation & Environmental Solutions Across a Utility Plant Steam Generator Technology Pulverizers Furnace Burners and ignitors Sootblowers Pressure parts Air heaters and air heating cleaning systems Bottom ash handling systems B&W provides a comprehensive array of proprietary technology and experience to utility power generation customers Environmental Solutions Particulate control Nitrogen oxides (NOx) removal Sulfur removal Mercury, dioxin and furan removal Fly ash handling systems Wastewater elimination Dry Scrubbing Technologies Particulate Control Technologies Particulate Control Technologies Fly Ash Handling Wet Scrubbing Technologies Fly Ash Handling Bottom Ash Handling Boiler Auxiliary Components: Fans, Air Heaters, etc. Boiler Pressure Parts Boiler Cleaning Equipment Burners Pulverizers SCR NOx Control Technologies
B A B C O C K & W I L C O X E N T E R P R I S E S , I N C .© 2022 Babcock & Wilcox Enterprises, Inc. All rights reserved. 34