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): June 28, 2024
| 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 1.01 Entry into a Material Definitive Agreement
On June 28, 2024, Babcock & Wilcox Enterprises, Inc. (the “Company”), through B&W PGG Luxembourg Finance Sárl, a subsidiary of the Company (the “Seller”), entered into an agreement to sell the entire issued and outstanding share capital of its subsidiary, Babcock & Wilcox Renewable Service A/S (“BWRS”), to Hitachi Zosen Inova AG (the “Buyer” and such agreement, the “Purchase Agreement”). The sale of BWRS to the Buyer was completed the same day.
The Purchase Agreement provides for a base purchase price equal to approximately $87 million, subject to certain debt and working capital upward or downward adjustments. The Purchase Agreement also includes customary representations and warranties regarding BWRS and its business and assets, as well as certain indemnities with respect thereto. The Company will also undertake a 24-month non-competition and non-solicitation agreement with the Buyer.
The Company does not have any material relationship with the Buyer other than in respect of the transaction.
Item 2.01 Completion of Acquisition or Disposition of Assets
The information presented in Item 1.01 of this Form 8-K is incorporated herein by reference.
Item 7.01 Regulation FD Disclosure
On July 1, 2024, the Company issued a press release announcing the sale of BWRS to the Buyer. A copy of the press release 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 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, 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 | Unaudited Pro Forma Condensed Consolidated Financial Information |
| 99.2 | Press Release, dated July 1, 2024 |
| 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. | ||
|---|---|---|
| July 1, 2024 | By: | /s/ Louis Salamone |
| Louis Salamone | ||
| Executive Vice President, Chief Financial Officer <br>(Principal Accounting Officer and Duly Authorized Representative) |
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Document
BABCOCK & WILCOX ENTERPRISES, INC.
INDEX TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma condensed consolidated financial information, which is based upon estimates by our management, is presented for informational purposes only. It is not intended to be indicative of the actual consolidated results of operations or the actual consolidated financial position that would have been achieved had the transactions or adjustments been consummated as of the dates indicated below, and it does not purport to indicate results that may be attained in the future.
BABCOCK & WILCOX ENTERPRISES, INC.
INDEX TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
| PAGE | |
|---|---|
| Unaudited Pro Forma Condensed Consolidated Balance Sheet as of March 31, 2024 | 3 |
| Unaudited Pro Forma Condensed Consolidated Statement of Operations for the Three Months Ended March 31, 2024 | 4 |
| Unaudited Pro Forma Condensed Consolidated Statement of Operations and Comprehensive Income for the Year Ended December 31, 2023 | 5 |
| Notes to the Pro Forma Condensed Consolidated Balance Sheet as of March 31, 2024 | 6 |
| Notes to the Pro Forma Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2024 and the Year Ended December 31, 2023 | 6 |
BABCOCK & WILCOX ENTERPRISES, INC.
INDEX TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
On June 28, 2024, Babcock & Wilcox Enterprises, Inc. (the “Company”), through B&W PGG Luxembourg Finance Sárl, a subsidiary of the Company (the “Seller”), entered into an agreement to sell the entire issued and outstanding share capital of its subsidiary, Babcock & Wilcox Renewable Services A/S (“BWRS”), to Hitachi Zosen Inova AG (the “Buyer” and such agreement, the “Purchase Agreement). The Sale of BWRS to the Buyer was competed the same day.
The following unaudited pro forma condensed consolidated financial statements are based on our historical consolidated financial statements as adjusted to give effect to the sale of BWRS. The unaudited pro forma condensed consolidated statements of operations for the three months ended March 31, 2024 and the 12 months ended December 31, 2023 give effect to the sale as if it had occurred on January 1, 2023. The unaudited pro forma condensed consolidated balance sheet as of March 31, 2024 gives effect to the transaction as if it had occurred on that date.
The unaudited pro forma condensed consolidated financial statements are presented for illustrative purposes only and are not necessarily indicative of the operating results that would have occurred if the transactions actually occurred on the dates presented or to project our results of operations or financial position for any future period. The information below should be read in conjunction with the Company's consolidated financial statements as of and for three months ended March 31, 2024 and as of and for the year ended December 31, 2023.
BABCOCK & WILCOX ENTERPRISES, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
MARCH 31, 2024
| (in thousands, except per share amounts) | Company Historical | Pro Forma Adjustments | Condensed Consolidated Pro Forma | |||
|---|---|---|---|---|---|---|
| Cash and cash equivalents | $ | 43,881 | $ | 82,997 | $ | 126,878 |
| Current restricted cash and cash equivalents | 16,935 | — | 16,935 | |||
| Accounts receivable – trade, net | 124,398 | (10,550) | 113,848 | |||
| Accounts receivable – other | 29,930 | (352) | 29,578 | |||
| Contracts in progress | 107,431 | (12,387) | 95,044 | |||
| Inventories, net | 112,407 | (6,886) | 105,521 | |||
| Other current assets | 22,975 | (148) | 22,827 | |||
| Current assets held for sale | 24,266 | — | 24,266 | |||
| Total current assets | 482,223 | 52,674 | 534,897 | |||
| Net property, plant and equipment and finance leases | 78,514 | (1,744) | 76,770 | |||
| Goodwill | 100,655 | (16,410) | 84,245 | |||
| Intangible assets, net | 42,816 | (10,526) | 32,290 | |||
| Right-of-use assets | 28,641 | (182) | 28,459 | |||
| Long-term restricted cash | 41,636 | — | 41,636 | |||
| Deferred tax assets | 2,094 | — | 2,094 | |||
| Other assets | 18,944 | (346) | 18,598 | |||
| Total assets | $ | 795,523 | $ | 23,466 | $ | 818,989 |
| Accounts payable | $ | 129,535 | $ | (3,696) | $ | 125,839 |
| Accrued employee benefits | 11,246 | (1,244) | 10,002 | |||
| Advance billings on contracts | 74,861 | (92) | 74,769 | |||
| Accrued warranty expense | 7,160 | (526) | 6,634 | |||
| Current Portion: | ||||||
| Financing lease liabilities | 1,400 | — | 1,400 | |||
| Operating lease liabilities | 3,804 | (60) | 3,744 | |||
| Other accrued liabilities | 65,268 | (13,157) | 52,111 | |||
| Loans payable | 4,473 | — | 4,473 | |||
| Current liabilities held for sale | 35,179 | — | 35,179 | |||
| Total current liabilities | 332,926 | (18,775) | 314,151 | |||
| Senior notes | 338,388 | — | 338,388 | |||
| Loans payable, net of current portion | 98,727 | — | 98,727 | |||
| Pension and other postretirement benefit liabilities | 172,174 | — | 172,174 | |||
| Finance lease liabilities, net of current portion | 25,839 | — | 25,839 | |||
| Operating lease liabilities, net of current portion | 25,990 | (122) | 25,868 | |||
| Deferred tax liability | 12,991 | (1,015) | 11,976 | |||
| Other non-current liabilities | 10,955 | (1,879) | 9,076 | |||
| Total liabilities | 1,017,990 | (21,791) | 996,199 | |||
| Stockholders' deficit: | ||||||
| Preferred stock, par value $0.01 per share, authorized shares of 20,000; issued and outstanding shares of 7,669 at both March 31, 2024 and December 31, 2023 | 77 | — | 77 | |||
| Common stock, par value $0.01 per share, authorized shares of 500,000; issued and outstanding shares of 89,480 and 89,449 at March 31, 2024 and December 31, 2023, respectively | 5,149 | — | 5,149 | |||
| Capital in excess of par value | 1,547,671 | — | 1,547,671 | |||
| Treasury stock at cost, 2,139 shares at March 31, 2024 and December 31, 2023, respectively | (115,164) | — | (115,164) | |||
| Accumulated deficit | (1,591,489) | 44,057 | (1,547,432) | |||
| Accumulated other comprehensive loss | (69,255) | 1,200 | (68,055) | |||
| Stockholders' deficit attributable to shareholders | (223,011) | 45,257 | (177,754) | |||
| Non-controlling interest | 544 | — | 544 | |||
| Total stockholders' deficit | (222,467) | 45,257 | (177,210) | |||
| Total liabilities and stockholders' deficit | $ | 795,523 | $ | 23,466 | $ | 818,989 |
See accompanying Note to the Condensed Consolidated Balance Sheet
3
BABCOCK & WILCOX ENTERPRISES, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2024
| (in thousands, except per share amounts) | Company Historical | Pro Forma Adjustments | Condensed Consolidated Pro Forma | |||
|---|---|---|---|---|---|---|
| Revenues | $ | 207,556 | $ | (17,518) | $ | 189,095 |
| Costs and expenses: | ||||||
| Cost of operations | 159,075 | (12,963) | 145,169 | |||
| Selling, general and administrative expenses | 41,438 | (3,302) | 38,136 | |||
| Restructuring activities | 1,580 | — | 1,580 | |||
| Research and development costs | 1,081 | — | 1,081 | |||
| Loss (gain) on asset disposals, net | 53 | (6) | 47 | |||
| Total costs and expenses | 203,227 | (16,271) | 186,013 | |||
| Operating income | 4,329 | (1,247) | 3,082 | |||
| Other (expense) income: | ||||||
| Interest expense | (12,834) | 27 | (12,807) | |||
| Interest income | 307 | (149) | 158 | |||
| Loss on debt extinguishment | (5,071) | — | (5,071) | |||
| Benefit plans, net | 96 | — | 96 | |||
| Foreign exchange | (1,333) | — | (1,333) | |||
| Total other expense, net | (18,835) | (122) | (18,957) | |||
| Loss before income tax expense | (14,506) | (1,369) | (15,875) | |||
| Income tax expense | 1,293 | — | 1,293 | |||
| Loss from continuing operations | (15,799) | (1,369) | (17,168) | |||
| Loss from discontinued operations, net of tax | (992) | — | (992) | |||
| Net loss | (16,791) | (1,369) | (18,160) | |||
| Net income attributable to non-controlling interest | (42) | — | (42) | |||
| Net loss attributable to stockholders | (16,833) | (1,369) | (18,202) | |||
| Less: Dividend on Series A preferred stock | 3,714 | — | 3,714 | |||
| Net loss attributable to stockholders of common stock | $ | (20,547) | $ | (1,369) | $ | (21,916) |
| Basic and diluted loss per share | ||||||
| Continuing operations | $ | (0.22) | $ | (0.23) | ||
| Discontinued operations | (0.01) | (0.01) | ||||
| Basic and diluted loss per share | $ | (0.23) | $ | (0.24) | ||
| Basic and diluted shares used in the computation of loss per share | 89,479 | 89,479 | ||||
| Other Comprehensive Loss | ||||||
| Net loss | $ | (16,791) | $ | (1,369) | $ | (18,160) |
| Other comprehensive (loss) income: | ||||||
| Currency translation adjustment | (3,125) | 1,382 | (1,743) | |||
| Pension and post retirement adjustments, net of tax | 231 | — | 231 | |||
| Total other comprehensive loss | (2,894) | 1,382 | (1,512) | |||
| Total comprehensive loss | (19,685) | 13 | (19,672) | |||
| Comprehensive income attributable to non-controlling interest | (67) | — | (67) | |||
| Comprehensive loss attributable to stockholders | $ | (19,752) | $ | 13 | $ | (19,739) |
See accompanying Note to the Condensed Consolidated Statement of Operations
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BABCOCK & WILCOX ENTERPRISES, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR YEAR ENDED DECEMBER 31, 2023
| (in thousands, except per share amounts) | Company Historical | Pro Forma Adjustments | Condensed Consolidated Pro Forma | |||
|---|---|---|---|---|---|---|
| Revenues | $ | 999,354 | $ | (96,411) | $ | 902,943 |
| Costs and expenses: | ||||||
| Cost of operations | 775,267 | (69,515) | 705,752 | |||
| Selling, general and administrative expenses | 191,465 | (12,522) | 178,943 | |||
| Restructuring activities | 4,222 | — | 4,222 | |||
| Research and development costs | 8,444 | — | 8,444 | |||
| Gain on sale of business | — | (45,257) | (45,257) | |||
| Loss on asset disposals, net | 57 | (30) | 27 | |||
| Total costs and expenses | 979,455 | (127,324) | 852,131 | |||
| Operating income | 19,899 | 30,913 | 50,812 | |||
| Other (expense) income: | ||||||
| Interest expense | (49,895) | — | (49,895) | |||
| Interest income | 1,192 | (74) | 1,118 | |||
| Benefit plans, net | (37,505) | — | (37,505) | |||
| Foreign exchange | (2,507) | — | (2,507) | |||
| Other expense – net | (1,336) | — | (1,336) | |||
| Total other expense, net | (90,051) | (74) | (90,125) | |||
| Loss before income tax expense | (70,152) | 30,839 | (39,313) | |||
| Income tax expense | 8,481 | 658 | 9,139 | |||
| Loss from continuing operations | (78,633) | 30,181 | (48,452) | |||
| Loss from discontinued operations, net of tax | (118,338) | — | (118,338) | |||
| Net loss | (196,971) | 30,181 | (166,790) | |||
| Net income attributable to non-controlling interest | (237) | — | (237) | |||
| Net loss attributable to stockholders | (197,208) | 30,181 | (167,027) | |||
| Less: Dividend on Series A preferred stock | 14,858 | — | 14,858 | |||
| Net loss attributable to stockholders of common stock | $ | (212,066) | $ | 30,181 | $ | (181,885) |
| Basic and diluted loss per share | ||||||
| Continuing operations | $ | (1.05) | $ | (0.71) | ||
| Discontinued operations | (1.33) | (1.33) | ||||
| Basic and diluted loss per share | $ | (2.38) | $ | (2.04) | ||
| Basic and diluted shares used in the computation of loss per share | 89,011 | 89,011 | ||||
| Other Comprehensive Loss | ||||||
| Net loss | $ | (196,971) | $ | 30,181 | $ | (166,790) |
| Other comprehensive (loss) income: | ||||||
| Currency translation adjustment | 5,555 | (1,642) | 3,913 | |||
| Pension and post retirement adjustments, net of tax | 870 | — | 870 | |||
| Total other comprehensive (loss) income | 6,425 | (1,642) | 4,783 | |||
| Total comprehensive loss | (190,546) | 28,539 | (162,007) | |||
| Comprehensive loss attributable to non-controlling interest | (127) | — | (127) | |||
| Comprehensive loss attributable to stockholders | $ | (190,673) | $ | 28,539 | $ | (162,134) |
See accompanying Note to the Condensed Consolidated Statement of Operations
5
NOTE TO THE PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 2024
The balance sheet of the Company as of March 31, 2024 reflected the assets and liabilities of Babcock & Wilcox Enterprises, Inc. and the assets and liabilities of BWRS. Upon completion of the transaction, substantially all of the BWRS assets and liabilities will be eliminated. Included in the Pro Forma Adjustments column are the divested assets and liabilities, the costs and expenses to be paid at closing and the estimated net cash proceeds from the transaction. Also included in the Pro Forma Adjustments is a decrease in retained deficit that would have resulted from the gain on the sale of the business.
NOTE TO THE PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND THE YEAR ENDED DECEMBER 31, 2023
The statements of operations for the three months ended March 31, 2024 and year ended December 31, 2023 reflected the revenue, costs and other income (expenses) of the Company. Upon completion of the transaction with the Buyer, substantially all of the revenue, costs and other income (expenses) associated with BWRS will be eliminated, except for those costs and other income (expense) related to retained assets and liabilities not assumed by the Buyer.
The Pro Forma Condensed Consolidated Statement of Operations were prepared to eliminate income and expenses based on the following assumptions:
•All revenue and cost of sales of BWRS will be eliminated with these transactions.
•All selling, general and administrative expenses, research and development costs and corporate allocations of BWRS will be eliminated with the exception of corporate allocations.
•All other income (expense) items of BWRS will be eliminated.
•The gain on the sale of the BWRS business was included in the year ended December 31, 2023.
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| News Release |
|---|
Babcock & Wilcox Announces Agreement to Sell its
Denmark-Based Renewable Parts and Services Subsidiary
–B&W received $87 million cash at closing, subject to customary adjustments and fees
–The sale aligns with B&W’s comprehensive business strategy to reduce long-term debt and optimize capital structure
–Company reiterates its Full Year 2024 Adjusted EBITDA target range of $105 million to $115 million, excluding BrightLoop™ and ClimateBright™ expenses
(AKRON, Ohio – July 1, 2024) – Babcock & Wilcox Enterprises, Inc. (“B&W” or the “Company”) (NYSE: BW) announced today that it has sold its Denmark-based Babcock & Wilcox Renewable Service A/S (BWRS) subsidiary to Zurich, Switzerland-based Hitachi Zosen Inova AG (HZI) for $87 million, subject to customary fees and adjustments.
BWRS, which employs more than 160 people and provides aftermarket parts and services for waste-to-energy plants in northern Europe and the UK was transferred to HZI upon closing on Friday, June 28, 2024.
“This transaction aligns with our previously announced intention to strategically sell certain non-core businesses and assets, and proceeds will be used to reduce our debt, increase our liquidity and support working capital,” Kenneth Young, B&W Chairman and Chief Executive Officer, said. “Energy demand in the utility and industrial sector is rapidly increasing, which is reflected in our higher bookings and full-year outlook within our segments and businesses as we move forward. Accordingly, we are reiterating our previously stated Full Year 2024 Adjusted EBITDA target range of $105 to $115 million, excluding BrightLoop and ClimateBright expenses.”
“B&W is a leader in technologies that provide clean, renewable energy from waste, and we will continue to leverage our core technologies, including our advanced DynaGrate® combustion grate, state-of-the-art boilers, fuel and ash handling systems and emissions control technologies in the European and global markets to support new build and large upgrade projects,” Young added. “We’re excited about the robust pipeline of opportunities we’re currently pursuing and the opportunity to continue to work closely with customers in these markets well into the future.”
About Babcock & Wilcox
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.
Forward-Looking Statements
B&W cautions that this release contains forward-looking statements, including, without limitation, statements relating to the sale of its Babcock & Wilcox Renewable Service A/S subsidiary to Hitachi Zosen Inova AG, as well as its reiteration of its full year 2024 Adjusted EBITDA target. These forward-looking statements are based on management’s current expectations and involve a number of risks and uncertainties. For a more complete discussion of these risk factors, see our filings with the Securities and Exchange Commission, including our most recent annual report on Form 10-K. If one or more of these risks or other risks materialize, actual results may vary materially from those expressed. We caution readers not to place undue reliance on these forward-looking statements, which speak only as of the date of this release, and we undertake no obligation to update or revise any forward-looking statement, except to the extent required by applicable law.
Investor Contact: Media Contact:
Investor Relations Ryan Cornell
Babcock & Wilcox Public Relations
704.625.4944 Babcock & Wilcox
investors@babcock.com 330.860.1345
rscornell@babcock.com