Babcock & Wilcox Enterprises, Inc. Q4 FY2023 earnings call

• Announced strategic actions to reduce costs and focus on higher margin core businesses, including expansion in waste to energy, thermal segment growth, and progress in carbon capture feed studies. - Expanding waste to energy presence in US, Europe, and Australia with improved pipeline of higher margin opportunities. - Thermal segment seeing growth in higher margin parts and services, including gas conversions. - Doubled carbon capture feed studies and optimistic about potential projects in 2024. - Continuing development of Bright Loop technology, with milestones achieved in financing and offtake arrangements. - Realized over $19 million in cost savings towards annual target of over $30 million, established new $150 million senior secured credit facility, and received BB+ credit rating reaffirmation. - Confident in strong financial performance in 2024 with robust pipeline of over $9 billion opportunities.

Consolidated revenues for 2023 were $999.4 million, an 18% improvement compared to 2022. Net loss in 2023 was $78.6 million vs. $20 million in 2022. GAAP operating income in 2023 was $19.9 million vs. $2.3 million in 2022. Adjusted EBITDA in 2023 was $84.1 million vs. $71.8 million in 2022. Total bookings in 2023 were $878 million, a 2% increase from 2022. Backlog at December 31, 2023 was $530 million. Fourth quarter 2023 consolidated revenues were $227.2 million, a 4% decline compared to Q4 2022. Net loss in Q4 2023 was $54.3 million vs. net income of $2.5 million in Q4 2022. GAAP operating income in Q4 2023 was $700,000 vs. $6.3 million in Q4 2022. Adjusted EBITDA in Q4 2023 was $19.5 million vs. $21 million in Q4 2022. Bookings in Q4 2023 were $250 million, a 44% increase compared to Q4 2022.

• Reiterated 2024 adjusted EBITDA target of $100 million to $110 million, excluding Bright Loop and Climate Bright expenses. - Anticipated spending $5 million to $9 million on Bright Loop projects in 2024. - Confident in strong bookings in 2024, with potential large gas conversion project announcement on Monday. - Expect backlog growth beginning in Q1 2024.

• Liquidity challenges arising from losses on B&W solar loss contracts. - Longer than anticipated negotiations on some new opportunities. - Macroeconomic conditions including higher interest rates impacting utility project evaluations.

Q: On some of the large projects and bookings, when will more details be announced and confidence in 2024 guide?

A: Details on the large gas conversion project will be announced on Monday. Bookings had some timing delays but confident in strong 2024 bookings.

Q: On doubling of carbon capture feed studies, quantification and timing?

A: Feed studies have good margins, anticipate one or two projects to fruition in 2024, but negotiations ongoing.

Q: On thermal business growth drivers in 2024?

A: Parts and services strong due to utility plants needing to perform, gas conversions increasing with expanded capabilities, and international expansion in Asia Pacific. Renewable services in Europe also growing.

Q: On strategic realignment target of $30 million, timeline and upside?

A: On track to realize full $30 million by end of 2024, with potential upside as business is optimized.

Q: On discontinued solar business timeline?

A: No update on timing, actively in discussions but no specific timeline yet.

Q: On Bright Loop in Ohio, status and timeline?

A: Letter of intent for financing, site under contract, working on finalizing construction estimates and off-take agreements. Waiting on long lead time items and civil works estimates.

Q: On grant applications for other Bright Loop projects?

A: Working with states and DOE on funding, under NDA on specific details but progressing discussions.