Babcock & Wilcox Enterprises, Inc. Q4 FY2024 earnings call

• In 2024, actions were taken to align with business strategy and pave the way for debt refinancing in 2025. - Thermal operations saw tailwinds from increased demand in utility and industrial power generation, with anticipation of biomass energy plant bookings later in 2024. - Fourth quarter 2024 showed improvements in revenues, operating income, and adjusted EBITDA. - Full year 2024 had stable revenues, with the Environmental segment contributing positively. - Bookings and backlog numbers were strong, with bookings up 39% and backlog up 47% year-over-year. - Progressed on BrightLoop projects, with an estimated $10 million to $15 million investment planned in 2025. - Completed sale of SPIG and GMAB businesses in Q4 2024 for net proceeds of $33.4 million, improving the balance sheet. - Core parts and services business remained strong despite coal plant closures and natural gas conversions.

In the fourth quarter of 2024, revenues were $200.8 million, an increase of 15% from $174.7 million in Q4 2023. Operating income from continuing operations was $11.6 million in Q4 2024 vs. a $3.3 million operating loss in Q4 2023. Adjusted EBITDA from continuing operations was $24.0 million in Q4 2024, a 55% year-over-year increase. For full year 2024, consolidated revenues were $717.3 million. Bookings in 2024 were approximately $900 million, a 39% increase from 2023, and backlog was over $540 million, a 47% increase from 2023. SPIG, B&W Renewable Services, and Vølund were reclassified into discontinued operations. The Thermal segment benefited from increased demand in utility and industrial power generation, and the Environmental segment had a positive impact on revenues. Adjusted EBITDA from continuing operations excluding BrightLoop and ClimateBright was up 13% year-over-year in 2024.

• Revised full year 2025 adjusted EBITDA target range to $70 million to $85 million, excluding BrightLoop and ClimateBright expenses. - Anticipate returning to positive cash flows in 2025. - Focus on refinancing current debt obligations, with discussions ongoing with bondholders and lenders. - Core business expected to continue performing ahead of expectations, supporting the adjusted EBITDA target range.

• Total debt at December 31, 2024, was $464.6 million, with significant debt due in 2025 and 2026, raising substantial doubt about going concern, but management is taking actions to address senior notes. - Impact of tariffs on project costs and timing, with uncertainty about specific project impacts and potential delays. - Regulatory uncertainties, including potential impacts of EPA emissions regulations and changes in federal policies like the IRA on project timelines and funding.

Q: First for me on the guidance, a little bit wider range than normal to start the year. Can you just kind of discuss some of the puts and takes there? What might get you to the top end versus the low end and just kind of confidence as we head through the year, how that builds, especially considering the new large coal-to-gas project?

A: There's a couple of key metrics in there. The tariffs have ups and downs, and it's too early to know the economic impact on customers. Also, need to get through debt restructuring and financing, which could impact costs. So, the range is due to uncertainty around tariffs and debt restructuring.

Q: Understood. And then I appreciate the update on Massillon. Can you maybe give an update on the Wyoming project, kind of where that stands, next guidepost we should kind of look for there? Is there any impact from kind of IRA? And again, just kind of broader federal noise there?

A: From the IRA standpoint, there's confidence it will move forward. On the Wyoming project, working with Black Hills, looking for financing from the Department of Energy, and have Congressional support. Still working through dynamics with the new administration, but it's positive.

Q: You had strong bookings in the quarter but just wanted to get a sense of how the pipeline is shaping up for this year. Are you seeing that kind of bookings level continue? How should we think about the, I guess, the bookings run rates into the end of the year?

A: Overall, pipeline is solid and growing. Seeing FEED studies transfer, biomass opportunities in US, and data centers needing power sources. Anticipate some biomass and other opportunities to be booked later in the year. Thermal business is doing well, focusing more on parts and services internationally to reduce LCs.