Babcock & Wilcox Enterprises, Inc. Q1 FY2026 earnings call

Overall Financial and Demand Momentum

• Management reports one of the strongest Q1 performances in recent company history, with revenue and adjusted EBITDA exceeding both internal and analyst consensus expectations, driven by surging demand for electrical generation from traditional utilities, industrial customers, and AI data center operators.
• Total project pipeline grew more than 17% quarter-over-quarter to over $14 billion, with over $2 billion in new AI data center power generation opportunities added in the quarter. Q1 2026 bookings hit $2.5 billion, a 1,900% increase year-over-year, and end-of-quarter backlog reached $2.7 billion, a 483% increase year-over-year.

Core Business Drivers

• Rising global energy demand driven by AI data center expansion and consumer/industrial growth has prompted utilities to recondition and reactivate underutilized coal-fired baseload generation assets; U.S. coal plants currently operate at only ~50% capacity factor, leaving significant untapped generation capacity to meet new load growth.
• Elevated natural gas prices have improved the operating economics of coal-fired generation, increasing asset utilization and demand for B&W's parts, services, and upgrade offerings. Continued growth in core parts and services is expected for the full year 2026.

AI Data Center Project Progress

• The Base Electron project in North Dakota is progressing on schedule: boiler manufacturing and steam turbine fabrication (led by Siemens Energy for long-lead items) are advancing as planned. Most major civil and mechanical construction is scheduled for 2027 and 2028.
• Management is in active discussions with multiple additional hyperscaler and utility customers for new AI data center power projects, with potential for additional bookings in 2026.

Balance Sheet and Debt Reduction

• The company paid off $15 million in outstanding bonds due December 2026 in Q1, and plans to fully retire the remaining $69 million in these bonds in a timely fashion. Total secured debt and unsecured bonds have been reduced by 87% as of Q1 2026, bringing net debt to $42.4 million, which is below 1x trailing 12-month adjusted EBITDA.

New Technology Development

• Progress on the Bright Loop carbon capture and hydrogen production technology initiative continues, with commercial scale demonstration at the Maslin, Ohio project remaining a key priority to position the company for future low-carbon growth opportunities.

Consolidated total revenue for Q1 2026 was $214.4 million, a 44% increase compared to $148.6 million in Q1 2025. Of this total, the Base Electron AI data center power project contributed $31 million in revenue in the quarter. The core parts and services segment (excluding large data center projects) delivered its strongest Q1 revenue in recent history, driven by elevated demand for coal plant reconditioning, recommissioning, and maintenance; no separate absolute revenue figure or specific revenue contribution percentage was disclosed for this standalone segment. Adjusted EBITDA for the consolidated company was $16.1 million, a 296% increase from $4 million in Q1 2025. Adjusted net income from continuing operations was $2.2 million, while GAAP net loss from continuing operations was $79.6 million, driven by $81.8 million in non-cash stock-related valuation costs. Operating loss for the quarter was $1.7 million, flat compared to a $1.8 million operating loss in Q1 2025.

• Management maintained the full-year 2026 guidance it previously issued, with no upward or downward revision announced in the Q1 call.
• Management noted that there is clear potential for upside to the current full-year guidance, depending on the pace of project milestone completion and the ability to pull forward manufacturing and construction activity on large new projects. The company will re-evaluate guidance in the coming months once it has greater visibility into project timing, and any activity that cannot be recognized in 2026 will flow into 2027 results.
• Management confirmed a strong, healthy ongoing outlook for the core parts and services segment for the remainder of 2026 and the foreseeable future, supported by sustained elevated coal plant utilization.

No explicit discussion of material operational failures, new risk factors, or updated risk outlooks was included in the Q1 2026 earnings call prepared remarks or Q&A section beyond standard procedural disclosure that forward-looking statements are inherently subject to unknown risks and uncertainties. Management did note that large custom power generation projects involve multiple variables (technology requirements, permitting, site location, customer commercial negotiations) that can impact timing and closing outcomes.

Q: Rob Brown (Lake Street Capital) asked for more detail on what is driving the 17% pipeline growth beyond the known AI data center trend. / A: Management explained that in addition to AI data center opportunities, the pipeline is growing from coal-to-natural gas conversion projects and large environmental upgrades for existing coal generation plants. For AI data center opportunities, the company offers a flexible combined generation solution: it starts with a B&W steam boiler and steam turbine, which can be deployed faster than alternative full combustion turbine systems, and can later add a combustion turbine to nearly double power output at the same site with minimal additional real estate. This model also supports optional future CO2 capture, which appeals to some customers.

Q: Jeff Gramp (Northland Capital) asked if B&W needs to make additional supply chain or capacity investments to support multiple concurrent large AI data center projects, or if the existing supply chain is sufficient. / A: Management stated that supply chain capacity established for the Base Electron project is already positioned to support additional projects. Multiple boiler manufacturers are lined up to accommodate different project sizes (ranging from smaller than Base Electron's 300 megawatt design to larger installations), and manufacturers have been aligned early to secure capacity. The company will monitor turbine and pressure part capacity as the project pipeline advances, but management is comfortable with current capacity for the near term.

Q: Aaron Spichala (Craig Hallam) asked how the strong Q1 start impacts full-year guidance and visibility into 2026 results. / A: Management confirmed it is maintaining existing full-year guidance for now, as it is still assessing how much project activity can be pulled forward into 2026 versus shifting to 2027. Management noted clear upside potential to current guidance, and will revisit guidance once it has better visibility into project timing in the coming months. Any activity that does not get recognized in 2026 will simply flow into 2027 results, so the strong pipeline positions the company well regardless of annual timing.