Babcock & Wilcox Enterprises, I Q4 FY2024 earnings call

• In 2024, the company took actions aligning with its business strategy to pave the way for refinancing or reducing debt in 2025, shifting focus to Thermal operations with increased demand tailwinds.
• Saw improvements in revenues, operating income, and adjusted EBITDA in Q4 2024 compared to 2023.
• Revised full year 2025 EBITDA target range to $70 million to $85 million, excluding BrightLoop and ClimateBright expenses.
• Invested in BrightLoop opportunity with expected spending of $10 million to $15 million in 2025 on projects and technology advancement.
• Divested nonstrategic assets in 2024 to improve balance sheet, avoid large newbuild projects, and reduce corporate overhead.
• Parts and services core business remained strong despite coal plant closures and natural gas conversions, with a robust backlog of $540.1 million.

In the fourth quarter of 2024, Babcock & Wilcox Enterprises saw improvements in key metrics. Fourth quarter revenue was $200.8 million, an increase of 15% compared to $174.7 million in Q4 2023. Operating income from continuing operations increased to $11.6 million in Q4 2024 from an operating loss of $3.3 million in Q4 2023. Adjusted EBITDA from continuing operations was $24.0 million in Q4 2024, a 55% year-over-year increase. For the full year 2024, consolidated revenues were $717.3 million. Bookings in 2024 were $889.6 million, a 39% increase from 2023, and backlog was $540.1 million, a 47% increase from 2023. The Thermal operations are benefiting from increased demand in the utility and industrial power generation sectors, and the Environmental segment had a positive impact on revenues.

• Revised full year 2025 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, in discussions with bondholders and lenders, and selling certain assets to pay down debt and improve working capital.

• Total debt at December 31, 2024, was $464.6 million, with significant portions classified as current, raising substantial doubt about going concern, but management is taking actions to address debt.
• Impact of tariffs on projects, with uncertainty about project timing and cost implications as tariffs may affect customers' decisions.
• Uncertainty around EPA emissions regulations and federal policies affecting Thermal business, though expected to have minimal material impact on overall operations.

Q: On the guidance, discuss the range and what might move it to top or low end, especially with tariffs and debt restructuring.

A: The range is due to uncertainty around tariffs' economic impact on customers (delaying projects or affecting margins) and debt restructuring's potential costs. Tariffs on equipment import/export can have varying material impacts on projects. Debt restructuring discussions also add uncertainty.

Q: Update on Wyoming project and IRA impact.

A: Working with Black Hills on the Wyoming project, seeking DOE financing, and having Congressional support. IRA credits are expected to move forward, but administration dynamics are still being worked through at the DOE.

Q: EPA emissions regulations impact on Thermal business.

A: Utilities with long-term fossil fuel and natural gas conversion plans are less likely to shift due to regulatory changes, as capital needs have long cycles. May slightly shift revenue mix between coal and gas conversions but no material impact on business.

Q: Pipeline and bookings for 2025.

A: Pipeline is growing with FEED studies, biomass opportunities in North America, data center power source needs, and focus on parts and services in North America. Expect bookings from biomass and data center projects later in the year.

Q: West Virginia project update.

A: The project is estimated to be around $140-150 million. $10 million in state support helps with early engineering, land is being secured, and discussions with outside investors are ongoing to take the project over.