Babcock & Wilcox Enterprises, I Q2 FY2025 earnings call

• Parts and services business had 31% revenue increase in Q2 2025 driven by demand from data centers and baseload generation.
• Completed sale of Diamond Power International for $177 million, improving balance sheet.
• Entered private bond exchange to reduce annual interest expense by over $1 million and extend debt maturity to 2030.
• Backlog of $418.1 million at end of Q2, a 49% increase from 2024.
• BrightLoop is progressing with commercial development for steam and hydrogen production, in discussions with oil and gas companies and utilities.
• Anticipate returning to positive cash flows in 2025 excluding BrightLoop.

The parts and services business saw a 31% increase in revenues compared to Q2 2024. Company-wide revenues with Diamond Power were $170.8 million. Revenue from continuing operations without Diamond Power in Q2 2025 was $144.1 million, roughly same as Q2 2024 but parts and services had a dramatic increase. Adjusted EBITDA including Diamond Power was $21.6 million. Adjusted EBITDA from continuing operations without Diamond Power was $15.1 million in Q2 2025, a 90% increase from Q2 2024. First half of 2025 adjusted EBITDA from continuing operations was $21.2 million, doubling from the first half of 2024. Backlog at the end of Q2 was $418.1 million, a 49% increase compared to the same period in 2024.

• Expect continued strong financial performance in remainder of 2025 buoyed by over $7.6 billion global pipeline of project opportunities.
• Anticipate key announcements on large upgrades and new builds in US by end of 2025.
• Confident in returning to positive free cash flow in 2025, driven by asset sales, interest reduction, and parts/services growth.

• Uncertainties in large project revenue timing and overlap.
• Risks associated with forward-looking statements as outlined in SEC filings.
• Continued need to manage debt and refinancing efforts.

Q: Can you talk about the current demand for energy on the thermal side of the business with potential large upgrades later this year?

A: In North America, there's a need for 120 GW increase in baseload generation over next 10 years from data centers alone. Discussing with customers on new generation including possible coal, and BrightLoop's role in producing steam with CO2 capture options.

Q: Any thoughts on what the size or order of potential projects might look like?

A: Too early to tell on size, but revenue would be spread over years with ongoing parts/services for the plants.

Q: Any thoughts on the second half guidance?

A: Anticipate strong year, working on 2026, will provide guidance end of 2025.

Q: Can you speak to confidence in returning to positive free cash flow in 2025?

A: Confident due to asset sales, interest reduction from bond exchange, and growth in parts/services.

Q: Explain how extending plant life helps the parts and service business?

A: Extended plant life leads to follow-on parts/services revenue over a longer term as plants need ongoing maintenance and upgrades.

Q: Give a sense of the BrightLoop pipeline?

A: Over 10 projects, BrightLoop can produce steam/hydrogen, in discussions with utilities on CO2 capture and alternative fuels like biomass for steam generation.