Babcock & Wilcox Enterprises Reports First Quarter 2024 Results
-
Exceeded expectations with Revenue of
$207.6 million and Operating Income of$4.3 million -
Increased Full Year 2024 Adjusted EBITDA target range to
$105.0 million to$115.0 million , excluding BrightLoopTM and ClimateBrightTM expenses -
Announced 2024 contract signings and awards of approximately
$500.0 million , nearly double the amount in the same period last year -
Announced backlog of
$532.8 million and implied backlog of$826.4 million in project opportunities -
Achieved annualized cost savings of approximately
$20.0 million to date related to strategic business realignment progressing toward stated target of over$30.0 million
Q1 2024 Continuing Operations Highlights and Outlook
– Revenues of
– Operating income of
– Net loss of
– Loss per share of
– Adjusted EBITDA of
– Adjusted EBITDA of
"We are pleased to report a strong start to the year, highlighted by first quarter consolidated revenue and Adjusted EBITDA that exceeded Company expectations. Benefiting from our strategic shift to reduce reliance on high-interest, low-margin new build projects, we’ve seen improvement in our Adjusted EBITDA margins and further demonstrated the strength of our aftermarket parts and services businesses,” commented
“We are actively working to capitalize on our
“As we look to the remainder of 2024, we expect strong operating momentum driven by our Thermal and Environmental segments. With a healthy demand pipeline across all business segments, we expect new bookings and stronger financial performance to continue throughout the year. We continue to focus on our balance sheet and expect continued improvements in our cash and liquidity as we began efforts to reduce our long-term debt.”
Q1 2024 Continuing Operations Financial Summary
Revenues in the first quarter of 2024 were
Babcock & Wilcox Renewable segment
revenues were
Babcock & Wilcox Environmental segment
revenues were
Babcock & Wilcox Thermal segment
revenues were
Liquidity and Balance Sheet
At
Reducing Cost of Debt
During the quarter, we closed the financing of a
Impacts of Market Conditions
Management continues to adapt to macroeconomic conditions, including the impacts from inflation, higher interest rates and foreign exchange rate volatility, geopolitical conflicts (including the ongoing conflicts in
Earnings Call Information
B&W plans to host a conference call and webcast on
Non-GAAP Financial Measures
The Company uses non-GAAP financial measures internally to evaluate its performance and in making financial and operational decisions. When viewed in conjunction with GAAP results and the accompanying reconciliation, the Company believes that its presentation of these measures provides investors with greater transparency and a greater understanding of factors affecting its financial condition and results of operations than GAAP measures alone. In addition to Adjusted EBITDA, in the fourth quarter of 2023, the Company introduced the non-GAAP financial measure of Adjusted EBITDA excluding BrightLoopTM and ClimateBrightTM. Management believes this measure is useful to investors because of the increasing importance of BrightLoop and ClimateBright to the future growth of the Company. Management uses EBITDA excluding BrightLoop and ClimateBrightto assess the Company’s performance independent of these technologies. Prior period results have been revised to conform with the revised definition and present separate reconciling items in our reconciliation, including business transition costs. The presentation of non-GAAP financial measures should not be considered in isolation or as a substitute for the Company’s related financial results prepared in accordance with GAAP. This release presents Adjusted EBITDA, which are non-GAAP financialmeasures. Adjusted EBITDA on a consolidated basis is defined as the sum of the Adjusted EBITDA for each of the segments, further adjusted for corporate allocations and research and development costs. At a segment level, the Adjusted EBITDA presented is consistent with the way the Company's chief operating decision maker reviews the results of operations and makes strategic decisions about the business and is calculated as earnings before interest expense, tax, depreciation and amortization adjusted for items such as gains or losses arising from the sale of non-income producing assets, net pension benefits, restructuring costs, impairments, gains and losses on debt extinguishment, costs related to financial consulting, research and development costs and other costs that may not be directly controllable by segment management and are not allocated to the segment. The Company presents consolidated Adjusted EBITDA because it believes it is useful to investors to help facilitate comparisons of the ongoing, operating performance before corporate overhead and other expenses not attributable to the operating performance of the Company's revenue generating segments. This release also presents certain targets for the Company’s Adjusted EBITDA in the future; these targets are not intended as guidance regarding how the Company believes the business will perform. The Company is unable to reconcile these targets to their GAAP counterparts without unreasonable effort and expense.
Bookings and Backlog
Bookings and backlog are our measure of remaining performance obligations under our sales contracts. It is possible that our methodology for determining bookings and backlog may not be comparable to methods used by other companies. Implied backlog and implied bookings include projects awarded or under contract but not fully released for performance.
We generally include expected revenue from contracts in our backlog when we receive written confirmation from our customers authorizing the performance of work and committing the customers to payment for work performed. Backlog may not be indicative of future operating results, and contracts in our backlog may be canceled, modified or otherwise altered by customers. Backlog can vary significantly from period to period, particularly when large new build projects or operations and maintenance contracts are booked because they may be fulfilled over multiple years. Because we operate globally, our backlog is also affected by changes in foreign currencies each period. We do not include orders of our unconsolidated joint ventures in backlog.
Bookings represent changes to the backlog. Bookings include additions from booking new business, subtractions from customer cancellations or modifications, changes in estimates of liquidated damages that affect selling price and revaluation of backlog denominated in foreign currency. We believe comparing bookings on a quarterly basis or for periods less than one year is less meaningful than for longer periods, and that shorter-term changes in bookings may not necessarily indicate a material trend.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical or current fact included in this release are forward-looking statements. You should not place undue reliance on these statements. Forward-looking statements include words such as “expect,” “intend,” “plan,” “likely,” “seek,” “believe,” “project,” “forecast,” “target,” “goal,” “potential,” “estimate,” “may,” “might,” “will,” “would,” “should,” “could,” “can,” “have,” “due,” “anticipate,” “assume,” “contemplate,” “continue” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operational performance or other events.
These forward-looking statements are based on management’s current expectations and involve a number of risks and uncertainties, including, among other things: our financial condition and ability to continue as a going concern; the impact of global macroeconomic conditions, including inflation and volatility in the capital markets; the impact of our divestiture of
These forward-looking statements are made based upon detailed assumptions and reflect management’s current expectations and beliefs. While we believe that these assumptions underlying the forward-looking statements are reasonable, we caution that it is very difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could affect actual results. The forward-looking statements included herein are made only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events, or otherwise, except as required by law.
About
Headquartered in
Exhibit 1
Condensed Consolidated Statements of Operations(1) (In millions, except per share amounts) |
||||||
|
Three Months Ended |
|||||
|
|
2024 |
|
|
2023 |
|
Revenues |
$ |
207.6 |
|
$ |
241.3 |
|
Costs and expenses: |
|
|
||||
Cost of operations |
|
159.1 |
|
|
189.3 |
|
Selling, general and administrative expenses |
|
41.4 |
|
|
48.0 |
|
Restructuring activities |
|
1.6 |
|
|
0.4 |
|
Research and development costs |
|
1.1 |
|
|
1.3 |
|
Loss on asset disposals, net |
|
0.1 |
|
|
0.9 |
|
Total costs and expenses |
|
203.2 |
|
|
240.0 |
|
Operating income |
|
4.3 |
|
|
1.3 |
|
Other (expense) income: |
|
|
||||
Interest expense |
|
(12.8 |
) |
|
(12.7 |
) |
Interest income |
|
0.3 |
|
|
0.1 |
|
Loss on debt extinguishment |
|
(5.1 |
) |
|
— |
|
Benefit plans, net |
|
0.1 |
|
|
(0.1 |
) |
Foreign exchange |
|
(1.3 |
) |
|
(0.5 |
) |
Other expense - net |
|
— |
|
|
(0.4 |
) |
Total other expense |
|
(18.8 |
) |
|
(13.5 |
) |
Loss before income tax expense |
|
(14.5 |
) |
|
(12.2 |
) |
Income tax expense |
|
1.3 |
|
|
0.5 |
|
Loss from continuing operations |
|
(15.8 |
) |
|
(12.7 |
) |
(Loss) income from discontinued operations, net of tax |
|
(1.0 |
) |
|
0.2 |
|
Net loss |
|
(16.8 |
) |
|
(12.5 |
) |
Net loss attributable to non-controlling interest |
|
— |
|
|
— |
|
Net loss attributable to stockholders |
|
(16.8 |
) |
|
(12.5 |
) |
Less: Dividend on Series A preferred stock |
|
3.7 |
|
|
3.7 |
|
Net loss attributable to stockholders of common stock |
$ |
(20.5 |
) |
$ |
(16.2 |
) |
|
|
|
||||
Basic and diluted loss per share |
|
|
||||
Continuing operations |
$ |
(0.22 |
) |
$ |
(0.18 |
) |
Discontinued operations |
|
(0.01 |
) |
|
— |
|
Loss per share |
$ |
(0.23 |
) |
$ |
(0.18 |
) |
|
|
|||||
Basic and diluted shares used in the computation of loss per share |
|
89.5 |
|
|
88.7 |
|
(1) Figures may not be clerically accurate due to rounding |
Exhibit 2
Condensed Consolidated Balance Sheets(1) |
||||||
(In millions) |
|
|
||||
Cash and cash equivalents |
$ |
43.9 |
|
$ |
65.3 |
|
Current restricted cash and cash equivalents |
|
16.9 |
|
|
5.7 |
|
Accounts receivable – trade, net |
|
124.4 |
|
|
144.0 |
|
Accounts receivable – other |
|
29.9 |
|
|
36.2 |
|
Contracts in progress |
|
107.4 |
|
|
90.1 |
|
Inventories, net |
|
112.4 |
|
|
113.9 |
|
Other current assets |
|
23.0 |
|
|
23.9 |
|
Current assets held for sale |
|
24.3 |
|
|
18.5 |
|
Total current assets |
|
482.2 |
|
|
497.6 |
|
Net property, plant and equipment and finance leases |
|
78.5 |
|
|
78.4 |
|
|
|
100.7 |
|
|
102.0 |
|
Intangible assets, net |
|
42.8 |
|
|
45.6 |
|
Right-of-use assets |
|
28.6 |
|
|
28.2 |
|
Long-term restricted cash |
|
41.6 |
|
|
0.3 |
|
Deferred tax assets |
|
2.1 |
|
|
2.1 |
|
Other assets |
|
18.9 |
|
|
21.6 |
|
Total assets |
$ |
795.5 |
|
$ |
775.7 |
|
|
||||||
Accounts payable |
$ |
129.5 |
|
$ |
127.5 |
|
Accrued employee benefits |
|
11.2 |
|
|
10.8 |
|
Advance billings on contracts |
|
74.9 |
|
|
81.1 |
|
Accrued warranty expense |
|
7.2 |
|
|
7.6 |
|
Financing lease liabilities |
|
1.4 |
|
|
1.4 |
|
Operating lease liabilities |
|
3.8 |
|
|
3.9 |
|
Other accrued liabilities |
|
65.3 |
|
|
68.1 |
|
Loans payable |
|
4.5 |
|
|
6.2 |
|
Current liabilities held for sale |
|
35.2 |
|
|
43.6 |
|
Total current liabilities |
|
332.9 |
|
|
350.2 |
|
Senior notes |
|
338.4 |
|
|
337.9 |
|
Loans payable, net of current portion |
|
98.7 |
|
|
35.4 |
|
Pension and other postretirement benefit liabilities |
|
172.2 |
|
|
172.9 |
|
Finance lease liabilities, net of current portion |
|
25.8 |
|
|
26.2 |
|
Operating lease liabilities, net of current portion |
|
26.0 |
|
|
25.4 |
|
Deferred tax liability |
|
13.0 |
|
|
13.0 |
|
Other non-current liabilities |
|
11.0 |
|
|
15.1 |
|
Total liabilities |
|
1,018.0 |
|
|
976.0 |
|
Commitments and contingencies |
|
|
||||
Stockholders' deficit: |
|
|
||||
Preferred stock |
|
0.1 |
|
|
0.1 |
|
Common stock |
|
5.1 |
|
|
5.1 |
|
Capital in excess of par value |
|
1,547.7 |
|
|
1,546.3 |
|
|
|
(115.2 |
) |
|
(115.2 |
) |
Accumulated deficit |
|
(1,591.5 |
) |
|
(1,570.9 |
) |
Accumulated other comprehensive loss |
|
(69.3 |
) |
|
(66.4 |
) |
Stockholders' deficit attributable to shareholders |
|
(223.0 |
) |
|
(201.0 |
) |
Non-controlling interest |
|
0.5 |
|
|
0.6 |
|
Total stockholders' deficit |
|
(222.5 |
) |
|
(200.4 |
) |
Total liabilities and stockholders' deficit |
$ |
795.5 |
|
$ |
775.7 |
|
(1) Figures may not be clerically accurate due to rounding. |
Exhibit 3
Condensed Consolidated Statements of Cash Flows(1) |
||||||
(In millions) |
Three Months Ended |
|||||
|
|
2024 |
|
|
2023 |
|
Cash flows from operating activities: |
|
|
||||
Net loss from continuing operations |
$ |
(15.8 |
) |
$ |
(12.7 |
) |
Net (loss) income from discontinued operations |
|
(1.0 |
) |
|
0.2 |
|
Net loss |
|
(16.8 |
) |
|
(12.5 |
) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
||||
Depreciation and amortization of long-lived assets |
|
4.8 |
|
|
5.4 |
|
Amortization of deferred financing costs and debt discount |
|
0.7 |
|
|
1.4 |
|
Amortization of guaranty fee |
|
0.6 |
|
|
0.2 |
|
Non-cash operating lease expense |
|
1.8 |
|
|
0.6 |
|
Loss on debt extinguishment |
|
5.1 |
|
|
— |
|
Loss on asset disposals |
|
0.1 |
|
|
0.9 |
|
Provision for (benefit from) deferred income taxes |
|
2.5 |
|
|
(1.9 |
) |
Prior service cost amortization for pension and postretirement plans |
|
0.2 |
|
|
0.2 |
|
Stock-based compensation |
|
1.4 |
|
|
3.4 |
|
Foreign exchange |
|
1.3 |
|
|
0.5 |
|
Changes in operating assets and liabilities: |
|
|
||||
Accounts receivable - trade, net and other |
|
18.0 |
|
|
(5.5 |
) |
Contracts in progress |
|
(21.5 |
) |
|
(29.0 |
) |
Advance billings on contracts |
|
(6.4 |
) |
|
3.6 |
|
Inventories, net |
|
3.1 |
|
|
(7.6 |
) |
Income taxes |
|
2.9 |
|
|
2.1 |
|
Accounts payable |
|
(1.8 |
) |
|
29.6 |
|
Accrued and other current liabilities |
|
(8.4 |
) |
|
2.7 |
|
Accrued contract loss |
|
(2.8 |
) |
|
(0.7 |
) |
Pension liabilities, accrued postretirement benefits and employee benefits |
|
0.2 |
|
|
(4.3 |
) |
Other, net |
|
(0.2 |
) |
|
(1.9 |
) |
Net cash used in operating activities |
|
(14.9 |
) |
|
(12.9 |
) |
Cash flows from investing activities: |
|
|
||||
Purchase of property, plant and equipment |
|
(3.4 |
) |
|
(2.2 |
) |
Purchases of available-for-sale securities |
|
(1.6 |
) |
|
(2.0 |
) |
Sales and maturities of available-for-sale securities |
|
2.1 |
|
|
2.1 |
|
Net cash used in investing activities |
|
(2.8 |
) |
|
(2.1 |
) |
Cash flows from financing activities: |
|
|
||||
Issuance of senior notes |
|
— |
|
|
— |
|
Borrowings on loan payable |
|
90.4 |
|
|
— |
|
Repayments on loan payable |
|
(28.8 |
) |
|
(1.7 |
) |
Payment of holdback funds from acquisition |
|
(3.0 |
) |
|
— |
|
Finance lease payments |
|
(0.3 |
) |
|
(0.3 |
) |
Payment of preferred stock dividends |
|
(3.7 |
) |
|
(3.7 |
) |
Shares of common stock returned to treasury stock |
|
— |
|
|
(0.1 |
) |
Debt issuance costs |
|
(3.1 |
) |
|
(0.1 |
) |
Other, net |
|
(0.1 |
) |
|
— |
|
Net cash provided by (used in) financing activities |
|
51.3 |
|
|
(5.9 |
) |
Effects of exchange rate changes on cash |
|
(2.4 |
) |
|
(1.5 |
) |
Net increase (decrease) in cash, cash equivalents and restricted cash |
|
31.1 |
|
|
(22.4 |
) |
Cash, cash equivalents and restricted cash at beginning of period |
|
71.4 |
|
|
113.5 |
|
Cash, cash equivalents and restricted cash at end of period |
$ |
102.5 |
|
$ |
91.1 |
|
(1) Figures may not be clerically accurate due to rounding. |
Exhibit 4
Segment Information(1) (In millions) |
||||||
SEGMENT RESULTS |
Three Months Ended |
|||||
|
|
2024 |
|
|
2023 |
|
REVENUES: |
|
|
||||
Babcock & Wilcox Renewable |
$ |
52.3 |
|
$ |
84.1 |
|
Babcock & Wilcox Environmental |
|
48.4 |
|
|
39.4 |
|
Babcock & Wilcox Thermal |
|
110.2 |
|
|
119.2 |
|
Other |
|
(3.3 |
) |
|
(1.5 |
) |
|
$ |
207.6 |
|
$ |
241.3 |
|
|
|
|
||||
ADJUSTED EBITDA: |
|
|
||||
Babcock & Wilcox Renewable |
$ |
1.7 |
|
$ |
4.3 |
|
Babcock & Wilcox Environmental |
|
3.3 |
|
|
1.9 |
|
Babcock & Wilcox Thermal |
|
13.7 |
|
|
13.7 |
|
Corporate |
|
(6.0 |
) |
|
(5.1 |
) |
Research and development costs |
|
(0.1 |
) |
|
(1.3 |
) |
|
$ |
12.5 |
|
$ |
13.6 |
|
|
|
|
||||
AMORTIZATION EXPENSE: |
|
|
||||
Babcock & Wilcox Renewable |
$ |
0.5 |
|
$ |
0.5 |
|
Babcock & Wilcox Environmental |
|
0.8 |
|
|
0.8 |
|
Babcock & Wilcox Thermal |
|
1.1 |
|
|
1.1 |
|
|
$ |
2.3 |
|
$ |
2.4 |
|
|
|
|
||||
DEPRECIATION EXPENSE: |
|
|
||||
Babcock & Wilcox Renewable |
$ |
0.3 |
|
$ |
0.9 |
|
Babcock & Wilcox Environmental |
|
0.4 |
|
|
0.2 |
|
Babcock & Wilcox Thermal |
|
1.3 |
|
|
1.8 |
|
|
$ |
2.1 |
|
$ |
2.9 |
|
|
|
|
||||
|
As of |
|||||
BACKLOG: |
|
2024 |
|
|
2023 |
|
Babcock & Wilcox Renewable |
$ |
148.0 |
|
$ |
196.5 |
|
Babcock & Wilcox Environmental |
|
166.1 |
|
|
172.6 |
|
Babcock & Wilcox Thermal |
|
209.1 |
|
|
251.6 |
|
Other/Eliminations |
|
9.6 |
|
|
7.3 |
|
|
$ |
532.8 |
|
$ |
628.0 |
|
|
|
|
||||
IMPLIED BACKLOG(2): |
|
|
||||
Babcock & Wilcox Renewable |
$ |
158.1 |
|
$ |
196.5 |
|
Babcock & Wilcox Environmental |
|
192.7 |
|
|
178.5 |
|
Babcock & Wilcox Thermal |
|
466.0 |
|
|
256.3 |
|
Other/Eliminations |
|
9.6 |
|
|
7.3 |
|
|
$ |
826.4 |
|
$ |
638.6 |
(1) |
Figures may not be clerically accurate due to rounding. |
|
(2) |
Implied backlog is backlog plus projects that are awarded or under contract but not fully released for performance. B&W Renewable included |
Exhibit 5
Reconciliation of Adjusted EBITDA(2)(3) (In millions) |
||||||
|
Three Months Ended |
|||||
|
|
2024 |
|
|
2023 |
|
Net loss |
$ |
(16.8 |
) |
$ |
(12.5 |
) |
(Loss) income from discontinued operations |
|
(1.0 |
) |
|
0.2 |
|
Net loss from continuing operations |
|
(15.8 |
) |
|
(12.7 |
) |
Interest expense |
|
12.5 |
|
|
12.5 |
|
Income tax expense |
|
1.3 |
|
|
0.5 |
|
Depreciation & amortization |
|
4.4 |
|
|
5.3 |
|
EBITDA |
|
2.4 |
|
|
5.6 |
|
|
|
|
||||
Benefit plans, net |
|
(0.1 |
) |
|
0.1 |
|
Loss on sales, net |
|
0.1 |
|
|
0.9 |
|
Stock compensation |
|
1.4 |
|
|
3.2 |
|
Restructuring expense and business services transition costs |
|
1.6 |
|
|
1.0 |
|
Settlements and related legal costs, net |
|
(4.1 |
) |
|
(2.5 |
) |
Loss on debt extinguishment |
|
5.1 |
|
|
— |
|
Acquisition pursuit and related costs |
|
0.1 |
|
|
0.1 |
|
Product development (1) |
|
1.6 |
|
|
1.4 |
|
Foreign exchange |
|
1.3 |
|
|
0.5 |
|
Financial advisory services |
|
0.2 |
|
|
— |
|
Contract disposal |
|
0.6 |
|
|
1.4 |
|
Letter of credit fees |
|
2.4 |
|
|
1.6 |
|
Other - net |
|
— |
|
|
0.2 |
|
Adjusted EBITDA |
$ |
12.5 |
|
$ |
13.6 |
|
Product development (1) |
|
(1.0 |
) |
|
(0.7 |
) |
BrightLoopTM and ClimateBrightTM expenses |
|
1.7 |
|
|
1.8 |
|
Adjusted EBITDA excluding BrightLoopTM and ClimateBrightTM expenses |
$ |
13.2 |
|
$ |
14.7 |
|
(1) |
Costs associated with development of commercially viable products that are ready to go to market. The elements of these costs associated with BrightLoopTM and ClimateBrightTM are included in the BrightLoopTM and ClimateBrightTM expenses line. |
|
(2) |
Certain 2023 amounts have been reclassified in the reconciliation to conform to the 2024 presentation. |
|
(3) |
Figures may not be clerically accurate due to rounding. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240509445174/en/
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