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Babcock & Wilcox Enterprises (BW)

Participants
Megan Wilson Vice President, Investor Relations
Kenneth Young Chief Executive Officer
Louis Salamone Chief Financial Officer
Robert Cathey SCW Capital LP
Call transcript
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Operator

Good afternoon. My name is Chris and I will be your conference operator today. At this time, I would like to welcome everyone to the Babcock & Wilcox Investor Call. [Operator Instructions] Thank you. Megan Wilson, Vice President of Investor Relations, you may begin the conference.

Megan Wilson

good and Chris, you, afternoon, everyone. Thank Babcock to & Wilcox Call. Conference Investor Enterprises’ Welcome Wilson, Investor President am Vice I Megan of Relations B&W. at

Salamone, this our discuss me and Executive Henry afternoon Kenny Chief Chief our Louis Bartoli, Young, and Financial well Officer recent arrangements project Joining fourth Strategy Officer; quarter as B&W’s are financing Officer; to Chief as settlements results.

also of our on at risks recent Harbor and forth certain we that the the found end our These for subject the to to forward-looking. in with statements make report press statements set those provides Safe XX-K release be During and Form related will statements and can including this provision call, forward-looking our detail about uncertainties, business. are risks in on further SEC annual our file be

undertake required Additionally, any statement. except as law, forward-looking by obligation update to no we

information also to supplement in results provided to provide Kenny. of not measures. We Form considered A results GAAP. should our measures be the non-GAAP can non-GAAP our substitute reconciliation will historical for the today. as information over a be with historical that, of on regarding turn accordance certain This or call to GAAP the I filed found With with X-K comparable SEC the superior

Kenneth Young

and and been EPC of over to of one, underlying call. renewable two, contracts; three, significance November, afternoon, we loss priorities: and position the renewable time When Thanks, discussed joined immediate our taking Megan overhead company to remaining costs our flows ourselves good turn our the mid contracts. in and everyone. our out reduce EPC profitability on capital; Lou, have plan join the I to for Thanks the hidden working Henry which and our the focus realize businesses laid loss our due to finance cash

today be I’m Over of objectives, tell is different a pleased a negative the And past turn over accurate our that held what’s wouldn’t contracts speculative and view an should been forward. those working B&W profitable towards over you recent that months, is diligently these research company. towards X.X and we've what and the to going and at to company risk significant speculation move able the EPC the corner for B&W be

Let's what EPC the projects. impacts to loss contracts renewable discuss been accomplished the these has and of minimize one-off

damages renewable we’ve First, risk projects settle we’ve and turned provisions complete These as remaining previously high settlements of and to burn liquidated projects. to four EPC risk on reached six associated over vastly reduce the those of and disclosed, those two our contracts. the cash claims, historic loss

these of turnover in One projects is expected May. to

going specific carried to For burn. which vastly systems removing the a We’ve contract another reached with other the exceed renewable have to which ourselves reduces key that could losses not project, be and been EPC the started. settlement role, a By fixed completed forward regarding also has legacy or potential risk. settlement identifies EPC cash amount, scope significant our costs from not

and and steady and specific leaders relatively for solid been these systems. from been in Volund has Renewable potential our As loss environmental forward. not to we settlements. business estimate renewable losses, have if boilers, have reach businesses to We underlying risks EPC we’ve significantly the going Other hundred contracts contracts and grate, additional these reduced our technology The had conveyors the maintain contained apart margins. such, in control several million exposures reach the did

reported, ever boiler, I U.K., and continues in technology state-of-the-art Volund to overhead as world with environmental to was grate, emerge be and as technologies EPC reductions and want and We U.K been remain is as are a Volund expect conveyor licensing. we that the supplier. the U.K That exiting challenges over and and is required now do stronger support other are strength the not in working than profitable now control a in stronger Volund than participate emphasize geographies. we committed the the providing achieve its or we it we to pipeline the to focus see been Again, parts coming maintenance and There markets loss operation by has a Volund's supply, we from means through the stated, and feel position the is despite enter decision stronger services, through as ever. around projects, before confident we overhang will these enter U.K do quarters. I the that previously not solid around and will world. did firmly systems we design in We projects, into core any This U.K operations and and Volund remain what previously as what but and in rumors, are and and market. exiting worldwide and these loss XXXX. the contracts

agreements profitability. support liquidity to settlement provide just financing and the secured capital company to we our additional road the important working on Second, to back and put as

B. of the out of financing unlock the our term to latter the believe and of through an We amendments and $XX term last this and million has businesses. We has and and demonstrates March. also our loan $XX an Riley to last in affiliates additional agreed loan to the our banks of up we value commitments to our from a additional Friday, another part arranged million. provide incremental value B. the This million we facility announced an of position out of necessary With and time. As Riley our appreciate mentioned, in a this technologies, some credit by turnovers, confidence core greatly shareholders provide core under $XXX support the FBR follows secured we uncommitted financing risk support and the core plant much combined our The EPC contracts B&W projects and reduction ability believe to profitable with a financial liabilities restore through company challenges operations now and power We cash to now can forward. financing, SPIG. Volund employees and loss to and business. focus our presented of positive we shadow the flow. real of of from with of the going stronger our strengths Along the strong the and have strength sheet significant the loss FBR a of balance strength emerge have settlements for unlocking value from on the overshadowed

operations increased on exit of combination are and our the we achieving of XXXX. as strategic we With cost-cutting path the execution initiatives a profitable to plan,

cost joined we've approximately least $XXX identified $XX savings million annualized At $XX saving cost have target eliminating November, rest level to of been corporate be implemented emphasis of across terms cutting, at the the overhead. expected have million three over target a new identified date implemented the initiatives since on million. of unnecessary been remainder year. all of segments previous an with These in company In of the the we this increased savings and and cost the in with savings additional to to

aggressively We overhead will going continue operations to look global streamline forward. reduce our unnecessary and to

So forward. now let's look

and underlying might've article of quite diverse serving the quality a company and pipeline is markets technologies, seen base offers. that will brands, Wilcox: the back have not but install recent reputable aftermarket that effects for decades a reality with our to changed. those the time, history, that products speculation these had power for some EPC It's those who retrofits recognize services have robust will been strong and look great take and a the wrong performance a global company industry-leading a large generation This to The to access. underlying time require market services and This vast to people, assets, before that backlog talented remember This loss come. You and projects with is Over. has BW is strengths always was headline our opposite. strengths industrial & company Clearly, and Babcock overshadowed need

on Now place, and cost-cutting with our services. has our products financing in industrial retrofit an power in on with for strength focusing increased services and and emphasis core initiatives aftermarket and been what the settlements, markets we're

on quality, projects We high-margin chasing rather are than focused revenues.

to focused each also more business line on to opportunities business flow. We and are in number profitability customers. and a delivery identified We've our cash improve capture of

We industries. global are best we market leader doing a do as what within these

perform now the the customer revenues, pressures end greatly strong Wilcox appreciate of at and to despite year, challenges. called recent our our table the support. power backlog with of fourth Babcock bookings & quarter Our segment, We continues business well financial

Our employees environmental a and have on being focus technology control oil markets. energy and as renewed utility, of supplier paper they pulp world-class and boiler the gas and to leading

globally and the aftermarket and business U.S power powered us the and in diamond in global base to and support of position related our needs. fleet generation strength coal installed a internationally equipment robust environmental Our puts

largely and services. untapped install aftermarket paper pulp a Our potential represents for base

Our boiler industrial opportunity. business great offers packages

push lowest opportunities flow incentives G&A globe. these reorganizing significantly the maximizing and and of ownership in around cash leadership cost optimize possible P&L business level on the to talented are We we power the into operation. are and business focused in the the to giving Internally, reducing the down

on With and well many the returning the it designer can for supplier core loss nearing, years. focus as Volund served its conclusion the model business EPC a technologies, of and business projects that profitably

business longer equipment the no on quarter optimizing projects. continue equipment and and and the scope aftermarket discussed, focusing aftermarket in structure. to business The and and licensing be we profitable we've business the As only EPC are bidding cost and its now previously only is fourth operations maintenance businesses

challenging fourth quarter and of result challenging as and of were bad reflective business. XXXX, not a Our a historical debt a SPIG had project core These write-downs. business primarily and the

latter on introduction end legacy completed core SPIG an quarter, on management to expect our project complete. all, taken on also can the We actions project and XX months The in two to the the increased but business of geographies, a stabilize half as focusing take fourth products focus of its the include XXXX sales, of actions the SPIG At new and projects of business. typical execution. restructuring,

on Our a focus more select in to strategy value in on the lower within projects selectively for higher results business. the backlog geographies change

performance performance second We cleanup and becoming believe to off impact half more will projects the quarter. benefits related and to in the remaining backlog as of the beyond. year throughout with XXXX improve second improved and continue trails our in terms strategy However, loss the their better XXXX in designed projects the evident have drive Volund to

now Lou XXXX, overhead. our on We fourth turn will are run EBITDA financial achieving including $XXX provide not the in over adjusted corporate I detail call to results. more a targeting quarter the million of rate around

Louis Salamone

Thanks, Kenny.

company's Renewables segments, and and reported SPIG, formally Wilcox, Other & the Volund Babcock mentioned, renewable segments, power, were respectively. as the Kenny and reportable As three industrial

significantly fourth of XXXX. of March as loss consolidated by the Our by million project the fifth $XXX.X the reached settlement related effect required in quarter of Volund impacted to were was revenues GAAP, that

fourth which the contracts. cost settlement, a to were was have new operating financial quarter, by Operating GAAP for offset write-downs in the Adjusted of continued in of levels Wilcox to impacted we the a basis, strategy on required quarter. previous $XXX.X of taken agreement. its strategic by loss the negative cooling we loss as actions also by costs again, $X.X costs due systems segment, estimated reported bad lower as partially losses volume $XX.X advisory dry partly terms and million, million were losses approximately and Volund the and and charges restructuring businesses offset as For to EBITDA also lower complete the were our other under was build Babcock On as quarter. million under build savings the credit $XXX.X debt well SPIG effect increased well million of the the GAAP restructuring from parts of In & segment’s actions. that the sold new of

and EBITDA the Volund bad of However, remove the a project pro been debt million. adjusted negative would impact losses the $X.X settlement, write-offs, to forma have SPIG

Now believe & We let $XXX.X business segment, quarter company's me the B&W's that negatively at turn formerly to In segment the revenue the over generally results. segment was the concern our negative segment, was Wilcox also steady fourth Power the Babcock by impacted performance. million. financial

impacted was EBITDA equity believe volume. segment, of adjusted as Gross segment their $XX.X reduction in was the country's interest was this and lower in million, SPIG The by revenues core joint quarter the outside system primarily Adjusted the including to its profit in following cooling bidding margin in progress million that strategy million cost by This many primarily orders the the U.S in because and estimated concern. customers services. EBITDA and profit was in due XX.X% we gross reduced delayed of cooling accruals. as costs lower were negative under affected of the profit project in by one in by contributed the a million $X.X In XXXX $XX.X or significant margin parts cooling income SG&A on aftermarket improve contracts mostly focusing products. would in increases profitability a million U.S gross was and due in lower $XX.X million venture fourth impacted strategy, by in the had reductions the geographies fourth segment, profit projects build build $XX.X change quarter prior debt XX.X%. negative of China expected the in sold EBITDA adjusted and lower As which million, of which quarter, profit the year quarter. gross the in quarter the new XXXX, the selectively formerly $XX.X previous volume Industrial offset was system $X.X to and the was system and the was sale more fourth within bad volume Gross the new

However, have million. adjusted significant projected losses the EBITDA $X write-downs, been remove to and pro forma would

$XXX.X the negative fifth Revenues the project As formally as reduced XXXX build a one in system Volund the $XX.X the quarter also direct partially Resource The under contracts be significant licensing the regarding of XXXX March to offset lower $XXX.X aftermarket Beach by by settlement Kenny Corporation again, due project, are the the to were Other segment, fourth of negative to early price XXXX. that project that European in sale of to The Palm million. Adjusted Renewable in with were primarily the mainly December mentioned, for $XX.X U.S affected the profit million due quarter, and results selling the project and negative Recovery the and million was business this this one and projects. the U.K Renewables estimated quarter, and million fourth settlement and costs of exception EBITDA from segment cooling for -- completed support which sold recording the the the lower the in of XXXX the loss primarily to segment, strategy higher XX, fourth to the settlement projected -- overhead by the mostly by new completed quarter these by impact impact activity gross SG&A. lower profit end a in due settlement. gross due were Volund was previous segment were

and This XXXX estimated to cost negative million, loss only $XX.X quarter forma the Recovery estimated the effect million. operations. of in Corporation. fourth adjusted actual the in to business trial maintenance EBITDA changes In and the and issues the a $XX.X Beach remove portfolio $XXX to segments due the was mainly other fourth and the and revenue The and However, XXXX, of the been EPC renewable quarter settlement pro cost differences with encountered would was the impact complete million. due contracts were startup of profitable including of of net the the the contracts to have business Resource exception of equipment March during XXXX sale Palm again during aftermarket operations lines of settlements

ended balance toward our related from the the to Turning reflecting operations $XX.X fourth loss work interest due net quarter equivalents December as flow, use in Volund and was level revolving cash borrowings. and of quarter with was our cash a to higher of in sheet at million, projects. Cash million, $XX.X Total $XXX.X We XX, $XX.X a million operations liquidity. of the cash expense debt related completion in to spending cash we the cash. million, of was quarter XXXX continuing restricted to mainly of activity flow

in quarter number including made and the fourth of to incremental a series negotiation earlier which financing during of facility to we revolving to described. arrangements mentioned, the company, amendments year, in and waivers our Kenny settlements during of provide a credit As liquidity the XXXX the Kenny limited

going last out stock to be million loan million The loans approval be working for agreements. issue months; to needs million as In agreed uncommitted and financing used per rights rights per to during offering with the and term capital Riley million term with six course share; XX a shareholder FBR B. B. of agreement credit under the $XXX extended the date at provides last offering. last $XX.X term an warrants connection to proceeds these $XX $XX one share Vintage Riley amounts of last out due $XX the used seek FBR, for from from Kenny out share out financing repay been execute additional for its per a execute stock the Capital common from all in at forward. amendment, was to X the most and facility term XX.X term the split. penny $XX that amendment the the permits by Our -- was of as to approximately the stock each million $X.XX to last will the term the held Management loans for Also within maturity reverse we’ve using to share addition December commitments million. project of loans purchase with company This XXXX. by of up following: one of XX, out facility amendment conjunction million up in exchange the finalizing the at common $X.XX Volund out will connection million agreements The The uncommitted amendment well provided under completed incremental affiliates the discussed. loans the incremental under were proceeds loans in of last agreement, recent have Inc. for settlement loss in $XXX pay

letters X. our reduces $XX condition items, with up found million respect any X-K million terms also issuance the projects, other facility of amendment as revolving grow future us also of date among business for It which expire year permits be filed SEC of failure creates of required. credit on can prior to existing It to required a refinance to in Volund and our the one from of letters intend All the liquidity new April allows to of credit minimum further. credit of $XX to or for The the to the $XX the maturity the facility borrowing. XX, default a with the of of Volund the million to any allows that -- after event agreement March facility as credit revolving to new terminate XXXX. We fully credit on

we're in mentioned, savings Kenny measures XXXX and As initiatives, across Cost to savings our small roughly have are a at the level our savings progressing of been all savings date and these now XXXX. $XXX to line implementation through be in annualized implemented amount expectations. corporate targeting been with the balance million identified savings implemented three cost and the plan have segments in in with quarters

of actions, guidance. guidance previously relevant the in stated announced was company's debentures quarter company's XXXX third no previous the withdrew XXXX, of financial and and asset Finally, on based other company that longer the the ongoing strategic a number

Kenny. the does at efforts associated this ongoing to other guidance now it will I Given company with back cost over to initiatives, the provide and turn strategic intend not time. savings

Kenneth Young

profitability the return and our projects renewable strides shadow of Volund our we've Thanks, strength can We SPIG significant power business now towards Lou. step healthy and and future. Well, technologies. EPC out demonstrate the in loss in underneath positioning the B&W from of a to summary, made core for

power who turn for industrial and working I've deliver assist call the we on operator, of our B&W are us much our will to us, core flow, forward back to customers believe the from the look together around profitability the now focused employee support challenging markets, these Henry, to times over Bob, safety. vendors of what and I during be All taking in a XXXX. better and cash and any in will and world, customers, questions. appreciate to employees we of to will continued We and me quality, course Lou, our every shareholders met

Operator

[Operator Capital. from SCW have do a Cathey Instructions] question We Robert with

line open. is Your

Robert Cathey

give was to not corporate [indiscernible]this run you appreciate spend, wondering seen EBITDA I for think we’ve components parent the us you kind giving I only around was for And as know you back what Thanks. us? Hey, XXXX, guys. to cost of -- I that from call. if you’re maybe could can corporate paid relates guidance the it some look guys original if breakdown I also context rate those like?

Louis Salamone

Okay.

We going the target be Robert? are detailed we part on the target not and earlier. of -- we guidance a not to going second question, have will we we’ve What are to indicated your give as to guidance That’s do guidance was able mentioned.

Robert Cathey

any around providing cost, It's that. irrelevant if around not guess corporate but guidance that's I you’re

Louis Salamone

state can costs guidance.. but what we give the were, not Well, corporate

Robert Cathey

Okay, what were they?

Louis Salamone

after into About -- allocated outside $XX other million costs of the segments.

Robert Cathey

and just then, And maybe context what business little happened provide I going and guess, I been on will I have, that Okay, forward? guess, around SPIG if what’s could a what and perfect. you remedied what focus

Kenneth Young

that and to in Yes, parts from a lend -- a on to more the around look that this give should and and both wet the of on around and think the after I opportunities follow-on well. mean, taken conference we sale maintenance into an about grow standpoint, the think be in world tend amount they we many for trying I little Robert just we focused into dry incredible just think SPIG here, product what aspects alluded peeled as or and so to -- high again is, had focused back I are as markets that to overall, markets on call talk level, kind bit

on focus So reduce as in parts we a aftermarket. higher margin wanted those geographies after-the-fact which have capabilities geography the opportunities SPIG higher more type and to there's maintain typically maintenance typically opportunities around wanted footprint, to and or the follow-on return to are them cost those obviously other we

Robert Cathey

it. Got

Okay.

work had thanks guys. difficult you really hard We getting situation. know all the to where today. Well, a appreciate Okay. I you’re

Kenneth Young

Thanks.

Louis Salamone

Thank you.

Kenneth Young

support. the Appreciate

Operator

presenters to turn for remarks. conclude things the of call. Q&A I this over Instructions] will any the And [Operator back now portion Okay. closing today’s

Megan Wilson

our our for be on later replay will limited us. call. That conference A a available for today. time concludes you joining website Thank

Operator

concludes conference This today’s call.

may You now disconnect.