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Babcock & Wilcox Enterprises (BW)

Participants
Megan Wilson Vice President Investor Relations
Kenny Young Chief Executive Officer
Louis Salamone Chief Financial Officer
Max Batzer Wynnefield Capital
Robert Cathey SCW Capital
Call transcript
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Operator

Ladies and gentlemen, thank you for standing by. And welcome to the Babcock & Wilcox Enterprise Fourth Quarter and Full Year 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session [Operator Instructions].

I will now turn the conference over to your speaker today, Megan Wilson, Vice President Investor Relations. you. Thank ahead. go Please

Megan Wilson

Relations and fourth everyone. XXXX quarter Megan of call. Chantal, & earnings to Wilcox I’m Investor President Vice Enterprises and Wilson, B&W. good you, Welcome afternoon, Babcock conference at Thank full year

B&W’s Joining and Executive to our Louis Kenny full and Officer, Officer fourth Financial Chief quarter me Chief year are this discuss afternoon Young, Salamone, results.

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

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

non-GAAP provide historical superior for fourth provided GAAP earnings also can results results our of the A the should We afternoon. yesterday be supplement in found and information be release with measures quarter regarding to of full-year a reconciliation substitute information This measures. or as not accordance historical in non-GAAP comparable certain our GAAP. published to considered

turn will With that, Kenny. to call I the over

Kenny Young

for Good afternoon, everyone. the Thanks, Megan. join And taking today. to thanks us time

implementation our strategy. turnaround really Our experienced management XXXX the demonstrate effectiveness of results team of and our and proven

our executing quarters adjusted profitability technology an and and increasing in on are employees are saving Our operational basis. on we initiatives. power unsurpassed EBITDA XXXX the consecutive achieved and cost within three for steadily We've industry,

XXXX. for the positive GAAP third generated from first quarter fourth operations the quarter, continuing the we In time since of income

years, pursuing strongest savings, we in robust our driving operating and pipeline strengthening revenues new sheet, growing accelerating entered Our margins, a transformation worldwide. position been balance and our cost of opportunities has profitable improving XXXX in

results cash and is management. Our strong line focus bottom

Several that home and from delays various many being taken in projects for it's many around our affected refinancing predict Like Like offices national and impacted to with the by been of arrangements actions spread. by every many the companies due taken by areas the us and timing, and work governments pandemic, global and pandemic local our the located the world, or company deferrals projects. worldwide its ongoing our to including major are impossible COVID-XX have liquidity restrictions our enforced we of of of extent and influence its fully process. in on control necessitate

encourage at this crisis in points Babcock However, us drive world, key of & forward time Wilcox. two and throughout the

technologies part products, of the The power the first to in overcome services support energy needed that is the around communities, help infrastructure U. world as available ensure services and products provide crisis. and we this We to ready are S. and deliver necessary our a industry. to critical and and

As we're requested. operating to continue and such, supporting an as deemed we are customers able essential business our and

support and We ways the seeing continual are the to challenges presents, lenders collaboration various contact on officials with we're with work together the and and we board. pandemic the customers, suppliers, to our government deal in appreciate across

customer of will pandemic the or to due fall spring of eventually deferred certain return expect that the of of project XXXX our that and XXXX, nature specific are majority because of addition, In a critical the on depending business, in revenues we the factors.

the their have commitment people to of in it day BW. past how have a and customers serve. strengthened our at continued that lives, by faced management our had talented critical demonstrate we employees experienced grapple here our is This we with dedicated honed on that the businesses is point key our set pandemic the our to recognizing team they the and work to effects has of restrictions ensuring been and related and years to and employees as continues, four and challenges and the communities day second The

impact our the we As predict COVID-XX of said, on fully business and significant can't I future challenges. its causing

current However, that have gives and our dedicated when base COVID-XX and globe. critical me customers eased strong in restrictions provider provide to taking positioned the and B&W continue to at technologies, are confidence best we core class executing to fact we experienced and are strategy understood and time, that and services engineering industry a impact well are support around our to together, appropriate the a the that better will managed be the support globally of our employees, the leverage

pandemic delayed full I'll with now or be year projects quarter the the able Louis? in as pandemic over our around pursue turn drive results. Louis strong will as pipeline conditions well we continue opportunities world. of deferred call when discuss the to fourth to our because to to conditions, the XXXX detail, of We forward of as allow,

Louis Salamone

I'll Thank with you, results. found XXXX consolidated in on our consolidated Further which year SEC. can Kenny. full I'll results the our and quarter detail, then turn results be to the XX-K, filed our we full review fourth and XXXX year in detail segment

technologies the consolidated volume as lower completed compared decrease which prior profitability, new construction to to million. as focus about expected quarter fourth fourth were and B&W periodic some of $XXX.X quarter our were in of XX% projects our XXXX. was in segment, the This due large Our results This well a year. on our build decrease was core

XXXX. of Wilcox geographies compared income of and profitability on of in improve margins income EPC strategy GAAP in segment, and due quarter contract in losses $XX fees the costs inclusive products. Babcock six loss European restructuring SPIG loss bidding in advisory primarily the million the improvement for absence of more settlement gross and $X.X selective quarter $XXX Our million operating a in improved segment change was on in the by to an core our and the focusing settlement the to its operating fourth approximately operating million, to was of The fourth

compared XXXX. a of quarter the EBITDA Our million improved also to million in adjust negative consolidated fourth positive $XXX.X $XX.X to a

in and quarter decrease a period results. volumes. the period move quarter fourth segment of some were compared of in the as of approximately quarter, in cover last XX.X% $XXX million year Babcock attributable XXXX, Adjusted the same due to last lower in now the settlement The the in segment of quarter $XX.X the Wilcox at based in volume and of effects prior -- for quarter XXXX The revenues fourth about to timing completion year. decrease builds was EBITDA the to quarter large the the was the lower on primarily year's fourth new $XXX our the million of construction the was the expected, period. was as I'll was fourth This the million a $XX.X same primarily the million. XX.X% of construction in margin compared projects. adjusted This with EBITDA of was XX.X% of of

a the by proportion Fourth Gross margin segment cost profit compared improved prior and compared primarily XX.X% revenue with was savings $XX primarily to million, year quarter processes. XX.X% reduction the volume, higher our sales XX% to decrease cost as profit our benefits same decreased margin improved in benefits. increased and mix the period the to due period, year, in of due partially prior part last the the was of offset to gross adjusted which

the onto segment. SPIG Moving

which the our in anticipated of to was million cost Adjusted build products the due $XX quarter projects, fourth expected, geographies focus driven our improve volume due lower on and more million This operating EBITDA cooling XXXX of revenues the reductions. new a $XX.X decreased was million. decrease improvement XXXX. build of million by profitability. SG&A to As mainly prior $XX.X core and of to cost shift a and strategy, a year, This XX.X% and new quarter the fourth in strategy savings restructuring, to change our compared to to of in systems negative $XXX,XXX, an bid negative was benefits $XX.X was following selectively over

positive gross due XXXX in million the $XX.X margin to million Adjusted the the fourth in fourth our segments as XXXX. XXXX million to other compared strategy. effects improved $XX.X a of period, in $XX.X negative in a a year new and of quarter prior fourth were the quarter million Revenues quarter for primarily compared to Volund to the of negative profit $X of renewable the

the revenues volume in impact operations, which of prior generated year licensing increased prior lines offset as EPC by $X.X segment’s as quarter. disclosed related in due the previously environmental settlement partially to of maintenance, sale well the million XXXX and approximately the compared to to in were and certain revenues quarter year and segment fourth Loibl, the Our of higher revenues, loss this projects on

due the to and a on the the of gain of EBITDA expense. impact compared million this warranty the XXXX, the $X absence in XXXX, negative European losses segment quarter adjusted of contracts of XXXX fourth EBITDA quarter million inclusive a positive settlement loss improved profitability segment fourth fourth Adjusted quarter $XXX quarter contracts lost in is $XXX in reported the the to million recorded European to as the This fourth and basis. In of primarily EPC the quarter a of EPC an on losses equivalent compared in results. million is last of year, returning to the $X.X to the in the as

this which October to turned the The to in extended contract. in however XXXX. of the a an quarter segment customer due over had in was turned contract one increase of contract, into complete XXXX to scope remaining loss the fourth small This estimate

negative the compared loss the Loibl the reported of $XXX.X gross EBITDA fourth the positive of of from was on absence overhead results million and on profit effect fourth due and segment's adjusted contracts, of levels partially profit Beyond and the sale. SG&A quarter million EPC The an quarter direct the in the XXXX the losses quarter million XXXX. of absence lower XXXX, to improvement lower settlement of a offset $X.X gross to XXXX in the of by included its support fourth $XXX.X adjusted

for turn now full XXXX. results year our to I'll

decrease full all GAAP completion our focus inclusive compared European loss million. -- technologies segments, $XX.X year, the approximately and restructuring fees profitable EPC loss of costs of were contracts. revenues as advisory XXXX. this and of was of operating an million loss million expected operating company's compared for to well the the and by contracts an in It's $XXX.X $XX.X and driven $XXX.X of XXXX as XX% to XXXX profitable on consolidated on on was core bidding For million, across XXXX the settlement

negative on a the operating EBITDA margins compared in was of to adjusted of million lower profitability. adjusted an basis strategy $XX.X XXXX. SPIG in improvement million loss improve profitable contracts losses and a XXXX EBITDA segment due European to settlement, Wilcox primarily The the in full EBITDA EPC its income our year $XXX.X on with to adjusted The in & gross the improved Babcock in significantly shift level was

million. flow was Cash We quarter increases by quarter, liquidity. in Interest now operations or fourth quarter of I'll $XX.X and expense generated in related as and was from fees our our increase highlight and balance or turn facility million the with $XX.X to compared in cash driven flow, $XX.X debt XXXX deferred to our ended million, and the $XXX contingent credit of million. this last as prior and of December primarily of out in year amortization loans. XXst cash accretion million revolving to equivalents the revolving was cash the sheet term quarter $XX.X unrestricted

basis. million to continuing completed contracts. saving EPC on were from and loss initiatives cost insurance that annualized targeted subcontractors various policies European pursue $XXX cost of implementation the the an our under for We're to nearly We've be recoveries

As of in measures the the the XX% balance of XXXX. half first have quarter, implemented of savings of the implemented end been with fourth roughly these

as are We continuing we and our will appropriate. opportunities for evaluate increase continue additional dispositions also potential to to to efficiencies, look

to before, was an and energy COVID-XX. and the began in essential S. industrial mentioned We the critical of support business first planned We're feel as effects Kenny progressing As quarter we infrastructure. The XXXX. business. U. for international of

of implement year have experienced last proven we an more in our and employee our team management of determined COVID-XX. team the and a year. response through to changes plan impacts We as that unprecedented business this turnaround the operations They engineered and even are

affected in other COVID-XX pandemic and our the resources. impossible uncertainty financial global by that business have markets. our this the will been predict pandemic been has and it has liquidity the what Our and on uncertainty created to business, financial impact, has It's caused significantly by the

business on and focused costs are financial and crisis, long the effects our flows our the disruption support term. this we while managing importantly, market However, to evaluating in of customers our continually through on the cash we're most our

now Kenny. back I'll turn to Kenny? it over

Kenny Young

Thanks, Louis.

confidence saving Our our performance quarter strength; entering on and track efforts, fourth continuing challenges, this to shareholders; profitability, global through and position to XXXX the of recent our our our we period following our record recent to in ability unprecedented lenders actions the provide of lead demonstrated and history. and to cost the improving strategic a XXXX through successfully customers, significant in business execute working corner shows turned while in

in are and understand communicating loss project each flows contingencies segment leader with as around the the impact related the the daily of basis. to We project a as company by profit and the business world on cash pandemic, and well

of We have of knowing each our revenues to to, expected strengthen customers in on return depending stages XXXX the of in the various XXXX, majority COVID-XX, deferred that or the are project. fall spring are due in to of

our on our our liquidity now employees the will and term. also questions. to continuing infrastructure, while strong with who of support well core certain our the our our energy of projects customers long for flow projects. fundamentally daily over focusing and this in the remobilization to call We're working protect us cash throughout Chantelle as will are care I customers through planning business managing We as taking them period, supporting to and taking your assist this delayed back crisis, turn

Operator

[Operator with Max from Instructions] Wynnefield Your Capital. first comes Batzer question

line open. Your is

Max Batzer

looking saying we by work many all year, lot in guys in tough after as remarks, start done a to it's as done with great this that last your of certainly the out unknown you’ve very that faced lifting be pointed like you have you I'd is to Kenny, are companies at. heavy and

lifting done you’ve much heavy and and good on And the so, work congratulations come. to that all, of first

and an designation jurisdictions that of you there in the essential it business. all questions, all Does some business consider place… that essential doing as applies Second all you here in now you're apply countries? said over that business Is other

Kenny Young

Yes, me hear can you okay.

live… this doing we're Sorry

Max Batzer

you. Yes, it, I’ve Don’t got about worry you... got I

Kenny Young

world that providing business services our Clearly a from of supporting both and to waste essential in local and sector, not the the as the provide where and in but position well energy of sector the function deem essential in our filing in each do the in we and and that the are pulp hospitals, today. paper U. technologies industry S. support energy standpoint. communities around other around jurisdictions We and world as filed the that still operations businesses world vital but the institutions, essential only around because occurring is

businesses different lot around we can of can, world, again so effectively support call And are But well too. we where deemed and we that to best as and where assistance the and are providing we those we are it essential to names we’re a one. deemed jurisdictionally again they

Max Batzer

healthy rose keeping name any your a staffed, finding still any in keeping is operations still is in it, Got it the Are rose. difficulty other place…? people and by you your

Kenny Young

from are CDC tested around proactive a now, company a and guidelines of S. right a employees aware local We From with perspective with the guidelines both too, regulations not closely internationally virus. steps perspective, company the keep our following directly from only our safe. world, as of as companies U. clearly doing have working those to in any not our that been well we're of today and but most following the taking officials employees best with for state like positive here significant and local standpoint, well foreign the as governments and also

would presence. taking technologies Obviously cases engineering need have work-at-home are need do but appropriate we an a go a certain There those established aspects measures. not and be where at proactive that to office. few we strong many like from perspective are to companies, the that we from Clearly home, a a access into work few employees

follow with be that supportive to we're them working those compliance standards the may of as too following activities and any they well as and are possible, we're and to on working onsite implementing relates where and it lead when customers Our and employees. their

from standpoint And so worldwide a fact positive employees we've the thrilled we're by under test the direct on very any with our impact basis far, virus. had that not a

Max Batzer

it work the as so the on out people and computers. that well do Well, remain on the you as may line, requires

One, more I moving chance still ahead… active are institutions your does or results that? ones. you two good this of quarter, getting were of the supportive? in fourth is And are the how impact refi on news. still short you you there doing? being that's mean I've thinking So got Are a

Kenny Young

we're impacts managing to and want than this wouldn't vendors well and this the efforts the the Obviously, of process in in too this as don't we're deferring well go it as through discussions. virus point with the lenders, as this the business about relates is a be impact at the will much obviously, felt, At process on through revenues that as at all it refinancing. point we business clearly lot and further in working in this and real with of as talked speak. challenges working point, closely COVID talks projects, that all I that. time to time. and presents working others And we're refinancing as in But far felt How know around we the of we and as and

Max Batzer

Well, it work hope, have to there's you some plays on least cash the time. lending for in And I'm out. the sure to still giving and thank that and after we've at it very guys see community I'm done, there is What's that this acknowledgement where Last get the let's burn? glad how active through me light much you're got you question there’s this. and hear and

Louis Salamone

and through so the through the really to working impacts, right flow borrowings now cash although, our been our far of generate been we and company. the able revolver operations But we've pandemic. right is been cash Operationally, COVID-XX we've positive. now, can't we closely future of Obviously, utilizing judge have

Max Batzer

that And for we continue hard. Good too have to so plays guess the you again my questions. don't Thank hit once that hope to see I luck that operations guys. much you out. revolver have just let’s Well, taking very that how

Operator

[Operator SCW Your Cathey Capital. Instructions] from next Robert with question comes

Your line is open.

Robert Cathey

I likelihood in what would that you need and mean, know was would your But of the just and facility what then what that, on the form comment -- be list? can't I would the do curious financing. specifics, what is work of the what wish you want ideal perhaps I you

Kenny Young

company free from that I -- Well, Louis feel I other way to chime like we're first to I protect deferred. I employees world, answer that, best we capital But think to can work projects foremost, and the this best stand period now every customers our way where and have around and is clearly that right particular in. and to trying think think, are making or Robert, the our sufficient sure answer delayed through

where flows of and on working take we're the has So briefing around the projects, where defer project, basis. and mean world working it the been delay limit mentioned a delayed a is project-by-project been to here, I days number site a working initiatives as hour the of either personnel by impact client we're therefore right the day-in XX/X ascertain on chosen literally. in have projects to we to and probably deferred. now cash literally project, the I have XX To cases really or certain day-out the

identify, what if in working and is standpoint identify is go our will, wouldn't we're through trying I think into you details I the here. gap, But trying this and to to period. and we're what what want to

how to in relates as will various have some back government it there's to questions allow globally and actions long get the we will in period obviously last business. So normality work this to us all the when

that in phases. will of happen Some

when customers will start deferred are shutdowns certain others of still this be and on be shifted in that to various again, stages start some quarantines yet we're identify the spring right obviously how It the working or a we occur in world and in these through fall and possibly, depends we're will it or to will determine the lasts shortly and And not revenue. whether parts start of fall Some are full or lifted all to that. if and lockdowns can the here working of this get with hopefully long out right work back they being, it occurs year. would obviously others summer. these where now to And now and recognizing in to

through ascertain can We're officials government all working a the that At watching loans are grants of we're trying for as with various we of time, or leverage that also those to government same programs deferment taxes and within very that, otherwise strategies. you and of flow we're cash our closely. following, working and company which are implement various programs that

of a assisting have that. professional number resources We with

doing from bit little and we're We early are those relates are a opportunities. it that company a as what to obviously standpoint well as just

ideas be can, We and on we support the working company, we much real we've that and news time concepts to we how it our support. on the stayed sure all point I'm able we're that to not of XXX% top and as can think but lenders plan to that relates have those. the to through And working time cash real we'll with then need we'll

all a a it's real in time aspects. So in

we can we’ll cost the good or and as this other prudence point. through real period. we’ll to on to business with time to obviously board, publicly managing And cash the relates obviously, manage everyone, and stakeholders, have tell containments that as or But defer of work that this it's full through do just flows, to announce how so, And we’ll at shareholders impact. it we'll some best others on working too our determine we do to programs programs early announced and some and that really

Robert Cathey

I appreciate. guys. good And that's thanks luck, work. well, And the for again, Okay, hard helpful.

Operator

over to back closing presenters no further the now at time. the There this remarks. I’ll turn are questions for call

Megan Wilson

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

Operator

call. This conference conclude today's

may disconnect. now You