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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
Call transcript
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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Babcock & Wilcox Second Quarter 2020 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 would now like to hand the conference over to your speaker for today, Megan Wilson, Vice President Investor Relations. ma’am. ahead, go Please

Megan Wilson

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

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

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

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

reconciliation provide non-GAAP GAAP. accordance in results non-GAAP the call published superior to a certain results Kenny. A of or that, not considered turn yesterday regarding with will the supplement measures. release GAAP information be I our as to of afternoon. for earnings We historical provided be This comparable measures found over should our quarter information historical also the substitute With second in can to

Kenny Young

three to COVID-XX fully all joining. afternoon, well they the further impacted to by our the in work customers' anticipated in at impacted quarter bookings and Like employees We safer or effects. Good timing thanks companies it Globally, relentless working impossible as create our provide unprecedented pandemic, other further a deferrals efforts taking our predict delays have saw for segments. Like as support in all steps internationally, we to we customers COVID-XX take the environment companies a everyone, is our of as of our during Megan. the safer time. world, and facilities appreciate the greatly here results us around the environment, are Thanks, by for and manufacturing many and negatively this extent and for to second were U.S. offices sites. continue across and project

current and the deferred from late location throughout on on projects depending specific certain in based XXXX, factors. information XXXX customers, However, of project majority and we to our our remobilize expect

the the on importantly, environmental expanding renewable and billion expect Thermal services. B&W and pipeline segment, energy, roughly that next segment. to advanced with More focused is billion the globally segment, $X parts pipeline identified our three is our projects $X in B&W for Environmental $X not of over technologies bid including we years, the for billion solutions $X with for B&W billion Renewable and This

see continue execution with grow significant We focus. project and profitably improved operational our to efficient our business to opportunities

cash Our on strong focus bottom and is management. line results

Babcock essential I've us and at and are and critical, global experienced, employees key dedicated before, products As points encouraged forward pandemic, Wilcox. said provide and more drive services, ever. infrastructure We determined this than two during challenging & managers and our

Our efforts. thank team we and their dedication navigate ongoing to crisis, their I'd like as to them this continues demonstrate for

core these we launched Today, for technologies Renewable, renewable and As offerings our environmental organizational accelerate strategies reflect designed facing new market B&W we are services. Thermal. our Environmental, leverage reporting B&W markets, B&W better B&W. aligning energy expanding markets, this and and to strategic these three our segments into industrial and provide day and segments products visibility financial under and initiatives, Through emerging toward and believe three we segments; growth future, branding an our exciting and improved is look infrastructure. and our sustainable at We initiatives, our highlight

key identify our growth, the global we particularly and growth Middle Africa to Asia-Pac organizational these our expand and opportunities We as and our structure in in and expect East, on execute geographical regions this strategic direction team will areas. sales improve support presence, when

opening and Perth, services globally. and development, engineer Australia in are hiring field personnel and offices including We business Dubai; region, sales in each headquarters regional several

part Officer. of in this our he in European construction under operational As new loss Jimmy drive joined efforts of our to EPC be role turnaround. XXXX projects last instrumental brands. the Operating Jimmy was over Chief of the initiative, and decades years experience and with strategic in complete the B&W energy Morgan on few these and our for will Jimmy performance industries, of the B&W has and responsible each taken

the our Wilcox. changing of build We renewable to rapidly. technology resources drive the execution, the Babcock and as and and our quality leadership support recognize platforms & project We globally wins will expansion environmental is next-generation we further through world

Our is a achieve providing by industrial meeting and help technology solutions and customer on clean, to focused next-generation B&W market energy infrastructure. sustainable needs

We are projects with in NGOs will years and working various to technologies design agencies build also come. through governmental and funded improve to that environment our new

expertise our next waste. opportunities Globally, business and traditional We significantly, in technologies our vast are opportunities we our carbon new create We and platform waste-to-energy technologies in increasing few from environmental our expand facilities, and the and throughout while the is focus reducing steadily market to significantly have including low-emission base. years, renewable energy on footprint to and believe growing for improved installed thermal the technologies standards. advanced the growing environmental thermal our technologies

are to brands drivers. market align these Our new designed with market-facing

and In includes XX% ash has our represented systems sales. handling, brand into about best-in-class Environmental industrial the and around XX carbon providing last them broad control. and by control, clean generation this steam nitrogen a environmental months, now. for experience for supports of controls, infrastructure dive emissions So sulfur chemical removal; utility world. particulate cooling, the B&W's energy dioxide control suite applications let's for oxide full looping solutions a B&W of mercury

industrial continues and aftermarket maintenance plants expect construction, provides safe services generation, steam the including expand the our and are base Through technologies drive to including demand and energy. this extensive leader renewable and this We waste processing, and worldwide applications, others, use to sustainable and In and B&W grow it and future. B&W energy industrial efficient create aftermarket biomass installed to utilities efficient, regulations months, sectors. XX% is systems sound towards proven renewable continue and waste-to-energy, products while black in for developing environmental reducing offer expect this has we months, And ecological including sales. and continue environmentally liquor for as technologies power working worldwide brand represented brand, we to ways and we the global for our refinery, cost-effective business field significantly use support systems to metals B&W base. our of installed to resources metals cleaner circular to and last that equipment power grow, pulp a for Renewable to energy food presence brand our a grow biomass In petrochemical, in and continue us this waste biomass like clean sales. and generation reliable, gas to Thermal last paper geographically. landfills and waste generating fuels, to generation, B&W's XX% energy industry. steam and about has parts XX grow general we brand from this recovering power generation for the of equipment, XX replacing economy emissions. has and of fossil about support a represented as heat oil the diverting for

global aftermarket as operational execution our within business own with as We our and discuss steadily to while over With points presence, we performances efforts services growth base our our to competitors, geographically, development quarter pipeline sales, installed of expect throughout our our drive and to those service as our and XXXX. turn significant the earnings expect financial parts second business broaden XXXX our of increasing and beyond. capabilities expand growth it now new combined and the from call the organizational well our of alignment we expanding I'll worldwide. Lou grow to key of improved branding, to global service

Louis Salamone

Thank you, Kenny.

Our consolidated bookings deferring segments anticipated into by and COVID-XX revenues million. $XXX.X our business in XXXX delaying in of projects later second XXXX. impacted into or negatively the quarter all were or

of settlement million, million. and operating advisory included costs consolidated GAAP $X.X loss Our was restructuring, $X.X which

second Our GAAP operations million. $XX.X continuing compared from improvement loss represents of to $XX.X quarter This a the was million XXXX.

again, EBITDA of offset Babcock of by our projects across affected, completed in of the $X.X COVID-XX all segment was also large XXXX. Adjusted end of the and completion the adjusted and & the they Our of business, adversely as XXXX million. EBITDA impacts consolidated was segments construction early the was Wilcox by several at

of maybe of operations savings the in Babcock the drive SG&A of consolidated the improvement, in costs. the over masked to is by our year. year While cost also XXXX. XX.X% These reduction drive positive see helped and implemented initiatives continue COVID-XX, impacts period this helped This initiatives increasing of This the to Wilcox a These benefits $X.X affects same SG&A XX.X% quarter XX.X% profit compared half to both gross and adverse million we of compared initiatives. saving in the saving cost cost in our of impacts the quarter. previously quarter, the to last our as our efforts expense segment a cost last second & adjusted

initiatives in XXXX as continue and our changes cost into these see in implemented We expect over of XXXX are implemented to from the XXXX saving benefits savings to the time. fully

$XXX.X revolver needs. U.S. approximately and last-out a to liquidity. this from June $XXX million quarter $XX.X borrowings primarily operations approximately million. $XXX.X in flow, available the working for Cash $XX.X our use quarter equivalents debt and capital million the well facility. and million flow cash unrestricted We revolving ended $XX.X our of under as related with and the was to cash balance loans. sheet, million, was second to XX for our was million Turning of cash at term was Total as credit

quarter. quarter is credit as can flow the debt revolving was in expense deferred fees contingent managing the related including second results, our the sheet we're to of reduced Further earnings All $XX.X quarter to and on our financing yesterday. be driven continues. senior compared our commitment with regarding and our facility. non-current. U.S. our related Interest decrease comparisons in release pandemic the prior was second the cash consent in Today, The focused filed global million, as cost found our on year XXXX by detail and of COVID-XX balance $XX.X primarily classified XX-K as million quarter

localities, in its we taken our effects to various measures restrictions continue long support evaluating on customers While other changing term. the by business the and and our

As XXXX. of of while expect it, of our certain majority in performance fully our deferred we the projects and it's impossible on continue affect to the XXXX to we delays and throughout and projects late anticipate COVID-XX business, and XXXX, remobilize predict the to will impact that deferrals evaluate in

also or manage furloughs deferrals of salaries CARES for employees in measures, including employees, rest April plan the suspended of payment of efforts certain number with facilities U.S. measures taken Act and to As the unpaid our XX% of year through for part of to participated the of fees for of Directors. in temporary as the match cost XXX(k) year. $X.X XX% Board as other payments and XXXX, temporary well of We've deferrals and the of team temporary cash. a for million pension certain deferring accordance crisis, each members cash we've in management We've certain our of rent also our the of July, our to compensation service contribution our this for conserve payable

and move we branding, appropriate. our In the infrastructure our our to continue to systems systems particular, infrastructure under we new are cloud. as as organizational our to to also amount strengthen internal have of modernize and IT continue significant forward, structure IT a our strengthening begun Looking we

the also cost efficiencies, these and from policies -- we various and are contracts. from recoveries under European recover from are subcontractors pursue of to losses EPC pursuing to some insurance cost We further continuously the continuing

reporting our We Kenny. expect now turn under to to it starting XXXX begin segments, our back the results. new full year results over financial I'll with

Kenny Young

Thanks, Lou.

how COVID-XX undertake seeing as and upgrades, progress our or timing will and the of many bookings new technology. near-term, of While the opportunities predict in customers we restart paused renewed are projects we leveraging affect projects can't emerging fully project our

and design and pursuing and grants to research are won technologies. We new paid emerging build new have opportunities

as will the questions. operations. with technologies, we combined is well and ongoing for the solutions to close, with opportunities and and expansion to platform alignment, environmental believe years. encourage assist our www.babcock.com. environmental our of Now our aftermarket renewable everyone new needs our and who organizational presence, our winning the as new now of before And few the serve the significantly in your we branding I efficient next launch the services would taking in executing on at expertise will out check call and We finally, energy, have expand geographic back quality our renewable customers' focus segmentation to operator, us I over turn to projects

Operator

a information name from was question gathered. line first be unable participant of comes Our to and your please the Instructions] company. [Operator state Caller, whose

open. is line Your

Unidentified Analyst

Hi. some potentially the program investor that is from specifically, I that My name wondering available. hoping I June And were that question, get try was is have and/or know update on And to Kenny, relief timing in XX the David loans an was Kingsley happening with for I [ph]. what quarter. looking you was I'm BW. was? Main Fed an the Street lending of would PPP the end missed what's the federally. it might I my

Kenny Young

programs mentioned as closely developments the you, daily, all in follow programs, the well around call, -- we Lou some as relief local and Thanks, been a other the U.S. as Like very PPP as state too, well, David. fact, as the as governments of have on matter as and by government, deferrals standpoint. that the tax payroll efforts through the from that and COVID provided well of

apply follow us. So programs relates various aspects and based do constantly on of don't other to conditions and we many closely that. that those But as to it

references we continue many our companies, we do monitor, our on point our which heard and as other too, it well at could. programs to as as and the possibly of try officials this time And so well. well, as in are possible in local closely and get to more so as officials Hill like priorities And state in to very practical too. very, concerns front and our and But to federal and watch -- voice we Congress, well, state Capitol follow voicing

Unidentified Analyst

Was PPP? PPP couple just -- of too get large Was the…? was BW out a to million of that dollars

Kenny Young

around various just as put in Yeah. not refinancing -- had point we we're of and time, qualify the of efforts able There's a leverage to we and aspects PPP, in well, other for those programs. some at we wouldn't where that us under in that some aspects. position too, or

So we'll hopefully able eye, an back basically, take that do of But some will weren't we some of keep yeah, up. take open that to that. advantage we -- changes will place and

Unidentified Analyst

Right.

Ken. Okay. Thank you,

Operator

turn are now Instructions] for the [Operator no remarks. at time. questions presenters back further this closing There I'll call to over

Megan Wilson

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

Operator

call. concludes This today's conference

disconnect. now may You