Babcock & Wilcox Enterprises (BW)

Megan Wilson Vice President, Corporate Development & Investor Relations
Kenny Young Chairman and Chief Executive Officer
Louis Salamone Chief Financial Officer
Richard Dearnley Longport Partners
Call transcript
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Ladies and gentlemen, thank you for standing by. Welcome to the Babcock & Wilcox Third 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 turn the call over to Megan Wilson, Vice President of Investor Relations. Please go ahead.

Megan Wilson

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

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

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

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

babcock.com. also for comparable superior regarding section will non-GAAP the in not our third to posted found and can this provided of on in results morning information non-GAAP historical morning historical or with filed to be A information as be results company measures our the should investor to X-K overview GAAP. release GAAP turn presentation the substitute This the measures. supplement relations published call our quarter on at and I earnings website Form in With accordance Kenny. reconciliation of our considered that, provide We certain this of a over

Kenny Young

joining thanks call. and Thanks, everyone, for our Megan good and morning

adjusted before demonstrating all roughly of across loss the EBITDA presented strategy. initiatives. of Our due also challenges loss was projects, quarter really ongoing but our for and COVID-XX execution the breakeven by impact the its revenues related third effectiveness cost-saving a EPC recovery, Despite of the quarter our European benefit were historical the the to results stronger, our primarily turnaround on segments, our recovery to reflecting loss of

to momentum project the to significantly quarter, were delayed Bookings effects restarting. pandemic number a the due improved continue both and or strategic recent of are of in our impacts of feel the previously restarts we projects actions. that deferred now While the of the the pandemic, reflecting

new and and XXX% waste-to-energy Specifically, third provide compared quarter as systems, renewable, and expansion, accelerate increase a submerged solutions. infrastructure. financing improvement gas-fired we as advanced, technology is to sustainable energy advanced natural suite work second to in we This partnerships This our strategic third XXX% million of our support and clean, thermal of initiatives, solutions environmental to our the of such value in flexible the industrial $XXX international grind technologies, over driven increase package which extended sequential energy ongoing storage XXXX the was and rebranding XXXX. booked quarter, of well as our agreement boilers, our and broad and by customers conveyor reorganization the high-performance innovative the to includes quarter systems,

Similar our planned. COVID-XX to companies services, us pandemic, predict effects. pipeline really or of include for we our it's strengthen. have expect continues other impossible extent bid presence identified forward, as further not XXXX, fully of international to And opportunities Looking by of the progressing timing impacted expansion through by parts does billion which to the way, and over the X that is the to

operational However, our efficiency. from to continue project profitably, opportunities improved we see benefiting to business our grow significant and execution

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

XXXX, $XX target visibility and the continue $XX between on have today. in adjusted million million We EBITDA to we of based

ever. employees is and key services, Babcock two As We stronger dedicated are our points a and drive all the & time, critical than provide and Wilcox. and and essential infrastructure say I products managers experienced,

for commitment and thank employees all all want critical I to of recognize And through continues team skill work efforts. pandemic. our Our to and with of the their

market our segments to aligned to markets, environmental have under NGOs we achieve We're quarter, clean various reflect design and with and and and help developing directly technologies last the working Thermal. low-emission solutions new Environmental technologies from and energy while our B&W facing to our build providing projects pursuits industrial by technology customer segments B&W energy waste. infrastructure. funded governmental agencies through sustainable B&W three closely strategic These Renewable, reporting financial new and align a them footprint reducing B&W's to announced and conditions, with support carbon needs technology core segments, we As and create

technologies, We renewable paper like thermal Under and around heat B&W we industry. resources while ecological our for renewable to vast systems pulp liquor including growing to cost-effective environmentally efficient offer and traditional and have and biomass a waves years, the for sound energy black business base leader great environmental waste-to-energy, energy. highly in biomass few significantly our best-in-class, through clean qualified our brand, world. expand expertise power this is gasification, to the steadily generation install the developing waste and technologies next Renewable opportunities platform and use over and and sustainable the

which As harmful gas of large significantly generates is a per carbon on you ton dioxide. methane, waste -- gas and which more greenhouse know, is as a amounts basis landfills than a greenhouse

role technologies full key segment play a providing world. energy B&W targets. biomass to utility worldwide We global expect applications grow by and demand for a clean around solutions environmental reduction this controls and suite a waste-to-energy for steam systems the as to best-in-class the generation in and infrastructure industrial supports carbon significantly Environmental of renewable continues emission

grow our expect regulations a as toward to segment future. We Environmental worldwide, drive energy us environmental to continue cleaner

parts, services and reliable, bookings increased generation, generation this products B&W aftermarket equipment, for maintenance construction, proven are and generation and today seeing Thermal and sectors. including We pipeline are field efficient, the industrial in that our steam gas provides power steam safe, and and plants strong in oil

our units, business capabilities to We both serve our steadily increasing service our parts it as best as and while aftermarket our expand base, services as expect install grow well own worldwide. we to competitors

with Asia-PAC as sector looks growth earnings complex Middle branding are and and call and drive we our from expanding our through financial quarter new gaining our operational third through to organizational to particularly We development Lou of to XXXX and broaden builds combined and sale, global and new he'll energy over efficiency XXXX. growth improve effort With fleet. the in presence the about current pipeline execution upgrades, expect points within Africa to I'll momentum East, turn performance key regions, business the in their improved also service alignment Lou? various longevity our talk the significant geographically, the global boiler beyond. of replacements, global and and some of our now

Louis Salamone

third of earnings XXXX, reporting last tomorrow segments, will reportable market The periods organizational our with results with XX-Q, and which our be by the for that Thank and our purposes under three announced quarter. financial we're focused aligned results release rebranding Beginning we quarter you, prior initiative have Kenny. strategic in restated new segment filed been for evening. the and comparative

quarter consolidate third Our revenues were million. $XXX.X

impacted profitability, adverse of compared segments the Our of combined across core COVID-XX the with revenues the focus as all XXXX. on and quarter impacts technologies to third

agreement favorable five by income in and volume connection loss $XX fees was by exchange, under lower the six October as well $X.X Our was net GAAP which segment to million, foreign segments, non-recurring contracts. our historical impacts as B&W of $XX.X advisory the million, and restructuring the of recovery, settlement recognized million all the and of European in of COVID-XX XXXX, in non-recurring the a the partially XXXX improvement loss by million. including third lower with the quarter impact driven expense. $XX.X an of with Renewable partially $XX.X recovery settlement offset of costs were million interest XX, of offset compared income loss GAAP consolidated insurer This an operating was primarily

EBITDA EBITDA approximately margins $XX.X adjusted an million, Our with of XX.X%. was consolidated adjusted

would loss improvement adjusted benefits in to first helped it the SG&A XX.X% -- implemented, the our months While the XX.X% had compared These this initiatives of ended segment by savings third the year. XX.X% of been initiatives compared the that drive in million we to nine as operations impacts temporarily to of also consolidated which cost-savings quarter XXXX. months both of profit a period a These reduced and $XX.X to COVID-XX, cost-saving reduction our initiatives of helped see continue is positive adverse the the expense last in affect SG&A. cost expenses and matters. to impacts efforts costs This legal previously XXXX. related Thermal recovery nine drive XX, inclusive in same XXXX gross in September And other the increasing

initiatives benefits We were savings continue in the and see as to XXXX expect XXXX changes over cost-savings time. that of remainder into the realized are fully the implemented our from of in XXXX, to the

Turning cash flow, sheet our and to liquidity. balance

cash was which approximately $XX.X of flow of ended XXXX as with facility. needs. $XX the in cash $XX.X use well from under million, available revolving capital primarily as approximately operations Our quarter borrowings cash equivalents was and for of third quarter unrestricted our million cash U.S. credit We of for a working the million,

contingent an credit facility. described loss driven XXXX, settlement primarily we as October by $XXX.X insurer at commitment quarter financing, million was On the $XX to Our a the million to $XXX.X expense was total September compared debt Interest deferred decrease revolver U.S. The in through consent our related quarter. from million, term to year in last and reduced received with out was related $XX.X million the $XXX.X XX and revolving in our XX, recovery fees million prior loans. million $XX.X earlier.

As to of comparisons of by through Today, our with proceeds flow of quarter our our and found global required this results, credit and by supporting quarter Further our to manage filed approximately our facility, applied the strategy, customers tomorrow of reduction continuing regarding the U.S. in while -- pandemic. recording and driving have our earnings third on million costs the XX% cash net the XX-Q focused XXXX we're evening. or credit through permanent be growth release detail related revolving including can our be been $X proceeds third a facility.

this deferrals Board for of of As for or of efforts rent of XX% costs compensation our certain our we've XXX(k) temporarily XX% employees year manage through of payable certain to our fees U.S. rest taken our and the of temporary of and for suspended of for employees, deferrals facilities. Directors. had of We've payment management, for measures, match furloughs a our our the including the senior part of crisis, also cash unpaid the number temporary to salaries certain service

$X.X accordance plan year pandemic. to in July cost-saving well in during XXXX We with other contribution XXXX as and in of well as year conserve plan $XX.X $X.X cash measures million the also the payments due were for plan as pension that as CARES Act the October, of and of the contribution payments deferred September, for each year million April, XXXX, our

from recoveries subcontractors we and or the I'd loss we growth as that, execute continuing forward, Kenny. to European pursue back our EPC strategy for efficiencies With like Looking to cost now further turn are across contracts. it pursuing over to continually

Kenny Young

Thanks, Lou.

project and aftermarket with While impacts emerging restart this can't affect fully our the our leveraging renewable significantly energy, seeing needs and our near-term, projects improved a technology. environmental predict and seeing to believe have and expertise we we renewed COVID-XX now timing, are we will plans, projects XXXX. earnings and how on winning with progress services is operations. quality we or and current few the upgrades in strongly and XXXX significant undertake renewed and pause years. strong the confident opportunities serve end Combined -- executing projects, into driving Based strategic the of opportunities year momentum expect COVID outlook. recent of platforms our we for as on technologies, are solutions many as over next on renewable the focus customers actions, in a expand We our our Today, new next our our environmental the visibility to bookings efficient bookings is through the customer customer's as in growth significantly well bookings

been our management, B&W have as significant our accelerating strengthen we myself, We in we back taking With for forward. announced Finally, reflects we are have of commitment Renewable, we to continue B&W questions. to us Natalia? for the on said fighting very turn XXXX. keenly the XXXX progress assist reaching and EBITDA Since to forward and confidence day stakeholders and which to who the have before, over core Natalia the including Environmental extension we brands, our all I focused senior unlock potential recently for one, B&W going and contracts will your targets we will Thermal. business, look that, call our global of as made of our


[Operator question we Instructions] a of from Partners. with line And Richard have the Dearnley Longport

Richard Dearnley

perhaps and those? or they're whatnot, salary permanent? And Could you on comment deferrals cuts then the could what on Good morning. might you go -- how size they furloughs to extent long

Kenny Young

I fill and start -- mean, we I'll Lou go can ahead. in. Yeah.

go ahead. Lou, Sorry.

Louis Salamone

quantification that standpoint, from just a million looking at $X -- about I to a Well, we're quarter. million $X

offset we us gets that stop. I'll know Kenny it government long any of and programs answer Some for let I of go. because will that when that that by get will it reimbursed don't how know

Kenny Young

Yeah. three I begin it's renew to -- impacts the diminish mean, begin over next how is aspect back precisely the work impact and projects, all people bringing start resume four to the the obviously customers of either here going the standpoint. furlough COVID to months. we're as sitting predict occur another we'll is or as from today, But impossible or to --

Richard Dearnley

but of And deferred debt the $X million, million million, would financing said Understand the it of what's was $XX repayment you the difference. net the half And million. recovery that. -- your be or loss $XX was that $X then,

Kenny Young

fees costs -- flow, and recovery on cash been Now, costs to many, now. legal with fees associated for years recovering and in right process mainly going that has that other many

So, it's the all net receipts. of

Richard Dearnley

I see.

you. Thank Okay.

Kenny Young

you. Thank


[Operator There remarks? are Are further there no questions. any Instructions] closing

Megan Wilson

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


quarter Thank for call. you Wilcox's This participation. the concludes third you. Babcock & earnings XXXX conference your Thank

disconnect. now may You