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Babcock & Wilcox Enterprises (BW)

Participants
Megan Wilson IR
Kenneth Young CEO
Lou Salamone CFO & CAO
Alex Rygiel B. Riley
Call transcript
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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Babcock & Wilcox Enterprises Q4 and Full Year 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions]. I would now like to hand the conference over to your speaker today, Megan Wilcox, Vice President of Investor Relations at Babcock & Wilcox. you. Thank

begin. may You

Megan Wilson

Relations and Fourth everyone. XXXX Quarter Megan of Call. April, & Earnings to Wilcox I'm Investor President Vice Enterprises and Wilson, B&W. good you, Welcome morning, Babcock Conference at Thank Full Year

B&W's results. Joining Executive and Financial to Officer; Kenny quarter fourth Chief Chief discuss Salamone, Chairman our me Lou and are this Officer, morning Young, and full year

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

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

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

Kenneth Young

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

our international for the Our initiatives food full the pipeline. strategic we including plan our of growth despite all provide robust COVID And effects in the results ongoing a XXXX our segments. for of fourth impact actions ongoing the strategic quarter rebranding and continued of of foundation positive reflect XXXX, cost-saving year our adverse pursue really global across as strong and our expansion segments,

with our Lou offerings, note our closing dramatically capital we stock improved have more discuss in of recent As and structure. will the detail, common senior

we $XX net Combined pension offerings, in net forma The in portfolio required of have expenses in in cash XXXX, debt of the interest save annually. of fees. only for pro and reduction our resulted significantly million paying we offerings forma by energy on XXXX the result clean a approximately reduced but and EBITDA debt debt $XXX secured down than X.Xx also million a million annually technology reduction cash our continue related with contributions, to future expenses, leverage execute to $XX by growth from the our our our X.X%, effects support ratio and provide of As our our XX, offerings as basis. as reduce expect Based a offerings adjusted downs the not our the December from we expansion certain cash to capital on pro to more strategy. payments proceeds

XXXX, and services, the our which XXXX. to time is XX.X% increase XX% $XXX development than delays in $X ended XX, quarter more project we COVID new implementing to of of energy pipeline and clean million At in lead time, several initiatives include of internationally, Notably, with keep presence as and in of While continued year our momentum cause and We're our expansion. shorter fourth sales with especially deferrals December mind, expand of and a end in $XXX our in branding, million and service bookings represented continuing XXXX, $XXX on profitability. And work new of research bottom gaining backlog million the and and our revenues. growth backlog projects global strategic roughly execution, do booked the XXXX, pipeline XXXX. technology, focusing in pursuing our billion continue through East reductions, Europe, same carbon-free cost project Middle our the in and we and compared on in we which not line identified parts about of including XXXX, Asia environmental and opportunities the

$XX forward, account our to visibility, us. target of XXXX customers for which continue Looking million on we the typically EBITDA based in $XX and $XXX into XXXX current reduced million outages historical to in seasonal taking weather first to quarter million on adjusted impacts maintenance is cold $XX and million performance of performance, an

increase Our each from normal year. cyclical QX performance QX to

see both the management. support our profitably, to grow technologies expansion and and focusing results renewable on as our through global bottom planned. efficiency Our and for is project improved innovation from environmental cash business strong and demand line benefiting We and significant progressing acquisition execution operational increasing opportunities

with strategic value. XXXX, shareholder continue have achieve in our to well us Our positioned and combined to create refinancing, actions our comprehensive recent targets

Across do systems, a aftermarket technology our comprehensive help X pursuits how we brands, align B&W to waste we with auxiliary brands, clean, and to upgrade our sustainable and we announced existing optimize markets, new we handling innovator, solutions and segments a these as by get last So equipment equipment and achieve and reporting parts as directly industrial reflect and B&W the customer under leveraging our Well, needs are now and steam financial core generation technologies plants. technology emission around market-facing and have X X well technologies segments energy We're energy and and infrastructure. there? of providing services aligned systems, and our B&W providing cooling focused These suite systems, operate biomass world. controls, as segments. year, ash on them a strategic our Thermal Environmental maintain ever-expanding Renewable,

our more regulations fossil the the use and industry carbon infrastructure grow potential increasing stringent globally. more is installed includes the aftermarket are There continues And legislation more major standards to energy services it and renewable and upgrades, is growing. and a Our and emission need That drive for is as critical biomass. technologies base this And water and growth hand-in-hand including for with our trends aging, landfilling, towards environmental like on regulation. aligned restrictions sources power the branding fuel waste the demand globally, driving today. for regulation are energy driving and with

further we continuing hydrogen production our markets. emerging needs and are innovation Our or technologies to combustion other syngas, requirements, biofuels customers and help to develop of our meet technologies and support these

that efforts And anticipated in capture climate will significant technical a experts technology application capture need and for power believe generator been this several as develop B&W with forward of change our also carbon -- We leader, to and global carbon the years. include working agencies technology. steps leader own has universities, government generation

now of We carbon pilot through commercial for the capture they have proven and efficacy and testing, technologies are ready demonstration. multiple field

our global focused environmental technologies; and we methane renewable installed the on about significant So services solutions of growth from competitors' development need transformation. presence our think around for the cash and supporting we as to focusing strategy, board equipment; which leveraging; parts impacts; carries opportunities reducing and large sales, across the markets waste, provide base flow increasing high-growth global the serve on profitability in energy expanding our world are meeting environmental to and business on in service our

team of And Dubai, Americas. European and the region a world, for headquarters around the managers Africa part are the this, in U.K. and we're and in Australia, our Asia regional -- regional announced outside we new headquarters service the Dubai doubling while members Pacific opening more recently Australia our As sales Europe, we're and in than hiring East, Middle presence

service over renewable realized well have results. technologies next full in cutting-edge larger incremental parts each in Lou? to aligned our the globally and the call years. for and as quarter Today, climate globally is deploy positioning upgrades sales, fourth expansion to our roughly thermal I'll X and the region the our performance through we environmental poised market points needs. we of opportunities. with are $XX while discuss success see address help year Lou already the key billion XXXX We This and financial to addressable to environmental as now turn for critical over

Lou Salamone

of improvement full year found our our on of X Thanks, turn the projects. full compared $XX positive Further million, offset of loss postponement in Loibl GAAP loss Kenny. of nonrecurring our primarily can recovery an of The was of by the and EPC to fees as then loss results income losses our detail initiatives million, results be lower which operating $XX.X COVID-XX million quarter first by of results, the the the in million loss in and decrease I'll segments cost the revenue and in XX-K fourth segments. to in the impact million, $XX on which -- $XXX.X including restructuring $X.X I'll savings including settlement compared Revenues with and was several XXXX a insurance COVID-XX, delay by impacted advisory The all SEC. divestiture XXXX. in was the XXXX to level to to impact year and XXXX. recovery, on due $XX.X to operating Consolidated contracts adversely XXXX. of in EBITDA detail. $XX.X of all compared the revenues costs operating file in expected Adjusted XXXX first a impacts in million XXXX were on the of improved and was our that's of partially were offset review on million XX%

see to million, our with fourth were quarter a and year. end strong down of at a momentum to $XXX.X in year turn backlog Fourth to of total XXXX XX.X% as our bookings backlog, to compared of prior and million, $XXX within revenues the fourth million XXXX. of quarter compared increase XX% We the the $XXX I'll continue the now quarter consolidated results. bookings

were as company's in completion in projects of revenues prior our restrictions also projects in in before, X segments said we all large As our all travel quarter prior to to COVID-XX decline. be -- year and contributed by customers year the ability impacted on-site. delayed limited The of this the the of workforce adversely segments

effects income and an The of primarily income fourth to of due lower Our in million, the impacts compared operating quarter the BMW gross Thermal XXXX. was of million by million as of to operating of settlement This Adjusted inclusive quarter improved compared was to million in volume operating and was $XX.X GAAP the of XXXX. $X.X fourth income restructuring advisory offset result consolidated partially in the decline costs of $XX.X million was COVID-XX. a in $XX $X.X EBITDA segment. margin fees of

balance flow, liquidity. Turning and to sheet cash

facility. prior related deferred million and as driven financing the related million with flow million U.S. in XX XXXX to expense million in revolving compared at available was operations cash The quarter cash under commitment flow. $XX.X $XX.X $XXX.X the in for fourth fees the cash $XXX.X quarter ended approximately $XXX.X primarily to equivalents quarter. We with $XX.X reduced of facility. quarter the credit borrowings Interest to unrestricted well of $XX.X the by last revolving cash debt million million Total of loans. as million in from consent December million Our our U.S. and out credit decrease term our and year was revolver $XX is contingent generated

common million on announced, of The million. XX, offering. notes senior for closed included of $X.XX we common a of the previously proceeds shares stock $XXX February public sold stock price gross share XXXX, As at per offering and approximately XX.X successfully

closed of deducting the net senior interest proceeds expenses. is before at of The in due resulted rate commissions also million offering after in and offerings We of notes which X.XXX%, million underwriting $XXX discounts X but an XXXX. $XXX approximately

also $XX.X of cash of loan compared fees, million, unrestricted other a XX, fees net the estimated interest deferred addition public toward was revolving amended last we In million its out the current commissions, pay our February term we sufficient operations, been XXXX, $XXX.X interest out the The existing out prepaid term deferred and forma on prior reduce letter notes revolving and fees debt financial discounts but reducing exchanged expenses, million rate remaining credit well million in into last revolving of and B. liquidity is have term and credit A to ongoing senior of borrowing offering. to availability its partial term pro $XX and offerings of things, our forecast. to as working public of and and XX%. amendment XXXX, A XXXX, zero. credit balance outstanding And its X.XXX% and the and confident our Taking on the $XX the support and these private account capital loan reduced the total for toward XX, strategic of Riley the actions, existing March to tranche effects facility On proceeds down currently, rate we're $XX.X to $XXX.X last On December our of also loan. loan would offerings, zero underwriting of balance payment to bank million Based paid agreement million concurrent to $XXX including among million. growth facility, advisory credit to, and X, that we information, at tranche bank its as respectively. the of prepayment outstanding availability after borrowing $XX and fees before the our million the approved

Looking expense of lower, loans interest forward the total out last on rate a notes. reduction secured to our rate our to XXXX, be we driven term expect and significantly by debt, the reduction of our senior the on

Let's turn initiatives. our to cost

first savings addition quarter we of initiatives to $XXX a additional expected the another cost implemented identified we've actions implemented million XXXX be million. $XXX cost of initiatives We've In to in also cost disclosed, beginning savings savings approximately $XX million of total $X the of XXXX. for previously million in of

efforts which These operations affect in adverse quarter same compared cost-saving Thermal see increasing reduced have to and help of benefits to previously we in temporarily drive that gross cost the initiatives we of initiatives COVID-XX, While savings period the last been impact continue both our impacts to XX.X% cost the implemented, of positive as SG&A. year. by profit of the the XX.X% segment adjusted this

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

which of to in period to is the next performance expectation been funding these that through total X for fund qualified pension to less It reduced subject XXXX the disclosed. current years. the previous million, the is contributed This XXXX investments. $XXX is company's for of In on $XX funding XXXX. minimum important previously the The XX%, compared million period have performance change be the XXXX as to addition, pension required minimum domestic through our contributions is numbers by with note the the contribution XXXX based plan, through are

to to in secured a significant we reduction further offerings, cost future continuing we're related our executed EPC the efficiencies the recoveries pursue forward, to I'll over identified years. position opportunities the take Looking now in energy X pipeline now to and Kenny. recently improved and technologies our billion interest due pursue of and payments $X opportunities contracts. an With cost our back are turn portfolio debt, of over clean advantage next over to to expand of it

Kenneth Young

emerging our and we of pursue technology provided $X current fully derisked portfolio and actions, technologies strong expansion customer Combined trends, affect as typical in and return strong energy, impacts identified energy a our weather quality earnings solutions serve significantly And progress, projects on than our on business. of in seasonal the industry, With Well, interest more performance, and strong and focus billion term, of parts to near well growth our we our seeing services public reduced the our a leveraging in predict foundation bookings which will needs maintenance to services opportunities performance. bookings customers and cold payments, top how confident have and Today, momentum plans, around first of pause is capabilities. X-year including timing now customers typical customers' new reduced bookings to on with outages recent our at are as in strategic thanks. renewable clean leverage our opportunities in outlook. executing aftermarket based balance significant COVID-XX environmental future the is winning quarterly improved and we recent offerings, XXXX, this our driving expect efficient for support historical is operations. on our while project significantly with as quarter can't more pipeline our high-margin and our we many Lou, closing of our cash the projects restarted of and sheet opportunities of continued and renewed or undertaking upgrades, visibility

climate to forward, operator and next-generation global powers to help concludes energy meet remain remarks, waste back and transformation. the our your deploying and to call energy I'll Looking our Renewable our as turn Environmental growing we environmental technologies questions. over including the assist capture on the critical focused segments, taking That carbon and our with goals B&W

Operator

first [Operator B. Rygiel Instructions] And with Riley. comes Alex from your question

Alex Rygiel

here. A couple questions of quick

very strength to First, on has you of January seeing maybe geographically could be sort the continued demonstration carbon which it the around address to comment and sounds you're and commercialization? like activity that strong either Maybe or then then time in on technologies where speak order comment line new And to February. of in those you could capture world division? the

Kenneth Young

Yes, to. more Sure. no than happy

done. based here. obviously in we segment, in of businesses purchase like. issue we're and talked that we're new more. thermal that the and the -- enhancements, borders quarter, provide on seeing, we the other begin So the starting which seeing the the bookings, the on you're and some upgrades see But like clearly, of chime Obviously, package for some some we've upgrades color that announcements about back order to the come in there's -- Lou area, and We to business

planning is line of in the to some order perhaps up with And outage in business. that company issue for now where a or importantly, fall PO more the they a to spring phases need outage

we're capturing we're well. of we're also loan opportunities some and come seeing environmental emissions the -- sizable waste just seeing it we're Those And that evolution. some out as in. in those are around world, in of seeing energy, -- but particular So And that facilities.

we booked in of the At been to everyone think, that are thought anticipated we're time, Thermal now, projects some that come and of -- gearing occur opportunities seeing delays. are the and year. around start strong strong. piece is there due back enhancements COVID that now have outages obviously, on than right we is normally occur a the other the various we well as come to would same by little clearly has world, the I more globally, as upgrades, but back. or There But last didn't faster focusing in those. environmental taking advantage country-by-country

we're So that seeing too. well, come positioning as in

from as settle in there if more completely and country-by-country, around in, possible, to been And we're COVID, involved and announce as other pandemic. positive on those talked we anxious as we're are gain it obviously we've entire things to border that example, closed to world, but bit down, the those other all that. number obviously, So go little a you And for momentum of a country-by-country, the soon underway, as aspects. has difficult cover again, is starting during activities about, obviously, are was and get. Australia, opportunities

a on lot so get there So new engineering were opportunities of just couldn't and or the deferred because so forth. delayed in, teams you

So as quickly in to planning activities preparing on well, areas people new work forward example, we're start changes, that as or seeing move those wanting the for opportunities, through budgets plan, to the and phases. starting

at lot moving be updating these least opportunities a that their and it at you've and emerging to So back of are long-term utility whether industry here and our industrial looking to got preparations forward. begin within the answering, continue and that globally or proposals companies sense making a or

excited So about that.

On the carbon capture aspect right now.

regenerable have oxy have and the absorb directly COX. third the we looping, developed, RSAT, So is agent other we're being the combustion being and one in being X jointly technologies that basically that will which involved chemical

hopefully needs would of phase. So they round the soon And a into still going moved do chemical commercial looping under here those that are Chemical all we're megawatt through that proof-of-concept X one of that that more exception to in with smaller regard. move cycles then regard. have looping. And

and have well. in for few technologies those discussions deemed are a as around The other with ready customers X and begun commercial deployment now technologies

approach Canada, in, drive known strong publicly a has carbon there. that. which a is tax to a there's taken obviously, So mandate, out

in we're more driving the this. right with to so Canada new start now administration, the U.S. is seeing emerge. doubt, And opportunities without a Obviously, is around

clearly official and a Although other out there's legislation there. policy hasn't yet, come direction

in either understand want too. clients same. a technology especially -- to are in U.S. Europe to talks in seeing in facility. their line move we capture we're facilities, well, as utility actually industrial up forward And how with waste-to-energy customers a out We're or around few So is the the carbon capture that of coming carbon there or few

move So summer on on it the feels that. like the of this hope path that. looping, we the commercial forward as unfold course side to we chemical And in that stage move will final of

this well, unique ready on particular but longer year, deployment little jointly it's technology with as bit is too. it a So for take a might one. commercial University State sometime That that work that later we for

And years. been and we're what about X past excited technology the over a trials concepts obviously. represents, very X, other So undergone has that lab that it's

ready a to in into field move it's more robust So and the way.

we're So that, we'll discuss pretty that be we get to out, about technology. that excited once happy but obviously,

Alex Rygiel

of now might revenue you balance suspect sheet, that of pipeline And But nicely what couple Very to thinking for your like? helpful. needed of the starts you does how capital very as quarters. for about your on And have cash M&A? position that using million working M&A outgrow cash $XX over be your some I look next are

Kenneth Young

they at cleanup out opportunities you done a and opportunities or some just We're you've even the number environmental adjacent those got some syngas and waste are around the and/or especially fuels could in And creation is biomass. of doing. There be some at where think of that a it by work bit or that a ethanol, bit the interesting have M&A need little younger either area. -- be at could items other companies a technology a a an lot larger platform, But hydrogen are little are -- opportunities to in Alex, looking at a of. also unique let's technologies also fuel looking there great on question. plants and these to those particular, perspective, renewable in are out be in and be that global company, we're look bit aspects bit and of complementary of little some from in industries emerging there, other That i.e., interesting a companies we can from say, smaller there. technologies where some type anywhere number of inside of that looking there's significant that a plants work could typically that technology, has can or of biofuels if There pieces older anywhere out areas, are what a little grow from they of actually especially inside we there there. And

biomass, so carbon are And opportunities well is capabilities and well, back looking as But around we going we'll as of main some the as capture think services, syngas in to waste-to-energy at around that on those again, as and of too. services and some we environmental we -- well, have the interesting interesting that, focus continue those. and that's and some augmenting what think technologies areas

of So at on aspects all itself, more revenue the it accretive and how of into to smaller as well technologies obviously factors, of in this we'll other stage that would standpoint point are the of these a at areas determine that the we where some almost number obviously looking move immediately. look possible, some create can from based bring obviously sooner in are an at as mature soon accretion those and technology , effectiveness a emerging marketplace we

on that any don't are at ahead. on. but areas looking of know I Yes. both comment that, other the balance So Go we're sides from we'll focused those that? Lou,

Lou Salamone

No.

a large X having were in that's of for segment. to $XX profitability, company projects $XX where think range. think And in we'll of just indication to statement the Thermal half is that one Environmental, taking those -- over of million we're I point company. with announced out projects we're while beginning proof the since I but of continues good where we've still usually think quarter, we're Renewable million Kenny's emphasizing the I taking be the And the of some to Environmental Renewable a and thing strategy the the and

Alex Rygiel

helpful. in both that the is And XQ most in very financial mentioned XQ revenue your likely to to from step-up performance, XQ in to expectation there EBITDA. Lou, That's you sort a of XQ and remarks, prepared

of about Or all might we're Can quarters? it the into to might quarter sort it on of year help how to contribute of you aligned short-term for So think XXXX? previous sort sort compare and sort of us first expectations. maybe the full how

Lou Salamone

Well, to company, follows $XX quarters set the rise than give and we hit the and million XXXX million historical talked will trends it COVID increase, really a EBITDA. $XX lessons we'll We've for target the guidance. million expect million the as following target We'd don't about. to that we of really as $XX of of vaccinations $XX

Operator

time. [Operator back There Instructions] are will remarks. turn closing now questions it further for over at no this I

Megan Wilson

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

Operator

and today's conference you for this call. Ladies gentlemen, Thank concludes participating.

You may now disconnect.