Babcock & Wilcox Enterprises Reports First Quarter 2022 Results
Babcock & Wilcox Enterprises (NYSE: BW) reported a strong first quarter of 2022, with revenues reaching $204 million, a 21% increase compared to Q1 2021. The Renewable segment performed particularly well, with revenues of $68 million, reflecting a 136% rise. Net loss improved to $8.7 million from a loss of $15.4 million. Bookings soared 41% to $239 million, while backlog jumped 35% to $721 million. The company continues to navigate challenges from the Ukraine conflict and COVID-19, but sees growth opportunities in energy security and decarbonization.
- 21% increase in revenues to $204 million compared to Q1 2021.
- 136% revenue growth in the Renewable segment.
- Bookings increased by 41% to $239 million.
- Backlog grew by 35% to $721 million, the largest since 2018.
- Adjusted EBITDA rose 40% to $12 million.
- Net loss of $8.7 million, although improved from $15.4 million in Q1 2021.
- Operating loss of $6.8 million compared to $6.5 million in Q1 2021.
- Revenues, bookings and backlog all significantly improved compared to the first quarter of 2021
Q1 2022 Highlights:
- Revenues of
- B&W Renewable segment revenues of
- Net loss of
- Loss per share of
- Consolidated adjusted EBITDA of
- Bookings of
- Ending backlog of
"Our results for the first quarter 2022, combined with strong bookings and backlog, have positioned us for a milestone 2022," said
"It was an exciting quarter for our ClimateBright™ decarbonization platform, as we announced that we will partner with
"As previously disclosed, we completed two more strategic acquisitions in the first quarter of 2022, expanding our portfolio of thermal and renewable technologies for hydrogen, natural gas and pulp and paper applications as well as waste heat recovery products for use in power generation, petrochemical, and process industries," Young stated. "We also are continuing to explore additional acquisition opportunities in both emerging technologies and mature markets and aggressively pursuing opportunities to further increase shareholder value. Based on our strong bookings and backlog in the first quarter, we are reiterating our 2022 target of
(1) |
|
The most comparable GAAP financial measure is not available without unreasonable effort. |
Q1 2022 Financial Summary
Consolidated revenues in the first quarter of 2022 were
Babcock & Wilcox Renewable segment revenues were
Babcock & Wilcox Environmental segment revenues were
Babcock & Wilcox Thermal segment revenues were
Acquisitions
On
On
Liquidity and Balance Sheet
At
COVID-19 Impact
The global COVID-19 pandemic has disrupted business operations including trade, commerce, financial and credit markets, and daily life throughout the world. The Company's business has been, and continues to be, adversely impacted by the measures taken and restrictions imposed in the countries in which it operates and by local governments and others to control the spread of this virus. These measures and restrictions have varied widely and have been subject to significant changes from time to time depending on the changes in the severity of the virus in these countries and localities. These restrictions, including travel and curtailment of other activity, negatively impact the Company's ability to conduct business.
The COVID-19 pandemic has also disrupted global supply chains including the manufacturing, supply, distribution, transportation and delivery of the Company's products. The Company has observed significant disruptions of the operations of logistics, service providers, delays in shipments and negative impacts to pricing of certain products. Disruptions and delays in the Company's supply chains as a result of the COVID-19 pandemic could continue to adversely impact the ability to meet customers’ demands. Additionally, the prioritization of shipments of certain products as a result of the pandemic could cause delays in the shipment or delivery of the Company's products. Such disruptions could result in reduced sales.
The volatility and variability of the virus has limited the Company's ability to forecast the impact of COVID-19 on its customers and its business. The ongoing impact of COVID-19, including evolving strains such as the Delta and Omicron variants, has resulted in the reimposition of certain restrictions and may lead to other restrictions being implemented in response to efforts to reduce the spread of the virus. These varying and changing events have caused many of the projects the Company had anticipated would begin during the prior two years to be delayed into 2022 and beyond. Many customers and projects require B&W's employees to travel to customer and project worksites. Certain customers and significant projects are located in areas where travel restrictions have been imposed, certain customers have closed or reduced on-site activities, and timelines for completion of certain projects have, as noted above, been extended into 2022 and beyond. Additionally, out of concern for the Company's employees, even where restrictions permit employees to return to its offices and worksites, the Company has incurred additional costs to protect its employees as well as advised those who are uncomfortable returning to worksites due to the pandemic that they are not required to do so for an indefinite period of time. The resulting uncertainty concerning, among other things, the spread and economic impact of the virus has also caused significant volatility and, at times, illiquidity in global equity and credit markets. The full extent of the COVID-19 impact on the Company's operational and financial performance will depend on future developments, including the ultimate duration and spread of the pandemic and related actions taken by the
Earnings Call Information
B&W plans to host a conference call and webcast on
Non-GAAP Financial Measures
The Company uses non-GAAP financial measures internally to evaluate its performance and in making financial and operational decisions. When viewed in conjunction with GAAP results and the accompanying reconciliation, the Company believes that its presentation of these measures provides investors with greater transparency and a greater understanding of factors affecting its financial condition and results of operations than GAAP measures alone. As previously disclosed, the Company changed its reportable segments in 2020 and has recast prior period results to account for this change. Additionally, the Company redefined its definition of adjusted EBITDA to eliminate the effects of certain items including the loss from a non-strategic business, interest on letters of credit included in cost of operations and loss on business held for sale. Prior period results have been revised to conform with the revised definition and present separate reconciling items in our reconciliation.
This release presents adjusted EBITDA for each business segment, which are non-GAAP financial measures. Adjusted EBITDA on a consolidated basis is defined as the sum of the adjusted EBITDA for each of the segments, further adjusted for corporate allocations and research and development costs. At a segment level, the adjusted EBITDA presented is consistent with the way the Company's chief operating decision maker reviews the results of operations and makes strategic decisions about the business and is calculated as earnings before interest expense, tax, depreciation and amortization adjusted for items such as gains or losses on asset sales, net pension benefits, restructuring costs, impairments, gains and losses on debt extinguishment, costs related to financial consulting, research and development costs and other costs that may not be directly controllable by segment management and are not allocated to the segment. The Company presented consolidated Adjusted EBITDA because it believes it is useful to investors to help facilitate comparisons of the ongoing, operating performance before corporate overhead and other expenses not attributable to the operating performance of the Company's revenue generating segments. This release also presents certain targets for our adjusted EBITDA in the future; these targets are not intended as guidance regarding how the Company believes the business will perform. The Company is unable to reconcile these targets to their GAAP counterparts without unreasonable effort and expense due to the aspirational nature of these targets.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical or current fact included in the release are forward-looking statements. You should not place undue reliance on these statements. Forward-looking statements include words such as “expect,” “intend,” “plan,” “likely,” “seek,” “believe,” “project,” “forecast,” “target,” “goal,” “potential,” “estimate,” “may,” “might,” “will,” “would,” “should,” “could,” “can,” “have,” “due,” “anticipate,” “assume,” “contemplate,” “continue” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operational performance or other events.
These forward-looking statements are based on management’s current expectations and involve a number of risks and uncertainties, including, among other things, the impact of COVID-19 and the invasion of
These forward-looking statements are made based upon detailed assumptions and reflect management’s current expectations and beliefs. While the Company believes that these assumptions underlying the forward-looking statements are reasonable, the Company cautions that it is very difficult to predict the impact of known factors, and it is impossible for the Company to anticipate all factors that could affect actual results. The forward-looking statements included herein are made only as of the date hereof. The Company undertakes no obligation to publicly update or revise any forward-looking statement as a result of new information, future events, or otherwise, except as required by law.
About
Headquartered in
Exhibit 1 |
||||||
|
||||||
Condensed Consolidated Statements of Operations(1) |
||||||
(In millions, except per share amounts) |
||||||
|
Three months ended |
|||||
|
|
2022 |
|
|
2021 |
|
Revenues |
$ |
204.0 |
|
$ |
168.2 |
|
Costs and expenses: |
|
|
||||
Cost of operations |
|
163.1 |
|
|
131.4 |
|
Selling, general and administrative expenses |
|
43.0 |
|
|
40.5 |
|
Advisory fees and settlement costs |
|
3.9 |
|
|
3.3 |
|
Restructuring activities |
|
0.1 |
|
|
1.0 |
|
Research and development costs |
|
0.7 |
|
|
0.6 |
|
Gain on asset disposals, net |
|
— |
|
|
(2.0 |
) |
Total costs and expenses |
|
210.8 |
|
|
174.7 |
|
Operating loss |
|
(6.8 |
) |
|
(6.5 |
) |
Other expense: |
|
|
||||
Interest expense |
|
(11.3 |
) |
|
(14.2 |
) |
Interest income |
|
0.1 |
|
|
0.1 |
|
Gain on sale of business |
|
— |
|
|
0.4 |
|
Benefit plans, net |
|
7.5 |
|
|
9.1 |
|
Foreign exchange |
|
3.1 |
|
|
(1.2 |
) |
Other expense – net |
|
(0.1 |
) |
|
(0.3 |
) |
Total other expense |
|
(0.7 |
) |
|
(6.1 |
) |
Loss before income tax expense |
|
(7.5 |
) |
|
(12.6 |
) |
Income tax expense |
|
1.2 |
|
|
2.8 |
|
Net loss |
|
(8.7 |
) |
|
(15.4 |
) |
Net loss (income) attributable to non-controlling interest |
|
0.4 |
|
|
— |
|
Net loss attributable to stockholders |
|
(8.3 |
) |
|
(15.5 |
) |
Less: Dividend on Series A preferred stock |
|
3.7 |
|
|
— |
|
Net loss attributable to stockholders of common stock |
$ |
(12.0 |
) |
$ |
(15.5 |
) |
|
|
|
||||
Basic loss per share |
$ |
(0.14 |
) |
$ |
(0.22 |
) |
Diluted loss per share |
$ |
(0.14 |
) |
$ |
(0.22 |
) |
|
|
|
||||
Shares used in the computation of earnings (loss) per share: |
|
|||||
Basic |
|
88.0 |
|
|
71.4 |
|
Diluted |
|
88.0 |
|
|
71.4 |
|
(1) |
|
Figures may not be clerically accurate due to rounding |
Exhibit 2 |
|||||||
|
|||||||
Condensed Consolidated Balance Sheets(1) |
|||||||
(In millions, except per share amount) |
|
|
|||||
Cash and cash equivalents |
$ |
108.1 |
|
$ |
224.9 |
|
|
Restricted cash and cash equivalents |
|
8.8 |
|
|
1.8 |
|
|
Accounts receivable – trade, net |
|
170.5 |
|
|
132.1 |
|
|
Accounts receivable – other |
|
39.8 |
|
|
34.6 |
|
|
Contracts in progress |
|
96.0 |
|
|
80.2 |
|
|
Inventories, net |
|
90.4 |
|
|
79.5 |
|
|
Other current assets |
|
27.3 |
|
|
29.4 |
|
|
Total current assets |
|
541.0 |
|
|
582.4 |
|
|
Net property, plant and equipment, and finance lease |
|
77.2 |
|
|
85.6 |
|
|
|
|
174.4 |
|
|
116.5 |
|
|
Intangible assets, net |
|
65.5 |
|
|
43.8 |
|
|
Right-of-use assets |
|
30.5 |
|
|
30.2 |
|
|
Other assets |
|
66.3 |
|
|
54.8 |
|
|
Total assets |
$ |
954.7 |
|
$ |
913.3 |
|
|
|
|||||||
Accounts payable |
$ |
97.8 |
|
$ |
85.9 |
|
|
Accrued employee benefits |
|
12.2 |
|
|
13.0 |
|
|
Advance billings on contracts |
|
99.9 |
|
|
68.4 |
|
|
Accrued warranty expense |
|
11.9 |
|
|
12.9 |
|
|
Financing lease liabilities |
|
2.0 |
|
|
2.4 |
|
|
Operating lease liabilities |
|
4.1 |
|
|
4.0 |
|
|
Other accrued liabilities |
|
75.9 |
|
|
54.4 |
|
|
Loans payable |
|
13.4 |
|
|
12.4 |
|
|
Total current liabilities |
|
317.3 |
|
|
253.4 |
|
|
Senior notes |
|
328.9 |
|
|
326.4 |
|
|
Long term loans payable |
|
1.5 |
|
|
1.5 |
|
|
Pension and other postretirement benefit liabilities |
|
174.9 |
|
|
182.7 |
|
|
Non-current finance lease liabilities |
|
29.1 |
|
|
29.4 |
|
|
Non-current operating lease liabilities |
|
27.0 |
|
|
26.7 |
|
|
Other non-current liabilities |
|
32.1 |
|
|
34.6 |
|
|
Total liabilities |
|
910.8 |
|
|
854.6 |
|
|
Commitments and contingencies |
|
|
|||||
Stockholders' equity: |
|
|
|||||
Preferred stock, par value |
|
0.1 |
|
|
0.1 |
|
|
Common stock, par value |
|
5.1 |
|
|
5.1 |
|
|
Capital in excess of par value |
|
1,520.5 |
|
|
1,518.9 |
|
|
|
|
(111.2 |
) |
|
(110.9 |
) |
|
Accumulated deficit |
|
(1,333.1 |
) |
|
(1,321.2 |
) |
|
Accumulated other comprehensive loss |
|
(62.5 |
) |
|
(58.8 |
) |
|
Stockholders' equity attributable to shareholders |
|
18.9 |
|
|
33.1 |
|
|
Non-controlling interest |
|
25.0 |
|
|
25.5 |
|
|
Total stockholders' equity |
|
43.9 |
|
|
58.6 |
|
|
Total liabilities and stockholders' equity |
$ |
954.7 |
|
$ |
913.3 |
|
|
(1) |
|
Figures may not be clerically accurate due to rounding. |
Exhibit 3 |
||||||
|
||||||
Condensed Consolidated Statements of Cash Flows(1) |
||||||
(In millions) |
Three months ended |
|||||
|
|
2022 |
|
|
2021 |
|
Cash flows from operating activities: |
|
|
||||
Net loss |
$ |
(8.7 |
) |
$ |
(15.4 |
) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
||||
Depreciation and amortization of long-lived assets |
|
6.2 |
|
|
4.1 |
|
Amortization of deferred financing costs and debt discount |
|
0.8 |
|
|
5.8 |
|
Amortization of guaranty fee |
|
0.2 |
|
|
0.5 |
|
Non-cash operating lease expense |
|
1.2 |
|
|
1.1 |
|
Gain on sale of business |
|
— |
|
|
(0.4 |
) |
Gain on asset disposals |
|
— |
|
|
(2.0 |
) |
(Benefit from) provision for deferred income taxes |
|
(0.7 |
) |
|
1.6 |
|
Prior service cost amortization for pension and postretirement plans |
|
0.6 |
|
|
0.2 |
|
Stock-based compensation, net of associated income taxes |
|
1.8 |
|
|
4.5 |
|
Foreign exchange |
|
(3.1 |
) |
|
1.2 |
|
Changes in assets and liabilities: |
|
|
||||
Accounts receivable |
|
(28.7 |
) |
|
(11.6 |
) |
Contracts in progress |
|
(13.3 |
) |
|
(6.9 |
) |
Advance billings on contracts |
|
27.5 |
|
|
18.2 |
|
Inventories |
|
(3.0 |
) |
|
(1.9 |
) |
Income taxes |
|
(7.0 |
) |
|
(1.9 |
) |
Accounts payable |
|
11.3 |
|
|
6.2 |
|
Accrued and other current liabilities |
|
(11.3 |
) |
|
(17.1 |
) |
Accrued contract loss |
|
4.3 |
|
|
(0.1 |
) |
Pension liabilities, accrued postretirement benefits and employee benefits |
|
(10.0 |
) |
|
(33.6 |
) |
Other, net |
|
(10.1 |
) |
|
(6.3 |
) |
Net cash used in operating activities |
|
(42.0 |
) |
|
(54.0 |
) |
Cash flows from investing activities: |
|
|
||||
Purchase of property, plant and equipment |
|
(1.0 |
) |
|
(1.4 |
) |
Acquisition of business, net of cash acquired |
|
(64.9 |
) |
|
— |
|
Proceeds from sale of business and assets, net |
|
— |
|
|
3.3 |
|
Purchases of available-for-sale securities |
|
(1.1 |
) |
|
(3.4 |
) |
Sales and maturities of available-for-sale securities |
|
1.7 |
|
|
5.5 |
|
Other, net |
|
— |
|
|
0.5 |
|
Net cash (used in) from investing activities |
|
(65.4 |
) |
|
4.5 |
|
(In millions) |
Three months ended |
|||||
|
|
2022 |
|
|
2021 |
|
Cash flows from financing activities: |
|
|
||||
Issuance of senior notes |
|
2.0 |
|
|
125.0 |
|
Borrowings on loan payable |
|
1.3 |
|
|
— |
|
Repayments on loan payable |
|
— |
|
|
— |
|
Repayments under last out term loans |
|
— |
|
|
(75.0 |
) |
Borrowings under |
|
— |
|
|
14.5 |
|
Repayments of |
|
— |
|
|
(178.8 |
) |
Preferred stock fees |
|
— |
|
|
— |
|
Payment of preferred stock dividends |
|
(3.7 |
) |
|
— |
|
Shares of common stock returned to treasury stock |
|
(0.2 |
) |
|
(3.3 |
) |
Issuance of common stock, net |
|
— |
|
|
161.5 |
|
Debt issuance costs |
|
(0.1 |
) |
|
(7.7 |
) |
Other, net |
|
(0.8 |
) |
|
(0.2 |
) |
Net cash (used in) from financing activities |
|
(1.6 |
) |
|
35.9 |
|
Effects of exchange rate changes on cash |
|
(0.8 |
) |
|
4.5 |
|
Net decrease in cash, cash equivalents and restricted cash |
|
(109.7 |
) |
|
(9.0 |
) |
Cash, cash equivalents and restricted cash, beginning of period |
|
226.7 |
|
|
67.4 |
|
Cash, cash equivalents and restricted cash, end of period |
$ |
117.0 |
|
$ |
58.4 |
|
(1) |
|
Figures may not be clerically accurate due to rounding. |
Exhibit 4 |
|||||||
|
|||||||
Segment Information(1) |
|||||||
(In millions) |
|||||||
SEGMENT RESULTS |
Three months ended |
||||||
|
|
2022 |
|
|
2021 |
|
|
REVENUES: |
|
|
|||||
Babcock & Wilcox Renewable |
$ |
68.0 |
|
$ |
28.8 |
|
|
Babcock & Wilcox Environmental |
|
34.9 |
|
|
31.2 |
|
|
Babcock & Wilcox Thermal |
|
102.2 |
|
|
108.3 |
|
|
Other |
|
(1.1 |
) |
|
— |
|
|
|
$ |
204.0 |
|
$ |
168.2 |
|
|
|
|
|
|||||
ADJUSTED EBITDA: |
|
|
|||||
Babcock & Wilcox Renewable |
$ |
1.5 |
|
$ |
0.2 |
|
|
Babcock & Wilcox Environmental |
|
1.4 |
|
|
1.1 |
|
|
Babcock & Wilcox Thermal |
|
14.2 |
|
|
10.5 |
|
|
Corporate |
|
(4.4 |
) |
|
(2.7 |
) |
|
Research and development costs |
|
(0.7 |
) |
|
(0.6 |
) |
|
|
$ |
12.0 |
|
$ |
8.6 |
|
|
|
|
|
|||||
AMORTIZATION EXPENSE: |
|
|
|||||
Babcock & Wilcox Renewable (2) |
$ |
2.1 |
|
$ |
0.1 |
|
|
Babcock & Wilcox Environmental |
|
0.7 |
|
|
0.8 |
|
|
Babcock & Wilcox Thermal (3) |
|
1.2 |
|
|
0.4 |
|
|
|
$ |
4.0 |
|
$ |
1.4 |
|
|
|
|
|
|||||
DEPRECIATION EXPENSE: |
|
|
|||||
Babcock & Wilcox Renewable |
$ |
0.6 |
|
$ |
0.7 |
|
|
Babcock & Wilcox Environmental |
|
0.2 |
|
|
0.4 |
|
|
Babcock & Wilcox Thermal |
|
1.4 |
|
|
1.5 |
|
|
|
$ |
2.2 |
|
$ |
2.7 |
|
|
|
|
|
|||||
|
As of |
||||||
BACKLOG: |
|
2022 |
|
|
2021 |
|
|
Babcock & Wilcox Renewable (4) |
$ |
440 |
|
$ |
215 |
|
|
Babcock & Wilcox Environmental |
|
126 |
|
|
118 |
|
|
Babcock & Wilcox Thermal |
|
158 |
|
|
206 |
|
|
Other/Eliminations |
|
(3 |
) |
|
(4 |
) |
|
|
$ |
721 |
|
$ |
535 |
|
|
(1) |
|
Figures may not be clerically accurate due to rounding. |
(2) |
|
Amortization expense in the Babcock & Wilcox Renewable segment includes |
(3) |
|
Amortization expense in the Babcock & Wilcox Thermal segment includes |
(4) |
|
Babcock & Wilcox Renewable backlog at |
Exhibit 5 |
||||||
|
||||||
Reconciliation of Adjusted EBITDA(2) |
||||||
(In millions) |
||||||
|
Three months ended |
|||||
|
|
2022 |
|
|
2021 |
|
Net loss |
|
(8.7 |
) |
|
(15.4 |
) |
Interest expense |
|
12.3 |
|
|
14.5 |
|
Income tax expense |
|
1.2 |
|
|
2.8 |
|
Depreciation & amortization |
|
6.2 |
|
|
4.1 |
|
EBITDA |
|
11.1 |
|
|
6.0 |
|
|
|
|
||||
Benefit plans, net |
|
(7.5 |
) |
|
(9.1 |
) |
Gain on sales, net |
|
— |
|
|
(2.4 |
) |
Stock compensation |
|
1.3 |
|
|
7.8 |
|
Restructuring activities and business services transition costs |
|
2.7 |
|
|
1.0 |
|
Advisory fees for settlement costs and liquidity planning |
|
1.0 |
|
|
2.0 |
|
Litigation legal costs |
|
2.5 |
|
|
0.4 |
|
Acquisition pursuit and related costs |
|
0.8 |
|
|
— |
|
Product development (1) |
|
0.9 |
|
|
— |
|
Foreign exchange |
|
(3.1 |
) |
|
1.2 |
|
Financial advisory services |
|
0.4 |
|
|
0.9 |
|
Contract step-up purchase price adjustment |
|
1.7 |
|
|
— |
|
Loss from business held for sale |
|
— |
|
|
0.5 |
|
Other - net |
|
0.1 |
|
|
0.3 |
|
Adjusted EBITDA |
$ |
12.0 |
|
$ |
8.6 |
|
(1) |
|
Costs associated with development of commercially viable products that are ready to go to market. |
(2) |
|
Figures may not be clerically accurate due to rounding. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20220509006085/en/
Investor Contact:
Investor Relations
704.625.4944 | investors@babcock.com
Media Contact:
Public Relations
330.860.1345 | rscornell@babcock.com
Source:
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