Babcock & Wilcox Enterprises Reports First Quarter 2023 Results
- Revenues, bookings, backlog, and Adjusted EBITDA significantly improved compared to the first quarter of 2022 and exceeded Company expectations
Q1 2023 Highlights and Outlook:
– Revenues of
– Net loss of
– Loss per share of
– Consolidated adjusted EBITDA of
– Bookings of
– Ending backlog of
– Reiterates Full Year 2023 Adjusted EBITDA target of
"We exceeded our first quarter expectations delivering strong results highlighted by increased volumes across our Renewable and Environmental segments, which helped drive consolidated revenue and adjusted EBITDA above expectations,” said Kenneth Young, B&W's Chairman and Chief Executive Officer. “Our parts and services bookings within all our segments was the highest since 2016. We also realized double digit revenue growth across all our segments. Our progress through the first quarter further supports the advancement of our strategic growth initiatives and positions us well to achieve our previously stated full-year adjusted EBITDA targets.”
“As we continue to execute our long-term strategic plans within our Renewable and Environmental businesses, we are pleased with the significant traction our BrightLoop™ technology has received to date. Most notably, we recently announced a commercial project with Black Hills Energy (BHE) in which B&W’s BrightLoop™ hydrogen generation technology was selected for a proposed project to produce hydrogen gas from coal and capture carbon dioxide emissions,” added Kenneth Young. “This project not only highlights the transformational technology we possess but also demonstrates utility market interest in our clean power production and carbon capture capabilities. We look forward to scaling this product offering and working in tandem with our customers to provide the solutions they need to enhance energy security and deliver efficient energy to their customers, while also significantly reducing green-house gas emissions.”
“While supply chain pressures continue, our success in qualifying additional suppliers has enabled us to capitalize on growing customer demand across all of our business segments and reinforces our expectations for an improved full-year performance. We remain committed to being a leader in the global clean energy transition and energy security and see continued opportunities for growth as we pursue our expanded pipeline of
Q1 2023 Financial Summary
Consolidated revenues in the first quarter of 2023 were
Babcock & Wilcox Renewable segment revenues were
Babcock & Wilcox Environmental segment revenues were
Babcock & Wilcox Thermal segment revenues were
Liquidity and Balance Sheet
At March 31, 2023, the Company had total debt of
Impacts of Market Conditions
Management continues to adapt to macroeconomic conditions, including rising inflation, higher interest rates, foreign exchange rate fluctuations and the impact of the ongoing conflict in
Earnings Call Information
B&W plans to host a conference call and webcast on Wednesday, May 10, 2023 at 8 a.m. ET to discuss the Company’s first quarter 2023 results. The listen-only audio of the conference call will be broadcast live via the Internet on B&W’s Investor Relations site. The dial-in number for participants in the
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. 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, including business transition costs. The presentation of non-GAAP financial measures should not be considered in isolation or as a substitute for the Company’s related financial results prepared in accordance with GAAP.
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 arising from the sale of non-income producing assets, 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.
Bookings and Backlog
Bookings and backlog are our measure of remaining performance obligations under our sales contracts. It is possible that our methodology for determining bookings and backlog may not be comparable to methods used by other companies.
We generally include expected revenue from contracts in our backlog when we receive written confirmation from our customers authorizing the performance of work and committing the customers to payment for work performed. Backlog may not be indicative of future operating results, and contracts in our backlog may be canceled, modified or otherwise altered by customers. Backlog can vary significantly from period to period, particularly when large new build projects or operations and maintenance contracts are booked because they may be fulfilled over multiple years. Because we operate globally, our backlog is also affected by changes in foreign currencies each period. We do not include orders of our unconsolidated joint ventures in backlog. The Company is in the process of exiting its only remaining fixed fee Operational and Maintenance Contract in our Renewable segment. A similar contract was exited as of December 31, 2022. The company believes it is useful to exclude the impact of this contract on our operating results as well as our backlog in order to highlight the performance of the business.
Bookings represent changes to the backlog. Bookings include additions from booking new business, subtractions from customer cancellations or modifications, changes in estimates of liquidated damages that affect selling price and revaluation of backlog denominated in foreign currency. We believe comparing bookings on a quarterly basis or for periods less than one year is less meaningful than for longer periods, and that shorter-term changes in bookings may not necessarily indicate a material trend.
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 this 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 global macroeconomic conditions, including inflation and volatility in the capital markets; the impact of the ongoing conflict in
These forward-looking statements are made based upon detailed assumptions and reflect management’s current expectations and beliefs. While we believe that these assumptions underlying the forward-looking statements are reasonable, we caution that it is very difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could affect actual results. The forward-looking statements included herein are made only as of the date hereof. We undertake 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 B&W Enterprises, Inc.
Headquartered in
Exhibit 1 Babcock & Wilcox Enterprises, Inc. Condensed Consolidated Statements of Operations(1) (In millions, except per share amounts) |
||||||
|
Three Months Ended March 31, |
|||||
|
|
2023 |
|
|
2022 |
|
Revenues |
$ |
257.2 |
|
$ |
204.0 |
|
Costs and expenses: |
|
|
||||
Cost of operations |
|
203.8 |
|
|
163.1 |
|
Selling, general and administrative expenses |
|
51.9 |
|
|
43.0 |
|
Advisory fees and settlement costs |
|
(2.5 |
) |
|
3.9 |
|
Restructuring activities |
|
0.4 |
|
|
0.1 |
|
Research and development costs |
|
1.3 |
|
|
0.7 |
|
Loss on asset disposals, net |
|
0.9 |
|
|
— |
|
Total costs and expenses |
|
255.9 |
|
|
210.8 |
|
Operating income (loss) |
|
1.4 |
|
|
(6.8 |
) |
Other (expense) income: |
|
|
||||
Interest expense |
|
(12.7 |
) |
|
(11.3 |
) |
Interest income |
|
0.1 |
|
|
0.1 |
|
Benefit plans, net |
|
(0.1 |
) |
|
7.5 |
|
Foreign exchange |
|
(0.5 |
) |
|
3.1 |
|
Other expense - net |
|
(0.2 |
) |
|
(0.1 |
) |
Total other expense |
|
(13.3 |
) |
|
(0.7 |
) |
Loss before income tax expense |
|
(12.0 |
) |
|
(7.5 |
) |
Income tax expense |
|
0.5 |
|
|
1.2 |
|
Net loss |
|
(12.5 |
) |
|
(8.7 |
) |
Net (income) loss attributable to non-controlling interest |
|
— |
|
|
0.4 |
|
Net loss attributable to stockholders |
|
(12.5 |
) |
|
(8.3 |
) |
Less: Dividend on Series A preferred stock |
|
3.7 |
|
|
3.7 |
|
Net loss attributable to stockholders of common stock |
$ |
(16.2 |
) |
$ |
(12.0 |
) |
|
|
|
||||
Basic loss per share |
$ |
(0.18 |
) |
$ |
(0.14 |
) |
Diluted loss per share |
$ |
(0.18 |
) |
$ |
(0.14 |
) |
|
|
|
||||
Shares used in the computation of loss per share: |
|
|||||
Basic |
|
88.7 |
|
|
88.0 |
|
Diluted |
|
88.7 |
|
|
88.0 |
|
(1) Figures may not be clerically accurate due to rounding |
||||||
Exhibit 2 Babcock & Wilcox Enterprises, Inc. Condensed Consolidated Balance Sheets(1) |
||||||
(In millions, except per share amount) |
March 31, 2023 |
December 31, 2022 |
||||
Cash and cash equivalents |
$ |
62.8 |
|
$ |
76.7 |
|
Current restricted cash and cash equivalents |
|
6.9 |
|
|
15.3 |
|
Accounts receivable – trade, net |
|
173.8 |
|
|
162.5 |
|
Accounts receivable – other |
|
38.0 |
|
|
38.5 |
|
Contracts in progress |
|
163.9 |
|
|
134.9 |
|
Inventories, net |
|
109.7 |
|
|
102.6 |
|
Other current assets |
|
30.4 |
|
|
27.0 |
|
Total current assets |
|
585.5 |
|
|
557.6 |
|
Net property, plant and equipment, and finance lease |
|
84.4 |
|
|
86.4 |
|
Goodwill |
|
157.3 |
|
|
157.0 |
|
Intangible assets, net |
|
58.8 |
|
|
60.3 |
|
Right-of-use assets |
|
28.2 |
|
|
29.4 |
|
Long-term restricted cash |
|
21.4 |
|
|
21.4 |
|
Other assets |
|
32.9 |
|
|
30.6 |
|
Total assets |
$ |
968.4 |
|
$ |
942.7 |
|
|
||||||
Accounts payable |
$ |
169.2 |
|
$ |
139.2 |
|
Accrued employee benefits |
|
12.3 |
|
|
12.5 |
|
Advance billings on contracts |
|
137.2 |
|
|
133.4 |
|
Accrued warranty expense |
|
9.9 |
|
|
9.6 |
|
Financing lease liabilities |
|
1.2 |
|
|
1.2 |
|
Operating lease liabilities |
|
3.8 |
|
|
3.6 |
|
Other accrued liabilities |
|
72.5 |
|
|
68.2 |
|
Loans payable |
|
4.3 |
|
|
4.3 |
|
Total current liabilities |
|
410.4 |
|
|
372.0 |
|
Senior notes |
|
336.0 |
|
|
335.5 |
|
Long term loans payable |
|
11.4 |
|
|
13.2 |
|
Pension and other postretirement benefit liabilities |
|
135.6 |
|
|
136.2 |
|
Non-current finance lease liabilities |
|
27.2 |
|
|
27.5 |
|
Non-current operating lease liabilities |
|
25.7 |
|
|
26.6 |
|
Deferred tax liability |
|
9.8 |
|
|
10.1 |
|
Other non-current liabilities |
|
22.6 |
|
|
23.8 |
|
Total liabilities |
|
978.6 |
|
|
944.7 |
|
Commitments and contingencies |
|
|
||||
Stockholders' deficit: |
|
|
||||
Preferred stock, par value |
|
0.1 |
|
|
0.1 |
|
Common stock, par value |
|
5.1 |
|
|
5.1 |
|
Capital in excess of par value |
|
1,541.0 |
|
|
1,537.6 |
|
Treasury stock at cost, 1,880 and 1,868 shares at March 31, 2023 and December 31, 2022, respectively |
|
(113.8 |
) |
|
(113.8 |
) |
Accumulated deficit |
|
(1,375.1 |
) |
|
(1,358.9 |
) |
Accumulated other comprehensive loss |
|
(68.0 |
) |
|
(72.8 |
) |
Stockholders' deficit attributable to shareholders |
|
(10.7 |
) |
|
(2.6 |
) |
Non-controlling interest |
|
0.5 |
|
|
0.5 |
|
Total stockholders' deficit |
|
(10.2 |
) |
|
(2.1 |
) |
Total liabilities and stockholders' deficit |
$ |
968.4 |
|
$ |
942.7 |
|
(1) Figures may not be clerically accurate due to rounding. |
||||||
Exhibit 3 Babcock & Wilcox Enterprises, Inc. Condensed Consolidated Statements of Cash Flows(1) |
||||||
(In millions) |
Three Months Ended March 31, |
|||||
|
|
2023 |
|
|
2022 |
|
Cash flows from operating activities: |
|
|
||||
Net loss |
$ |
(12.5 |
) |
$ |
(8.7 |
) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
||||
Depreciation and amortization of long-lived assets |
|
5.4 |
|
|
6.2 |
|
Amortization of deferred financing costs and debt discount |
|
1.4 |
|
|
0.8 |
|
Amortization of guaranty fee |
|
0.2 |
|
|
0.2 |
|
Non-cash operating lease expense |
|
0.6 |
|
|
1.2 |
|
Loss on asset disposals |
|
0.9 |
|
|
— |
|
Benefit from deferred income taxes |
|
(1.9 |
) |
|
(0.7 |
) |
Prior service cost amortization for pension and postretirement plans |
|
0.2 |
|
|
0.6 |
|
Stock-based compensation |
|
3.4 |
|
|
1.8 |
|
Foreign exchange |
|
0.5 |
|
|
(3.1 |
) |
Changes in operating assets and liabilities: |
|
|
||||
Accounts receivable - trade, net and other |
|
(5.5 |
) |
|
(28.7 |
) |
Contracts in progress |
|
(29.0 |
) |
|
(13.3 |
) |
Advance billings on contracts |
|
3.6 |
|
|
27.5 |
|
Inventories, net |
|
(7.6 |
) |
|
(3.0 |
) |
Income taxes |
|
2.1 |
|
|
(7.0 |
) |
Accounts payable |
|
29.6 |
|
|
11.3 |
|
Accrued and other current liabilities |
|
2.7 |
|
|
(11.3 |
) |
Accrued contract loss |
|
(0.7 |
) |
|
4.3 |
|
Pension liabilities, accrued postretirement benefits and employee benefits |
|
(4.3 |
) |
|
(10.0 |
) |
Other, net |
|
(1.9 |
) |
|
(10.1 |
) |
Net cash used in operating activities: |
|
(12.9 |
) |
|
(42.0 |
) |
|
|
|
||||
Cash flows from investing activities: |
|
|
||||
Purchase of property, plant and equipment |
|
(2.2 |
) |
|
(1.0 |
) |
Acquisition of business, net of cash acquired |
|
— |
|
|
(64.9 |
) |
Purchases of available-for-sale securities |
|
(2.0 |
) |
|
(1.1 |
) |
Sales and maturities of available-for-sale securities |
|
2.1 |
|
|
1.7 |
|
Net cash used in investing activities |
|
(2.2 |
) |
|
(65.4 |
) |
Cash flows from financing activities: |
|
|
||||
Issuance of senior notes |
|
— |
|
|
2.0 |
|
Borrowings on loan payable |
|
— |
|
|
1.3 |
|
Repayments on loan payable |
|
(1.7 |
) |
|
— |
|
Finance lease payments |
|
(0.3 |
) |
|
(0.7 |
) |
Payment of preferred stock dividends |
|
(3.7 |
) |
|
(3.7 |
) |
Shares of common stock returned to treasury stock |
|
(0.1 |
) |
|
(0.2 |
) |
Debt issuance costs |
|
(0.1 |
) |
|
(0.1 |
) |
Other, net |
|
|
(0.1 |
) |
||
Net cash used in financing activities |
|
(5.9 |
) |
|
(1.6 |
) |
Effects of exchange rate changes on cash |
|
(1.5 |
) |
|
(0.8 |
) |
Net decrease in cash, cash equivalents and restricted cash |
|
(22.4 |
) |
|
(109.7 |
) |
Cash, cash equivalents and restricted cash at beginning of period |
|
113.5 |
|
|
226.7 |
|
Cash, cash equivalents and restricted cash at end of period |
$ |
91.1 |
|
$ |
117.0 |
|
(1) Figures may not be clerically accurate due to rounding. |
||||||
Exhibit 4 Babcock & Wilcox Enterprises, Inc. Segment Information(1) (In millions) |
||||||
SEGMENT RESULTS |
Three Months Ended March 31, |
|||||
|
|
2023 |
|
|
2022 |
|
REVENUES: |
|
|
||||
Babcock & Wilcox Renewable |
$ |
100.1 |
|
$ |
68.0 |
|
Babcock & Wilcox Environmental |
|
39.4 |
|
|
34.9 |
|
Babcock & Wilcox Thermal |
|
119.2 |
|
|
102.2 |
|
Other |
|
(1.5 |
) |
|
(1.1 |
) |
|
$ |
257.2 |
|
$ |
204.0 |
|
|
|
|
||||
ADJUSTED EBITDA: |
|
|
||||
Babcock & Wilcox Renewable |
$ |
4.9 |
|
$ |
2.0 |
|
Babcock & Wilcox Environmental |
|
1.9 |
|
|
1.4 |
|
Babcock & Wilcox Thermal |
|
13.7 |
|
|
14.2 |
|
Corporate |
|
(5.1 |
) |
|
(4.4 |
) |
Research and development costs |
|
(1.3 |
) |
|
(0.7 |
) |
|
$ |
14.2 |
|
$ |
12.5 |
|
|
|
|
||||
AMORTIZATION EXPENSE: |
|
|
||||
Babcock & Wilcox Renewable |
$ |
0.5 |
|
$ |
2.1 |
|
Babcock & Wilcox Environmental |
|
0.8 |
|
|
0.7 |
|
Babcock & Wilcox Thermal |
|
1.1 |
|
|
1.2 |
|
|
$ |
2.4 |
|
$ |
4.0 |
|
|
|
|
||||
DEPRECIATION EXPENSE: |
|
|
||||
Babcock & Wilcox Renewable |
$ |
1.0 |
|
$ |
0.6 |
|
Babcock & Wilcox Environmental |
|
0.2 |
|
|
0.2 |
|
Babcock & Wilcox Thermal |
|
1.8 |
|
|
1.4 |
|
|
$ |
3.0 |
|
$ |
2.2 |
|
|
|
|
||||
|
As of March 31, |
|||||
BACKLOG: |
|
2023 |
|
|
2022 |
|
Babcock & Wilcox Renewable (2) |
$ |
231 |
|
$ |
293 |
|
Babcock & Wilcox Environmental |
|
173 |
|
|
126 |
|
Babcock & Wilcox Thermal |
|
252 |
|
|
158 |
|
Other/Eliminations |
|
7 |
|
|
(3 |
) |
|
$ |
663 |
|
$ |
574 |
|
(1) |
Figures may not be clerically accurate due to rounding. |
|
(2) |
B&W Renewable backlog has been adjusted downward |
|
| Exhibit 5
Babcock & Wilcox Enterprises, Inc. Reconciliation of Adjusted EBITDA (In millions) |
||||||
|
Three Months Ended March 31, |
|||||
|
|
2023 |
|
|
2022 |
|
Net loss |
$ |
(12.5 |
) |
$ |
(8.7 |
) |
Interest expense |
|
14.4 |
|
|
12.3 |
|
Income tax expense |
|
0.5 |
|
|
1.2 |
|
Depreciation & amortization |
|
5.4 |
|
|
6.2 |
|
EBITDA |
|
7.8 |
|
|
11.1 |
|
|
|
|
||||
Benefit plans, net |
|
0.1 |
|
|
(7.5 |
) |
Loss on sales, net |
|
0.9 |
|
|
— |
|
Stock compensation |
|
3.2 |
|
|
1.3 |
|
Restructuring activities and business services transition costs |
|
1.0 |
|
|
2.7 |
|
Settlement and related legal costs |
|
(3.0 |
) |
|
2.5 |
|
Advisory fees for settlement costs and liquidity planning |
|
0.5 |
|
|
1.0 |
|
Acquisition pursuit and related costs |
|
0.1 |
|
|
0.8 |
|
Product development (1) |
|
1.4 |
|
|
0.9 |
|
Foreign exchange |
|
0.5 |
|
|
(3.1 |
) |
Contract disposal (2) |
|
1.4 |
|
|
0.9 |
|
Contract step-up purchase price adjustment |
|
— |
|
|
1.7 |
|
Other - net |
|
0.3 |
|
|
0.1 |
|
Adjusted EBITDA(3) |
$ |
14.2 |
|
$ |
12.5 |
|
(1) |
Costs associated with development of commercially viable products that are ready to go to market. |
(2) |
Impacts of the disposal of our O&M contracts has been adjusted in the prior period to ensure uniform presentation with the current period |
(3) |
Figures may not be clerically accurate due to rounding. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20230510005375/en/
Investor Contact:
Lou Salamone, CFO
Babcock & Wilcox Enterprises, Inc.
704.625.4944 | investors@babcock.com
Media Contact:
Ryan Cornell
Public Relations
Babcock & Wilcox Enterprises, Inc.
330.860.1345 | rscornell@babcock.com
Source: Babcock & Wilcox Enterprises, Inc.
