Q4 2021 Babcock & Wilcox Enterprises Inc Earnings Call

Form 8-K, this morning and posted on the Investor Relations section of our website at Babcock Dot com.

That I will turn the call over to Kenny.

Yeah.

Thanks, Megan Thanks, Victoria, and good morning, everyone and thanks for joining our call well Wow, what a year 2021 was a year of unprecedented growth and accomplishments for BBW.

Specialty compared to 2020 revenues were up about 28% net income swung from a loss of.

A negative $10 million to net income of about $32 million positive and an adjusted EBITDA increased by about 260% excluding <unk>.

Not actually exclude the non recurring loss recovery in 2020, we also achieved our ambitious target of adjusted EBITDA of $70 million for the year.

Annual bookings.

And ending backlog were both up about 20% with our highest level of annual bookings since 2017.

Our quarter over quarter results for the fourth quarter were actually just as significant revenues were up about 28% net income was up a remarkable 504% and adjusted EBITDA was up about 77% and bookings were up 61%.

In 2021, we did what we said we would do will be focused on execution, we booked for renewable waste to energy Newbuild projects in 2021, and actually we just announced last month we.

We closed several strategic acquisitions and continued investing in building our climate bright de carbonization platform, including driving forward on commercial demonstration projects for <unk>.

Our innovative bright loop hydrogen production technology.

Our extraordinary fourth quarter bookings of $269 million included awards of two additional renewable <unk>.

<unk> projects, including contracts for $58 million and $24 million supply advanced waste to energy technology for power plants in Europe .

With the addition of an $11 million booking for biomass boiler upgrade at the beginning of 2022, we have booked five sizable renewable energy projects in September .

Our recent acquisitions over the last six months have strategically expanded our clean and renewable energy businesses.

We're excited about the substantial opportunities we see for solar.

Solar installation and construction services in the United States through our BW Fosler solar business, which is reflected through our growing pipeline. We're also exploring opportunities to combine solar with <unk> long term.

Long duration energy storage solutions and look forward to continuing our efforts to drive these newer technology.

Through our November acquisition of voter a flexible scalable renewable aftermarket parts and services business based in Denmark, We launched our BMW renewable services platform to further expand our renewable operation and maintenance.

Parts and service business in Europe , and focused on renewable waste energy and biomass energy technologies.

In February of this year, we acquired Fps, a leading designer and manufacturer of hydrogen natural gas and renewable pulp and paper combustion equipment and technologies based in Nova Scotia, Canada.

<unk> and control system capabilities are ideally suited to clean energy applications, such as firing hydrogen, which complements BMW hydrogen generation and combustion technologies and we see significant potential growth in those markets not only in North America, but around the world.

In February we also completed a small bolt on acquisition of Optimus industries in Tulsa, Oklahoma, which designs and manufactures waste heat recovery products, including package boilers water tube and fire to waste heat boilers economizer, some super heaters in units for sulfur acid plants.

We expect the addition of U S packaged boiler manufacturing capabilities to increase our U S market access and create additional opportunities for the combined business moving forward.

Okay.

We are continuing to explore additional acquisition and investment opportunities in both emerging technologies in mature markets and aggressively pursuing opportunities to further increase shareholder value.

Our results bookings and strategic actions in 2021 have positioned us for an even stronger 2022 looking forward as we previously mentioned, we increased our 2022 target to a range of $110 million to $120 million and adjusted EBITDA.

And our overall pipeline is now more than seven 5 million of identified project opportunities through 2024, which again does not include parts and services.

Additionally, we anticipate growth in our parts and service business as the year progresses due to higher demand by our installed base as a direct result of higher natural gas prices are robust and growing pipeline recent contract wins and strategic acquisitions give us confidence in our ability to.

She is a significant year over year growth in 2022, and we anticipate that full year 2022, we will realize the potential and continued momentum of our ongoing growth strategies.

As always our EBITDA will ramp between Q1 being the lowest in Q4 being the highest as normal based on our historical trends.

Most importantly, we believe that 2022 will be a milestone year for our climate bright de carbonization platform.

Interest in our technologies is rapidly expanding particularly.

For our breakthrough bright loop technology to produce hydrogen and our steam or syngas from a variety of fuels, our feedstocks, while isolating <unk> for sequestration.

Utilization without the good news without any additional parasitic load or loss of efficiency on the plant.

In November of 2021, we signed an exclusive global license agreement with Ohio State Innovation Foundation for it unique particle that is used within our bright loop platform for de carbonization and the production of hydrogen <unk> steam or syngas, which.

Which complements <unk> existing chemical looping technology portfolio.

This technology was jointly researched and developed by BMW and collaboration with the Ohio State University and it's used to produce hydrogen from syngas has been successfully demonstrated.

We have proven how fully scalable and accepted adaptable. This technology is for both large and small installations and we are excited about its transformational potential.

We're excited and the fact that we are now moving forward with a number of potential commercial scale demonstration projects.

Including detailed design and engineering site selection permitting and financing all with a goal of having the equipment on the ground for at least one plant by the end of 2022 and producing hydrogen by the end of 2023.

Our robust pipeline of energy transition carbon capture and hydrogen production opportunities is accelerating as our customers seek solutions to address some of the world's most urgent climate objectives.

We are continuing working on over 20 potential climate bright carbon capture and hydrogen projects.

Really determine the size and scale and best carbon capture solution based on customers specific needs and anticipate booking additional climate bright projects in the coming months.

I'll now turn the call over to Lou to discuss the key points of our financial performance in the fourth quarter of 2021 as well as our full year results.

Thanks Kenny.

First I'll review, our full year 2021 results and then I'll turn to our fourth quarter 2021 results for further detail I would call your attention to the fact that we filed our 10-K with the SEC and you can refer to it for further details beyond what we discussed here in this call.

Consolidated revenues for 2021 were $723 4 million or <unk>.

28% improvement compared to 2020.

The improvement was primarily due to a higher level of activity in our thermal and environmental segments expanded geographic presence and improved strategies to mitigate the continued impact of COVID-19.

As well as the acquisitions of Fosler and vote in our renewable segment.

Net income in 2021 was $31 5 million compared to a net loss of $10 3 million in 2020.

GAAP operating income in 2021 was $20 8 million compared to an operating loss of $1 7 million in 2020.

This increase was primarily due to the earlier referenced increase in revenue. We also note that operating income in the prior year included a $26 million settlement.

From an insurer, which is a one time item.

We achieved our 2021 adjusted EBITDA target of more than $70 million with an adjusted EBITDA, reaching $70 6 million as compared to $19 7 million in 2020, and a $19 7 million excludes the nonrecurring $26 million settlement.

Which I mentioned a few moments ago.

Total bookings in 2021 were 779 million, a 21% increase compared to full year bookings in 2020. This is the highest level of annual bookings since 2017.

<unk> at December 31, 2021 was $639 million and Thats, a 19% increase compared to the prior year end.

Let me now turn to our fourth quarter results.

Fourth quarter consolidated revenues were $192 million or 28% improvement compared to the fourth quarter of 2020. This was primarily due to a higher level of activity in our project business within all three segments, including as Kenny mentioned four large waste to energy project.

In the renewable segment.

And fifth we just signed an increased construction volume in the thermal segment as well as the acquisitions of <unk> and Volta.

Net income in the fourth quarter of 2021 was $30 2 million. This was more than six times. The net income of $5 million in the fourth quarter of 2020.

Our GAAP operating income in the fourth quarter of 2021 was $9 7 million more than four times. The operating income of $2 2 million in the fourth quarter of 2020.

This increase was primarily due to the earlier referenced revenue increase as well as favorable project execution.

Adjusted EBITDA was $27 9 million in the quarter compared to $15 8 million in the 2020 quarter.

Bookings in the fourth quarter of 2021 with $269 million. This is a 61% increase compared to fourth quarter bookings in 2020.

I'll now turn to cash flow balance sheet and liquidity cash flow from operations in the <unk>.

Fourth quarter of 2021 was a use of $3 4 million.

We ended the quarter with total debt of $340 million and cash and cash equivalents and restricted cash of $226 million for a net debt of approximately $114 million. This is inclusive of the net proceeds under our six 5% senior notes offering.

Which was executed in December and after cash paid for the acquisition of fossil and Volta.

Net leverage at December 31 was $1 six one times the last 12 months adjusted EBITDA.

Net interest expense for the quarter was $8 7 million as compared to $9 8 million in the prior year quarter. The decrease was primarily driven by the reduction in interest rate.

Based on our last out term loans and the rates secured on our senior notes issued during the public common stock and senior notes offering in 2021.

As Kevin stated our strong results for the fourth quarter were propelled by continued execution of our growth strategy and drove us to achieve our adjusted EBITDA target of more than $70 million for the full year 2021.

We booked four sizable renewable waste to energy products projects at Newbuild projects from 2021, interpreting again as I've said to the highest level of annual bookings since 2017, we closed several strategic acquisitions in the past six months and anticipate those acquisitions will further propel our growth.

In coming years.

We expect 2020 changes quarterly profile to follow our normal cyclical performance of increasing profitability from the first through the fourth quarter.

Again, as Kenny said, we're reiterating our 2022 target of $110 million to $120 million of adjusted EBITDA and this is supported by a robust pipeline of more than seven $5 billion of opportunities through 2024, and a $639 million back.

At the end of 2021, and 19% improvement over the prior year and the accelerating momentum of our strategic actions I'll now turn it back over to Kenny.

Thanks for that.

Closing.

We have made tremendous strides over the past three years and we are extremely proud of the milestone year, we achieved at Babcock and Wilcox in 2021.

Our employees around the world have stepped up to meet the global demand and we want to recognize the tremendous achievements of each and every one of them.

We are growing and expanding and adding new talent across our three segments.

We've achieved significant year over year growth in revenue net income and EBITDA.

We are executing on what we promised by booking five renewable waste to energy Newbuild projects and closing several strategic acquisitions all accomplished just since September .

We continue to build our climate, Brian de Carbonization platform.

And progressed on our pursuit of 20, plus potential climate bright projects and driving forward on bright loop carbon capture and hydrogen commercial demonstration projects.

Acknowledging reviews, we are seeing from our customers regarding our bright loop platform is giving us even greater confidence in the long term demand of this emerging technology.

And looking forward to 2022, we are confident about the year the year over year growth, we expect to achieve for the coming year with targeted adjusted EBITDA of $110 million to $120 million.

The strategic actions and growth strategies, we have been working on for several years are materializing, which.

As proven by our recent significant bookings substantially increased backlog and our more than $7 5 billion. Three year pipeline is BMW continues to deploy our innovative environmental and renewable offerings, including our waste to energy and climate Brightened Carbonization technologies, we are confident that our.

Capabilities will continue to demonstrate <unk> role as a leader and an innovator that advances the worlds energy transition solutions and as always we continue to drive our results towards increased shareholder value.

With that I'll turn the call back over to Victoria, and medium who can help take any questions Victoria.

Thank you we will now.

On to the Q&A portion of the call.

I would like to ask a question. Please press star followed by one of your telephone keypad. If you wish to withdraw your question. Please press star two.

<unk> asked a question. Please ensure that your line is on mute locally.

Okay Alright.

Okay.

And now our first question comes from Zane Karimi from D. A Davidson. Please go ahead. Your line is open.

Hey, good morning, and thank you for taking my question.

Yeah.

So goodbye.

I know, it's early but it does seem to be a significant pick up in the interest pertaining to the waste to energy solutions business, especially in Europe .

Can you talk a little bit more about the opportunities in hand, as well as what youre seeing elsewhere.

This could be one solid solution to energy concerns through the region.