Q1 2024 Babcock & Wilcox Enterprises Inc Earnings Call

May 9, 2024

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Good evening.

Ciara: My name is Ciara, and I will be your conference operator today. At this time, I would like to welcome everyone to the conference call. All lines have been placed on mute to prevent any background noise.

My name is Sierra and I will be your conference operator today.

Ciara: At this time I would like to welcome everyone to the conference call.

Ciara: All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a Q&A session.

Ciara: After the speaker's remarks, there will be a Q&A session. If you would like to ask a question during this time, simply press the star key followed by the number 1 on your telephone keypad. If you would like to withdraw your question, press the star key again. Thank you. Sharyn, you may begin your conference call.

Sharyn: If you'd like to ask a question. During this time simply press star followed by the number one on your telephone keypad.

Sharyn: If you'd like to withdraw your question press the Star Keys.

Sharyn: Thank you.

Sharyn: Sharon you May begin your conference call.

Sharyn Brooks: Thank you, Sierra. And thanks to everyone for joining us on Babcock & Wilcox Enterprises' first quarter 2024 earnings conference call. I'm Sharyn Brooks, Director of Communication.

Ciara: Thank you Sarah and thanks to everyone for joining us on Babcock <unk> Wilcox Enterprises' first quarter 2024 earnings Conference call I'm, Sharon Brooks director of Communications.

Sharyn Brooks: Joining the call today are Kenny Young, B&W's Chairman and Chief Executive Officer, and Lou Salamone, Chief Financial Officer, to discuss our first quarter results. During this call, certain statements we make will be forward-looking. These statements are subject to risks and uncertainties, including those set forth in our Safe Harbor provision for forward-looking statements, which can be found at the end of our earnings press release and also in our Form 10-Q that will be filed today and our Form 10-K that is on file with the SEC and provides further detail about the risks related to our business.

Sharyn Brooks: Joining the call today are Kenny young Bmw's, Chairman and Chief Executive Officer, and Lou Salamone, Chief Financial Officer to discuss our first quarter results.

Sharyn Brooks: Additionally, except as required by law, we undertake no obligation to update any forward-looking statements. We also provide non-GAP information regarding certain of our historical and targeted results to supplement the results provided in accordance with GAP. This information should not be considered superior to, or as a substitute for, the comparable GAAP measures. A reconciliation of historical non-GAAP measures can be found in our first quarter earnings release published this afternoon and in our company overview presentation to be filed on Form 8K this afternoon and posted on the investor relations section of our website at babcock.com. I will now turn the call over to Kenny.

Sharyn Brooks: During this call certain statements, we make will be forward looking these statements are subject to risks and uncertainties, including those set forth in our safe Harbor provision for forward looking statements that can be found at the end of our earnings press release and also in our Form 10-Q that will be filed today and our Form 10-K that is.

Kenny: File with the SEC and provide further detail about the risks related to our business. Additionally, except as required by law, we undertake no obligation to update any forward looking statements.

Kenny: We also provide non-GAAP information regarding certain of our historical and targeted results to supplement the results provided in accordance with GAAP. This information should not be considered superior to or as a substitute for the comparable GAAP measures.

Sharyn Brooks: A reconciliation of historical non-GAAP measures can be found in our first quarter earnings release published this afternoon and in our company overview presentation to be filed on form 8-K. This afternoon and posted on the Investor Relations section of our website at Babcock Dot Com I will now turn the call over to Kenny.

Kenneth M. Young: Thanks, Sharyn. Good afternoon, everyone, and thanks for joining us for our first quarter 2024 earnings call. We are off to a very strong start in 2024 with first quarter results that came in ahead of our expectations as we continue to advance and execute against our strategic plan based on selective higher-margin new build projects, a heavier focus on upgrades, parts, and services, and increased engineering engagements and feed studies for Climate Bright and Bright Loop.

Kenny: Thanks, Sharon good afternoon, everyone and thanks for joining us for our first quarter 2024 earnings call.

Kenneth M. Young: We are off to a very strong start in 2024 with first quarter results that came in ahead of our expectations as we continue to advance and execute against our strategic plan based on selective higher margin newbuild projects heavier focus on upgrades parts and services and <unk>.

Kenneth M. Young: <unk> engineering engagements and feed studies for climate, Brian and Brian.

Kenneth M. Young: Demand from our global industrial and utility customers for solutions in power generation upgrades, environmental and renewable technologies, as well as hydrogen and syngas projects, continues to expand, as evidenced by the approximately $500 million in new signed contracts and awards in the first quarter. This is nearly double the total value achieved during this same period in 2023.

Kenneth M. Young: Demand from our global industrial and utility customers for solutions and power generation upgrades, environmental and renewable technologies as well as hydrogen and syngas projects continues to expand as evidenced by the approximately $500 million and new signed contracts and awards in the first quarter.

Kenneth M. Young: This is nearly double the total value achieved during the same period in 2023.

Kenneth M. Young: Customer activity remained robust across all segments through the first quarter of 2024, despite what is historically a weaker seasonal period for B&W, which supports our positive outlook for the full year 2024 and enabled us to recently increase our full year adjusted EBITDA target to a range of $105 to $115 million. We also continue to make progress on our stated cost reduction efforts during the first quarter, which now total $20 million to date, as we work toward our target of over $30 million in annualized cost savings. Cash used within our discontinued operations is now significantly reduced to almost zero.

Kenneth M. Young: Customer activity remained robust across all segments through the first quarter of 2024. Despite what is historically a weaker seasonal period for BMW, which supports our positive outlook for the full year 2024 and enabled us to recently increase our full year adjusted EBIT target to a range.

Kenneth M. Young: $105 million to $115 million.

Kenneth M. Young: We also continue to make progress on our stated cost reduction efforts during the first quarter, which now totaled $20 million to date as we work toward our target of over 30 million in annualized cost savings.

Kenneth M. Young: Past used within our discontinued operations is now significantly reduced to almost neutral cash from continuing operations is improving and going forward. We are taking specific steps to increase liquidity as we focus on paying down or reducing our long term debt.

Kenneth M. Young: Cash from continuing operations is improving, and going forward, we are taking specific steps to increase liquidity as we focus on paying down or reducing our long-term debt. Our strategic focus on higher-margin core business continues, as do our dedicated efforts to expand our Bright Loop low-carbon hydrogen technology and our Climate Bright decarbonization technology. In particular, we are making significant strides within our research and development to advance both the engineering, performance, and particle manufacturing processes for Bright Loop to improve the attrition rate, which will lower overall costs of green hydrogen production. As mentioned, our first quarter performance displayed consolidated revenues and adjusted EBITDA that exceeded the company's expectations.

Kenneth M. Young: Our strategic focus on higher margin core business.

Kenneth M. Young: Continues as do our dedicated efforts to expand our bright loop low carbon hydrogen technology at our climate, Brian de Carbonization technologies in particular, we're making significant strides within our research and development to advance both the engineering performance and particle manufacturing process for <unk>.

Kenneth M. Young: Bright room to improve the attrition rate, which will lower overall cost of green hydrogen production.

Kenneth M. Young: As mentioned, our first quarter performance displayed consolidated revenues and adjusted EBITDA that exceeded the company's expectations.

Kenneth M. Young: These results, combined with strong bookings year-to-date, set the stage for our recently increased full-year adjusted EBITDA target range. Notably, we are already seeing the benefits of our strategic plan as adjusted EBITDA margins expanded during the first quarter of 2024 as compared to the first quarter of 2023. Our margins are benefiting from the shift to selective higher-margin new build projects, particularly in the renewable segment, along with notable strength across our aftermarket parts and services businesses.

Kenneth M. Young: These results combined with a strong bookings year to date set the stage for our recently increased full year adjusted EBITDA target range, notably we are already seeing the benefits from our strategic plan as adjusted EBIT margins expanded during the first quarter of 2024 as compared to the first quarter of 2023.

Kenneth M. Young: Our margins are benefiting from the shift to selective higher margin newbuild projects, particularly in the renewables segment, along with notable strength across our aftermarket parts and services businesses from.

Kenneth M. Young: From a segment perspective, our environmental business was a standout performer during the first quarter, with revenue increasing 23% compared to the first quarter of 2023 and margins that continued to expand, which drove a 74% increase in total adjusted EBITDA compared to the first quarter of 2023. These results were primarily driven by higher volume and improved operating performance as we completed certain projects during the first quarter.

Kenneth M. Young: From a segment perspective, our environmental business was a standout performer during the first quarter with revenue, increasing 23% compared to first quarter of 2023 and margins that continue to expand which drove a 74% increase in total adjusted EBITDA compared to the first quarter of 2023.

Kenneth M. Young: Hi.

Kenneth M. Young: These results were primarily driven by higher volume and improved operating performance as we completed certain projects during the first quarter.

Kenneth M. Young: As demonstrated by the new contracts and awards announced in April, we continue to see strong underlying industry trends with expanding global demand for clean power production and energy security and an over $9 billion global pipeline of identified project opportunities. These trends remain foundational drivers of our business outlook for 2024 and beyond, and we continue to make considerable progress in converting that strong global pipeline of identified project opportunities, which includes over $1.5 billion of Bright Loop and Climate Bright opportunities alone, into bookings. Our backlog and implied backlog at the end of the first quarter was $826 million, representing an increase of 29% compared to the backlog and implied backlog at the end of the first quarter of 2023.

Kenneth M. Young: As demonstrated by the new contracts and awards announced in April we continued to see strong underlying industry trends with expanding global demand for clean power production and energy security and an over $9 billion global pipeline of identified project opportunities.

Kenneth M. Young: These trends remain foundational drivers of our business outlook for 2024 and beyond and we continue to make considerable progress in converting that strong global pipeline of identified project opportunities, which includes over $1 5 billion of bright looping climate bright opportunities alone.

Kenneth M. Young: Bookings or backlog and implied backlog at the end of first quarter was $826 million, representing an increase of 29% compared to the backlog and an implied backlog at the end of first quarter 2023.

Kenneth M. Young: Looking ahead, given the new EPA requirements, we are seeing increasing opportunities for coal-to-natural gas and coal-to-biomass projects within the United States, which is very exciting for us as we look to the remainder of 2024 and into 2025. Many of these projects are either under development, in the proposal stage, or in final design with various revenue ranges of $50 million to $400 million in value for B&W. With our increasing visibility of customer demand and our near-term booking success, we are reiterating our recently revised Higher Full Year 2024 Adjusted EBITDA target of $105 million to $115 million, which excludes Bright Loop and Climate Bright.

Kenneth M. Young: Looking ahead, given the new EPA requirements, we're seeing increasing opportunities for coal to natural gas and coal to biomass projects within the United States, which is very exciting for us as we look to the remainder of 2024 and into 2025.

Kenneth M. Young: Many of these projects are either underdevelopment in the proposal stage or in final design with various revenue ranges of 50 million to $400 million in value for BMW.

Kenneth M. Young: With our increasing visibility of customer demand and our near term bookings success. We are reiterating our recently revised higher full year 2024, adjusted EBIT target of $105 million to $115 million, which excludes bright loop in climate Bright importantly, we continue to invest in our bright loop opportunity.

Kenneth M. Young: Importantly, we continue to invest in our Bright Loop opportunities and anticipate spending in the range of $7 to $10 million in 2024 on our Bright Loop projects and technology advancement, which excludes any spending on CapEx. Our efforts to progress Bright Loop and continue both our commercial development of existing projects, as well as the continued focus on improving our overall operational effectiveness of our technologies to produce low-cost green hydrogen. With regard to recent developments across Bright Loop and Climate Bright, we are continuing to progress with engineering work for our previously announced Bright Loop projects in Gillette, Wyoming; Baton Rouge, Louisiana; and Massillon, Ohio.

Kenneth M. Young: <unk> and anticipate spending in the range of $7 million to $10 million in 2024 on a bright loop projects and technology advancement, which excludes any spending on capex.

Kenneth M. Young: Our efforts to progress bright looping continue both our commercial development of existing projects as well as the continued focus on improving our overall operational effectiveness of our technologies to produce low cost green hydrogen with regard to recent developments across bright loop in climate right. We are continuing to progress with engine.

Kenneth M. Young: <unk> work for our previously announced brightly projects and Gillette, Wyoming Baton Rouge, Louisiana Massillon, Ohio. This includes the award we discussed previously for $16 million in matching funds from the Wyoming Energy Authority to fund the permitting engineering and development activities for the Wyoming project, which is a clean hydrogen Jenna.

Kenneth M. Young: This includes the award we discussed previously for $16 million in matching funds from the Wyoming Energy Authority to fund the permitting, engineering, and development activities for the Wyoming Project, which is a clean hydrogen generation facility with CO2 capture and sequestration utilizing coal as a feedstock. BNW and its partners expect to perform all of the detailed engineering for that plant and will prepare for the civil and foundation work to be executed in the spring of 2025.

Kenneth M. Young: <unk> facility with Sidoti capture and sequestration utilizing coal as a feedstock.

Kenneth M. Young: <unk> and our partners expect to perform all of the detailed engineering for that plant and we're prepared for the civil and foundation work to be executed in the spring of 2025.

Kenneth M. Young: These projects are definitely getting noticed, and you may have seen Bright Loop featured in a number of major news and trade media outlets recently, including articles in Forbes, Carbon Capture Magazine, Power Magazine, and H2View, as our Bright Loop technology continues to gain recognition as a potentially superior alternative to other hydrogen technologies. We remained excited about the prospects and outlook for the Bright Loop platform, with a visible pathway to reach $1 billion in bookings by 2028, with a combination of small, medium, and large Bright Loop projects that capitalize on our current identified pipeline, which I mentioned earlier includes approximately $1.5 billion in Bright Loop and Climate Bright opportunities alone.

Kenneth M. Young: These projects are definitely getting noticed and you may have seen bright loop featured in a number of major news and trade media outlets recently, including articles in Forbes carbon capture magazine power magazine and <unk> to view as our bright loop technology continues to gain recognition as a potentially superior alternative to other hydro.

Kenneth M. Young: <unk> technologies.

Kenneth M. Young: We remained excited about the prospects and outlook for the bright loop platform with a visible pathway to reach $1 billion in bookings by 2028 with a combination of small medium and large bright loop projects that capitalize on our current identified pipeline.

Kenneth M. Young: Which I mentioned earlier includes approximately $1 5 billion and bright loop in climate bright opportunities alone.

Kenneth M. Young: We continue to believe this level of activity has the potential to lead to $1 billion in revenues by 2030, which would still only represent roughly 1% of the market share for total global hydrogen spend by 2030.

Kenneth M. Young: We continue to believe this level of activity has the potential to lead to the $1 billion in revenues by 2030, which would still only represent roughly 1% of the market share for total global hydrogen spend by 2030.

Kenneth M. Young: Within Bright Loop, it's been extremely exciting to watch our team advance the engineering process and the business towards deploying these technologies at scale and further expanding our suite of carbon capture solutions. We also continue to see opportunities for new projects related to waste energy in the United States and Europe, which should enable us to leverage our Climate Bright decarbonization platform and present additional higher-margin prospects. We also anticipate that we will soon be able to announce a significant U.S. coal-to-biomass fuel switching project that will utilize B&W's Solbrite post-combustion carbon capture technology to produce energy with net negative CO2 emissions. Solbrite, which is based on regenerable solvent absorption technology, is another component of our ClimateBrite suite of solutions and one more area that we believe holds significant promise for the future.

Kenneth M. Young: Within bright loop, it's been extremely exciting to watch our team advanced the engineering process and the business towards deploying these technologies at scale and further expanding our suite of carbon capture solutions. We also continue to see opportunities for new projects related to waste to energy in the United States, and Europe, which should enable us.

Kenneth M. Young: To leverage our climate bright de carbonization platform and presents additional higher margin prospects. We also anticipate we will soon be able to announce a significant U S coal to biomass fuel switching project that will utilize BMW solve bright post combustion carbon capture technology to produce energy with net negative Sidoti.

Kenneth M. Young: Emissions salt bright, which is based on regeneron <unk> solvent absorption technology is another component of our climate bright suite of solutions and one more area that we believe holds significant promise for the future.

Louis Salamone: We also continue to progress and close out the legacy under our Performing Solar Projects as planned and in line with previous targets. Our solar organization continues to improve performance with higher quality operations, improved margins, and a stronger and expanding pipeline of opportunities. By the end of the first quarter, we are seeing significant cash flow improvements related to our solar operations as we have completed or nearing completion of certain legacy projects. I'll now turn the call over to Lou, who will discuss the financial details of the first quarter. Lou?

Kenneth M. Young: We also continued to progress and close out the legacy under our.

Lou: Performing solar projects as planned and in line with previous targets. Our solar organization continues to improve performance with higher quality operations improved margins and stronger and expanding pipeline of opportunities by the end of the first quarter, we are seeing significant cash flow improvements related to our.

Lou: Solar operations as we have completed or nearing completion of certain legacy projects.

Louis Salamone: I'll now turn the call over to Lou who will discuss the financial details of the first quarter Blue. Thanks, Kenny I am pleased to review our first quarter results further details of which can be found in the 10-Q that is on file with the SEC.

Louis Salamone: Thanks, Kenny. I'm pleased to review our first quarter results, further details of which can be found in the 10-Q that is on file with the SEC. Our first quarter consolidated revenues were $207.6 million, which is a 14% decrease compared to the first quarter of 2023. This decrease is primarily driven by a decrease in the B&W Renewable Segment revenue due to fewer waste-to-energy projects, which, as Kenny noted earlier, is consistent with our previously stated strategy to focus on higher margin and lower risk new build projects, and a decrease in the thermal segment revenue as a large project in our U.S. construction business was completed in 2023 that was not fully replaced in the first quarter of 2024.

Louis Salamone: Our first quarter consolidated revenues were $207 6 million, which is a 14% decrease compared to the first quarter of 2023. This decrease is primarily driven by a decrease in the BMW renewable segment revenue due to fewer waste to energy projects, which as Ken noted earlier as <unk>.

Louis Salamone: <unk> with our previously stated strategy to focus on higher margin and lower risk Newbuild projects particular in our renewable business.

Louis Salamone: And a decrease in the thermal segment revenue as a large project in our U S. Construction business was completed in 2023 that was not fully replaced in the first quarter of 2024 are.

Louis Salamone: Our net operating income for the first quarter of 2024 was $4.3 million compared to operating income of $1.3 million in the first quarter of 2023. Our adjusted EBITDA, excluding Bright Loop and Climate Bright expenses, was $13.2 million compared to $14.7 million in the first quarter of 2023, implied bookings for the first quarter of 2024. Implied bookings in the first quarter of 2024 were $506 million, and ending implied bookings were $826.4 million for the quarter.

Louis Salamone: Our net operating income for the first quarter of 2024 was $4 3 million compared to operating income of $1 3 million in the first quarter of 2023, our adjusted EBITDA, Excluding bright light bright loop and climate bright expenses was $13 2 million compared to $14 <unk>.

Louis Salamone: $7 million in the first quarter of 2023.

Louis Salamone: Implied bookings in the first quarter of 2024.

Louis Salamone: Implied bookings in the first quarter of 2024 were $506 million and ending implied bookings was $826 4 million.

Louis Salamone: The final in the quarter our loss per share in the first quarter of 2024 was 22 compared to a loss per share of 18% in the first 18 in the first quarter of 2023.

Louis Salamone: Our loss per share in the first quarter of 2024 was $0.22 compared to a loss per share of $0.18 in the first quarter of 2023. I'll now turn to our first quarter segment results. Within our Babcock & Wilcox Renewable segment, revenues were $52.3 million for the first quarter of 2024, which is a decrease of 38% compared to $84.1 million in the first quarter of 2023. This decrease in revenue is primarily due to our strategic shift to reduce reliance on lower-margin, new-build projects.

Louis Salamone: Now turn to our first quarter segment results within our Babcock Wilcox renewable segment revenues were $52 3 million for the first quarter of 2024, which is a decrease of 38% compared to the $84 1 million in the first quarter of 2023. This decrease in revenue is primarily due to our <unk>.

Louis Salamone: Strategic shift to reduce reliance on lower margin newbuild projects.

Louis Salamone: Adjusted EBITDA in the first quarter of 2024 was $1.7 million compared to $4.3 million, primarily due to the reduced volume described earlier, which is partially offset by higher adjusted EBITDA attributable to the European Renewable Parts and Service business. Within the Babcox & Wilcox environmental segment, revenues were $48.4 million in the first quarter of 2024, which is an increase of 23% compared to $39.4 million in This increase is primarily driven by a higher volume related to flue gas treatment projects and a higher overall volume of cooling technology projects, as well as a slightly increased volume in our parts business. Adjusted EBITDA was $3.3 million for the quarter as compared to $1.9 million in the same period last year.

Louis Salamone: Adjusted EBITDA in the first quarter of 2024 was $1 7 million compared to $4 3 million, primarily due to the reduced volume described earlier, which is partially offset by higher adjusted EBITDA attributable to the European renewable parts and service business.

Louis Salamone: Within the Babcock and Wilcox Environmental segment revenues were $48 4 million in the first quarter of 2024, which is an increase of 23% compared to the $39 4 million in the first quarter of 2023.

Louis Salamone: This increase was primarily driven by a higher volume related to flu gas treatment projects and higher overall volume of cooling technology projects as well as a slightly increased volume in our parts business adjust.

Louis Salamone: Adjusted EBITDA was $3 3 million for the quarter as compared to $1 9 million in the same period last year.

Louis Salamone: This is primarily attributable to the higher volume described earlier and improved operating performance as certain environmental projects were completed in the quarter. Turning to the Babcock & Wilcox thermal segment, revenues were $110.2 million in the first quarter of 2024. This is a decrease of 8% compared to $119.2 million in the first quarter of 2023. The revenue decrease is attributable to a large construction project completed in 2023 that was not fully replaced in the first quarter of 2024.

Louis Salamone: This is primarily attributable to the higher volume described earlier and improved operating performance as certain environmental projects were completed in the quarter.

Louis Salamone: Turning to the Babcock and Wilcox thermal segment revenues were $110 2 million in the first quarter of 2024. This is a decrease of 8% compared to the $119 2 million in the first quarter of 2023.

Louis Salamone: The revenue decrease is attributable to a large construction project completed in 2023 that was not fully replaced in the first quarter of 2024 as mentioned earlier.

Louis Salamone: As mentioned earlier, adjusted EBITDA in the first quarter of 2024 was $13.7 million, consistent with $13.7 million in the first quarter of 2023, with increased international sales being offset by decreased adjusted EBITDA in our U.S. construction business. I'll now turn to our balance sheet, cash flow, and liquidity. Total debt at March 31, 2024 was $441.6 million, and the company had cash, cash equivalents, and restricted cash balances of $102.5 million. As Kenny previously mentioned, we've significantly closed out legacy solar projects and anticipate cash burn for those projects being neutral going forward.

Louis Salamone: Adjusted EBITDA in the first quarter.

Louis Salamone: 2024 was $13 7 million consistent with the $13 7 million in the first quarter of 2023 with increased international sales being offset by decreased adjusted EBITDA in our U S construction business.

Louis Salamone: I'll now turn to our balance sheet cash flow and liquidity.

Louis Salamone: Total debt at March 31, 2024 was $441 6 million and the company had cash cash equivalents and restricted cash balances of $102 5 million.

Louis Salamone: As <unk> previously mentioned, we significantly closed out legacy solar projects and anticipate cash burn for those projects being neutral going forward.

Louis Salamone: Based on improved financial performance and the quality, strength, and turnover in our parks and services business, our lenders have increased our borrowing capacity under our current senior debt facility by increasing the advance rate on inventory. This increase provides the company with additional liquidity. We've also entered into advanced negotiations related to the sale of one of our non-strategic businesses. Proceeds from this sale are expected to be approximately $40 million, subject to due diligence and continuing negotiations.

Louis Salamone: Based on improved financial performance and the quality and strength in turnover in our parts and services business. Our lenders have increased our borrowing capacity under our current senior debt facility by increasing the advance rate on inventory.

Louis Salamone: This increase provides the company with additional liquidity.

Louis Salamone: We've also entered into advanced negotiations related to the sale of one of our non strategic businesses.

Louis Salamone: Proceeds from this sale are expected to be approximately $40 million subject to due diligence and continuing negotiations.

Louis Salamone: Additionally, as previously announced, we are initiating a process to sell certain other non-corporate businesses as assets. The proceeds of these sales will be used to primarily pay down existing debt, and some will be used for working capital. As a result of these actions, we are confident that we've overcome the previous liquidity concerns. I will now turn the call back over to Kenneth. Thanks, Lou.

Louis Salamone: Additionally, as previously announced we are initiating a process to sell certain other noncore businesses and assets.

Louis Salamone: The proceeds of these sales will be used to primarily pay down existing debt and some will be used for working capital as a result of these actions. We are confident that we have overcome the previous liquidity concern.

Kenneth: I will now turn the call back over to Kenny.

Kenneth M. Young: Thanks, Lou. Well, in closing, we remain intently focused on continuing to execute our strategic reliance plan, and we are already seeing the benefits with the expanded year-over-year adjusted EBITDA margins during the first quarter as we reduce our reliance on or focus more on selective higher-margin new-build projects. With broad-based customer demand and new awards year-to-date that are nearly double our 2023 levels, we have visibility and optimism for further growth as we progress through 2024 toward our recently revised higher-adjusted EBITDA target range of $105 million to $115 million, excluding Bright Loop and Climate Bright expenses.

Kenneth: Thanks, Lew well in closing we remain intently focused on continuing to execute our strategic realignment plan and we are already seeing the benefits within expanded year over year adjusted EBITDA margins during the first quarter as we reduce our reliance on <unk>.

Kenneth M. Young: Or focus more on selective higher margin newbuild projects with broad based customer demand and new awards year to date that are nearly double our 2023 levels, we have visibility and optimism for further growth as we progress through 2024 toward our recently revised higher adjusted EBITDA.

Kenneth M. Young: That range of $105 million to a $115 million, excluding bright loop in climate REIT expenses, we continue to believe our deep industry expertise with clean energy and carbon capture technologies, coupled with our long history in traditional energy sources positions us well to deliver environmentally conscious technology driven solutions.

Kenneth M. Young: We continue to believe our deep industry expertise with clean energy and carbon capture technologies, coupled with our long history in traditional energy sources, positions us well to deliver environmentally conscious, technology-driven solutions to our global customers. And, lastly, as always, I would like to recognize the efforts of our employees around the world, along with our global customer base and suppliers, for their continued support of Babcock & Wilcox. As a company, we remain focused on becoming a leader in the global energy transition while delivering consistent, profitable growth for our shareholders.

Kenneth M. Young: Through our global customers.

Kenneth M. Young: And lastly, as always I would like to recognize the efforts of our employees around the world along with our global customer base and suppliers for their continued support of Babcock and Wilcox.

Kenneth M. Young: As a company we remain focused on becoming a leader in the global energy transition, while delivering consistent profitable growth for our shareholders. We're both excited and inspired by the growth possibilities ahead of us for the remainder of 2024 and beyond as we work to capitalize on strong customer demand and continue to support the global <unk>.

Kenneth M. Young: We're both excited and inspired by the growth possibilities ahead of us for the remainder of 2024 and beyond, as we work to capitalize on strong customer demand and continue to support the global transition to sustainable energy solutions. I'll now turn the call back over to Ciara, who can help us answer a handful of questions.

Ciara: Physician to sustainable energy solutions.

Ciara: Ill now turn the call back over to Sierra who can help us take a handful of questions Sarah.

Ciara: Thank you.

Ciara: We will now begin the Q&A session. If you would like to ask a question, please press star followed by 1 on your telephone keypad. To remove a question, press star 2. And if you are using a speakerphone, please pick up your handset before asking your question. The first question today comes from Brent Thielman with D.A. Davidson.

Ciara: We'll now begin the Q&A session.

Brent Edward Thielman: If you'd like to ask a question. Please press star followed by one on your telephone keypad.

Speaker Change: To remove that question Crestar Q.

Brent Edward Thielman: And if you are using a speakerphone. Please pick up your handset before asking your question.

Ciara: Our first question today comes from Brent Thielman with D. A davidson.

Brent Edward Thielman: Please proceed.

Brent Edward Thielman: Hey, thanks. Good evening. Kenny, I was curious about the conversion timing of implied backlog into backlog, when you think that drops through, and maybe just any thoughts on when you think you'll start revenue on some of this new business you've picked up here recently.

Brent Edward Thielman: Hey, Thanks, good evening.

Kenneth M. Young: Yeah, so the timing on the implied to backlog or implied blackout to backlog on that particular piece would be, the convert on that would be later this year. Some of those projects will go out two or three years in overall revenue recognition. So, you know, the burn rate or the burn off rate would start in Q3, Q4 this year. And that's what we anticipate anyway. And the revenue would be generated over the next two to three years on several of those projects.

Brent Edward Thielman: Kenny just on the.

Kenneth M. Young: Curious on the conversion timing.

Kenneth M. Young: <unk> backlog and the backlog when you think that drops through.

Kenneth M. Young: Maybe just any thoughts on when you think you'll start.

Kenneth M. Young: Revenue in some of this new business you picked.

Kenneth M. Young: Staff here recently.

Speaker Change: Yes, so the timing on the <unk>.

Kenneth M. Young: Implied to backlog or imply blackouts of backlog on that particular piece would be the convert on that would be later this year. Some of those projects will go out two or three years and overall revenue recognition. So.

Kenneth M. Young: The burn rate or the bar operate would start Q3 Q4 this year end.

Kenneth M. Young: That's what we anticipate anyway and the revenue would be over the next two to three years on several of those projects.

Kenneth M. Young: Okay, great. And the coal-to-gas opportunities sound pretty compelling, what you talked about in the potential pipeline, maybe just your You've got a big one in the implied book now, your ability to pursue more of these, you know, maybe what are the economics attached to these types of projects? I imagine they're attractive to you. Just any more thoughts around on those particular opportunities.

Speaker Change: Okay great.

Kenneth M. Young: And the coal to gas opportunities pretty compelling.

Kenneth M. Young: You talked about and the potential pipeline, maybe just you were.

Kenneth M. Young: You've got a big one in.

Kenneth M. Young: Implied book now your ability to pursue more of the.

Kenneth M. Young: Maybe what are the economics attached to these types of projects and I imagine that attractive to you just any more thoughts around those particular opportunities.

Kenneth M. Young: Yeah, no, there are a number of those opportunities that are being considered right now by our customer base here in the U.S. There, you know, several of those are at, you know, various stages. I mentioned, you know, a few are in the proposal stage, a few are in, you know, more traditional design phase, and, you know, one or two are in a little bit further in the early negotiations or discussion phase.

Kenneth M. Young: Yes, no thats there are a number of those opportunities that are being considered right now by our customer base here in the U S.

Kenneth M. Young: Several of those are at.

Kenneth M. Young: Various stages as I mentioned.

Kenneth M. Young: A few are in proposal stage of fewer and more traditional design phase and one or two or a little bit further in early negotiations or discussion phase. So the pipeline is very strong around those I think.

Kenneth M. Young: So, the pipeline is very strong around those. I think, you know, domestically in the U.S., with the new EPA requirements that have been known for quite some time but were recently passed by the EPA and put into effect just recently, I think it helps to accelerate some of those projects or perhaps, more importantly, I think it solidifies the need within the regulatory environment to approve those projects and move those forward. One of the, you know, strengths we have is when we acquired FPS, who is doing a lot of the early technology and engineering aspects of these gas conversions.

Kenneth M. Young: Domestically in the U S.

Kenneth M. Young: With the new EPA requirements that were.

Kenneth M. Young: Obviously known for quite some time, but we're recently passed by the EPA.

Kenneth M. Young: And put into effectiveness just recently I think helps to accelerate some of those projects or perhaps more importantly, I think solidifies the need within the regulatory environment to approve those projects and move those forward.

Kenneth M. Young: One of the strengths. We have is when we acquired Fps, obviously, who is doing a lot of the early technology and engineering aspects of these gas conversions.

Kenneth M. Young: That component has helped us, at least on the leading engineering and technology side of those gas conversions, and one of the strengths we also have, I think, is the fact that we've got a strong structure group and relationship with the boilermakers where we can actually do more of a turnkey approach in providing these conversions to our customers and more of an end-to-end solution set. So, that puts us at a little bit of an advantage over our competitors and, you know, hopefully, it helps improve some of the operational performance of those projects, not only for B&W but for our customers as well as we continue to execute them. So, we feel good about the market, and we'll see how it progresses, but there are a number of those opportunities out there.

Kenneth M. Young: With that component has helped us.

Kenneth M. Young: At least on a leading engineering and technology side of those gas conversions and one of the strengths. We also have I think is in the fact that we've got a strong structure group within relationship with the boiler makers.

Kenneth M. Young: Where we can actually do more of a turnkey approach and providing these these conversions to our customers.

Kenneth M. Young: And more of an end to end solution set so that puts us in a little bit of an advantage related to our competitors in.

Kenneth M. Young: Hopefully that helps improve some of the operational performance of those projects not only for BMW, but for our customers as well as we continue to execute those so we feel good about the market.

Kenneth M. Young: We will see how it progresses, but there are a number of those opportunities out there.

Kenneth M. Young: Okay, great. Just my last one, just in terms of some of the strategic actions, some of which sound like they're pretty far along. You mentioned some other things in there, non-core sales, maybe some real estate sales, without committing, obviously, as these things go, but, you know, opportunities to get some of that done this year, just thoughts on the timeline there.

Speaker Change: Okay, Great just my last one just in terms of some of the strategic action plan, which sounds like they're pretty far along.

Kenneth M. Young: You mentioned some other things in their noncore sales, maybe some real estate sales.

Kenneth M. Young: Without committing obviously.

Speaker Change: Please go ahead.

Kenneth M. Young: Opportunities to get some of that done this year just thoughts on timeline there.

Kenneth M. Young: I think we do anticipate that a few of those will happen this year. Hard to give a specific date, but we are focused on getting some of those done this year, whether it's Q3, Q4, obviously varies, depends, and that type of thing. But we are anticipating some impact this year from those.

Kenneth M. Young: I think we do anticipate that a few of those will happen this year hard to give a specific date, but.

Kenneth M. Young: We are focused on getting some of those done this year, whether it's Q3 Q4, obviously varies depends on that that type of thing.

Kenneth M. Young: We are anticipating some impact this year from those.

Brent Edward Thielman: Okay, thanks guys. I'll turn it up. Thanks, Brent.

Speaker Change: Okay. Thanks, guys I'll turn it over.

Speaker Change: Thanks Brent.

Robert Duncan Brown: Our next question comes from Rod Brown with Lake Street Capital Markets. Please proceed.

Brent Edward Thielman: Our next question comes from Rob Brown with Lake Street Capital markets. Please proceed.

Robert Duncan Brown: Good afternoon.

Kenneth M. Young: Hey Rob, first question on the Bright Loop technology, great to see it's getting more press and visibility, just how's the pipeline of discussions with customers going, and when you know, how is that maturing, and how do we think about getting order activity kicking over on new projects?

Robert Duncan Brown: Hey, Rob.

Kenneth M. Young: Just a question on the bright loop technology, great to see it's getting more press and visibility.

Robert Duncan Brown: Just how is the pipeline of discussions with customers going and win.

Kenneth M. Young: How is that maturing and how do we think about getting order activity taking over a new product.

Kenneth M. Young: Yeah, the progress in the pipeline continues to grow. As I think I've mentioned before, the interest in the technology and the need demand are better than what we had originally anticipated, so that's exciting. Obviously, the pressure on us is to continue moving these early projects forward towards commercialization of that technology, and that's very much a key for us as it relates to continuing to book more and more projects down the road.

Kenneth M. Young: Yes.

Robert Duncan Brown: Progress in the pipeline continues to grow.

Kenneth M. Young: As I think I've mentioned before.

Kenneth M. Young: The interest in the technology and the need the demand is better than what we had originally anticipated so that's exciting.

Kenneth M. Young: Obviously the pressure on US is to continue moving these early projects forward towards commercialization of that technology and Thats very much a key for us.

Kenneth M. Young: As it relates to continuing to book more and more projects down the road.

Kenneth M. Young: The interesting part is, obviously, Bright Loop is a very flexible, yet complex, in a weird way, a very simple technology where we're able to create hydrogen production by dividing the water molecule with a very low power intensive approach, less power than that which is required for electrolysis and even SMR to produce hydrogen.

Kenneth M. Young: The interesting part is obviously bright lupus.

Kenneth M. Young: He is a very flexible yet complex.

Kenneth M. Young: And it also in a weird way a very simplistic technology.

Kenneth M. Young: Where we're able to create hydrogen production by dividing the water molecule with a very low power.

Kenneth M. Young: Tentative approach.

Kenneth M. Young: Less power than Thats required for electrolysis and even <unk>.

Kenneth M. Young: To produce hydrogen at the same time bright loop.

Kenneth M. Young: At the same time, Bright Loop, via its core technology, is also able to create different syngases, and we're starting to see a little bit of movement on pipeline opportunities with various oil and gas industries and others around different syngases that can be used in sustainable aviation projects and other areas, and so we're starting to see that as well with our Bright Loop technology. Part of our challenge, obviously, is to ensure that we keep our engineering teams focused on all of the milestones and activities on these initial projects in Wyoming, Louisiana, and, in particular, in Massillon, Ohio, but at the same time, be able to respond to some of these newer pipeline requests, especially in some of these newer developed areas. And that's always where we have to balance.

Kenneth M. Young: Just its core technology is also able to create.

Kenneth M. Young: Different syngas and we're starting to see a little bit of movement on pipeline opportunities with various oil and gas industries and others.

Kenneth M. Young: Around different syngas as that can be used in sustainable aviation projects in other areas and so we're we're starting to see that as well.

Kenneth M. Young: On a bright blue technology and so it's.

Kenneth M. Young: Part of our challenge obviously is to ensure that we keep our engineering team is focused on all of the milestones and activities on these initial projects in Wyoming, Louisiana in particular in Massillon, Ohio, but at the same time.

Kenneth M. Young: We're able to respond to some of these newer pipeline requests, especially in some of these newer evolved areas and that's always what we have to balance right.

Kenneth M. Young: The need for more engineering talent in our decarbonization and Bright Loop will definitely continue to expand, and that's an area that we've got to keep an eye out on as we work through all these, just to make sure we keep some discipline on the specific projects that we try to go after. It won't be material, but I do think we'll start to see some revenue flow from various Bright Loop and other activities.

Kenneth M. Young: They are the need for more engineering talent in our de Carbonization and bright Roop will definitely continue to expand.

Kenneth M. Young: And Thats an area that we've got to keep an eye out on as we work through all of these is to make sure. We keep some discipline on the specific projects that we try to go after but.

Kenneth M. Young: We won't be material, but I do think we will start to see some revenue flow from from various bright loop.

Kenneth M. Young: I know for sure we'll see some revenue flow from Climate Bright overall and some of the decarbonization activities. We are today not necessarily material, but we're probably doing double the amount of feed studies today, and these are paid feed studies on some of the decarbonization projects. Some of those are in the U.S., Canada, and one or two in Northern Europe, so the amount of activities is increasing, and we fully anticipate one or two of those will turn into full projects over the course of the next several months.

Kenneth M. Young: And other activities I know for sure we will see some revenue flow from climate bright overall in some of the de carbonization activities.

Kenneth M. Young: Activities, we are today not necessarily material, but.

Kenneth M. Young: We're probably doing double the amount of feed studies today and these are paid feed studies.

Kenneth M. Young: And some of the de carbonization projects. Some of those are in the U S. Canada, one or two in northern Europe.

Kenneth M. Young: So the amount of activity is increasing.

Kenneth M. Young: And we fully anticipate one or two of those will turn into full projects.

Kenneth M. Young: Obviously, for sure this year, at least we're confident that way and working towards that. We're excited about those, and some of those are in more detail in the negotiation discussions on some of the Solve Bright and other decarbonization technologies we have now. And so we're hopeful that one or two of those gets announced as a full project over the next several months.

Kenneth M. Young: Over the course of the next several months obviously for sure. This year. That's at least we are confident that way.

Kenneth M. Young: And working towards that so we're excited about those and some of those are in more detail in negotiation discussions on some of the salt bright and other de Carbonization technologies, we have now and so we're hopeful that one or two of those gets announced as a full project over the next several months.

Kenneth M. Young: Okay, great. And on kind of the incremental, I guess, activity or thoughts around the need for power generation going forward here, how does that sort of macro trend show up in your business? Do you, where do you sort of, should you see it first? How did that impact you?

Speaker Change: Okay great.

Kenneth M. Young: And.

Kenneth M. Young: Kind of the sort of the incremental I guess.

Kenneth M. Young: Activity or thoughts around the need for power generation going forward here, how does that.

Kenneth M. Young: Sort of macro trend.

Kenneth M. Young: Show up in your business do you, where do you sort of.

Kenneth M. Young: Could you see it first.

Kenneth M. Young: Yes.

Speaker Change: Thank you.

Kenneth M. Young: Well, we're seeing it go global. So, you know, from a parts and services standpoint, it's very fascinating because we are seeing, you know, increased demand for our parts and services business. And, you know, we anticipate that going on for a considerable amount of time. It's interesting, we're not really at an inflection point, but we're at a demand point in the U.S. where, you know, a lot of the fossil fuel plants need to increase efficiency and also environmental aspects around those plants.

Speaker Change: Well, we're seeing global so from a parts and services standpoint.

Kenneth M. Young: It's very fast because we are seeing increased demand for our parts and services business and we anticipate that going on for a considerable amount of time.

Kenneth M. Young: We're not really at an inflection point, but we're at a demand point in the U S where.

Kenneth M. Young: A lot of the fossil fuel plants need to increase efficiency and also environmental aspects around those plants and we continue to provide more parts and services and upgrades and other enhancements for those.

Kenneth M. Young: And we continue to provide more parts and services and upgrades and other enhancements for those. The other aspect, as I mentioned, and we talked about earlier, is converting some of those plants either into natural gas plants or, in the case of one or two of our projects that were in discussions, converting those into biomass with carbon sequestration technologies associated with that.

Kenneth M. Young: The other aspect is I mentioned, obviously, we talked about earlier is on converting some of those plants either into natural gas.

Kenneth M. Young: Plants or in the case of one or two of our projects that were in discussions on converting those into biomass.

Kenneth M. Young: With carbon sequestration technologies associated with that.

Kenneth M. Young: But, you know, baseload generation in the United States is continuing to increase. And so there's pressure on the grid and the infrastructure here in the U.S. to continue to provide strong baseload generation. And we're seeing, I think, from our customers in how we're positioned. I think, you know, we're also seeing a benefit from having those strong relationships and being in a better position because we've, you know, acquired some of the technologies related to these gas conversion opportunities, and it's put us in a better position there.

Kenneth M. Young: But the base load in the United States base load generation is continuing to increase and so there is pressure on the grid and the infrastructure here in the U S to continue.

Kenneth M. Young: Continued to provide strong baseload generation and we're seeing I think from our customers and how we're positioned I think we're also seeing.

Kenneth M. Young: A benefit from having those strong relationships and being in better position because we've acquired some of the technologies related to these gas conversion opportunities and it's put us in a better boost in there, but it's kind of unique because we are seeing both sides of that rate. We're seeing the need to have a better base load generation and the efficiencies of those which is stronger parts and services.

Kenneth M. Young: But it's kind of unique because we are seeing both sides of that, right? We're seeing the need to have better baseload generation and the efficiencies of those, which means stronger parts and services here in the U.S., but also elsewhere around the world. But we're seeing, I would say, increased opportunities and upgrade projects because of the need to drive some of these newer conversions that are happening here in the U.S. And I think that trend will at least continue for the next four to, you know, eight, six years for the foreseeable future. And obviously, we'll see where it goes from there, but it's kind of a unique time for us in that area, too, right now.

Kenneth M. Young: Here in the U S, but also elsewhere.

Kenneth M. Young: Around the world, but we're seeing I would say increased opportunities.

Kenneth M. Young: Upgrade projects because of the need to drive some of these newer conversions that are happening here in the U S and I think that trend will at least continue for the next four to.

Kenneth M. Young: Eight six years for the foreseeable future and obviously, we'll see where it goes from there but.

Kenneth M. Young: It's kind of a unique time for us in that area as well too right now.

Robert Duncan Brown: Great, thank you. I'll turn it over to you.

Speaker Change: Great. Thank you I'll turn it over.

Alexander John Rygiel: Our next question comes from Alex Rygiel, with C. Reilly.

Robert Duncan Brown: Our next question comes from Alex Rygiel with B Riley. Please.

Alexander John Rygiel: Please proceed.

Kenneth M. Young: Good evening, Kenny and Lou. How are you doing?

Alexander John Rygiel: David and Ken how are you doing.

Kenneth M. Young: Hey Alex, how are you? Good, thanks.

Alexander John Rygiel: Hey, Alex how are you good thanks.

Alexander John Rygiel: Excellent. A quick question here. As it relates to that $9 billion in pipeline, can you talk a little bit about maybe some of the largest opportunities or geographically where they're positioned, or which technologies or what not that make up the largest component of that?

Alexander John Rygiel: Okay excellent and a quick question here.

Alexander John Rygiel: As it relates to that $9 billion of pipeline can you talk a little bit about maybe some of the largest opportunities.

Alexander John Rygiel: Can I quickly where they're positioned.

Alexander John Rygiel: Or which technologies or <unk> or whatnot.

Alexander John Rygiel: That make up the largest component of that.

Kenneth M. Young: Sure. Yeah, I can give you some color.

Alex: Sure, Yes, I can I can give you some color.

Kenneth M. Young: First of all that pipeline as we look at that as a pipeline of opportunities that we think with book over the next three years on it not necessarily revenue recognition over three years, but book.

Kenneth M. Young: First of all, that pipeline is, we look at that as a pipeline of opportunities that we think would book over the next three years on it. Not necessarily revenue recognition over three years, but bookings over the next three years. So those are identified projects. As you can see on the charts, there is a strong impact in North America on a number of different projects that we have today. Those range anywhere, and I kind of referenced that a little bit in the remarks, but some of those projects can be upwards of $300 million, $400 million, and there are a few of those. There are several in that $50 million to $150 million range, depending on the size.

Kenneth M. Young: Over the next three years, so those are identified projects.

Kenneth M. Young: As you can see on the chart there is a.

Kenneth M. Young: A strong impact in North America on a number of different projects that we have today.

Kenneth M. Young: Those range anywhere I kind of referenced it a little bit in the remarks, but some of those projects can be upwards of $3 $400 million and there's a few of those there are several in that $50 million to $150 million range.

Kenneth M. Young: Depending on the size some of those are conversions and some of those are.

Kenneth M. Young: Some of those are conversions, and some of those are upgrades to either increased power generation or new carbon capture solutions and systems, which are good, solid projects for us. When you look at a coal plant, or any kind of plant, and add a post-combustion element to that plant, those are sizable capital dollars that the utility is investing in. Obviously, they're looking for a return, either 45Q or otherwise, but the range of those projects is pretty solid for us.

Kenneth M. Young: Upgrades to either increase power generation or some of those are applying new carbon capture solutions and systems, which are good solid projects for us. Those are when you look at a coal plant, if youre, adding or any kind of plan on adding a post combustion element to us to that plan.

Kenneth M. Young: <unk>.

Kenneth M. Young: Those are sizable capital dollars that the utilities investing in.

Kenneth M. Young: Obviously, they are looking for a return either 45, Q or otherwise but.

Kenneth M. Young: So the range of those projects are pretty solid for us.

Kenneth M. Young: We're also seeing, at the same time, a number of projects that are in the even the $10 million to $15 million range, and across our thermal segment. Even in the U.S., we're seeing larger opportunities in renewable energy with some of the biomass projects that we've got underway. I mentioned that we're in discussions on a potential coal-to-biomass conversion. We're seeing sizable projects in the U.S. We're also seeing waste-to-energy projects in the U.S. that are emerging in different areas.

Kenneth M. Young: We're seeing also at the same time.

Kenneth M. Young: A number of projects that are in the even the $10 million to $15 million range.

Kenneth M. Young: And across our thermal segment.

Kenneth M. Young: Even in the U S. We're seeing larger opportunities in renewable with some of the biomass projects that we've got underway I mentioned that we're in discussions on a potential coal to biomass conversion that were.

Kenneth M. Young: In discussions on so we're seeing sizable projects in the U S. We're also seeing waste energy projects in the U S that are.

Kenneth M. Young: Emerging in different areas as Theres, new EPA requirements around a number of the waste to energy plants that will have to go through some upgrades as it relates to emission control systems and other aspects that bodes well for us.

Kenneth M. Young: There are new EPA requirements around a number of waste-to-energy plants that will have to go through some upgrades as it relates to emission control systems and other aspects that bodes well for us. We're seeing some, again, as we talked about, selective new-build opportunities in the U.S. for replacing some older waste-to-energy plants, which are required. We're seeing that similar type of opportunity in Europe, where we mentioned we're being a little more selective, but there are a number of aged waste-to-energy plants in Europe that would require projects or new upgrades or enhancements, and those can be anywhere from $10 million to $100 million, depending on the actual scope, and they're going to vary site by site.

Kenneth M. Young: And we're seeing some.

Kenneth M. Young: Again, as we talked about selective newbuild opportunities here in the U S on replacing some older waste to energy plants, which are required we're seeing that similar type.

Kenneth M. Young: Opportunity in Europe, where we mentioned were being little more selective, but there are number of aged.

Kenneth M. Young: Waste energy plants in Europe that would require project, our new upgrades or enhancements and those can be anywhere from 10 to 100 million depending on the actual scope and theyre going to vary site by site.

Kenneth M. Young: We're starting to see some very good projects on the small end as well as on the medium end, but they're, again, selective. We are starting to see higher-end projects, similar to the ones that we just announced, but that we think would be operationally strong for us as well.

Kenneth M. Young: We're starting to see some very good projects on the small end as well as in the medium in but they are again selective but we are starting to see higher end projects similar to the ones that we just announced but that we think would be operationally strong for us as well too.

Alexander John Rygiel: And then, can you also give us an update on each of the three Bright Loop projects in Ohio, Wyoming, and Louisiana?

Kenneth M. Young: And then can you also give us an update on each of the three frankly.

Alexander John Rygiel: Frankly projects in Ohio, and Louisiana.

Kenneth M. Young: Yeah, so we're in Ohio, I'll go kind of in reverse order here, but in Ohio specifically, we are in the final engineering, design, and construction components, bringing those final pieces together at this particular point in time. We are in, if you will, final negotiations discussions on the finalization of the offtake agreements associated with the hydrogen and the CO2 for that particular site, and we are in discussions right now on the financing of that specific site to move that forward.

Alexander John Rygiel: Yes.

Alexander John Rygiel: Ohio, I'll go kind of reverse order here, but Ohio, specifically, we are in final engineering.

Kenneth M. Young: Design and construction.

Kenneth M. Young: It's bringing those final pieces together at this particular point in time, we are in.

Kenneth M. Young: If you will final negotiation and discussion on the Finalization of the off take agreements associated with the hydrogen and Cotwo.

Kenneth M. Young: For that particular site and we are in discussions right now on the financing.

Kenneth M. Young: Of that specific site.

Kenneth M. Young: So we are hopeful that those pieces come together relatively soon, but the effort around that particular project and moving those particular pieces forward is in full gear for us. We also have a separate team that's working on the Wyoming project at this point in time, given the state grant and obviously our partner Black Hills Energy at that particular location, and again working through the final design of the entire project, including all of the steel, the steel structures, the civil works, which will be done by a partner that we're in discussions with, but all of that work is part of this grant that we're pulling together, including the permitting processes proceeding on that project.

Kenneth M. Young: Move that forward. So we are hopeful that those pieces come together relatively soon but.

Kenneth M. Young: The effort around that particular project.

Kenneth M. Young: And moving those particular pieces forward is in full gear for us.

Kenneth M. Young: We also have a separate team that's working on the Wyoming project at this point in time given the state.

Kenneth M. Young: Grant and obviously, our partner Black Hills energy at that particular location.

Kenneth M. Young: And again working through the.

Kenneth M. Young: The final design of the entire project, including all of the steel the steel structures.

Kenneth M. Young: Civil works, which will be done by a partner that we're in discussions with but all of that work as part of this grant that we're pulling together, including the permitting process is proceeding on that project.

Kenneth M. Young: The other in Louisiana, right now, we're keenly focused on the financing aspect, and we're in discussions with one or two different potential finance partners on that project to move forward. We're also working with a few locally within the state on some further, if you will, feedstock availability. We're keenly focused there on the biomass side of that aspect. All of those efforts from a development standpoint continue on those projects, and they're in various states, but we're working diligently to bring those to closure as appropriate, when time permits.

Kenneth M. Young: The.

Kenneth M. Young: The other in Louisiana right now, we're keenly focused on the financing aspect and we're in discussions with one or two different client potential finance partners on that project to drive forward. We're also working with a few locally within the state on some further.

Kenneth M. Young: You will feedstock availability, we're keenly focused there on the biomass side of that aspect. So all of those efforts from a development standpoint continue on those projects and they are in various states, but we are working diligently to bring those to closure as an appropriate time permits.

Kenneth M. Young: Also, we're trying to do that with very minimal use of cash on our balance sheet. It's obviously, we're using some, as I mentioned, but we're trying to minimize that and make sure that we have outside financing to move those projects forward.

Kenneth M. Young: Also trying to do that with very minimal use of cash on our balance sheet and it's obviously, we're using some as I mentioned, but we're trying to minimize that and make sure that we have outside financing to move those projects forward.

Alexander John Rygiel: And then maybe one from Lou. Lou, can you talk us through a little bit of the cadence of Ibida? from 2Q through 4Q.

Kenneth M. Young: And then maybe one for Luke Luke can you talk to a little bit of the cadence.

Alexander John Rygiel: EBITDA.

Lou: From Q3 <unk>.

Louis Salamone: Yeah, Alex, but the cadence will go along with what our cadence has traditionally been. Q1 is usually our lowest. And then it, it varies, but you'll get close to doubling Q1 and Q2 and then about a 30-35% increase in Q3 and another 25% increase in Q4, and depending on how those percentages work out, that should really get us to the targeted number that Kenny spoke of earlier of between 105 and 115 of adjusted EBITDA.

Lou: Yeah, Alex the cadence will go along with what our cadence has traditionally been.

Louis Salamone: Q1 is usually our lowest.

Louis Salamone: Cadence and then.

Louis Salamone: It varies but youll.

Louis Salamone: Get close to doubling Q1, and Q2, and then about 30%, 35% increase in Q3, and another 25% increase in Q4, and depending how those percentages workout that should really get us to the.

Louis Salamone: The targeted number that Ken spoke of earlier of between 105.

Louis Salamone: And 115.

Louis Salamone: <unk> adjusted EBITDA.

Alexander John Rygiel: Thank you very much. Welcome.

Speaker Change: Alright, Thank you very much.

Alexander John Rygiel: Welcome.

Aaron Michael Spychalla: Our next question comes from Aaron Spychalla with Craig Coleman.

Alexander John Rygiel: Our next question comes from Aaron <unk> with Craig Hallum.

Aaron Michael Spychalla: Please proceed.

Kenneth M. Young: Hi Kenny. Hi Lou.

Aaron Michael Spychalla: Yes, Hi, Jenny Hi, Lou Thanks for taking the questions.

Aaron Michael Spychalla: Yes, I just wanted to dig a little deeper on some of the EPA emissions rule, you kind of talked about as it pertains to waste to energy and kind of climate bright.

Aaron Michael Spychalla: Thanks for taking the question. You know, just wanted to dig a little deeper on some of the EPA emissions rules you kind of talked about as it pertains to waste to energy and kind of climate bright. Can you just kind of talk about, you know, help us think about the impact of those and kind of timings that you might be expecting moving forward? Yeah.

Aaron Michael Spychalla: Can you just kind of talk about help us think about the impact.

Aaron Michael Spychalla: From those and kind of timing that you might be expecting moving forward.

Kenneth M. Young: Yeah, obviously to the marketplace. No surprise in the rules, right? They've been out for consideration for quite some time and, obviously, just recently passed, but it pushes, obviously or pushes the utilities that are using coal facilities to, by 2032, either eliminate those particular plants or add some sort of carbon sequestration, you know, to those particular plants or increase, you know, utilization of a green fuel that would actually be co-fired with the coal itself.

Aaron Michael Spychalla: Yes.

Kenneth M. Young: To the marketplace no surprises on the rules, but there have been out for consideration for.

Kenneth M. Young: For quite some time and obviously just recently.

Kenneth M. Young: Past, but it pushes obviously pushes the utilities that are using coal facilities.

Kenneth M. Young: Two by 2032, obviously, either eliminate those particular plants or add some sort of carbon sequestration.

Kenneth M. Young: Two of those particular plants or increase Utah.

Kenneth M. Young: Utilization.

Kenneth M. Young: <unk> fuel that would actually be co fired with the coal itself. So.

Kenneth M. Young: So, you know, overall, they're just driving those utility customers to either, which is no surprise in what they've been planning on, either convert to natural gas or add a carbon capture element to it or, you know, combine with different green energy on those particular plants to have a carbon offset related to those. And, you know, each one of those areas is a potential impact for us. If they add, you know, some sort of sequestration, that's great. We actually provide that.

Kenneth M. Young: Overall, they're just driving those utility customers to either which is no surprise and what <unk> been planning on either convert to natural gas.

Kenneth M. Young: Or at a carbon capture element to it or combine with.

Kenneth M. Young: Different green energy on those particular plants to have a carbon offset related to those and.

Kenneth M. Young: And at each one of those areas.

Kenneth M. Young: Potential impact for us if they add some sort of sequestration thats, great. We actually provide that if they do a conversion we can do that if they are.

Kenneth M. Young: If they do a conversion, we can do that. If they are looking for biomass offset or combining on that particular piece, then those are areas that we can help with as well for those particular plants. But, you know, it's just I think where it helps us more than anything is, as some of these projects require PUC approvals on a state or local basis, it just helps reinforce the PUCs to approve the projects because they're coming off the mandate from the EPA requirements.

Kenneth M. Young: Our looking for biomass offset or combining on that particular piece and those are areas that we can help with as well too.

Kenneth M. Young: For those particular plants, but.

Kenneth M. Young: It just I think where it helps us more than anything is as some of these projects require PUC approvals on a state or local basis. It just helps reinforce the puc's to approve the projects because they are coming off a mandate from the EPA requirements.

Kenneth M. Young: On the waste to energy side, the main focus is around some of the emissions, you know, reduction in sulfur oxide, nitric oxide, some of the SOx, NOx, and other components, mercury, vapor, and other areas where they're just trying to increase or they're trying to reduce, if you will, further the emissions of some of the waste to energy plants. You know, some of the newer ones will be fine. Some of the older ones out there will require some upgrades or enhancements, or, you know, in a few cases, it might require an extensive upgrade or enhancement to those particular sites, all of which opens up opportunities for us.

Kenneth M. Young: On the waste to energy side the main focus.

Kenneth M. Young: Around some of the emissions.

Kenneth M. Young: Reduction in sulfur oxide nitric oxide some some of the Sox Nox and other components Mercury and other areas, where they are just trying to increase.

Kenneth M. Young: Or they're trying to reduce if you will further the emissions of some of the waste to energy plants.

Kenneth M. Young: Some of the newer ones will be fine some of the older ones.

Kenneth M. Young: Out there, we'll have require some upgrades or enhancements or.

Kenneth M. Young: In a few cases it might require an extensive upgrade our enhancements to those particular sites.

Kenneth M. Young: All of which opens up opportunities for us but.

Kenneth M. Young: But, and again, none of those are surprises. So, several of those sites and plants are in our pipeline, and, you know, we've been in discussions on various technologies and solutions and working through those particular areas. Again, I think these rules just help reinforce, you know, the investment grade that these plants have to undergo, and that helps eliminate or help support, you know, some of the PUC and local EPA approvals that are required for some of these permits. So, that's how we view it.

Kenneth M. Young: And again, none of those are surprises so several of those sites and plants are in our pipeline than we've been in discussions on.

Kenneth M. Young: On various technologies and solutions and working through those particular areas again I think these rules just help reinforce the investment grade that these plants have to undergo and that helps to eliminate our help support some of the PUC and local.

Kenneth M. Young: Approvals that are required on some of these permits so.

Kenneth M. Young: That's how we view it.

Kenneth M. Young: All right, thanks for the call there. And then just on the targeted cost savings, so $20 million of the $30 million so far, can you just talk about, you know, kind of the line of sight for the rest of this year and just remind us where we should expect to see the rest going forward? Is that, you know, on the OPEX side or the COG side or some combination?

Speaker Change: Alright, thanks for the color there and then just on the targeted cost savings so $20 million of the $30 million. So far can you just talk about.

Kenneth M. Young: The line of sight and.

Kenneth M. Young: For the rest of this year and just remind us where we should expect to see the rest going forward does that on the Opex line card side or some combination.

Kenneth M. Young: No, it'll be more in the, I mean, there will be a little bit coming out of COGS, but it'll be more on the OPEX side for us to recognize that, you know, total reduction on that piece of it. It'll come over the course of the year.

Speaker Change: No it'll be it'll be more in the I mean, there will be a little bit coming out of Cogs, but it would be more on the opex side for us to recognize that total reduction on that piece of it.

Kenneth M. Young: That will come over the course of the year some of that is.

Aaron Michael Spychalla: Some of that is, you know, as we continue to shift, if you will, some of the focus on the selective higher-margin projects, we're going to be able to reduce some of the overhead, you know, both within, you know, certain operations, and also in the manufacturing side of operations. So, you know, those help as well, too, in the overall shift. Some of that's coming in the form of, you know, improved IT productivity and operations, and financial productivity and operations in the company as we continue to make improvements in and around those particular areas.

Kenneth M. Young: We continue to.

Aaron Michael Spychalla: Shifts if you will.

Aaron Michael Spychalla: Some of the focus on the selective higher margin projects, we're going to be able to reduce some of the overhead.

Aaron Michael Spychalla: Both within certain operations also in the manufacturing side of operations. So.

Aaron Michael Spychalla: Those help as well too.

Aaron Michael Spychalla: On the overall shift some of that is coming in in the form of improved productivity.

Aaron Michael Spychalla: Productivity and operations financial productivity in operations.

Aaron Michael Spychalla: And the company as we continue to.

Aaron Michael Spychalla: Make improvements in and around those particular areas but.

Aaron Michael Spychalla: But, you know, we feel that we're on track with our target of 30 this year, and, you know, if we can do better, we'll obviously do better, but we wanted to put out a status. I think 20 million versus that target is a pretty good milestone at this point, and we'll continue to implement that over the course of the year.

Aaron Michael Spychalla: We feel that we're on track with our target of 30.

Aaron Michael Spychalla: This year end.

Aaron Michael Spychalla: If we can do better we would obviously do better but we wanted to.

Aaron Michael Spychalla: Put out of status I think $20 million versus that target is a pretty good milestone at this point.

Aaron Michael Spychalla: And we will continue to implement that over the over the course of the year.

Louis Salamone: And then, if I could just sneak one more in for Lou, you know, on the free cash flow side of things, should that, you know, do you expect that to kind of follow a similar path as kind of EBITDA throughout the year, or maybe just maybe talk about some of the moving pieces there?

Speaker Change: Understood and then if I could just sneak one more in.

Lou: On the free cash flow side of things should that.

Louis Salamone: Do you expect that to kind of follow a similar path as kind of the EBITDA throughout the year, just maybe talk about some of the moving pieces there.

Louis Salamone: It should follow the EBITDA path throughout the year, Aaron, and, you know, we'd increase the pre-cash flow through the first, through the second, third, and fourth quarter. The fourth quarter is traditionally a really good cash flow period, right along with EBITDA, projected EBITDA, and targeted EBITDA.

Lou: It should follow the EBITDA path throughout the year.

Louis Salamone: Aaron.

Louis Salamone: We'd increase the free cash flow through the first through the second third and fourth quarter fourth quarter is traditionally.

Lou: Really good cash flow period, so that should go right along with it.

Louis Salamone: projected EBITDA and targeted EBITDA.

Lou: With the EBITDA debt to EBITDA targeted EBITDA.

Aaron Michael Spychalla: Alright, thanks for taking the questions. I'll turn it over to you.

Speaker Change: Alright, thanks for taking the questions I'll turn it over.

Sharyn Brooks: Great. Thanks. Thanks, everyone. Sharyn, I'll turn it over to you if you want to close out.

Speaker Change: Great. Thanks, Thanks, everyone.

Sharyn Brooks: Sharon I'll turn it over to you from a closeout.

Ciara: Thank you everyone for joining us today. That concludes our conference call. A replay will be available for a limited time on our website later today. That will conclude today's conference call. Thank you all.

Sharyn Brooks: Thank you everyone for joining us today that concludes our conference call a replay will be available for a limited time on our website later today.

Ciara: Okay.

Ciara: That will conclude today's conference call. Thank you all for your participation. You may now disconnect your lines. Thank you all for your participation; you may now disconnect your line.

Sharyn Brooks: That will conclude today's conference call.

Ciara: Thank you all for your participation you may now disconnect your lines.

Q1 2024 Babcock & Wilcox Enterprises Inc Earnings Call

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