Babcock & Wilcox Enterprises, Inc. [BW] Filings

10-Q 1 bw-20240630.htm 10-Q bw-20240630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No. 001-36876

BABCOCK & WILCOX ENTERPRISES, INC.

(Exact name of registrant as specified in its charter)


Delaware						47-2783641
(State or other Jurisdiction of Incorporation or Organization)						(I.R.S. Employer Identification No.)

1200 East Market Street, Suite 650
Akron, Ohio						44305
(Address of Principal Executive Offices)						(Zip Code)

Registrant's Telephone Number, Including Area Code: (330) 753-4511

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	BW	New York Stock Exchange
8.125% Senior Notes due 2026	BWSN	New York Stock Exchange
6.50% Senior Notes due 2026	BWNB	New York Stock Exchange
7.75% Series A Cumulative Perpetual Preferred Stock	BW PRA	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☒

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

The number of shares of the registrant's common stock outstanding at August 2, 2024 was 92,195,934.

TABLE OF CONTENTS


		PAGE
Cautionary Statement Concerning Forward-Looking Information		3
PART I - FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements	4
	Condensed Consolidated Statements of Operations for the Three and Six Mo nths Ended June 30, 2024 and 2023 (Unaudited)	5
	Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Six Mo nths Ended June 30, 2024 and 202 3 (Unaudited)	6
	Condensed Consolidated Balance Sheets as of June 30, 202 4 and December 31, 2023 (Unaudited)	7
	Condensed Consolidated Statement of Stockholders' (Deficit) Equity for the Three and Six Mo nths Ended June 30, 20 2 4 and 202 3 (Unaudited)	8
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2024 and 2023 (Unaudited)	9
	Notes to Condensed Consolidated Financial Statements	11
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	34
	Overview	35
	Results of Operations - Three and Six Mo nths E nded June 30, 2024 and 2023	36
	Liquidity and Capital Resources	47
	Critical Accounting Policies and Estimates	50
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	50
Item 4.	Controls and Procedures	50
Item 5.	Other Information	46
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	51
Item 1A.	Risk Factors	51
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	51
Item 6.	Exhibits	52
SIGNATURES		55

Definitions

In this Quarterly Report on Form 10-Q, or this “Quarterly Report”, unless the context otherwise indicates, “B&W,” “we,” “us,” “our” or the “Company” mean Babcock & Wilcox Enterprises, Inc. and its consolidated subsidiaries. Unless otherwise noted, discussion of our business and results of operations in this Quarterly Report on Form 10-Q refers to our continuing operations.


Abbreviation or acronym						Term

6.50% Senior Notes						6.50% Senior Notes due December 31, 2026 issued by Babcock & Wilcox Enterprises, Inc. in 2021
8.125% Senior Notes						8.125% Senior Notes due February 28, 2026 issued by Babcock & Wilcox Enterprises, Inc. in 2021
Amended Revolving Credit Agreement						Amended Revolving Credit Agreement with PNC
AOCI						Accumulated Other Comprehensive Income (loss)
ASC						Accounting Standards Codification
ASU						Accounting Standards Update

Axos						Axos Bank, an affiliate of Axos Financial, Inc.

B&W Solar						Babcock & Wilcox Solar Energy, Inc., formerly known as Fosler Construction Company, Inc.
B. Riley						B. Riley Financial, Inc and its affiliates, a related party












Credit Agreement						Credit Agreement between us, with certain of our subsidiaries as guarantors, the lenders party thereto from time to time and Axos Bank, as administrative agent, swingline lender and letter of credit issuer on January, 18, 2024 (as amended from time to time).
CTA						Currency Translation Adjustment
Debt Documents						Collectively, the Revolving Credit Agreement, Letter of Credit Agreement and Reimbursement Agreement
Debt Facilities						The facilities available under the Debt Documents


EBITDA						Earnings before interest, taxes, depreciation and amortization

Exchange Act						The Securities Exchange Act of 1934, as amended

FASB						Financial Accounting Standards Board


GAAP						Generally Accepted Accounting Principles in the United States of America




IRC						U.S. Internal Revenue Code of 1986, as amended

Letter of Credit Agreement						Letter of Credit agreement with PNC


MSD						MSD Partners and affiliates, including MSD PCOF Partners XLV, LLC
MTM						Mark-to-Market

NOL						Net operating losses

Notes Due 2026						Collectively, the 8.125% Senior Notes due February 28, 2026 and the 6.50% Senior Notes due December 31, 2026




PNC						PNC Bank, National Association
Preferred Stock						7.75% Series A Cumulative Perpetual Preferred Stock

Revolving Credit Agreement						Revolving Credit Agreement with PNC

SEC						United States Securities and Exchange Commission


SOFR						The Secured Overnight Financing Rate

***** Cautionary Statement Concerning Forward-Looking Information *****

This Quarterly Report on Form 10-Q, including Management's Discussion and Analysis of Financial Condition and Results of Operations, contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical or current fact included in this Quarterly Report are forward-looking statements. You should not place undue reliance on these statements. Forward-looking statements include words such as “expect,” “intend,” “plan,” “likely,” “seek,” “believe,” “project,” “forecast,” “target,” “goal,” “potential,” “estimate,” “may,” “might,” “will,” “would,” “should,” “could,” “can,” “have,”

“due,” “anticipate,” “assume,” “contemplate,” “continue” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operational performance or other events.

The forward-looking statements included herein are made only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events, or otherwise, except as required by law. These forward-looking statements are based on management’s current expectations and involve a number of risks and uncertainties, including, but not limited to: our financial condition and ability to continue as a going concern; risks associated with contractual pricing in our industry; our relationships with customers, subcontractors and other third parties; our ability to comply with our contractual obligations; disruptions at our manufacturing facilities or a third-party manufacturing facility that we have engaged; the actions or failures of our co-venturers; our ability to implement our growth strategy, including through strategic acquisitions, which we may not successfully consummate or integrate; our evaluation of strategic alternatives for certain businesses and non-core assets may not result in a successful transaction; the risks of unexpected adjustments and cancellations in our backlog; professional liability, product liability, warranty and other claims; our ability to compete successfully against current and future competitors; our ability to develop and successfully market new products; the impacts of macroeconomic downturns, industry conditions and public health crises; the cyclical nature of the industries in which we operate; changes in the legislative and regulatory environment in which we operate; supply chain issues, including shortages of adequate components; failure to properly estimate customer demand; our ability to comply with the covenants in our debt agreements; our ability to refinance our 8.125% Notes due 2026 and 6.50% Notes due 2026 prior to their maturity; our ability to maintain adequate bonding and letter of credit capacity; impairment of goodwill or other indefinite-lived intangible assets; credit risk; disruptions in, or failures of, our information systems; our ability to comply with privacy and information security laws; our ability to protect our intellectual property and use the intellectual property that we license from third parties; risks related to our international operations, including fluctuations in the value of foreign currencies, global tariffs, sanctions and export controls could harm our profitability; volatility in the price of our common stock; B. Riley’s significant influence over us; changes in tax rates or tax law; our ability to use net operating loss and certain tax credits; our ability to maintain effective internal control over financial reporting; our ability to attract and retain skilled personnel and senior management; labor problems, including negotiations with labor unions and possible work stoppages; risks associated with our retirement benefit plans; natural disasters or other events beyond our control, such as war, armed conflicts or terrorist attacks; and the risks and uncertainties described under the heading "Risk Factors" in Part I, Item 1A of our Annual Report, as such risk factors may be amended, supplemented or superseded from time to time by other reports we file with the SEC.

These forward-looking statements are made based upon detailed assumptions and reflect management’s current expectations and beliefs. While we believe that these assumptions underlying the forward-looking statements are reasonable, forward-looking statements are subject to uncertainties and factors relating to our operations and business environment that are difficult to predict and may be beyond our control. Such uncertainties and factors may cause actual results to differ materially from those expressed or implied by the forward-looking statements.

PART I

ITEM 1. Condensed Consolidated Financial Statements

BABCOCK & WILCOX ENTERPRISES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands, except per share amounts)	2024		2023		2024		2023
Revenues	$	233,642	$	291,515	$	441,198	$	532,773
Costs and expenses:
Cost of operations	179,152		228,352		338,227		417,681
Selling, general and administrative expenses	50,525		49,772		91,963		97,786


Restructuring activities	767		1,021		2,347		1,405
Research and development costs	1,180		924		2,261		2,232
Gain on sale of business	(40,174)		—		(40,174)		—
(Gain) loss on asset disposals, net	(7)		(955)		46		(18)
Total costs and expenses	191,443		279,114		394,670		519,086
Operating income	42,199		12,401		46,528		13,687
Other (expense) income:
Interest expense	(12,534)		(11,176)		(25,368)		(23,832)
Interest income	285		478		592		591
Loss on debt extinguishment	(1,053)		—		(6,124)		—

Benefit plans, net	92		(138)		188		(247)
Foreign exchange	499		1,154		(834)		693
Other income (expense) – net	426		(264)		426		(633)
Total other expense, net	(12,285)		(9,946)		(31,120)		(23,428)
Income (loss) before income tax expense	29,914		2,455		15,408		(9,741)
Income tax expense	4,692		1,861		5,985		2,351
Income (loss) from continuing operations	25,222		594		9,423		(12,092)
Income (loss) from discontinued operations, net of tax	142		(5,606)		(850)		(5,395)
Net income (loss)	25,364		(5,012)		8,573		(17,487)
Net income attributable to non-controlling interest	(49)		(76)		(91)		(97)
Net income (loss) attributable to stockholders	25,315		(5,088)		8,482		(17,584)
Less: Dividend on Series A preferred stock	3,715		3,715		7,429		7,430
Net income (loss) attributable to stockholders of common stock	$	21,600	$	(8,803)	$	1,053	$	(25,014)

Basic earnings (loss) per share:
Continuing operations	$	0.24	$	(0.04)	$	0.02	$	(0.22)
Discontinued operations	—		(0.06)		(0.01)		(0.06)
Basic earnings (loss) per share	$	0.24	$	(0.10)	$	0.01	$	(0.28)

Diluted earnings (loss) per share:
Continuing operations	$	0.24	$	(0.04)	$	0.02	$	(0.22)
Discontinued operations	—		(0.06)		(0.01)		(0.06)
Diluted earnings (loss) per share	$	0.24	$	(0.10)	$	0.01	$	(0.28)


Shares used in the computation of basic earnings (loss) per share	91,049		88,783		90,264		88,758
Shares used in the computation of diluted earnings (loss) per share	91,152		88,783		90,324		88,758

See accompanying Notes to Condensed Consolidated Financial Statements.

BABCOCK & WILCOX ENTERPRISES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)


	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2024		2023		2024		2023
Net income (loss)	$	25,364	$	(5,012)	$	8,573	$	(17,487)
Other comprehensive loss:
Currency translation adjustments ("CTA")	(2,266)		3,527		(5,391)		8,119
Reclassification of CTA to net income (loss)	1,201		—		1,201		—








Benefit obligations:
Pension and post retirement adjustments, net of tax	232		222		463		445

Other comprehensive income (loss)	(833)		3,749		(3,727)		8,564
Total comprehensive income (loss)	24,531		(1,263)		4,846		(8,923)
Comprehensive (income) loss attributable to non-controlling interest	(40)		27		(26)		41
Comprehensive income (loss) attributable to stockholders	$	24,491	$	(1,236)	$	4,820	$	(8,882)

See accompanying Notes to Condensed Consolidated Financial Statements.

BABCOCK & WILCOX ENTERPRISES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS


(in thousands, except per share amount)	June 30, 2024		December 31, 2023
Cash and cash equivalents	$	95,466	$	65,304
Current restricted cash	75,332		5,737
Accounts receivable – trade, net	124,967		144,016
Accounts receivable – other	25,945		36,179
Contracts in progress	88,644		90,054
Inventories, net	110,309		113,890
Other current assets	24,958		23,918
Current assets held for sale	28,941		18,495
Total current assets	574,562		497,593
Net property, plant and equipment and finance leases	78,168		78,369
Goodwill	83,842		101,956
Intangible assets, net	30,518		45,627
Right-of-use assets	27,632		28,192
Long-term restricted cash	31,291		297
Deferred tax assets	2,094		2,105
Other assets	21,015		21,559

Total assets	$	849,122	$	775,698

Accounts payable	$	147,350	$	127,491
Accrued employee benefits	11,850		10,797
Advance billings on contracts	63,255		81,098
Accrued warranty expense	6,695		7,634

Financing lease liabilities	1,434		1,367
Operating lease liabilities	3,532		3,932
Other accrued liabilities	53,690		68,090
Loans payable	3,475		6,174
Current liabilities held for sale	42,609		43,614
Total current liabilities	333,890		350,197
Senior notes	339,024		337,869
Loans payable, net of current portion	134,308		35,442


Pension and other postretirement benefit liabilities	167,979		172,911
Finance lease liabilities, net of current portion	25,465		26,206
Operating lease liabilities, net of current portion	25,331		25,350
Deferred tax liability	10,545		12,991

Other noncurrent liabilities	10,924		15,082
Total liabilities	1,047,466		976,048

Stockholders' deficit:
Preferred stock, par value $0.01 per share, authorized shares of 20,000; issued and outstanding shares 7,669 at both June 30, 2024 and December 31, 2023	77		77
Common stock, par value $0.01 per share, authorized shares of 500,000; outstanding shares of 92,010 and 89,449 at June 30, 2024 and December 31, 2023, respectively	5,174		5,148
Capital in excess of par value	1,550,977		1,546,281
Treasury stock at cost, 2,154 and 2,139 shares at June 30, 2024 and December 31, 2023, respectively	(115,180)		(115,164)
Accumulated deficit	(1,569,889)		(1,570,942)
Accumulated other comprehensive loss	(70,088)		(66,361)
Stockholders' deficit attributable to shareholders	(198,929)		(200,961)
Non-controlling interest	585		611
Total stockholders' deficit	(198,344)		(200,350)
Total liabilities and stockholders' deficit	$	849,122	$	775,698

See accompanying Notes to Condensed Consolidated Financial Statements.

BABCOCK & WILCOX ENTERPRISES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' (DEFICIT) EQUITY


	Common Stock			Preferred Stock			Capital In Excess of Par Value		Treasury Stock		Accumulated Deficit		Accumulated Other Comprehensive (Loss)		Non-controlling Interest		Total Stockholders’ (Deficit) Equity
(in thousands, except share amounts)	Shares	Par Value		Shares	Par Value
Balance at December 31, 2023	89,449	$	5,148	7,669	$	77	$	1,546,281	$	(115,164)	$	(1,570,942)	$	(66,361)	$	611	$	(200,350)
Net loss	—			—	—		—		—		(16,833)		—		42		(16,791)
Currency translation adjustments	—	—		—	—		—		—		—		(3,125)		(109)		(3,234)

Pension and post retirement adjustments, net of tax	—	—		—	—		—		—		—		231		—		231
Stock-based compensation charges	31	1		—	—		1,390		—		—		—		—		1,391
Dividends to preferred stockholders	—	—		—	—		—		—		(3,714)		—		—		(3,714)




Balance at March 31, 2024	89,480	$	5,149	7,669	$	77	$	1,547,671	$	(115,164)	$	(1,591,489)	$	(69,255)	$	544	$	(222,467)
Net income	—	$	—	—	$	—	$	—	$	—	$	25,315	$	—	$	49	$	25,364
Currency translation adjustments	—	—		—	—		—		—		—		(1,065)		(8)		(1,073)
Pension and post retirement adjustments, net of tax	—	—		—	—		—		—		—		232		—		232
Stock-based compensation charges	126	1		—	—		1,273		(16)		—		—		—		1,258
Dividends to preferred stockholders	—	—		—	—		—		—		(3,715)		—		—		(3,715)


Common stock offering, net	2,404	24		—	—		2,033		—		—		—		—		2,057

Balance at June 30, 2024	92,010	$	5,174	7,669	$	77	$	1,550,977	$	(115,180)	$	(1,569,889)	$	(70,088)	$	585	$	(198,344)


	Common Stock			Preferred Stock			Capital In Excess of Par Value		Treasury Stock		Accumulated Deficit		Accumulated Other Comprehensive (Loss)		Non-controlling Interest		Total Stockholders’ Equity (Deficit)
(in thousands, except share amounts)	Shares	Par Value		Shares	Par Value
Balance at December 31, 2022	88,700	$	5,138	7,669	$	77	$	1,537,625	$	(113,753)	$	(1,358,875)	$	(72,786)	$	485	$	(2,089)
Net loss	—	—		—	—		—		—		(12,496)		—		21		(12,475)
Currency translation adjustments	—	—		—	—		—		—		—		4,592		(35)		4,557
Pension and post retirement adjustments, net of tax	—	—		—	—		—		—		—		223		—		223
Stock-based compensation charges	45	1		—	—		3,357		(64)		—		—		—		3,294
Dividends to preferred shareholders	—	—		—	—		—		—		(3,715)		—		—		(3,715)
Dividends to non-controlling interest	—	—		—	—		—		—		—		—		(1)		(1)
Balance at March 31, 2023	88,745	$	5,139	7,669	$	77	$	1,540,982	$	(113,817)	$	(1,375,086)	$	(67,971)	$	470	$	(10,206)
Net loss	—	$	—	—	$	—	$	—	$	—	$	(5,088)	$	—	$	76	$	(5,012)
Currency translation adjustments	—	—		—	—		—		—		—		3,527		(20)		3,507
Pension and post retirement adjustments, net of tax	—	—		—	—		—		—		—		222		—		222
Stock-based compensation charges	83	—		—	—		2,185		(1)		—		—		—		2,184
Dividends to preferred stockholders	—	—		—	—		—		—		(3,715)		—		—		(3,715)

Balance at June 30, 2023	88,828	$	5,139	7,669	$	77	$	1,543,167	$	(113,818)	$	(1,383,889)	$	(64,222)	$	526	$	(13,020)

See accompanying Notes to Condensed Consolidated Financial Statements.

BABCOCK & WILCOX ENTERPRISES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


	Six Months Ended June 30,
(in thousands)	2024		2023
Cash flows from operating activities:
Net income (loss) from continuing operations	$	9,423	$	(12,092)
Net loss from discontinued operations	(850)		(5,395)
Net income (loss)	$	8,573	$	(17,487)

Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization of long-lived assets	9,517		11,259


Amortization of deferred financing costs and debt discount	2,508		2,806
Amortization of guaranty fee	1,367		464
Non-cash operating lease expense	3,655		3,289

Loss on debt extinguishment	6,124		—

Gain on sale of business	(40,174)		—
Loss on asset disposals	47		339
Provision for (benefit from) deferred income taxes	2,514		(1,696)
Prior service cost amortization for pension and postretirement plans	462		446
Stock-based compensation	2,689		5,571

Foreign exchange	834		(693)
Changes in operating assets and liabilities:
Accounts receivable - trade, net and other	(7,523)		(10,482)
Contracts in progress	(17,362)		(40,849)
Advance billings on contracts	(14,950)		6,377
Inventories, net	472		(15,728)
Income taxes	4,649		(4,297)
Accounts payable	35,287		40,541
Accrued and other current liabilities	(11,968)		3,219
Accrued contract loss	(4,659)		(1,280)
Pension liabilities, accrued postretirement benefits and employee benefits	(2,374)		(4,681)
Other, net	(6,273)		631
Net cash used in operating activities	(26,585)		(22,251)

Cash flows from investing activities:
Purchase of property, plant and equipment	(7,970)		(5,594)


Purchases of available-for-sale securities	(3,194)		(3,949)
Sales and maturities of available-for-sale securities	3,723		5,379
Proceeds from sale of business and assets, net	83,477		—
Other, net	(160)		—
Net cash provided by (used in) investing activities	75,876		(4,164)

BABCOCK & WILCOX ENTERPRISES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


	Six Months Ended June 30,
(in thousands)	2024		2023
Cash flows from financing activities:

Borrowings on loan payable	138,961		16,165
Repayments on loan payable	(43,164)		(12,049)






Finance lease payments	(673)		(584)
Payment of holdback funds from acquisition	(2,950)		—
Payment of preferred stock dividends	(7,429)		(7,431)
Shares of common stock returned to treasury stock	(16)		(65)


Issuance of common stock, net	2,033		—
Debt issuance costs	(5,064)		—
Other, net	(78)		(280)
Net cash provided by (used in) financing activities	81,620		(4,244)

Effects of exchange rate changes on cash	(191)		1,078
Net increase (decrease) in cash, cash equivalents and restricted cash	130,720		(29,581)
Cash, cash equivalents and restricted cash at beginning of period	71,369		113,460
Cash, cash equivalents and restricted cash at end of period	$	202,089	$	83,879

Schedule of cash, cash equivalents and restricted cash:
Cash and cash equivalents	$	95,466	$	55,035
Current restricted cash	75,332		18,338
Long-term restricted cash	31,291		10,506
Total cash, cash equivalents and restricted cash at end of period	$	202,089	$	83,879

Supplemental Cash flow information:
Income taxes paid, net	$	4,253	$	3,264
Interest paid	$	16,226	$	12,764

See accompanying Notes to Condensed Consolidated Financial Statements.

BABCOCK & WILCOX ENTERPRISES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2024

NOTE 1 – BASIS OF PRESENTATION

These interim Condensed Consolidated Financial Statements of Babcock & Wilcox Enterprises, Inc. (“B&W,” “management,” “we,” “us,” “our” or the “Company”) have been prepared in accordance with GAAP and SEC instructions for interim financial information, and should be read in conjunction with the Annual Report on Form 10-K for the year ended December 31, 2023. The Notes to Condensed Consolidated Financial Statements are presented on the basis of continuing operations, unless otherwise stated.

The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and the accompanying notes. Actual results could differ from these estimates. In the opinion of management, these Condensed Consolidated Financial Statements contain all estimates and adjustments, consisting of normal recurring adjustments, required to fairly present the financial position, results of operations, and cash flows for the periods presented. Operating results for the six months ended June 30, 2024 are not necessarily indicative of the results to be expected for the year ending December 31, 2024.

There have been no material changes to our significant accounting policies included in the Annual Report on Form 10-K for the year ended December 31, 2023.

Non-controlling interests are presented in the Condensed Consolidated Financial Statements as if parent company investors (controlling interests) and other minority investors (non-controlling interests) in partially-owned subsidiaries have similar economic interests in a single entity. As a result, investments in non-controlling interests are reported as equity in the Condensed Consolidated Financial Statements. Additionally, the Condensed Consolidated Financial Statements include 100% of a controlled subsidiary’s earnings, rather than only our share. Transactions between the parent company and non-controlling interests are reported in equity as transactions between stockholders, provided that these transactions do not create a change in control.

Liquidity

The accompanying Condensed Consolidated Financial Statements have been prepared in accordance with GAAP applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

We have historically incurred operating losses, primarily due to losses recognized on our B&W Solar business as well as higher debt service costs and recurring cash deficits from operating activities. Our assessment of our ability to fund future operations is inherently subjective, judgment-based and susceptible to change based on future events. Currently, with existing cash on hand and available liquidity, we are projecting insufficient liquidity to fund operations through one year following the date that this Quarterly Report is issued. These conditions and events raise substantial doubt about our ability to continue as a going concern. As described below, it is probable that our alternative measures contemplated, cost savings plans and anticipated proceeds from the sale of non-strategic assets alleviate the substantial doubt about our ability to continue as a going concern.

In response to the conditions, we are implementing several strategies to obtain the required funding for future operations and are considering other alternative measures to improve cash flow, including suspension of the dividend on our Preferred Stock and delaying development of new products, which together we expect would reduce our annual cash spending by approximately $25 million. The following actions were completed through the issuance date of this Quarterly Report:

•sold our B&W Renewable Service A/S business for net proceeds of $83.5 million on June 28, 2024 (described in Note 3 to the Condensed Consolidated Financial Statements);

•completed the sale of a non-core facility for net proceeds of $4.2 million;

•sold 2.4 million common shares pursuant to our At-The-Market Offering (described in Note 15 to the Condensed Consolidated Financial Statements) for net proceeds of $2.0 million;

•negotiated the settlement of a liability to the former owner of B&W Solar at a discount, resulting in future cash savings of $7.2 million; and,

•initiated a company-wide cost savings plan with targeted annual savings of $30.0 million, $25.0 million of which has been achieved to date.

The following strategies are ongoing to further increase available liquidity:

•continued advanced negotiations related to the sale of three additional non-strategic businesses, which are expected to generate significant proceeds that will be used to meaningfully reduce outstanding debt; and,

•filed for a waiver of required minimum contributions to the Retirement Plan for Employees of Babcock & Wilcox Commercial Operations (the "U.S. Plan"), that if granted, would reduce cash funding requirements in 2024 and would increase contributions annually over the subsequent five-year period. We cannot provide any assurances that such waiver will be granted.

Based on our ability to raise funds through the actions noted above and our Cash and cash equivalents as of June 30, 2024, we have concluded it is probable that such actions would provide sufficient liquidity to fund operations for the next twelve months following the date of this Quarterly Report.

Operations

Our operations are assessed based on three reportable market-facing segments consistent with our strategic initiative to accelerate growth and provide stakeholders improved visibility into our renewable and environmental growth platforms. Our reportable segments are as follows:

•Babcock & Wilcox Renewable: Technologies for efficient and environmentally sustainable power and heat generation, including waste-to-energy, biomass-to-energy and black liquor systems for the pulp and paper industry. Our technologies support a circular economy, diverting waste from landfills to use for power generation and replacing fossil fuels, while recovering metals and reducing emissions.

•Babcock & Wilcox Environmental: A full suite of emissions control and environmental technology solutions for utility, waste-to-energy, biomass-to-energy, carbon black, and industrial steam generation applications around the world. Our broad experience includes systems for cooling, ash handling, particulate control, nitrogen oxides and sulfur dioxides removal, chemical looping for carbon control, and mercury control.

•Babcock & Wilcox Thermal: Steam generation equipment, aftermarket parts, construction, maintenance and field services for plants in the power generation, oil and gas, and industrial sectors. We have an extensive global base of installed equipment for utilities and general industrial applications including refining, petrochemical, food processing, metals and others.

For financial information about our segments see Note 5 to the Condensed Consolidated Financial Statements.

NOTE 2 – EARNINGS (LOSS) PER SHARE

The following table sets forth the computation of basic and diluted loss per share of our common stock, net of non-controlling interest and dividends on preferred stock:


	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands, except per share amounts)	2024		2023		2024		2023
Net income (loss) from continuing operations	$	25,222	$	594	$	9,423	$	(12,092)
Net income attributable to non-controlling interest	(49)		(76)		(91)		(97)
Less: Dividend on Series A preferred stock	3,715		3,715		7,429		7,430
Income (loss) from continuing operations attributable to stockholders of common stock	21,458		(3,197)		1,903		(19,619)
Income (loss) from discontinued operations, net of tax	142		(5,606)		(850)		(5,395)
Net income (loss) attributable to stockholders of common stock	$	21,600	$	(8,803)	$	1,053	$	(25,014)

Weighted average shares used to calculate basic earnings (loss) per share	91,049		88,783		90,264		88,758
Dilutive effect of stock options, restricted stock and performance units	103		—		60		—
Weighted average shares used to calculate diluted earnings (loss) per share	91,152		88,783		90,324		88,758

Basic earnings (loss) per common share:
Continuing operations	$	0.24	$	(0.04)	$	0.02	$	(0.22)
Discontinued operations	$	—	$	(0.06)	$	(0.01)	$	(0.06)
Basic earnings (loss) per common share	$	0.24	$	(0.10)	$	0.01	$	(0.28)

Diluted earnings (loss) per share:
Continuing operations	$	0.24	$	(0.04)	$	0.02	$	(0.22)
Discontinued operations	—		(0.06)		(0.01)		(0.06)
Diluted earnings (loss) per share	$	0.24	$	(0.10)	$	0.01	$	(0.28)

We incurred a net loss in the three- and six-month periods ended June 30, 2023, therefore the basic and diluted shares are the same for those periods.

If we had net income attributable to stockholders of common stock in the three months ended June 30, 2023, diluted shares would have included an additional 0.5 million shares, respectively. If we had net income in the six months ended June 30, 2023, diluted shares would have included an additional 0.4 million shares.

We excluded 2.0 million and 1.1 million shares related to stock options from the diluted share calculation for the three months ended June 30, 2024 and 2023, respectively, because their effect would have been anti-dilutive. We excluded 2.2 million and 1.7 million shares related to stock options from the diluted share calculation from the six months ended June 30, 2024 and 2023, respectively, because their effect would have been anti-dilutive.

NOTE 3 - DIVESTITURE

On June 28, 2024, we, through our B&W PGG Luxembourg Finance Sárl subsidiary, entered into an agreement to sell the entire issued and outstanding share capital of our subsidiary, Babcock & Wilcox Renewable Service A/S (“BWRS”), to Hitachi Zosen Inova AG (“Buyer”). The Sale of BWRS to the Buyer was completed the same day. We received net cash proceeds of $83.5 million and recorded a gain on the sale of the business of $40.2 million. The proceeds will be used to reduce outstanding debt and support working capital needs.

NOTE 4 – ASSETS AND LIABILITIES HELD FOR SALE AND DISCONTINUED OPERATIONS

During the third quarter of 2023, we committed to a plan to sell our B&W Solar business resulting in a significant change that would impact our operations. As of September 30, 2023, we met all of the criteria for the assets and liabilities of this business, formerly part of our B&W Renewable segment, to be accounted for as held for sale. In addition, we also determined that the operations of the B&W Solar business qualified as a discontinued operation, primarily based upon its significance to our current and historic operating losses.

We continued to meet the criteria to account for the B&W Solar business as held for sale and discontinued operations as of June 30, 2024.

The following table summarizes the operating results of the disposal group included in discontinued operations in the Condensed Consolidated Statements of Operations:


	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2024		2023		2024		2023
Revenues	$	22,478	$	13,672	$	33,851	$	29,661
Cost of operations	21,324		15,863		31,690		30,305
General and administrative expenses	784		2,883		2,483		4,351
Restructuring expenses	—		—		35		—
Loss on asset disposals, net	—		353		—		353


Total costs and expenses	22,108		19,099		34,208		35,009
Operating income (loss)	370		(5,427)		(357)		(5,348)




Other expense	(228)		(179)		(493)		(47)

Income (loss) from discontinued operations before tax	142		(5,606)		(850)		(5,395)
Benefit from income taxes	—		—		—		—
Income (loss) from discontinued operations, net of tax	$	142	$	(5,606)	$	(850)	$	(5,395)

The following table provides the major classes of assets and liabilities of the disposal group included in assets held for sale and liabilities held for sale in the Condensed Consolidated Balance Sheets:


(in thousands)	June 30, 2024		December 31, 2023
Cash	$	—	$	31
Contracts in progress	9,678		4,538

Accounts receivable - trade	8,366		3,272

Other assets, net	242		62


Total current assets	18,286		7,903

Net property, plant and equipment and finance leases	2,755		2,683
Intangible assets, net	7,833		7,833


Right-of-use assets	67		76

Total non-current assets	10,655		10,592
Total assets of disposal group	$	28,941	$	18,495

Loans payable, current	$	550	$	502
Operating lease liabilities, current	24		23
Accounts payable	34,766		26,298
Accrued employee benefits	65		231
Advance billings on contracts	1,699		5,961
Accrued warranty expense	1,040		1,078
Other current liabilities	2,452		8,101
Total current liabilities	40,596		42,194

Loans payable, net of current portion	909		1,308
Non-current operating lease liabilities	42		—
Other non-current liabilities	1,062		112
Total non-current liabilities	2,013		1,420
Total liabilities of disposal group	$	42,609	$	43,614

Reported as:


Current assets of discontinued operations	$	28,941	$	18,495



Current liabilities of discontinued operations	$	42,609	$	43,614

The significant components included in the Condensed Consolidated Statements of Cash Flows for the discontinued operations are as follows:


	Six Months Ended June 30,
(in thousands)	2024		2023
Depreciation and amortization of long-lived assets	$	—	$	158





Changes in operating assets and liabilities:
Accounts receivable	(5,094)		(3,511)
Contracts in progress	(5,140)		(6,057)
Accounts payable	8,468		11,046


Purchase of property, plant and equipment	(

Babcock & Wilcox Enterprises, Inc. [BW] Filings
Babcock & Wilcox Enterprises, Inc. [BWNB] Filings
Babcock & Wilcox Enterprises, Inc. [BW-PA] Filings
Babcock & Wilcox Enterprises, Inc. [BWSN] Filings
10-Q	[2024-08-08]
10-Q	[2024-05-09]
10-K	[2024-03-15]
10-Q	[2023-11-09]
10-Q	[2023-08-08]
10-Q	[2023-05-10]
10-K	[2023-03-16]
10-Q	[2022-11-08]
10-Q	[2022-08-08]
10-Q	[2022-05-09]
10-K	[2022-03-08]
10-Q	[2021-11-10]
10-Q	[2021-08-12]
10-Q	[2021-05-13]
10-K	[2021-03-08]
10-Q	[2020-11-13]
10-Q	[2020-08-12]
10-Q	[2020-05-15]
10-K	[2020-03-30]
10-Q	[2019-11-07]
10-Q	[2019-08-08]
10-Q	[2019-05-09]
S-1	[2019-04-30]
10-K	[2019-04-02]
10-Q	[2018-11-08]
10-Q	[2018-08-09]
10-Q	[2018-05-08]
10-K	[2018-03-01]
10-Q	[2017-11-08]
10-Q	[2017-08-09]
10-Q	[2017-05-09]
10-K	[2017-02-28]
10-Q	[2016-11-02]
10-Q	[2016-08-09]
10-Q	[2016-05-10]
10-K	[2016-02-25]
10-Q	[2015-11-03]
10-Q	[2015-08-04]
S-1	[2015-06-09]

Babcock & Wilcox Enterprises, Inc. [BW] Filings

Babcock & Wilcox Enterprises, Inc. [BWNB] Filings

Babcock & Wilcox Enterprises, Inc. [BW-PA] Filings

Babcock & Wilcox Enterprises, Inc. [BWSN] Filings