BW earnings call analysis

NYSE:BW Q4 2025 Earnings Call Transcript Generated on 6/6/2026 Tamiya | Conference Call Operator: Good afternoon, thank you for attending the Babcock and Wilcox Enterprises fourth quarter and full year 2025 conference call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. I would now like to turn the conference over to your host, Sharon Brooks, B&W's Director of Communications. Thank you. You may proceed, Ms.

Brooks. Sharon Brooks | Director of Communications

Thank you, Tamiya. And thanks to everyone for joining us on Babcock and Wilcox Enterprises fourth quarter and full year 2025 earnings conference call. I'm Sharon Brooks, Director of Communications. Joining the call today are Kenny Young, B&W's Chairman and Chief Executive Officer, and Cameron Freymeier, Chief Financial Officer, to discuss our fourth quarter and four-year 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 that can be found at the end of our earnings press release published on March 4, 2026, and in our annual report on Form 10-K that has been filed with the SEC today. Additionally, except as required by law, we undertake no obligation to update any forward-looking statement. 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. A reconciliation of historical non-GAAP measures can be found in our fourth quarter and full year 2025 earnings release published on March 4, 2026, and in our company overview presentation filed on Form 8K, which is posted on the investor relations section of our website at babcock.com. I will now turn the call over to Kenny.

Kenny Young | Chairman and Chief Executive Officer

Thanks, Sharon. Well, good afternoon, everyone, and thank you for joining us on our fourth quarter and full year 2025 earnings call. Over the past year, Babcock & Wilcox has seen significant growth due to higher demand in electrical generation. Our company has reached a new pinnacle, which combined with recent announcements allows us to increase our 2026 adjusted EBITDA target range to between 80 and 100 million. Our core business, excluding data centers, continued to grow as our parts and services saw elevated demand from the increased operation of baseload generation in North America and beyond. As energy needs continue to expand from consumers, industries, and data centers that utilize grid power, coal plants are being reconditioned and reengaged by utilities to help meet that accelerating demand. Existing coal plants in the U.S. have been operating at less than 50%, and these power plants have untapped capacity that is starting to be used to support the increased power demand. As natural gas prices climb, the cost of coal operations has become more attractive, which translates into greater use of parts and services, as well as upgrades and enhancements. all of which increased demand for our core business. Our parts and services revenues grew by over 17% in 2025, and we saw growth continuing in 2026 as well. As a reminder, the majority of our parts, services, and small upgrade revenues are not in our backlog as the book to bill cycle is much quicker than longer term projects. The increasing demand for power in North America serves as a catalyst for B&W's continued growth, positioning us to play a pivotal role in supporting AI data center expansion and increased baseload generation needs in the years ahead. Our recent announcement of a full notice or full approval to proceed on our project with base electron is an exciting step forward into the AI data center space. Our agreement with Base Electron, backed by Applied Digital, is valued at $2.4 billion and is intended to deliver 1.2 gigawatts of electricity that will be directly connected to the grid in support of AI factory campuses. Combining steam turbines with our previously designed and engineered 300 megawatt boilers enables us to eliminate months of initial development work. that is required with typical new boiler projects. Overall, this can help accelerate a standard delivery schedule by up to a year. Site visits are now underway, and we've started the boiler manufacturing process. Siemens Energy has started the fabrication process of the turbines, and work is scheduled to commence at the site later this year with most of the construction, including civil and mechanical, scheduled for 2027 and 2028. We are also working closely with the Boilermaker Union to ready the labor force needed at peak periods throughout this project. Currently, just over $430 million of this contract is fixed price, specifically the boilers and the steam turbines, while the remaining work is covered under a cost-plus approach. Applied Digital is backstopping the contract with a guarantee of full and timely performance of all of Base Electron's obligations. Base Electron has also indicated its interest in purchasing another 1.2 gigawatts of power from B&W, possibly at a different location. The impact of this contract on B&W is truly profound. And we have now added 3 to 5 billion in additional AI data center opportunities to our portfolio. We believe our proven technologies are well positioned to deliver the reliable, high-capacity power generation that is required to meet the growing demands of power grid today. Furthermore, we are in real-time discussions with additional data center customers around specific opportunities. A few of these are actively underway right now, and we hope to be able to issue further announcements and details in the coming weeks. These potential projects with other developers, hyperscalers, and utilities, if booked, will also utilize B&W boiler designs in combination with steam turbines. As a result, and even after converting $2.4 billion of our pipeline to backlog, These new opportunities are now reflected in our current pipeline of over $12 billion. Additionally, we are seeing increased utilization of coal-fired power generation, along with upgrades and enhancements driven by initiatives from the U.S. Department of Energy and the National Energy Dominance Council, combined with rising demand for fossil fuel-based power generation and extended lead times for combustion turbines, These dynamics highlight our ability to deliver solutions more quickly by leveraging our proven steam generation technologies. We are now in early discussions regarding the potential of new power generation utilizing coal technologies and are excited to see this development moving forward for utilities, coal is an offset to higher natural gas prices. And either through upgrades or new build, we see the reliance on coal technologies continuing here in the US with additional facilities being added in Asia as well. Our backlog continues to benefit from this increased demand for coal and power generation, as well as the tailwinds from AI data center growth. In total, we saw our continuing operations backlog rise to 2.8 billion, which is a 470% increase compared to the end of 2024. Our pipeline of over 12 billion grew by roughly 20% in 2025, even with the conversion of this recent project to backlog. And we do see continued pathways for growth moving forward into 2026. During the fourth quarter of 2025, We delivered strong operating results while displaying continued core business momentum. Revenue, operating income, and adjusted EBITDA all significantly outperformed company and consensus expectations for the quarter. Adjusted EBITDA was 53% higher compared to the fourth quarter of 2024, and operating income was up 373% when compared to the same period of 2024. These results during the quarter reflect the strong demand for our diverse portfolio of technologies and demonstrate B&W's evolution and strategic advancements over the past year. In recent months, we fully paid off the remaining outstanding bonds due in February 2026 and expect to fully pay off the remaining outstanding December 2026 bonds in a timely fashion. These bond payments pair with the continued pay down of our overall debt levels. Across 2025, we achieved a substantial reduction of our debt on our balance sheet, resulting in a net debt of $119.7 million at the end of 2025, which is a $217.3 million improvement compared to the net debt of $337 million at the end of 2024. Our Bright Loop advancements continue to evolve behind the scenes, including our Massillon and Wyoming projects. We are building momentum around the use of chemical looping as a means to convert solid and gas fuels to either hydrogen or steam generation, while simultaneously capturing the CO2 that can be used for enhanced oil or methane recovery, as well as other beneficial uses. The commercial demonstration of Brightloop at Massillon remains an important milestone for B&W as we continue to position the company for additional growth opportunities in the future. I'll now turn the call over to Cameron, who will discuss our full-year 2025 results. Cameron?

Cameron Freymeier | Chief Financial Officer

Thanks, Kenny. I am pleased to review our full-year 2025 financial results, further details of which can be found in the 10-K that was filed with the SEC this afternoon. Our 2025 consolidated revenues were 587.7 million, which was a modest increase compared to the revenue of 581 million in 2024. Our core parts and services continued to excel across 2025, increasing revenues 17%, outperforming expectations due to higher coal generation usage and growing base load demand in North America. Continued growth in our parts and service is expected throughout 2026. Our operating income in 2025 was 20.7 million, which was an improvement compared to an operating loss of 6.3 million in 2024. Loss from continuing operations in 2025 was 32.8 million, compared to a loss of 104.3 million in 2024. And our loss per share from continuing operations was 45 cents in 2025, compared to a loss per share of $1.30 in 2024. Adjusted EBITDA from continuing operations was 43.7 million, compared to $21.2 million in 2024. As Kenny stated earlier, we have announced our full year of 2026 adjusted EBITDA target range is between $80 to $100 million. I'll now turn to our balance sheet, cash flow, and liquidity. Total debt at December 31st, 2025 was $321.1 million, which includes unamortized fees and unamortized gains from our bond swap earlier this year. Our current debt consists of 83.9 million of December 2026 bonds, which, as Kenny stated earlier, will be paid off within the year, and 151 million of bonds due in 2030, or 129.5 million of bonds when unamortized fees and unamortized gains are excluded. The company had cash and cash equivalents and restricted cash balance of 201.4 million giving us a net debt as of December 31st, 2025 of 119.7 million or 79.7 million when excluding unamortized gains, fees, as well as leases. As Kenny previously mentioned, we delivered a significant year-over-year improvement in our net debt, reducing it by 217.3 million compared to December 31st, 2024. Additionally, in December of 2025, BMW paid off outstanding bonds due in February 2026 and the remaining outstanding December 2026 bonds will be paid off this year. With that, I will now turn the call back over to Kenny.

Kenny Young | Chairman and Chief Executive Officer

Thanks, Cameron. Well, we are excited about our growing opportunities to expand into power generation for the rapidly evolving AI data center space. And we remain focused on executing against our strategic plan. We remain uniquely positioned to capitalize on the growing global demand for baseload electrical generation, and our pipeline remains robust, exceeding $12 billion in project opportunities with significant tailwinds bolstered by the growing impact of AI data centers. We anticipate prospects for the new bookings and further strong financial performance throughout 2026. I would like to once again recognize the hard work and expertise of our employees around the world who help us meet our customers' needs today and further strengthen our ability to support the energy needs of the future. We would also like to recognize and thank our vendors and manufacturers around the world who are working to meet the requirements of our initial data center project and, importantly, are working closely with us to ensure timely delivery on the next project once booked. These manufacturers are working to ensure we have the necessary resources and delivery schedules to meet our customer demands. We continue to be enthusiastic about the path forward and expect 2026 to be a strong operational year for B&W with resilient global demand for our technologies driving sustained growth in the quarters ahead. In closing, B&W is also celebrating its 160th year, and it's a good time to reflect on some of the milestones and firsts that have defined our company history. from playing a leading role in the global industrial revolution of the 19th century to helping make universal electrification from coal and natural gas possible to developing some of the world's most efficient and effective environmental emissions control, renewable energy, and hydrogen generation and carbon capture technologies. B&W has constantly been at the forefront of innovation. But it all began with creating steam for power, and BMW boilers and steam generation technologies have contributed to more than 400 gigawatts of total electrical capacity worldwide. We're proud of our history, and we're excited about what lies ahead for our company. And with that, I'll now turn the call back over to Mia, who will help us with a few questions. Mia?

Tamiya | Conference Call Operator

Thank you. We will now begin the question and answer session. The first question comes from Aaron Spichala with Craig Hallam.

You may proceed. Aaron Spichala | Analyst, Craig Hallum

Yeah. Hi, Kenny and Cameron.

Thanks for taking the questions. Tamiya | Conference Call Operator

Hi, Aaron.

Aaron Spichala | Analyst, Craig Hallum

You know, maybe first on, hi. Maybe first for us, just on the, you know, the base electron project, you know, moving to 2.4 billion, can you just talk about the dynamics there versus the limited notice? And then just on the project, Any other color on timeline? You know, you talked a little bit about some of the milestones, but maybe just a little bit more detail there. And then, you know, timing of kind of working capital needs and cash flows on your end.

Kenny Young | Chairman and Chief Executive Officer

Sure. Let me see if I can capture that. So to back up, as you indicated, obviously, we announced the limited notice to proceed last November, I believe. for $1.4 billion on the project. Typical in large projects, until we get to the final notice to proceed, there's always variability on the exact scope and final amounts. of the project at that time. So that's why we'd like to take that approach. So as we were working through the final scope on the project, the final terms and conditions of the contract, we mentioned the firm versus cost plus scenarios on it. We were able then to complete the contract plus the final scope and those negotiations, which led us then to the $2.4 billion announcement for the um the gigawatts being provided so it's kind of normal evolution from a a limited notice to proceed the final notice to proceed and there's some variability always in the dollar amounts depending on that final scope and as well as contract terms and conditions um in that regard so um i think that was one question the the other on um kind of the milestones of what's happening as you know mentioned in the remarks uh we're beginning you know the site visits are underway um On that particular piece, we have the manufacturing processes going at various locations around the world, both from a turbine standpoint and the processes for the boiler pressure parts construction at various locations around the world. and obviously very confident in meeting the schedule and the timelines for delivery. So, you know, some of the variability right now is waiting to get some specific dates on when construction on site will begin. Obviously, we're working through those. There's details behind the scenes on that, but we're anticipating, you know, some work beginning this year at this point in time, and then obviously a bulk of this will move into 2027. and 2028 once we are well into the construction phase of this standpoint. So I think the exciting aspect is, you know, working obviously with our manufacturers as well as with Siemens on the turbines, along with the boilermakers in the union, obviously getting their labor force ready. You know, we do feel confident that we can meet those timeframes and the fact that we're using Previously engineered boilers eliminates a significant amount of timeframes in this project schedule, so it gives us confidence in being able to complete this on time.

Aaron Spichala | Analyst, Craig Hallum

Good. Thanks for that. And then on the guidance increase, can you maybe just talk to visibility into that and maybe cadence throughout the year and then any expected contribution on the power generation project?

Kenny Young | Chairman and Chief Executive Officer

Yeah, so obviously there's a little bit baked in from the contribution of the power project into that increase, for sure. On that, it's, again, variable until we know more specifically when we get costs to the site. And that's obviously where our revenue recognition is based on costs, as you know. So the key component there is that we're able to drive costs to the project on the site. So we wanted to increase, obviously, inclusive of that, and there's some elevated increases that we're seeing just in some of the general parts services and upgrades and usage around some of the coal and natural gas services. projects that were involved in as well, too. So, you know, the combinations of those gave us the confidence to increase that. We also, I think, extended the range a little bit, you know, 80 to 100 million because of some of the variability when we specifically start some of the construction, you know, on site as it relates to the base electron contract.

Cameron Freymeier | Chief Financial Officer

Yeah, Aaron, and I think typically you'll see kind of the the growth and adjusted even our revenue throughout the year. Yeah, there's the cyclical aspect. It'll stuff up each quarter.

Aaron Spichala | Analyst, Craig Hallum

Okay. Okay. And then maybe one last one just on that, you know, coal to gas project. Can you maybe give an update there, you know, how far you are into that project timeline to finish that up? And then just any other thoughts on the pipeline for those types of opportunities as well?

Cameron Freymeier | Chief Financial Officer

Yeah, so as of right now, we're, you know, we're on schedule, Aaron. I think we're, you know, we'll finish up really bulk of the 27 or, yeah, 26 and then going to 27. So, no issues there.

Kenny Young | Chairman and Chief Executive Officer

And on the pipeline side, we've got other, not that large, but there's other conversion projects that we're in discussions on as it relates to that. You know, again, interestingly enough, because some of the developments that are coming out of Capitol Hill, You know, in some of the recent remarks by President Trump, there's, you know, some mandates and some of the utilities are looking at extending coal power generation further. Some of that due to, as I mentioned in the remarks, on the higher price of natural gas, right? So they're extending out some of the coal plants to last longer. So some of the natural gas conversions, or a few of them, are shifting further. out in in later years but in the meantime some of those plants now are going through you know a little bit higher or increased upgrades or parts replacements to continue operating those in the as efficiently as possible so it you know both help us obviously on those but we're seeing a little of that impact as well too great um thank you for taking the questions i'll turn it over yeah thanks aaron Tamiya | Conference Call Operator: Thank you. Next comes from Rob Brown with Lake Street Capital Markets.

You may proceed. Rob Brown | Analyst, Lake Street Capital Markets

Good afternoon. Congratulations on all the progress. I just wanted to dig into the pipeline a little more. You said you had a potential second project from Base Electron and then several other AI data center projects. Could you give us a sense of maybe the sizing of the pipeline-type projects and maybe the timeline of those projects?

Kenny Young | Chairman and Chief Executive Officer

Yeah, so we're, you know, as mentioned, obviously Base Electron has expressed interest in an additional, you know, 1 gigawatt or 1.2 gigawatt worth of power on that. We are also, you know, in discussions, you know, I would say, again, as I mentioned in the comments, real-time discussions with one or two other projects. outside of base electron and applied that are looking at the similar solution. The boiler size may vary. There's a project or two looking at smaller boilers, but it's still in the one gigawatt range. So most of the data center projects usually are, when we have discussions, one or two could be in the 500 megawatt range. Most are in the one to two gigawatt range when we get into discussions about the power solutions. Our specific scope on some of those will vary a little bit. In some cases, it'll be a little more turnkey like we're doing at Base Electron. Others we're in discussions on right now would be more for us to provide the boiler and the steam turbines. but under a different EPC structure. So there are different levels of scope that we're involved in, but from an overall size standpoint, most of those discussions are in a very similar size, both in the gigawatt aspect. Some are different scope on a total project basis, so they'll have different pricing elements. But you can kind of get a sense of the general project impact that would come from these additional projects if we can get them booked.

Rob Brown | Analyst, Lake Street Capital Markets

Okay, great. And then in terms of capacity to do these, it sounds like there's a total of two to three projects that are in the works. What's sort of the ability to do or the capacity to take that work on? Or does it need to spread out over time?

Kenny Young | Chairman and Chief Executive Officer

Yeah, no, great question. So we are, as I mentioned or tried to mention in the remarks, we are working closely with Siemens and other turbine companies. working with them closely. We've got several meetings coming up over the next few weeks, but trying to establish increased capacity on the steam turbine side of this. So, again, either through Siemens and that relationship or, you know, depending on size with one or two other turbine companies around the world. You know, the great aspect around using steam turbines versus combustion turbines is that there's, especially when we get to smaller turbines, there is more manufacturers and a little bit better excess capacity that we can leverage within the manufacturing process on that side. So when we negotiated the first set of turbines with Siemens, we were also working with them and continue to do so to identify places where we can leverage and get to increased capacity with them to move on to another four possible steam turbines with Siemens. also discussions with others out there to ensure that we have the capacity to meet those data center project needs. We've also taken that same approach on the boiler pressure part manufacturing side, both with steel aspects here in the U.S., fabrication here in the U.S., but also with our manufacturing partners and companies and our own manufacturing facilities that we have, but also our partner manufacturing facilities that we have in Central Asia and Southeast Asia to make sure that we have the right resources and everything lined up on those raw materials from various components on steel pressure parts to be able to make the manufacturing schedules and have those shipped. We're looking at one case where we're looking for the possibility to ship a modular boiler approach through obviously a water access shipping standpoint, but that can be delivered directly to site on one of the opportunities that we're in discussions on. Instead of a stick build on site, it would be more of a modular aspect on site. And by spreading those across different manufacturers because they're different sized boilers and different sized turbines, we have confidence in having the capacity and the manufacturing to meet these next two or three projects that we're in discussions on as well. On top of that, a critical component is the labor force. And the Boilermakers, who we have a really good relationship with, has been instrumental in helping us prep and prepare for these particular project sites on the readiness of a labor force and availability as we look down the road to have these construction schedules outlined and obviously eventually move under contract. So we're looking at it both on that side. And then, of course, in B&W internally, as it relates to having the right team aspects ready to go to project manage these from the procurement phase all the way to the construction phase, to the delivery phase, to the on-site phase, to the commissioning and obviously the project completion phase as well. The good news about this, and I think that's where it helps to show, is that BW is not actually engineering new boilers here. So the pressure usually on scope for us is if we have to actually extend beyond the engineering resources that we have, which we're slowly adding to that. But we don't have an immediate impact on those engineering resources because we're leveraging previously designed boilers. And all of those things combine to give us the confidence and the capacity to deliver these.

Rob Brown | Analyst, Lake Street Capital Markets

Okay, thanks for that comprehensive overview.

I'll turn it over. Thanks. Tamiya | Conference Call Operator

Thank you. The following comes from Jeff Grant with Northland Capital.

You may proceed. Jeff Grant | Analyst, Northland Capital

Good evening, guys. Thanks for the time. Hey, Jeff. Kenny, on your prepared remarks, it sounded like some of these conversations on some of these other projects are fairly mature, and I guess just wanted to verify if that's a fair read here. I don't know if it's appropriate to try to get you to quote, you know, how many months behind maybe relative to the base electron kind of progression. But it sounds like some of these conversations are pretty far down the path, but want to make sure we have appropriately set our expectations regarding timing.

Kenny Young | Chairman and Chief Executive Officer

Yeah, no, good question. Obviously, we don't want to get too out in front and negotiate contracts in the public space. But, you know, we are in discussions. I think like most projects for us, right, there would be an evolution where we would If we do get it booked or announced, we would enter into some sort of an initial phase, whether that's a limited notice to proceed or some other form of agreement that would give us the ability to map out all of the site elements at this specific location on this other opportunity. the delivery schedules, you know, the layout aspects of it, and it allows them also then to use our technologies and various permits and other aspects around the project while we ready the full manufacturing process for those specific boilers and turbines on that front. So we are in discussions there. You know, I hate to put a time frame on those. You know, hopefully we can get to you know, at least an initial discussion or announcement in the next several weeks, but we'll, you know, we'll just have to see how that goes. But we are in that level of discussion with one or two other opportunities at the moment.

Jeff Grant | Analyst, Northland Capital

That's great to hear. And for my follow-up, I'm just kind of curious, as you guys are kind of seeing things play out, how much of a catalyst have some of these announcements been for you guys with respect to the APLD project? Do you feel the market participants were generally already aware of what you guys bring to the table, and so it didn't really bring any new people to the fold, or did that announcement and some of the progress you guys have had provide some kind of, I don't know, validation that, you know, this is a real solution that people can look to to address power capacity issues?

Kenny Young | Chairman and Chief Executive Officer

Yeah, for sure. One or two of the projects that we're contemplating, you know, that potential, immediate potential here were also, you know, underway in parallel with the discussions with Applied. for certain. But I would say also, you know, as the result of the announcement of the Plaid contract, the amount of inbound interest from both hyperscalers, utilities, and other developers and other IPPs has been extremely, boy, lack of a better term, I mean, very significant, right? And that's, I would say, around the world, not just here in North America, but in other locations around the world as well, too. on that. So, you know, some of those come from very mature clients, meaning, you know, they've got real projects behind them. You know, some of those opportunities come from developers and other aspects that don't, right? But, you know, I think the amount of attention that we picked up on, not only, I will say, in the marketplace, But I would also say, you know, within, you know, the Department of Energy and the Energy Dominance Council has also been significant on this and the support of this as well, too. So, you know, we have, you know, we're in discussions with a lot on Capitol Hill as well as the Department of Energy, and they're very much aware of the progress not only on the applied base electron project, but also potentially on one or two of these others as well. So, you know, all of that has been very much a positive for us, you know, today, but we'll see how that goes in the future. But it's pretty exciting at this point in time.

Jeff Grant | Analyst, Northland Capital

Great. That's real helpful. If I can sneak one more in, maybe for Cameron, is there a way to kind of bifurcate how much of the increase in the guide is related to kind of core business outperformance versus contribution from this project?

Cameron Freymeier | Chief Financial Officer

Yeah, I mean, Jeff, I think right now it's with applied being, you know, such a large contract and, you know, days, weeks of POC accounting, we can move that one way or the other. I don't think we're going in that kind of detail at this point in time just because it could move, you know, depending on how all the stuff works out, which is also why we got that larger range.

Jeff Grant | Analyst, Northland Capital

Understood. Understood. Fair enough. All right. Thank you guys for your time.

Thank you. Tamiya | Conference Call Operator

Thank you. There are currently no other questions queued, so I'll pass it back to Sharon Brooks for closing remarks.

Sharon Brooks | Director of Communications

Thank you, everyone, for joining us. That concludes our conference call. A replay will be available for a limited time on our website later today. jsPDF 3.0.3 D:20260606090020-00'00'

NYSE:BW Q3 2025 Earnings Call Transcript Generated on 6/6/2026 Victoria | Conference Call Operator: Good afternoon. Thank you for attending the Babcock and Wilcox Enterprises Third Quarter 2025 Conference Call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. I would now like to turn the conference over to our host, Sharon Brooks, BNW's Director of Communications. Thank you. You may proceed, Ms. Brooks. Thank you, Victoria.

Sharon Brooks | Director of Communications

And thanks to everyone for joining us on Babcock and Wilcox Enterprises Third Quarter 2025 Earnings Conference Call. Joining the call today are Kenny Young, B&W's Chairman and Chief Executive Officer, and Cameron Freymeier, Chief Financial Officer, to discuss our third 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 that can be found at the end of our earnings press release and also in our Form 10-Q that was filed this afternoon and our Form 10-K that is on 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 statement. 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 gap measures. A reconciliation of historical non-gap measures can be found in our third quarter earnings release published last week and in our company overview presentation filed on Form 8K this afternoon and posted on the investor relations section of our website at babcock.com.

Kenny Young | Chairman and Chief Executive Officer

Thanks, Sharon. Well, good afternoon, everyone, and thanks for joining us today on our call. We continue to execute on our strategy to expand our global parts and services business while also focusing on large opportunities within North America and reducing a majority of our debt obligations. The increasing demand for power in North America drives our growth and aligns well with our strategy. to divest certain non-core assets to significantly reduce our debt while positioning B&W to play a pivotal role in supporting AI data center expansion and increased baseload generation needs. We are pleased to report a number of positive developments this quarter at Babcock and Wilcox, both in relation to our quarterly financials as well as our recent projects and partnerships that we have completed. Adjusted EBITDA and operating income significantly outperformed company and consensus expectations this quarter. Adjusted EBITDA was 58% higher compared to third quarter of 2024, while operating income was up 315% when compared to the same period of 2024. Our improved margins directly reflect the record quarter results for our parts and services business. During the third quarter, our global parts and services achieved the highest quarterly and year to date bookings, revenue and gross profit in recent company history. Our growing backlog continues to benefit from increasing demand across projects, upgrades and construction as power generation needs for industrials and utilities in North America continue to accelerate. In total, we saw our backlog rise 56% quarter over quarter to a total of over 393 million. Through a combination of disposition of non-core assets and equity raises, we have paid or will pay down the February 2026 notes by end of the year 2025. We also have the liquidity to pay down the December 2026 bonds a process that we plan to begin by end of year. Over the course of the past several months and with key equity raises last week, our balance sheet has significantly improved. With this improvement, along with the tailwinds from baseload generation demands in the market, we have positioned B&W for substantial growth in 2026. We are currently projecting a range of $70 million to $85 million in EBITDA from our core business in 2026, which is 80% growth year over year from 2025. And this does not include any revenues or margin from our recently announced AI data center projects. We have been in discussions on several opportunities within the AI data center space, and we are seeing agentic AI as a new catalyst for higher power demands in the U.S. and around the world. We are pleased to announce that we have signed a limited notice to proceed with Applied Digital to begin work for the delivery and installation of natural gas technology that will provide one gigawatt of efficient energy for an AI factory and data center project. The total project valued at full notice to proceed will be over $1.5 billion in total once finalized, and we anticipate that full notice to proceed to be released in the next few months. As a part of this deal, B&W plans to design and install four 300 megawatt natural gas fired power plants consisting of proven boilers and associated steam turbines to support Applied Digital's AI factory. The plant is targeted to begin operation in 2028. This technology carries equal efficiency as simple cycle turbines and can be operational much faster than combined or simple cycle power plant options. The impact from this deal on B&W is profound, adding 3 to 5 billion in AI data center opportunities in our pipeline. We are also pursuing other projects and opportunities, which brings our total global pipeline to 10 to 12 billion in totality, including Climate Bright and Bright Loop. Taking a look at our Bright Loop technologies, our efforts to progress Bright Loop are moving forward as we further the commercial development of our existing projects and continue working to improve the overall operational effectiveness of these technologies to produce low-cost hydrogen or steam We're seeing increasing activity for Bright Loop technology, both for steam generation and hydrogen production that can produce energy with lower costs and expenditures. In fact, we're in discussions with a number of oil and gas companies and large utilities about using Bright Loop for specific steam or hydrogen generation projects. From a Climate Bright perspective, we are seeing an increased demand to leverage carbon credits, both in waste energy and coal energy, as optional offtake revenues for our customers. We also are in discussions on several opportunities and believe we can announce a significant carbon capture project utilizing our Solve Bright technology very soon. I'll now turn the call over to Cameron to discuss the financial details for the third quarter of 2025. Cameron?

Cameron Freymeier | Chief Financial Officer

Yeah, thanks, Kenny. I am pleased to review our third quarter results further details of which can be found in the 10Q that is on file with the SEC. Our third quarter consolidated revenues were $149 million, which was roughly in line with the third quarter of 2024. Global parts and service remained strong in the third quarter of 2025, with revenues of $68.4 million compared to revenues of $61.7 million in the third quarter of 2024. The improvement is primarily due to the increasing need for electricity from fossil fuels, driven by the demand from artificial intelligence, data centers, and expanding economies. Our net operating income in the third quarter of 2025 was $6.5 million compared to operating income of $1.6 million in the third quarter of 2025. Loss from continuing operations in the third quarter of 2025 was $2.3 million compared to a loss of $7.9 million in the third quarter of 2024, and our adjusted EBITDA was $12.6 million compared to $8 million in the third quarter of 2024, beating street expectations. As Kenny stated earlier, we have announced our 2026 full-year adjusted EBITDA target range of $70 to $85 million, stemming from our core business, which does not take into account any growth related to data centers. I'll now turn to our balance sheet, cash flow, and liquidity. Total debt at September 30th, 2025 was $379.3 million, consisting of 98.4 million of February 2026 bonds, 90.9 million of December 2026 bonds, and 121 million of bonds due in 2030, with the remaining debt being related to our veterans of credits. As of September 30th, we have zero drawn on our asset-based loan. The company had cash, cash equivalents, and restricted cash balance of 201.1 million giving us a net debt as of September 30th, 2025 of 178.2 million. On October 2nd, B&W paid down 70 million of bonds that were due in February of 2026. And we recently announced the remaining outstanding February 2026 bonds will be paid down fully in December of 2025. Another notable development took place last week when the company was able to raise an additional 65 million of equity which has further strengthened our balance sheet and shows the ability to pay down the remaining of the 2026 bonds that are due in December of 2026. When factoring in our recent equity raise, this will leave us with a pro forma net debt of 113.2 million, which will be between 0.8 to 1.6 times targeted 2026 EBITDA. Lastly, although we said on Friday that we would be pausing sales under the ATM program, We've decided to resume ATM sales and intend to sell shares under the ATM program opportunistically based on market conditions and our share price. I'll now turn the call back over to Kenny.

Kenny Young | Chairman and Chief Executive Officer

Cameron, thanks. Well, in closing, as always, I would just like to recognize the efforts of our dedicated and talented employees that are around the world who focus on working hard every day to meet the challenges and supporting our customers while meeting the energy demands of today. I will now turn the call back over to Victoria, who will, and I think we have time for about three questions. So, Victoria, I'll turn it back over to you.

Victoria | Conference Call Operator

Thanks. Of course. As he said, for today's call, we will only have time for three questions. Our first question comes from the line of Aaron Spichala with Craig Hallam. Your line is now open.

Aaron Spichala | Analyst, Craig-Hallum Capital Markets

Yeah, hi, Kenny and Cameron. Thanks for taking the questions. Maybe first on the $1.5 billion project, can you just talk a little bit about next steps that are needed and how you see potential contribution from a timing and margin perspective moving forward, and then just thoughts on the supply chain and working capital needs as that ramps?

Kenny Young | Chairman and Chief Executive Officer

Sure, no, appreciate that, Aaron. Thanks for jumping on the call today. So first of all, we're actually right now working with Applied obviously to finalize the exact location where this will take place. And so we can finalize the full notice to proceed, which again, as you mentioned in the comments, we anticipate being done here in the next couple of months. As part of that, we're also behind the scenes working with a few of the steam turbines at this point in time and have secured some verbal commitments that we have the ability to meet these timeframes. And so we'll look to finalize those details on that as well as our own manufacturing of these particular boilers. The great news, I think, in this case is that we're using – I'm going to use the term off-the-shelf. So these are – these 300-megawatt boilers are designs that we have. installed at several locations prior to this event. So this is a proven technology in architecture. And so there's very little, if any, engineering that needs to be performed in order to get these to a manufacturing state. We already have the construction drawings of each of these with application diagrams, the layouts, the header layouts, the tubing, everything associated with this type of a boiler to meet the specs and standards here in the U.S. and so it's an easy method for us to move that right into the manufacturing process and that's the exciting part here it's a rare opportunity for us to do and utilize a design that we have implemented in many locations prior so we're obviously very comfortable with the standards and the performance of those boilers easy to move into manufacturing and leveraging the fact that we have access to the steam turbines in a much faster um go-to-market model than than trying to leverage a combined cycle or simple cycle turbine plant um today so that's the benefit here on that but we're working through all of those in parallel with applied and again trying to have the phone notice proceed um signed here in the next couple months and we're working uh diligently behind the scenes to um move the project uh full forward um As it relates to the working capital aspects on it, you know, we'll work with Applied on the timing of that and how we move that forward. That'll be part of the full notice to proceed process here over the next couple months. You know, typically for us, we typically keep the working capital on projects like this at a neutral to, you know, positive. So, you know, down payment requirements that we have with manufacturers and subcontractors are typically collected up front on these projects. I have no reason to believe it would be any different here. So we're moving forward under that direction, and Applied understands that as well. So we think that will help minimize this a little bit overall and any impacts of working capital on the company, and we should remain cash flow positive on this as we do on projects like this. at this point in time. So that's the overall plan. As far as revenue recognition goes and margin recognition, obviously we're a POC shop under that. It will depend on timing of when we can apply the cost to the project into next year. Some of that will be based on the final notice to proceed and the timeframe there. So it's a little bit vague and it won't be terribly much, I would say in 26, um you know i don't know i'm just throwing out a number maybe 10 15 um of the value would be realized then the the bulk of it would based on the accounting methods would be realized more in the the 27 and obviously um uh 28. so um we've you know based on the fact that we're still finalizing that mtp uh in our guidance next year we have not included this project or any other data center projects in that 70 to 85 million range. So this would represent complete upside and probably significant upside to any number that we would be putting out right now. Cameron, I don't see anything you want to add to that, but otherwise, I'll turn it back to you.

Cameron Freymeier | Chief Financial Officer

No, no. I think you hit all the points, Kenny.

Aaron Spichala | Analyst, Craig-Hallum Capital Markets

That's very helpful. Thanks. You know, maybe just second on the additional pipeline sounds like, you know, last week it was a billion and a half. This today sounds like maybe three to five billion. You know, so maybe some growth there. Can you just talk about how mature some of those opportunities are and, you know, potential timing of when you could see some of those move forward as well?

Kenny Young | Chairman and Chief Executive Officer

We are obviously in talks with several as it relates to, and have been, you know, I want to emphasize that have been prior to this announcement in talks with several on this particular solution in different sizes, right? Meaning in some would be smaller in a, MAYBE A HALF GIGAWATT RANGE, SOME ARE PERHAPS EVEN A LITTLE LARGER IN A, YOU KNOW, ONE AND A HALF TO TWO GIGAWATT RANGE. SO THERE'S A NUMBER OF THESE OPPORTUNITIES WHERE THIS SOLUTION MAKES THE MOST SENSE FROM BOTH A COST STANDPOINT AS WELL AS DELIVERY AND TIMEFRAME STANDPOINT. SOME OF THAT WOULD BE SUBJECT TO, YOU KNOW, COMPLETE AVAILABILITY IN THE MANUFACTURING AND THE STEAM TURBINE SIDE. AND AGAIN, YOU KNOW, THE EARLY INDICATIONS ARE WE'VE GOT SOME REAL POSITIVE CAPACITIES THERE TO MEET THIS ENTIRE DEMAND. And so it's on some of those that will be working with them to move forward, hopefully on a couple of those opportunities, if we can get them to commit, I would say those would be in the next year's timeframe to announce on that regard. But we're obviously involved with these other opportunities that are out there and fully intend to push those across um the goal line the that's on this solution the other ones that we're heavily working with is related to our denim partnership um and we are working very closely with denim capital right now on a number of locations um to convert some coal plants to natural gas and that that's also in the works as well too so i think you know we have Those opportunities are within that opportunity and pipeline as well as the other natural gas and steam turbine combination that were proposed for applied would also be in that opportunity as well. So the combinations of all that and the sizes of those, we decided to take the pipeline up even a little bit further from last week.

Aaron Spichala | Analyst, Craig-Hallum Capital Markets

That's great. Thanks for the color and best of luck.

I'll turn it over. Victoria | Conference Call Operator

Thanks. Thank you for your questions. Our next question comes from the line of Rob Brown with Lake Street Capital Markets.

Rob Brown | Analyst, Lake Street Capital Markets

Good afternoon. On the ability or your capacity for that pipeline, what is your capacity sort of in this PowerGen segment, and how do you sort of think about capacity kind of limits there?

Kenny Young | Chairman and Chief Executive Officer

So there's two main components to that capacity aspect, Rob. And thanks for jumping on, by the way. There's two aspects to that. One is the manufacturing of the boiler, fabrication of the boiler. For us, that's par for the course, right? That's what we do. And we have been looking and evaluating our own internal capacities that we have today. AS WELL AS OUR EXTERNAL PARTNERS THAT WE USE IN VARIOUS PLACES AROUND THE WORLD TO MANUFACTURE THESE KIND OF SYSTEMS. SO ALL OF THOSE COMPANIES ARE ON BOARD WITH THIS. AND QUITE FRANKLY, IT'S A VOLUME. MANY OF THESE MANUFACTURING AND FABRICATION GROUPS ARE COMFORTABLE AND USED TO DEALING WITH PROJECTS OF THIS SIZE. SO IT'S JUST A MATTER OF HOW MUCH WE CAN PUT INTO EACH LOCATION ON THAT. AND WE'RE GOING THROUGH THAT RIGHT NOW. I would say within the pipeline that we have today, again, depending on the exact timing of some of this, we feel pretty comfortable that we can complete the manufacturing and have the capacity to do that on the boiler fabrication and manufacturing. On the steam turbine aspect of this, the good news is there's a lot more steam turbine companies than there are combined cycle and simple cycle companies. out there. We're in, you know, can't give names right now, but we're in discussions with several and are quickly trying to move into a relationship with them that we have this capacity secured, you know, and we believe just based on a lot of the early conversations that we're having with these particular groups that that capacity does exist. maybe across, you know, a couple different manufacturers, and we'll have to work through that. But, you know, from a steam turbine perspective, we think these opportunities do exist. They're obviously very excited because this is a way for them to get involved in a high-growth area for them as well, too. So, so far, it's been full energy, if you will, across both the manufacturing side and on the steam turbine side as well.

Rob Brown | Analyst, Lake Street Capital Markets

Okay, thank you for that. Switching to kind of the climate-pride projects, I think you mentioned the CO2 capture opportunity that's developing. Can you give a little more color there on when that might happen and what the size could be?

Kenny Young | Chairman and Chief Executive Officer

Yeah, so there are, you know, a few projects that we're in dialogue and discussions on. Some of these are, you know, feed studies that, you know, we always talk about feed studies out there, feed studies meaning front-end engineering design studies, and we have several of those going on at this case. So, you know, we're in discussions right now to finalize an opportunity and, you know, feel like that can happen fairly soon, hopefully, you know, not days, weeks at max. ON A PROJECT THAT WE CAN PUT OUT AND, YOU KNOW, BORDER MAGNITUDE, YOU KNOW, WOULD BE IN THE I JUST CALL IT 72 um 100 million ish in that category i'll leave it kind of a little bit of a range there as we finalize it but um you know on the initial project itself and then you know there's probably more opportunities and upside on that but um we're we are seeing um you know in the us from some of these operators and the hyperscalers and other aspects where you know a few occasions they would like to have the CDRs or the carbon offtake and the groups that are building out these power plants are looking at how they can capture CDRs or carbon to be able to sell those as additional revenue for the plant owners as it relates to building out the infrastructure to support the hyperscalers. And we've seen that with a few developers and we've got, I think, a pathway here to hopefully announce a project or two, but one specifically in the next days, if not weeks.

Rob Brown | Analyst, Lake Street Capital Markets

Okay, thank you. Congratulations on the progress. Yeah, thank you.

Victoria | Conference Call Operator

Thank you for your questions. Our next question comes from the line of Brent Thaleman with BA Davidson. Your line is now open.

Brent Thaleman | Analyst, B.A. Davidson

Hey, thank you. Hey, Kenny, I want to ask just back on the Applied Digital contract, a billion and a half dollars, is that all within B&W's Scope, I know this is all getting worked out, but obviously it's a, it's a massive potential uptick to. The backlog that you have today, so just wanted to kind of understand what's all in there.

Kenny Young | Chairman and Chief Executive Officer

Yeah, no, this is that that doing and a half would anticipate and represent scope as associated with this project, right? would bring all of the aspects and elements of the boiler and the steam capabilities, plus the construction aspect, right? We have our own construction company here in the U.S., so it'd be blended with construction, the steam turbines and the boiler aspect of it. And then we'll work through some of the other elements to complete the plant on time and on schedule. We'll work with the plant on that. So we put it as over a billion and a half at that site. The total value could be higher depending on final scope. And we'll just have to work through that. But I wanted to give some idea and indication of what it looks like from a B&W perspective. So we intended that to be our scope. The scope of the project would be a little bit larger. under that scenario, but we'll work with them to complete that once we have the NTP finalized.

Brent Thaleman | Analyst, B.A. Davidson

Okay. Yeah, I appreciate that, Kenny. And then I guess just as a follow-up, anything you can say in terms of just risk sharing associated with it? Is this all fixed price in terms of execution? And I noticed there's an equity component that Applied Digital gets in BW. Maybe just talk about that whether that's going to be something that's ongoing as you look to maybe some of these other opportunities out there.

Kenny Young | Chairman and Chief Executive Officer

You know, it's hard to say whether that same model would exist elsewhere too early. Not saying it won't, but hard to say right now. On it, we viewed it as a very positive thing. We think, you know, having Those warrants out there, obviously, there's incentive for applied to get the NTP done sooner and complete, obviously. But, you know, also, you know, there's buy-in, if you will, or support for BW overall, not only as a potential customer and client, but, you know, as a shareholder as well, too. We think all of that's very much positive. And we, you know, obviously have seen that throughout some of the data center and other aspects as well, too. So, we view that as overall very, very positive. As far as the risk share, we're working through that right now on how that would appear to be. The outside manufacturers and seed turbine companies would share a part of that risk overall as well, too. And, you know, we as we always do, we look to balance it. I think the biggest piece here is that and this is what greatly reduces the risk overall to us is that this is these are projects and technologies that we have. performed on a multitude of other occasions. So, there's no new technology being designed or installed here or implemented here. This is well-proven technology that has been installed in tens, if not dozens, of locations where B&W has actually constructed these. Obviously, we have the I think, advantage in the U.S. having our construction company and leveraging the boilermakers who are a great welder and fabrication aspect of this on site. But again, these are all boilers that have been built previously. So we know the performance, we know the complexity that's involved in these, the timeframe that's involved in these, you know, and as well as we've gone through all of the risk aspect of overseeing the manufacturing processes of these and understand how to manage that manufacturing process effectively. And we've got all the best practices and everything from each of these that we've implemented in prior periods. So this is unlike any other large project that B&W has been in historically. This one I think is extremely unique and opportunistic because it is something that has been done many, many times before. And there is absolutely no new technologies being implemented here. So, to us, that's a significant reduction in risk in that case, and the terms and conditions will all be detailed in the final notice to proceed.

Brent Thaleman | Analyst, B.A. Davidson

Okay. Got it. Thanks, Kenny.

Victoria | Conference Call Operator

Thank you for your questions. That will conclude our question and answer session today. I would now like to pass the call back to Sharon for any final remarks.

Sharon Brooks | Director of Communications

Thank you for joining us. This concludes our conference call. A replay will be available for a limited time on our website later today.

Victoria | Conference Call Operator

That concludes today's call. Thank you for your participation and enjoy the rest of your day. jsPDF 3.0.3 D:20260606090022-00'00'