Babcock & Wilcox Enterprises, Inc.

Good afternoon. Thank you for attending today's Babcock and Wilcox Enterprises Q1 2022 Earnings Conference Call. My name is Bethany, and I will be your moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you would like to ask a question, please press star 1 on your telephone keypad. I would now like to pass the conference over to our host, Sharon Brooks, with Babcock and Wilcox. Please go ahead.

Thank you, Bethany, and thanks to everyone for joining us on Babcock and Wilcox Enterprises' first quarter 2022 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 Lou Salamone, Chief Financial Officer, to discuss our first quarter results. During this call, certain statements we make will be forward-looking. These statements are subject to risks and uncertainties, including those set forth in our safe harbor provision for forward-looking statements that can be found at the end of our earnings press release and also in our Form 10-Q that will be filed today and our Form 10-K that is 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 statements. 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 first quarter earnings release published this afternoon and in our company overview presentation that will be filed on form 8k this afternoon and posted on the investor relations section of our website at babcock.com i will now turn the call over to kenny thank you sharon and thanks to everyone for joining us this afternoon well it continues to be an extremely exciting time for all of us at babcock and wilcox you know as a company

We have a very long and successful history as a technology leader and solutions provider throughout the world and across the power generation industry. That is something our employees are extremely proud of, not only because of what the company has accomplished and the strong relationships we've built with our customers and suppliers and others, but also because it puts us in a truly unique position to support the world's energy transition and drive innovation forward. I do want to recognize and thank our employees around the world for their continued tireless efforts in driving our company forward. In fact, with their help, in the 12 months ended, March 31st, 2022, we have reached approximately $75 million of adjusted EBITDA, which is a significant accomplishment. Today, we're working hard to support our customers' needs for clean energy. with an extensive range of proven technologies, including our climate bright suite of decarbonization technologies and our innovative hydrogen production technology solutions for solar power construction and installation and market leading waste energy and biomass energy systems. We have mission controls and cooling systems and next generation energy storage solutions and aftermarket parts and services to help our customers keep their plants running at peak performance. We continue to support our fossil fuel customers globally as the need to provide power from fossil fuels has increased due to limited supply and higher prices for natural gas. We'll talk more about some of the progress we're making in those areas a little bit later on today. But first, I'm very pleased to share that we ended the quarter ahead of our plan. and with increases in revenues, bookings, and backlog over the same quarter a year ago. In fact, we now have the highest backlog since 2018, and we continue to be in a great position for an outstanding 2022 and beyond to meet our adjusted EBITDA targets and also achieve significant year-over-year growth as we focus on our long-term strategic objectives and, as always, the fundamentals like safety and strong project execution. Like many companies, we are seeing some supply chain challenges due to the war in Ukraine and the resurgence of COVID-19 in China and elsewhere. And we are working to mitigate these issues by leveraging our established global resources with respect to raw materials that may be delayed or impacted as these situations evolve. At the same time, we're seeing the potential for additional tailwinds across our business segments as customers face decisions, not only about decarbonization efforts to support climate change goals, but also about energy security and alternatives to natural gas. B&W has the ability to serve customers' needs across those spectrums. And so we will also continue to monitor the potential for opportunities in those areas as the situation continues to evolve. While the pandemic has continued to cause delays for some project bookings or push back some of the start dates of some projects, bookings for the quarter were very strong at $239 million, which reflects a 41% increase over the same quarter a year ago. Despite these increases, we did see some impacts, particularly in our aftermarket parts and services group. as the high use of coal during the period meant that parts and service visits were delayed by some customers. Backlog at quarter end was a solid $721 million, and we continue to see a robust pipeline of more than $7.5 billion of identified project opportunities over the next three years. Turning to our Climate Bright decarbonization platform, we've had a very exciting quarter that included the announcement that we're partnering with Kiewit Industrial to support the Fidelis New Energy Plan 200 megawatt net negative carbon impact biomass power plant in Baton Rouge, Louisiana. It will be the largest of its kind in the world, and we will provide power for Fidelis' grown fuels facility, which will produce sustainable jet fuel, diesel fuel, green hydrogen, and others. We will provide a B&W biomass boiler, our proprietary Oxibright, oxycombustion carbon capture technology, and a full suite of environmental systems to control emissions. This project actually is currently not in our backlog, and we're very excited about the opportunities for our Oxibright system, which uses pure oxygen for combustion and can be used with a wide range of fuels to produce a concentrated stream of CO2 which can then be sequestered underground or put to other beneficial use. It's truly a groundbreaking project and a great opportunity to demonstrate the leadership role B&W can play in providing advanced technologies for decarbonization, emission controls, and the generation of clean power. And we're pleased to have been named the preferred supplier for this project and to provide our engineering design equipment and technology as it moves forward. We're also making progress in our efforts to develop a near-term demonstration site for the next scale-up of our Bright Loop decarbonization, hydrogen, and syngas production technology. This is a technology we're extremely enthusiastic about and one that we've developed through the many years of effort in conjunction with The Ohio State University and the Department of Energy. It truly revolutionizes the boiler system and uses a chemical reaction process to create combustion without incineration. The Bright Loop process uses a patent particle, which is very flexible and can react with a variety of feedstocks, including natural gas, biomass, coal, treated municipal solid waste, thin gas, and even petroleum coke from the refining industries. So it really provides customers with a lot of options in terms of the applications where it can be used. Just as important, since Brightloop uses a chemical reaction, we can isolate thin gases from the process, including pure hydrogen, along with a pure stream of CO2 for either sequestration or other industrial uses. We are moving into a full-scale demonstration of the technology this year And we have identified one site in particular with favorable conditions, and we are working to secure access to the property along with a potential hydrogen off-taker. We are also working to secure external grants and investments for this groundbreaking project. And at the same time, we're moving forward with final design and engineering, which is progressing as planned. Needless to say, interest in our Brightloop product is very high worldwide, particularly given its revolutionary ability to use solid fuels to generate hydrogen. As a part of our commercial demonstration project, we plan to use biomass fuel to generate hydrogen, sequester the CO2 generated from the process, and also use this site to test other solid fuels using this chemical looping process. So again, we see this as a game-changing technology evolution that can effectively separate CO2 while producing hydrogen, steam, or syngas. It's exceptionally versatile and can support a wide array of applications, and it's scalable so we can be adopted economically to both large and small installations. With respect to other aspects of our business, we continue to see strong interest, particularly in our renewable energy technology, and expect to announce a number of new build renewable bookings in the second quarter. Certainly, our first quarter revenues of $68 million in our B&W renewable segment, which is a 136% increase over the first quarter of 2021 represents a great start to the year as we see continued demand for our waste-to-energy, biomass-to-energy products and other products and services within this segment. We're also seeing continued growth within our global parts and services business with bookings for equipment upgrades, services and replacement parts, and we're excited about opportunities to to build on our parts and service and retrofit opportunities, not only throughout North America, but internationally as well. We continue to make strategic investments in our clean and renewable energy businesses as part of our growth strategy and closed on two strategic acquisitions during the quarter. In the first, which closed in February, we acquired 100% of Fossil Power Systems, or FPS, based in Nova Scotia, Canada. And FPS is a leading designer and manufacturer of hydrogen, natural gas, and renewable pulp and paper combustion equipment, including igniters, scanners, plant controls, and safety systems. FPS technologies and capabilities are ideally suited to clean energy applications, such as firing hydrogen, which complements our clean energy strategy, in particular, the Bright Loop and BrightGen technologies. We closed on an additional acquisition in February When B&W acquired 100% of the equity interest of Optimist Industries based in Tulsa, Oklahoma, creating an even broader foundation of capabilities to serve our customers. Optimist has a reputable and reliable technologies that align closely with B&W's business and designs and manufactures steam generation and waste heat recovery technologies for use in the power generation, petrochemical and process industries, including package boilers, water tube and fire tube waste heat boilers, condomizers, superheaters, waste recovery equipment, and products for sulfuric acid plants. This acquisition provides opportunities in the growing heat recovery steam generator aftermarket, as well as access to broader U.S. package boiler manufacturing capabilities. We're extremely pleased to have the experienced and dedicated FPS and Optimus employees and additional capabilities as part of our Company and the transition activities related to these acquisitions continues to move along smoothly. We also announced in March that B&W joined the United Nations Global Compact. This initiative provides a global platform for the development, implementation, and disclosure of responsible business practices in the areas of human rights, labor, the environment, and anti-corruption. This reinforces our company's commitment to the 10 principles of the Global Compact and our commitment to advancing the UN Sustainable Development Goals. It also helps further position B&W as a leader in the global energy transition to clean, sustainable, and socially responsible ways of powering utilities and industry. With that, I'll turn the call over to Lou to discuss the financial details of the first quarter of 2022. Lou? Thanks, Kenny.