Babcock & Wilcox Enterprises, Inc.

Good evening. Thank you for attending today's Babcock and Wilcox Enterprises Third Quarter 2022 Earnings Conference Call. My name is Megan, and I'll 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, Director of Communications. Sharon, please go ahead.

Thank you, Megan, and thanks to everyone for joining us on Babcock & Wilcox Enterprises' third quarter 2022 earnings conference call. Joining the call today are Kenny Young, B&W's chairman and chief executive officer, and Lou Salamone, 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 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 third 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 thanks sharon and thanks everyone for joining us today well while we continue to see elevated demand directly supported by an increase in in our bookings and a strong backlog our Results for the quarter and revised targets reflect many of the current market challenges and negative impacts of the industry worldwide and the global supply chain pressures and challenges driven by geopolitical issues and the ongoing war in Ukraine, along with various lingering COVID restrictions. These ongoing issues negatively impacted the timing of revenue recognition on certain projects across our business segments. Despite these near-term headwinds, we continue to execute and progress against our long-term strategic growth strategy with an over 30% increase in both bookings and backlog at the end of the third quarter compared to the same period a year ago. More importantly, our backlog is strong and increasing. Although certain regional backlog and inventory values are reduced by currency drops in Great Britain and across Europe, We continue to have a strong and proven management team in place. And it's a team that has led this company through its most difficult losses. And over a number of years ago, followed by the challenges of a global pandemic followed by the global geopolitical issues and the resulting impacts, especially with the, within the energy sector, as a result of the war in Ukraine, despite all that Babcock and Wilcox continues to perform. has strong operational capabilities and is much faster at reacting to global and regional challenges than in the past. In addition, we have maintained a high level of operational performance and remain on target in terms of our performance across our global projects. We have taken a number of steps to address these challenges, including managing our projects more conservatively to smooth out various impacts from the global supply chain, and project delays, as well as the cost increases we continue to see. Importantly, we want to emphasize that our third quarter results and recently revised adjusted EBITDA targets is not reflective of nor a repeat of overall project performance related issues. Rather, it reflects the timing of revenue recognition across our project portfolio that has been adversely impacted by the ongoing market challenges that we and so many other companies continue to face. Despite the present supply chain headwinds, we remain optimistic about our current visibility for new booking opportunities, which should drive growth in 2023 across all of our business segments as a result of the rising demand for thermal baseload generation and clean energy technology solutions. As discussed on our prior earnings call and mentioned in our previously announced revision to our adjusted EBITDA targets, the war in Ukraine and the global supply chain disruptions continue to present ongoing challenges to our various project timings and parts delivery, which again is similar to the experience of so many companies around the world. These challenges also affect our customers as their infrastructure suppliers are facing delays for raw materials, industrial components, and labor shortages that are required to cover the balance of plant and are outside of our scope. These have affected the timing of plan new bookings as well as deferrals on revenues in certain projects and parts and services. We continue to work to mitigate these challenges through various supply chain efforts, our customers' efforts, and our established global resources. We remain intently focused on minimizing these issues where possible, but recognize that we may continue to experience such adverse impacts as these global conditions persist. As best we can, we believe our revised targets reflect the currently known supply chain challenges and overall timing of new bookings, backlog runoff, and thus revenues in EBITDA. Our operational performance on projects remains strong and on target. Our recently revised expectations are not reflective of overall project performance-related issues, again, and generally we have been effective at mitigating any project issues that arise from time to time appropriately. As we look forward to the potential tailwind opportunities for our business segments, As demand for energy security and alternatives to natural gas continue to emerge, we remain committed to expanding our operations both domestically and internationally as a global technology leader and solutions provider. Healthy and elevated demand trends along with global initiatives around hydrogen and the decarbonization future continue to position the company well to be a leader in the clean energy transition. We have over 90 patents filed around our carbon capture technology and processes, as well as exclusive rights with patents shared with the Ohio State University through our joint R&D efforts over the past 10 to 15 years. Our biomass energy solutions combined with Oxibright, our oxycombustion technology, allows for green energy to be produced with negative carbon intensity, which allows our customers to maximize the low carbon fuel standards. We continue to develop new technologies such as green steam, long-duration storage, as well as exploring and testing various fuel alternatives for Brightloop. We continue to progress our commercialization process for Brightloop and are in detailed discussions to secure specific site locations, feedstock, and CO2 sequestration. We are now in discussions with various industrial and utility clients regarding additional commercial opportunities And the interest and application of BrightLoop continues in earnest. Throughout the third quarter, we continue to recognize increased interest in our Climate Bright decarbonization platform, as evidenced by the recently announced contract award to study the application of B&W Solbright solvent-based carbon dioxide capture solution for Consul. Consul Energy's advanced coal and biomass-based 21st century power plant project, which is Currently in development, this award followed shortly after our announced $42 million contract to provide construction installation services for an environmental upgrade project here in the U.S. for a power plant. Together, these developments speak to the increasing demand for clean power production infrastructure and validate our growth pipeline within the environmental segment. We will discuss these recent award wins in further detail on the call today and provide updates on current scale-up bright loop decarbonization and hydrogen and gas production technologies. With respect to our bookings and backlog at the end of the third quarter, we experienced strong year-over-year growth, supporting our outlook for improved fourth quarter performance and our ability to reiterate our adjusted EBITDA target for the full year 2023 of 100 to 120 million. For the third quarter of 2022, our ending backlog was $730 million, which is an increase of 35% compared to the third quarter of 2021. Additionally, when excluding the negative impact on our existing backlog related to foreign exchange rates, we saw our backlog grow sequentially during the third quarter of 2022 as compared to the second quarter of 2022. Bookings for the third quarter 2022 were $227 million, an increase of 31% as compared to the same period a year ago, demonstrating our continued success in converting our recently expanded $7.8 billion of identified global project opportunities. Our current visibility for new booking opportunities reflect an increase over the last quarter, $7.5 billion of identified pipeline opportunities in this is expected to drive growth through 2023. We look forward to announcing additional contract awards when these prospects materialize. We anticipate an additional new-built waste-to-energy announcement yet this year. That plus our current backlog in waste-to-energy has significantly increased towards our goal of revenues being two-thirds renewable and environmental and one-third thermal in the near future. The $42 million environmental segment contract award I mentioned earlier to provide construction and installation services for the environmental upgrade highlights our strategic focus on providing the necessary equipment to enable clean and efficient processes for our customers' operational success. We strive to provide existing new customers with the technology required to enable a sustainable future and are excited to provide our extensive expertise and solutions. Our recently announced contract award to study the application of B&W Solbright solvent-based carbon dioxide capture solution for Consul Energy's advanced coal and biomass-based 21st century power plant project is yet another great example of how we are providing our customers with transformative technology solutions. Through this study, we aim to evaluate how our Solbright technology would be used to treat the flue gas stream from a power plant to capture CO2 and generate clean energy with near zero emissions. We remain intently focused on advancing this study to show how our advanced carbon capture technologies can be used on this groundbreaking clean energy project and similar projects in the future. I'll now turn the call over to Lou Salamone, who will discuss some of the financial details for the third quarter.