Babcock & Wilcox Enterprises, Inc.

Good evening. My name is Micaiah, and I will be your conference operator today. At this time, I would like to welcome everyone to the conference call. All lines will be muted during the presentation portion of the call with opportunity for questions and answers at the end. Sharon, you may begin your conference call at this time.

Thank you, Micaiah, and thanks to everyone for joining us on Babcock and Wilcox Enterprises' second quarter 2024 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 second 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 could 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 second quarter earnings release published this afternoon 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. I will now turn the call over to Kenny.

Thanks, Sharon, and thanks, Micaiah. And good afternoon, everyone, and thanks for joining us on our second quarter 2024 earnings call. We continue to build on our strong start to 2024 with a robust second quarter result across all of our businesses. Our results in the second quarter reflect the increased demand for our portfolio of technologies that support the generation of efficient and sustainable energy regardless of fuel source. And BMW is well positioned to capitalize on the continued growth in natural gas conversions, environmental solutions, carbon capture, and clean energy opportunities globally with utility and industrial customers. We are excited about the progress we're making to advance our revolutionary climate bright decarbonization technologies, including our innovative bright loop system that creates hydrogen without incineration or gasification, to support the world's energy transition. We continue to see opportunities for new bookings this year for these types of hydrogen generation and carbon capture projects, and we'll discuss some exciting new developments later during this call. Additionally, our teams have worked hard to reduce our overall costs, improve our margins, as we are seeing the benefits of our more selective market approach and target of higher value projects and opportunities. We've also seen an increase in paid front-end engineering design or feed studies regarding various biomass, carbon capture, and hydrogen opportunities. We expect that a few of these feed studies will lead to booking opportunities over the coming years, and we are looking at expanding our engineering teams due to the increased demand for these studies. As mentioned, We generated another quarter of strong operating results during Q2, highlighted by adjusted EBITDA that exceeded our expectation and keeps us on track to achieve our full year adjusted EBITDA targets. Based on the combination of strong thermal parts bookings and new customer activities and better than expected adjusted EBITDA through the second quarter of 2024, we are reiterating our full year adjusted EBITDA target of 105 to 115 million despite the sale of our Danish Renewable Services subsidiary, which was completed during the second quarter. The proceeds from this sale improved our balance sheet and demonstrates the execution of our stated intent to sell certain non-strategic businesses. Importantly, we remain in negotiations related to the sale of other non-strategic assets, with proceeds expected to significantly reduce our debt obligations improve liquidity, and support growth working capital. We also continue to make progress on our cost reduction efforts during the second quarter, achieving $25 million to date as we work toward our target of over $30 million of annualized cost savings. We have significantly improved the cash in our solar operations, which produced $6 million of cash in the second quarter and is now generating positive EBITDA results despite its classification. In parallel, we continue utilizing cash to ramp up our investment in Brightloop and Climate Bright as we continue developing the pipeline of opportunities and anticipate bookings later this year. These actions and our improved margins are creating a pathway that will allow us to improve our liquidity as we focus on reducing our long-term debt. The expected growth and anticipated higher margins of our Brightloop low-carbon hydrogen technology and our climate-bright decarbonization technologies should also lead to continued higher margins in the future. I would like now to discuss our strong second quarter operating performance, in which our adjusted EBITDA exceeded the company's expectations. These results, combined with strong bookings and year-to-date, set the stage for us to reiterate our full-year adjusted EBITDA target range. We are already seeing the benefits of our strategic plan as adjusted EBITDA margins expanded during the second quarter of 2024, representing 100 basis points of improvement compared to the second quarter of 23. Our margins are benefiting from the shift to reduce reliance on high-interest, low-margin new-build projects. Our margins have been further supported by strength across our aftermarket parts and services businesses. From a segment perspective, our environmental business was a standout performer during the second quarter, with revenue increasing 15% compared to the second quarter of 2023 and margins that continued to expand, which drove a 97% increase in total adjusted EBITDA compared to the second quarter of 2023. These results were primarily driven by higher margin product mix, along with a favorable closeout of the flue gas treatment project. While revenue declined year-over-year in the renewable segment as a result of our strategic shift to be more selective and reduce the number of low-margin new-build projects that we pursue, adjusted EBITDA increased 40% compared to the second quarter of last year, benefiting from our cost-reduction efforts related to the restructuring of our renewable businesses. The thermal revenues declined compared to the second quarter of 2023 as a result of a completion of a large construction project in 2023. However, customer demand for our thermal segment products and services remained strong, as demonstrated by bookings in the first half of 2024 that exceeded bookings in the same period of 2023. And we anticipate a strong Q4 based on previously announced gas conversion projects and recent parts and service bookings. We continue to see strong underlying industry trends with expanding global demand for clean power production and energy security, and a global pipeline of identified project opportunities of over 9 billion, which includes over 1.5 billion of Brightloop and Climate Bright opportunities alone. These trends are foundational drivers for our business outlook for 2024 and beyond as we continue to make considerable progress in converting this pipeline into bookings. Moving through the second half of 2024, we anticipate prospects for continued new bookings and strong financial performance. Our backlog and applied backlog at the end of the second quarter was $472,757 million million respectively, representing a slight decrease in bookings but an increase of 39% compared to the backlog and implied backlog at the end of second quarter of 2023. As we introduced last quarter, the implied backlog figure includes awarded projects as well as those under contract and have not been fully released for performance and provides a better representation of our customer demand. Looking ahead, given the new EPA requirements, we are seeing increasing opportunities for coal to natural gas and coal to biomass projects within the United States, which is very exciting for us as we look to the remainder of 2024 and into 2025. Many of these projects are either under development in the proposal stage or in final design, and have with revenue ranges of 50 to 400 million in value for B&W. With our increasing visibility of customer demand and our near-term booking success, we are reiterating our full year 2024 adjusted EBITDA target range of 105 to 115 million which excludes Bright Loop and Climate Bright. Importantly, we continue to invest in our Bright Loop opportunities and anticipate spending in the range of $10 to $15 million in 2024 on our Bright Loop projects and technology advancement, including CapEx. Our efforts to progress Brightloop 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, low-carbon intensity hydrogen. We are continuing to progress with engineering work for our previously announced Brightloop projects in Gillette, Wyoming, Baton Rouge, Louisiana, and Massillon, Ohio, In fact, today we are excited to announce a few key developments regarding our Massillon, Ohio project. As we have previously stated, it's important to prove the commercial demonstration of Brightloop both for hydrogen production as well as syngas production, which can be used as sustainable aviation fuel, or SAF, or other synthetic fuels. We have signed a 10-year take if tendered offtake agreement with CGI International for up to five tons of hydrogen per day while sequestering the CO2. We have reached indicative financing terms for the construction and leaseback of the site for up to 10 years as well. We do anticipate signing the SPV financing letters of intent and begin construction immediately with the goal of reaching hydrogen production by the end of 2025 or early 2026. This is a significant development for our Bright Loop technologies as we now will have a commercial demonstration facility near our headquarters in Ohio. This will raise our technology readiness level into bankable projects as we continue our efforts towards the Wyoming, Louisiana, and potentially West Virginia projects as well as other Brightloop opportunities where we are in discussions or have engaged in feed studies around the world. We remain excited about the prospects and outlook for the Brightloop platform with visibility to reach 1 billion in bookings by 2028, driven by a combination of small, medium, and large Brightloop projects that are in our current identified pipeline. As I mentioned earlier, this pipeline includes approximately $1.5 billion of Bright Loop and Climate Bright opportunities alone. We continue to believe this level of activity has the potential to lead to $1 billion in revenues by 2030, which would still only represent roughly 1% of the market share for total global hydrogen spend by 2030. Within Bright Loop, It's been extremely exciting to watch our team advance the engineering process and the business towards deploying these technologies at scale and further expanding our suite of carbon capture solutions. We also continue to see opportunities for new projects related to waste energy in the United States, which should enable us to leverage our Climate Bright decarbonization platform and present additional higher margin prospects. I'll now turn the call over to Lou to discuss the financial details of the second quarter for 2024. Lou?