Babcock & Wilcox Enterprises (BW) Q3 2024 earnings summary

Executive summary

• Achieved significant year-over-year operating margin improvement in Q3 2024, driven by strategic avoidance of low-margin projects, improved project performance, and cost reductions.

• Revenue for Q3 2024 was $209.9M, down 12% year-over-year, mainly due to the sale of BWRS and fewer waste-to-energy projects; net loss attributable to common stockholders was $9.0M, a significant improvement from $120.6M loss in Q3 2023.

• Adjusted EBITDA for Q3 2024 was $22.3M, up from $20.0M in Q3 2023; excluding divested BWRS, Q3 2023 Adjusted EBITDA was $12.5M.

• Completed sale of SPIG and GMAB businesses for $33.7M; total asset divestiture proceeds in 2024 exceed $116M.

• Strong demand for technologies supporting efficient and sustainable energy generation, with a robust pipeline of over $9B in project opportunities.

Financial highlights

• Q3 2024 consolidated revenues were $209.9M; excluding BWRS, revenues increased by $4.7M year-over-year.

• Operating loss of $1.5M in Q3 2024, including a $5.8M non-cash impairment and a $4.9M settlement to exit a loss-generating contract.

• Q3 2024 net loss attributable to common stockholders: $9.0M; loss per share improved to $0.10 from $1.35 in Q3 2023.

• Adjusted EBITDA (excluding BrightLoop and ClimateBright) was $23.3M, up 78% year-over-year when excluding BWRS.

• Implied bookings reached $810.5M and backlog $628.2M at quarter end.

Outlook and guidance

• Revised full-year 2024 EBITDA target to $91M-$95M, reflecting recent divestitures and excluding BrightLoop and ClimateBright expenses.

• Management expects liquidity actions and cost savings to provide sufficient funding for the next 12 months.

• Expect to invest $10M-$15M in BrightLoop projects and technology advancement in 2024.

• Anticipates continued strong demand and financial performance into Q4 2024 and 2025, supported by a healthy project pipeline.

• Free cash flow conversion expected at about 40% of EBITDA after interest and BrightLoop costs.