Babcock & Wilcox Enterprises, Inc. (BW)·Q3 2025 Earnings Summary

Executive Summary

• Q3 2025 delivered stronger profitability with operating income of $6.5M (+315% YoY) and Adjusted EBITDA of $12.6M (+59% YoY), while revenue was $149.0M (-2% YoY) as large project timing slipped later into 2025 .
• Results vs S&P Global consensus: revenue modest miss ($149.0M vs $155.6M), EPS notable beat (Primary EPS +$0.334 vs -$0.105), EBITDA slightly below GAAP consensus; company highlighted non-GAAP Adjusted EBITDA beating expectations. Bold: revenue miss, EPS beat, non-GAAP EBITDA beat* *.
• Strategic catalysts: signed LNTP for >$1.5B AI data center power project with Applied Digital; AI pipeline >$3B; global pipeline >$10B; introduced FY2026 Adjusted EBITDA target of $70–$85M (core business, excludes AI) .
• Balance sheet actions: sold ASH for $29M and Diamond Power for $177M, raised $67.5M via ATM, paid down $70M of Feb 2026 notes and announced full redemption of remaining $26M 8.125% notes due 2026 on Dec 5, 2025 .

What Went Well and What Went Wrong

• What Went Well

  • “Adjusted EBITDA and Operating Income significantly outperformed Company and consensus expectations this quarter” .
  • Global Parts & Services achieved the “highest quarterly and year-to-date bookings, revenue, gross profit and EBITDA in recent company history” .
  • AI entry: LNTP with Applied Digital for >$1.5B (1 GW) and partnership with Denham Capital; AI pipeline >$3B, global pipeline >$10B .

• What Went Wrong

  • Revenue down YoY ($149.0M vs $152.6M) on lower large project volume and bookings timing; Environmental segment projects declined YoY (projects $7.6M vs $28.3M in Q3 2024) .
  • Continued loss from continuing operations (-$2.3M), though improved from -$7.9M YoY; interest expense remained high ($8.5M Q3) .
  • Backlog lower vs Q1 2025 (Q1 $526.8M → Q2 $418.0M → Q3 $393.5M), reflecting project runoff and timing of releases .

Financial Results

• Quarterly overview (oldest → newest):

• Segment Revenues ($USD Millions):

• Segment Adjusted EBITDA ($USD Millions):

• KPIs & Balance Sheet:

• Margins (S&P Global):

Values retrieved from S&P Global.*

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “The impact from this deal on B&W is profound, adding over $3 billion to our pipeline which brings our total global pipeline to over $10 billion” — Kenneth Young, CEO .
• “Adjusted EBITDA and Operating Income significantly outperformed Company and consensus expectations this quarter” — Kenneth Young .
• “We anticipate 2026 Adjusted EBITDA from our core business in the range of $70 million to $85 million… This range does not include any AI Data Center projects” — Kenneth Young .
• CFO framing: pro forma net debt ~$113.2M post equity raise, implying 0.8–1.6x targeted FY2026 EBITDA — Cameron Frymyer .

Q&A Highlights

• Applied Digital project next steps: finalizing location and full NTP in coming months; leveraging “off‑the‑shelf” 300 MW boiler designs and multiple steam turbine suppliers; working capital expected neutral/positive via upfront payments; revenue recognition weighted to 2027–2028, minimal in 2026 .
• AI pipeline capacity: boiler fabrication partners and multiple turbine vendors onboard; capacity viewed as adequate; Denham partnership to convert coal plants to gas adds to pipeline .
• Risk sharing & structure: scope for B&W >$1.5B includes boilers, turbines, and construction; risk sharing with manufacturers/turbine suppliers; technology risk reduced by proven designs and prior installations; equity-linked warrants with Applied Digital seen as positive alignment .

Estimates Context

• Consensus vs actual (S&P Global; Q3 2025):

Values retrieved from S&P Global.*

• Bold beats/misses: Revenue miss (~$6.6M); EPS beat (swing from expected loss to positive EPS); GAAP EBITDA modest miss. Company emphasized non-GAAP Adjusted EBITDA ($12.6M) and noted it was ahead of expectations, explaining the discrepancy vs GAAP consensus .
• Implication: Street models likely underestimating the contribution of non-GAAP performance and discontinued operations (Q3 discontinued operations EPS +$0.36), suggesting estimates may need to adjust mix and margin assumptions .

Key Takeaways for Investors

• The EPS beat and profitability improvement were driven by margin expansion (lower corporate overhead), strong Parts & Services, and significant discontinued operations gains; however, revenue softness reflects timing of large projects — focus on booking conversion and Environmental project rebound .
• The >$1.5B Applied Digital opportunity, AI pipeline >$3B, and Denham partnership materially change BW’s growth optionality; watch for full NTP in Q1 2026 and initial revenue recognition pacing (limited in 2026, heavier in 2027–2028) .
• Balance sheet de-risking continued: asset sales (ASH $29M; Diamond $177M), debt paydowns/redemption (Dec 5, 2025), and $67.5M ATM raise — net leverage trending toward 0.8–1.6x FY2026 target EBITDA post raise .
• Segment mix: Thermal strength persists; Environmental project revenue was weaker YoY — monitor bookings and margin trajectory by segment to assess sustainability of EBITDA growth .
• Seasonality tailwinds into Q4 and Parts & Services momentum should support near-term performance; macro/tariff risks remain a watch item but management is actively managing supply chain and liquidity .
• Trading considerations: near-term catalysts include full NTP, carbon capture announcement ($70–$100M), continued bond redemptions; estimate revisions may move higher for non-GAAP profitability and EPS mix if execution continues .

Additional Source Documents (Q3 2025)

• Q3 2025 8‑K and Press Release: revenue, profitability, backlog, pipeline, and LNTP details .
• AI Data Center LNTP press release: project scope (four 300 MW gas-fired plants), timeline (operations targeted 2028) .
• ASH sale press release: $29M proceeds; B&W to represent A‑S‑H and Diamond Power products post-sale .
• Full redemption of 8.125% notes: Dec 5, 2025 redemption notice .
• ATM equity raise: $67.5M, including $50M from a single institutional investor .