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Babcock & Wilcox Enterprises, Inc. (BW)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered year-over-year improvements in revenue (+15% to $200.8M), operating income ($11.6M vs. -$3.3M), and adjusted EBITDA ($23.9M vs. $15.4M), while the net loss from continuing operations narrowed to $45.0M; backlog ended 2024 at $540.1M (+47% YoY), supported by strong Thermal demand and bookings momentum .
  • Versus Wall Street, revenue missed consensus ($200.8M vs. $213.1M*) while Primary EPS beat (actual -$0.028* vs. -$0.05*), reflecting stronger profitability than expected despite a top-line shortfall; the company’s reported diluted EPS from continuing operations was -$0.52 . Values retrieved from S&P Global.
  • Management introduced FY2025 adjusted EBITDA (ex BrightLoop/ClimateBright) of $70–$85M and expects positive net cash flow in 2025 excluding BrightLoop; during Q4 the Thermal business benefited from a large natural gas conversion and a major construction project, and the company continued debt-reduction initiatives and asset sales .
  • Strategic tailwinds include utility/industrial base-load demand (AI data centers, EVs), a growing FEED pipeline (12–15 studies >$1B potential), and a full notice to proceed on a $246M coal-to-gas conversion at AES Indiana (scheduled completion Q1 2027), which supports multi-year revenue visibility .

What Went Well and What Went Wrong

What Went Well

  • Adjusted EBITDA expanded 55% YoY to $23.9M in Q4, with segment EBITDA growth in Renewable (+$5.0M vs. $3.1M) and Environmental (+$4.0M vs. -$1.2M), and Thermal steady at $17.9M; management emphasized margin benefits from shifting away from low-margin new builds . “Our margins are benefiting from our strategic shift to reduce reliance on high interest, low-margin new build projects” .
  • Bookings and backlog strength: FY2024 bookings reached $889.6M (+39% YoY) and year-end backlog was $540.1M (+47% YoY), positioning for sustained growth in 2025 and beyond . “We continue to see strong demand... and we expect this will further drive increases to our backlog and bookings” .
  • Strategic projects: full NTP for AES Indiana $246M conversion (multi-year revenue), and continued BrightLoop development including West Virginia’s $10M performance-based support and Massillon, OH progress toward hydrogen by early 2026 .

What Went Wrong

  • Revenue missed S&P consensus (actual $200.8M vs. $213.1M*), with Environmental segment revenue down 39% YoY due to project timing and lower ash-handling volume; company-wide EPS remained negative on a GAAP basis (-$0.52 diluted continuing ops) . Values retrieved from S&P Global.
  • Going-concern risk disclosed: debt maturities and a springing maturity reclassified a large ABL facility to current liabilities; management is seeking refinancing and asset sales, but plans were not finalized at filing .
  • Tariff uncertainty could affect project timing and customer decisions; management cited possible impacts ranging from minor to multi-million-dollar on specific projects, contributing to a wider FY2025 EBITDA range .

Financial Results

MetricQ4 2023Q3 2024Q4 2024
Revenue ($USD Millions)$174.7 $209.9 $200.8
Operating Income ($USD Millions)$(3.3) $(1.5) $11.6
Net Income (Loss) – Continuing Ops ($USD Millions)$(58.3) $(11.1) $(45.0)
Diluted EPS – Continuing Ops ($USD)$(0.70) $(0.16) $(0.52)
Adjusted EBITDA ($USD Millions)$15.4 $22.3 $23.9

Segment breakdown (revenues and adjusted EBITDA):

SegmentQ4 2023 Revenue ($MM)Q4 2024 Revenue ($MM)Q4 2023 Adj. EBITDA ($MM)Q4 2024 Adj. EBITDA ($MM)
Renewable$28.5 $33.6 $3.1 $5.0
Environmental$31.3 $19.0 $(1.2) $4.0
Thermal$115.0 $148.2 $16.3 $17.9

KPIs:

KPIQ4 2023Q4 2024
Quarterly Bookings ($USD Millions)$140 $426
Backlog (as of year-end, $USD Millions)$369 $540
FY Bookings ($USD Millions)$638 $890

Consensus vs. Actual (Q4 2024):

MetricConsensus (Q4 2024)Actual (Q4 2024)Surprise
Revenue ($USD Millions)$213.1*$200.8 -$12.3 (-5.8%)*
Primary EPS ($USD)-$0.05*-$0.028*+$0.022*

Values retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted EBITDA (ex BrightLoop/ClimateBright)FY2025N/A$70–$85M Introduced
Adjusted EBITDA (ex BrightLoop/ClimateBright)FY2024$105–$115M (Q2 reiteration) $91–$95M (revised after divestitures, Q3 call) Lowered
BrightLoop & ClimateBright spendFY2025N/A$10–$15M Introduced
Net cash flow (ex BrightLoop)FY2025N/AAnticipate positive Introduced

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q4 2024)Trend
AI/data-center power demandEmphasized as tailwind; growing FEED activity (12–15 studies; >$1B potential) Reaffirmed as key driver; 12–15 active FEED studies Consistently strengthening
Debt/going concern & refinancingLiquidity improvement via asset sales; working toward debt reduction Going-concern qualification; plans to refinance and sell assets, in active discussions Elevated focus on refinancing
BrightLoop progressMassillon offtake and financing path; Wyoming/Louisiana engineering Target hydrogen by early 2026; $10M WV support; bookings target ~$1B by 2028 Execution milestones advancing
Thermal fuel-switching & pipelineLarge gas conversions under development; Thermal bookings strength AES Indiana $246M full NTP; multiple conversion prospects into 2026–2027 revenue Visibility improved
Tariffs/macro & EPAMacro caution (inflation, FX, supply chain) Tariffs may alter project timing/margins; EPA reconsideration seen as limited impact on BW’s mix Uncertainty persists, manageable

Management Commentary

  • “We believe the increasing need for power and electricity fueled by demand from artificial intelligence data centers, electric vehicles and expanding economies will be key drivers for growth... we expect these tailwinds to increase in the coming years” .
  • “Our continuing operations going into 2025 have the largest backlog in recent company history... We also remain focused on reducing our overall debt... and anticipate returning to positive cash flow in 2025” .
  • “Adjusted EBITDA from continuing operations was $68.9 million... leading to our Full Year 2025 adjusted EBITDA target range of $70 million to $85 million” .
  • “Adjusted EBITDA... was a 55% year-over-year increase... Our margins are benefiting from our strategic shift to reduce reliance on high interest, low-margin new build projects” .

Q&A Highlights

  • Guidance range drivers: Management cited tariff-related cost pass-through uncertainty and timing impacts on customer decisions, plus the need to finalize debt restructuring — hence the wider FY2025 EBITDA range .
  • Tariff impact: Discussions underway with customers; impacts could range from tens of thousands to $5–$7M per project depending on scope; too early to quantify outcomes .
  • Wyoming project and IRA: Working with Black Hills; pursuing DOE financing; congressional support noted; timing subject to new administration’s process .
  • EPA emissions reconsideration: Viewed as limited impact on BW’s long-term mix; potential minor delays in some gas conversions but overall neutral — BW serves coal parts/services and natural gas conversions .
  • Data-center and biomass bookings: Expect 1–2 data-center-related power projects to book in 2025 for revenue over 2026–2027; focusing less on large international new builds and more on North American parts/services .

Estimates Context

  • Revenue missed consensus ($200.8M vs. $213.1M*) and Primary EPS beat (actual -$0.028* vs. -$0.05*). Only one EPS estimate and three revenue estimates were recorded for Q4 2024, suggesting thin coverage and higher dispersion risk*. Values retrieved from S&P Global.
  • SPGI EBITDA actual (-$14.1M*) diverged from the company’s non-GAAP adjusted EBITDA ($23.9M), reflecting definitional differences; investors should anchor modeling on GAAP vs. adjusted constructs consistently . Values retrieved from S&P Global.
  • Implication: Street models likely need to adjust revenue timing (Environmental segment softness; project mix) and incorporate higher margins from Thermal and Environmental, while reflecting financing costs and the going-concern caveat .

Key Takeaways for Investors

  • Mix shift working: Margin trajectory is improving as BW pivots away from low-margin international new builds toward North American Thermal/services — maintain focus on adjusted EBITDA progression vs. sales growth .
  • Backlog/bookings support 2025: $540.1M backlog (+47% YoY) and $889.6M bookings (+39% YoY) underpin FY2025 adjusted EBITDA guidance of $70–$85M (ex BrightLoop/ClimateBright) .
  • Multi-year project visibility: AES Indiana $246M fuel-switch provides revenue into 2027; expect additional biomass/data-center power projects to enter bookings, creating catalysts as announcements materialize .
  • Balance sheet remains the swing factor: Going-concern disclosure elevates refinancing risks; monitor asset sales and bondholder negotiations as key stock drivers near-term .
  • BrightLoop optionality: Progress (WV $10M support; Massillon target early 2026) offers long-term upside; near-term cash flow expectations exclude BrightLoop, limiting drag while preserving strategic runway .
  • Tariff/EPA scenarios: Tariff uncertainty may tweak project timing, but pass-through mechanisms and BW’s diversified fuel/technology offering mitigate margin risk; EPA shifts likely modest for revenue mix .
  • Trading lens: Near-term moves will key off refinancing milestones and new bookings announcements; medium-term thesis leans on Thermal growth, services resilience, and margin expansion against a rising base-load demand backdrop .
Note: Values marked with * are retrieved from S&P Global.