Babcock & Wilcox (BW) Q1 2026 Earnings Transcript

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Date

May 11, 2026

Call participants

• Chairman and Chief Executive Officer — Kenneth Young
• Chief Financial Officer — Cameron Frymyer
• Director of Communications — Sharyn Brooks

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Takeaways

• Revenue -- $214 million, representing a 44% increase year over year, driven primarily by large project volume and heightened demand from industrial, utility, and AI data center customers.
• Adjusted EBITDA -- $16.1 million, a 296% increase year over year, reflecting margin improvement and increased project activity.
• Bookings -- $2.5 billion, marking a more than 1,900% increase compared to the prior year, attributed mainly to new projects in both core and AI data center sectors.
• Backlog -- $2.7 billion, up 483% compared to the prior year, due to growth in base business and incremental data center project development, with a clarifier that increases come from both core and new customer segments.
• Total pipeline -- Over $14 billion, growing more than 17% from the previous period, explicitly augmented by over $2 billion in new AI data center opportunities.
• Base Electron project revenue contribution -- $31 million, with management guiding for continued milestone-driven revenue contributions throughout the year and a larger ramp in future construction phases.
• Net debt -- $42.4 million at quarter-end, achieved after $15 million in bond repurchases, with an 87% reduction in secured debt and unsecured bonds in the quarter.
• Adjusted net income from continuing operations -- $2.2 million, after excluding $81.8 million of noncash warrant and stock appreciation rights costs related to significant share price appreciation.
• Operating loss -- $1.7 million, flat sequentially versus the prior year, as operating improvements were offset by increased noncash share-based costs.
• Debt repayment plan -- Remaining $69 million in December 2026 bonds expected to be paid off in a timely manner, supported by recent liquidity and cash flow generation.
• Core parts and services performance -- Reported strongest first-quarter revenues in recent history, driven by elevated demand as coal plants operate at around 50% capacity factors and customers increase reinvestment in baseload generation assets.
• BrightLoop initiative progress -- Continued commercial development for low-cost hydrogen and steam, with a priority placed on scaling chemical looping technology for both CO2 capture and multi-fuel flexibility at the Massillon project.
• Management guidance policy -- Guidance remains unchanged until further clarity emerges on project timing, though management noted "potential for upside" pending milestones.
• Supply chain readiness -- Management stated, "we feel good about the current supply chain that we've established" to execute multiple large projects concurrently, with proactive measures in place.
• Customer demand trends -- Customers are showing interest in both technology upgrades for coal-to-gas conversions and in power generation configurations with increased electrical output per site footprint.

Summary

Babcock & Wilcox Enterprises (NYSE:BW) delivered outstanding topline and bookings growth, fueled by surging demand from traditional utility customers and rapidly expanding opportunities with AI data centers. The accelerating pipeline and backlog indicate a major step change in project volume, especially in large-scale power generation. A significant portion of new bookings and pipeline expansion arises from data center demand, with management highlighting ongoing conversations with both hyperscalers and utilities. Aggressive balance sheet deleveraging during the period positions the company to support long-term growth with increased financial flexibility. Management maintained existing guidance while expressly noting upside potential contingent on further project milestones or accelerated manufacturing schedules.

• Management explained, "the impact of AI data center growth on B&W is truly profound," referencing the addition of over $2 billion in AI data center pipeline opportunities from both hyperscaler and utility customers.
• On the technology side, customers are increasingly considering integrated solutions that combine Babcock & Wilcox Enterprises boiler and steam turbine systems with optional combustion turbines to double power output for specific data center applications.
• Net loss from continuing operations totaled $79.6 million due to the recording of $81.8 million in noncash warrants and stock-related costs arising from the sharp appreciation in company shares.
• Management described sustained strength in parts and services visibility for the remainder of the year, supported by "more investment put into these coal plants than we've seen in the past because they are running a lot longer."
• Management cited the Base Electron project as a template for scaling manufacturing and supply chain capacity to meet growing demand from new large projects.

Industry glossary

• Adjusted EBITDA: Earnings before interest, taxes, depreciation, and amortization, adjusted for items such as noncash stock compensation and other expenses, providing a normalized measure of core business performance.
• Backlog: The total value of contracted orders not yet fulfilled or recognized as revenue, indicating future revenue visibility.
• Bookings: The total value of new orders signed within a period, reflecting customer demand and sales momentum.
• BrightLoop: Proprietary chemical looping technology developed by Babcock & Wilcox Enterprises, designed for low-emission hydrogen and steam production with simultaneous CO2 capture for industrial applications.
• LNTP: Limited Notice to Proceed; the preliminary authorization to begin project phase activities before full notice to proceed is granted.
• Hyperscaler: Large technology company operating significant cloud or data center infrastructure, often requiring specialized solutions for their scale.

Full Conference Call Transcript

Operator: Good afternoon. Thank you for attending the Babcock & Wilcox Enterprises First Quarter 2026 Conference Call. [Operator Instructions]. I would now like to turn the conference over to your host, Sharyn Brooks, B&W's Director of Communications. Thank you. You may proceed, Ms. Brooks.

Sharyn Brooks: Thank you, Allen, and thanks to everyone for joining us on Babcock & Wilcox Enterprises First Quarter 2026 Earnings Conference Call. I'm Sharyn Brooks, Director of Communications. Joining the call today are Kenny Young, B&W's Chairman and Chief Executive Officer; and Cameron Frymyer, Chief Financial Officer, to discuss our first 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 in our quarterly report on Form 10-Q that was filed with the SEC earlier today.

Additionally, except as required by law, we undertake no obligation to update any forward-looking statements. We also provide non-GAAP information regarding certain historical and targeted results to supplement the results provided in accordance with GAAP. This information, which includes our discussion of adjusted EBITDA, adjusted net income and net debt 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 first quarter 2026 earnings release published earlier today and in our company overview presentation filed on Form 8-K, which is posted on the Investor Relations section of our website at babcock.com.

Please also see our first quarter 2026 earnings release published on May 11, 2026, for further information regarding our bookings and backlog. I will now turn the call over to Kenny.

Kenneth Young: Thanks, Sharyn. Well, good afternoon, everyone, and thanks for joining us on our first quarter 2026 earnings call. We are very pleased to report one of the strongest first quarter performances in recent company history. Babcock & Wilcox continued to see significant growth in the quarter, driven by high demand for electrical generation from utility, industrial and AI data center customers. In addition, we also achieved strong operating results supported by continued momentum in our core business and ongoing debt reductions as well. Our quarterly results were highlighted by revenue and adjusted EBITDA that exceeded company and street expectations. Adjusted EBITDA was $16.1 million for the first quarter, which was 296% increase compared to the first quarter of 2025.

Our revenues for the quarter came in at $214 million, which is a 44% increase compared to the first quarter of 2025. We also achieved positive adjusted net income from continued operations of $2.2 million after removing $81.8 million of costs associated with increased noncash warrant and stock appreciation rights valuation, both of which are directly due to the significant stock price increase in the first quarter of 2026. These top line metrics capture the recent tailwinds we've seen across our business and illustrate B&W's growth trajectory moving forward as we continue to capitalize on strong global demand for parts and services, new baseload generation and behind-the-meter AI data center projects.

These recent tailwinds can also be seen in our pipeline, bookings and backlog as well, which saw significant acceleration during the first quarter of 2026. Our total pipeline grew by more than 17% to over $14 billion, including new AI data center opportunities. Our bookings and backlog values continue to surge, fueled by our core business growth and development of our Base Electron project in North Dakota as we are in further discussions with other hyperscaler customers as well. In the first quarter of 2026, we had bookings of $2.5 billion, which is more than a 1,900% increase compared to the first quarter of 2025.

Additionally, our backlog was $2.7 billion in the first quarter of 2026, which is a 483% increase compared to the first quarter of 2025. We believe our results reflect strong global demand for B&W's technologies and combined with the increased demand for power generation gives us a solid foundation for continued growth this year and for many years to come. Our core business, excluding data centers, continued to excel as our parts and services saw elevated demand from the increased operation of baseload generation in North America and beyond. Rising energy demand from consumers, industries and grid-dependent AI data centers is prompting utilities to recondition and recommission coal-fired generation assets to help meet accelerating load growth.

Existing coal plants in the U.S. are currently operating at capacity factors of around 50%, highlighting a significant source of underutilized generation capacity available to support expanding electricity needs. At the same time, elevated natural gas prices are driving improved economics of coal-based generation. This has increased utilization and created additional demand for our core business offerings. The rising demand for power across North America serves as a catalyst for B&W's continued growth, positioning us to play a critical role in supporting AI data center expansion and meeting increased baseload generation needs in the years ahead. Our project with Base Electron is progressing favorably as boiler manufacturing and steam turbines move forward.

Siemens Energy continues to progress turbine fabrication and other long lead time items such as boiler pressure parts are advancing as planned. Most of the construction, including civil and mechanical is scheduled for 2027 and 2028, and the impact of AI data center growth on B&W is truly profound as we added over $2 billion in additional AI data center opportunities in our pipeline from hyperscalers and utility customers. And as I mentioned before, we remain in active discussions with different AI data center customers regarding potential bookings in 2026. In the first quarter of 2026, we paid off $15 million in outstanding bonds that are due in December of 2026.

This is the continuation of our bond buybacks, and we expect to fully pay off the remaining $69 million in outstanding December 2026 bonds in a timely fashion. Including these bond repurchases, we have significantly reduced our secured debt and unsecured bonds by 87% in the first quarter of 2026, resulting in net debt of $42.4 million at the end of the quarter. These recent debt payments bring our net debt to below 1x our trailing 12-month adjusted EBITDA. Our efforts to progress our BrightLoop initiatives are moving forward as we further the commercial development of existing projects and continue working to improve the overall operational effectiveness of these technologies to produce low-cost hydrogen or steam.

We are building momentum around the use of chemical looping as a means to convert solid and gas fuels to either hydrogen or steam generation while simultaneously capturing the CO2 that can be used for enhanced oil or methane recovery and other beneficial uses. The commercial scale demonstration of BrightLoop at our Massillon, Ohio project still remains a key priority for B&W as we continue to position the company for expanded growth opportunities in the years ahead. I'll now turn the call over to Cameron to discuss the financial details of the first quarter of 2026. Cameron?

Cameron Frymyer: Thanks, Kenny. I am pleased to review our first quarter 2026 financial results, further details of which can be found in the 10-Q that was filed with the SEC this morning. Our first quarter 2026 consolidated revenues were $214.4 million, which is a significant increase compared to revenue of $148.6 million in the first quarter of 2025. The increase is primarily driven by large project volume, including $31 million from Base Electron and the increasing need for electricity from fossil fuels driven by the demand from AI data centers and expanding economies. Our core parts and services continue to perform well, delivering the strongest first quarter revenues in recent history.

This development comes as higher demand from consumers, industrials and AI data centers drive increased coal baseload generation. Continued growth in our parts and services is expected throughout 2026. Our operating loss in the first quarter of 2026 was $1.7 million, which is relatively flat compared to an operating loss of $1.8 million in the first quarter of 2025. Net loss from continuing operations in the first quarter of 2026 was $79.6 million compared to a net loss of $15.6 million in the first quarter of 2025. This increase in net loss is attributed to $81.8 million of noncash warrants and other stock-related costs that were recorded this quarter due to the increase in our stock performance.

Excluding the impact of these stock warrants and other stock-related costs, B&W reported adjusted net income from continuing operations of $2.2 million. Adjusted EBITDA from continuing operations was $16.1 million in the first quarter of 2026 compared to $4 million in the first quarter of 2025. I'll now turn to the balance sheet, cash flow and liquidity. Total debt on our balance sheet at March 31, 2026, was $275.9 million, which includes unamortized fees, unamortized gains from the bond swap done in 2025. Excluding these fees, gains and leases, our secured debt and senior notes totaled $237.2 million, of which $69.1 million is current, which, as Kenny stated earlier, we will be paid off within the year.

The company had cash, cash equivalents and restricted cash balance of $194.8 million, giving us net debt as of March 31, 2026, of $42.4 million against our secured debt and senior notes. With that, I will now turn the call back over to Kenny.

Kenneth Young: Thanks, Cameron. Well, in closing, we are encouraged by a strong start to 2026. Our core business continues to see sustained opportunity fueled by the evolving need for power generation and growth in areas such as the AI data center space. B&W remains focused on our objectives and uniquely positioned to capitalize on this current landscape. Our pipeline remains robust, exceeding $14 billion in project opportunities with significant tailwinds bolstered by the growing impact of AI data centers. Meanwhile, our bookings and backlog continue to convert at a strong pace, and we expect that momentum to continue throughout 2026.

As we celebrate B&W's 160th year, I would like to recognize our employees around the world, past and present, who have made this a milestone possible. Their expertise, commitment to working safely and dedication to advancing our technologies and serving our customers set Babcock & Wilcox apart and have established our company as a recognized leader in the industries we serve. I also want to thank our customers and suppliers for their continued support. And with this strong foundation, we're excited about where we're headed and confident in our ability to leverage our leading power and environmental solutions to capitalize on the many opportunities ahead.

With that, I'll now turn the call back over to Allen, who will assist on a few questions. Allen?

Operator: [Operator Instructions] Our first question comes from the line of Rob Brown with Lake Street Capital Markets.

Robert Brown: Congratulations on all the progress. First question is on the expanding pipeline, I think it went up by a couple of billion this quarter since last quarter. What's sort of the environment for the pipeline you're seeing? What are some of the opportunities you're taking a look at? And I know AI data center is driving a lot of it, but could you give us just some more color on the pipeline growth?

Kenneth Young: Sure. Yes. Obviously, the data center aspect of our business is driving quite a bit there. But there are others. We continue -- and I'll start with maybe one part here and work back. But we still continue to see a lot of opportunity in growing in either coal to natural gas conversion opportunities or in some cases, some large coal generation plant upgrades, environmental upgrades to help and assist on those particular areas. So we're seeing a lot of larger opportunities across the breadth of our portfolio of technologies, both on the core side and environmental side as well.

Specifically in the data center opportunities, we are seeing new opportunities emerge, both from utilities as well as hyperscalers that we're in discussions with that are -- in some cases, they're looking to power specific data center opportunities. In some cases, they're looking to power specific manufacturing or large manufacturing associated with data center opportunities. And so there's combinations there on the specific end case or end user where that power would be applied. But we're looking and talking to them around utilizing and leveraging B&W's boiler technology.

One of the key areas that we're focused on is supporting our customers on the ability to leverage our steam boilers with steam turbine combination, but perhaps combine that with a combustion turbine down the road, where obviously, you can gain some efficiencies through that combination of adding the combustion turbine with the steam boiler and the steam turbine generation set on that. But what we believe we also gain is you can actually increase the amount of power output provided on the same size or same square foot basis, if you will.

So in other words, if we're putting in a 50-megawatt or 100-megawatt boiler by adding the combustion turbine and combining the heat on from the turbine into the steam boiler itself, we can actually almost double the size of the output from that particular site. So with very little real estate, we can actually increase the amount of wattage that can come from that particular location. So there's interest in a few of our customers as it relates to those kind of long-term technology aspects.

And then clearly, a few customers also want to make sure that they're in a position to capture the CO2 at some future point in time, either for enhanced oil recovery or methane recovery or other uses or even sequestration. But -- so as we talk about the data center concept, there's some uniqueness around our ability to get the steam boiler and turbine out quicker than a combustion set, but does give them an ability to combine the combustion turbine at a later date in order to enhance that particular site or increase the overall productivity or output from an electrical generation standpoint. And that's an attractive value proposition for our customers. So we're looking at all of that.

Robert Brown: Okay. Great. Then on the Base Electron project, you had $31 million in the quarter. How do you see that kind of playing out? Is it really ramp significantly starting next year? Or do you get a decent amount of revenue this year?

Kenneth Young: We'll get more revenue this year. I mean, clearly, the bigger ramp, obviously, as I mentioned, is when we get into the full construction aspect on site. So not only civil and the early groundworks and all of that, but more when we're putting up steel, starting to do the steel production of the site itself. That's when there is a very significant ramp on revenue. So we'll see that as we go into next year there.

But they'll continue to produce revenue this year for Base Electron as we complete different milestones on the manufacturing side of the project itself and complete some of the on-site preparation work we need to do for engineering and other aspects for the civil construction capabilities and get the site prepped for the actual steel manufacturing itself. So there are different milestones involved in those contracts. So we'll still see further revenue this year. But yes, the huge amounts will start to impact next year.

Operator: Your next question comes from the line of Jef Grampp with Northland Capital Markets.

Jeffrey Grampp: Kenny, for some of these projects, as I recall on the last earnings call a couple of months back, it sounded like there were a couple of projects that were in, I guess, fairly serious discussions. I know you're relatively limited on what you can say on the call. But just kind of wondering on those specific projects or any others that have kind of come up on the priority list over the last couple of months, what's kind of the latest and greatest is in terms of the state of those conversations and the outlook there?

Kenneth Young: Yes. No, we still progress on those discussions with 2 or 3 different customers out there to determine, obviously, the best way to move forward with them on that. I think if we get one or so across the goal line, it will clearly be a project where we'll sign some sort of MOU or LNTP or something, obviously, to start and then allow us to get everything set up to move into the full notice to proceed at a later date. So similar to what we do just about every big project that B&W has ever been involved in. So on that front. But those discussions still continue and working through a number of different scenarios.

As typical on these kind of projects, there's a lot of different variables that the end user and customers are trying to accomplish, either be from a technology standpoint, end user standpoint, permitting standpoint, location, geography, so on and so forth. So a lot of things kind of ebb and flow as we enter into these discussions, but they continue, and we're hopeful that we can move one across the goal line.

Jeffrey Grampp: Got it. Appreciate that. As my follow-up, to the extent you get another 1 or 2 projects under the belt here that you ultimately can book. Are there any investments or things along that kind of notion that B&W may look to make to ensure it can deliver on perhaps an accelerated slate of projects? Or do you feel that the companies and the supply chains are appropriately situated to deliver on multiple projects running concurrently?

Kenneth Young: Yes. No, we feel good about the current supply chain that we've established. Obviously, around the Base Electron project, we use that in order to establish a broader aspect around potential on other data center projects so that we could begin to secure a little bit of capacity there around that. I think each one of these will be a little bit nuanced. The size of the boilers and the size of the turbines will vary. They won't -- they'll be -- as we've always talked about, we want to as much as possible use and leverage existing technology that B&W has put in the marketplace, same on the turbine side of the equation.

But there will be -- because there's a need to have different size of boilers used, right? For Base Electron, we're using the 300-megawatt boilers. In other cases, we're looking at smaller, in some cases, we're actually looking at even bigger. So the positive news on that is that we have different manufacturers lined up to be able to accept depending on the size of the boiler out there.

And so where we've been proactive on is to make sure as we move forward into these opportunities that the manufacturers are kind of if you will, sitting side-by-side with us as it relates to these so that we can ensure that we've got the capacity to make those happen out there. So we feel good about where we are right now. In the future, obviously, having security on the steam turbine aspect of it for us and some of the pressure parts is going to be crucial as we get past the 1 or 2 of these additional projects as we move along.

And we'll have to make sure that we've got -- we keep in mind how we can secure that capacity to continue to move forward. But at the moment, we feel pretty good about our position right now.

Operator: Your next question comes from Aaron Spychalla with Craig-Hallum.

Aaron Spychalla: Maybe first for me on just guidance with the better start to the year, and it sounds like confidence in activity levels. Can you just talk to visibility in the guidance and maybe cadence throughout the year?

Kenneth Young: Yes. No, good question. Obviously, we kept the guidance where we are right now, 100% just as we try to figure out how much we could shift either into construction or pull forward some of the manufacturing and other aspects around these projects that we're involved in. Once we have a better handle on that here in the coming months, then we'll relook at the guidance we put out in the marketplace, and we'll see how that goes. But I think the positive news is there's definitely potential for upside related to our guidance that exists today, and we're going to keep an eye on how things progress this year and see where it goes.

Obviously, if it doesn't hit this year, then it just goes into next year. So either way, it's a good position for B&W to be in, but we'll keep an eye on that and circle back around on that at a later date.

Aaron Spychalla: Right. Understood. And then within the guide for this year, is there a way to think about kind of that base parts and services business, what kind of contribution looks like there? And just as we think about kind of growth in the coming years, you obviously have the big projects and some of these coal-to-gas conversions. But just what's kind of that base run rate, and it seems like that business is still very much healthy.

Kenneth Young: Yes. No, it's -- I mean, obviously, our parts and services, as we mentioned, had a significantly strong first quarter, one of its best in -- from a first quarter standpoint in recent history. Usually, as you know, Q1 is a little low for us from a parts and services, Q2, maybe about the same, slightly better. But Q3, Q4 is where we really pick up on that due to the outages and other aspects. The demand we're seeing is still strong out there for that business. We don't see that changing as it goes into the rest of the year.

We have pretty good visibility into the outages that are targeted to come later this year to do maybe a significant aspect, not necessarily a gas or coal-to-gas conversion, but a broader upgrade or something maybe environmental aspects as well, too, on these coal plants. I think the uniqueness is that on the coal plants that they're being used, obviously, more and more and more, and they have capacity to be used even further than they are today. As a result of that, you're seeing more investment put into these coal plants than we've seen in the past because they are running a lot longer and the need for them to run now is also increasing.

So a lot of the utilities or a lot of our customers are investing more into these plants to ensure the longevity for the, obviously, baseload generation. So it's a good place for us to be in right now and excited about that. And we're taking it a quarter at a time, but it's -- right now, we see a very strong outlook on the parts and services and anticipate that continuing right now for the foreseeable future. I don't -- the concept of the utilization on this, and that's the good news about it. These aren't just one-off kind of parts aspects. This is based on a continuation of these plants running.

We don't see that slowing down anytime soon.

Aaron Spychalla: Right. Okay. And then just maybe almost housekeeping. On the pipeline expansion to $14 billion, it's great to see. You had kind of talked about a data center power gen pipeline of $3 billion to $5 billion plus, I think. Is most of that increase just driven -- the $2 billion kind of driven by an increase in that pipeline or anything else to highlight?

Kenneth Young: Yes. That's -- I mean the data centers obviously have a large impact just because of the size consideration of those. There are a few that we're talking to that are in the 500 megawatts range. To start with, there's a couple that are in the 300-megawatt range, but there are some that are in the 1 to 2 gigawatt range. So there is a big demand for that as the data centers continue to grow. And obviously, we're not going to book all of that business, but the opportunities are wide across that size range. So when you're talking about a 1 gigawatt plant or higher, that's a significant project for us.

And so obviously has solid revenue ramifications if we get that booked across the goal line. So overall, the pipeline out there is reflective of that, and we -- it's been able to allow us to grow it quite a bit. But -- and the opportunities are still continue to evolve or come. But keep in mind, the pipeline is projects where we think we'll close, not necessarily 100% with us, but we think we'll close within the next 3 years. There's obviously opportunities that are outside that 3-year window that would increase the size of that. But we don't talk about the opportunities.

But just to give you some idea, there's a lot of conversations on things that could be 4 years out that don't make it to the pipeline for that very definition reason.

Operator: We have reached the end of the Q&A session. I will now turn the call back to Sharyn Brooks for closing remarks.

Sharyn Brooks: Thank you for joining us. That concludes our conference call. A replay will be available for a limited time on our website later today.

Operator: You may now disconnect.

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