Babcock & Wilcox Enterprises (BW) risk factors, FY2024 10-K

Risks Related to Our Business, Operations and Strategy

1. 01We are in need of additional financing to continue as a going concern, and current ongoing discussions with our lenders and other parties to secure additional financing may result in additional indebtedness and dilution to our existing shareholders
2. 02We must refinance our 8.125% Notes due 2026 and 6.50% Notes due 2026 prior to their maturity
3. 03Our customers, suppliers, vendors, employees and other third parties with whom we do business may react negatively to the substantial doubt about our ability to continue as a going concern
4. 04We are subject to risks associated with contractual pricing in our industry, including the risk that, if our actual costs exceed the costs we estimate on our fixed-price contracts, our profitability will decline, and we may suffer losses
5. 05Disputes with customers with long-term contracts could adversely affect our financial condition
6. 06Our contractual performance may be affected by third parties’ and subcontractors’ failure to meet schedule, quality and other requirements in our contracts, which could increase costs, scope, or technical difficulty or in extreme cases, limit our ability to meet contractual requirements
7. 07A material disruption at one of our manufacturing facilities or a third-party manufacturing facility that we have engaged could adversely affect our ability to generate sales and result in increased costs
8. 08If our co-venturers fail to perform their obligations on a contract or if we fail to coordinate effectively with our co-venturers, we could be exposed to legal liability, damage to reputation, reduced profit, or liquidity challenges
9. 09Our growth strategy includes strategic acquisitions, which we may not consummate or successfully integrate
10. 10Our evaluation of strategic alternatives for certain businesses and non-core assets may not result in a successful transaction
11. 11Our backlog is subject to unexpected adjustments and cancellations and may not be a reliable indicator of future revenues or earnings; our inability to deliver our backlog on time could affect our future sales and profitability, and our relationships with our customers
12. 12accidents or failures, including accidents resulting in bodily injury or harm, could disqualify us from continuing business with customers, and any losses arising thereby may not be covered by insurance or other indemnification
13. 13We may not be able to compete successfully against current and future competitors
14. 14If we fail to develop new products, or customers do not accept them, our business could be adversely affected

Risks Related to Our Industry

1. 15Demand for our products and services is vulnerable to macroeconomic downturns and industry conditions
2. 16Unfavorable macroeconomic conditions may lead customers to delay, curtail or cancel proposed or existing contracts, which may decrease the overall demand for our products and services and adversely affect our results of operations
3. 17Supply chain issues, including shortages of adequate component supply that increase our costs or cause delays in our ability to fulfill orders, and/or our failure to estimate customer demand properly could have an adverse impact on our business and operating results and our relationships with customers
4. 18vendors also may be unable to meet our demand, significantly increase lead times for deliveries or impose significant price increases that we are or may be unable to offset through alternate sources of supply, price increases to our customers or increased productivity in our operations

Risks Related to Our Financial Condition

1. 19The financial and other covenants in our debt agreements may adversely affect us
2. 20Maintaining adequate bonding and letter of credit capacity is necessary for us to successfully bid on, win and complete various contracts
3. 21Our total assets include goodwill and other indefinite-lived intangible assets. If we determine these have become impaired, our business, financial condition and results of operations could be materially adversely affected
4. 22We are exposed to credit risk and may incur losses as a result of such exposure

Risks Related to Intellectual Property and Information Security

1. 23A disruption in, or failure of our information technology systems, including those related to cybersecurity, could adversely affect our business operations and financial performance

Risks Related to Government Regulation

1. 24We are subject to government regulations that may adversely affect our future operations
2. 25Our business and our customers’ businesses are required to obtain, and to comply with, national, state and local government permits and approvals

Risks Related to Environmental Regulation

1. 26Our operations are subject to various environmental laws and legislation that may become more stringent in the future

Risks Related to Our International Operations

1. 27Our business may be affected by sanctions and export controls targeting Russia and other responses to Russia's invasion of Ukraine
2. 28As a result of Russia's invasion of Ukraine, the United States, the United Kingdom and the European Union governments, among others, have developed coordinated sanctions and export control measure packages
3. 29We utilize a restricted party screening process completed by a third party to monitor compliance with applicable trade restrictions, including those trade restrictions implemented in response to the Russian invasion of Ukraine
4. 30We could be adversely affected by violations of the United States Foreign Corrupt Practices Act, the UK Anti-Bribery Act or other anti-bribery laws
5. 31Our international operations are subject to political, economic and other uncertainties not generally encountered in our domestic operations
6. 32Fluctuations in the value of foreign currencies could harm our profitability
7. 33Uncertainty over global tariffs, or the financial impact of tariffs, may negatively affect our results

Risks Related to Ownership of Our Common Stock

1. 34The market price and trading volume of our common stock may be volatile
2. 35Substantial sales, or the perception of sales, of our common stock by us or certain of our existing shareholders could cause our stock price to decline and future issuances may dilute our common shareholders' ownership
3. 36B. Riley has significant influence over us
4. 37We may issue preferred stock that could dilute the voting power or reduce the value of our common stock
5. 38The existence of some provisions of our certificate of incorporation and bylaws and Delaware law could discourage, delay or prevent a change in control of us that a shareholder may consider favorable

Risks Relating to the 2015 Spin-Off from our Former Parent

1. 39Potential indemnification liabilities to BWXT pursuant to the master separation agreement could materially adversely affect us

Risks Relating to Tax Matters

1. 40We could be subject to changes in tax rates or tax law, adoption of new regulations, changing interpretations of existing law or exposure to additional tax liabilities in excess of accrued amounts that could adversely affect our financial position
2. 41Our ability to use NOL and certain tax credits to reduce future tax payments could be further limited if we experience an additional "ownership change"
3. 42Our business could be harmed if we fail to maintain effective internal control over financial reporting, and we have identified certain material weaknesses as of December 31, 2024
4. 43Our reported financial results may be adversely affected by new accounting pronouncements or changes in existing accounting standards and practices, which could result in volatility in our results of operations
5. 44The loss of the services of one or more of our key personnel, or our failure to attract, recruit, motivate, and retain qualified personnel in the future, could disrupt our business and harm our results of operations
6. 45We outsource certain business processes to third-party vendors and have certain business relationships that subject us to risks, including disruptions in business which could increase our costs
7. 46Negotiations with labor unions and possible work stoppages and other labor problems could divert management's attention and disrupt operations. In addition, new collective bargaining agreements or amendments to existing agreements could increase our labor costs and operating expenses
8. 47Pension and medical expenses associated with our retirement benefit plans may fluctuate significantly depending on a number of factors, and we may be required to contribute cash to meet underfunded pension obligations
9. 48Natural disasters or other events beyond our control, such as war, armed conflicts or terrorist attacks could adversely affect our business