Babcock & Wilcox Enterprises (BW) Q4 2025 earnings call transcript

Thank you, Tamia, and thanks to everyone for joining us on Babcock and Wilcox Enterprises fourth quarter and full year 2025 earnings conference call. I'm Sharon Brooks, Director of Communications. Joining the call today are Kenny Young, B&W's Chairman and Chief Executive Officer and Cameron Frymeyer, Chief Financial Officer, to discuss our fourth quarter and four year 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 published on March 4th, 2026, and in our annual report on Form 10K that is filed with the SEC today.

Additionally, except as required by law, we undertake no obligation to update any forward-looking statements. We also provide non-gap information regarding certain of our historical and targeted results to supplement the results provided in accordance with GAP. This information should not be considered superior to or as a substitute for the comparable GAP measures. A reconciliation of historical non-gap measures can be found in our fourth quarter and full year 2025 earnings release published on March 4th, 2026, and in our company overview presentation filed on Form 8K, which is posted on the investor relations section of our website at Babcock. com. I will now turn the call over to Kenny.

Thanks, Sharon. Well, good afternoon, everyone. And thank you for joining us on our fourth quarter and full year 2025 earnings call. Over the past year, Babcock and Wilcox has seen significant growth due to higher demand in electrical generation. Our company has reached a new pinnacle, which combined with recent announcements allows us to increase our 2026 adjusted EBITDA target range to between 80 and 100 million. Our core business, excluding data centers, continued to grow as our parts and services saw elevated demand from the increased operation of base low generation in North America and beyond.

As energy needs continue to expand from consumers, industries, and data centers that utilize grid power, coal plants are being reconditioned and reengaged by utilities to help meet that accelerating demand. Existing coal plants in the U. S. have been operating at less than 50%. And these power plants have untapped capacity that is starting to be used to support the increased power demand.

As natural gas prices climb, the cost of coal operations has become more attractive, which translates into greater use of parts and services, as well as upgrades and enhancements, all of which increase demand for our core business. Our parts and services revenues grew by over 17% in 2025, and we saw growth continuing in 2026 as well. As a reminder, the majority of our parts, services, and small upgrade revenues are not in our backlog, as the book-to-bill cycle is much quicker than longer-term projects.

The increasing demand for power in North America serves as a catalyst for BMW's continued growth, positioning us to play a pivotal role in supporting AI data center expansion and increased base low generation needs in the years ahead. Our recent announcement of a full notice or full approval to proceed on our project with base electron is an exciting step forward into the AI data center space. Our agreement with base electron, backed by applied digital, is valued at 2.4 billion and is intended to deliver 1.2 gigawatts of electricity that will be directly connected to the grid in support of AI factory campuses.

Combining steam turbines with our previously designed and engineered 300 megawatt boilers enables us to eliminate months of initial development work that is required with typical new boiler projects. Overall, this can help accelerate a standard delivery schedule by up to a year. Site visits are now underway, and we've started the boiler manufacturing process. Seaman's energy has started the fabrication process of the turbines and work is scheduled to commit at the site later this year, with most of the construction, including civil and mechanical, scheduled for 2027 and 2028.

We are also working closely with the Boilermaker Union to ready the labor force needed at peak periods throughout this project. Currently, just over 430 million of this contract is fixed price, specifically the boilers and the steam turbines, while the remaining work is covered under a cost plus approach. Applied digital is backstopping the contract with a guarantee of full and timely performance of all of base electron's obligations.

Base electron has also indicated its interest in purchasing another 1.2 gigawatts of power for BMW, possibly at a different location.

The impact of this contract on BMW is truly profound, and we have now added 3 to 5 billion in additional AI data center opportunities to our portfolio. We believe our proven technologies are well-positioned to deliver the reliable high-capacity power generation that is required to meet the growing demands of power grid today. Furthermore, we are in real-time discussions with additional data center customers around specific opportunities.

A few of these are actively underway right now, and we hope to be able to issue further announcements and details in the coming weeks. These potential projects with other developers, hyperscalers, and utilities, if booked, will also utilize BMW boiler designs in combination with steam turbines. As a result, and even after converting 2.4 billion of our pipeline to backlog, these new opportunities are now reflected in our current pipeline of over $12 billion.

Additionally, we are seeing increased utilization of coal-fired power generation along with upgrades and enhancements driven by initiatives from the U. S. Department of Energy and the National Energy Dominance Council combined with rising demand for fossil fuel-based power generation and extended lead times for combustion turbines. These dynamics highlight our ability to deliver solutions more quickly by leveraging our proven steam generation technologies.

We are now in early discussions regarding the potential of new power generation utilizing coal technologies and are excited to see this development moving forward. For utilities, coal is an offset to higher natural gas prices, and either through upgrades or new build, we see the reliance on coal technologies continuing here in the U. S. with additional facilities being added in Asia as well.

Our backlog continues to benefit from this increased demand for coal and power generation, as well as the tailwinds from AI data center growth. In total, we saw our continuing operations backlog rise to $2.8 billion, which is a 470% increase compared to the end of 2024. Our pipeline of over $12 billion grew by roughly 20% in 2025, even with the conversion of this recent project to backlog. And we do see continued pathways for growth moving forward into 2026.

During the fourth quarter of 2025, we delivered strong operating results while displaying continued core business momentum, revenue, operating income, and adjusted EBITDA, all significantly outperformed company and consensus expectations for the quarter. Adjusted EBITDA was 53% higher compared to the fourth quarter of 2024, and operating income was up 373% when compared to the same period of 2024. These results during the quarter reflect the strong demand for our diverse portfolio of technologies and demonstrate BMW's evolution and strategic advancements over the past year. In recent months, we fully paid off the remaining outstanding bonds due in February 2026 and expect to fully pay off the remaining outstanding December 2026 bonds in a timely fashion.

Our bright loop advancements continue to evolve behind the scenes, including our masculine and Wyoming projects. 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, as well as other beneficial uses.

The commercial demonstration of bright loop at Maslow and remains an important milestone for BMW as we continue to position the company for additional growth opportunities in the future. I'll now turn the call over to Cameron who will discuss our full year 2025 results. Cameron?

Thanks, Kenny. I am pleased to review our full year 2025 finance results, further details of which can be found in the 10k that was filed with the SEC this afternoon. Our 2025 consolidated revenues were 587.7 million, which is a modest increase compared to the revenue of 581 million in 2024. Our core parts and services continue to excel across 2025, increasing revenues 17% outperforming expectations due to higher cold generation usage and growing based on demand in North America. Continue growth in our parts and services is expected throughout 2026.

Our operating income in 2025 was 20.7 million, which was an improvement compared to an operating loss of 6.3 million in 2024. Loss from continuing operations in 2025 was 32.8 million compared to a loss of 104.3 million in 2024. And our last first share from continuing operations was 45 cents in 2025 compared to a loss per share of $1.30 in 2024.

Adjusted EBITDA from continuing operations is 43.7 million compared to 21.2 million in 2024. As Kenny stated earlier, we have announced our full year 2026 adjusted EBITDA target range is between 80 to 100 million dollars. I'll now turn to our balance sheet, cash flow and liquidity. Total debt at December 31st 2025 was 321.1 million, which includes unamertized fees and unamertized gains from our bond swap earlier this year.

Our current debt consists of 83.9 million of December 2026 bond, which as Kenny stated earlier will be paid off within the year. And 151 million of bonds due in 2030, or 129.5 million of bonds when unamertized fees and unamertized gains are excluded. The company had cash in cash equivalents and restricted cash balance of 201.4 million, giving us a net debt as a December 31st 2025 of 119.7 million or 79.7 million when excluding unamertized gains fees as well as leases.

As Kenny previously mentioned, we delivered a significant year over year improvement in our net debt reducing it by 217.3 million compared to December 31st 2024. Additionally, in December of 2025, BMW paid off outstanding bonds due in February of 2026 and remaining outstanding December 2026 bonds we paid off this year.

With that, I will now turn the call back over to Kenny.

Thanks, Cameron. Well, we are excited about our growing opportunities to expand in the power generation for the rapidly evolving AI data center space. And we remain focused on executing against our strategic plan. We remain uniquely positioned to capitalize on the growing global demand for base load electrical generation. And our pipeline remains robust, exceeding 12 billion in project opportunities with significant tailwinds bolstered by the growing impact of AI data centers.

We anticipate prospects for the new bookings and further strong financial performance throughout 2026. I would like to once again recognize the hard work and expertise of our employees around the world who help us meet our customers needs today and further strengthen our ability to support the energy needs of the future. We would also like to recognize and thank our vendors and manufacturers around the world who are working to meet the requirements of our initial data center project. And importantly, are working closely with us to ensure timely delivery on the next project once booked.

These manufacturers are working to ensure we have the necessary resources and delivery schedules to meet our customer demands. We continue to be enthusiastic about the path forward and expect 2026 to be a strong operational year for BMW, with resilient global demand for our technology driving sustained growth in the quarters ahead.

In closing, BMW is also celebrating its 160th year. And it's a good time to reflect on some of the milestones and firsts that have defined our company history. From playing a leading role in the global industrial revolution of the 19th century, to helping make universal electrification from coal and natural gas possible, to developing some of the world's most efficient and effective environmental emissions control, renewable energy, and hydrogen generation and carbon capture technologies, BMW has constantly been at the forefront of innovation.

But it all began with creating steam for power. And BMW boilers and steam generation technologies have contributed to more than 400 gigawatts of total electrical capacity worldwide. We're proud of our history and we're excited about what lies ahead for our company. And with that, I'll now turn the call back over to Mia, who will help us with a few questions.

Hi, Aaron. You know, maybe first on. Hi. Maybe first for us, just on the, you know, the base electron project, you know, moving to 2.4 billion. Can you just talk about the dynamics there versus the limited notice? And then just on the project, any other color on timeline? You know, you talked a little bit about some of the milestones, but maybe just a little bit more detail there and then, you know, timing of kind of working capital needs and cash flows on your end.

Sure. Let me see if I can capture that. So to back up as you indicated, obviously, we announced the limited notice perceived last November, I believe, for 1.4 billion on the project. We, you know, typical in large projects until we get to the final notice to proceed. There's always variability in the exact scope and final amounts of the project at that time. So that's why we'd like to take that approach. So as we were working through the final scope on the project, the final terms and conditions of the contract is, you know, we mentioned the firm versus time or cost plus scenarios on it. We were able to then to complete the contract plus the final scope and those negotiations, which led us then to the 2.4 billion dollar announcement for the gigawatts being provided.

So it's kind of normal evolution from a limited notice to proceed. The final notice to proceed and there's some variability always in the dollar amounts, depending on that final scope and as well as contract terms and conditions in that regard. So I think that was one question. The other on kind of the milestones and what's happening, as you mentioned in the remarks, we're beginning, you know, the site visits are underway on that particular piece. We have the manufacturing processes going at various locations around the world, both from a turbine standpoint and the processes for the boiler pressure parts construction at various locations around the world.

And obviously very confident meeting the schedule and the timelines for delivery. So, you know, some of the variability right now is waiting to get some specific dates on when construction on site will begin. Obviously, we're working through those, there's details behind the scenes on that, but we're anticipating, you know, some work beginning this year at this point time. And then obviously a bulk of this will move into 2027 and 2028 once we are well into the construction phase of this standpoint. So I think the exciting aspect is, you know, working obviously with our manufacturers as well as with Siemens on the turbines along with the boiler makers in the union, obviously getting the labor force ready.

You know, we do feel confident that we can meet those timeframes and the fact that we're using previously engineered boilers. Eliminates a significant amount of timeframes in this project schedule. So gives us confidence in being able to complete this, you know, on time.

Yeah, so we obviously there's, you know, a little bit baked in from the contribution of the power project into that increase for sure on that. Again, variable until we know more specifically when we get cost to the site. And that's, you know, obviously where our revenue recognition is based on cost, as you know, so the key component there is that we're able to drive cost to the project on the site on that. So we wanted to increase obviously inclusive of that. And obviously, you know, there's some elevated increases that we're seeing just in some of the general part services in upgrades and usage around some of the coal and natural gas projects that were involved in as well too.

So, you know, the combinations of those gave us the confidence to increase that. We also, I think, extended the range a little bit, you know, 80 to 100 million because of some of the variability when we specifically start some of the construction, you know, on site as it relates to the base electron contract.

Yeah, Aaron, I think as typically you'll see the growth and adjusted even our revenue throughout the year.

Yeah, that's a cool aspect. Okay, and then maybe one last one just on that, you know, cold the gas project. Can you maybe give an update there, you know, how far you are into that project timeline to finish that up and then just any other thoughts on the pipeline for those types of opportunities as well.

Yeah, so as of right now, we're, you know, we're on schedule here and I think we're, you know, we'll finish up really bulk of the 27 or 26 and then go to 27.

So, no, no issues there. On pipelines that we've got other, not that large, but there's other conversion projects that we're in discussions on as it relates that, you know, again, interestingly enough, because some of the developments that are coming out of Capitol Hill. You know, some of the recent remarks by President Trump, there's, you know, some mandates and some of the, the utilities are looking at extending coal power generation further. Some of that due to, as I mentioned in the remarks on the higher price of natural gas, right, so they're extending out some of the coal plants to last longer. So some of the natural gas conversions or a few of them are shifting out in later years, but in the meantime, some of those plants now are going through, you know, a little bit higher or increased upgrades or parts replacement to continue operating those in the as efficiently as possible.

So it, you know, both help us obviously on those, but we're seeing a little of that impact as well too.

Thanks, Aaron.

Yeah. So we're, you know, as mentioned, obviously base electron has expressed interest in an additional, you know, 1 gigawatt or 1.2 gigawatt worth of power on that. We are also, you know, in discussions, you know, I would say, again, as I mentioned in the comments, real time discussions with one or two other projects outside of base electron and applied that are looking at the similar.

Solution made the boiler size may vary. You know, there's a project or two looking at smaller boilers, but more that, but it's still in the 1 gigawatt range. So most of the data center projects usually are when we have discussions. It's in the, you know, 1 or 2 could be in the 500 megawatt range. Most are in the 1 to 2 gigawatt range when we get into discussions about the power solutions.

Our specific scope on some of those will vary a little bit. You know, in some cases, it'll be a little more turnkey like we're doing at base electron. Others are, we're in discussions on right now would be more for us to provide the boiler and the steam turbines.

But under a, you know, a different EPC structure. So there are, you know, different levels of scope that we're involved in, but from an overall size standpoint. Most of those discussions are in a very similar size, both in the, you know, the gigawatt aspect. Some are different scope on a total project basis. So they'll have different pricing elements, but, you know, you can kind of get a sense of the general project impact that would come from these additional projects if we can get them booked.

Yeah, no, great question. So we are, you know, as I mentioned, or tried to mention in the remarks, we are working closely with Siemens and other, you know, turbine companies. But working with them closely, we've got several meanings coming up over the next few weeks, but trying to establish increased capacity on the steam turbine side of this. So again, either through Siemens in that relationship or, you know, depending on size with one or two other turbine companies around the world.

You know, the great aspect around using steam turbines versus combustion turbines is that there's, especially when we get to smaller turbines, there is more manufacturers and a little bit better excess capacity that we can leverage within the manufacturing process on that side. So when we negotiated the first set of turbines with Siemens, we were also working with them and continue to do so to identify places where we can leverage and get to, you know, more possible steam turbines with Siemens, also discussions with others out there to ensure that we have the capacity to meet those data center project needs.

We've also taken that same approach on the boiler pressure part manufacturing side, you know, both with steel aspects here in the U. S. , fabrication here in the U. S. , but also with our manufacturing partners and companies and our own manufacturing facilities that we have, but also our partner manufacturing facilities that we have in Central Asia and Southeast Asia to make sure that we have the right resources and everything lined up on those raw materials from various components on steel pressure parts to be able to make the manufacturing schedules and have those shipped.

We're looking at one case where we're looking for the possibility to ship a modular boiler approach through obviously a water access shipping standpoint, but that can be delivered directly to site on one of the opportunities that we're in discussions on.

Instead of a stick build on site, it would be more of a modular aspect on site. And by spreading those across different manufacturers because of different sized boilers and different sized turbines, we can, we have confidence in having the capacity and the manufacturing to meet these next two or three projects that we're in discussions on as well.

On top of that, you know, critical component is the labor force. And the Boilermakers who we have a really good relationship with has been instrumental in helping us prep and prepare for these particular project sites on the readiness of labor force and availability as we look down the road to have these construction schedules outlined and obviously eventually move under contract. So we're looking at it both on that side. And then of course in B&W internally as it relates to having the right team aspects ready to go to project manager these from the procurement phase all the way to the construction phase, to the delivery phase, to the onsite phase, to the commissioning and obviously the project completion phase as well.

The good news about this, and I think that's where it helps show is that B&W is not actually engineering new boilers here. So the pressure usually on scope for us is if we have to actually extend beyond the engineering resources that we have, which we're slowly adding to that, but we don't have an immediate impact on those engineering resources because we're leveraging previously designed boilers and that all of those things combined to give us the confidence and the capacity to deliver these.

Hey, Jeff. Okay. On the.

Yeah, no, good. Good question. Obviously, we don't want to get to that front negotiate contracts in the public space, but you know, we are in discussions. I think like most projects for us right there would be an evolution where we would. If we do get it booked or announced, we would enter into a, you know, some sort of an initial phase, whether that's a limit to notice, proceed or are some other form of agreement right that would give us the ability to map out all of the site elements. At this specific location on this other opportunity, the delivery schedules, you know, the layout aspects of it. And it allows them also to use our technologies in various permits and other aspects around the project while we ready the full manufacturing process for those specific boilers and turbines on that front.

So we are in discussions there. You know, I hate to put a timeframe on those. You know, hopefully we can get to, you know, at least an initial discussion or announcement in the next several weeks, but we'll, you know, we just have to see how that goes. But we are in that level of discussion with one or two other opportunities at the moment.

Yeah, for sure. One or two of the projects that we're contemplating, you know, that potential immediate potential here were also, you know, underway in parallel with discussions with applied for certain. But I would say also, you know, as the result of the announcement of the applied contract, the amount of inbound interest from a, both hyperscalers, utilities and other developers and other IPPs. Has been extremely, boy, lack of a term, I mean, very significant, right? So, and that's, I would say, around the world, not just here in North America, but in other locations around the world as well too on that. So we'll, you know, some of those are come from very mature clients, meaning, you know, they've got real projects behind them.

You know, some of those opportunities come from developers and other aspects that don't, right? But, you know, it's, I think the, the amount of attention that we picked up on, not only, I will say in the marketplace, but I would also say, you know, within, you know, the Department of Energy and the Energy Dominance Council has also been significant on this and the support of this as well too. So, you know, we have, you know, we're in discussions with a lot on Capitol Hill, as well as the Department of Energy, and they're very much aware of the progress, not only on the applied base electron project, but also potentially on one or two of these others as well.

So, you know, all of that has been very much a positive for us, you know, today, but we'll see how that goes in the future, but it's pretty exciting at this point in time.

Yeah. I mean, Jeff, I think right now it's with applied being, you know, such a large contract and, you know, days, weeks of POC accounting, where they can move that one way or the other. I don't think we're going in that kind of detail at this point time, just because it could move, you know, depending on how all the stuff works out, which is also how we got that larger range.

All right. Thank you.

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