In This Article:
Release Date: November 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Babcock & Wilcox Enterprises Inc (NYSE:BW) reported significant operating margin improvement year-over-year, driven by strategic actions to avoid lower-margin projects and improve project performance.
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The company has a strong pipeline of 12 to 15 active front-end engineering design studies, representing potential projects worth over $1 billion.
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Babcock & Wilcox Enterprises Inc (NYSE:BW) has increased its implied backlog by 48% compared to the same period last year, excluding divestitures.
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The company has made progress on its cost reduction efforts, achieving $26.5 million in cost savings towards a target of over $30 million in annualized savings.
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Babcock & Wilcox Enterprises Inc (NYSE:BW) continues to invest in its Brightloop and ClimateBright technologies, with expectations of higher margins and growth in the future.
Negative Points
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The company recorded a $5.8 million non-cash impairment related to the sale of an asset and a $4.9 million settlement to exit a loss-generating contract, impacting operating income.
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Babcock & Wilcox Enterprises Inc (NYSE:BW) reported a decrease in consolidated revenues for the third quarter compared to the same period in 2023, primarily due to divestitures.
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The company experienced an operating loss of $1.4 million in the third quarter of 2024, compared to an operating income of $5.5 million in the third quarter of 2023.
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There is a significant amount of debt on the balance sheet, with total debt at $474.5 million as of September 30, 2024.
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The company revised its full-year 2024 EBITDA target downward due to recent divestitures, indicating potential challenges in maintaining previous financial expectations.
Q & A Highlights
Q: Can you discuss the new EBITDA guidance range of $91 to $95 million and how it compares to past guidance? A: The previous guidance was $105 to $115 million. The adjustment to $91 to $95 million primarily reflects the divestiture of SPIG and GMAB. This change bridges the gap between the new and old targets. - Kenny Young, CEO
Q: What is the conversion rate for the 12 to 15 active feed studies worth over a billion dollars, and how much of this is in backlog? A: The conversion rate for feed studies is typically high, around 40-50%. These studies are smaller in revenue but lead to larger projects. The studies are crucial for leveraging engineering strengths in carbon capture and Brightloop technologies. - Kenny Young, CEO