In a recent announcement, Babcock & Wilcox Enterprises (BW), a global leader in energy and environmental products and services for power and industrial markets, unveiled its financial results for the third quarter (Q3) of 2023 that triggered a significant decline in the company’s stock. BW-PA, a subsidiary, saw a decline of 26.64%, marking a challenging period for the company. The report also detailed a strategic business realignment initiative.
At the time of this publication, Babcock & Wilcox Enterprises Inc stock (BW) has witnessed a decline.
Babcock & Wilcox Enterprises Inc
Current Price: $1.12
Change : -1.19
Change (%): (-51.52%)
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Babcock & Wilcox Enterprises Q3 2023 Financial Results:
BW reported improved continuing operations revenues and adjusted EBITDA in comparison to the third quarter of 2022. Thermal Revenues witnessed a notable uptick of 17%, contributing to the positive financial performance. The financial highlights for Q3 2023 include revenues of $239.4 million, a 13% improvement from the same quarter in 2022. Net loss was reported at $12.3 million, slightly lower than the net loss of $12.8 million in Q3 2022. Loss per share increased to $0.18 from $0.15 in the same period last year. Consolidated adjusted EBITDA amounted to $20.0 million, showing an improvement compared to $13.0 million in Q3 2022. The ending backlog stood at $507.0 million, aligning with the company’s expectations.
Strategic Business Realignment Plan:
As part of its strategic moves, the company announced a commitment for a $150 million Senior Secured Credit facility refinancing, aimed at reducing interest expenses by up to $5 million. Additionally, BW inked a memorandum of understanding (MoU) for a significant hydrogen offtake in Louisiana, involving CO2 capture over a 10-year period, amounting to 200 tonnes per day.
Dr. Naomi Boness, Ph.D., was appointed to the Board of Directors, enhancing the company’s expertise in hydrogen generation and carbon capture.
The heart of BW’s strategic business realignment plan is a focused shift toward higher margin aftermarket businesses across all segments, with an emphasis on sustainable and profitable growth. This includes a reduction in overhead related to large new build projects and a targeted reduction of up to $20 million in posted Letters of Credit (“LCs”) by the end of fiscal year 2024.
The company also disclosed considerations of strategic alternatives for non-strategic assets and decided to reclassify B&W Solar out of continuing operations.
Updated Outlook:
Looking ahead, BW has updated its outlook, targeting a backlog growth ranging from $550.0 million to $650.0 million by the end of 2023. The Full Year 2023 Adjusted EBITDA target is revised to $85.0 million to $90.0 million, excluding BrightLoop™ and ClimateBright™. For Full Year 2024, the company introduced an Adjusted EBITDA target of $100.0 million to $110.0 million, also excluding BrightLoop™ and ClimateBright™.
The strategic realignment plan is aimed at bolstering cash flow generation and strengthening the balance sheet, aligning with BW’s broader vision to position itself for future growth in BrightLoop™ and ClimateBright™ technologies.
