Ladies and gentlemen, thank you for standing by, and welcome to the Babcock & Wilcox First Quarter 2020 Earnings Conference Call. [Operator Instructions] I would now like to hand the conference over to one of your speakers for today, Megan Wilson, Vice President of Investor Relations. Please go ahead, ma'am.

Thank you, Carol, and good morning, everyone. Welcome to Babcock & Wilcox Enterprises First Quarter 2020 Earnings Conference Call. I'm Megan Wilson, Vice President of Investor Relations at B&W. Joining me this morning are Kenny Young, B&W's Chief Executive Officer; and Lou Salamone, 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 also in our Form 10-Q that will be filed today and our Form 10-K that is on file with the SEC and provide further detail about the risks related to our business. Additionally, except as required by law, we undertake no obligation to update any forward-looking statements. We also provide non-GAAP information regarding certain of our historical results to supplement the results provided in accordance with GAAP. This information should not be considered superior to, or as a substitute for, the comparable GAAP measures. A reconciliation of historical non-GAAP issues can be found in our first quarter earnings release published yesterday afternoon. With that, I will turn the call over to Kenny.

Thank you, Megan. Good morning, everyone, and thanks for joining. Our first quarter 2020 results and our completed 2-year refinancing agreement demonstrate the effectiveness of our turnaround strategy and the confidence of our lenders, shareholders, our customers, vendors and our employees in our operational plans and growth opportunities. Despite an operating loss on a GAAP basis, we closed the first quarter of 2020 with positive adjusted EBITDA despite the combined efforts of COVID-19 and our industry's typical historical lower first quarter patterns. This is due to the determination and experience of the entire team that engineered the turnaround of our business and their efforts to implement changes to route our operations in response to the unprecedented impacts of COVID-19. Our employees and technology are unsurpassed within our industry. And despite the impacts of COVID-19, our bookings in the first quarter were about the same as the first quarter last year. And we continue to see a robust pipeline of new opportunities worldwide. Our focus is, and continues to be, bottom line results and strong cash management. Our 2-year refinancing and credit extension is a critical milestone and a significant accomplishment for our company. Our ability to complete this long-term refinancing in financial markets distressed by the effects of COVID-19 is a major success. This refinancing gives us financial stability and strength to focus on our long-term growth strategy, and we sincerely appreciate the support of our lenders and stakeholders to reach this milestone. Like many companies around the world, we have been affected by the actions taken by various local and national governments worldwide to control the spread of the global COVID-19 pandemic. Several of our major offices and many of our projects are located in areas with restrictions that necessitate a work from home arrangement and that forced delays…

Thank you, Kenny. Our first quarter consolidated revenues were $148.6 million, down 36% compared to the first quarter of 2019. This was expected due to our focus on our core technologies and profitability. The decline was also driven by lower volume of periodic large construction, newbuild projects in the B&W segment, the ongoing wind down of the SPIG U.S. operations and the effect of COVID-19 restrictions on services volume in the SPIG segment and the 2019 sale of Loibl in the Vølund & Other Renewable segment. Our GAAP operating loss in the first quarter of 2020 was a loss of $10.3 million, inclusive of restructuring and settlement costs and advisory fees of $6.2 million compared to an operating loss of $32 million in the first quarter of 2019. The improvement in operating income was primarily due to improved gross margins in the Babcock & Wilcox segment, the absence of losses on the 6 European EPC loss contracts and lower levels of direct overhead support, warranty expense and SG&A in the Vølund & Other Renewable segment. This was partially offset by the decline in overall volume and changes in product mix in the SPIG segment. Our consolidated adjusted EBITDA improved to a positive $700,000 compared to a negative $4.4 million in the first quarter of 2019. Turning to our first quarter segment results. Revenues in the Babcock & Wilcox segment were $122 million in the first quarter of 2020 as compared to $188.6 million in the prior period. This decline was primarily attributable to lower volume of large construction newbuild projects as was expected. Adjusted EBITDA in the first quarter was $10.7 million, an increase of 17.2% compared to $9.1 million in last year's quarter. This was primarily due to higher parts margin and the results of cost savings and restructuring…

Thanks, Lou. We continue to demonstrate significant progress in our turnaround. Our successful long-term refinancing agreement is the latest critical milestone in our strategy and gives us financial stability to focus on our long-term growth. Our employees and technologies underpin our core strengths. We have a demonstrated track record in working through significant challenges while continuing to execute. We continue to book critical work, and we see strong pipeline of new opportunities worldwide despite the impacts of COVID-19. This includes strong growth opportunities across each of our segments, including renewable energy, parts and services and advanced technologies to support efficient long-term operations of our core energy customers. We continue to focus on supporting our customers and our energy infrastructure, taking care of our employees and managing our cash flow through the pandemic to protect our fundamentally strong core business for the long term. I will now turn the call back over to Carol, our operator, who will assist us in taking your questions. Carol?

[Operator Instructions] Our first question this morning comes from Hale Hoak from Hoak & Co. Hale Hoak;Hoak & Co: Congratulations on the refi. It's nice to have that behind you. You've been operating in refinancing limbo for quite a while. With that behind you, is there any more thought, and Lou mentioned, a continued focus on cost savings. But you did a fabulous job on margins in the core BW segment. Is there more to do there? And kind of how do you think about in a normal environment, what the earnings power should be there? We used to talk about $80 million or $100 million of EBITDA, I think. Is that still a goal that if and when we're back to post COVID-19, that's a rate you'd like to be able to hit?

Hale, thanks for jumping on the call this morning. From an overall perspective, and I appreciate the congratulations of refinancing, you're right, it has been a long time coming, and we're grateful to get it behind us, and we feel very strong in a successful way. As we look at our company, as we've talked about previously on a few other calls, we continue to look at how we can improve the overall operating margins of the business, whether that be in the core BW segment or our other segments, Vølund and SPIG as well. Obviously, we're looking at how we can maximize the operations and the efficiencies. It's what we do. And we have a lot of people working very hard to accomplish that. Those are not necessarily relating to employee reductions per se, but also in areas where we can improve the manufacturing process and capabilities, improve the timeliness of the manufacturing processes and capabilities and so on and so forth. That has not only an impact on overall margins in the business but also helps impact the timing of cash flows as it relates to the various projects. And we've made a lot of strides and we'll continue to do so. As far as the target concern that we've talked about in the past, clearly, our target is still there that we want to achieve. There's going to be impacts this year of COVID-19 on the overall business. And sitting here now, like everyone, it's hard to predict what will happen overall. We're working through it, obviously, day by day, week-by-week and month by month. But our goals that we've discussed in the past are still there. And we believe the company can eventually reach those levels, given time. Obviously, COVID is an impact, but we're still determined, and we still have a vision to get to those levels and we see the capabilities that -- in the future to get there. Hale Hoak;Hoak & Co: Well, great. And congratulations again, and thanks to the B. Riley for their support.

Our next question comes from Nelson Obus from Wynnefield Capital.

Yes. I had a couple of questions. Is there any effort to pursue the former parent in regard to possible fraudulent conveyance concerns?

Nelson, thanks for joining this morning on that. We wouldn't comment on if we were or could at this point, obviously, from that standpoint, but we've had people looking into possibilities on recoveries across the board, whether they be there or they -- in former insurance standpoints, as we talked about, perspectives, on projects, things like that in the past. But we wouldn't give a direct comment on anything that we're truly -- would be involved in if we were involved in at this point in time.

Well, I assume that at some point, it would become public if you filed against them. I mean it's true you've looked into this, haven't you? You should, I mean, to represent the shareholders, it's kind of an interesting timing on the spin-off.

Yes. We -- I don't think, to our knowledge, Nelson, we've left any stone unturned as it relates to helping improve the cash flow position of this company overall, without a doubt.

Well, that's a big one, come on. The rest is, I suspect. What's the blended coupon on the debt now?

It's in the -- on the loan, the lap out is 12%. And then the revolver is around 7%.

So obviously…

That floats with LIBOR and other benchmarks.

I assume, with the new refinancing, is it -- do you have the ability to replace that high yield -- that pretty onerous yield, as you realize. Is there any prepayment penalty, if somehow you can get a better coupon?

There's -- as described in the 8-K and in the documents filed -- that will be filed with it, there were no prepayment penalties, per se.

Well, that's good. I just wanted to follow up with Hale's question. I mean, maybe asking it in a less -- in a more skeptical manner. I mean you've had this metric about cost savings. It goes back a long way. You've had a goal in terms of EBITDA. I think a big component of that was pension. It wasn't really cash. But a $119 million shows up again is something you're proud about. But can you take us through what exactly you've done? I mean I realize we have COVID, but I have to be honest with you, all the savings that you keep reporting on has never been evident to the shareholders even before COVID. So maybe a little deeper dive in terms of exactly where that savings came from. I can tell you, most companies I've seen that have saved $120 million, even with COVID or even taking COVID out, have had more vibrant P&L. So that would be kind of helpful.

Well, Nelson, quite honestly, I disagree with your statement on that. So I think this company that has gone through loss EPC contracts that have totaled several hundreds and million dollars that have impacted the losses over the years and to pull $120 million out of this business to get it back to a profitable state at this point in time is quite an achievement. And I think those results have definitely impacted the business. The numbers we filed last year and the positive $33 million of EBITDA wouldn't have been achievable without reducing obviously that significant amount of cost. So I'm not sure where you're missing that, but we disagree with that…

What I'm trying to do is get -- figure out how you calculated it. I mean if you have bad contracts that ran off, that's not how I would look at it. In other words, have you really taken costs out? Or have you simply shed things that unfortunately, your predecessors got you into?

Nelson, we've taken out true costs. There's been true costs that have put a positive impact on the margin of the business and the EBITDA of the business and gets down into net income. So when we talk about $120 million in savings, we're not talking about $120 million of contract deferrals, we talk about $120 million in savings. So you can have your opinion about it, but I'll disagree. So I think it's been a tremendous success for the shareholders of this company, and I think -- those who will continue. And I think our employees have done an amazing job of turning this around to create the value.

Well, I guess my opinion is, if you took that much money out on the cost basis, you're on a bad business, but -- okay. I mean I was kind of interested in the breakdown.

That's great. Nelson, is there any other questions you have? Or is there any other comments you'd like…

I mean, can you break -- I just answer my question. $119 million, can you break it down a little bit?

We've broken it down before. If you go back and look at the filings, I think we put as much detail as we can out there. It's all impacted [indiscernible]

I would think that you would have that. Look, I think it's a stupid metric.

All right. Nelson, is there any other questions you have right now? Otherwise we're moving on. Operator, can you move to the next investor, please? We're done.

And we have no one else in the queue at this time. I'll turn the call back for any closing remarks.

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

Ladies and gentlemen, this does conclude today's conference call. Thank you for participating. You may now disconnect.