00:00 Hello, everyone, and welcome to the Babcock & Wilcox Enterprises Fourth Quarter and Full-Year 2021 Earnings Conference Call. My name is Victoria and I will be coordinating the call today. 0:25 I'll now pass over to your host, Megan Wilson, Chief Strategy Officer to begin. Please go ahead.

0:33 Thank you, Victoria and good morning everyone. Welcome to Babcock & Wilcox Enterprises fourth quarter and full-year 2021 earnings conference call. I am Megan Wilson, Chief Strategy Officer and Senior Vice President of Corporate Development Chief Financial Officer to discuss our fourth quarter and full-year results. 0:50 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 in our Annual Report on Form 10-K it is on file with the SEC and provide further detail about the risks related to our business. 1:10 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 and targeted 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 measures can be found in our fourth quarter and full-year earnings release published this morning and in our company overview presentation filed on Form 8-K this morning and posted on the Investor Relations section of our website at babcock.com. 1:45 With that, I will turn the call over to Kenny.

01:50 Thanks, Megan. Thanks Victoria and good morning everyone and thanks for joining our call. Well, wow, what a year 2021 was a year of unprecedented growth and accomplishments for B&W, especially compared to 2020 revenues were, up about 28%, our net income swung from a loss of negative $10 million to net income of about $32 million positive and an adjusted EBITDA increased by about 260% excluding -- not actually exclude the non-recurring loss recovery in 2020. 2:28 We have also achieved our ambitious target of adjusted EBITDA of $70 million for the year. And annual bookings and ending backlog were both, up about 20% with our highest level of annual booking since 2017. Our quarter-over-quarter results for the fourth quarter were actually just as significant, the revenues were up about 28%, net income was up a remarkable 504% and adjusted EBITDA was, up about 77% and bookings were up 61%. 3:03 In 2021, we did what we said we would do, we focused on execution, we booked four renewable waste to energy new build projects in 2021 and actually if that we just announced last month. We closed several strategic acquisitions and continue to investing and building our ClimateBright decarbonization platform, including driving forward on commercial demonstration projects for our innovative BrightLoop hydrogen production technology. 3:36 Our extraordinary fourth quarter bookings of $269 million included awards of two additional renewable new build projects, including contracts for $58 million and $24 million of supply advanced waste to energy technology for power plants in Europe. With the addition of an $11 million booking for biomass boiler upgrade in the beginning of 2022, we have booked five sizable renewable energy projects, since September. Our recent acquisitions over the last six months have strategically expanded our clean and renewable energy businesses. 4:14…

10:06 Thanks, Kenny. First, I'll review our full-year 2021 results and then I'll turn to our fourth quarter 2021 results. For further detail I'd call your attention to the fact that we filed our 10-K with the SEC and you can refer to it for further details beyond what we discuss here in this call. 10:27 Consolidated revenues for 2021, were $723.4 million, 28% improvement, compared to 2020. The improvement was primarily due to a higher level of activity in our thermal and environmental segments, expanded geographic presence and improved strategies to mitigate the continued impact of COVID-19, as well as the acquisitions of Fosler and VODA in our renewable segment. 10:56 Net income in 2021 was $31.5 million, compared to a net loss of $10.3 million in 2020. GAAP operating income in 2021 was $20. 8 million, compared to an operating loss of $1.7 million in 2020, this increase was primarily due to the earlier referenced increase in revenue. We also note that operating income in the prior year included a $26 million settlement from an insurer, which is a one-time item. 11:31 We achieved our 2021 adjusted EBITDA target of more than $70 million with an adjusted EBITDA reaching $70.6 million, as compared to $19.7 million in 2020 and the $19.7 million excludes a non-recurring $26 million settlement, which I mentioned a few moments ago. 11:53 So bookings in 2021 were $779 million, a 21% increase, compared to full-year bookings in 2020, this is the highest level of annual bookings, since 2017. Backlog at December 31, 2021 was $639 million and that's a 19% increase, compared to the prior year-end. 12:19 Let me now turn to our fourth quarter results, fourth quarter consolidated revenues were $192 million, a 28% improvement, compared to the fourth quarter of 2020, this…

16:17 Lou, thanks for that. Well, in closing, we have many tremendous strides over the past three years and we are extremely proud of the milestone year we achieved at Babcock & Wilcox in 2021. Our employees around the world have stepped up to meet the global demand and we want to recognize the tremendous achievements of each and every one of them. We are growing and expanding and adding new talent across our three segments. We've achieved significant year-over-year growth in revenue, net income and EBITDA. We are executing on what we promised, but booking five renewable waste to energy new build projects and closing several strategic acquisitions all accomplished just since September. 17:03 We continue to build our ClimateBright decarbonization platform and progressed on our pursuit of 20-plus potential ClimateBright projects and driving forward on BrightLoop carbon capture and hydrogen commercial demonstration projects. The reviews, we are seeing from our customers regarding our BrightLoop platform is giving us even greater confidence in the long-term demand of this emerging technology. 17:34 And looking forward to 2022, we are confident about the year, the year-over-year growth we expect to achieve for the coming year with a target adjusted EBITDA of $110 million to $120 million. The strategic actions and growth strategies, we have been working on for several years are materializing, which is proven by our recent significant bookings substantially increased backlog and our more than $7.5 billion in three-year pipeline. 18:03 As B&W continues to deploy our innovative environmental and renewable offerings, including our waste to energy and ClimateBright decarbonization technologies, we are confident that our capabilities will continue to demonstrate B&Ws role as a leader and then innovator that advances the world's energy transition solutions. And as always we continue to drive our results towards increased shareholder value. 18:30 With that I'll turn the call back over to Victoria, a median who can help take any questions. Victoria?

18:39 Thank you. We will now move on to the Q&A portion of the call. And our first question comes from Zane Karimi from D.A. Davidson. Please go ahead, your line is open.

19:07 Hey, good morning and thank you for taking my question.

19:14 Yes, good morning.

19:15 So first here -- I know it's early, but it does seem to be a significant take up in the interest pertaining to the waste to energy solutions business, especially in Europe. Can you talk a little bit more about the opportunities in hand, as well as your -- as what you're seeing elsewhere? Seems like this could be one, sort of, solution to energy concerns through the region?

: 20:31 The good news for us is -- as we’ve recapitalized our company many, many times over the past couple of years, moved us into a very strong position. You know, strengthen our abilities to take on more projects and our customers and partners and some of the groups that we work with jointly on this opportunities are seeing more and more waste energy demand to be created or built in Europe. The other side of that is -- we are also seeing a increased demand on some of the older waste energy plants and technologies that are out there to upgrade or convert or enhance or augment those plants and facilities as well and so it’s one of the reasons we invested in the parts and services business in Northern Europe was to be in a much better position to take advantage of those emerging market opportunities. 21:30 Whereas, we’re continuing to look worldwide obviously, we do see the need to reduce greenhouse gases in particular from methane, methane reduction from landfills to us, it’s still a very strong part of the global change to reduce greenhouse gas, you know, and as we have often talked about the fact that, you know, even here in the US, theirs is nothing from landfills, which will equate to the same greenhouse gas effected roughly 77 million automobiles. And so it’s still is the significant issues related to a global environmental aspect and reducing greenhouse gases overall. And we are starting to see opportunities emerge in the US, there is still some other areas that need to improve to make it a much more economical attractive solution here. But meanwhile, Europe is still a growing market for us, and we are continuing to work on a number of opportunities over there and anticipate, you know, making further announcements this year, obviously, on additional bookings in our waste and energy technology from European, potentially another parts of the world as well.

22:39 Thank you for that color. And could you talk a little bit more about your exposure to hydrocarbon companies. You know, both traditional oil and gas was in the industrial segment. Like, how big are they for you and as this push in commodity prices moved higher. How could it potentially benefit you guys fix it all?

23:02 Well, as we often talk about and did on the call is what you. We do have a strong parts and services business within our thermal segment that relies on various parts of fuel, both in the industrial and the utility sector for that. The increase -- the main increase are driver for us is on natural gas, when natural gas prices go up, you know, other forms of fuel is used to create energy and that bodes well for us from a product and service perspective. It’s always interesting because it’s two-fold, on one hand when the natural gas prices increased significantly then there is more power output from other forms of fossil fuels and those plants operate to the fullest capacity for much longer periods of time. So as they operate for longer period of time. There's clearly more wear and tear that occurs and eventually that leads to greater parts and services that come through our thermal operations. So with worldwide right now as we obviously continue to watch and observe what's happening, it’s all of the different geopolitical aspects that occurring these days and as well as potentially increases in natural gas and other energy forms, some of those have very positive impacts for us in and around that and we also see (ph) of especially in Europe right now where natural gas is becoming a premium you're just to kind of a natural inclination for a lot of the utility and energy providers to go back and look at alternate forms. 24:39 We think also long-term that helps drive further initiatives around hydrogen production and the use of hydrogen as a replacement from a fuel source in the long run. And so we're equally excited about the impact, but that could lead to our hydrogen production capabilities and we mentioned in the -- on this call, we're looking to move forward with a one or two commercial demonstrations yet this year. So that’s -- the impacts -- impact us in various ways from that standpoint, but we don't see them as a negative actually, it opens up opportunities for us. We're excited about that. Lou, anything you want to add to that?

25:25

25:28 I'm sorry.

25:33 No that’s, okay. Go ahead.

25:37 Okay, thank you for that color. And last one for me before I jump into queue, but how should we think about the sequence of the year to build toward 2020 guidance, particularly among the segments?

25:53 Well, I think as we talk about and have talked about in the past, as we continue to evolve and execute against our strategy and over the next couple of years you will see that transition of revenue is going towards two-third by environmental and renewable. Our pipeline and obviously, our recent announcement support that and we'll see that increase over that period time. As we also talked about on the call today our ramp and EBITDA towards our target of the $110 million, $120 million will be just like this year, it will be Q1 will be the lowest, Q4 will be the higher. So it's just were a lot of cyclical trends to our business, especially in the parts and services side, it's just normal course for us and we'll see that again this year. 26:44 But at the same time, we also know the bookings that we anticipate and projects that we're heavily involved in and actively working to pursue to close and those announcements, whether they'd be Q1, Q2, Q3, but we have that timing layered into our targets and fully seen anticipate reaching those milestones. But it will be -- it will occur, just like it normally does. Q1 being low, Q4 being high.

27:13 Thank you for that. And again, congratulations on the big year.

27:19 Thanks and I appreciate that. Thank you.

27:24 Perfect. Thank you again for your question. Our next question comes from Alex Rygiel from B. Riley. Please go ahead, your line is open.

27:33 Thank you. Good morning, gentlemen and a fantastic year and quarter. Kenny the tough question first, can you address the situation over in Eastern Europe and how it may shift customers’ views on both thermal and clean energy projects?

27:48 Sure. Obviously, it's -- we're -- it’s a everyday we’re moving situation that's occurring and we watch it very closely in that regard. The biggest impact short order, obviously is natural gas prices and the access to natural gas in Europe, for us it's too early to determine whether or not that, that will lead to an increased exponentially moving growth on waste to energy, meaning more and more countries adopt a different platform for energy consumption or energy production. And so it's a little too early to see that we do see growth in our waste to energy, environment, but I would say it's reflected or impacted by what's happening in Ukraine at the moment. 28:38 We are seeing obviously and talking to many customers about the shift and their future and obviously they are trying to figure out long-term, if they need to look at different energy sources to create energy in long-run and we're having those conversations with them at this point in time, but it's still too early to see any real impact. That will hit us and we hate to predict, obviously anything at this point in time and it's a very delicate situation in the geopolitical aspect in Ukraine. But we're seeing a lot of focus and a lot of request to discuss in a different alternative energy sources, including hydrogen and other biofuels in Europe, and some of that is as a result of what's happening right now in Europe and some of that's just normal course in a direction that started years ago that continues to grow. So I'd probably leave it at that right now, Alex.

29:38 That is helpful and then your liquidity position still pretty strong. Directionally where your M&A efforts, sort of, targeting at this time both end-markets, as well as geographically?

29:54 Yes, we still look globally we’re very active in both ownership M&A companies that we would acquire in total or even without leaving some minority ownership with the original founders. But we're equally looking at small investments in emerging technologies, and that complements, or help propel our hydrogen production and other decarbonization technologies globally. It is a -- we see the need to keep investing and expanding and we're getting a lot of momentum, especially around the potential for biomass to hydrogen production as a alternative source of energy in particular, around our BrightLoop platform and that's coming from a lot of different vertical industries, as well as in the utility sector as well. 30:50 And we'll continue to look at investments in those areas. In particular around some of these emerging aspects and those could be in Europe within the US and elsewhere in the world, but we're excited about some of those opportunities and where they can help B&W grow more and more. Of course we'll still keep an eye on and look and evaluate opportunities to acquire cash flows, especially with those high synergies were those make sense, I think it's just prudent that we evaluate and those kinds of opportunities as well too. But there is strength of what we're looking at from an M&A standpoint, there’s lot towards the emerging technologies and were those mainly.

31:37 Thank you very much.

31:40 Thanks, Alex.

31:43 Perfect. Thank you, Alex for your question. And our next question comes from Rob Brown from Lake Street Capital Markets. Please go ahead, your line is open.

32:03 Hi, good morning Just to go back to the FPS acquisition and hydrogen technology there, maybe you could just spend on how that helps your hydrogen strategy . Yes great.

32:19 Yes, one of the unique characteristics around FPS technology in particular hydrogen standards is when you burn or consume hydrogen from a combustion standpoint the flame is not often visible. And so you need some strong -- very strong scanner technology as it relates to that sensitivity. And one of the things that we really liked about FPS, well, it’s a two-fold really around it. One, B&W has been as part of its parts and services utilizing FPS technology for many, many years and so it was an easy extension as it relates to some of our parts and services business today, but they are one of the few companies in the world that has a strong platform around the scanning technology on -- for hydrogen and hydrogen ignitors, as well and so it was combining that we felt that obtaining that technology, which would be required as hydrogen becomes more and more prevalent in the marketplace was significant advantage for us and one that we felt that we could incorporate on a global basis. 33:34 FPS had been more focused on the North American market was predominantly where they play. We are interest and obviously working hard to bring the product portfolio up to an international standard and we'll be doing that and one which we think we can grow on an international basis through our global parts and services organization. But we think that technology was important from the hydrogen combustion standpoint.

34:07 Okay, great. And then just maybe a little bit more on the pipeline had a number of project hit how do you sort of see that playing out through your pipeline and if frontend weighted or should it ratable or how do you think about ?

34:28 Well, we’re excited that the pipeline continues to build, you know, in projects again renewable projects in particular here in the US, as well as in Europe overall, anticipate that we'll see some announcements of bookings in the Q1, Q2 timeframe, probably more Q2 at this stage, but we anticipate that and other projects throughout the year that we're working on now. Obviously when you're working on some of these larger projects out there those take time to work through the engineering aspects. The contract negotiation aspects just normal typical nature of getting this projects accomplished and through our – out to a booking standpoint, so that we can start to execute on those projects. 35:19 But there are number of active projects that were heavily involved in right now, again both in the US and Europe and Southeast Asia, as well as the Middle East and as these continue to develop obviously, we'll push to get those announced as quickly as we can, once they are ready to go. But there’s some very exciting opportunities that we see out there that, that we fully intend to book and get announced this year. So it's -- I would say you would start to see more of that happened in the Q2, Q3 and in Q4 timeframes around our bookings, which is very typical for us, but there are number that we're working on right now, when it's just reflective in the fact that our pipeline continues to grow and I think we've increased it from $6.5 billion to $7.5 billion just to give some color on that.

36:14 Okay, great, thank you. I’ll turn it over.

36:17 Thanks, Rob.

36:20 Perfect, thank you. And our final question comes as a follow-up from Zane Karimi from D.A. Davidson. Please go ahead.

36:30 Yes. Thank you for taking the follow-up. Real quick, what does the pipeline look like installer and is that basis constrained by supply disruptions like others have seen? And what sort of growth could we be expecting this year in the business?

36:47 Solar is -- continues to build the pipeline for solar is continues to build for us and opportunities and we're actively engaged in the number of opportunities right now booked. And I would say one of the nice things about the business that we acquired is that they are capable of delivering smaller community solar projects the down in the 5, 10, 20 megawatt range, but equally capable of delivering larger projects that it would be in the 100-plus megawatt range for solar output. I mean, obviously that's restricted for us right now in the United States in that regard, but we are working on a number of projects right now. 37:41 Obviously the -- bringing in the panels from an overall standpoint is -- varies depends on the customer and capabilities and which ones have access those panels in those technologies right now. But we do see a number of smaller projects, were -- any supply chain constraint wouldn't be necessarily an issue as part of that overall portfolio, some of the larger projects would be phased in probably over a longer term period and balancing that, but we're seeing both of those opportunities increase our pipeline right now and again anticipate booking and a few of those projects this year.

38:28 Thank you for the time.

38:32 Perfect. Thank you for your question, Zane. At this time there are no further questions. And I would like to pass back over to Megan for any final remarks.

38:43 Thank you for joining us. That concludes our conference call, a replay will be available for a limited time on our website later today.

38:55 Thank you everybody for joining today's call. You may now disconnect your lines.