Babcock Q4 2025 Earnings Report

Babcock EPS Results

• Actual EPS: -$0.05
• Consensus EPS: -$0.04
• Beat/Miss: Missed by -$0.01
• One Year Ago EPS: N/A

Babcock Revenue Results

• Actual Revenue: $161.00 million
• Expected Revenue: $179.10 million
• Beat/Miss: Missed by -$18.10 million
• YoY Revenue Growth: N/A

Babcock Announcement Details

• Quarter: Q4 2025
• Date: 3/4/2026
• Time: After Market Closes
• Conference Call Date: N/A
• Conference Call Time: N/A

Babcock (NYSE:BW) & Wilcox Enterprises, Inc. (NYSE: BW) is an energy and environmental technology company that provides equipment, technologies and services for power generation and industrial applications. The company serves utilities, industrial operators and other customers seeking to generate energy, improve operating efficiency and reduce emissions.

Its offerings include steam generation systems, boilers, replacement parts, maintenance and engineering services, as well as technologies for controlling air pollution and managing solid waste. Babcock & Wilcox also develops solutions for waste-to-energy generation, renewable energy, hydrogen production and carbon capture, with applications across power, manufacturing and other heavy industries.

The company traces its roots to 1867, when George Babcock and Stephen Wilcox established Babcock & Wilcox. Based in Akron, Ohio, Babcock & Wilcox serves customers in North America and international markets through its portfolio of energy and environmental technologies.

Babcock Q4 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: B&W received full approval on the Base Electron (Applied Digital–backed) contract valued at $2.4 billion to deliver 1.2 GW for AI data centers; site visits and boiler/turbine manufacturing have started and Applied Digital is backstopping Base Electron's obligations.
• Positive Sentiment: The company raised its 2026 adjusted EBITDA target to $80M–$100M after a strong Q4 in which adjusted EBITDA increased 53% year‑over‑year and operating income rose 373% year‑over‑year.
• Positive Sentiment: Backlog expanded to $2.8 billion (a 470% increase vs. year‑end 2024) and the pipeline grew to over $12 billion, supported by a 17% increase in parts & services and new AI data center and baseload power opportunities.
• Negative Sentiment: Execution and margin risks remain—only about $430 million of the Base Electron contract is fixed‑price while the rest is cost‑plus, revenue recognition hinges on cost‑to‑site and construction timing, and turbine/manufacturer and labor capacity could constrain delivery.

Presentation

[Operator]

Good afternoon. Thank you for attending the Babcock & Wilcox Enterprises Fourth Quarter and Full Year 2025 Conference Call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. I would now like to turn the conference over to your host, Sharyn Brooks, B&W's Director of Communications. Thank you. You may proceed, Ms. Brooks.

[Sharyn Brooks, Director of Communications at Babcock & Wilcox Enterprises]

Thank you, Tamia. Thanks to everyone for joining us on Babcock & Wilcox Enterprises Fourth Quarter and Full Year 2025 Earnings Conference Call. I'm Sharyn Brooks, Director of Communications. Joining the call today are Kenny Young, B&W's Chairman and Chief Executive Officer, and Cameron Frymyer, Chief Financial Officer, to discuss our fourth quarter and full year results.

[Sharyn Brooks, Director of Communications at Babcock & Wilcox Enterprises]

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 10-K that has been filed with the SEC today. Additionally, except as required by law, we undertake no obligation to update any forward-looking statement.

[Sharyn Brooks, Director of Communications at Babcock & Wilcox Enterprises]

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.

[Sharyn Brooks, Director of Communications at Babcock & Wilcox Enterprises]

A reconciliation of historical non-GAAP 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 8-K, which is posted on the investor relations section of our website at babcock.com. I will now turn the call over to Kenny.

[Kenny Young, Chairman and CEO at Babcock & Wilcox Enterprises]

Thanks, Sharyn. 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 & 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 million and $100 million.

[Kenny Young, Chairman and CEO at Babcock & Wilcox Enterprises]

Our core business, excluding data centers, continued to grow as our parts and services saw elevated demand from the increased operation of baseload 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.

[Kenny Young, Chairman and CEO at Babcock & Wilcox Enterprises]

Existing coal plants in the US 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.

[Kenny Young, Chairman and CEO at Babcock & Wilcox Enterprises]

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.

[Kenny Young, Chairman and CEO at Babcock & Wilcox Enterprises]

The increasing demand for power in North America serves as a catalyst for B&W's continued growth, positioning us to play a pivotal role in supporting AI data center expansion and increased baseload 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.

[Kenny Young, Chairman and CEO at Babcock & Wilcox Enterprises]

Our agreement with Base Electron, backed by Applied Digital, is valued at $2.4 billion and is intended to deliver 1.2GW 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 300MW boilers enables us to eliminate months of initial development work that is required with typical new boiler projects.

[Kenny Young, Chairman and CEO at Babcock & Wilcox Enterprises]

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. Siemens Energy has started the fabrication process of the turbines, and work is scheduled to commence at the site later this year, with most of the construction, including civil and mechanical, scheduled for 2027 and 2028.

[Kenny Young, Chairman and CEO at Babcock & Wilcox Enterprises]

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.

[Kenny Young, Chairman and CEO at Babcock & Wilcox Enterprises]

Base Electron has also indicated its interest in purchasing another 1.2GW of power from B&W, possibly at a different location. The impact of this contract on B&W is truly profound, and we have now added $3 billion 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 the power grid today.

[Kenny Young, Chairman and CEO at Babcock & Wilcox Enterprises]

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 B&W boiler designs in combination with steam turbines.

[Kenny Young, Chairman and CEO at Babcock & Wilcox Enterprises]

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 US Department of Energy and the National Energy Dominance Council.

[Kenny Young, Chairman and CEO at Babcock & Wilcox Enterprises]

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.

[Kenny Young, Chairman and CEO at Babcock & Wilcox Enterprises]

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 US, 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.

[Kenny Young, Chairman and CEO at Babcock & Wilcox Enterprises]

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.

[Kenny Young, Chairman and CEO at Babcock & Wilcox Enterprises]

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.

[Kenny Young, Chairman and CEO at Babcock & Wilcox Enterprises]

These results during the quarter reflect the strong demand for our diverse portfolio of technologies and demonstrate B&W'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. These bond payments pair with the continued pay down of our overall debt levels.

[Kenny Young, Chairman and CEO at Babcock & Wilcox Enterprises]

Across 2025, we achieved a substantial reduction of our debt on our balance sheet, resulting in a net debt of $119.7 million at the end of 2025, which is a $217.3 million improvement compared to the net debt of $337 million at the end of 2024. Our BrightLoop advancements continue to evolve behind the scenes, including our Massillon and Wyoming projects.

[Kenny Young, Chairman and CEO at Babcock & Wilcox Enterprises]

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.

[Kenny Young, Chairman and CEO at Babcock & Wilcox Enterprises]

The commercial demonstration of BrightLoop at Massillon remains an important milestone for B&W 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?

[Cameron Frymyer, EVP and CFO at Babcock & Wilcox Enterprises]

Thanks, Kenny. I am pleased to review our full year 2025 financial results, further details of which can be found in the 10-K that was filed with the SEC this afternoon. Our 2025 consolidated revenues were $587.7 million, which was a modest increase compared to the revenue of $581 million in 2024.

[Cameron Frymyer, EVP and CFO at Babcock & Wilcox Enterprises]

Our core parts and services continued to excel across 2025, increasing revenue 17%, outperforming expectations due to higher coal generation usage and growing baseload demand in North America. Continued growth in our parts and service 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.

[Cameron Frymyer, EVP and CFO at Babcock & Wilcox Enterprises]

Loss from continuing operations in 2025 was $32.8 million, compared to a loss of $104.3 million in 2024. Our loss per share from continuing operations was $0.45 in 2025, compared to a loss per share of $1.30 in 2024. Adjusted EBITDA from continuing operations was $43.7 million, compared to $21.2 million in 2024.

[Cameron Frymyer, EVP and CFO at Babcock & Wilcox Enterprises]

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

[Cameron Frymyer, EVP and CFO at Babcock & Wilcox Enterprises]

Our current debt consists of $83.9 million of December 2026 bonds, 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 unamortized fees and unamortized gains are excluded.

[Cameron Frymyer, EVP and CFO at Babcock & Wilcox Enterprises]

The company had cash and cash equivalents and restricted cash balance of $201.4 million, giving us a net debt as of December 31, 2025 of $119.7 million or $79.7 million when excluding unamortized 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.

[Cameron Frymyer, EVP and CFO at Babcock & Wilcox Enterprises]

Additionally, in December of 2025, B&W paid off outstanding bonds due in February of 2026, and the remaining outstanding December 2026 bonds will be paid off this year. With that, I will now turn the call back over to Kenny.

[Kenny Young, Chairman and CEO at Babcock & Wilcox Enterprises]

Thanks, Cameron. Well, we are excited about our growing opportunities to expand into power generation for the rapidly evolving AI data center space, and we remain focused on executing against our strategic plan.

[Kenny Young, Chairman and CEO at Babcock & Wilcox Enterprises]

We remain uniquely positioned to capitalize on the growing global demand for baseload 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.

[Kenny Young, Chairman and CEO at Babcock & Wilcox Enterprises]

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.

[Kenny Young, Chairman and CEO at Babcock & Wilcox Enterprises]

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.

[Kenny Young, Chairman and CEO at Babcock & Wilcox Enterprises]

We continue to be enthusiastic about the path forward and expect 2026 to be a strong operational year for B&W, with resilient global demand for our technologies driving sustained growth in the quarters ahead. In closing, B&W 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.

[Kenny Young, Chairman and CEO at Babcock & Wilcox Enterprises]

From playing a leading role in the global industrial revolution of the nineteenth 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.

[Kenny Young, Chairman and CEO at Babcock & Wilcox Enterprises]

B&W has constantly been at the forefront of innovation. It all began with creating steam for power, and B&W boilers and steam generation technologies have contributed to more than 400GW of total electrical capacity worldwide. We're proud of our history, and we're excited about what lies ahead for our company. With that, I'll now turn the call back over to Mia, who will help us with a few questions. Mia?

[Operator]

Thank you. We will now begin the question and answer session. The first question comes from Aaron Spychalla with Craig-Hallum. You may proceed.

[Aaron Spychalla, Senior Research Analyst at Craig-Hallum]

Yeah. Hi, Kenny and Cameron. Thanks for taking the questions.

[Kenny Young, Chairman and CEO at Babcock & Wilcox Enterprises]

Hi, Aaron.

[Aaron Spychalla, Senior Research Analyst at Craig-Hallum]

You know, maybe first for us, just on, 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? 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. You know, timing of kind of working capital needs and cash flows on your end.

[Kenny Young, Chairman and CEO at Babcock & Wilcox Enterprises]

Sure. Let me see if I can capture that. To back up as you indicated, obviously, we announced a limited notice to proceed 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.

[Kenny Young, Chairman and CEO at Babcock & Wilcox Enterprises]

That's why we elected to take that approach. As we were working through the final scope on the project, the final terms and conditions of the contract, as you know, we mentioned the firm versus time or cost-plus scenarios on it.

[Kenny Young, Chairman and CEO at Babcock & Wilcox Enterprises]

We were able to then complete the contract plus the final scope and those negotiations, which led us then to the, you know, the $2.4 billion announcement for the GWs being provided.

[Kenny Young, Chairman and CEO at Babcock & Wilcox Enterprises]

It's kind of normal evolution from a limited notice to proceed to 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. I think that was one question. The other on kind of the milestones of what's happening, as you know, mentioned in the remarks, we're beginning, you know, the site visits are underway on that particular piece.

[Kenny Young, Chairman and CEO at Babcock & Wilcox Enterprises]

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. Obviously very confident in meeting the schedule and the timelines for delivery.

[Kenny Young, Chairman and CEO at Babcock & Wilcox Enterprises]

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 details behind the scenes on that. We're anticipating, you know, some work beginning this year at this point in 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.

[Kenny Young, Chairman and CEO at Babcock & Wilcox Enterprises]

I think the exciting aspect is, you know, working obviously with our manufacturers as well as with Siemens on the turbines along with the boilermakers in the union, obviously, getting their labor force ready. You know, we do feel confident that we can meet those time frames, and the fact that we're using previously engineered boilers eliminates a significant amount of time frames in this project schedule. Gives us confidence in being able to complete this, you know, on time.

[Aaron Spychalla, Senior Research Analyst at Craig-Hallum]

Good. Thanks for that. Then on the guidance increase, can you maybe just talk to, you know, visibility into that and maybe cadence throughout the year, and then any expected contribution on the power generation project?

[Kenny Young, Chairman and CEO at Babcock & Wilcox Enterprises]

Yeah. 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. It's 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.

[Kenny Young, Chairman and CEO at Babcock & Wilcox Enterprises]

The key component there is that we're able to drive cost to the project on the site, on that. We wanted to increase obviously inclusive of that. You know, there's some elevated increases that we're seeing just in some of the general parts services and upgrades and usage around some of the coal and natural gas projects that we're involved in as well too.

[Kenny Young, Chairman and CEO at Babcock & Wilcox Enterprises]

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 million 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.

[Cameron Frymyer, EVP and CFO at Babcock & Wilcox Enterprises]

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

[Kenny Young, Chairman and CEO at Babcock & Wilcox Enterprises]

Yeah. The cyclical aspect of it.

[Cameron Frymyer, EVP and CFO at Babcock & Wilcox Enterprises]

It'll step up each quarter.

[Aaron Spychalla, Senior Research Analyst at Craig-Hallum]

Okay. Maybe one last one just on that, you know, coal to gas project. Can you maybe give an update there, you know, how far you are into that project, timeline to finish that up? Just any other thoughts on the pipeline for those types of opportunities as well.

[Cameron Frymyer, EVP and CFO at Babcock & Wilcox Enterprises]

Yeah. As of right now we're, you know, we're on schedule, Aaron. I think we're, you know, we'll finish up really bulk of the 2027 or 2026 and then go into 2027. No issues there.

[Kenny Young, Chairman and CEO at Babcock & Wilcox Enterprises]

On the pipeline side, we've got other, not that large, but there's other conversion projects that we're in discussions on, as it relates to that. You know, again, interestingly enough, because some of the developments that are coming out of Capitol Hill.

[Kenny Young, Chairman and CEO at Babcock & Wilcox Enterprises]

You know, and some of the recent remarks by President Trump, there's you know, some mandates and some of 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? They're extending out some of the coal plants to last longer. Some of the natural gas conversions or a few of them are shifting out in later years.

[Kenny Young, Chairman and CEO at Babcock & Wilcox Enterprises]

In the meantime, some of those plants now are going through, you know, a little bit higher or increased upgrades or parts replacements to continue operating those in them as efficiently as possible. It, you know, both help us obviously on those, but we're seeing a little of that impact as well too.

[Aaron Spychalla, Senior Research Analyst at Craig-Hallum]

Great. Thank you for taking the questions. I'll turn it over.

[Kenny Young, Chairman and CEO at Babcock & Wilcox Enterprises]

Yeah. Thanks, Aaron.

[Operator]

Thank you. Next comes from Rob Brown with Lake Street Capital Markets. You may proceed.

[Rob Brown, Founding Partner, Senior Research Analyst at Lake Street Capital Markets]

Good afternoon, and congratulations on all this progress. I just wanted to dig into the pipeline a little more. You said you had a potential second project from Base Electron and then several other AI data center projects. Could you just give a sense of maybe the sizing of the pipeline type projects and maybe the kind of timeline of those projects?

[Kenny Young, Chairman and CEO at Babcock & Wilcox Enterprises]

Yeah. We're, you know, as mentioned, obviously, Base Electron has expressed interest in an additional, you know, 1 GW or 1.2 GW 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 1 or 2 other projects outside of Base Electron and Applied that are looking at the similar solution.

[Kenny Young, Chairman and CEO at Babcock & Wilcox Enterprises]

The boiler size may vary. You know, there's a project or 2 looking at smaller boilers, but more but it's still in the 1 GW range. 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 500MW range.

[Kenny Young, Chairman and CEO at Babcock & Wilcox Enterprises]

Most are in the 1-2 GW 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.

[Kenny Young, Chairman and CEO at Babcock & Wilcox Enterprises]

Others, 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, different EPC structure. 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.

[Kenny Young, Chairman and CEO at Babcock & Wilcox Enterprises]

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.

[Rob Brown, Founding Partner, Senior Research Analyst at Lake Street Capital Markets]

Okay, great. In terms of capacity to do these, you know, it sounds like there's, you know, call it total of 2-3 projects that are in the works. What's sort of the ability to or the capacity to take that work on? Or does it need to spread out over time?

[Kenny Young, Chairman and CEO at Babcock & Wilcox Enterprises]

Yeah. No, great question. 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. Working with them closely, we've got several meetings coming up over the next few weeks, trying to establish increased capacity on the steam turbine side of this.

[Kenny Young, Chairman and CEO at Babcock & Wilcox Enterprises]

Either again, either through Siemens and 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.

[Kenny Young, Chairman and CEO at Babcock & Wilcox Enterprises]

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, increased capacity with them to move on to another four 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.

[Kenny Young, Chairman and CEO at Babcock & Wilcox Enterprises]

We've also taken that same approach on the boiler pressure part manufacturing side, you know, both with steel aspects here in the US, fabrication here in the US, 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 you know, 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 the steel pressure parts to be able to make the manufacturing schedules and have those shipped.

[Kenny Young, Chairman and CEO at Babcock & Wilcox Enterprises]

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 to a more of instead of a stick build on site. It would be more of a modular aspect on site.

[Kenny Young, Chairman and CEO at Babcock & Wilcox Enterprises]

Those by spreading those across different manufacturers because they're different sized boilers and different sized turbines, 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.

[Kenny Young, Chairman and CEO at Babcock & Wilcox Enterprises]

On top of that, you know, critical component is the labor force and, you know, 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 a labor force and availability as we look, you know, down the road to have these construction schedules outlined and obviously eventually move under contract.

[Kenny Young, Chairman and CEO at Babcock & Wilcox Enterprises]

We're looking at it both on that side. Of course, at B&W internally as it relates to having the right team aspects ready to go to project manage 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.

[Kenny Young, Chairman and CEO at Babcock & Wilcox Enterprises]

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. The pressure usually on scope for us is if we have to actually extend beyond, you know, the engineering resources that we have, which, you know, 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. That all of those things combine to give us the confidence and the capacity to deliver these.

[Rob Brown, Founding Partner, Senior Research Analyst at Lake Street Capital Markets]

Okay. Thanks for that comprehensive overview. I'll turn it over.

[Kenny Young, Chairman and CEO at Babcock & Wilcox Enterprises]

Thank you.

[Operator]

Thank you. The following comes from Jeff Grant with Northland Capital. You may proceed.

[Jeff Grant, Analyst at Northland Capital]

Good evening, guys. Thanks for the time.

[Kenny Young, Chairman and CEO at Babcock & Wilcox Enterprises]

Hey. Hey, Jeff.

[Jeff Grant, Analyst at Northland Capital]

Kenny, on your prepared remarks, it sounded like some of these conversations on some of these other projects are fairly mature, and I guess just wanted to verify if that's a fair read here. I don't know if it's appropriate to, you know, try to get you to quote, you know, how many months behind maybe relative to the Base Electron kind of progression. It sounds like some of these conversations are pretty far down the path, but want to make sure we kind of appropriately set our expectations regarding timing.

[Kenny Young, Chairman and CEO at Babcock & Wilcox Enterprises]

Yeah. No, good question. Obviously, we don't want to get too out in front to negotiate contracts in the public space. 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 you know, some sort of an initial phase, whether that's a limited notice to proceed or 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.

[Kenny Young, Chairman and CEO at Babcock & Wilcox Enterprises]

It allows them also then 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. We are in discussions there. You know, 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'll just have to see how that goes. We are in that level of discussion with one or two other opportunities at the moment.

[Jeff Grant, Analyst at Northland Capital]

That's great to hear. For my follow-up, I'm just kinda curious, as you guys are kinda seeing things play out, how much of a catalyst have some of these announcements been for you guys with respect to the APLD project?

[Jeff Grant, Analyst at Northland Capital]

Do you feel the market participants were generally already aware of what you guys bring to the table, and so it didn't really bring any new people to the fold? Or did that announcement and some of the progress you guys have had provide some kind of, I don't know, validation that, you know, this is a real solution that people can look to to address power capacity issues?

[Kenny Young, Chairman and CEO at Babcock & Wilcox Enterprises]

Yeah, for sure, one or two of the projects that we're contemplating, you know, that have potential, immediate potential here were also, you know, underway in parallel with the discussions with Applied for certain.

[Kenny Young, Chairman and CEO at Babcock & Wilcox Enterprises]

But I would say also, you know, as the result of the announcement of the Applied contract, the amount of inbound interest from both hyperscalers, utilities, and other developers and other IPPs has been extremely, for lack of a better term. I mean, very significant, right? So 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. You know, some of those come from very mature clients, meaning, you know, they've got real projects behind them.

[Kenny Young, Chairman and CEO at Babcock & Wilcox Enterprises]

You know, some of those opportunities come from developers and other aspects that don't, right? You know, it's, I think, 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 National Energy Dominance Council has also been significant on this and the support of this as well too.

[Kenny Young, Chairman and CEO at Babcock & Wilcox Enterprises]

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 Digital Base Electron project, but also potentially on one or two of these others as well.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. It's pretty exciting at this point in time.

[Jeff Grant, Analyst at Northland Capital]

Great. That's real helpful. If I can sneak one more in, maybe for Cameron. Is there a way to kind of bifurcate how much of the increase in the guide is related to kind of core business outperformance versus contributions from this project?

[Cameron Frymyer, EVP and CFO at Babcock & Wilcox Enterprises]

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, really can move that one way or the other. I don't think we're going in that kind of detail at this point in time just because it could move, you know, depending on how all the stuff works out, which is also why we got that larger range.

[Jeff Grant, Analyst at Northland Capital]

Understood. Fair enough. All right, thank you guys for the time.

[Cameron Frymyer, EVP and CFO at Babcock & Wilcox Enterprises]

Thank you.

[Kenny Young, Chairman and CEO at Babcock & Wilcox Enterprises]

Thank you.

[Operator]

Thank you. There are currently no other questions queued, so I'll pass it back to Sharyn Brooks for closing remarks.

[Sharyn Brooks, Director of Communications at Babcock & Wilcox Enterprises]

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.

Participants

Executives

• Cameron Frymyer, EVP and CFO
• Kenny Young, Chairman and CEO
• Sharyn Brooks, Director of Communications

Analysts

• Aaron Spychalla, Senior Research Analyst at Craig-Hallum
• Jeff Grant, Analyst at Northland Capital
• Rob Brown, Founding Partner, Senior Research Analyst at Lake Street Capital Markets