Good afternoon. My name is Chris and I will be your conference operator today. At this time, I would like to welcome everyone to the Babcock & Wilcox Investor Call. [Operator Instructions] Thank you. Megan Wilson, Vice President of Investor Relations, you may begin the conference..

Thank you, Chris, and good afternoon, everyone. Welcome to Babcock & Wilcox Enterprises’ Investor Conference Call. I am Megan Wilson, Vice President of Investor Relations at B&W.

Joining me this afternoon are Kenny Young, B&W’s Chief Executive Officer; Louis Salamone, Chief Financial Officer; and Henry Bartoli, Chief Strategy Officer to discuss our recent project settlements and financing arrangements as well as our fourth 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 recent press release and also in our annual report on Form 10-K on file with the SEC and provides further detail about the risks related to our business.

Additionally, except as required by law, we undertake no obligation to update any forward-looking statement. 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 measures can be found on our Form 8-K filed with the SEC today. With that, I will turn the call over to Kenny..

It's Over. Clearly, that speculation was wrong and the reality is quite opposite. This company has and always had strong underlying assets, industry-leading technologies, reputable global brands, talented people, a robust backlog and pipeline and great market access.

This is a company with a vast install base that will require aftermarket retrofits and services for decades to come. This is a company serving large diverse power generation and industrial markets that need quality products and services that BW offers.

The strengths have been overshadowed for some time, but those who take the time to remember our history, to look back to our performance before the effects of these EPC loss projects will recognize those underlying strengths have not changed.

Now with the settlements, financing and cost-cutting initiatives in place, we're focusing on what has been our strength in our core products and services for power and industrial markets with an increased emphasis on retrofit and aftermarket services. We are focused on quality, high-margin projects rather than chasing revenues.

We are focused on profitability and cash flow. We've also identified a number of opportunities in each business line to capture more business and improve delivery to our customers. We are doing what we do best as a global market leader within these industries.

Our power business now called Babcock & Wilcox segment, continues to perform well with table fourth quarter revenues, strong bookings and backlog at the end of the year, despite the pressures of our recent financial challenges. We greatly appreciate our customer support.

Our employees have renewed energy as they focus on being a world-class leading supplier of boiler and environmental control technology to the utility, oil and gas and paper and pulp markets.

Our installed base in the U.S and globally and our diamond powered business internationally puts us in a position of strength to support the robust global coal power generation fleet and related aftermarket and environmental equipment needs. Our pulp and paper install base represents a largely untapped potential for aftermarket services.

Our industrial packages boiler business offers great opportunity. We are focused on maximizing these opportunities around the globe.

Internally, we are significantly reducing G&A in reorganizing the business to push ownership of cost and cash flow down into the lowest P&L level possible and giving the talented leadership in the business the power and incentives to optimize operation.

With the conclusion of EPC loss projects nearing, the Volund business can focus on its core technologies, returning the business model as a designer and supplier that served it well and profitably for many years. As we've previously discussed, the business is no longer bidding EPC scope projects.

The business equipment only and aftermarket businesses continue to be profitable in the fourth quarter and we are now focusing the business on its equipment only aftermarket licensing and operations and maintenance and optimizing cost and structure.

Our SPIG business had a challenging fourth quarter and a challenging 2018, primarily as a result of project and bad debt write-downs. These were historical and not reflective of the core business. We expect actions taken in the latter half of 2018 to stabilize the SPIG business.

The actions include focusing on our sales, on core products and geographies, restructuring, introduction of new management and an increased focus on project execution. At the end of the fourth quarter, the business also completed all, but two of its legacy projects as a typical SPIG project can take 18 months to complete.

Our change in strategy to focus more on selectively on higher value projects within the select geographies results in a lower backlog for the business. However, the projects and backlog have better terms designed to drive improved performance in 2019 and beyond.

We believe our strategy will continue to improve performance throughout 2019 with the benefits becoming more evident in the second half of the year as remaining cleanup related to Volund loss projects and their impact trails off in the second quarter.

We are targeting achieving a run rate adjusted EBITDA of around $100 million in 2020, not including corporate overhead. I will now turn the call over the Lou to provide more detail on our fourth quarter financial results..

execute $50 million rights offering at $0.30 per share within six months; exchange $35.1 million of the last out term loan held by Vintage Capital Management for common stock at $0.30 per share; issue approximately 16.7 million warrants each to purchase one share of common stock at one penny per share and execute a 1 for 10 reverse stock split.

The amendment permits the company to repay up to $86 million of the last out term loans using the proceeds from the rights offering. Also in connection with the amendment, the maturity date for all last out term loans under the credit agreement will be extended to December 31, 2020.

All of the terms of the agreement can be found in our 8-K filed with the SEC on April 5. The amendment also among other items, reduces our required minimum liquidity to $30 million from $40 million as a condition of the borrowing.

It allows for issuance of up to $20 million of new letters of credit with respect to any Volund -- any future Volund projects, which allows us to grow that business further.

It also permits letters of credit to expire one year after the maturity date of the revolving credit facility and creates a new event of default for the failure to terminate the existing credit facility on or prior to March 15, 2020. We fully intend to refinance the revolving credit facility as required.

As Kenny mentioned, we're now targeting $100 million in annualized savings through our cost savings initiatives, roughly three quarters of these savings measures have been implemented to date with the balance to be implemented in 2019 and a small amount in 2020.

Cost savings have been identified across all segments at the corporate level and the implementation plan and savings are progressing in line with our expectations.

Finally, in the third quarter of 2018, the company announced that based on a number of ongoing asset debentures and other strategic actions, the company's previous guidance was no longer relevant and withdrew the company's previously stated 2018 financial guidance.

Given the ongoing efforts associated with cost savings and other strategic initiatives, the company does not intend to provide guidance at this time. I will now turn it back over to Kenny..

Thanks, Lou. Well, in summary, we've made significant strides towards positioning B&W for return to profitability in a healthy future. We can now step out from underneath the shadow of the renewable EPC loss projects and demonstrate the strength of our core power business and our Volund and SPIG technologies.

All of us, from me to Lou, Henry, Bob, to every B&W employee I've met around the world, we are focused on quality, cash flow, profitability and of course safety.

We appreciate the continued support of our customers, vendors and employees and shareholders during these challenging times and look forward to working together to deliver for our customers in our core power and industrial markets, and what we believe will be a much better 2019.

I will now turn the call back over to the operator, who will assist us in taking any questions..

[Operator Instructions] We do have a question from Robert Cathey with SCW Capital. Your line is open..

Hey, guys. I appreciate you guys [indiscernible]this call.

I was wondering -- I know you’re not giving guidance as it relates to the run rate EBITDA for 2020, if you could kind of breakdown those components for us? And I also think we’ve only seen corporate that was paid back to parent from the original spend, if you can maybe give us some context around what corporate cost look like? Thanks..

Okay. We are not going to be able to give detailed guidance on the target we’ve mentioned. That’s a target and we will have guidance -- we are not going to do guidance as we indicated earlier.

What was the second part of your question, Robert?.

It's around corporate cost, but I guess that's irrelevant if you’re not providing any guidance around that..

Well, we can state what the corporate costs were, but not give guidance...

Okay, what were they?.

About $25 million after costs allocated outside of -- into the other segments..

Okay, perfect.

And then, I guess, just what I have, if you could maybe provide a little context around SPIG and I guess, what happened and what’s been remedied and what that business will focus on going forward?.

Yes, just to talk a little bit about -- I mean, and again on high level, I think as we kind of alluded to in this -- in the conference call here, Robert is, SPIG had taken on I think an incredible amount trying to grow into many markets around the world and we just peeled that back into what we think are the more focused markets that they should be focused on from a product standpoint, both wet and dry overall, and so look for opportunities that lend or tend to give follow-on aspects around maintenance and parts after the sale as well.

So those are typically more higher margin type opportunities and we wanted SPIG to reduce the geography footprint, as there's cost obviously to maintain those geographies and we wanted them to focus on the higher return opportunities which typically have a follow-on capabilities around maintenance in other parts after-the-fact or aftermarket..

Got it. Okay. Okay. Well, thanks guys. I know you had a really difficult situation. We appreciate all the hard work getting to where you’re today..

Thanks..

Thank you..

Appreciate the support..

[Operator Instructions] Okay. And this conclude the Q&A portion of today’s call. I will now turn things back over to the presenters 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..

This concludes today’s conference call. You may now disconnect..