Hello, everyone and welcome to the Babcock and Wilcox Q4 and Full-Year 2022 Earnings Conference Call. My name is Emily and I'll be coordinating your call today. [Operator Instructions] I will now turn the call over to our host, Sharyn Brooks; Director of Communications. Please go ahead..

Thank you, Emily and thanks to everyone for joining us on Babcock and Wilcox Enterprises fourth quarter and full-year 2022 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 Lou Salamone, Chief Financial Officer to discuss our fourth quarter and full-year 2022 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 in our Annual Report on Form 10-K that will be filed with the SEC tomorrow, March 16, 2023 after the close of the market.

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. I will now turn the call over to Kenny..

Thanks, Sharyn. Thanks, operator and good morning, everyone, and thanks for joining our fourth quarter and full-year 2022 earnings call. We had a very strong quarter for Babcock & Wilcox and generated backlog and new opportunities to position us to reach our 2023 EBITDA targets.

We increased our pipeline of opportunities, especially around our clean energy technologies, and renewable and environmental as well as expanding opportunities with our BrightLoop hydrogen production technologies.

Despite the near-term headwinds and ongoing supply chain disruptions, our seasonally strong fourth quarter results, which improved significantly on a sequential basis, enabled us to achieve our revised EBITDA, adjusted EBITDA target for the full year of 2022.

Revenues in the fourth quarter increased 30% compared to 2021 and our quarterly bookings were $197 million, which were in-line with our strong fourth quarter bookings in the prior year. Our year-over-year results for 2022 were just as significant.

Revenues for the year increased 23%, and our annual bookings of $908 million set a new record highs since 2017.

In addition, we booked seven renewable waste-to-energy new build projects in 2022, and announced several agreements with a number of leading companies to further augment our market applications of BrightLoop, SolveBright and OxyBright technologies.

Although, our performance for the year was impacted by global supply chain and market conditions, we continue to execute and progress against our long-term strategic growth strategy with an expanded pipeline of $8 billion and quality projects, and an ending backlog of $704 million, a 19% increase compared to the end of 2021.

And remember, our backlog does not include our standard parts and service revenues. We look forward to 2023, we see strong customer demand across all of our business segments, coupled with significant backlog and booking momentum, which reinforces our conviction for an improved full year performance and continued growth throughout the year.

Given our current visibility for new booking opportunities, we reiterate our 2023 full year adjusted EBITDA target of $100 million to $120 million. While industry challenges and negative impacts of the global supply chain pressures still remain, we have implemented several strategic initiatives to mitigate these headwinds where possible.

In recent quarters, we have worked to expand the qualification of alternative suppliers and modified our sourcing strategies to limit the impact that industry-wide bottlenecks have had with respect to availability of raw materials, fabrication capabilities and labor shortages among a broad range of other factors.

While we continue to evaluate where further improvements in our supply chain can be implemented, we are proud of our team's ability to react proactively to the present global and regional challenges, while maintaining the highest level of operational performance.

Our focus on providing customers with the technologies and services necessary to meet their growing demands for thermal base load generation and clean energy solutions remain our top priority.

In the fourth quarter, we also announced two significant contract awards in our Environmental segment, which serves as a testament to our customers confidence in our emission control and ash handling technologies.

The first contract valued at over $24 million included the supply of two industrial package boilers, auxiliary equipment and advanced emission control technologies for a petroleum refinery in North America. Under that same contract, B&W Environmental will supply two select catalytic reduction systems STR's to control nitrogen oxide emissions.

The second contract is valued at over $20 million included the design and supply of ash handling and conveying technologies for a power plant in North America, leveraging our equipment to assist the plant, operator and reducing the environmental impact of the plant and ensuring compliance with emission requirements.

B&W Environmental will design, manufacture and supply four state-of-the-art Allen-Sherman-Hoff submerged grind conveyors or STC systems, that are designed to meet Effluent Limitation Guidelines, ELG and other coal combustion residuals requirements and also supply two tube conveyors for the project.

These contract awards follow two very instrumental announcements we made last quarter, including a $43 million contract to provide construction and installation services for an environmental upgrade project here in the U.S.

In addition to a contract award to study the application of B&W SolveBright solvent based carbon dioxide capture solution for console energy.

Overall, we are pleased with the progress, our environmental business segment has achieved and the validation it brings to our growth pipeline and ultimate goal of revenues being two-thirds environmental and renewable, and one-third thermal.

In addition, we just recently announced this year, a $65 million contract to provide renewable waste-to-energy and environmental technologies to low stock sustainable energy plan in the United Kingdom.

This is one of the largest waste-to-energy plants in the UK and reflect strongly on our relationships with Copenhagen Infrastructure Partners and FCC Environmental Services.

With respect to the supportive industry legislation has been passed, we are excited to announce that we are collaborating with customers and partners to pursue a number of advanced clean energy projects and opportunities that will be made possible through the funding provided by the historic $1.7 trillion spending package recently signed by President Biden.

The appropriations packages contained historic funding for clean energy projects, including opportunities for hydrogen generation, carbon capture, renewable energy and methane mitigation, demonstrations that would potentially benefit from B&W's advanced clean energy solutions.

The spending package includes specific appropriations language that directs the Department of Energy to support commercial demonstration of hydrogen production using chemical looping, utilizing coal biomass or natural gas.

This is a significant accomplishment and developed, we look forward to advancing our discussions with customers, partners and representatives from the U.S. Department of Energy to explore ways in which we can accelerate the clean energy transition and provide essential innovative technologies for those projects.

B&W has a diverse suite of renewable energy environmental and decarbonization technologies that are proven and ready to deploy including hydrogen, CO2 capture, decarbonization, methane abatement, renewable energy and emission controls.

Our commitment to further drive sustainability is reinforced by our recently announced collaboration with Chart Industries to evaluate innovative application, utilizing our BrightLoop technology and the Global Alliance with Fidelis to produce clean zero carbon intensity hydrogen.

Through the collaboration with Chart Industries, B&W were further deploy its BrightLoop hydrogen technology utilizing Chart's hydrogen liquefaction and carbon capture equipment.

The partnership aims to provide low carbon hydrogen generation and cost effective transportable forms of liquid hydrogen and carbon dioxide, while developing sales and marketing strategies for potential commercial customers.

We are excited to partner with Chart industry and look forward to advancing the scalability and innovative applications our BrightLoop technology has to offer. The Global Alliance with Fidelis focuses on the production of clean hydrogen, using B&W's bubbling fluidized bed boiler technology and Fidelis's proprietary Fidelis H2 technologies.

The partnership aims to produce zero carbon intensity hydrogen from natural gas that meets the required threshold under the Inflation Reduction Act to qualify for the full $3 per kilogram, 45B hydrogen production tax credit.

We look forward to deploying these technologies at scale, and further developing our suite of carbon capture solutions ultimately leveraging our ClimateBright Decarbonization platform and supportive industry legislation to further diversify our environmental and renewable business.

I'll now turn the call over to Lou to discuss the financial details of the fourth quarter and the full year 2022.

Lou?.

Thanks, Kenny. First, I'll review our full year 2022 results, and then I'm going to turn over to our fourth quarter 2022 results.

For further detail, I call your attention to the fact that we will file our 10-K with the SEC tomorrow March 16 after the close of the market and you can refer to it for further details, beyond what we discussed here in this call today.

Our consolidated revenues for 2022 were $889.8 million and as Kenny mentioned that's a 23% improvement compared to 2021.

The improvement was primarily due to a higher level of activity in our Renewable and Environmental segments, and our expanded geographic presence and the improved strategies to mitigate the continued impact of COVID-19, as well as acquisitions we closed in the second half of 2021.

The net loss in 2022 was $26.6 million compared to net income of $31.5 million in 2021, which included non-cash items -- which '21 included non-cash items of approximately $31.1 million, which were primarily related to non-cash items with respect to income tax benefits and mark-to-market pension benefits.

GAAP operating loss in 2022 was a $4.2 million compared to an operating income of $20.8 million in 2021. We achieved our revised 2022 adjusted EBITDA target of more than $70 million with an adjusted EBITDA reaching $72.4 million as compared to $70.6 million in 2021.

Total bookings in 2022 were $908 million, a 17% increase compared to full year bookings in 2021. This is the highest level of annual bookings since 2017. Backlog at December 31, 2022 was $704 million and this is a 19% increase compared to the prior year end. Now I will turn over to our fourth quarter results.

Fourth quarter consolidated results, revenues were $249.9 million, that's a 30% improvement compared to the fourth quarter of 2021. This improvement was primarily attributable to higher overall volumes and previously competed -- completed acquisitions, while it was partially offset by a lower level of construction activity in our thermal segment.

Net income for the fourth quarter was $5.7 million compared to net income of $30.2 million in the fourth quarter of 2021, again this is primarily related to non-cash items, including a $15.2 million tax benefit and a $17.8 million positive mark-to-market adjustments in our benefit plans.

Our GAAP operating income in the fourth quarter was $9.3 million compared to an operating income of $9.7 million in the fourth quarter of 2021. Adjusted EBITDA was $26.7 million in the quarter, compared to $27.8 million in the 2021 quarter.

Bookings in the fourth quarter were -- of 2022 were $197 million, which is in-line with the strong bookings of the fourth quarters of comparable 2021 period. I'll now turn to cash flow, our balance sheet and our liquidity. Our cash flow from operations in the fourth quarter of 2022 was a source of cash of $36.8 million.

We ended the year with total debt of $353 million and a combined cash, cash equivalent and restricted cash balances of over $113.5 million for net debt of approximately $239.5 million. Our net leverage at December 31, 2022 was 3.31 times the last 12 months adjusted EBITDA.

As Kenny stated, our strong results for the fourth quarter were propelled by continued execution of our growth strategy and drove us to achieve our adjusted EBITDA target of more than $70 million for the full year of 2022.

We booked seven sizable renewable waste-to-energy product -- projects in 2022 contributing again as I said to the highest level of our annual bookings since 2017. We expect 2024's quarterly profile to follow our normal cyclical performance of increasing profitability from the first to the fourth quarter.

And again, as Kenny has highlighted, we are reiterating our 2023 target of $100 million to $120 million of adjusted EBITDA. This is supported by a robust pipeline of more than $8 billion of opportunities through 2024 and a $704 million backlog at the end of 2022.

The backlog is in 19% improvement over the prior year and shows the accelerating momentum of our strategic actions. I'll now turn the call back over to Kenny..

Lou, thanks. Well in closing, capacity has been one of tremendous growth and progress for B&W despite all of the macro headwinds and an ongoing growing supply chain disruptions. Notably, we have seen continued success across the multiple key fronts, including achieving a record level of annual bookings since 2017.

Topline annual revenue improvement year-over-year, an improved outlook for adjusted EBITDA growth in 2023, demonstrating the effectiveness of our strategic initiatives and the strength of our world-class team of operators.

Looking ahead, we remain excited about the prospects stemming from a robust pipeline of more than $8 billion of global identified projects and upgrade opportunities, driving profitable multi-year growth and enhancing shareholder value.

Our deep industry expertise with clean energy and carbon capture technologies coupled with our experienced in traditional energy sources, gives us a unique advantage in delivering sustainable solutions to our customers and stakeholders.

As we continue to evaluate the ever evolving landscape of the energy transition, Babcock & Wilcox looks forward to developing its ClimateBright Platform and deploying its technology at scale.

I want to express my sincere gratitude to all of our employees and customers and shareholders and partners for their continued support and confidence in our company. We remain steadfast in our commitment to becoming a front-runner in the global energy transition and look forward to building on our successes in the years ahead.

Together, we continue to drive strong profitable growth and create a more sustainable future for generations to come. That wraps up our comments. I will turn it back over to the operator to answer any questions..

Thank you. [Operator Instructions] The first question today comes from Aaron Spychalla with Craig-Hallum. Aaron, please go ahead..

Good morning, Kenny and Lou. Thanks for taking the questions. Maybe first on waste-to-energy. Good to see the low stock award to start 2023. Can you just maybe talk about the pipeline there, how it's trending and then supply chain and timelines on the current project.

Just how that compares to your expectations back in October?.

Yeah. So low stock obviously was a great announcement. We are hoping to get that one in before the end of the calendar year 2022.

But it took a few extra days to get that complete, but excited about that and there is -- I would say, the exciting part about that project right now is that there could be opportunities to expand, more scope depending on certain activities and other things that may be developing down the road.

So we're truly excited about that and also reflect strongly as I mentioned in my remarks on our relationship with SIP and FCC. FCC has got a large presence here in the U.S. as well as in Northern Europe and it's great to expand our relationship with both SIP and FCC, likewise.

From an overall pipeline standpoint, we do have a number of other opportunities that we are working on some hopefully would be announcements this year, some that would be -- we're working diligently on that would be announced next year, this is all in waste-to-energy around that segment.

And we're continuing to expand some of the royalty capabilities we talked about it a little bit here and there. But where we're licensing our waste-to-energy technology in Asia, specifically in China, in India and we're seeing some growth come out of those segments as well too, and we anticipate seeing more here in 2023 and '24.

So the pipeline is strong overall, and we continue to see advancements in both waste-to-energy and I would say to follow-on, we're starting to see more opportunities in biomass-to-energy primarily because of the net negative impact of what biomass-to-energy power looks like, especially when you're sequestering the CO2 through OxyBright.

And we're seeing a pipeline starting to increase on specifically around those combined technologies, because of the IRA advancements here in the U.S. So from a supply chain perspective, what we talked about on the call. I don't -- we don't see anything that's significantly improved in supply chain.

What we've done is just basically taking the approach like we mentioned last year and looking at our projections this year and going into next year, you see we're living in this era of this current supply chain aspects. So things that normally would have taken a few months to bring on or getting access to steel inside 90 days now takes six months.

So as we look at how we negotiate contracts, as we look at how we look at revenue and forecast going forward. We just -- we tried our best to incorporate all of those standard supply chain issues to make it just part of our normal business expectations, and then reset our cost structures and then obviously our forecast around that.

So, as we always said, unless things get materially worse we think we've got much of that baked into our forecast, and our business planning at this point in time. And if things get better, obviously, that would have a positive impact for us, but we're not assuming it does as it relates to our numbers and projections for '23..

Understood. Thanks for the color. And then you mentioned language on commercial demonstration for chemical looping in the legislation.

Can you just talk a little bit about what funding might look like there, anything on timing for deployments? And then any update to just the broad kind of 30 plus pipeline of kind of ClimateBright as those things are progressing?.

Yeah. So we're excited about the appropriations language that was -- we worked, obviously, a lot with legislation and Ohio State legislation, and other Federal Senators that to support that language on both sides of the aisle. So we had support from the public side, the Democratic side of the aisle to get that language in the DOE.

So we're working with them now, it has to go through the normal appropriations, process and cycle inside the DOE.

And so we'll see how that plays out over the next few months, I don't -- it's not going to be a quick road to influx of cash to support the commercial demonstration, but it's clearly there to help support the demonstration, and we're working with a number of groups within the DOE to bring that to fruition. At some point in time, that will happen.

And the DOE is excited about our program and others. Anytime you're working with the government, things just take a little bit longer than you would hope and like. But we're excited to have it there, we look forward to working with them. On the commercial efforts, things are continuing to progress. We talk a lot about the couple opportunities.

I think we put out publicly on the potential on the project in Louisiana, and the potential on a project now in Wyoming, using two different fuels, one would be biomass, one would be coal, actually using waste coal in that particular case, and we're working on a third project that would be utilizing pet coke, which is an oil and gas petroleum waste product to create hydrogen, and isolate capture the CO2 associated with that.

And we haven't talked publicly too much about the fact that we also produced nitrogen as it relates to the process and we're able to capture that nitrogen. And we've been in discussions with a few companies around the potential use of the nitrogen in conjunction with the hydrogen, in conjunction with the CO2.

So we're seeing some broader applications around that technology, and we're still on-track with developing those commercial opportunities and why we're starting to build a pipeline of larger opportunities around BrightLoop, and that would be the natural part of progression for that and we're seeing that unfold.

So we're bullish on where it's going and we definitely clearly see the upside. And I think as we get more and more out in the marketplace and as we work with companies like Chart, Fidelis and others to expand our customer reach on that technology. We're seeing more and more applications where this come into play, including Europe and as well as Asia.

So it's exciting for us and we'll continue to advance those over the course of the year and hopefully, we get some announcements out on a few of these more concrete soon, but we're definitely working hard to get it to that level..

That's good to hear. We'll stay tuned. Thanks for taking the questions..

Yeah. Thank you..

The next question comes from the line of Rob Brown with Lake Street Capital. Rob, please go ahead. Your line is open..

Hi. Good morning..

Hey, Rob..

Just a little bit further color on the new -- just wanted to get some additional color on the new booking pipeline growth. You talked about waste-to-energy market.

Kind of what -- was that the main driver of the growth that where you seeing the new booking opportunity growth and some further color on the new booking pipeline?.

Yeah. We're seeing it. The growth is primarily coming from renewable energy, I think we -- I believe it's out on our website, our new investor deck is up -- I'm looking out share now here. So on our investors deck which is on the website, you'll see the revised pipeline on there, that we just put out.

But the growth is really coming from the renewables segment and it does include everything I talked about. It also includes solar, we're seeing a significant amount of solar opportunity. Some of those are in the community solar aspects, some of those are in the small. I would say, sub scaled utility meaning not 500 megawatt kind of projects.

But the solar aspect is starting to really grow in the U.S. with, obviously, the preparations that we put out last year, plus some of the incentives. And its again like you read in the headlines, there's a lot of international development that's coming into the U.S. on projects, that are looking at combinations.

We're -- in some of those pipeline opportunities we've got waste-to-energy or biomass, but they want to supplement that with solar capabilities as well too.

So what we talked about originally, our intent to get into solar was more around leveraging the solar industry, but how do we create combinations of these clean power technology solutions of solar and biomass, and solar to waste.

Some of it could be a simplistic as solar going in and around the land mass in the area of waste-to-energy standpoint, and we're in discussions with opportunities around those.

Obviously, the concept of additional potentially moving into green steam and seeing those is most important to us and having those conversations and some of that is starting to come into the pipeline, when we talk about our pipeline overall.

But it is all focused in renewable, whether it's in our oxy combustion biomass, in our solar capabilities or waste energy capabilities. Our BrightLoop capabilities, the pipeline is definitely growing in that regard. Our thermal business has pipeline in their projects out there a lot of those are construction or upgrades and enhancements.

And it's not that those are shrinking, the parts -- the thermal business is staying really steady for us. Clearly the pipeline doesn't include the parts and services piece. So that's separate business that we always talk about, and we always got to keep that in mind.

But it's -- the reason that we're seeing the expansion is all around the Renewable and Environmental segments. So we're excited about that..

Okay. Great. Thank you. And then the thermal parts and services business. I think at one point, there was some deferment of activity.

How do you sort of see that market, is there a pent-up demand there? How does that look at this point?.

Yeah. We had a strong Q4 in bookings. And I would say, Q1 is flowing back more traditional like a traditional standpoint. We've -- as it relates to just the expectations of revenue and EBITDA margin from that sector, we've incorporated in our forecast before where things were book-and-bill in 30 days, that's book-and-bill in 65 to 90 days.

But that's just incorporated in our planning and our flows of costs and revenues going forward, but the demand for that is come back to the, I would say, prior COVID levels at this stage and we're quite pleased with that.

It's always unique, because we -- if you take out this anomaly of a COVID year and anomaly of a supply chain impacts that we had last year and look at the end of '22 and look in -- we look at 2023 that business overall just continues to operate and perform at very solid margins, and we continue to look at how we can expand internationally and we continue to look at how we can expand it by through reverse engineering of competitive technologies, but it's just a solid state business.

But it's -- I think we're fairly back on track to where it once was, as it relates to the demand and the orders starting to commence. I don't know if that's..

No, that's consistent with what we're experiencing at this point in time. So we expect the thermal business to continue to perform as well as it has. It just hasn't been hit by any decreases as much as people sometimes predicted the thermal business will be hit..

Great. Thank you. I will turn it over..

Thanks, Rob..

Thanks, Rob..

The next question comes from Brent Thielman with D.A. Davidson. Brent, please go ahead..

Hey, thanks. Good morning. Ken, I think, you guys have taken a lot of internally to address some of these supply chain issues, which should be out this year. But can you help us sort of better understand this kind of $30 million plus bridge on guidance from 2022-23.

Is that sort of assume no further degradation in margins or delays related to supply chain.

And then the remainder is essentially a ramp up on new work booked and kind of normalization your short-cycle business, just kind of wanted to parse that bridge out?.

Yeah. No, it's a great question. So what we did was we took basically the current state of the supply chain, which was impactful, obviously, in our objectives in '22. But we just normalize that out in our forecast.

So when we look at the business, we just assume that the supply chain, timing and processes and everything that we faced or just booked into our normal aspects.

So again, as I mentioned before, I mean there's certain things that take 30 to 45 days to get it from a part standpoint and how they take longer, that -- we just incorporated that in our planning processes.

So now is where we're looking at the parts and services business and we are booking the revenues and when those revenues would be realized from a margin perspective. There is some added time to that, but it's baked into our forecast and calculations.

So the best way I can describe is, we've just -- we've normalized that meaning -- we just incorporated that level of supply chain aspects and said, that's just normal course. And now our forecasts are based on that going forward and again if it improves, if things go back to where it was.

I don't have any -- we don't have any signs here that says, hey, it's going to go back to where it was. But if it does start to improve and that would only bring improvements to our bottom line and top line as well.

But right now we just kind of baked in that and say, hey, this is just the way it's going to be, let's build the -- let's make sure we manage the business accordingly, forecast the business quarterly. And so, that's all baked into those numbers..

Okay. I mean it's seemingly -- it does, I mean, seemingly should have pretty good top-line growth, all the new work you booked.

Are you assuming that you can see some margin expansion, as well this year at this point or is it too early to say, given all those supply chain factors?.

I would say, this way, I think there's potential out there across the board for margin expansion and it's too early to say that to give any guidance as we say, we see specific ways that could happen. Clearly, there is potential for that and we'll see how it shakes out as we go forward, but those opportunities are there.

So we'll keep an eye on it, but I wouldn't say anything right now that we can give any concrete guidance to..

And that I would say right now, when we look at going forward. We do our modeling based on where prices are, we're not looking at any great decreased inflation and et cetera. While we've done a little better than inflation, our supply chain guys have done a good job.

As we model out and see where we can still be in the 100 to 120 range, that's based on, as Kenny said, really current pricing conditions et cetera. So there could be upside, but I think we just have to wait and see what happens in the economy..

Understood. And then, just a quick follow-on the [Technical Difficulty].

Brent, you're breaking up. It's very hard for us to understand your -- if you can sort of change where you're sitting or something but….

Yeah.

Can you hear me well?.

Right now, we can. Go ahead, Brent..

If you can hear me. Yeah, just a follow up on the [indiscernible] sequence that the EBITDA for through fourth quarter.

Maybe just your expectations for cash flow the year in comparability with the kind of business right now?.

Brent, I really apologize, but we're getting maybe every third word of your question..

Okay. I apologize., Thanks guys..

Yeah, follow-up right after the call. I apologize, but we can't get you -- what you're saying..

Apologies for that Brent. We'll now move on to our final question, which comes from the line of Alex Rygiel with B Riley. Alex, please go ahead..

Thank you. Good morning, gentlemen and very nice quarter.

In totality, can you talk about the opportunity with Fidelis, the multiple project opportunities of project cycles? And how that might flow through backlog over time?.

Yeah. None of the Fidelis projects that were -- obviously, they are in our pipeline, but they're not in our backlog yet materially. We've got some minor engineering revenues, it seems like that here and there with them. But the larger projects are not in there yet at this point in time.

Fidelis is -- they're finalizing their funding aspects around the grown projects. We're very close to that process. And I think, as we described, it would be potential bookings towards the end of this year and I think we're all on track on that.

We'll have, obviously, probably through the summer time some further announcements on that publicly, that we put out on timing and updates as it relates to Fidelis, but fully anticipate that anyway. But that's how we're tracking it. So I would look at it at the end of the year more, obviously, it's going to be a three-year project.

I think they're targeting that facility to be up and running by early 2026, something like that. The other Fidelis is also we're working with them on some other opportunities and some of those are around hydrogen and some of those are in carbon capture projects and we're excited to be a part and closer with them on those opportunities.

Some of those have had good potential and I would imagine we might be working with them on some engineering studies and things on those projects even over the course of the next few months. Again, nothing material, but they have a number of projects that are involved in globally. And so we're definitely excited about that to be a part of that.

So I know if that helps Alex, but that's how we're thinking about it..

No, that does. And then coming back to the supply chain challenges and understanding that every project contract is different. Are you able to pass along some of -- if not all of the kind of unanticipated costs, talk us through that a little bit..

Yeah. We do have that. There's a lot of depends like we sell thousands and thousands of different parts and things like that. But we do have the capabilities to pass along a lot of the price increase or cost increases that occur or that we inherited from our vendors and suppliers.

There are moments where we can do it immediately, there are -- depending on the situation, somewhere we absorb it on one or two, but then we're able to pass it the increases at a later date very -- just depends on the contract and other aspects we have.

But there is a few project -- large long-term projects and we're in multi-year projects, where we have the ability to adjust some pricing mechanisms, on certain elements, maybe not on others. So they do vary a little bit project to project and part and part and customer to customer.

But on average, we're able to effectively increase that, in some cases 100% immediately, in some cases there a little bit of a lag. But for the most part, we're able to -- overall, we're able to adjust that over time to our customers and have those price increases to cover those costs..

And then lastly, Lou, can you comment on sort of the outlook for cash flow in 2023, understanding that there is every year kind of a few dynamics that might stand out as special situations?.

Yeah. As you've seen in the past, the cadence of our cash flow kind of grows over each quarter. So your first quarter --our first quarter is generally a lower cash flow quarter, it builds in the second quarter, builds a little more in the third quarter and then a very as we evidenced by the performance here, we have a very strong fourth quarter.

So we expect that cadence to continue. We've also taken internal and process steps to more closely with each of our units to push better cash processes and collection processes and that's paid off to. But, Alex, I would expect the same cadence that you've experienced over the years.

But with the EBITDA growth that we're looking at, we should be able to produce very good cash flows in line with that EBITDA growth..

Excellent. Thank you very much..

Thanks, Alex..

Those were the questions we have for today's call. I will turn the call back to the management team for any concluding 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..

Thank you, everyone for joining us today. This concludes our call and you may now disconnect your lines..