Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


FORM 10-Q
(Mark One)
x☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2017March 31, 2021


OR
¨☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to


Commission File No. 001-36876


BABCOCK & WILCOX ENTERPRISES, INC.
(Exact name of registrant as specified in its charter)
DELAWAREDelaware47-2783641
(State or other Jurisdiction of Incorporation or Organization)(I.R.S. Employer Identification No.)
THE HARRIS BUILDING1200 East Market Street, Suite 650
13024 BALLANTYNE CORPORATE PLACE, SUITE 700Akron, Ohio44305
CHARLOTTE, NORTH CAROLINA28277
(Address of Principal Executive Offices)(Zip Code)
Registrant's Telephone Number, Including Area Code: (704) 625-4900(330) 753-4511

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.01 par valueBWNew York Stock Exchange
8.125% Senior Notes due 2026BWSNNew York Stock Exchange
7.75% Series A Cumulative Perpetual Preferred StockBW PRANew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x☒    No  ¨☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x☒    No  ¨

☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer☐Accelerated filer☐
Non-accelerated filer☒Smaller reporting company☒
Large accelerated filerxAccelerated filer¨
Non-accelerated filer
¨  (Do not check if a smaller reporting company)
Smaller reporting company¨
Emerging growth company¨☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extensionextended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    
Yes  ¨☐    No  x

☒
The number of shares of the registrant's common stock outstanding at October 31, 2017May 6, 2021 was 44,049,127.85,727,419.

1

Table of Contents




BABCOCK & WILCOX ENTERPRISES, INC.
FORM 10-Q
TABLE OF CONTENTS
PAGE
PART I - FINANCIAL INFORMATION
Item 1.
3
3
4
5
6
67
78
Item 2.
3032
32
34
40
46
Item 3 - 3.
4546
Item 4.
46
PART II - OTHER INFORMATION
Item 1.
47
Item 1A.
47
Item 2.
47
Item 6 - Exhibits6.
48
SIGNATURES
4849

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PART I - FINANCIAL INFORMATION

ITEM 1. Condensed Consolidated Financial Statements

BABCOCK & WILCOX ENTERPRISES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 Three months ended September 30, Nine months ended September 30,
(in thousands, except per share amounts)20172016 20172016
Revenues$408,703
$410,955
 $1,149,636
$1,198,279
Costs and expenses:     
Cost of operations361,416
337,198
 1,095,271
1,018,314
Selling, general and administrative expenses60,241
60,697
 195,847
182,761
Goodwill impairment charges86,903
—
 86,903
—
Restructuring activities and spin-off transaction costs3,775
2,395
 8,910
38,021
Research and development costs2,291
2,361
 7,454
8,273
Losses (gains) on asset disposals, net59
(2) 63
(17)
Total costs and expenses514,685
402,649
 1,394,448
1,247,352
Equity in income (loss) and impairment of investees1,234
2,827
 (13,380)4,887
Operating income (loss)(104,748)11,133
 (258,192)(44,186)
Other income (expense):     
Interest income121
115
 359
656
Interest expense(7,468)(379) (15,567)(1,169)
Other – net(7,633)(241) (6,024)113
Total other income (expense)(14,980)(505) (21,232)(400)
Income (loss) before income tax expense(119,728)10,628
 (279,424)(44,586)
Income tax expense (benefit)(5,639)1,617
 (7,644)(790)
Net income (loss)(114,089)9,011
 (271,780)(43,796)
Net income attributable to noncontrolling interest(213)(117) (566)(293)
Net income (loss) attributable to shareholders$(114,302)$8,894
 $(272,346)$(44,089)
      
Basic income (loss) per share$(2.48)$0.18
 $(5.69)$(0.87)
      
Diluted income (loss) per share$(2.48)$0.18
 $(5.69)$(0.87)
      
Shares used in the computation of earnings per share:     
Basic46,149
49,621
 47,905
50,613
Diluted46,149
49,857
 47,905
50,613
Three months ended March 31,
(in thousands, except per share amounts)20212020
Revenues$168,248 $148,554 
Costs and expenses:
Cost of operations131,385 114,628 
Selling, general and administrative expenses40,457 37,608 
Advisory fees and settlement costs3,291 4,239 
Restructuring activities993 1,951 
Research and development costs588 1,341 
Gain on asset disposals, net(2,004)(915)
Total costs and expenses174,710 158,852 
Operating loss(6,462)(10,298)
Other (expense) income:
Interest expense(14,223)(22,091)
Interest income109 40 
Gain on sale of business358 0 
Benefit plans, net9,098 7,536 
Foreign exchange(1,209)(9,326)
Other – net(278)(206)
Total other expense(6,145)(24,047)
Loss before income tax expense (benefit)(12,607)(34,345)
Income tax expense (benefit)2,836 (810)
Loss from continuing operations(15,443)(33,535)
Income from discontinued operations, net of tax0 1,913 
Net loss(15,443)(31,622)
Net (income) loss attributable to non-controlling interest(21)96 
Net loss attributable to stockholders$(15,464)$(31,526)
Basic and diluted loss per share - continuing operations$(0.22)$(0.72)
Basic and diluted earnings per share - discontinued operations0 0.04 
Basic and diluted loss per share$(0.22)$(0.68)
Shares used in the computation of earnings (loss) per share:
Basic and diluted71,396 46,403 
See accompanying notes to condensed consolidated financial statements.Condensed Consolidated Financial Statements.

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BABCOCK & WILCOX ENTERPRISES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
 Three months ended September 30, Nine months ended September 30,
(in thousands)20172016 20172016
Net income (loss)$(114,089)$9,011
 $(271,780)$(43,796)
Other comprehensive income (loss):     
Currency translation adjustments, net of taxes2,591
2,811
 14,765
(7,015)
      
Derivative financial instruments:     
Unrealized gains (losses) on derivative financial instruments398
1,419
 2,642
5,476
Income taxes130
287
 (9)990
Unrealized gains (losses) on derivative financial instruments, net of taxes268
1,132
 2,651
4,486
Derivative financial instrument (gains) losses reclassified into net income5,679
(1,519) (769)(3,516)
Income taxes2,112
(272) 165
(615)
Reclassification adjustment for (gains) losses included in net income, net of taxes3,567
(1,247) (934)(2,901)
      
Benefit obligations:     
Unrealized gains (losses) on benefit obligations(66)(25) (207)(49)
Income taxes—
—
 —
—
Unrealized gains (losses) on benefit obligations, net of taxes(66)(25) (207)(49)
Amortization of benefit plan costs (benefits)(619)15
 (2,281)(294)
Income taxes11
7
 31
(421)
Amortization of benefit plan costs (benefits), net of taxes(630)8
 (2,312)127
      
Investments:     
Unrealized gains (losses) on investments84
18
 171
53
Income taxes15
—
 60
24
Unrealized gains (losses) on investments, net of taxes69
18
 111
29
Investment (gains) losses reclassified into net income(6)—
 (50)1
Income taxes(2)—
 (18)—
Reclassification adjustments for (gains) losses included in net income, net of taxes(4)—
 (32)1
      
Other comprehensive income (loss)5,795
2,697
 14,042
(5,322)
Total comprehensive income (loss)(108,294)11,708
 (257,738)(49,118)
Comprehensive income (loss) attributable to noncontrolling interest(59)(218) (85)(370)
Comprehensive income (loss) attributable to shareholders$(108,353)$11,490
 $(257,823)$(49,488)
Three months ended March 31,
(in thousands)20212020
Net loss$(15,443)$(31,622)
Other comprehensive income (loss):
Currency translation adjustments (CTA)(70)2,380 
Reclassification of CTA to net loss(4,512)0 
Benefit obligations:
Amortization of benefit plan benefits198 (246)
Other comprehensive (loss) income(4,384)2,134 
Total comprehensive loss(19,827)(29,488)
Comprehensive (loss) income attributable to non-controlling interest3 154 
Comprehensive loss attributable to stockholders$(19,824)$(29,334)
See accompanying notes to condensed consolidated financial statements.Condensed Consolidated Financial Statements.

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BABCOCK & WILCOX ENTERPRISES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amount)September 30, 2017 December 31, 2016(in thousands, except per share amount)March 31, 2021December 31, 2020
Cash and cash equivalents$48,137
 $95,887
Cash and cash equivalents$53,833 $57,338 
Restricted cash and cash equivalents26,648
 27,770
Restricted cash and cash equivalents4,613 10,085 
Accounts receivable – trade, net320,202
 282,347
Accounts receivable – trade, net144,125 128,317 
Accounts receivable – other67,421
 73,756
Accounts receivable – other30,694 35,442 
Contracts in progress169,182
 166,010
Contracts in progress66,233 59,308 
Inventories91,099
 85,807
Inventories67,864 67,161 
Other current assets37,339
 45,957
Other current assets24,014 26,421 
Current assets held for saleCurrent assets held for sale0 4,728 
Total current assets760,028
 777,534
Total current assets391,376 388,800 
Net property, plant and equipment143,107
 133,637
Net property, plant and equipment, and finance leaseNet property, plant and equipment, and finance lease85,848 85,078 
Goodwill204,105
 267,395
Goodwill47,354 47,363 
Deferred income taxes163,013
 163,388
Investments in unconsolidated affiliates87,417
 98,682
Intangible assets80,000
 71,039
Intangible assets22,209 23,908 
Right-of-use assetsRight-of-use assets9,513 10,814 
Other assets22,227
 17,468
Other assets24,187 24,673 
Non-current assets held for saleNon-current assets held for sale1,870 11,156 
Total assets$1,459,897
 $1,529,143
Total assets$582,357 $591,792 
   
Foreign revolving credit facilities$12,398
 $14,241
Accounts payable243,565
 220,737
Accounts payable$78,503 $73,481 
Accrued employee benefits38,009
 35,497
Accrued employee benefits13,740 13,906 
Advance billings on contracts219,822
 210,642
Advance billings on contracts81,753 64,002 
Accrued warranty expense41,230
 40,467
Accrued warranty expense19,537 25,399 
Operating lease liabilitiesOperating lease liabilities3,578 3,995 
Other accrued liabilities92,491
 95,954
Other accrued liabilities70,572 81,744 
Current liabilities held for saleCurrent liabilities held for sale0 8,305 
Total current liabilities647,515
 617,538
Total current liabilities267,683 270,832 
United States revolving credit facility58,900
 9,800
Second lien term loan facility138,384
 —
Revolving credit facilitiesRevolving credit facilities0 164,300 
Last out term loansLast out term loans73,330 183,330 
Senior notesSenior notes155,509 0 
Pension and other accumulated postretirement benefit liabilities275,269
 301,259
Pension and other accumulated postretirement benefit liabilities219,262 252,292 
Other noncurrent liabilities45,046
 39,595
Non-current finance lease liabilitiesNon-current finance lease liabilities33,155 29,690 
Non-current operating lease liabilitiesNon-current operating lease liabilities6,137 7,031 
Other non-current liabilitiesOther non-current liabilities22,725 22,579 
Total liabilities1,165,114
 968,192
Total liabilities777,801 930,054 
Commitments and contingencies   Commitments and contingencies0
Stockholders' equity:   
Common stock, par value $0.01 per share, authorized 200,000 shares; issued and outstanding 44,049 and 48,688 shares at September 30, 2017 and December 31, 2016, respectively499
 544
Stockholders' deficit:Stockholders' deficit:
Common stock, par value $0.01 per share, authorized shares of 500,000; issued and outstanding shares of 85,664 and 54,452 at March 31, 2021 and December 31, 2020, respectivelyCommon stock, par value $0.01 per share, authorized shares of 500,000; issued and outstanding shares of 85,664 and 54,452 at March 31, 2021 and December 31, 2020, respectively5,101 4,784 
Capital in excess of par value800,183
 806,589
Capital in excess of par value1,330,134 1,164,436 
Treasury stock at cost, 5,681 and 5,592 shares at September 30, 2017 and
December 31, 2016, respectively
(104,745) (103,818)
Retained deficit(387,030) (114,684)
Accumulated other comprehensive loss(22,440) (36,482)
Stockholders' equity attributable to shareholders286,467
 552,149
Noncontrolling interest8,316
 8,802
Total stockholders' equity294,783
 560,951
Total liabilities and stockholders' equity$1,459,897
 $1,529,143
Treasury stock at cost, 1,214 and 718 shares at March 31, 2021 and December 31, 2020, respectivelyTreasury stock at cost, 1,214 and 718 shares at March 31, 2021 and December 31, 2020, respectively(109,298)(105,990)
Accumulated deficitAccumulated deficit(1,365,670)(1,350,206)
Accumulated other comprehensive income (loss)Accumulated other comprehensive income (loss)(56,774)(52,390)
Stockholders' deficit attributable to shareholdersStockholders' deficit attributable to shareholders(196,507)(339,366)
Non-controlling interestNon-controlling interest1,063 1,104 
Total stockholders' deficitTotal stockholders' deficit(195,444)(338,262)
Total liabilities and stockholders' deficitTotal liabilities and stockholders' deficit$582,357 $591,792 

See accompanying notes to condensed consolidated financial statements.Condensed Consolidated Financial Statements.

5


BABCOCK & WILCOX ENTERPRISES, INC.
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' (DEFICIT) EQUITY

Common StockCapital In
Excess of
Par Value		Treasury StockAccumulated DeficitAccumulated
Other
Comprehensive
Loss		Non-controlling
Interest		Total
Stockholders’
Deficit
 SharesPar Value
  (in thousands, except share and per share amounts)
Balance at December 31, 202054,452 $4,784 $1,164,436 $(105,990)$(1,350,206)$(52,390)$1,104 $(338,262)
Net (loss) income— — — — (15,464)— 21 (15,443)
Currency translation adjustments— — — — — (4,582)(24)(4,606)
Defined benefit obligations— — — — — 198 — 198 
Stock-based compensation charges1,725 22 4,480 (3,308)— — — 1,194 
Common stock offering29,487 295 161,218 — — — — 161,513 
Dividends to non-controlling interest— — — — — — (38)(38)
Balance at March 31, 202185,664 $5,101 $1,330,134 $(109,298)$(1,365,670)$(56,774)$1,063 $(195,444)

Common StockCapital In
Excess of
Par Value		Treasury StockAccumulated DeficitAccumulated
Other
Comprehensive
Income		Non-controlling
Interest		Total
Stockholders’
Deficit
 SharesPar Value
  (in thousands, except share and per share amounts)
Balance at December 31, 201946,374 $4,699 $1,142,614 $(105,707)$(1,339,888)$1,926 $1,417 $(294,939)
Net loss— — — — (31,526)— (96)(31,622)
Currency translation adjustments— — — — — 2,380 (58)2,322 
Defined benefit obligations— — — — — (246)— (246)
Stock-based compensation charges33 4 876 (9)— — — 871 
Dividends to noncontrolling interest— — — — — — (36)(36)
Balance at March 31, 202046,407 $4,703 $1,143,490 $(105,716)$(1,371,414)$4,060 $1,227 $(323,650)

See accompanying notes to Condensed Consolidated Financial Statements.

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6



BABCOCK & WILCOX ENTERPRISES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months ended March 31,
(in thousands)20212020
Cash flows from operating activities:
Net loss$(15,443)$(31,622)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization of long-lived assets4,058 4,208 
Amortization of deferred financing costs, debt discount and payment-in-kind interest5,779 9,877 
Amortization of guaranty fee452 0 
Non-cash operating lease expense1,140 1,223 
Gain on sale of business(358)0 
Gains on asset disposals(2,005)(915)
Provision for (benefit from) deferred income taxes, including valuation allowances1,557 (424)
Prior service cost amortization for pension and postretirement plans198 (246)
Stock-based compensation, net of associated income taxes4,502 880 
Foreign exchange1,209 9,326 
Changes in assets and liabilities:
Accounts receivable(11,629)10,599 
Contracts in progress(6,911)7,690 
Advance billings on contracts18,226 (7,321)
Inventories(1,863)1,286 
Income taxes(1,919)(1,888)
Accounts payable6,246 (26,451)
Accrued and other current liabilities(17,127)6,110 
Accrued contract loss(129)(2,593)
Pension liabilities, accrued postretirement benefits and employee benefits(33,640)(10,258)
Other, net(6,297)(4,942)
Net cash used in operating activities(53,954)(35,461)
Cash flows from investing activities:
Purchase of property, plant and equipment(1,410)(2,394)
Proceeds from sale of business and assets, net3,297 0 
Purchases of available-for-sale securities(3,394)(6,352)
Sales and maturities of available-for-sale securities5,495 3,420 
Other, net534 831 
Net cash from (used in) investing activities4,522 (4,495)
Cash flows from financing activities:
Borrowings under our U.S. revolving credit facility14,500 70,200 
Repayments of our U.S. revolving credit facility(178,800)(64,200)
Borrowings under last out term loans0 30,000 
Repayments under last out term loans(75,000)0 
Issuance of senior notes125,000 0 
Shares of our common stock returned to treasury stock(3,308)(9)
Issuance of common stock, net161,513 0 
Debt issuance costs(7,727)(5,749)
Other, net(241)550 
Net cash from financing activities35,937 30,792 
Effects of exchange rate changes on cash4,518 (1,392)
Net decrease in cash, cash equivalents and restricted cash(8,977)(10,556)
Cash, cash equivalents and restricted cash, beginning of period67,423 56,941 
Cash, cash equivalents and restricted cash, end of period$58,446 $46,385 
 Nine months ended September 30,
(in thousands)2017 2016
Cash flows from operating activities: 
Net income (loss)$(271,780) $(43,796)
Non-cash items included in net income (loss):   
Depreciation and amortization of long-lived assets31,037
 27,413
Amortization of debt issuance costs and debt discount3,190
 —
Income of equity method investees(4,813) (4,887)
Goodwill impairment charges86,903
 —
Other than temporary impairment of equity method investment in TBWES18,193
 —
Losses on asset disposals and impairments, net543
 14,906
Provision for (benefit from) deferred income taxes(2,100) (7,613)
Recognition of losses (gains) for pension and postretirement plans(1,219) 30,646
Stock-based compensation, net of associated income taxes8,523
 13,899
Changes in assets and liabilities, net of effects of acquisitions:   
Accounts receivable1,375
 49,082
Accrued insurance receivable—
 (15,000)
Contracts in progress and advance billings on contracts6,682
 (53,983)
Inventories2,717
 (7,990)
Income taxes9,196
 6,296
Accounts payable5,514
 (32,390)
Accrued and other current liabilities(16,011) (3,733)
Pension liabilities, accrued postretirement benefits and employee benefits(27,960) (21,206)
Other, net(781) 8,601
Net cash from operating activities(150,791) (39,755)
Cash flows from investing activities:   
Decrease in restricted cash and cash equivalents(2,934) 8,270
Investment in equity method investees—
 (26,220)
Purchase of property, plant and equipment(10,666) (20,376)
Acquisition of business, net of cash acquired(52,547) (142,980)
Purchases of available-for-sale securities(22,900) (30,738)
Sales and maturities of available-for-sale securities31,077
 20,986
Other61
 (556)
Net cash from investing activities(57,909) (191,614)
Cash flows from financing activities:   
Borrowings under our United States revolving credit facility511,423
 75,465
Repayments of our United States revolving credit facility(462,323) (42,248)
Proceeds from our second lien term loan facility, net of $34.2 million discount141,674
 —
Repayments of our foreign revolving credit facilities(3,313) (18,289)
Common stock repurchase from related party(16,674) —
Shares of our common stock returned to treasury stock(927) (78,391)
Debt issuance costs(14,025) —
Other(298) (1,166)
Net cash from financing activities155,537
 (64,629)
Effects of exchange rate changes on cash5,413
 (4,126)
Net increase (decrease) in cash and equivalents(47,750) (300,124)
Cash and equivalents, beginning of period95,887
 365,192
Cash and equivalents, end of period$48,137
 $65,068


See accompanying notes to condensed consolidated financial statements.

Condensed Consolidated Financial Statements.
6
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BABCOCK & WILCOX ENTERPRISES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2017MARCH 31, 2021



NOTE 1 – BASIS OF PRESENTATION


These interim financial statementsCondensed Consolidated Financial Statements of Babcock & Wilcox Enterprises, Inc. ("(“B&W," "we," "us," "our"” “management,” “we,” “us,” “our” or "the Company"the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States and Securities and Exchange Commission ("SEC") instructions for interim financial information, and should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2016 (“Annual Report”). Accordingly, significant accounting policies and other disclosures normally provided have been omitted since such items are disclosed in our Annual Report. We have included all adjustments, in the opinion of management, consisting only of normal, recurring adjustments, necessary for a fair presentation of the interim financial statements. We have eliminated all intercompany transactions and accounts. We present the notes to our condensed consolidated financial statementsCondensed Consolidated Financial Statements on the basis of continuing operations, unless otherwise stated.


COVID-19

In December 2019, a novel strain of coronavirus, COVID-19, was identified in Wuhan, China and has subsequently spread globally. This global pandemic has disrupted business operations, trade, commerce, financial and credit markets, and daily life throughout the world. Our business has been, and continues to be, adversely impacted by the measures taken and restrictions imposed in the countries in which we operate and by local governments and others to control the spread of this virus. These measures and restrictions have varied widely and have been subject to significant changes from time to time depending on the changes in the severity of the virus in these countries and localities. These restrictions, including travel and curtailment of other activity, negatively impact our ability to conduct business. The volatility and variability of the virus has limited our ability to forecast the impact of the virus on our customers and our business. The continuing resurgence of COVID-19, including at least one new strain, has resulted in the reimposition of certain restrictions and may lead to other restrictions being implemented in response to efforts to reduce the spread of the virus. These varying and changing events have caused many of the projects we had anticipated would begin in 2020 to be delayed into 2021 and beyond. Many customers and projects require B&W's employees to travel to customer and project worksites. Certain customers and significant projects are located in areas where travel restrictions have been imposed, certain customers have closed or reduced on-site activities, and timelines for completion of certain projects have, as noted above, been extended into 2021 and beyond. Additionally, out of concern for our employees, even where restrictions permit employees to return to our offices and worksites, we have incurred additional costs to protect our employees as well as, advising those who are uncomfortable returning to worksites due to the pandemic that they are not required to do so for an indefinite period of time. The resulting uncertainty concerning, among other things, the spread and economic impact of the virus has also caused significant volatility and, at times, illiquidity in global equity and credit markets. The full extent of the COVID-19 impact on our operational and financial performance will depend on future developments, including the ultimate duration and spread of the pandemic and related actions taken by the U.S. government, state and local government officials, and international governments to prevent disease spread, as well as the availability and effectiveness of COVID-19 vaccinations in the U.S. and abroad, all of which are uncertain, out of our control, and cannot be predicted.

Beginning in April 2020 and continuing as of May 13, 2021, as part of the Company’s response to the impact of the COVID-19 pandemic on its business, the Company continues to take a number of cash conservation and cost reduction measures which include:

•suspension of our 401(k) company match for U.S. employees for 2021;
•utilizing options for government loans and programs in the U.S. and abroad that are appropriate and available; and
•deferring $20.9 million of the estimated Pension Plan contribution payments of $45.6 million that would have been due during 2021, in accordance with the American Rescue Plan Act of 2021 (the "ARPA relief plan") signed into law in March 2021. In January 2021, we made Pension Plan contributions of $23.1 million, excluding interest.
8


NOTE 2 – EARNINGS PER SHARE


The following table sets forth the computation of basic and diluted earnings per share of our common stock:stock, net of non-controlling interest:
Three months ended March 31,
(in thousands, except per share amounts)20212020
Loss from continuing operations$(15,464)$(33,439)
Income from discontinued operations, net of tax0 1,913 
Net loss attributable to stockholders$(15,464)$(31,526)
Weighted average shares used to calculate basic and diluted earnings (loss) per share71,396 46,403 
Basic and diluted (loss) earnings per share
Continuing operations$(0.22)$(0.72)
Discontinued operations0 0.04 
Basic and diluted loss per share$(0.22)$(0.68)
 Three months ended September 30, Nine months ended September 30,
(in thousands, except per share amounts)20172016 20172016
Net income (loss) attributable to shareholders$(114,302)$8,894
 $(272,346)$(44,089)
      
Weighted average shares used to calculate basic earnings per share46,149
49,621
 47,905
50,613
Dilutive effect of stock options, restricted stock and performance shares—
236
 —
—
Weighted average shares used to calculate diluted earnings per share46,149
49,857
 47,905
50,613
      
Basic income (loss) per share:$(2.48)$0.18
 $(5.69)$(0.87)
      
Diluted income (loss) per share:$(2.48)$0.18
 $(5.69)$(0.87)


Because we incurred a net loss in the quarter and ninethree months ended September 30, 2017March 31, 2021 and the nine months ended September 30, 2016,2020, basic and diluted shares are the same.


If we had net income in the ninethree months ended September 30, 2017 and 2016,March 31, 2021, diluted shares would include an additional 0.41.6 million and 0.5 million shares, respectively.shares. If we had net income in the quarterthree months ended September 30, 2017,March 31, 2020, diluted shares would include an additional 0.5 million shares.


We excluded 2.00.4 million and 0.60.5 million shares related to stock options from the diluted share calculation for the ninethree months ended September 30, 2017March 31, 2021 and 2016,2020, respectively, because their effect would have been anti-dilutive. For the quarter ended September 30, 2017, we excluded 2.3 million shares related to stock options because their effect would have been anti-dilutive.


NOTE 3 – SEGMENT REPORTING


Our operationsB&W’s innovative products and services are assessed based on threeorganized into 3 market-facing segments which changed in the third quarter of 2020 as part of the Company's strategic, market-focused organizational and re-branding initiative to accelerate growth and provide stakeholders improved visibility into our renewable and environmental growth platforms. Segment results for all periods have been restated for comparative purposes. Our reportable segments which are summarized as follows:


Power segment: focused on•Babcock & Wilcox Renewable: Cost-effective technologies for efficient and environmentally sustainable power and heat generation, including waste-to-energy, biomass energy and black liquor systems for the supply ofpulp and aftermarket services for steam-generating, environmental and auxiliary equipmentpaper industry. B&W’s leading technologies support a circular economy, diverting waste from landfills to use for power generation and otherreplacing fossil fuels, while recovering metals and reducing emissions.
•Babcock & Wilcox Environmental: A full suite of best-in-class emissions control and environmental technology solutions for utility, waste to energy, biomass, carbon black, and industrial applications.
steam generation applications around the world. B&W’s broad experience includes systems for cooling, ash handling, particulate control, nitrogen oxides and sulfur dioxides removal, chemical looping for carbon control, and mercury control.
Renewable segment: focused on•Babcock & Wilcox Thermal: Steam generation equipment, aftermarket parts, construction, maintenance and field services for plants in the supplypower generation, oil and gas, and industrial sectors. B&W has an extensive global base of steam-generating systems, environmental and auxiliaryinstalled equipment for the waste-to-energyutilities and biomass power generation industries.general industrial applications including refining, petrochemical, food processing, metals and others.

Industrial segment: focused on custom-engineered cooling, environmental and other industrial equipment along with related aftermarket services.
9

7

Table
Revenues exclude eliminations of Contents



revenues generated from sales to other segments or to other product lines within the segment. An analysis of our operations by segment is as follows:
Three months ended March 31,
(in thousands)20212020
Revenues:
B&W Renewable segment
B&W Renewable$17,997 $22,338 
Vølund10,814 13,661 
28,811 35,999 
B&W Environmental segment
B&W Environmental17,433 12,935 
SPIG11,184 11,337 
GMAB2,543 1,648 
31,160 25,920 
B&W Thermal segment
B&W Thermal108,281 86,683 
108,281 86,683 
Other(4)(48)
$168,248 $148,554 
 Three months ended September 30, Nine months ended 
 September 30,
(in thousands)20172016 20172016
Revenues:     
Power segment$202,222
$211,749
 $612,274
$762,293
Renewable segment108,557
124,344
 262,168
293,593
Industrial segment99,288
76,809
 281,734
147,275
Eliminations(1,364)(1,947) (6,540)(4,882)
 408,703
410,955
 1,149,636
1,198,279
Gross profit:     
Power segment40,629
48,896
 132,653
170,903
Renewable segment181
18,592
 (100,119)14,468
Industrial segment9,461
14,601
 34,240
33,506
Intangible amortization expense included in cost of operations(2,984)(7,752) (11,455)(8,833)
Mark to market loss included in cost of operations—
(580) (954)(30,079)
 47,287
73,757
 54,365
179,965
Selling, general and administrative ("SG&A") expenses(59,225)(59,615) (192,742)(179,225)
Goodwill impairment charges(86,903)—
 (86,903)—
Restructuring activities and spin-off transaction costs(3,775)(2,395) (8,910)(38,021)
Research and development costs(2,291)(2,361) (7,454)(8,273)
Intangible amortization expense included in SG&A(1,016)(1,018) (2,999)(3,071)
Mark to market loss included in SG&A—
(64) (106)(465)
Equity in income of investees1,234
2,827
 4,813
4,887
Impairment of equity method investment—
—
 (18,193)—
Gains (losses) on asset disposals, net(59)2
 (63)17
Operating income (loss)$(104,748)$11,133
 $(258,192)$(44,186)


DuringThe presentation of the first halfcomponents of 2017, we announced our planadjusted EBITDA in the table below is consistent with the way our chief operating decision maker reviews the results of our operations and makes strategic decisions about our business. Items such as gains or losses on asset sales, MTM pension adjustments, restructuring costs, impairments, losses on debt extinguishment, costs related to reclassify the Industrial Steam product line currently included infinancial consulting required under our PowerU.S. Revolving Credit Facility, research and development costs and other costs that may not be directly controllable by segment management are not allocated to the Industrialsegments.
10


Adjusted EBITDA for each segment beginningis presented below with the quarter ended September 30, 2017. We have indefinitely postponed that reorganization. As of September 30, 2017, the Industrial Steam product line remains in the Power segment for all periods presented.a reconciliation to net income (loss) attributable to stockholders.
Three months ended March 31,
(in thousands)20212020
Adjusted EBITDA (1)
B&W Renewable segment$204 $(1,434)
B&W Environmental segment1,101 270 
B&W Thermal segment10,430 7,606 
Corporate(2,685)(4,143)
Research and development costs(588)(1,341)
8,462 958 
Restructuring activities(993)(1,951)
Financial advisory services(933)(929)
Advisory fees for settlement costs and liquidity planning(1,978)(2,614)
Litigation legal costs(380)(696)
Stock compensation(7,829)(712)
Interest on letters of credit included in cost of operations(286)(152)
Loss from business held for sale(483)(788)
Depreciation & amortization(4,058)(4,208)
Gain (loss) from a non-strategic business12 (121)
Gain on asset disposals, net2,004 915 
Operating loss(6,462)(10,298)
Interest expense, net(14,114)(22,051)
Gain on sale of business358 0 
Net pension benefit9,098 7,536 
Foreign exchange(1,209)(9,326)
Other – net(278)(206)
Total other income (expense)(6,145)(24,047)
Loss before income tax (benefit) expense(12,607)(34,345)
Income tax (benefit) expense2,836 (810)
Loss from continuing operations(15,443)(33,535)
Income from discontinued operations, net of tax0 1,913 
Net loss(15,443)(31,622)
Net (income) loss attributable to non-controlling interest(21)96 
Net loss attributable to stockholders$(15,464)$(31,526)

NOTE 4 – UNIVERSAL ACQUISITION

On January 11, 2017, we acquired Universal Acoustic & Emission Technologies, Inc. ("Universal") for approximately $52.5 million in cash, funded primarily by borrowings under our United States revolving credit facility, net of $4.4 million cash acquired in the business combination. Transaction costs included in the purchase price were approximately $0.2 million. We accounted(1) Adjusted EBITDA for the Universal acquisition using the acquisition method, whereby all of the assets acquired and liabilities assumed were recognized at their fair value on the acquisition date, with any excess of the purchase price over the estimated fair value recorded as goodwill. In order to purchase Universal on January 11, 2017, we borrowed approximately $55.0 million under the United States revolving credit facility in 2017.

Universal provides custom-engineered acoustic, emission and filtration solutions to the natural gas power generation, mid-stream natural gas pipeline, locomotive and general industrial end-markets. Universal's product offering includes gas turbine inlet and exhaust systems, silencers, filters and enclosures. At the acquisition date, Universal employed approximately 460 people, mainly in the United States and Mexico. During 2017, we integrated Universal with our Industrial segment. Universal contributed $16.0 million and $49.8 million of revenue to our operating results during the three and nine months ended September 30, 2017, respectively. Universal contributed $3.2 millionMarch 31, 2020, excludes losses related to a non-strategic business and $10.0 millioninterest on letters of gross profit (excluding intangible asset amortization expense of $0.5 million and $2.6 million) to our operating results in the three and nine months ended

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September 30, 2017, respectively. We expect Universal to contribute over $70.0 million of revenue and be accretive to the Industrial segment's gross profit during 2017.

The allocation of the purchase price based on the estimated fair value of assets acquired and liabilities assumed is set forth below. We are in the process of finalizing the purchase price allocation associated with the valuation of certain intangible assets and deferred tax balances; as a result, the provisional measurements of intangible assets, goodwill and deferred income tax balances are subject to change. Purchase price adjustments are expected to be finalized by December 31, 2017.
(in thousands)
Estimated acquisition
date fair value
Cash$4,379
Accounts receivable11,270
Contracts in progress3,167
Inventories4,585
Other assets579
Property, plant and equipment16,692
Goodwill14,413
Identifiable intangible assets19,500
Deferred income tax assets935
Current liabilities(10,833)
Other noncurrent liabilities(1,423)
Deferred income tax liabilities(6,338)
Net acquisition cost$56,926

The intangible assets included above consist of the following:
 
Estimated
fair value (in thousands)
 
Weighted average
estimated useful life
(in years)
Customer relationships$10,800
 15
Backlog1,700
 1
Trade names / trademarks3,000
 20
Technology4,000
 7
Total amortizable intangible assets$19,500
  

The acquisition of Universal resulted in an increase in our intangible asset amortization expense during the three and nine months ended September 30, 2017 of $0.5 million and $2.6 million, respectively, which iscredit included in cost of operations that were previously included in Adjusted EBITDA and total $(0.1) million and $(0.2) million, respectively.

We do not separately identify or report our condensed consolidated statement of operations. Amortization of intangible assets by segment as our chief operating decision maker does not consider assets by segment to be a critical measure by which performance is notmeasured.
11


NOTE 4 – REVENUE RECOGNITION AND CONTRACTS

Revenue Recognition

A performance obligation is a contractual promise to transfer a distinct good or service to the customer. A contract's transaction price is allocated to segment results.each distinct performance obligation and is recognized as revenue when (point in time) or as (over time) the performance obligation is satisfied.


Approximately $0.1 millionRevenue from goods and $1.5 million of acquisitionservices transferred to customers at a point in time, which includes certain aftermarket parts and integration related costs of Universal was recorded as a componentservices, accounted for 27% and 31% of our operating expenses in the condensed consolidated statement of operations in the three and nine months ended September 30, 2017, respectively.


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The following unaudited pro forma financial information below represents our results of operationsrevenue for the three and nine months ended September 30, 2016March 31, 2021 and 122020, respectively. Revenue from products and services transferred to customers over time, which primarily relates to customized, engineered solutions and construction services, accounted for 73% and 69% of our revenue for the three months ended DecemberMarch 31, 2016 had2021 and 2020, respectively.

Refer to Note 3 for our disaggregation of revenue by product line.

Contract Balances

The following represents the Universal acquisition occurred on January 1, 2016. The unaudited pro forma financial information below is not intended to represent or be indicativecomponents of our actual consolidated resultscontracts in progress and advance billings on contracts included in our Condensed Consolidated Balance Sheets:
(in thousands)March 31, 2021December 31, 2020$ Change% Change
Contract assets - included in contracts in progress:
Costs incurred less costs of revenue recognized$27,096 $25,888 $1,208 5 %
Revenues recognized less billings to customers39,137 33,420 5,717 17 %
Contracts in progress$66,233 $59,308 $6,925 12 %
Contract liabilities - included in advance billings on contracts:
Billings to customers less revenues recognized$80,328 $61,884 $18,444 30 %
Costs of revenue recognized less cost incurred1,425 2,118 (693)(33)%
Advance billings on contracts$81,753 $64,002 $17,751 28 %
Net contract balance$(15,520)$(4,694)$(10,826)231 %
Accrued contract losses$453 $582 $(129)(22)%

Backlog

On March 31, 2021 we had $535.0 million of remaining performance obligations, which we completed the acquisition at January 1, 2016. This information should not be takenalso refer to as representativetotal backlog. We expect to recognize approximately 51.0%, 18.7% and 30.3% of our future consolidated results of operations.
 Three months endedNine months endedTwelve months ended
(in thousands)September 30, 2016September 30, 2016December 31, 2016
Revenues$431,412
$1,259,905
$1,660,986
Net income (loss) attributable to B&W8,903
(43,458)(113,940)
Basic earnings per common share0.18
(0.86)(2.27)
Diluted earnings per common share0.18
(0.86)(2.27)

The unaudited pro forma results includedremaining performance obligations as revenue in the table above reflect the following pre-tax adjustments to our historical results:

A net increase in amortization expense related to timingremainder of amortization of the fair value of identifiable intangible assets acquired of $0.5 million, $2.4 million2021, 2022 and $2.8 million in the three and nine months ended September 30, 2016 and the 12 months ended December 31, 2016,thereafter, respectively.


Elimination of the historical interest expense recognized by Universal of $0.1 million, $0.3 million and $0.4 million in the three and nine months ended September 30, 2016 and the 12 months ended December 31, 2016, respectively.

Elimination of $2.1 million in transaction related costs recognized in the 12 months ended December 31, 2016.

NOTE 5 – CONTRACTS AND REVENUE RECOGNITION

We generally recognize revenues and related costs from long-term contracts on a percentage-of-completion basis. Accordingly, we review contract price and cost estimates regularly as work progresses and reflect adjustments in profit proportionate to the percentage of completion in the periods in which we revise estimates to complete the contract. To the extent that these adjustments result in a reduction of previously reported profits from a project, we recognize a charge against current earnings. If a contract is estimated to result in a loss, that loss is recognized in the current period as a charge to earnings and the full loss is accrued on our balance sheet, which results in no expected gross profit from the loss contract in the future unless there are revisions to our estimated revenues or costs at completion in periods following the accrual of the contract loss. Changes in the estimated results of our percentage-of-completion contracts are necessarily based on information available at the time that the estimates are made and are based on judgments that are inherently uncertain as they are predictive in nature. As with all estimates to complete used to measure contract revenue and costs, actual results can and do differ from our estimates made over time.Contract Estimates


In the three and nine months ended September 30, 2017March 31, 2021 and 2016,2020, we recognized changes in estimated gross profit related to long-term contracts accounted for on the percentage-of-completionover time basis, which are summarized as follows:
Three months ended March 31,
(in thousands)20212020
Increases in gross profit for changes in estimates for over time contracts$3,025 $8,182 
Decreases in gross profit for changes in estimates for over time contracts(1,358)(4,845)
Net changes in gross profit for changes in estimates for over time contracts$1,667 $3,337 

12

 Three months ended September 30, Nine months ended September 30,
(in thousands)20172016 20172016
Increases in estimates for percentage-of-completion contracts$3,040
$7,996
 $15,777
$33,056
Decreases in estimates for percentage-of-completion contracts(12,312)(22,126) (135,445)(65,805)
Net changes in estimates for percentage-of-completion contracts$(9,272)$(14,130) $(119,668)$(32,749)
B&W Renewable EPC Loss Contracts


As disclosed in our December 31, 2016 consolidated financial statements, weWe had four6 B&W Renewable EPC contracts for renewable energy projectsfacilities in Europe that were loss contracts at December 31, 2016. During2017. The scope of these EPC (Engineer, Procure and Construct) contracts extended beyond our core technology, products and services. In addition to these loss contracts, we have one remaining extended scope contract in our Babcock & Wilcox Renewable segment which turned into a loss contract in the fourth quarter of 2019.

In the three months ended June 30, 2017, two additional renewable energy projects in Europe became loss contracts. During the threeMarch 31, 2021 and nine months ended September 30, 2017,March 31, 2020, we recorded a total of $11.6$0.1 million and $123.8$0.1 million respectively, in net lossesgains, respectively, inclusive of warranty expense as described in Note 10, resulting from changes in the estimated revenues and costs to complete these sixthe 6 European renewable energyB&W Renewable EPC loss contracts. These changes in estimates include an increase in our estimate ofAll 6 contracts were approximately 100% complete at March 31, 2021; total liquidated damages associated with these six projects of $13.26 contracts were $92.5 million and $22.6 million in the three and nine months ended September 30, 2017, respectively, to a total of $62.8$86.5 million at September 30, 2017.March 31, 2021 and March 31, 2020, respectively. The charges recordedchange in the nine months

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ended September 30, 2017 wereliquidated damages was due to revisions in the estimated revenues and costs at completion during the period, primarily as a resultforeign exchange impact.

In 2019, one of structural steel design issues including the anticipated schedule impact, scheduling delays and shortcomings in our subcontractors' estimated productivity. Also included in the charges recorded in the nine months ended September 30, 2017 were corrections that reduced (increased) estimated contract losses at completion by $1.0 million, $(6.0) million and $1.1 million relating to the three months ended December 31, 2016, March 31, 2017 and June 30, 2017, respectively. Management has determined these amounts are immaterial to the consolidated financial statements in these previous periods. As of September 30, 2017, the status of these six lossother B&W Renewable energy contracts was as follows:

The first project becameturned into a loss contract in the second quarter of 2016. As of September 30, 2017, this project is approximately 97% completedue to delays and construction activities are complete as of the date of this report. The unit became operational during the second quarter of 2017, andother start-up costs prior to turnover activities linked to the customer's operation of the facility are expected to be completed during the first quarter of 2018. During the three and nine months ended September 30, 2017, we recognized additional contract losses of $4.6 million and $15.1 million, respectively, on the project as a result of differencesclient in actual and estimated costs and schedule delays. Our estimate at completion as of September 30, 2017 includes $9.4 million of total expected liquidated damages. As of September 30, 2017, the reserve for estimated contract losses recorded in "other accrued liabilities" in our consolidated balance sheet was $2.3 million.October 2019. In the three and nine months ended September 30, 2016, we recognized charges of $14.0 million and $45.7 million, respectively, and as of September 30, 2016, this project had $7.8 million of accrued losses and was 79% complete.

The second project became a loss contract in the fourth quarter of 2016. As of September 30, 2017, this contract was approximately 75% complete, and we expect this project to be completed in early 2018. During the three and nine months ended September 30, 2017, we recognized contract gains of $2.0 million and contract losses of $35.4 million, respectively, on this project as a result of changes in construction cost estimates and schedule delays. Our estimate at completion as of September 30, 2017 includes $15.5 million of total expected liquidated damages. As of September 30, 2017, the reserve for estimated contract losses recorded in "other accrued liabilities" in our consolidated balance sheet was $13.6 million.

The third project became a loss contract in the fourth quarter of 2016. As of September 30, 2017, this contract was approximately 95% complete and construction activities are complete as of the date of this report. The unit became operational during the second quarter of 2017, and turnover activities linked to the customer's operation of the facility are expected to be completed during the fourth quarter of 2017. During the three and nine months ended September 30, 2017, we recognized additional contract losses of $1.6 million and $7.1 million, respectively, as a result of changes in the estimated costs at completion. Our estimate at completion as of September 30, 2017 includes $6.7 million of total expected liquidated damages for schedule delays. As of September 30, 2017, the reserve for estimated contract losses recorded in "other accrued liabilities" in our consolidated balance sheet was $1.7 million.

The fourth project became a loss contract in the fourth quarter of 2016. As of September 30, 2017, this contract was approximately 77% complete, and we expect this project to be completed in early 2018. During the three and nine months ended September 30, 2017, we revised our estimated revenue and costs at completion for this loss contract, which resulted in contract gains of $4.5 million and contract losses of $17.4 million, respectively. Our estimate at completion as of September 30, 2017 includes $8.9 million of total expected liquidated damages due to schedule delays. The changes in the status of this project were primarily attributable to changes in the estimated costs at completion, offset by a $4.8 million reduction in estimated liquidated damages we recognized during the three months ended March 31, 2017.2021 and March 31, 2020, we did 0t recognize additional charges on this contract. As of September 30, 2017, the reserve for estimated contract losses recorded in "other accrued liabilities" in our consolidated balance sheet was $5.2 million.

The fifth project became a loss contract in the second quarter of 2017. As of September 30, 2017,March 31, 2021, this contract was approximately 60% complete, and we expect this project to be completed in the second half of 2018. During the three and nine months ended September 30, 2017, we revised our estimated revenue and costs at completion for this loss contract, which resulted in additional contract losses of $12.0 million and $35.3 million, respectively. Our estimate at completion as of September 30, 2017 includes $17.9 million of total expected liquidated damages due to schedule delays. The change in the status of this project was primarily attributable to changes in the estimated costs at completion and schedule delays. As of September 30, 2017, the reserve for estimated contract losses recorded in "other accrued liabilities" in our consolidated balance sheet was $14.3 million.99% complete.

The sixth project became a loss contract in the second quarter of 2017. As of September 30, 2017, this contract was approximately 68% complete, and we expect this project to be completed in the first half of 2018. During the nine months ended September 30, 2017, we revised our estimated revenue and costs at completion for this loss contract, which resulted in additional contract losses of $18.5 million. We had no significant change in estimate on this loss contract during the

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three months ended September 30, 2017. Our estimate at completion as of September 30, 2017 includes $4.3 million of total expected liquidated damages due to schedule delays. The change in the status of this project was primarily attributable to changes in the estimated costs at completion and schedule delays. As of September 30, 2017, the reserve for estimated contract losses recorded in "other accrued liabilities" in our consolidated balance sheet was $3.3 million.


In September 2017, we identified the failure of a structural steel beam on the fifth project, which temporarily stopped worka contact for a biomass plant in the boiler building pending corrective actions to stabilize the structure that are expected to be complete in the fourth quarter of 2017.United Kingdom, The engineering, design and manufacturing of the steel structure were the responsibility of our subcontractors. A similar design was also used on the second and fourth projects,two other contracts, and although no structural failure occurred on these two other projects,contracts, work was also stopped for a short period of time, andin certain restricted areas while we added reinforcement ofto the structure is underway.structures, which also resulted in delays. The total costs related to thesethe structural steel issues areon these three contracts were estimated to be approximately $20$36 million, which include the impact of project delays, and is included in the September 30, 2017March 31, 2021 estimated losses at completion for these three projects ascontracts. We are continuing to aggressively pursue recovery of this cost from responsible subcontractors. In October 2020, we entered into a settlement agreement with an insurer under which we received a settlement of $26.0 million to settle claims in connection with 5 of 6 European B&W Renewable EPC loss contracts disclosed above.

The Company is continuing to pursue other additional potential claims where appropriate and available.

B&W Environmental Loss Contracts

At March 31, 2021, the B&W Environmental segment had 2 significant loss contracts, each of which are contracts for a dry cooling system for a gas-fired power plant in the preceding paragraphs.United States. In the three months ended March 31, 2021 and March 31, 2020, we did 0t recognize additional charges on these contracts. As of March 31, 2021, the first contract was approximately 100% complete and the second contract was approximately 99% complete.

Also
NOTE 5 – INVENTORIES

The components of inventories are as follows:
(in thousands)March 31, 2021December 31, 2020
Raw materials and supplies$46,851 $46,659 
Work in progress8,460 8,195 
Finished goods12,553 12,307 
Total inventories$67,864 $67,161 
13


NOTE 6 – PROPERTY, PLANT & EQUIPMENT, & FINANCE LEASE

Property, plant and equipment less accumulated depreciation is as follows:
(in thousands)March 31, 2021December 31, 2020
Land$1,533 $1,584 
Buildings33,902 34,207 
Machinery and equipment150,605 151,399 
Property under construction5,182 5,336 
191,222 192,526 
Less accumulated depreciation137,025 135,925 
Net property, plant and equipment54,197 56,601 
Finance lease34,254 30,551 
Less finance lease accumulated amortization2,603 2,074 
Net property, plant and equipment, and finance lease$85,848 $85,078 

NOTE 7 - GOODWILL

The following summarizes the changes in the net carrying amount of goodwill as of March 31, 2021:
(in thousands)B&W RenewableB&W EnvironmentalB&W ThermalTotal
Balance at December 31, 2020$10,211 $5,673 $31,479 $47,363 
Currency translation adjustments(1)(1)(7)(9)
Balance at March 31, 2021$10,210 $5,672 $31,472 $47,354 

Goodwill is tested for impairment annually and when impairment indicators exist. NaN impairment indicators were identified during the three months ended March 31, 2021. Because the B&W Thermal, B&W Construction Co., LLC, B&W Renewable and B&W Environmental reporting units each had negative carrying values, reasonable changes in assumptions would not indicate impairment.
14


NOTE 8– INTANGIBLE ASSETS

Our intangible assets are as follows:
(in thousands)March 31, 2021December 31, 2020
Definite-lived intangible assets
Customer relationships$24,102 $24,862 
Unpatented technology15,321 15,713 
Patented technology3,114 2,642 
Tradename12,769 13,088 
All other9,418 9,262 
Gross value of definite-lived intangible assets64,724 65,567 
Customer relationships amortization(19,762)(19,537)
Unpatented technology amortization(7,149)(6,751)
Patented technology amortization(2,616)(2,593)
Tradename amortization(4,978)(4,831)
All other amortization(9,315)(9,252)
Accumulated amortization(43,820)(42,964)
Net definite-lived intangible assets$20,904 $22,603 
Indefinite-lived intangible assets
Trademarks and trade names$1,305 $1,305 
Total intangible assets, net$22,209 $23,908 

The following summarizes the changes in the carrying amount of intangible assets:
Three months ended March 31,
(in thousands)20212020
Balance at beginning of period$23,908 $25,300 
Amortization expense(856)(895)
Currency translation adjustments(843)(73)
Balance at end of the period$22,209 $24,332 

Amortization of intangible assets is included in cost of operations and SG&A in our Condensed Consolidated Statement of Operations but is not allocated to segment results.

Estimated future intangible asset amortization expense is as follows (in thousands):
Amortization Expense
Year ending December 31, 2021$2,470 
Year ending December 31, 20223,321 
Year ending December 31, 20233,319 
Year ending December 31, 20243,247 
Year ending December 31, 20252,549 
Year ending December 31, 20261,292 
Thereafter4,706 
15


NOTE 9– LEASES

Certain fixed assets for our Copley, Ohio location were sold on March 15, 2021, as described in Note 23. In conjunction with the sale, we executed a leaseback agreement also commencing March 16, 2021 and expiring on March 31, 2033. The lease is classified as a finance lease with total future minimum payments during the initial term of the lease of approximately $5.7 million as of March 31, 2021. An incremental borrowing rate of 7% was used to determine the ROU asset. We recorded a $3.7 million ROU asset in net property, plant and equipment, and finance lease and corresponding liabilities in otheraccrued liabilities and other non-current finance liabilities in the Condensed Consolidated Balance Sheets as of March 31, 2021.

The components of lease expense included on our Condensed Consolidated Statements of Operations were as follows:
Three months ended March 31,
(in thousands)Classification20212020
Operating lease expense:
Operating lease expenseSelling, general and administrative expenses$1,339 $1,507 
Short-term lease expenseSelling, general and administrative expenses1,155 188 
Variable lease expense (1)
Selling, general and administrative expenses208 776 
Total operating lease expense$2,702 $2,471 
Finance lease expense:
Amortization of right-of-use assetsSelling, general and administrative expenses$529 $515 
Interest on lease liabilitiesInterest expense616 615 
Total finance lease expense$1,145 $1,130 
Sublease income (2)
Other – net$(22)$(22)
Net lease cost$3,825 $3,579 
(1) Variable lease expense primarily consists of common area maintenance expenses paid directly to lessors of real estate leases.
(2) Sublease income excludes rental income from owned properties, which is not material.

Other information related to leases is as follows:
Three months ended March 31,
(in thousands)20212020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$1,355 $1,400 
Operating cash flows from finance leases616 615 
Financing cash flows from finance leases203 (586)
March 31, 2021December 31, 2020
Right-of-use assets obtained in exchange for lease liabilities:
Operating leases$491 $2,629 
Finance leases$3,702 $146 
Weighted-average remaining lease term:
Operating leases (in years)3.03.1
Finance leases (in years)13.513.9
Weighted-average discount rate:
Operating leases9.28 %9.26 %
Finance leases7.92 %8.00 %

16

Amounts relating to leases were presented on our Condensed Consolidated Balance Sheets in the following line items:
(in thousands)
Assets:ClassificationMarch 31, 2021December 31, 2020
Operating lease assetsRight-of-use assets$9,513 $10,814 
Finance lease assetsNet property, plant and equipment, and finance lease31,651 28,477 
Total non-current lease assets$41,164 $39,291 
Liabilities:
Current
Operating lease liabilitiesOperating lease liabilities$3,578 $3,995 
Finance lease liabilitiesOther accrued liabilities920 886 
Non-current
Operating lease liabilitiesNon-current operating lease liabilities6,137 7,031 
Finance lease liabilitiesNon-current finance lease liabilities33,155 29,690 
Total lease liabilities$43,790 $41,602 

Future minimum lease payments required under non-cancellable leases as of March 31, 2021 were as follows:
(in thousands)Operating LeasesFinance LeasesTotal
2021 (excluding the three months ended March 31, 2021)$3,467 $2,629 $6,096 
20223,439 3,793 7,232 
20232,407 3,879 6,286 
20241,326 3,944 5,270 
2025313 3,969 4,282 
Thereafter19 38,412 38,431 
   Total$10,971 $56,626 $67,597 
Less imputed interest(1,256)(22,551)(23,807)
Lease liability$9,715 $34,075 $43,790 

NOTE 10 – ACCRUED WARRANTY EXPENSE

We may offer assurance type warranties on products and services we sell. Changes in the carrying amount of our accrued warranty expense are as follows:
Three months ended March 31,
(in thousands)20212020
Balance at beginning of period$25,399 $33,376 
Additions1,475 1,350 
Expirations and other changes(1,318)(517)
Payments(5,943)(3,119)
Translation and other(76)(137)
Balance at end of period$19,537 $30,953 

17

We accrue estimated expense included in cost of operations on our Condensed Consolidated Statements of Operations to satisfy contractual warranty requirements when we recognize the associated revenues on the related contracts, or in the case of a loss contract, the full amount of the estimated warranty costs is accrued when the contract becomes a loss contract. In addition, we record specific provisions or reductions where we expect the actual warranty costs to significantly differ from the accrued estimates. Such changes could have a material effect on our consolidated financial condition, results of operations and cash flows.

NOTE 11 – RESTRUCTURING ACTIVITIES

The Company incurred restructuring charges in the three months ended September 30, 2017, we adjusted the designMarch 31, 2021 and 2020. The charges primarily consist of three of these renewable facilitiesseverance costs related to increase the guaranteed power output, which will allow us to achieve contractual bonus opportunities for the higher output. The bonus opportunities increased the estimated selling priceactions taken, including as part of the three contracts by approximately $15 million in total,Company’s strategic, market-focused organizational and this positive change in estimated costre-branding initiative. During 2021, these charges also include actions taken to complete was fully recognized inaddress the third quarterimpact of 2017 because each of these three were loss projects.

During the three and nine months ended September 30, 2017, we recognized a net loss of $2.3 millionCOVID-19 on our business.

The following table summarizes the restructuring activity incurred by segment:
Three months ended March 31,Three months ended March 31,
20212020
(in thousands)TotalSeverance and related costs
Other (1)
TotalSeverance and related costs
Other (1)
B&W Renewable segment$509 $453 $56 $801 $658 $143 
B&W Environmental segment89 35 54 140 57 83 
B&W Thermal segment348 12 336 941 386 555 
Corporate47 0 47 69 0 69 
$993 $500 $493 $1,951 $1,101 $850 
TotalSeverance and related costs
Other (1)
Cumulative costs to date$41,307 33,713 7,594 
(1) Other amounts consist primarily of exit, relocation, COVID-19 related and other renewable energy projects that are not loss contracts, and we expect them to remain profitable at completion.costs.


During the third quarter of 2016, we determined it was probable that we would receive a $15.0 million insurance recovery for a portion of the losses on the first European renewable energy project discussed above. There was no change in the accrued probable insurance recovery at September 30, 2017. The insurance recovery represents the full amount available under the insurance policy, and is recorded in accounts receivable - other in our condensed consolidated balance sheet at September 30, 2017.

NOTE 6 – RESTRUCTURING ACTIVITIES AND SPIN-OFF TRANSACTION COSTS

Restructuring liabilities

Restructuring liabilities are included in other accrued liabilities on our condensed consolidated balance sheets.Condensed Consolidated Balance Sheets. Activity related to the restructuring liabilities is as follows:
Three months ended March 31,
(in thousands)20212020
Balance at beginning of period
$8,146 $5,358 
Restructuring expense993 1,951 
Payments(1,117)(1,968)
Balance at end of period$8,022 $5,341 
 Three months ended September 30, Nine months ended September 30,
(in thousands)20172016 20172016
Balance at beginning of period (1)
$967
$11,984
 $2,254
$740
Restructuring expense3,428
1,792
 7,285
19,816
Payments(2,399)(10,422) (7,543)(17,202)
Balance at September 30$1,996
$3,354
 $1,996
$3,354


(1) ForThe payments shown above for the three month periodsmonths ended September 30, 2017March 31, 2021 and 2016, the balance at the beginning of the period is as of June 30, 2017 and 2016, respectively. For the nine month periods ended September 30, 2017 and 2016, the balance at the beginning of the period is as of December 31, 2016 and 2015, respectively.

2020 relate primarily to severance. Accrued restructuring liabilities at September 30, 2017March 31, 2021 and 20162020 relate primarily to employee termination benefits.

18
Excluded from restructuring expense in the table above are non-cash restructuring charges that did not impact the accrued restructuring liability. In the three and nine months ended September 30, 2017, we recognized $0.2 million and $0.6 million, respectively, in non-cash restructuring expense related to losses (gains) on the disposals of long-lived assets. In the three and nine months ended September 30, 2016, we recognized non-cash charges of $0.2 million and $14.8 million, respectively, related to impairments of long-lived assets.


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Spin-off transaction costs

Spin-off costs were primarily attributable to employee retention awards directly related to the spin-off from our former parent, The Babcock & Wilcox Company (now known as BWX Technologies, Inc.). In the three and nine months ended September 30, 2017, we recognized spin-off costs of $0.2 million and $1.0 million, respectively. In the three and nine months ended September 30, 2016, we recognized spin-off costs of $0.4 million and $3.4 million, respectively. In the nine months ended September 30, 2017, we disbursed $1.9 million of the accrued retention awards.

NOTE 7 – PROVISION FOR INCOME TAXES

We had an income tax benefit of $5.6 million in the three months ended September 30, 2017, which resulted in a 4.7% effective tax rate as compared to $1.6 million of income tax expense in the three months ended September 30, 2016, which resulted in a 15.2% effective tax rate. Our effective tax rate for the three months ended September 30, 2017 was lower than our statutory rate primarily due to nondeductible goodwill impairment charges, foreign losses in our Renewable segment that are subject to a valuation allowance and nondeductible expenses, offset by favorable discrete items of $0.4 million. The discrete items include favorable adjustments to prior year U.S. tax returns and the effect of vested and exercised share-based compensation awards. Our effective tax rate for the three months ended September 30, 2016 was lower than our statutory rate primarily due to changes in the jurisdictional mix of our forecasted full year income and losses and favorable impacts from adjustments related to prior years' tax returns in the United States and foreign jurisdictions.

We had an income tax benefit of $7.6 million in the nine months ended September 30, 2017, which resulted in a 2.7% effective tax rate as compared to an income tax benefit of $0.8 million in the nine months ended September 30, 2016, which resulted in a 1.8% effective tax rate for the nine months ended September 30, 2016. Our effective tax rate for the nine months ended September 30, 2017 was lower than our statutory rate primarily due to the reasons noted above, as well as the second quarter tax benefit associated with the impairment of our equity method investment in India, which was offset by a valuation allowance, second quarter discrete items including withholding tax on a forecasted distribution outside the United States, partly offset by first quarter favorable discrete adjustments to prior year foreign tax returns and nondeductible transaction costs. Our effective tax rate for the nine months ended September 30, 2016 was lower than our statutory rate primarily due to a $13.1 million increase in valuation allowances associated with deferred tax assets related to our equity investment in a foreign joint venture and state net operating losses, and to the jurisdictional mix of our forecasted full year income and losses, as described above.

During the nine months ended September 30, 2017, we prospectively adopted Financial Accounting Standards Board ("FASB") Accounting Standards Update ("ASU") 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-based Payment Accounting. Adopting the new accounting standard resulted in a net $0.2 million and $1.7 million income tax benefit in the three and nine months ended September 30, 2017, respectively, associated with the income tax effects of vested and exercised share-based compensation awards.

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NOTE 812 – COMPREHENSIVE INCOMEPENSION PLANS AND OTHER POSTRETIREMENT BENEFITS


Gains and losses deferredComponents of net periodic benefit cost (benefit) included in accumulated other comprehensivenet income (loss) ("AOCI") are reclassified and recognized in the condensed consolidated statements of operations once they are realized. The changes in the components of AOCI, net of tax, for the first three quarters in 2017 and 2016 were as follows:
(in thousands)Currency translation gain (loss) (net of tax)Net unrealized gain (loss) on investments (net of tax)Net unrealized gain (loss) on derivative instruments (net of tax)Net unrecognized gain (loss) related to benefit plans (net of tax)Total
Balance at December 31, 2016$(43,987)$(37)$802
$6,740
$(36,482)
Other comprehensive income (loss) before reclassifications5,417
61
4,587
(44)10,021
Amounts reclassified from AOCI to net income (loss)—
(27)(3,843)(882)(4,752)
Net current-period other comprehensive income (loss)5,417
34
744
(926)5,269
Balance at March 31, 2017$(38,570)$(3)$1,546
$5,814
$(31,213)
Other comprehensive income (loss) before reclassifications6,757
(19)(2,204)(97)4,437
Amounts reclassified from AOCI to net income (loss)—
(1)(658)(800)(1,459)
Net current-period other comprehensive income (loss)6,757
(20)(2,862)(897)2,978
Balance at June 30, 2017(31,813)(23)(1,316)4,917
(28,235)
Other comprehensive income (loss) before reclassifications2,591
69
268
(66)2,862
Amounts reclassified from AOCI to net income (loss)—
(4)3,567
(630)2,933
Net current-period other comprehensive income (loss)2,591
65
3,835
(696)5,795
Balance at September 30, 2017$(29,222)$42
$2,519
$4,221
$(22,440)

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(in thousands)Currency translation gain (loss) (net of tax)Net unrealized gain (loss) on investments (net of tax)Net unrealized gain (loss) on derivative instruments (net of tax)Net unrecognized gain (loss) related to benefit plans (net of tax)Total
Balance at December 31, 2015$(19,493)$(44)$1,786
$(1,102)$(18,853)
Other comprehensive income (loss) before reclassifications1,740
18
2,576
(61)4,273
Amounts reclassified from AOCI to net income (loss)—
1
(1,003)61
(941)
Net current-period other comprehensive income1,740
19
1,573
—
3,332
Balance at March 31, 2016$(17,753)$(25)$3,359
$(1,102)$(15,521)
Other comprehensive income (loss) before reclassifications(11,566)(7)778
37
(10,758)
Amounts reclassified from AOCI to net income (loss)—
—
(651)58
(593)
Net current-period other comprehensive income (loss)(11,566)(7)127
95
(11,351)
Balance at June 30, 2016(29,319)(32)3,486
(1,007)(26,872)
Other comprehensive income (loss) before reclassifications2,811
18
1,132
(25)3,936
Amounts reclassified from AOCI to net income (loss)—
—
(1,247)8
(1,239)
Net current-period other comprehensive income (loss)2,811
18
(115)(17)2,697
Balance at September 30, 2016$(26,508)$(14)$3,371
$(1,024)$(24,175)

The amounts reclassified out of AOCI by component and the affected condensed consolidated statements of operations line items are as follows (in thousands):
AOCI componentLine items in the Condensed Consolidated Statements of Operations affected by reclassifications from AOCIThree months ended September 30, Nine months ended September 30,
20172016 20172016
Derivative financial instrumentsRevenues$2,092
$1,940
 $8,094
$4,524
 Cost of operations159
24
 113
57
 Other-net(7,930)(445) (7,438)(1,065)
 Total before tax(5,679)1,519
 769
3,516
 Provision for income taxes(2,112)272
 (165)615
 Net income$(3,567)$1,247
 $934
$2,901
       
Amortization of prior service cost on benefit obligationsCost of operations$619
$(15) $2,281
$294
 Provision for income taxes(11)(7) (31)421
 Net income (loss)$630
$(8) $2,312
$(127)
       
Realized gain on investmentsOther-net$6
$—
 $50
$(1)
 Provision for income taxes2
—
 18
—
 Net income (loss)$4
$—
 $32
$(1)

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NOTE 9 – CASH AND CASH EQUIVALENTS

The components of cash and cash equivalents are as follows:
Pension BenefitsOther Benefits
Three months ended March 31,Three months ended March 31,
(in thousands)2021202020212020
Interest cost$5,671 $8,261 $39 $72 
Expected return on plan assets(15,009)(15,641)0 0 
Amortization of prior service cost (credit)28 43 173 (271)
Benefit plans, net (1)
(9,310)(7,337)212 (199)
Service cost included in COS (2)
217 211 6 5 
Net periodic benefit cost (benefit)$(9,093)$(7,126)$218 $(194)
(in thousands)September 30, 2017December 31, 2016
Held by foreign entities$44,778
$94,415
Held by United States entities3,359
1,472
Cash and cash equivalents$48,137
$95,887
   
Reinsurance reserve requirements$21,456
$21,189
Restricted foreign accounts5,192
6,581
Restricted cash and cash equivalents$26,648
$27,770

Our United States revolving credit facility described in Note 17 allows for nearly immediate borrowing of available capacity to fund cash requirements(1)    Benefit plans, net, which is presented separately in the normal courseCondensed Consolidated Statements of business, meaning thatOperations, is not allocated to the minimum United States cash on handsegments.
(2)    Service cost related to a small group of active participants is maintained to minimize borrowing costs.

NOTE 10 – INVENTORIES

The componentspresented within cost of inventories are as follows:
(in thousands)September 30, 2017December 31, 2016
Raw materials and supplies$66,995
$61,630
Work in progress9,518
6,803
Finished goods14,586
17,374
Total inventories$91,099
$85,807

NOTE 11 – EQUITY METHOD INVESTMENTS

Joint ventures in which we have significant ownership and influence, but not control, are accounted for in our consolidated financial statements using the equity method of accounting. We assess our investments in unconsolidated affiliates for other-than-temporary-impairment when significant changes occuroperations in the investee's business or our investment philosophy. Such changes might include a seriesCondensed Consolidated Statement of operating losses incurred by the investee that are deemed other than temporary, the inability of the investee to sustain an earnings capacity that would justify the carrying amount of the investment or a change in the strategic reasons that were important when we originally entered into the joint venture. If an other-than-temporary-impairment were to occur, we would measure our investment in the unconsolidated affiliate at fair value.

Our primary equity method investees include joint ventures in ChinaOperations and India, each of which manufactures boiler parts and equipment. At September 30, 2017 and December 31, 2016, our total investment in these joint ventures was $87.4 million and $98.7 million, respectively.

During the third quarter of 2017, both we and our joint venture partner began the process of scaling back the operations at Thermax Babcock & Wilcox Energy Solutions Private Limited ("TBWES"), our joint venture in India, dueis allocated to the decline in forecasted market opportunities in India. Currently, the manufacturing facility in India has been reduced to essential personnel only while engineering services are expected to continue inB&W Thermal segment.

There were 0 MTM adjustments for our engineering office through the end of 2017. These actions are in line with our change in strategy for the joint venture announced in the second quarter of 2017, which reduced the expected recoverable value of our investment in TBWES. We recognized an $18.2 million other-than-temporary-impairment of our investment in TBWES during the nine months ended September 30, 2017. The impairment charge was based on the difference in the carrying value of our investment in TBWESpension and our share of the estimated fair value of TBWES's net assets.

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NOTE 12– INTANGIBLE ASSETS

Our intangible assets are as follows:
(in thousands)September 30, 2017December 31, 2016
Definite-lived intangible assets  
Customer relationships$59,683
$47,892
Unpatented technology19,941
18,461
Patented technology6,560
2,499
Tradename22,818
18,774
Backlog30,088
28,170
All other7,550
7,429
Gross value of definite-lived intangible assets146,640
123,225
Customer relationships amortization(21,931)(17,519)
Unpatented technology amortization(4,443)(2,864)
Patented technology amortization(2,043)(1,532)
Tradename amortization(4,749)(3,826)
Acquired backlog amortization(27,814)(21,776)
All other amortization(6,965)(5,974)
Accumulated amortization(67,945)(53,491)
Net definite-lived intangible assets$78,695
$69,734
   
Indefinite-lived intangible assets:  
Trademarks and trade names$1,305
$1,305
Total indefinite-lived intangible assets$1,305
$1,305

The following summarizes the changes in the carrying amount of intangible assets:
 Nine months ended September 30,
(in thousands)20172016
Balance at beginning of period$71,039
$37,844
Business acquisitions19,500
55,438
Amortization expense(14,455)(11,904)
Currency translation adjustments and other3,916
647
Balance at end of the period$80,000
$82,025

The January 11, 2017 acquisition of Universal resulted in an increase in our intangible asset amortization expense during the three and nine months ended September 30, 2017 of $0.5 million and $2.6 million, respectively.

The July 1, 2016 acquisition of SPIG, S.p.A. resulted in an increase in our intangible asset amortization expense during the three and nine months ended September 30, 2017 of $1.9 million and $7.3 million, respectively, and $7.1 million of intangible asset amortization expenseother postretirement benefit plans during the three months ended September 30, 2016.March 31, 2021 and 2020.


AmortizationWe made contributions to our pension and other postretirement benefit plans totaling $24.0 million and $0.4 million during the three months ended March 31, 2021 and 2020, respectively. Contributions made during the three months ended March 31, 2021 include $0.4 million of intangible assets is included in costinterest as required per the CARES Act that was signed into law on March 27, 2020.

In accordance with the American Rescue Plan Act of operations in our condensed consolidated statement2021, we elected to defer $20.9 million of operations, but it is not allocated to segment results.the estimated Pension Plan contribution payments of $45.6 million that would have been due during 2021.


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Estimated future intangible asset amortization expense, including the increase in amortization expense resulting from the January 11, 2017 acquisition of Universal, is as follows (in thousands):
Period endingAmortization expense
Three months ending December 31, 2017$3,582
Twelve months ending December 31, 2018$12,444
Twelve months ending December 31, 2019$10,342
Twelve months ending December 31, 2020$9,042
Twelve months ending December 31, 2021$8,782
Twelve months ending December 31, 2022$7,205
Thereafter$27,298


NOTE 13 – GOODWILL2021 SENIOR NOTES OFFERING


On February 12, 2021, we completed a public offering of $125.0 million aggregate principal amount of our 8.125% senior notes due 2026. The offering was conducted pursuant to an underwriting agreement (the “Notes Underwriting Agreement”) dated February 10, 2021, between us and B. Riley Securities, Inc., as representative of the several underwriters (the “Underwriters”). At the completion, we received gross proceeds of approximately $125.0 million. Net proceeds received were approximately $120.0 million after deducting underwriting discounts and commissions, but before expenses. The Senior Notes were issued in denominations of $25.00 per Senior Note and in integral multiples thereof.

In addition to the public offering, we issued $35.0 million of Senior Notes to B. Riley Financial, Inc. in exchange for a deemed prepayment of our existing Last Out Term Loan Tranche A-3 in a concurrent private offering.

The following summarizes the changes in the carrying amount of goodwill:
(in thousands)PowerRenewableIndustrialTotal
Balance at December 31, 2016$46,220
$48,435
$172,740
$267,395
Increase resulting from Universal acquisition—
—
14,413
14,413
Third quarter 2017 impairment charges*
—
(49,965)(36,938)(86,903)
Currency translation adjustments1,180
1,530
6,490
9,200
Balance at September 30, 2017$47,400
$—
$156,705
$204,105

* Prior to September 30, 2017, we had not recorded any goodwill impairment charges.

Our annual goodwill impairment assessment is performed on October 1 of each year (the "annual assessment" date); however, events during 2017 have required two interim assessments of all six of our reporting units. In the second quarter of 2017, significant charges in our Renewable segment was considered to be a triggering event for the interim assessment as of June 30, 2017, which did not indicate impairment. In the third quarter of 2017, our market capitalization significantly decreased to below our equity value, which was considered to be a trigger for a second interim assessment. Additionally, the forecast was reduced for our SPIG reporting unit based on a change in the market strategy implemented by the new segment management to focus on core geographies and products.

Assessing goodwill for impairment involves a two step test. Step 1components of the test compares the fair value of a reporting unit with its carrying amount, including goodwill. If the carrying amount of a reporting unit exceeds its fair value, the second step of the test is performed to measure the amount of the impairment loss, if any. Step 2 of the test compares the implied fair value of the reporting unit's goodwill with the carrying amount of that goodwill, and impairment is measured as the excess of the carrying value over the implied value of goodwill. Estimating the fair value of a reporting unit requires significant judgment. The fair value of each reporting unit determined under Step 1 of the goodwill impairment test was based on a 50% weighting of an income approach using a discounted cash flow analysis based on forward-looking projections of future operating results, a 30% to 40% weighting of a market approach using multiples of revenue and earnings before interest, taxes, depreciation and amortization ("EBITDA") of guideline companies and a 20% to 10% weighting of a market approach using multiples of revenue and EBITDA from recent, similar business combinations.

We primarily attributed the significant decline in our market capitalization in the third quarter of 2017 to the announcement of significant charges in the Renewable reporting unit. Accordingly, we increased the discount rate applied to future projected cash flows from 15.0% at June 30, 2017 to 23.5% at September 30, 2017. As a result of the increase in the discount rate and an increase in the carrying value of the reporting unit, impairment was indicated at September 30, 2017, which measured $50.0 million ($48.9 million net of tax), the full carrying value. Other long-lived assets in the reporting unit were not impaired.

For our SPIG reporting unit, which is included in our Industrial segment, the Step 1 also indicated impairment. At June 30, 2017 and October 1, 2016, the fair value exceeded the carrying value by less than 1% and 5%, respectively. At September 30, 2017, the independently obtained fair value estimates decreased under both the income and market valuation approaches due

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to a short-term decrease in profitability attributable to specific current contracts and changes in SPIG's market strategy introduced by segment management during the third quarter. The discount rate applied to future projected cash flows was 14.0% and 12.5% at each of the September 30, 2017 and June 30, 2017 interim tests, respectively. Step 2 of the impairment test at September 30, 2017 measured $36.9 million of impairment (with no income tax impact). The SPIG reporting unit has $38.0 million of goodwill remaining after the impairment charge. Other long-lived assets in the reporting unit were not impaired.

For the remaining four reporting units where impairment was not indicated at September 30, 2017, the goodwill balances at September 30, 2017 and the Step 1 goodwill impairment test headroom (the estimated fair value less the carrying value)Senior Notes are as follows:
(in thousands)March 31, 2021
8.125% Senior Notes due 2026$160,000 
Unamortized deferred financing costs4,491 
Net debt balance$155,509 
 Power Segment Industrial Segment
(in millions)PowerConstruction MEGTECUniversal
Reporting unit headroom60%98% 12%18%
Goodwill balance$38.5$8.9 $104.3$14.4


Step 1The Senior Notes are senior unsecured obligations of the impairment test for our MEGTEC reporting unit, which is includedCompany and rank equally in our Industrial segment, did not indicate impairment,right of payment with all of the Company’s other existing and the fair value exceeded the carrying value by 12% at September 30, 2017 compared to 3.0% at June 30, 2017future senior unsecured and 22% at October 1, 2016. Under both the income and market valuation approaches, the fair value estimatesunsubordinated indebtedness. The Senior Notes bear interest at the interim assessment datarate of 8.125% per annum. Interest on the Senior Notes is payable quarterly in arrears on January 31, April 30, July 31 and October 31 of each year, commencing on April 30, 2021. The Senior Notes will mature on February 28, 2026.

We may, at our option, at any time and from time to time, redeem the second interim assessmentSenior Notes for cash in whole or in part (i) on or after February 28, 2022 and prior to February 28, 2023, at a price equal to $25.75 per Senior Note, plus accrued and unpaid
19

interest to, but excluding, the date decreased comparedof redemption, (ii) on or after February 28, 2023 and prior to February 29, 2024, at a price equal to $25.50 per Senior Note, plus accrued and unpaid interest to, but excluding, the date of redemption, (iii) on or after February 29, 2024 and prior to February 28, 2025, at a price equal to $25.25 per Senior Note, plus accrued and unpaid interest to, but excluding, the date of redemption and (iv) on or after February 28, 2025 and prior to maturity, at a price equal to 100% of their principal amount, plus accrued and unpaid interest to, but excluding, the date of redemption. On and after any redemption date, interest will cease to accrue on the redeemed Senior Notes. The Indenture governing the Senior Notes contains customary events of default and cure provisions.

On March 31, 2021, we entered into a sales agreement with B. Riley Securities, Inc., a related party, in which we may sell to or through B. Riley Securities, Inc., from time to time, additional Senior Notes up to an aggregated principal amount of $150.0 million of Senior Notes. The Senior Notes will have the same terms as (other than date of issuance), form a single series of debt securities with and have the same CUSIP number and be fungible with, the Senior Notes issued February 12, 2021, as described above.

Senior Notes - Subsequent Event

As of May 10, 2021, the Company has sold $10.6 million aggregate principal amount of Senior Notes for $11.0 million gross proceeds related to the annual assessment date dueMarch 31, 2021 sales agreement disclosed above. The Company received $10.7 million of net cash proceeds after commission and fees.

Exchange Agreement

On February 12, 2021, the Company and B. Riley entered into the Exchange Agreement pursuant to lower projected net sales and EBITDA. Similarwhich we issued to many industrial businesses, the reductionB. Riley, a related party, $35.0 million aggregate principal amount of Senior Notes in MEGTEC reporting unit revenues has been the resultexchange for a deemed prepayment of a decline in new equipment demand, primarily in the Americas; however, bookings trends have recently improved and backlog at September 30, 2017 is 67% higher than at the same date a year ago. The MEGTEC reporting unit recorded a 15% increase in revenues and a 16% increase in gross profit during the third quarter$35.0 million of 2017. The estimate of fair value of the MEGTEC reporting unit is sensitive to changes in assumptions, particularly assumed discount rates and projections of future operating results under the income approach. The discount rate applied to future projected cash flows was 12.5% and 11.0% at each of the September 30, 2017 and June 30, 2017 interim tests, respectively. Absent any other changes, an increase in the discount rate could result in future impairment of goodwill. Decreases in future projected operating results could also result in future impairment of goodwill.our existing Tranche A term loan with B. Riley Financial (the “Exchange”).


NOTE 14 – PROPERTY, PLANT & EQUIPMENT2021 COMMON STOCK OFFERING


Property, plant and equipment is stated at cost. The compositionOn February 12, 2021, we completed a public offering of our property, plantcommon stock pursuant to an underwriting agreement (the “Underwriting Agreement”) dated February 9, 2021, between us and equipment less accumulated depreciation is set forth below:
(in thousands)September 30, 2017December 31, 2016
Land$8,802
$6,348
Buildings121,952
114,322
Machinery and equipment206,437
189,489
Property under construction14,218
22,378
 351,409
332,537
Less accumulated depreciation208,302
198,900
Net property, plant and equipment$143,107
$133,637

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TableB. Riley Securities, Inc., as representative of Contents



NOTE 15 – WARRANTY EXPENSE

Changes in the carrying amountseveral underwriters (the “Underwriters”). At the closing, we issued to the public 29,487,180 shares of our accrued warranty expensecommon stock and received gross proceeds of approximately $172.5 million. Net proceeds from the offering were approximately $163.0 million after deducting underwriting discounts and commissions, but before expenses.

The net proceeds of the offering were used to make a prepayment towards the balance outstanding under our U.S. Revolving Credit Facility and permanently reduce the commitments under our senior secured credit facilities.

NOTE 15– LAST OUT TERM LOANS

The components of the Last Out Term Loans by Tranche are as follows:
March 31, 2021
(in thousands)A-3
Proceeds (1)
$61,660 
Discount and fees8,650 
Paid-in-kind interest3,020 
Net debt balance$73,330 
(1) Tranche A-3 proceeds represent the net proceeds after the $39.7 million principal prepayment from the July 2019 Equitization Transactions and a $40.0 million principal repayment in March 2021
20

 Nine months ended September 30,
(in thousands)20172016
Balance at beginning of period$40,467
$39,847
Additions17,818
18,300
Expirations and other changes(9,053)(2,945)
Increases attributable to business combinations1,060
901
Payments(11,126)(10,922)
Translation and other2,064
(217)
Balance at end of period$41,230
$44,964
December 31, 2020
(in thousands)A-3A-4A-6Total
Proceeds (1)
$101,660 $30,000 $40,000 $171,660 
Discount and fees8,650 0 0 8,650 
Paid-in-kind interest3,020 0 0 3,020 
Net debt balance$113,330 $30,000 $40,000 $183,330 

(1) Tranche A-3 proceeds represent the net proceeds after the $39.7 million principal prepayment from the July 2019 Equitization Transactions.
During
Last Out Term Loans are incurred under our A&R Credit Agreement and are pari passu with the nineU.S. Revolving Credit Facility except for certain payment subordination provisions. The Last Out Term Loans are subject to the same representations and warranties, covenants and events of default as the U.S. Revolving Credit Facility. In connection with the effectiveness of the A&R Credit Agreement, the maturity date for the Last Out Term Loans was extended to December 30, 2022.

On February 12, 2021, in connection with the Exchange described in Note 13, the interest rate on the remaining Last Out Term Loan Tranche A balances was reduced to 6.625% from 12.0%. Interest expense associated with the Last Out Term Loans is detailed in Note 17.

Tranche A-3
Effective with Amendment No. 16 to our previous Amended Credit Agreement, we borrowed $150.0 million face value from B. Riley, a related party, under Tranche A-3. The $141.4 million net proceeds from Tranche A-3 were primarily used to pay the amounts due under the settlement agreements covering certain European B&W Renewable loss projects as described in Note 4, with the remainder used for working capital and general corporate purposes.

As part of the Equitization Transactions of July 23, 2019, we prepaid $39.7 million principal of Tranche A-3. Also, on March 4, 2021, effective with A&R Amendment No. 3, we paid down an additional $40.0 million on our existing Tranche A-3.

Tranche A-4
On January 31, 2020, effective with Amendment No. 20 to the Amended Credit Agreement, we borrowed $30.0 million face value of the Tranche A-4 from B. Riley, a related party and received net proceeds of $26.3 million after incurring total fees of $3.7 million. On March 4, 2021, effective with A&R Amendment No. 3, we paid down the $30.0 million outstanding on our existing Tranche A-4.

Tranche A-5
On January 31, 2020, we entered into Amendment No. 20 to the Amended Credit Agreement. Amendment No. 20 provides an incremental Tranche A-5 to be extended prior to maturity of the Last Out Term Loans under the Amended Credit Agreement in the event certain customer letters of credit are drawn. The terms of Tranche A-5 are the same as the terms for the Tranche A-3 under the Amended Credit Agreement. As of May 13, 2021, 0 borrowings occurred under Tranche A-5.

Tranche A-6
On May 14, 2020, effective with the A&R Credit Agreement, we borrowed $30.0 million face value of the Tranche A-6 from B. Riley, a related party, as described in Note 16. On November 30, 2020, we borrowed an additional $10.0 million face value of the Tranche A-6 pursuant to the terms of the A&R Credit Agreement which required the proceeds to be applied as a permanent reduction of the U.S. Revolving Credit Facility.

As described in Note 13, on February 12, 2021, we issued $35.0 million of Senior Notes to B. Riley Financial, Inc. in exchange for a deemed prepayment of our existing Tranche A-6 as part of the Exchange. Also, on March 4, 2021, effective with A&R Amendment No. 3, we paid down the remaining $5.0 million outstanding on our existing Tranche A-6.

Tranche A-7
The A&R Credit Agreement provided us with up to $50.0 million of additional funding for letters of credit in the form of Tranche A-7, from B. Riley, a related party, as described in Note 16. The $50.0 million will be available upon request by the Company, subject to certain limitations. As of May 13, 2021, 0 borrowings occurred under Tranche A-7.
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NOTE 16 – REVOLVING DEBT

Our revolving debt was comprised of our U.S. Revolving Credit Facility in the U.S.in the amount of $164.3 million as of December 31, 2020. As described below, effective with A&R Amendment No. 3 on March 4, 2021, we can no longer obtain revolving loans under the terms of our A&R Credit Agreement.

A&R Credit Agreement

On May 11, 2015, we entered into an amended credit agreement with a syndicate of lenders in connection with our spin-off from The Babcock & Wilcox Company (now BWX Technologies, Inc.) which governs the U.S. Revolving Credit Facility and the Last Out Term Loans. Since June 2016, we have entered into a number of waivers and amendments to the credit agreement, including several to avoid default under the financial and other covenants specified in the credit agreement.

On May 14, 2020, we entered into the A&R Credit Agreement which refinances and extends the maturity of our U.S. Revolving Credit Facility and Last Out Term Loans.

On October 30, 2020, we entered into A&R Amendment No. 1 with Bank of America, N.A. A&R Amendment No. 1, among other matters, (i) provides that, under the A&R Credit Agreement, the "Commitment Reduction Amount" shall be an amount equal to (a) for any "Prepayment Event" relating to a "Recovery Event" (each as defined under the A&R Credit Agreement), 50% of the net cash proceeds with respect to such Prepayment Event, and (b) with respect to any other Prepayment Event under the A&R Credit Agreement, the net cash proceeds with respect to such Prepayment Event, and (ii) establishes new financial covenants for interest coverage ratios and senior leverage ratios.

On February 8, 2021, we entered into A&R Amendment No. 2 with Bank of America, N.A., as administrative agent to the lenders under our Amended and Restated Credit Agreement. A&R Amendment No. 2 amends our A&R Credit Agreement to, among other matters, (i) permit the issuance of 8.125% Senior Notes offering described above, (ii) permit the deemed prepayment of $35.0 million of our Last Out Term Loan Tranche A with $35.0 million principal amount of Senior Notes, (iii) provide that 75% of the Senior Notes gross proceeds shall be used to repay outstanding borrowings and permanently reduce the commitments under our senior secured credit facilities, and (iv) provide that $5.0 million of certain previously deferred facility fees will be paid by the Company.

On March 4, 2021, we entered into A&R Amendment No. 3 with Bank of America, N.A. A&R Amendment No. 3, among other matters, at the date of effectiveness (i) permits the prepayment of certain term loans, (ii) reduces the revolving credit
22

commitments to $130.0 million and removes the ability to obtain revolving loans under the credit agreement, and (iii) amends certain covenants and conditions to the extension of credit.

On March 26, 2021, we entered into A&R Amendment No. 4 with Bank of America, N.A. A&R Amendment No. 4, among other matters, at the date of effectiveness (i) permits the issuance of 8.125% senior notes due 2026 up to an aggregate principle amount of $150.0 million, and (ii) modifies the calculation of the senior leverage ratio.

As of March 31, 2021, the future effective minimum interest coverage ratios under our A&R Credit Agreement are as follows:
•0.80:1.00 for the quarter ending June 30, 2021
•1.00:1.00 for the quarter ending September 30, 2021
•1.10:1.00 for the quarter ending December 31, 2021
•1.25:1.00 for the quarter ending March 31, 2022 and the last day of each fiscal quarter ending thereafter

As of March 31, 2021, the future effective maximum permitted senior leverage ratios under our A&R Credit Agreement are as follows:
•4.25:1.00 for the quarter ending June 30, 2021
•3.75:1.00 for the quarter ending September 30, 2021
•3.00:1.00 for the quarter ending December 31, 2021
•2.25:1.00 for the quarter ending March 31, 2022 and the last day of each fiscal quarter ending thereafter

See Note 25 - Subsequent Events for an additional amendment to the A&R Credit Agreement as of May 10, 2021.

U.S. Revolving Credit Facility

As of March 31, 2021, effective with Amendment No. 3 to the A&R Credit Agreement described above, the U.S. Revolving Credit Facility provides for an aggregate letters of credit amount of up to $130.0 million.

At March 31, 2021, usage under the U.S. Revolving Credit Facility consisted of $22.0 million of financial letters of credit and $82.1 million of performance letters of credit. At March 31, 2021, we had approximately $25.9 million available to meet letter of credit requirements based on our overall facility size.

On February 12, 2021, we received gross proceeds of $125.0 million from the 2021 Senior Notes offering. As required by the Company’s U.S. Revolving Credit Facility, 75% of the gross proceeds or $93.8 million received by the Company was applied as a permanent reduction of the U.S. Revolving Credit Facility as of February 12, 2021.

Also on February 16, 2021, we prepaid $167.1 million toward the remaining outstanding U.S. Revolving Credit Facility.

Letters of Credit, Bank Guarantees and Surety Bonds

Certain of our subsidiaries primarily outside of the United States have credit arrangements with various commercial banks and other financial institutions for the issuance of letters of credit and bank guarantees in association with contracting activity. The aggregate value of all such letters of credit and bank guarantees opened outside of the U.S. Revolving Credit Facility as of March 31, 2021 and December 31, 2020 was $60.7 million and $88.5 million, respectively. The aggregate value of the letters of credit provided by the U.S. Revolving Credit Facility backstopping letters of credit or bank guarantees was $18.0 million as of March 31, 2021. Of the letters of credit issued under the U.S. Revolving Credit Facility, $27.3 million are subject to foreign currency revaluation.

We have posted surety bonds to support contractual obligations to customers relating to certain contracts. We utilize bonding facilities to support such obligations, but the issuance of bonds under those facilities is typically at the surety's discretion. These bonds generally indemnify customers should we fail to perform our obligations under the applicable contracts. We, and certain of our subsidiaries, have jointly executed general agreements of indemnity in favor of surety underwriters relating to surety bonds those underwriters issue in support of some of our contracting activity. As of March 31, 2021, bonds issued and outstanding under these arrangements in support of contracts totaled approximately $266.4 million. The aggregate value of the letters of credit provided by the U.S. Revolving Credit facility backstopping surety bonds was $34.7 million.

23

Our ability to obtain and maintain sufficient capacity under our U.S. Revolving Credit Facility is essential to allow us to support the issuance of letters of credit, bank guarantees and surety bonds. Without sufficient capacity, our ability to support contract security requirements in the future will be diminished.

NOTE 17 –INTEREST EXPENSE AND SUPPLEMENTAL CASH FLOW INFORMATION

Interest expense in our Condensed Consolidated Financial Statements consisted of the following components:
Three months ended March 31,
(in thousands)20212020
Components associated with borrowings from:
Senior Notes$1,733 $0 
Last Out Term Loans - cash interest3,513 4,048 
U.S. Revolving Credit Facility$1,416 $4,039 
6,662 8,087 
Components associated with amortization or accretion of:
Senior Notes1,468 0 
Last Out Term Loans - discount and financing fees0 2,150 
U.S. Revolving Credit Facility - deferred financing fees and commitment fees4,400 9,035 
U.S. Revolving Credit Facility - deferred ticking fee for Amendment 160 1,658 
5,868 12,843 
Other interest expense1,693 1,161 
Total interest expense$14,223 $22,091 

The following table provides a reconciliation of cash, cash equivalents and restricted cash reporting within the Condensed Consolidated Balance Sheets that sum to the total of the same amounts in the Condensed Consolidated Statements of Cash Flows:
(in thousands)March 31, 2021December 31, 2020March 31, 2020
Held by foreign entities$25,169 $38,726 $27,937 
Held by U.S. entities28,664 18,612 7,447 
Cash and cash equivalents of continuing operations53,833 57,338 35,384 
Reinsurance reserve requirements2,053 4,551 5,779 
Restricted foreign accounts0 2,869 3,107 
Bank guarantee collateral2,560 2,665 2,115 
Restricted cash and cash equivalents4,613 10,085 11,001 
Total cash, cash equivalents and restricted cash shown in the Condensed Consolidated Statements of Cash Flows$58,446 $67,423 $46,385 

24

The following cash activity is presented as a supplement to our Condensed Consolidated Statements of Cash Flows and is included in Net cash used in activities:
Three months ended March 31,
(in thousands)20212020
Income tax payments, net$1,499 $793 
Interest payments on our U.S. Revolving Credit Facility$5,979 $4,150 
Interest payments on our Last Out Term Loans3,560 4,038 
Total cash paid for interest$9,539 $8,188 

NOTE 18 – PROVISION FOR INCOME TAXES

In the three months ended September 30, 2017March 31, 2021, income tax expense was $2.8 million, resulting in an effective tax rate of (22.5)%. In the three months ended March 31, 2020, income tax benefit was $0.8 million, resulting in an effective tax rate of 2.4%. For the three months ended March 31, 2020, the Company determined the use of the discrete method was more appropriate than the annual effective tax rate method due to the financial uncertainty of the COVID-19 pandemic. Therefore, the Company applied a permitted exception to the ASC 740-270 rules and 2016,recorded the actual income tax expense discretely for the three months ended March 31, 2020.

Our effective tax rate for the three months ended March 31, 2021 and 2020 is not reflective of the U.S. statutory rate primarily due to valuation allowances against our Powernet deferred tax assets and discrete items. We have unfavorable discrete items of`$2.5 million for the three months ended March 31, 2021, which primarily represents withholding taxes, and favorable discrete items of $0.5 million for the three months ended March 31, 2020.

We are subject to federal income tax in the United States and numerous countries that have statutory tax rates different than the United States federal statutory rate of 21%. The most significant of these foreign operations are located in Canada, Denmark, Germany, Italy, Mexico, Sweden, and the United Kingdom, with effective tax rates ranging between approximately 19% and 30%. We provide for income taxes based on the tax laws and rates in the jurisdictions where we conduct operations. These jurisdictions may have regimes of taxation that vary in both nominal rates and the basis on which these rates are applied. Our consolidated effective income tax rate can vary from period to period due to these variations, changes in jurisdictional mix of our income, and valuation allowances.

NOTE 19 – CONTINGENCIES

Litigation Relating to Boiler Installation and Supply Contract

On December 27, 2019, a complaint was filed against Babcock & Wilcox by P.H. Glatfelter Company (“Glatfelter”) in the United States District Court for the Middle District of Pennsylvania, Case No. 1:19-cv-02215-JPW, alleging claims of breach of contract, fraud, negligent misrepresentation, promissory estoppel and unjust enrichment (the “Glatfelter Litigation”). The complaint alleges damages in excess of $58.9 million. On March 16, 2020 we filed a motion to dismiss, and on December 14, 2020 the court issued its order dismissing the fraud and negligent misrepresentation claims and finding that, in the event that parties’ contract is found to be valid, Plaintiffs’ claims for damages will be subject to the contractual cap on liability (defined as the $11.7 million purchase price subject to certain adjustments). On January 11, 2021, we filed our Answer and a Counterclaim for breach of contract, seeking damages in excess of $2.9 million. We intend to continue to vigorously litigate the action. However, given the preliminary stage of the litigation, it is too early to determine if the outcome of the Glatfelter Litigation will have a material adverse impact on our condensed consolidated financial condition, results of operations or cash flows.

25

SEC Investigation

The U.S. SEC is conducting a formal investigation of the Company, focusing on the accounting charges and related matters involving the Company's B&W Renewable segment reduced its accrued warranty expense by $4.7 millionfrom 2015-2019. The SEC has served multiple subpoenas on the Company for documents. The Company is cooperating with the SEC related to the subpoenas and $2.2 million, respectively, to reflect the expiration of warranties, and updated its estimated warranty accrual rate to reflect its warranty claims experienceinvestigation. The SEC has taken testimony from past and current contractual warranty obligations, which reducedofficers, directors, and employees in addition to also seeking testimony from certain third-parties. It is reasonably possible that the accrued warranty expense by $4.1 millionSEC may bring one or more claims against the Company and certain individuals. Due to the stage of the investigation, we are unable to estimate the amount of loss or range of potential loss of any claim. However, there can be no assurance that such claims will not have a material impact on the Company.

Stockholder Derivative and Class Action Litigation

On April 14, 2020, a putative B&W stockholder (“Plaintiff”) filed a derivative and class action complaint against certain of the Company’s directors (current and former), executives and significant stockholders (“Defendants”) and the Company (as a nominal defendant). The action was filed in the nine months ended September 30, 2017. AdditionsDelaware Court of Chancery and is captioned Parker v. Avril, et al., C.A. No. 2020-0280-PAF ("Stockholder Litigation"). Plaintiff alleges that Defendants, among other things, did not properly discharge their fiduciary duties in connection with the 2019 rights offering and related transactions. The case is currently in discovery. We believe that the outcome of the Stockholder Litigation will not have a material adverse impact on our condensed consolidated financial condition, results of operations or cash flows, net of any insurance coverage.

Other

Due to the warranty accrual include specific provisionsnature of our business, we are, from time to time, involved in routine litigation or subject to disputes or claims related to our business activities, including, among other things: performance or warranty-related matters under our customer and supplier contracts and other business arrangements; and workers' compensation, premises liability and other claims. Based on industrial steam projects totaling $7.1 millionour prior experience, we do not expect that any of these other litigation proceedings, disputes and $2.1 million during the nine months ended September 30, 2017 and 2016, respectively.claims will have a material adverse effect on our condensed consolidated financial condition, results of operations or cash flows.


NOTE 1620 – PENSION PLANS AND OTHER POSTRETIREMENT BENEFITSCOMPREHENSIVE INCOME


Components of net periodic benefit cost (benefit) includedGains and losses deferred in netaccumulated other comprehensive income (loss) ("AOCI") are as follows:
 Pension benefits Other benefits
 Three months ended September 30, Nine months ended September 30, Three months ended September 30, Nine months ended September 30,
(in thousands)20172016 20172016 20172016 20172016
Service cost$227
$548
 $756
$1,137
 $3
$6
 $11
$18
Interest cost10,369
10,086
 30,905
30,890
 (106)206
 255
629
Expected return on plan assets(14,936)(15,925) (44,646)(46,107) —
—
 —
—
Amortization of prior service cost29
81
 80
335
 (561)—
 (2,277)—
Recognized net actuarial loss—
645
 1,062
30,545
 —
—
 —
—
Net periodic benefit cost (benefit)$(4,311)$(4,565) $(11,843)$16,800
 $(664)$212
 $(2,011)$647

Duringgenerally reclassified and recognized in the Condensed Consolidated Statements of Operations once they are realized. The changes in the components of AOCI, net of tax, for the first quarter of 2017, lump sum payments from our Canadian pension plan resulted in a plan settlement of $0.4 million, which also resulted in interim mark to market accounting for the pension plan. The mark to market adjustment in the first quarter of 2017 was $0.7 million. The effect of these charges2021 and mark to market adjustments are reflected in the $1.1 million "Recognized net actuarial loss" for the nine months ended September 30, 2017 in the table above. There2020 were no significant plan settlements or interim mark to market adjustments during the second or third quarters of 2017.as follows:

(in thousands)Currency translation
loss		Net unrecognized loss related to benefit plans
(net of tax)		Total
Balance at December 31, 2020$(47,575)$(4,815)$(52,390)
Other comprehensive loss before reclassifications(70)0 (70)
Reclassified from AOCI to net income (loss)(4,512)198 (4,314)
Net other comprehensive (loss) income(4,582)198 (4,384)
Balance at March 31, 2021$(52,157)$(4,617)$(56,774)
During the second and third quarters of 2016, we recorded adjustments to our benefit plan liabilities resulting from certain curtailment and settlement events. In September 2016, lump sum payments from our Canadian pension plan resulted in a $0.1 million pension plan settlement charge. In May 2016, the closure of our West Point, Mississippi manufacturing facility resulted in a $1.8 million curtailment charge in our United States pension plan. In April 2016, lump sum payments from our Canadian pension plan resulted in a $1.1 million plan settlement charge. These events resulted in interim mark to market accounting for the respective benefit plans in 2016. Mark to market charges in the three months ended September 30, 2016 were $0.5 million in our Canadian pension plan. Mark to market charges for our United States and Canadian pension plans were $27.5 million in the nine months ended September 30, 2016. The pension mark to market charges were impacted by higher than expected returns on pension plan assets. The weighted-average discount rate used to remeasure the benefit plan liabilities at September 30, 2016 was 3.88%. The effect of these charges and mark to market adjustments are reflected in the 2016 "Recognized net actuarial loss" in the table above.

(in thousands)Currency translation
gain		Net unrecognized loss related to benefit plans
(net of tax)		Total
Balance at December 31, 2019$5,743 $(3,817)$1,926 
Other comprehensive income before reclassifications2,380 0 2,380 
Reclassified from AOCI to net income (loss)0 (246)(246)
Net other comprehensive income (loss)2,380 (246)2,134 
Balance at March 31, 2020$8,123 $(4,063)$4,060 

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We have excluded the recognized net actuarial loss from our reportable segments and such amount has been reflected in Note 3 as the mark to market adjustment in the reconciliation of reportable segment income (loss) to consolidated operating losses. The recognized net actuarial loss during the three and nine months ended September 30, 2017 and 2016 was recorded in our condensed consolidated statements of operations in the following line items:
 Pension benefits
 Three months ended September 30, Nine months ended September 30,
(in thousands)20172016 20172016
Cost of operations$—
$580
 $954
$30,079
Selling, general and administrative expenses—
64
 106
465
Other—
—
 2
—
Total$—
$644
 $1,062
$30,544

We made contributions to our pension and other postretirement benefit plans totaling $9.8 million and $16.2 million during the three and nine months ended September 30, 2017, respectively, as compared to $1.8 million and $4.4 million during the three and nine months ended September 30, 2016, respectively.

See Note 23 for the future expected effect of FASB ASU 2017-07 on the presentation of benefit and expense related to our pension and post retirement plans.
NOTE 17 – REVOLVING DEBT

The componentsamounts reclassified out of our revolving debt are comprised of separate revolving credit facilities in the following locations:
(in thousands)September 30, 2017December 31, 2016
United States$58,900
$9,800
Foreign12,398
14,241
Total revolving debt$71,298
$24,041

United States revolving credit facility

On May 11, 2015, we entered into a credit agreement with a syndicate of lenders ("Credit Agreement") in connection with our spin-off from The Babcock & Wilcox Company. The Credit Agreement, which is scheduled to mature on June 30, 2020, provides for a senior secured revolving credit facility, initially in an aggregate amount of up to $600.0 million. The proceeds from loans under the Credit Agreement are available for working capital needs and other general corporate purposes,AOCI by component and the full amount is available to support the issuanceaffected Condensed Consolidated Statements of letters of credit.

On February 24, 2017 and August 9, 2017, we entered into amendments to the Credit Agreement (the “Amendments” and the Credit Agreement, as amended to date, the “Amended Credit Agreement”) to, among other things: (1) permit us to incur the debt under the second lien term loan facility (discussed further in Note 18), (2) modify the definition of EBITDA in the Amended Credit Agreement to exclude: up to $98.1 million of charges for certain Renewable segment contracts for periods including the quarter ended December 31, 2016, up to $115.2 million of charges for certain Renewable segment contracts for periods including the quarter ended June 30, 2017, up to $4.0 million of aggregate restructuring expenses incurred during the period from July 1, 2017 through September 30, 2018 measured on a consecutive four-quarter basis, realized and unrealized foreign exchange losses resulting from the impact of foreign currency changes on the valuation of assets and liabilities, and fees and expenses incurred in connection with the August 9, 2017 amendment, (3) replace the maximum leverage ratio with a maximum senior debt leverage ratio, (4) decrease the minimum consolidated interest coverage ratio, (5) limit our ability to borrow under the Amended Credit Agreement during the covenant relief period to $250.0 million in the aggregate, (6) reduce commitments under the revolving credit facility from $600.0 million to $500.0 million, (7) require us to maintain liquidity (as defined in the Amended Credit Agreement) of at least $75.0 million as of the last business day of any calendar month, (8) require us to repay outstanding borrowings under the revolving credit facility (without any reduction in commitments) with certain excess cash, (9) increase the pricing for borrowings and commitment fees under the Amended Credit Agreement, (10) limit our ability to incur debt and liens during the covenant relief period, (11) limit our ability to make acquisitions and investments in third parties during the covenant relief period, (12) prohibit us from paying dividends and undertaking stock

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repurchases during the covenant relief period (other than our share repurchase from an affiliate of AIP (discussed further in Note 18)), (13) prohibit us from exercising the accordion described below during the covenant relief period, (14) limit our financial and commercial letters of credit outstanding under the Amended Credit Agreement to $30.0 million during the covenant relief period, (15) require us to reduce commitments under the Amended Credit Agreement with the proceeds of certain debt issuances and asset sales, (16) beginning with the quarter ended September 30, 2017, limit to no more than $25.0 million any cumulative net income losses attributable to certain Vølund projects, and (17) increase reporting obligations and require us to hire a third-party consultant. The covenant relief period will end, at our election, when the conditions set forth in the Amended Credit AgreementOperations line items are satisfied, but in no event earlier than the date on which we provide the compliance certificate for our fiscal quarter ending December 31, 2018.

Other than during the covenant relief period, the Amended Credit Agreement contains an accordion feature that allows us, subject to the satisfaction of certain conditions, including the receipt of increased commitments from existing lenders or new commitments from new lenders, to increase the amount of the commitments under the revolving credit facility in an aggregate amount not to exceed the sum of (1) $200.0 million plus (2) an unlimited amount, so long as for any commitment increase under this subclause (2) our senior leverage ratio (assuming the full amount of any commitment increase under this subclause (2) is drawn) is equal to or less than 2.00:1.0 after giving pro forma effect thereto. During the covenant relief period, our ability to exercise the accordion feature will be prohibited.

The Amended Credit Agreement and our obligations under certain hedging agreements and cash management agreements with our lenders and their affiliates are (1) guaranteed by substantially all of our wholly owned domestic subsidiaries, but excluding our captive insurance subsidiary, and (2) secured by first-priority liens on certain assets owned by us and the guarantors. The Amended Credit Agreement requires interest payments on revolving loans on a periodic basis until maturity. We may prepay all loans at any time without premium or penalty (other than customary LIBOR breakage costs), subject to notice requirements. The Amended Credit Agreement requires us to make certain prepayments on any outstanding revolving loans after receipt of cash proceeds from certain asset sales or other events, subject to certain exceptions and a right to reinvest such proceeds in certain circumstances. During the covenant relief period, such prepayments may require us to reduce the commitments under the Amended Credit Agreement by a corresponding amount of such prepayments. Following the covenant relief period, such prepayments will not require us to reduce the commitments under the Amended Credit Agreement.

After giving effect to Amendments, loans outstanding under the Amended Credit Agreement bear interest at our option at either (1) the LIBOR rate plus 5.0% per annum or (2) the base rate (the highest of the Federal Funds rate plus 0.5%, the one month LIBOR rate plus 1.0%, or the administrative agent's prime rate) plus 4.0% per annum. Interest expense associated with our United States revolving credit facility loans for the three and nine months ended September 30, 2017 was $3.3 million and $7.0 million, respectively. Included in interest expense was $1.3 million and $2.1 million of non-cash amortization of direct financing costs for the three and nine months ended September 30, 2017, respectively. A commitment fee of 1.0% per annum is charged on the unused portions of the revolving credit facility. A letter of credit fee of 2.50% per annum is charged with respect to the amount of each financial letter of credit outstanding, and a letter of credit fee of 1.50% per annum is charged with respect to the amount of each performance and commercial letter of credit outstanding. Additionally, an annual facility fee of $1.5 million is payable on the first business day of 2018 and 2019, and a pro rated amount is payable on the first business day of 2020.

The Amended Credit Agreement includes financial covenants that are tested on a quarterly basis, based on the rolling four-quarter period that ends on the last day of each fiscal quarter. The maximum permitted senior debt leverage ratio as defined in the Amended Credit Agreement is:
6.00:1.0 for the quarter ended September 30, 2017,
8.50:1.0 for each of the quarters ending December 31, 2017 and March 31, 2018,
6.25:1.0 for the quarter ending June 30, 2018,
4.00:1.0 for the quarter ending September 30, 2018,
3.75:1.0 for the quarter ending December 31, 2018,
3.25:1.0 for each of the quarters ending March 31, 2019 and June 30, 2019, and
3.00:1.0 for each of the quarters ending September 30, 2019 and each quarter thereafter.

The minimum consolidated interest coverage ratio as defined in the Credit Agreement is:
1.50:1.0 for the quarter ended September 30, 2017,
1.00:1.0 for each of the quarters ending December 31, 2017 and March 31, 2018,
1.25:1.0 for the quarter ending June 30, 2018,

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1.50:1.0 for each of the quarters ending September 30, 2018 and December 31, 2018,
1.75:1.0 for each of the quarters ending March 31, 2019 and June 30, 2019, and
2.00:1.0 for each of the quarters ending September 30, 2019 and each quarter thereafter.

Beginning with September 30, 2017, consolidated capital expenditures in each fiscal year are limited to $27.5 million.

At September 30, 2017, usage under the Amended Credit Agreement consisted of $58.9 million in borrowings at an effective interest rate of 6.88%, $7.7 million of financial letters of credit and $87.2 million of performance letters of credit. At September 30, 2017, we had $94.7 million available for borrowings or to meet letter of credit requirements primarily based on trailing 12 month EBITDA, and our leverage (as defined in the Amended Credit Agreement) ratio was 3.00 and our interest coverage ratio was 2.59. In addition, through September 30, 2017, we have used $11.6 million of the $25.0 million of permitted net income losses attributable to our Vølund projects. At September 30, 2017, we were in compliance with all of the covenants set forth in the Amended Credit Agreement.

Foreign revolving credit facilities

Outside of the United States, we have revolving credit facilities in Turkey, China and India that are used to provide working capital to our operations in each country. These three foreign revolving credit facilities allow us to borrow up to $14.8 million in aggregate and each have a one year term. At September 30, 2017, we had $12.4 million in borrowings outstanding under these foreign revolving credit facilities at an effective weighted-average interest rate of 5.17%.

Other credit arrangements

Certain subsidiaries have credit arrangements with various commercial banks and other financial institutions for the issuance of letters of credit and bank guarantees in associated with contracting activity. The aggregate value of all such letters of credit and bank guarantees not secured by the United States revolving credit facility as of September 30, 2017 and December 31, 2016 was $279.1 million and $255.2 million, respectively.

We have posted surety bonds to support contractual obligations to customers relating to certain projects. We utilize bonding facilities to support such obligations, but the issuance of bonds under those facilities is typically at the surety's discretion. Although there can be no assurance that we will maintain our surety bonding capacity, we believe our current capacity is adequate to support our existing project requirements for the next 12 months. In addition, these bonds generally indemnify customers should we fail to perform our obligations under the applicable contracts. We, and certain of our subsidiaries, have jointly executed general agreements of indemnity in favor of surety underwriters relating to surety bonds those underwriters issue in support of some of our contracting activity. As of September 30, 2017, bonds issued and outstanding under these arrangements in support of contracts totaled approximately $472.3 million.

NOTE 18 – SECOND LIEN TERM LOAN FACILITY

On August 9, 2017, we entered into a second lien credit agreement (the "Second Lien Credit Agreement") with an affiliate of American Industrial Partners ("AIP"), governing a second lien term loan facility. The second lien term loan facility consists of a second lien term loan in the principal amount of $175.9 million, all of which was borrowed on August 9, 2017, and a delayed draw term loan facility in the principal amount of up to $20.0 million, which may be drawn in a single draw prior to June 30, 2020, subject to certain conditions. Through September 30, 2017, we have not utilized the delayed draw term loan facility.

Borrowings under the second lien term loan, other than the delayed draw term loan, have a coupon interest rate of 10% per annum, and borrowings under the delayed draw term loan have a coupon interest rate of 12% per annum, in each case payable quarterly. Undrawn amounts under the delayed draw term loan accrue a commitment fee at a rate of 0.50%, which was paid at closing. The second lien term loan and any borrowings we may make under the delayed draw term loan have a scheduled maturity of December 30, 2020.

In connection with our entry into the second lien term loan facility, we used $50.9 million of the proceeds to repurchase approximately 4.8 million shares of our common stock (approximately 10% of our shares outstanding) held by an affiliate of AIP, which was one of the conditions precedent for the second lien term loan facility. Based on observable and unobservable market data, we determined the fair value of the shares we repurchased from the related party on August 9, 2017 was $16.7 million. We utilized a discounted cash flow model and estimates of our weighted average cost of capital on the transaction

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date to derive the estimated fair value of the share repurchase. The $34.2 million difference between the share repurchase price and the fair value of the repurchased shares was recorded as a discount on the second lien term facility borrowing. Non-cash amortization of the debt discount and direct financing costs will be accreted to the carrying value of the loan through interest expense over the term of the second lien term loan facility utilizing the effective interest method and an effective interest rate of 18.64%.

The carrying value of the second lien term loan facility at September 30, 2017 was as follows (in thousands):
AOCI componentLine items in the Condensed Consolidated Statements of Operations affected by reclassifications from AOCIThree months ended March 31,
20212020
Release of currency translation adjustment with the sale of businessGain on sale of business$4,512 $0 
Amortization of prior service cost on benefit obligationsBenefit plans, net(198)246 
Net income$4,314 $246 

Face value
Unamortized debt discount
and direct financing costs
Net carrying value
$175,884$37,500$138,384

Interest expense associated with our second lien credit agreement is comprised of the following:
(in thousands)
Actual for the period
August 9, 2017 through
September 30, 2017
 
Forecasted for the period
October 1, 2017 through
December 31, 2017
Forecasted for the period
January 1, 2018 through
December 31, 2018
Coupon interest (10%)$2,554 $4,433$17,588
Amortization of financing costs and discount$1,095 $2,119$9,678
Total interest expense$3,649 $6,552$27,266

Borrowings under the Second Lien Credit Agreement are (1) guaranteed by substantially all of our wholly owned domestic subsidiaries, but excluding our captive insurance subsidiary, and (2) secured by second-priority liens on certain assets owned by us and the guarantors. The Second Lien Credit Agreement requires interest payments on loans on a quarterly basis until maturity. Voluntary prepayments made during the first year after closing are subject to a make-whole premium, voluntary prepayments made during the second year after closing are subject to a 3.0% premium and voluntary prepayments made during the third year after closing are subject to a 2.0% premium. The Second Lien Credit Agreement requires us to make certain prepayments on any outstanding loans after receipt of cash proceeds from certain asset sales or other events, subject to certain exceptions and a right to reinvest such proceeds in certain circumstances, and subject to certain restrictions contained in an intercreditor agreement among the lenders under the Amended Credit Agreement and the Second Lien Credit Agreement.

The Second Lien Credit Agreement contains representations and warranties, affirmative and restrictive covenants, financial covenants and events of default substantially similar to those contained in the Amended Credit Agreement, subject to appropriate cushions. The Second Lien Credit Agreement is generally less restrictive than the Amended Credit Agreement.

NOTE 19 – CONTINGENCIES

ARPA litigation

On February 28, 2014, the Arkansas River Power Authority ("ARPA") filed suit against Babcock & Wilcox Power Generation Group, Inc. (now known as The Babcock & Wilcox Company and referred to herein as “BW PGG”) in the United States District Court for the District of Colorado (Case No. 14-cv-00638-CMA-NYW) alleging breach of contract, negligence, fraud and other claims arising out of BW PGG's delivery of a circulating fluidized bed boiler and related equipment used in the Lamar Repowering Project pursuant to a 2005 contract.

A jury trial took place in mid-November 2016. Some of ARPA’s claims were dismissed by the judge during the trial. The jury’s verdict on the remaining claims was rendered on November 21, 2016. The jury found in favor of B&W with respect to ARPA’s claims of fraudulent concealment and negligent misrepresentation and on one of ARPA’s claims of breach of contract. The jury found in favor of ARPA on the three remaining claims for breach of contract and awarded damages totaling $4.2 million, which exceeded the previous $2.3 million accrual we established in 2012 by $1.9 million. We increased our accrual by $1.9 million in the fourth quarter of 2016. At September 30, 2017 and December 31, 2016, $4.2 million was included in other accrued liabilities in our consolidated balance sheet, and we have posted a bond pending resolution of post-trial matters.

ARPA also requested that pre-judgment interest of $4.1 million plus post-judgment interest at a rate of 0.77% compounded annually be added to the judgment, together with certain litigation costs. The court granted ARPA $3.7 million of pre-

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judgment interest on July 21, 2017, which we recorded in our June 30, 2017 condensed consolidated financial statements in other accrued liabilities and interest expense. B&W commenced an appeal of the judgment on August 18, 2017, and ARPA filed a notice of cross appeal on August 31, 2017.

Stockholder litigation

On March 3, 2017 and March 13, 2017, the Company and certain of its officers were named as defendants in two separate but largely identical complaints alleging violations of the federal securities laws. The complaints were brought on behalf of a putative class of investors who purchased the Company's common stock between July 1, 2015 and February 28, 2017 and were filed in the United States District Court for the Western District of North Carolina (collectively, the "Stockholder Litigation"). During the second quarter of 2017, the Stockholder Litigation was consolidated into a single action and a lead plaintiff was selected by the Court. During the third quarter of 2017, the plaintiff further amended its complaint. As amended, the complaint now purports to cover investors who purchased shares between June 17, 2015 and August 9, 2017.

The plaintiff in the Stockholder Litigation alleges fraud, misrepresentation and a course of conduct relating to the facts surrounding certain projects underway in the Company's Renewable segment, which, according to the plaintiff, had the effect of artificially inflating the price of the Company's common stock. The plaintiff further alleges that stockholders were harmed when the Company disclosed on February 28, 2017 and August 9, 2017 that it would incur losses on these projects. The plaintiff seeks an unspecified amount of damages.

We believe the allegations in the Stockholder Litigation are without merit, and that the outcome of the Stockholder Litigation will not have a material adverse impact on our consolidated financial condition, results of operations or cash flows, net of any insurance coverage.

Other

Due to the nature of our business, we are, from time to time, involved in routine litigation or subject to disputes or claims related to our business activities, including, among other things: performance or warranty-related matters under our customer and supplier contracts and other business arrangements; and workers' compensation, premises liability and other claims. Based on our prior experience, we do not expect that any of these other litigation proceedings, disputes and claims will have a material adverse effect on our consolidated financial condition, results of operations or cash flows.

NOTE 20 – DERIVATIVE FINANCIAL INSTRUMENTS

Our foreign currency exchange ("FX") forward contracts that qualify for hedge accounting are designated as cash flow hedges. The hedged risk is the risk of changes in functional-currency-equivalent cash flows attributable to changes in FX spot rates of forecasted transactions related to long-term contracts. We exclude from our assessment of effectiveness the portion of the fair value of the FX forward contracts attributable to the difference between FX spot rates and FX forward rates. At September 30, 2017 and 2016, we had deferred approximately $2.5 million and $3.4 million, respectively, of net gains on these derivative financial instruments in accumulated other comprehensive income ("AOCI").

At September 30, 2017, our derivative financial instruments consisted solely of FX forward contracts. The notional value of our FX forward contracts totaled $121.2 million at September 30, 2017 with maturities extending to November 2019. These instruments consist primarily of contracts to purchase or sell euros and British pounds sterling. We are exposed to credit-related losses in the event of nonperformance by counterparties to derivative financial instruments. We attempt to mitigate this risk by using major financial institutions with high credit ratings. The counterparties to all of our FX forward contracts are financial institutions party to our United States revolving credit facility. Our hedge counterparties have the benefit of the same collateral arrangements and covenants as described under our United States revolving credit facility. During the third quarter of 2017, our hedge counterparties removed the lines of credit supporting new FX forward contracts. Subsequently, we have not entered into any new FX forward contracts.

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The following tables summarize our derivative financial instruments:
 Asset and Liability Derivative
(in thousands)September 30, 2017December 31, 2016
Derivatives designated as hedges:  
Foreign exchange contracts:  
Location of FX forward contracts designated as hedges:  
Accounts receivable-other$1,694
$3,805
Other assets750
665
Accounts payable542
1,012
Other liabilities183
213
   
Derivatives not designated as hedges:  
Foreign exchange contracts:  
Location of FX forward contracts not designated as hedges:  
Accounts receivable-other$1,238
$105
Accounts payable2,594
403
Other liabilities8
7

The effects of derivatives on our financial statements are outlined below:
 Three months ended September 30, Nine months ended September 30,
(in thousands)20172016 20172016
Derivatives designated as hedges:     
Cash flow hedges     
Foreign exchange contracts     
Amount of gain (loss) recognized in other comprehensive income$398
$1,419
 $2,642
5,476
Effective portion of gain (loss) reclassified from AOCI into earnings by location:     
Revenues2,092
1,940
 8,094
4,524
Cost of operations159
24
 113
57
Other-net(7,930)(445) (7,438)(1,065)
Portion of gain (loss) recognized in income that is excluded from effectiveness testing by location:     
Other-net(7,005)1,607
 (10,524)3.408
      
Derivatives not designated as hedges:     
Forward contracts     
Loss recognized in income by location:     
Other-net$(1,364)$(154) $(1,709)$(567)

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NOTE 21 – FAIR VALUE MEASUREMENTS


The following tables summarize our financial assets and liabilities carried at fair value, all of which were valued from readily available prices or using inputs based upon quoted prices for similar instruments in active markets (known as "Level 1" and "Level 2" inputs, respectively, in the fair value hierarchy established by the FASB Topic, Fair Value Measurements and Disclosures).
(in thousands)
Available-for-sale securitiesMarch 31, 2021Level 1Level 2
Corporate notes and bonds$7,804 $7,804 $0 
Mutual funds645 0 645 
United States Government and agency securities4,757 4,757 0 
Total fair value of available-for-sale securities$13,206 $12,561 $645 
(in thousands)     
Available-for-sale securitiesSeptember 30, 2017 Level 1Level 2Level 3
Commercial paper$5,394
 $—
$5,394
$—
Mutual funds1,286
 —
1,286
—
U.S. Government and agency securities7,243
 7,243
—
—
Total fair value of available-for-sale securities$13,923
 $7,243
$6,680
$—


(in thousands)
Available-for-sale securitiesDecember 31, 2020Level 1Level 2
Corporate notes and bonds$6,139 $6,139 $0 
Mutual funds636 0 636 
Corporate Stocks4,168 4,168 0 
United States Government and agency securities4,365 4,365 0 
Total fair value of available-for-sale securities$15,308 $14,672 $636 

(in thousands)     
Available-for-sale securitiesDecember 31, 2016 Level 1Level 2Level 3
Commercial paper$6,734
 $—
$6,734
$—
Certificates of deposit2,251
 —
2,251
—
Mutual funds1,152
 —
1,152
—
Corporate bonds750
 750
—
—
U.S. Government and agency securities7,104
 7,104
—
—
Total fair value of available-for-sale securities$17,991
 $7,854
$10,137
$—
Available-For-Sale Securities


DerivativesSeptember 30, 2017 December 31, 2016
Forward contracts to purchase/sell foreign currencies$355  $2,940 

Available-for-sale securities

We estimate the fair value of available-for-sale securities based on quoted market prices. Our investments in available-for-sale securities are presented in "other assets"other assets on our condensed consolidated balance sheets.Condensed Consolidated Balance Sheets with contractual maturities ranging from 0-5 years.


DerivativesSenior Notes


Derivative assets and liabilities currently consistOn February 12, 2021, we completed a Senior Notes offering, as described in Note 13, of FX forward contracts. Where applicable, the$160 million aggregate principal amount of 8.125% Senior Notes due 2026. The fair value of these derivative assets and liabilitiesthe Senior Notes is computed by discounting the projected future cash flow amounts to present value using market-based observable inputs, including FX forward and spot rates, interest rates and counterparty performance risk adjustments.based on readily available quoted market prices as of March 31, 2021.

(in thousands)March 31, 2021
Senior NotesCarrying ValueEstimated Fair Value
8.125% Senior Notes due 2026 ('BWSN')$160,000 $169,536 
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Other financial instrumentsFinancial Instruments


We used the following methods and assumptions in estimating our fair value disclosures for our other financial instruments:

•Cash and cash equivalents and restricted cash and cash equivalents. The carrying amounts that we have reported in the accompanying condensed consolidated balance sheetsCondensed Consolidated Balance Sheets for cash and cash equivalents and restricted cash and cash equivalents approximate their fair values due to their highly liquid nature.
•Last Out Term Loans and Revolving debtDebt. We base the fair values of debt instruments on quoted market prices. Where quoted prices are not available, we base the fair values on Level 2 inputs such as the present value of future cash flows discounted at estimated borrowing rates for similar debt instruments or on estimated prices based on current yields for debt issues of similar quality and terms. The fair value of our debt instrumentsLast Out Term Loans approximated their carrying value at September 30, 2017March 31, 2021 and December 31, 2016.


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Non-recurring2020. The fair value measurementsof our Revolving Debt approximated their carrying value at December 31, 2020.

The purchase price allocation associated with the January 11, 2017 acquisition of Universal required significant fair value measurements using unobservable inputs. •Warrants. The fair value of the acquired intangible assetswarrants was determinedestablished using the income approach (see Note 4).Black-Scholes option pricing model value approach.

The other-than-temporary impairment
NOTE 22– RELATED PARTY TRANSACTIONS

Transactions with B. Riley

Based on its Schedule 13D filings, B. Riley beneficially owns 33.2% of our equity method investmentoutstanding common stock as of March 31, 2021.

B. Riley is party to the Last Out Term Loans as described in TBWES (see Note 11) required significant15.

We entered into an agreement with BRPI Executive Consulting, LLC, an affiliate of B. Riley, on November 19, 2018 and amended the agreement on November 9, 2020 to retain the services of Mr. Kenny Young, to serve as our Chief Executive Officer until December 31, 2023, unless terminated by either party with thirty days written notice. Under this agreement, payments are $0.75 million per annum, paid monthly. Subject to the achievement of certain performance objectives as determined by the Compensation Committee of the Board, a bonus or bonuses may also be earned and payable to BRPI Executive Consulting, LLC.

Total fees associated with B. Riley related to the Last Out Term Loans and services of Mr. Kenny Young, both as described above, were $0.2 million and $4.2 million for the three months ended March 31, 2021 and 2020, respectively.

On November 13, 2020 we entered into an agreement with B. Riley Principal Merger Corp. II, an affiliate of B. Riley, to purchase 200,000 shares of Class A common stock of Eos Energy Storage LLC for an aggregate purchase price of $2.0 million. The shares were sold in January 2021 for which the Company recognized net proceeds of $4.5 million.

The public offering of our Senior Notes in February 2021, as described in Note 13, was conducted pursuant to an underwriting agreement dated February 10, 2021, between us and B. Riley Securities, Inc., as representative of several underwriters. At the closing date on February 12, 2021, we paid B. Riley Securities, Inc. $5.2 million for underwriting fees and other transaction cost related to the Senior Notes offering.

The public offering of our common stock, as described in Note 14, was conducted pursuant to the Underwriting Agreement dated February 9, 2021, between us and B. Riley Securities, Inc., as representative of the several underwriters. Also on February 12, 2021, we paid B. Riley Securities, Inc. $9.5 million for underwriting fees and other transaction costs related to the offering.

On February 12, 2021, the Company and B. Riley entered into the Exchange Agreement pursuant to which we agreed to issue to B. Riley $35.0 million aggregate principal amount of Senior Notes in exchange for a deemed prepayment of $35.0 million of our existing Tranche A term loan with B. Riley Financial in the Exchange, as described in Note 13.

On March 31, 2021, we entered into a sales agreement with B. Riley Securities, Inc., a related party, in which we may sell, from time to time, up to an aggregated principal amount of $150.0 million of 8.125% senior notes due 2026 to or through B. Riley Securities, Inc., as described in Note 13.

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Refer to Note 25 for additional related party transactions with B. Riley and its affiliates regarding the subsequent events in conjunction with the public offering of the 7.75% Series A Cumulative Perpetual Preferred Stock between the Company and B. Riley Securities, Inc., as representative of the several underwriters.

Transactions with Vintage Capital Management, LLC

On March 26, 2021, Vintage and B. Riley completed a transaction pursuant to which B. Riley agreed to purchase from Vintage, and Vintage agreed to sell to B. Riley, all 10,720,785 shares of our common stock owned by Vintage.

Based on its Schedule 13D filings, Vintage beneficially owns 0% of our outstanding common stock as of March 31, 2021.

NOTE 23 – ASSETS HELD FOR SALE, DIVESTITURES AND DISCONTINUED OPERATIONS

Assets Held for Sale

Certain fixed assets for the Copley, Ohio location were sold on March 15, 2021 for $4.0 million. We received $3.3 million of net proceeds after adjustments and recognized a gain on sale of $1.9 million. In conjunction with the sale, we executed a leaseback agreement commencing March 16, 2021 and expiring on March 31, 2033.

In December 2019, we determined that a small business within the B&W Thermal segment met the criteria to be classified as held for sale. At December 31, 2020, the carrying value of the net assets planned to be sold approximated the estimated fair value measurements using unobservable inputs ("Level 3" inputsless costs to sell. Refer to Divestitures below as defined inthis sale closed March 5, 2021.

The following table summarizes the fair value hierarchy established by FASB Topic Fair Value Measurements and Disclosures). We determined the impairment charge by first determining an estimate of the price that could be received to sell the assets and transfer the liabilities held by TBWES in an orderly transaction between market participants at June 30, 2017. The fair value of TBWES's net assets was determined through a combination of the cost approach, a market approach and an income approach.

Our interim goodwill impairment test and third quarter impairment charge required significant fair value measurements using unobservable inputs (see Note 13). The fair value of each reporting unit determined under Step 1 of the goodwill impairment test was based on an income approach using a discounted cash flow analysis, a market approach using multiples of revenue and EBITDA of guideline companies, and a market approach using multiples of revenue and EBITDA from recent, similar business combinations. The faircarrying value of the assets and liabilities held for sale at March 31, 2021 and December 31, 2020:
(in thousands)March 31, 2021December 31, 2020
Accounts receivable – trade, net$0 $2,103 
Accounts receivable – other0 86 
Contracts in progress0 458 
Inventories0 1,676 
Other current assets0 405 
     Current assets held for sale0 4,728 
Net property, plant and equipment1,870 10,365 
Intangible assets0 759 
Right-of-use-asset0 32 
     Non-current assets held for sale1,870 11,156 
Total assets held for sale$1,870 $15,884 
Accounts payable$0 $5,211 
Accrued employee benefits0 178 
Advance billings on contracts0 370 
Accrued warranty expense0 466 
Operating lease liabilities0 32 
Other accrued liabilities0 2,048 
     Current liabilities held for sale0 8,305 
Total liabilities held for sale$0 $8,305 

29

Divestitures

Effective March 5, 2021, we sold all of the issued and outstanding capital stock of Diamond Power Machine (Hubei) Co., Inc, to BPE Clyde Pte Ltd. for $2.8 million. We received $2.0 million in gross proceeds before expenses and recorded an $0.8 million favorable contract asset for the Renewable and SPIG reporting units determined under Step 2amortization period from March 8, 2021 through December 31, 2023. We recognized a $0.4 million pre-tax gain, inclusive of the goodwill impairment test were basedrecognition of $4.5 million of CTA, on either an income or market approach.

The measurementthe sale of the net actuarial loss associated with our Canadian pension plan was determined using unobservable inputs (see Note 16). These inputs includedbusiness in the estimated discount rate, expected return on plan assets and other actuarial inputsthree months ended March 31, 2021.

On March 17, 2020, we fully settled the remaining escrow associated with the plan participants.sale of PBRRC and received $4.5 million in cash.


The determinationDiscontinued Operations

On April 6, 2020, we fully settled the remaining escrow associated with the sale of the estimated fair value of the related party share repurchase required significant fair value measurements using unobservable inputs (see Note 18). We utilized a discounted cash flow modelMEGTEC and estimates of our weighted average cost of capital on the transaction date to derive the estimated fair value of the share repurchase.Universal businesses and received $3.5 million in cash.


NOTE 22 – SUPPLEMENTAL CASH FLOW INFORMATION

During the nine months ended September 30, 2017 and 2016, we recognized the following non-cash activity in our condensed consolidated financial statements:
(in thousands)20172016
Accrued capital expenditures in accounts payable$1,118
$2,543

During the nine months ended September 30, 2017 and 2016, we recognized the following cash activity in our condensed consolidated financial statements:
(in thousands)20172016
Income tax payments (refunds), net$(11,190)$11,289
Interest payments on our United States revolving credit facility$2,876
$40
Interest payments on our second lien term loan facility$2,492
$—

NOTE 2324 – NEW ACCOUNTING STANDARDS


We adopted the following accounting standard during the first quarter of 2021:

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendments in this update simplify the accounting for income taxes by removing exceptions related to the incremental approach for intra-period tax allocation, certain deferred tax liabilities, and the general methodology for calculating income taxes in an interim period. The amendment also provides simplification related to accounting for franchise (or similar) tax, evaluating the tax basis step up of goodwill, allocation of consolidated current and deferred tax expense, reflection of the impact of enacted tax law or rate changes in annual effective tax rate calculations in the interim period that includes enactment date, and other minor codification improvements. The impact of this standard on our condensed consolidated financial statements was immaterial.

New accounting standards not yet adopted that could affect our consolidated financial statementsCondensed Consolidated Financial Statements in the future are summarized as follows:


In May 2014,March 2021, the FASB issued ASU 2014-09, Revenue from Contracts with Customers. 2021-01, Reference Rate Reform (Topic 848): Scope. The newamendments in this update clarify that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting standardapply to derivatives that are affected by the discounting transition. This update is an amendment to ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform of Financial Reporting, which was issued in March 2020 and provides a comprehensive modeloptional expedients and exceptions for applying generally accepted accounting principles to usecontracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in accountingthe updates apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The expedients and exceptions provided by the updates do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for revenue from contracts with customers and will replace mosthedging relationships existing revenue recognition guidance when it becomes effective. In 2016, the FASB issued accounting standards updates to address implementation issues and to clarify the guidance for identifying performance obligations, licenses; determining ifas of December 31, 2022, that an entity ishas elected certain optional expedients for and that are retained through the principal or agentend of the hedging relationship. The amendments in a revenue arrangement; and technical corrections and improvements on topics including: contract costs, loss provisions on construction and production contracts and disclosures for remaining and prior-period performance obligations. The new accounting standard also requires more detailed disclosures to enable financial statement users to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with

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customers. The new accounting standard isboth updates are effective for interim and annual reporting periods beginning after December 15, 2017, and permits retrospectively applying the guidance to each prior reporting period presented (full retrospective method) or prospectively applying the guidance and providing additional disclosures comparing results to previous guidance, with the cumulative effect of initially applying the guidance recognized in beginning retained earnings at the date of initial application (modified retrospective method). We have developed a cross-functional team of B&W professionals from across each of our reportable segments and an implementation plan to adopt the new accounting standard. To date, we have analyzed our primary revenue streams and performed a detailed review of a sample of key contracts representative of our products and services in order to assess potential changes in our processes, systems, internal controls and the timing and method of revenue recognition and related disclosures. Based on our preliminary assessment, we do not expect the timing of revenue recognition to change significantlyall entities upon adoption of the new accounting standard; however, we are still assessing the impact to process, systems, internal controls and disclosures. We plan to adopt the new accounting standard on January 1, 2018 under the modified retrospective method. The FASB has issued,issuance and may issue in the future, interpretative guidance, which may cause our evaluationbe adopted any date on or after March 12, 2020 up to change. Our evaluation will include the existing, uncompleted contracts at that time the new accounting standard is adopted, and as a result, we will not be able to make a final determination aboutDecember 31, 2022. We are currently evaluating the impact of adopting the new accounting standard until the first quarter of 2018.

In January 2016, the FASB issued ASU 2016-1, Financial Instruments-Overall: Recognition and Measurement of Financial Assets and Financial Liabilities. The new accounting standard is effective for us beginning in 2018, but early adoption is permitted. The new accounting standard requires investments such as available-for-sale securities to be measured at fair value through earnings each reporting period as opposed to changes in fair value being reported in other comprehensive income. We do not expect the new accounting standard to have a significant impact on our financial results when adopted.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). With adoption of this standard, lessees will have to recognize almost all leases as a right-of-use asset and a lease liability on their balance sheet. For income statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating or finance. Classification will be based on criteria that are similar to those applied in current lease accounting, but without explicit bright lines. The new accounting standard is effective for us beginning in 2019. We do not expect the new accounting standard to have a significant impact on our financial results when adopted.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The new guidance is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. Of the eight classification-related changes this new standard will require in the statement of cash flows, only two of the classification requirements are relevant to our historical cash flow statement presentation (presentation of debt prepayments and presentation of distributions from equity method investees). However, the new classification requirements would not have changed our historical statement of cash flows. The new standard is effective for us beginning in 2018. We do not plan to early adopt the new accounting standard because the impact is not expected to be material to our consolidated statement of cash flows when adopted.

In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. The new guidance clarifies the definition of a business in an effort to make the guidance more consistent. The guidance provides a test for determining when a group of assets and business activities is not a business, specifically, when substantially all of the fair value of the gross assets acquired or disposed of are concentrated in a single identifiable asset or group of assets, and if inputs and substantive processes that significantly contribute to the ability to create outputs is not present. The new accounting standard is effective for us beginning in 2018. We do not expect the new accounting standard to have a significant impact on our financial results when adopted.

In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The new guidance removes the requirement to compare implied fair value of goodwill with the carrying amount, therefore impairment charges would be recognized immediately by the amount which carrying value exceeds fair value. The new accounting standard is effective beginning in 2020. We are currently assessing the impact that adopting this new accounting standard will have on our financial statements.

In March 2017, the FASB issued ASU 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Benefit Cost and Net Periodic Postretirement Benefit Cost. The new guidance classifies service cost as the only component of net periodic benefit cost presented in cost of operations, whereas the other components will be presented in other income. This will affect not only how we present net periodic benefit cost, but also how we present segment gross profit and operating income upon adoption. The new accounting standard is effective for us beginning in 2018. We have

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assessed the impact of adopting the new standard on our consolidated statement of operations and determined the required reclassifications will primarily impact our Power segment's gross profit. The changes in the classification of the historical components of net periodic benefit costs are summarized in the following table:
Pension & other postretirement benefit costs (benefits)
(in thousands)
December 31,
2016
December 31,
2015
Current
classification		Future
classification
Service cost$1,703
$13,701
Cost of operationsCost of operations
Interest cost41,772
50,644
Cost of operationsOther income (expense)
Expected return on plan assets(61,939)(68,709)Cost of operationsOther income (expense)
Amortization of prior service cost250
307
Cost of operationsOther income (expense)
Recognized net actuarial losses -
mark to market adjustments		24,110
40,210
Cost of operations or SG&A expensesOther income (expense)
Net periodic benefit cost (benefit)$5,896
$36,153
  

New accounting standards that were adopted during the nine months ended September 30, 2017 are summarized as follows:

In the nine months ended September 30, 2017, the Company adopted ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-based Payment Accounting. This new accounting standard has affected how we account for share-based payments, with the most significant impact being the impact of income taxes associated with share-based compensation. Subsequent to adoption, the income tax effects related to share-based payments will be recorded as a component of income tax expense (or benefit) as they occur, rather than being classified as a component of additional paid-in capital. In addition, the effect of excess tax benefits will now be presented in the cash flow statement as an operating activity. We prospectively adopted the new accounting standard. See Note 7 for the effect on the statement of operations for the three and nine months ended September 30, 2017.

In the nine months ended September 30, 2017, the Company adopted ASU 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory. This new accounting standard requires that first-in, first-out inventory be measured at the lower of cost or net realizable value. Under GAAP prior to the adoption of this new accounting standard, inventory was measured at the lower of cost or market, where market was defined as replacement cost, with a ceiling of net realizable value and a floor of net realizable value minus a normal profit margin. Although this new accounting standard raises the threshold on when charges against inventory can occur, we do not expect a significant impact because we have not had significant inventory charges in the past. We prospectively adopted the new accounting standard and it had no impact on our condensed consolidated financial statementsstatements.

In August 2020, the FASB issued ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815 – 40). The amendments in this update simplify the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity by removing major separation models required under current U.S. GAAP. The amendments also improve the three or nine months ended September 30, 2017.consistency of diluted earnings per share calculations. The amendments in this update are effective for public business entities that meet the definition of an SEC filer, excluding entities eligible to be smaller reporting companies as defined by the SEC, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. We are currently evaluating the impact of the standard on our condensed consolidated financial statements.
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In November 2018, the FASB issued ASU 2018-19, Codification Improvements to Topic 326: Financial Instruments - Credit Losses. This update is an amendment to the new credit losses standard, ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, that was issued in June 2016 and clarifies that operating lease receivables are not within the scope of Topic 326. The new credit losses standard changes the accounting for credit losses for certain instruments. The new measurement approach is based on expected losses, commonly referred to as the current expected credit loss (CECL) model, and applies to financial assets measured at amortized cost, including loans, held-to-maturity debt securities, net investment in leases, and reinsurance and trade receivables, as well as certain off-balance sheet credit exposures, such as loan commitments. The standard also changes the impairment model for available-for-sale debt securities. The provisions of this standard will primarily impact the allowance for doubtful accounts on our trade receivables, contracts in progress, and potentially our impairment model for available-for-sale debt securities (to the extent we have any upon adoption). For public, smaller reporting companies, this standard is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. We are currently evaluating the impact of both standards on our condensed consolidated financial statements.

NOTE 2425 – SUBSEQUENT EVENTEVENTS


In the third quarter of 2017 and through the date of this report,2021 Preferred Stock Offerings

On May 7, 2021, we have announced plans to implement restructuring actions to improve our global cost structure and increase our financial flexibility. The restructuring actions includecompleted a workforce reduction at both the business segment and corporate levels totaling approximately 9%public offering of our global workforce, SG&A expense reductions7.75% Series A Cumulative Perpetual Preferred Stock (the "Preferred Stock") pursuant to an underwriting agreement (the “Underwriting Agreement”) dated May 4, 2021, between us and new cost control measures,B. Riley Securities, Inc., as representative of the several underwriters (the “Underwriters”). At the closing, we issued to the public 4,000,000 shares of our Preferred Stock, at an offering price of $25.00 per share for gross proceeds of approximately $100.0 million before deducting underwriting discounts, commissions and office closuresestimated offering expenses. We have granted the underwriters a 30-day option to purchase up to an additional 600,000 shares of the Preferred Stock in connection with the offering. Net proceeds from the offering were approximately $95.7 million after deducting underwriting discounts, commissions but before expenses. The Preferred Stock has a par value of $0.01 per share and consolidationsis perpetual and has no maturity date. The Preferred Stock has a cumulative cash dividend, when and as if declared by our Board of Directors, at a rate of 7.75% per year on the liquidation preference amount of $25.00 per share and payable quarterly in non-core geographies. These actions includearrears.

The Preferred Stock will, as to dividend rights and rights as to the distribution of assets upon our liquidation, dissolution or winding-up, rank: (1) senior to all classes or series of our common stock and to all other capital stock issued by us expressly designated as ranking junior to the Preferred Stock; (2) on parity with any future class or series of our capital stock expressly designated as ranking on parity with the Preferred Stock; (3) junior to any future class or series of our capital stock expressly designated as ranking senior to the Preferred Stock; and (4) junior to all our existing and future indebtedness.

The Preferred Stock has no stated maturity and is not subject to mandatory redemption or any sinking fund. We will pay cumulative cash dividends on the Preferred Stock when, as and if declared by our Board of Directors (or a duly authorized committee of our Board of Directors), only out of funds legally available for payment of dividends. Dividends on the Preferred Stock will accrue on the stated amount of $25.00 per share of the Preferred Stock at a rate per annum equal to 7.75% (equivalent to $1.9375 per year), payable quarterly in arrears. Dividends on the Series A Preferred Stock declared by our board of directors (or a duly authorized committee of our board of directors) will be payable quarterly in arrears on March 31, June 30, September 30 and December 31, beginning on June 30, 2021.

The net proceeds of the offering are intended to be used for general corporate purposes, including clean energy growth initiatives, potential future acquisitions and reduction of approximately 30% of B&W Vølund's workforce, which will right-size its workforce to operate under a new execution model focused on B&W's core boiler, grate and environmental equipment technologies, with the balance of plant and civil construction scope being executed by a partner. We believe the new B&W Vølund business model provides the Company with a lower risk profile and aligns with B&W's strategy of being an industrial and power equipment technology and solutions provider. Other actions are focused on productivity and efficiency gains to enhance profitability and cash flows, and to mitigate the impact of lower demand in the global coal-fired power market. Total estimated costs associated with these restructuring actions are anticipated to be approximately $20 million, most of which will be recognized in the fourth quarter of 2017, and the estimated annual savings arenet leverage.

The Preferred Stock is expected to be approximately $45 millionbegin trading on the NYSE under the symbol “BW PRA” within 30 business days of the closing date.

Revolving Debt - A&R Credit Agreement

On May 10, 2021, we entered into Amendment No. 5 to Amended and Restated Credit Agreement with Bank of America, N.A., in 2018.


its capacity as administrative agent (“A&R Amendment No. 5”). A&R Amendment No. 5 amends the terms of our A&R Credit Agreement to, among other matters, (i) permit the payment of dividends on the Preferred Stock and (ii) permit certain future issuances of Preferred Stock to B. Riley, a related party, in exchange for deemed prepayments of amounts outstanding under our A&R Credit Agreement.
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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations


FORWARD-LOOKING STATEMENTS***** Cautionary Statement Concerning Forward-Looking Information *****


This quarterly report, including Management's Discussion and Analysis of Financial Condition and Results of Operations, contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. You should not place undue reliance on these statements. These forward-looking statements include statements that reflect the current views of our senior management with respect to our financial performance and future events with respect to our business and industry in general. Statements that include the words "expect," "intend," "plan," "believe," "project," "forecast," "estimate," "may," "should," "anticipate" and similar statements of a future or forward-looking nature identify forward-looking statements. Forward-looking

These forward-looking statements address matters thatare based on management’s current expectations and involve a number of risks and uncertainties. Accordingly, thereuncertainties, including, among other things, the impact of COVID-19 on us and the capital markets and global economic climate generally; our recognition of any asset impairments as a result of any decline in the value of our assets or our efforts to dispose of any assets in the future; our ability to obtain and maintain sufficient financing to provide liquidity to meet our business objectives, surety bonds, letters of credit and similar financing; our ability to comply with the requirements of, and to service the indebtedness under, our A&R Credit Agreement; the highly competitive nature of our businesses and our ability to win work, including identified project opportunities in our pipeline; general economic and business conditions, including changes in interest rates and currency exchange rates; cancellations of and adjustments to backlog and the resulting impact from using backlog as an indicator of future earnings; our ability to perform contracts on time and on budget, in accordance with the schedules and terms established by the applicable contracts with customers; failure by third-party subcontractors, partners or suppliers to perform their obligations on time and as specified; our ability to successfully resolve claims by vendors for goods and services provided and claims by customers for items under warranty; our ability to realize anticipated savings and operational benefits from our restructuring plans, and other cost-savings initiatives; our ability to successfully address productivity and schedule issues in our B&W Renewable, B&W Environmental and B&W Thermal segments, including the ability to complete our B&W Renewable's European EPC projects and B&W Environmental's U.S. loss projects within the expected time frame and the estimated costs; our ability to successfully partner with third parties to win and execute contracts within our B&W Environmental, B&W Renewable and B&W Thermal segments; changes in our effective tax rate and tax positions, including any limitation on our ability to use our net operating loss carryforwards and other tax assets; our ability to successfully manage research and development projects and costs, including our efforts to successfully develop and commercialize new technologies and products; the operating risks normally incident to our lines of business, including professional liability, product liability, warranty and other claims against us; difficulties we may encounter in obtaining regulatory or other necessary permits or approvals; changes in actuarial assumptions and market fluctuations that affect our net pension liabilities and income; our ability to successfully compete with current and future competitors; our ability to negotiate and maintain good relationships with labor unions; changes in pension and medical expenses associated with our retirement benefit programs; social, political, competitive and economic situations in foreign countries where we do business or seek new business; and the other factors specified and set forth under "Risk Factors" in our periodic reports filed with the Securities and Exchange Commission, including our most recent annual report on Form 10-K.

These forward-looking statements are made based upon detailed assumptions and reflect management’s current expectations and beliefs. While we believe that these assumptions underlying the forward-looking statements are reasonable, we caution that it is very difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could affect actual results.

The forward-looking statements included herein are made only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events, or otherwise, except as required by law.

OVERVIEW OF RESULTS

B&W is a growing, globally-focused renewable, environmental and thermal technologies provider with decades of experience providing diversified energy and emissions control solutions to a broad range of industrial, electrical utility, municipal and other customers. B&W’s innovative products and services are organized into three market-facing segments:

•Babcock & Wilcox Renewable: Cost-effective technologies for efficient and environmentally sustainable power and heat generation, including waste-to-energy, biomass energy and black liquor systems for the pulp and paper
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industry. B&W’s leading technologies support a circular economy, diverting waste from landfills to use for power generation and replacing fossil fuels, while recovering metals and reducing emissions.
•Babcock & Wilcox Environmental: A full suite of best-in-class emissions control and environmental technology solutions for utility, waste to energy, biomass, carbon black, and industrial steam generation applications around the world. B&W’s broad experience includes systems for cooling, ash handling, particulate control, nitrogen oxides and sulfur dioxides removal, chemical looping for carbon control, and mercury control.
•Babcock & Wilcox Thermal: Steam generation equipment, aftermarket parts, construction, maintenance and field services for plants in the power generation, oil and gas, and industrial sectors. B&W has an extensive global base of installed equipment for utilities and general industrial applications including refining, petrochemical, food processing, metals and others.

Our business depends significantly on the capital, operations and maintenance expenditures of global electric power generating companies, including renewable and thermal powered heat generation industries and industrial facilities with environmental compliance policy requirements. Several factors may influence these expenditures, including:

•climate change initiatives promoting environmental policies which include renewable energy options utilizing waste-to-energy or biomass to meet legislative requirements and clean energy portfolio standards in the United States, European, Middle East and Asian markets;
•requirements for environmental improvements in various global markets;
•expectation of future governmental requirements to further limit or reduce greenhouse gas and other emissions in the United States, Europe and other international climate change sensitive countries;
•prices for electricity, along with the cost of production and distribution including the cost of fuels within the United States, Europe, Middle East and Asian based countries;
•demand for electricity and other end products of steam-generating facilities;
•level of capacity utilization at operating power plants and other industrial uses of steam production;
•requirements for maintenance and upkeep at operating power plants to combat the accumulated effects of usage;
•overall strength of the industrial industry; and
•ability of electric power generating companies and other steam users to raise capital.

Customer demand is heavily affected by the variations in our customers' business cycles and by the overall economies and energy, environmental and noise abatement needs of the countries in which they operate.

We recorded operating loss of $6.5 million in the first quarter of 2021 as compared to operating loss of $10.3 million in the first quarter of 2020 and we showed improved results in all three segments as described below.

Adjusted EBITDA in the B&W Renewable segment was $0.2 million and $(1.4) million in the first quarter of 2021 and 2020, respectively. The increase was primarily due to favorable product mix in our parts business and the benefits of cost savings and restructuring initiatives being partially offset by lower revenue in the current quarter.

The B&W Environmental segment generated adjusted EBITDA of $1.1 million and $0.3 million in the first quarter of 2021 and 2020, respectively. The increase is primarily attributable to higher volume in the current quarter and the benefits of cost savings and restructuring initiatives being partially offset by unfavorable mix in our parts business.

Our B&W Thermal segment generated adjusted EBITDA of $10.4 million and $7.6 million in the first quarter of 2021 and 2020, respectively. This increase is primarily attributable to a higher level of activity on construction projects, favorable project execution and the benefits of cost savings and restructuring initiatives.

We have manufacturing facilities in Mexico, the United States, Denmark, Scotland and China. Many aspects of our operations and properties could be affected by political developments, environmental regulations and operating risks. These and other factors may have a material impact on our international and domestic operations or our business as a whole.

Through our restructuring efforts, we continue to make significant progress to make our cost structure more variable and to reduce costs. We expect our cost-savings measures to continue to translate to bottom-line results, with top-line growth driven by opportunities for our core technologies and support services across the B&W Renewable, B&W Environmental, and B&W Thermal segments globally.

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We have identified additional initiatives that are underway as of the date of this filing that are expected to further reduce costs, and we expect to continue to explore other cost saving initiatives to improve cash generation and evaluate additional non-core asset sales to continue to strengthen our liquidity. There are or will be important factors that could cause our actual results to differ materially from those indicated in these statements. These factors include the cautionary statements included in this report and the factors set forth under "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2016 ("Annual Report") filed with the Securities and Exchange Commission. If one or more events related to these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may differ materially from what we anticipate. We assume no obligation

Year-over-year comparisons of our results from continuing operations were also impacted by:

•$1.0 million and $2.0 million of restructuring costs were recognized in the first quarter of 2021 and 2020, respectively. The restructuring costs primarily related to revise or update any forward-looking statementseverance.
•$0.9 million and $0.9 million of financial advisory service fees were recorded in the first quarter of 2021 and 2020, respectively. These services are required under our U.S. Revolving Credit Facility. Financial advisory service fees are included in this report for any reason, except as required by law.advisory fees and settlement costs in the Condensed Consolidated Statement of Operations.
•$2.0 million and $2.6 million of legal and other advisory fees were recognized in the first quarter of 2021 and 2020, respectively. These fees are related to the contract settlement and liquidity planning and are included in advisory fees and settlement costs in the Condensed Consolidated Statement of Operations.

OVERVIEW OF RESULTS


In this report, unlessaddition to the context otherwise indicates, "B&W," "we," "us," "our"discussions described above, we continue to evaluate further dispositions, opportunities for additional cost savings and "the Company" mean Babcock & Wilcox Enterprises, Inc.opportunities for insurance recoveries and its consolidated subsidiaries. other claims where appropriate and available. If the value of our business was to decline, or if we were to determine that we were unable to recognize an amount in connection with any proposed disposition in excess of the carrying value of any disposed asset, we may be required to recognize impairments for one or more of our assets that may adversely impact our business, financial condition and results of operations.

RESULTS OF OPERATIONS

Condensed Consolidated Results of Operations

The presentation of the components of our revenues, gross profit and operating income onadjusted EBITDA in the following pages of this Management's Discussion and Analysis of Financial Condition and Results of Operationstable below is consistent with the way our chief operating decision maker reviews the results of our operations and makes strategic decisions about theour business.

We generally recognize revenues and related Items such as gains or losses on asset sales, MTM pension adjustments, restructuring costs, from long-term contractsimpairments, losses on a percentage-of-completion basis. Accordingly, we review contract price and cost estimates regularly as work progresses and reflect adjustments in profit proportionate to the percentage of completion in the periods in which we revise estimates to complete the contract. To the extent that these adjustments result in a reduction of previously reported profits from a project, we recognize a charge against current earnings. Changes in the estimated results of our percentage of completion contracts are necessarily based on information available at the time that the estimates are made and are based on judgments that are inherently uncertain as they are predictive in nature. As with all estimates to complete used to measure contract revenue and costs, actual results can and do differ from our estimates made over time.

Our Renewable segment continued to make progress towards completing its portfolio of European renewable energy projects in the third quarter of 2017, represented by a $60.4 million increase in revenue compared to the second quarter of 2017. Our near break-even gross profit in the Renewable segment in the third quarter of 2017 is a result of recognizing gross profit on our loss contracts only to the extent there are current changes in estimated losses at completion. In September 2017, we identified the failure of a structural steel beam on one of these projects, which temporarily stopped work in the boiler building pending corrective actions to stabilize the structure that are expected to be complete in the fourth quarter of 2017. The engineering, design and manufacturing of the steel structure were the responsibility of subcontractors. A similar design was also used on two of the other projects, and although no structural failure occurred on these other two projects, work was stopped for a short period of time while reinforcement of the structures is completed. Thedebt extinguishment, costs related to these structural steel issues is estimatedfinancial consulting required under our U.S. Revolving Credit Facility, research and development costs and other costs that may not be directly controllable by segment management are not allocated to be approximately $20 million, primarilythe segments.

Three months ended March 31,
(in thousands)20212020$ Change
Revenues:
B&W Renewable segment$28,811 $35,999 $(7,188)
B&W Environmental segment31,160 25,920 5,240 
B&W Thermal segment108,281 86,683 21,598 
Other(4)(48)44 
$168,248 $148,554 $19,694 
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Three months ended March 31,
(in thousands)20212020$ Change
Adjusted EBITDA (1)
B&W Renewable segment$204 $(1,434)$1,638 
B&W Environmental segment1,101 270 831 
B&W Thermal segment10,430 7,606 2,824 
Corporate(2,685)(4,143)1,458 
Research and development costs(588)(1,341)753 
$8,462 $958 $7,504 
(1) Adjusted EBITDA for the three months ended March 31, 2020, excludes losses related to project delays,a non-strategic business and isinterest on letters of credit included as a current charge in the third quartercost of 2017. Alsooperations that were previously included in the third quarter of 2017, we adjusted the design of three of these renewable facilities to increase the guaranteed power output, which will allow us to achieve contractual bonus opportunities for the higher output. The bonus opportunities increased the estimated selling price of the three contracts by approximately $15 million inAdjusted EBITDA and total and this positive change in estimated cost to complete was fully recognized in the third quarter of 2017 because each of these three were loss projects.

Our Power segment continued to deliver gross margins consistent with our expectations in the third quarter of 2017. As previously disclosed, we anticipated a future decline in the coal power generation markets and proactively responded by restructuring our Power segment to help us hold gross margins. Our 2016 restructuring has been effective, and the Power segment's gross margin percentage has not significantly changed despite the 4.5% decline in revenues in the third quarter of 2017 compared to the same quarter in 2016 and the 19.7% decline in revenues in the nine months ended September 30, 2017

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compared to the nine months ended September 30, 2016. The Power segment also continues to benefit from consistent, effective contract execution.

The primary driver of the increase in Industrial segment revenues in the third quarter of 2017 was the $16.0 million contribution from Universal Acoustic & Emissions Technology, Inc. ("Universal"), which was acquired on January 11, 2017. The acquisition benefited the Industrial segment's gross profit in the third quarter of 2017, which helped offset the impact of a change in the product mix and challenges related to completing several cooling systems projects. Our MEGTEC business unit recorded sequential increases in quarterly bookings in 2017, which added to strong 2017 bookings at our SPIG business unit, and we expect continued improvement in the Industrial markets to benefit this segment.

We recorded goodwill impairment charges of $86.9 million in the third quarter of 2017. In the quarter, our market capitalization significantly decreased to below our stockholders' equity, which we attributed to the announcement of our second quarter 2017 results that included significant charges in the Renewable reporting unit. Accordingly, we increased the discount rate applied to future projected cash flows, which resulted in a $50.0 million goodwill impairment charge in our Renewable segment. Additionally in the third quarter of 2017, the forecast was reduced for our SPIG reporting unit based on a change in the market strategy implemented by the new segment management to focus on core geographies and products. The forecast reduction in combination with a short-term decrease in profitability attributable to specific current contracts and an increase in the discount rate applied to future projected cash flows resulted in a $36.9 million impairment charge to the SPIG reporting unit within the Industrial segment.

In the third quarter of 2017 and through the date of this report, we have announced plans to implement restructuring actions to improve our global cost structure and increase our financial flexibility. The restructuring actions include a workforce reduction at both the business segment and corporate levels totaling approximately 9% of our global workforce, selling, general and administrative ("SG&A") expense reductions and new cost control measures, and office closures and consolidations in non-core geographies. These actions include reduction of approximately 30% of B&W Vølund's workforce, which will right-size its workforce to operate under a new execution model focused on B&W's core boiler, grate and environmental equipment technologies, with the balance-of-plant and civil construction scope being executed by a partner. We believe the new B&W Vølund business model provides us with a lower risk profile and aligns with our strategy of being an industrial and power equipment technology and solutions provider. Other actions are focused on productivity and efficiency gains to enhance profitability and cash flows, and to mitigate the impact of lower demand in the global coal-fired power market. Total estimated costs associated with these restructuring actions are anticipated to be less than $20 million, most of which will be recognized in the fourth quarter of 2017, and the estimated annual savings are expected to be at least $45 million in 2018.

We used $19.7 million of cash in the third quarter of 2017. Net borrowings on our United States revolving credit facility were $59.2 million, which included the repayment of $115.5 million of the revolving credit facility balance with net proceeds from the issuance of our second lien term loan on August 9, 2017. Our use of cash was primarily to fund progress on our Renewable segment contracts. We expect our operations to use cash through the fourth quarter of 2017 and first part of 2018, particularly in the Renewable segment, as we fund contract losses and work down advanced bill positions. Our forecasted use of cash is expected to be funded in part through borrowings from our United States revolving credit facility.

Year-over-year comparisons of our results were also affected by:

$4.0$(0.1) million and $8.8$(0.2) million, of intangible amortization expense in the third quarters of 2017respectively.

Three Months Ended March 31, 2021 and 2016, respectively, and $14.52020

Revenues increased by$19.7 million and $11.9to $168.2 million of expense in the nine months ended September 30, 2017 and 2016, respectively. We expect $18.0 million of amortization expense in the full year 2017 compared to $19.9 million of amortization in the full year 2016.
$3.6 million and $7.9 million of restructuring expense was recognized in the third quarter and nine months ended September 30, 2017, respectively, compared to $2.0 million and $34.6 million of restructuring expense in the third quarter and nine months ended September 30, 2016, respectively. The pre-2017 actions restructured our business that serves the power generation market in advance of lower demand projected for power generation from coal in the United States. The 2017 restructuring actions were implemented to help the Power segment continue to manage its fixed costs, align our Renewable segment with the changing business model and achieve SG&A cost savings.
$0.2 million and $1.0 million and of expense related to the spin-off from our former Parent was recognized in the third quarter and nine months ended September 30, 2017, respectively, compared to $0.4 million and $3.4 million in the third quarter and nine months ended September 30, 2016, respectively. The costs were primarily attributable to employee retention awards.

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$3.7 million of interest payable was awarded by the court based on the outcome of our appeal of the November 21, 2016 Arkansas River Power Authority ("ARPA") trial verdict, which was recorded as an increase in interest expense during the nine months ended September 30, 2017.
$0.3 million and $0.8 million of SG&A expenses in the third quarters of 2017 and 2016 associated with acquisition and integration costs related to SPIG and Universal, respectively, and $3.1 million and $1.9 million of acquisition and integration costs in the nine months ended September 30, 2017 and 2016, respectively.
$1.1 million of actuarially determined mark to market losses were recognized in the nine months ended September 30, 2017, which relate to lump sum settlement payments from our Canadian pension plan in the first quarter of 2017.
$0.6 million and $30.5 million of actuarially determined mark2021 as compared to market pension losses in the quarter and nine months ended September 30, 2016, respectively, were triggered by the closure of our West Point, Mississippi manufacturing facility in May 2016 that resulted in a curtailment in our United States pension plan and lump sum payments from our Canadian pension plan in April 2016 that resulted in plan settlements.

Our third quarter and year to date segment and other operating results are described in more detail below.

RESULTS OF OPERATIONS

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2017 VS. 2016

Selected financial highlights are presented in the table below:
 Three months ended September 30, Nine months ended September 30,
(In thousands)20172016$ Change 20172016$ Change
Revenues:       
Power segment$202,222
$211,749
$(9,527) $612,274
$762,293
$(150,019)
Renewable segment108,557
124,344
(15,787) 262,168
293,593
(31,425)
Industrial segment99,288
76,809
22,479
 281,734
147,275
134,459
Eliminations(1,364)(1,947)583
 (6,540)(4,882)(1,658)
 408,703
410,955
(2,252) 1,149,636
1,198,279
(48,643)
Gross profit (loss):       
Power segment40,629
48,896
(8,267) 132,653
170,903
(38,250)
Renewable segment181
18,592
(18,411) (100,119)14,468
(114,587)
Industrial segment9,461
14,601
(5,140) 34,240
33,506
734
Intangible amortization expense included in cost of operations(2,984)(7,752)4,768
 (11,455)(8,833)(2,622)
Mark to market adjustments included in cost of operations—
(580)580
 (954)(30,079)29,125
 47,287
73,757
(26,470) 54,365
179,965
(125,600)
Goodwill impairment charges(86,903)—
(86,903) (86,903)—
(86,903)
SG&A expenses(59,225)(59,615)390
 (192,742)(179,225)(13,517)
Restructuring activities and spin-off transaction costs(3,775)(2,395)(1,380) (8,910)(38,021)29,111
Research and development costs(2,291)(2,361)70
 (7,454)(8,273)819
Intangible amortization expense included in SG&A(1,016)(1,018)2
 (2,999)(3,071)72
Mark to market adjustments included in SG&A—
(64)64
 (106)(465)359
Equity in income of investees1,234
2,827
(1,593) 4,813
4,887
(74)
Impairment of equity method investment—
—
—
 (18,193)—
(18,193)
Gains (losses) on asset disposals, net(59)2
(61) (63)17
(80)
Operating income (loss)$(104,748)$11,133
$(115,881) $(258,192)$(44,186)$(214,006)

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Condensed and consolidated results of operations

Three months ended September 30, 2017 vs. 2016

Revenues decreased by $2.3 million to $408.7$148.6 million in the thirdfirst quarter of 2017 as compared2020 primarily due to $411.0 milliona higher level of construction project activity in the third quartercurrent quarter. Revenues for each of 2016. Anticipated decreases in construction activities associated with new buildour segments have been adversely impacted by COVID-19 including the postponement and retrofit projects in the Powerdelay of several projects. In addition revenue was impacted by segment and a decrease in the revenue recognized in the Renewable segment resulting from ongoing performance challenges on our renewable energy contracts were partially offset by the increase in revenue in the Industrial segment resulting from the acquisition of Universal on January 11, 2017.

In the third quarter of 2017, we had consolidated gross profit of $47.3 million,specific changes which compares to gross profit of $73.8 million in the third quarter of 2016, a decrease of $26.5 million. The primary drivers of the decrease were the six uncompleted European loss contracts in the Renewable segment (see Note 5 in the condensed consolidated financial statements), productivity issues on new build cooling system projects in the Industrial segment and the volume impact of the decline in the Power segment's revenues, which were partially offset by the gross profit contribution from the Universal acquisition. Intangible asset amortization expense isare discussed in further detail in the sections below.


Our goodwill impairment charges,Operating losses improved $3.8 million to $(6.5) million in the first quarter of 2021 compared to $(10.3) million in the first quarter of 2020. The increase is primarily due to the higher construction volume as described above, improved project execution and the benefits of costs savings and restructuring initiatives. Restructuring expenses, advisory fees, amortization expense, gains (losses) on dispositions of equity method investees, and equity in income of investeesimpairments are discussed in further detail in the sections below.


NineNon-GAAP Financial Measures

The following discussion of our business segment results of operations includes a discussion of adjusted gross profit, a non-GAAP financial measure. Adjusted gross profit differs from the most directly comparable measure calculated in accordance with generally accepted accounting principles ("GAAP"). Amortization expense is not allocated to the segments’ adjusted gross profit. A reconciliation of operating income (loss), the most directly comparable GAAP measure, to adjusted gross profit is included in the table below. Management believes that this financial measure is useful to investors because it excludes certain expenses, allowing investors to more easily compare our financial performance period to period.
Three months ended March 31,
(in thousands)20212020$ Change
Adjusted gross profit (1)(2)
Operating loss$(6,462)$(10,298)$3,836 
Selling, general and administrative ("SG&A") expenses40,391 37,532 2,859 
Advisory fees and settlement costs3,291 4,239 (948)
Amortization expense1,385 1,410 (25)
Restructuring activities993 1,951 (958)
Research and development costs588 1,341 (753)
(Gain) loss from a non-strategic business(12)121 (133)
Gains on asset disposals, net(2,004)(915)(1,089)
$38,170 $35,381 $2,789 
(1) Amortization is not allocated to the segments' adjusted gross profit, but depreciation is allocated to the segments' adjusted gross profit.
(2) Adjusted gross profit for the three months ended September 30, 2017 vs. 2016March 31, 2020, excludes losses related to a non-strategic business that was previously included in Adjusted gross profit and totals $(0.1) million.

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Revenues decreased
Adjusted gross profit by $48.6 million to $1.15 billionsegment is as follows:
Three months ended March 31,
(in thousands)20212020$ Change
Adjusted gross profit (loss)
B&W Renewable segment$6,900 $6,921 $(21)
B&W Environmental segment5,942 5,299 643 
B&W Thermal segment25,328 23,161 2,167 
$38,170 $35,381 $2,789 

B&W Renewable Segment Results
Three months ended March 31,
(in thousands)20212020$ Change
Revenues$28,811 $35,999 $(7,188)
Adjusted EBITDA$204 $(1,434)$1,638 
Adjusted gross profit$6,900 $6,921 $(21)
Adjusted gross profit (loss) %23.9 %19.2 %

Three Months Ended March 31, 2021 and 2020

Revenues in the nine months ended September 30, 2017 as compared to $1.20 billion for the corresponding nine month period in 2016. The primary decreases were in construction activities associated with new build and retrofit projects in the Power segment and a decrease in the revenue recognized in theB&W Renewable segment resulting from ongoing performance challenges on six of our renewable energy contracts. These declines were partially offset by the increase in revenue in the Industrial segment resulting from the acquisitions of SPIG and Universal.

Gross profit decreased by $125.620%, or $7.2 million to $54.4 million in the nine months ended September 30, 2017 as compared to $180.0$28.8 million in the corresponding period in 2016. The primary driversfirst quarter of the decrease were the six uncompleted European loss contracts in the Renewable segment (see Note 5 in the condensed consolidated financial statements) and the impact of the decline in the Power segment's revenues, which were partially offset by gross profit contributions from the SPIG and Universal acquisitions. Intangible asset amortization expense is discussed in further detail in the sections below.

Excluding amortization of intangible assets and pension mark2021 compared to market adjustments, SG&A expenses increased by $13.5$36.0 million in the nine months ended September 30, 2017 to $192.7 million as compared to $179.2 million in the corresponding nine month period in 2016, primarily related to adding the SPIG and Universal businesses and ongoing project support activities in the Renewable segment, partially offset by savings from our 2016 restructuring actions. Intangible asset amortization expense and pension mark to market adjustments are discussed in further detail in the sections below.

Equity in income of investees during the nine months ended September 30, 2017 includes a $18.2 million other-than-temporary-impairment of our investment in Thermax Babcock & Wilcox Energy Solutions Private Limited ("TBWES") that we recorded in the secondfirst quarter of 2017.2020. The impairment charge was a result of the strategic change we and our joint venture partner have madereduction in revenue is due to the decline in forecasted market opportunities in India.

Our goodwill impairment chargesproject delays and restructuring expense are discussed in further detail in the sections below.


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Power
 Three months ended September 30, Nine months ended September 30,
(In thousands)20172016$ Change 20172016$ Change
Revenues$202,222
$211,749
$(9,527) $612,274
$762,293
$(150,019)
Gross profit$40,629
$48,896
$(8,267) $132,653
$170,903
$(38,250)
Gross margin %20%23%  22%22% 

Three months ended September 30, 2017 vs. 2016

Revenues decreased 4%, or $9.5 million, to $202.2 million in the third quarter of 2017, compared to $211.7 million in the corresponding quarter in 2016. The revenue decrease is attributable to the anticipated decline in the coal power generation market, and primarily impacted our new build utility and environmental product and service line due to a decrease in construction activity. We resized our business in anticipation of these declines with our 2016 restructuring actions. Partially offsetting the revenue decrease was an increase in revenues associated with our retrofits product and service line in the third quarter of 2017 compared to the corresponding quarter in 2016.

Gross profit decreased 17%, or $8.3 million, to $40.6 million in the quarter ended September 30, 2017, compared to gross profit of $48.9 million in the corresponding quarter in 2016. We were able to largely maintain our gross margin percentage as a result of the 2016 restructuring actions, which partially offset the gross profit effect of lower sales volumes. Compared to the third quarter of 2016, the primary decrease in gross profit in the third quarter of 2017 was attributable to the decrease in gross profit from a lower volume of construction activity associated with our new build utility and environmental equipment product and service line. Also contributing to the decrease were fewer net improvements on projects that were completed this year versus last year.

Nine months ended September 30, 2017 vs. 2016

Revenues decreased 20%, or $150.0 million, to $612.3 million in the nine months ended September 30, 2017, compared to $762.3 million in the corresponding nine month period in 2016. The revenue decrease is attributable to the anticipated decline in the coal power generation market discussed above. Compared to the nine months ended September 30, 2016, the primary decrease in revenues in the nine months ended September 30, 2017 was attributable to a decline new build utility and environmental equipment and retrofit projects primarily due to a decrease in construction activity. Partially offsetting those declines in revenues was an increase in industrial steam generation revenues in the nine months ended September 30, 2017 compared to the corresponding nine month period in 2016.

Gross profit decreased 22%, or $38.3 million, to $132.7 million in the nine months ended September 30, 2017, compared to $170.9 million in the corresponding nine month period in 2016. We were able to maintain our gross margin percentage as a result of the 2016 restructuring actions, which partially offset the gross profit effect of lower sales volumes. Compared to the nine months ended September 30, 2016, the decrease in gross margins are attributable to the same reasons discussed in the three month explanations above.

Renewable
 Three months ended September 30, Nine months ended September 30,
(In thousands)20172016$ Change 20172016$ Change
Revenues$108,557
$124,344
$(15,787) $262,168
$293,593
$(31,425)
Gross profit (loss)$181
$18,592
$(18,411) $(100,119)$14,468
$(114,587)
Gross margin %—%15%
 (38)%5%

Three months ended September 30, 2017 vs. 2016

Revenues decreased 13%, or $15.8 million, to $108.6 million in the third quarter of 2017, compared to $124.3 million in the corresponding quarter in 2016. The number of contracts and level of activity in the segment during the thirdcurrent quarter of 2017 and 2016 were comparable. The $15.8 million decrease in revenuedue to COVID-19.

Adjusted EBITDA in the third quarter of 2017 was primarily attributableB&W Renewable segment increased $1.6 million, to revisions in our estimates of progress and estimated liquidated damages on six of our renewable energy contracts.

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Gross profit decreased $18.4$0.2 million in the thirdfirst quarter of 2017 to $0.2 million,2021 compared to $18.6$(1.4) million in the correspondingfirst quarter of 2020. The benefits of cost savings and restructuring initiatives and favorable product mix in 2016. The decrease was primarily a result of six renewable energy loss contracts that remained uncompleted as of September 30, 2017.The loss contracts are not expected to contribute any gross profit toour parts business more than offset the Renewable segment throughout 2017 unless there are revisions to our estimated revenues or costs at completion in future periods.

Nine months ended September 30, 2017 vs. 2016

Revenues decreased 11% in the nine months ended September 30, 2017 to $262.2 million, compared to $293.6 million in the corresponding nine month period in 2016. The number of contracts and level of activity in the segment during the nine months ended September 30, 2017 and 2016 were comparable. The decrease in revenues in the nine months ended September 30, 2017 is due to the same reasons noted in the three month explanationsvolume, as discussed above.


Gross profit decreased in the nine months ended September 30, 2017 to a loss of $100.1 million, compared to gross profit of $14.5 million in the corresponding nine month period in 2016. Changes in estimates to complete our renewable energy contracts resulted in $123.8 million in charges during the nine months ended September 30, 2017.

See Note 5 in the condensed consolidated financial statements for additional information on the impact of the segment's renewable energy contracts on our results of operations in the third quarters and nine months ended September 30, 2017 and 2016.

Industrial
 Three months ended September 30, Nine months ended September 30,
(In thousands)20172016$ Change 20172016$ Change
Revenues$99,288
$76,809
$22,479
 $281,734
$147,275
$134,459
Gross profit$9,461
$14,601
$(5,140) $34,240
$33,506
$734
Gross margin %10%19%

 12%23%


Three months ended September 30, 2017 vs. 2016

Revenues increased 29%, or $22.5 million, to $99.3 million in the third quarter of 2017, compared to $76.8 million in the corresponding quarter in 2016. The increase in revenues in the Industrial segment is attributable to organic growth from new build cooling systems projects, complemented by the acquisition of Universal on January 11, 2017, which added $16.0 million of revenue in the third quarter of 2017.

Gross profit decreased 35%, or $5.1 million, to $9.5 million in the third quarter of 2017, compared to $14.6 million in the corresponding quarter in 2016. The acquisition of Universal contributed $3.3 million ofAdjusted gross profit in the thirdB&W Renewable segment remained flat at $6.9 million due to lower volume as described above which was offset by favorable product mix in our parts business and the benefits of cost savings and restructuring initiatives.

B&W Environmental Segment Results
Three months ended March 31,
(In thousands)20212020$ Change
Revenues$31,160 $25,920 $5,240 
Adjusted EBITDA$1,101 $270 $831 
Adjusted gross profit$5,942 $5,299 $643 
Adjusted gross profit %19.1 %20.4 %

Three Months Ended March 31, 2021 and 2020

Revenues in the B&W Environmental segment increased 20%, or $5.2 million to $31.2 million in the first quarter of 2017. The year-over-year net decrease in gross margin percentage reflects product mix, as new build cooling system projects generally have lower margins than other products and services2021 compared to $25.9 million in the segment. In addition,first quarter of 2020. The increase is primarily due to higher service and project activity in the Industrial segment'scurrent quarter.

Adjusted EBITDA in the B&W Environmental segment was $1.1 million in the first quarter of 2021 compared to $0.3 million in the first quarter of 2020. The increase is driven primarily by the higher volume, as described above and the benefits of cost savings and restructuring initiatives partially offset by unfavorable mix in our parts business.

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Adjusted gross profit in the third quarter of 2017 also was affected by productivity issues on new build cooling system projects. The productivity issues caused usB&W Environmental segment increased $0.6 million to increase project cost estimates and deploy additional resources to complete the projects on time.

Nine months ended September 30, 2017 vs. 2016

Revenues increased 91%, or $134.5 million, to $281.7 million in the nine months ended September 30, 2017, compared to $147.3$5.9 million in the corresponding nine month period in 2016. The increase in revenuesfirst quarter of 2021 compared to $5.3 million in the Industrial segmentfirst quarter of 2020. The increase is primarily attributable to the July 1, 2016 acquisition of SPIGincrease in volume being partially offset by unfavorable product mix in our parts business.

B&W Thermal Segment Results
Three months ended March 31,
(In thousands)20212020$ Change
Revenues$108,281 $86,683 $21,598 
Adjusted EBITDA$10,430 $7,606 $2,824 
Adjusted gross profit$25,328 $23,161 $2,167 
Adjusted gross profit %23.4 %26.7 %

Three Months Ended March 31, 2021 and the January 11, 2017 acquisition of Universal, which together added $193.1 million of revenue2020

Revenues in the nine months ended September 30, 2017. Partially offsetting the increase is a $20.4B&W Thermal segment increased 25%, or $21.6 million, decline in revenues attributable to environmental solutions sales in the United States, primarily$108.3 million in the first halfquarter of 2017.2021 compared to $86.7 million generated in the first quarter of 2020. The revenue increase is attributable to a higher level of activity on construction projects in the current quarter.


Gross profitAdjusted EBITDA in the B&W Thermal segment increased 2%, or $0.7$2.8 million to $34.2$10.4 million in the nine months ended September 30, 2017,first quarter of 2021 compared to $33.5$7.6 million in the corresponding nine month periodfirst quarter of 2020, which is mainly attributable to the increase in 2016. The acquisitionsvolume as described above, favorable project execution and the benefits of SPIGcosts savings and Universal contributed $12.6 million ofrestructuring initiatives.


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Adjusted gross profit in the nine months ended September 30, 2017. The year-over-year decrease in gross margins are attributableB&W Thermal segment increased $2.2 million, to the same reasons discussed$25.3 million in the three month explanations above.first quarter of 2021, compared to $23.2 million in the first quarter of 2020, which is consistent with the increase in revenue as described above being partially offset by unfavorable product mix in our parts business.


Bookings and backlogBacklog


Bookings and backlog are not measures recognized by generally accepted accounting principles.our measure of remaining performance obligations under our sales contracts. It is possible that our methodology for determining bookings and backlog may not be comparable to methods used by other companies.


We generally include expected revenue from contracts in our backlog when we receive written confirmation from our customers authorizing the performance of work and committing the customers to payment for work performed. Backlog may not be indicative of future operating results, and projectscontracts in our backlog may be canceled, modified or otherwise altered by customers. Backlog can vary significantly from period to period, particularly when large new build projects or operations and maintenance contracts are booked because they may be fulfilled over multiple years. Additionally, because we operate globally, our backlog is also affected by changes in foreign currencies each period. We do not include orders of our unconsolidated joint ventures in backlog.


Bookings represent changes to the backlog. Bookings include additions to our backlog.from booking new business, subtractions from customer cancellations or modifications, changes in estimates of liquidated damages that affect selling price and revaluation of backlog denominated in foreign currency. We believe comparing bookings on a quarterly basis or for periods less than one
37

year is less meaningful than for longer periods, and that shorter termshorter-term changes in bookings may not necessarily indicate a material trend.
Three months ended March 31,
(In approximate millions)20212020
B&W Renewable(1)
$37 $34 
B&W Environmental41 45 
B&W Thermal91 130 
Other/eliminations— — 
Bookings$169 $209 
 Three months ended September 30,Nine months ended September 30,
(In millions)2017201620172016
Power$122$198$476$623
Renewable35(2)86124
Industrial10070360133
Other/eliminations(2)—(40)—
Bookings$255$266$881$880
(1) B&W Renewable bookings includes the revaluation of backlog denominated in currency other than U.S. dollars. The foreign exchange impact on B&W Renewable bookings in the first quarter of 2021 and 2020 was $7.0 million and $(6.9) million, respectively.


Our backlog as of March 31, 2021 and 2020 was as follows:
As of March 31,
(In approximate millions)September 30, 2017December 31, 2016September 30, 2016(In approximate millions)20212020
Power$482$618$668
Renewable1,0641,2411,289
Industrial317216233
B&W Renewable(1)
B&W Renewable(1)
$215 $224 
B&W EnvironmentalB&W Environmental118 100 
B&W ThermalB&W Thermal206 183 
Other/eliminations(37)(3)—Other/eliminations(4)(6)
Backlog$1,826$2,072$2,190Backlog$535 $501 

(1)    B&W Renewable backlog at March 31, 2021, includes $164.0 million related to long-term operation and maintenance contracts for renewable energy plants, with remaining durations extending until 2034. Generally, such contracts have a duration of 10-20 years and include options to extend.

Of the backlog at September 30, 2017,March 31, 2021, we expect to recognize revenues as follows:
(In approximate millions)20212022ThereafterTotal
B&W Renewable$55 $22 $138 $215 
B&W Environmental69 28 21 118 
B&W Thermal153 50 3 206 
Other/eliminations(4)— — (4)
Expected revenue from backlog$273 $100 $162 $535 

(In approximate millions)20172018ThereafterTotal
Power$155$157$170$482
Renewable1292327031,064
Industrial71246—317
Other/eliminations—6(43)(37)
Backlog$355$641$830$1,826
Corporate


Goodwill impairment

We recorded goodwill impairment chargesCorporate costs in adjusted EBITDA include SG&A expenses that are not allocated to the reportable segments. These costs include, among others, certain executive, compliance, strategic, reporting and legal expenses associated with governance of $86.9the total organization and being an SEC registrant. Corporate costs decreased $1.5 million ($85.8to $2.7 million net of tax) in the thirdfirst quarter of 2017, which included a $50.02021 as compared to $4.1 million charge in the Renewable reporting unitfirst quarter of 2020, primarily due to lower audit fees, bonus costs and a $36.9 million chargetemporary consultant fees incurred in the SPIG reporting unit. The reasonsfirst quarter of 2021.

Advisory Fees and Settlement Costs

Advisory fees and settlement costs decreased by $0.9 million to $3.3 million in the first quarter of 2021 as compared to $4.2 million in the first quarter of 2020, primarily due to reduced use of external consultants in 2021 as the Company staffed certain positions internally.

Research and Development

Our research and development activities are related to improving our products through innovations to reduce the cost of our products to make them more competitive and through innovations to reduce performance risk of our products to better meet our and our customers' expectations.Research and development expenses totaled $0.6 million and $1.3 million for the three
38

months ended March 31, 2021 and 2020, respectively. The decrease resulted primarily from timing of specific research and development efforts.

Restructuring

Restructuring actions across our business units and corporate functions resulted in $1.0 million and $2.0 million of expense in the three months ended March 31, 2021 and 2020, respectively.

Depreciation and Amortization

Depreciation expense was $2.7 million and $2.8 million in the three months ended March 31, 2021 and 2020, respectively.

Amortization expense was $1.4 million and $1.4 million in the three months ended March 31, 2021 and 2020, respectively.

Pension and Other Postretirement Benefit Plans

We recognize benefits from our defined benefit and other postretirement benefit plans based on actuarial calculations primarily because our expected return on assets is greater than our service costs. Service cost is low because our plan benefits are frozen except for a small number of hourly participants. Pension benefits were $9.1 million and $7.5 million in the three months ended March 31, 2021 and 2020, respectively. There were no MTM adjustments for our pension and other postretirement benefit plans during the first quarter of 2021 or 2020. Refer to Note 12 to the Condensed Consolidated Financial Statements.

Our pension costs also include MTM adjustments from time to time, as described further in Note 12 to the Condensed Consolidated Financial Statements. Interim MTM charges are a result of curtailments or settlements. Any MTM charge or gain should not be considered to be representative of future MTM adjustments as such events are not currently predicted and are in each case subject to market conditions and actuarial assumptions as of the date of the event giving rise to the MTM adjustment.

Other than service cost of $0.2 million and $0.2 million in the three months ended March 31, 2021 and 2020, respectively, which are related to the small number of hourly participants still accruing benefits within the Babcock & Wilcox Thermal segment, pension benefit and MTM adjustments are excluded from the results of our segments. Refer to Note 12 to the Condensed Consolidated Financial Statements for further information regarding our pension and other postretirement plans.

The costs and funding requirements of our pension and postretirement benefit plans depend on our various assumptions, madeincluding estimates of rates of return on benefit-related assets, discount rates for future payment obligations, rates of future cost growth, mortality assumptions and trends for future costs. Variances from these estimates could have a material adverse effect on us. Our policy to recognize these variances annually through MTM accounting could result in volatility in our results of operations, which could be material. The funding obligations for the Company’s pension plans are impacted by the performance of the financial markets, particularly the equity markets, and interest rates. If the financial markets do not provide the long-term returns that are expected, or discount rates increase the present value of liabilities, the Company could be required to make larger contributions.

Foreign Exchange

We translate assets and liabilities of our foreign operations into United States dollars at current exchange rates, and we translate items in our statement of operations at average exchange rates for the periods presented. We record adjustments resulting from the translation of foreign currency financial statements as a component of accumulated other comprehensive income (loss). We report foreign currency transaction gains and losses in Condensed Consolidated Statements of Operations.

Foreign exchange was a loss of $1.2 million and $9.3 million for the three months ended March 31, 2021 and 2020, respectively. Foreign exchange gains and losses are primarily related to unhedged intercompany loans denominated in European currencies to fund foreign operations.

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Income Taxes
Three months ended March 31,
(In thousands, except for percentages)20212020$ Change
Income (loss) before income taxes$(12,607)$(34,345)$21,738 
Income tax expense (benefit)$2,836 $(810)$3,646 
Effective tax rate(22.5)%2.4 %

Our income tax expense in the first quarter of 2021 reflects a full valuation allowance against our net deferred tax assets, except in Mexico, Canada, the United Kingdom, Finland, Germany, Thailand, the Philippines. Indonesia, and Sweden. Deferred tax assets are evaluated each period to determine whether realization is more likely than not. Valuation allowances are established when management determines it is more likely than not that some portion, or all, of the deferred tax assets will not be realized. Valuation allowances may be removed in the future if sufficient positive evidence exists to outweigh the negative evidence under the framework of ASC 740, Income Taxes.

Our effective tax rate for the first quarter of 2021 is not reflective of the United States statutory rate primarily due to a valuation allowance against certain net deferred tax assets and unfavorable discrete items, including estimated withholding taxes on the divestiture of Diamond Power Machine (Hubei) Co. referenced in Note 23. In certain jurisdictions (namely, the United States, Denmark, and Italy) where the company anticipates a loss for the fiscal year or incurs a loss for the year-to-date period for which a tax benefit cannot be realized in accordance with ASC 740, the company excludes the loss in that jurisdiction from the overall computation of the estimated annual effective tax rate.

In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes. ASU No. 2019-12 removes certain exceptions to the general principles in Topic 740, primarily related to intraperiod tax allocation, recognizing deferred tax liabilities for outside basis differences, and calculating income taxes in interim periods. The Company adopted ASU No. 2019-12 on January 1, 2021, on a prospective basis. The adoption did not have a material impact on our interim consolidated financial statements.

Liquidity and Capital Resources

Liquidity

Our primary liquidity requirements include debt service and working capital needs. We fund our liquidity requirements primarily through cash generated from operations, external sources of financing, including our senior notes and A&R Credit Agreement that governs the U.S. Revolving Credit Facility and the last out term loans (the “Last Out Term Loans”), and equity offerings, each of which are described below in further detail along with other sources of liquidity.

Since January 1, 2021, we executed the following actions:

•on February 8, 2021, we entered into A&R Amendment No. 2 to Amended and Restated Credit Agreement (“A&R Amendment No. 2”) with Bank of America, N.A., as administrative agent to the lenders under our Amended and Restated Credit Agreement. A&R Amendment No. 2 amends our Amended and Restated Credit Agreement (the “A&R Credit Agreement”) to, among other matters, (i) permit the issuance of 8.125% senior notes due 2026 (the “Senior Notes”) in the offering described below, (ii) permit the deemed prepayment of $35.0 million of our Last Our Term Loan Tranche A with $35.0 million principal amount of Senior Notes, (iii) provide that 75% of the Senior Notes gross proceeds shall be used to repay outstanding borrowings and permanently reduce the commitments under our senior secured credit facilities, and (iv) provide that $5.0 million of certain previously deferred facility fees will be paid by the Company;
•on February 12, 2021, we entered into a letter agreement (the “Exchange Agreement”) with B. Riley Financial, Inc. (“B. Riley”), a related party, pursuant to which we agreed to issue to B. Riley $35.0 million aggregate principal amount of Senior Notes in exchange for a deemed prepayment of $35.0 million of our existing Tranche A term loan with B. Riley. On February 12, 2021, we issued $35.0 million of senior notes to B. Riley in exchange for a deemed prepayment of our existing Last Out Term Loan' Tranche A-6. The interest rate on the remaining Last Out Term Loan Tranche A balances has been reduced to 6.625% from 12.0%;
•on February 12, 2021, we received gross proceeds of approximately $172.5 million after closing a public offering of our common stock in which 29,487,180 shares of common stock were issued, inclusive of 3,846,154 shares issued to
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B. Riley Securities, Inc., a related party, as representative of several underwriters in the common stock offering. Net proceeds received were approximately $163.0 million after deducting underwriting discounts and commissions, but before expenses;
•on February 12, 2021, we received gross proceeds of approximately $125.0 million after completing an issuance of our $125.0 million aggregate principal amount of Senior Notes, in a public offering through B. Riley Securities, Inc., a related party, as representative of several underwriters in the senior notes offering. Net proceeds received were approximately $120.0 million after deducting underwriting discounts and commissions, but before expenses;
•on March 4, 2021, we entered into A&R Amendment No. 3 to Amended and Restated Credit Agreement (“A&R Amendment No. 3”) with Bank of America, N.A., as administrative agent to the lenders under our A&R Credit Agreement. A&R Amendment No. 3, among other matters, at the date of effectiveness (i) permits the prepayment of certain term loans, (ii) reduces the revolving credit commitments under our A&R Credit Agreement to $130.0 million and removes the ability to obtain revolving loans under our A&R Credit Agreement, and (iii) amends certain covenants and conditions to the extension of credit under our A&R Credit Agreement;
•on March 4, 2021, effective with the execution of A&R Amendment No. 3, we paid $75.0 million towards our existing Last Out Term Loans and paid $21.8 million of accrued and deferred fees related to the revolving credit facility; and
•on March 5, 2021, we sold all of the issued and outstanding capital stock of Diamond Power Machine (Hubei) Co., Inc, to BPE Clyde Pte Ltd. for $2.8 million. We received $2.0 million in cash and recorded an $0.8 million favorable contract asset for the amortization period from March 8, 2021 through December 31, 2023. We recognized a $0.4 million gain on the sale of the business.
•on March 15, 2021, we completed the sale of certain fixed assets for the Copley, Ohio location for $4.0 million, received $3.3 million of net cash proceeds after adjustments and recognized a gain on sale of $1.9 million. In conjunction with the sale, we executed a leaseback agreement commencing March 16, 2021 and expiring on March 31, 2033;
•on March 26, 2021, we entered into A&R Amendment No. 4 to Amended and Restated Credit Agreement (“A&R Amendment No. 4”) with Bank of America, N.A., as administrative agent to the lenders under our A&R Credit Agreement. A&R Amendment No. 4, among other matters, at the date of effectiveness (i) permits the issuance of additional Senior Notes of up to an aggregate principle amount of $150 million, and (ii) modifies the calculation of the senior leverage ratio, as described in Note 16 to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report;
•on March 31, 2021, we entered into a sales agreement with B. Riley Securities, Inc., a related party, in which we may sell, from time to time, up to an aggregated principal amount of $150 million of 8.125% senior notes due 2026 to or through B. Riley Securities, Inc., as described in Note 13 to the condensed consolidated financial statements. The third quarter 2017 impairment charges eliminated all of the Renewable reporting unit's goodwill balance at September 30, 2017, and $38.0 million of the SPIG reporting unit's goodwill balance remains after the impairment charge; long-lived assetsCondensed Consolidated Financial Statements included in the two reporting units were not impaired.

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SG&A expenses

SG&A expenses, excluding intangible asset amortization expense and pension mark to market adjustments, decreased by $0.4 million to $59.2 million in the third quarter of 2017, as compared to $59.6 million in the third quarter of 2016. The primary reasons for the decrease are the $8.7 million of SG&A savings from our 2016 restructuring focused on the Power segment and $0.5 million lower acquisition and integration costs, partially offset by $4.1 million of increased costs to support ongoing Renewable projects and a $4.7 million increase resulting from the Universal acquisition and other support activities in the Industrial segment.

SG&A expenses, excluding intangible asset amortization expense and pension mark to market adjustments, increased by $13.5 million in the nine months ended September 30, 2017 to $192.7 million, as compared to $179.2 million in the nine months ended September 30, 2016. SG&A increased by $20.2 million from the SPIG and Universal acquisitions, and $13.3 million to support ongoing Renewable projects, partially offset by $21.9 million of savings from our 2016 restructuring actions focused on the Power segment.

Research and development expenses

Research and development expenses relate to the development and improvement of new and existing products and equipment, as well as conceptual and engineering evaluation for translation into practical applications. These expenses were $2.3 million and $2.4 million for the quarter ended September 30, 2017 and 2016, respectively, and $7.5 million and $8.3 million for the nine months ended September 30, 2017 and 2016, respectively. We continuously evaluate each research and development project and collaborate with our business teams to ensure that we believe we are developing technology and products that are currently desired by the market and will result in future sales.

Restructuring

2017 Restructuring activities

In the third quarter of 2017 and through the datePart I, Item 1 of this report, we have announced plans to implement restructuring actions to improve our global cost structure and increase our financial flexibility. The restructuring actions include a workforce reduction at bothQuarterly Report;
•as of May 10, 2021, the business segment and corporate levels totaling approximately 9%Company has sold $10.6 million aggregate principal amount of our global workforce, SG&A expense reductions and new cost control measures, and office closures and consolidations in non-core geographies. These actions include reduction of approximately 30% of B&W Vølund's workforce, which will right-size its workforce to operate under a new execution model focused on B&W's core boiler, grate and environmental equipment technologies, with the balance-of-plant and civil construction scope being executed by a partner. We believe the new B&W Vølund business model provides us with a lower risk profile and aligns with our strategy of being an industrial and power equipment technology and solutions provider. Other actions are focused on productivity and efficiency gains to enhance profitability and cash flows, and to mitigate the impact of lower demand in the global coal-fired power market. Total estimated costs associated with these restructuring actions are anticipated to be approximately $20Senior Notes for $11.0 million most of which will be recognized in the fourth quarter of 2017, and the estimated annual savings are expected to be approximately $45 million in 2018.

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Pre-2017 Restructuring activities

Our series of restructuring activities prior to 2017 were intended to help us maintain margins, make our costs more variable and allow our business to be more flexible. We made our manufacturing costs more volume-variable through the closure of manufacturing facilities and development of manufacturing arrangements with third parties. Also, we made our cost of engineering and supply chain more variable by creating a matrix organization capable of delivering products across multiple segments, and developing more volume-variable outsourcing arrangements with our joint venture partners and other third parties to meet fluctuating demand. This new matrix organization and operating model required different competencies and, in some cases, changes in leadership. While primarily applicable to our Power segment, our restructuring actions also benefit the Renewable and Industrial segments to a lesser degree. As demonstrated in our segment gross margin percentages, notwithstanding the challenges in our Renewable segment, we have achieved our objective of maintaining gross margins in the Power segment. Quantification of cost savings, however, is significantly dependent upon volume assumptions that have changed since the restructuring actions were initiated.

On June 28, 2016, we announced actions to restructure our power business in advance of lower projected demand for power generation from coal in the United States. These restructuring actions were primarily in the Power segment. Additionally, we announced leadership changes on December 6, 2016, which included the departure of members of management in our Renewable segment. The costs associated with these restructuring activities totaled $0.4 million and $4.0 million in the third quarter and nine months ended September 30, 2017, respectively, and were primarily related to $0.4 million and $2.4 million of employee severance in the third quarter and nine months ended September 30, 2017, respectively. This compares to the $1.4 million of charges in the third quarter and nine months ended September 30, 2016, respectively, which consisted of $0.5 million of employee severance costs, a $0.1 million non-cash impairment of the long-lived assets at B&W's one coal power plant and $0.8 million of costs related to organizational realignment of personnel and processes. We expect additional restructuring charges of up to $0.1 million, primarily related to additional manufacturing facility consolidation initiatives that will extend through the fourth quarter of 2017.

The restructuring initiatives announced prior to 2016 were intended to better position us for growth and profitability. They have primarily been related to facility consolidation and organizational efficiency initiatives. Theses costs were $0.5 million and $0.6 million in the third quarter of 2017 and 2016, respectively. These costs were $1.0 million and $3.8 million in the nine months ended September 30, 2017 and 2016, respectively. We expect nominal additional restructuring charges during the fourth quarter of 2017, primarily related to facility demolition and consolidation activities.

Spin-off transaction costs

Spin-off costs were primarily attributable to employee retention awards directlyproceeds related to the spin-off from our former parent,March 31, 2021 sales agreement disclosed in Note 13 to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report. The Babcock & Wilcox Company (now known as BWX Technologies, Inc.). In the third quarter and nine months ended September 30, 2017, we recognized spin-off costs of $0.2 million and $1.0 million, respectively. In the third quarter and nine months ended September 30, 2016, we recognized spin-off costs of $0.4 million and $3.4 million, respectively. In the second quarter of 2017, we disbursed $1.9received $10.7 million of net cash proceeds after commission and fees;
•on May 7, 2021, we completed a public offering of our 7.75% Series A Cumulative Perpetual Preferred Stock (the "Preferred Stock") pursuant to an underwriting agreement (the “Underwriting Agreement”) dated May 4, 2021, between us and B. Riley Securities, Inc., as representative of the accrued retention awards. Approximately $0.5several underwriters (the “Underwriters”). At the closing, we issued to the public 4,000,000 shares of our Preferred Stock, at an offering price of $25.00 per share for gross proceeds of approximately $100 million before deducting underwriting discounts, commissions and estimated offering expenses. We have granted the underwriters a 30-day option to purchase up to an additional 600,000 shares of such costs remain, which we expect to be recognized through June 30, 2018.

Equitythe Preferred Stock in income (loss)connection with the offering. Net proceeds from the offering were approximately $95.7 million after deducting underwriting discounts, commissions but before expenses. The Preferred Stock has a par value of investees

Our primary equity method investees included joint ventures$0.01 per share and is perpetual and has no maturity date. The Preferred Stock has a cumulative cash dividend, when and as if declared by our Board of Directors, at a rate of 7.75% per year on the liquidation preference amount of $25.00 per share and payable quarterly in China and India, each of which manufactures boiler parts and equipment. Excluding the impairment described below, Equity in income of investees in the third quarter of 2017 decreased $1.6 million to $1.2 million from $2.8 million in the third quarter of 2016. The decrease in equity income of investees in the third quarter of 2017 is primarily attributable to winding down the joint venture in Indiaarrears as described in Note 1125 to the condensed consolidated financial statementsCondensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report; and
•on May 10, 2021, we entered into Amendment No. 5 to Amended and Restated Credit Agreement with Bank of America, N.A., in its capacity as administrative agent (“A&R Amendment No. 5”). A&R Amendment No. 5 amends the terms of our A&R Credit Agreement to, among other matters, (i) permit the payment of dividends on the Preferred Stock and (ii) permit certain future issuances of Preferred Stock to B. Riley, a related party, in exchange for deemed prepayments of amounts outstanding under our A&R Credit Agreement.
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Beginning in April 2020 and continuing as of May 13, 2021, as part of the Company’s response to the December 22, 2016 saleimpact of allthe COVID-19 pandemic on its business, the Company continues to take a number of cash conservation and cost reduction measures which include:

•suspension of our interest in our former Australian joint venture, Halley & Mellowes Pty. Ltd. ("HMA"). HMA contributed $0.6 million401(k) company match for U.S. employees for 2021;
•utilizing options for government loans and $1.5 million to our equity in income of investeesprograms in the third quarter of 2016U.S. and abroad that are appropriate and available; and
•deferring the nine months ended September 30, 2016, respectively.

At September 30, 2017, our total investment in equity method investees was $87.4remaining $20.9 million which included a $58.7 million investment in Babcock & Wilcox Beijing Company, Ltd. ("BWBC"). Based in China, BWBC designs, manufactures and sells various power plant boilers and related aftermarket equipment. BWBC has been profitable historically, and we have determined that no other-than-temporary-impairment has occurred based on the value of its cash on hand, long-lived assets and expected future cash flows.

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Our investment in equity method investees also included a investment in TBWES, which has a manufacturing facility intended primarily for new build coal boiler projects in India. During the second quarter of 2017, both we and our joint venture partner decided to make a strategic change in the Indian joint venture due to the decline in forecasted market opportunities in India, which reduced the expected recoverable value of our investment in the joint venture. As a result of this strategic change, we recognized a $18.2 million other-than-temporary-impairment of our investment in TBWES in the second quarter of 2017. The impairment charge was based on the difference in the carrying value of our investment in TBWES and our share of the estimated fair valuePension Plan contribution payments of TBWES's net assets. After recording the impairment charge, our remaining investment in TBWES at September 30, 2017 was $26.0 million.

We assess our investments in unconsolidated affiliates for other-than-temporary-impairment when significant changes occur in the investee's business or our investment philosophy. Such changes might include a series of operating losses incurred by the investee that are deemed other than temporary, the inability of the investee to sustain an earnings capacity$45.6 million that would justify the carrying amount of the investment or a change in the strategic reasons that were important when we originally entered into the joint venture. If an other-than-temporary-impairment were to occur, we would measure our investment in the unconsolidated affiliate at fair value.

Intangible asset amortization expense

We recorded $4.0 million and $8.8 million of intangible amortization expense during the third quarters of 2017 and 2016, respectively, and $14.5 million and $11.9 million of expense during the nine months ended September 30, 2017 and 2016, respectively. The increase in amortization expense is attributable to our last two business combinations, which increased our intangible assets by $74.7 million.

We acquired $55.2 million of intangible assets in the July 1, 2016 acquisition of SPIG. Amortization of the SPIG intangible assets resulted in $1.9 million and $7.1 million of expense during the third quarter of 2017 and 2016, respectively, and $7.3 million and $7.1 million of expense during the nine months ended September 30, 2017 and 2016, respectively.

We acquired $19.5 million of intangible assets in the January 11, 2017 acquisition of Universal. Amortization of the Universal intangible assets resulted in $0.5 million in the third quarter of 2017 and $2.6 million of expense during the nine months ended September 30, 2017.

We expect total intangible amortization expense of $3.6 million in the fourth quarter of 2017.

Market to market adjustments

During the first quarter of 2017, lump sum payments from our Canadian pension plan resulted in a plan settlement of $0.4 million, which also resulted in interim mark to market accounting for the pension plan. The mark to market adjustment in the first quarter of 2017 was $0.7 million. The effect of these charges and mark to market adjustments are reflected in the $1.1 million "Recognized net actuarial loss." There were no significant plan settlements or interim mark to market adjustments during the second or third quarters of 2017.

During the second and third quarters of 2016, we recorded adjustments to our benefit plan liabilities resulting from certain curtailment and settlement events. In September 2016, lump sum payments from our Canadian pension plan resulted in a $0.1 million pension plan settlement charge. In May 2016, the closure of our West Point, Mississippi manufacturing facility resulted in a $1.8 million curtailment charge in our United States pension plan. In April 2016, lump sum payments from our Canadian pension plan resulted in a $1.1 million plan settlement charge. These events resulted in interim mark to market accounting for the respective benefit plans in 2016. Mark to market charges in the three months ended September 30, 2016 were $0.5 million in our Canadian pension plan. Mark to market charges for our United States and Canadian pension plans were $27.5 million in the nine months ended September 30, 2016. The pension mark to market charges were impacted by higher than expected returns on pension plan assets. The weighted-average discount rate used to remeasure the benefit plan liabilities at September 30, 2016 was 3.88%. The effect of these charges and mark to market adjustments are reflected in the "Recognized net actuarial loss."

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Provision for income taxes
 Three months ended September 30, Nine months ended September 30,
(In thousands)20172016$ Change 20172016$ Change
Income (loss) before income taxes$(119,728)$10,628
$(130,356) $(279,424)$(44,586)$(234,838)
Income tax expense (benefit)$(5,639)$1,617
$(7,256) $(7,644)$(790)$(6,854)
Effective tax rate4.7%15.2%  2.7%1.8% 

We operate in numerous countries that have statutory tax rates below that of the United States federal statutory rate of 35%. The most significant of these foreign operations are located in Canada, Denmark, Germany, Italy, Mexico, Sweden and the United Kingdom with effective tax rates ranging between 19% and approximately 30%. In addition, the jurisdictional mix of our income (loss) before tax can be significantly affected by mark to market adjustments related to our pension and postretirement plans, which have been primarilydue during 2021, in accordance with the United States,American Rescue Plan Act of 2021 (the "ARPA relief plan") signed into law in March 2021. In January 2021, we made Pension Plan contributions of $23.1 million, excluding interest.

Cash and the impact of discrete items.Cash Flows

Income (loss) before the provision for income taxes generated in the United States and foreign locations for the quarters ended September 30, 2017 and 2016 is presented in the table below.
 Three months ended September 30, Nine months ended September 30,
(In thousands)20172016 20172016
United States$(3,653)$8,831
 $(41,070)$(20,611)
Other than United States(116,075)1,797
 (238,354)(23,975)
Income (loss) before income taxes$(119,728)$10,628
 $(279,424)$(44,586)

See Note 7 to the condensed consolidated financial statements for explanation of differences between our effective income tax rate and our statutory rate.

Liquidity and capital resources


At September 30, 2017,March 31, 2021, our unrestricted cash and cash equivalents totaled $48.1$53.8 million and we had $209.7total debt of $228.8 million. Our foreign business locations held $25.2 million of our total borrowings ($247.2 million face value before debt discounts).unrestricted cash and cash equivalents at March 31, 2021. In general, our foreign cash balances are not available to fund our United StatesU.S. operations unless the funds are repatriated or used to repay intercompany loans made from the United StatesU.S. to foreign entities, which could expose us to taxes we presently have not made a provision for in our results of operations. $44.8 million of our $48.1 million of unrestricted cash and cash equivalents at September 30, 2017 was held by foreign entities. We presently have no plans to repatriate these funds to the United States asU.S. As described above, effective with A&R Amendment No. 3 on March 4, 2021, we believe that our United States liquidity is sufficient to meet the anticipated cash requirements of our United States operations.

Historically, our primary sources of liquidity have been cash from operations, borrowingscan no longer obtain revolving loans under our United States revolving credit facility and borrowings under foreign revolving credit facilities. Our borrowing capacity under our United States revolving credit facility is primarily limited by the financial covenants, which are most significantly affected by our trailing 12 months EBITDA (as defined in the credit agreement governing the facility). The significant loss accruals we recorded in the second quarter of 2017 and the fourth quarter of 2016 reduced our trailing 12 months EBITDA and, in turn, our ability to comply with our financial covenants. Accordingly, we amended our credit agreement in February 2017 and August 2017 to, among other things, provide covenant relief.agreement.


To provide additional liquidity, we entered into a second lien term loan facility on August 9, 2017 with an affiliate of American Industrial Partners ("AIP"). The second lien term loan facility consists of a second lien term loan in the principal amount of $175.9 million, all of which we borrowed on August 9, 2017, and a delayed draw term loan in the principal amount of $20.0 million, which may be drawn in a single draw prior to June 30, 2020, subject to certain conditions. On August 9, 2017, we used $125.0 million of the second lien term loan proceeds to repay borrowings outstanding under our United States revolving credit facility and pay fees and expenses related to the second lien term loan facility and the amendment of our United States revolving credit facility. The balance of the second lien term loan proceeds were used to repurchase approximately 4.8 million shares of our common stock held by an affiliate of AIP for approximately $50.9 million, which was one of the conditions precedent for the second lien term loan facility. As described in Note 18 to the

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condensed consolidated financial statements, the difference between the price paid for the shares and the estimated fair value of the shares repurchased was treated as a debt discount together with the direct financing costs.

We had approximately $94.7 million of availability under our United States revolving credit facility as of September 30, 2017. Based on the amended United States revolving credit and second lien term loan facilities, we believe we have adequate sources of liquidity at September 30, 2017 to meet our cash requirements. Our assessment is based on our operating forecast, backlog, cash on-hand, borrowing capacity, planned capital investments and ability to manage future discretionary cash outflows during the next 12 month period. We expect our operations to use cash over the full year of 2017 and into the first half of 2018, particularly in the Renewable segment, as we fund contract losses and work down advanced bill positions. Our forecasted use of cash over the next 12 months is expected to be funded in part through borrowings from our United States revolving credit facility. Our United States revolving credit facility allows for nearly immediate borrowing of available capacity to fund cash requirements in the normal course of business, meaning that the minimum United States cash on hand is maintained to minimize borrowing costs. After giving effect to the $50.0 million of unrestricted cash on hand required under our financial covenants, we expect to have between $73.0 million and $173.0 million of available borrowing capacity from our United States revolving credit facility during the next 12 months based on our forecast of the trailing 12 month EBITDA calculation and forecasted borrowings. We expect cash and cash equivalents, cash flows from operations, and our borrowing capacity under our United States revolving credit facility and second lien term loan facility to be sufficient to meet our liquidity needs for at least 12 months from the date of this filing.

Our net cashCash used in operations was $150.8$54.0 million in the ninethree months ended September 30, 2017, compared to cash used in operations of $39.8 millionMarch 31, 2021, which is primarily represented in the nine months ended September 30, 2016. The change is partially attributable to the $228.3 million increase in our net loss of continuing operations, the change in the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016. Also,pension, postretirement and employee benefit liabilities. There was also a $13.0$13.2 million net decrease in cash outflows associated with changes in accounts receivable, contracts in progress and advanced billings in the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016 resulted primarily from the timing of billings and stage of completion of large, ongoing contracts in our Renewable segment. Generally, we try to structure contract milestones to mirror our expected cash outflows over the course of the contract; however, the timing of milestone receipts can greatly affect our overall cash position. Our portfolio of Renewable energy contracts at both September 30, 2017 and December 31, 2016 included milestone payments from our customers in advance of incurring the contract expenses, and as a result we are in an advance bill position on most of these contracts at both dates. Because of the advanced bill positions, combined with the increase in expected costs to complete the Renewable loss contracts, we expect the use of cash by the Renewable segment to continue during 2017 and into the first half of 2018 until these contracts are completed. Partially offsetting these operating cash outflows was a $25.6 million decrease in operating cash outflows associated with changes in contract related accounts payable and accrued liabilities inworking capital. In the ninethree months ended September 30, 2017 compared to the nine months ended September 30, 2016.

Our netMarch 31, 2020, cash used in operations was $35.5 million primarily represented in the net loss of continuing operations before depreciation and amortization. There was also a $10.7 million net increase in operating cash outflows associated with changes in working capital.

Cash flows from investing activities was $57.9provided net cash of $4.5 million in the ninethree months ended September 30, 2017March 31, 2021, primarily related to $3.3 million proceeds from the sale of business, proceeds from asset disposals and $191.6net change in available-for-sale securities, offset by $1.4 million of capital expenditures. In the three months ended March 31, 2020, cash flows from investing activities used net cash of $4.5 million, primarily from the net change in available-for-sale securities and $2.4 million of capital expenditures.

Cash flows from financing activities provided net cash of $35.9 million in the ninethree months ended September 30, 2016. TheMarch 31, 2021, primarily related to the $125.0 million issuance of senior notes and $161.5 million common stock issuance, primarily offset by $75.0 million last out term loans repayments, a $164.3 million net reduction on the U.S. Revolving Credit Facility and $7.7 million of financing fees. Cash flows from financing activities provided net cash used in investing activities was primarily attributable to the $52.5 million acquisition of Universal on January 11, 2017, net of $4.4 million cash acquired in the business combination (see Note 4 to the condensed consolidated financial statements). The net cash used in investing activities in the nine months ended September 30, 2016 included $143.0 million acquisition of SPIG, net of $26.0 million cash acquired, and a $26.2 million contribution to increase our interest in TBWES, our joint venture in India. Capital expenditures were $10.7 million and $20.4$30.8 million in the ninethree months ended September 30, 2017 and 2016, respectively.

Our net cash provided by financing activities was $155.5March 31, 2020, primarily related to $30.0 million inface value borrowings from the nine months ended September 30, 2017, compared to $64.6last out term loans, $6.0 million of cash used in the nine months ended September 30, 2016. The cash provided by financing activities in the nine months ended September 30, 2017 was a result of net borrowings from our United Statesthe U.S. revolving credit facility, partly offset by $5.7 million of $49.1financing fees.

2021 Senior Notes Offering

On February 12, 2021, we completed a public offering of $125.0 million aggregate principal amount of our 8.125% senior notes due 2026. The offering was conducted pursuant to an underwriting agreement (the “Notes Underwriting Agreement”) dated February 10, 2021, between us and B. Riley Securities, Inc., as representative of the several underwriters (the “Underwriters”). At the completion, we received gross proceeds of approximately $125.0 million. Net proceeds received were approximately $120.0 million after deducting underwriting discounts and commissions, but before expenses. The Senior Notes were issued in denominations of $25.00 per Senior Note and in integral multiples thereof.

In addition to the public offering, we issued $35.0 million of Senior Notes to B. Riley Financial, Inc. in exchange for a deemed prepayment of our existing Last Out Term Loan Tranche A-3 in a concurrent private offering.

The Senior Notes are senior unsecured obligations of the Company and rank equally in right of payment with all of the Company’s other existing and future senior unsecured and unsubordinated indebtedness. The Senior Notes bear interest at the rate of 8.125% per annum. Interest on the Senior Notes is payable quarterly in arrears on January 31, April 30, July 31 and October 31 of each year, commencing on April 30, 2021. The Senior Notes will mature on February 28, 2026.
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We may, at our option, at any time and from time to time, redeem the Senior Notes for cash in whole or in part (i) on or after February 28, 2022 and prior to February 28, 2023, at a price equal to $25.75 per Senior Note, plus accrued and unpaid interest to, but excluding, the date of redemption, (ii) on or after February 28, 2023 and prior to February 29, 2024, at a price equal to $25.50 per Senior Note, plus accrued and unpaid interest to, but excluding, the date of redemption, (iii) on or after February 29, 2024 and prior to February 28, 2025, at a price equal to $25.25 per Senior Note, plus accrued and unpaid interest to, but excluding, the date of redemption and (iv) on or after February 28, 2025 and prior to maturity, at a price equal to 100% of their principal amount, plus accrued and unpaid interest to, but excluding, the date of redemption. On and after any redemption date, interest will cease to accrue on the redeemed Senior Notes. The Indenture governing the Senior Notes contains customary events of default and cure provisions.

On March 31, 2021, we entered into a sales agreement with B. Riley Securities, Inc., a related party, in which we may sell to or through B. Riley Securities, Inc., from time to time, additional Senior Notes up to an aggregated principal amount of $150.0 million of Senior Notes. The Senior Notes will have the same terms as (other than date of issuance), form a single series of debt securities with and have the same CUSIP number and be fungible with, the Senior Notes issued February 12, 2021, as described above.

Senior Notes - Subsequent Event

As of May 10, 2021, the Company has sold $10.6 million aggregate principal amount of Senior Notes for $11.0 million gross proceeds related to the March 31, 2021 sales agreement disclosed above. The Company received $10.7 million of net cash proceeds after commission and fees.

Exchange Agreement

On February 12, 2021, the Company and B. Riley entered into a letter agreement (the “Exchange Agreement”) pursuant to which we issued to B. Riley, a related party, $35.0 million aggregate principal amount of Senior Notes in exchange for a deemed prepayment of $35.0 million of our existing Tranche A term loan with B. Riley Financial (the “Exchange”).

2021 Common Stock Offering

On February 12, 2021, we completed a public offering of our common stock pursuant to an underwriting agreement (the “Underwriting Agreement”) dated February 9, 2021, between us and B. Riley Securities, Inc., as representative of the several underwriters (the “Underwriters”). At the closing, we issued to the public 29,487,180 shares of our common stock and received gross proceeds of approximately $172.5 million. Net proceeds from the offering were approximately $163.0 million after deducting underwriting discounts and commissions, but before expenses.

The net proceeds of the offering were used to fundmake a prepayment towards the balance outstanding under our working capital needsU.S. Revolving Credit Facility and permanently reduce the Universal acquisition.commitments under our senior secured credit facilities.

Last Out Term Loans

Last Out Term Loans are incurred under our A&R Credit Agreement and are pari passu with the U.S. Revolving Credit Facility except for certain payment subordination provisions. The Last Out Term Loans are subject to the same representations and warranties, covenants and events of default as the U.S. Revolving Credit Facility. In addition, cash provided by financing activities inconnection with the nine months ended September 30, 2017 included proceeds from the issuanceeffectiveness of the second lien term loan of $141.7A&R Credit Agreement, the maturity date for the Last Out Term Loans was extended to December 30, 2022.

On February 12, 2021, in connection with the Exchange described in Note 13, the interest rate on the remaining Last Out Term Loan Tranche A balances was reduced to 6.625% from 12.0%. Interest expense associated with the Last Out Term Loans is detailed in Note 17.

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Tranche A-3
Effective with Amendment No. 16 to our credit agreement, we borrowed $150.0 million which were used to repurchase $16.7 million of sharesface value from B. Riley, a related party, fund debt issuance costsunder Tranche A-3. The $141.4 million net proceeds from Tranche A-3 were primarily used to pay the amounts due under the settlement agreements covering certain European B&W Renewable loss projects as described in Note 4, with the remainder used for working capital and repaygeneral corporate purposes.

As part of the Equitization Transactions of July 23, 2019, we prepaid $39.7 million principal of Tranche A-3. Also, on March 4, 2021, effective with A&R Amendment No. 3, we paid down an additional $40.0 million on our existing Tranche A-3.

Tranche A-4
On January 31, 2020, effective with Amendment No. 20 to the Amended Credit Agreement, we borrowed $30.0 million face value of the Tranche A-4 from B. Riley, a portionrelated party and received net proceeds of $26.3 million after incurring total fees of $3.7 million. On March 4, 2021, effective with A&R Amendment No. 3, we paid down the $30.0 million outstanding on our existing Tranche A-4.

Tranche A-5
On January 31, 2020, we entered into Amendment No. 20 to the Amended Credit Agreement. Amendment No. 20 provides an incremental Tranche A-5 to be extended prior to maturity of the Last Out Term Loans under the Amended Credit Agreement in the event certain customer letters of credit are drawn. The terms of Tranche A-5 are the same as the terms for the Tranche A-3 under the Amended Credit Agreement. As of May 13, 2021, no borrowings occurred under Tranche A-5.

Tranche A-6
On May 14, 2020, effective with the A&R Credit Agreement, we borrowed $30.0 million face value of the Tranche A-6 from B. Riley, a related party, as described in Note 16. On November 30, 2020, we borrowed an additional $10.0 million face value of the Tranche A-6 pursuant to the terms of the A&R Credit Agreement which required the proceeds to be applied as a permanent reduction of the U.S. Revolving Credit Facility.

As described in Note 13, on February 12, 2021, we issued $35.0 million of Senior Notes to B. Riley Financial, Inc. in exchange for a deemed prepayment of our United States revolvingexisting Tranche A-6 as part of the Exchange. Also, on March 4, 2021, effective with A&R Amendment No. 3, we paid down the remaining $5 million outstanding on our existing Tranche A-6.

Tranche A-7
The A&R Credit Agreement provided us with up to $50.0 million of additional funding for letters of credit facility. The net cash used in financing activities in the nine months ended September 30, 2016 is primarily attributableform of Tranche A-7, from B. Riley, a related party, as described in Note 16. The $50.0 million will be available upon request by the Company, subject to repurchasescertain limitations. As of $78.4 million of our common stock.May 13, 2021, no borrowings occurred under Tranche A-7.



A&R Credit Agreement
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United States revolving credit facility


On May 11, 2015, we entered into aan amended credit agreement with a syndicate of lenders ("Credit Agreement") in connection with our spin-off from The Babcock & Wilcox Company. TheCompany (now BWX Technologies, Inc.) which governs the U.S. Revolving Credit Facility and the Last Out Term Loans. Since June 2016, we have entered into a number of waivers and amendments to the credit agreement, including several to avoid default under the financial and other covenants specified in the credit agreement.

On May 14, 2020, we entered into the A&R Credit Agreement which is scheduled to mature on Junerefinances and extends the maturity of our U.S. Revolving Credit Facility and Last Out Term Loans.

On October 30, 2020, we entered into A&R Amendment No. 1 with Bank of America, N.A. A&R Amendment No. 1, among other matters, (i) provides that, under the A&R Credit Agreement, the "Commitment Reduction Amount" shall be an amount equal to (a) for any "Prepayment Event" relating to a "Recovery Event" (each as defined under the A&R Credit Agreement), 50% of the net cash proceeds with respect to such Prepayment Event, and (b) with respect to any other Prepayment Event under the A&R Credit Agreement, the net cash proceeds with respect to such Prepayment Event, and (ii) establishes new financial covenants for interest coverage ratios and senior leverage ratios.

On February 8, 2021, we entered into A&R Amendment No. 2 with Bank of America, N.A., as administrative agent to the lenders under our Amended and Restated Credit Agreement. A&R Amendment No. 2 amends our A&R Credit Agreement to, among other matters, (i) permit the issuance of 8.125% Senior Notes offering described above, (ii) permit the deemed prepayment of $35.0 million of our Last Out Term Loan Tranche A with $35.0 million principal amount of Senior Notes, (iii)
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provide that 75% of the Senior Notes gross proceeds shall be used to repay outstanding borrowings and permanently reduce the commitments under our senior secured credit facilities, and (iv) provide that $5.0 million of certain previously deferred facility fees will be paid by the Company.

On March 4, 2021, we entered into A&R Amendment No. 3 with Bank of America. A&R Amendment No. 3, among other matters, at the date of effectiveness (i) permits the prepayment of certain term loans, (ii) reduces the revolving credit commitments to $130.0 million and removes the ability to obtain revolving loans under the credit agreement, and (iii) amends certain covenants and conditions to the extension of credit.

On March 26, 2021, we entered into A&R Amendment No. 4 with Bank of America. A&R Amendment No. 4, among other matters, at the date of effectiveness (i) permits the issuance of 8.125% senior notes due 2026 up to an aggregate principle amount of $150.0 million, and (ii) modifies the calculation of the senior leverage ratio.

On May 10, 2021, we entered into A&R Amendment No. 5 with Bank of America, N.A. A&R Amendment No. 5, among other matters, at the date of effectiveness (i) permits the issuance of certain disqualified stock and the payment of regular cash dividends thereon and (ii) permits the related cashless prepayment of term loans.

U.S. Revolving Credit Facility

As of March 31, 2021, effective with Amendment No. 3 to the A&R Credit Agreement described above, the U.S. Revolving Credit Facility provides for a senior secured revolving credit facility, initially in an aggregate letters of credit amount of up to $600$130.0 million. The proceeds of loans under the Credit Agreement are available for working capital needs and other general corporate purposes, and the full amount is available to support the issuance of letters of credit.


On February 24, 2017 and August 9, 2017, we entered into amendments to the Credit Agreement (the “Amendments” and the Credit Agreement, as amended to date, the “Amended Credit Agreement”) to, among other things: (1) permit us to incur the debt under the second lien term loan facility, (2) modify the definition of EBITDA in the Amended Credit Agreement to exclude: up to $98.1 million of charges for certain Renewable segment contracts for periods including the quarter ended December 31, 2016, up to $115.2 million of charges for certain Renewable segment contracts for periods including the quarter ended June 30, 2017, up to $4.0 million of aggregate restructuring expenses incurred during the period from July 1, 2017 through September 30, 2018 measured on a consecutive four-quarter basis, realized and unrealized foreign exchange losses resulting from the impact of foreign currency changes on the valuation of assets and liabilities, and fees and expenses incurred in connection with the August 9, 2017 amendment, (3) replace the maximum leverage ratio with a maximum senior debt leverage ratio, (4) decrease the minimum consolidated interest coverage ratio, (5) limit our ability to borrow under the Amended Credit Agreement during the covenant relief period to $250.0 million in the aggregate, (6) reduce commitments under the revolving credit facility from $600.0 million to $500.0 million, (7) require us to maintain liquidity (as defined in the Amended Credit Agreement) of at least $75.0 million as of the last business day of any calendar month, (8) require us to repay outstanding borrowings under the revolving credit facility (without any reduction in commitments) with certain excess cash, (9) increase the pricing for borrowings and commitment fees under the Amended Credit Agreement, (10) limit our ability to incur debt and liens during the covenant relief period, (11) limit our ability to make acquisitions and investments in third parties during the covenant relief period, (12) prohibit us from paying dividends and undertaking stock repurchases during the covenant relief period (other than our share repurchase from an affiliate of AIP), (13) prohibit us from exercising the accordion described below during the covenant relief period, (14) limit our financial and commercial letters of credit outstanding under the Amended Credit Agreement to $30.0 million during the covenant relief period, (15) require us to reduce commitments under the Amended Credit Agreement with the proceeds of certain debt issuances and asset sales, (16) beginning with the quarter ended September 30, 2017, limit to no more than $25.0 million any cumulative net income losses attributable to certain Vølund projects, and (17) increase reporting obligations and require us to hire a third-party consultant. The covenant relief period will end, at our election, when the conditions set forth in the Amended Credit Agreement are satisfied, but in no event earlier than the date on which we provide the compliance certificate for our fiscal quarter ended December 31, 2018.

Other than during the covenant relief period, the Amended Credit Agreement contains an accordion feature that allows us, subject to the satisfaction of certain conditions, including the receipt of increased commitments from existing lenders or new commitments from new lenders, to increase the amount of the commitments under the revolving credit facility in an aggregate amount not to exceed the sum of (1) $200.0 million plus (2) an unlimited amount, so long as for any commitment increase under this subclause (2) our senior leverage ratio (assuming the full amount of any commitment increase under this subclause (2) is drawn) is equal to or less than 2.0:1.0 after giving pro forma effect thereto. During the covenant relief period, our ability to exercise the accordion feature will be prohibited.

After giving effect to Amendments, loans outstanding under the Amended Credit Agreement bear interest at our option at either (1) the LIBOR rate plus 5.0% per annum or (2) the base rate (the highest of the Federal Funds rate plus 0.5%, the one month LIBOR rate plus 1.0%, or the administrative agent's prime rate) plus 4.0% per annum. A commitment fee of 1.0% per annum is charged on the unused portions of the revolving credit facility. A letter of credit fee of 2.50% per annum is charged with respect to the amount of each financial letter of credit outstanding, and a letter of credit fee of 1.50% per annum is charged with respect to the amount of each performance and commercial letter of credit outstanding. Additionally, an annual facility fee of $1.5 million is payable on the first business day of 2018 and 2019, and a pro rated amount is payable on the first business day of 2020.

The Amended Credit Agreement includes financial covenants that are tested on a quarterly basis, based on the rolling four-quarter period that ends on the last day of each fiscal quarter. The maximum permitted senior debt leverage ratio as defined in the Amended Credit Agreement is:
6.00:1.0 for the quarter ended September 30, 2017,
8.50:1.0 for each of the quarters ending December 31, 2017 andAt March 31, 2018,

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6.25:1.0 for the quarter ending June 30, 2018,
4.00:1.0 for the quarter ending September 30, 2018,
3.75:1.0 for the quarter ending December 31, 2018,
3.25:1.0 for each of the quarters ending March 31, 2019 and June 30, 2019, and
3.00:1.0 for each of the quarters ending September 30, 2019 and each quarter thereafter.

The minimum consolidated interest coverage ratio as defined in the Credit Agreement is:
1.50:1.0 for the quarter ended September 30, 2017,
1.00:1.0 for each of the quarters ending December 31, 2017 and March 31, 2018,
1.25:1.0 for the quarter ending June 30, 2018,
1.50:1.0 for each of the quarters ending September 30, 2018 and December 31, 2018,
1.75:1.0 for each of the quarters ending March 31, 2019 and June 30, 2019, and
2.00:1.0 for each of the quarters ending September 30, 2019 and each quarter thereafter.

Beginning with September 30, 2017, consolidated capital expenditures in each fiscal year are limited to $27.5 million.

At September 30, 2017,2021, usage under the AmendedU.S. Revolving Credit AgreementFacility consisted of $58.9 million in borrowings at an effective interest rate of 6.88%, $7.7$22.0 million of financial letters of credit and $87.2$82.1 million of performance letters of credit. At September 30, 2017,March 31, 2021, we had approximately $94.7$25.9 million available for borrowings or to meet letter of credit requirements primarily based on trailingour overall facility size.

On February 12, month EBITDA, and our leverage (as defined in2021, we received gross proceeds of $125.0 million from the Amended2021 Senior Notes offering. As required by the Company’s U.S. Revolving Credit Agreement) ratio was 3.00 and our interest coverage ratio was 2.59. In addition, through September 30, 2017, we have used $11.6 millionFacility, 75% of the $25.0gross proceeds, or $93.8 million, of permitted net income loss attributable to Vølund projects. At September 30, 2017, we were in compliance with allreceived by the Company was applied as a permanent reduction of the covenants set forthU.S. Revolving Credit Facility as of February 12, 2021.

Also on February 16, 2021, we prepaid $167.1 million towards the remaining outstanding U.S. Revolving Credit Facility.

Effective with A&R Amendment No. 3 on March 4, 2021, we can no longer obtain revolving loans under the credit agreement.

2021 Preferred Stock Offerings

On May 7, 2021, we completed a public offering of our 7.75% Series A Cumulative Perpetual Preferred Stock (the "Preferred Stock") pursuant to an underwriting agreement (the “Underwriting Agreement”) dated May 4, 2021, between us and B. Riley Securities, Inc., as representative of the several underwriters (the “Underwriters”). At the closing, we issued to the public 4,000,000 shares of our Preferred Stock, at an offering price of $25.00 per share for gross proceeds of approximately $100.0 million before deducting underwriting discounts, commissions and estimated offering expenses. We have granted the underwriters a 30-day option to purchase up to an additional 600,000 shares of the Preferred Stock in the Amended Credit Agreement, and we forecast our complianceconnection with the financial covenants to be closest to the minimum thresholds at March 31, 2018.

We plan to execute the actions necessary to enable us to maintain compliance with the financial and other covenants described above. We believe we will accomplish our plans to maintain compliance with our financial and other covenants, and believe our cash on hand,offering. Net proceeds from potential future asset sales,the offering were approximately $95.7 million after deducting underwriting discounts, commissions but before expenses. The Preferred Stock has a par value of $0.01 per share and is perpetual and has no maturity date. The Preferred Stock has a cumulative cash flows from operationsdividend, when and amounts available underas if declared by our United States revolving credit facility will be adequate to enable us to fund our operations. However, there can be no assurance that we will be successful. Our ability to generate cash flows from operations, access funding under reasonable terms, contract business with reasonable terms and conditions and comply with our financial and other covenants may be impacted by a varietyBoard of business, economic, regulatory and other factors, which may be outside of our control. Such factors include, but are not limited to: our ability to access capital markets and complete asset dispositions, delay or cancellation of projects, decreased profitability on our projects due to matters not reasonably forecasted, changes in the timing of cash flows on our projects due to the timing of receipts and required payments of liabilities and funding of our loss projects, the timing of approval or settlement of change orders and claims, changes in foreign currency exchange or interest rates, performance of pension plan assets or changes in actuarially determined liabilities. In addition, we could be impacted if our customers experience a material change in their ability to pay us or if the banks associated with our lending facilities were to cease or reduce operations. Also, we have what we believe is adequate capacity to provide letters of credit and secure surety bonds in support of current and future projects, but there can be no assurance that these will be renewed or available at reasonable commercial terms in the future.

Second lien term loan

On August 9, 2017, we entered into a second lien credit agreement (the "Second Lien Credit Agreement") with an affiliate of AIP governing a second lien term loan facility. The second lien term loan facility consists of a second lien term loan in the principal amount of $175.9 million, all of which we borrowed on August 9, 2017, and a delayed draw term loan facility in the principal amount of up to $20.0 million, which may be drawn in a single draw prior to June 30, 2020, subject to certain conditions. Borrowings under the second lien term loan, other than the delayed draw term loan, bear interest at 10% per annum, and borrowings under the delayed draw term loan bear interest at 12% per annum, in each case payable quarterly. Undrawn amounts under the delayed draw term loan accrue a commitment feeDirectors, at a rate of 0.50%7.75% per annum. year on the liquidation preference amount of $25.00 per share and payable quarterly in arrears.

The second lien term loan has a scheduled maturityPreferred Stock will, as to dividend rights and rights as to the distribution of December 30, 2020. Any delayed draw borrowings would also have a scheduled maturity of December 30, 2020. In connection withassets upon our entry into the second lien term loan facility, we used a portion of the proceeds from the second lien term loanliquidation, dissolution or winding-up, rank: (1) senior to repurchase approximately 4.8 million sharesall classes or series of our common stock (approximately 10%and to all other capital stock issued by us expressly designated as ranking junior to the Preferred Stock; (2) on parity with any future class or series of our shares outstanding) heldcapital stock expressly designated as ranking on parity with the Preferred Stock; (3) junior to any future class or series of our capital stock expressly designated as ranking senior to the Preferred Stock; and (4) junior to all our existing and future indebtedness.

The Preferred Stock has no stated maturity and is not subject to mandatory redemption or any sinking fund. We will pay cumulative cash dividends on the Preferred Stock when, as and if declared by an affiliateour Board of AIPDirectors (or a duly authorized committee of our Board of Directors), only out of funds legally available for approximately $50.9 million, which was onepayment of dividends. Dividends on the Preferred Stock will accrue on the stated amount of $25.00 per share of the conditions precedent for the second lien term loan facility.


Preferred Stock at a rate per annum equal to
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7.75% (equivalent to $1.9375 per year), payable quarterly in arrears. Dividends on the Series A Preferred Stock declared by our board of Contents


Borrowings under the Second Lien Credit Agreement are (1) guaranteed by substantially alldirectors (or a duly authorized committee of our wholly owned domestic subsidiaries, but excluding our captive insurance subsidiary,board of directors) will be payable quarterly in arrears on March 31, June 30, September 30 and (2) secured by second-priority liensDecember 31, beginning on certain assets owned by us and the guarantors. The Second Lien Credit Agreement requires interest payments on loans on a periodic basis until maturity. Voluntary prepayments made during the first year after closing are subject to a make-whole premium, voluntary prepayments made during the second year after closing are subject to a a 3.0% premium and voluntary prepayments made during the third year after closing are subject to a 2.0% premium. The Second Lien Credit Agreement requires us to make certain prepayments on any outstanding loans after receipt of cash proceeds from certain asset sales or other events, subject to certain exceptions and a right to reinvest such proceeds in certain circumstances, and subject to certain restrictions contained in an intercreditor agreement among the lenders under the Amended Credit Agreement and the Second Lien Credit Agreement.June 30, 2021.


The Second Liennet proceeds of the offering are intended to be used for general corporate purposes, including clean energy growth initiatives, potential future acquisitions and reduction of net leverage.

Letters of Credit, Agreement contains representationsBank Guarantees and warranties, affirmative and restrictive covenants, financial covenants and events of default substantially similar to those contained in the Amended Credit Agreement, subject to appropriate cushions. The Second Lien Credit Agreement is generally less restrictive than the Amended Credit Agreement.Surety Bonds


Foreign revolving credit facilities

OutsideCertain subsidiaries primarily outside of the United States we have revolving credit facilities in Turkey, China and India that are used to provide working capital to our operations in each country. These three foreign revolving credit facilities allow us to borrow up to $14.8 million in aggregate and each have a one year term. At September 30, 2017, we had $12.4 million in borrowings outstanding under these foreign revolving credit facilities at an effective weighted-average interest rate of 5.17%.

Other credit arrangements

Certain subsidiaries have credit arrangements with various commercial banks and other financial institutions for the issuance of letters of credit and bank guarantees in associatedassociation with contracting activity. The aggregate value of all such letters of credit and bank guarantees not secured byopened outside of the United States revolving credit facilityU.S. Revolving Credit Facility as of September 30, 2017March 31, 2021 and December 31, 20162020 was $279.1$60.7 million and $255.2$88.5 million, respectively. The aggregate value of the letters of credit provided by the U.S. Revolving Credit Facility backstopping letters of credit or bank guarantees was $18.0 million as of March 31, 2021. Of the letters of credit issued under the U.S. Revolving Credit Facility, $27.3 million are subject to foreign currency revaluation.


We have posted surety bonds to support contractual obligations to customers relating to certain projects.contracts. We utilize bonding facilities to support such obligations, but the issuance of bonds under those facilities is typically at the surety's discretion. Although there can be no assurance that we will maintain our surety bonding capacity, we believe our current capacity is more than adequate to support our existing project requirements for the next 12 months. In addition, theseThese bonds generally indemnify customers should we fail to perform our obligations under the applicable contracts. We, and certain of our subsidiaries, have jointly executed general agreements of indemnity in favor of surety underwriters relating to surety bonds those underwriters issue in support of some of our contracting activity. As of September 30, 2017,March 31, 2021, bonds issued and outstanding under these arrangements in support of contracts totaled approximately $472.3$266.4 million. The aggregate value of the letters of credit provided by the U.S. Revolving Credit facility backstopping surety bonds was $34.7 million.


Our ability to obtain and maintain sufficient capacity under our U.S. Revolving Credit Facility is essential to allow us to support the issuance of letters of credit, bank guarantees and surety bonds. Without sufficient capacity, our ability to support contract security requirements in the future will be diminished.

Off-Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements that have, or are reasonably expected to have, a material current or future effect on its financial condition, results of operations, liquidity, capital expenditures or capital resources. at March 31, 2021.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES


For a summary of the critical accounting policies and estimates that we use in the preparation of our unaudited condensed consolidated financial statements,Condensed Consolidated Financial Statements, see "Critical“Critical Accounting Policies"Policies and Estimates” in our Annual Report. There have been no significant changes to our policies during the quarterthree months ended September 30, 2017.March 31, 2021.


Item 3. Quantitative and Qualitative Disclosures About Market Risk


Our exposures to market risks could changehave not changed materially from those disclosed under "Quantitative“Quantitative and Qualitative Disclosures About Market Risk"Risk” in our Annual Report. Our exposure to market risk from changes in interest rates relates primarily to our cash equivalents and our investment portfolio, which primarily consists of investments in United States Government obligations and highly liquid money market instruments denominated in United States dollars. We are averse to principal loss and seek to ensureReport on Form 10-K for the safety and preservation of our invested funds by limiting default risk, market risk and reinvestment risk. Our investments are classified as available-for-sale.year ended December 31, 2020.

Although the condensed and consolidated balance sheets do not present debt at fair value, our second lien term loan facility is fixed-rate debt, the fair value of which could fluctuate as a result of changes in prevailing market rates. On September 30, 2017, its principal balance was $175.9 million. Our United States revolving credit facility is variable-rate debt, so its fair

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value would not be significantly affected by changes in prevailing market rates. On September 30, 2017, its principal balance was $58.9 million.
We have operations in many foreign locations, and, as a result, our financial results could be significantly affected by factors such as changes in foreign currency exchange ("FX") rates or weak economic conditions in those foreign markets. Our primary foreign currency exposures are Danish kroner, Great British pound, Euro, Canadian dollar, and Chinese yuan. In order to manage the risks associated with FX rate fluctuations, we attempt to hedge those risks with FX derivative instruments, but there can be no assurance that such instruments will be available to us on reasonable terms. Historically, we have hedged those risks with FX forward contracts. We do not enter into speculative derivative positions. During the third quarter of 2017, our hedge counterparties removed the lines of credit supporting new FX forward contracts. Subsequently, we have not entered into any new FX forward contracts.

Item 4. Controls and Procedures


Disclosure controlsControls and proceduresProcedures


As of the end of the period covered by this report, the Company's management, with the participation of our Chief Executive Officer and the Chief Financial Officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures as(as that term is defined in Rules 13a-15(e) and 15d-15(e) ofadopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended (the "Exchange Act")). DisclosureOur disclosure controls and procedures, by their nature, can provide only reasonable assurance regarding the control objectives. It should be noted that the design of any system of disclosure controls and procedures is based in part upon various assumptions about the likelihood
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of future events, and we cannot assure that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.

Based on the evaluation referred to above, our Chief Executive Officer and Chief Financial Officer concluded that the design and operation of our disclosure controls and procedures are the controls and processes that are designedeffective as of March 31, 2021 to ensureprovide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. Disclosure controlsforms of the Securities and procedures include, without limitation, controlsExchange Commission, and procedures designed to ensure thatsuch information required to be disclosed in the reports that the Company files or submits under the Exchange Act is accumulated and communicated to management as appropriate to allow timely decisions regarding required disclosures. Our disclosure controls and procedures were developed through a process in which our management applied its judgment in assessing the costs and benefits of such controls and procedures, which, by their nature, can provide only reasonable assurance regarding the control objectives. The design of any system of disclosure controls and procedures is based in part upon various assumptions about the likelihood of future events, and we cannot provide absolute assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.disclosure.

On January 11, 2017, we acquired Universal, which would have represented approximately 3% of our total consolidated assets and consolidated revenues as of and for the year ended December 31, 2016, respectively. As the acquisition occurred during the last 12 months, the scope of our assessment of the effectiveness of disclosure controls and procedures does not include internal control over financial reporting related to Universal. This exclusion is in accordance with the SEC's general guidance that an assessment of a recently acquired business may be omitted from our internal control over financial reporting scope in the year of acquisition.

Based on the evaluation referred to above, our Chief Executive Officer and Chief Financial Officer concluded the disclosure controls and procedures were not effective due to the material weakness in internal control over financial reporting that we reported for the quarter ended June 30, 2017 at Vølund, a business unit within our Renewable segment, which remains unremediated as of September 30, 2017. Our management has completed all steps designed to remediate the material weakness at September 30, 2017; however, the material weakness at Vølund cannot be remediated until the new processes and procedures have been in place for a sufficient period of time and management has determined through testing that the controls are effective. Management expects the material weakness at Vølund will be remediated at December 31, 2017; however, our remediation plans cannot guarantee the material weakness will be remediated by a specific future date or at all.

We are committed to continuing to improve our internal control over financial reporting and will continue to review our financial reporting processes and internal controls at Vølund. As we continue to evaluate and work to improve our internal control over financial reporting, we may identify additional measures to address the material weakness at Vølund. Our management, with the oversight of the audit and finance committee of our board of directors, will continue to assess and take steps to enhance the overall design and capability of our control environment in the future.


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Changes in internal control over financial reportingInternal Control Over Financial Reporting


During the three months ended September 30, 2017, we finalized the implementation of a new financial consolidation, planning and reporting system. The new system replaces the legacy system we used under a service agreement with our former Parent. In connection with the implementation, we updated the processes that constitute our internal control over financial reporting, as necessary, to accommodate related changes to our accounting procedures and business processes. Although the processes that constitute our internal control over financial reporting have been affected by the system implementation, we do not believe the implementation of the financial consolidation, planning and reporting system has had or will have a material adverse effect on our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Management has taken steps to ensure that appropriate internal controls are designed and implemented. The new system and associated internal controls were subject to testing and data reconciliation during implementation.

Other than the system change described above, thereThere were no changes in our internal control over financial reporting during the quarterthree months ended September 30, 2017March 31, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. We have not experienced any material impact to our internal controls over financial reporting, despite the fact that some of our team members are working remotely in response to the COVID-19 pandemic. We are continually monitoring and assessing the COVID-19 situation on our internal controls to ensure their operating effectiveness.


PART II - OTHER INFORMATION


Item 1. Legal Proceedings


For information regarding ongoing investigations and litigation, see Note 19 to the unaudited condensed consolidated financial statementsCondensed Consolidated Financial Statements in Part I of this report, which we incorporate by reference into this Item.


Item 1A. Risk Factors


We are subject to various risks and uncertainties in the course of our business. The discussion of such risks and uncertainties may be found under "Risk Factors"“Risk Factors” in our Annual Report.Report on Form 10-K for the fiscal year ended December 31, 2020. There have been no material changes to such risk factors.


Item 2. Unregistered Sales of Equity Securities and Use of Proceeds


In August 2015, we announcedaccordance with the provisions of the employee benefit plans, the Company acquired the following shares in connection with the vesting of employee restricted stock that our Board of Directors authorized a share repurchase program.require us to withhold shares to satisfy employee statutory income tax withholding obligations. The following table provides information on our purchasesidentifies the number of equity securitiescommon shares and average price per share for each month during the quarter ended September 30, 2017. AnyMarch 31, 2021. The Company does not have a general share repurchase program at this time.
(data in whole amounts)
Period
Total number of shares acquired (1)
Average price per shareTotal number of shares purchased as part of publicly announced plans or programsApproximate dollar value of shares that may yet be purchased under the plans or programs
January 202179,182 $3.51 — $— 
February 2021416,665 $7.27 — $— 
March 2021— $— — $— 
Total495,847 $6.67 — $— 
(1) Acquired shares purchased that were not part of a publicly announced plan or program are related to repurchases of commonrecorded in treasury stock pursuant to the provisions of employee benefit plans that permit the repurchase of shares to satisfy statutory tax withholding obligations.in our Condensed Consolidated Balance Sheets.
Period  
Total number of shares purchased (1) (2)
Average
price paid
per share
Total number of
shares purchased as
part of publicly
announced plans  or
programs
Approximate dollar value of shares that may 
yet be purchased under 
the plans or programs
(in thousands) (3)
July 1, 2017 - July 31, 2017 3,620 $—— $100,000
August 1, 2017 - August 31, 2017 4,835,775 $10.52— $100,000
September 1, 2017 - September 30, 2017 944 $—— $100,000
Total 4,840,339  —  
(1)Includes 3,620, 953 and 944 shares repurchased in July, August and September, respectively, pursuant to the provisions of employee benefit plans that require us to repurchase shares to satisfy employee statutory income tax withholding obligations.
(2)Includes 4,834,822 shares repurchased for $50,883,635 on August 9, 2017 from an affiliate of AIP in conjunction with the issuance of our second lien term loan facility.
(3)On August 4, 2016, we announced that our board of directors authorized the repurchase of an indeterminate number of our shares of common stock in the open market at an aggregate market value of up to $100 million over the next twenty-four months. As of November 8, 2017, we have not made any share repurchases under the August 4, 2016 share repurchase authorization.

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Item 6. Exhibits
3.1
Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Babcock & Wilcox Enterprises, Inc. Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 (File No. 001-36876)).
10.13.2
Certificate of Amendment No. 3 dated August 9, 2017, to Credit Agreement, dated May 11, 2015, among Babcock & Wilcox Enterprises, Inc., asof the Borrower, BankRestated Certificate of America, N.A., as administrative Agent and Lender, and the other Lenders party theretoIncorporation (incorporated by reference to Exhibit 3.1 to the Babcock & Wilcox Enterprises, Inc. Current Report on Form 8-K filed August 15, 2017on June 17, 2019 (File No. 001-36876)).
10.23.3
Second Lien Credit Agreement, dated August 9, 2017, among Babcock & Wilcox Enterprises, Inc.,Certificate of Amendment of the Restated Certificate of Incorporation, as the Borrower, Lightship Capital LLC, as administrative Agent and Lender, and the other Lenders party theretoamended (incorporated by reference to Exhibit 3.1 to the Babcock & Wilcox Enterprises, Inc. Current Report on Form 8-K filed August 15, 2017on July 24, 2019 (File No.001-36876)No. 001-36876)).
10.33.4
Amendment No. 4 dated September 20, 2017Amended and Restated Bylaws (incorporated by reference to Credit Agreement, dated May 11, 2015, amongExhibit 3.1 to the Babcock & Wilcox Enterprises, Inc., Quarterly Report on Form 10-Q for the quarter ended March 31, 2017 (File No. 001-36876)).
4.3
Indenture dated February 12, 2021 (incorporated by reference to Exhibit 4.1 to the Babcock & Wilcox Enterprises, Inc. Current Report on Form 8-K filed on February 12, 2021 (File No. 001-36876)).
4.4
Supplemental Indenture dated February 12, 2021 (incorporated by reference to Exhibit 4.2 to the Babcock & Wilcox Enterprises, Inc. Current Report on Form 8-K filed on February 12, 2021 (File No. 001-36876)).
4.5
Form of 8.125% Senior Note Due 2026 (included in Exhibit 4.4)
10.1
Consultant Agreement by and between The Babcock & Wilcox Company Inc. and Henry Bartoli effective as of January 1, 2021 (incorporated by reference to Exhibit 10.3 of the borrower,Babcock & Wilcox Enterprises, Inc. Current Report on Form 8-K filed November 10, 2020 (File No. 001-36876)).
10.2
Exchange Agreement by and between Babcock & Wilcox Enterprises Inc. and B. Riley Financial, Inc. dated February 12, 2021 (incorporated by reference to Exhibit 1.3 to the Babcock & Wilcox Enterprises, Inc. Current Report on Form 8-K filed on February 12, 2021 (File No. 001-36876)).
10.3
Amendment No. 2 to Amended and Restated Credit Agreement by and between Babcock and Wilcox Enterprises Inc. and Bank of America, N.A., as Administrative Agent, anddated February 8, 2021 (incorporated by reference to Exhibit 10.1 to the other Lenders party theretoBabcock & Wilcox Enterprises, Inc. Current Report on Form 8-K filed on February 12, 2021 (File No. 001-36876)).
10.4
Amendment No. 3 to Amended and Restated Credit Agreement by and between Babcock and Wilcox Enterprises Inc. and Bank of America, N.A., as Administrative Agent, dated March 4, 2021 (incorporated by reference to Exhibit 10.68 to the Babcock & Wilcox Enterprises, Inc. Annual Report on Form 10-K for the year ended December 31, 2020 (File No. 001-36876)).
10.5
Amendment No. 4 to Amended and Restated Credit Agreement by and between Babcock and Wilcox Enterprises Inc. and Bank of America, N.A., as Administrative Agent, dated March 26, 2021 (incorporated by reference to Exhibit 10.1 to the Babcock & Wilcox Enterprises, Inc. Current Report on Form 8-K filed on April 1, 2021 (File No. 001-36876)).
10.6
Amendment No. 5 to Amended and Restated Credit Agreement by and between Babcock and Wilcox Enterprises Inc. and Bank of America, N.A., as Administrative Agent, dated May 10, 2021
31.1
Rule 13a-14(a)/15d-14(a) certification of Chief Executive OfficerOfficer.
31.2
Rule 13a-14(a)/15d-14(a) certification of Chief Financial OfficerOfficer.
32.1
Section 1350 certification of Chief Executive OfficerOfficer.
32.2
Section 1350 certification of Chief Financial OfficerOfficer.
101.INS101.SCHXBRL Instance Document
101.SCHXBRL Taxonomy Extension Schema DocumentDocument.
101.CALXBRL Taxonomy Extension Calculation Linkbase DocumentDocument.
101.LABXBRL Taxonomy Extension Label Linkbase DocumentDocument.
101.PREXBRL Taxonomy Extension Presentation Linkbase DocumentDocument.
101.DEFXBRL Taxonomy Extension Definition Linkbase DocumentDocument.
104Cover Page Interactive Data File (embedded within the inline XBRL document)
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SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


November 8, 2017BABCOCK & WILCOX ENTERPRISES, INC.
May 13, 2021By:By:/s/ Daniel W. HoehnLouis Salamone
Daniel W. HoehnLouis Salamone
Executive Vice President, Controller &Chief Financial Officer and Chief Accounting Officer

(Principal Financial and Accounting Officer and Duly Authorized Representative)











































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