

x☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2017~~March 31, 2022



¨☐			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

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 class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	BW	New York Stock Exchange
8.125% Senior Notes due 2026	BWSN	New York Stock Exchange
6.50% Senior Notes due 2026	BWNB	New York Stock Exchange
7.75% Series A Cumulative Perpetual Preferred Stock	BW PRA	New 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 ¨

¨ ~~(Do not check if a smaller reporting company)~~

If an emerging growth company, indicate by check mark if the registrant has elected not to use the ~~extension~~extended 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).

~~BABCOCK & WILCOX ENTERPRISES, INC.~~

This Quarterly Report on Form 10-Q, 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. All statements other than statements of historical or current fact included in this Quarterly Report are forward-looking statements. You should not place undue reliance on these statements. Forward-looking statements include words such as “expect,” “intend,” “plan,” “likely,” “seek,” “believe,” “project,” “forecast,” “target,” “goal,” “potential,” “estimate,” “may,” “might,” “will,” “would,” “should,” “could,” “can,” “have,” “due,” “anticipate,” “assume,” “contemplate,” “continue” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operational performance or other events.

These forward-looking statements are based on management’s current expectations and involve a number of risks and uncertainties, including, among other things, the impact of COVID-19 and the invasion of Ukraine by Russia and the capital markets and global economic climate generally; our ability to integrate acquired businesses and the impact of those acquired businesses on our cash flows, results of operations and financial condition, including our recent acquisitions of Fosler Construction Company Inc., VODA A/S, Fossil Power Systems, Inc., and Optimus Industries, LLC; 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 debt facility agreements; our ability to pay dividends on our 7.75% Series A Cumulative Perpetual Preferred Stock; our ability to make interest payments on our 8.125% senior notes due 2026 and our 6.50% notes due 2026; 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; 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 filed on March 8, 2022.

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.

Three months ended September 30, Nine months ended September 30,
(in thousands, except per share amounts) 2017 2016 2017 2016
Revenues $ 408,703
$ 410,955
$ 1,149,636
$ 1,198,279
Costs and expenses:
Cost of operations 361,416
337,198
1,095,271
1,018,314
Selling, general and administrative expenses 60,241
60,697
195,847
182,761
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
Losses (gains) on asset disposals, net 59
(2 ) 63
(17 )
Total costs and expenses 514,685
402,649
1,394,448
1,247,352
Equity in income (loss) and impairment of investees 1,234
2,827
(13,380 ) 4,887
Operating income (loss) (104,748 ) 11,133
(258,192 ) (44,186 )
Other income (expense):
Interest income 121
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:
Basic 46,149
49,621
47,905
50,613
Diluted 46,149
49,857
47,905
50,613

Condensed Consolidated Financial Statements.

~~Table of Contents~~

BABCOCK & WILCOX ENTERPRISES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Three months ended September 30, Nine months ended September 30,
(in thousands) 2017 2016 2017 2016
Net income (loss) $ (114,089 ) $ 9,011
$ (271,780 ) $ (43,796 )
Other comprehensive income (loss):
Currency translation adjustments, net of taxes 2,591
2,811
14,765
(7,015 )

Derivative financial instruments:
Unrealized gains (losses) on derivative financial instruments 398
1,419
2,642
5,476
Income taxes 130
287
(9 ) 990
Unrealized gains (losses) on derivative financial instruments, net of taxes 268
1,132
2,651
4,486
Derivative financial instrument (gains) losses reclassified into net income 5,679
(1,519 ) (769 ) (3,516 )
Income taxes 2,112
(272 ) 165
(615 )
Reclassification adjustment for (gains) losses included in net income, net of taxes 3,567
(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 taxes 11
7
31
(421 )
Amortization of benefit plan costs (benefits), net of taxes (630 ) 8
(2,312 ) 127

Investments:
Unrealized gains (losses) on investments 84
18
171
53
Income taxes 15
—
60
24
Unrealized gains (losses) on investments, net of taxes 69
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)		2022		2021
Net loss		$	(8,684)	$	(15,443)
Other comprehensive (loss) income:
Currency translation adjustments ("CTA")		(4,285)		$	(70)

Reclassification of CTA to net loss		—		(4,512)






Benefit obligations:
Pension and post retirement adjustments, net of tax		593		198

Other comprehensive loss		(3,692)		(4,384)
Total comprehensive loss		(12,376)		(19,827)
Comprehensive income attributable to non-controlling interest		461		3
Comprehensive loss attributable to stockholders		$	(11,915)	$	(19,824)

See accompanying notes to ~~condensed consolidated financial statements.~~

Condensed Consolidated Financial Statements.

~~Table of Contents~~

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, 2022		December 31, 2021
Cash and cash equivalents	$	48,137		$	95,887		Cash and cash equivalents	$	108,137	$	224,874
Restricted cash and cash equivalents	26,648			27,770			Restricted cash and cash equivalents	8,833		1,841
Accounts receivable – trade, net	320,202			282,347			Accounts receivable – trade, net	170,464		132,068
Accounts receivable – other	67,421			73,756			Accounts receivable – other	39,819		34,553
Contracts in progress	169,182			166,010			Contracts in progress	95,972		80,176
Inventories	91,099			85,807
Inventories, net							Inventories, net	90,401		79,527
Other current assets	37,339			45,957			Other current assets	27,343		29,395

Total current assets	760,028			777,534			Total current assets	540,969		582,434
Net property, plant and equipment	143,107			133,637
Net property, plant and equipment, and finance lease							Net property, plant and equipment, and finance lease	77,156		85,627
Goodwill	204,105			267,395			Goodwill	174,371		116,462
Deferred income taxes	163,013			163,388
Investments in unconsolidated affiliates	87,417			98,682
Intangible assets	80,000			71,039
Intangible assets, net							Intangible assets, net	65,452		43,795
Right-of-use assets							Right-of-use assets	30,500		30,163
Other assets	22,227			17,468			Other assets	66,251		54,784

Total assets	$	1,459,897		$	1,529,143		Total assets	$	954,699	$	913,265

Foreign revolving credit facilities	$	12,398		$	14,241
Accounts payable	243,565			220,737			Accounts payable	$	97,840	$	85,929
Accrued employee benefits	38,009			35,497			Accrued employee benefits	12,245		12,989
Advance billings on contracts	219,822			210,642			Advance billings on contracts	99,910		68,380
Accrued warranty expense	41,230			40,467			Accrued warranty expense	11,873		12,925
Financing lease liabilities							Financing lease liabilities	1,973		2,445
Operating lease liabilities							Operating lease liabilities	4,078		3,950
Other accrued liabilities	92,491			95,954			Other accrued liabilities	75,949		54,385
Loans payable							Loans payable	13,433		12,380

Total current liabilities	647,515			617,538			Total current liabilities	317,301		253,383
United States revolving credit facility	58,900			9,800
Second lien term loan facility	138,384			—
Pension and other accumulated postretirement benefit liabilities	275,269			301,259
Other noncurrent liabilities	45,046			39,595
Senior notes							Senior notes	328,870		326,366
Long term loans payable							Long term loans payable	1,476		1,543

Pension and other postretirement benefit liabilities							Pension and other postretirement benefit liabilities	174,873		182,730
Non-current finance lease liabilities							Non-current finance lease liabilities	29,094		29,369
Non-current operating lease liabilities							Non-current operating lease liabilities	27,032		26,685
Other non-current liabilities							Other non-current liabilities	32,111		34,567
Total liabilities	1,165,114			968,192			Total liabilities	910,757		854,643
Commitments and contingencies							Commitments and contingencies	0		0
Stockholders' equity:							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, respectively	499			544
Preferred stock, par value $0.01 per share, authorized shares of 20,000; issued and outstanding shares of 7,669 and 7,669 at March 31, 2022 and December 31, 2021, respectively							Preferred stock, par value $0.01 per share, authorized shares of 20,000; issued and outstanding shares of 7,669 and 7,669 at March 31, 2022 and December 31, 2021, respectively	77		77
Common stock, par value $0.01 per share, authorized shares of 500,000; issued and outstanding shares of 86,338 and 86,286 at March 31, 2022 and December 31, 2021, respectively							Common stock, par value $0.01 per share, authorized shares of 500,000; issued and outstanding shares of 86,338 and 86,286 at March 31, 2022 and December 31, 2021, respectively	5,111		5,110
Capital in excess of par value	800,183			806,589			Capital in excess of par value	1,520,545		1,518,872
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		)
Treasury stock at cost, 1,553 and 1,525 shares at March 31, 2022 and December 31, 2021, respectively							Treasury stock at cost, 1,553 and 1,525 shares at March 31, 2022 and December 31, 2021, respectively	(111,155)		(110,934)
Accumulated deficit							Accumulated deficit	(1,333,133)		(1,321,154)
Accumulated other comprehensive loss	(22,440		)	(36,482		)	Accumulated other comprehensive loss	(62,514)		(58,822)
Stockholders' equity attributable to shareholders	286,467			552,149			Stockholders' equity attributable to shareholders	18,931		33,149
Noncontrolling interest	8,316			8,802
Non-controlling interest							Non-controlling interest	25,011		25,473
Total stockholders' equity	294,783			560,951			Total stockholders' equity	43,942		58,622
Total liabilities and stockholders' equity	$	1,459,897		$	1,529,143		Total liabilities and stockholders' equity	$	954,699	$	913,265

See accompanying notes to ~~condensed consolidated financial statements.~~

Condensed Consolidated Financial Statements.


	Common Stock			Preferred Stock			Capital In Excess of Par Value		Treasury Stock		Accumulated Deficit		Accumulated Other Comprehensive (Loss)		Non-controlling Interest		Total Stockholders’ Equity
(in thousands, except share amounts)	Shares	Par Value		Shares	Par Value
Balance at December 31, 2021	86,286	$	5,110	7,669	$	77	$	1,518,872	$	(110,934)	$	(1,321,154)	$	(58,822)	$	25,473	$	58,622
Net loss	—	—		—	—		—		—		(8,264)		—		(420)		(8,684)
Currency translation adjustments	—	—		—	—		—		—		—		(4,285)		(41)		(4,326)

Pension and post retirement adjustments, net of tax	—	—		—	—		—		—		—		593		—		593
Stock-based compensation charges	52	1		—	—		1,765		(221)		—		—		—		1,545
Dividends to preferred stockholders	—	—		—	—		—		—		(3,715)		—		—		(3,715)
Preferred stock, net	—	—		—	—		(92)		—		—		—		—		(92)



Dividends to non-controlling interest	—	—		—	—		—		—		—		—		(1)		(1)
Balance at March 31, 2022	86,338	$	5,111	7,669	$	77	$	1,520,545	$	(111,155)	$	(1,333,133)	$	(62,514)	$	25,011	$	43,942


	Common Stock			Capital In Excess of Par Value		Treasury Stock		Accumulated Deficit		Accumulated Other Comprehensive (Loss)		Non-controlling Interest		Total Stockholders’ Deficit
(in thousands, except share amounts)	Shares	Par Value
Balance at December 31, 2020	54,452	$	4,784	$	1,164,436	$	(105,990)	$	(1,350,206)	$	(52,390)	$	1,104	$	(338,262)
Net loss	—	—		—		—		(15,464)		—		21		(15,443)
Currency translation adjustments	—	—		—		—		—		(4,582)		(24)		(4,606)
Pension and post retirement adjustments, net of tax	—	—		—		—		—		198		—		198
Stock-based compensation charges	1,725	22		4,480		(3,308)		—		—		—		1,194
Common stock offering	29,487	295		161,218		—		—		—		—		161,513
Dividends to non-controlling interest	—	—		—		—		—		—		(38)		(38)
Balance at March 31, 2021	85,664	$	5,101	$	1,330,134	$	(109,298)	$	(1,365,670)	$	(56,774)	$	1,063	$	(195,444)

See accompanying notes to Condensed Consolidated Financial Statements.

~~Table of Contents~~

BABCOCK & WILCOX ENTERPRISES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


	Three Months Ended March 31,
(in thousands)	2022		2021
Cash flows from operating activities:
Net loss	$	(8,684)	$	(15,443)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization of long-lived assets	6,202		4,058
Amortization of deferred financing costs and debt discount	834		5,779
Amortization of guaranty fee	231		452
Non-cash operating lease expense	1,174		1,140
Gain on sale of business	—		(358)

Gain on asset disposals	—		(2,005)
(Benefit from) provision for deferred income taxes	(689)		1,557
Prior service cost amortization for pension and postretirement plans	593		198
Stock-based compensation, net of associated income taxes	1,766		4,502

Foreign exchange	(3,085)		1,209
Changes in assets and liabilities:
Accounts receivable	(28,694)		(11,629)
Contracts in progress	(13,334)		(6,911)
Advance billings on contracts	27,532		18,226
Inventories	(2,996)		(1,863)
Income taxes	(7,009)		(1,919)
Accounts payable	11,297		6,246
Accrued and other current liabilities	(11,290)		(17,127)
Accrued contract loss	4,274		(129)
Pension liabilities, accrued postretirement benefits and employee benefits	(10,048)		(33,640)
Other, net	(10,073)		(6,297)
Net cash used in operating activities	(41,999)		(53,954)
Cash flows from investing activities:
Purchase of property, plant and equipment	(1,004)		(1,410)
Acquisition of business, net of cash acquired	(64,914)		—
Proceeds from sale of business and assets, net	—		3,297
Purchases of available-for-sale securities	(1,125)		(3,394)
Sales and maturities of available-for-sale securities	1,674		5,495
Other, net	(15)		534
Net cash (used in) from investing activities	(65,384)		4,522

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 assets 31,037
27,413
Amortization of debt issuance costs and debt discount 3,190
—
Income of equity method investees (4,813 ) (4,887 )
Goodwill impairment charges 86,903
—
Other than temporary impairment of equity method investment in TBWES 18,193
—
Losses on asset disposals and impairments, net 543
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 taxes 8,523
13,899
Changes in assets and liabilities, net of effects of acquisitions:
Accounts receivable 1,375
49,082
Accrued insurance receivable —
(15,000 )
Contracts in progress and advance billings on contracts 6,682
(53,983 )
Inventories 2,717
(7,990 )
Income taxes 9,196
6,296
Accounts payable 5,514
(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 securities 31,077
20,986
Other 61
(556 )
Net cash from investing activities (57,909 ) (191,614 )
Cash flows from financing activities:
Borrowings under our United States revolving credit facility 511,423
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 discount 141,674
—
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 activities 155,537
(64,629 )
Effects of exchange rate changes on cash 5,413
(4,126 )
Net increase (decrease) in cash and equivalents (47,750 ) (300,124 )
Cash and equivalents, beginning of period 95,887
365,192
Cash and equivalents, end of period $ 48,137
$ 65,068


	Three Months Ended March 31,
(in thousands)	2022		2021
Cash flows from financing activities:
Issuance of senior notes	2,016		125,000
Borrowings on loan payable	1,342		—
Repayments on loan payable	(31)		—

Repayments under last out term loans	—		(75,000)
Borrowings under U.S. revolving credit facility	—		14,500
Repayments of U.S. revolving credit facility	—		(178,800)

Preferred stock fees	—		—
Payment of preferred stock dividends	(3,715)		—
Shares of common stock returned to treasury stock	(221)		(3,308)


Issuance of common stock, net	—		161,513
Debt issuance costs	(119)		(7,727)
Other, net	(840)		(241)
Net cash (used in) from financing activities	(1,568)		35,937
Effects of exchange rate changes on cash	(794)		4,518
Net decrease in cash, cash equivalents and restricted cash	(109,745)		(8,977)
Cash, cash equivalents and restricted cash, beginning of period	226,715		67,423
Cash, cash equivalents and restricted cash, end of period	$	116,970	$	58,446

See accompanying notes to ~~condensed consolidated financial statements.~~

Condensed Consolidated Financial Statements.

~~Table of Contents~~

BABCOCK & WILCOX ENTERPRISES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~SEPTEMBER 30, 2017~~MARCH 31, 2022

NOTE 1 – BASIS OF PRESENTATION

These interim ~~financial statements~~Condensed 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 ("GAAP") 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 statements~~Condensed 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 subsequently spread globally. This global pandemic has disrupted business operations, including 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 changes in the severity of the virus in these countries and localities. These restrictions, including curtailment of travel and other activity, negatively impact our ability to conduct business.

Disruption to our global supply changes from COVID-19 has included impacts to the manufacturing, supply, distribution, transportation and delivery of our products. We also observed significant disruptions of the operations of our logistics, service providers, delays in shipments and negative impacts to pricing of certain of our products. Disruptions and delays in our supply chains as a result of the COVID-19 pandemic could continue to adversely impact our ability to meet our customers’ demands. Additionally, the prioritization of shipments of certain products as a result of the pandemic could cause delays in the shipment or delivery of our products. Such disruptions could result in reduced sales.

The volatility and variability of the virus has limited our ability to forecast the impact of COVID-19 on our customers and our business. The ongoing impact of COVID-19, including evolving strains such as the delta and omicron variants, has resulted in the reimposition of certain restrictions and may lead to the implementation of other restrictions 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 to begin during the prior two years to be delayed into 2022 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 2022 and beyond. Additionally, out of concern for our employees, even where restrictions permit employees to return to our offices and worksites, we incurred additional costs to protect our employees and advised 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 impact of COVID-19 and its variants 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 outbreaks, as well as the availability, effectiveness and acceptance of COVID-19 vaccinations in the U.S. and abroad, all of which are uncertain, out of our control, and cannot be predicted.

NOTE 2 – EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted ~~earnings~~loss per share of our common stock, net of non-controlling interest and dividends on preferred stock:


	Three Months Ended March 31,
(in thousands, except per share amounts)		2022		2021


Net loss attributable to stockholders of common stock		$	(11,979)	$	(15,464)

Weighted average shares used to calculate basic and diluted loss per share		87,992		71,396



Basic loss per share		$	(0.14)	$	(0.22)




Diluted loss per share		$	(0.14)	$	(0.22)

Three months ended September 30, Nine months ended September 30,
(in thousands, except per share amounts) 2017 2016 2017 2016
Net income (loss) attributable to shareholders $ (114,302 ) $ 8,894
$ (272,346 ) $ (44,089 )

Weighted average shares used to calculate basic earnings per share 46,149
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 share 46,149
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 nine months ended September 30, 2017 and the nine months ended September 30, 2016, basic and diluted shares are the same.~~

If we ~~had~~were in a net income inposition during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2022 and ~~2016,~~2021, diluted shares would include an additional 0.9 million and 1.6 million shares, respectively.

We excluded 0.4 million and ~~0.5 million shares, respectively. If we had net income in the quarter ended September 30, 2017, diluted shares would include an additional 0.5 million shares.~~

~~We excluded 2.0 million and 0.6~~0.4 million shares related to stock options from the diluted share calculation for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2022 and ~~2016,~~2021, 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 operations are assessed based on ~~three~~3 reportable market-facing segments as part of the Company's strategic, market-focused organizational and re-branding initiative to accelerate growth and provide stakeholders with improved visibility into our renewable and environmental growth platforms. Our reportable segments ~~which~~ are ~~summarized~~ as follows:

•Babcock & Wilcox Renewable: Cost-effective technologies for efficient and environmentally sustainable power and heat generation, including waste-to-energy, solar construction and installation, biomass energy and black liquor systems for the pulp and paper industry. B&W’s leading technologies support a circular economy by 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.

~~Power~~

Revenues exclude eliminations of revenues generated from sales to other segments or to other product lines within the segment. An analysis of our operations by segment: ~~focused~~ is as follows:


	Three Months Ended March 31,
(in thousands)		2022		2021
Revenues:
B&W Renewable segment
B&W Renewable		$	19,711	$	17,997
B&W Renewable Services (1)		8,288		5,260
Vølund		16,336		5,554
Fosler Solar		23,626		—
		67,961		28,811
B&W Environmental segment
B&W Environmental		18,185		17,433
SPIG		12,060		11,184
GMAB		4,703		2,543
		34,948		31,160
B&W Thermal segment
B&W Thermal		102,239		108,281
		102,239		108,281

Eliminations		(1,099)		(4)
Total Revenues		$	204,049	$	168,248

(1) B&W Renewable Services' 2021 revenues were reclassed from Vølund's prior year reported amount for year-over-year comparability.

Adjusted EBITDA on a consolidated basis is a non-GAAP metric defined as the sum of the adjusted EBITDA for each of the segments, further adjusted for corporate allocations and research and development costs. At a segment level, the adjusted EBITDA presented below is consistent with the manner in which the Company's chief operating decision maker ("CODM") reviews the results of operations and makes strategic decisions about the business and is calculated as earnings before interest, tax, depreciation and amortization adjusted for items such as gains or losses on asset sales, net pension benefits, restructuring costs, impairments, gains and losses on debt extinguishment, costs related to financial consulting, research and development costs and other costs that may not be directly controllable by segment management and are not allocated to the segment.The Company uses adjusted EBITDA internally to evaluate its performance and in making financial and operational decisions. When viewed in conjunction with GAAP results, the Company believes that its presentation of adjusted EBITDA provides investors with greater transparency and a greater understanding of factors affecting its financial condition and results of operations than GAAP measures alone. Prior period results have been revised to conform with the revised definition and present separate reconciling items in our reconciliation.

Adjusted EBITDA for each segment is presented below with a reconciliation from net loss.


	Three Months Ended March 31,
(in thousands)		2022		2021
Net loss		$	(8,684)	$	(15,443)
Interest expense		12,324		14,509
Income tax expense		1,230		2,836
Depreciation & amortization		6,202		4,058
EBITDA		11,072		5,960

Benefit plans, net		(7,452)		(9,098)
Gain on sales, net		(20)		(2,362)
Stock compensation		1,319		7,829
Restructuring activities and business services transition costs		2,688		993
Advisory fees for settlement costs and liquidity planning		1,032		1,978
Litigation costs		2,528		380
Acquisition pursuit and related costs		843		—
Product development (1)		852		—
Foreign exchange		(3,085)		1,209
Financial advisory services		375		933
Contract step-up purchase price adjustment		1,745		—
Loss from business held for sale		—		483
Other - net		123		266
Adjusted EBITDA		$	12,020	$	8,571

(1) Costs associated with development of commercially viable products that are ready to go to market.


	Three Months Ended March 31,
(in thousands)		2022		2021
Adjusted EBITDA
B&W Renewable segment		$	1,455	$	204
B&W Environmental segment		1,439		1,105
B&W Thermal segment		14,154		10,535
Corporate		(4,373)		(2,685)
Research and development costs		(655)		(588)
		$	12,020	$	8,571

We do not separately identify or report our assets by segment as our CODM does not consider assets by segment to be a critical measure by which performance is measured.

NOTE 4 – REVENUE RECOGNITION AND CONTRACTS

Revenue Recognition

We generate the vast majority of our revenues from the supply of, and aftermarket services for, steam-generating, environmental and auxiliary ~~equipment for power generation and other industrial applications.~~

~~Renewable segment~~: ~~focused on~~equipment. We also earn revenue from the supply of ~~steam-generating systems, environmental and auxiliary equipment for the waste-to-energy and biomass power generation industries.~~

~~Industrial segment~~: ~~focused on~~ custom-engineered cooling ~~environmental and other industrial equipment~~systems for

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~~An analysis~~Revenue from goods and services transferred to customers at a point in time, which includes certain aftermarket parts and services, accounted for 19% and 27% of our ~~operations~~revenue for the three months ended March 31, 2022 and 2021, respectively. Revenue from products and services transferred to customers over time, which primarily relates to customized, engineered solutions and construction services, accounted for 81% and 73% of our revenue for the three months ended March 31, 2022 and 2021, respectively.

Refer to Note 3 for our disaggregation of revenue by ~~segment is as follows:~~product line.

Three months ended September 30, Nine months ended
September 30,
(in thousands) 2017 2016 2017 2016
Revenues:
Power segment $ 202,222
$ 211,749
$ 612,274
$ 762,293
Renewable segment 108,557
124,344
262,168
293,593
Industrial segment 99,288
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 segment 40,629
48,896
132,653
170,903
Renewable segment 181
18,592
(100,119 ) 14,468
Industrial segment 9,461
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 investees 1,234
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 )
Contract Balances

~~During~~The following represents the ~~first half~~components of ~~2017, we announced~~ our ~~plan to reclassify the Industrial Steam product line currently~~Contracts in progress and Advance billings on contracts included in our Power segment to the Industrial segment beginning 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.Condensed Consolidated Balance Sheets:


(in thousands)	March 31, 2022		December 31, 2021		$ Change		% Change
Contract assets - included in contracts in progress:
Costs incurred less costs of revenue recognized	$	32,101	$	35,939	$	(3,838)	(11)	%
Revenues recognized less billings to customers	63,871		44,237		19,634		44	%
Contracts in progress	$	95,972	$	80,176	$	15,796	20	%
Contract liabilities - included in advance billings on contracts:
Billings to customers less revenues recognized	$	100,130	$	68,615	$	31,515	46	%
Costs of revenue recognized less cost incurred	(220)		(235)		15		(6)	%
Advance billings on contracts	$	99,910	$	68,380	$	31,530	46	%

Net contract balance	$	(3,938)	$	11,796	$	(15,734)	(133)	%

Accrued contract losses	$	4,652	$	378	$	4,274	1,131	%

~~NOTE 4 – UNIVERSAL ACQUISITION~~Backlog

On ~~January 11, 2017,~~March 31, 2022 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 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 $49.8had $721.0 million of ~~revenue~~remaining performance obligations, which we also refer to our operating results during the three and nine months ended September 30, 2017, respectively. Universal contributed $3.2 million and $10.0 million 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.~~as total backlog. We expect ~~Universal~~ to ~~contribute over $70.0 million of revenue~~recognize approximately 61.4%, 15.4% 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 receivable 11,270
Contracts in progress 3,167
Inventories 4,585
Other assets 579
Property, plant and equipment 16,692
Goodwill 14,413
Identifiable intangible assets 19,500
Deferred income tax assets 935
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
Backlog 1,700
1
Trade names / trademarks 3,000
20
Technology 4,000
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 is included in cost of operations in our condensed consolidated statement of operations. Amortization of intangible assets is not allocated to segment results.

~~Approximately $0.1 million and $1.5 million of acquisition and integration related costs of Universal was recorded as a component~~23.2% of our ~~operating expenses~~remaining performance obligations as revenue in ~~the condensed consolidated statement of operations in the three~~2022, 2023 and ~~nine months ended~~ ~~September 30, 2017, respectively.~~

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The following unaudited pro forma financial information below represents our results of operations for the three and nine months ended September 30, 2016 and 12 months ended December 31, 2016 had the Universal acquisition occurred on January 1, 2016. The unaudited pro forma financial information below is not intended to represent or be indicative of our actual consolidated results had we completed the acquisition at January 1, 2016. This information should not be taken as representative of our future consolidated results of operations.

Three months ended Nine months ended Twelve months ended
(in thousands) September 30, 2016 September 30, 2016 December 31, 2016
Revenues $ 431,412
$ 1,259,905
$ 1,660,986
Net income (loss) attributable to B&W 8,903
(43,458 ) (113,940 )
Basic earnings per common share 0.18
(0.86 ) (2.27 )
Diluted earnings per common share 0.18
(0.86 ) (2.27 )

~~The unaudited pro forma results included in the table above reflect the following pre-tax adjustments to our historical results:~~

A net increase in amortization expense related to timing of amortization of the fair value of identifiable intangible assets acquired of $0.5 million, $2.4 million 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, 2017~~March 31, 2022 and ~~2016,~~2021, we recognized changes in estimated gross profit related to long-term contracts accounted for on the ~~percentage-of-completion~~over time basis, which are summarized as follows:


	Three months ended March 31,
(in thousands)		2022		2021
Increases in gross profit for changes in estimates for over time contracts		$	3,341	$	3,025
Decreases in gross profit for changes in estimates for over time contracts		(2,862)		(1,358)
Net changes in gross profit for changes in estimates for over time contracts		$	479	$	1,667

Three months ended September 30, Nine months ended September 30,
(in thousands) 2017 2016 2017 2016
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 Projects

During March 2022, we determined that our Fosler Solar reporting unit had 7 projects located in the United States that existed at the time we acquired Fosler on September 30, 2021 which generated losses that arose due to the status of certain construction activities, existing at acquisition date, not adequately disclosed in ~~our December~~the sales agreement and not recognized in the financial records of the seller. As of March 31, 2016 consolidated financial statements, we had four renewable energy projects in Europe that were loss contracts at December 31, 2016. During the three months ended June 30, 2017, two additional renewable energy projects in Europe became loss contracts. During the three and nine months ended September 30, 2017,2022, we recorded ~~a total~~an increase in goodwill of ~~$11.6~~$14.9 million ~~and $123.8 million, respectively, in net losses~~ resulting from the

initial recognition of $14.5 million of accrued liabilities and $0.4 million of warranty accruals during this acquisition's annual measurement period. We have submitted insurance claims to recover a portion of these losses as of March 31, 2022.

NOTE 5 – INVENTORIES

Inventories are stated at the lower of cost or net realizable value. The components of inventories are as follows:


(in thousands)	March 31, 2022		December 31, 2021
Raw materials and supplies	$	63,772	$	56,352
Work in progress	7,212		5,723
Finished goods	19,417		17,452
Total inventories	$	90,401	$	79,527

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

Property, plant and equipment less accumulated depreciation is as follows:


(in thousands)	March 31, 2022		December 31, 2021
Land	$	1,533	$	1,489
Buildings	32,681		31,895
Machinery and equipment	145,134		144,325
Property under construction	4,877		12,480
	184,225		190,189
Less accumulated depreciation	134,639		133,137
Net property, plant and equipment	49,586		57,052
Finance leases	34,160		34,159
Less finance lease accumulated amortization	6,590		5,584
Net property, plant and equipment, and finance lease	$	77,156	$	85,627

NOTE 7 - GOODWILL

The following summarizes the changes in the ~~estimated revenues~~net carrying amount of goodwill as of March 31, 2022:


(in thousands)	B&W Renewable		B&W Environmental		B&W Thermal		Total
Balance at December 31, 2021	$	79,357	$	5,667	$	31,438	$	116,462
Addition - Fossil Power(1)	—		—		35,392		35,392
Addition - Optimus Industries(1)	—		—		11,081		11,081
Measurement period adjustments - Fosler(1)(2)	11,163		—		—		11,163
Measurement period adjustments - VODA(1)(2)	(61)		—		—		(61)
Currency translation adjustments	57		45		232		334
Balance at March 31, 2022	$	90,516	$	5,712	$	78,143	$	174,371

(1) As described in Note 21, we are in the process of completing the purchase price allocation associated with the Fosler Construction, VODA, Fossil Power and ~~costs to complete these six European renewable energy loss contracts. These changes in estimates include an increase in our estimate~~Optimus Industries acquisitions and as a result, the provisional measurements of ~~liquidated damages~~goodwill associated with these ~~six projects of $13.2 million and $22.6 million in the three and nine months ended September 30, 2017, respectively,~~acquisitions are subject to ~~a total of $62.8 million at September 30, 2017. The charges recorded in the nine months~~change.

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~~ended September 30, 2017 were~~(2) Our preliminary purchase price allocation changed due to ~~revisions in the estimated revenues~~additional information and ~~costs at completion during the period, primarily as a result of structural steel design issues including the anticipated schedule impact, scheduling delays~~further analysis.

Goodwill is tested for impairment annually and ~~shortcomings in our subcontractors' estimated productivity. Also included in the charges recorded in the nine months ended September 30, 2017~~on an interim basis when impairment indicators exist. No impairment indicators 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 loss contracts was as follows:

The first project became a loss contract in the second quarter of 2016. As of September 30, 2017, this project is approximately 97% 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 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 differences 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. 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 recognizedidentified during the three months ended March 31, ~~2017.~~ 2022.

As of ~~September 30, 2017,~~March 31, 2022, Fosler's goodwill increase of $11.2 million included a $14.9 million increase resulting from the ~~reserve for estimated contract losses recorded~~initial recognition of $14.5 million of accrued liabilities and $0.4 million of warranty accruals during this acquisition's annual measurement period, as described in ~~"other accrued liabilities"~~Note 4.

NOTE 8– INTANGIBLE ASSETS

Our intangible assets are as follows:


(in thousands)	March 31, 2022		December 31, 2021
Definite-lived intangible assets(1)
Customer relationships	$	67,332	$	46,903
Unpatented technology	18,591		15,410
Patented technology	3,682		3,103
Tradename	13,383		12,747
Acquired backlog	3,100		3,100
All other	9,128		9,319
Gross value of definite-lived intangible assets	115,216		90,582
Customer relationships amortization	(21,820)		(20,800)
Unpatented technology amortization	(8,729)		(8,313)
Patented technology amortization	(2,769)		(2,729)
Tradename amortization	(5,595)		(5,425)
Acquired backlog	(3,100)		(1,620)
All other amortization	(9,056)		(9,205)
Accumulated amortization	(51,069)		(48,092)
Net definite-lived intangible assets	$	64,147	$	42,490
Indefinite-lived intangible assets
Trademarks and trade names	$	1,305	$	1,305
Total intangible assets, net	$	65,452	$	43,795

(1) As described in Note 21, we are in the process of completing the purchase price allocation associated with the Fosler Construction, VODA, Fossil Power and Optimus Industries acquisitions and as a result, the increase in intangible assets associated with these acquisitions are subject to change.

The following summarizes the changes in the carrying amount of intangible assets, net:


	Three Months Ended March 31,
(in thousands)	2022		2021
Balance at beginning of period	$	43,795	$	23,908
Business acquisitions and adjustments(1)	25,092		—
Amortization expense	(2,978)		(856)
Currency translation adjustments	(457)		(843)
Balance at end of the period	$	65,452	$	22,209

Amortization of intangible assets is included in Cost of operations and SG&A in our ~~consolidated balance sheet was $5.2 million.~~Condensed Consolidated Statement of Operations but is not allocated to segment results.

~~The fifth project became~~Intangible assets are assessed for impairment on an interim basis when impairment indicators exist. No impairment indicators were identified during the three months ended March 31, 2022.

Estimated future intangible asset amortization expense as of March 31, 2022 is as follows (in thousands):


			Amortization Expense
Year ending December 31, 2022			5,990
Year ending December 31, 2023			7,986
Year ending December 31, 2024			7,906
Year ending December 31, 2025			7,089
Year ending December 31, 2026			5,890
Year ending December 31, 2027			5,229
Thereafter			24,057

See Note 21 for intangible assets identified in conjunction with the acquisitions of Fosler Construction, VODA, Fossil Power and Optimus Industries, which are subject to change pending the finalization of the purchase price allocation associated with these acquisitions.

NOTE 9 – ACCRUED WARRANTY EXPENSE

We may offer assurance type warranties on products and services that we sell. Changes in the carrying amount of our accrued warranty expense are as follows:


	Three Months Ended March 31,
(in thousands)	2022		2021
Balance at beginning of period	$	12,925	$	25,399
Additions	1,300		1,475
Expirations and other changes	(1,467)		(1,318)
Payments	(193)		(5,943)
Translation and other	(692)		(76)
Balance at end of period	$	11,873	$	19,537

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. Additions at March 31, 2022 included $0.4 million related to the Fosler projects, as described in ~~the second quarter of 2017. As of September 30, 2017, this contract was approximately 60% complete, and~~Note 4. In addition, we record specific provisions or reductions where we expect ~~this project~~the actual warranty costs to ~~be completed in~~significantly differ from 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 toaccrued estimates. Such 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~~could have a material effect on our consolidated ~~balance sheet was $14.3 million.~~financial condition, results of operations and cash flows.

NOTE 10 – RESTRUCTURING ACTIVITIES

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 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 our subcontractors. A similar design was also used on the second and fourth projects, and although no structural failure occurred on these two other projects, work was also stopped for a short period of time, and reinforcement of the structure is underway. The costs related to these structural steel issues are estimated to be approximately $20 million, which include the impact of project delays, and is included in the September 30, 2017 estimated losses at completion for these three projects as disclosed in the preceding paragraphs.

~~Also~~Company incurred restructuring charges in the three months ended ~~September 30, 2017, we adjusted the design~~March 31, 2022, and 2021. The charges primarily consist of ~~three of these renewable facilities~~severance and related costs 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~~actions taken as part of the ~~three contracts~~Company’s strategic, market-focused organizational and re-branding initiative.

The following tables summarizes the restructuring activity incurred by ~~approximately $15 million in total,~~segment:


	Three Months Ended March 31,						Three Months Ended March 31,
	2022						2021
(in thousands)	Total		Severance and related costs		Other (1)		Total		Severance and related Costs		Other(1)
B&W Renewable segment	$	(193)	$	(229)	$	36	$	509	$	453	$	56
B&W Environmental segment	69		10		59		89		35		54
B&W Thermal segment	198		50		148		348		12		336
Corporate	20		—		20		47		—		47
	$	94	$	(169)	$	263	$	993	$	500	$	493
Cumulative costs to date	$	45,277	37,083		8,194		0		0		0

(1) Other amounts consist primarily of exit, relocation, COVID-19 related 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.~~other costs.

During the three and nine months ended September 30, 2017, we recognized a net loss of $2.3 million on our other renewable energy projects that are not loss contracts, and we expect them to remain profitable at completion.

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~~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)		2022		2021
Balance at beginning of period		$	6,561	$	8,146
Restructuring expense		94		993
Payments		(749)		(1,117)
Balance at end of period		$	5,906	$	8,022

Three months ended September 30, Nine months ended September 30,
(in thousands) 2017 2016 2017 2016
Balance at beginning of period⁽¹⁾
$ 967
$ 11,984
$ 2,254
$ 740
Restructuring expense 3,428
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⁾~~For~~The payments shown above for the three ~~month periods~~months ended ~~September 30, 2017~~March 31, 2022 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.

2021 relate primarily to severance. Accrued restructuring liabilities at ~~September 30, 2017~~March 31, 2022 and ~~2016~~2021 relate primarily to employee termination benefits.

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~~

~~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 811 – ~~COMPREHENSIVE INCOME~~PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS

~~Gains and losses deferred~~Components of net periodic cost (benefit) included in ~~accumulated other comprehensive~~net (loss) 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 reclassifications 5,417
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 reclassifications 6,757
(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 reclassifications 2,591
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 reclassifications 1,740
18
2,576
(61 ) 4,273
Amounts reclassified from AOCI to net income (loss) —
1
(1,003 ) 61
(941 )
Net current-period other comprehensive income 1,740
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 reclassifications 2,811
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 component Line items in the Condensed Consolidated Statements of Operations affected by reclassifications from AOCI Three months ended September 30, Nine months ended September 30,
2017 2016 2017 2016
Derivative financial instruments Revenues $ 2,092
$ 1,940
$ 8,094
$ 4,524
Cost of operations 159
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 obligations Cost 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 investments Other-net $ 6
$ —
$ 50
$ (1 )
Provision for income taxes 2
—
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 Benefits				Other Benefits
	Three Months Ended March 31,				Three Months Ended March 31,
(in thousands)	2022		2021			2022		2021
Interest cost	$	6,664	$	5,671		$	49	$	39
Expected return on plan assets	(14,366)		(15,009)			—		—
Amortization of prior service cost (credit)	28		28			173		173
Benefit plans, net (1)	(7,674)		(9,310)			222		212
Service cost included in COS (2)	201		217			5		6
Net periodic benefit cost (benefit)	$	(7,473)	$	(9,093)		$	227	$	218

(in thousands) September 30, 2017 December 31, 2016
Held by foreign entities $ 44,778
$ 94,415
Held by United States entities 3,359
1,472
Cash and cash equivalents $ 48,137
$ 95,887

Reinsurance reserve requirements $ 21,456
$ 21,189
Restricted foreign accounts 5,192
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 in the normal course of business, meaning that the minimum United States cash on hand(1) Benefit plans, net, which is ~~maintained to minimize borrowing costs.~~

~~NOTE 10 – INVENTORIES~~

~~The components of inventories are as follows:~~

(in thousands) September 30, 2017 December 31, 2016
Raw materials and supplies $ 66,995
$ 61,630
Work in progress 9,518
6,803
Finished goods 14,586
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~~presented separately in our ~~consolidated financial statements using the equity method~~Condensed Consolidated Statements of accounting. 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 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 China 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, dueOperations, is not allocated to the ~~decline in forecasted market opportunities in India. Currently, the manufacturing facility in India has been reduced~~segments.

(2) Service cost related to ~~essential personnel only while engineering services are expected to continue~~a small group of active participants is presented within Cost of operations in our ~~engineering office through~~Condensed Consolidated Statements of Operations and is allocated to the ~~end of 2017. These actions are in line with~~B&W Thermal segment.

There were no mark-to-market ("MTM") adjustments for 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, 2017 December 31, 2016
Definite-lived intangible assets
Customer relationships $ 59,683
$ 47,892
Unpatented technology 19,941
18,461
Patented technology 6,560
2,499
Tradename 22,818
18,774
Backlog 30,088
28,170
All other 7,550
7,429
Gross value of definite-lived intangible assets 146,640
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) 2017 2016
Balance at beginning of period $ 71,039
$ 37,844
Business acquisitions 19,500
55,438
Amortization expense (14,455 ) (11,904 )
Currency translation adjustments and other 3,916
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 March 31, 2022 and 2021.

We made contributions to our pension and other postretirement benefit plans totaling $0.4 million and $24.0 million during the three months ended March 31, 2022 and 2021, respectively.

NOTE 12 – DEBT

Senior Notes

8.125% Senior Notes

During 2021, we completed sales of $151.2 million aggregate principal amount of our 8.125% senior notes due 2026 (the “8.125% Senior Notes”) for net proceeds of approximately $146.6 million. In addition to the completed sales, we issued $35.0 million of 8.125% Senior Notes to B. Riley Financial, Inc., a related party, in exchange for a deemed prepayment of our then existing Last Out Term Loan Tranche A-3. The 8.125% Senior Notes bear interest at the rate of 8.125% per annum which is payable quarterly in arrears on January 31, April 30, July 31 and October 31 of each year, commencing on April 30, 2021. The 8.125% Senior Notes mature on February 28, 2026.

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 8.125% Senior Notes up to an aggregate principal amount of $150.0 million. The 8.125% Senior Notes 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 are fungible with the initial 8.125% Senior Notes issuance in 2021.

During the first quarter of 2022, the Company sold $2.0 million aggregate principal of 8.125% Senior Notes under the sales agreement described above for $2.0 million of net proceeds.

6.50% Senior Notes

During 2021, we completed sales of $151.4 million aggregate principal amount of our 6.50% senior notes due in 2026 (the “6.50% Senior Notes”) for net proceeds of approximately $145.8 million. Interest on the 6.50% Senior Notes is payable quarterly in arrears on March 31, June 30, September 30 ~~2016.~~and December 31 of each year, and commenced on March 31, 2022. The 6.50% Senior Notes mature on December 31, 2026.

~~Amortization~~The components of ~~intangible~~the Company's senior notes at March 31, 2022 are as follows:


	Senior Notes
(in thousands)	8.125%		6.50%		Total
Senior notes due 2026	$	188,200	$	151,440	$	339,640
Unamortized deferred financing costs	(5,043)		(6,297)		(11,340)
Unamortized premium	570		—		570
Net debt balance	$	183,727	$	145,143	$	328,870

Revolving Debt

On June 30, 2021, we entered into a Revolving Credit Agreement (the “Revolving Credit Agreement”) with PNC Bank, National Association, as administrative agent (“PNC”) and a letter of credit agreement (the “Letter of Credit Agreement”) with PNC, pursuant to which PNC agreed to issue up to $110 million in letters of credit that is secured in part by cash collateral provided by an affiliate of MSD Partners, MSD PCOF Partners XLV, LLC (“MSD”), as well as a reimbursement, guaranty and security agreement with MSD, as administrative agent, and the cash collateral providers from time to time party thereto, along with certain of our subsidiaries as guarantors, pursuant to which we are obligated to reimburse MSD and any other cash collateral provider to the extent the cash collateral provided by MSD and any other cash collateral provider to secure the Letter of Credit Agreement is drawn to satisfy draws on letters of credit (the “Reimbursement Agreement”) and collectively with the Revolving Credit Agreement and Letter of Credit Agreement, the “Debt Documents” and the facilities thereunder, the “Debt Facilities”). The obligations of the Company under each of the Debt Facilities are guaranteed by certain existing and future domestic and foreign subsidiaries of the Company. B. Riley Financial, Inc. (“B. Riley”), a related party, has provided a guaranty of payment with regard to the Company’s obligations under the Reimbursement Agreement, as described below. The Company expects to use the proceeds and letter of credit availability under the Debt Facilities for working capital purposes and general corporate purposes. The Revolving Credit Agreement matures on June 30, 2025. As of March 31, 2022, no borrowings have occurred under the Revolving Credit Agreement and under the Letter of Credit Agreement, usage consisted of $16.2 million of financial letters of credit and $90.8 million of performance letters of credit.

Each of the Debt Facilities has a maturity date of June 30, 2025. The interest rates applicable under the Revolving Credit Agreement float at a rate per annum equal to either (i) a base rate plus 2.0% or (ii) 1 or 3 month reserve-adjusted LIBOR rate plus 3.0%. The interest rates applicable to the Reimbursement Agreement float at a rate per annum equal to either (i) a base rate plus 6.50% or (ii) 1 or 3 month reserve-adjusted LIBOR plus 7.50%. Under the Letter of Credit Agreement, the Company is required to pay letter of credit fees on outstanding letters of credit equal to (i) administrative fees of 0.75% and (ii) fronting fees of 0.25%. Under the Revolving Credit Agreement, the Company is required to pay letter of credit fees on outstanding letters of credit equal to (i) letter of credit commitment fees of 3.0% and (ii) letter of credit fronting fees of 0.25%. Under each of the Revolving Credit Agreement and the Letter of Credit Agreement, we are required to pay a facility fee equal to 0.375% per annum of the unused portion of the Revolving Credit Agreement or the Letter of Credit Agreement, respectively. The Company is permitted to prepay all or any portion of the loans under the Revolving Credit Agreement prior to maturity without premium or penalty. Prepayments under the Reimbursement Agreement shall be subject to a prepayment fee of 2.25% in the first year after closing, 2.0% in the second year after closing and 1.25% in the third year after closing with no prepayment fee payable thereafter.

The Company has mandatory prepayment obligations under the Reimbursement Agreement upon the receipt of proceeds from certain dispositions or casualty or condemnation events. The Revolving Credit Agreement and Letter of Credit Agreement require mandatory prepayments to the extent of an over-advance.

The obligations under the Debt Facilities are secured by substantially all assets of the Company and each of the guarantors, in each case subject to inter-creditor arrangements. As noted above, the obligations under the Letter of Credit Facility are also secured by the cash collateral provided by MSD and any other cash collateral provider thereunder.

The Debt Documents contain certain representations and warranties, affirmative covenants, negative covenants and conditions that are customarily required for similar financings. The Debt Documents require the Company to comply with certain financial maintenance covenants, including a quarterly fixed charge coverage test of not less than 1.00 to 1.00, a quarterly senior net leverage ratio test of not greater than 2.50 to 1.00, a non-guarantor cash repatriation covenant not to exceed $35 million at any one time, a minimum liquidity covenant of at least $30.0 million at all times, and an annual cap on maintenance capital expenditures of $7.5 million. The Debt Documents also contain customary events of default (subject, in certain instances, to specified grace periods) including, but not limited to, the failure to make payments of interest or premium, if any, on, or principal under the respective facility, the failure to comply with certain covenants and agreements specified in the applicable Debt Agreement, defaults in respect of certain other indebtedness and certain events of insolvency. If any event of default occurs, the principal, premium, if any, interest and any other monetary obligations on all the then outstanding amounts under the Debt Documents may become due and payable immediately.

In connection with the Company’s entry into the Debt Documents on June 30, 2021, B. Riley, a related party, entered into a Guaranty Agreement in favor of MSD, in its capacity as administrative agent under the Reimbursement Agreement, for the ratable benefit of MSD, the cash collateral providers and each co-agent or sub-agent appointed by MSD from time to time (the “B. Riley Guaranty”). The B. Riley Guaranty provides for the guarantee of all of the Company’s obligations under the Reimbursement Agreement. The B. Riley Guaranty is enforceable in certain circumstances, including, among others, certain events of default and the acceleration of the Company’s obligations under the Reimbursement Agreement. Under a fee letter with B. Riley, the Company agreed to pay B. Riley $0.9 million per annum in connection with the B. Riley Guaranty. The Company entered into a reimbursement agreement with B. Riley governing the Company’s obligation to reimburse B. Riley to the extent the B. Riley Guaranty is called upon by the agent or lenders under the Reimbursement Agreement.

As of March 31, 2022, a subsidiary has borrowed $1.7 million against a $3.5 million line of credit with a variable interest rate on the line of credit of 5.0% per annum. On April 1, 2022, the line of credit was paid in full and terminated.

Effective with the Revolving Credit Agreement, the Company entered into on June 30, 2021, the Company has no remaining Last Out Term Loans and no further borrowings thereunder are available.

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 outside of our Letter of Credit Agreement as of March 31, 2022 was $48.3 million. The aggregate value of the outstanding letters of credit provided under the Letter of

Credit Agreement backstopping letters of credit or bank guarantees was $34.8 million as of March 31, 2022. Of the outstanding letters of credit issued under the Letter of Credit Agreement, $52.0 million are subject to foreign currency revaluation.

We have also 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 the underwriters issue in support of some of our contracting activity. As of March 31, 2022, bonds issued and outstanding under these arrangements in support of our contracts totaled approximately $221.5 million. The aggregate value of the letters of credit backstopping surety bonds was $9.2 million.

Our ability to obtain and maintain sufficient capacity under our current Debt Facilities 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.

Other Indebtedness - Loans Payable

As of March 31, 2022, our Denmark subsidiary has 3 unsecured interest-free loans totaling $3.3 million under a local government loan program related to COVID-19. The loans of $0.8 million, $1.6 million and $0.9 million are payable in April 2022, May 2022 and May 2023, respectively. The loan payable in May 2023 is included in ~~cost of operations~~ Long term loans payables in our ~~condensed consolidated statement~~Condensed Consolidated Balance Sheets. Subsequent to March 31, 2022, the loan due April 2022 was repaid on April 1, 2022.

As of ~~operations, but it is not allocated to segment results.~~March 31, 2022, Fosler Construction has 2 loans totaling $8.9 million. Both loans have a variable interest rate with a minimum rate of 6.0% and are due June 30, 2022. Fosler Construction also has loans, primarily for vehicles and equipment, totaling $0.6 million at March 31, 2022. The vehicle and equipment loans are included in long term loans payables in our Condensed Consolidated Balance Sheets.

~~Table of Contents~~

~~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 ending Amortization 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 – ~~GOODWILL~~PREFERRED STOCK

In May 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”) between us and B. Riley Securities, Inc.. At the closing, we issued to the public 4,444,700 shares of our Preferred Stock, at an offering price of $25.00 per share for net proceeds of approximately $106.4 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 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 arrears.

The ~~following summarizes~~Preferred Stock ranks, as to dividend rights and rights as to the ~~changes in~~distribution of assets upon our liquidation, dissolution or winding-up: (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 ~~carrying~~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, only out of funds legally available for payment of dividends. Dividends on the Preferred Stock will accrue on the stated amount of ~~goodwill:~~

(in thousands) Power Renewable Industrial Total
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 adjustments 1,180
1,530
6,490
9,200
Balance at September 30, 2017 $ 47,400
$ —
$ 156,705
$ 204,105

^* ~~Prior~~$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 Preferred Stock declared by our Board of Directors will be payable quarterly in arrears on March 31, June 30, September 30 ~~2017, we had not recorded any goodwill impairment charges.~~

~~Our annual goodwill impairment assessment is performed on October 1~~and December 31 of each ~~year~~year.

During the three months ending March 31, 2022, the Company's Board of Directors approved dividends totaling $3.7 million. There are no cumulative undeclared dividends of the Preferred Stock at March 31, 2022.

On June 1, 2021, the Company and B. Riley, a related party, entered into an agreement (the ~~"annual assessment" date); however, events during 2017 have required two interim assessments of all six~~“Exchange Agreement”) pursuant to which we (i) issued B. Riley 2,916,880 shares of our ~~reporting units. In the second quarter~~Preferred Stock, representing an exchange price 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 1 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

$25.00 per share

~~Table~~

and paid $0.4 million in cash, and (ii) paid $0.9 million in cash to B. Riley for accrued interest due, in exchange for a deemed prepayment of ~~Contents~~

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$73.3 million of ~~impairment (with no income tax impact). The SPIG reporting unit has $38.0~~our then existing term loans with B. Riley under the Company’s prior A&R Credit Agreement.

On July 7, 2021, we entered into a sales agreement with B. Riley Securities, Inc., a related party, in connection with the offer to or through B. Riley Securities, Inc., from time to time, additional shares of Preferred Stock up to an aggregate amount of $76.0 million of ~~goodwill remaining after~~Preferred Stock. The Preferred Stock has the ~~impairment charge. Other long-lived assets in~~same terms and have the ~~reporting unit were not impaired.~~

same CUSIP number and is fungible with, the Preferred Stock issued during May 2021. For the ~~remaining four reporting units where impairment was not indicated at September 30, 2017,~~three months ending March 31, 2022, the ~~goodwill balances at September 30, 2017 and the Step 1 goodwill impairment test headroom (the estimated fair value less the carrying value) are as follows:~~

Power Segment Industrial Segment
(in millions) Power Construction MEGTEC Universal
Reporting unit headroom 60% 98% 12% 18%
Goodwill balance $38.5 $8.9 $104.3 $14.4

Step 1 of the impairment test for our MEGTEC reporting unit, which is included in our Industrial segment, did not indicate impairment, and the fair value exceeded the carrying value by 12% at September 30, 2017 compared to 3.0% at June 30, 2017 and 22% at October 1, 2016. Under both the income and market valuation approaches, the fair value estimates at the interim assessment data and the second interim assessment date decreased comparedCompany has sold no additional Preferred Stock pursuant to the ~~annual assessment date due to lower projected~~sales agreement. As of December 31, 2021, the Company sold $7.7 million aggregate principal amount of Preferred Stock for $7.7 million of net sales and EBITDA. Similar to many industrial businesses, the reduction in MEGTEC reporting unit revenues has been the result 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 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.proceeds.

NOTE 14 – ~~PROPERTY, PLANT & EQUIPMENT~~COMMON STOCK

~~Property, plant and equipment is stated at cost. The composition~~On February 12, 2021, we completed a public offering of our ~~property, plant~~common stock pursuant to an underwriting agreement dated February 9, 2021, between us and ~~equipment less accumulated depreciation is set forth below:~~B. Riley Securities, Inc., as representative of the several underwriters. At the time of closing, we issued to the public 29,487,180 shares of our common stock and received net proceeds of 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 toward the balance outstanding under our then existing U.S. Revolving Credit Facility and permanently reduced the commitments under our senior secured credit facilities.

(in thousands) September 30, 2017 December 31, 2016
Land $ 8,802
$ 6,348
Buildings 121,952
114,322
Machinery and equipment 206,437
189,489
Property under construction 14,218
22,378
351,409
332,537
Less accumulated depreciation 208,302
198,900
Net property, plant and equipment $ 143,107
$ 133,637

~~Table of Contents~~

NOTE 15 ~~– WARRANTY~~–INTEREST EXPENSE AND SUPPLEMENTAL CASH FLOW INFORMATION

~~Changes~~Interest expense in our Condensed Consolidated Financial Statements consisted of the following components:


	Three Months Ended March 31,
(in thousands)		2022		2021
Components associated with borrowings from:
Senior notes		$	6,216	$	1,733
Last Out Term Loans - cash interest		—		3,513
U.S. Revolving Credit Facility		—		1,416
		6,216		6,662
Components associated with amortization or accretion of:
Revolving Credit Agreement		1,060		—
Senior notes		643		1,468
U.S. Revolving Credit Facility		—		4,400
		1,703		5,868

Components associated with interest from:
Lease liabilities		708		616
Other interest expense		2,640		1,077
		3,348		1,693

Total interest expense		$	11,267	$	14,223

The following table provides a reconciliation of Cash and cash equivalents and Restricted cash and cash equivalents reporting within the Condensed Consolidated Balance Sheets and in the ~~carrying~~Condensed Consolidated Statements of Cash Flows:


(in thousands)	March 31, 2022		December 31, 2021		March 31, 2021
Held by foreign entities	$	35,870	$	42,070	$	25,169
Held by U.S. entities	72,267		182,804		28,664
Cash and cash equivalents	108,137		224,874		53,833

Reinsurance reserve requirements	584		443		2,053
Bank guarantee collateral	492		997		2,560
Letters of credit collateral	1,858		401		—
Hold-back for acquisition purchase price (1)	5,899		—		—
Restricted cash and cash equivalents	8,833		1,841		4,613
Total cash, cash equivalents and restricted cash shown in the Condensed Consolidated Statements of Cash Flows	$	116,970	$	226,715	$	58,446

(1) The purchase price for Fossil Power Systems ("FPS") was $59.1 million, including a hold-back of $5.9 million as reflected above. The hold-back is being held in escrow for potential payment of up to the maximum amount twelve months from the February 1, 2022 date of acquisition if the conditions are met. The hold-back amount is included in Restricted cash and cash equivalents and Other accrued liabilities on our ~~accrued warranty expense are~~Condensed Consolidated Balance Sheets.

The following cash activity is presented as ~~follows:~~a supplement to our Condensed Consolidated Statements of Cash Flows and is included in Net cash used in operating activities:


	Three Months Ended March 31,
(in thousands)	2022		2021
Income tax payments, net	$	471	$	1,499

Interest payments - 8.125% Senior Notes due 2026	$	3,783	$	—
Interest payments - 6.50% Senior Notes due 2026	2,926		—
Interest payments on our U.S. Revolving Credit Facility	—		5,979
Interest payments on our Last Out Term Loans	—		3,560
Total cash paid for interest	$	6,709	$	9,539

Nine months ended September 30,
(in thousands) 2017 2016
Balance at beginning of period $ 40,467
$ 39,847
Additions 17,818
18,300
Expirations and other changes (9,053 ) (2,945 )
Increases attributable to business combinations 1,060
901
Payments (11,126 ) (10,922 )
Translation and other 2,064
(217 )
Balance at end of period $ 41,230
$ 44,964
NOTE 16 – PROVISION FOR INCOME TAXES

~~During~~In the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2022, income tax expense was $1.2 million, resulting in an effective tax rate of (16.5)%. In the three months ended March 31, 2021, income tax expense was $2.8 million, resulting in an effective tax rate of (22.5)%.

Our effective tax rate for the three months ended March 31, 2022 and ~~2016, our Power segment reduced its accrued warranty expense by $4.7~~2021 is not reflective of the U.S. statutory rate due to valuation allowances against certain net deferred tax assets and discrete items. We have unfavorable discrete items of $0.4 million ~~and $2.2 million, respectively, to reflect~~for the ~~expiration~~three months ended March 31, 2022, which primarily represent withholding taxes. We had unfavorable discrete items of ~~warranties, and updated its estimated warranty accrual rate to reflect its warranty claims experience and current contractual warranty obligations, which reduced the accrued warranty expense by $4.1~~$2.5 million in the ~~nine~~three months ended ~~September 30, 2017. Additions~~March 31, 2021, which primarily represented withholding taxes.

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 foreign income tax rate variations, changes in the jurisdictional mix of our income and valuation allowances.

NOTE 17 – 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 ~~warranty accrual include specific provisions~~contractual cap on ~~industrial steam projects totaling $7.1~~liability (defined as the $11.7 million purchase price subject to certain adjustments). On January 11, 2021, we filed our answer and ~~$2.1~~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 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 consolidated financial condition, results of operations or cash flows.

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 Delaware 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 litigation is currently ongoing and at this time we are unable to determine whether the outcome of the Stockholder Litigation will have a material adverse impact on our consolidated financial condition, results of operations or cash flows, net of any insurance coverage.

Russian Invasion of Ukraine

We do not currently have contracts directly with Russian entities or businesses and we currently do not do business in Russia directly. We believe the Company’s only involvement with Russia or Russian-entities, involves sales of our products in the amount of approximately $3.1 million ~~during~~by a wholly-owned Italian subsidiary of the ~~nine months ended September 30, 2017~~Company to non-Russian counterparties who may resell our products to Russian entities or perform services in Russia using our products. The economic sanctions and ~~2016, respectively.~~export-control measures and the ongoing invasion of Ukraine could impact our subsidiary’s rights and responsibilities under the contracts and could result in potential losses to the Company.

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 1618 – ~~PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS~~COMPREHENSIVE INCOME

~~Components of net periodic benefit cost (benefit) included~~Gains and losses deferred in ~~net~~accumulated 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) 2017 2016 2017 2016 2017 2016 2017 2016
Service cost $ 227
$ 548
$ 756
$ 1,137
$ 3
$ 6
$ 11
$ 18
Interest cost 10,369
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 cost 29
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

~~During~~generally 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 charges2022 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. There~~2021 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, 2021	$	(55,499)	$	(3,323)	$	(58,822)
Other comprehensive loss before reclassifications	(4,285)		—		(4,285)
Reclassified from AOCI to net loss	—		593		593
Net other comprehensive (loss) income	(4,285)		593		(3,692)
Balance at March 31, 2022	(59,784)		(2,730)		(62,514)

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 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)		—		(70)
Reclassified from AOCI to net (loss) income	(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)

~~Table of Contents~~

~~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) 2017 2016 2017 2016
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 ~~components~~amounts reclassified out of ~~our revolving debt are comprised of separate revolving credit facilities in the following locations:~~

(in thousands) September 30, 2017 December 31, 2016
United States $ 58,900
$ 9,800
Foreign 12,398
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 issuance~~affected 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 component	Line items in the Condensed Consolidated Statements of Operations affected by reclassifications from AOCI	Three Months Ended March 31,
			2022		2021
Release of currency translation adjustment with the sale of business	Loss on sale of business		$	—	$	4,512

Pension and post retirement adjustments, net of tax	Benefit plans, net		(593)		(198)
	Net (loss) income		$	(593)	$	4,314

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~~

~~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, 2017 December 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 assets 750
665
Accounts payable 542
1,012
Other liabilities 183
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 payable 2,594
403
Other liabilities 8
7

~~The effects of derivatives on our financial statements are outlined below:~~

Three months ended September 30, Nine months ended September 30,
(in thousands) 2017 2016 2017 2016
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:
Revenues 2,092
1,940
8,094
4,524
Cost of operations 159
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 2119 – 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 securities	March 31, 2022		Level 1		Level 2
Corporate notes and bonds	$	8,218	$	8,218	$	—
Mutual funds	673		—		673
United States Government and agency securities	2,933		2,933		—
Total fair value of available-for-sale securities	$	11,824	$	11,151	$	673

(in thousands)
Available-for-sale securities September 30, 2017 Level 1 Level 2 Level 3
Commercial paper $ 5,394
$ —
$ 5,394
$ —
Mutual funds 1,286
—
1,286
—
U.S. Government and agency securities 7,243
7,243
—
—
Total fair value of available-for-sale securities $ 13,923
$ 7,243
$ 6,680
$ —


(in thousands)
Available-for-sale securities	December 31, 2021		Level 1		Level 2
Corporate notes and bonds	$	9,477	$	9,477	$	—
Mutual funds	714		—		714
United States Government and agency securities	2,017		2,017		—
Total fair value of available-for-sale securities	$	12,208	$	11,494	$	714

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

Derivatives September 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.

~~Derivatives~~Senior Notes

~~Derivative assets and liabilities currently consist~~See Note 12 above for a discussion of ~~FX forward contracts. Where applicable, the~~our senior notes. The fair value of ~~these derivative assets and liabilities~~the 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, 2022.


(in thousands)	March 31, 2022
Senior Notes	Carrying Value		Estimated Fair Value
8.125% Senior Notes due 2026 ('BWSN')	$	188,200	$	197,759
6.50% Senior Notes due 2026 ('BWNB')	$	151,440	$	144,353

Other ~~financial instruments~~Financial 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 sheets~~Condensed Consolidated Balance Sheets for cash and cash equivalents and restricted cash and cash equivalents approximate their fair values due to their highly liquid nature.

•Revolving ~~debt~~Debt. 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 instruments~~Revolving Debt approximated their carrying value at ~~September 30, 2017 and December~~March 31, ~~2016.~~

2022.

~~Non-recurring fair value measurements~~

~~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 assets~~warrants was ~~determined~~established using the ~~income approach (see Note 4).~~Black-Scholes option pricing model value approach.

•Contingent consideration: In connection with the Fosler Construction Company acquisition, the Company agreed to pay contingent consideration based on the achievement of targeted revenue thresholds for the year ended December 31, 2022. The ~~other-than-temporary impairment~~range of undiscounted amounts the Company could be required to pay under the contingent consideration arrangement is between $0.0 million and $10.0 million. As of March 31, 2022, the fair value of the contingent consideration liability is $9.6 million and is classified as a component of other current liabilities in the Company's Condensed Consolidated Balance Sheets. The fair value measurement of the contingent consideration related to the Fosler Construction Company acquisition was categorized as a Level 3 liability, as the measurement amount is based primarily on significant inputs not observable in the markets. The Company evaluates the fair value of contingent consideration and the corresponding liability each reporting period using an option pricing framework. The Company estimates projections during the earn-out period and volatility within the option pricing model captures variability in the potential pay-out. The analysis considers a discount rate applicable to the underlying projections and the risk of the Company paying the future liability.

NOTE 20– RELATED PARTY TRANSACTIONS

The Company believes transactions with related parties were conducted on terms equivalent to those prevailing in an arm's length transaction.

Transactions with B. Riley

Based on its Schedule 13D filings with the SEC, B. Riley beneficially owns approximately 30.3% of our ~~equity method investment~~outstanding common stock as of March 31, 2022.

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 services of Mr. Kenny Young were $0.2 million and $0.2 million for the three months ended March 31, 2022 and 2021, respectively.

The public offering of our 8.125% Senior Notes in ~~TBWES (see~~February 2021, as described in Note ~~11) required significant~~12, was conducted pursuant to an underwriting agreement dated February 10, 2021, between us and B. Riley Securities, Inc., an affiliate of B. Riley, 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 8.125% Senior Notes offering.

The public offering of our common stock, as described in Note 14, was conducted pursuant to an 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 8.125% 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 12.

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 12. As of March 31, 2022, we paid B. Riley Securities, Inc. $0.6 million for underwriting fees and other transaction costs related to the offering of which $0.1 million has been paid for the three months ended March 31, 2022.

On May 26, 2021, we completed the additional sale of 444,700 shares of our Preferred Stock, related to the grant to the underwriters, as described in Note 13, and paid B. Riley Securities, Inc. $0.4 million for underwriting fees in conjunction with the transaction.

On June 30, 2021, we entered into new Debt Facilities, as described in Note 12. In connection with the Company’s entry into the Debt Facilities, B. Riley Financial, Inc., an affiliate of B. Riley, has provided a guaranty of payment with regard to the Company’s obligations under the Reimbursement Agreement, as describe in Note 12. Under a fee letter with B. Riley, the Company shall pay B. Riley $0.9 million per annum in connection with the B. Riley Guaranty.

On July 7, 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 $76.0 million of Preferred Stock to or through B. Riley Securities, Inc., as described in Note 13. As of March 31, 2022, we paid B. Riley Securities, Inc. $0.2 million for underwriting fees and other transaction costs related to the offering.

The public offering of our 6.50% Senior Notes in December 2021, as described in Note 12, was conducted pursuant to an underwriting agreement dated December 8, 2021, between us and B. Riley Securities, Inc., an affiliate of B. Riley, as representative of several underwriters. At the closing date on December 13, 2021, we paid B. Riley Securities, Inc. $5.5 million for underwriting fees and other transaction cost related to the 6.50% Senior Notes offering.

On December 17, 2021, B. Riley Financial, Inc. entered into a General Agreement of Indemnity (the "Indemnity Agreement"), between us and AXA-XL and or its affiliated associated and subsidiary companies (collectively the “Surety”). Pursuant to the terms of the Indemnity Agreement, B. Riley will indemnify the Surety for losses the Surety may incur as a result of providing a payment and performance bond in an aggregate amount not to exceed €30.0 million in connection with our proposed performance on a specified project. In consideration of B. Riley's execution of the Indemnity Agreement, we paid B. Riley a fee of $1.7 million following the issuance of the bond by the Surety, which represents approximately 5.0% of the bonded obligations, to be amortized over the term of the agreement.

On September 30, 2021, we acquired a 60% controlling ownership stake in Illinois-based solar energy contractor Fosler Construction Company Inc. (“Fosler Construction”). Fosler Construction provides commercial, industrial and utility-scale solar services and owns 2 community solar projects in Illinois that are being developed under the Illinois Solar for All program. Fosler Construction was founded in 1998 with a track record of successfully completing solar projects profitably with union labor while aligning its model with a growing number of renewable project incentives in the U.S. We believe Fosler Construction is positioned to capitalize on the high-growth solar market in the U.S. and that the acquisition aligns with B&W’s aggressive growth and expansion of our clean and renewable energy businesses. Fosler Construction is reported as part of our B&W Renewable segment, and operates under the name Fosler Solar, a Babcock and Wilcox company.

We estimated fair values primarily using ~~unobservable inputs ("Level 3" inputs as defined~~the discounted cash flow method at September 30, 2021 for the preliminary allocation of consideration to the assets acquired and liabilities assumed. During the measurement period, we will continue to obtain information to assist in finalizing the fair value of assets acquired and liabilities assumed, which may differ materially from these preliminary estimates. Any subsequent changes in the fair ~~value hierarchy established by FASB Topic~~ ~~Fair Value Measurements and Disclosures). We determined the impairment charge by first determining an estimate~~values of the ~~price that could be received~~assets acquired and liabilities assumed during the measurement period may result in adjustments to ~~sell~~goodwill.

As of March 31, 2022, we recorded an increase in goodwill of $14.9 million resulting from the initial recognition of $14.5 million of accrued liabilities and $0.4 million of warranty accruals during this acquisition's annual measurement period, as described in Note 4.

On February 1, 2022, we acquired 100% ownership of Fossil Power Systems, Inc. (“FPS”) for approximately $59.1 million, excluding working capital adjustments. The consideration paid for FPS included a ~~market approach~~hold-back of $5.9 million, payable twelve months from the date of the acquisition if certain conditions of the purchase agreement are met an is recorded on our Condensed Consolidated Balance Sheets in restricted cash and ~~an income approach.~~cash equivalents and other accrued liabilities.

~~Our interim goodwill impairment test~~FPS is a leading designer and ~~third quarter impairment charge required significant~~manufacturer of hydrogen, natural gas and renewable pulp and paper combustion equipment including ignitors, plant controls and safety systems based in Dartmouth, Nova Scotia, Canada and is reported as part of our B&W Thermal segment.

We estimated fair ~~value measurements~~values primarily using ~~unobservable inputs (see Note 13). The~~the discounted cash flow method at February 1, 2022 for the preliminary allocation of consideration to the assets acquired and liabilities assumed. During the measurement period, we will continue to obtain information to assist in finalizing the fair value of ~~each reporting unit determined under Step 1~~assets acquired and liabilities assumed, which may differ materially from these preliminary estimates. Any subsequent changes in the fair values of the ~~goodwill impairment test was~~assets acquired and liabilities assumed during the measurement period may result in adjustments to goodwill.

On February 28, 2022, we acquired 100% ownership of Optimus Industries, LLC ("Optimus Industries") for approximately $19.0 million, excluding working capital adjustments. Optimus Industries designs and manufactures waste heat recovery products for use in power generation, petrochemical, and process industries, including package boilers, watertube and firetube waste heat boilers, economizers, superheaters, waste heat recovery equipment and units for sulfuric acid plants and is based ~~on an income approach~~in Tulsa, Oklahoma and Chanute, Kansas. Optimus Industries is reported as part of our B&W Thermal segment.

The fair values for the Optimus Industries acquisition have not been completed as of the filing date of this Quarterly report.

We will estimate fair values primarily using athe discounted cash flow ~~analysis, a market approach using multiples~~method at February 28, 2022 for the preliminary allocation of ~~revenue~~consideration to the assets acquired and ~~EBITDA~~liabilities assumed. During the measurement period, we will obtain information to assist in finalizing the fair value of ~~guideline companies,~~assets acquired and ~~a market approach using multiples~~liabilities assumed, which may differ materially from these preliminary estimates. Any subsequent changes in the fair values of ~~revenue~~the assets acquired and ~~EBITDA from recent, similar business combinations.~~liabilities assumed during the measurement period may result in adjustments to goodwill.

Purchase Price Allocations

The provisional measurements noted in the tables below are preliminary and subject to modification in the future. The preliminary purchase price allocation to assets acquired and liabilities assumed in the acquisitions were:


	Fosler Construction
(in thousands)	Initial Allocation of Consideration		Measurement Period Adjustments		Updated Preliminary Allocation

Accounts receivable	$	1,904	$	121	$	2,025
Contracts in progress	1,363		9,433		10,796
Other current assets	1,137		(304)		833
Property, plant and equipment	9,527		(7,860)		1,667
Goodwill(1) (4)	43,230		19,912		63,142
Other assets	17,497		(4,600)		12,897
Right of use assets	1,093		—		1,093
Debt	(7,625)		—		(7,625)
Current liabilities (4)	(5,073)		(15,829)		(20,902)
Advance billings on contracts	(1,557)		238		(1,319)
Non-current lease liabilities	(1,730)		—		(1,730)
Other non-current liabilities	(4,112)		3,218		(894)
Non-controlling interest(2)	(22,262)		(1,734)		(23,996)
Net acquisition cost	$	33,392	$	2,595	$	35,987

(1) Goodwill is calculated as the excess of the purchase price over the net assets acquired. With respect to the Fosler Construction acquisition, goodwill represents Fosler's ability to significantly expand EPC and O&M services among new customers across the U.S. by leveraging B&W's access to capital and geographic reach.

(2) The fair value of the ~~assets and liabilities for the Renewable and SPIG reporting units determined under Step 2 of the goodwill impairment test were~~non-controlling interest was derived based on ~~either an income or market approach.~~

~~The measurement of~~ the net actuarial loss associated with our Canadian pension plan was determined using unobservable inputs (see Note 16). These inputs included the estimated discount rate, expected return on plan assets and other actuarial inputs associated with the plan participants.

~~The determination of the estimated~~ fair value of the ~~related party share repurchase required significant~~60% controlling interest acquired by B&W. The transaction price paid by B&W reflects a Level 2 input involving an observable transaction involving an ownership interest in Fosler Construction. Also, as described above, a portion of the purchase consideration relates to the contingent consideration.

(3) Our preliminary purchase price allocation changed due to additional information and further analysis.

(4) Our preliminary goodwill and current liabilities adjustments increased $14.5 million due to additional accrued liabilities recognized attributable to the Fosler projects described in Note 4.


	VODA
(in thousands)	Initial Allocation of Consideration		Measurement Period Adjustments		Updated Preliminary Allocation
Cash	$	4,737	$	—	$	4,737
Accounts receivable	5,654		—		5,654
Contracts in progress	258		—		258
Other current assets	825		—		825
Property, plant and equipment	253		—		253
Goodwill(1)	17,176		(61)		17,115
Other assets	14,321		—		14,321
Right of use assets	433		—		433
Current liabilities	(5,181)		—		(5,181)
Advance billings on contracts	(2,036)		—		(2,036)
Non-current lease liabilities	(302)		—		(302)
Other non-current liabilities	(3,264)		—		(3,264)
Net acquisition cost	$	32,874	$	(61)	$	32,813

(1) Goodwill is calculated as the excess of the purchase price over the net assets acquired. With respect to the VODA acquisition, goodwill represents VODA's ability to significantly expand within the aftermarket parts and services industries by leveraging B&W's access to capital and existing platform within the renewable service market. Goodwill is not expected to be deductible for U.S federal income tax purposes.

(2)Our preliminary purchase price allocation changed due to additional information and further analysis.


	Purchase Price Allocation at March 31, 2022
(in thousands)	Fossil Power Systems		Optimus Industries(2)
Cash	$	1,869	$	5,338
Accounts receivable	2,624		5,165
Contracts in progress	370		2,598
Other current assets	3,228		2,115
Property, plant and equipment	178		2,441
Goodwill(1)	35,392		11,081
Other assets	25,092		12
Right of use assets	1,115		94
Current liabilities	(1,792)		(4,240)
Advance billings on contracts	(645)		(3,779)
Non-current lease liabilities	(989)		(2)
Other non-current liabilities	(7,384)		(1,858)
Net acquisition cost	$	59,058	$	18,965

(1) Goodwill is calculated as the excess of the purchase price over the net assets acquired. With respect to the FPS acquisition, goodwill represents FPS's ability to significantly expand services among new customers by leveraging cross-selling opportunities and recognizing general cost synergies.

(2)With respect to Optimus Industries, the fair value ~~measurements~~analysis has not been completed. We will update the purchase price allocations after the fair value analysis has been completed.

Intangible assets are included in other assets above and consists of the following:


	Fosler Construction			VODA
(in thousands)	Estimated Acquisition Date Fair Value		Weighted Average Estimated Useful Life	Estimated Acquisition Date Fair Value		Weighted Average Estimated Useful Life
Customer Relationships	$	9,400	12 years	$	13,855	11 years
Tradename	—		—	228		3 years
Backlog	3,100		5 months	—		—
Total intangible assets(1)	$	12,500		$	14,083

	Fossil Power Systems
	Estimated Acquisition Date Fair Value		Weighted Average Estimated Useful Life
Customer Relationships	$	20,451	9 years
Tradename	787		14 years
Patented Technology	578		12 years
Unpatented Technology	3,276		12 years
Total intangible assets(1)	$	25,092

(1) Intangible assets were valued using ~~unobservable~~the income approach, which includes significant assumptions around future revenue growth, profitability, discount rates and customer attrition. Such assumptions are classified as level 3 inputs ~~(see Note 18). We utilized~~within the fair value hierarchy.

Costs related to our acquisitions of Fosler, VODA, Fossil Power Systems, and Optimus Industries, which were recorded as a ~~discounted cash flow model and estimates~~component of our ~~weighted average cost~~operating expenses in our Condensed Consolidated Statements of Operations, consists of the following:


	For the Three Months Ended
(in thousands)	March 31, 2022
Fosler Construction	$	195
VODA	140
FPS	31
Optimus Industries	69
Total	$	435

~~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:~~

~~During the nine months ended September 30, 2017 and 2016, we recognized the following cash activity in our condensed consolidated financial statements:~~

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 consistency of diluted earnings per share calculations. The impact of this standard on our Condensed Consolidated Financial Statements was immaterial.

In ~~May 2014,~~October 2021, the FASB issued ASU ~~2014-09,~~ ~~Revenue from Contracts with Customers~~. The new accounting standard provides a comprehensive model to use in accounting for revenue from contracts with customers and will replace most 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 if an entity is the principal or agent 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

~~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 January 2017, the FASB issued ASU 2017-01,~~ 2021-08, Business Combinations (Topic 805): ~~Clarifying the Definition of a Business.~~ Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. The ~~new guidance clarifies the definition of~~amendment in this update provides an exception to fair value measurement for contract assets and contract liabilities (i.e., deferred revenue) acquired in a business ~~in an effort to make the guidance more consistent. The guidance provides~~combination. As a ~~test for determining when a group of~~result, contract assets and contract liabilities will be recognized and measured by the acquirer in accordance with ASC 606, Revenue from Contracts with Customers. The amendment also improves consistency in revenue recognition in the post-acquisition period for acquired contracts as compared to contracts entered into after the business ~~activities is not a business, specifically, when substantially all of the fair value of the gross assets acquired or disposed of are concentrated~~combination. The amendment 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~~this update is effective for ~~us beginning~~public business entities in ~~2018. We do not expect~~January 2023; all other entities have an additional year to adopt. Early adoption is permitted; however, if the new ~~accounting standard~~guidance is adopted in an interim period, it is required to ~~have a significant impact on our financial results when adopted.~~

~~In January 2017,~~be applied retrospectively to all business combinations within 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~~year 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~~adoption. This amendment is effective for fiscal years beginning ~~in 2020.~~after December 15, 2022, including interim periods within those fiscal years. 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

~~assessed~~evaluating 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:

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

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 ~~three or nine months ended September 30, 2017.~~

~~NOTE 24– SUBSEQUENT EVENT~~

~~FORWARD-LOOKING STATEMENTS~~

~~This report~~You should read the following discussion of our financial condition and results of operations in conjunction with the financial statements and the notes thereto included in Financial Statements under Item 1 within this Quarterly Report. The following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. See Cautionary Statement Concerning Forward-Looking Information.

•Babcock & Wilcox Renewable: Cost-effective technologies for efficient and environmentally sustainable power and heat generation, including waste-to-energy, solar construction and installation, biomass energy and black liquor systems for the pulp and paper 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.

•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 ~~meaning~~United States, Europe, Middle East and Asian based countries;

•demand for electricity and other end products of ~~Section 27A~~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;

•prices of and access to materials, particularly as a result of rising inflation and the impact of the ~~Securities Act~~Russian invasion of ~~1933 and 21E~~Ukraine;

•overall strength of the ~~Securities Exchange Act~~industrial industry; and

•ability of ~~1934. You should not place undue reliance on these statements. These forward-looking statements include statements that reflect~~electric power generating companies and other steam users to raise capital.

~~OVERVIEW OF RESULTS~~

~~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) 2017 2016 $ Change 2017 2016 $ Change
Revenues:
Power segment $ 202,222
$ 211,749
$ (9,527 ) $ 612,274
$ 762,293
$ (150,019 )
Renewable segment 108,557
124,344
(15,787 ) 262,168
293,593
(31,425 )
Industrial segment 99,288
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 segment 40,629
48,896
(8,267 ) 132,653
170,903
(38,250 )
Renewable segment 181
18,592
(18,411 ) (100,119 ) 14,468
(114,587 )
Industrial segment 9,461
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 investees 1,234
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 )

Components of ~~Contents~~Our Results of Operations

Operating Income (Loss)

The following discussion of our business segment results of operations includes a discussion of adjusted EBITDA, which when used on a consolidated basis is a non-GAAP financial measure. Adjusted EBITDA differs from the most directly comparable measure calculated in accordance with generally accepted accounting principles (“GAAP”). A reconciliation of net income (loss), the most directly comparable GAAP measure, to adjusted EBITDA is included in “Non-GAAP Financial Measures” 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)		2022		2021
Revenues:
B&W Renewable segment		$	67,961	$	28,811
B&W Environmental segment		34,948		31,160
B&W Thermal segment		102,239		108,281
Eliminations		(1,099)		(4)
		$	204,049	$	168,248


	Three Months Ended March 31,
(in thousands)		2022		2021
Adjusted EBITDA
B&W Renewable segment		$	1,455	$	204
B&W Environmental segment		1,439		1,105
B&W Thermal segment		14,154		10,535
Corporate		(4,373)		(2,685)
Research and development costs		(655)		(588)
		$	12,020	$	8,571

Three ~~months ended September 30, 2017 vs. 2016~~Months Ended March 31, 2022 and 2021

Revenues ~~decreased~~increased by ~~$2.3~~$35.8 millionto ~~$408.7~~$204.0 million in the ~~third quarter of 2017~~three months ended March 31, 2022 as compared to ~~$411.0~~$168.2 million in the ~~third quarter~~three months ended March 31, 2021. The increase is primarily attributable to higher volume driven by new-

build projects and the acquisitions of ~~2016. Anticipated decreases in construction activities associated with new build~~Fosler Construction and ~~retrofit projects in the Power segment and a decrease in the revenue recognized in the~~VODA within our Renewable segment, ~~resulting from ongoing performance challenges on~~the acquisitions of Fossil Power Systems and Optimus Industries within our ~~renewable energy contracts were~~Thermal segment, in addition to a higher level of volume in our Environmental segment partially offset by a lower level of construction activity in our Thermal segment. The negative impacts on 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, which compares to gross profit of $73.8 million in the third quarter of 2016,~~global economy as a ~~decrease of $26.5 million. The primary drivers~~result of the ~~decrease were~~ongoing Russia-Ukraine military conflict adversely impacted each of our segments causing shortages of supplies and materials and affecting the ~~six uncompleted European loss contracts in the Renewable segment (see Note 5 in the condensed consolidated financial statements), productivity issues~~timing of revenue 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 isseveral projects. Segment specific changes are discussed in further detail in the sections below.

~~Nine months ended September 30, 2017 vs. 2016~~

~~Revenues decreased by~~ ~~$48.6 million~~ to $1.15 billion 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 the 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 $125.6 million to~~ ~~$54.4 million~~ in the nine months ended September 30, 2017 as compared to $180.0 million in the corresponding period in 2016. 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) 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 mark to market adjustments, SG&A expenses 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 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 second quarter of 2017. The impairment charge was a result of the strategic change we and our joint venture partner have made due to the decline in forecasted market opportunities in India.

~~Our goodwill impairment charges and restructuring expense are discussed in further detail in the sections below.~~

~~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.

~~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 third quarter of 2017 and 2016 were comparable. The $15.8 million decrease in revenue in the third quarter of 2017 was primarily attributable to revisions in our estimates of progress and estimated liquidated damages on six of our renewable energy contracts.

Gross profit decreased $18.4 million in the third quarter of 2017 to $0.2 million, compared to $18.6 million in the corresponding quarter 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 to 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 explanations 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.

~~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 of gross profit in the third 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 services in the segment. In addition, the Industrial segment's gross profit in the third quarter of 2017 also was affected by productivity issues on new build cooling system projects. The productivity issues caused us to increase project cost estimates and deploy additional resources to complete the projects on time.

~~Nine months ended September 30, 2017 vs. 2016~~

(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 three months ended March 31, 2022 and 2021 was $6.0 million and $7.0 million, respectively.

(1) B&W Renewable backlog at March 31, 2022, includes $153.2 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.

Three months ended September 30, Nine months ended September 30,
(In millions) 2017 2016 2017 2016
Power $122 $198 $476 $623
Renewable 35 (2) 86 124
Industrial 100 70 360 133
Other/eliminations (2) — (40) —
Bookings $255 $266 $881 $880

Adjusted EBITDA on a consolidated basis is a non-GAAP metric defined as the sum of the adjusted EBITDA for each of the segments, further adjusted for corporate allocations and research and development costs. At a segment level, the adjusted EBITDA presented below is consistent with the way the Company's chief operating decision maker reviews the results of operations and makes strategic decisions about the business and is calculated as earnings before interest, tax, depreciation and amortization adjusted for items such as gains or losses on asset sales, net pension benefits, restructuring costs, impairments, gains and losses on debt extinguishment, costs related to financial consulting, research and development costs and other costs that may not be directly controllable by segment management and are not allocated to the segment.The Company uses adjusted EBITDA internally to evaluate its performance and in making financial and operational decisions. When viewed in conjunction with GAAP results, the Company believes that its presentation of adjusted EBITDA provides investors with greater transparency and a greater understanding of factors affecting its financial condition and results of operations than GAAP measures alone. Additionally, the Company redefined its definition of adjusted EBITDA to eliminate the effects of certain items including business transition costs. Prior period results have been revised to conform with the revised definition and present separate reconciling items in our reconciliation.


	Three Months Ended March 31,
(in thousands)		2022		2021
Net loss		$	(8,684)	$	(15,443)
Interest expense		12,324		14,509
Income tax expense		1,230		2,836
Depreciation & amortization		6,202		4,058
EBITDA		11,072		5,960

Benefit plans, net		(7,452)		(9,098)
Gain on sales, net		(20)		(2,362)
Stock compensation		1,319		7,829
Restructuring activities and business services transition costs		2,688		993
Advisory fees for settlement costs and liquidity planning		1,032		1,978
Litigation costs		2,528		380
Acquisition pursuit and related costs		843		—
Product development (1)		852		—
Foreign exchange		(3,085)		1,209
Financial advisory services		375		933
Contract step-up purchase price adjustment		1,745		—
Loss from business held for sale		—		483

Other - net		123		266
Adjusted EBITDA		$	12,020	$	8,571

(1) Costs associated with development of commercially viable products that are ready to go to market.

(In approximate millions) 2017 2018 Thereafter Total
Power $155 $157 $170 $482
Renewable 129 232 703 1,064
Industrial 71 246 — 317
Other/eliminations — 6 (43) (37)
Backlog $355 $641 $830 $1,826


	Three Months Ended March 31,
(in thousands)		2022		2021
Adjusted EBITDA
B&W Renewable segment		$	1,455	$	204
B&W Environmental segment		1,439		1,105
B&W Thermal segment		14,154		10,535
Corporate		(4,373)		(2,685)
Research and development costs		(655)		(588)
		$	12,020	$	8,571

~~Goodwill impairment~~B&W Renewable Segment Results

~~We recorded goodwill impairment charges of $86.9 million ($85.8 million net of tax)~~

Three Months Ended March 31, 2022 and 2021

Revenues in the ~~third quarter of 2017, which included a $50.0 million charge in the~~B&W Renewable reporting unit and a $36.9 million charge in the SPIG reporting unit. The reasons for the charges and related assumptions made by management are 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 assets in the two reporting units were not impaired.

~~SG&A expenses, excluding intangible asset amortization expense and pension mark to market adjustments, decreased by $0.4~~segment increased $39.2 million, to ~~$59.2~~$68.0 million in the ~~third quarter of 2017, as~~three months ended March 31, 2022 compared to ~~$59.6~~$28.8 million in the ~~third quarter~~three months ended March 31, 2021. The increase in revenue is primarily due to the acquisitions of ~~2016. The primary reasons for the decrease are the $8.7 million~~Fosler Construction and VODA and higher volume 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 activitiesnew-build projects.

Adjusted EBITDA in the ~~Industrial segment.~~

~~SG&A expenses, excluding intangible asset amortization expense and pension mark~~B&W Renewable segment increased $1.3 million, to ~~market adjustments, increased by $13.5~~$1.5 million in the ~~nine~~three months ended ~~September 30, 2017 to $192.7 million, as~~March 31, 2022 compared to ~~$179.2~~$0.2 million in the ~~nine~~three months ended ~~September 30, 2016. SG&A~~March 31, 2021. The increase is primarily due to the higher volume, as described above offset partially by mix within the segment.

B&W Environmental Segment Results

Three Months Ended March 31, 2022 and 2021

Revenues in the B&W Environmental segment increased ~~by $20.2 million from the SPIG and Universal acquisitions, and $13.3~~12%, or $3.8 million to ~~support ongoing Renewable~~$34.9 million in the three months ended March 31, 2022 compared to $31.2 million in the three months ended March 31, 2021. The increase is primarily driven by higher overall volume in ash handling systems, scrubbers, precipitators and cooling systems.

Adjusted EBITDA in the B&W Environmental segment was $1.4 million in the three months ended March 31, 2022 compared to $1.1 million in the three months ended March 31, 2021. The increase is driven primarily by higher volume, as described above.

B&W Thermal Segment Results

Revenues in the B&W Thermal segment decreased 6%, or $6.0 million, to $102.2 million in the three months ended March 31, 2022 compared to $108.3 million in the three months ended March 31, 2021. The revenue decrease is attributable to a lower level of activity on construction projects, partially offset by ~~$21.9~~the acquisitions of Fossil Power Systems and Optimus Industries.

Adjusted EBITDA in the B&W Thermal segment increased $3.6 million to $14.2 million in the three months ended March 31, 2022 compared to $10.5 million in the three months ended March 31, 2021, which is mainly attributable to the acquisitions of Fossil Power Systems and Optimus Industries and continued cost savings ~~from our 2016~~and restructuring ~~actions focused on~~initiatives benefiting the ~~Power segment.~~current year, which more than offset the overall decrease in volume, as described above.

Advisory fees and settlement costs increased $0.6 million to $3.9 million in the three months ended March 31, 2022 as compared to $3.3 million in the corresponding period of 2021. The increase is primarily related to higher legal fees and other costs incurred in the current quarter.

Our research and development ~~expenses~~

activities are focused on improving our products through innovations to reduce their cost and make them more competitive, as well as to reduce performance risk of our products to better meet our and our customers’ expectations.Research and development expenses ~~relate to the development~~remained relatively unchanged 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.

~~2017 Restructuring activities~~

~~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$0.7 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~~three months ended ~~September 30, 2017~~March 31, 2022 and ~~2016,~~2021, respectively. ~~We expect nominal additional restructuring charges during the fourth quarter of 2017, primarily related to facility demolition~~

~~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 third quarter and nine months ended September 30, 2017, we recognized spin-off costs of $0.2corporate functions resulted in $0.1 million and $1.0 million ~~respectively. In~~of expense in the ~~third quarter and nine~~three months ended ~~September 30, 2016, we recognized spin-off costs~~March 31, 2022 and 2021, respectively. The decrease of ~~$0.4~~$0.9 million ~~and $3.4 million, respectively. In~~for the ~~second quarter~~three months ended March 31, 2022 is due to a lower level of ~~2017, we disbursed $1.9 million~~restructuring actions compared to the prior year comparable quarter. For the three months ended March 31, 2021, the charges primarily consist of severance related to actions taken, including as part of the ~~accrued retention awards. Approximately $0.5 million of such~~Company’s strategic, market-focused organizational and re-branding initiatives.

~~Equity in income (loss) of investees~~

~~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~~functions 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~~in the ~~nine~~three months ended ~~September 30, 2017.~~March 31, 2022. These charges primarily result from actions taken to outsource certain tasks to offshore service providers or to transfer administrative and compliance tasks to global service providers as part of our strategic efforts to reduce future selling, general and administrative costs. Transition costs are included in selling, general and administrative expenses in our Condensed Consolidated Statements of Operations.

~~We expect total intangible amortization~~

Depreciation expense ~~of $3.6~~was $2.2 million and $2.7 million in the ~~fourth~~three months ended March 31, 2022 and 2021, respectively.

Our pension costs also include mark-to-market ("MTM") adjustments from time to time and are primarily a result of changes in the discount rate, curtailments and 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. There were no MTM adjustments for our other postretirement benefit plans during the three months ended March 31, 2022 and 2021, respectively.

Refer to Note 11 to the Condensed Consolidated Financial Statements for further information regarding our pension and other postretirement plans.



~~DELAWARE~~Delaware		47-2783641
(State or other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

~~THE HARRIS BUILDING~~1200 East Market Street, Suite 650
~~13024 BALLANTYNE CORPORATE PLACE, SUITE 700~~Akron, Ohio		44305
~~CHARLOTTE, NORTH CAROLINA~~	~~28277~~
(Address of Principal Executive Offices)	(Zip Code)



						PAGE
Cautionary Statement Concerning Forward-Looking Information						3
PART I - FINANCIAL INFORMATION
Item 1.			~~Item 1 –~~ Condensed Consolidated Financial Statements			3

	Condensed Consolidated Statements of Operations for the Three ~~and Nine~~ Months Ended ~~September 30, 2017~~March 31, 2022 and ~~2016 (Unaudited)~~2021			34

	Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three ~~and Nine~~ Months Ended ~~September 30, 2017~~March 31, 2022 and ~~2016~~2021 (Unaudited)			45

	Condensed Consolidated Balance Sheets as of ~~September 30, 2017~~March 31, 2022 and December 31, ~~2016~~2021 (Unaudited)			56
			Condensed Consolidated Statement of Stockholders' Equity (Deficit) for each of the Three Month Periods Ended March 31, 2022, and 2021 (Unaudited)			7
			Condensed Consolidated Statements of Cash Flows for the ~~Nine~~Three Months Ended ~~September 30, 2017~~March 31, 2022 and ~~2016~~2021 (Unaudited)			68

	Notes to Condensed Consolidated Financial Statements			710

Item 2.	~~Item 2 -~~ Management's Discussion and Analysis of Financial Condition and Results of ~~Operations~~Operation			3033
			Overview			33
			Results of Operations - Three Months Ended March 31, 2022 and 2021			34
			Liquidity and Capital Resources			40
			Critical Accounting Policies and Estimates			42
Item ~~3 -~~ 3.			Quantitative and Qualitative Disclosures ~~About~~about Market Risk			4542

Item 4.	~~Item 4 -~~ Controls and Procedures			4643

PART III I - OTHER INFORMATION

Item 1.	~~Item 1 -~~ Legal Proceedings			4743

Item 1A.	~~Item 1A -~~ Risk Factors			4743

Item 2.	~~Item 2 -~~ Unregistered Sales of Equity Securities and Use of Proceeds			4743

	Item ~~6 - Exhibits~~6.	48Exhibits			44

SIGNATURES					4846



	Three months ended September 30,						Nine months ended September 30,
(in thousands, except per share amounts)	2017			2016			2017			2016
Revenues	$	408,703		$	410,955		$	1,149,636		$	1,198,279
Costs and expenses:
Cost of operations	361,416			337,198			1,095,271			1,018,314
Selling, general and administrative expenses	60,241			60,697			195,847			182,761
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
Losses (gains) on asset disposals, net	59			(2		)	63			(17		)
Total costs and expenses	514,685			402,649			1,394,448			1,247,352
Equity in income (loss) and impairment of investees	1,234			2,827			(13,380		)	4,887
Operating income (loss)	(104,748		)	11,133			(258,192		)	(44,186		)
Other income (expense):
Interest income	121			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:
Basic	46,149			49,621			47,905			50,613
Diluted	46,149			49,857			47,905			50,613



	Three months ended September 30,						Nine months ended September 30,
(in thousands)	2017			2016			2017			2016
Revenues:
Power segment	$	202,222		$	211,749		$	612,274		$	762,293
Renewable segment	108,557			124,344			262,168			293,593
Industrial segment	99,288			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 segment	40,629			48,896			132,653			170,903
Renewable segment	181			18,592			(100,119		)	14,468
Industrial segment	9,461			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 investees	1,234			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	)



(in thousands)	Estimated acquisition date fair value
Cash	$	4,379
Accounts receivable	11,270
Contracts in progress	3,167
Inventories	4,585
Other assets	579
Property, plant and equipment	16,692
Goodwill	14,413
Identifiable intangible assets	19,500
Deferred income tax assets	935
Current liabilities	(10,833		)
Other noncurrent liabilities	(1,423		)
Deferred income tax liabilities	(6,338		)
Net acquisition cost	$	56,926



	Estimated fair value (in thousands)		Weighted average estimated useful life (in years)
Customer relationships	$	10,800	15
Backlog	1,700		1
Trade names / trademarks	3,000		20
Technology	4,000		7
Total amortizable intangible assets	$	19,500



	Three months ended		Nine months ended			Twelve months ended
(in thousands)	September 30, 2016		September 30, 2016			December 31, 2016
Revenues	$	431,412	$	1,259,905		$	1,660,986
Net income (loss) attributable to B&W	8,903		(43,458		)	(113,940		)
Basic earnings per common share	0.18		(0.86		)	(2.27		)
Diluted earnings per common share	0.18		(0.86		)	(2.27		)



(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 reclassifications	5,417			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 reclassifications	6,757			(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 reclassifications	2,591			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	)



Period ending	Amortization 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



(in thousands)	Power		Renewable			Industrial			Total
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 adjustments	1,180		1,530			6,490			9,200
Balance at September 30, 2017	$	47,400	$	—		$	156,705		$	204,105



	Power Segment		Industrial Segment
(in millions)	Power	Construction	MEGTEC	Universal
Reporting unit headroom	60%	98%	12%	18%
Goodwill balance	$38.5	$8.9	$104.3	$14.4



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



(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



	Asset and Liability Derivative
(in thousands)	September 30, 2017		December 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 assets	750		665
Accounts payable	542		1,012
Other liabilities	183		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 payable	2,594		403
Other liabilities	8		7



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



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 operations	Cost of operations
Interest cost	41,772			50,644			Cost of operations	Other income (expense)
Expected return on plan assets	(61,939		)	(68,709		)	Cost of operations	Other income (expense)
Amortization of prior service cost	250			307			Cost of operations	Other income (expense)
Recognized net actuarial losses - mark to market adjustments	24,110			40,210			Cost of operations or SG&A expenses	Other income (expense)
Net periodic benefit cost (benefit)	$	5,896		$	36,153


	Three Months Ended March 31,
(in approximate millions)		2022		2021
B&W Renewable(1)		$	101	$	37
B&W Environmental		37		41
B&W Thermal		101		91

Bookings		$	239	$	169


	As of March 31,
(in approximate millions)	2022		2021
B&W Renewable(1)	$	440	$	215
B&W Environmental	126		118
B&W Thermal	158		206
Other/eliminations	(3)		(4)
Backlog	$	721	$	535


(in approximate millions)	2022		2023		Thereafter		Total
B&W Renewable	$	233	$	68	$	139	$	440
B&W Environmental	88		14		24		126
B&W Thermal	125		29		4		158
Other/eliminations	(3)		—		—		(3)
Expected revenue from backlog	$	443	$	111	$	167	$	721



(In approximate millions)	2017	2018	Thereafter	Total
Power	$155	$157	$170	$482
Renewable	129	232	703	1,064
Industrial	71	246	—	317
Other/eliminations	—	6	(43)	(37)
Backlog	$355	$641	$830	$1,826


	Three Months Ended March 31,
(In thousands, except for percentages)		2022			2021
Loss before income taxes		$	(7,454)		$	(12,607)
Income tax expense		$	1,230		$	2,836
Effective tax rate		(16.5)		%	(22.5)		%


(data in whole amounts)
Period	Total number of shares acquired (1)	Average price 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
January 2022	19,734	$	8.65	—	$	—
February 2022	6,833	$	7.37	—	$	—
March 2022	—	$	—	—	$	—
Total	26,567	$	8.32	—	$	—



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.


2.1*		Master Separation Agreement, dated as of June 8, 2015, between The Babcock & Wilcox Company and Babcock & Wilcox Enterprises, Inc. (incorporated by reference to Exhibit 2.1 to the Babcock & Wilcox Enterprises, Inc. Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 (File No. 001-36876)).

~~10.1~~3.1		~~Amendment No. 3 dated August 9, 2017,~~ Restated Certificate of Incorporation (incorporated by reference to ~~Credit Agreement, dated May 11, 2015, among~~Exhibit 3.1 to the Babcock & Wilcox Enterprises, Inc.~~, as~~ Quarterly Report on Form 10-Q for the ~~Borrower, Bank~~quarter ended June 30, 2015 (File No. 001-36876)).

3.2		Certificate of ~~America, N.A., as administrative Agent and Lender, and~~Amendment of the ~~other Lenders party thereto~~Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Babcock & Wilcox Enterprises, Inc. Current Report on Form 8-K filed ~~August 15, 2017~~on June 17, 2019 (File No. 001-36876)).

~~10.2~~3.3		~~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 thereto~~amended (incorporated by reference to Exhibit 3.1 to the Babcock & Wilcox Enterprises, Inc. Current Report on Form 8-K filed ~~August 15, 2017~~on July 24, 2019 (File ~~No.001-36876)~~No. 001-36876)).

~~10.3~~3.4		~~Amendment No. 4 dated September 20, 2017 to Credit Agreement, dated May 11, 2015, among~~ Amended and Restated Bylaws of the Babcock & Wilcox Enterprises, Inc.~~, as the borrower, Bank of America, N.A. as Administrative Agent, and the other Lenders party thereto~~

3.5		Certificate of Designations with respect to the 7.75% Series A Cumulative Perpetual Preferred Stock, dated May 6, 2021, filed with the Secretary of State of Delaware and effective on May 6, 2021 (incorporated by reference to Exhibit 3.4 to the Babcock & Wilcox Enterprises, Inc. Form 8-A filed on May 7, 2021 (File No. 001-36876)).

3.6		Certificate of Increase in Number of Shares of 7.75% Series A Cumulative Perpetual Preferred Stock, dated June 1, 2021 (incorporated by reference to Exhibit 3.1 to the Babcock & Wilcox Enterprises, Inc. Current Report on Form 8-K filed on July 7, 2021 (File No. 001-36876)).










































































































































































31.1		Rule 13a-14(a)/15d-14(a) certification of Chief Executive ~~Officer~~Officer.

31.2		Rule 13a-14(a)/15d-14(a) certification of Chief Financial ~~Officer~~Officer.

32.1		Section 1350 certification of Chief Executive ~~Officer~~Officer.

32.2		Section 1350 certification of Chief Financial ~~Officer~~Officer.

~~101.INS~~101.SCH		~~XBRL Instance Document~~

~~101.SCH~~	XBRL Taxonomy Extension Schema ~~Document~~Document.

101.CAL		XBRL Taxonomy Extension Calculation Linkbase ~~Document~~Document.

101.LAB		XBRL Taxonomy Extension Label Linkbase ~~Document~~Document.

101.PRE		XBRL Taxonomy Extension Presentation Linkbase ~~Document~~Document.

101.DEF		XBRL Taxonomy Extension Definition Linkbase ~~Document~~Document.



104						Cover Page Interactive Data File (embedded within the inline XBRL document)



~~November 8, 2017~~			BABCOCK & WILCOX ENTERPRISES, INC.

May 9, 2022	By:	~~By:~~	/s/ ~~Daniel W. Hoehn~~Louis Salamone
			~~Daniel W. Hoehn~~Louis Salamone
			Executive Vice President, ~~Controller &~~Chief Financial Officer and Chief Accounting Officer
	(Principal Financial and Accounting Officer and Duly Authorized Representative)