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

FORM 10-Q
(Mark One)
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2021March 31, 2022

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

Commission File No. 001-36876 

BABCOCK & WILCOX ENTERPRISES, INC.
(Exact name of registrant as specified in its charter)
Delaware 47-2783641
(State or other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification No.)
1200 East Market Street, Suite 650 
Akron, Ohio 44305
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (330) 753-4511
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.01 par valueBWNew York Stock Exchange
8.125% Senior Notes due 2026BWSNNew York Stock Exchange
6.50% Senior Notes due 2026BWNBNew York Stock Exchange
7.75% Series A Cumulative Perpetual Preferred StockBW PRANew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).    Yes  ☒    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐  Accelerated filer ☐☒
Non-accelerated filer ☒☐  Smaller reporting company ☒☐
Emerging growth company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the 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).    
Yes  ☐    No  ☒
The number of shares of the registrant's common stock outstanding at November 5, 2021May 2, 2022 was 86,260,649.86,337,832.
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SIGNATURES
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***** Cautionary Statement Concerning Forward-Looking Information *****

This quarterly report,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. Statements thatForward-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 words "expect," "intend," "plan," "believe," "project," "forecast," "estimate," "may," "should," "anticipate" and similar statementstiming or nature of a future operational performance or forward-looking nature identify forward-looking statements.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 on usand 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 acquisitionrecent acquisitions of Fosler Construction Company Inc;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,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;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.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.
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PART I - FINANCIAL INFORMATION

ITEM 1. Condensed Consolidated Financial Statements
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BABCOCK & WILCOX ENTERPRISES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three months ended September 30,Nine months ended September 30,
(in thousands, except per share amounts)2021202020212020
Revenues$159,960 $132,513 $531,068 $416,464 
Costs and expenses:
Cost of operations114,643 75,156 404,827 292,691 
Selling, general and administrative expenses38,206 35,689 112,367 107,876 
Advisory fees and settlement costs1,841 3,846 9,658 10,074 
Restructuring activities4,575 2,396 7,968 6,739 
Research and development (benefit) costs(228)1,355 969 3,927 
Gain on asset disposals, net(13,838)(3)(15,804)(916)
Total costs and expenses145,199 118,439 519,985 420,391 
Operating income (loss)14,761 14,074 11,083 (3,927)
Other income (expense):
Interest expense(8,330)(12,203)(30,574)(49,776)
Interest income130 167 385 430 
Gain (loss) on debt extinguishment— — 6,530 (6,194)
Loss on sale of business— — (2,240)(108)
Benefit plans, net9,867 7,328 24,889 22,314 
Foreign exchange(1,673)24,963 (1,056)22,749 
Other – net(806)(276)(988)(3,068)
Total other income (expense)(812)19,979 (3,054)(13,653)
Income (loss) before income tax expense13,949 34,053 8,029 (17,580)
Income tax expense (benefit)301 (502)6,683 (467)
Income (loss) from continuing operations13,648 34,555 1,346 (17,113)
Income from discontinued operations, net of tax— — — 1,800 
Net income (loss)13,648 34,555 1,346 (15,313)
Net (income) loss attributable to non-controlling interest(5)169 (41)407 
Net income (loss) attributable to stockholders13,643 34,724 1,305 (14,906)
Less: Dividend on Series A preferred stock3,681 — 5,412 — 
Net income (loss) attributable to stockholders of common stock$9,962 $34,724 $(4,107)$(14,906)
Basic earnings (loss) per share
Continuing operations$0.12 $0.70 $(0.05)$(0.35)
Discontinued operations— — — 0.04 
Basic earnings (loss) per share$0.12 $0.70 $(0.05)$(0.31)
Diluted earnings (loss) per share
Continuing operations$0.11 $0.69 $(0.05)$(0.35)
Discontinued operations— — — 0.04 
Diluted earnings (loss) per share$0.11 $0.69 $(0.05)$(0.31)
Shares used in the computation of earnings (loss) per share:
Basic86,002 49,478 81,088 47,585 
Diluted86,964 50,056 81,088 47,585 
Three Months Ended March 31,
(in thousands, except per share amounts)20222021
Revenues$204,049 $168,248 
Costs and expenses:
Cost of operations163,060 131,385 
Selling, general and administrative expenses43,044 40,457 
Advisory fees and settlement costs3,935 3,291 
Restructuring activities94 993 
Research and development costs719 588 
Gain on asset disposals, net(20)(2,004)
Total costs and expenses210,832 174,710 
Operating loss(6,783)(6,462)
Other expense:
Interest expense(11,267)(14,223)
Interest income117 109 
Gain on sale of business— 358 
Benefit plans, net7,452 9,098 
Foreign exchange3,085 (1,209)
Other expense – net(58)(278)
Total other expense(671)(6,145)
Loss before income tax expense(7,454)(12,607)
Income tax expense1,230 2,836 
Net loss(8,684)(15,443)
Net loss (income) attributable to non-controlling interest420 (21)
Net loss attributable to stockholders(8,264)(15,464)
Less: Dividend on Series A preferred stock3,715 — 
Net loss attributable to stockholders of common stock$(11,979)$(15,464)
Basic loss per share$(0.14)$(0.22)
Diluted loss per share$(0.14)$(0.22)
Shares used in the computation of loss per share:
Basic87,992 71,396 
Diluted87,992 71,396 

See accompanying notes to Condensed Consolidated Financial Statements.
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BABCOCK & WILCOX ENTERPRISES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Three months ended September 30,Nine months ended September 30,
(in thousands)2021202020212020
Net income (loss)$13,648 $34,555 $1,346 $(15,313)
Other comprehensive income (loss):
Currency translation adjustments (CTA)(1,292)(22,916)(2,840)(24,631)
Reclassification of CTA to net income (loss)— — (4,512)— 
Benefit obligations:
Amortization of benefit plan benefits197 (246)593 (738)
Other comprehensive loss(1,095)(23,162)(6,759)(25,369)
Total comprehensive income (loss)12,553 11,393 (5,413)(40,682)
Comprehensive income attributable to non-controlling interest25 175 18 434 
Comprehensive income (loss) attributable to stockholders$12,578 $11,568 $(5,395)$(40,248)
Three Months Ended March 31,
(in thousands)20222021
Net loss$(8,684)$(15,443)
Other comprehensive (loss) income:
Currency translation adjustments ("CTA")(4,285)$(70)
Reclassification of CTA to net loss— (4,512)
Benefit obligations:
Pension and post retirement adjustments, net of tax593 198 
Other comprehensive loss(3,692)(4,384)
Total comprehensive loss(12,376)(19,827)
Comprehensive income attributable to non-controlling interest461 3 
Comprehensive loss attributable to stockholders$(11,915)$(19,824)
See accompanying notes to Condensed Consolidated Financial Statements.
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BABCOCK & WILCOX ENTERPRISES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amount)(in thousands, except per share amount)September 30, 2021December 31, 2020(in thousands, except per share amount)March 31, 2022December 31, 2021
Cash, cash equivalents and restricted cash$115,747 $67,423 
Cash and cash equivalentsCash and cash equivalents$108,137 $224,874 
Restricted cash and cash equivalentsRestricted cash and cash equivalents8,833 1,841 
Accounts receivable – trade, netAccounts receivable – trade, net129,908 128,317 Accounts receivable – trade, net170,464 132,068 
Accounts receivable – otherAccounts receivable – other36,941 35,442 Accounts receivable – other39,819 34,553 
Contracts in progressContracts in progress68,266 59,308 Contracts in progress95,972 80,176 
Inventories72,999 67,161 
Inventories, netInventories, net90,401 79,527 
Other current assetsOther current assets22,907 26,421 Other current assets27,343 29,395 
Current assets held for sale— 4,728 
Total current assetsTotal current assets446,768 388,800 Total current assets540,969 582,434 
Net property, plant and equipment, and finance leaseNet property, plant and equipment, and finance lease109,918 85,078 Net property, plant and equipment, and finance lease77,156 85,627 
GoodwillGoodwill90,548 47,363 Goodwill174,371 116,462 
Intangible assets37,528 23,908 
Intangible assets, netIntangible assets, net65,452 43,795 
Right-of-use assetsRight-of-use assets9,812 10,814 Right-of-use assets30,500 30,163 
Other assetsOther assets34,784 24,673 Other assets66,251 54,784 
Non-current assets held for sale— 11,156 
Total assetsTotal assets$729,358 $591,792 Total assets$954,699 $913,265 
Accounts payableAccounts payable$85,948 $73,481 Accounts payable$97,840 $85,929 
Accrued employee benefitsAccrued employee benefits15,660 13,906 Accrued employee benefits12,245 12,989 
Advance billings on contractsAdvance billings on contracts44,439 64,002 Advance billings on contracts99,910 68,380 
Accrued warranty expenseAccrued warranty expense15,210 25,399 Accrued warranty expense11,873 12,925 
Financing lease liabilitiesFinancing lease liabilities3,302 886 Financing lease liabilities1,973 2,445 
Operating lease liabilitiesOperating lease liabilities3,651 3,995 Operating lease liabilities4,078 3,950 
Other accrued liabilitiesOther accrued liabilities51,996 80,858 Other accrued liabilities75,949 54,385 
Loans payableLoans payable10,137 — Loans payable13,433 12,380 
Current liabilities held for sale— 8,305 
Total current liabilitiesTotal current liabilities230,343 270,832 Total current liabilities317,301 253,383 
Senior notesSenior notes181,150 — Senior notes328,870 326,366 
Long term loans payableLong term loans payable1,789 — Long term loans payable1,476 1,543 
Last out term loans— 183,330 
Revolving credit facilities— 164,300 
Pension and other accumulated postretirement benefit liabilities205,079 252,292 
Pension and other postretirement benefit liabilitiesPension and other postretirement benefit liabilities174,873 182,730 
Non-current finance lease liabilitiesNon-current finance lease liabilities52,526 29,690 Non-current finance lease liabilities29,094 29,369 
Non-current operating lease liabilitiesNon-current operating lease liabilities6,298 7,031 Non-current operating lease liabilities27,032 26,685 
Other non-current liabilitiesOther non-current liabilities31,773 22,579 Other non-current liabilities32,111 34,567 
Total liabilitiesTotal liabilities708,958 930,054 Total liabilities910,757 854,643 
Commitments and contingenciesCommitments and contingencies00Commitments and contingencies00
Stockholders' equity (deficit):
Preferred stock, par value $0.01 per share, authorized shares of 20,000; issued and outstanding shares of 7,599 and 0 at September 30, 2021 and December 30, 2020, respectively76 — 
Common stock, par value $0.01 per share, authorized shares of 500,000; issued and outstanding shares of 86,244 and 54,452 at September 30, 2021 and December 31, 2020, respectively5,110 4,784 
Stockholders' equity:Stockholders' equity:
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, respectivelyPreferred 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, respectively77 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, respectivelyCommon 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, respectively5,111 5,110 
Capital in excess of par valueCapital in excess of par value1,516,368 1,164,436 Capital in excess of par value1,520,545 1,518,872 
Treasury stock at cost, 1,512 and 718 shares at September 30, 2021 and December 31, 2020, respectively(110,853)(105,990)
Treasury stock at cost, 1,553 and 1,525 shares at March 31, 2022 and December 31, 2021, respectivelyTreasury stock at cost, 1,553 and 1,525 shares at March 31, 2022 and December 31, 2021, respectively(111,155)(110,934)
Accumulated deficitAccumulated deficit(1,354,313)(1,350,206)Accumulated deficit(1,333,133)(1,321,154)
Accumulated other comprehensive lossAccumulated other comprehensive loss(59,149)(52,390)Accumulated other comprehensive loss(62,514)(58,822)
Stockholders' deficit attributable to shareholders(2,761)(339,366)
Stockholders' equity attributable to shareholdersStockholders' equity attributable to shareholders18,931 33,149 
Non-controlling interestNon-controlling interest23,161 1,104 Non-controlling interest25,011 25,473 
Total stockholders' equity (deficit)20,400 (338,262)
Total liabilities and stockholders' equity (deficit)$729,358 $591,792 
Total stockholders' equityTotal stockholders' equity43,942 58,622 
Total liabilities and stockholders' equityTotal liabilities and stockholders' equity$954,699 $913,265 

See accompanying notes to Condensed Consolidated Financial Statements.




























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

Common StockPreferred StockCapital In
Excess of
Par Value		Treasury StockAccumulated DeficitAccumulated
Other
Comprehensive
Loss		Non-controlling
Interest		Total
Stockholders’
Equity (Deficit)
(in thousands, except share and per share amounts)SharesPar 
Value		SharesPar 
Value
Balance at December 31, 202054,452 $4,784 — $— $1,164,436 $(105,990)$(1,350,206)$(52,390)$1,104 $(338,262)
Net (loss) income— — — — — — (15,464)— 21 (15,443)
Currency translation adjustments— — — — — — — (4,582)(24)(4,606)
Defined benefit obligations— — — — — — — 198 — 198 
Stock-based compensation charges1,725 22 — — 4,480 (3,308)— — — 1,194 
Common stock offering, net29,487 295 — — 161,218 — — — — 161,513 
Dividends to non-controlling interest— — — — — — — — (38)(38)
Balance at March 31, 202185,664 $5,101 — $— $1,330,134 $(109,298)$(1,365,670)$(56,774)$1,063 $(195,444)
Net income— — — — — — 3,126 — 15 3,141 
Currency translation adjustments— — — — — — — (1,478)(5)(1,483)
Defined benefit obligations— — — — — — — 198 — 198 
Stock-based compensation charges65 2 — — 1,201 (3)— — — 1,200 
Common stock offering— — — — (529)— — — — (529)
Preferred stock offering, net— — 4,445 45 105,998 — — — — 106,043 
Equitized Last Out Term Loan principal payment— — 2,917 29 72,893 — — — — 72,922 
Dividends to preferred stockholders— — — — — — (1,731)— — (1,731)
Dividends to non-controlling interest— — — — — — — — (36)(36)
Balance at June 30, 202185,729 $5,103 7,362 $74 $1,509,697 $(109,301)$(1,364,275)$(58,054)$1,037 $(15,719)
Net income— — — — — — 13,643 — 5 13,648 
Currency translation adjustments— — — — — — — (1,292)(30)(1,322)
Defined benefit obligations— — — — — — — 197 — 197 
Stock-based compensation charges515 7 — — 916 (1,552)— — — (629)
Common stock offering— — — — (50)— — — — (50)
Preferred stock offering, net— — 237 2 5,805 — — — — 5,807 
Dividends to preferred stockholders— — — — — — (3,681)— — (3,681)
Non-controlling interest from acquisition— — — — — — — — 22,262 22,262 
Dividends to non-controlling interest— — — — — — — — (113)(113)
Balance at September 30, 202186,244 $5,110 7,599 $76 $1,516,368 $(110,853)$(1,354,313)$(59,149)$23,161 $20,400 
Common StockPreferred StockCapital In
Excess of
Par Value		Treasury StockAccumulated DeficitAccumulated
Other
Comprehensive
(Loss)		Non-controlling
Interest		Total
Stockholders’
Equity
(in thousands, except share amounts)SharesPar 
Value		SharesPar 
Value
Balance at December 31, 202186,286 $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 charges52 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, 202286,338 $5,111 7,669 $77 $1,520,545 $(111,155)$(1,333,133)$(62,514)$25,011 $43,942 

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Common StockCapital In
Excess of
Par Value		Treasury StockAccumulated DeficitAccumulated
Other
Comprehensive
Income		Non-controlling
Interest		Total
Stockholders’
Deficit
(in thousands, except share and per share amounts)SharesPar
 Value
Balance at December 31, 201946,374 $4,699 $1,142,614 $(105,707)$(1,339,888)$1,926 $1,417 $(294,939)
Net loss— — — — (31,526)— (96)(31,622)
Currency translation adjustments— — — — — 2,380 (58)2,322 
Defined benefit obligations— — — — — (246)— (246)
Stock-based compensation charges33 4 876 (9)— — — 871 
Dividends to non-controlling interest— — — — — — (36)(36)
Balance at March 31, 202046,407 $4,703 $1,143,490 $(105,716)$(1,371,414)$4,060 $1,227 $(323,650)
Net loss— — — — (18,104)— (142)(18,246)
Currency translation adjustments— — — — — (4,095)37 (4,058)
Defined benefit obligations— — — — — (246)— (246)
Stock-based compensation charges— — 923 (1)— — — 922 
Equitized guarantee fee payment1,713 17 3,883 — — — — 3,900 
Equitized Last Out Term Loan interest payment1,192 12 2,703 — — — — 2,715 
Dividends to non-controlling interest— — — — — — (37)(37)
Balance at June 30, 202049,312 $4,732 $1,150,999 $(105,717)$(1,389,518)$(281)$1,085 $(338,700)
Net income (loss)— — — — 34,724 — (169)34,555 
Currency translation adjustments— — — — — (22,916)(6)(22,922)
Defined benefit obligations— — — — — (246)— (246)
Stock-based compensation charges360 4 1,520 (268)— — — 1,256 
Equitized Last Out Term Loan interest payment2,334 24 5,292 — — — — 5,316 
Dividends to non-controlling interest— — — — — — (37)(37)
Balance at September 30, 202052,006 $4,760 $1,157,811 $(105,985)$(1,354,794)$(23,443)$873 $(320,778)
Common StockCapital In
Excess of
Par Value		Treasury StockAccumulated DeficitAccumulated
Other
Comprehensive
(Loss)		Non-controlling
Interest		Total
Stockholders’
Deficit
(in thousands, except share amounts)SharesPar
 Value
Balance at December 31, 202054,452 $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 charges1,725 22 4,480 (3,308)— — — 1,194 
Common stock offering29,487 295 161,218 — — — — 161,513 
Dividends to non-controlling interest— — — — — — (38)(38)
Balance at March 31, 202185,664 $5,101 $1,330,134 $(109,298)$(1,365,670)$(56,774)$1,063 $(195,444)

See accompanying notes to Condensed Consolidated Financial Statements.

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BABCOCK & WILCOX ENTERPRISES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine months ended September 30,Three Months Ended March 31,
(in thousands)(in thousands)20212020(in thousands)20222021
Cash flows from operating activities:Cash flows from operating activities:Cash flows from operating activities:
Net income (loss)$1,346 $(15,313)
Net lossNet loss$(8,684)$(15,443)
Adjustments to reconcile net loss to net cash used in operating activities:Adjustments to reconcile net loss to net cash used in operating activities:Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization of long-lived assetsDepreciation and amortization of long-lived assets12,684 12,296 Depreciation and amortization of long-lived assets6,202 4,058 
Amortization of deferred financing costs and debt discountAmortization of deferred financing costs and debt discount7,150 16,013 Amortization of deferred financing costs and debt discount834 5,779 
Amortization of guaranty feeAmortization of guaranty fee1,370 698 Amortization of guaranty fee231 452 
Non-cash operating lease expenseNon-cash operating lease expense3,206 3,600 Non-cash operating lease expense1,174 1,140 
Loss on sale of business2,240 108 
(Gain) loss on debt extinguishment(6,530)6,194 
Gain on sale of businessGain on sale of business— (358)
Gain on asset disposalsGain on asset disposals(15,804)(916)Gain on asset disposals— (2,005)
Provision for (benefit from) deferred income taxes, including valuation allowances2,601 (788)
Mark to market, prior service cost amortization for pension and postretirement plans(1,660)(738)
(Benefit from) provision for deferred income taxes(Benefit from) provision for deferred income taxes(689)1,557 
Prior service cost amortization for pension and postretirement plansPrior service cost amortization for pension and postretirement plans593 198 
Stock-based compensation, net of associated income taxesStock-based compensation, net of associated income taxes6,628 3,327 Stock-based compensation, net of associated income taxes1,766 4,502 
Equitized non-cash interest expense— 8,031 
Foreign exchangeForeign exchange1,056 (22,749)Foreign exchange(3,085)1,209 
Changes in assets and liabilities:Changes in assets and liabilities:Changes in assets and liabilities:
Accounts receivableAccounts receivable1,466 28,577 Accounts receivable(28,694)(11,629)
Accrued insurance receivable— (26,000)
Contracts in progressContracts in progress(9,365)21,633 Contracts in progress(13,334)(6,911)
Advance billings on contractsAdvance billings on contracts(20,625)(23,161)Advance billings on contracts27,532 18,226 
InventoriesInventories(4,681)(4,865)Inventories(2,996)(1,863)
Income taxesIncome taxes(4,239)(4,820)Income taxes(7,009)(1,919)
Accounts payableAccounts payable7,375 (33,450)Accounts payable11,297 6,246 
Accrued and other current liabilitiesAccrued and other current liabilities(44,768)13,793 Accrued and other current liabilities(11,290)(17,127)
Accrued contract lossAccrued contract loss(266)(5,294)Accrued contract loss4,274 (129)
Pension liabilities, accrued postretirement benefits and employee benefitsPension liabilities, accrued postretirement benefits and employee benefits(47,108)(25,922)Pension liabilities, accrued postretirement benefits and employee benefits(10,048)(33,640)
Other, netOther, net90 (17,550)Other, net(10,073)(6,297)
Net cash used in operating activitiesNet cash used in operating activities(107,834)(67,296)Net cash used in operating activities(41,999)(53,954)
Cash flows from investing activities:Cash flows from investing activities:Cash flows from investing activities:
Purchase of property, plant and equipmentPurchase of property, plant and equipment(4,213)(2,274)Purchase of property, plant and equipment(1,004)(1,410)
Acquisition of business(27,211)— 
Acquisition of business, net of cash acquiredAcquisition of business, net of cash acquired(64,914)— 
Proceeds from sale of business and assets, netProceeds from sale of business and assets, net23,770 8,784 Proceeds from sale of business and assets, net— 3,297 
Purchases of available-for-sale securitiesPurchases of available-for-sale securities(9,597)(19,149)Purchases of available-for-sale securities(1,125)(3,394)
Sales and maturities of available-for-sale securitiesSales and maturities of available-for-sale securities11,373 14,597 Sales and maturities of available-for-sale securities1,674 5,495 
Other, netOther, net(15)534 
Net cash (used in) from investing activitiesNet cash (used in) from investing activities(5,878)1,958 Net cash (used in) from investing activities(65,384)4,522 


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Nine months ended September 30,Three Months Ended March 31,
(in thousands)(in thousands)20212020(in thousands)20222021
Cash flows from financing activities:Cash flows from financing activities:Cash flows from financing activities:
Issuance of senior notes, net151,239 — 
Issuance of senior notesIssuance of senior notes2,016 125,000 
Borrowings on loan payableBorrowings on loan payable3,472 — Borrowings on loan payable1,342 — 
Borrowings under last out term loans— 60,000 
Repayments on loan payableRepayments on loan payable(31)— 
Repayments under last out term loansRepayments under last out term loans(75,408)— Repayments under last out term loans— (75,000)
Borrowings under U.S. revolving credit facilityBorrowings under U.S. revolving credit facility14,500 126,300 Borrowings under U.S. revolving credit facility— 14,500 
Repayments of U.S. revolving credit facilityRepayments of U.S. revolving credit facility(178,800)(123,400)Repayments of U.S. revolving credit facility— (178,800)
Issuance of preferred stock, net111,850 — 
Preferred stock feesPreferred stock fees— — 
Payment of preferred stock dividendsPayment of preferred stock dividends(5,412)— Payment of preferred stock dividends(3,715)— 
Shares of common stock returned to treasury stockShares of common stock returned to treasury stock(4,863)(278)Shares of common stock returned to treasury stock(221)(3,308)
Issuance of common stock, netIssuance of common stock, net160,934 — Issuance of common stock, net— 161,513 
Debt issuance costsDebt issuance costs(16,725)(10,343)Debt issuance costs(119)(7,727)
Other, netOther, net(1,569)98 Other, net(840)(241)
Net cash from financing activities159,218 52,377 
Net cash (used in) from financing activitiesNet cash (used in) from financing activities(1,568)35,937 
Effects of exchange rate changes on cashEffects of exchange rate changes on cash2,818 4,389 Effects of exchange rate changes on cash(794)4,518 
Net increase (decrease) in cash, cash equivalents and restricted cash48,324 (8,572)
Net decrease in cash, cash equivalents and restricted cashNet decrease in cash, cash equivalents and restricted cash(109,745)(8,977)
Cash, cash equivalents and restricted cash, beginning of periodCash, cash equivalents and restricted cash, beginning of period67,423 56,941 Cash, cash equivalents and restricted cash, beginning of period226,715 67,423 
Cash, cash equivalents and restricted cash, end of periodCash, cash equivalents and restricted cash, end of period$115,747 $48,369 Cash, cash equivalents and restricted cash, end of period$116,970 $58,446 
See accompanying notes to Condensed Consolidated Financial Statements.
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BABCOCK & WILCOX ENTERPRISES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021MARCH 31, 2022

NOTE 1 – BASIS OF PRESENTATION

These interim Condensed Consolidated Financial Statements of Babcock & Wilcox Enterprises, Inc. (“B&W,” “management,” “we,” “us,” “our” or 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. 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 on the basis of continuing operations, unless otherwise stated.

COVID-19

In December 2019, a novel strain of coronavirus, COVID-19,("COVID-19"), was identified in Wuhan, China and subsequently spread globally. This global pandemic has disrupted business operations, including global supply chains, 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.

The COVID-19 pandemic has also disruptedDisruption to our global supply chains includingchanges from COVID-19 has included impacts to the manufacturing, supply, distribution, transportation and delivery of our products. We could also seeobserved 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. Lastly,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 the virusCOVID-19 on our customers and our business. The continuing resurgenceongoing impact of COVID-19, including newevolving strains such as the delta variant,and omicron variants, has resulted in the reimposition of certain restrictions and may lead to the implementation of other restrictions being implemented in response to efforts to reduce the spread of the virus. These varying and changing events have caused many of the projects we had anticipated wouldto begin in 2020during the prior two years to be delayed into the second half of 20212022 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 the fourth quarter of 20212022 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 impact, including new strains such as the delta variant, that may arise along with the availability of vaccines and anti-vaccination attitudes of the public, that could negatively impact our evaluationits 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 disease spread,outbreaks, as well as the availability, effectiveness and effectivenessacceptance of COVID-19 vaccinations in the U.S. and abroad, all of which are uncertain, out of our control, and cannot be predicted.


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NOTE 2 – EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earningsloss per share of our common stock, net of non-controlling interest and dividends on preferred stock:
Three months ended September 30,Nine months ended September 30,
(in thousands, except per share amounts)2021202020212020
Income (loss) from continuing operations attributable to stockholders of common stock$9,962 $34,724 $(4,107)$(16,706)
Income from discontinued operations attributable to stockholders of common stock, net of tax— — — 1,800 
Net income (loss) attributable to stockholders of common stock$9,962 $34,724 $(4,107)$(14,906)
Weighted average shares used to calculate basic earnings (loss) per share86,002 49,478 81,088 47,585 
Dilutive effect of stock options, restricted stock and performance units962 578 — — 
Weighted average shares used to calculate diluted earnings (loss) per share86,964 50,056 81,088 47,585 
Basic earnings (loss) per share
Continuing operations$0.12 $0.70 $(0.05)$(0.35)
Discontinued operations— — — 0.04 
Basic earnings (loss) per share$0.12 $0.70 $(0.05)$(0.31)
Diluted earnings (loss) per share
Continuing operations$0.11 $0.69 $(0.05)$(0.35)
Discontinued operations— — — 0.04 
Diluted earnings (loss) per share$0.11 $0.69 $(0.05)$(0.31)

Because we incurred a net loss in the nine months ended September 30, 2021 and 2020, basic and diluted shares are the same.
Three Months Ended March 31,
(in thousands, except per share amounts)20222021
Net loss attributable to stockholders of common stock$(11,979)$(15,464)
Weighted average shares used to calculate basic and diluted loss per share87,992 71,396 
Basic loss per share$(0.14)$(0.22)
Diluted loss per share$(0.14)$(0.22)

If we hadwere in a net income inposition during the ninethree months ended September 30,March 31, 2022 and 2021, and 2020, diluted shares would include an additional 1.30.9 million and 422.3 thousand1.6 million shares, respectively.

We excluded 0.90.4 million and 1.10.4 million shares related to stock options from the diluted share calculation for the three months ended September 30,March 31, 2022 and 2021, and 2020, respectively, because their effect would have been anti-dilutive. We excluded 1.0 million and 1.3 million shares related to stock options from the diluted share calculation for the nine months ended September 30, 2021 and 2020, respectively, because their effect would have been anti-dilutive.

NOTE 3 – SEGMENT REPORTING

B&W’s innovative products and servicesOur operations are organized intoassessed based on 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 are as follows:

•Babcock & Wilcox Renewable: Supplies cost-effectiveCost-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: Provides aA 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
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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: Distributes and manufactures steamSteam 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.

Total revenues
11

Revenues exclude eliminations of revenues generated from sales to other segments.segments or to other product lines within the segment. An analysis of our operations by segment is as follows:
Three months ended September 30,Nine months ended September 30,Three Months Ended March 31,
(in thousands)(in thousands)2021202020212020(in thousands)20222021
Revenues:Revenues:Revenues:
B&W Renewable segmentB&W Renewable segmentB&W Renewable segment
B&W RenewableB&W Renewable$20,783 $21,253 $63,481 $70,657 B&W Renewable$19,711 $17,997 
B&W Renewable Services (1)
B&W Renewable Services (1)
8,288 5,260 
VølundVølund17,217 17,809 41,674 47,913 Vølund16,336 5,554 
Fosler SolarFosler Solar23,626 — 
38,000 39,062 105,155 118,570 67,961 28,811 
B&W Environmental segmentB&W Environmental segmentB&W Environmental segment
B&W EnvironmentalB&W Environmental14,338 11,841 42,766 35,289 B&W Environmental18,185 17,433 
SPIGSPIG16,514 10,323 40,892 32,510 SPIG12,060 11,184 
GMABGMAB7,397 3,098 14,109 8,555 GMAB4,703 2,543 
38,249 25,262 97,767 76,354 34,948 31,160 
B&W Thermal segmentB&W Thermal segmentB&W Thermal segment
B&W ThermalB&W Thermal83,819 70,025 328,416 223,920 B&W Thermal102,239 108,281 
83,819 70,025 328,416 223,920 102,239 108,281 
Other(108)(1,836)(270)(2,380)
EliminationsEliminations(1,099)(4)
Total RevenuesTotal Revenues$159,960 $132,513 $531,068 $416,464 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.

The presentationAdjusted EBITDA on a consolidated basis is a non-GAAP metric defined as the sum of the components of our adjusted EBITDA infor each of the tablesegments, further adjusted for corporate allocations and research and development costs. At a segment level, the adjusted EBITDA presented below is consistent with the way ourmanner in which the Company's chief operating decision maker ("CODM") reviews the results of our operations and makes strategic decisions about our business. Itemsthe 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 segments.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.
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Adjusted EBITDA for each segment is presented below with a reconciliation tofrom net income (loss) attributable to stockholders of common stock.loss.
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Three months ended September 30,Nine months ended September 30,
(in thousands)2021202020212020
Adjusted EBITDA (1)
B&W Renewable segment (2)
$11,399 $23,575 $15,030 $22,003 
B&W Environmental segment3,471 2,177 7,270 1,408 
B&W Thermal segment9,205 7,287 32,066 22,879 
Corporate(5,866)(4,916)(11,548)(12,864)
Research and development benefit (costs)513 (1,355)(560)(3,927)
18,722 26,768 42,258 29,499 
Restructuring activities(4,575)(2,396)(7,968)(6,739)
Acquisition pursuit and related costs(4,037)— (4,037)— 
Financial advisory services(322)(1,650)(2,554)(3,161)
Advisory fees for settlement costs and liquidity planning(954)(1,387)(4,991)(5,156)
Litigation legal costs(566)(809)(2,113)(1,757)
Stock compensation(152)(1,175)(8,032)(3,074)
Interest on letters of credit included in cost of operations(572)(186)(1,178)(585)
Loss from business held for sale— (93)(483)(411)
Depreciation & amortization(4,305)(4,056)(12,684)(12,296)
Contract asset amortization(73)— (146)— 
Product development(2,427)— (2,690)— 
Gain (loss) from a non-strategic business184 (945)(103)(1,163)
Gain on asset disposals, net13,838 3 15,804 916 
Operating income (loss)14,761 14,074 11,083 (3,927)
Interest expense, net(8,200)(12,036)(30,189)(49,346)
Gain (loss) on debt extinguishment— — 6,530 (6,194)
Loss on sale of business— — (2,240)(108)
Net pension benefit before MTM7,614 7,328 22,636 22,314 
MTM gain from benefit plans2,253 — 2,253 — 
Foreign exchange(1,673)24,963 (1,056)22,749 
Other – net(806)(276)(988)(3,068)
Total other income (expense)(812)19,979 (3,054)(13,653)
Income (loss) before income tax expense13,949 34,053 8,029 (17,580)
Income tax expense (benefit)301 (502)6,683 (467)
Income (loss) from continuing operations13,648 34,555 1,346 (17,113)
Income from discontinued operations, net of tax— — — 1,800 
Net income (loss)13,648 34,555 1,346 (15,313)
Net (income) loss attributable to non-controlling interest(5)169 (41)407 
Net income (loss) attributable to stockholders13,643 34,724 1,305 (14,906)
Less: Dividend on Series A preferred stock3,681 — 5,412 — 
Net income (loss) attributable to stockholders of common stock$9,962 $34,724 $(4,107)$(14,906)
Three Months Ended March 31,
(in thousands)20222021
Net loss$(8,684)$(15,443)
Interest expense12,324 14,509 
Income tax expense1,230 2,836 
Depreciation & amortization6,202 4,058 
EBITDA11,072 5,960 
Benefit plans, net(7,452)(9,098)
Gain on sales, net(20)(2,362)
Stock compensation1,319 7,829 
Restructuring activities and business services transition costs2,688 993 
Advisory fees for settlement costs and liquidity planning1,032 1,978 
Litigation costs2,528 380 
Acquisition pursuit and related costs843 — 
Product development (1)
852 — 
Foreign exchange(3,085)1,209 
Financial advisory services375 933 
Contract step-up purchase price adjustment1,745 — 
Loss from business held for sale— 483 
Other - net123 266 
Adjusted EBITDA$12,020 $8,571 
(1) Adjusted EBITDA for the three and nine months ended September 30, 2020, excludes losses relatedCosts associated with development of commercially viable products that are ready to a non-strategic business and interest on letters of credit included in cost of operations that were previously included in Adjusted EBITDA and total $0.9 million and $0.2 million, respectively, and $1.2 million and $0.6 million, respectively.go to market.
(2)Adjusted EBITDA for the three and nine months ended September 30, 2020 includes a $26 million non-recurring loss recovery related to claims in connection with multiple Renewable EPC loss contracts.
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Three Months Ended March 31,
(in thousands)20222021
Adjusted EBITDA
B&W Renewable segment$1,455 $204 
B&W Environmental segment1,439 1,105 
B&W Thermal segment14,154 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 chief operating decision makerCODM does not consider assets by segment to be a critical measure by which performance is measured.
NOTE 4 – REVENUE RECOGNITION AND CONTRACTS

Revenue Recognition

A performance obligation is a contractual promise to transfer a distinct good or service toWe generate the customer. A contract's transaction price is allocated to each distinct performance obligationvast majority of our revenues from the supply of, and is recognized asaftermarket services for, steam-generating, environmental and auxiliary equipment. We also earn revenue when (point in time) or as (over time)from the performance obligation is satisfied.supply of custom-engineered cooling systems for
steam applications along with related aftermarket services.

13

Revenue from goods and services transferred to customers at a point in time, which includes certain aftermarket parts and services, accounted for 21%19% and 34%27% of our revenue for the three months ended September 30,March 31, 2022 and 2021, and 2020, respectively, and 20% and 32% of our revenue for the nine months ended September 30, 2021 and 2020, respectively. Revenue from products and services transferred to customers over time, which primarily relates to customized, engineered solutions and construction services, accounted for 79%81% and 66%73% of our revenue for the three months ended September 30,March 31, 2022 and 2021, and 2020, respectively, and 80% and 68% of our revenue for the nine months ended September 30, 2021 and 2020, respectively.

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

Contract Balances

The following represents the components of our contractsContracts in progress and advanceAdvance billings on contracts included in our Condensed Consolidated Balance Sheets:
(in thousands)(in thousands)September 30, 2021December 31, 2020$ Change% Change(in thousands)March 31, 2022December 31, 2021$ Change% Change
Contract assets - included in contracts in progress:Contract assets - included in contracts in progress:Contract assets - included in contracts in progress:
Costs incurred less costs of revenue recognizedCosts incurred less costs of revenue recognized$29,038 $25,888 $3,150 12 %Costs incurred less costs of revenue recognized$32,101 $35,939 $(3,838)(11)%
Revenues recognized less billings to customersRevenues recognized less billings to customers39,228 33,420 5,808 17 %Revenues recognized less billings to customers63,871 44,237 19,634 44 %
Contracts in progressContracts in progress$68,266 $59,308 $8,958 15 %Contracts in progress$95,972 $80,176 $15,796 20 %
Contract liabilities - included in advance billings on contracts:Contract liabilities - included in advance billings on contracts:Contract liabilities - included in advance billings on contracts:
Billings to customers less revenues recognizedBillings to customers less revenues recognized$44,275 $61,884 $(17,609)(28)%Billings to customers less revenues recognized$100,130 $68,615 $31,515 46 %
Costs of revenue recognized less cost incurredCosts of revenue recognized less cost incurred164 2,118 (1,954)(92)%Costs of revenue recognized less cost incurred(220)(235)15 (6)%
Advance billings on contractsAdvance billings on contracts$44,439 $64,002 $(19,563)(31)%Advance billings on contracts$99,910 $68,380 $31,530 46 %
Net contract balanceNet contract balance$23,827 $(4,694)$28,521 (608)%Net contract balance$(3,938)$11,796 $(15,734)(133)%
Accrued contract lossesAccrued contract losses$316 $582 $(266)(46)%Accrued contract losses$4,652 $378 $4,274 1,131 %

Backlog

On September 30, 2021March 31, 2022 we had $540.0$721.0 million of remaining performance obligations, which we also refer to as total backlog. We expect to recognize approximately 29.1%61.4%, 32.6%15.4% and 38.3%23.2% of our remaining performance obligations as revenue in the remainder of 2021, 2022, 2023 and thereafter, respectively.

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Changes in Contract Estimates

In the three and nine months ended September 30,March 31, 2022 and 2021, and 2020, we recognized changes in estimated gross profit related to long-term contracts accounted for on the over time basis, which are summarized as follows:
Three months ended September 30,Nine months ended September 30,
(in thousands)2021202020212020
Increases in gross profit for changes in estimates for over time contracts (1)
$7,001 $27,237 $12,340 $34,453 
Decreases in gross profit for changes in estimates for over time contracts(1,523)(8,058)(6,018)(13,003)
Net changes in gross profit for changes in estimates for over time contracts$5,478 $19,179 $6,322 $21,450 
(1) Increases in gross profits for changes in estimates for over time contracts reflects a non-recurring loss recovery of $26.0 million in the three and nine months ended September 30, 2020.
Three months ended March 31,
(in thousands)20222021
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 

B&W Renewable EPC Loss ContractsProjects

WeDuring March 2022, we determined that our Fosler Solar reporting unit had 6 B&W Renewable EPC contracts for renewable energy facilities in Europe that were loss contracts at December 31, 2017. The scope of these EPC (Engineer, Procure and Construct) contracts extended beyond our core technology, products and services. In addition to these loss contracts, we have one remaining extended scope contract in our Babcock & Wilcox Renewable segment which turned into a loss contract7 projects located in the fourth quarter of 2019.

NaN ofUnited States that existed at the 6 contracts were 100% complete and the remaining 2 contracts were nearly 100% complete attime we acquired Fosler on September 30, 2021 with only limited warranty obligations remaining, and all have been turned overwhich generated losses that arose due to the customers. Instatus of certain construction activities, existing at acquisition date, not adequately disclosed in the three months ended September 30, 2021sales agreement and 2020,not recognized in the financial records of the seller. As of March 31, 2022, we recorded $0.2an increase in goodwill of $14.9 million in net gains and $1.1 million in net losses, respectively, and in the nine months ended September 30, 2021 and 2020, we recorded $0.3 million in net gains and $1.4 million in net losses, respectively, inclusive of warranty expense as described in Note 10, resulting from changes in the estimated revenues and costs to complete those contracts. All liquidated damages associated with these 6 contracts have been settled and paid as of December 31, 2020.

In October 2020, we entered into a settlement agreement with an insurer under which we received a settlement of $26.0 million to settle claims in connection with 5 of 6 European B&W Renewable EPC loss contracts disclosed above. We recognized this non-recurring loss recovery of $26.0 million as a reduction of our cost of operations in our Condensed Consolidated Statements of Operations and recorded the insurance receivable in accounts receivable - other in our Condensed Consolidated Balance Sheets at September 30, 2020 because we determined the loss recovery was probable as of such date.

During the third quarter of 2021, the Company received an offer from a subcontractor to reimburse the Company for project costs related to three of the Renewable EPC loss contracts described above. As we have been in negotiations with this subcontractor for some time, our determination that this recent offer, while not accepted, was deemed to have met the probability threshold for recognition. Accordingly, we have recognized this offer as a reduction of our cost of operations in our Condensed Consolidated Statements of Operations and recorded the receivable in accounts receivable - other in our Condensed Consolidated Balance Sheets at September 30, 2021 and in the Table above. We continue to pursue further recoveries relative to these project costs, similar to our normal practice, and the ultimate resolution of this matter could change materially.

The Company, as a normal part of its ongoing business operations, is continuing to pursue other additional potential claims and recoveries from subcontractors and others where appropriate and available.

B&W Environmental Loss Contracts

At September 30, 2021, the B&W Environmental segment had 2 significant loss contracts of which both contracts were nearly 100% complete. We did not recognize additional contract losses in the three months ended September 30, 2021 and in the nine months ended September 30, 2021 our estimated loss on these contracts improved by $0.4 million. In the three and nine months ended September 30, 2020, we recognized $1.3 million of additional charges on these contracts.

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initial recognition of Contents$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)(in thousands)September 30, 2021December 31, 2020(in thousands)March 31, 2022December 31, 2021
Raw materials and suppliesRaw materials and supplies$49,356 $46,659 Raw materials and supplies$63,772 $56,352 
Work in progressWork in progress6,571 8,195 Work in progress7,212 5,723 
Finished goodsFinished goods17,072 12,307 Finished goods19,417 17,452 
Total inventoriesTotal inventories$72,999 $67,161 Total inventories$90,401 $79,527 

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

Property, plant and equipment less accumulated depreciation is as follows:
(in thousands)(in thousands)September 30, 2021December 31, 2020(in thousands)March 31, 2022December 31, 2021
LandLand$1,524 $1,584 Land$1,533 $1,489 
BuildingsBuildings32,523 34,207 Buildings32,681 31,895 
Machinery and equipmentMachinery and equipment150,751 151,399 Machinery and equipment145,134 144,325 
Property under constructionProperty under construction11,224 5,336 Property under construction4,877 12,480 
196,022 192,526 184,225 190,189 
Less accumulated depreciationLess accumulated depreciation138,619 135,925 Less accumulated depreciation134,639 133,137 
Net property, plant and equipmentNet property, plant and equipment57,403 56,601 Net property, plant and equipment49,586 57,052 
Finance lease57,393 30,551 
Finance leasesFinance leases34,160 34,159 
Less finance lease accumulated amortizationLess finance lease accumulated amortization4,878 2,074 Less finance lease accumulated amortization6,590 5,584 
Net property, plant and equipment, and finance leaseNet property, plant and equipment, and finance lease$109,918 $85,078 Net property, plant and equipment, and finance lease$77,156 $85,627 

NOTE 7 - GOODWILL

The following summarizes the changes in the net carrying amount of goodwill as of September 30, 2021:March 31, 2022:
(in thousands)B&W
Renewable		B&W EnvironmentalB&W
Thermal		Total
Balance at December 31, 2020$10,211 $5,673 $31,479 $47,363 
Addition - Fosler Construction(1)
43,230 — — 43,230 
Currency translation adjustments(7)(6)(32)(45)
Balance at September 30, 2021$53,434 $5,667 $31,447 $90,548 
(in thousands)B&W
Renewable		B&W EnvironmentalB&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 adjustments57 45 232 334 
Balance at March 31, 2022$90,516 $5,712 $78,143 $174,371 
(1) As described in Note 24,21, we are in the process of completing the purchase price allocation associated with the Fosler Construction, acquisitionVODA, Fossil Power and Optimus Industries acquisitions and as a result, the provisional measurements of goodwill associated with this acquisitionthese acquisitions are subject to change.
(2) Our preliminary purchase price allocation changed due to additional information and further analysis.
Goodwill is tested for impairment annually and on an interim basis when impairment indicators exist. No impairment indicators were identified during the three months ended September 30, 2021. BecauseMarch 31, 2022.

As of March 31, 2022, Fosler's goodwill increase of $11.2 million included a $14.9 million increase resulting from the B&W Thermal, B&W Construction Co., LLC, B&W Renewableinitial recognition of $14.5 million of accrued liabilities and B&W Environmental reporting units each had negative carrying values, reasonable changes$0.4 million of warranty accruals during this acquisition's annual measurement period, as described in assumptions would not indicate impairment.Note 4.
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NOTE 8 – INTANGIBLE ASSETS

Our intangible assets are as follows:
(in thousands)September 30, 2021December 31, 2020
Definite-lived intangible assets
Customer relationships$38,251 $24,862 
Unpatented technology15,514 15,713 
Patented technology3,115 2,642 
Tradename12,726 13,088 
Acquired backlog2,700 — 
All other9,413 9,262 
Gross value of definite-lived intangible assets81,719 65,567 
Customer relationships amortization(20,297)(19,537)
Unpatented technology amortization(7,935)(6,751)
Patented technology amortization(2,696)(2,593)
Tradename amortization(5,281)(4,831)
All other amortization(9,287)(9,252)
Accumulated amortization(45,496)(42,964)
Net definite-lived intangible assets$36,223 $22,603 
Indefinite-lived intangible assets
Trademarks and trade names$1,305 $1,305 
Total intangible assets, net$37,528 $23,908 

The following summarizes the changes in the carrying amount of intangible assets:
Nine months ended September 30,
(in thousands)20212020
Balance at beginning of period$23,908 $25,300 
Business acquisitions and adjustments(1)
17,100 — 
Amortization expense(2,531)(2,564)
Currency translation adjustments(949)955 
Balance at end of the period$37,528 $23,691 
(in thousands)March 31, 2022December 31, 2021
Definite-lived intangible assets(1)
Customer relationships$67,332 $46,903 
Unpatented technology18,591 15,410 
Patented technology3,682 3,103 
Tradename13,383 12,747 
Acquired backlog3,100 3,100 
All other9,128 9,319 
Gross value of definite-lived intangible assets115,216 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 24,21, we are in the process of completing the purchase price allocation associated with the Fosler Construction, acquisitionVODA, Fossil Power and Optimus Industries acquisitions and as a result, the increase in amortization expenseintangible assets associated with this acquisition isthese 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)20222021
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 
(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.

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

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.

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Estimated future intangible asset amortization expense including the increase in amortization expense resulting from the September 30, 2021 acquisitionas of Fosler Construction,March 31, 2022 is as follows (in thousands):
Amortization Expense(1)
Year ending December 31, 2021$2,744 
Year ending December 31, 20225,6335,990 
Year ending December 31, 20234,5527,986 
Year ending December 31, 20244,4697,906 
Year ending December 31, 20253,7087,089 
Year ending December 31, 20262,4525,890 
Year ending December 31, 20275,229 
Thereafter12,66524,057 
(1) As describedSee Note 21 for intangible assets identified in Note 24, weconjunction with the acquisitions of Fosler Construction, VODA, Fossil Power and Optimus Industries, which are insubject to change pending the processfinalization of completing the purchase price allocation associated with the Fosler Construction acquisition and as a result, the estimated future intangible asset amortization expense associated with this acquisition is subject to change.these acquisitions.

NOTE 9– LEASES

Certain real property assets for our Copley, Ohio location were sold on March 15, 2021, as described in Note 24. In conjunction with the sale, we executed a leaseback agreement commencing March 16, 2021 and expiring on March 31, 2033. The lease is classified as a finance lease with total future minimum payments during the initial term of the lease of approximately $5.6 million as of September 30, 2021. An incremental borrowing rate of 7.19% was used to determine the right-of-use (the "ROU") asset. As of September 30, 2021, a $3.5 million ROU asset is recorded in net property, plant and equipment, and finance lease with corresponding liabilities of $3.8 million in otheraccrued liabilities and other non-current finance liabilities in our Condensed Consolidated Balance Sheets.

Certain real property assets for our Lancaster, Ohio location were sold on August 13, 2021, as described in Note 24. In conjunction with the sale, we executed a leaseback agreement commencing August 13, 2021 and expiring on August 31, 2041. The lease is classified as a finance lease with total future minimum payments during the initial term of the lease of approximately $36.6 million as of September 30, 2021. An incremental borrowing rate of 6.65% was used to determine the ROU asset. We recorded a $19.4 million ROU asset in net property, plant and equipment, and finance lease and corresponding liabilities of $19.5 million in otheraccrued liabilities and other non-current finance liabilities in our Condensed Consolidated Balance Sheets as of September 30, 2021.

On September 30, 2021, we acquired a 60% controlling ownership stake in Illinois-based solar energy contractor Fosler Construction, as described in Note 24. As of September 30, 2021, there were 2 Fosler Construction leases classified as operating leases with total future minimum payments during the remaining term of the leases of approximately $1.5 million. As of September 30, 2021, a $1.1 million ROU asset is recorded in right-of-use assets with corresponding liabilities of $1.1 million in operating lease liabilities and non-current operating lease liabilities in our Condensed Consolidated Balance Sheets. As of September 30, 2021, there was 1 lease classified as a finance lease with total future minimum payments during the remaining term of the leases of approximately $1.5 million. An incremental borrowing rate of 6.65% was used to determine the ROU asset. We recorded a $0.7 million ROU asset in net property, plant and equipment, and finance lease and corresponding liabilities of $0.7 million in otheraccrued liabilities and other non-current finance liabilities in our Condensed Consolidated Balance Sheets as of September 30, 2021.
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The components of lease expense included on our Condensed Consolidated Statements of Operations were as follows:
Three months ended September 30,Nine months ended September 30,
(in thousands)Classification2021202020212020
Operating lease expense:
Operating lease expenseSelling, general and administrative expenses$1,172 $1,433 $3,819 $4,329 
Short-term lease expenseSelling, general and administrative expenses435 866 3,076 1,346 
Variable lease expense (1)
Selling, general and administrative expenses58 625 256 1,019 
Total operating lease expense$1,665 $2,924 $7,151 $6,694 
Finance lease expense:
Amortization of right-of-use assetsCost of operations$723 $517 $1,844 $1,546 
Amortization of right-of-use assetsSelling, general and administrative expenses482 — 959 — 
Interest on lease liabilitiesInterest expense870 612 2,194 1,843 
Total finance lease expense$2,075 $1,129 $4,997 $3,389 
Sublease income (2)
Other – net$(22)$(22)$(65)$(65)
Net lease cost$3,718 $4,031 $12,083 $10,018 
(1) Variable lease expense primarily consists of common area maintenance expenses paid directly to lessors of real estate leases.
(2) Sublease income excludes rental income from owned properties, which is not material.

Other information related to leases is as follows:
Nine months ended September 30,
(in thousands)20212020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$3,925 $4,275 
Operating cash flows from finance leases2,194 1,843 
Financing cash flows from finance leases1,382 (208)

(in thousands)September 30, 2021December 31, 2020
Right-of-use assets obtained in exchange for lease liabilities:
Operating leases$3,102 $2,629 
Finance leases$26,841 $146 
Weighted-average remaining lease term:
Operating leases (in years)3.73.1
Finance leases (in years)15.313.9
Weighted-average discount rate:
Operating leases8.79 %9.26 %
Finance leases7.39 %8.00 %

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Amounts relating to leases were presented on our Condensed Consolidated Balance Sheets in the following line items:
(in thousands)
Assets:ClassificationSeptember 30, 2021December 31, 2020
Operating lease assetsRight-of-use assets$9,812 $10,814 
Finance lease assetsNet property, plant and equipment, and finance lease52,515 28,477 
Total non-current lease assets$62,327 $39,291 
Liabilities:
Current
Operating lease liabilitiesOperating lease liabilities$3,651 $3,995 
Finance lease liabilitiesFinancing lease liabilities3,302 886 
Non-current
Operating lease liabilitiesNon-current operating lease liabilities6,298 7,031 
Finance lease liabilitiesNon-current finance lease liabilities52,526 29,690 
Total lease liabilities$65,777 $41,602 

Future minimum lease payments required, including the future minimum lease payments resulting from the September 30, 2021 acquisition of Fosler Construction, under non-cancellable leases as of September 30, 2021 were as follows:
(in thousands)Operating LeasesFinance LeasesTotal
2021 (excluding the nine months ended September 30, 2021)$1,108 $1,840 $2,948 
20224,047 6,803 10,850 
20232,754 5,481 8,235 
20241,645 5,577 7,222 
2025613 5,635 6,248 
Thereafter1,131 69,650 70,781 
   Total$11,298 $94,986 $106,284 
Less imputed interest(1,349)(39,158)(40,507)
Lease liability$9,949 $55,828 $65,777 

NOTE 109 – 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:
Nine months ended September 30,Three Months Ended March 31,
(in thousands)(in thousands)20212020(in thousands)20222021
Balance at beginning of periodBalance at beginning of period$25,399 $33,376 Balance at beginning of period$12,925 $25,399 
AdditionsAdditions5,155 4,508 Additions1,300 1,475 
Expirations and other changesExpirations and other changes(4,790)(3,523)Expirations and other changes(1,467)(1,318)
PaymentsPayments(10,212)(8,410)Payments(193)(5,943)
Translation and otherTranslation and other(342)852 Translation and other(692)(76)
Balance at end of periodBalance at end of period$15,210 $26,803 Balance at end of period$11,873 $19,537 

We accrue estimated expense included in costCost 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 Note 4. In
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addition, we record specific provisions or reductions where we expect the actual warranty costs to significantly differ from the accrued estimates. Such changes could have a material effect on our consolidated financial condition, results of operations and cash flows.

NOTE 1110 – RESTRUCTURING ACTIVITIES

The Company incurred restructuring charges in the three months ended September 30, 2021March 31, 2022, and 2020.2021. The charges primarily consist of severance and business service transitionrelated costs related to actions taken including as part of the Company’s strategic, market-focused organizational and re-branding initiative. During 2020, these charges also include actions taken to address the impact of COVID-19 on our business.

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The following tables summarizes the restructuring activity incurred by segment:
Three months ended September 30,Three months ended September 30,
20212020
(in thousands)TotalSeverance and related costs
Other (1)
TotalSeverance and related costs
Other (1)
B&W Renewable segment$715 $382 $333 $594 $340 $254 
B&W Environmental segment332 128 204 299 119 180 
B&W Thermal segment1,242 362 880 1,370 422 948 
Corporate2,286 124 2,162 133 — 133 
$4,575 $996 $3,579 $2,396 $881 $1,515 

Nine months ended September 30,Nine months ended September 30,Three Months Ended March 31,Three Months Ended March 31,
2021202020222021
(in thousands)(in thousands)TotalSeverance and related costs
Other (1)
TotalSeverance and related costs
Other (1)
(in thousands)TotalSeverance and related costs
Other (1)
TotalSeverance and related Costs
Other(1)
B&W Renewable segmentB&W Renewable segment$1,781 $1,301 $480 $2,346 $1,153 $1,193 B&W Renewable segment$(193)$(229)$36 $509 $453 $56 
B&W Environmental segmentB&W Environmental segment630 335 295 676 330 346 B&W Environmental segment69 10 59 89 35 54 
B&W Thermal segmentB&W Thermal segment3,132 1,409 1,723 3,259 1,111 2,148 B&W Thermal segment198 50 148 348 12 336 
CorporateCorporate2,425 132 2,293 458 — 458 Corporate20 — 20 47 — 47 
$7,968 $3,177 $4,791 $6,739 $2,594 $4,145 $94 $(169)$263 $993 $500 $493 
Cumulative costs to dateCumulative costs to date$48,282 36,390 11,892 Cumulative costs to date$45,277 37,083 8,194 0
(1) Other amounts consist primarily of business service transition, exit, relocation, COVID-19 related and other costs.

Restructuring liabilities are included in otherOther accrued liabilities on our Condensed Consolidated Balance Sheets. Activity related to the restructuring liabilities is as follows:
Three months ended September 30,Nine months ended September 30,Three Months Ended March 31,
(in thousands)(in thousands)2021202020212020(in thousands)20222021
Balance at beginning of period
Balance at beginning of period
$7,945 $5,087 $8,146 $5,359 
Balance at beginning of period
$6,561 $8,146 
Restructuring expenseRestructuring expense4,575 2,396 7,968 6,739 Restructuring expense94 993 
PaymentsPayments(5,482)(2,307)(9,076)(6,922)Payments(749)(1,117)
Balance at end of periodBalance at end of period$7,038 $5,176 $7,038 $5,176 Balance at end of period$5,906 $8,022 

The payments shown above for the three months ended September 30,March 31, 2022 and 2021 and 2020 relate primarily to severance and business service transition costs.severance. Accrued restructuring liabilities at September 30,March 31, 2022 and 2021 and 2020 relate primarily to employee termination benefits and business service transition costs.benefits.
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NOTE 1211 – PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS

Components of net periodic benefit cost (benefit) included in net (loss) income (loss) are as follows:
Pension BenefitsOther BenefitsPension BenefitsOther Benefits
Three months ended September 30,Nine months ended September 30,Three months ended September 30,Nine months ended September 30,Three Months Ended March 31,Three Months Ended March 31,
(in thousands)(in thousands)20212020202120202021202020212020(in thousands)2022202120222021
Interest costInterest cost$5,603 $8,263 $16,883 $24,773 $109 $88 $187 $232 Interest cost$6,664 $5,671 $49 $39 
Expected return on plan assetsExpected return on plan assets(13,527)(15,452)(40,309)(46,636)— — — — Expected return on plan assets(14,366)(15,009)— — 
Amortization of prior service cost (credit)Amortization of prior service cost (credit)28 44 84 130 173 (271)519 (813)Amortization of prior service cost (credit)28 28 173 173 
Recognized net actuarial gain(2,253)— (2,253)— — — — — 
Benefit plans, net (1)
Benefit plans, net (1)
(10,149)(7,145)(25,595)(21,733)282 (183)706 (581)
Benefit plans, net (1)
(7,674)(9,310)222 212 
Service cost included in COS (2)
Service cost included in COS (2)
217 212 652 632 6 5 18 14 
Service cost included in COS (2)
201 217 5 6 
Net periodic benefit cost (benefit)Net periodic benefit cost (benefit)$(9,932)$(6,933)$(24,943)$(21,101)$288 $(178)$724 $(567)Net periodic benefit cost (benefit)$(7,473)$(9,093)$227 $218 
(1)    Benefit plans, net, which is presented separately in our Condensed Consolidated Statements of Operations, is not allocated to the segments.
(2)    Service cost related to a small group of active participants is presented withincost Cost of operations in our Condensed Consolidated StatementStatements of Operations and is allocated to the B&W Thermal segment.

Recognized net actuarial gain consists primarily of our reported actuarial gain and the difference between the actual return on plan assets and the expected return on plan assets. Total mark to market (“MTM”) adjustments for our pension benefit plans were gains of $2.3 million for the three and nine months ended September 30, 2021. There were no MTM adjustments for our other postretirement benefit plans during the three and nine months ended September 30, 2021. There were no MTMmark-to-market ("MTM") adjustments for our pension and other postretirement benefit plans during the three and nine months ended September 30, 2020. The recognized net actuarial gain was recorded in March 31, 2022 and 2021.
benefit plans, net in our Condensed Consolidated Statements of Operations.

We made contributions to our pension and other postretirement benefit plans totaling $0.4 million and $24.7$24.0 million during the three and nine months ended September 30, 2021, respectively, as compared to $0.5 million and $1.6 million during the three and nine months ended September 30, 2020, respectively. Contributions made during the three months ended September 30,March 31, 2022 and 2021, includes no interest and during the nine months ended September 30, 2021 includes $0.4 million of interest as required per the CARES Act that was signed into law on March 27, 2020.respectively.
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In accordance with the American Rescue Plan Act of 2021, we elected to defer $20.9 million of the estimated Pension Plan contribution payments of $45.6 million that would have been due during 2021.

NOTE 1312 – 2021 SENIOR NOTES OFFERINGDEBT

On February 12,Senior Notes

8.125% Senior Notes

During 2021, we completed a public offeringsales of $125.0$151.2 million aggregate principal amount of our 8.125% senior notes due 2026 (the "Senior Notes"“8.125% Senior Notes”). At the completion of the offering, we received for net proceeds of approximately $120.0 million after deducting underwriting discounts, commissions, and before expenses.

$146.6 million. In addition to the public offering,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-3A-3. The 8.125% Senior Notes bear interest at the rate of 8.125% per annum which is payable quarterly in a concurrent private offering.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 of Senior Notes.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 beare fungible with the initial 8.125% Senior Notes issued February 12, 2021, as described above.issuance in 2021.

AsDuring the first quarter of September 30, 2021,2022, the Company has sold $25.6$2.0 million aggregate principal amount of 8.125% Senior Notes under the sales agreement discloseddescribed above for $26.0$2.0 million of net proceeds after commissions and fees.proceeds.

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The components of the6.50% Senior Notes are as follows:
(in thousands)
September 30, 2021
8.125% Senior Notes due 2026$185,599 
Unamortized deferred financing costs(5,039)
Unamortized premium590 
Net debt balance$181,150 
TheDuring 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 are senior unsecured obligationsNotes”) for net proceeds of the Company and rank equally in right of payment with all of the Company’s other existing and future senior unsecured and unsubordinated indebtedness. The Senior Notes bear interest at the rate of 8.125% per annum.approximately $145.8 million. Interest on the 6.50% Senior Notes is payable quarterly in arrears on JanuaryMarch 31, AprilJune 30, July 31September 30 and OctoberDecember 31 of each year, commencingand commenced on April 30, 2021.March 31, 2022. The 6.50% Senior Notes mature on February 28,December 31, 2026.

NOTE 14– LAST OUT TERM LOANSThe components of 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 premium570 — 570 
Net debt balance$183,727 $145,143 $328,870 

Effective with the new debt facilities the Company entered into on June 30, 2021, as described in Note 15 below, the Company has no remaining Last Out Term Loans and no further borrowings thereunder are available. The Last our Term Loan activity is described as follows:

Last Out Term Loan Tranche
(in thousands)A-3A-4A-6Total
Balance at December 31, 2020$113,330 $30,000 $40,000 $183,330 
Payments in cash(40,408)(30,000)(5,000)(75,408)
Equitized deemed prepayment - preferred stock issuance(72,922)— — (72,922)
Deemed prepayment - senior notes issuance— — (35,000)(35,000)
Balance at September 30, 2021$— $— $— $— 

NOTE 15 – REVOLVING DEBT

Revolving Debt Facilities

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, including to backstop certain letters of credit issued under our previous A&R Credit Agreement, dated as of May 14, 2020 (as amended, restated or otherwise modified from time to time), by and among the Company, as borrower, Bank of America, N.A., as administrative agent, the lenders and the other parties from time to time party thereto, which was repaid and commitments thereunder terminated as of June 30, 2021.purposes. The Revolving Credit Agreement matures on June 30, 2025. As of September 30, 2021,March 31, 2022, no borrowings have occurred under the Revolving Credit Agreement and under the Letter of Credit Agreement, usage consisted of $19.5$16.2 million of financial letters of credit and $69.0$90.8 million of performance letters of credit.
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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
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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.

A&R Credit AgreementAs 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.

As described above,Effective with the A&RRevolving Credit Agreement, commitments were terminated, all loans were repaid and all outstanding and undrawn letters of credit were collateralizedthe Company entered into on June 30, 2021. The2021, the Company recognized a gain on debt extinguishment of $6.5 million in the quarter ended June 30, 2021, primarily representing the write-off of accrued revolver fees of $11.3 million offset by the unamortized deferred financing fees of $4.8 million related to the prior A&R Credit Agreement.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 September 30, 2021March 31, 2022 was $53.1$48.3 million. The aggregate value of the outstanding letters of credit provided under the Letter of
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Credit Agreement backstopping letters of credit or bank guarantees was $21.7$34.8 million as of September 30, 2021.March 31, 2022. Of the outstanding letters of credit issued under the Letter of Credit Agreement, $29.8$52.0 million are subject to foreign currency revaluation.
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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 thosethe underwriters issue in support of some of our contracting activity. As of September 30, 2021,March 31, 2022, bonds issued and outstanding under these arrangements in support of our contracts totaled approximately $157.6$221.5 million. The aggregate value of the letters of credit backstopping surety bonds was $13.1$9.2 million.
Our ability to obtain and maintain sufficient capacity under our newcurrent 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

During the nine months ended September 30, 2021,As of March 31, 2022, our Denmark subsidiary receivedhas 3 unsecured interest freeinterest-free loans totaling $3.4$3.3 million under a local government loan program related to COVID-19. The loans of $0.8 million, $1.7$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 longLong term loans payables in our Condensed Consolidated Balance Sheets. Subsequent to March 31, 2022, the loan due April 2022 was repaid on April 1, 2022.

As of September 30, 2021, as a result of our recent acquisition of a 60% controlling ownership stake in Fosler Construction Company Inc. (“Fosler Construction”) as described in Note 24,March 31, 2022, Fosler Construction has 2 loans totaling $7.6$8.9 million. Both loans have a variable interest rate with a minimum rate of 6%6.0% and are payable January 1,due June 30, 2022. Fosler Construction also has loans, primarily for vehicles and equipment, totaling $0.9$0.6 million at September 30, 2021.March 31, 2022. The vehicle and equipment loans are included in long term loans payables in our Condensed Consolidated Balance Sheets.

NOTE 1613 – PREFERRED STOCK

OnIn May 7, 2021, we completed a public offering of our 7.75% Series A Cumulative Perpetual Preferred Stock (the "Preferred Stock") pursuant to an underwriting agreement (the “Underwriting Agreement”) dated May 4, 2021, between us and B. Riley Securities, Inc., as representative of several underwriters (the “Underwriters”).Inc.. At the closing, we issued to the public 4,000,0004,444,700 shares of our Preferred Stock, at an offering price of $25.00 per share for net proceeds of approximately $95.7$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.

On May 26, 2021, we completed the additional sale of 444,700 shares of our Preferred Stock, related to the grant to the underwriters described above, at an offering price of $25.00 per share for net proceeds of approximately $10.7 million after deducting underwriting fees and commissions.

The Preferred Stock ranks, as to dividend rights and rights as to the 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 Preferred Stock; (2) on parity with any future class or series of our capital stock expressly designated as ranking on parity with the Preferred Stock; (3) junior to any future class or series of our capital stock expressly designated as ranking senior to the Preferred Stock; and (4) junior to all our existing and future indebtedness.

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

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On June 8, 2021,During the three months ending March 31, 2022, the Company's Board of Directors approved a dividend of $0.290625 per share of the Company's outstanding Preferred Stock, with a record date for the dividend of June 18, 2021 and a payment date of June 30, 2021. On June 30, 2021, the Company paid dividends totaling $1.7 million.

On September 2, 2021, the Company's Board of Directors approved a dividend of $0.484375 per share of the Company's outstanding Preferred Stock, with a record date for the dividend of September 15, 2021 and a payment date of September 30, 2021. On September 30, 2021, the Company paid dividends totaling $3.7 million. After the Company paid the dividends on September 30, 2021, thereThere are no cumulative undeclared dividends of the Preferred Stock at September 30, 2021.March 31, 2022.

On June 1, 2021, the Company and B. Riley, a related party, entered into an agreement (the “Exchange Agreement”) pursuant to which we (i) issued B. Riley 2,916,880 shares of our Preferred Stock, representing an exchange price of $25.00 per share
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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 $73.3 million of 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 and 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 Preferred Stock. The Preferred Stock will havehas the same terms as (other than date of issuance and first dividend) with and have the same CUSIP number and beis fungible with, the Preferred Stock issued during May 2021. The first dividend forFor the three months ending March 31, 2022, the Company has sold no additional Preferred Stock issued thereunder, when, as and if declared, will accumulate and be cumulative from the dividend payment date (March 31, June 30, September 30 and December 31 of each year) for which full cumulative dividends have been paid immediately priorpursuant to the original issue date for each such share.

sales agreement. As of September 30,December 31, 2021, the Company sold $5.9$7.7 million aggregate principal amount of Preferred Stock for $5.9$7.7 million of net proceeds after commission and fees related to the July 7, 2021 sales agreement disclosed above.proceeds.

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

NOTE 1714 – COMMON STOCK

On February 12, 2021, we completed a public offering of our common stock pursuant to an underwriting agreement dated February 9, 2021, between us and 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 reducereduced the commitments under our senior secured credit facilities.

On May 20, 2021, at the 2021 annual meeting of stockholders of the Company, the stockholders of the Company, upon the recommendation of the Company’s Board of Directors, approved the Babcock & Wilcox Enterprises, Inc. 2021 Long-Term Incentive Plan. The 2021 Plan became effective upon such stockholder approval. The maximum number of shares of the Company’s common stock that may be issued or transferred pursuant to awards under the 2021 Plan equals: (1) 1,250,000 shares, plus (2) the number of any shares subject to awards granted under the Company’s Amended and Restated 2015 Long-Term Incentive Plan (the “2015 Plan”) and outstanding as of May 20, 2021 which expire, or are terminated, surrendered, or forfeited for any reason without issuance of such shares (including for outstanding performance share awards to the extent they are earned at less than maximum). No new awards may be granted under the 2015 Plan. As of May 20, 2021 (immediately prior to the stockholder approval of the 2021 Plan), the total number of shares of our common stock subject to outstanding awards granted under the 2015 Plan was 2,007,152 shares.
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NOTE 1815 –INTEREST EXPENSE AND SUPPLEMENTAL CASH FLOW INFORMATION

Interest expense in our Condensed Consolidated Financial Statements consisted of the following components:
Three months ended September 30,Nine months ended September 30,Three Months Ended March 31,
(in thousands)(in thousands)2021202020212020(in thousands)20222021
Components associated with borrowings from:Components associated with borrowings from:Components associated with borrowings from:
Senior Notes$3,801 $— $8,993 $— 
Senior notesSenior notes$6,216 $1,733 
Last Out Term Loans - cash interestLast Out Term Loans - cash interest— — 4,349 6,140 Last Out Term Loans - cash interest— 3,513 
Last Out Term Loans - equitized interest— 5,315 — 8,031 
U.S. Revolving Credit FacilityU.S. Revolving Credit Facility— 3,382 1,416 10,830 U.S. Revolving Credit Facility— 1,416 
3,801 8,697 14,758 25,001 6,216 6,662 
Components associated with amortization or accretion of:Components associated with amortization or accretion of:Components associated with amortization or accretion of:
Revolving Credit AgreementRevolving Credit Agreement1,057 — 1,057 — Revolving Credit Agreement1,060 — 
Senior Notes335 — 2,101 — 
Last Out Term Loans - discount and financing fees— (545)— 3,183 
U.S. Revolving Credit Facility - deferred financing fees and commitment fees— 1,711 5,995 14,376 
U.S. Revolving Credit Facility - deferred ticking fee for Amendment 16— — — 1,660 
Senior notesSenior notes643 1,468 
U.S. Revolving Credit FacilityU.S. Revolving Credit Facility— 4,400 
1,392 1,166 9,153 19,219 1,703 5,868 
Components associated with interest from:Components associated with interest from:Components associated with interest from:
Lease liabilitiesLease liabilities870 612 2,194 1,843 Lease liabilities708 616 
Other interest expenseOther interest expense2,267 1,728 4,469 3,713 Other interest expense2,640 1,077 
3,137 2,340 6,663 5,556 3,348 1,693 
Total interest expenseTotal interest expense$8,330 $12,203 $30,574 $49,776 Total interest expense$11,267 $14,223 

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The following table provides a reconciliation of Cash and cash equivalents and Restricted cash and cash equivalents and restricted cash reporting that sum to the total cash amount inwithin the Condensed Consolidated Balance Sheets and in the Condensed Consolidated Statements of Cash Flows:
(in thousands)(in thousands)September 30, 2021December 31, 2020September 30, 2020(in thousands)March 31, 2022December 31, 2021March 31, 2021
Held by foreign entitiesHeld by foreign entities$39,238 $38,726 $36,848 Held by foreign entities$35,870 $42,070 $25,169 
Held by U.S. entitiesHeld by U.S. entities67,817 18,612 2,086 Held by U.S. entities72,267 182,804 28,664 
Cash and cash equivalentsCash and cash equivalents107,055 57,338 38,934 Cash and cash equivalents108,137 224,874 53,833 
Reinsurance reserve requirementsReinsurance reserve requirements774 4,551 3,443 Reinsurance reserve requirements584 443 2,053 
Restricted foreign accounts— 2,869 2,752 
Bank guarantee collateralBank guarantee collateral1,026 2,665 3,240 Bank guarantee collateral492 997 2,560 
Letters of credit collateralLetters of credit collateral6,892 — — Letters of credit collateral1,858 401 — 
Hold-back for acquisition purchase price (1)
Hold-back for acquisition purchase price (1)
5,899 — — 
Restricted cash and cash equivalentsRestricted cash and cash equivalents8,692 10,085 9,435 Restricted cash and cash equivalents8,833 1,841 4,613 
Total cash, cash equivalents and restricted cash shown in the Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Cash Flows$115,747 $67,423 $48,369 
Total cash, cash equivalents and restricted cash shown in the Condensed Consolidated Statements of Cash FlowsTotal cash, cash equivalents and restricted cash shown in the Condensed Consolidated Statements of Cash Flows$116,970 $226,715 $58,446 

(1)
As disclosed above, letters The purchase price for Fossil Power Systems ("FPS") was $59.1 million, including a hold-back of credit collateral of $6.9$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 Condensed Consolidated Balance SheeSeptember 30, 2021ts. represents cash pledged to secure the outstanding and undrawn letters of credit issued under our prior A&R Credit Agreement, most of which are expected to be
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cancelled and replaced by new letters of credit issued by PNC, as described in Note 15 – Revolving Debt. We expect the completion of the issuance of new letters of credit to cover the remaining collateral balance by December 31, 2021.

The following cash activity is presented as a supplement to our Condensed Consolidated Statements of Cash Flows and is included in Net cash used in operating activities:
Nine months ended September 30,Three Months Ended March 31,
(in thousands)(in thousands)20212020(in thousands)20222021
Income tax payments, netIncome tax payments, net$6,094 $3,967 Income tax payments, net$471 $1,499 
Interest payments on our 8.125% Senior Notes due 2026$6,681 $— 
Interest payments - 8.125% Senior Notes due 2026Interest payments - 8.125% Senior Notes due 2026$3,783 $— 
Interest payments - 6.50% Senior Notes due 2026Interest payments - 6.50% Senior Notes due 20262,926 — 
Interest payments on our U.S. Revolving Credit FacilityInterest payments on our U.S. Revolving Credit Facility5,979 8,280 Interest payments on our U.S. Revolving Credit Facility— 5,979 
Interest payments on our Last Out Term LoansInterest payments on our Last Out Term Loans6,140 6,140 Interest payments on our Last Out Term Loans— 3,560 
Total cash paid for interestTotal cash paid for interest$18,800 $14,420 Total cash paid for interest$6,709 $9,539 

NOTE 1916 – PROVISION FOR INCOME TAXES

In the three months ended September 30, 2021,March 31, 2022, income tax expense was $0.3$1.2 million, resulting in an effective tax rate of 2.2%(16.5)%. In the three months ended September 30, 2020,March 31, 2021, income tax benefitexpense was $0.5$2.8 million, resulting in an effective tax rate of (1.5)(22.5)%.

In the nine months ended September 30, 2021, income tax expense was $6.7 million, resulting in an effective tax rate of 83.2%. In the nine months ended September 30, 2020, income tax benefit was $0.5 million, resulting in an effective tax rate of 2.7%.

Our effective tax rate for the three and nine months ended September 30,March 31, 2022 and 2021 and 2020 is not reflective of the U.S. statutory rate due to valuation allowances against certain net deferred tax assets and discrete items. We have favorable discrete items of $0.6 million and unfavorable discrete items of $2.9$0.4 million for the three and nine months ended September 30, 2021, respectively,March 31, 2022, which primarily represent withholding taxes ($3.0 million expense), adjustment to our United Kingdom deferred tax liabilities due to an enacted change in tax rate ($0.6 million expense), return to provision adjustments ($0.4 million benefit), and miscellaneous items ($0.3 million benefit) for the nine months ended September 30, 2021.taxes. We had unfavorable discrete items of $0.1$2.5 million and favorable discrete items of $1.2 million forin the three and nine months ended September 30, 2020, respectively.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.
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NOTE 2017 – CONTINGENCIES

Litigation Relating to Boiler Installation and Supply Contract

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

SEC Investigation

The staff of the SEC has informed the Company that its investigation is now concluded and that the staff does not intend to recommend any enforcement action against the Company. As the Company previously disclosed, the U.S. SEC had been conducting a formal investigation of the Company, focusing on the accounting charges and related matters involving the Company's B&W Renewable segment from 2015-2019.

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 caselitigation is currently in discovery. We believe thatongoing and at this time we are unable to determine whether the outcome of the Stockholder Litigation will not have a material adverse impact on our condensed consolidated financial condition, results of operations or cash flows, net of any insurance coverage.

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 by a wholly-owned Italian subsidiary of the 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 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 condensed consolidated financial condition, results of operations or cash flows.
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NOTE 2118 – COMPREHENSIVE INCOME

Gains and losses deferred in accumulated other comprehensive income (loss) ("AOCI") are 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 three quartersquarter of 20212022 and 20202021 were as follows:
(in thousands)Currency translation
loss		Net unrecognized loss
related to benefit plans
(net of tax)		Total
Balance at December 31, 2020$(47,575)$(4,815)$(52,390)
Other comprehensive loss before reclassifications(70)— (70)
Reclassified from AOCI to net income (loss)(4,512)198 (4,314)
Net other comprehensive (loss) income(4,582)198 (4,384)
Balance at March 31, 2021$(52,157)$(4,617)$(56,774)
Other comprehensive loss before reclassifications(1,478)— (1,478)
Reclassified from AOCI to net income— 198 198 
Net other comprehensive (loss) income(1,478)198 (1,280)
Balance at June 30, 2021$(53,635)$(4,419)$(58,054)
Other comprehensive income (loss) before reclassifications(1,292)— (1,292)
Reclassified from AOCI to net income (loss)— 197 197 
Net other comprehensive income (loss)(1,292)197 (1,095)
Balance at September 30, 2021$(54,927)$(4,222)$(59,149)
(in thousands)Currency translation lossNet 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)

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(in thousands)Currency translation
gain (loss)		Net unrecognized loss
related to benefit plans
(net of tax)		Total
Balance at December 31, 2019$5,743 $(3,817)$1,926 
Other comprehensive income before reclassifications2,380 — 2,380 
Reclassified from AOCI to net loss— (246)(246)
Net other comprehensive income (loss)2,380 (246)2,134 
Balance at March 31, 2020$8,123 $(4,063)$4,060 
Other comprehensive loss before reclassifications(4,095)— (4,095)
Reclassified from AOCI to net loss— (246)(246)
Net other comprehensive loss(4,095)(246)(4,341)
Balance at June 30, 2020$4,028 $(4,309)$(281)
Other comprehensive loss before reclassifications(22,916)$— (22,916)
Reclassified from AOCI to net income (loss)— $(246)(246)
Net other comprehensive (loss) income(22,916)(246)(23,162)
Balance at September 30, 2020$(18,888)$(4,555)$(23,443)
(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)

The amounts reclassified out of AOCI by component and the affected Condensed Consolidated Statements of Operations line items are as follows (in thousands):
AOCI componentAOCI componentLine items in the Condensed Consolidated Statements of Operations affected by reclassifications from AOCIThree months ended September 30,Nine months ended September 30,AOCI componentLine items in the Condensed Consolidated Statements of Operations affected by reclassifications from AOCIThree Months Ended March 31,
202120202021202020222021
Release of currency translation adjustment with the sale of businessRelease of currency translation adjustment with the sale of businessLoss on sale of business$— $— $4,512 $— Release of currency translation adjustment with the sale of businessLoss on sale of business$— $4,512 
Amortization of prior service cost on benefit obligationsBenefit plans, net(197)246 (593)738 
Net (loss) income$(197)$246 $3,919 $738 
Pension and post retirement adjustments, net of taxPension and post retirement adjustments, net of taxBenefit plans, net(593)(198)
Net (loss) income$(593)$4,314 
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NOTE 2219 – 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)(in thousands)(in thousands)
Available-for-sale securitiesAvailable-for-sale securitiesSeptember 30, 2021Level 1Level 2Available-for-sale securitiesMarch 31, 2022Level 1Level 2
Corporate notes and bondsCorporate notes and bonds$8,719 $8,719 $— Corporate notes and bonds$8,218 $8,218 $— 
Mutual fundsMutual funds701 — 701 Mutual funds673 — 673 
United States Government and agency securitiesUnited States Government and agency securities4,131 4,131 — United States Government and agency securities2,933 2,933 — 
Total fair value of available-for-sale securitiesTotal fair value of available-for-sale securities$13,551 $12,850 $701 Total fair value of available-for-sale securities$11,824 $11,151 $673 

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(in thousands)(in thousands)(in thousands)
Available-for-sale securitiesAvailable-for-sale securitiesDecember 31, 2020Level 1Level 2Available-for-sale securitiesDecember 31, 2021Level 1Level 2
Corporate notes and bondsCorporate notes and bonds$6,139 $6,139 $— Corporate notes and bonds$9,477 $9,477 $— 
Mutual fundsMutual funds636 — 636 Mutual funds714 — 714 
Corporate Stocks4,168 4,168 — 
United States Government and agency securitiesUnited States Government and agency securities4,365 4,365 ��� United States Government and agency securities2,017 2,017 — 
Total fair value of available-for-sale securitiesTotal fair value of available-for-sale securities$15,308 $14,672 $636 Total fair value of available-for-sale securities$12,208 $11,494 $714 

Available-For-Sale Securities

Our investments in available-for-sale securities are presented in other assets on our Condensed Consolidated Balance Sheets with contractual maturities ranging from 0-5 years.

Senior Notes

See Note 1312 above for a discussion of our recent offerings of Senior Notes.senior notes. The fair value of the Senior Notessenior notes is based on readily available quoted market prices as of September 30, 2021.March 31, 2022.

(in thousands)(in thousands)September 30, 2021(in thousands)March 31, 2022
Senior NotesSenior NotesCarrying ValueEstimated Fair ValueSenior NotesCarrying ValueEstimated Fair Value
8.125% Senior Notes due 2026 ('BWSN')8.125% Senior Notes due 2026 ('BWSN')$185,599 $194,211 8.125% Senior Notes due 2026 ('BWSN')$188,200 $197,759 
6.50% Senior Notes due 2026 ('BWNB')6.50% Senior Notes due 2026 ('BWNB')$151,440 $144,353 

Other 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 for cash and cash equivalents and restricted cash and cash equivalents approximate their fair values due to their highly liquid nature.
•Last Out Term Loans and Revolving 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 Last Out Term Loans and Revolving Debt approximated their carrying value at DecemberMarch 31, 2020.2022.
•Warrants. The fair value of the warrants was established using the Black-Scholes option pricing model value approach.

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Non-recurring fair value measurements

The purchase price allocation associated•Contingent consideration: In connection with the September 30, 2021 acquisition of controlling ownership of Fosler Construction Company Inc. ("Fosler Construction")acquisition, the Company agreed to pay contingent consideration based on the achievement of targeted revenue thresholds for the year ended December 31, 2022. The range of undiscounted amounts the Company could be required significant fair value measurements using unobservable inputs ("Level 3" inputs as defined into pay under the contingent consideration arrangement is between $0.0 million and $10.0 million. As of March 31, 2022, the fair value hierarchy established by FASB Topic Fair Value Measurementsof the contingent consideration liability is $9.6 million and Disclosures). See Note 24 for additional information regardingis 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 acquisition.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 2320 – 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 outstanding common stock as of September 30, 2021.March 31, 2022.

B. Riley was party to the Last Out Term Loans under our A&R Credit Agreement, as described in Note 14.

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

Total fees associated with B. Riley related to the Last Out Term Loans and services of Mr. Kenny Young both as described above, were $0.2 million and $0.6$0.2 million for the three and nine months ended September 30,March 31, 2022 and 2021, respectively, and were $0.1 million and $7.6 million for the three and ninerespectively months ended September 30, 2020, respectively..

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

The public offering of our 8.125% Senior Notes in February 2021, as described in Note 13,12, 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 17,14, 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 1312.

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 Senior Nnotesotes due 2026 to or through B. Riley Securities, Inc., as described in Note 1312. As of September 30, 2021,March 31, 2022, we paid B. Riley Securities, Inc. In$0.5c. $0.6 million for for underwriting fees and other transaction costs related to the offering.offering of which $0.1 million has been paid for the three months ended March 31, 2022.

The public offering of our 7.75% Series A Cumulative Perpetual Preferred Stock, as described in Note 16,13, was conducted pursuant to an underwriting agreement dated May 4, 2021, between us and B. Riley Securities, Inc., as representative of several underwriters. At the closing date on May 7, 2021, we paid B. Riley Securities, Inc. $4.3 million for underwriting fees and other transaction cost related to the Preferred Stock offering.
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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 16,13, and paid B. Riley Securities, Inc. $0.4 million for underwriting fees in conjunction with the transaction.

On June 1, 2021, we issued 2,916,880 shares of the Company’s 7.75% Series A Cumulative Perpetual Preferred Stock and paid $0.4 million in cash due to B. Riley, a related party, in exchange for a deemed prepayment of $73.3 million of our then existing Last Out Term Loans and paid $0.9 million in cash for accrued interest, as described in Note 16.13.

On June 30, 2021, we entered into new Debt Facilities, as described in Note 1512. 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 1512. 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 $7676.0 million of Preferred Stock to or through B. Riley Securities, Inc., as described in Note 1613. As of September 30, 2021,March 31, 2022, we paid B. Riley Securities, Inc. $0.10.2 million for underwriting fees and other transaction costs related to the offering.
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Transactions with Vintage Capital Management, LLCThe 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 March 26,December 17, 2021, Vintage and B. Riley completedFinancial, Inc. entered into a transaction pursuantGeneral Agreement of Indemnity (the "Indemnity Agreement"), between us and AXA-XL and or its affiliated associated and subsidiary companies (collectively the “Surety”). Pursuant to whichthe terms of the Indemnity Agreement, B. Riley agreedwill 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 purchase from Vintage, and Vintage agreed to sell toexceed €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 all 10,720,785 sharesa fee of our common stock owned$1.7 million following the issuance of the bond by Vintage.the Surety, which represents approximately 5.0% of the bonded obligations, to be amortized over the term of the agreement.

BasedOn December 28, 2021, we received a notice that the underwriters of the 6.50% Senior Notes had elected to exercise their overallotment option for an additional $11.4 million in aggregate principal amount of the Senior Notes. At the closing date on its Schedule 13D filings, Vintage beneficially owns 0% of our outstanding common stock as of SeptemberDecember 30, 2021.2021, we paid B. Riley Securities, Inc. $0.5 million for underwriting fees and other transaction cost related to the 6.50% Senior Notes overallotment.

NOTE 2421 – ACQUISITIONS ASSETS HELD FOR SALE,AND DIVESTITURES AND DISCONTINUED OPERATIONS

Acquisitions

Fosler Construction

On September 30, 2021, we acquired a 60% controlling ownership stake in Illinois-based solar energy contractor Fosler Construction Company Inc. (“Fosler Construction”) for approximately $27.2 million in cash plus a contingent consideration arrangement. The acquisition was accounted for under the acquisition method of accounting for business combinations. We are in the process of completing the purchase price allocation associated with the Fosler Construction business combination and as a result, the provisional measurements of goodwill and any other assets and liabilities acquired are subject to change.. 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 and employs approximately 120 people with a track record of successfully completing solar projects profitably with union labor andwhile 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 will beis reported as part of our B&W Renewable segment, and it will operateoperates under the name Fosler Solar, a Babcock and Wilcox company.

The total fair value of consideration for the acquisition is $33.4$36.0 million, including $6.2$27.2 million in cash plus $8.8 million in estimated fair value of the contingent consideration arrangement. In connection with the acquisition, the Company agreed to pay contingent consideration based on the achievement of specified objectives, including reaching targeted revenue thresholds.thresholds for the year ended December 31, 2022. The 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.

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We estimated fair values primarily using 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. If we determine anyAny subsequent changes in the fair values of the assets acquired and liabilities assumed during the measurement period may result in adjustments are material,to 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.

VODA

On November 30, 2021, we acquired 100% ownership of VODA A/S (“VODA”) through our wholly-owned subsidiary, B&W PGG Luxembourg Finance SARL, for approximately $32.9 million. VODA is a Denmark-based multi-brand aftermarket parts and services provider, focusing on energy-producing incineration plants including waste-to-energy, biomass-to-energy or other fuels, providing service, engineering services, spare parts as well as general outage support and management. VODA has extensive experience in incineration technology, boiler and pressure parts, SRO, automation, and performance optimization. VODA is reported as part of our B&W Renewable segment and is included in the B&W Renewable Services product line.

We estimated fair values primarily using the discounted cash flow method at November 30, 2021 for the preliminary allocation of consideration to the assets acquired and liabilities assumed. During the measurement period, we will apply those adjustments, including any related impactscontinue to net income,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 reportingfair values of the assets acquired and liabilities assumed during the measurement period may result in adjustments to goodwill.

Fossil Power Systems

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 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 cash equivalents and other accrued liabilities.

FPS is a leading designer and 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 values primarily using 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 assets acquired and liabilities assumed, which may differ materially from these preliminary estimates. Any subsequent changes in the fair values of the assets acquired and liabilities assumed during the measurement period may result in adjustments are determined.to goodwill.

Optimus Industries

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 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 the discounted cash flow method at February 28, 2022 for the preliminary allocation of consideration to the assets acquired and liabilities assumed. During the measurement period, we will 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 values of the assets acquired and liabilities assumed during the measurement period may result in adjustments to goodwill.
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Purchase Price Allocations

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

(in thousands)Estimated Acquisition Date Fair Value
Accounts receivable1,904 
Contracts in progress1,363 
Other current assets1,137 
Property, plant and equipment9,527 
Goodwill(1)
43,230 
Other assets17,497 
Right of use assets1,093 
Debt(7,625)
Current liabilities(6,630)
Non-current lease liabilities(1,730)
Other non-current liabilities(4,112)
Non-controlling interest(2)
(22,262)
Net acquisition cost$33,392 
Fosler Construction
(in thousands)Initial Allocation of ConsiderationMeasurement Period AdjustmentsUpdated Preliminary Allocation
Accounts receivable$1,904 $121 $2,025 
Contracts in progress1,363 9,433 10,796 
Other current assets1,137 (304)833 
Property, plant and equipment9,527 (7,860)1,667 
Goodwill(1) (4)
43,230 19,912 63,142 
Other assets17,497 (4,600)12,897 
Right of use assets1,093 — 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. Goodwill is not expected to be deductible for U.S federal income tax purposes.
(2) The fair value of the non-controlling interest was derived based on the fair value of the 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 ConsiderationMeasurement Period AdjustmentsUpdated Preliminary Allocation
Cash$4,737 $— $4,737 
Accounts receivable5,654 — 5,654 
Contracts in progress258 — 258 
Other current assets825 — 825 
Property, plant and equipment253 — 253 
Goodwill(1)
17,176 (61)17,115 
Other assets14,321 — 14,321 
Right of use assets433 — 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 
30

(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 receivable2,624 5,165 
Contracts in progress370 2,598 
Other current assets3,228 2,115 
Property, plant and equipment178 2,441 
Goodwill(1)
35,392 11,081 
Other assets25,092 12 
Right of use assets1,115 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 analysis has not been completed. We will update the purchase price allocations after the fair value analysis has been completed.


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

(in thousands)Estimated Acquisition Date Fair ValueWeighted Average Estimated Useful Life
Customer Relationships14,400 12 years
Backlog2,700 5 months
Total intangible assets(1)
$17,100 
Fosler ConstructionVODA
(in thousands)Estimated Acquisition Date Fair ValueWeighted Average Estimated Useful LifeEstimated Acquisition Date Fair ValueWeighted Average Estimated Useful Life
Customer Relationships$9,400 12 years$13,855 11 years
Tradename— — 228 3 years
Backlog3,100 5 months— — 
Total intangible assets(1)
$12,500 $14,083 
Fossil Power Systems
Estimated Acquisition Date Fair ValueWeighted Average Estimated Useful Life
Customer Relationships$20,451 9 years
Tradename787 14 years
Patented Technology578 12 years
Unpatented Technology3,276 12 years
Total intangible assets(1)
$25,092 
(1) Intangible assets were valued using 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 within the fair value hierarchy.

The Company incurred approximately $0.4 million of costs
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Costs related to the acquisitionour acquisitions of Fosler, ConstructionVODA, Fossil Power Systems, and Optimus Industries, which were recorded as a component of our operating expenses in our Condensed Consolidated StatementStatements of Operations, forconsists of the three and nine months ended September 30, 2021.following:

Assets Held for Sale
For the Three Months Ended
(in thousands)March 31, 2022
Fosler Construction$195 
VODA140 
FPS31 
Optimus Industries69 
Total$435 

Divestitures

Certain real property assets for the Copley, Ohio location were sold on March 15, 2021 for $4.0 million. We received $3.3 million of net proceeds after adjustments and recognized a gain on sale of $1.9 million. In conjunction with the sale, we executed a leaseback agreement commencing March 16, 2021 and expiringwhich expires on March 31, 2033. These assets were treated as assets held for sale on our Condensed Consolidated Balance Sheets as of December 31, 2020.

Certain real property assets for the Lancaster, Ohio location were sold on August 13, 2021 for $18.9 million. We received $15.8 million of net proceeds after adjustments and expenses and recognized a gain on sale of $13.9 million. In conjunction with the sale, we executed a leaseback agreement commencing August 13, 2021 and expiringwhich expires on August 31, 2041. These assets were treated as assets held for sale on our Condensed Consolidated Balance Sheets as of December 31, 2020.

In December 2019, we determined that a small business within the B&W Thermal segment met the criteria to be classified as held for sale. At December 31, 2020, the carrying value of the net assets planned to be sold approximated the estimated fair value less costs to sell. Refer to Divestitures below as this sale closed March 5, 2021.

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The following table summarizes the carrying value of the assets and liabilities held for sale at December 31, 2020:
(in thousands)December 31, 2020
Accounts receivable – trade, net$2,103 
Accounts receivable – other86 
Contracts in progress458 
Inventories1,676 
Other current assets405 
     Current assets held for sale4,728 
Net property, plant and equipment10,365 
Intangible assets759 
Right-of-use-asset32 
     Non-current assets held for sale11,156 
Total assets held for sale$15,884 
Accounts payable$5,211 
Accrued employee benefits178 
Advance billings on contracts370 
Accrued warranty expense466 
Operating lease liabilities32 
Other accrued liabilities2,048 
     Current liabilities held for sale8,305 
Total liabilities held for sale$8,305 

Divestitures

Effective March 5, 2021, we sold all of the issued and outstanding capital stock of Diamond Power Machine (Hubei) Co., Inc, for $2.8 million. We received $2.0 million in gross proceeds before expenses and recorded an $0.8 million favorable contract asset for the amortization period from March 8, 2021 through December 31, 2023. For the ninetwelve months ended September 30,December 31, 2021, we recognized a $2.2$1.8 million pre-tax loss, inclusive of the recognition of $4.5 million of currency translation adjustment, on the sale of the business and after consideration of certain working capital adjustments that are in dispute. Additional adjustments may be necessary as this is finalized.

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

Discontinued Operations

On April 6, 2020, we fully settled the remaining escrow associated with the sale of the MEGTEC and Universal businesses and received $3.5 million in cash.

NOTE 2522 – NEW ACCOUNTING STANDARDS

We adopted the following accounting standard during the nine monthsfirst quarter of 2021:

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

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

In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt-Modifications and Extinguishments (Subtopic 470-50), Compensation-Stock Compensation (Topic 718), and Derivatives and Hedging-Contracts in Equity's Own Equity (Subtopic 815-40): Issuer's Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options (a consensus of the FASB Emerging Issues Task Force). The amendments in this update affect all entities that issue freestanding written call options that are classified in equity. Specifically, the amendments affect those entities when a freestanding equity-classified written call option is modified or exchanged and remains equity classified after the modification or exchange. The amendments that relate to the recognition and measurement of EPS for certain modifications or exchanges of freestanding equity-classified written call options affect entities that present EPS in accordance with the guidance in Earnings Per Share (Topic 260). The amendments in this update do not apply to modifications or exchanges of financial instruments that are within the scope of another Topic. That is, accounting for those instruments continues to be subject to the requirements in other Topics. The amendments in this update do not affect a holder’s accounting for freestanding call options. The update is applicable to B&W as we have previously issued freestanding written call options however those options remain unexercised as of September 30, 2021 and they have not been modified or exchanged to date. The amendments are effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. We are currently evaluating the impact of the standards on our condensed consolidated financial statements.

In March 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848): Scope. The amendments in this update clarify that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. This update is an amendment to ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform of Financial Reporting, which was issued in March 2020 and provides optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in the updates apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The expedients and exceptions provided by the updates do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for hedging relationships existing as of December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship. The amendments in both updates are effective for all entities upon issuance and may be adopted any date on or after March 12, 2020 up to December 31, 2022. We are currently evaluating the impact of the standards on our condensed consolidated financial statements.2022:

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 amendmentsimpact of this standard on our Condensed Consolidated Financial Statements was immaterial.

New accounting standards not yet adopted that could affect our Condensed Consolidated Financial Statements in the future are summarized as follows:
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In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. The amendment in this update areprovides an exception to fair value measurement for contract assets and contract liabilities (i.e., deferred revenue) acquired in a business combination. As a 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 combination. The amendment in this update is effective for public business entities that meet the definition of an SEC filer, excluding entities eligible to be smaller reporting companies as defined by the SEC, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Forin January 2023; all other entities have an additional year to adopt. Early adoption is permitted; however, if the amendments arenew guidance is adopted in an interim period, it is required to be applied retrospectively to all business combinations within the year of adoption. This amendment is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020,2022, including interim periods within those fiscal years. We are currently evaluating the impact of the standard on our condensed consolidated financial statements.

In November 2018, the FASB issued ASU 2018-19, Codification Improvements to Topic 326: Financial Instruments - Credit Losses. This update is an amendment to the new credit losses standard, ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, that was issued in June 2016 and clarifies that operating lease receivables are not within the scope of Topic 326. The new credit losses standard changes the accounting for credit losses for certain instruments. The new measurement approach is based on expected losses, commonly referred to as the current expected credit loss (CECL)("CECL") model, and applies to financial assets measured at amortized cost, including loans, held-to-maturity debt securities, net investment in leases, and reinsurance and trade receivables, as well as certain off-balance
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sheet credit exposures, such as loan commitments. The standard also changes the impairment model for available-for-sale debt securities. The provisions of this standard will primarily impact the allowance for doubtful accounts on our trade receivables, contracts in progress, and potentially our impairment model for available-for-sale debt securities (to the extent we have any upon adoption). For public, smaller reporting companies, this standard is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. We are currently evaluating the impact of both standards on our condensed consolidated financial statements.Condensed Consolidated Financial Statements.


NOTE 26 – PROPOSED ACQUISITION

During the third quarter, we announced our intention to acquire 100% of the equity interests of VODA A/S, a leading multi-brand aftermarket parts and service provider for the waste-to-energy and biomass-to-energy markets based in Vejen, Denmark, for approximately $30.0 million.

VODA focuses on energy producing incineration plants including waste-to-energy, biomass-to-energy or other fuels, providing service, engineering services, spare parts as well as general outage support and management. VODA has extensive experience within incineration technology, boiler / pressure parts, SRO, automation, and performance optimization.They employ people mainly in Denmark and Sweden. The planned acquisition of VODA aligns with B&W’s aggressive growth and expansion of our clean and renewable energy businesses.

The foregoing planned acquisition is expected to close by the end of December 2021 and remains subject to the satisfaction or waiver of certain customary closing conditions specified in the share purchase agreement, including the receipt of Foreign Direct Investment clearance in Denmark by December 31, 2021.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

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.

BUSINESS OVERVIEW OF RESULTS

B&W is a growing, globally-focused renewable, environmental and thermal technologies provider with decadesover 150 years of experience providing diversified energy and emissions control solutions to a broad range of industrial, electrical utility, municipal and other customers. B&W’s innovative products and services are organized into three market-facing segments:segments. Our reportable segments are 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, 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.

On September 30, 2021,February 1, 2022, we acquired a 60% controlling100% ownership stake in Illinois-based solar energy contractor Fosler Construction Companyof Fossil Power Systems, Inc. (“Fosler Construction”) for approximately $27.2$59.1 million, excluding working capital adjustments. Fossil Power Systems, Inc., is a leading designer and manufacturer of hydrogen, natural gas and
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renewable pulp and paper combustion equipment including ignitors, plant controls and safety systems based in cash plus a contingent consideration arrangement. Fosler Construction provides commercial, industrial and utility-scale solar services and owns two community solar projects in Illinois being developed under the Illinois Solar for All program. Fosler Construction was founded in 1998 and employs approximately 120 people with a track record of successfully completing solar projects profitably with union labor and aligning its model with a growing number of renewable project incentives in the U.S. We believe Fosler ConstructionDartmouth, Nova Scotia, Canada. Fossil Power Systems, Inc. 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 will be reported as part of our B&W Renewable segment,Thermal segment.

On February 28, 2022, we acquired 100% ownership of Optimus Industries, LLC for approximately $19.0 million, excluding working capital adjustments. Optimus Industries, LLC designs and it will operate under the name Fosler Solar, a Babcockmanufactures waste heat recovery products for use in power generation, petrochemical, and Wilcox company.
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Tableprocess 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 in Tulsa, Oklahoma and Chanute, Kansas. Optimus Industries, LLC is reported as part of Contents
our B&W Thermal segment.

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

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

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

We recorded operating income of $14.8 million and $11.1 million in the three and nine months ended September 30, 2021, respectively, compared to operating income of $14.1 million and an operating loss of $3.9 million in the three and nine months ended September 30, 2020, respectively, and we showed improved results in our Environmental and Thermal segments as described below.

Adjusted EBITDA in the B&W Renewable segment was $11.4 million and $15.0 million in the three and nine months ended September 30, 2021, respectively, compared to $23.6 million and $22.0 million in the three and nine months ended September 30, 2020, respectively. The decline is primarily attributable to the non-recurring loss recovery of $26.0 million recognized in third quarter of 2020 under an October 10, 2020 settlement agreement with an insurer in connection with five of the six European B&W Renewable EPC loss contracts, as described in Note 4.

Adjusted EBITDA in the B&W Environmental segment was $3.5 million and $7.3 million in the three and nine months ended September 30, 2021, respectively, compared to $2.2 million and $1.4 million in the three and nine months ended September 30, 2020, respectively. The increase is driven primarily by the higher volume partially offset by an increase in shared resources.

Adjusted EBITDA in the B&W Thermal segment was $9.2 million and $32.1 million in the three and nine months ended September 30, 2021, respectively, compared to $7.3 million and $22.9 million in the three and nine months ended September 30, 2020, respectively. This increase is primarily attributable to the increase in volume offset partially by product mix, an increase in expenses due to growth in Asia and Middle East, and an increase in shared resources due to higher volume.

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

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

We have identified additional initiatives that are underway as of the date of this filing that are expected to further reduce costs, and we expect to continue to explore other cost saving initiatives to improve cash generation and evaluate additional non-core asset sales to continue to strengthen our liquidity. There are or will be important factors that could cause our actual results to differ materially from those indicated in these statements. If one or more events related to these or other risks or
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uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may differ materially from what we anticipate.

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

•$4.6 million and $8.0 million of restructuring costs were recognized in the three and nine months ended September 30, 2021, respectively, compared to $2.4 million and $6.7 million of restructuring costs recognized in the three and nine months ended September 30, 2020, respectively. The restructuring costs primarily related to severance and business service transition costs.
•$0.3 million and $2.6 million of financial advisory service fees were recognized in the three and nine months ended September 30, 2021, respectively, as compared to $1.7 million and $3.2 million in the corresponding periods of 2020. Financial advisory service fees are included in advisory fees and settlement costs in our Condensed Consolidated Statement of Operations.
•$1.0 million and $5.0 million of legal and other advisory fees were recognized in the three and nine months ended September 30, 2021, respectively, as compared to $1.4 million and $5.2 million in the corresponding periods of 2020 These fees are related to the contract settlement and liquidity planning and are included in advisory fees and settlement costs in our Condensed Consolidated Statement of Operations.
•$0.6 million and $2.1 million of litigation legal costs were recognized in the three and nine months ended September 30, 2021, respectively, as compared to $0.8 million and $1.8 million in the corresponding periods of 2020. These fees are included in advisory fees and settlement costs in our Condensed Consolidated Statement of Operations.
•$4.0 million of costs related to actual or potential acquisitions were recognized in the three and nine months ended September 30, 2021. These costs are included in selling, general and administrative costs in our Condensed Consolidated Statement of Operations.

In addition, to the discussions described above, we continue to evaluate further dispositions, opportunities for additional cost savings and opportunities for subcontractor recoveries and other claims where appropriate and available. If the value of our business was to decline, or if we were to determine that we were unable to recognize an amount in connection with any proposed disposition in excess of the carrying value of any disposed asset, we may be required to recognize impairments for one or more of our assets that may adversely impact our business, financial condition and results of operations.

RESULTS OF OPERATIONS
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Components of Our Results of Operations

Revenue

Our revenue is the total amount of income generated by our business and consists primarily of income from our renewable, environmental and thermal technology solutions that we provide to a broad range of industrial electric utility and other customers. Revenue from our operations is assessed based on our three market-facing segments, Babcock & Wilcox Renewable, Babcock & Wilcox Environmental and Babcock & Wilcox Thermal.

Operating Income (Loss)

Operating income (loss) consists primarily of our revenue minus costs and expenses, including cost of operations, SG&A, and advisory fees and settlement costs.

Net Income (Loss)

Net income (loss) consists primarily of operating income minus other income and expenses, including interest income, foreign exchange and expense related to our benefit plans.

Condensed Consolidated Results of Operations

The presentation of the components of our adjusted EBITDA in the table below is consistent with the way our chief operating decision maker reviews the results of our operations and makes strategic decisions about our business. Items such as gains or losses on asset sales, 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 are not allocated to the segments.

Three months ended September 30,Nine months ended September 30,
(in thousands)20212020$ Change20212020$ Change
Revenues:
B&W Renewable segment$38,000 $39,062 $(1,062)$105,155 $118,570 $(13,415)
B&W Environmental segment38,249 25,262 12,987 97,767 76,354 21,413 
B&W Thermal segment83,819 70,025 13,794 328,416 223,920 104,496 
Other(108)(1,836)1,728 (270)(2,380)2,110 
$159,960 $132,513 $27,447 $531,068 $416,464 $114,604 
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Three months ended September 30,Nine months ended September 30,
(in thousands)20212020$ Change20212020$ Change
Adjusted EBITDA (1)
B&W Renewable segment (2)
$11,399 $23,575 $(12,176)$15,030 $22,003 $(6,973)
B&W Environmental segment3,471 2,177 1,294 7,270 1,408 5,862 
B&W Thermal segment9,205 7,287 1,918 32,066 22,879 9,187 
Corporate(5,866)(4,916)(950)(11,548)(12,864)1,316 
Research and development costs513 (1,355)1,868 (560)(3,927)3,367 
$18,722 $26,768 $(8,046)$42,258 $29,499 $12,759 
(1) Adjusted EBITDA for the three and nine months ended September 30, 2020, excludes losses related to a non-strategic business and interest on letters of credit included in cost of operations that were previously included in Adjusted EBITDA and total $0.9 million and $0.2 million, respectively, and $1.2 million and $0.6 million, respectively.
(2)Adjusted EBITDA for the three and nine months ended September 30, 2020 includes a $26 million non-recurring loss recovery related to claims in connection with multiple Renewable EPC loss contracts.

Three Months Ended September 30, 2021 and 2020

Revenues increased by$27.4 millionto $160.0 million in the third quarter of 2021 compared to $132.5 million in the corresponding period of 2020, primarily due to a higher level of activity in our project business within our Thermal segment as well as increased volume and higher overall project activity in our Environmental segment being partially offset by project timing in our Renewable segment. Segment specific changes are discussed in further detail in the sections below.

Operating income increased $0.7 million to $14.8 million in the third quarter of 2021 compared to $14.1 million in the corresponding period of 2020. The increase is primarily due to the revenue increase described above partially offset by the non-recurring loss recovery of $26.0 million recognized in third quarter of 2020 under an October 10, 2020 settlement agreement with an insurer in connection with five of the six European B&W Renewable EPC loss contracts, as described in Note 4. Restructuring expenses, advisory fees, research and development, depreciation and amortization expense and gains on dispositions are discussed in further detail in the sections below.

Nine Months Ended September 30, 2021 and 2020

Revenues increased by$114.6 millionto $531.1 million in the nine months ended September 30, 2021 compared to $416.5 million in the corresponding period of 2020, primarily attributable to a higher level of activity in our Thermal and Environmental segments being partially offset by project timing and delays of large orders in our Renewable segment. Segment specific changes which are discussed in further detail in the sections below.

Operating income increased $15.0 million to $11.1 million in the nine months ended September 30, 2021 compared to an operating loss of $(3.9) million in the corresponding period of 2020. The increase is primarily due to higher overall revenue volume and is partially offset by the non-recurring loss recovery of $26.0 million recognized in the nine months ended September 30, 2020 under an October 10, 2020 settlement agreement with an insurer in connection with five of the six European B&W Renewable EPC loss contracts, as described in Note 4. Restructuring expenses, advisory fees, research and development, depreciation and amortization expense and gains on dispositions are discussed in further detail in the sections below.

Non-GAAP Financial Measures

The following discussion of our business segment results of operations includes a discussion of adjusted gross profit,EBITDA, which when used on a consolidated basis is a non-GAAP financial measure. Adjusted gross profitEBITDA differs from the most directly comparable measure calculated in accordance with generally accepted accounting principles (“(“GAAP”). Amortization expense is not allocated to the segments’ adjusted gross profit. A reconciliation of operatingnet income (loss), the most directly comparable GAAP measure, to adjusted gross
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profitEBITDA is included in the table“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 September 30,Nine months ended September 30,
(in thousands)20212020$ Change20212020$ Change
Adjusted gross profit (1)(2)
Operating income (loss)$14,761 $14,074 $687 $11,083 $(3,927)$15,010 
Selling, general and administrative ("SG&A") expenses37,528 35,611 1,917 111,081 107,647 3,434 
Advisory fees and settlement costs1,841 3,846 (2,005)9,658 10,074 (416)
Amortization expense2,030 1,365 665 5,333 4,110 1,223 
Contract asset amortization expense73 — 73 146 — 146 
Restructuring activities4,575 2,396 2,179 7,968 6,739 1,229 
Research and development costs(228)1,355 (1,583)969 3,927 (2,958)
Losses from a non-strategic business(184)945 (1,129)103 1,163 (1,060)
Gain on asset disposals, net(13,838)(3)(13,835)(15,804)(916)(14,888)
$46,558 $59,589 $(13,031)$130,537 $128,817 $1,720 
Three Months Ended March 31,
(in thousands)20222021
Revenues:
B&W Renewable segment$67,961 $28,811 
B&W Environmental segment34,948 31,160 
B&W Thermal segment102,239 108,281 
Eliminations(1,099)(4)
$204,049 $168,248 
(1) Amortization is not allocated to the segments' adjusted gross profit, but depreciation is allocated to the segments' adjusted gross profit.
(2) Adjusted gross profit for the three and nine months ended September 30, 2020, excludes losses related to a non-strategic business that was previously included in Adjusted gross profit and totals $0.9 million and $1.2 million, respectively
Three Months Ended March 31,
(in thousands)20222021
Adjusted EBITDA
B&W Renewable segment$1,455 $204 
B&W Environmental segment1,439 1,105 
B&W Thermal segment14,154 10,535 
Corporate(4,373)(2,685)
Research and development costs(655)(588)
$12,020 $8,571 

Adjusted gross profit by segment is as follows:
Three months ended September 30,Nine months ended September 30,
(in thousands)20212020$ Change20212020$ Change
Adjusted gross profit
B&W Renewable segment$17,381 $32,092 $(14,711)$34,106 $48,401 $(14,295)
B&W Environmental segment7,870 6,874 996 20,483 16,628 3,855 
B&W Thermal segment21,307 20,623 684 75,948 63,788 12,160 
$46,558 $59,589 $(13,031)$130,537 $128,817 $1,720 

B&W Renewable Segment Results
Three months ended September 30,Nine months ended September 30,
(in thousands)20212020$ Change20212020$ Change
Revenues$38,000 $39,062 $(1,062)$105,155 $118,570 $(13,415)
Adjusted EBITDA$11,399 $23,575 $(12,176)$15,030 $22,003 $(6,973)
Adjusted gross profit$17,381 $32,092 $(14,711)$34,106 $48,401 $(14,295)
Adjusted gross profit %45.7 %82.2 %32.4 %40.8 %

Three Months Ended September 30,March 31, 2022 and 2021 and 2020

Revenues in the B&W Renewable segment decreased 3%, or $1.1increased by$35.8 millionto $38.0$204.0 million in the third quarter of 2021three months ended March 31, 2022 as compared to $39.1$168.2 million in the corresponding period of 2020.three months ended March 31, 2021. The reduction in revenueincrease is primarily dueattributable to higher volume driven by new-
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build projects and the completionacquisitions of large serviceFosler Construction and licensing projectsVODA within our Renewable segment, the acquisitions of Fossil Power Systems and Optimus Industries within our 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 global economy as a result of the ongoing Russia-Ukraine military conflict adversely impacted each of our segments causing shortages of supplies and materials and affecting the timing of revenue on several projects. Segment specific changes are discussed in further detail in the third quarter of 2020 compared to current volume in the third quarter of 2021.sections below.

Adjusted EBITDA in the B&W Renewable segment decreased $12.2Net loss improved by $6.8 million to $11.4from a net loss of $15.4 million in the third quarterthree months ended March 31, 2021 to a net loss of 2021 compared to $23.6$8.7 million in the corresponding periodthree months ended March 31, 2022. Operating loss increased $0.3 million to an operating loss of 2020.$6.8 million in the three months ended March 31, 2022 as compared to an operating loss of $6.5 million in the three months ended March 31, 2021. The decrease is primarily due to the non-recurring loss recovery of $26.0$1.9 million gain on sale recognized in thirdthe prior years quarter related to the sale of 2020 under an October 10, 2020 settlement agreement with an insurer in connection with five ofcertain real property assets at the six European B&W Renewable EPC loss contracts,Copley, Ohio location as described in Note 4.

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Table21 to the Condensed Consolidated Financial Statements included in Part I, Item 1 of Contents
Adjusted gross profitthis Quarterly Report. Restructuring expenses, advisory fees, research and development, depreciation and amortization expense, pension and other postretirement benefit plans, foreign exchange, and income taxes are discussed in further detail in the B&W Renewable segment decreased $14.7 million, to $17.4 million in the third quarter of 2021 compared to $32.1 million in the corresponding period of 2020. The decrease is primarily due to the non-recurring loss recovery of $26.0 million recognized in third quarter of 2020 under an October 10, 2020 settlement agreement with an insurer in connection with five of the six European B&W Renewable EPC loss contracts, as described in Note 4.

Nine Months Ended September 30, 2021 and 2020

Revenues in the B&W Renewable segment decreased 11%, or $13.4 million to $105.2 million in the nine months ended September 30, 2021 compared to $118.6 million in the corresponding period of 2020. The reduction in revenue is primarily due to lower volume in the first nine months of 2021 coupled with the completion of prior year large service and licensing projects that have not been replaced.

Adjusted EBITDA in the B&W Renewable segment decreased $7.0 million, to $15.0 million in the nine months ended September 30, 2021 compared to $22.0 million in the corresponding period of 2020. The decrease is primarily due to lower volume and the non-recurring loss recovery of $26.0 million recognized in third quarter of 2020 under an October 10, 2020 settlement agreement with an insurer in connection with five of the six European B&W Renewable EPC loss contracts, as described in Note 4.

Adjusted gross profit in the B&W Renewable segment decreased $14.3 million, to $34.1 million in the third quarter of 2021 compared to $48.4 million in the corresponding period of 2020. The decrease is primarily due to lower volume and the non-recurring loss recovery of $26.0 million recognized in third quarter of 2020 under an October 10, 2020 settlement agreement with an insurer in connection with five of the six European B&W Renewable EPC loss contracts, as described in Note 4.

B&W Environmental Segment Results
Three months ended September 30,Nine months ended September 30,
(In thousands)20212020$ Change20212020$ Change
Revenues$38,249 $25,262 $12,987 $97,767 $76,354 $21,413 
Adjusted EBITDA$3,471 $2,177 $1,294 $7,270 $1,408 $5,862 
Adjusted gross profit$7,870 $6,874 $996 $20,483 $16,628 $3,855 
Adjusted gross profit %20.6 %27.2 %21.0 %21.8 %

Three Months Ended September 30, 2021 and 2020

Revenues in the B&W Environmental segment increased 51%, or $13.0 million to $38.2 million in the third quarter of 2021 compared to $25.3 million in the corresponding period of 2020. The increase is primarily driven by increased volume in our ASH project business as well as higher overall project activity in the current quarter as compared to the prior quarter which was impacted due to the postponement of new projects as a result of COVID-19.

Adjusted EBITDA in the B&W Environmental segment was $3.5 million in the third quarter of 2021 compared to $2.2 million in the corresponding period of 2020. The increase is driven primarily by the higher volume, as described above partially offset by an increase in shared resources.

Adjusted gross profit in the B&W Environmental segment increased $1.0 million to $7.9 million in the third quarter of 2021 compared to $6.9 million in the corresponding period of 2020. The increase is primarily attributable to the increase in volume, as described above partially offset by an increase in shared resources.

Nine Months Ended September 30, 2021 and 2020

Revenues in the B&W Environmental segment increased 28%, or $21.4 million to $97.8 million in the nine months ended September 30, 2021 compared to $76.4 million in the corresponding prior year period of 2020. The increase is primarily driven by increased volume in our ASH project business as well as projects which were previously postponed due to COVID-19 in the prior periods being released in the current period.

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Adjusted EBITDA in the B&W Environmental segment was $7.3 million in the nine months ended September 30, 2021 compared to $1.4 million in the corresponding prior year period of 2020. The increase is driven primarily by the higher volume, as described above, and a $1.3 million charge recognized in the prior period related to completion of two B&W Environmental Loss Contracts as compared to a $0.4 million improvement recognized in the current period on those same projects, as described in Note 4.

Adjusted gross profit in the B&W Environmental segment increased $3.9 million to $20.5 million in the nine months ended September 30, 2021 compared to $16.6 million in the corresponding prior year period of 2020. The increase is primarily attributable to the increase in volume and a $1.3 million charge recognized in the prior period related to completion of two B&W Environmental Loss Contracts as compared to a $0.4 million improvement recognized in the current period on those same projects, as described in Note 4.

B&W Thermal Segment Results
Three months ended September 30,Nine months ended September 30,
(In thousands)20212020$ Change20212020$ Change
Revenues$83,819 $70,025 $13,794 $328,416 $223,920 $104,496 
Adjusted EBITDA$9,205 $7,287 $1,918 $32,066 $22,879 $9,187 
Adjusted gross profit$21,307 $20,623 $684 $75,948 $63,788 $12,160 
Adjusted gross profit %25.4 %29.5 %23.1 %28.5 %

Three Months Ended September 31, 2021 and 2020

Revenues in the B&W Thermal segment increased 20%, or $13.8 million, to $83.8 million in the third quarter of 2021 compared to $70.0 million generated in the corresponding period of 2020. The revenue increase is attributable to a higher level of activity in our project business than in the comparable prior year quarter which was negatively impacted by COVID-19.

Adjusted EBITDA in the B&W Thermal segment increased $1.9 million to $9.2 million in the third quarter of 2021 compared to $7.3 million in the corresponding period of 2020. The increase is due to higher volume as described above offset partially by product mix and an increase in shared resources due to higher volume.

Adjusted gross profit in the B&W Thermal segment increased $0.7 million, to $21.3 million in the third quarter of 2021, compared to $20.6 million in the corresponding period of 2020, which is mainly attributable to the increase in revenue as described above offset partially by product mix and an increase in shared resources due to higher volume.

Nine Months Ended September 31, 2021 and 2020

Revenues in the B&W Thermal segment increased 47%, or $104.5 million, to $328.4 million in the nine months ended September 30, 2021 compared to $223.9 million generated in the corresponding prior year period of 2020. The revenue increase is attributable to a higher level of activity on parts, construction, package boilers and international service orders which were all negatively impacted in the comparable prior year period due to COVID-19.

Adjusted EBITDA in the B&W Thermal segment increased $9.2 million to $32.1 million in the nine months ended September 30, 2021 compared to $22.9 million in the corresponding prior year period of 2020, which is mainly attributable to the increase in volume as described above offset partially by product mix, an increase in expenses due to growth in Asia and Middle East, and an increase in shared resources due to higher volume.

Adjusted gross profit in the B&W Thermal segment increased $12.2 million, to $75.9 million in the nine months ended September 30, 2021, compared to $63.8 million in the corresponding prior year period of 2020, which is consistent with the increase in revenue as described above offset partially by product mix, and an increase in shared resources due to higher volume.
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sections below.

Bookings and Backlog

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

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

Bookings represent changes to the backlog. Bookings include additions from booking new business, subtractions from customer cancellations or modifications, changes in estimates of liquidated damages that affect selling price and revaluation of backlog denominated in foreign currency. We believe comparing bookings on a quarterly basis or for periods less than one year is less meaningful than for longer periods, and that shorter-term changes in bookings may not necessarily indicate a material trend.
Three months ended September 30,Nine months ended September 30,Three Months Ended March 31,
(In approximate millions)2021202020212020
(in approximate millions)(in approximate millions)20222021
B&W Renewable(1)
B&W Renewable(1)
$103 $26 $184 $91 
B&W Renewable(1)
$101 $37 
B&W EnvironmentalB&W Environmental22 41 90 98 B&W Environmental37 41 
B&W ThermalB&W Thermal48 114 236 294 B&W Thermal101 91 
Other/eliminations— (4)— (5)
BookingsBookings$173 $177 $510 $478 Bookings$239 $169 
(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 third quarter ofthree months ended March 31, 2022 and 2021 and 2020 was $3.6$6.0 million and $(6.4) million, respectively. The foreign exchange impact on B&W Renewable bookings in the nine months ended September 30, 2021 and 2020 was $8.1 million and $(7.0)$7.0 million, respectively.

Our backlog as of September 30,March 31, 2022 and 2021 and 2020 was as follows:
As of September 30,As of March 31,
(In approximate millions)20212020
(in approximate millions)(in approximate millions)20222021
B&W Renewable(1)
B&W Renewable(1)
$313 $196 
B&W Renewable(1)
$440 $215 
B&W EnvironmentalB&W Environmental101 107 B&W Environmental126 118 
B&W ThermalB&W Thermal130 208 B&W Thermal158 206 
Other/eliminationsOther/eliminations(4)(2)Other/eliminations(3)(4)
BacklogBacklog$540 $509 Backlog$721 $535 
(1)    B&W Renewable backlog at September 30, 2021,March 31, 2022, includes $152.8$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.
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Of the backlog at September 30, 2021,March 31, 2022, we expect to recognize revenues as follows:
(In approximate millions)20212022ThereafterTotal
(in approximate millions)(in approximate millions)20222023ThereafterTotal
B&W RenewableB&W Renewable$60 $76 $177 $313 B&W Renewable$233 $68 $139 $440 
B&W EnvironmentalB&W Environmental32 42 27 101 B&W Environmental88 14 24 126 
B&W ThermalB&W Thermal69 58 3 130 B&W Thermal125 29 4 158 
Other/eliminationsOther/eliminations(4)— — (4)Other/eliminations(3)— — (3)
Expected revenue from backlogExpected revenue from backlog$157 $176 $207 $540 Expected revenue from backlog$443 $111 $167 $721 

Non-GAAP Financial Measures

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)20222021
Net loss$(8,684)$(15,443)
Interest expense12,324 14,509 
Income tax expense1,230 2,836 
Depreciation & amortization6,202 4,058 
EBITDA11,072 5,960 
Benefit plans, net(7,452)(9,098)
Gain on sales, net(20)(2,362)
Stock compensation1,319 7,829 
Restructuring activities and business services transition costs2,688 993 
Advisory fees for settlement costs and liquidity planning1,032 1,978 
Litigation costs2,528 380 
Acquisition pursuit and related costs843 — 
Product development (1)
852 — 
Foreign exchange(3,085)1,209 
Financial advisory services375 933 
Contract step-up purchase price adjustment1,745 — 
Loss from business held for sale— 483 
Other - net123 266 
Adjusted EBITDA$12,020 $8,571 
(1) Costs associated with development of commercially viable products that are ready to go to market.


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Three Months Ended March 31,
(in thousands)20222021
Adjusted EBITDA
B&W Renewable segment$1,455 $204 
B&W Environmental segment1,439 1,105 
B&W Thermal segment14,154 10,535 
Corporate(4,373)(2,685)
Research and development costs(655)(588)
$12,020 $8,571 

B&W Renewable Segment Results
Three Months Ended March 31,
(in thousands)20222021$ Change
Revenues$67,961 $28,811 $39,150 
Adjusted EBITDA$1,455 $204 $1,251 

Three Months Ended March 31, 2022 and 2021

Revenues in the B&W Renewable segment increased $39.2 million, to $68.0 million in the three months ended March 31, 2022 compared to $28.8 million in the three months ended March 31, 2021. The increase in revenue is primarily due to the acquisitions of ContentsFosler Construction and VODA and higher volume of new-build projects.

Adjusted EBITDA in the B&W Renewable segment increased $1.3 million, to $1.5 million in the three months ended March 31, 2022 compared to $0.2 million in the three months ended 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,
(in thousands)20222021$ Change
Revenues$34,948 $31,160 $3,788 
Adjusted EBITDA$1,439 $1,105 $334 

Three Months Ended March 31, 2022 and 2021

Revenues in the B&W Environmental segment increased 12%, or $3.8 million to $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
Three Months Ended March 31,
(In thousands)20222021$ Change
Revenues$102,239 $108,281 $(6,042)
Adjusted EBITDA$14,154 $10,535 $3,619 

Three Months Ended March 31, 2022 and 2021
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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 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 and restructuring initiatives benefiting the current year, which more than offset the overall decrease in volume, as described above.

Corporate

Corporate costs in adjusted EBITDA include SG&A expenses that are not allocated to the reportable segments. These costs include, among others, certain executive, compliance, strategic, reporting and legal expenses associated with governance of the total organization and being an SEC registrant. Corporate costs increased $1.0$1.7 million to $5.9$4.4 million in three months ended March 31, 2022 as compared to $4.9$2.7 million incurred forin the three months ended September 30, 2021 and 2020, respectively.March 31, 2021. The increase is primarily due to higher incentive compensation costs recognized for the third quarter ended September 30, 2021.

Corporate costs decreased $1.3 million to $11.5 million compared to $12.9 million incurred for the nine months ended September 30, 2021increased tax services and 2020, respectively. The decrease is primarily due to lower audit fees, personnel, director fees and insurance costs, offset by higher incentive compensation costs recognized in the first nine months of 2021.fees.

Advisory Fees and Settlement Costs

Advisory fees and settlement costs decreased by $2.0costs increased $0.6 million to $1.8$3.9 million in the third quarter of 2021 three months ended March 31, 2022 as compared to $3.8$3.3 million in the corresponding period of 2020 and advisory2021. The increase is primarily related to higher legal fees and settlementother costs decreased $0.4 million to $9.7 millionincurred in the nine months ended September 30, 2021 as compared to $10.1 million in the corresponding period of 2020. The change is primarily due to decreased use of external consultants in the third quarter of 2021.current quarter.

Research and Development

Our research and development activities are focused on improving our products through innovations to reduce thetheir cost of our products and make them more competitive, as well as to reduce performance risk of our products to better meet our and our customers'customers’ expectations. Research and development (benefit) expenses remained relatively unchanged and totaled $(0.2)$0.7 million and $1.4$0.6 million in the third quarter of 2021 and 2020, respectively, and totaled $1.0 million and $3.9 million in the ninethree months ended September 30,March 31, 2022 and 2021, and 2020, respectively. The $(0.2) million benefit in the third quarter of 2021 resulted from the recognition of a foreign research and development refundable credit of $0.8 million from the 2020 tax year. Excluding the effects of the refundable credit, the decreases for the three and nine months ending September 30, 2021 resulted primarily from timing of specific research and development efforts.

Restructuring

Restructuring actions across our business units and corporate functions resulted in $4.6$0.1 million and $2.4 million in the third quarter of 2021 and 2020, respectively, and totaled $8.0 million and $6.7$1.0 million of expense in the ninethree months ended September 30,March 31, 2022 and 2021, and 2020, respectively. The decrease of $0.9 million for the three months ended March 31, 2022 is due to a lower level of restructuring actions compared to the prior year comparable quarter. For the three months ended March 31, 2021, the charges primarily consist of severance and business service transition costs related to actions taken, including as part of the Company’s strategic, market-focused organizational and re-branding initiativeinitiatives.

Transition Costs

Transition costs across our corporate and business functions resulted in $2.6 million of expense in the three months ended 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.

Depreciation and Amortization

Depreciation expense was $2.3$2.2 million and $2.7 million in the third quarter of 2021 and 2020, respectively and depreciation expense was $7.4 million and $8.2 million in the ninethree months ended September 30,March 31, 2022 and 2021, and 2020, respectively.

Amortization expense was $2.1$4.0 million and $1.4 million in the third quarter of 2021 and 2020, respectively and amortization expense was $5.5 million and $4.1 million in the ninethree months ended September 30,March 31, 2022 and 2021, and 2020, respectively.

Pension and Other Postretirement Benefit Plans
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We recognize benefits from our defined benefit and other postretirement benefit plans based on actuarial calculations primarily because our expected return on assets is greater than our service cost. Service cost is low because our plan benefits are frozen except for a small number of hourly participants. Pension benefits before MTM were $7.6 million and $7.3 million in the third quarter of 2021 and 2020, respectively. Pension benefits before MTM were $22.6 million and $22.3 million in the nine months ended September 30, 2021 and 2020, respectively.

Our pension costs also include MTMmark-to-market ("MTM") adjustments from time to time. Interim MTM chargestime 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
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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. Total MTM adjustments for our pension benefit plans were gains of $2.3 million for the three and nine months ended September 30, 2021. There were no MTM adjustments for our other postretirement benefit plans during the three and nine months ended September 30, 2021. There were no MTM adjustments for our pensionMarch 31, 2022 and other postretirement benefit plans during the three and nine months ended September 30, 2020.2021, respectively.

Other than service cost of $0.2 million and $0.2 million in the third quarter of 2021 and 2020, respectively, and $0.7 million and $0.6 million in the nine months ended September 30, 2021 and 2020, respectively, which are related to the small number of hourly participants still accruing benefits within the Babcock & Wilcox Thermal segment, pension benefit and MTM adjustments are excluded from the results of our segments.

The costs and funding requirements of our pension and postretirement benefit plans depend on our various assumptions, including estimates of rates of return on benefit-related assets, discount rates for future payment obligations, rates of future cost growth, mortality assumptions and trends for future costs. Variances from these estimates could have a material adverse effect on us. Our policy to recognize these variances annually through MTM accounting could result in volatility in our results of operations, which could be material. The funding obligations for the Company’s pension plans are impacted by the performance of the financial markets, particularly the equity markets, and interest rates. If the financial markets do not provide the long-term returns that are expected, or discount rates increase the present value of liabilities, the Company could be required to make larger contributions. Refer to Note 1211 to the Condensed Consolidated Financial Statements for further information regarding our pension and other postretirement plans.

Foreign Exchange

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

Foreign exchange was a gain/gain (loss) of $(1.7)$3.1 million and $25.0$(1.2) million for the third quarter of 2021 and 2020, respectively, and a gain/(loss) of $(1.1) million and $22.7 million for the ninethree months ended September 30,March 31, 2022 and 2021, and 2020, respectively. Foreign exchange gains and losses are primarily related to unhedged intercompany loans denominated in European currencies to fund foreign operations.

Income Taxes
Three months ended September 30,Nine months ended September 30,Three Months Ended March 31,
(In thousands, except for percentages)(In thousands, except for percentages)20212020$ Change20212020$ Change(In thousands, except for percentages)20222021
Income (loss) before income taxes$13,949 $34,053 $(20,104)$8,029 $(17,580)$25,609 
Income tax expense (benefit)$301 $(502)$803 $6,683 $(467)$7,150 
Loss before income taxesLoss before income taxes$(7,454)$(12,607)
Income tax expenseIncome tax expense$1,230 $2,836 
Effective tax rateEffective tax rate2.2 %(1.5)%83.2 %2.7 %Effective tax rate(16.5)%(22.5)%

Our income tax expense in the thirdfirst quarter of 20212022 reflects a full valuation allowance against our net deferred tax assets, except in Mexico, Canada, the United Kingdom, Brazil, Finland, Germany, Thailand, the Philippines, Indonesia, and Sweden. Deferred tax assets are evaluated each period to determine whether realization is more likely than not. Valuation allowances are established when management determines it is more likely than not that some portion, or all, of the deferred tax assets will not be realized. Valuation allowances may be removed in the future if sufficient positive evidence exists to outweigh the negative evidence under the framework of ASC 740, Income Taxes.

Our effective tax rate for the thirdfirst quarter of 20212022 is not reflective of the United States statutory rate primarily due to a valuation allowance against certain net deferred tax assets and favorableunfavorable discrete items,items. including return to provision adjustments. In certain jurisdictions (namely, Denmarkthe United States and Italy) where the Company anticipates a loss for the fiscal year or incurs a loss for the year-to-date period for which a tax benefit cannot be realized in accordance with ASC 740, the Company excludes the loss in that jurisdiction from the overall computation of the estimated annual effective tax rate. For the period ended September 30, 2021, the United States was not considered a loss jurisdiction and was included in the estimated annual effective tax rate.

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In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes. ASU No. 2019-12 removes certain exceptions to the general principles in Topic 740, primarily related to intraperiod tax allocation, recognizing deferred tax liabilities for changes in ownership of foreign equity method investments or foreign subsidiaries, and exception to the general methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year. The Company adopted ASU No. 2019-12 on January 1, 2021, on a prospective basis. The adoption did not have a material impact on our interim consolidated financial statements, estimated income for the full fiscal year 2021, or to the trend of earnings.

Liquidity and Capital Resources

Liquidity

Our primary liquidity requirements include debt service, funding of dividends on preferred stock and working capital needs. We fund our liquidity requirements primarily through cash generated from operations, external sources of financing, including our, recent Revolving Credit Agreement, Senior Notes, andsenior notes, equity offerings, including our Preferred Stock, each ofand revolving credit agreement which are described below and in the Notes to our Condensed Consolidated Financial Statements included in Part I, Item 1I of this Quarterly Report in further detail along with other sources of liquidity.

We recently
40

During the first quarter of 2022, we executed the following actions:

•in June 2021,on February 1, 2022, we issued 2,916,880 sharesacquired 100% ownership of our Preferred Stock and paid $0.4Fossil Power Systems, Inc. for approximately $59.1 million, in cash to B. Riley, a related party, in exchange for a deemed prepayment of $73.3 million of our then existing Tranche A-3 term loan and paid $0.9 million in cash for accrued interest due to B. Riley,excluding working capital adjustments as described in Note 1421 to the Condensed Consolidated Financial Statements included in Part I, Item 1I of this Quarterly Report. As a result of such deemed prepayment, the total amount outstanding under our Last Out Term Loans was reduced to zero;Report;
•on June 30, 2021 and September 30, 2021,February 28, 2022, we paid dividends on our outstanding Preferred Stock totaling $1.7acquired 100% ownership of Optimus Industries, LLC for approximately $19.0 million, and $3.7 million, respectively,excluding working capital adjustments as described in Note 1621 to the Condensed Consolidated Financial Statements included in Part I, Item 1I of this Quarterly Report; and
•on June 30, 2021, we entered intoduring the Revolving Credit Agreement with PNC, as administrative agentfirst quarter of 2022, the Company sold $2.0 million aggregate principal of 8.125% Senior Notes and swing loan lender which provides for an up to $50.0 million asset-based revolving credit facility, including a $15 million letter of credit sublimit and a $5 million swingline sublimit. In addition, we entered into the Letter of Credit Agreement with PNC, pursuant to which PNC has agreed to issue up to $110 million in letters of credit secured in part by cash collateral provided by an affiliate of MSD. Lastly, we entered into the Reimbursement Agreement with MSD, as administrative agent, and the cash collateral providers from time to time party thereto, pursuant to which we shall reimburse MSD and any other cash collateral provider to the extent the up to $110received $2.0 million of 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,net proceeds as described in Note 1512 to the Condensed Consolidated Financial Statements included in Part I, Item 1I of this Quarterly Report;Report.
•
in August 2021, we completed the sale of certain real property assets at our Lancaster, Ohio location for $18.9 million. We received $15.8 million of net proceeds after adjustments
See Note 12, Note 13, Note 14 and expenses and recognized a gain on sale of $13.9 million. In conjunction with the sale, we executed a leaseback agreement commencing August 13, 2021 and expiring on August 31, 2041;
•as of September 30, 2021, we issued an additional $25.6 million aggregate principal amount of Senior Notes for $26.0 million net proceeds under the March 31, 2021 sales agreement as described in Note 1321 to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report;
•as of September 30, 2021, we issued additional shares of our Preferred Stock for $5.9 million net proceeds under the sales agreement as described in Note 16 to the Condensed Consolidated Financial Statements included in Part I Item 1 of this Quarterly Report; and
•on September 30, 2021, we acquired a 60% controlling ownership stake in Illinois-based solar energy contractor Fosler Construction Company Inc. (“Fosler Construction”) for approximately $27.2 million in cash plus a contingent consideration arrangement, preliminarily valued at $6.2 million, with a maximum value up to $10.0 million if a certain revenue target is achieved in 2022.

See Note 13, Note 14, Note 15, Note 16, Note 17 and Note 24 to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report for additional information on our external sources of financing and equity offerings.

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Beginning in April 2020 and continuing as of November 10, 2021, as part of the Company’s response to the impact of the COVID-19 pandemic on its business, the Company continues to take a number of cash conservation and cost reduction measures which include:

•suspension of our 401(k) company match for U.S. employees, however, the Company is implementing a new 401(k) company match for U.S. employees starting January 1, 2022;
•utilizing options for government loans and programs in the U.S. and abroad that are appropriate and available; and
•deferring the remaining $20.9 million of the estimated Pension Plan contribution payments of $45.6 million that would have been due during 2021, in accordance with the American Rescue Plan Act of 2021 (the “ARPA relief plan”) signed into law in March 2021. In January 2021, we made Pension Plan contributions of $23.1 million, excluding interest.

Cash and Cash Flows

At September 30, 2021,March 31, 2022, our unrestricted cash and cash equivalents totaled $107.1$108.1 million and we had total debt of $193.1 million.$343.8 million as well as $191.7 million of gross preferred stock outstanding. Our foreign business locations held $39.2$35.9 million of our total unrestricted cash and cash equivalents at September 30, 2021.March 31, 2022. In general, our foreign cash balances are not available to fund our U.S. operations unless the funds are repatriated or used to repay intercompany loans made from the U.S. to foreign entities, which could expose us to taxes we presently have not made a provision for in our results of operations. We presently have no plans to repatriate these funds to the U.S..U.S. In addition, we had $6.9$1.9 million of restricted cash at September 30, 2021March 31, 2022 related to collateral for certain letters of credit.

Cash used in operations was $107.8$42.0 million in the ninethree months ended September 30, 2021,March 31, 2022, which is primarily represented inattributable to the $47.1net loss, $10.0 million changereduction in pension, postretirement and employee benefit liabilities and a $70.9$13.2 million net decrease in operating cash outflows associated with changes in working capital. In the ninethree months ended September 30, 2020,March 31, 2021, cash used in operations was $67.3$54.0 million which is primarily represented in the result of our net loss, of continuing operations, the increase in accounts receivable - other from recognizing the non-recurring loss recovery insurance settlement of $26.0 million described in Note 4, the change in pension, postretirement and employee benefit liabilities and the impact of fluctuating foreign currency exchange rates.liabilities. There was also was a $2.8$13.2 million net increasedecrease in operating cash outflows associated with changes in working capital.

Cash flows from investing activities used net cash of $5.9$65.4 million in the ninethree months ended September 30, 2021,March 31, 2022, primarily due to the acquisitionacquisitions of Fosler Constructionbusiness of $27.2$64.9 million and $4.2$1.0 million of capital expenditures, offset by proceeds from the sale of business and assets of $23.8 million.expenditures. In the ninethree months ended September 30, 2020,March 31, 2021, cash flows from investing activities provided net cash of $2.0$4.5 million, primarily related to $8.0$3.3 million proceeds from the settlement of remaining escrows associated with the sale of Palm Beach Resource Recovery Corporationbusiness, proceeds from asset disposals and MEGTEC and Universal businesses, offset by the net change in available-for-sale securities, and $2.3offset by $1.4 million of capital expenditures.

Cash flows from financing activities providedused net cash of $159.2$1.6 million in the ninethree months ended September 30, 2021,March 31, 2022, primarily related to the issuancepayment of commonthe preferred stock Senior Notes and Preferred Stockdividend of $3.7 million offset by $75.4 million Last Out Term Loans repayments, a $164.3 million net reduction on the prior U.S. Revolving Credit Facility and $16.7 millionsenior note proceeds of financing fees.$2.0 million. Cash flows from financing activities provided net cash of $52.4$35.9 million in the ninethree months ended September 30, 2020,March 31, 2021, primarily related to $60.0the $125.0 million face value borrowings from the Last Out Term Loansissuance of senior notes and $161.5 million common stock issuance, offset by $2.9$75.0 million oflast out term loans repayments, a $164.3 million net borrowings fromreduction on the prior U.S. Revolving Credit Facility and $10.3$7.7 million of financing fees.

Debt Facilities

As described above and in the NotesNote 12 to our Condensed Consolidated Financial Statements included in Part I, Item 1I of this Quarterly Report, on June 30, 2021, we entered into the Debt Facilities, including theReimbursement Agreement, Revolving Credit Agreement.Agreement and Letter of Credit Agreement (collectively, 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, a related party, has provided a guaranty of payment with regard to the Company’s obligations under the Reimbursement Agreement, as described below.Agreement. The Company expects to use the proceeds and letter of credit availability under the Debt Facilities for working capital purposes and general corporate purposes,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
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including to backstop certainCredit Agreement, usage consisted of $16.2 million of financial letters of credit issued under our previous A&R Credit Agreement, for which commitments were terminated, all loans were repaid and all outstanding and undrawn$90.8 million of performance letters of credit were collateralized on June 30, 2021.

Last Out Term Loans

Effective with the new debt facilities the Company entered into on June 30, 2021, as described in Note 15 to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report, the Company has no remaining Last Out Term Loans and no further borrowings thereunder are available.

The Company recognized a loss on debt extinguishment of $6.2 million in the quarter ended June 30, 2020, primarily representing the unamortized value of the original issuance discount and fees on the Tranche A-3 Last Out Term Loan.

See Note 14 to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report for additional information on our Last Out Term Loans.

A&R Credit Agreementcredit.

As described above, the A&R Credit Agreement commitments were terminated, all loans were repaid and all outstanding and undrawn lettersof March 31, 2022, a subsidiary has borrowed $1.7 million against a $3.5 million line of credit were collateralizedwith a variable interest rate on June 30, 2021. The Company recognized a gain on debt extinguishmentthe line of $6.5 millioncredit of 5.0% per annum. On April 1, 2022, the line of credit was paid in the quarter ended June 30, 2021, primarily representing the write-off of accrued revolver fees of $11.3 million offset by the unamortized deferred financing fees of $4.8 million related to the prior A&R Credit Agreement.full and terminated.

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 September 30, 2021March 31, 2022 was $53.1$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 $21.7$34.8 million as of September 30, 2021.March 31, 2022. Of the outstanding letters of credit issued under the Letter of Credit Agreement, $29.8$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 those underwriters issue in support of some of our contracting activity. As of September 30, 2021,March 31, 2022, bonds issued and outstanding under these arrangements in support of contracts totaled approximately $157.6$221.5 million. The aggregate value of the letters of credit backstopping surety bonds was $13.1$9.2 million.

Our ability to obtain and maintain sufficient capacity under our newcurrent 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

During the nine months ended September 30, 2021,As of March 31, 2022, our Denmark subsidiary receivedhas three unsecured interest freeinterest-free loans totaling $3.4$3.3 million under a local government loan program related to COVID-19. The loans of $0.8 million, $1.7$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 long term loans payables in our Condensed Consolidated Balance Sheets. Subsequent to March 31, 2022, the loan due April 2022 was repaid on April 1, 2022.

As of September 30, 2021, for our recent acquisition of a 60% controlling ownership stake in Fosler Construction Company Inc. (“Fosler Construction”) as described in Note 24,March 31, 2022, Fosler Construction has two loans totaling $7.6$8.9 million. Both loans have a variable interest rate with a minimum rate of 6%6.0% and are payable January 1,due June 30, 2022. In addition, Fosler Construction also has loans primarily for vehicles and equipment totaling $0.9$0.6 million at September 30, 2021.March 31, 2022. The vehicle and equipment loans are included in long term loans payables in our Condensed Consolidated Balance Sheets.

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Off-Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements that have, or are reasonably expected to have, a material current or future effect on its financial condition, results of operations, liquidity, capital expenditures or capital resources at September 30, 2021.March 31, 2022.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

For a summary of the critical accounting policies and estimates that we use in the preparation of our unaudited Condensed Consolidated Financial Statements, see “Critical"Critical Accounting Policies and Estimates”Estimates" in our Annual Report.Report for the year ended December 31, 2021. There have been no significant changes to our policies during the ninethree months ended September 30, 2021.March 31, 2022.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Our exposures to market risks have not changed materially from those disclosed under “Quantitative"Quantitative and Qualitative Disclosures About Market Risk”Risk" in our Annual Report on Form 10-K for the year ended December 31, 2020.2021.
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Item 4. Controls and Procedures

Disclosure Controls and Procedures

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

On September 30, 2021, we acquired a 60% controlling ownership in Fosler Construction, as described in Note 24 of the unaudited condensed consolidated financial statements in Part I of this report. As the acquisition occurred during the last 12 months, the scope of our assessment of the effectiveness of disclosure controls and procedures does not include internal control over financial reporting related to the Fosler Construction acquisition. This exclusion is in accordance with the SEC's general guidance that an assessment of a recently acquired business may be omitted from our internal control over financial reporting scope in the year of acquisition.

Based on the evaluation referred to above, our Chief Executive Officer and Chief Financial Officer concluded that the design and operation of our disclosure controls and procedures are effective as of September 30, 2021March 31, 2022 to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission, and such information is accumulated and communicated to management as appropriate to allow timely decisions regarding disclosure.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the ninethree months ended September 30, 2021March 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. We have not experienced any material impact to our internal controls over financial reporting, despite the fact that some of our team members are working remotely in response to the COVID-19 pandemic. We are continually monitoring and assessing the COVID-19 situationthese situations on our internal controls to ensure their operating effectiveness.

PART II - OTHER INFORMATION
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Item 1. Legal Proceedings

For information regarding ongoing investigations and litigation, see Note 2017 to the unaudited Condensed Consolidated Financial Statements included in Part I, Item 1I of this Quarterly Report, which we incorporate by reference into this Item.

Item 1A. Risk Factors

We are subject to various risks and uncertainties in the course of our business. The discussion of such risks and uncertainties may be found under “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 and
in our Quarterly Report on Form 10-Q for2021. Other than the quarter ended March 31, 2021 and June 30, 2021 and other filings with the SEC since the date of the Form 10-K. Thereadditional risk factor set forth below there have been no material changes to the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2021.

The ongoing invasion of Ukraine by Russia may continue to adversely affect our business and results of operations.

The ongoing invasion of Ukraine by Russia, and the global response to it, may continue to adversely affect our business and results of operations. The military conflict between Russia and Ukraine has caused significant volatility and disruptions to the global markets, including shortages of supplies and materials necessary for our business. For example, the conflict can impact our ability to place orders for materials, such risk factors.as steel, in Europe, and may more broadly impact lead times for materials globally. It is not possible to predict the short- and long-term implications of this conflict, which could include but are not limited to further uncertainty about economic and political stability, delays in access to supplies and materials, increases in inflation rate and energy prices and adverse effects on currency exchange rates and financial markets. As described in our Business Overview and Results of Operations included in Part I, Item II and Note 17 to the Condensed Consolidated Financial Statements included in Part I, Item I of this Quarterly Report, the conflict has resulted in shortages of supplies and materials and delays in the timing of revenue. We continue to monitor the situation closely and are proactively assessing and evaluating alternative sources to bolster our supplies and materials moving forward.

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

In accordance with the provisions of the employee benefit plans, the Company acquired the following shares in connection with the vesting of employee restricted stock that require us to withhold shares to satisfy employee statutory income tax withholding obligations. The following table identifies the number of common shares and average price per share for each month during the quarter ended September 30, 2021.March 31, 2022. The Company does not have a general share repurchase program at this time.
(data in whole amounts)(data in whole amounts)(data in whole amounts)
PeriodPeriod
Total number of shares acquired (1)
Average price per shareTotal 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		Period
Total number of shares acquired (1)
Average price per shareTotal 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
July 2021— $— — $— 
August 2021198,609 $7.82 — $— 
September 2021— $— — $— 
January 2022January 202219,734 $8.65 — $— 
February 2022February 20226,833 $7.37 — $— 
March 2022March 2022— $— — $— 
TotalTotal198,609 $7.82 — $— Total26,567 $8.32 — $— 
(1) Acquired shares are recorded in treasury stock in our Condensed Consolidated Balance Sheets.

Item 6. Exhibits
2.1*
3.1
3.2
3.3
3.4
3.5
3.6
31.1
31.2
32.1
32.2
101.SCHXBRL Taxonomy Extension Schema Document.
101.CALXBRL Taxonomy Extension Calculation Linkbase Document.
101.LABXBRL Taxonomy Extension Label Linkbase Document.
101.PREXBRL Taxonomy Extension Presentation Linkbase Document.
101.DEFXBRL Taxonomy Extension Definition Linkbase Document.
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104Cover Page Interactive Data File (embedded within the inline XBRL document)
*Certain schedules and exhibits to this agreement have been omitted pursuant to Item 601(b)(2) of Regulation S-K. A copy of any omitted schedule and/or exhibit will be furnished to the SEC upon request.

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SIGNATURES

Pursuant to the requirements of the Section 13 or 15(d) of Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

BABCOCK & WILCOX ENTERPRISES, INC.
November 10, 2021May 9, 2022By:/s/ Louis Salamone
Louis Salamone
Executive Vice President, Chief Financial Officer and Chief Accounting Officer
(Principal Financial and Accounting Officer and Duly Authorized Representative)










































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