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 ~~March 31,~~September 30, 2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No. 001-36876

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ 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 ~~May 2,~~October 31, 2022 was ~~86,337,832.~~88,633,634.

TABLE OF CONTENTS


		PAGE
Cautionary Statement Concerning Forward-Looking Information		3
PART I - FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements	3
	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended ~~March 31,~~September 30, 2022 and 2021 (Unaudited)	4
	Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended ~~March 31,~~September 30, 2022 and 2021 (Unaudited)	5
	Condensed Consolidated Balance Sheets as of ~~March 31,~~September 30, 2022 and December 31, 2021 (Unaudited)	6
	Condensed Consolidated Statement of Stockholders' ~~Equity~~ (Deficit) E quity for ~~each of~~ the Three ~~Month Periods~~Months Ended March 31, June 30, and September 30 2022, and 2021 (Unaudited)	7
	Condensed Consolidated Statements of Cash Flows for the ~~Three~~Nine Months Ended ~~March 31,~~September 30, 2022 and 2021 (Unaudited)	89
	Notes to Condensed Consolidated Financial Statements	1011
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operation	3338
	Overview	3338
	Results of Operations - Three and Nine Months Ended ~~March 31,~~September 30, 2022 and 2021	3440
	Liquidity and Capital Resources	4049
	Critical Accounting Policies and Estimates	4251
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	4251
Item 4.	Controls and Procedures	4351
PART I III - OTHER INFORMATION
Item 1.	Legal Proceedings	4352
Item 1A.	Risk Factors	4352
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4352
Item 6.	Exhibits	4452
SIGNATURES		4654

***** Cautionary Statement Concerning Forward-Looking Information *****

This Quarterly Report on Form 10-Q, including Management's Discussion and Analysis of Financial Condition and Results of Operations, contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical or current fact included in this Quarterly Report are forward-looking statements. You should not place undue reliance on these statements. Forward-looking statements include words such as “expect,” “intend,” “plan,” “likely,” “seek,” “believe,” “project,” “forecast,” “target,” “goal,” “potential,” “estimate,” “may,” “might,” “will,” “would,” “should,” “could,” “can,” “have,” “due,” “anticipate,” “assume,” “contemplate,” “continue” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operational performance or other events.

These forward-looking statements are based on management’s current expectations and involve a number of risks and uncertainties, including, among other things, the impact of COVID-19 or other similar global health crises, the impact of the ongoing conflict in Ukraine, the impact of global macroeconomic conditions, including inflation and ~~the invasion of Ukraine by Russia and~~volatility in the capital ~~markets and global economic climate generally;~~markets; our ability to integrate acquired businesses and the impact of those acquired businesses on our cash flows, results of operations and financial condition, including our recent acquisitions of Fosler Construction Company Inc. (also referred to as Fosler Solar and Fosler, herein), VODA A/S, Fossil Power Systems, Inc., and Optimus Industries, LLC; our recognition of any asset impairments as a result of any decline in the value of our assets or our efforts to dispose of any assets in the future; our ability to obtain and maintain sufficient financing to provide liquidity to meet our business objectives, surety bonds, letters of credit and similar financing; our ability to comply with the requirements of, and to service the indebtedness under, our debt facility agreements; our ability to pay dividends on our 7.75% Series A Cumulative Perpetual Preferred Stock; our ability to make interest payments on our 8.125% senior notes due 2026 and our 6.50% notes due 2026; the highly competitive nature of our businesses and our ability to win work, including identified project opportunities in our pipeline; general economic and business conditions, including changes in interest rates and currency exchange rates; cancellations of and adjustments to backlog and the resulting impact from using backlog as an indicator of future earnings; our ability to perform contracts on time and on budget, in accordance with the schedules and terms established by the applicable contracts with customers; failure by third-party subcontractors, partners or suppliers to perform their obligations on time and as specified; delays initiated by our customers; our ability to successfully resolve claims by vendors for goods and services provided and claims by customers for items under warranty; our ability to realize anticipated savings and operational benefits from our restructuring plans, and other cost savings initiatives; our ability to successfully address productivity and schedule issues in our B&W Renewable, B&W Environmental and B&W Thermal segments; our ability to successfully partner with third parties to win and execute contracts within our B&W Environmental, B&W Renewable and B&W Thermal segments; changes in our effective tax rate and tax positions, including any limitation on our ability to use our net operating loss carryforwards and other tax assets; our ability to successfully manage research and development projects and costs, including our efforts to successfully develop and commercialize new technologies and products; the operating risks normally incident to our lines of business, including professional liability, product liability, warranty and other claims against us; difficulties we may encounter in obtaining regulatory or other necessary permits or approvals; changes in actuarial assumptions and market fluctuations that affect our net pension liabilities and income; our ability to successfully compete with current and future competitors; our ability to negotiate and maintain good relationships with labor unions; changes in pension and medical expenses associated with our retirement benefit programs; social, political, competitive and economic situations in foreign countries where we do business or seek new business, and the other factors specified and set forth under "Risk Factors" in our periodic reports filed with the Securities and Exchange Commission, including our most recent annual report on Form 10-K filed on March 8, 2022.

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

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

PART I

ITEM 1. Condensed Consolidated Financial Statements

BABCOCK & WILCOX ENTERPRISES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


		Three Months Ended March 31,			Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands, except per share amounts)	(in thousands, except per share amounts)		2022			2021		(in thousands, except per share amounts)	2022		2021		2022		2021
Revenues	Revenues		$	204,049		$	168,248	Revenues	$	214,870	$	159,960	$	639,938	$	531,068
Costs and expenses:	Costs and expenses:							Costs and expenses:
Cost of operations	Cost of operations		163,060			131,385		Cost of operations	176,085		114,643		512,485		404,827
Selling, general and administrative expenses	Selling, general and administrative expenses		43,044			40,457		Selling, general and administrative expenses	39,356		38,206		127,351		112,367
Goodwill impairment								Goodwill impairment	7,224		—		7,224		—
Advisory fees and settlement costs	Advisory fees and settlement costs		3,935			3,291		Advisory fees and settlement costs	1,198		1,841		10,275		9,658
Restructuring activities	Restructuring activities		94			993		Restructuring activities	359		4,575		351		7,968
Research and development costs			719			588
Research and development costs (benefit)								Research and development costs (benefit)	994		(228)		2,850		969
Gain on asset disposals, net	Gain on asset disposals, net		(20)			(2,004)		Gain on asset disposals, net	(28)		(13,838)		(7,165)		(15,804)
Total costs and expenses	Total costs and expenses		210,832			174,710		Total costs and expenses	225,188		145,199		653,371		519,985
Operating loss			(6,783)			(6,462)
Operating (loss) income								Operating (loss) income	(10,318)		14,761		(13,433)		11,083
Other expense:	Other expense:							Other expense:
Interest expense	Interest expense		(11,267)			(14,223)		Interest expense	(11,320)		(8,330)		(33,249)		(30,574)
Interest income	Interest income		117			109		Interest income	103		130		323		385

Gain on sale of business			—			358
Gain on debt extinguishment								Gain on debt extinguishment	—		—		—		6,530
Loss on sale of business								Loss on sale of business	—		—		—		(2,240)
Benefit plans, net	Benefit plans, net		7,452			9,098		Benefit plans, net	7,424		9,867		22,279		24,889
Foreign exchange	Foreign exchange		3,085			(1,209)		Foreign exchange	(2,007)		(1,673)		(3,218)		(1,056)
Other expense – net			(58)			(278)
Total other expense			(671)			(6,145)
Loss before income tax expense			(7,454)			(12,607)
Other income (expense) – net								Other income (expense) – net	454		(806)		(169)		(988)
Total other expense, net								Total other expense, net	(5,346)		(812)		(14,034)		(3,054)
(Loss) income before income tax expense								(Loss) income before income tax expense	(15,664)		13,949		(27,467)		8,029
Income tax expense	Income tax expense		1,230			2,836		Income tax expense	4,902		301		4,777		6,683

Net loss			(8,684)			(15,443)
Net (loss) income								Net (loss) income	(20,566)		13,648		(32,244)		1,346
Net loss (income) attributable to non-controlling interest	Net loss (income) attributable to non-controlling interest		420			(21)		Net loss (income) attributable to non-controlling interest	2,800		(5)		3,647		(41)
Net loss attributable to stockholders			(8,264)			(15,464)
Net (loss) income attributable to stockholders								Net (loss) income attributable to stockholders	(17,766)		13,643		(28,597)		1,305
Less: Dividend on Series A preferred stock	Less: Dividend on Series A preferred stock		3,715			—		Less: Dividend on Series A preferred stock	3,715		3,681		11,145		5,412
Net loss attributable to stockholders of common stock			$	(11,979)		$	(15,464)
Net (loss) income attributable to stockholders of common stock								Net (loss) income attributable to stockholders of common stock	$	(21,481)	$	9,962	$	(39,742)	$	(4,107)

Basic loss per share			$	(0.14)		$	(0.22)
Basic (loss) earnings per share								Basic (loss) earnings per share	$	(0.24)	$	0.12	$	(0.45)	$	(0.05)

Diluted loss per share			$	(0.14)		$	(0.22)
Diluted (loss) earnings per share								Diluted (loss) earnings per share	$	(0.24)	0.11		$	(0.45)	$	(0.05)

Shares used in the computation of loss per share:
Shares used in the computation of (loss) earnings per share:								Shares used in the computation of (loss) earnings per share:
Basic	Basic		87,992			71,396		Basic	88,321		86,002		88,115		81,088
Diluted	Diluted		87,992			71,396		Diluted	88,321		86,964		88,115		81,088

See accompanying notes to Condensed Consolidated Financial Statements.

BABCOCK & WILCOX ENTERPRISES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)


		Three Months Ended March 31,			Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	(in thousands)		2022			2021		(in thousands)	2022		2021		2022		2021
Net loss			$	(8,684)		$	(15,443)
Net (loss) income								Net (loss) income	$	(20,566)	$	13,648	$	(32,244)	$	1,346
Other comprehensive (loss) income:	Other comprehensive (loss) income:							Other comprehensive (loss) income:
Currency translation adjustments ("CTA")	Currency translation adjustments ("CTA")		(4,285)			$	(70)	Currency translation adjustments ("CTA")	(13,344)		(1,292)		(24,263)		(2,840)

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

Benefit obligations:	Benefit obligations:							Benefit obligations:
Pension and post retirement adjustments, net of tax	Pension and post retirement adjustments, net of tax		593			198		Pension and post retirement adjustments, net of tax	198		197		593		593

Other comprehensive loss	Other comprehensive loss		(3,692)			(4,384)		Other comprehensive loss	(13,146)		(1,095)		(23,670)		(6,759)
Total comprehensive loss			(12,376)			(19,827)
Total comprehensive (loss) income								Total comprehensive (loss) income	(33,712)		12,553		(55,914)		(5,413)
Comprehensive income attributable to non-controlling interest	Comprehensive income attributable to non-controlling interest		461			3		Comprehensive income attributable to non-controlling interest	—		25		959		18
Comprehensive loss attributable to stockholders			$	(11,915)		$	(19,824)
Comprehensive (loss) income attributable to stockholders								Comprehensive (loss) income attributable to stockholders	$	(33,712)	$	12,578	$	(54,955)	$	(5,395)

See accompanying notes to Condensed Consolidated Financial Statements.

BABCOCK & WILCOX ENTERPRISES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS


(in thousands, except per share amount)	(in thousands, except per share amount)	March 31, 2022		December 31, 2021		(in thousands, except per share amount)	September 30, 2022		December 31, 2021
Cash and cash equivalents	Cash and cash equivalents	$	108,137	$	224,874	Cash and cash equivalents	$	48,471	$	224,874
Restricted cash and cash equivalents		8,833		1,841
Current restricted cash and cash equivalents						Current restricted cash and cash equivalents	9,630		1,841
Accounts receivable – trade, net	Accounts receivable – trade, net	170,464		132,068		Accounts receivable – trade, net	146,491		132,068
Accounts receivable – other	Accounts receivable – other	39,819		34,553		Accounts receivable – other	46,534		34,553
Contracts in progress	Contracts in progress	95,972		80,176		Contracts in progress	125,030		80,176
Inventories, net	Inventories, net	90,401		79,527		Inventories, net	97,832		79,527
Other current assets	Other current assets	27,343		29,395		Other current assets	24,605		29,395

Total current assets	Total current assets	540,969		582,434		Total current assets	498,593		582,434
Net property, plant and equipment, and finance lease	Net property, plant and equipment, and finance lease	77,156		85,627		Net property, plant and equipment, and finance lease	81,737		85,627
Goodwill	Goodwill	174,371		116,462		Goodwill	155,229		116,462
Intangible assets, net	Intangible assets, net	65,452		43,795		Intangible assets, net	59,794		43,795
Right-of-use assets	Right-of-use assets	30,500		30,163		Right-of-use assets	30,401		30,163
Long-term restricted cash						Long-term restricted cash	11,397		—
Other assets	Other assets	66,251		54,784		Other assets	44,416		54,784

Total assets	Total assets	$	954,699	$	913,265	Total assets	$	881,567	$	913,265

Accounts payable	Accounts payable	$	97,840	$	85,929	Accounts payable	$	122,083	$	85,929
Accrued employee benefits	Accrued employee benefits	12,245		12,989		Accrued employee benefits	12,110		12,989
Advance billings on contracts	Advance billings on contracts	99,910		68,380		Advance billings on contracts	97,961		68,380
Accrued warranty expense	Accrued warranty expense	11,873		12,925		Accrued warranty expense	10,621		12,925
Financing lease liabilities	Financing lease liabilities	1,973		2,445		Financing lease liabilities	1,140		2,445
Operating lease liabilities	Operating lease liabilities	4,078		3,950		Operating lease liabilities	3,786		3,950
Other accrued liabilities	Other accrued liabilities	75,949		54,385		Other accrued liabilities	69,531		54,385
Loans payable	Loans payable	13,433		12,380		Loans payable	2,301		12,380

Total current liabilities	Total current liabilities	317,301		253,383		Total current liabilities	319,533		253,383
Senior notes	Senior notes	328,870		326,366		Senior notes	333,498		326,366
Long term loans payable	Long term loans payable	1,476		1,543		Long term loans payable	534		1,543

Pension and other postretirement benefit liabilities	Pension and other postretirement benefit liabilities	174,873		182,730		Pension and other postretirement benefit liabilities	156,519		182,730
Non-current finance lease liabilities	Non-current finance lease liabilities	29,094		29,369		Non-current finance lease liabilities	27,778		29,369
Non-current operating lease liabilities	Non-current operating lease liabilities	27,032		26,685		Non-current operating lease liabilities	27,328		26,685
Other non-current liabilities	Other non-current liabilities	32,111		34,567		Other non-current liabilities	33,505		34,567
Total liabilities	Total liabilities	910,757		854,643		Total liabilities	898,695		854,643
Commitments and contingencies	Commitments and contingencies	0		0		Commitments and contingencies
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, respectively		77		77
Common stock, par value $0.01 per share, authorized shares of 500,000; issued and outstanding shares of 86,338 and 86,286 at March 31, 2022 and December 31, 2021, respectively		5,111		5,110
Stockholders' (deficit) equity:						Stockholders' (deficit) 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 September 30, 2022 and December 31, 2021, respectively						Preferred stock, par value $0.01 per share, authorized shares of 20,000; issued and outstanding shares of 7,669 and 7,669 at September 30, 2022 and December 31, 2021, respectively	77		77
Common stock, par value $0.01 per share, authorized shares of 500,000; issued and outstanding shares of 88,633 and 86,286 at September 30, 2022 and December 31, 2021, respectively						Common stock, par value $0.01 per share, authorized shares of 500,000; issued and outstanding shares of 88,633 and 86,286 at September 30, 2022 and December 31, 2021, respectively	5,137		5,110
Capital in excess of par value	Capital in excess of par value	1,520,545		1,518,872		Capital in excess of par value	1,533,904		1,518,872
Treasury stock at cost, 1,553 and 1,525 shares at March 31, 2022 and December 31, 2021, respectively		(111,155)		(110,934)
Treasury stock at cost, 1,867 and 1,525 shares at September 30, 2022 and December 31, 2021, respectively						Treasury stock at cost, 1,867 and 1,525 shares at September 30, 2022 and December 31, 2021, respectively	(113,749)		(110,934)
Accumulated deficit	Accumulated deficit	(1,333,133)		(1,321,154)		Accumulated deficit	(1,360,896)		(1,321,154)
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(62,514)		(58,822)		Accumulated other comprehensive loss	(82,492)		(58,822)
Stockholders' equity attributable to shareholders		18,931		33,149
Stockholders' (deficit) equity attributable to shareholders						Stockholders' (deficit) equity attributable to shareholders	(18,019)		33,149
Non-controlling interest	Non-controlling interest	25,011		25,473		Non-controlling interest	891		25,473
Total stockholders' equity		43,942		58,622
Total liabilities and stockholders' equity		$	954,699	$	913,265
Total stockholders' (deficit) equity						Total stockholders' (deficit) equity	(17,128)		58,622
Total liabilities and stockholders' (deficit) equity						Total liabilities and stockholders' (deficit) equity	$	881,567	$	913,265

See accompanying notes to Condensed Consolidated Financial Statements.

BABCOCK & WILCOX ENTERPRISES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' (DEFICIT) EQUITY ~~(DEFICIT)~~


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

Pension and post retirement adjustments, net of tax	Pension and post retirement adjustments, net of tax	—	—		—	—		—				—		—					593			—				593		Pension and post retirement adjustments, net of tax	—		—				—		—			—		—			—			593			—			593
Stock-based compensation charges	Stock-based compensation charges	52	1		—	—		1,765				(221)		—					—			—				1,545		Stock-based compensation charges	52		1				—		—			1,673		(221)			—			—			—			1,453
Dividends to preferred stockholders	Dividends to preferred stockholders	—	—		—	—		—				—		(3,715)					—			—				(3,715)		Dividends to preferred stockholders	—		—				—		—			—		—			(3,715)			—			—			(3,715)
Preferred stock, net		—	—		—	—		(92)				—		—					—			—				(92)

Dividends to non-controlling interest	Dividends to non-controlling interest	—	—		—	—		—				—		—					—			(1)				(1)		Dividends to non-controlling interest	—		—				—		—			—		—			—			—			(1)			(1)
Balance at March 31, 2022	Balance at March 31, 2022	86,338	$	5,111	7,669	$	77	$	1,520,545			$	(111,155)	$	(1,333,133)				$	(62,514)		$	25,011			$	43,942	Balance at March 31, 2022	86,338		$	5,111			7,669		$	77		$	1,520,545	$	(111,155)		$	(1,333,133)		$	(62,514)		$	25,011		$	43,942
Net loss																												Net loss	—		—				—		—			—		—			(2,567)			—			(427)			(2,994)
Currency translation adjustments																												Currency translation adjustments	—		—				—		—			—		—			—			(6,634)			(71)			(6,705)
Pension and post retirement adjustments, net of tax																												Pension and post retirement adjustments, net of tax	—		—				—		—			—		—			—			(198)			—			(198)
Stock-based compensation charges																												Stock-based compensation charges	54		1				—		—			1,386		—			—			—			—			1,387
Dividends to preferred stockholders																												Dividends to preferred stockholders	—		—				—		—			—		—			(3,715)			—			—			(3,715)

Balance at June 30, 2022																												Balance at June 30, 2022	86,392		$	5,112			7,669		$	77		$	1,521,931	$	(111,155)		$	(1,339,415)		$	(69,346)		$	24,513		$	31,717
Net loss																												Net loss	—		—				—		—			—		—			(17,766)			—			(2,800)			(20,566)
Currency translation adjustments																												Currency translation adjustments	—		—				—		—			—		—			—			(13,344)			(87)			(13,431)
Pension and post retirement adjustments, net of tax																												Pension and post retirement adjustments, net of tax	—		—				—		—			—		—			—			198			—			198
Stock-based compensation charges																												Stock-based compensation charges	2,241		25				—		—			3,347		(2,594)			—			—			—			778
Purchase of Fosler Construction non-controlling interest																												Purchase of Fosler Construction non-controlling interest	—		—				—		—			8,626		—			—			—			(20,735)			(12,109)
Common stock offering																												Common stock offering							—		—			—		—			—			—			—			—
Preferred stock offering, net																												Preferred stock offering, net	—		—				—		—			—		—			—			—			—			—
Equitized Last Out Term Loan principal payment																												Equitized Last Out Term Loan principal payment	—		—				—		—			—		—			—			—			—			—
Dividends to preferred stockholders																												Dividends to preferred stockholders	—		—				—		—			—		—			(3,715)			—			—			(3,715)

Dividends to non-controlling interest																												Dividends to non-controlling interest	—		—				—		—			—		—			—			—			—			—
Balance at September 30, 2022																												Balance at September 30, 2022	88,633		$	5,137			7,669		$	77		$	1,533,904	$	(113,749)		$	(1,360,896)		$	(82,492)		$	891		$	(17,128)

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


	Common Stock			Preferred Stock			Capital In Excess of Par Value		Treasury Stock		Accumulated Deficit		Accumulated Other Comprehensive (Loss)		Non-controlling Interest		Total Stockholders’ (Deficit) Equity
(in thousands, except share amounts)	Shares	Par Value		Shares	Par Value
Balance at December 31, 2020	54,452	$	4,784	—	$	—	$	1,164,436	$	(105,990)	$	(1,350,206)	$	(52,390)	$	1,104	$	(338,262)
Net loss	—	—		—	—		—		—		(15,464)		—		21		(15,443)
Currency translation adjustments	—	—		—	—		—		—		—		(4,582)		(24)		(4,606)
Pension and post retirement adjustments, net of tax	—	—		—	—		—		—		—		198		—		198
Stock-based compensation charges	1,725	22		—	—		4,480		(3,308)		—		—		—		1,194
Common stock offering	29,487	295		—	—		161,218		—		—		—		—		161,513
Dividends to non-controlling interest	—	—		—	—		—		—		—		—		(38)		(38)
Balance at March 31, 2021	85,664	$	5,101	—	$	—	$	1,330,134	$	(109,298)	$	(1,365,670)	$	(56,774)	$	1,063	$	(195,444)
Net income	—	—		—	—		—		—		3,126		—		15		3,141
Currency translation adjustments	—	—		—	—		—		—		—		(1,478)		(5)		(1,483)
Pension and post retirement adjustments, net of tax	—	—		—	—		—		—		—		198		—		198
Stock-based compensation charges	65	2		—	—		1,201		(3)		—		—		—		1,200
Common stock offering, net	—	—		—	—		(529)										(529)
Preferred stock offering, net	—	—		4,445	45		105,998		—		—		—		—		106,043
Equitized Last Out Term Loan interest 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, 2021	85,729	$	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 charges	515	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, 2021	86,244	$	5,110	7,599	$	76	$	1,516,368	$	(110,853)	$	(1,354,313)	$	(59,149)	$	23,161	$	20,400

See accompanying notes to Condensed Consolidated Financial Statements.

BABCOCK & WILCOX ENTERPRISES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


		Three Months Ended March 31,				Nine Months Ended September 30,
(in thousands)	(in thousands)	2022		2021			(in thousands)	2022		2021
Cash flows from operating activities:	Cash flows from operating activities:						Cash flows from operating activities:
Net loss		$	(8,684)	$	(15,443)
Net (loss) income							Net (loss) income	$	(32,244)	$	1,346
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 assets	Depreciation and amortization of long-lived assets	6,202		4,058			Depreciation and amortization of long-lived assets	13,184		12,684
Goodwill impairment							Goodwill impairment	7,224		—
Change in fair value of contingent consideration							Change in fair value of contingent consideration	(9,567)		—
Amortization of deferred financing costs and debt discount	Amortization of deferred financing costs and debt discount	834		5,779			Amortization of deferred financing costs and debt discount	3,864		7,150
Amortization of guaranty fee	Amortization of guaranty fee	231		452			Amortization of guaranty fee	543		1,370
Non-cash operating lease expense	Non-cash operating lease expense	1,174		1,140			Non-cash operating lease expense	5,698		3,206
Gain on sale of business		—		(358)

Loss on sale of business							Loss on sale of business	—		2,240
Gain on debt extinguishment							Gain on debt extinguishment	—		(6,530)
Gain on asset disposals	Gain on asset disposals	—		(2,005)			Gain on asset disposals	(7,000)		(15,804)
(Benefit from) provision for deferred income taxes	(Benefit from) provision for deferred income taxes	(689)		1,557			(Benefit from) provision for deferred income taxes	(2,597)		2,601
Prior service cost amortization for pension and postretirement plans	Prior service cost amortization for pension and postretirement plans	593		198			Prior service cost amortization for pension and postretirement plans	593		(1,660)
Stock-based compensation, net of associated income taxes	Stock-based compensation, net of associated income taxes	1,766		4,502			Stock-based compensation, net of associated income taxes	6,497		6,628

Foreign exchange	Foreign exchange	(3,085)		1,209			Foreign exchange	3,218		1,056
Changes in assets and liabilities:	Changes in assets and liabilities:						Changes in assets and liabilities:
Accounts receivable	Accounts receivable	(28,694)		(11,629)			Accounts receivable	(26,224)		1,466
Contracts in progress	Contracts in progress	(13,334)		(6,911)			Contracts in progress	(48,208)		(9,365)
Advance billings on contracts	Advance billings on contracts	27,532		18,226			Advance billings on contracts	28,915		(20,625)
Inventories	Inventories	(2,996)		(1,863)			Inventories	(15,098)		(4,681)
Income taxes	Income taxes	(7,009)		(1,919)			Income taxes	(2,133)		(4,239)
Accounts payable	Accounts payable	11,297		6,246			Accounts payable	39,639		7,375
Accrued and other current liabilities	Accrued and other current liabilities	(11,290)		(17,127)			Accrued and other current liabilities	(10,813)		(44,768)
Accrued contract loss	Accrued contract loss	4,274		(129)			Accrued contract loss	3,481		(266)
Pension liabilities, accrued postretirement benefits and employee benefits	Pension liabilities, accrued postretirement benefits and employee benefits	(10,048)		(33,640)			Pension liabilities, accrued postretirement benefits and employee benefits	(27,144)		(47,108)
Other, net	Other, net	(10,073)		(6,297)			Other, net	792		90
Net cash used in operating activities	Net cash used in operating activities	(41,999)		(53,954)			Net cash used in operating activities	(67,380)		(107,834)
Cash flows from investing activities:	Cash flows from investing activities:						Cash flows from investing activities:
Purchase of property, plant and equipment	Purchase of property, plant and equipment	(1,004)		(1,410)			Purchase of property, plant and equipment	(8,947)		(4,213)
Acquisition of business, net of cash acquired	Acquisition of business, net of cash acquired	(64,914)		—			Acquisition of business, net of cash acquired	(64,914)		(27,211)
Proceeds from sale of business and assets, net	Proceeds from sale of business and assets, net	—		3,297			Proceeds from sale of business and assets, net	2,500		23,770
Purchases of available-for-sale securities	Purchases of available-for-sale securities	(1,125)		(3,394)			Purchases of available-for-sale securities	(5,006)		(9,597)
Sales and maturities of available-for-sale securities	Sales and maturities of available-for-sale securities	1,674		5,495			Sales and maturities of available-for-sale securities	8,498		11,373
Other, net	Other, net	(15)		534			Other, net	299		—
Net cash (used in) from investing activities		(65,384)		4,522
Net cash used in investing activities							Net cash used in investing activities	(67,570)		(5,878)


		Three Months Ended March 31,				Nine Months Ended September 30,
(in thousands)	(in thousands)	2022		2021			(in thousands)	2022		2021
Cash flows from financing activities:	Cash flows from financing activities:						Cash flows from financing activities:
Issuance of senior notes	Issuance of senior notes	2,016		125,000			Issuance of senior notes	5,455		151,239
Borrowings on loan payable	Borrowings on loan payable	1,342		—			Borrowings on loan payable	1,342		3,472
Repayments on loan payable	Repayments on loan payable	(31)		—			Repayments on loan payable	(13,863)		—

Repayments under last out term loans	Repayments under last out term loans	—		(75,000)			Repayments under last out term loans	—		(75,408)
Borrowings under U.S. revolving credit facility	Borrowings under U.S. revolving credit facility	—		14,500			Borrowings under U.S. revolving credit facility	—		14,500
Repayments of U.S. revolving credit facility	Repayments of U.S. revolving credit facility	—		(178,800)			Repayments of U.S. revolving credit facility	—		(178,800)

Preferred stock fees		—		—
Issuance of preferred stock, net							Issuance of preferred stock, net	(40)		111,850
Payment of preferred stock dividends	Payment of preferred stock dividends	(3,715)		—			Payment of preferred stock dividends	(11,145)		(5,412)
Shares of common stock returned to treasury stock	Shares of common stock returned to treasury stock	(221)		(3,308)			Shares of common stock returned to treasury stock	(2,815)		(4,863)

Issuance of common stock, net	Issuance of common stock, net	—		161,513			Issuance of common stock, net	—		160,934
Debt issuance costs	Debt issuance costs	(119)		(7,727)			Debt issuance costs	209		(16,725)
Other, net	Other, net	(840)		(241)			Other, net	1,776		(1,569)
Net cash (used in) from financing activities		(1,568)		35,937
Net cash (used in) provided by financing activities							Net cash (used in) provided by financing activities	(19,081)		159,218
Effects of exchange rate changes on cash	Effects of exchange rate changes on cash	(794)		4,518			Effects of exchange rate changes on cash	(3,186)		2,818
Net decrease in cash, cash equivalents and restricted cash		(109,745)		(8,977)
Cash, cash equivalents and restricted cash, beginning of period		226,715		67,423
Cash, cash equivalents and restricted cash, end of period		$	116,970	$	58,446
Net (decrease) increase in cash, cash equivalents and restricted cash							Net (decrease) increase in cash, cash equivalents and restricted cash	(157,217)		48,324
Cash, cash equivalents and restricted cash at beginning of period							Cash, cash equivalents and restricted cash at beginning of period	226,715		67,423
Cash, cash equivalents and restricted cash at end of period							Cash, cash equivalents and restricted cash at end of period	$	69,498	$	115,747

Schedule of cash, cash equivalents and restricted cash:							Schedule of cash, cash equivalents and restricted cash:
Cash and cash equivalents							Cash and cash equivalents	$	48,471	$	107,055
Current restricted cash							Current restricted cash	9,630		8,692
Long-term restricted cash							Long-term restricted cash	11,397		—
Total cash, cash equivalents and restricted cash at end of period							Total cash, cash equivalents and restricted cash at end of period	$	69,498	$	115,747

Supplemental Cash flow information:							Supplemental Cash flow information:
Income taxes paid, net							Income taxes paid, net	2,693		6,094
Interest paid							Interest paid	19,292		18,800

See accompanying notes to Condensed Consolidated Financial Statements.

910

BABCOCK & WILCOX ENTERPRISES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~MARCH 31,~~SEPTEMBER 30, 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”~~“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~~the Company's Annual Report. ~~We have~~The Company has 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~~The Company has eliminated all intercompany transactions and accounts. ~~We present~~The Company has presented the notes to ~~our~~its Condensed Consolidated Financial Statements on the basis of continuing operations, unless otherwise stated.

~~COVID-19~~The preparation of these consolidated financial statements requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and the accompanying notes. Actual results could differ from these estimates. In the opinion of management, these consolidated financial statements contain all estimates and adjustments, consisting of normal recurring accruals, required to fairly present the financial position, results of operations, and cash flows for the interim periods. Operating results for the three and nine months ended September 30, 2022 are not necessarily indicative of the results to be expected for the full-year ending December 31, 2022.

In December 2019, a novel strain of coronavirus, ("COVID-19"), was identified in Wuhan, China and subsequently spread globally. This global pandemic has disrupted business operations, including trade, commerce, financial and credit markets, and daily life throughout the world. Our business has been, and continues to be, adversely impacted by the measures taken and restrictions imposedNon-controlling interests are presented in the ~~countries~~Company’s consolidated financial statements as if parent company investors (controlling interests) and other minority investors (non-controlling interests) in ~~which we operate and by local governments and others to control the spread of this virus. These measures and restrictions~~partially-owned subsidiaries have ~~varied widely and have been subject to significant changes from time to time depending on changes~~similar economic interests in a single entity. As a result, investments in non-controlling interests are reported as equity in the ~~severity~~Company’s consolidated financial statements. Additionally, the Company’s consolidated financial statements include 100% of a controlled subsidiary’s earnings, rather than only its share. Transactions between the ~~virus~~parent company and non-controlling interests are reported in equity as transactions between stockholders, provided that these ~~countries~~transactions do not create a change in control.

Risks and ~~localities. These restrictions, including curtailment of travel and other activity, negatively impact our ability to conduct business.~~Uncertainties

~~Disruption~~Management continues to adapt to macroeconomic conditions, including rising inflation, higher interest rates, foreign exchange rate fluctuations and the impact of the ongoing conflict in Ukraine and the COVID-19 pandemic, all of which impacted the Company during the first nine months of 2022. The COVID-19 pandemic has continued to create challenges for us in countries that have significant outbreak mitigation strategies, namely, countries in our Asia-Pacific region, which led to temporary project postponements and has continued to impact results in this region. Additionally, the Company has experienced negative impacts to its global supply ~~changes from~~chains as a result of COVID-19, ~~has included impacts~~the war in Ukraine, Russia-related supply chain shortages and other factors, including disruptions to the manufacturing, supply, distribution, transportation and delivery of ~~our~~its products. WeThe Company has also observed significant delays and disruptions of ~~the operations of our logistics,~~its service providers ~~delays in shipments~~ and negative impacts to pricing of certain of ~~our~~its products. ~~Disruptions~~These delays and ~~delays in our supply chains as a result of the COVID-19 pandemic~~disruptions have had, and could continue to ~~adversely~~have, an adverse impact ~~our~~on the Company’s ability to meet ~~our~~ customers’ demands. Additionally, the prioritization of shipments of certain products as a result of the pandemic could cause delays in the shipment or delivery of our products. Such disruptions could result in reduced sales.

~~The volatility and variability of the virus has limited our ability~~We are continuing to ~~forecast~~actively monitor the impact of ~~COVID-19~~these market conditions on current and future periods and actively manage costs and our liquidity position to provide additional flexibility while still supporting our customers and ~~our business.~~their specific needs. The ~~ongoing~~duration and scope of these conditions cannot be predicted, and therefore, any anticipated negative financial impact ~~of COVID-19, including evolving strains such as the delta and omicron variants, has resulted in the reimposition of certain restrictions and may lead~~ to the implementation of other restrictions in response to efforts to reduce the spread of the virus. These varying and changing events have caused many of the projects we had anticipated to begin during the prior two years to be delayed into 2022 and beyond. Many customers and projects require B&W's employees to travel to customer and project worksites. Certain customers and significant projects are located in areas where travel restrictions have been imposed, certain customers have closed or reduced on-site activities, and timelines for completion of certain projects have, as noted above, been extended into 2022 and beyond. Additionally, out of concern for our employees, even where restrictions permit employees to return to our offices and worksites, we incurred additional costs to protect our employees and advised those who are uncomfortable returning to worksites due to the pandemic that they are not required to do so for an indefinite period of time. The resulting uncertainty concerning, among other things, the spread and economic impact of the virus has also caused significant volatility and, at times, illiquidity in global equity and credit markets. The full extent of the impact of COVID-19 and its variants on our operational and financial performance will depend on future developments, including the ultimate duration and spread of the pandemic and related actions taken by the U.S. government, state and local government officials, and international governments to prevent outbreaks, as well as the availability, effectiveness and acceptance of COVID-19 vaccinations in the U.S. and abroad, all of which are uncertain, out of our control, andCompany’s operating results cannot be ~~predicted.~~reasonably estimated.

1011

NOTE 2 – EARNINGS PER SHARE

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

Three Months Ended March 31,
(in thousands, except per share amounts) 2022 2021
Net loss attributable to stockholders of common stock $ (11,979) $ (15,464)
Weighted average shares used to calculate basic and diluted loss per share 87,992 71,396
Basic loss per share $ (0.14) $ (0.22)
Diluted loss per share $ (0.14) $ (0.22)


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands, except per share amounts)	2022		2021		2022		2021


Net (loss) income attributable to stockholders of common stock	$	(21,481)	$	9,962	$	(39,742)	$	(4,107)

Weighted average shares used to calculate basic and diluted (loss) earnings per share	88,321		86,002		88,115		81,088
Dilutive effect of stock options, restricted stock and performance units	—		962		—		—
Weighted average shares used to calculate diluted earnings (loss) per share	88,321		86,964		88,115		81,088

Basic (loss) earnings per share	$	(0.24)	$	0.12	$	(0.45)	$	(0.05)




Diluted (loss) earnings per share	$	(0.24)	$	0.11	$	(0.45)	$	(0.05)

Because the Company incurred a net loss in the three and nine-month periods ended September 31, 2022 and the nine-month period ended September 30, 2021, basic and diluted shares are the same.

If ~~we were~~the Company had net income in the three months ended September 30, 2022, diluted shares would include an additional 0.8 million shares. If the Company was in a net income position during the ~~three~~nine months ended ~~March 31,~~September 30, 2022 and 2021, diluted shares would include an additional 0.9 million and ~~1.6~~1.3 million shares, respectively.

WeThe Company excluded ~~0.4~~0.3 million and ~~0.4~~0.9 million shares related to stock options from the diluted share calculation for the ~~three months~~three-month periods ended ~~March 31,~~September 30, 2022 and 2021, respectively, because their effect would have been anti-dilutive. The Company excluded 0.4 million and 1.0 million shares related to stock options from the diluted share calculation for the nine-month periods ended September 30, 2022 and 2021, respectively, because their effect would have been anti-dilutive.

NOTE 3 – SEGMENT REPORTING

~~Our~~The Company's operations are assessed based on 3three reportable market-facing segments as part of ~~the Company's~~its strategic, market-focused organizational and re-branding initiative to accelerate growth and provide stakeholders with improved visibility into ~~our~~its renewable and environmental growth platforms. ~~Our~~The Company's three 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 by diverting waste from landfills to use for power generation and replacing fossil fuels while recovering metals and reducing emissions.

•Babcock & Wilcox Environmental: A full suite of best-in-class emissions control and environmental technology solutions for utility, waste to energy, biomass, carbon black and industrial steam generation applications around the world. B&W’s broad experience includes systems for cooling, ash handling, particulate control, nitrogen oxides and sulfur dioxides removal, chemical looping for carbon control, and mercury control.

•Babcock & Wilcox Thermal: Steam generation equipment, aftermarket parts, construction, maintenance and field services for plants in the power generation, oil and gas, and industrial sectors. B&W has an extensive global base of installed equipment for utilities and general industrial applications including refining, petrochemical, food processing, metals and others.

1112

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


		Three Months Ended March 31,			Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	(in thousands)		2022			2021		(in thousands)	2022		2021		2022		2021
Revenues:	Revenues:							Revenues:
B&W Renewable segment	B&W Renewable segment							B&W Renewable segment
B&W Renewable	B&W Renewable		$	19,711		$	17,997	B&W Renewable	$	34,279	$	20,783	$	89,500	$	63,481
B&W Renewable Services (1)	B&W Renewable Services (1)		8,288			5,260		B&W Renewable Services (1)	30,164		2,036		57,996		10,889
Vølund	Vølund		16,336			5,554		Vølund	14,043		15,181		48,936		30,785
Fosler Solar	Fosler Solar		23,626			—		Fosler Solar	3,201		—		28,443		—
			67,961			28,811			81,687		38,000		224,875		105,155
B&W Environmental segment	B&W Environmental segment							B&W Environmental segment
B&W Environmental	B&W Environmental		18,185			17,433		B&W Environmental	25,773		14,338		56,759		42,766
SPIG	SPIG		12,060			11,184		SPIG	14,521		16,514		40,815		40,892
GMAB	GMAB		4,703			2,543		GMAB	4,332		7,397		13,612		14,109
			34,948			31,160			44,626		38,249		111,186		97,767
B&W Thermal segment	B&W Thermal segment							B&W Thermal segment
B&W Thermal	B&W Thermal		102,239			108,281		B&W Thermal	91,331		83,819		309,875		328,416
			102,239			108,281			91,331		83,819		309,875		328,416

Eliminations	Eliminations		(1,099)			(4)		Eliminations	(2,774)		(108)		(5,998)		(270)
Total Revenues	Total Revenues		$	204,049		$	168,248	Total Revenues	$	214,870	$	159,960	$	639,938	$	531,068

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

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

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

Three Months Ended March 31,
(in thousands) 2022 2021
Net loss $ (8,684) $ (15,443)
Interest expense 12,324 14,509
Income tax expense 1,230 2,836
Depreciation & amortization 6,202 4,058
EBITDA 11,072 5,960
Benefit plans, net (7,452) (9,098)
Gain on sales, net (20) (2,362)
Stock compensation 1,319 7,829
Restructuring activities and business services transition costs 2,688 993
Advisory fees for settlement costs and liquidity planning 1,032 1,978
Litigation costs 2,528 380
Acquisition pursuit and related costs 843 —
Product development (1)
852 —
Foreign exchange (3,085) 1,209
Financial advisory services 375 933
Contract step-up purchase price adjustment 1,745 —
Loss from business held for sale — 483
Other - net 123 266
Adjusted EBITDA $ 12,020 $ 8,571

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


		Three Months Ended March 31,			Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	(in thousands)		2022			2021		(in thousands)	2022		2021		2022		2021
Adjusted EBITDA	Adjusted EBITDA							Adjusted EBITDA
B&W Renewable segment(1)	B&W Renewable segment(1)		$	1,455		$	204	B&W Renewable segment(1)	$	4,522	$	11,399	$	14,846	$	15,030
B&W Environmental segment	B&W Environmental segment		1,439			1,105		B&W Environmental segment	3,082		3,476		5,112		7,286
B&W Thermal segment	B&W Thermal segment		14,154			10,535		B&W Thermal segment	10,761		9,329		41,276		32,436
Corporate	Corporate		(4,373)			(2,685)		Corporate	(4,419)		(5,866)		(13,018)		(11,548)
Research and development costs	Research and development costs		(655)			(588)		Research and development costs	(891)		513		(2,532)		(560)
			$	12,020		$	8,571		$	13,055	$	18,851	$	45,684	$	42,644

(1) Adjusted EBITDA for the nine months ended September 30, 2022 includes a $7.0 million non-recurring gain on sale related to development rights of a future solar project that was sold as well as the reduction to Selling, General and Administrative Costs of $9.6 million for the three and nine months ended September 30, 2022 that resulted from the reversal of the contingent consideration related to an acquisition.

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

NOTE 4 – REVENUE RECOGNITION AND CONTRACTS

Revenue Recognition

~~We generate~~The Company generates the vast majority of ~~our~~its revenues from the supply of, and aftermarket services for, steam-generating, environmental and auxiliary equipment. WeThe Company also ~~earn~~earns revenue from the supply of custom-engineered cooling systems for

steam applications along with related aftermarket services.

Revenue from goods and services transferred to customers at a point in time, which includes certain aftermarket parts and services, accounted for ~~19%~~25% and ~~27%~~21% of ~~our~~the Company's revenue for the three months ended ~~March 31,~~September 30, 2022 and 2021, respectively, and 23% and 20% of its revenue for the nine months ended September 30, 2022 and 2021, respectively. Revenue from products and services transferred to customers over time, which primarily relates to customized, engineered solutions and construction services, accounted for ~~81%~~75% and ~~73%~~79% of ~~our~~the Company's revenue for the three months ended ~~March 31,~~September 30, 2022 and 2021, ~~respectively.~~respectively, and 77% and 80% of its revenue for nine months ended September 30, 2022 and 2021, respectively

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

Refer to Note 3 for ~~our~~the Company's disaggregation of revenue by product line.

Contract Balances

The following represents the components of ~~our~~ the Company's Contracts in progress and Advance billings on contracts included in ~~our~~its Condensed Consolidated Balance Sheets:


(in thousands)	(in thousands)	March 31, 2022		December 31, 2021		$ Change		% Change		(in thousands)	September 30, 2022		December 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 recognized	Costs incurred less costs of revenue recognized	$	32,101	$	35,939	$	(3,838)	(11)	%	Costs incurred less costs of revenue recognized	$	60,182	$	35,939	$	24,243	67	%
Revenues recognized less billings to customers	Revenues recognized less billings to customers	63,871		44,237		19,634		44	%	Revenues recognized less billings to customers	64,849		44,237		20,612		47	%
Contracts in progress	Contracts in progress	$	95,972	$	80,176	$	15,796	20	%	Contracts in progress	$	125,031	$	80,176	$	44,855	56	%
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 recognized	Billings to customers less revenues recognized	$	100,130	$	68,615	$	31,515	46	%	Billings to customers less revenues recognized	$	87,033	$	68,615	$	18,418	27	%
Costs of revenue recognized less cost incurred	Costs of revenue recognized less cost incurred	(220)		(235)		15		(6)	%	Costs of revenue recognized less cost incurred	10,927		(235)		11,162		(4,750)	%
Advance billings on contracts	Advance billings on contracts	$	99,910	$	68,380	$	31,530	46	%	Advance billings on contracts	$	97,960	$	68,380	$	29,580	43	%

Net contract balance	Net contract balance	$	(3,938)	$	11,796	$	(15,734)	(133)	%	Net contract balance	$	27,071	$	11,796	$	15,275	129	%

Accrued contract losses	Accrued contract losses	$	4,652	$	378	$	4,274	1,131	%	Accrued contract losses	$	3,859	$	378	$	3,481	921	%

Backlog

On ~~March 31,~~September 30, 2022 we had ~~$721.0~~$730.0 million of remaining performance obligations, which wethe Company also ~~refer~~refers to as total backlog. ~~We expect~~The Company expects to recognize approximately ~~61.4%~~32.5%, ~~15.4%~~46.4% and ~~23.2%~~21.1% of ~~our~~ its remaining performance obligations as revenue in 2022, 2023 and thereafter, respectively.

Changes in Contract Estimates

InDuring the three ~~months~~and nine-month periods ended ~~March 31,~~September 30, 2022 and 2021, wethe Company 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 March 31,			Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	(in thousands)		2022			2021		(in thousands)	2022		2021		2022		2021
Increases in gross profit for changes in estimates for over time contracts	Increases in gross profit for changes in estimates for over time contracts		$	3,341		$	3,025	Increases in gross profit for changes in estimates for over time contracts	$	1,690	$	7,001	$	11,343	$	12,340
Decreases in gross profit for changes in estimates for over time contracts	Decreases in gross profit for changes in estimates for over time contracts		(2,862)			(1,358)		Decreases in gross profit for changes in estimates for over time contracts	(10,353)		(1,523)		(20,004)		(6,018)
Net changes in gross profit for changes in estimates for over time contracts	Net changes in gross profit for changes in estimates for over time contracts		$	479		$	1,667	Net changes in gross profit for changes in estimates for over time contracts	$	(8,663)	$	5,478	$	(8,661)	$	6,322

B&W Renewable Projects

During March 2022, wethe Company determined that ~~our~~its Fosler Solar reporting unit had 7nine projects located in the United States that existed at the time weFosler was acquired ~~Fosler~~ on September 30, 2021 which generated losses that arose due to the status of certain construction activities, existing at acquisition date, not adequately disclosed in the sales agreement and not recognized in the financial records of the seller. As of ~~March 31,~~September 30, 2022, wethe Company has recorded an increase in goodwill of ~~$14.9~~$14.4 million, primarily resulting from the

~~initial~~ recognition of ~~$14.5~~$14.1 million of accrued liabilities and $0.4 million of warranty accruals ~~during this acquisition's annual~~in conjunction with the finalization of purchase accounting as measurement ~~period. We have~~period adjustments which was finalized as of September 30, 2022.

During the nine months ended September 30, 2022, two additional Fosler Solar projects became loss contracts. In the three and nine months ended September 30, 2022, the Company recorded $8.6 million in net losses from changes in the estimated revenues and costs to complete the eleven Fosler Solar loss contracts. The Company has submitted insurance claims to recover a portion of these losses as of ~~March 31,~~September 30, 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)	March 31, 2022		December 31, 2021		(in thousands)	September 30, 2022		December 31, 2021
Raw materials and supplies	Raw materials and supplies	$	63,772	$	56,352	Raw materials and supplies	$	79,911	$	56,352
Work in progress	Work in progress	7,212		5,723		Work in progress	4,950		5,723
Finished goods	Finished goods	19,417		17,452		Finished goods	12,971		17,452
Total inventories	Total inventories	$	90,401	$	79,527	Total inventories	$	97,832	$	79,527

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

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


(in thousands)	(in thousands)	March 31, 2022		December 31, 2021		(in thousands)	September 30, 2022		December 31, 2021
Land	Land	$	1,533	$	1,489	Land	$	2,378	$	1,489
Buildings	Buildings	32,681		31,895		Buildings	33,842		31,895
Machinery and equipment	Machinery and equipment	145,134		144,325		Machinery and equipment	148,032		144,325
Property under construction	Property under construction	4,877		12,480		Property under construction	7,771		12,480
		184,225		190,189			192,023		190,189
Less accumulated depreciation	Less accumulated depreciation	134,639		133,137		Less accumulated depreciation	135,158		133,137
Net property, plant and equipment	Net property, plant and equipment	49,586		57,052		Net property, plant and equipment	56,865		57,052
Finance leases	Finance leases	34,160		34,159		Finance leases	30,548		34,159
Less finance lease accumulated amortization	Less finance lease accumulated amortization	6,590		5,584		Less finance lease accumulated amortization	5,676		5,584
Net property, plant and equipment, and finance lease	Net property, plant and equipment, and finance lease	$	77,156	$	85,627	Net property, plant and equipment, and finance lease	$	81,737	$	85,627

NOTE 7 - GOODWILL

The following summarizes the changes in the net carrying amount of goodwill as of ~~March 31,~~September 30, 2022:


(in thousands)	(in thousands)	B&W Renewable		B&W Environmental		B&W Thermal		Total		(in thousands)	B&W Renewable		B&W Environmental		B&W Thermal		Total
Balance at December 31, 2021	Balance at December 31, 2021	$	79,357	$	5,667	$	31,438	$	116,462	Balance at December 31, 2021	$	79,357	$	5,667	$	31,438	$	116,462
Addition - Fossil Power(1)	Addition - Fossil Power(1)	—		—		35,392		35,392		Addition - Fossil Power(1)					35,392		35,392
Addition - Optimus Industries(1)	Addition - Optimus Industries(1)	—		—		11,081		11,081		Addition - Optimus Industries(1)					11,081		11,081
Measurement period adjustments - Fosler(1)(2)		11,163		—		—		11,163
Measurement period adjustments - Fosler(2)										Measurement period adjustments - Fosler(2)	10,697						10,697
Measurement period adjustments - VODA(1)(2)	Measurement period adjustments - VODA(1)(2)	(61)		—		—		(61)		Measurement period adjustments - VODA(1)(2)	(61)						(61)
Measurement period adjustments - Fossil Power(1)(2)										Measurement period adjustments - Fossil Power(1)(2)					270		270
Measurement period adjustments - Optimus Industries(1)(2)										Measurement period adjustments - Optimus Industries(1)(2)					(7,273)		(7,273)
Goodwill impairment - Fosler										Goodwill impairment - Fosler	(7,224)						(7,224)
Currency translation adjustments	Currency translation adjustments	57		45		232		334		Currency translation adjustments	(1,041)		(786)		(2,288)		(4,115)
Balance at March 31, 2022		$	90,516	$	5,712	$	78,143	$	174,371
Balance at September 30, 2022										Balance at September 30, 2022	$	81,728	$	4,881	$	68,622	$	155,229

(1) As described in Note 21, ~~we are~~the Company is 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 provisional measurements of goodwill associated with these acquisitions are subject to change.

(2) ~~Our~~The Company's preliminary purchase price allocation changed due to additional information and further analysis.

Goodwill represents the excess of the consideration transferred over the fair value of net assets, including identifiable intangible assets, at the acquisition date. Goodwill is ~~tested~~assessed for impairment annually ~~and~~ on ~~an interim basis when~~October 1 or more frequently if events or changes in circumstances indicate a potential impairment ~~indicators exist. No impairment indicators were identified during the three months ended March 31, 2022.~~exists.

AsIn assessing goodwill for impairment, the Company follows ASC 350, Intangibles – Goodwill and Other, which permits a qualitative assessment of ~~March 31,~~whether it is more likely than not that the fair value of the reporting unit is less than its carrying value including goodwill. If the qualitative assessment determines that it is not more likely than not that the fair value of a reporting unit is less than its carrying value, including goodwill, then no impairment is determined to exist for the reporting unit. However, if the qualitative assessment determines that it is more likely than not that the fair value of the reporting unit is less than its carrying value, including goodwill, or we choose not to perform the qualitative assessment, then we compare the fair value of that reporting unit with its carrying value, including goodwill, in a quantitative assessment. If the carrying value of a reporting unit exceeds its fair value, goodwill is considered impaired with the impairment loss measured as the excess of the reporting unit’s carrying value, including goodwill, over its fair value. The estimated fair value of the reporting unit is derived based on valuation techniques the Company believes market participants would use for each of the reporting units.

During the quarter ended September 30, 2022, ~~Fosler's goodwill increase~~the Company identified certain factors, including but not limited to, the acquisition of ~~$11.2 million included a $14.9 million increase resulting~~the remaining 40% ownership stake in Fosler Construction Company Inc. for an amount less than the remaining balance of the non-controlling interest, significant deterioration in operating results 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.~~those originally forecast

1516

at the date of acquisition primarily as a result of supply chain issues on certain solar product inputs, the recognition of additional contract losses in the third quarter of $8.6 million beyond amounts previously accounted for as measurement period adjustments during the year, the determination that the contingent consideration would not be payable, all of which contributed to the identification of a triggering event, requiring an interim quantitative goodwill impairment assessment of its Fosler Construction reporting unit. In addition, in conjunction with the interim goodwill impairment test, the Company performed an impairment analysis of the Fosler asset group's its long-lived and intangible assets and noted no impairment.

The quantitative assessment was performed using a combination of the income approach (discounted cash flows), the market approach and the guideline transaction method. The income approach uses the reporting unit’s estimated future cash flows, discounted at the weighted-average cost of capital of a hypothetical third-party buyer to account for uncertainties within the projections. The income approach uses assumptions based on the reporting unit’s estimated revenue growth, operating margin, and working capital turnover. The market approach estimates fair value by applying cash flow multiples to the reporting unit’s operating performance. The multiples are derived from comparable publicly traded companies with similar characteristics to the reporting unit. The guideline transaction method estimates fair value by applying recent observed transaction multiples from transactions involving companies with similar characteristics to the reporting unit’s business.

The Company compared the fair value of the Fosler Construction reporting unit to its carrying value and determined that the carrying value of the reporting unit exceeded the fair value. As such, the Company recorded goodwill impairment losses related to the Fosler Construction reporting unit of $7.2 million.

No indicators of goodwill impairment were identified for the Company's other reporting units.

NOTE 8 – INTANGIBLE ASSETS

~~Our~~The Company's intangible assets are as follows:


(in thousands)	(in thousands)	March 31, 2022		December 31, 2021		(in thousands)	September 30, 2022		December 31, 2021
Definite-lived intangible assets(1)
Definite-lived intangible assets(1) (2)						Definite-lived intangible assets(1) (2)
Customer relationships	Customer relationships	$	67,332	$	46,903	Customer relationships	$	67,027	$	46,903
Unpatented technology	Unpatented technology	18,591		15,410		Unpatented technology	17,819		15,410
Patented technology	Patented technology	3,682		3,103		Patented technology	3,646		3,103
Tradename	Tradename	13,383		12,747		Tradename	13,029		12,747
Acquired backlog	Acquired backlog	3,100		3,100		Acquired backlog	3,100		3,100
All other	All other	9,128		9,319		All other	9,138		9,319
Gross value of definite-lived intangible assets	Gross value of definite-lived intangible assets	115,216		90,582		Gross value of definite-lived intangible assets	113,759		90,582
Customer relationships amortization	Customer relationships amortization	(21,820)		(20,800)		Customer relationships amortization	(24,705)		(20,800)
Unpatented technology amortization	Unpatented technology amortization	(8,729)		(8,313)		Unpatented technology amortization	(9,584)		(8,313)
Patented technology amortization	Patented technology amortization	(2,769)		(2,729)		Patented technology amortization	(2,845)		(2,729)
Tradename amortization	Tradename amortization	(5,595)		(5,425)		Tradename amortization	(5,962)		(5,425)
Acquired backlog	Acquired backlog	(3,100)		(1,620)		Acquired backlog	(3,100)		(1,620)
All other amortization	All other amortization	(9,056)		(9,205)		All other amortization	(9,074)		(9,205)
Accumulated amortization	Accumulated amortization	(51,069)		(48,092)		Accumulated amortization	(55,270)		(48,092)
Net definite-lived intangible assets	Net definite-lived intangible assets	$	64,147	$	42,490	Net definite-lived intangible assets	$	58,489	$	42,490
Indefinite-lived intangible assets	Indefinite-lived intangible assets					Indefinite-lived intangible assets
Trademarks and trade names	Trademarks and trade names	$	1,305	$	1,305	Trademarks and trade names	$	1,305	$	1,305
Total intangible assets, net	Total intangible assets, net	$	65,452	$	43,795	Total intangible assets, net	$	59,794	$	43,795

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

(2) The Company finalized the purchase price allocation for the Fosler Construction acquisition on September 30, 2022 which resulted in several measurement period adjustments

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


	Nine Months Ended September 30,
(in thousands)	2022		2021
Balance at beginning of period	$	43,795	$	23,908
Business acquisitions and adjustments(1) (2)	27,412		17,100
Impairment of intangible assets	—		—
Amortization expense	(7,111)		(2,531)
Currency translation adjustments	(4,302)		(949)
Balance at end of the period	$	59,794	$	37,528

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

(3)

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

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

~~(1)~~ ~~As described in Note 21, we are in the process of completing~~Company finalized the purchase price allocation ~~associated with~~for the Fosler Construction ~~VODA, Fossil Power and Optimus Industries acquisitions and as a result, the increase~~acquisition on September 30, 2022 which resulted in ~~intangible assets associated with these acquisitions are subject to change.~~several measurement period adjustments.

Amortization of intangible assets is included in Cost of operations and SG&A in ~~our~~the Company's 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. NoSee Note 7 regarding the Company's interim impairment ~~indicators were identified during~~testing process for the ~~three~~nine months ended ~~March 31,~~September 30, 2022.

Estimated future intangible asset amortization expense as of ~~March 31,~~September 30, 2022 is as follows (in thousands):


			Amortization Expense
Year ending December 31, 2022			~~5,990~~1,926
Year ending December 31, 2023			~~7,986~~7,701
Year ending December 31, 2024			~~7,906~~7,629
Year ending December 31, 2025			~~7,089~~6,832
Year ending December 31, 2026			~~5,890~~5,757
Year ending December 31, 2027			~~5,229~~5,156
Thereafter			~~24,057~~23,489

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

NOTE 9 – ACCRUED WARRANTY EXPENSE

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


		Three Months Ended March 31,					Nine Months Ended September 30,
(in thousands)	(in thousands)	2022		2021		(in thousands)	2022		2021
Balance at beginning of period	Balance at beginning of period	$	12,925	$	25,399	Balance at beginning of period	$	12,925	$	25,399
Additions	Additions	1,300		1,475		Additions	3,799		5,155
Expirations and other changes	Expirations and other changes	(1,467)		(1,318)		Expirations and other changes	(3,257)		(4,790)
Payments	Payments	(193)		(5,943)		Payments	(2,159)		(10,212)
Translation and other	Translation and other	(692)		(76)		Translation and other	(687)		(342)
Balance at end of period	Balance at end of period	$	11,873	$	19,537	Balance at end of period	$	10,621	$	15,210

~~We accrue~~The Company accrues estimated expense included in Cost of operations on ~~our~~its Condensed Consolidated Statements of Operations to satisfy contractual warranty requirements when ~~we recognize~~it recognizes 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,~~September 30, 2022 included $0.4 million related to the Fosler projects, as described in Note 4. In addition, ~~we record~~the Company records specific provisions or reductions where ~~we expect~~it expects the actual warranty costs to significantly

differ from the accrued estimates. Such changes could have a material effect on ~~our~~the Company's consolidated financial condition, results of operations and cash flows.

NOTE 10 – RESTRUCTURING ACTIVITIES

The Company incurred restructuring charges (benefits) in the three and nine months ended ~~March 31,~~September 30, 2022, and 2021. The charges (benefits) primarily consist of severance and related costs to actions taken as part of the Company’s strategic, market-focused organizational and re-branding initiative.

The following tables summarizes the restructuring activity incurred by segment:


		Three Months Ended March 31,						Three Months Ended March 31,							Three Months Ended September 30,						Three Months Ended September 30,
		2022						2021							2022						2021
(in thousands)	(in thousands)	Total		Severance and related costs		Other (1)		Total		Severance and related Costs		Other(1)		(in thousands)	Total		Severance and related costs (benefit)		Other (1)		Total		Severance and related costs		Other(1)
B&W Renewable segment	B&W Renewable segment	$	(193)	$	(229)	$	36	$	509	$	453	$	56	B&W Renewable segment	$	78	$	6	$	72	$	715	$	382	$	333
B&W Environmental segment	B&W Environmental segment	69		10		59		89		35		54		B&W Environmental segment	73		8		65		332		128		204
B&W Thermal segment	B&W Thermal segment	198		50		148		348		12		336		B&W Thermal segment	204		14		190		1,242		362		880
Corporate	Corporate	20		—		20		47		—		47		Corporate	4		1		3		2,286		124		2,162
		$	94	$	(169)	$	263	$	993	$	500	$	493		$	359	$	29	$	330	$	4,575	$	996	$	3,579
Cumulative costs to date		$	45,277	37,083		8,194		0


	Nine Months Ended September 30,						Nine Months Ended September 30,
	2022						2021
(in thousands)	Total		Severance and related costs (benefit)		Other (1)		Total		Severance and related costs		Other(1)
B&W Renewable segment	$	865	$	743	$	122	$	1,781	$	1,301	$	480
B&W Environmental segment	176		27		149		630		335		295
B&W Thermal segment	484		130		354		3,132		1,409		1,723
Corporate	(1,174)		(1,227)		53		2,425		132		2,293
	$	351	$	(327)	$	678	$	7,968	$	3,177	$	4,791
Cumulative costs to date	$	45,534	36,925		8,609

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

Restructuring liabilities are included in Other accrued liabilities on ~~our~~the Company's Condensed Consolidated Balance Sheets. Activity related to the restructuring liabilities is as follows:


		Three Months Ended March 31,			Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands)	(in thousands)		2022			2021		(in thousands)	2022			2021		2022		2021
Balance at beginning of period	Balance at beginning of period		$	6,561		$	8,146	Balance at beginning of period	$	4,136		$	7,945	$	6,561	$	8,146
Restructuring expense			94			993
Restructuring (benefit) expense								Restructuring (benefit) expense	359			4,575		351		7,968
Payments	Payments		(749)			(1,117)		Payments	(1,943)			(5,482)		(4,360)		(9,076)
Balance at end of period	Balance at end of period		$	5,906		$	8,022	Balance at end of period	$	2,552		$	7,038	$	2,552	$	7,038

The payments shown above for the three and nine months ended ~~March 31,~~September 30, 2022 and 2021 relate primarily to ~~severance.~~severance costs. Accrued restructuring liabilities at ~~March 31,~~September 30, 2022 and 2021 relate primarily to employee termination benefits.

NOTE 11 – PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS

Components of net periodic cost (benefit) included in net (loss) income are as follows:


		Pension Benefits				Other Benefits			Pension Benefits								Other Benefits
		Three Months Ended March 31,				Three Months Ended March 31,			Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	(in thousands)	2022		2021			2022			2021		(in thousands)	2022		2021		2022		2021			2022		2021		2022		2021
Interest cost	Interest cost	$	6,664	$	5,671		$	49		$	39	Interest cost	$	6,685	$	5,603	$	19,958	$	16,883		$	49	$	109	$	147	$	187
Expected return on plan assets	Expected return on plan assets	(14,366)		(15,009)			—			—		Expected return on plan assets	(14,358)		(13,527)		(42,985)		(40,309)			—		—		—		—
Amortization of prior service cost (credit)		28		28			173			173
Amortization of prior service cost												Amortization of prior service cost	27		28		82		84			173		173		519		519
Recognized net actuarial gain												Recognized net actuarial gain	—		(2,253)		—		(2,253)			—		—		—		—
Benefit plans, net (1)	Benefit plans, net (1)	(7,674)		(9,310)			222			212		Benefit plans, net (1)	(7,646)		(10,149)		(22,945)		(25,595)			222		282		666		706
Service cost included in COS (2)	Service cost included in COS (2)	201		217			5			6		Service cost included in COS (2)	195		217		594		652			5		6		15		18
Net periodic benefit cost (benefit)	Net periodic benefit cost (benefit)	$	(7,473)	$	(9,093)		$	227		$	218	Net periodic benefit cost (benefit)	$	(7,451)	$	(9,932)	$	(22,351)	$	(24,943)		$	227	$	288	$	681	$	724

(1) Benefit plans, net,, which is presented separately in ~~our~~the Company's Condensed Consolidated Statements of Operations, is not allocated to the segments.

(2) Service cost related to a small group of active participants is presented within Cost of operations in ~~our~~the Company's Condensed Consolidated Statements of Operations and is allocated to the B&W Thermal segment.

There were no mark-to-market ("MTM") adjustments for ~~our~~the Company's pension and other postretirement benefit plans during the three and nine months ended ~~March 31,~~September 30, 2022 and 2021.

WeThe Company made contributions to ~~our~~its pension and other postretirement benefit plans totaling ~~$0.4~~$1.7 million and ~~$24.0~~$2.5 million during the three and nine months ended ~~March 31,~~September 30, 2022, respectively, as compared to $0.4 million and $24.7 million during the three and nine months ended September 30, 2021, respectively.

NOTE 12 – DEBT

Senior Notes

8.125% Senior Notes

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

On March 31, 2021, wethe Company entered into a sales agreement with B. Riley Securities, Inc., a related party, in which weit may sell to or through B. Riley Securities, Inc., from time to time, additional 8.125% Senior Notes up to an aggregate principal amount of $150.0 million. The 8.125% Senior Notes have the same terms as (other than date of issuance), form a single series of debt securities with and have the same CUSIP number and are fungible with the initial 8.125% Senior Notes issuance in 2021.

During the first ~~quarter~~nine months of 2022, the Company sold ~~$2.0~~$5.4 million aggregate principal of 8.125% Senior Notes under the sales agreement described above for ~~$2.0~~$5.4 million of net proceeds.

6.50% Senior Notes

During 2021, wethe Company completed sales of $151.4 million aggregate principal amount of ~~our~~its 6.50% senior notes due in 2026 (the “6.50% Senior Notes”) for net proceeds of approximately $145.8 million. Interest on the 6.50% Senior Notes is

payable quarterly in arrears on March 31, June 30, September 30 and December 31 of each ~~year, and commenced on March 31, 2022.~~year. The 6.50% Senior Notes mature on December 31, 2026.

The components of the Company's senior notes at ~~March 31,~~September 30, 2022 are as follows:


		Senior Notes							Senior Notes
(in thousands)	(in thousands)	8.125%		6.50%		Total		(in thousands)	8.125%		6.50%		Total
Senior notes due 2026	Senior notes due 2026	$	188,200	$	151,440	$	339,640	Senior notes due 2026	$	191,640	$	151,440	$	343,080
Unamortized deferred financing costs	Unamortized deferred financing costs	(5,043)		(6,297)		(11,340)		Unamortized deferred financing costs	(4,442)		(5,633)		(10,075)
Unamortized premium	Unamortized premium	570		—		570		Unamortized premium	493		—		493
Net debt balance	Net debt balance	$	183,727	$	145,143	$	328,870	Net debt balance	$	187,691	$	145,807	$	333,498

Revolving Debt

On June 30, 2021, wethe Company 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~~its subsidiaries as guarantors, pursuant to which ~~we are~~the Company is obligated to reimburse MSD and any other cash collateral provider to the extent the cash collateral provided by MSD and any other cash collateral provider to secure the Letter of Credit Agreement is drawn to satisfy draws on letters of credit (the “Reimbursement Agreement”) and collectively with the Revolving Credit Agreement and Letter of Credit Agreement, the “Debt Documents” and the facilities thereunder, the “Debt Facilities”). The obligations of the Company under each of the Debt Facilities are guaranteed by certain existing and future domestic and foreign subsidiaries of the Company. B. Riley Financial, Inc. (“B. Riley”), a related party, has provided a guaranty of payment with regard to the Company’s obligations under the Reimbursement Agreement, as described below. The Company expects to use the proceeds and letter of credit availability under the Debt Facilities for working capital purposes and general corporate purposes. The Revolving Credit Agreement matures on June 30, 2025. As of ~~March 31,~~September 30, 2022, no borrowings have occurred under the Revolving Credit Agreement and under the Letter of Credit Agreement, usage consisted of ~~$16.2~~$15.1 million of financial letters of credit and ~~$90.8~~$94.3 million of performance letters of credit.

Each of the Debt Facilities has a maturity date of June 30, 2025. The interest rates applicable under the Revolving Credit Agreement float at a rate per annum equal to either (i) a base rate plus 2.0% or (ii) 1 or 3 month reserve-adjusted LIBOR rate plus 3.0%. The interest rates applicable to the Reimbursement Agreement float at a rate per annum equal to either (i) a base rate plus 6.50% or (ii) 1 or 3 month reserve-adjusted LIBOR plus 7.50%. Under the Letter of Credit Agreement, the Company is required to pay letter of credit fees on outstanding letters of credit equal to (i) administrative fees of 0.75% and (ii) fronting fees of 0.25%. Under the Revolving Credit Agreement, the Company is required to pay letter of credit fees on outstanding letters of credit equal to (i) letter of credit commitment fees of 3.0% and (ii) letter of credit fronting fees of 0.25%. Under each of the Revolving Credit Agreement and the Letter of Credit Agreement, ~~we are~~the Company is 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, a current ratio of not less than 1.25 to 1.00, 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. As of September 30, 2022, the Company was not in compliance with the aforementioned quarterly fixed charge coverage test and received a waiver from MSD and PNC for the period ended September 30, 2022.

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

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

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

Letters of Credit, Bank Guarantees and Surety Bonds

Certain of ~~our~~the Company's 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~~the Company's Letter of Credit Agreement as of ~~March 31,~~September 30, 2022 was ~~$48.3~~$45.1 million. The aggregate value of the outstanding letters of credit provided under the Letter of

Credit Agreement backstopping letters of credit or bank guarantees was ~~$34.8~~$36.7 million as of ~~March 31,~~September 30, 2022. Of the outstanding letters of credit issued under the Letter of Credit Agreement, ~~$52.0~~$58.8 million are subject to foreign currency revaluation.

~~We have~~The Company has also posted surety bonds to support contractual obligations to customers relating to certain contracts. ~~We utilize~~The Company utilizes 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 wethe Company fail to perform ~~our~~its obligations under ~~the~~its applicable contracts. ~~We,~~The Company, and certain of ~~our~~its subsidiaries, have jointly executed general agreements of indemnity in favor of surety underwriters relating to surety bonds the underwriters issue in support of some of ~~our~~its contracting activity. As of ~~March 31,~~September 30, 2022, bonds issued and outstanding under these arrangements in support of ~~our~~its contracts totaled approximately ~~$221.5~~$333.9 million. The aggregate value of the letters of credit backstopping surety bonds was ~~$9.2~~$8.7 million.

~~Our~~The Company's ability to obtain and maintain sufficient capacity under ~~our~~the its current Debt Facilities is essential to allow usit to support the issuance of letters of credit, bank guarantees and surety bonds. Without sufficient capacity, ~~our~~the Company's ability to support contract security requirements in the future will be diminished.

Other Indebtedness - Loans Payable

As of ~~March 31,~~September 30, 2022, ~~our~~the Company's Denmark subsidiary has 3an unsecured interest-free ~~loans totaling $3.3~~loan of $0.7 million under a local government loan program related to ~~COVID-19. The loans of $0.8 million,~~COVID-19 that is payable May 2023. In addition, the Company had $1.6 million ~~and $0.9 million~~in a loan payable related to financed insurance premiums payable April 2023. These loan payables are included in current Loans 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~~the Company's Condensed Consolidated Balance Sheets. ~~Subsequent to March 31, 2022, the loan due April 2022 was repaid on April 1, 2022.~~

~~As of March 31, 2022,~~ Fosler Construction ~~has 2 loans totaling $8.9 million. Both loans have a variable interest rate with a minimum rate of 6.0% and are due June 30, 2022. Fosler Construction also~~ has loans, primarily for vehicles and equipment, totaling ~~$0.6~~$0.5 million at ~~March 31,~~September 30, 2022. The vehicle and equipment loans are included in ~~long term~~Long-term loans payables in ~~our~~the Company's Condensed Consolidated Balance Sheets.

NOTE 13 – PREFERRED STOCK

In May 2021, wethe Company completed a public offering of ~~our~~its 7.75% Series A Cumulative Perpetual Preferred Stock (the "Preferred Stock") pursuant to an underwriting agreement (the “Underwriting Agreement”) between usthe Company and B. Riley Securities, ~~Inc..~~Inc. At the closing, wethe Company issued to the public 4,444,700 shares of ~~our~~its Preferred Stock, at an offering price of $25.00 per share for net proceeds of approximately $106.4 million after deducting underwriting discounts, commissions but before expenses. The Preferred Stock has a par value of $0.01 per share and is perpetual and has no maturity date. The Preferred Stock has a cumulative cash dividend, when and as if declared by ~~our~~the Company's Board of Directors, at a rate of 7.75% per year on the liquidation preference amount of $25.00 per share and payable quarterly in arrears.

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

The Preferred Stock has no stated maturity and is not subject to mandatory redemption or any sinking fund. WeThe Company will pay cumulative cash dividends on the Preferred Stock when, as and if declared by ~~our~~its 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~~the Company's Board of Directors will be payable quarterly in arrears on March 31, June 30, September 30 and December 31 of each year.

During the ~~three~~nine months ending ~~March 31,~~September 30, 2022, the Company's Board of Directors approved dividends totaling ~~$3.7~~$11.1 million. There are no cumulative undeclared dividends of the Preferred Stock at ~~March 31,~~September 30, 2022.

On June 1, 2021, the Company and B. Riley, a related party, entered into an agreement (the “Exchange Agreement”) pursuant to which wethe Company (i) issued B. Riley 2,916,880 shares of ~~our~~its Preferred Stock, representing an exchange price of $25.00 per share

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~~the Company's then existing term loans with B. Riley under the Company’s prior A&R Credit Agreement.

On July 7, 2021, wethe Company entered into a sales agreement with B. Riley Securities, Inc., a related party, in connection with the offer to or through B. Riley Securities, Inc., from time to time, additional shares of Preferred Stock up to an aggregate amount of $76.0 million of Preferred Stock. The Preferred Stock has the same terms and have the same CUSIP number and is fungible with, the Preferred Stock issued during May 2021. For the ~~three~~nine months ending ~~March 31,~~September 30, 2022, the Company has sold no additional Preferred Stock pursuant to the sales agreement. As of December 31, 2021, the Company sold $7.7 million aggregate principal amount of Preferred Stock for $7.7 million of net proceeds.

NOTE 14 – COMMON STOCK

On February 12, 2021, wethe Company completed a public offering of ~~our~~its common stock pursuant to an underwriting agreement dated February 9, 2021, between usthe Company and B. Riley Securities, Inc., as representative of the several underwriters. At the time of closing, wethe Company issued to the public 29,487,180 shares of ~~our~~its 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~~the Company's then existing U.S. Revolving Credit Facility and permanently reduced the commitments under ~~our~~its senior secured credit facilities.

On May 19, 2022, at the 2022 annual meeting of stockholders of the Company, the stockholders of the Company, upon the recommendation of the Company’s Board of Directors, approved an amendment to the Babcock & Wilcox Enterprises, Inc. 2021 Long-Term Incentive Plan. The Plan Amendment became effective upon such stockholder approval. The Plan Amendment increased the total number of shares of the Company’s common stock authorized for award grants under the 2021 Plan from 1,250,000 shares to 5,250,000 shares. The 2021 Plan replaced the Company’s Amended and Restated 2015 Long-Term Incentive Plan. In addition to the 5,250,000 shares available for award grant purposes under the 2021 Plan as described above, any shares of Company common stock underlying any outstanding award granted under the 2015 Plan that,

following May 20, 2021, expires, or is terminated, surrendered, or forfeited for any reason without issuance of such shares shall also be available for the grant of new awards under the 2021 Plan.

NOTE 15 –INTEREST EXPENSE AND SUPPLEMENTAL CASH FLOW INFORMATION

Interest expense in ~~our~~the Company's Condensed Consolidated Financial Statements consisted of the following components:


		Three Months Ended March 31,			Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	(in thousands)		2022			2021		(in thousands)	2022		2021		2022		2021
Components associated with borrowings from:	Components associated with borrowings from:							Components associated with borrowings from:
Senior notes	Senior notes		$	6,216		$	1,733	Senior notes	$	6,385	$	3,801	$	18,715	$	8,993
Last Out Term Loans - cash interest	Last Out Term Loans - cash interest		—			3,513		Last Out Term Loans - cash interest	—		—		—		4,349
U.S. Revolving Credit Facility	U.S. Revolving Credit Facility		—			1,416		U.S. Revolving Credit Facility	—		—		—		1,416
			6,216			6,662			6,385		3,801		18,715		14,758
Components associated with amortization or accretion of:	Components associated with amortization or accretion of:							Components associated with amortization or accretion of:
Revolving Credit Agreement	Revolving Credit Agreement		1,060			—		Revolving Credit Agreement	1,237		1,057		3,465		1,057
Senior notes	Senior notes		643			1,468		Senior notes	657		335		1,950		2,101
U.S. Revolving Credit Facility	U.S. Revolving Credit Facility		—			4,400		U.S. Revolving Credit Facility	—		—		—		5,995
			1,703			5,868			1,894		1,392		5,415		9,153

Components associated with interest from:	Components associated with interest from:							Components associated with interest from:
Lease liabilities	Lease liabilities		708			616		Lease liabilities	707		870		2,112		2,194
Other interest expense	Other interest expense		2,640			1,077		Other interest expense	2,334		2,267		7,007		4,469
			3,348			1,693			3,041		3,137		9,119		6,663

Total interest expense	Total interest expense		$	11,267		$	14,223	Total interest expense	$	11,320	$	8,330	$	33,249	$	30,574

The following table provides a reconciliation of Cash, ~~and~~ cash equivalents and ~~Restricted~~Short-term and Long-term restricted cash ~~and cash equivalents~~ reporting within the Company's Condensed Consolidated Balance Sheets and in the Condensed Consolidated Statements of Cash Flows:


(in thousands)	(in thousands)	March 31, 2022		December 31, 2021		March 31, 2021		(in thousands)	September 30, 2022		December 31, 2021		September 30, 2021
Held by foreign entities	Held by foreign entities	$	35,870	$	42,070	$	25,169	Held by foreign entities	$	27,435	$	42,070	$	39,238
Held by U.S. entities	Held by U.S. entities	72,267		182,804		28,664		Held by U.S. entities	21,036		182,804		67,817
Cash and cash equivalents	Cash and cash equivalents	108,137		224,874		53,833		Cash and cash equivalents	48,471		224,874		107,055

Reinsurance reserve requirements	Reinsurance reserve requirements	584		443		2,053		Reinsurance reserve requirements	648		443		774
Bank guarantee collateral	Bank guarantee collateral	492		997		2,560		Bank guarantee collateral	1,892		997		1,026
Letters of credit collateral	Letters of credit collateral	1,858		401		—		Letters of credit collateral	1,190		401		6,892
Hold-back for acquisition purchase price (1)	Hold-back for acquisition purchase price (1)	5,899		—		—		Hold-back for acquisition purchase price (1)	5,900		—		—
Restricted cash and cash equivalents		8,833		1,841		4,613
Escrow for long-term project (2)								Escrow for long-term project (2)	11,397		—		—
Current and Long-term restricted cash and cash equivalents								Current and Long-term restricted cash and cash equivalents	21,027		1,841		8,692
Total cash, cash equivalents and restricted cash shown in the Condensed Consolidated Statements of Cash Flows	Total cash, cash equivalents and restricted cash shown in the Condensed Consolidated Statements of Cash Flows	$	116,970	$	226,715	$	58,446	Total cash, cash equivalents and restricted cash shown in the Condensed Consolidated Statements of Cash Flows	$	69,498	$	226,715	$	115,747

(1) The purchase price for Fossil Power Systems ("FPS") was ~~$59.1~~$59.2 million, including a hold-back of $5.9 million ~~as reflected above.~~ which is included in Current restricted cash and cash equivalents and Other accrued liabilities on the Company's Condensed Consolidated Balance Sheets. 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.

(2) On December 15, 2021, the Company entered into an agreement to place $11.5 million in an escrow account as security to ensure project performance. On April 30, 2023, $2.5 million of the total amount held in escrow will be reclassified from Long-Term restricted cash to Current restricted cash in anticipation of the initial payment on April 20, 2024. The ~~hold-back~~remaining amount ~~is included in Restricted~~of $9.0 million will be reclassified from Long-term restricted cash ~~and~~to Current restricted cash ~~equivalents and Other accrued liabilities~~ on ~~our Condensed Consolidated Balance Sheets.~~September 30, 2024, with a scheduled final settlement on September 30, 2025.

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


		Three Months Ended March 31,				Nine Months Ended September 30,
(in thousands)	(in thousands)	2022		2021			(in thousands)	2022		2021
Income tax payments, net	Income tax payments, net	$	471	$	1,499		Income tax payments, net	$	2,693	$	6,094

Interest payments - 8.125% Senior Notes due 2026	Interest payments - 8.125% Senior Notes due 2026	$	3,783	$	—		Interest payments - 8.125% Senior Notes due 2026	$	11,444	$	6,681
Interest payments - 6.50% Senior Notes due 2026	Interest payments - 6.50% Senior Notes due 2026	2,926		—			Interest payments - 6.50% Senior Notes due 2026	7,848		—
Interest payments on our U.S. Revolving Credit Facility		—		5,979
Interest payments on our Last Out Term Loans		—		3,560
Interest payments on U.S. Revolving Credit Facility							Interest payments on U.S. Revolving Credit Facility	—		5,979
Interest payments on Last Out Term Loans							Interest payments on Last Out Term Loans	—		6,140
Total cash paid for interest	Total cash paid for interest	$	6,709	$	9,539		Total cash paid for interest	$	19,292	$	18,800

NOTE 16 – PROVISION FOR INCOME TAXES

In the three months ended ~~March 31,~~September 30, 2022, income tax expense was ~~$1.2~~$4.9 million, resulting in an effective tax rate of ~~(16.5)~~(31.3)%. In the three months ended ~~March 31,~~September 30, 2021, income tax expense was ~~$2.8~~$0.3 million, resulting in an effective tax rate of ~~(22.5)%~~2.2%.

~~Our~~In the nine months ended September 30, 2022, income tax expense was $4.8 million, resulting in an effective tax rate of (17.4)%. In the nine months ended September 30, 2021, income tax expense was $6.7 million, resulting in an effective tax rate of 83.2%.

The Company's effective tax rate for the three and nine months ended ~~March 31,~~September 30, 2022 and 2021 is not reflective of the U.S. statutory rate due to valuation allowances against certain net deferred tax assets and discrete items. ~~We have~~The Company has unfavorable discrete items of ~~$0.4~~$0.7 million and $1.2 million for the three and nine months ended ~~March 31,~~September 30, 2022, which primarily represent withholding ~~taxes. We~~taxes and deferred tax asset remeasurement due to an enacted change in tax law. The Company had favorable discrete items of $0.6 million and unfavorable discrete items of ~~$2.5~~$2.9 million infor the three and nine months ended ~~March 31,~~September 30, 2021, which primarily represented withholding ~~taxes.~~taxes and deferred tax liability remeasurement due to an enacted change in tax law.

~~We are~~The Company is 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~~The Company provides for income taxes based on the tax laws and rates in the jurisdictions where ~~we conduct~~it conducts operations. These jurisdictions may have regimes of taxation that vary in both nominal rates and the basis on which these rates are applied. ~~Our~~The Company's 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~~its income, and valuation allowances.

The Inflation Reduction Act ("IRA") and CHIPS and Science Act ("CHIPS Act") were signed into law in August 2022. The IRA introduced new provisions, including a 15 percent corporate alternative minimum tax for certain large corporations that have at least an average of $1 billion adjusted financial statement income over a consecutive three-tax-year period and a new excise tax on corporate stock buybacks of public US companies. The CHIPS Act, introduces investment tax credits and incentives in semiconductor manufacturing. The corporate minimum tax and excise tax on stock buybacks will be effective for years beginning after December 31, 2022. There is no impact to our financial position at this time.

2325

NOTE 17 – CONTINGENCIES

Litigation Relating to Boiler Installation and Supply Contract

On December 27, 2019, a complaint was filed against Babcock & Wilcox by P.H. Glatfelter Company (“Glatfelter”) in the United States District Court for the Middle District of Pennsylvania, Case No. 1:19-cv-02215-JPW, alleging claims of breach of contract, fraud, negligent misrepresentation, promissory estoppel and unjust enrichment (the “Glatfelter Litigation”). The complaint alleges damages in excess of $58.9 million. On March 16, 2020 wethe Company 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, wethe Company filed ~~our~~its answer and a counterclaim for breach of contract, seeking damages in excess of $2.9 million. ~~We intend~~The Company intends to continue to vigorously litigate the action. However, given the stage of the litigation, it is too early to determine if the outcome of the Glatfelter Litigation will have a material adverse impact on ~~our~~The Company's consolidated financial condition, results of operations or cash flows.

Stockholder Derivative and Class Action Litigation

On April 14, 2020, a putative B&W stockholder (“Plaintiff”) filed a derivative and class action complaint against certain of the Company’s directors (current and former), executives and significant stockholders ~~(“Defendants”~~(collectively, “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"~~(the “Stockholder Litigation”). Plaintiff alleges that Defendants, among other things, did not properly discharge their fiduciary duties in connection with the 2019 rights offering and related transactions. ~~The litigation is currently ongoing and at this time we are unable~~

On June 10, 2022, after pursuing private mediation, the parties to ~~determine whether the outcome of~~ the Stockholder Litigation reached a settlement agreement in principle to resolve the Stockholder Litigation. That settlement agreement includes (i) certain corporate governance changes that the Company is willing to implement in the future, (ii) a total payment of $9.5 million, and (iii) other customary terms and conditions. All attorney’s fees, administration costs, and expenses associated with the settlement of this matter will be deducted from the total payment amount, other than the cost of notice, which will be borne by the Company. Of the total settlement amount, the Company will pay $4.75 million on behalf of B. Riley Financial, Inc. and Vintage Capital Management, LLC pursuant to existing contractual indemnification obligations to settle Plaintiff’s direct claims asserted against these entities. This $4.75 million, after the deduction of attorney’s fees and the customary settlement costs and expenses described above, will be paid to shareholders of the Company, excluding any Defendant in the Stockholder Litigation. The remaining $4.75 million of the total settlement amount, after the deduction of attorney’s fees and the customary settlement costs and expenses described above, will be paid to the Company from insurance proceeds and the contribution of certain other parties to the Stockholder Litigation to settle the derivative claims asserted by Plaintiff on behalf of the Company. The proposed settlement, which remains subject to court approval, would resolve all claims that have ~~a material adverse impact~~been, could have been, could now be, or in the future could, can, or might be asserted in the Stockholder Litigation. The settlement of this matter remains subject to court approval and the amount to be paid by the Company is fully accrued and reflected in Other accrued liabilities on ~~our consolidated financial condition, results of operations or cash flows, net of any insurance coverage.~~the Company's Condensed Consolidated Balance Sheets at September 30, 2022.

Russian Invasion of Ukraine

~~We do~~The Company does not currently have contracts directly with Russian entities or businesses and weit currently dodoes not doconduct business in Russia directly. ~~We believe~~It is believed that the Company’s only involvement with Russia or ~~Russian-entities,~~Russian entities, involves sales of ~~our~~its products with a trade receivable 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~~the Company's products to Russian entities or perform services in Russia using ~~our~~its products. The Company has implemented a restricted party screening process completed by a third party to monitor compliance with trade restrictions. The economic sanctions and export-control measures and the ongoing invasion of Ukraine could impact ~~our~~the Company's subsidiary’s rights and responsibilities under the contracts and could result in potential losses to the Company.

Other

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

2427

NOTE 18 – 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, ~~quarter~~second and third quarters of 2022 and 2021 were as follows:


(in thousands)	(in thousands)	Currency translation loss		Net unrecognized loss related to benefit plans (net of tax)		Total		(in thousands)	Currency translation loss		Net unrecognized loss related to benefit plans (net of tax)		Total
Balance at December 31, 2021	Balance at December 31, 2021	$	(55,499)	$	(3,323)	$	(58,822)	Balance at December 31, 2021	$	(55,499)	$	(3,323)	$	(58,822)
Other comprehensive loss before reclassifications	Other comprehensive loss before reclassifications	(4,285)		—		(4,285)		Other comprehensive loss before reclassifications	(4,285)		—		(4,285)
Reclassified from AOCI to net loss	Reclassified from AOCI to net loss	—		593		593		Reclassified from AOCI to net loss	—		593		593
Net other comprehensive (loss) income	Net other comprehensive (loss) income	(4,285)		593		(3,692)		Net other comprehensive (loss) income	(4,285)		593		(3,692)
Balance at March 31, 2022	Balance at March 31, 2022	(59,784)		(2,730)		(62,514)		Balance at March 31, 2022	$	(59,784)	$	(2,730)	$	(62,514)
Other comprehensive loss before reclassifications								Other comprehensive loss before reclassifications	(6,634)		—		(6,634)
Reclassified from AOCI to net loss								Reclassified from AOCI to net loss	—		(198)		(198)
Net other comprehensive loss								Net other comprehensive loss	(6,634)		(198)		(6,832)
Balance at June 30, 2022								Balance at June 30, 2022	$	(66,418)	$	(2,928)	$	(69,346)
Other comprehensive loss before reclassifications								Other comprehensive loss before reclassifications	$	(13,344)	$	—	(13,344)
Reclassified from AOCI to net loss								Reclassified from AOCI to net loss			$	198	198
Net other comprehensive loss								Net other comprehensive loss	(13,344)		198		(13,146)
Balance at September 30, 2022								Balance at September 30, 2022	$	(79,762)	$	(2,730)	$	(82,492)


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

The amounts reclassified out of AOCI by component and the affected Condensed Consolidated Statements of Operations line items are as follows (in thousands):


AOCI component	AOCI component	Line items in the Condensed Consolidated Statements of Operations affected by reclassifications from AOCI	Three Months Ended March 31,			AOCI component	Line items in the Condensed Consolidated Statements of Operations affected by reclassifications from AOCI			Three Months Ended September 30,			Nine Months Ended September 30,
				2022						2021	AOCI component	Line items in the Condensed Consolidated Statements of Operations affected by reclassifications from AOCI	2022		2021		2022		2021
Release of currency translation adjustment with the sale of business	Release of currency translation adjustment with the sale of business	Loss on sale of business		$	—			$	4,512				$	—	$	—	$	—	$	4,512

Pension and post retirement adjustments, net of tax	Pension and post retirement adjustments, net of tax	Benefit plans, net		(593)				(198)			Pension and post retirement adjustments, net of tax	Benefit plans, net	198		(197)		593		(593)
		Net (loss) income		$	(593)			$	4,314			Net (loss) income	$	198	$	(197)	$	593	$	3,919

NOTE 19 – FAIR VALUE MEASUREMENTS

The following tables summarize ~~our~~the Company's 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 securities	Available-for-sale securities	March 31, 2022		Level 1		Level 2		Available-for-sale securities	September 30, 2022		Level 1		Level 2
Corporate notes and bonds	Corporate notes and bonds	$	8,218	$	8,218	$	—	Corporate notes and bonds	$	6,147	$	6,147	$	—
Mutual funds	Mutual funds	673		—		673		Mutual funds	620		—		620
United States Government and agency securities	United States Government and agency securities	2,933		2,933		—		United States Government and agency securities	3,787		3,787		—
Total fair value of available-for-sale securities	Total fair value of available-for-sale securities	$	11,824	$	11,151	$	673	Total fair value of available-for-sale securities	$	10,554	$	9,934	$	620


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

Available-For-Sale Securities

~~Our~~The Company's investments in available-for-sale securities are presented in Other asset~~other assets~~s on ~~our~~its Condensed Consolidated Balance Sheets with contractual maturities ranging from 0-5 years.

Senior Notes

See Note 12 above for a discussion of ~~our~~the Company's senior notes. The fair value of the senior notes is based on readily available quoted market prices as of ~~March 31,~~September 30, 2022.


(in thousands)	(in thousands)	March 31, 2022				(in thousands)	September 30, 2022
Senior Notes	Senior Notes	Carrying Value		Estimated Fair Value		Senior Notes	Carrying Value		Estimated Fair Value
8.125% Senior Notes due 2026 ('BWSN')	8.125% Senior Notes due 2026 ('BWSN')	$	188,200	$	197,759	8.125% Senior Notes due 2026 ('BWSN')	$	191,640	$	184,800
6.50% Senior Notes due 2026 ('BWNB')	6.50% Senior Notes due 2026 ('BWNB')	$	151,440	$	144,353	6.50% Senior Notes due 2026 ('BWNB')	$	151,440	$	144,898

Other Financial Instruments

WeThe Company used the following methods and assumptions in estimating ~~our~~its fair value disclosures for ~~our~~its other financial instruments:

•Cash and cash equivalents and restricted cash and cash equivalents. The carrying amounts that ~~we have~~the Company has 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.

•Revolving Debt. ~~We base~~The Company bases the fair values of debt instruments on quoted market prices. Where quoted prices are not available, ~~we base~~the Company bases 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~~the Company's Revolving Debt approximated their carrying value at ~~March 31,~~September 30, 2022.

•Warrants. The fair value of the warrants was established using the Black-Scholes option pricing model value approach.

•Contingent consideration: In connection with the Fosler Construction Company acquisition, the Company agreed to pay contingent consideration based on the achievement of targeted revenue thresholds for the year ended December 31, 2022. The range of undiscounted amounts the Company could be required to pay under the contingent consideration arrangement is between $0.0 million and $10.0 million. ~~As of March 31, 2022,~~The Company used the ~~fair~~Monte Carlo simulation method to calculate the value of the contingent consideration and it was determined that the value of the liability isshould be zero at September 30, 2022. As such, the Company removed $9.6 million ~~and is classified as a component of other~~from Other current liabilities in the Company's Condensed Consolidated Balance ~~Sheets.~~Sheets and recorded a reduction of Selling, General and Administrative expense of $9.6 million on the Company's Condensed Consolidated Statements of Operations. The fair value measurement of the contingent consideration related to the Fosler Construction Company acquisition was categorized as a Level 3 liability, as the measurement amount is based primarily on significant inputs not observable in the markets. The Company evaluates the fair value of contingent consideration and the corresponding liability each reporting period using an option pricing framework. The Company estimates projections during the earn-out period and volatility within the option pricing model captures variability in the potential pay-out. The analysis considers a discount rate applicable to the underlying projections and the risk of the Company paying the future liability.

NOTE 20 – RELATED PARTY TRANSACTIONS

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

Transactions with B. Riley

Based on its Schedule 13D filings with the SEC, B. Riley beneficially owns approximately ~~30.3%~~30.5% of ~~our~~the Company's outstanding common stock as of ~~March 31,~~September 30, 2022.

WeThe Company 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~~its Chief Executive Officer until December 31, 2023, unless terminated by either party with thirty days written notice. Under this agreement, payments are $0.75 million per annum, paid monthly. Subject to the achievement of certain performance objectives as determined by the Compensation Committee of the Board, a bonus or bonuses may also be earned and payable to BRPI Executive Consulting, LLC. Total fees associated with B. Riley related to the services of Mr. Kenny Young were $0.2 million and ~~$0.2~~$0.6 million for the three and nine months ended ~~March 31,~~September 30, 2022, respectively, and $0.2 million and $0.4 million for the three and nine months ended September 30, 2021, ~~respectively~~.respectively.

As described in Note 17, on June 10, 2022, after pursuing private mediation, the parties to the Stockholder Litigation reached a settlement agreement in principle to resolve the Stockholder Litigation. Of the total $9.5 million settlement amount, the Company will pay $4.75 million on behalf of B. Riley Financial, Inc. and Vintage Capital Management, LLC pursuant to existing contractual indemnification obligations to settle Plaintiff’s direct claims asserted against these entities. This $4.75 million, after the deduction of attorney’s fees and customary settlement costs and expenses, will be paid to shareholders of the Company, excluding any Defendant in the Stockholder Litigation. The settlement of this matter remains subject to court approval and the amount to be paid by the Company is fully accrued at September 30, 2022.

The public offering of ~~our~~the Company's 8.125% Senior Notes in February 2021, as described in Note 12, was conducted pursuant to an underwriting agreement dated February 10, 2021, between usthe Company and B. Riley Securities, Inc., an affiliate of B. Riley, as representative of several underwriters. At the closing date on February 12, 2021, wethe Company 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~~the Company's common stock, as described in Note 14, was conducted pursuant to an underwriting agreement dated February 9, 2021, between usthe Company and B. Riley Securities, Inc., as representative of the several underwriters. Also on February 12, 2021, wethe Company 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 wethe Company 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~~its existing Tranche A term loan with B. Riley Financial in the Exchange, as described in Note 12.

On March 31, 2021, wethe Company entered into a sales agreement with B. Riley Securities, Inc., a related party, in which wethe Company may sell, from time to time, up to an aggregated principal amount of $150.0 million of 8.125% Senior Notes due 2026 to or through B. Riley Securities, Inc., as described in Note 12. As of ~~March 31,~~September 30, 2022, wethe Company paid B. Riley Securities, Inc. $0.6 million for underwriting fees and other transaction costs related to the offering of which ~~$0.1~~$0.1 million has been paid for the ~~three~~nine months ended ~~March 31,~~September 30, 2022.

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

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

On June 1, 2021, wethe Company issued 2,916,880 shares of ~~the Company’s~~its 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~~the Company's then existing Last Out Term Loans and paid $0.9 million in cash for accrued interest, as described in Note 13.

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

On July 7, 2021, wethe Company entered into a sales agreement with B. Riley Securities, Inc., a related party, in which wethe Company may sell, from time to time, up to an aggregated principal amount of $76.0 million of Preferred Stock to or through B. Riley Securities, Inc., as described in Note 13. As of ~~March 31,~~September 30, 2022, wethe Company paid B. Riley Securities, Inc. $0.2 million for underwriting fees and other transaction costs related to the offering.

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

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

On December 28, 2021, wethe Company 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 December 30, 2021, wethe Company paid B. Riley Securities, Inc. $0.5 million for underwriting fees and other transaction cost related to the 6.50% Senior Notes overallotment.

On July 20, 2022, BRF Investments, LLC, an affiliate of B. Riley, a related party exercised 1,541,666.7 warrants to purchase 1,541,666 shares of the Company's common stock at a price per share of $0.01 pursuant to the terms of the warrant agreement between the Company and B. Riley dated July 23, 2019.

On July 28, 2022, the Company participated in the sale process of Hamon Holdings Corporation ("Hamon") for which B. Riley Securities, Inc., a related party to the Company, has been engaged as Hamon’s investment banker and to serve as advisor to Hamon through a Chapter 11 363 Asset Sale of Hamon’s entire United States business or potential carve-out of any of its four main subsidiaries. The Company was the successful bidder for the assets of one of those subsidiaries, Hamon Research-Cottrell, Inc., a major provider of air pollution control technology, for approximately $2.9 million.

NOTE 21 – ACQUISITIONS AND DIVESTITURES

Acquisitions

Fosler Construction

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

The total fair value of consideration for the acquisition is $36.0 million, including $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 targeted revenue 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 iswas between $0.0 million and $10.0 million. The Company used the Monte Carlo simulation method to calculate the value of the contingent consideration and it was determined that the value of the liability should be zero at September 30, 2022. See Note 19 for more details.

WeThe Company 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. Any subsequent changes in the fair values of the assets acquired and liabilities assumed during the measurement period ~~may result in adjustments~~and up to ~~goodwill.~~

AsSeptember 30, 2022 when the purchase price allocation was finalized. During the first nine months of ~~March 31,~~ 2022, wethe Company recorded an increase in goodwill of ~~$14.9~~$14.4 million resulting from the initial recognition of ~~$14.5~~$14.1 million of accrued liabilities and $0.4 million of warranty accruals ~~during this acquisition's annual~~as preliminary measurement period adjustments, as described in Note 4.

During the three and nine months ended September 30, 2022, the Company recorded $8.6 million in net losses from changes in the estimated revenues and costs to complete the eleven Fosler Solar loss contracts, as described in Note 4. The Company has submitted insurance claims to recover a portion of these losses as of September 30, 2022. See Note 4 for more details.

On September 24, 2022, the Company acquired the remaining 40% ownership stake in Fosler Construction for $12.7 million. In addition to the transfer of the remaining ownership stake, the settlement and share transfer agreement released all parties from the aforementioned contingent consideration arrangement, as well as other claims known as of the effective date of the agreement. The Company will make payments of $3.0 million, $5.0 million, and $4.7 million on January 16, 2023, June 30, 2023, and January 15, 2024, respectively, for a present value of $12.1 million at September 30, 2022. The Company has recorded the payments due within one year within the Other accrued liabilities caption and the payment due longer than one year within the Other non-current liabilities caption in the Company’s Condensed Consolidated Balance Sheet. As a result of the agreement, the Company removed the remaining non-controlling interest balance of $20.7 million from the Condensed Consolidated Balance Sheet and recorded an increase to Capital in Excess of Par Value for the $8.6 million difference.

During the quarter ended September 30, 2022, the Company identified certain factors, including the acquisition of the remaining 40% ownership stake in Fosler Construction Company Inc., which contributed to the identification of a triggering event, requiring an interim quantitative goodwill impairment assessment and resulted in a goodwill impairment charge at Fosler Construction of $7.2 million.See Note 7 for more details.

VODA

On November 30, 2021, wethe Company acquired 100% ownership of VODA A/S (“VODA”) through ~~our~~its 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~~the Company's B&W Renewable segment and is included in the B&W Renewable Services product line.

WeThe Company 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, wethe Company 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 to goodwill.

Fossil Power Systems

On February 1, 2022, wethe Company acquired 100% ownership of Fossil Power Systems, Inc. (“FPS”) for approximately ~~$59.1 million, excluding working capital adjustments.~~$59.2 million. 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 anand is recorded on ~~our~~the Company's Condensed Consolidated Balance Sheets in ~~restricted~~Restricted cash and cash equivalents and other accrued ~~liabilitie~~s.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~~the Company's B&W Thermal segment.

WeThe Company 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, wethe Company 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 to goodwill.

Optimus Industries

On February 28, 2022, wethe Company acquired 100% ownership of Optimus Industries, LLC ("Optimus Industries") for approximately ~~$19.0 million, excluding working capital adjustments.~~$19.2 million. 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~~the Company's 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~~Company estimated 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, wethe Company 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 to goodwill.

Hamon Holdings Corporation Industries

On July 28, 2022, the Company acquired certain assets of Hamon Holdings Corporation ("Hamon Holdings") through a competitive sale process, in connection with B. Riley Securities, Inc., a related party to the Company, had been engaged as Hamon Holdings’ investment banker and to serve as advisor to Hamon Holdings through a Chapter 11 363 Asset Sale of Hamon Holdings’ entire United States business or potential carve-out of any of its four main subsidiaries. B&W was the successful bidder for the assets of one of those subsidiaries, Hamon Research-Cottrell, Inc., ("Hamon") a major provider of air pollution control technology, for approximately $2.9 million.

Purchase Price Allocations

The ~~provisional measurements noted in the tables below are preliminary and subject to modification in the future. The preliminary~~ purchase price allocation to assets acquired and liabilities assumed in the acquisitions ~~were:~~are detailed in following tables. Specific to the Fosler Construction acquisition, the allocation of consideration to the net tangible and intangible assets acquired and liabilities assumed is based on estimated fair values at September 30, 2021, and was finalized during the quarter ended September 30, 2022. The following is a summary of the purchase price allocation to assets acquired and liabilities assumed in the Fosler Construction Acquisition:


		Fosler Construction							Fosler Construction
(in thousands)	(in thousands)	Initial Allocation of Consideration		Measurement Period Adjustments		Updated Preliminary Allocation		(in thousands)	Initial Allocation of Consideration		Measurement Period Adjustments(3)		Final Allocation

Accounts receivable	Accounts receivable	$	1,904	$	121	$	2,025	Accounts receivable	$	1,904	$	121	$	2,025
Contracts in progress	Contracts in progress	1,363		9,433		10,796		Contracts in progress	1,363		9,433		10,796
Other current assets	Other current assets	1,137		(304)		833		Other current assets	1,137		(835)		302
Property, plant and equipment	Property, plant and equipment	9,527		(7,860)		1,667		Property, plant and equipment	9,527		(7,860)		1,667
Goodwill(1) (4)	Goodwill(1) (4)	43,230		19,912		63,142		Goodwill(1) (4)	43,230		20,086		63,316
Other assets	Other assets	17,497		(4,600)		12,897		Other assets	17,497		(4,600)		12,897
Right of use assets	Right of use assets	1,093		—		1,093		Right of use assets	1,093		—		1,093
Debt	Debt	(7,625)		—		(7,625)		Debt	(7,625)		—		(7,625)
Current liabilities (4)	Current liabilities (4)	(5,073)		(15,829)		(20,902)		Current liabilities(4)	(5,073)		(15,472)		(20,545)
Advance billings on contracts	Advance billings on contracts	(1,557)		238		(1,319)		Advance billings on contracts	(1,557)		238		(1,319)
Non-current lease liabilities	Non-current lease liabilities	(1,730)		—		(1,730)		Non-current lease liabilities	(1,730)		—		(1,730)
Other non-current liabilities	Other non-current liabilities	(4,112)		3,218		(894)		Other non-current liabilities	(4,112)		3,218		(894)
Non-controlling interest(2)	Non-controlling interest(2)	(22,262)		(1,734)		(23,996)		Non-controlling interest(2)	(22,262)		(1,734)		(23,996)
Net acquisition cost	Net acquisition cost	$	33,392	$	2,595	$	35,987	Net acquisition cost	$	33,392	$	2,595	$	35,987

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

(2) The fair value of the 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~~The Company's purchase price allocation changed due to additional information and further analysis.

(4) ~~Our preliminary~~The Company's goodwill and current liabilities adjustments increased ~~$14.5~~$14.1 million, primarily due to additional accrued liabilities recognized attributable to the Fosler projects described in Note 4.

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

3034


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

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

(2) ~~Our~~The Company's preliminary purchase price allocation changed due to additional information and further analysis.


		Purchase Price Allocation at March 31, 2022					Fossil Power Systems
(in thousands)	(in thousands)	Fossil Power Systems		Optimus Industries(2)		(in thousands)	Estimated Acquisition Date Fair Value		Measurement Period Adjustments(2)		Updated Preliminary Allocation
Cash	Cash	$	1,869	$	5,338	Cash	$	1,869	$	—	$	1,869
Accounts receivable	Accounts receivable	2,624		5,165		Accounts receivable	2,624		—		2,624
Contracts in progress	Contracts in progress	370		2,598		Contracts in progress	370		—		370
Other current assets	Other current assets	3,228		2,115		Other current assets	3,228		—		3,228
Property, plant and equipment		178		2,441
Property, plant and equipment, net						Property, plant and equipment, net	178		—		178
Goodwill(1)	Goodwill(1)	35,392		11,081		Goodwill(1)	35,392		270		35,662
Other assets	Other assets	25,092		12		Other assets	25,092		—		25,092
Right of use assets	Right of use assets	1,115		94		Right of use assets	1,115		—		1,115
Current liabilities	Current liabilities	(1,792)		(4,240)		Current liabilities	(1,792)		(18)		(1,810)
Advance billings on contracts	Advance billings on contracts	(645)		(3,779)		Advance billings on contracts	(645)		—		(645)
Non-current lease liabilities	Non-current lease liabilities	(989)		(2)		Non-current lease liabilities	(989)		—		(989)
Other non-current liabilities		(7,384)		(1,858)
Non-current liabilities						Non-current liabilities	(7,384)		(106)		(7,490)
Net acquisition cost	Net acquisition cost	$	59,058	$	18,965	Net acquisition cost	$	59,058	$	146	$	59,204

(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) The Company's preliminary purchase price allocation changed due to additional information and further analysis.


	Optimus Industries
(in thousands)	Estimated Acquisition Date Fair Value		Measurement Period Adjustments(2)		Updated Preliminary Allocation
Cash	$	5,338	$	—	$	5,338
Accounts receivable	5,165		—		5,165
Contracts in progress	2,598		—		2,598
Other current assets	2,115		—		2,115
Property, plant and equipment, net	2,441		5,178		7,619
Goodwill(1)	11,081		(7,274)		3,807
Other assets	12		2,319		2,331
Right of use assets	94		11		105
Current liabilities	(4,240)		—		(4,240)
Advance billings on contracts	(3,779)		—		(3,779)
non-current lease liabilities	(2)		—		(2)
Non-current liabilities	(1,858)		—		(1,858)
Net acquisition cost	$	18,965	$	234	$	19,199

(1) Goodwill is calculated as the excess of the purchase price over the net assets acquired. With respect to the Optimus Industries ~~the fair value analysis has~~acquisition, goodwill represents Optimus Industries ability to significantly expand future customer relationships which are not ~~been completed. We will update the~~in place today and recognize general cost synergies.

(2) The Company's preliminary purchase price ~~allocations after the fair value analysis has been completed.~~allocation changed due to additional information and further analysis.

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


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

		Fossil Power Systems							Fossil Power Systems			Optimus Industries
		Estimated Acquisition Date Fair Value		Weighted Average Estimated Useful Life					Estimated Acquisition Date Fair Value		Weighted Average Estimated Useful Life	Estimated Acquisition Date Fair Value		Weighted Average Estimated Useful Life
Customer Relationships	Customer Relationships	$	20,451	9 years				Customer Relationships	$	20,451	9 years	2,100		10 years
Tradename	Tradename	787		14 years				Tradename	787		14 years	220		3 years
Patented Technology	Patented Technology	578		12 years				Patented Technology	578		12 years	—		—
Unpatented Technology	Unpatented Technology	3,276		12 years				Unpatented Technology	3,276		12 years	—		—
Total intangible assets(1)	Total intangible assets(1)	$	25,092					Total intangible assets(1)	$	25,092		$	2,320

(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.

~~Costs~~For the three and nine-month periods ended September 30, 2022, costs of $0.2 million and $1.0 million related to ~~our~~the Company's acquisitions of Fosler, VODA, Fossil Power Systems, and Optimus Industries ~~which~~ were recorded as a component of ~~our~~its operating expenses in ~~our~~the Condensed Consolidated Statements of ~~Operations, consists of the following:~~


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

Operations.

Divestitures

On June 30, 2022 the Company sold development rights related to a future solar project for $8.0 million. In conjunction with the sale, the Company recognized a $7.0 million gain on sale and recorded an $8.0 million receivable within Accounts

receivable – other in the Company's Condensed Consolidated Balance Sheet. During the 3 months ended September 30, 2022, the Company received $2.5 million of proceeds from the sale.

Certain real property assets for the Copley, Ohio location were sold on March 15, 2021 for $4.0 million. WeThe Company 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, which expires on March 31, 2033.

Certain real property assets for the Lancaster, Ohio location were sold on August 13, 2021 for $18.9 million. WeThe Company 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, wethe Company executed a leaseback agreement commencing August 13, 2021, which expires on August 31, 2041.

Effective March 5, 2021, wethe Company sold all of the issued and outstanding capital stock of Diamond Power Machine (Hubei) Co., Inc, for $2.8 million. Wethe Company 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 twelve months ended December 31, 2021, we recognized a $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.

NOTE 22 – NEW ACCOUNTING PRONOUNCEMENTS AND STANDARDS

WeThe Company adopted the following accounting standard during the first ~~quarter~~nine months of 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 impact of this standard on ~~our~~the Company's Condensed Consolidated Financial Statements was immaterial.

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

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 provides 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 in January 2023; all other entities have an additional year to adopt. Early adoption is permitted; however, if the new 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, 2022, including interim periods within those fiscal years. ~~We are~~The Company is currently evaluating the impact of the standard on ~~our condensed consolidated financial statements.~~its 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") model, and applies to financial assets measured at amortized cost, including loans, held-to-maturity debt securities, net investment in leases, and reinsurance and trade receivables, as well as certain off-balance sheet credit exposures, such as loan commitments. The standard also changes the impairment model for available-for-sale debt securities. The provisions of this standard will primarily impact the allowance for doubtful accounts on ~~our~~the Company's trade receivables, contracts in progress, and potentially ~~our~~its 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~~The Company is currently evaluating the impact of both standards on ~~our~~its Condensed Consolidated Financial Statements.

NOTE 23 – SUBSEQUENT EVENTS

On October 14, 2022, the Company changed the name of Fosler Construction to Babcock & Wilcox Solar Energy, Inc.

On October 25, 2022, the Company executed a revision to the lease on its Akron, Ohio headquarters which modified the payments and extended the term of the lease through June 2038 from its original expiration date of June 2034.

On November 7, 2022 the Company executed an amendment to it’s Debt Documents with MSD which modified certain financial maintenance covenants for future periods beginning with fiscal quarters ending on December 31, 2022. The Fixed Charge Coverage Ratio was amended to 0.55:1.0 for the fiscal quarter ending December 31, 2022, 0.65 to 1.00 for the fiscal quarter ending March 31, 2023, 0.80 to 1.00 for the fiscal quarter ending June 30, 2023, 1.15 to 1.00 for the fiscal quarter ending September 30, 2023 and 1.25 to 1.00 for the fiscal quarter ending December 31, 2023 and thereafter. The Senior Net Leverage Ratio was amended to 2.00 to 1.00 for the fiscal quarter ending December 31, 2022, 1.75 to 1.00 for the fiscal quarter ending March 31, 2023, 1.60 to 1.00 for the fiscal quarter ending June 30, 2023, and 1.50 to 1.00 for the fiscal quarter ending September 30, 2023 and thereafter. The amendment also establishes minimum cash flow covenants, as defined, for the fiscal quarter ending December 31, 2022 of $20.0 million and $25.0 million for the fiscal year 2023 and each fiscal year thereafter. Further, the amendment also establishes a minimum liquidity covenant of $30.0 million at all times. In addition, the Company also executed an amendment to it's Debt Documents with PNC which modified the calculation of the Fixed Charge Coverage Ratio for the fiscal quarters ending December 31, 2022, March 31, 2023 and June 30, 2023. The calculation of the Fixed Charge Coverage ratio for the fiscal quarter ending September 30, 2023 and thereafter will revert to the original calculation as stated in the original Debt Documents.

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

~~You should read the~~The following discussion of our financial condition and results of operations should be read 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.~~statements as a result of many factors, including those described in more detail under "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2021. See ~~Cautionary~~also "Cautionary Statement Concerning Forward-Looking ~~Information.~~Information" herein.

Third Quarter 2022 Update

Management continues to adapt to macroeconomic conditions, including rising inflation, higher interest rates, foreign exchange rate fluctuations and the impact of the ongoing conflict in Ukraine and the COVID-19 pandemic, all of which impacted the Company during the first nine months of 2022. The COVID-19 pandemic has continued to create challenges for us in countries that have significant outbreak mitigation strategies, namely, countries in our Asia-Pacific region, which led to temporary project postponements and has continued to impact results in this region. Additionally, the Company has experienced negative impacts to its global supply chains as a result of COVID-19, the war in Ukraine, Russia-related supply chain shortages and other factors, including disruptions to the manufacturing, supply, distribution, transportation and delivery of its products. The Company has also observed significant delays and disruptions of its service providers and negative impacts to pricing of certain of its products. These delays and disruptions have had, and could continue to have, an adverse impact on the Company’s ability to meet customers’ demands. We are continuing to actively monitor the impact of these market conditions on current and future periods and actively manage costs and our liquidity position to provide additional flexibility while still supporting our customers and their specific needs. The duration and scope of these conditions cannot be predicted, and therefore, any anticipated negative financial impact to the Company’s operating results cannot be reasonably estimated.

BUSINESS OVERVIEW

B&W is a growing, globally-focused renewable, environmental and thermal technologies provider with over 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. Our reportable segments are as follows:

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.

On February 1, 2022, we acquired 100% ownership of Fossil Power Systems, Inc. for approximately ~~$59.1 million, excluding working capital adjustments.~~$59.2 million. Fossil Power Systems, Inc., 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. Fossil Power Systems, Inc. is reported as part of our B&W Thermal segment.

On February 28, 2022, we acquired 100% ownership of Optimus Industries, LLC for approximately ~~$19.0 million, excluding working capital adjustments.~~$19.2 million. Optimus Industries, LLC 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, LLC is reported as part of 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 have manufacturing facilities in Mexico, the United States, Denmark, ~~Scotland~~the United Kingdom and 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 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 uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may differ materially from what we anticipate.

In addition, 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

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 following discussion of our business segment results of operations includes a discussion of adjusted EBITDA, which when used on a consolidated basis is a non-GAAP financial measure. Adjusted EBITDA differs from the most directly comparable measure calculated in accordance with generally accepted accounting principles (“GAAP”). A reconciliation of net income (loss), the most directly comparable GAAP measure, to adjusted EBITDA is included in “Non-GAAP Financial Measures” below. Management believes that this financial measure is useful to investors because it excludes certain expenses, allowing investors to more easily compare our financial performance period to period.

Three Months Ended March 31,
(in thousands) 2022 2021
Revenues:
B&W Renewable segment $ 67,961 $ 28,811
B&W Environmental segment 34,948 31,160
B&W Thermal segment 102,239 108,281
Eliminations (1,099) (4)
$ 204,049 $ 168,248


		Three Months Ended March 31,	Three Months Ended September 30,					Nine Months Ended September 30,
(in thousands)	(in thousands)			2022		2021			(in thousands)	2022		2021		$ Change		2022		2021		$ Change
Adjusted EBITDA
Revenues:									Revenues:
B&W Renewable segment	B&W Renewable segment			$	1,455	$	204		B&W Renewable segment	$	81,687	$	38,000	$	43,687	$	224,875	$	105,155	$	119,720
B&W Environmental segment	B&W Environmental segment			1,439		1,105			B&W Environmental segment	44,626		38,249		6,377		111,186		97,767		13,419
B&W Thermal segment	B&W Thermal segment			14,154		10,535			B&W Thermal segment	91,331		83,819		7,512		309,875		328,416		(18,541)
Corporate				(4,373)		(2,685)
Research and development costs				(655)		(588)
Eliminations									Eliminations	(2,774)		(108)		(2,666)		(5,998)		(270)		(5,728)
				$	12,020	$	8,571			$	214,870	$	159,960	$	54,910	$	639,938	$	531,068	$	108,870


	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands)	2022		2021		$ Change		2022		2021		$ Change
Adjusted EBITDA
B&W Renewable segment(1)	$	4,522	$	11,399	$	(6,877)	$	14,846	$	15,030	$	(184)
B&W Environmental segment	3,082		3,476		(394)		5,112		7,286		(2,174)
B&W Thermal segment	10,761		9,329		1,432		41,276		32,436		8,840
Corporate	(4,419)		(5,866)		1,447		(13,018)		(11,548)		(1,470)
Research and development costs	(891)		513		(1,404)		(2,532)		(560)		(1,972)
	$	13,055	$	18,851	$	(5,796)	$	45,684	$	42,644	$	3,040

(1) Adjusted EBITDA for nine months ended September 30, 2022 includes a $7.0 million non-recurring gain on sale related to development rights of a future solar project that was sold as well as the reduction to Selling, General and Administrative Costs of $9.6 million for the three and nine months ended September 30, 2022 that resulted from the reversal of the contingent consideration related to an acquisition.

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

Revenues increased by $~~35.8~~54.9 million to ~~$204.0~~$214.9 million in the three months ended ~~March 31,~~September 30, 2022 as compared to ~~$168.2~~$160.0 million in the three months ended ~~March 31,~~September 30, 2021. The increase is primarily attributable to ~~higher volume driven by new-~~

~~build projects and~~ the acquisitions of Fosler Construction and VODA within our Renewable segment, higher overall volume in our Environmental segment and the acquisitions of Fossil Power ~~Systems~~Systems and Optimus Industries within our Thermal segment ~~in addition to a higher level of volume in our Environmental segment~~being 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 continue to 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 sections below.

Net ~~loss improved~~(loss)/income decreased by ~~$6.8~~$34.2 million ~~from~~resulting in a net loss of ~~$15.4~~$20.6 million in the three months ended ~~March 31, 2021~~September 30, 2022 as compared to a net ~~loss~~income of ~~$8.7~~$13.6 million in the three months ended ~~March 31, 2022.~~September 30, 2021. Operating (loss)/income decreased by $25.1 million in the comparable three-month periods ended September 30, 2022 and September 30, 2021. Operating loss ~~increased $0.3~~for the three-month period ended September 30, 2022 was $(10.3) million as compared to an operating ~~loss~~income of ~~$6.8~~$14.8 million in the three months ended ~~March 31, 2022 as compared~~September 30, 2021. The unfavorable variance is primarily related to ~~an operating loss of $6.5 million~~overall increased costs and expenses, higher interest expense and foreign exchange losses in the three months ended March 31, 2021. The decrease is primarily due to the $1.9 million gain on sale recognized in the prior years quarter related to the sale of certain real property assets at the Copley, Ohio location as described in Note 21 to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report. current period. Restructuring ~~expenses,~~activities, 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 sections below.

Nine Months Ended September 30, 2022 and 2021

Revenues increased by$108.9 millionto $639.9 million in the nine months ended September 30, 2022 as compared to $531.1 million in the nine months ended September 30, 2021. The increase is primarily attributable to the acquisitions of Fosler Construction and VODA within our Renewable segment, higher overall volume in our Environmental segment and the acquisitions of Fossil Power Systems and Optimus Industries within our Thermal segment being 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 continue to 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 sections below.

Net loss/income declined by $33.6 million. We recorded a net loss of $32.2 million in the nine months ended September 30, 2022 as compared to net income of $1.3 million in the nine months ended September 30, 2021. Operating (loss)/income negatively changed by $24.5 million resulting in an operating loss of $13.4 million in the nine months ended September 30, 2022 as compared to operating income of $11.1 million in the nine months ended September 30, 2021. The year-over-year change is primarily related to overall increases in costs and expenses, higher interest expense and an increase in foreign exchange losses. The aforementioned expense increase were partially offset by positive contributions from the acquisitions, as described above offset partially by a lower level of construction activity in our Thermal segment.Restructuring activities, 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 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 March 31,			Three Months Ended September 30,						Nine Months Ended September 30,
(in approximate millions)	(in approximate millions)		2022			2021		(in approximate millions)	2022		2021		2022		2021
B&W Renewable(1)	B&W Renewable(1)		$	101		$	37	B&W Renewable(1)	$	57	$	103	$	217	$	184
B&W Environmental	B&W Environmental		37			41		B&W Environmental	40		22		112		90
B&W Thermal	B&W Thermal		101			91		B&W Thermal	130		48		382		236

Bookings	Bookings		$	239		$	169	Bookings	$	227	$	173	$	711	$	510

(1) B&W Renewable bookings includes the revaluation of backlog denominated in currency other than U.S. dollars. The foreign exchange impact on B&W Renewable bookings in the ~~three months ended March 31,~~third quarter of 2022 and 2021 was ~~$6.0~~$(17.0) million and ~~$7.0~~$3.6 million, respectively. The foreign exchange impact on B&W Renewable bookings in the nine months ended September 30, 2022 and 2021 was $(23.4) million and $8.1 million, respectively.

Our backlog as of ~~March 31,~~September 30, 2022 and 2021 was as follows:


		As of March 31,					As of September 30,
(in approximate millions)	(in approximate millions)	2022		2021		(in approximate millions)	2022		2021
B&W Renewable(1)	B&W Renewable(1)	$	440	$	215	B&W Renewable(1)	$	374	$	313
B&W Environmental	B&W Environmental	126		118		B&W Environmental	121		101
B&W Thermal	B&W Thermal	158		206		B&W Thermal	233		130
Other/eliminations	Other/eliminations	(3)		(4)		Other/eliminations	2		(4)
Backlog	Backlog	$	721	$	535	Backlog	$	730	$	540

(1) B&W Renewable backlog at ~~March 31,~~September 30, 2022, includes ~~$153.2~~$117.2 million ~~related~~related to long-term operation and maintenance contracts for renewable energy plants, with remaining durations extending until 2034. Generally, such contracts have a duration of 10-20 years and include options to extend.

Of the backlog at September 30, 2022, we expect to recognize revenues as follows:


(in approximate millions)	2022		2023		Thereafter		Total
B&W Renewable	$	118	$	141	$	115	$	374
B&W Environmental	33		65		23		121
B&W Thermal	84		133		16		233
Other/eliminations	2		—		—		2
Expected revenue from backlog	$	237	$	339	$	154	$	730

OfChanges in Contract Estimates

During the ~~backlog at March 31,~~three and nine-month periods ended September 30, 2022 ~~we expect~~and 2021, the Company recognized changes in estimated gross profit related to ~~recognize revenues~~long-term contracts accounted for on the over time basis, which are summarized as follows:

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


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2022		2021		2022		2021
Increases in gross profit for changes in estimates for over time contracts	$	1,690	$	7,001	$	11,343	$	12,340
Decreases in gross profit for changes in estimates for over time contracts	(10,353)		(1,523)		(20,004)		(6,018)
Net changes in gross profit for changes in estimates for over time contracts	$	(8,663)	$	5,478	$	(8,661)	$	6,322

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,~~arising from the sale of non-income producing assets, net pension benefits, restructuring ~~costs,~~activities, 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.~~reconciliation, including business transition costs.


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2022		2021		2022		2021
Net (loss) income	$	(20,566)	$	13,648	$	(32,244)	$	1,346
Interest expense	12,768		8,902		37,150		31,752
Income tax (benefit) expense	4,902		301		4,777		6,683��
Depreciation & amortization	4,818		4,305		16,756		12,684
EBITDA	1,922		27,156		26,439		52,465

Benefit plans, net	(7,424)		(9,867)		(22,279)		(24,889)
(Gain) loss on sales, net	(28)		(13,838)		(165)		(13,564)
Stock compensation	3,448		152		5,242		8,032
Restructuring activities and business services transition costs	1,746		4,575		6,188		7,968
Advisory fees for settlement costs and liquidity planning	27		954		1,938		4,991
Settlement and related legal costs	776		566		7,215		2,113
Gain on debt extinguishment	—		—		—		(6,530)
Acquisition pursuit and related costs	2,575		4,037		4,768		4,037
Product development (1)	757		2,427		2,600		2,690
Foreign exchange	2,007		1,673		3,218		1,056
Financial advisory services	394		322		1,121		2,554
Contract step-up purchase price adjustment	—		—		1,745		—
Loss from business held for sale	—		—		—		483
Goodwill impairment	7,224		—		7,224		—
Other - net	(369)		694		430		1,238

Adjusted EBITDA(2)	$	13,055	$	18,851	$	45,684	$	42,644

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

(2) Adjusted EBITDA for the nine months ended September 30, 2022 includes a $7.0 million non-recurring gain on sale related to development rights of a future solar project that was sold as well as the reduction to Selling, General and Administrative Costs of $9.6 million for the three and nine months ended September 30, 2022 that resulted from the reversal of the contingent consideration related to an acquisition.


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2022		2021		2022		2021
Adjusted EBITDA
B&W Renewable segment(1)	$	4,522	$	11,399	$	14,846	$	15,030
B&W Environmental segment	3,082		3,476		5,112		7,286
B&W Thermal segment	10,761		9,329		41,276		32,436
Corporate	(4,419)		(5,866)		(13,018)		(11,548)
Research and development costs	(891)		513		(2,532)		(560)
	$	13,055	$	18,851	$	45,684	$	42,644

3744

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

B&W Renewable Segment Results


		Three Months Ended March 31,					Three Months Ended September 30,			Nine Months Ended September 30,
(in thousands)	(in thousands)		2022		2021			$ Change			(in thousands)	2022		2021		$ Change		2022		2021		$ Change
Revenues	Revenues		$	67,961	$	28,811		$	39,150		Revenues	$	81,687	$	38,000	$	43,687	$	224,875	$	105,155	$	119,720
Adjusted EBITDA	Adjusted EBITDA		$	1,455	$	204		$	1,251		Adjusted EBITDA	$	4,522	$	11,399	$	(6,877)	$	14,846	$	15,030	$	(184)

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

Revenues in the B&W Renewable segment increased ~~$39.2~~115% or $43.7 million, to ~~$68.0~~$81.7 million in the three months ended ~~March 31,~~September 30, 2022 compared to ~~$28.8~~$38.0 million in the three months ended ~~March 31,~~September 30, 2021. The increase in revenue is primarily due to ~~the acquisitions of Fosler Construction and VODA and~~ higher volume of new-build ~~projects.~~projects and revenues from acquisitions which closed on September 30, and November 30, 2021.

Adjusted EBITDA in the B&W Renewable segment decreased $6.9 million, to $4.5 million in the three months ended September 30, 2022 compared to income of $11.4 million in the three months ended September 30, 2021 due to a large project improvement achieved in the prior year period and due to the negative impact of global supply chain challenges and geopolitical issues.These various challenges resulted in the delivery of parts orders and projects being delayed into future quarters as well negatively impacting gross margin due to higher costs. The higher revenue levels increased shared overhead and SG&A allocations to the segment based on revenue. The negative impacts were partially offset by the reduction of the $9.6 million contingent consideration related to an acquisition as well higher volume of new build projects as described above.

Nine Months Ended September 30, 2022 and 2021

Revenues in the B&W Renewable segment increased 114% or $119.7 million, to $224.9 million in the nine months ended September 30, 2022 compared to $105.2 million in the nine months ended September 30, 2021. The increase in revenue is primarily due to higher volumes of new-build projects and revenues from acquisitions which closed on September 30 and November 30, 2021.

Adjusted EBITDA in the B&W Renewable segment ~~increased $1.3~~decreased $0.2 million, to ~~$1.5~~$14.8 million in the ~~three~~nine months ended ~~March 31,~~September 30, 2022 compared to ~~$0.2~~$15.0 million in the ~~three~~nine months ended ~~March 31,~~September 30, 2021. The ~~increase~~decrease is primarily due to a large project improvement achieved in the prior year period and due to the negative impact of global supply chain challenges and geopolitical issues. These various challenges resulted in the delivery of parts orders being delayed and projects being delayed into future quarters as well negatively impacting gross margin due to higher costs. The higher revenue levels increased shared overhead and SG&A allocations to the segment based on revenue. The negative impacts were partially offset by the reduction of the $9.6 million contingent consideration related to the Fosler acquisition as well higher volume of new build projects as described ~~above offset partially by mix within the segment.~~above.

B&W Environmental Segment Results


		Three Months Ended March 31,					Three Months Ended September 30,			Nine Months Ended September 30,
(in thousands)	(in thousands)		2022		2021			$ Change			(in thousands)	2022		2021		$ Change		2022		2021		$ Change
Revenues	Revenues		$	34,948	$	31,160		$	3,788		Revenues	$	44,626	$	38,249	$	6,377	$	111,186	$	97,767	$	13,419
Adjusted EBITDA	Adjusted EBITDA		$	1,439	$	1,105		$	334		Adjusted EBITDA	$	3,082	$	3,476	$	(394)	$	5,112	$	7,286	$	(2,174)

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

Revenues in the B&W Environmental segment increased ~~12%~~17%, or ~~$3.8~~$6.4 million to ~~$34.9~~$44.6 million in the three months ended ~~March 31,~~September 30, 2022 compared to ~~$31.2~~$38.2 million in the three months ended ~~March 31,~~September 30, 2021. The increase is primarily driven by higher overall volume in ~~ash handling systems, scrubbers, precipitators~~our project product lines. Revenue was lower than anticipated in the segment due to the negative impact of global supply chain challenges and ~~cooling systems.~~geopolitical issues..

Adjusted EBITDA in the B&W Environmental segment was $3.1 million in the three months ended September 30, 2022 compared to $3.5 million in the three months ended September 30, 2021. The decrease is primarily driven by the completion of higher margin projects in the prior period along with higher levels of shared overhead and SG&A allocated to the segment being partially offset by higher revenue volume, as described above. Adjusted EBITDA was lower than anticipated in the

segment due to the negative impact of global supply chain challenges and geopolitical issues. These various challenges resulted in certain projects being delayed into future quarters and higher costs all of which could not be recovered from our customers.

Nine Months Ended September 30, 2022 and 2021

Revenues in the B&W Environmental segment increased 14%, or $13.4 million to $111.2 million in the nine months ended September 30, 2022 compared to $97.8 million in the nine months ended September 30, 2021. The increase is primarily driven by higher overall volume in our project product lines. Revenue was lower than anticipated in the segment due to the negative impact of global supply chain challenges and geopolitical issues.

Adjusted EBITDA in the B&W Environmental segment was ~~$1.4~~$5.1 million in the ~~three~~nine months ended ~~March 31,~~September 30, 2022 compared to ~~$1.1~~$7.3 million in the ~~three~~nine months ended ~~March 31,~~September 30, 2021. The ~~increase~~decrease is primarily driven ~~primarily~~by the completion of higher margin projects in the prior period along with higher levels of shared overhead and SG&A allocated to the segment being partially offset by higher revenue volume, as described above. Adjusted EBITDA was lower than anticipated in the segment due to the negative impact of global supply chain challenges and geopolitical issues. Previous tariff implications, also created challenges to solar supply chain which led to disruptions within the North American solar markets. These various challenges resulted in certain projects being delayed into future quarters and higher costs all of which could not be recovered from our customers.

B&W Thermal Segment Results


		Three Months Ended March 31,					Three Months Ended September 30,			Nine Months Ended September 30,
(In thousands)	(In thousands)		2022		2021			$ Change			(In thousands)	2022		2021		$ Change		2022		2021		$ Change
Revenues	Revenues		$	102,239	$	108,281		$	(6,042)		Revenues	$	91,331	$	83,819	$	7,512	$	309,875	$	328,416	$	(18,541)
Adjusted EBITDA	Adjusted EBITDA		$	14,154	$	10,535		$	3,619		Adjusted EBITDA	$	10,761	$	9,329	$	1,432	$	41,276	$	32,436	$	8,840

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

38Revenues in the B&W Thermal segment increased 9%, or $7.5 million to $91.3 million in the three months ended September 30, 2022 compared to $83.8 million in the three months ended September 30, 2021. The revenue increase is attributable to two acquisitions that closed in February 2022.

Adjusted EBITDA in the B&W Thermal segment increased $1.4 million to $10.8 million in the three months ended September 30, 2022 compared to $9.3 million in the three months ended September 30, 2021, primarily attributable to two acquisitions closed in February 2022. Revenue and adjusted EBITDA were lower than anticipated in the segment due to the negative impact of global supply chain challenges and geopolitical issues. These various challenges resulted in the delay of the delivery of parts orders and services primarily in certain international markets as anticipated.

Nine Months Ended September 30, 2022 and 2021

Revenues in the B&W Thermal segment decreased 6%, or ~~$6.0~~$18.5 million, to ~~$102.2~~$309.9 million in the ~~three~~nine months ended ~~March 31,~~September 30, 2022 compared to ~~$108.3~~$328.4 million in the ~~three~~nine months ended ~~March 31,~~September 30, 2021. The revenue decrease is attributable to a lower level of activity on construction projects, partially offset by ~~the~~two acquisitions ~~of Fossil Power Systems and Optimus Industries.~~that closed in February 2022..

Adjusted EBITDA in the B&W Thermal segment increased ~~$3.6~~$8.8 million to ~~$14.2~~$41.3 million in the ~~three~~nine months ended ~~March 31,~~September 30, 2022 compared to ~~$10.5~~$32.4 million in the ~~three~~nine months ended ~~March 31,~~September 30, 2021, which is mainly attributable to favorable product mix and by two acquisitions closed in February 2022 as well as lower level of shared overhead and SG&A allocated to the ~~acquisitions~~segment.These are partially offset by the lower volume 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~~construction projects described above.Revenue and adjusted EBITDA were lower than anticipated in the segment due to the negative impact of global supply chain challenges and geopolitical issues. Previous tariff implications, also created challenges to solar supply chain which led to disruptions within the North American solar markets. These various challenges resulted in the delay in the delivery of parts orders and services in certain international markets as anticipated

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 $1.7~~decreased $1.5 million to $4.4 million in three months ended ~~March 31,~~September 30, 2022 as compared to ~~$2.7~~$5.9 million incurred in the three months ended ~~March 31,~~September 30, 2021.

Corporate costs increased $1.5 million to $13.0 million in the nine months ended September 30, 2022 as compared to $11.5 million incurred in the nine months ended September 30, 2021. The increase is primarily due to increased tax ~~services~~ and ~~audit fees.~~accounting services.

On July 28, 2022, the Company granted 860,000 restricted stock units (“RSUs”) with a market-based condition. The RSU’s will vest only if the closing price of the Company's common stock is equal to or higher than $12.00 by the fifth anniversary of the date of grant. The total fair value of the grant is $5.8 million and is being recognized over the derived requisite service period, determined to be 9 months, within Selling, General and Administrative expenses. As of September 30, 2022, the total unrecognized compensation charge related to the RSU’s is approximately $4.5 million. In addition, on July 28, 2022, the Company granted 924,340 RSU’s. These awards are recognized on a straight-line basis over a 3-year vesting period. As of September 30, 2022, the total unrecognized compensation charge related to the RSU’s is approximately $6.6 million, which is expected to be recognized through fiscal 2025.

Advisory Fees and Settlement Costs

Advisory fees and settlement costs ~~increased~~decreased $0.6 million to ~~$3.9~~$1.2 million in the three months ended ~~March 31,~~September 30, 2022 as compared to ~~$3.3~~$1.8 million in the comparable period of 2021. Advisory fees and settlement costs increased $0.6 million to $10.3 million in the ~~corresponding~~nine months ended September 30, 2022 as compared to $9.7 million in the comparable period of 2021. The increase is primarily related to higher legal fees and other costs incurred in ~~the current quarter.~~prior quarters.

Research and Development

Our research and development activities are focused on improving our products through innovations to reduce their cost and make them more competitive, as well as to reduce performance risk of our products to better meet our and our customers’ expectations. Research and development expenses ~~remained relatively unchanged and~~ totaled ~~$0.7~~$1.0 million and ~~$0.6~~$(0.2) million in the three months ended ~~March 31,~~September 30, 2022 and 2021, respectively, $2.9 million and $1.0 million in the nine months ended September 30, 2022 and 2021, respectively.

Restructuring

Restructuring actions across our business units and corporate functions resulted in ~~$0.1~~$0.4 million and ~~$1.0~~$4.6 million of expense in the three months ended ~~March 31,~~September 30, 2022 and 2021, respectively, and $0.4 million and $8.0 million of expense in the nine months ended September 30, 2022 and 2021, respectively. The decrease ~~of $0.9 million~~ for the ~~three~~nine months ended ~~March 31,~~September 30, 2022 ~~is due to a lower level of restructuring actions~~ compared to the prior year comparable ~~quarter. For~~period is due to overall lower levels of restructuring actions in all three reportable segments during the three months ended March 31, 2021, the charges primarily consist of severance related to actions taken, including as part of the Company’s strategic, market-focused organizational and re-branding initiatives.current year.

Transition Costs

Transition costs across our corporate and business functions resulted in ~~$2.6~~$1.5 million and $6.0 million of expense in the three and nine months ended ~~March 31, 2022.~~September 30, 2022, respectively. 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 ~~$2.2~~$2.3 million and ~~$2.7~~$2.3 million in the three months ended ~~March 31,~~September 30, 2022 and 2021, ~~respectively.~~respectively, and depreciation expense was $7.1 million and $7.4 million in the nine months ended September 30, 2022 and 2021.

Amortization expense was ~~$4.0~~$1.4 million and ~~$1.4~~$2.0 million in the three months ended ~~March 31,~~September 30, 2022 and 2021, respectively, amortization expense was $6.1 million and $5.3 million in the nine months ended September 30, 2022 and 2021, respectively.

Pension and Other Postretirement Benefit Plans

We recognize benefits from our defined benefit and other postretirement benefit plans based on actuarial calculations primarily because our expected return on assets is greater than our service cost. Service cost is low because our plan benefits are frozen except for a small number of hourly participants.

Our pension costs also include mark-to-market ("MTM") adjustments from time to time and are primarily a result of changes in the discount rate, curtailments and settlements. Any MTM charge or gain should not be considered to be representative of future MTM adjustments as such events are not currently predicted and are in each case subject to market conditions and actuarial assumptions as of the date of the event giving rise to the MTM adjustment. There were no MTM adjustments for our other postretirement benefit plans during the three and nine months ended ~~March 31,~~September 30, 2022 and 2021, respectively.

Refer to Note 11 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 (loss)~~loss of ~~$3.1~~$(2.0) million and ~~$(1.2)~~$(1.7) million for the three months ended ~~March 31,~~September 30, 2022 and 2021, respectively, and a loss of $(3.2) million and $(1.1) million for the nine months ended September 30, 2022 and 2021, 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 March 31,	Three Months Ended September 30,								Nine Months Ended September 30,
(In thousands, except for percentages)	(In thousands, except for percentages)			2022			2021			(In thousands, except for percentages)	2022			2021			$ Change		2022			2021			$ Change
Loss before income taxes				$	(7,454)		$	(12,607)
Income tax expense				$	1,230		$	2,836
(Loss) income before income taxes										(Loss) income before income taxes	$	(15,664)		$	13,949		$	(29,613)	$	(27,467)		$	8,029		$	(35,496)
Income tax (benefit) expense										Income tax (benefit) expense	$	4,902		$	301		$	4,601	$	4,777		$	6,683		$	(1,906)
Effective tax rate	Effective tax rate			(16.5)		%	(22.5)		%	Effective tax rate	(31.3)		%	2.2		%			(17.4)		%	83.2		%

Our income tax expense in the ~~first~~third quarter of 2022 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("ASC 740").

Our effective tax rate for the ~~first~~third quarter of 2022 is not reflective of the United States statutory rate primarily due to a valuation allowance against certain net deferred tax assets and unfavorable discrete items. In certain jurisdictions (namely, ~~the 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.

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, senior notes, equity offerings, including our Preferred Stock, and revolving credit agreement which are described in the Notes to our Condensed Consolidated Financial Statements included in Part I, Item I of this Quarterly Report in further detail along with other sources of liquidity.

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

•on February 1, 2022, we acquired 100% ownership of Fossil Power Systems, Inc. for approximately ~~$59.1~~$59.2 million, excluding working capital adjustments as described in Note 21 to the Condensed Consolidated Financial Statements included in Part I, Item I of this Quarterly Report;

•on February 28, 2022, we acquired 100% ownership of Optimus Industries, LLC for approximately $19.0 million, excluding working capital adjustments as described in Note 21 to the Condensed Consolidated Financial Statements included in Part I, Item I of this Quarterly Report; and

•~~during the first quarter of 2022,~~ the Company sold ~~$2.0~~$5.4 million aggregate principal of 8.125% Senior Notes and received ~~$2.0~~$5.4 million of net proceeds as described in Note 12 to the Condensed Consolidated Financial Statements included in Part I, Item I of this Quarterly Report.

See Note 12, Note 13, Note 14 and Note 21 to the Condensed Consolidated Financial Statements included in Part I, Item I of this Quarterly Report for additional information on our external sources of financing and equity offerings.

Cash and Cash Flows

At ~~March 31,~~September 30, 2022, our ~~unrestricted~~ cash and cash equivalents, current restricted cash and long-term restricted cash totaled ~~$108.1~~$69.5 million and we had total debt of ~~$343.8~~$336.3 million as well as $191.7 million of gross preferred stock outstanding. Our foreign business locations held ~~$35.9~~$27.4 million of our total unrestricted cash and cash equivalents at ~~March 31,~~September 30, 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. In addition, we had ~~$1.9~~$1.2 million of restricted cash at ~~March 31,~~September 30, 2022 related to collateral for certain letters of credit. We believe our future operating cash flows will be more than sufficient to cover debt repayments, other contractual obligations, capital expenditures and dividends for the next 12 months and thereafter for the foreseeable future.

Cash used in operations was ~~$42.0~~$67.4 million in the ~~three~~nine months ended ~~March 31,~~September 30, 2022, which is primarily attributable to the year-to-date net loss ~~$10.0~~of $32.2 million ~~reduction~~combined with $56.8 million in ~~pension,~~net unfavorable changes in working capital. Cash used in operations was $107.8 million in the nine months ended September 30, 2021, which is primarily represented in the $47.1 million change in postretirement and employee benefit liabilities and ~~a $13.2~~the remaining $75.0 million of net ~~decrease~~increase in operating cash outflows associated with changes in working capital. In the three months ended March 31, 2021, cash used in operations was $54.0 million which is primarily the result of our net loss, the change in pension, postretirement and employee benefit liabilities. There was also a $13.2 million decrease in operating cash outflows associated withunfavorable changes in working capital.

Cash flows from investing activities used net cash of ~~$65.4~~$67.6 million in the ~~three~~nine months ended ~~March 31,~~September 30, 2022, primarily due to the acquisitions of business of $64.9 million and ~~$1.0~~$8.9 million of capital expenditures. ~~In the three months ended March 31, 2021, cash~~Cash flows from investing activities ~~provided~~used net cash of ~~$4.5~~$5.9 million in the nine months ended September 30, 2021, primarily related to ~~$3.3~~the acquisition of Fosler Construction of $27.2 million combined with $4.2 million of capital expenditures, partially offset by proceeds from the sale of business ~~proceeds from asset disposals~~ and assets, net ~~change in available-for-sale securities, offset by $1.4 million~~ of ~~capital expenditures.~~$23.8 million.

Cash flows ~~from~~used in financing activities ~~used net cash~~ of ~~$1.6~~$19.1 million in the ~~three~~nine months ended ~~March 31,~~September 30, 2022, primarily related to the payment of the preferred stock dividend of ~~$3.7~~$11.1 million and loan payments of $13.9 million, partially offset by the senior note proceeds of ~~$2.0~~$5.5 million. Cash flows ~~from~~provided by financing activities ~~provided net cash of $35.9~~were $159.2 million in the ~~three~~nine months ended ~~March 31, 2021,~~September 30, 2021. Cash generated was primarily related to the ~~$125.0 million~~ issuance of ~~senior notes and $161.5 million~~ common stock, ~~issuance,~~Senior Notes and Preferred Stock, partially offset by ~~$75.0~~$75.4 million ~~last out term loans~~Last Out Term Loans repayments, a $164.3 million net reduction on the prior U.S. Revolving Credit Facility and ~~$7.7~~$16.7 million of incremental financing fees.

Debt Facilities

As described in the Note 12 to our Condensed Consolidated Financial Statements included in Part I, Item I of this Quarterly Report, on ~~June~~September 30, 2021, we entered into the Reimbursement Agreement, Revolving Credit 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. The Company expects to use the proceeds and letter of credit availability under the Debt Facilities for working capital purposes and general corporate purposes. The Revolving Credit Agreement matures on June 30, 2025. As of ~~March 31,~~September 30, 2022, no borrowings have occurred under the Revolving Credit Agreement and under the Letter of

Credit Agreement, usage consisted of ~~$16.2~~$15.1 million of financial letters of credit and ~~$90.8~~$94.3 million of performance letters of credit.

As of ~~March 31, 2022, a subsidiary has borrowed $1.7 million against a $3.5 million line of credit with a variable interest rate on the line of credit of 5.0% per annum. On April 1,~~September 30, 2022, the ~~line of credit~~Company was ~~paid~~not in ~~full~~compliance with their Quarterly Fixed Charge Coverage financial covenant and ~~terminated.~~received a waiver from MSD and PNC for the period ended September 30, 2022 as described within Note 12.

Letters of Credit, Bank Guarantees and Surety Bonds

Certain of our subsidiaries primarily outside of the United States have credit arrangements with various commercial banks and other financial institutions for the issuance of letters of credit and bank guarantees in association with contracting activity. The aggregate value of all such letters of credit and bank guarantees outside of our Letter of Credit Agreement as of ~~March 31,~~September 30, 2022 was ~~$48.3~~$45.1 million. The aggregate value of the outstanding letters of credit provided under the Letter of Credit Agreement backstopping letters of credit or bank guarantees was ~~$34.8~~$36.7 million as of ~~March 31,~~September 30, 2022. Of the outstanding letters of credit issued under the Letter of Credit Agreement, ~~$52.0~~$58.8 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 ~~March 31,~~September 30, 2022, bonds issued and outstanding under these arrangements in support of contracts totaled approximately ~~$221.5~~$333.9 million. The aggregate value of the letters of credit backstopping surety bonds was ~~$9.2~~$8.7 million.

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

Other Indebtedness - Loans Payable

As of ~~March 31,~~September 30, 2022, our Denmark subsidiary has ~~three~~an unsecured interest-free ~~loans totaling $3.3~~loan of $0.7 million under a local government loan program related to ~~COVID-19. The loans of $0.8 million,~~COVID-19 that is payable May 2023. In addition, the Company had $1.6 million ~~and $0.9 million are payable~~ in ~~April 2022, May 2022 and May 2023, respectively. The~~a loan payable ~~in May 2023 is~~related to financed insurance premiums payable April 2023. These loans are included in current ~~long term loans payables~~Loans payable in our Condensed Consolidated Balance Sheets. ~~Subsequent to March 31, 2022, the loan due April 2022 was repaid on April 1, 2022.~~

~~As of March 31, 2022,~~ Fosler Construction ~~has two loans totaling $8.9 million. Both loans have a variable interest rate with a minimum rate of 6.0% and are due June 30, 2022. Fosler Construction also~~ has loans, primarily for vehicles and equipment, totaling ~~$0.6~~$0.5 million at ~~March 31,~~September 30, 2022. The vehicle and equipment loans are included in long term loans payables in our Condensed Consolidated Balance Sheets.

Off-Balance Sheet Arrangements

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

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

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

Item 3. Quantitative and Qualitative Disclosures About Market Risk

~~Our~~The Company's exposures to market risks have not changed materially from those disclosed under "Quantitative and Qualitative Disclosures About Market Risk" in ~~our~~the Company's Annual Report on Form 10-K for the year ended December 31, 2021.

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~~its Chief Executive Officer and the Chief Financial Officer, has evaluated the effectiveness of the design and operation of ~~our~~its 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~~The Company's 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.

Based on the evaluation referred to above, ~~our~~the Company's Chief Executive Officer and Chief Financial Officer concluded that the design and operation of ~~our~~its disclosure controls and procedures are effective as of ~~March 31,~~September 30, 2022 to provide reasonable assurance that information required to be disclosed by us in the reports that ~~we file~~the Company files or ~~submit~~submits 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~~the Company's internal control over financial reporting during the three months ended ~~March 31,~~September 30, 2022 that have materially affected, or are reasonably likely to materially affect, ~~our~~its internal control over financial reporting. ~~We have~~The Company has not experienced any material impact to ~~our~~its internal controls over financial reporting, despite the fact that some of ~~our~~its team members are working remotely in response to the COVID-19 pandemic. ~~We are~~The Company is continually monitoring and assessing these situations on ~~our~~its internal controls to ensure their operating effectiveness.

Inherent Limitations in Effectiveness of Controls

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures, or our internal controls, will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of simple error or mistake or fraud. Additionally, controls can be circumvented by individuals

or groups of persons or by an unauthorized override of the controls. Accordingly, because of the inherent limitations in our control system, misstatements in our public reports due to error or fraud may occur and not be detected.

PART II

Item 1. Legal Proceedings

For information regarding ongoing investigations and litigation, see Note 17 to the Condensed Consolidated Financial Statements included in Part I, Item I of this Quarterly Report, which ~~we incorporate~~the Company incorporates by reference into this Item.

Item 1A. Risk Factors

~~We are~~The Company is subject to various risks and uncertainties in the course of ~~our~~its business. The discussion of such risks and uncertainties may be found under “Risk Factors” in ~~our~~the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2021. Other than the additional risk factor set forth below there have been no material changes to the risk factors set forth in ~~our~~the Company's 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~~the Company's business and results of operations.

The ongoing invasion of Ukraine by Russia, and the global response to it, may continue to adversely affect ~~our~~the Company's 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~~the Company's business. For example, the conflict can impact ~~our~~the Company's ability to place orders for materials, such as steel, in Europe, and may more broadly impact lead times for materials globally. It is not possible to predict the ~~short-~~short-term 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~~the Company's 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~~The Company continues to monitor the situation closely and ~~are~~is proactively assessing and evaluating alternative sources to bolster ~~our~~its current sources of supplies and materials moving forward.

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 ~~March 31,~~September 30, 2022. The Company does not have a general share repurchase program at this time.
(data in whole amounts)
Period
Total number of shares acquired (1)
Average price per share Total number of shares purchased as part of
publicly announced plans or programs Approximate dollar value of shares that may yet be
purchased under the plans or programs
January 2022 19,734 $ 8.65 — $ —
February 2022 6,833 $ 7.37 — $ —
March 2022 — $ — — $ —
Total 26,567 $ 8.32 — $ —

(data in whole amounts)

Period

Total number of shares acquired (1)

Average price per share

Total number of shares purchased as part of
publicly announced plans or programs

Approximate dollar value of shares that may yet be
purchased under the plans or programs

July 2022

—

August 2022

—

September 2022

—

Total

—

(1) Acquired shares are recorded in treasury stock in ~~our~~the Company's Condensed Consolidated Balance Sheets.

Item 6. Exhibits


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


3.1						Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Babcock & Wilcox Enterprises, Inc. Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 (File No. 001-36876)).

3.2						Certificate of Amendment of the Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Babcock & Wilcox Enterprises, Inc. Current Report on Form 8-K filed on June 17, 2019 (File No. 001-36876)).

3.3						Certificate of Amendment of the Restated Certificate of Incorporation, as amended (incorporated by reference to Exhibit 3.1 to the Babcock & Wilcox Enterprises, Inc. Current Report on Form 8-K filed on July 24, 2019 (File No. 001-36876)).

3.4						Amended and Restated Bylaws of the Babcock & Wilcox Enterprises, Inc.

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

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










































































































































































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

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

32.1						Section 1350 certification of Chief Executive Officer.

32.2						Section 1350 certification of Chief Financial Officer.

101.SCH						XBRL Taxonomy Extension Schema Document.

101.CAL						XBRL Taxonomy Extension Calculation Linkbase Document.

101.LAB						XBRL Taxonomy Extension Label Linkbase Document.

101.PRE						XBRL Taxonomy Extension Presentation Linkbase Document.

101.DEF						XBRL Taxonomy Extension Definition Linkbase Document.



104						Cover 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.

~~May 9,~~November 8, 2022	By:	/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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