Exhibit 99.1
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Investor and Analyst Day
June 17, 2015
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Safety Share
. 2 © Babcock & Wilcox Enterprises, Inc. All rights reserved.
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Safe Harbor Statement
Forward-looking statements. The Babcock & Wilcox Company (“B&W”) cautions that this presentation contains forward-looking statements, including, without limitation, statements relating to the timing of and expected benefits associated with the planned spin-off of Babcock & Wilcox Enterprises, Inc. (“New B&W”) into an independent public company; backlog, to the extent it may be viewed as an indicator of future revenues; management’s expectations regarding the industries in which we operate; our guidance and forecasts for 2015; and our projected operating margin improvements, savings and restructuring costs. These forward-looking statements are based on management’s current expectations and involve a number of risks and uncertainties, including, among other things, the proposed spin-off not being completed as anticipated or at all; delays or other difficulties in completing the spin-off, including the inability to satisfy the conditions for its completion; disruptions experienced with customers and suppliers; adverse changes in the industries in which we operate and delays, changes or termination of contracts in backlog. If one or more of these risks or other risks materialize, actual results may vary materially from those expressed. For a more complete discussion of these and other risk factors, see B&W’s filings with the SEC, including our annual report on Form 10-K for the year ended December 31, 2014 and subsequent quarterly report on Form 10-Q. See also New B&W’s filings with the SEC, including the information statement included as an exhibit to New B&W’s registration statement on Form 10. B&W and New B&W caution not to place undue reliance on these forward-looking statements, which speak only as of June 17, 2015, the date of this presentation, and undertake no obligation to update or revise any forward-looking statement, except to the extent required by applicable law.
Pro-forma financial information. The pro forma financial data in this presentation reflects transactions related to the spin-off and is subject to assumptions and adjustments described in New B&W’s registration statement on Form 10. New B&W’s management believes these assumptions and adjustments are reasonable under the circumstances and given the information available at this time. The pro forma financial data does not purport to represent what New B&W’s financial position and results of operations actually would have been had the spinoff occurred on the dates indicated, or to project New B&W’s financial performance for any future period following the spinoff.
Non-GAAP financial information. This presentation includes Adjusted Earnings per Share as a non-GAAP financial measure. A reconciliation to GAAP Earnings per Share, the most directly comparable GAAP measure, is included at the end of this presentation. This presentation also discusses targeted EBITDA growth. EBITDA is a non-GAAP financial measure defined by New B&W as earnings before interest, taxes, depreciation and amortization. These measures should be considered in addition to results prepared in accordance with GAAP, but are not a substitute for GAAP results.
. 3 © Babcock & Wilcox Enterprises, Inc. All rights reserved.
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Agenda
Topic Presenter
Introduction
Leslie Kass VP, Investor Relations & Communications
B&W Company Overview
Global Services Business
Global Power Business
Industrial Environmental Business
Jim Ferland Chairman & CEO
Financial Overview
Jenny Apker SVP and CFO
Closing Remarks
Jim Ferland Chairman & CEO
Q&A Session
. 4 © Babcock & Wilcox Enterprises, Inc. All rights reserved.
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Company Overview
. 5 © Babcock & Wilcox Enterprises, Inc. All rights reserved.
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148 Years of Success in Power Generation
“…the best boiler God has permitted man yet to make.”
Thomas A. Edison (1888)
Leading technology base
Combustion systems
Fluid flow systems
Heat transfer systems
Emissions control systems
Steam/its generation and use
Longest continuously published engineering text of its kind in the world
Published by B&W since 1875
Used by power engineers worldwide
New 42nd edition published in 2015
. 6 © Babcock & Wilcox Enterprises, Inc. All rights reserved.
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B&W Company Profile
Headquarters: Charlotte, NC
Incorporation: Delaware
Chairman & CEO: E. James Ferland
Employees: Approximately 6,000 employees, in addition to 2,500 joint venture employees worldwide
Global leader in energy and environmental technologies and services for the power and industrial markets
Installed electricity generation capacity of more than 300,000 MW in more than 90 countries
Ability to service B&W and competitor products
Pioneered environmental equipment in the 1970s with most comprehensive suite of products available
Employees in 25 countries
. 7 © Babcock & Wilcox Enterprises, Inc. All rights reserved.
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Spin-Off Overview
Overview
Ticker
Exchange
Distribution Ratio
Expected Sharecount
Record Date
Distribution Date
Trading Begins
BW
NYSE
1:2 (BW to BWC)
53.5M fully diluted shares outstanding
June 18, 2015
June 30, 2015
July 1, 2015
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Three-Pronged Strategy Drives EPS Growth and Shareholder Value
Optimize Traditional Business to Align with Changing Market (Increase Margin)
Pursue Growth Opportunities in International Market
(Increase Revenue)
Continue Disciplined Acquisition Program
(Increase Revenue and Margin)
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Post-Spin Benefits and Opportunities
Increases Management Focus on Operations
Better Positions B&W for Changing Industry Dynamics
Increases International Tax Optionality
Facilitates Board Emphasis on Long-Term Strategy
.. 10 © Babcock & Wilcox Enterprises, Inc. All rights reserved.
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Investment Highlights
Strong Foundation
Great Brand Associated with Quality, Reliable Delivery and Innovation
Customer and Strategic Partner Relationships
Experienced Management Team
Recurring Aftermarket Services Business
Significant Earnings Upside
Three-Pronged Growth Strategy Aligned with Businesses
Technology Leader in Global Power Generation
Established Platform in Industrial Environmental Market
Strong Balance Sheet Enables Strategy Execution
.. 11 © Babcock & Wilcox Enterprises, Inc. All rights reserved.
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Business Model Delivers Maximum Customer Value
B&W engineers custom solutions that are difficult to replicate and are fundamental to reliable operations and regulatory compliance
Custom Technology Solutions
Engineering and Design
Manufacturing
Complex Project Management
Customer Relationship Management
Strategic Sourcing
Facility Operation
On-Site Installation
Each new installation provides attractive aftermarket opportunities
. 12 © Babcock & Wilcox Enterprises, Inc. All rights reserved.
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Skilled Management Team
Finance
Jenny Apker
Senior Vice President & Chief Financial Officer
Chairman and Chief Executive Officer
Jim Ferland
Global Services
Division
Mark Low
Senior Vice President
Global Power Division
Paul Scavuzzo
Senior Vice President
Industrial Environmental Division
Ken Zak
Senior Vice President
Operations
Pete Goumas
Senior Vice President
Corporate Development and Treasury
Mark Carano
Senior Vice President & Treasurer
Business Development
Elias Gedeon
Senior Vice President & Chief
Business Development Officer
Investor Relations and Communications
Leslie Kass
Vice President
Legal
André Hall
Senior Vice President & General Counsel
Human Resources
Wendy Radtke
Senior Vice President
. 13 © Babcock & Wilcox Enterprises, Inc. All rights reserved.
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Experienced Board of Directors Thomas A. Christopher
Jim Ferland
Chairman and Chief Executive Officer
Former Vice Chairman of AREVA, Mr. Christopher also served as its President and CEO from 2000 to 2009. Before that, he held a number of positions at Westinghouse, including Vice President and General Manager, Westinghouse Power Services.
Cynthia S. Dubin
Ms. Dubin is Finance Director for JKX Oil & Gas, an LSE-listed oil and gas exploration and production company. From 2006-2011 she was co-founder and CFO of Canamens, a pan European oil and gas company. She was with Edison Mission Energy from 1993-2005, latterly as VP and CFO for EMEA.
Brian K. Ferraioli
Mr. Ferraioli is the Executive Vice President and Chief Financial Officer for KBR, a global technology, engineering, procurement and construction company. He was formerly Executive Vice President and CFO of The Shaw Group, which was acquired by CB&I in February 2013.
Stephen G. Hanks
From November 2007 until his retirement in January 2008, Mr. Hanks served as President of the Washington Division of URS Corporation, an engineering, construction and technical services company, as well as a member of the Board of Directors. From June 2001 to November 2007, he was President and CEO of Washington Group Intl.
Anne R. Pramaggiore
Ms. Pramaggiore is President and CEO of ComEd, an electric utility company delivering electricity to 3.8 million customers in Chicago and Northern Illinois. Ms. Pramaggiore also serves as a board member of Chicago Federal Reserve Board, Motorola Solutions, and several civic and community organizations.
Larry L. Weyers
Prior to his retirement in March 2010, Mr. Weyers served as Chairman of Integrys Energy Group, Inc., a holding company with operations providing products and services in regulated and non-regulated energy markets. He also serves as VP and Lead Director of the Board of Directors of Green Bay Packers, Inc., on which he has served since 2003.
. 14 © Babcock & Wilcox Enterprises, Inc. All rights reserved.
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Consolidated Revenue Overview
2015E B&W Revenue Breakdown
Other 21%
Renewables 18%
Gas 6%
Coal 55%
Other
7%
Asia 9%
Europe 19%
North America 65%
Aftermarket coal will be a solid base for the business while our strategy drives growth and diversification
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Business Segments Align with Growth Strategy
Global Services
Parts and technical services
Service projects
Construction services
Operations and maintenance
Global Power
Utility steam generation
Renewable power
Industrial power
Environmental solutions
Industrial Environmental
Air pollution control systems
Coating and drying equipment
Replacement parts
Preventive maintenance
Optimize Traditional Business to Align with Changing
Markets
Pursue Growth
Opportunities in
International Markets
Continue Disciplined
Acquisition Program
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Global Services
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Global Services Overview
2014 Revenue by Segment
69% U.S.
Service Projects 31%
Construction Services 27%
$908.7M
Parts and Technical Services 34%
31% International
Operations and Maintenance, 8%
Aftermarket products and services for steam generating equipment and associated environmental and auxiliary equipment
Servicing B&W installed electricity generation capacity of approximately 300,000 MW in more than 90 countries plus competitor equipment
Supports general industry and renewable boilers, including waste-to-energy and pulp & paper
Extensive network of regionally located service centers, technical support personnel and global sourcing capabilities
Parts and Service Projects Construction Services Operations and Technical Services Maintenance
Optimize Traditional Business to Align with Changing Markets
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Market Overview
2014 Total Revenue Breakdown
Non-Coal 30%
Intl. Coal 15%
U.S. Coal 55%
2014 Non-Coal Revenue Breakdown
53%
International
Natural Gas 15%
General Industry 58%
Renewable 27%
47% U.S.
Renewable
Biomass
Waste to Energy
General Industry
Petrochemical, Refinery
Pulp & Paper
Manufacturing
Metals
Cement
Total Electricity Generation in U.S. by Fuel with EPA Clean Power Plan(1)
% of Electricity Generated
0% 20% 40% 60% 80% 100% 120%
0% 1% 1% 1% 14% 17% 25% 25% 19% 19% 18% 18% 28% 32%
0.6% 31% 31%
0.4%
0.3% 0.3% 38% 31% 25% 25%
2015 2020 2025 2030
Coal Petroleum Natural Gas Nuclear Renewable Sources Other
Coal will continue to be a significant part of the U.S. electricity generation mix
B&W’s non-coal business represents a diverse customer base
Source: Analysis of the impacts of the Clean Power Plan, Energy Information Administration (EIA)
Footnote: (1) Base case normalized to %
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Competitive Positioning
U.S. Market Share: Coal-Fired Power Plants
Other, 3%
Riley Stoker (now BPI) 6%
B&W 35%
AMEC Foster Wheeler 14%
317GW
Alstom 42%
Source: Utility Data Institute, 2015
B&W is a strong international brand with a reputation of serving customer needs on time and within budget
Strong position in the U.S. power generation market with long-standing customer relationships
Global competitors vary, but many customers specifically want B&W quality and reliability
Growth in global installed base will provide additional opportunity in future years
Select Competitors
Footnote: Trademarks are the property of their respective owners.
. 20 © Babcock & Wilcox Enterprises, Inc. All rights reserved.
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Global Services Strategy
1. Improve margins by enhancing operating model and reducing fixed overhead
2. Leverage position as an original equipment manufacturer to secure business on B&W units and offer increased reliability for non-B&W units
3. Create new sources of revenue through global expansion and innovation
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Ongoing Rationalization of Operations
Cambridge, Ontario
Ceased fossil operations in 2014 and consolidated into other North American sites
B&W Foundry (Barberton, OH)
Operations to be closed in June 2015 and replaced with strategic partnership
Melville, Saskatchewan
Plant to be mothballed upon completion of contract work in July 2015
Diamond Power Restructuring
Integration of parts businesses and reducing costs through make/buy decisions
Ongoing Pipeline of Initiatives
B&W continues to work toward maximum cost effectiveness across all manufacturing assets
2014
2015
2016
Magotteaux Partnership
Entered into a strategic agreement in January 2015 for the supply of pulverizers and other specialty castings and wear materials
Monterrey, Mexico
Expansion scheduled for completion in August 2015 and will enable high-quality and cost efficient service to the Americas
Through a critical but balanced evaluation approach, B&W is reducing fixed overhead and improving margins
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Case Study: B&W Foundry
B&W entered into a strategic agreement with Magotteaux, a world leader in casting engineered wear parts, in January 2015
This unique relationship will bring together B&W’s extensive pulverizer experience and Magotteaux’s expertise in wear materials, creating truly world-class products
Provides B&W access to new materials – higher value to our customer base
Opens new markets to B&W by supplying wear parts and other services
Magotteaux is a world leader in casting engineered wear parts
Variablizes B&W’s costs and places fixed pricing limits on B&W’s risk
Significant annual savings for B&W
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Opportunities for New Revenue
New channels to market through strategic partner relationships
Align with turbine generator suppliers to improve power generation plant efficiencies per EPA 111(d)
Expand Global Services through local service providers
Develop solutions to meet new regulatory requirements (e.g. coal ash ponds)
B&W offers two alternatives to coal ash ponds (Hydrobin® dewatering and submerged chain conveyor systems)
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Case Study: Alliant Ottumwa
Leveraging B&W technology to expand customer base (Alstom boilers)
Global Power
Environmental systems for SO2 and particulate/dust control and ash handling
Global Service
Major boiler upgrade provided in tandem with steam turbine upgrade
Construction advisory services, start-up and commissioning, Resident Service Engineer Program
Boiler cleaning equipment replacement parts, emerging opportunity for pulverizer wear parts
EPC construction service contract under JV model with Burns & McDonnell
Environmental compliance
Generating capacity increase (8%)
Plant heat rate improvement (4.5%)
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Global Power
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Global Power Overview
Steam generating systems for fossil fuels and renewable energy conversion for power generation and industrial uses
Environmental solutions include emissions control products and related equipment
Complex project execution from design through commissioning, offering predictable installation of reliable equipment
2014 Revenue by Segment
57%
U.S.
New Build Environmental 36%
$471.9M
New Build Steam Generation 64%
43%
International
Utility Steam Generation
Renewable Power
Industrial Power
Environmental Solutions
Pursue Growth Opportunities in International Market
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Market Opportunity
Select Fuels Generating Capacity (GWe) by Region
3,000 Coal Natural Gas Renewables
2,000
1,000
0
2014 2025 2014 2025 2014 2025 2014 2025
North America Central / South America
EMEA Asia Pacific
Source: IHS Energy Scenarios (Rivalry), July 2014
Global capital spending on power generation is and will continue to be robust
Energy policy and natural resource availability will drive technology selection
B&W possesses a strong brand and technology foundation
B&W is well-positioned to globally deploy our products and services
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Competitive Landscape
Competitors vary by market and product
B&W capability and diverse product portfolio allows for the right technology solution to be brought forward for each opportunity Business development processes and close alignment to our customers drive the pursuit of the most attractive opportunities Engage with strategic partners to enhance product offerings
Footnote: Trademarks are the property of their respective owners.
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Go-To-Market Strategy
Renewable
Look for policy drivers (landfill abatements and renewable mandates)
Enhance sales team to replicate U.K. and Nordic region market success
Leverage brand, capabilities and technology advantage
Create strategic partnerships
Look for strategic O&M opportunities
Coal
Driven by GDP, energy demand and natural resource availability
Selective bidding when B&W brand, capabilities and superior technology provide a competitive advantage
Strengthen partnerships with Asian trading houses
Partner with strategic turbine suppliers
Support and team with Asian and European EPC companies
Environmental
Global emissions regulations continue toward developed world standards in growing markets
Full suite of advanced environmental technologies capable of addressing specific client needs
Leverage diverse capabilities of affiliates to access new end markets
Bundle product offerings with steam generation projects to increase scope and value to owner
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Global Power Strategy
1. Focus on growth markets where demand and energy policy favor our technology (renewable energy and coal)
2. Invest in sales and business development infrastructure worldwide
3. Utilize Asian joint ventures for market access and competitive engineering and manufacturing
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Recent Project Awards Demonstrate Global Expansion is Underway
Emissions Control Project in Colorado
March 2015 – $40.3M
Biomass Power Plant in England
March 2015 – >$220M
Biomass Power Plant in Wales
January 2015 – >$200M
Supercritical Coal-Fire Boiler and SCR System in Vietnam January 2015
Waste-to-Energy Power Plant in Scotland December 2014 – $230M
Biomass Power Plant in Denmark
July 2014 – $80M
Two Subcritical Coal-Fired Boilers in Dominican Republic July 2014
. 32 © Babcock & Wilcox Enterprises, Inc. All rights reserved.
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Case Study: Partnership Led to Win in Vietnam Duyen Hai 3 Extension Award
Project Highlights
Project is in a growth market (Southeast Asia)
Important partners and customer
Leveraged enterprise to drive competitiveness
B&W Technologies
Highly efficient supercritical boiler technology
Low NOx combustion technology
SCR and other auxiliary equipment
688 MW Supercritical Pulverized Coal Steam Generator
. 33 © Babcock & Wilcox Enterprises, Inc. All rights reserved.
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Asian Joint Venture Strategy
B&W is positioned for new coal generation planned in Asia
Babcock & Wilcox Beijing Co. (Beijing, China) Manufacturing capacity of 5,000 MW per year, boilers and environmental, since 1986
Thermax Babcock & Wilcox Energy Solutions (Pune, India) 108 acre manufacturing facility with capacity of 3,000 MW per year, boilers and related equipment
Facilities provide:
Licensed products in domestic markets
Access to external markets (finance and customer driven)
Two different income streams (equity income and royalty)
Engineering and manufacturing support for the enterprise
Channel to take new products to markets faster.
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Case Study: Amager Bakke
Currently under construction, the Amager Bakke Waste-to-Energy plant is located in the city center of Copenhagen and is an environmental landmark with recreational ambitions
Plant Performance
Total plant efficiency > 99%
Electricity for 62,000 households
Heat for 160,000 households
10,000 tons of metals recovered
Burning 560,000 tons of waste per year
B&W Technologies
DynaGrate® combustion system
Multi pass waste-fired boiler
2 units each burning 840 t/d MSW
Inconel® boiler surface protection
Combined heat and power production
Front end SCR
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Case Study: Palm Beach County WTE Facility
B&W designed and built a 3,000 TPD mass burn facility in Palm Beach County, Florida, that opens June 2015
Palm Beach County (2016)
5% Landfill
36% Recycling
59% WTE
*Source: SWA
One of the largest waste-to-energy facilities in the world
1.7M tons of solid waste per year
Electric power capacity: 150 MW gross
Power for more than 85,000 homes
B&W technologies and services
Stirling® mass burn boilers (3 X 1000 TPD)
DynaGrate ® traveling grate combustion system
Emissions control system
O&M services (20-year contract)
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Industrial Environmental
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Industrial Environmental Overview
B&W acquired MEGTEC Systems, Inc. on June 20, 2014
40+ year history with ~600 employees across 13 offices globally
Asset-light flexible manufacturing platform
Significantly expanded B&W’s industrial environmental capabilities and provides additional channels to market
Design, engineer, manufacture and service industrial equipment for process industries worldwide
Specific technologies for industrial air pollution abatement and recovery
Coating and drying equipment for various end markets (including energy storage)
Recurring aftermarket business
2014 Revenue by Segment(1)
53%
U.S.
Environmental
Solutions 46%
Aftermarket Services 34%
$185.7M
Engineered Equipment 20%
47%
International
Footnote: (1) 2014 full-year segment revenue includes revenue attributable to previous owner and revenue attributable to B&W
Air Pollution Control Systems
Coating and Drying Equipment
Replacement Parts
Preventive Maintenance
Continued Disciplined Acquisition Program
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Market Opportunity
Industrial environmental business provides engineered solutions to a wide range of problems and processes in diverse and naturally growing end markets 5% projected annual market growth
Broad customer base includes ~3,100 businesses stretching across six continents and over 60 countries
Steady stream of repeat aftermarket orders from customers over a long equipment lifecycle promotes a strong relationship and recurring business over time
Footnote: Trademarks are the property of their respective owners.
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Global Demand Drivers
Growth Drivers
Environmental Solutions
Macro-economic growth
Aging installed base
Increasing regulation
Engineered Products
Macro-economic growth
Aging installed base
Focus on sustainability
Legend: = Main = Major = Minor
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Competitive Landscape
Footnote: Trademarks are the property of their respective owners.
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Industrial Environmental Strategy
Perform operationally and grow via acquisition
MEGTEC acquisition is highly complementary to B&W’s core competencies
History of acquisitions and opportunity for further synergistic consolidation in the fragmented industrial environmental market
B&W will continue to evaluate and execute strategic acquisitions that focus on expanding our existing capabilities as well as entering new, adjacent markets
Key Acquisition Criteria
Alignment with core competencies
Synergistic value
Long-term growth platform
Diversification or international growth
1997
TEC Systems and MEG Combine to Create MEGTEC
1998
Butler Automatic License of zero-speed splicers
1999
Thermo Wisconsin Dryer and emission control equipment
Wolverine
Air emission control division
2001
AMAL/ Enkel
Paster and splicer business
2006
Vara, Barnebey Sutcliffe, and Sutcliffe Speakman
Solvent recovery and distillation operations
2009
The former Ross Air Systems
Intellectual property for dryers and ovens
2013
TurboSonic
Air pollution control systems and liquid atomizing technologies
2014
Babcock & Wilcox MEGTEC: A Subsidiary of Babcock & Wilcox Power Generation Group, Inc.
. 42 © Babcock & Wilcox Enterprises, Inc. All rights reserved.
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Case Study: Coffee Roasters
B&W serves a diverse customer base of industrial manufacturers, including global beverage industry leaders
B&W regenerative thermal oxidizer (RTO) technology effectively controls volatile organic compound (VOC) and odor emissions that result from coffee roasting operations
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Case Study: Polybutadiene Rubber Plant
B&W’s international customer base includes Reliance Industries, a ~$70B Mumbai-based company
B&W provided off gas treatment for a Polybutadiene Rubber Plant located in Hajira, Gujarat, India
B&W technology included
Epsilon® RTO
Venturi scrubber
Steam preheater for exhaust gases
A second installation on a Low Density Polyethylene (LDPE) plant is under construction
Future opportunities with the customer include additional RTOs and scrubbers, distillation and purification solutions, captive power plants, and air pollution control equipment
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Financial Overview
. 45 © Babcock & Wilcox Enterprises, Inc. All rights reserved.
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Growth Strategies Drive Value Creation
Optimize Traditional Business to Align with Changing Markets
Pursue Growth Opportunities in International Market
Continue Disciplined
Acquisition Program
Targeting margin improvement of 200-300 bps by 2017, primarily through Global Services
Targeting annual organic revenue growth of 3-5%, primarily through Global Power and Industrial Environmental
Growth in revenue and earnings
Targeting annual EPS growth of 10-12% in 2016 and 2017 before acquisitions
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Driving Margins Through Operational Improvement
Continue to aggressively identify additional cost reductions
Targeting the full 200-300 bps in operating margin improvements to be recognized by 2017
Activities to generate more than $75M in annual savings have been identified
Expect more than half of savings to drop to B&W’s bottom line
Remainder of savings will support top line growth through increased competitiveness
Approximately $20M in savings achieved through 1Q 2015
Associated restructuring costs to achieve these savings of $35M—$50M
Global Manufacturing Consolidation
Engineering
International Efficiency Improvements
Supply Chain Optimization
Organizational Efficiency Improvements
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Strong and Growing Backlog
Positions B&W well for future growth
B&W continues to build a more diverse backlog, both by geography and by market
Significant amount of aftermarket business is not reflected in backlog totals and provides additional revenue support
~40% of backlog expected to be realized in 2017 and after
Backlog
$2,506 $2,581 $2,247 $1,972 $2,072 $1,605
$3,000 $2,500 $2,000 $1,500 Thousands $1,000 $500 $0
2010 2011 2012 2013 2014 LTM 3/31/15
Geographic Diversification
Intl. 22%
U.S. 78%
Intl. 47%
U.S. 53%
Backlog: 12/31/13
Backlog: 3/31/15
End Market Diversification
Non-Coal 63%
Coal 37%
Non-Coal 67%
Coal 33%
Backlog: 12/31/13
Backlog: 3/31/15
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Pro Forma Capitalization
Well-capitalized stand-alone business with capacity to fund growth
Pro Forma Capital Structure
($ in millions)
At Spin
Cash (U.S.)
$105
Cash (Outside U.S.)
175
Total Cash
$280
Revolver Availability(1)
485
Total Liquidity
$765
Total Debt
3
Shareholders’ Equity
$645
Capital Allocation Priorities
Cost reduction initiatives
Global business development
Acquisitions
Return of capital
Footnote: (1) $600M revolving line of credit, net of $115M of expected outstanding letters of credit under the credit facility.
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Segment Profitability Characteristics
Segment Revenue
Millions
$3,000 $2,500 $2,000 $1,500 $1,000 $500 $0
$105 $147 $603 $781 $712 $603 $472 $486
$939 $1,005 $1,055 $909 $939 $822
2010 2011 2012 2013 2014 LTM 3/31/15
Global Services Global Power Industrial Environmental
Segment Gross Profit and Gross Margin
Millions
$600 $500 $400 $300 $200 $100 $0
23.7%
22.8% 23.6% 21.4% 21.3% 21.9% 22.0% 17.7% 20.6% 20.1%
$35 $178 $25 $126 $100 $95
$221 $225 $194 $205
25.0% 20.0% 15.0% 10.0% 5.0% 0.0%
2012 2013 2014 LTM 3/31/15
Global Services Global Power Industrial Environmental
Global Services
Flat revenue
Mix impacts average margin
Top priority is driving margin
Global Power
Revenue growth driven by international projects
Stable margins
Good project execution provides margin upside
Industrial Environmental
Revenue growth in line with market growth
Consistent mix of new equipment and aftermarket services
Stable margins
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Improving Cash Flow Profile
Net Work-in-Process Millions
$300 $250 $200 $150 $100 $50 $0
$249 $228
$160 $132
$72 $40
2010 2011 2012 2013 2014 LTM 3/31/15
Net work-in-process (Net WIP)
= advanced billings less contracts-in-progress
Net WIP position is impacted by
Market cycles
Market contracting conditions
Project terms and timing
Strong contracting environment in 2011 and 2012 led to a large Net WIP balance
Pro Forma Operating Cash Flow
Millions
$60 $50 $40 $30 $20 $10 $0
($10)
($20)
$52 $48
($8) ($6)
2012 2013 2014 1Q 2015
Stabilization of Net WIP
Heightened focus on working capital management
Capital expenditures approximately equal to depreciation
Pension funding requirements have eased
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Capital Expenditures
Capital Expenditures(1)
Millions
$45 $40 $35 $30 $25 $20 $15 $10 $5 $0
$5 $40
$4 $5
~$23 $19
$15 $16
2012 2013 2014 2015E 2016F
& Beyond
Business CapEx ProForma Corporate CapEx
Footnote: (1) 2012, 2013 and 2014 business capital expenditures are pro forma for MEGTEC business prior to B&W ownership
B&W Facility in Monterrey
2015 increase in capital expenditures is primarily related to the expansion of the Monterrey facility Going forward, B&W expects normalized annual capital expenditures of $20M—$25M
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Pension Update
Mark-to-Market Gain/(Loss)
Millions
$100 $50 $0
($50)
($100)
($150)
$90
?
($6)
($99)
2012 2013 2014 2015E
Pension Funding Status
Thousands
$1,500 $1,000 $500 $0
$1,236 $1,150 $1,079 $980 $882 $918
2012 2013 2014
Plan Assets Plan Liabilities
Pension Contribution
Millions
$90 $80 $70 $60 $50 $40 $30 $20 $10 $0
$83
$29
$8 $5
2012 2013 2014 2015E
Benefit of remaining salaried participants will be frozen on December 31, 2015 A 25 bps increase in interest rate decreases the pension benefit obligation by approximately $36M Mark-to-market accounting policy results in volatility in earnings (non-cash)
Primarily reflects the re-estimate of plan liabilities due to changes in discount rate
Pension contributions are expected to remain modest going forward
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FY 2015 Guidance
Revenues of approximately $1.7B
Represents 15% year-over-year growth
Combination of core growth and the full-year impact of MEGTEC acquisition
Adjusted Earnings per Share of $1.10 to $1.30
Excludes any mark-to-market adjustment for pension and post-retirement benefits, spin-related transaction costs and restructuring charges Includes $13M share of BWC annual corporate overhead plus incremental stand-alone costs of $8-$10M in second half of 2015 ($14-$16M per year post-2015) Assumes effective tax rate between 32% and 34%
2015 Quarterly EPS
Second quarter EPS slightly less than first quarter due to timing Third and fourth quarter EPS improves incrementally Approximately 60% of annual earnings are expected to be realized in the third and fourth quarters
Targeting annual EPS growth of 10-12% in 2016 and 2017 before acquisitions
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Closing Remarks
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Three-Pronged Strategy Drives EPS Growth and Shareholder Value
Optimize Traditional Business to Align with Changing Market (Increase Margin)
Pursue Growth Opportunities in International Market
(Increase Revenue)
Continue Disciplined Acquisition Program
(Increase Revenue and Margin)
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Management Alignment with Shareholder Interests
Earnings Per Share
Return on Invested Capital
Total Shareholder Return
Cash Flow
Management team will be rewarded ONLY if we deliver shareholder value
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Investment Highlights
Strong Foundation
Great Brand Associated with Quality, Reliable Delivery and Innovation
Customer and Strategic Partner Relationships
Experienced Management Team
Recurring Aftermarket Services Business
Significant Earnings Upside
Three-Pronged Growth Strategy Aligned with Businesses
Technology Leader in Global Power Generation
Established Platform in Industrial Environmental Market
Strong Balance Sheet Enables Strategy Execution
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Appendix
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B&W Management Team
E. James Ferland Chairman and Chief Executive Officer
A seasoned executive with more than 25 years of experience in the utility and commercial nuclear power industry, Mr. Ferland joined B&W in April 2012 as President and Chief Executive Officer.
Immediately prior to joining B&W, Mr. Ferland served as President of the Americas division at Westinghouse Electric Company. He also served as President and Chief Executive Officer of Louisiana Energy Services (LES), where LES obtained a combined construction and operating license for an enrichment plant issued by the U.S. Nuclear Regulatory Commission, among several other accomplishments. Earlier in his career, he gained extensive power generation operation and leadership experience with various U.S.-based utilities.
Mr. Ferland holds a bachelor’s degree in nuclear engineering from Rensselaer Polytechnic Institute and a master’s degree in business administration from the University of Virginia Darden School of Business.
Jenny L. Apker Senior Vice President and Chief Financial Officer
Ms. Apker currently serves as Senior Vice President and Chief Financial Officer. She joined B&W in June 2010 as Vice President and Treasurer, and assumed added responsibility for the Investor Relations function in August 2012.
Prior to joining B&W, Ms. Apker served as Vice President and Treasurer of Dex One Corporation (formerly R.H. Donnelley Corporation), a marketing services company, from 2003 -2010. Before that, she was Assistant Treasurer at Allied Waste Industries, Inc., a waste services company, from 1998-2003. Her experience includes serving as Vice President of Wells Fargo Bank/First Interstate Bank of Arizona, and in a number of positions in Corporate Finance and Treasury at Greyhound Financial Corporation. She began her professional career in 1979 as a Financial Accountant at The Greyhound Corporation.
Ms. Apker holds a bachelor’s degree from Rice University, where she obtained degrees in managerial studies and political science.
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B&W Management Team
Mark S. Low
Senior Vice President, Global Services Division
Mr. Low is responsible for all of the company’s domestic and international service business. From 2012-2013, he was Vice President and General Manager of B&W’s Environmental Products and Services Division, responsible for the company’s environmental products and services business. From 2007 to 2012, he served as Vice President, Service Projects, and led all technical and commercial aspects of the company’s service business including project management, forecasting, costing, cost forecasting, and warranty resolution.
He initially joined B&W in 1979 as a Field Service Engineer. In 1989, he left the company to serve as Vice President of Sales for Tampella Power Corporation of Finland. He rejoined B&W in 1997 as Director of International Sales for the South American/Caribbean market and the global Pulp and Paper market, later serving as Manager of Business Development for the company’s former Fossil Power Division.
Mr. Low earned a bachelor’s degree in metallurgical engineering from Lafayette College.
D. Paul Scavuzzo
Senior Vice President, Global Power Division
Mr. Scavuzzo is responsible for the company’s new-boiler and environmental product lines in North America and internationally. He is also responsible for B&W’s Denmark-based subsidiary, Babcock & Wilcox Vølund, the company’s joint venture operations in China and India, and its Research & Development and Licensing activities. He has led the Global Power Division since March 2012. Before that, he was Vice President, Steam Generating Systems, from 2009 to 2012, leading the utility and industrial boiler business segment, including proposal and project execution of backlog projects and new contracts.
Mr. Scavuzzo joined the company as a Co-op Engineer while in college, and was subsequently hired in 1987 as a Field Service Engineer. He later served in a variety of positions within the company’s former Fossil Power Division, including Performance Engineering, Proposal Engineering, Project Engineering, and Proposal Management.
Mr. Scavuzzo holds both a bachelor’s and a master’s degree in mechanical engineering from The University of Akron, and a master’s of business administration from Kent State University.
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B&W Management Team
Ken Zak
Senior Vice President, Industrial Environmental Division
Mr. Zak is responsible for B&W’s Industrial Environmental business, which includes its B&W MEGTEC operations. Prior to assuming his current position in May 2015, he was Senior Vice President of Business Operations for B&W MEGTEC. From September 2003 to December 2012, he served as Vice President of the Industrial & Environmental Products Group. From September 1997 to September 2003, he was Director of Marketing & Business Development.
He joined B&W MEGTEC in 1992 as Director of Marketing Services. Before that, he held positions with W.R. Grace & Co. and Owens Corning Fiberglas, primarily serving in commercial development roles at corporate research facilities.
Mr. Zak holds a bachelor’s degree in chemistry from the University of Delaware and a master’s degree in industrial administration from the Krannert School of Management at Purdue University.
Peter J. Goumas
Senior Vice President, Operations
Mr. Goumas is responsible for B&W’s Engineering, Manufacturing, Supply Chain Management, Quality Assurance, Facility Services, Operational Excellence and Environmental, Health and Safety functions. Previously, he also served in a number of positions with the company’s former Babcock & Wilcox Nuclear Operations Group, including Vice President, Programs, Contracts and Business Development, and Vice President, Manufacturing and Business Development.
He joined B&W in 1985 as a Quality Assurance Engineer and subsequently served in various management positions of increasing responsibility in Barberton, OH, and Mt. Vernon, IN. He joined the former Marine Mechanical Corporation (MMC) in January 2002 as Vice President, Programs and Information Technology, and supported MMC’s integration into B&W’s business upon its acquisition in 2007.
Mr. Goumas holds a bachelor’s degree in mechanical engineering from the University of Akron and a master’s in business administration from Lynchburg College.
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B&W Management Team
Mark A. Carano
Senior Vice President, Corporate Development and Treasurer
Mr. Carano leads B&W’s corporate strategy and merger and acquisition activities. He provides oversight, leadership and direction as the company identifies, evaluates and pursues new business opportunities and strategic partnerships. As Treasurer, he is responsible for the strategic leadership and oversight of the company’s corporate finance and treasury operations functions.
He joined B&W in 2013 after serving as a Managing Director in the Investment Banking Group of Bank of America Merrill Lynch since 1996. Prior to that, he was in the Investment Banking Group of Deutsche Bank in New York, London and Baltimore.
Mr. Carano holds a bachelor’s degree from Vanderbilt University and a master’s in business administration from the Northwestern University Kellogg School of Management.
Elias Gedeon
Senior Vice President and Chief Business Development Officer
Mr. Gedeon has more than 30 years of experience in the power generation industry and has held various sales, operations and P&L leadership positions in the U.S. and overseas.
Prior to joining B&W in May 2014, he served as Alstom Power’s Boiler Group Vice President, Global Sales and Marketing since 2009, and from 2003 as Alstom’s Power Vice President Sales—Americas. From 1981 to 2002, Mr. Gedeon held a number of positions of increasing responsibility at Foster Wheeler Power Group and its subsidiaries including Executive Vice President, Global Sales and Marketing; and Vice President, Operations, Foster Wheeler Energia S.A. Spain. He began his professional career as a Service Engineer with Foster Wheeler Energy in 1981 and has worked and lived in many countries.
Mr. Gedeon holds a bachelor’s degree in engineering from Stevens Institute of Technology and a master’s in business administration from the University of Michigan Ross School of Business.
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B&W Management Team
Leslie C. Kass
Vice President, Investor Relations and Communications
Ms. Kass leads the investor relations, marketing/communications functions, and government relations areas. Previously, she was Vice President of Regulatory and Agency Relations, leading B&W’s efforts to develop a strong relationship with the Nuclear Regulatory Commission and other government agencies.
Before joining B&W in 2013, Ms. Kass was Vice President of Nuclear Regulatory Affairs for Westinghouse. She has also served at the Nuclear Energy Institute as Senior Director of Business Policy and Fuel Supply, leading the industry interface with the financial community and serving as a subject matter expert on the financial policies required to build new nuclear electric generating plants. After several years with Altran and Duke Engineering & Services, she served as Senior Project Manager for Entergy in its nuclear headquarters and later as Manager of Engineering Programs and Components at Arkansas Nuclear One Station.
Ms. Kass holds a degree in materials science and engineering from the Massachusetts Institute of Technology, and a master’s in business administration from the Duke University Fuqua School of Business.
J. André Hall
Senior Vice President and General Counsel
Mr. Hall is Senior Vice President, General Counsel and Corporate Secretary. He joined B&W in August 2013, serving as Assistant General Counsel, Transactions and Compliance, and responsible for corporate legal activities relating to global compliance, international trade compliance and mergers and acquisitions.
He has more than 20 years of legal experience in the aerospace, defense and chemical industries. His diverse legal background includes mergers and acquisitions, ethics and compliance, products liability litigation and international business transactions. Prior to joining B&W, Mr. Hall served as Global Business Practices & Compliance Officer for UTC Aerospace Systems, following United Technologies’ acquisition of Charlotte-based Goodrich Corporation. From 2000 to 2013, he held several roles of increasing responsibility at Goodrich, including serving as Goodrich’s Vice President of Business Conduct and Chief Ethics Officer.
Mr. Hall earned his undergraduate degree from Furman University and his law degree from the University of North Carolina.
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B&W Management Team
Wendy S. Radtke
Senior Vice President, Human Resources
Ms. Radtke provides direction and leadership for B&W’s global Human Resources functions and strategy including Total Rewards, talent acquisition, performance management, succession planning, diversity and inclusion, learning and development, and employee and labor relations, ensuring these areas are closely aligned with the company’s overall growth plans and business objectives.
From 2012-2015, Wendy served as Vice President of Talent Management at The Goodyear Tire & Rubber Company. From 2009 to 2012, she was Vice President, Asia Pacific Human Resources at Goodyear, located in Shanghai, China. Before joining Goodyear, Radtke spent eight years at Honeywell International where she held a variety of positions with increasing responsibility , including her last role as Vice President of Asia Pacific Human Resources for the Automation and Control Solutions business located in Shanghai, China. Wendy also held several HR-related positions of increasing responsibility at Pepsi Bottling Group and 3M Company.
Ms. Radtke earned a bachelor’s degree in English and psychology from Indiana University and a master’s degree in industrial relations from the University of Minnesota
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Non-GAAP Reconciliation
Three Months
Ended March 31, Year Ended December 31,
(In thousands except per share amounts) 2015 2014 2014 2013 2012
Pro Forma Net Income $ 12,326 $ 8,133 $ (8,315) $ 147,493 $ 106,933
Actuarial (Gains) Losses on Our Pension and Post-Retirement Plans — 63,857 (60,248) 6,537 Special Charges for Restructuring Activities 1,462 926 12,950 12,215 -
Adjusted Pro Forma Net Income(1) $ 13,788 $ 9,059 $ 68,492 $ 99,460 $ 113,470
Pro Forma Diluted Earnings Per Common Share $ 0.23 $ 0.15 $ (0.15) $ 2.62 $ 1.80
Actuarial (Gains) Losses on Our Pension and Post-Retirement Plans — 1.18 (1.07) 0.11 Special Charges for Restructuring Activities 0.03 0.02 0.24 0.22 -
Adjusted Pro Forma Diluted Earnings Per Common Share(1) $ 0.26 $ 0.16 $ 1.26 $ 1.77 $ 1.91
Pro Forma Weighted Average Diluted Shares Outstanding 53,573 55,443 54,239 56,343 59,511
(1) The pro forma diluted weighted average shares outstanding were based on the number of shares utilized to calculate BWC dilutive earnings per share for the three months ended March 31, 2015 and 2014 and the years ended December 31, 2014, 2013 and 2012 adjusted for an assumed distribution ratio of one share of New B&W’s common stock for every two Company common shares. This calculation may not be indicative of the dilutive effect that will actually result from New B&W stock-based awards issued in connection with the adjustment of outstanding BWC stock-based awards, which will not be determined until after the distribution date.
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