Babcock & Wilcox Enterprises (BW) Q2 FY26 earnings call: guidance and Q&A

How is the Base Electron project developing, and how will revenue flow through the income statement in the coming quarters, especially given the significant revenue recognized in Q2?

Management stated that more revenue was recognized earlier than anticipated due to manufacturing milestones. The bulk of revenue will pick up significantly in early 2027 when the construction phase begins and materials are shipped on-site. They are ahead of expectations and on budget, and the increased EBITDA guidance reflects this.

“I think where the real bulk of the revenues pick up is as we move into the construction phase and we begin shipping materials on site, which will have significant milestones. Obviously, that will begin -- that will start early next year on the particular site location.”

asked by Rob Brown · answered by Kenneth Young

Can you elaborate on the 4 to 6 gigawatts of potential pipeline, how these projects are developing, and how they compare to the Base Electron project in terms of numbers and types?

Projects will evolve with initial Letters of Notice to Proceed (LNTP) before full Notice to Proceed (NTP). They are confident about 1-2 projects, leading to the Siemens turbine reservation. These projects will use 50-megawatt boilers and steam turbines in an enhanced combined-cycle fashion, allowing for later addition of combustion turbines to double output. They are also discussing other large coal-related projects for grid or direct data center connections, noting B&W's unique position to support these.

“In this particular case, instead of the larger boilers, we're using 50-megawatt boilers and steam turbines in an enhanced combined-cycle fashion where we can actually install the boiler and the turbine ahead of the combustion turbine, and we're able to add a combustion turbine at a later date.”

asked by Rob Brown · answered by Kenneth Young

How is the market responding to B&W's quicker time-to-market and comparable cost structure for power generation, and what is the market's need for speed?

Customers always want faster delivery. B&W's enhanced combined-cycle approach provides power 3 to 5 years faster than a combustion turbine alone, with comparable efficiency and heat rate. It also offers greater reliability, as the system can still operate at 50% capacity if one unit goes down, unlike traditional combined-cycle plants.

“But we're providing power 3 to 5 years faster on those sites than a combustion turbine alone.”

asked by Rob Brown · answered by Kenneth Young

What is the confidence in meeting growth given supply chain constraints, particularly regarding labor and the Siemens turbine order? Are investments needed?

B&W has flexibility and capacity with different boiler manufacturers (internal and third-party). The Base Electron project manufacturing is on schedule. The Siemens turbine reservation for 1 GW is secured, with good supply chain and payment terms. For labor, they are closely monitoring highly skilled labor availability, working with unions on incentives and training for upcoming construction, especially for Base Electron in 2027.

“We wanted to move ahead and invest in these next gigawatt worth of steam turbines. And so that reservation has been secured on that and ready to ship in the next 12 to 14 months on those turbine units.”

asked by Aaron Spychalla · answered by Kenneth Young

Can you provide more details on the TerraSpark coal plant FEED study, the opportunity pipeline, and timing for next steps?

The FEED study is progressing, involving front-end engineering design and close collaboration with the DOE. Many engineers are excited about building a coal plant in the U.S. It's too early to forecast revenues past the FEED study, but it's an active and engaged project.

“I can tell you from an employee perspective, we've got a lot of employees that never thought they would see the light of day of building a coal plant here in the U.S.”

asked by Aaron Spychalla · answered by Kenneth Young

What are the next steps for ClimateBright, specifically the Massillon project, and what does the pipeline look like for growth?

Fabrication of BrightLoop fuel reactors for the Massillon project is underway, with construction starting later this fall and initial operations anticipated in late 2027. There's significant interest from hyperscalers and oil companies due to its CO2 treatment capabilities. The project is crucial for scaling up to larger projects like West Virginia and Wyoming, which aim to produce steam from coal with CO2 isolation. They anticipate bookings in 2028-2030 for BrightLoop and other ClimateBright applications.

“The operation of Massillon in late 2027 will position BrightLoop as a commercially available option for energy production as the demand for new generation assets continues to grow.”

asked by Aaron Spychalla · answered by Kenneth Young