Babcock & Wilcox Enterprises, Inc.

Condensed Consolidated Results of Operations

The following discussion is of our consolidated results of operations below.

Revenues decreased by $3.6 million to $149.0 million in the three months ended September 30, 2025 compared to $152.6 million in the three months ended September 30, 2024. The decrease is primarily driven by lower large project volume in B&W Environmental of $20.6 million, due to larger projects being completed last year and the timing of booking replacement projects starting later 2025, partially offset by higher parts volume of $7.1 million and higher volume related to natural gas conversion projects of $7.5 million. This improvement is primarily due to the increasing need for electricity from fossil fuels driven by the demand from artificial intelligence, data centers and expanding economies.

Costs of operations decreased by $4.6 million to $111.9 million in the three months ended September 30, 2025 compared to $116.5 million in the three months ended September 30, 2024. The decrease is primarily driven by the lower revenue as described above as well as the product mix of lower project volume, higher parts volume which has higher gross margin that contributed to the improvement, and lower costs needed to complete certain projects.

SG&A expenses decreased by $3.6 million to $29.8 million in the three months ended September 30, 2025 compared to $33.3 million in the three months ended September 30, 2024. The decrease is primarily driven by the reduction in Corporate overhead costs.

Research and development costs decreased by $0.9 million to $0.3 million in the three months ended September 30, 2025 compared to $1.2 million in the three months ended September 30, 2024. The decrease is primarily driven by the increased commercialization of our BrightLoop™technology.

Loss on asset disposals, net increased in the three months ended September 30, 2025 compared to the three months ended September 30, 2024 due to small disposals in 2025.

Operating income increased by $4.9 million to $6.5 million in the three months ended September 30, 2025 compared to $1.6 million in the three months ended September 30, 2024. The increase is a result of the reduced costs previously noted.

Loss from continuing operations decreased by $5.6 million to $2.3 million in the three months ended September 30, 2025 compared to a loss of $7.9 million in the three months ended September 30, 2024, primarily driven by the improvement in the operating income results noted above. We benefited from an interest expense reduction and a gain on debt extinguishment offset by an increase to tax expense.

Revenues increased by $4.0 million to $448.9 million in the nine months ended September 30, 2025 compared to $444.9 million in the nine months ended September 30, 2024. The increase is primarily driven by larger parts volume of $33.6 million and higher volume related to natural gas conversion projects of $16.7 million, partially offset by lower large project volume in B&W Environmental in 2025 of $42.1 million.

Costs of operations decreased by $7.7 million to $337.9 million in the nine months ended September 30, 2025 compared to $345.6 million in the nine months ended September 30, 2024. The decrease is primarily driven by the mix of the business as parts sales grew more which have higher gross margin, larger project revenue decreased and lower costs were needed to finish larger projects.

SG&A expenses decreased by $5.7 million to $92.8 million in the nine months ended September 30, 2025 compared to $98.5 million in the nine months ended September 30, 2024. The decrease is primarily driven by the legal settlement of $6.5 million in 2024, offset by increased expenses in employee benefits in the current year.

Research and development costs decreased by $1.2 million to $1.6 million in the nine months ended September 30, 2025 compared to $2.8 million in the nine months ended September 30, 2024. The decrease is primarily driven by the increased commercialization of our BrightLoop™technology.

Impairment of long-lived assets increased in the nine months ended September 30, 2025 compared to a nominal amount in the nine months ended September 30, 2024. The increase is driven by the reduction in our real estate footprint.

Loss on asset disposals increased in the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 due to small disposals in 2025.

Operating income increased by $16.8 million to $14.9 million in the nine months ended September 30, 2025 compared to an operating loss of $1.9 million in the nine months ended September 30, 2024, primarily due to the revenue increase as described above and an increase in gross profit due to the improvement in cost of operations in product mix.

Loss from continuing operations decreased by $21.2 million to $22.4 million compared to a loss of $43.6 million in the nine months ended September 30, 2024, primarily due to the revenue increase as described above and an increase in gross profit due to the improvement in cost of operations in product mix. We benefited from an interest expense reduction and a gain on debt extinguishment compared to a loss in 2024.

Other Expenses Impacting Operating Results

Interest Expense

Interest expense for the three and nine months ended September 30, 2025 is lower compared to the three and nine months ended September 30, 2024 due to the debt refinancing transactions that occurred in 2025 that results in lower base principal and will result in accretion of the gain over the life of the debt. See Note 13 in the Condensed Consolidated Financial Statements for further details.

Income Taxes

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 nine months of 2025 is not reflective of the U.S. statutory rate primarily due to certain foreign entities having a tax rate higher than the U.S. statutory rate, valuation allowances against certain net deferred tax assets and unfavorable discrete items. In certain jurisdictions where we anticipate a loss for the year or incur a loss for the year-to-date period for which a tax benefit cannot be realized in accordance with ASC 740, we exclude the loss in that jurisdiction from the overall computation of the estimated annual effective tax rate.

Bookings and Backlog

Bookings and backlog are our measures of remaining performance obligations under our sales contracts. We believe these metrics provide investors, lenders and other users of our financial statements with a leading indicator of future revenues. 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 conversion 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.

Bookings represent changes to the backlog. Bookings include additions related to booking new business or increases in project scope, subtractions due to customer cancellations or reductions in scope, changes in estimates 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.

Backlog as of September 30, 2025 and 2024 was as follows:

Of the backlog at September 30, 2025, we expect to recognize revenues as follows:

Non-GAAP Financial Measures

We use non-GAAP financial measures internally to evaluate our performance and make financial and operational decisions. When viewed in conjunction with GAAP results and the accompanying reconciliations, we believe that the presentation of these measures provides investors with greater transparency and a greater understanding of factors affecting our financial position and results of operations than GAAP measures alone. The presentation of non-GAAP financial measures should not be considered in isolation or as a substitute for the related financial results prepared in accordance with GAAP.

The following discussion of our business segment results of operations includes a discussion of EBITDA and Adjusted EBITDA. EBITDA focuses on the earnings generated from core business operations, without considering the effects of financing, accounting decisions or tax. Adjusted EBITDA differs from the most directly comparable measure calculated in accordance with GAAP. A reconciliation of net loss, the most directly comparable GAAP measure, to Adjusted EBITDA is included 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. When viewed in conjunction with GAAP results and the accompanying reconciliation in Note 5 to the Condensed Consolidated Financial Statements, we believe the presentation of Adjusted EBITDA provides investors with greater transparency and a greater understanding of factors affecting our financial position and results of operations than GAAP measures alone.

Adjusted EBITDA on a consolidated basis is 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 metrics presented in this report are consistent with the manner in which our CODM primarily reviews the results of operations and makes strategic decisions about the business. Our CODM reviews actuals to budgets and forecasts on a quarterly basis and when making decisions. Adjusted EBITDA is calculated as earnings before interest, tax, depreciation and amortization adjusted for items such as gains or losses arising from the sale of non-income producing assets, net pension benefits, restructuring activities, impairments, gains and losses on debt extinguishment, legal and settlement costs, costs related to financial consulting, and other costs that may not be directly controllable by segment management and are not allocated to the segment. We present consolidated Adjusted EBITDA because we believe it is useful to investors to help facilitate comparisons of the ongoing, operating performance before corporate overhead and other expenses not attributable to the operating performance of our revenue generating segments. Additionally, the Company redefined its definition of Adjusted EBITDA to eliminate the effects of certain items including interest on letters of credit included in Cost of operations and product development costs. Prior period results have been revised to conform with the revised definition and present separate reconciling items in our reconciliation.

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, and research and development activity costs.

Impairment of long-lived assets

Impairment of long-lived assets refers to when the carrying amount of an asset exceeds the fair value or recoverable amount.

Benefit plans, net

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 include MTM adjustments 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.

Refer to Note 12 to the Condensed Consolidated Financial Statements for further information regarding our pension and other postretirement plans.

Loss on asset disposals, net

We, at times, will sell or dispose of certain assets that are unrelated to our current or future operations. Therefore, we believe it is useful to exclude these gains and losses from our non-GAAP financial measures in order to highlight the performance of the continuing business.

Stock compensation

The grant date fair value of stock compensation varies based on the derived stock price at the time of grant, valuation methodologies, subjective assumptions, and reward types. This may make the impact of this form of compensation on our current financial results difficult to compare to previous and future periods. Therefore, we believe it is useful to exclude stock-based compensation from our non-GAAP financial measures in order to highlight the performance of the business and to be consistent with the way many investors evaluate our performance and compare our operating results to peer companies.

Restructuring activities

Restructuring activities and business services transition actions across our business units and corporate functions primarily consist of severance and related costs associated with non-recurring actions taken to transform our operations with impacts on employees and facilities used in our businesses. Business services transition costs relate to new technology implementation, expected to provide future benefit and are included in Cost of operations and SG&A expenses in the Condensed Consolidated Statement of Operations.

Settlements and related legal costs (recoveries)

Settlements and related legal costs relate to expenses associated with resolving legal disputes, whether through negotiated settlements or court judgments.

Gain (loss) on debt extinguishment

Losses on debt extinguishment were due to the write-off of deferred financing fees and certain other exit costs associated with our extinguishment of the Debt Facilities.

Foreign exchange

We translate assets and liabilities of our foreign operations into U.S. dollars at current exchange rates, and we translate items in our Condensed Consolidated Statement of Operations at average exchange rates for the periods presented. We record adjustments resulting from the translation of foreign currency amounts as a component of Accumulated Other Comprehensive Loss. We report foreign currency transaction gains (losses) in income in the Condensed Consolidated Statements of Operations. Management excludes these expenses from Adjusted EBITDA as they do not reflect the ordinary course of business and are inherently unpredictable in timing and amount.

Foreign exchange gains and losses are primarily related to unhedged intercompany loans denominated in European currencies to fund foreign operations.

Financial advisory services

Financial advisory services relate to business planning and other professional services.

RESULTS BY SEGMENT

B&W Thermal Segment Results

Revenues in the B&W Thermal segment increased 8%, or $8.9 million, to $118.3 million in the three months ended September 30, 2025 from $109.4 million in the three months ended September 30, 2024. The increase is primarily due to higher volume of natural gas conversions of $7.5 million and higher parts volume of $2.7 million, partially offset by lower Construction volumes of $5.2 million.

Adjusted EBITDA in the B&W Thermal segment increased $1.8 million to $15.2 million in the three months ended September 30, 2025 from $13.4 million in the three months ended September 30, 2024. This is primarily driven by the increase in revenue as described above.

Revenues in the B&W Thermal segment increased 11%, or $33.5 million, to $345.8 million in the nine months ended September 30, 2025 from $312.3 million nine months ended September 30, 2024, driven primarily by the increase in boiler related parts of $27.3 million due to higher volume of natural gas conversions of $16.7 million partially offset by lower Construction volume of $3.8 million.

Adjusted EBITDA in the B&W Thermal segment increased $8.4 million to $40.2 million in the nine months ended September 30, 2025 from $31.9 million in the nine months ended September 30, 2024. The increase in EBITDA is primarily driven by the increased revenue as described above.

B&W Renewable Segment Results

Revenues in the B&W Renewable segment increased 59%, or $5.7 million, to $15.2 million in the three months ended September 30, 2025 from $9.5 million in the three months ended September 30, 2024. This is primarily attributable to the increase in our pulp and paper business of $4.7 million.

Adjusted EBITDA in the B&W Renewable segment increased $1.0 million, to $0.7 million in the three months ended September 30, 2025 from $(0.3) million the three months ended September 30, 2024 driven by the increase in revenue as described above.

Revenues in the B&W Renewable segment increased 21%, or $8.4 million, to $48.4 million in the nine months ended September 30, 2025 from $40.1 million in the nine months ended September 30, 2024. This is primarily attributable to the increase in our pulp and paper business of $5.5 million.

Adjusted EBITDA in the B&W Renewable segment increased $1.8 million, to $1.4 million in the nine months ended September 30, 2025 from $(0.4) million in the nine months ended September 30, 2024. This is primarily attributable to the increase in revenue as described above.

B&W Environmental Segment Results

Revenues in the B&W Environmental segment decreased 54%, or $18.2 million, to $15.5 million in the three months ended September 30, 2025 from $33.7 million in the three months ended September 30, 2024. This is primarily attributable to lower volume of projects in our flue gas treatment business of $13.7 million as projects that were completed in 2024 were not fully replaced in 2025 primarily due to timing of the replacement projects that have started later in 2025.

Adjusted EBITDA in the B&W Environmental segment increased $2.3 million, to $2.8 million in the three months ended September 30, 2025 from $0.6 million in the three months ended September 30, 2024. This is primarily due to lower SG&A as well as margin improvements on ASH projects of $2.6 million partially offset by the revenue decrease as described above.

Revenues in the B&W Environmental segment decreased 41%, or $38.0 million, to $54.6 million in the nine months ended September 30, 2025 from $92.6 million in the nine months ended September 30, 2024. The decrease is primarily due to projects closing out in 2024 that were not fully replaced in 2025 as the replacement projects have started later in 2025.

Adjusted EBITDA in the B&W Environmental segment increased $4.0 million, to $6.9 million in the nine months ended September 30, 2025 from $2.9 million in the nine months ended September 30, 2024. The increase is primarily due to cost reductions offset partially by the lower revenue as described above.

Corporate Results

Adjusted EBITDA in Corporate decreased $0.3 million, to $(6.0) million in the three months ended September 30, 2025 from $(5.7) million in the three months ended September 30, 2024. This is related to an increase in employee benefits.

Adjusted EBITDA in Corporate increased $1.0 million, to $(14.6) million in the nine months ended September 30, 2025 from $(15.6) million in the nine months ended September 30, 2024. This is primarily related to a decrease in audit and consulting fees.