Babcock & Wilcox Enterprises, Inc.

Condensed Consolidated Results of Operations

The following discussion reflects the consolidated results of our operations.

Three Months Ended September 30, 2026 and 2025

Revenues increased by $151.6 million to $290.8 million in the three months ended September 30, 2026 compared to $139.2 million in the three months ended September 30, 2025. The increase is primarily driven by an increase in large project volume, including $77.8 million from Base Electron. This improvement is primarily due to the increasing need for electricity from fossil fuels driven by the demand from AI, data centers and expanding economies.

Cost of operations increased by $140.1 million to $245.9 million in the three months ended September 30, 2026 compared to $105.9 million in the three months ended September 30, 2025. The increase is primarily driven by the higher revenue as described above as well as the product mix of higher large project volume which carries higher costs needed to complete certain projects. In addition, construction costs have increased due to a nationwide shortage of skilled labor, which has caused lower than expected productivity on certain job sites.

SG&A expenses increased by $1.4 million to $30.5 million in the three months ended September 30, 2026 compared to $29.1 million in the three months ended September 30, 2025. The increase is primarily driven by higher employee compensation expense, reflecting increased volume from revenue growth during the period.

Research and development costs slightly increased by $0.3 million to $0.6 million in the three months ended September 30, 2026 compared to $0.3 million in the three months ended September 30, 2025. The increase is primarily driven by our BrightLoop™investment.

(Gain) loss on asset disposals, net increased by $0.6 million to a slight gain in the three months ended September 30, 2026 compared to a $0.6 million loss in the three months ended September 30, 2025, primarily due to minor disposals in the third quarter of 2026.

Operating income increased by $10.4 million to $13.8 million in the three months ended September 30, 2026 compared to Operating income of $3.4 million in the three months ended September 30, 2025. The increase is primarily due to the revenue increase and increased gross profit, partially offset by the increased SG&A expenses noted above.

Income from continuing operations increased by $99.7 million to $93.5 million in the three months ended September 30, 2026 compared to a loss of $6.2 million in the three months ended September 30, 2025. The increase is primarily driven by the improvement in the operating income results noted above. We also benefited from the change in fair value of customer warrants of $85.1 million and a reduction to interest expense of $4.4 million.

Nine Months Ended September 30, 2026 and 2025

Revenues increased by $398.2 million to $824.9 million in the nine months ended September 30, 2026 compared to $426.7 million in the nine months ended September 30, 2025. The increase is primarily driven by an increase in large project volume, including $209.5 million from Base Electron. This improvement is primarily due to the increasing need for electricity from fossil fuels driven by the demand from AI, data centers and expanding economies.

Costs of operations increased by $365.9 million to $690.0 million in the nine months ended September 30, 2026 compared to $324.1 million in the nine months ended September 30, 2025. The increase is primarily driven by the mix of the business as large project volume increased, resulting in higher costs needed to complete certain projects. In addition, construction costs have increased due to a nationwide shortage of skilled labor, which has caused lower than expected productivity on certain job sites.

SG&A expenses increased by $17.9 million to $108.6 million in the nine months ended September 30, 2026 compared to $90.8 million in the nine months ended September 30, 2025. The increase is driven by an increase in employee compensation expense, including stock-based compensation awards, reflecting increased volume from revenue growth during the period.

Research and development costs increased by $0.4 million to $2.0 million in the nine months ended September 30, 2026 compared to $1.6 million in the nine months ended September 30, 2025. The increase is primarily driven by general investment in research and technology.

Impairment of long-lived assets decreased by $1.0 million in 2026 due to an impairment recognized in 2025 relating to a reduction in our real estate footprint.

(Gain) loss on asset disposals decreased by $0.3 million to $0.4 million in the nine months ended September 30, 2026 compared to $0.7 million in the nine months ended September 30, 2025, primarily related to minor disposals in 2026.

Operating income increased by $15.4 million to $23.9 million in the nine months ended September 30, 2026 compared to $8.5 million in the nine months ended September 30, 2025, primarily due to the increased revenue and gross profit, partially offset by the increased SG&A expenses noted above.

Income from continuing operations increased by $57.3 million to $28.1 million compared to a loss of $29.1 million in the nine months ended September 30, 2025. The increase was driven by the improvement in operating income results noted above and the non-cash change in fair value of customer warrants of $20.8 million. Also contributing to the increase in income are reductions in income tax expense of $2.3 million and interest expense of $17.0 million.

Other Expenses Impacting Operating Results

Interest Expense

Interest expense for the three and nine months ended September 30, 2026 is lower compared to the three and nine months ended September 30, 2025 due to the debt refinancing and paydown transactions that occurred in 2025 as well as the redemption of our 6.50% Senior Notes in August 2026 that results in lower base principal and will result in accretion of the gain on exchange over the life of the debt. See Note 13 to the Condensed Consolidated Financial Statements for further details.

Change in Fair Value of Customer Warrants

The Change in fair value of customer warrants is primarily driven by fluctuations in the Company's stock price, which decreased as of September 30, 2026 comparative to June 30, 2026 and December 31, 2025 for the Initial Warrant, and also decreased as of September 30, 2026 comparative to June 30, 2026 and the February 26, 2026 grant date stock price for the Additional Warrant issued. As a result, we recorded income of $85.1 million for the three months ended September 30, 2026, and income of $20.8 million for the nine months ended September 30, 2026.

Income Taxes

Our effective tax rate for the three and nine months ended September 30, 2026 is not reflective of the U.S. statutory rate primarily due to certain foreign countries having a tax rate higher than the U.S. statutory rate, valuation allowances against certain net deferred tax assets and favorable 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.

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").

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 our customers to pay 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 new business or increases in project scope, subtractions due to customer cancellations or reductions in project 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.

Total bookings for the three and nine months ended September 30, 2026 and 2025 were as follows:

(1)Bookings of $2.4 billion were related to Base Electron for the nine months ended September 30, 2026.

Our backlog as of September 30, 2026 and 2025 was as follows:

Of the backlog at September 30, 2026, we expect to recognize revenues as follows:

Non-GAAP Financial Measures

In addition to Income (loss) from continuing operations, 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. EBITDA and Adjusted EBITDA differ from the most directly comparable measure calculated in accordance with GAAP. A reconciliation of Income (loss) from continuing operations, the most directly comparable GAAP measure, to EBITDA and 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, we believe the presentation of EBITDA and 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 is calculated as earnings before interest, tax, depreciation and amortization, and adjusted for items such as gains or losses arising from the sale of non-income producing assets, net pension benefits, stock-based compensation, restructuring activities, impairments, gains and losses on debt extinguishment, legal and settlement costs, costs related to financial consulting and amortization and valuation of customer warrants. 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.

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 pension and other postretirement benefit income or expense based on actuarial calculations. The net impact depends on the relationship between the expected return on plan assets and the cost of providing benefits. Benefit costs are relatively low because our plans are frozen, meaning employees are no longer earning additional benefits.

Reported pension results may vary due to mark‑to‑market adjustments, which reflect changes in interest rates, asset performance or one‑time events such as plan settlements or curtailments. These adjustments are driven by market conditions and actuarial assumptions as of the date of the event. Because mark‑to‑market impacts are inherently volatile and often event‑driven, any gain or loss recognized in a given period should not be considered indicative of future pension income or expense.

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

(Gain) 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-based compensation

The grant date fair value of stock-based 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 Statements of Operations.

(Loss) gain on debt extinguishment

Losses (gains) on debt extinguishment are due to the exit costs or benefits associated with our repurchases and settlements of outstanding debt. See Note 13 to the Condensed Consolidated Financial Statements for additional details on the repayment or settlement activity for the periods presented.

Settlements and related legal costs

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

Foreign exchange

Foreign exchange gains and losses are primarily related to settlement of transactions denominated in a currency different than the functional currency of the Company. 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.

Financial advisory services

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

Customer warrant amortization

Customer warrants are amortized over the life of the associated agreement and recorded as a reduction to Revenues in the Condensed Consolidated Statements of Operations. Management excludes the reduction to revenue from Adjusted EBITDA as they are a non-cash transaction and do not reflect the ordinary course of business.

See Note 14 to the Condensed Consolidated Financial Statements for further information regarding our Customer warrant amortization.

Change in fair value of customer warrants

Change in fair value of customer warrants is recognized as a gain or loss in the Condensed Consolidated Statements of Operations. Management excludes the expense from Adjusted EBITDA as they are a non-cash transaction and do not reflect the ordinary course of business.

See Note 14 to the Condensed Consolidated Financial Statements for further information regarding our Change in fair value of customer warrants.