What changed in this filing

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Item 9A. Controls and Procedures

2022-03-08 compared with 2021-03-08 · 103 added, 35 removed, 343 unchanged (29% of the section changed)

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As of the end of the period covered by this report, the Company's management, with the participation of our Chief Executive Officer and the Chief Financial Officer, has evaluated the effectiveness of the design and operation of our 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 disclosure controls and procedures, which, by their nature, can provide only reasonable assurance regarding the control objectives.

Our 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 Chief Executive Officer and Chief Financial Officer concluded that the design and operation of our disclosure controls and procedures are effective as of December 31, 2020 to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit 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.

Based on the evaluation referred to above, our Chief Executive Officer and Chief Financial Officer concluded that the design and operation of our disclosure controls and procedures are effective as of December 31, 2021 to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit 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.

Management's Report on Internal Control Over Financial Reporting

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Our financial reporting process and associated internal controls were designed to provide reasonable assurance to management and the Board of Directors regarding the reliability of financial reporting and the preparation of our Consolidated Financial Statements for external reporting in accordance with accounting principles generally accepted in the United States of America.

On September 30, 2021, we acquired a 60% controlling ownership in Fosler Construction and on November 30, 2021, we acquired 100% ownership of VODA, as described in Note 26 of the Consolidated Financial Statements in Part I of this report.

In accordance with the SEC’s general guidance that an assessment of a recently acquired business may be omitted from our internal control over financial reporting scope in the year of acquisition we excluded the acquired businesses from management’s report on internal control over financial reporting.

Management, with the participation of our principal executive and financial officers, assessed the effectiveness of our internal control over financial reporting as of December 31, 2021.

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Based on our assessment, management has concluded that B&W's internal control over financial reporting was effective at the reasonable assurance level described above as of December 31, 2021.

Attestation Report of Independent Registered Public Accounting Firm

The effectiveness of our internal control over financial reporting as of December 31, 2021 has been audited by Deloitte & Touche LLP, our independent registered public accounting firm, as stated in their report, which is included in Item 8, Financial Statements and Supplementary Data under the heading “Report of Independent Registered Public Accounting Firm,” and is incorporated herein by reference.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the three months ended December 31, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

There were no changes in our internal control over financial reporting during the year ended December 31, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

We have not experienced any material impact to our internal controls over financial reporting, despite the fact that some of our team members are working remotely in response to the COVID-19 pandemic.

We are continually monitoring and assessing the COVID-19 situation on our internal controls to ensure their operating effectiveness.

In addition, during 2021, the Company outsourced certain support functions to external service providers of which some were still in transition as of December 31, 2021.

We are continually monitoring and assessing these situations on our internal controls to ensure their operating effectiveness.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and the Board of Directors of Babcock & Wilcox Enterprises, Inc.:

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of Babcock & Wilcox Enterprises, Inc.

(the “Company”) as of December 31, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the Company maintained, in

all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2021, of the Company and our report dated March 8, 2022 , expressed an unqualified opinion on those financial statements and included an explanatory paragraph regarding the Company’s change in accounting principle.

As described in Item 9A, management excluded from its assessment the internal control over financial reporting at Fosler Construction Company Inc.

and VODA A/S, which were acquired on September 30, 2021, and November 30, 2021, respectively, and whose financial statements constitute approximately 14% of total assets and 2% of revenues of the consolidated financial statement amounts as of and for the year ended December 31, 2021.

Accordingly, our audit did not include the internal control over financial reporting at these acquired entities.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Item 9A.

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Deloitte & Touche LLP

Cleveland, Ohio

March 8, 2022

Other Information

Not applicable.

On March 2, 2022, our Board of Directors approved an amendment to our Amended and Restated Bylaws of Babcock & Wilcox Enterprises, Inc.

(the “Amendment”).

Pursuant to such amendment, the entirety of Section 2.10(e) was deleted.

As a result of the Amendment, our Bylaws no longer include an age limitation for members of our Board of Directors.

The effective date of the Amendment is March 2, 2022.

A complete copy of the Bylaws reflecting the Amendment is attached to this Annual Report on Form 10-K as Exhibit 3.4.

Directors, Executive Officers and Corporate Governance

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Louis Salamone 75 Executive Vice President, Chief Financial Officer and Chief Accounting Officer

Morgan 52 Chief Operating Officer

Dziewisz 55 Senior Vice President and Corporate Secretary

Caruso 58 Chief Implementation Officer

Morgan 53 Executive Vice President and Chief Operating Officer

Dziewisz 56 Executive Vice President, General Counsel and Corporate Secretary

Kenneth Young has served as our Chief Executive Officer since November 2018 and as the Chairman of our Board of Directors since September 2020.

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Salamone was Vice President and Chief Financial Officer of OpenPeak Inc., a provider of mobile cybersecurity solutions, from April 2009 until March 2013, and Executive Vice President and Chief Financial Officer of LCC, from June 2006 until April 2009.

Morgan has served as our Chief Operating Officer of The Babcock & Wilcox Company since August 2020.

He has also served as Managing Director of our Babcock & Wilcox Vølund subsidiary since Mach 2020.

Morgan has served as Chief Operating Officer of The Babcock & Wilcox Company since August 2020 and was additionally named Executive Vice President on January 1, 2022.

He has also served as Managing Director of our Babcock & Wilcox Vølund subsidiary since March 2020.

Previously, Mr.

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From December 2016 until January 2019, Mr.

Morgan served as Senior Vice President, Renewable, including our Babcock & Wilcox Vølund subsidiary and Babcock & Wilcox's operations and maintenance services businesses.

Morgan served as Senior Vice President, Renewable,with responsibility for the company’s Babcock & Wilcox Vølund subsidiary and for Babcock & Wilcox’s operations and maintenance services businesses.

From August 2016 to December 2016, he served as Senior Vice President, Operations.

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from February 2016 to May 2016.

Before joining Babcock & Wilcox, he was President for Allied Technical Resources, Inc., a technical staffing company, from September 2013 to January 2016.

Before joining Babcock & Wilcox, he was President of Allied Technical Resources, Inc., a technical staffing company, from September 2013 to January 2016.

Previous positions included serving as Chief Operating Officer with BHI Energy, Vice President of Installation and Modification Services with Westinghouse Electric Company, and as Managing Director for AREVA T&D.

He began his career with Duke Energy.

Dziewisz has served as our Senior Vice President and Corporate Secretary since February 1, 2020.

He also serves as the Company’s Chief Compliance Officer and the General Counsel of The Babcock & Wilcox Company.

Dziewisz served as our Senior Vice President and Corporate Secretary since February 1, 2020.

He was additionally named Executive Vice President on January 1, 2022 and the Company’s General Counsel on January 27, 2022.

He also serves as the Company’s Chief Compliance Officer.

Previously, Mr.

Dziewisz served as our Vice President, Assistant General Counsel & Chief Compliance Officer from January 2019 to February 2020.

Dziewisz served as the General Counsel of The Babcock & Wilcox Company from February 2020 to January 2022, as well as our Vice President, Assistant General Counsel & Chief Compliance Officer from January 2019 to February 2020.

From June 2013 until January 2019, Mr.

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Dziewisz joined the Company in 1997.

Caruso has served as our Chief Implementation Officer since April 2018.

He works closely with the Company’s executive leadership team to review financial and operational strategies, and revenue and profitability enhancement opportunities.

Caruso also serves as a Managing Director of Alvarez & Marsal's North American Commercial Restructuring practice (“NACR”) since September 2006.

He is a member of the NACR Executive Committee and co-leads

the NACR Midwest Region.

Executive Compensation

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Principal Accountant Fees and Services

The information required by this item is incorporated by reference to the material appearing under the heading “Ratification of Appointment of Independent Registered Public Accounting Firm for Year Ending December 31, 2021” in the Proxy Statement for our 2021 Annual Meeting of Stockholders.

The information about aggregate fees billed to us by our principal accountant, Deloitte & Touche LLP (PCAOB ID No.

34 ) will be presented under the caption "Ratification of Appointment of Independent Registered Public Accounting Firm for Year Ending December 31, 2022” in the Proxy Statement for our 2022 Annual Meeting of Stockholders.

Exhibits, Financial Statement Schedules

a) The following documents are filed as part of this Annual Report on Form 10-K:

1) Financial Statements—the consolidated financial statements of Babcock & Wilcox Enterprises, Inc.

and its consolidated subsidiaries are included in Part II, Item 8 of this Annual Report on Form 10-K.

2) Exhibits—the exhibit index listed in the exhibit index below are filed with, or incorporated by reference in, this Annual Report on Form 10-K.

EXHIBIT INDEX

Master Separation Agreement, dated as of June 8, 2015, between The Babcock & Wilcox Company and Babcock & Wilcox Enterprises, Inc.

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Current Report on Form 8-K filed on July 24, 2019 (File No.

Amended and Restated Bylaws (incorporated by reference to Exhibit 3.1 to the Babcock & Wilcox Enterprises, Inc.

Quarterly Report on Form 10-Q for the quarter ended March 31, 2017 (File No.

Form of Warrant (incorporated by reference to Exhibit 4.1 of the Babcock & Wilcox Enterprises, Inc.

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

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.

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.

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Current Report on Form 8-K filed on February 12, 2021 (File No.

Supplemental Indenture dated February 12, 2021 (incorporated by reference to Exhibit 4.2 to the Babcock & Wilcox Enterprises, Inc.

First Supplemental Indenture dated February 12, 2021 (incorporated by reference to Exhibit 4.2 to the Babcock & Wilcox Enterprises, Inc.

Current Report on Form 8-K filed on February 12, 2021 (File No.

Second Supplemental Indenture dated December 13, 2021 (incorporated by reference to Exhibit 4.3 to the Babcock & Wilcox Enterprises, Inc.

Current Report on Form 8-K filed on December 14, 2021 (File No.

Form of 8.125% Senior Note Due 2026 (included in Exhibit 4.4)

Form of 6.50%% Senior Note Due 2026 (included in Exhibit 4.5)

Form of Certificate representing 7.75% Series A Cumulative Perpetual Preferred Stock (incorporated by reference to Exhibit 4.1 to the Babcock & Wilcox Enterprises, Inc.

Form 8-A filed on May 7, 2021 (File No.

Tax Sharing Agreement, dated as of June 8, 2015, by and between The Babcock & Wilcox Company and Babcock & Wilcox Enterprises, Inc.

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Babcock & Wilcox Enterprises, Inc.

2021 Long-Term Incentive Plan (incorporated by reference to the Babcock & Wilcox Enterprises, Inc.

Current Report on Form 8-K filed on May 26, 2021 (File No.

Babcock & Wilcox Enterprises, Inc.

Executive Incentive Compensation Plan (incorporated by reference to Exhibit 10.9 to the Babcock & Wilcox Enterprises, Inc.

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Current Report on Form 8-K filed November 10, 2020 (File No.

Settlement Agreement between Babcock & Wilcox Volund A/S and XL Insurance Company SE dated October 10, 2020.

Settlement Agreement between Babcock & Wilcox Volund A/S and XL Insurance Company SE dated October 10, 2020 (incorporated by reference to Exhibit 10.65 of the Babcock & Wilcox Enterprises, Inc.

Annual Report on Form 10-K for the year ended December 31, 2020 (File No.

Exchange Agreement by and between Babcock & Wilcox Enterprises Inc.

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3 to Amended and Restated Credit Agreement by and between Babcock and Wilcox Enterprises Inc.

and Bank of America, N.A., as Administrative Agent, dated March 4 2021

and Bank of America, N.A., as Administrative Agent, dated March 4 2021 (incorporated by reference to Exhibit 10.68 of the Babcock & Wilcox Enterprises, Inc.

Annual Report on Form 10-K for the year ended December 31, 2020 (File No.

Amendment No.

4 to Amended and Restated Credit Agreement by and between Babcock and Wilcox Enterprises Inc.

and Bank of America, N.A., as Administrative Agent, dated March 26, 2021 (incorporated by reference to Exhibit 10.1 to the Babcock & Wilcox Enterprises, Inc.

Current Report on Form 8-K filed on April 1, 2021 (File No.

Amendment No.

5 to Amended and Restated Credit Agreement dated May 10, 2021 (incorporated by reference to the Babcock & Wilcox Enterprises, Inc.

Current Report on Form 8-K filed on May 13, 2021 (File No.

Revolving Credit, Guaranty and Security Agreement, dated as of June 30, 2021, by and among Babcock & Wilcox Enterprises, Inc.

and PNC Bank, National Association, as administrative agent, lender and swing loan lender (incorporated by reference to the Babcock & Wilcox Enterprises, Inc.

Current Report on Form 8-K filed on July 7, 2021 (File No.

Letter of Credit Issuance and Reimbursement and Guaranty Agreement, dated as of June 30, 2021, by and among Babcock & Wilcox Enterprises, Inc.

and PNC Bank, National Association, as issuer (incorporated by reference to the Babcock & Wilcox Enterprises, Inc.

Current Report on Form 8-K filed on July 7, 2021 (File No.

Reimbursement, Guaranty and Security Agreement, dated as of June 30, 2021, by and among Babcock & Wilcox Enterprises, Inc.

and MSD PCOF Partners XLV, LLC, as administrative agent (incorporated by reference to the Babcock & Wilcox Enterprises, Inc.

Current Report on Form 8-K filed on July 7, 2021 (File No.

Guaranty Agreement, dated as of June 30, 2021, by B.

Riley Financial, Inc.

in favor of MSD PCOF Partners XLV, LLC, as administrative agent (incorporated by reference to the Babcock & Wilcox Enterprises, Inc.

Current Report on Form 8-K filed on July 7, 2021 (File No.

LIFO Preferability Letter

Significant Subsidiaries of the Registrant.

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Balance at end of period $ 11,828 $ 17,222

Deferred Tax Assets Valuation Allowance

Year ended December 31,

(in thousands) 2020 2019

Balance at beginning of period $ 539,791 $ 483,967

Charges to costs and expenses ( 17,498 ) 56,254

Charges to other accounts 13,958 ( 430 )

Balance at end of period $ 536,251 $ 539,791

Inventory Reserves

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Deductions 14 ( 867 )

Held for sale — ( 1,384 )

Currency translation adjustments and other 97 296

Balance at end of period $ 6,534 $ 7,078

* December 31, 2020 balance at beginning of period amount has been adjusted to reflect the change in inventory accounting method, as described in Notes 2 and 6 to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report.

Form 10-K Summary

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures