What changed in this filing

/stocks — the workspaceLOADING

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

2023-03-16 compared with 2022-03-08 · 835 added, 737 removed, 1226 unchanged (56% of the section changed)

13 unchanged sentences

We have audited the accompanying consolidated balance sheets of Babcock & Wilcox Enterprises, Inc.

(the "Company") as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive income (loss), stockholders' equity (deficit), and cash flows, for each of the three years in the period ended December 31, 2021, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the "financial statements").

and subsidiaries (the "Company") as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive (loss) income, stockholders' equity, and cash flows, for each of the three years in the period ended December 31, 2022, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 16, 2023, expressed an unqualified opinion on the Company's internal control over financial reporting.

Change in Accounting Principle

As discussed in Notes 2 and 6 to the consolidated financial statements, the Company elected to change its method of accounting for certain inventories from the last-in, first-out (“LIFO”) cost method to the first-in, first-out (“FIFO”) cost method which has been retrospectively applied to the consolidated financial statements as of December 31, 2020 and 2019.

Basis for Opinion

9 unchanged sentences

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate to.

Revenue Recognition and Contracts – Refer to Notes 2 and 5 to the financial statements

Critical Audit Matter Description

The Company recognizes fixed price long-term contract revenue over the contract term (“over time”) as the work progresses, either as products are produced or as services are rendered, because transfer of control to the customer occurs over time.

Substantially all of the Company’s fixed price long-term contracts represent a single performance obligation as the interdependent nature of the goods and services provided prevents them from being separately identifiable within the contract.

7 unchanged sentences

Our audit procedures related to management’s estimates of total costs and profit for the performance obligations used to recognize revenue for certain fixed price long-term contracts included the following, among others:

• We tested the effectiveness of controls over management’s project contract review evaluation, including those over the review of each significant project’s current financial position and overall job performance and review of contract changes.

• We selected a sample of fixed price long-term contracts performed over time and performed the following:

7 unchanged sentences

– Comparing management’s estimates for the selected contracts to costs and profits of similar performance obligations, when applicable.

– Performing multiple live project site visits

– Performing multiple live and virtual project site visits.

– Tested the mathematical accuracy of management’s calculation of revenue for the performance obligation.

1 unchanged sentence

• Evaluated the Company’s disclosures related to revenue recognition and contracts to assess their conformity with the applicable accounting standards.

Goodwill – Babcock & Wilcox Solar Reporting Unit - Refer to Notes 2 and 8 to the financial statements

Critical Audit Matter Description

The Company’s evaluation of goodwill for impairment involves the comparison of the fair value of each reporting unit to its carrying value.

As described in Note 8 to the consolidated financial statements, the Company's consolidated goodwill balance was $157 million as of December 31, 2022, of which $56.6 million was allocated to the Babcock & Wilcox Solar reporting unit.

The Company’s goodwill is tested annually on October 1st or more frequently if events or changes in circumstances indicate that the assets might be impaired.

The Company’s evaluation of goodwill for impairment involves the comparison of the fair value of Babcock & Wilcox Solar reporting unit to its carrying value.

As disclosed further within Note 8, the Company identified certain factors, including but not limited to, the acquisition of the remaining 40% ownership stake in Babcock & Wilcox Solar for an amount less than the remaining balance of the non-controlling interest, significant deterioration in operating results from those originally forecast at the date of acquisition primarily as a result of supply chain issues on certain solar product inputs, the recognition of additional contract losses in the third quarter of $8.6 million beyond amounts previously accounted for as measurement period adjustments during the year, the determination that the contingent consideration would not be payable, all of which contributed to the identification of a triggering event, requiring an interim quantitative goodwill impairment assessment of its Babcock & Wilcox Solar reporting unit during the quarter ended September 30, 2022.

The Company performed a quantitative analysis and compared the fair value of the Babcock & Wilcox Solar reporting unit to its carrying value and determined that the carrying value of the reporting unit exceeded the fair value as of September 30, 2022.

As such, the Company recorded a goodwill impairment loss

related to the Babcock & Wilcox Solar reporting unit of $7.2 million in the third quarter of fiscal 2022 which is recognized on the consolidated statements of operations for the twelve months ended December 31, 2022.

The quantitative analysis performed as of September 30, 2022 was updated as of October 1, 2022, the Company’s annual impairment test date, utilizing a qualitative assessment, and the analysis noted that the fair value of the Babcock & Wilcox Solar reporting unit exceeded the carrying value as of the annual impairment test date.

Management re-evaluated its Babcock & Wilcox Solar reporting unit at December 31, 2022 and no additional indicators of goodwill impairment were identified.

In the performance of the interim goodwill impairment assessment as of September 30, 2022, the Company determined the fair value of its Babcock & Wilcox Solar reporting unit using a combination of the income approach (discounted cash flows), and the market approach (guideline public company method and the guideline transaction method).

The determination of the fair value using the income approach required management to make significant estimates and assumptions related to the Babcock & Wilcox Solar reporting unit’s forecasted future revenues, earnings before interest, taxes, depreciation, and amortization (EBITDA) margins, and discount rate.

Changes in these assumptions could have significant impacts on either the fair value, the amount of any goodwill impairment charge, or both.

Given the significant judgments made by management to estimate the fair value of the Babcock & Wilcox Solar reporting unit and the difference between its fair value and carrying value, we identified the goodwill evaluation of the Babcock & Wilcox Solar reporting unit as a critical audit matter.

This required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists, when performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions related to selection of the discount rate and forecasts of future revenue and EBITDA margins.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the goodwill evaluation of the Babcock & Wilcox Solar reporting unit included the following, amongst others:

• We tested the effectiveness of controls over management’s goodwill impairment evaluation, including those over the determination of the fair value of the Babcock & Wilcox Solar reporting unit.

• We evaluated management’s determination and evaluation of triggering events at each of the quarterly and year and reporting periods.

• We evaluated management’s ability to accurately forecast future revenues, and EBITDA margins by comparing actual results to management’s historical forecasts.

• We evaluated the reasonableness of management’s revenue and EBITDA margin forecasts by comparing the forecasts to (1) historical revenues, and EBITDA margins, (2) internal communications to management and the Board of Directors, (3) inquiry with non-management personnel and (4) forecasted information included in analyst and industry reports for the Company and certain of its peer companies.

• With the assistance of our internal fair value specialists, we evaluated the reasonableness of the valuation methods.

• With the assistance of our internal fair value specialists, we evaluated the reasonableness of the valuation assumptions, including the discount rate by (1) testing the source information underlying the determination of the discount rate and the mathematical accuracy of the calculation and (2) developing a range of independent estimates and comparing those to the discount rate selected by management.

• We evaluated the impact of changes in management’s goodwill assessment from the September 30, 2022 interim quantitative evaluation of goodwill for the Babcock & Wilcox Solar reporting unit to the October 1, 2022 annual measurement date, as well as to December 31, 2022, inclusive of macroeconomic factors.

Acquisition of Babcock & Wilcox Solar - Contingent Consideration Liability and Acquisition of Remaining Ownership Interest – Refer to Note 26 to the financial statements

Critical Audit Matter Description

On September 30, 2021, the Company acquired a 60% controlling ownership interest in Illinois-based solar energy contractor Babcock & Wilcox Solar Energy, Inc.

(“Babcock & Wilcox Solar”) in a business combination with a total fair value of consideration for the acquisition of $36.0 million, including $27.2 million in cash plus $8.8 million in estimated fair value of the contingent consideration arrangement.

In connection with the acquisition, the Company agreed to pay contingent consideration based on the achievement of targeted revenue thresholds for the year ended December 31, 2022.

The range of undiscounted amounts the Company could be required to pay under the contingent consideration arrangement was between $0.0 million and $10.0 million.

Accordingly, the total purchase price was allocated to the assets acquired and liabilities assumed based on their respective fair values.

The Company estimated fair values primarily using the discounted cash flow method at September 30, 2021 for the preliminary allocation of consideration to the assets acquired and liabilities assumed during the measurement period and up to September 30, 2022 when the purchase price allocation was finalized.

Prior to the finalization of the measurement period, on September 24, 2022, the Company acquired the remaining 40% ownership interest in Babcock & Wilcox Solar for $12.7 million.

In addition to the transfer of the remaining ownership interest, the settlement and share transfer agreement released all parties from the contingent consideration arrangement, as well as other claims known as of the effective date of the agreement, resulting in the fair value of the contingent consideration to be $0 and the removal of the remaining non-controlling interest balance of $20.7 million.

Given the significant judgments made by management to estimate the fair value of the contingent consideration liability and the fair value of the non-controlling interest as of the settlement date, we identified the accounting and valuation for the buyout of the remaining 40% of Babcock & Wilcox Solar as a critical audit matter.

There was a high degree of auditor judgment and an increased extent of effort, including the need to involve our National Office – Accounting and Reporting Services (NOARS) group and internal fair value specialists, to audit the accounting treatment of the settlement agreement and the reasonableness of the inputs used in the fair value measurement of the contingent consideration liability and non-controlling interest, including the selection of the discount rate and forecasts of future revenues and EBITDA margins.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the accounting treatment of the settlement agreement and the fair value of the contingent consideration liability and non-controlling interest included the following, among others:

• We tested the effectiveness of controls over management’s valuation of the contingent consideration liability and non-controlling interest, such as controls related to management’s selection of the significant valuation assumption (discount rate) and significant business assumptions (forecasts of future revenue and EBITDA margins).

• We tested the effectiveness of controls over management’s identification and assessment of significant unusual transactions.

• We tested the fair value of the non-controlling interest by evaluating the reasonableness of management’s revenue and EBITDA margin forecasts by comparing the forecasts to (1) historical revenues, and EBITDA margins, (2) internal communications to management and the Board of Directors, (3) inquiry with non-management personnel and (4) forecasted information included in analyst and industry reports for the Company and certain of its peer companies.

• With the assistance of our internal fair value specialists, we evaluated the reasonableness of the valuation methods.

• We analyzed the executed settlement agreement to understand the provisions of the buyout of the remaining 40% interest of the shares in Babcock & Wilcox Solar and the contingent consideration liability provision.

• With the assistance of our National Office – Accounting and Reporting Services (NOARS) group, we evaluated the accounting treatment of the agreement.

• We evaluated the fair value of the non-controlling interest and the contingent consideration liability and the allocation of the consideration transferred to the components of the settlement based upon the relative fair values of the share purchase.

• We evaluated the accounting treatment relating to the reduction of the fair value of the contingent consideration liability to $0 as a reduction to selling, general and administrative costs.

• We evaluated the accounting treatment of the gain associated with the purchase of the non-controlling interest as an adjustment to capital in excess of par.

• Evaluated the Company’s disclosures related to the settlement agreement to assess their conformity with the applicable accounting standards.

/s/ DELOITTE & TOUCHE LLP

10 unchanged sentences

Selling, general and administrative expenses 178,519 154,897 141,746

Goodwill impairment 7,224 — —

Advisory fees and settlement costs 8,532 13,083 12,878

5 unchanged sentences

Total costs and expenses 893,996 702,542 568,054

Operating income (loss)

Operating (loss) income

( 4,181 ) 20,821 ( 1,737 )

Other income (expense):

Other (expense) income:

Interest expense ( 44,983 ) ( 39,393 ) ( 59,796 )

7 unchanged sentences

Other – net ( 3,944 ) ( 1,270 ) ( 1,128 )

Total other income (expense)

Total other (expense) income

( 11,340 ) 8,493 ( 2,181 )

Income (loss) before income tax expense

(Loss) income before income tax expense

( 15,521 ) 29,314 ( 3,918 )

Income tax (benefit) expense

Income tax expense (benefit)

11,063 ( 2,224 ) 8,179

Income (loss) from continuing operations

(Loss) income from continuing operations

( 26,584 ) 31,538 ( 12,097 )

Income from discontinued operations, net of tax — — 1,800

Net income (loss)

Net (loss) income

( 26,584 ) 31,538 ( 10,297 )

Net (income) loss attributable to non-controlling interest

Net loss (income) attributable to non-controlling interest

3,723 ( 644 ) ( 21 )

Net income (loss) attributable to stockholders

Net (loss) income attributable to stockholders

( 22,861 ) 30,894 ( 10,318 )

Dividend on Series A preferred stock 9,127 — —

Net income (loss) attributable to stockholders of common stock

Dividends on Series A preferred stock 14,860 9,127 —

Net (loss) income attributable to stockholders of common stock

$ ( 37,721 ) $ 21,767 $ ( 10,318 )

Basic income (loss) per share

Basic (loss) income per share

Continuing operations $ ( 0.43 ) $ 0.26 $ ( 0.25 )

Discontinued operations — — 0.04

Basic income (loss) per share

Basic (loss) income per share

$ ( 0.43 ) $ 0.26 $ ( 0.21 )

Diluted income (loss) per share

Diluted (loss) income per share

Continuing operations $ ( 0.43 ) $ 0.26 $ ( 0.25 )

Discontinued operations — — 0.04

Diluted income (loss) per share

Diluted (loss) income per share

$ ( 0.43 ) $ 0.26 $ ( 0.21 )

Shares used in the computation of income (loss) per share:

Shares used in the computation of (loss) income per share:

Basic 88,256 82,391 48,710

Diluted 88,256 83,580 48,710

* Year ended December 31, 2020 and 2019 amounts have been adjusted to reflect the change in inventory accounting method, as described in Notes 2 and 6 to the Consolidated Financial Statements.

See accompanying notes to Consolidated Financial Statements.

BABCOCK & WILCOX ENTERPRISES, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

Year ended December 31,

(in thousands) 2022 2021 2020

Net income (loss)

Net (loss) income

$ ( 26,584 ) $ 31,538 $ ( 10,297 )

Other comprehensive income (loss):

Other comprehensive (loss) income:

Currency translation adjustments (CTA) ( 14,834 ) $ ( 3,412 ) ( 53,318 )

Reclassification of CTA to net income (loss)

( 4,512 ) — 3,176

Derivative financial instruments:

Unrealized gains on derivative financial instruments — — ( 1,367 )

Derivative financial instrument losses reclassified into net loss — — 202

Derivative financial instruments reclassified to advanced billings on contracts — — ( 197 )

Reclassification of CTA to net loss — ( 4,512 ) —

Benefit obligations:

Pension and post retirement adjustments, net of tax 870 1,492 ( 998 )

Other comprehensive (loss) income

Other comprehensive loss

( 13,964 ) ( 6,432 ) ( 54,316 )

Total comprehensive income (loss)

Total comprehensive (loss) income

( 40,548 ) 25,106 ( 64,613 )

Comprehensive (loss) income attributable to non-controlling interest

Comprehensive income (loss) attributable to non-controlling interest

3,852 ( 595 ) ( 29 )

Comprehensive income (loss) attributable to stockholders

Comprehensive (loss) income attributable to stockholders

$ ( 36,696 ) $ 24,511 $ ( 64,642 )

4 unchanged sentences

Cash and cash equivalents $ 76,728 $ 224,874

Restricted cash and cash equivalents 1,841 10,085

Current restricted cash and cash equivalents 15,335 1,841

Accounts receivable – trade, net 162,461 132,068

1 unchanged sentence

Contracts in progress 134,939 80,176

Inventories 79,527 74,446

Inventories, net 102,637 79,527

Other current assets 27,002 29,395

Current assets held for sale — 4,728

Total current assets 557,612 582,434

Net property, plant and equipment, and finance lease 85,627 85,078

Net property, plant and equipment and finance leases 86,363 85,627

Goodwill 156,993 116,462

Intangible assets 43,795 23,908

Intangible assets, net 60,293 43,795

Right-of-use assets 29,438 30,163

Long-term restricted cash 21,397 —

Other assets 30,559 54,784

Non-current assets held for sale — 11,156

Total assets 942,655 913,265

7 unchanged sentences

Loans payable 4,291 12,380

Current liabilities held for sale — 8,305

Total current liabilities 371,999 253,383

1 unchanged sentence

Long term loans payable 13,197 1,543

Last out term loans — 183,330

Revolving credit facilities — 164,300

Pension and other accumulated postretirement benefit liabilities 136,176 182,730

1 unchanged sentence

Non-current operating lease liabilities 26,583 26,685

Deferred tax liabilities 10,054 1,399

Other non-current liabilities 23,755 33,168

1 unchanged sentence

Commitments and contingencies

Stockholders' equity (deficit):

Stockholders' (deficit) equity:

Preferred stock, par value $ 0.01 per share, authorized shares of 20,000 ;

issued and outstanding shares of 7,669 and 0 at December 31, 2021 and 2020, respectively

issued and outstanding shares of 7,669 at both at December 31, 2022 and 2021

Common stock, par value $ 0.01 per share, authorized shares of 500,000 ;

5 unchanged sentences

Accumulated other comprehensive loss ( 72,786 ) ( 58,822 )

Stockholders' equity (deficit) attributable to shareholders 33,149 ( 332,081 )

Stockholders' equity attributable to shareholders ( 2,574 ) 33,149

Non-controlling interest 485 25,473

Total stockholders' equity (deficit)

58,622 ( 330,977 )

Total liabilities and stockholders' equity (deficit)

$ 913,265 $ 599,077

* Year ended December 31, 2020 amounts have been adjusted to reflect the change in inventory accounting method, as described in Notes 2 and 6 to the Consolidated Financial Statements.

Total stockholders' (deficit) equity ( 2,089 ) 58,622

Total liabilities and stockholders' equity $ 942,655 $ 913,265

See accompanying notes to Consolidated Financial Statements.

BABCOCK & WILCOX ENTERPRISES, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

Common Stock Preferred Stock Capital In

7 unchanged sentences

Value Shares Par

Balance at December 31, 2018 (As reported) 16,879 $ 1,748 — $ — $ 1,047,062 $ ( 105,590 ) $ ( 1,217,914 ) $ ( 11,432 ) $ 8,829 $ ( 277,297 )

Inventory accounting method change* — — — — — — 7,285 — — 7,285

Balance at December 31, 2019 46,374 $ 4,699 — $ — $ 1,142,614 $ ( 105,707 ) $ ( 1,332,603 ) $ 1,926 $ 1,417 $ ( 287,654 )

1 unchanged sentence

Currency translation adjustments — — — — — — — ( 53,318 ) 8 ( 53,310 )

Derivative financial instruments — — — — — — — ( 1,362 ) — ( 1,362 )

Pension and post retirement adjustments, net of tax — — — — — — — ( 998 ) — ( 998 )

Stock-based compensation charges 460 9 — — 4,548 ( 283 ) — — — 4,274

Rights offering, net 13,922 1,392 — — 39,544 — — — — 40,936

Last Out Term Loan principal value exchanged for common stock 15,465 1,547 — — 44,848 — — — — 46,395

Issuance of beneficial conversion option of Last Out Term Loan Tranche A-3 — — — — 2,022 — — — — 2,022

Warrants — — — — 6,066 — — — — 6,066

Dividends to non-controlling interest — — — — — — — — ( 272 ) ( 272 )

Balance at December 31, 2019 46,374 4,699 — $ — $ 1,142,614 $ ( 105,707 ) $ ( 1,332,603 ) $ 1,926 $ 1,417 $ ( 287,654 )

Net (loss) income — — — — — — ( 10,318 ) — 21 ( 10,297 )

Currency translation adjustments — — — — — — — ( 53,318 ) 8 ( 53,310 )

Pension and post retirement adjustments, net of tax — — — — — — — ( 998 ) — ( 998 )

Stock-based compensation charges 460 9 — — 4,548 ( 283 ) — — — 4,274

Equitized guarantee fee payment 1,713 17 — — 3,883 — — — — 3,900

13 unchanged sentences

Balance at December 31, 2021 86,286 $ 5,110 7,669 $ 77 $ 1,518,872 $ ( 110,934 ) $ ( 1,321,154 ) $ ( 58,822 ) $ 25,473 $ 58,622

* Amount reflects the change in inventory accounting method, as described in Notes 2 and 6 to the Consolidated Financial Statements

Net income — — — — — — ( 22,861 ) — ( 3,723 ) ( 26,584 )

Currency translation adjustments — — — — — — — ( 14,834 ) ( 129 ) ( 14,963 )

Pension and post retirement adjustments, net of tax — — — — — — — 870 — 870

Stock-based compensation charges 2,414 28 — — 9,949 ( 2,819 ) — — — 7,158

Purchase of Babcock & Wilcox Solar and SPIG non-controlling interest — — — — 8,804 — — — ( 20,735 ) ( 11,931 )

Dividends to preferred stockholders — — — — — — ( 14,860 ) — 0 ( 14,860 )

Dividends to non-controlling interest — — — — — — — — ( 401 ) ( 401 )

Balance at December 31, 2022 88,700 5,138 7,669 77 1,537,625 ( 113,753 ) ( 1,358,875 ) ( 72,786 ) 485 ( 2,089 )

See accompanying notes to Consolidated Financial Statements.

4 unchanged sentences

Cash flows from operating activities:

Net income (loss)

Net (loss) income

$ ( 26,584 ) $ 31,538 $ ( 10,297 )

1 unchanged sentence

Depreciation and amortization of long-lived assets 23,992 18,337 16,805

Goodwill impairment 7,224 — —

Change in fair value of contingent consideration ( 9,567 ) — —

Amortization of deferred financing costs and debt discount 5,225 7,918 16,743

3 unchanged sentences

(Gain) loss on debt extinguishment — ( 6,530 ) 6,194

( 6,530 ) 6,194 3,969

Gain on asset disposals

( 8,836 ) ( 15,737 ) ( 3,262 )

(Benefit from) provision for deferred income taxes, including valuation allowances

Provision for (benefit from) deferred income taxes, including valuation allowances

5,897 ( 7,745 ) 1,791

29 unchanged sentences

Repayments on loan payable ( 16,915 ) ( 846 ) —

Proceeds from sale-leaseback financing transactions 13,339 — —

Finance lease payments ( 2,435 ) ( 2,366 ) 13

Borrowings under last out term loans — — 70,000

4 unchanged sentences

revolving credit facility — ( 178,800 ) ( 173,600 )

Repayments under our foreign revolving credit facilities — — ( 605 )

Issuance of preferred stock, net — 113,275 —

1 unchanged sentence

Shares of common stock returned to treasury stock ( 2,819 ) ( 4,944 ) ( 283 )

Proceeds from rights offering — — 40,376

Costs related to rights offering — — ( 832 )

Issuance of common stock, net — 160,841 —

1 unchanged sentence

Other, net ( 48 ) ( 222 ) ( 342 )

Net cash from financing activities 302,812 44,098 167,018

Net cash (used in) from financing activities ( 11,165 ) 302,812 44,098

Effects of exchange rate changes on cash ( 2,653 ) 1,217 4,971

Net increase (decrease) in cash, cash equivalents and restricted cash

Net (decrease) increase in cash, cash equivalents and restricted cash

( 113,255 ) 159,292 10,482

1 unchanged sentence

Cash, cash equivalents and restricted cash, end of period $ 113,460 $ 226,715 $ 67,423

Schedule of cash, cash equivalents and restricted cash:

Cash and cash equivalents $ 76,728 $ 224,874 $ 57,338

Current restricted cash 15,335 1,841 10,085

Long-term restricted cash 21,397 $ — —

Cash, cash equivalents and restricted cash at end of period $ 113,460 $ 226,715 $ 67,423

Income taxes paid, net $ 7,950 $ 4,991 $ 6,960

Interest paid $ 25,673 $ 20,234 $ 17,815

See accompanying notes to Consolidated Financial Statements.

5 unchanged sentences

(“B&W,” “management,” “we,” “us,” “our” or the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”).

We have eliminated all intercompany transactions and accounts.

We present the notes to our Consolidated Financial Statements on the basis of continuing operations, unless otherwise stated.

In December 2019, a novel strain of coronavirus, COVID-19, was identified in Wuhan, China and subsequently spread globally.

This global pandemic has disrupted business operations, including global supply chains, trade, commerce, financial and credit markets, and daily life throughout the world.

Our business has been, and continues to be, adversely impacted by the measures taken and restrictions imposed in the countries in which we operate and by local governments and others to control the spread of this virus.

These measures and restrictions have varied widely and have been subject to significant changes from time to time depending on changes in the severity of the virus in these countries and localities.

These restrictions, including curtailment of travel and other activity, negatively impact our ability to conduct business.

Disruption to our global supply changes from COVID-19 has included impacts to the manufacturing, supply, distribution, transportation and delivery of our products.

We could also see significant disruptions of the operations of our logistics, service providers, delays in shipments and negative impacts to pricing of certain of our products.

Disruptions and delays in our supply chains as a result of the COVID-19 pandemic could adversely our ability to meet our customers’ demands.

Additionally, the prioritization of shipments of certain products as a result of the pandemic could cause delays in the shipment or delivery of our products.

Such disruptions could result in reduced sales.

The volatility and variability of the virus has limited our ability to forecast the impact of the virus on our customers and our business.

The ongoing impact of COVID-19, including new strains such as the delta and omicron variants, has resulted in the reimposition of certain restrictions and may lead to other restrictions being implemented in response to efforts to reduce the spread of the virus.

These varying and changing events have caused many of the projects we had anticipated would begin in 2020 to be delayed into the 2022 and beyond.

Many customers and projects require B&W's employees to travel to customer and project worksites.

Certain customers and significant projects are located in areas where travel restrictions have been imposed, certain customers have closed or reduced on-site activities, and timelines for completion of certain projects have, as noted above, been extended into 2022 and beyond.

Additionally, out of concern for our employees, even where restrictions permit employees to return to our offices and worksites, we incurred additional costs to protect our employees and advised those who are uncomfortable returning to worksites due to the pandemic that they are not required to do so for an indefinite period of time.

The resulting uncertainty concerning, among other things, the spread and economic impact of the virus has also caused significant volatility and, at times, illiquidity in global equity and credit markets.

The full extent of the impact of COVID-19 and its variants on our operational and financial performance will depend on future developments, including the ultimate duration and spread of the pandemic and related actions taken by the U.S.

government, state and local government officials, and international governments to prevent outbreaks, as well as the availability, effectiveness and acceptance of COVID-19 vaccinations in the U.S.

and abroad, all of which are uncertain, out of our control, and cannot be predicted.

The Company has eliminated all intercompany transactions and accounts and presents the notes to the Consolidated Financial Statements on the basis of continuing operations, unless otherwise stated.

Occasionally, it is necessary for reporting entities to reclassify an amount from a prior period from one financial statement caption to another for comparability with the current period.

For the period ended December 31, 2022, the Company added a separate balance sheet caption for Deferred tax liability which was previously included in Other non-current liabilities as it is now deemed to be material.

As such, a reclassification in the prior period was made to conform to the current period presentation.

Balance sheet presentation for year ended December 31, 2021 has been modified to separately disclose the $ 1.4 million in Deferred tax liability and Other non-current liabilities has been reduced by the same amount for accurate year-over-year comparability.

Market Update

The COVID-19 pandemic has continued to create challenges for the Company in countries that have significant outbreak mitigation strategies, namely, countries in our Asia-Pacific region, which led to temporary project postponements and has continued to impact results in this region.

Additionally, the Company has experienced negative impacts to its global supply chains as a result of COVID-19, the war in Ukraine, Russia-related supply chain shortages and other factors, including disruptions to the manufacturing, supply, distribution, transportation and delivery of its products.

The Company has also observed significant delays and disruptions of its service providers and negative impacts to pricing of certain of its products.

These delays and disruptions have had, and could continue to have, an adverse impact on the Company’s ability to meet customers’ demands.

The Company is continuing to actively monitor the impact of these market conditions on current and future periods and actively manage costs and our liquidity position to provide additional flexibility while still supplying its customers and their specific needs.

The duration and scope of these conditions cannot be predicted, and therefore, any anticipated negative financial impact to the Company’s operating results cannot be reasonably estimated.

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES

Reportable segments

Our operations are assessed based on three reportable market-facing segments as part of the Company's strategic, market-focused organizational and re-branding initiative to accelerate growth and provide stakeholders improved visibility into our renewable and environmental growth platforms.

Our reportable segments are as follows:

The Company's operations are assessed based on three reportable market-facing segments as part of the its strategic, market-focused organizational and re-branding initiative to accelerate growth and provide stakeholders improved visibility into its renewable and environmental growth platforms.

The Company's reportable segments are as follows:

• Babcock & Wilcox Renewable:

7 unchanged sentences

B&W has an extensive global base of installed equipment for utilities and general industrial applications including refining, petrochemical, food processing, metals and others.

For financial information about our segments see Note 4 to our Consolidated Financial Statements.

For financial information about the Company's segments see Note 4 to the Consolidated Financial Statements.

Use of estimates

We use estimates and assumptions to prepare our Consolidated Financial Statements in conformity with GAAP.

Some of our more significant estimates include our estimate of costs to complete long-term construction contracts, estimates associated with assessing whether goodwill, intangible assets and other long-lived assets are impaired, estimates of costs to be incurred to satisfy contractual warranty requirements, estimates of the value of acquired intangible and tangible assets, estimates associated with the realizability of deferred tax assets, and estimates we make in selecting assumptions related to the valuations of our pension and postretirement plans, including the selection of our discount rates, mortality and expected rates of return on our pension plan assets.

These estimates and assumptions affect the amounts we report in our Consolidated Financial Statements and accompanying notes.

Our actual results could differ from these estimates.

Variances could result in a material effect on our financial condition and results of operations in future periods.

The Company uses estimates and assumptions to prepare its Consolidated Financial Statements in conformity with generally accepted accounting principles ("GAAP").

Some of the more significant estimates include the Company's estimate of costs to complete long-term construction contracts, estimates associated with assessing whether goodwill, intangible assets and other long-lived assets are impaired, estimates of costs to be incurred to satisfy contractual warranty requirements, estimates of the value of acquired intangible and tangible assets, estimates associated with the realizability of deferred tax assets, and estimates the Company makes in selecting assumptions related to the valuations of its pension and postretirement plans, including the selection of discount rates, mortality and expected rates of return on pension plan assets.

These estimates and assumptions affect the amounts the Company reports in its Consolidated Financial Statements and accompanying notes.

The Company's actual results could differ from these estimates.

Variances could result in a material effect on the company's financial condition and results of operations in future periods.

Earnings per share

We have computed earnings per common share on the basis of the weighted average number of common shares, and, where dilutive, common share equivalents, outstanding during the indicated periods.

The weighted average shares used to calculate basic and diluted earnings per share reflect the bonus element for the 2019 Rights Offering on July 23, 2019 and the one-for- ten reverse stock split on July 24, 2019.

We have a number of forms of stock-based compensation, including incentive and non-qualified stock options, restricted stock, restricted stock units, performance shares, and performance units, subject to satisfaction of specific performance goals.

We include the shares applicable to these plans in dilutive earnings per share when related performance criteria have been met.

The Company has computed earnings per common share on the basis of the weighted average number of common shares, and, where dilutive, common share equivalents, outstanding during the indicated periods.

The Company has a number of forms of stock-based compensation, including incentive and non-qualified stock options, restricted stock, restricted stock units, performance shares, and performance units, subject to satisfaction of specific performance goals.

The Company includes the shares applicable to these plans in dilutive earnings per share when related performance criteria have been met.

The computation of basic and diluted earnings per share is included in Note 3.

Our investments primarily relate to our wholly owned insurance subsidiary.

We classify investments available for current operations in the Consolidated Balance Sheets as current assets, while we classify investments held for long-term purposes as non-current assets.

We adjust the amortized cost of debt securities for amortization of premiums and accretion of discounts to maturity.

The Company's investments primarily relate to its wholly owned insurance subsidiary.

The Company classifies investments available for current operations in its Consolidated Balance Sheets as Current assets, while investments held for long-term purposes are classified as Non-current assets.

The Company adjusts the amortized cost of debt securities for amortization of premiums and accretion of discounts to maturity.

That amortization is included in Interest income.

We include realized gains and losses on our investments in other - net in our Consolidated Statements of Operations.

The cost of securities sold is based on the specific identification method.

We include interest on securities in interest income.

Realized gains and losses on the Company's investments are recorded in Other - net in the Consolidated Statements of Operations.

The cost of securities sold is based on the specific identification method and is included in interest on securities in Interest income on the Company's Consolidated Statements of Operations.

Foreign currency translation

We translate assets and liabilities of our foreign operations into U.S.

dollars at current exchange rates, and we translate items in our statement of operations at average exchange rates for the periods presented.

We record adjustments resulting from the translation of foreign currency financial statements as a component of accumulated other comprehensive income (loss).

We report foreign currency transaction gains and losses in income.

We have included a transaction (loss) gain of $( 4.3 ) million, $ 58.8 million and $( 16.6 ) million in the years ended December 31, 2021, 2020, and 2019, respectively, in foreign exchange in our Consolidated Statements of Operations.

The Company translates assets and liabilities of its foreign operations into U.S.

dollars at current exchange rates, and translates items in the Consolidated Statement of Operations at average exchange rates for the periods presented.

The Company records adjustments resulting from the translation of foreign currency financial statements as a component of Accumulated other comprehensive income (loss).

The Company reports foreign currency transaction gains and losses in income.

The Company has included transaction l osses of $( 0.6 ) million and $( 4.3 ) million and a transaction gain of $ 58.8 million in the years ended December 31, 2022, 2021, and 2020, respectively, in Foreign exchange in its Consolidated Statements of Operations.

These foreign exchange net gains and losses are primarily related to transaction gains or losses from unhedged intercompany loans when the loan is denominated in a currency different than the participating entity's functional currency.

12 unchanged sentences

Substantially all of our revenue recognized over time under the cost-to-cost input method contains a single performance obligation as the interdependent nature of the goods and services provided prevents them from being separately identifiable within the contract.

Generally, we try to structure contract milestones to mirror our expected cash outflows over the course of the contract;

however, the timing of milestone receipts can greatly affect our overall cash position.

Refer to Note 4 for our disaggregation of revenue by product line.

As of December 31, 2021, we have estimated the costs to complete of all our in-process contracts in order to estimate revenues using a cost-to-cost input method.

Generally, the Company tries to structure contract milestones to mirror its expected cash outflows over the course of the contract;

however, the timing of milestone receipts can greatly affect the overall cash position.

Refer to Note 4 for details of disaggregation of revenue by segment.

As of December 31, 2022, the Company has estimated the costs to complete of all in-process contracts in order to estimate revenues using a cost-to-cost input method.

However, it is possible that current estimates could change due to unforeseen events, which could result in adjustments to overall contract costs.

The risk on fixed-priced contracts is that revenue from the customer does not cover increases in our costs.

The risk on fixed-priced contracts is that revenue from the customer does not cover increases in costs.

It is possible that current estimates could materially change for various reasons, including, but not limited to, fluctuations in forecasted labor productivity, transportation, fluctuations in foreign exchange rates or steel and other raw material prices.

Increases in costs on our fixed-price contracts could have a material adverse impact on our consolidated financial condition, results of operations and cash flows.

Alternatively, reductions in overall contract costs at completion could materially improve our consolidated financial condition, results of operations and cash flows.

Increases in costs on our fixed-price contracts could have a material adverse impact on the Company's consolidated financial condition, results of operations and cash flows.

Alternatively, reductions in overall contract costs at completion could materially improve the Company's consolidated financial condition, results of operations and cash flows.

Variations from estimated contract performance could result in material adjustments to operating results for any fiscal quarter or year.

Contract modifications are routine in the performance of our contracts.

Contract modifications are routine in the performance of the Company's contracts.

Contracts are often modified to account for changes in the contract specifications or requirements.

In most instances, contract modifications are for goods or services that are not distinct and, therefore, are accounted for as part of the existing contract, with cumulative adjustment to revenue.

We recognize accrued claims in contract revenues for extra work or changes in scope of work to the extent of costs incurred when we believe we have an enforceable right to the modification or claim and the amount can be estimated reliably, and its realization is probable.

In evaluating these criteria, we consider the contractual/legal basis for enforcing the claim, the cause of any additional costs incurred and whether those costs are identifiable or otherwise determinable, the nature and reasonableness of those costs, the objective evidence available to support the amount of the claim, and our relevant history

with the counter-party that supports our expectations about their willingness and ability to pay for the additional cost along with a reasonable margin.

We generally recognize sales commissions in equal proportion as revenue is recognized.

Our sales agreements are structured such that commissions are only payable upon receipt of payment, thus a capitalized asset at contract inception has not been recorded for sales commission as a liability has not been incurred at that point.

The Company recognizes accrued claims in contract revenues for extra work or changes in scope of work to the extent of costs incurred when it believes it has an enforceable right to the modification or claim and the amount can be estimated reliably, and its realization is probable.

In evaluating these criteria, the Company considers the contractual/legal basis for enforcing the claim, the cause of any additional costs incurred and whether those costs are identifiable or otherwise determinable, the nature and reasonableness of those costs, the objective evidence available to support the amount of the claim, and the relevant history with the counter-party that supports expectations about their willingness and ability to pay for the additional cost along with a reasonable margin.

The Company generally recognizes sales commissions in equal proportion as revenue is recognized.

The Company's sales agreements are structured such that commissions are only payable upon receipt of payment, thus a capitalized asset at contract inception has not been recorded for sales commission as a liability has not been incurred at that point.

Contract balances

Contracts in progress, a current asset in our Consolidated Balance Sheets, includes revenues and related costs so recorded, plus accumulated contract costs that exceed amounts invoiced to customers under the terms of the contracts.

Advance billings, a current liability in our Consolidated Balance Sheets, includes advance billings on contracts invoices that exceed accumulated contract costs and revenues and costs recognized under the cost-to-cost input method.

Contracts in progress, a current asset in the Company's Consolidated Balance Sheets, includes revenues and related costs so recorded, plus accumulated contract costs that exceed amounts invoiced to customers under the terms of the contracts.

Advance billings, a current liability in the Company's Consolidated Balance Sheets, includes advance billings on contracts invoices that exceed accumulated contract costs and revenues and costs recognized under the cost-to-cost input method.

Those balances are classified as current based on the life cycle of the associated contracts.

Most long-term contracts contain provisions for progress payments.

Our unbilled receivables do not contain an allowance for credit losses as we expect to invoice customers and the collection of all amounts for unbilled revenues is deemed probable.

We review contract price and cost estimates each reporting period as the work progresses and reflect adjustments proportionate to the costs incurred to date relative to total estimated costs at completion in income in the period when those estimates are revised.

For all contracts, if a current estimate of total contract cost indicates a loss on a contract, the projected contract loss is recognized in full through the statement of operations and an accrual for the estimated loss on the uncompleted contract is included in other accrued liabilities in the Consolidated Balance Sheets.

In addition, when we determine that an uncompleted contract will not be completed on-time and the contract has liquidated damages provisions, we recognize the estimated liquidated damages at the most likely amount we will incur and record them as a reduction of the estimated selling price in the period the change in estimate occurs.

Losses accrued in advance of the completion of a contract are included in other accrued liabilities in our Consolidated Balance Sheets.

The Company's unbilled receivables do not contain an allowance for credit losses as the expectation to invoice customers and the collection of all amounts for unbilled revenues is deemed probable.

The Company reviews contract price and cost estimates each reporting period as the work progresses and reflect adjustments proportionate to the costs incurred to date relative to total estimated costs at completion in income in the period when those estimates are revised.

For all contracts, if a current estimate of total contract cost indicates a loss on a contract, the projected contract loss is recognized in full through the statement of operations and an accrual for the estimated loss on the uncompleted contract is included in Other accrued liabilities in the Company's Consolidated Balance Sheets.

In addition, when the Company determines that an uncompleted contract will not be completed on-time and the contract has liquidated damages provisions, it recognizes the estimated liquidated damages at the most likely amount it will incur and record them as a reduction of the

estimated selling price in the period the change in estimate occurs.

Losses accrued in advance of the completion of a contract are included in Other accrued liabilities in the Company's Consolidated Balance Sheets.

Warranty expense

We accrue estimated expense included in cost of operations on our Consolidated Statements of Operations to satisfy contractual warranty requirements when we recognize the associated revenues on the related contracts, or in the case of a loss contract, the full amount of the estimated warranty costs is accrued when the contract becomes a loss contract.

In addition, we record specific provisions or reductions where we expect the actual warranty costs to significantly differ from the accrued estimates.

Such changes could have a material effect on our consolidated financial condition, results of operations and cash flows.

The Company accrues estimated expense included in Cost of operations on its Consolidated Statements of Operations to satisfy contractual warranty requirements when it recognizes the associated revenues on the related contracts, or in the case of a loss contract, the full amount of the estimated warranty costs is accrued when the contract becomes a loss contract.

In addition, the Company records specific provisions or reductions where it expects the actual warranty costs to significantly differ from the accrued estimates.

Such changes could have a material effect on the Company's consolidated financial condition, results of operations and cash flows.

Research and development

Our research and development activities are related to improving our products through innovations to reduce the cost of our products to make them more competitive and through innovations to reduce performance risk of our products to better meet our and our customers' expectations.

The Company's research and development activities are related to improving its products through innovations to reduce the cost of its products to make them more competitive and through innovations to reduce performance risk of its products to better meet its own and its customers' expectations.

Research and development activities totaled $ 3.8 million, $ 1.6 million and $ 4.4 million in the years ended December 31, 2022, 2021, and 2020, respectively.

Advertising expense

Advertising expense is recognized when incurred and is included in selling, general and administrative expenses on our Consolidated Statements of Operations.

Advertising expenses in the years ended December 31, 2021, 2020, and 2019 were not significant.

Pension plans and postretirement benefits

We sponsor various defined benefit pension and postretirement plans covering certain employees of our U.S., Canadian and U.K.

subsidiaries.

We use actuarial valuations to calculate the cost and benefit obligations of our pension and postretirement benefits.

The actuarial valuations use significant assumptions in the determination of our benefit cost and obligations, including assumptions regarding discount rates, expected returns on plan assets, mortality and health care cost trends.

We determine our discount rate based on a review of published financial data and discussions with our actuary regarding rates of return on high-quality, fixed-income investments currently available and expected to be available during the period to maturity of our pension and postretirement plan obligations.

We use an alternative spot rate method for discounting the benefit obligation rather than a single equivalent discount rate because it more accurately applies each year's spot rates to the projected cash flows.

The Company sponsors various defined benefit pension and postretirement plans covering certain employees of its U.S., Canadian and U.K.

subsidiaries and uses actuarial valuations to calculate the cost and benefit obligations of its pension and postretirement benefits.

The actuarial valuations use significant assumptions in the determination of the Company's benefit cost and obligations, including assumptions regarding discount rates, expected returns on plan assets, mortality and health care cost trends.

The Company determines its discount rate based on a review of published financial data and discussions with its actuary regarding rates of return on high-quality, fixed-income investments currently available and expected to be available during the period to maturity of its pension and postretirement plan obligations.

The Company uses an alternative spot rate method for discounting the benefit obligation rather than a single equivalent discount rate because it more accurately applies each year's spot rates to the projected cash flows.

The components of benefit cost related to service cost, interest cost, expected return on plan assets and prior service cost amortization are recorded on a quarterly basis based on actuarial assumptions.

In the fourth quarter of each year, or as interim remeasurements are required, we recognize net actuarial gains and losses into earnings as a component of net periodic benefit cost (mark to market (“MTM”) pension adjustment).

Recognized net actuarial gains and losses consist primarily of our reported actuarial gains and losses and the difference between the actual return on plan assets and the expected return on plan assets.

We recognize the funded status of each plan as either an asset or a liability in the Consolidated Balance Sheets.

In the fourth quarter of each year, or as interim remeasurements are required, the Company recognizes net actuarial gains or losses into earnings as a component of net periodic benefit cost (mark to market (“MTM”) pension adjustment).

Recognized net actuarial gains and losses consist primarily of the Company's reported actuarial gains and losses and the difference between the actual return on plan assets and the expected return on plan assets.

The Company recognizes the funded status of each plan as either an asset or a liability in the Consolidated Balance Sheets.

The funded status is the difference between the fair value of plan assets and the present value of its benefit obligation, determined on a plan-by-plan basis.

1 unchanged sentence

Income tax expense for federal, foreign, state and local income taxes are calculated on taxable income based on the income tax law in effect at the latest balance sheet date and includes the cumulative effect of any changes in tax rates from those used previously in determining deferred tax assets and liabilities.

We record a valuation allowance to reduce our deferred tax assets to the amount that is more likely than not to be realized.

For those tax positions where it is more likely than not that a tax benefit will be sustained, we have recorded the largest amount of tax benefit with a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information.

The Company records a valuation allowance to reduce its deferred tax assets to the amount that is more likely than not to be realized.

For those tax positions where it is more likely than not that a tax benefit will be sustained, the Company has recorded the largest amount of tax benefit with a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information.

For those income tax positions where it is not more likely than not that a tax benefit will be sustained, no tax benefit has been recognized in our Consolidated Financial Statements.

We record interest and penalties (net of any applicable tax benefit) related to income taxes as a component of income tax expense on our Consolidated Statements of Operations.

The Company records interest and penalties (net of any applicable tax benefit) related to income taxes as a component of Income tax expense on the Company's Consolidated Statements of Operations.

Cash and cash equivalents and restricted cash

Our cash equivalents are highly liquid investments, with maturities of three months or less when we purchase them.

We record cash and cash equivalents as restricted when we are unable to freely use such cash and cash equivalents for our general operating purposes.

The Company's cash equivalents are highly liquid investments, with maturities of three months or less at the time of purchase.

The Company records cash and cash equivalents as current or long-term restricted when it is unable to freely use such cash and cash equivalents for its general operating purposes.

Trade accounts receivable and allowance for doubtful accounts

Our trade accounts receivable balance is stated at the amount owed by our customers, net of allowances for estimated uncollectible balances.

We maintain allowances for doubtful accounts for estimated losses expected to result from the inability of our customers to make required payments.

The Company's trade accounts receivable balance is stated at the amount owed by its customers, net of allowances for estimated uncollectible balances.

The Company maintains allowances for doubtful accounts for estimated losses expected to result from the inability of its customers to make required payments.

These estimates are based on management's evaluation of the ability of customers to make payments, with emphasis on historical remittance experience, known customer financial difficulties, the age of receivable balances and any other known factors specific to a receivable.

Accounts receivable are charged to the allowance when it is determined they are no longer collectible.

Our allowance for doubtful accounts was $ 11.9 million and $ 17.2 million at December 31, 2021 and 2020, respectively.

The Company's allowance for doubtful accounts was $ 10.8 million and $ 11.9 million at December 31, 2022 and 2021, respectively.

Amounts charged to selling, general and administrative expenses were $ 0.2 million, $ 0.1 million and $ 0.2 million for the years ended December 31, 2022, 2021, and 2020, respectively.

We carry our inventories at the lower of cost or net realizable value.

We determine cost on the first-in, first-out basis.

During the fourth quarter of 2021, the Company voluntarily changed its method of accounting for certain domestic inventory previously valued by the LIFO method to the FIFO method.

The cumulative effect of this change on periods presented prior to 2019 resulted in an increase in retained earnings of $ 7.3 million at December 31, 2018.

The impact on earnings was a decrease of $ 0.1 million and an increase of $ 0.4 million for the years ending December 31, 2020 and 2019, respectively.

The FIFO method of accounting for inventory is preferable because it more closely matches the physical inventory flow, better reflects the current value of inventories on our Consolidated Balance Sheets, improves our financial reporting by having a consistent method across the organization, and increases comparability with certain peers of the Company.

inventory reserve was $ 6.5 million and $ 7.1 million at December 31, 2021 and 2020, respectively.

The Company carries its inventories at the lower of cost or net realizable value and determines cost on the first-in, first-out basis.

The Company's obsolete inventory reserve was $ 7.2 million and $ 6.5 million at December 31, 2022 and 2021, respectively.

The components of inventories can be found in Note 6.

Property, plant and equipment

We carry our property, plant and equipment at depreciated cost, less any impairment provisions.

We depreciate our property, plant and equipment using the straight-line method over estimated economic useful lives of eight to 33 years for buildings and three to 28 years for machinery and equipment.

Our depreciation expense was $ 9.7 million, $ 11.3 million and $ 19.3 million for the years ended December 31, 2021, 2020, and 2019, respectively.

We expense the costs of maintenance, repairs and renewals that do not materially prolong the useful life of an asset as we incur them.

The Company carries its property, plant and equipment at depreciated cost, less any impairment provisions.

The Company depreciates its property, plant and equipment using the straight-line method over estimated economic useful lives of eight to 33 years for buildings and three to 28 years for machinery and equipment.

Depreciation expense was $ 11.0 million, $ 9.7 million and $ 11.3 million for the years ended December 31, 2022, 2021, and 2020, respectively.

The costs of maintenance, repairs and renewals that do not materially prolong the useful life of an asset are expensed as incurred.

Property, plant and equipment amounts are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset, or asset group, may not be recoverable.

2 unchanged sentences

Fair value is generally determined using a discounted cash flow analysis.

Our estimates of cash flow may differ from actual cash flow due to, among other things, technological changes, economic conditions or changes in operating performance.

Any changes in such factors may negatively affect our business and result in future asset impairments.

The Company's estimates of cash flow may differ from actual cash flow due to, among other things, technological changes, economic conditions or changes in operating performance.

Any changes in such factors may negatively affect the Company and result in future asset impairments.

Investments in consolidated entities

SPIG maintains a 60 % ownership interest in a joint venture entity, which is consolidated into the B&W Environmental segment results.

On September 30, 2021, we acquired a 60 % controlling ownership interest in Illinois-based solar energy contractor Fosler Construction Company Inc.

(“Fosler Construction”).

See Note 26 for further information on this acquisition.

Goodwill represents the excess of the cost of our acquired businesses over the fair value of the net assets acquired.

We perform testing of goodwill for impairment annually on October 1 st or when impairment indicators are present.

We may elect to perform a qualitative test when we believe that there is substantially in excess fair value over carrying value based on our most recent quantitative assessment, adjusted for relevant events and circumstances that could affect fair value during the current year.

If we conclude based on this assessment that it is more likely than not that the reporting unit is not impaired, we do not perform a quantitative impairment test.

In all other circumstances, we perform a quantitative impairment test to identify potential goodwill impairment and measure the amount of any goodwill impairment.

Goodwill impairment tests recognize impairment for the amount that the carrying value of a reporting unit exceeds its fair value up to the remaining amount of goodwill.

SPIG maintained a 60 % ownership interest in a joint venture entity, which is consolidated within the B&W Environmental segment results.

The remaining 40 % was purchased for a nominal amount in December 2022.

On September 30, 2021, the Company acquired a 60 % controlling ownership interest in Illinois-based solar energy contractor Babcock & Wilcox Solar (formerly known as Fosler Construction Company, Inc.

On September 24, 2022, the Company acquired the remaining 40 % ownership stake in Babcock & Wilcox Solar for $ 12.7 million.

See Note 26 to the Company's Consolidated Financial Statements.

Goodwill is generally recorded as a result of a business combination and represents the excess of purchase price over the fair value of the tangible and identifiable net assets acquired.

The Company performs testing of goodwill for impairment annually on October 1st or if the Company determines that impairment indicators are present.

In assessing goodwill for impairment, the Company follows ASC 350, Intangibles – Goodwill and Other, which permits a qualitative assessment of whether it is

more likely than not that the fair value of the reporting unit is less than its carrying value including goodwill.

If the qualitative assessment determines that it is not more likely than not that the fair value of a reporting unit is less than its carrying value, including goodwill, then no impairment is determined to exist for the reporting unit.

However, if the qualitative assessment determines that it is more likely than not that the fair value of the reporting unit is less than its carrying value, including goodwill, or the Company chooses not to perform the qualitative assessment, then the Company will compare the fair value of that reporting unit with its carrying value, including goodwill, in a quantitative assessment.

If the carrying value of a reporting unit exceeds its fair value, goodwill is considered impaired with the impairment loss measured as the excess of the reporting unit’s carrying value, including goodwill, over its fair value.

The estimated fair value of the reporting unit is derived based on valuation techniques the Company believes market participants would use for each of the reporting units.

Intangible assets

Intangible assets are recognized at fair value when acquired.

Intangible assets are recognized at fair value when acquired, generally as a result of a business combination.

Intangible assets with definite lives are amortized to operating expense using the straight-line method over their estimated useful lives and tested for impairment when events or changes in circumstances indicate that their carrying amounts may not be recoverable.

Intangible assets with indefinite lives are not amortized and are subject to impairment testing at least annually or in interim periods when impairment indicators are present.

We may elect to perform a qualitative assessment when testing indefinite lived intangible assets for impairment to determine whether events or circumstances affecting significant inputs related to the most recent quantitative evaluation have occurred, indicating that it is more likely than not that the indefinite lived intangible asset is impaired.

Otherwise, we test indefinite lived intangible assets for impairment by determining the fair value of the indefinite lived intangible asset and comparing the fair value of the intangible asset to its carrying amount.

If the carrying amount of the intangible asset exceeds its fair value, we recognize impairment for the amount of the difference.

The Company may elect to perform a qualitative assessment when testing indefinite lived intangible assets for impairment to determine whether events or circumstances affecting significant inputs related to the most recent quantitative evaluation have occurred, indicating that it is more likely than not that the indefinite lived intangible asset is impaired.

Otherwise, the Company tests indefinite lived intangible assets for impairment by determining the fair value of the indefinite lived intangible asset and comparing the fair value of the intangible asset to its carrying amount.

If the carrying amount of the intangible asset exceeds its fair value, an impairment is recognized for the amount of the difference.

Accounting for Leases

We determine if an arrangement is a lease at inception.

The Company determines if an arrangement is a lease at inception.

Operating leases are included in Right-of-use (“ROU”) assets, Operating lease liabilities and Non-current operating lease liabilities in the Consolidated Balance Sheets.

Finance leases are included in net property, plant and equipment, and finance lease, other accrued liabilities and other non-current finance

liabilities in the Consolidated Balance Sheets.

Finance leases are included in Net property, plant and equipment, and Finance lease, Other accrued liabilities and Other non-current finance liabilities in the Consolidated Balance Sheets.

Lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date.

As substantially all of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at lease commencement date in determining the present value of future payments.

Our incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments, and in economic environments where the leased asset is located.

Since substantially all of the Company's leases do not provide an implicit rate, the incremental borrowing rate based on the information available at lease commencement date is used to determine the present value of future payments.

The Company's incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments, and in economic environments where the leased asset is located.

The ROU assets also include any prepaid lease payments made and initial direct costs incurred and excludes lease incentives.

Our lease terms may include options to extend or terminate the lease, which we recognize when it is reasonably certain that we will exercise that option.

The Company's lease terms may include options to extend or terminate the lease, which are recognized when it is reasonably certain that the option will be exercised.

Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

Leases with an initial term of 12 months or less are not recorded on the balance sheet.

For leases beginning in 2019 and later, we account for lease components (e.g., fixed payments including rent) together with the non-lease components (e.g., common-area maintenance costs) as a single lease component for all classes of underlying assets.

Derivative financial instruments

Derivative assets and liabilities usually consist of FX forward contracts.

Where applicable, the value of these derivative assets and liabilities is computed by discounting the projected future cash flow amounts to present value using market-based observable inputs, including FX forward and spot rates, interest rates and counterparty performance risk adjustments.

As of December 31, 2021, we do not hold any derivative assets or liabilities.

For leases beginning in 2019 and later, the Company accounts for lease components (e.g., fixed payments including rent) together with the non-lease components (e.g., common-area maintenance costs) as a single lease component for all classes of underlying assets.

Self-insurance

We have a wholly owned insurance subsidiary that provides employer's liability, general and automotive liability and workers' compensation insurance and, from time to time, builder's risk insurance (within certain limits) to our companies.

We may also, in the future, have this insurance subsidiary accept other risks that we cannot or do not wish to transfer to outside insurance companies.

Included in other non-current liabilities on our Consolidated Balance Sheets are reserves for self-insurance totaling $ 9.3 million and $ 11.6 million as of December 31, 2021 and 2020, respectively .

The Company has a wholly owned insurance subsidiary that provides employer's liability, general and automotive liability and workers' compensation insurance and, from time to time, builder's risk insurance (within certain limits) to its companies.

The Company may also, in the future, have this insurance subsidiary accept other risks that it cannot or do not wish to transfer to outside insurance companies.

Included in Other non-current liabilities on its Consolidated Balance Sheets are reserves for self-insurance totaling $ 8.3 million and $ 9.3 million as of December 31, 2022 and 2021, respectively .

Loss contingencies

We estimate liabilities for loss contingencies when it is probable that a liability has been incurred and the amount of loss is reasonably estimable.

We provide disclosure when there is a reasonable possibility that the ultimate loss will exceed the recorded provision or if such probable loss is not reasonably estimable.

We are currently involved in some significant litigation, as discussed in Note 22.

Our losses are typically resolved over long periods of time and are often difficult to assess and estimate due to, among other reasons, the possibility of multiple actions by third parties;

The Company estimates liabilities for loss contingencies when it is probable that a liability has been incurred and the amount of loss is reasonably estimable.

Disclosures are provided when there is a reasonable possibility that the ultimate loss will exceed the recorded provision or if such probable loss is not reasonably estimable.

The Company is currently involved in

some significant litigation, as discussed in Note 22.

The Company's losses are typically resolved over long periods of time and are often difficult to assess and estimate due to, among other reasons, the possibility of multiple actions by third parties;

the attribution of damages, if any, among multiple defendants;

7 unchanged sentences

and the likelihood of success on appeal.

Consequently, it is possible future earnings could be affected by changes in our assessments of the probability that a loss has been incurred in a material pending litigation against us and/or changes in our estimates related to such matters .

Consequently, it is possible future earnings could be affected by changes in the Company's assessments of the probability that a loss has been incurred in a material pending litigation against the Company and/or changes in its estimates related to such matters .

Loss recoveries

We recognize loss recoveries and provide disclosures only when receipt of the recovery is probable and we are able to reasonably estimate the amount of the recovery.

Our loss recoveries are typically resolved over long periods of time and are often difficult to assess and estimate due to, among other reasons, the possibility of multiple actions by third parties, multiple complex unresolved procedural and substantive issues;

The Company recognizes loss recoveries and provide disclosures only when receipt of the recovery is probable and it is able to reasonably estimate the amount of the recovery.

The Company's loss recoveries are typically resolved over long periods of time and are often difficult to assess and estimate due to, among other reasons, the possibility of multiple actions by third parties, multiple complex unresolved procedural and substantive issues;

the wide-ranging outcomes reached in similar cases, including the variety of losses incurred.

Consequently, it is possible future earnings could be affected by changes in our assessments of the probability that a loss recovery has been recognized and/or changes in our estimates related to such matters.

See Note 5 for discussions regarding the project contract cost recovery recognized in 2021 and the non-recurring loss recovery in 2020.

Consequently, it is possible future earnings could be affected by changes in our assessments of the probability that a loss recovery has been recognized and/or changes in the Company's estimates related to such matters.

See Note 5 for discussions regarding the project contract cost recovery recognized in 2022 and 2021.

Contingent consideration

The fair values of earn-out arrangements are included as part of the purchase price of the acquired companies on their respective acquisition dates.

For each transaction, we estimate the fair value of contingent earn-out payments as part of the initial purchase price and record the estimated fair value of contingent consideration as a liability in other non-current liabilities on our Consolidated Balance Sheets.

We review and re-assess the estimated fair value of contingent consideration on a quarterly basis, and the updated fair value could differ materially from the initial estimates.

Changes in the estimated fair value of our contingent earn-out liabilities related to the time component of the present value calculation are reported in interest expense on our Consolidated Statements of Operations.

Adjustments to the estimated fair value related to changes in all other unobservable inputs are reported in operating income (loss) on our Consolidated Statements of Operations.

For each transaction, the Company estimates the fair value of contingent earn-out payments as part of the initial purchase price and records the estimated fair value of contingent consideration as a liability in Other non-current liabilities on its Consolidated Balance Sheets.

The Company reviews and re-assesses the estimated fair value of contingent consideration on a quarterly basis, and the updated fair value could differ materially from the initial estimates.

Changes in the estimated fair value of the Company's contingent earn-out liabilities related to the time component of the present value calculation are reported in Interest expense on its Consolidated Statements of Operations.

Adjustments to the estimated fair value related to changes in all other unobservable inputs are reported in Other - net on its Consolidated Statements of Operations.

Stock-based compensation

5 unchanged sentences

The determination of the fair value of a share-based payment award using an option-pricing model or a Monte Carlo simulation requires the input of significant assumptions, such as the expected life of the award and stock price volatility.

We recognize expense for all stock-based awards granted on a straight-line basis over the requisite service periods of the awards, which is generally equivalent to the vesting term.

The Company recognizes expense for all stock-based awards granted on a straight-line basis over the requisite service periods of the awards, which is generally equivalent to the vesting term.

For liability-classified awards, changes in fair value are recognized through cumulative catch-ups each period.

3 unchanged sentences

Recently adopted accounting standards

We adopted the following accounting standard during the year ended December 31, 2021:

Effective January 1, 2021 we adopted ASU 2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes.

The amendments in this update simplify the accounting for income taxes by removing exceptions related to the incremental approach for intra-period tax allocation, certain deferred tax liabilities, and the general methodology for calculating income taxes in an interim period.

The amendment also provides simplification related to accounting for franchise (or similar) tax, evaluating the tax basis step up of goodwill, allocation of consolidated current and deferred tax expense, reflection of the impact of enacted tax law or rate changes in annual effective tax rate calculations in the interim period that includes enactment date, and other minor codification improvements.

The impact of this standard on our consolidated financial statements was immaterial.

In March 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848):

The amendments in this update clarify that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition.

This update is an amendment to ASU 2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform of Financial Reporting, which was issued in March 2020 and provides optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met.

The amendments in the updates apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform.

The expedients and exceptions provided by the updates do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for hedging relationships existing as of December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship.

As of December 31, 2021, we have not yet elected any optional expedients provided in the standard.

We will apply the accounting relief as relevant contract and hedge accounting relationship modifications are made during the reference rate reform transition period.

The impact of this standard on our consolidated financial statements was immaterial.

In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt-Modifications and Extinguishments (Subtopic 470-50), Compensation-Stock Compensation (Topic 718), and Derivatives and Hedging-Contracts in Equity's Own Equity (Subtopic 815-40):

Issuer's Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options (a consensus of the FASB Emerging Issues Task Force).

The amendments in this update affect all entities that issue freestanding written call options that are classified in equity.

Specifically, the amendments affect those entities when a freestanding equity-classified written call option is modified or exchanged and remains equity classified after the modification or exchange.

The amendments that relate to the recognition and measurement of EPS for certain modifications or exchanges of freestanding equity-classified written call options affect entities that present EPS in accordance with the guidance in Earnings Per Share (Topic 260) .

The amendments in this update do not apply to modifications or exchanges of financial instruments that are within the scope of another Topic.

That is, accounting for those instruments continues to be subject to the requirements in other Topics.

The amendments in this update do not affect a holder’s accounting for freestanding call options.

The update is applicable to B&W as we have previously issued freestanding written call options.

As of December 31, 2021, these options remain unexercised and we will apply the accounting standard as freestanding written call options are modified or exchanged.

The impact of this standard on our consolidated financial statements was immaterial.

The Company adopted the following accounting standard during the year ended December 31, 2022:

In August 2020, the FASB issued ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815 – 40) .

The amendments in this update simplify the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity by removing major separation models required under current U.S.

The amendments also improve the consistency of diluted earnings per share calculations.

The impact of this standard had no impact on the Company's Consolidated Financial Statements.

The Company considers the applicability and impact of all issued ASUs.

Recently issued ASUs that are not adopted were assessed and determined to be not applicable in the current reporting period.

New accounting standards not yet adopted that could affect the Company's Consolidated Financial Statements in the future are summarized as follows:

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers.

The amendment in this update provides an exception to fair value measurement for contract assets and contract liabilities (i.e., deferred revenue) acquired in a business combination.

As a result, contract assets and contract liabilities will be recognized and measured by the acquirer in accordance with ASC 606, Revenue from Contracts with Customers.

The amendment also improves consistency in revenue recognition in the post-acquisition period for acquired contracts as compared to contracts entered into after the business combination.

The amendment in this update is effective for public business entities in January 2023;

all other entities have an additional year to adopt.

Early adoption is permitted;

however, if the new guidance is adopted in an interim period, it is required to be applied retrospectively to all business combinations within the year of adoption.

This amendment is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

The impact of the new standard on our consolidated financial statements and related disclosures will depend on the magnitude of future acquisitions.

In November 2018, the FASB issued ASU 2018-19, Codification Improvements to Topic 326:

Financial Instruments - Credit Losses.

This update is an amendment to the new credit losses standard, ASU 2016-13, Financial Instruments—Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments , that was issued in June 2016 and clarifies that operating lease receivables are not within the scope of Topic 326.

The new credit losses standard changes the accounting for credit losses for certain instruments.

The new measurement approach is based on expected losses, commonly referred to as the current expected credit loss ("CECL") model, and applies to financial assets measured at amortized cost, including loans, held-to-maturity debt securities, net investment in leases, and reinsurance and trade receivables, as well as certain off-balance sheet credit exposures, such as loan commitments.

The standard also changes the impairment model for available-for-sale debt securities.

The provisions of this standard will primarily impact the allowance for doubtful accounts on the Company's trade receivables, contracts in progress, and potentially its impairment model for available-for-sale debt securities (to the extent we have any upon adoption).

For public, smaller reporting companies, this standard is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

The Company is currently evaluating the impact of both standards on its Consolidated Financial Statements and does not expect a material impact.

NOTE 3 – EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings (loss) per share of our common stock, net of non-controlling interest and dividends on preferred stock:

The following table sets forth the computation of basic and diluted (loss) earnings per share of the Company's common stock, net of non-controlling interest and dividends on preferred stock:

Year ended December 31,

(in thousands, except per share amounts) 2022 2021 2020

Income (loss) from continuing operations attributable to stockholders of common stock

(Loss) income from continuing operations attributable to stockholders of common stock

$ ( 37,721 ) $ 21,767 $ ( 12,118 )

Income from discontinued operations attributable to stockholders of common stock, net of tax

Net income (loss) attributable to stockholders of common stock

(Loss) income from discontinued operations attributable to stockholders of common stock, net of tax

Net (loss) income attributable to stockholders of common stock

$ ( 37,721 ) $ 21,767 $ ( 10,318 )

Weighted average shares used to calculate basic income (loss) per share

Weighted average shares used to calculate basic (loss) income per share

88,256 82,391 48,710

Dilutive effect of stock options, restricted stock and performance units — 1,189 —

Weighted average shares used to calculate diluted income (loss) per share

Weighted average shares used to calculate diluted (loss) income per share

88,256 83,580 48,710

Basic income (loss) per share

Basic (loss) income per share

Continuing operations $ ( 0.43 ) $ 0.26 $ ( 0.25 )

Discontinued operations — — 0.04

Basic income (loss) per share

Basic (loss) income per share

$ ( 0.43 ) $ 0.26 $ ( 0.21 )

Diluted income (loss) per share

Diluted (loss) income per share

Continuing operations $ ( 0.43 ) $ 0.26 $ ( 0.25 )

Discontinued operations — — 0.04

Diluted income (loss) per share

Diluted (loss) income per share

$ ( 0.43 ) $ 0.26 $ ( 0.21 )

Because we incurred a net loss in the years ended December 31, 2020 and 2019 basic and diluted shares are the same.

If we had net income in the years ended December 31, 2020 and 2019 diluted shares would include an additional 610.9 thousand and 150.0 thousand shares, respectively.

We exclu ded 0.3 million , 1.3 million, and 0.3 million shares related to stock options from the diluted share calculation for the years ended December 31, 2021, 2020, and 2019 respectively, because their effect would have been anti-dilutive.

Because the Company incurred a net loss in the years ended December 31, 2022 and 2020 basic and diluted shares are the sam e.

If the Company had net income in the years ended December 31, 2022 and 2020 diluted shares would include an additional 717.6 thousand and 610.9 thousand shares, respectively.

The Company exclu ded 2.1 million , 0.3 million, and 1.3 million shares related to stock options from the diluted share calculation for the years ended December 31, 2022, 2021, and 2020 respectively, because their effect would have been anti-dilutive.

NOTE 4 – SEGMENT REPORTING

Our operations are assessed based on three reportable segments as described in Note 2.

Revenues exclude eliminations of revenues generated from sales to other segments or to other product lines within the segment.

An analysis of our operations by segment is as follows:

The Company's operations are assessed based on three reportable segments as described in Note 2.

An analysis of the Company's operations by segment is as follows:

Year ended December 31,

2 unchanged sentences

B&W Renewable $ 136,376 $ 83,639 $ 89,790

B&W Renewable Services (1)

78,960 25,852 23,835

Vølund 73,337 34,819 42,562

Fosler 12,490 — —

B&W Solar 41,897 12,490 —

330,570 156,800 156,187

9 unchanged sentences

Total Revenues $ 889,815 $ 723,363 $ 566,317

The presentation of the components of our adjusted EBITDA in the table below is consistent with the way our chief operating decision maker reviews the results of our operations and makes strategic decisions about our business.

Items such as gains or losses on asset sales, net pension benefits, restructuring costs, impairments, gains and losses on debt extinguishment, costs related to financial consulting, research and development costs and other costs that may not be directly controllable by segment management are not allocated to the segments.

Adjusted EBITDA for each segment is presented below with a reconciliation from net income (loss).

Year ended December 31,

(in thousands) 2021 2020 2019

Net income (loss) $ 31,538 $ ( 10,297 ) $ ( 129,039 )

Interest expense 41,359 60,713 95,266

Income tax (benefit) expense ( 2,224 ) 8,179 5,286

Depreciation & amortization 18,337 16,805 23,605

EBITDA 89,010 75,400 ( 4,882 )

Benefit plans, net ( 48,142 ) ( 5,600 ) ( 22,800 )

Gain on sales, net ( 13,984 ) ( 3,155 ) ( 339 )

(Gain) loss on debt extinguishment ( 6,530 ) 6,194 3,969

Stock compensation 10,476 4,587 3,376

Restructuring activities and business services transition costs 10,726 11,849 11,707

Advisory fees for settlement costs and liquidity planning 5,480 6,357 11,824

Litigation legal costs 4,894 2,137 475

Acquisition pursuit and related costs 4,841 — —

Product development (1)

Foreign exchange 4,294 ( 58,799 ) 16,602

Financial advisory services 2,709 4,384 9,069

Other - net 1,489 1,128 ( 285 )

Loss from business held for sale 483 467 5,850

Loss from a non-strategic business 116 2,559 5,518

Settlement cost to exit contract (2)

Income from discontinued operations — ( 1,800 ) ( 694 )

Adjusted EBITDA (3)

$ 70,575 $ 45,708 $ 45,965

(1) Costs associated with development of commercially viable products that are ready to go to market.

(2) In March 2019, we entered into a settlement in connection with an additional B&W Renewable waste-to-energy EPC contract, for which notice to proceed was not given and the contract was not started.

The settlement eliminated our obligations to act, and our risk related to acting, as the prime EPC should the project have moved forward.

(3)) Adjusted EBITDA for the twelve months ended December 31, 2020 includes a $ 26 million non-recurring loss recovery related to certain historical EPC loss contracts in the third quarter.

(1) B&W Renewable Services' 2021 and 2020 revenues were reclassified from Vølund's prior year reported amount for year-over-year comparability.

At a segment level, the adjusted EBITDA presented below is consistent with the manner in which the Company's chief operating decision maker ("CODM") reviews the results of operations and makes strategic decisions about the business and 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, costs related to financial consulting, research and development costs and other costs that may not be directly controllable by segment management and are not allocated to the segment.

Year ended December 31,

5 unchanged sentences

B&W Thermal segment 56,291 49,143 36,052

Corporate ( 12,467 ) ( 14,425 ) ( 17,579 )

Research and development benefit (costs) ( 1,093 ) ( 4,379 ) ( 2,861 )

$ 70,575 $ 45,708 $ 45,965

(1) Adjusted EBITDA for the twelve months ended December 31, 2020 includes a $ 26 million non-recurring loss recovery related to certain historical EPC loss contracts in the third quarter.

We do not separately identify or report our assets by segment as our chief operating decision maker does not consider assets by segment to be a critical measure by which performance is measured.

We estimate that 47 %, 43 % and 45 % of our consolidated revenues in 2021, 2020, and 2019, respectively, were related to coal-fired power plants.

(1) Adjusted EBITDA in our Renewable segment for the year ended December 31, 2022 includes a $ 6.2 million non-recurring gain on sale related to development rights of a future solar project that was sold as well as $ 9.6 million that resulted from the reversal of the contingent consideration related to an acquisition.

(2) Adjusted EBITDA in our Renewable segment for the year ended December 31, 2020 includes a $ 26.0 million non-recurring loss recovery related to certain historical EPC loss contracts.

The Company does not separately identify or report its assets by segment as its chief operating decision maker does not consider assets by segment to be a critical measure by which performance is measured.

The Company estimates that 38 %, 47 % and 43 % of its consolidated revenues in 2022, 2021, and 2020, respectively, were related to coal-fired power plants.

The availability of natural gas in great supply has caused, in part, low prices for natural gas in the United States, which has led to more demand for natural gas relative to energy derived from coal.

A material decline in spending by electric power generating companies and other steam-using industries on coal-fired power plants over a sustained period of time could materially and adversely affect the demand for our power generation products and services and, therefore, our financial condition, results of operations and cash flows.

A material decline in spending by electric power generating companies and other steam-using industries on coal-fired power plants over a

sustained period of time could materially and adversely affect the demand for our power generation products and services and, therefore, our financial condition, results of operations and cash flows.

Coal-fired power plants have been scrutinized by environmental groups and government regulators over the emissions of potentially harmful pollutants.

This scrutiny and other economic incentives including tax advantages, have promoted the growth of nuclear, wind and solar power, among others, and a decline in cost of renewable power plant components and power storage.

The recent economic environment and uncertainty concerning new environmental legislation or replacement rules or regulations in the United States and elsewhere has caused many of our major customers, principally electric utilities, to delay making substantial expenditures for new plants, and delay upgrades to existing power plants.

The recent economic environment and uncertainty concerning new environmental legislation or replacement rules or regulations in the United States and elsewhere has caused many of the Company's major customers, principally electric utilities, to delay making substantial expenditures for new plants, and to delay upgrades to existing power plants.

Information about our consolidated operations in different geographic areas:

4 unchanged sentences

Denmark 50,857 30,310 28,590

United Kingdom 26,722 25,811 54,347

Sweden 35,303 22,391 11,430

Israel 14,110 1,635 635

Saudi Arabia 12,529 9,545 5,243

Hong Kong 11,056 4,490 4,524

United Kingdom 30,223 26,722 25,811

China 25,890 10,028 8,461

Finland 6,310 6,606 14,118

South Korea 3,961 4,050 14,443

Saudi Arabia 21,428 12,529 9,545

Brazil 15,049 3,946 5,540

France 12,555 4,539 1,776

Taiwan 12,433 5,776 1,871

Indonesia 11,724 1,853 19,644

Israel 3,082 14,110 1,635

Hong Kong 896 11,056 4,490

Aggregate of all other countries, each with less than $10 million in revenues 88,217 100,357 92,630

$ 889,815 $ 723,363 $ 566,317

(1) We allocate geographic revenues based on the location of the customer's operations.

Year ended December 31,

(in thousands) 2021 2020 2019

(1) The Company allocates geographic revenues based on the location of the customer's operations.

(in thousands) December 31, 2022 December 31, 2021

NET PROPERTY, PLANT AND EQUIPMENT, AND FINANCE LEASE

8 unchanged sentences

Revenue Recognition

We generate the vast majority of our revenues from the supply of, and aftermarket services for, steam-generating, environmental and auxiliary equipment.

We also earn revenue from the supply of custom-engineered cooling systems for

steam applications along with related aftermarket services.

Our revenue recognition accounting policy is described in more detail in Note 2.

The Company generates the vast majority of its revenues from the supply of, and aftermarket services for, steam-generating, environmental and auxiliary equipment.

The Company also earns revenue from the supply of custom-engineered cooling

systems for steam applications along with related aftermarket services.

The Company's revenue recognition accounting policy is described in more detail in Note 2.

Contract Balances

The following represents the components of our contracts in progress and advance billings on contracts included in our Consolidated Balance Sheets:

The following represents the components of Contracts in progress and advance billings on contracts included in the Company's Consolidated Balance Sheets:

(in thousands) December 31, 2022 December 31, 2021 $ Change % Change

14 unchanged sentences

Total retainage $ 3,984 $ 4,166 $ ( 182 ) ( 4 ) %

We have included retainage expected to be collected in 2022 in accounts receivable – trade, net in our Consolidated Balance Sheets.

Retainage expected to be collected after one year are included in other assets in our Consolidated Balance Sheets.

Of the long-term retainage at December 31, 2021, we anticipate collecting $ 1.6 million in 2023.

On December 31, 2021 we had $ 639.0 million of remaining performance obligations, which we also refer to as total backlog.

We expect to recognize approximately 62.2 %, 12.8 % and 25.0 % of our remaining performance obligations as revenue in 2022, 2023 and thereafter, respectively.

The Company has included retainage expected to be collected in 2023 in Accounts receivable – trade, net in its Consolidated Balance Sheets.

Retainage expected to be collected after one year are included in Other assets in The Company's Consolidated Balance Sheets.

Of the long-term retainage at December 31, 2022, collection of $ 0.8 million is anticipated in 2024.

On December 31, 2022 the Company ha d $ 704.0 million of rem aining performance obligations, which are also referred to as total backlog.

The Company expects to recognize approximately 80.3 %, 8.8 % and 10.9 % of its remaining performance obligations as revenue in 2023, 2024 and thereafter, respectively.

Changes in Contract Estimates

In the years ended December 31, 2021, 2020 and 2019 we recognized changes in estimated gross profit related to long-term contracts accounted for on the over time basis, which are summarized as follows:

In the years ended December 31, 2022, 2021 and 2020 the Company recognized changes in estimated gross profit related to long-term contracts accounted for on the over time basis, which are summarized as follows:

Year ended December 31,

5 unchanged sentences

(1) Increases in gross profits for changes in estimates for over time contracts reflects a non-recurring loss recovery of $ 26.0 million in the year ended December 31, 2020.

B&W Renewable EPC Loss Contracts

We had six B&W Renewable EPC contracts for renewable energy facilities in Europe that were loss contracts at December 31, 2017.

The scope of these EPC (Engineer, Procure and Construct) contracts extended beyond our core technology, products and services.

In addition to these loss contracts, we have one remaining extended scope contract in our Babcock & Wilcox Renewable segment which turned into a loss contract in the fourth quarter of 2019.

Five of the six contracts were 100 % complete and the remaining one contract was nearly 100 % complete at December 31, 2021, with only limited warranty obligations remaining, and all have been turned over to the customers.

In the years ended December 31, 2021 and 2020, we recorded $ 42 thousand in net gains and $ 3.7 million in net losses, respectively, inclusive of warranty expense as described in Note 11, resulting from changes in the estimated revenues and costs to complete those contracts.

All liquidated damages associated with these six contracts have been settled and paid as of December 31, 2020.

In October 2020, we entered into a settlement agreement with an insurer under which we received a settlement of $ 26.0 million to settle claims in connection with five of six European B&W Renewable EPC loss contracts disclosed above.

We recognized this non-recurring loss recovery of $ 26.0 million as a reduction of our c ost of operations in our Consolidated Statements of Operation s in 2020.

During 2021, the Company settled a dispute with a subcontractor for project costs related to three of the Renewable EPC loss contracts described above.

Accordingly, we recognized this settlement as a reduction of our cost of operations in our Consolidated Statements of Operations and recorded the receivable in a ccounts receivable - other in our Consolidated Balance Sheets at December 31, 2021 and in the Table above.

The Company, as a normal part of its ongoing business operations, is continuing to pursue other additional potential claims and recoveries from subcontractors and others where appropriate and available.

B&W Environmental Loss Contracts

At December 31, 2021, the B&W Environmental segment had two significant loss contracts of which both contracts were nearly 100 % complete.

In the year ended December 31, 2021 our estimated loss on these contracts improved by $ 0.4 million.

In the twelve months ended December 31, 2020 and 2019, we recognized $ 1.3 million and $ 5.6 million, respectively, of additional charges on these contracts.

B&W Renewable Contracts

During 2022, the Company determined that its Babcock & Wilcox Solar reporting unit had nine projects located in the United States that existed at the time Babcock & Wilcox Solar was acquired on September 30, 2021 which generated losses that arose due to the status of certain construction activities, existing at acquisition date, not adequately disclosed in the sales agreement and not recognized in the financial records of the seller.

During the year ended December 31, 2022, the Company has recorded an increase in goodwill of $ 14.4 million, primarily resulting from the recognition of $ 14.1 million of accrued liabilities and $ 0.4 million of warranty accruals in conjunction with the finalization of purchase accounting as measurement period adjustments.

The Company has submitted insurance claims to recover a portion of these losses as of December 31, 2022.

During the year ended December 31, 2022, four additional Babcock & Wilcox Solar projects became loss contracts, as such, the Company recorded $ 13.2 million in net losses from changes in the estimated costs to complete the thirteen Babcock & Wilcox Solar loss contracts.

As a normal part of its ongoing business operations, the Company is continuing to pursue other additional potential claims and recoveries from subcontractors and others where appropriate and available.

NOTE 6 – INVENTORIES

Inventories are stated at the lower of cost or net realizable value.

During the fourth quarter of 2021, the Company voluntarily changed its method of accounting for certain domestic inventory previously valued by the LIFO method to the FIFO method.

The cumulative effect of this change on periods presented prior to 2019 resulted in an increase in retained earnings of $ 7.3 million at December 31, 2018.

The impact on earnings was a decrease of $ 0.1 million and an increase of $ 0.4 million for the years ending December 31, 2020 and 2019, respectively.

The FIFO method of accounting for inventory is preferable because it more closely matches the physical inventory flow, better reflects the current value of inventories on our Consolidated

Balance Sheets, improves our financial reporting by having a consistent method across the organization, and increases comparability with certain peers of the Company.

The components of inventories are as follows:

3 unchanged sentences

Finished goods 12,565 17,452

Total inventories $ 79,527 $ 74,446

(1) December 31, 2020 amounts have been revised to reflect the change in inventory accounting method, as described above.

As a result of the retrospective application of this change in accounting method, the following financial statement line items within the accompanying financial statements were adjusted, as follows:

December 31, 2021 December 31, 2020

(in thousands) As Computed Under LIFO As Reported Under FIFO Effect

of Change As Computed Under LIFO As Reported Under FIFO Effect

Consolidated Balance Sheets

Inventories $ 72,242 $ 79,527 $ 7,285 $ 67,161 $ 74,446 $ 7,285

Accumulated deficit ( 1,328,439 ) ( 1,321,154 ) 7,285 ( 1,350,206 ) ( 1,342,921 ) 7,285

NOTE 7 – PR OPERTY, PLANT & EQUIPMENT, & FINANCE LEASE

Total inventories, net $ 102,637 $ 79,527

NOTE 7 – PR OPERTY, PLANT & EQUIPMENT, & FINANCE LEASES

Property, plant and equipment less accumulated depreciation is as follows:

9 unchanged sentences

Less finance lease accumulated amortization 6,197 5,584

Net property, plant and equipment, and finance lease $ 85,627 $ 85,078

Net property, plant and equipment, and finance leases $ 86,363 $ 85,627

NOTE 8 - GOODWILL

3 unchanged sentences

Thermal Total

Goodwill $ 129,322 $ 80,145 $ 31,438 $ 240,905

Accumulated impairment losses ( 49,965 ) ( 74,478 ) — ( 124,443 )

Balance at December 31, 2021 79,357 5,667 31,438 116,462

Addition - Fosler Construction (1)

Addition - Fossil Power (1)

— — 35,392 35,392

Addition - VODA (1)

Addition - Optimus Industries (1)

— — 11,081 11,081

Measurement period adjustments - Babcock & Wilcox Solar (2)

10,697 — — 10,697

Measurement period adjustments - Babcock & Wilcox Renewable Service A/S (2)

( 61 ) — — ( 61 )

Measurement period adjustments - Fossil Power (1)(2)

Measurement period adjustments - Optimus Industries (1)(2)

— — ( 7,273 ) ( 7,273 )

Goodwill impairment - Babcock & Wilcox Solar ( 7,224 ) — — ( 7,224 )

Currency translation adjustments ( 710 ) ( 320 ) ( 1,321 ) ( 2,351 )

Balance at December 31, 2022 $ 82,059 $ 5,347 $ 69,587 $ 156,993

(1) As described in Note 26, we are in the process of completing the purchase price allocation associated with the Fosler Construction and VODA acquisitions and as a result, the provisional measurements of goodwill associated with these acquisitions are subject to change.

Goodwill is tested for impairment annually and when impairment indicators exist.

No impairment indicators were identified during the year ended December 31, 2021.

In conducting the annual impairment test for goodwill, the Company has the option to first assess qualitative factors to determine whether it is more likely than not the fair value of any reporting unit is less than its carrying amount.

If the Company elects to perform a qualitative assessment and determines an impairment is more likely than not, the Company is required to perform a quantitative impairment test.

Otherwise, no further analysis is required.

Alternatively, the Company may elect to proceed directly to the quantitative impairment test.

During the annual goodwill impairment testing as of October 1, 2021, the Company elected to perform a quantitative impairment test.

No impairment charges were recorded as a result of the quantitative testing performed.

(1) As described in Note 26, the Company is in the process of completing the purchase price allocation associated with the Fossil Power and Optimus Industries acquisitions and, as a result, the provisional measurements of goodwill associated with these acquisitions are subject to change.

(2) The Company's preliminary and final purchase price allocation changed due to additional information and further analysis.

Goodwill represents the excess of the consideration transferred over the fair value of net assets, including identifiable intangible assets, at the acquisition date.

Goodwill is assessed for impairment annually on October 1 or more frequently if events or changes in circumstances indicate a potential impairment exists.

In assessing goodwill for impairment, the Company follows ASC 350, Intangibles – Goodwill and Other, which permits a qualitative assessment of whether it is more likely than not that the fair value of the reporting unit is less than its carrying value including goodwill.

However, if the qualitative assessment determines that it is more likely than not that the fair value of the reporting unit is less than its carrying value, including goodwill, or we choose not to perform the qualitative assessment, then we compare the fair value of that reporting unit with its carrying value, including goodwill, in a quantitative assessment.

If the carrying value

of a reporting unit exceeds its fair value, goodwill is considered impaired with the impairment loss measured as the excess of the reporting unit’s carrying value, including goodwill, over its fair value.

The estimated fair value of the reporting unit is derived based on valuation techniques the Company believes market participants would use for each of the reporting units.

During the quarter ended September 30, 2022, the Company identified certain factors, including but not limited to, the acquisition of the remaining 40 % ownership stake in Babcock & Wilcox Solar for an amount less than the remaining balance of the non-controlling interest, significant deterioration in operating results from those originally forecast at the date of acquisition primarily as a result of supply chain issues on certain solar product inputs, the recognition of additional contract losses in the third quarter of $ 8.6 million beyond amounts previously accounted for as measurement period adjustments during the year, the determination that the contingent consideration would not be payable, all of which contributed to the identification of a triggering event, requiring an interim quantitative goodwill impairment assessment of its Babcock & Wilcox Solar reporting unit.

In addition, in conjunction with the interim goodwill impairment test, the Company performed an impairment analysis of the Babcock & Wilcox Solar asset group's long-lived and intangible assets and noted no impairment.

The quantitative assessment was performed using a combination of the income approach (discounted cash flows), the market approach and the guideline transaction method.

The income approach uses the reporting unit’s estimated future cash flows, discounted at the weighted-average cost of capital of a hypothetical third-party buyer to account for uncertainties within the projections.

The income approach uses assumptions based on the reporting unit’s estimated revenue growth, operating margin, and working capital turnover.

The market approach estimates fair value by applying cash flow multiples to the reporting unit’s operating performance.

The multiples are derived from comparable publicly traded companies with similar characteristics to the reporting unit.

The guideline transaction method estimates fair value by applying recent observed transaction multiples from transactions involving companies with similar characteristics to the reporting unit’s business.

The Company compared the fair value of the Babcock & Wilcox Solar reporting unit to its carrying value and determined that the carrying value of the reporting unit exceeded the fair value by approximately $ 7.2 million.

As such, the Company recorded goodwill impairment losses related to the Babcock & Wilcox Solar reporting unit of $ 7.2 million.

The Company re-evaluated its Babcock & Wilcox Solar reporting unit at December 31, 2022 and no additional indicators of goodwill impairment were identified for this or any of the Company's other reporting units at the measurement date of October 1, 2022.

The quantitative goodwill impairment test approach was used on the Company's remaining reporting units and there was no evidence that the fair value of each reporting unit would not exceed its carrying value at the October 1, 2021 measurement date.

The Company will continue to evaluate the results of its Babcock & Wilcox Solar reporting unit and conduct interim testing if additional impairment indicators are present in future quarters.

NOTE 9 – INTANGIBLE ASSETS

Our intangible assets are as follows:

The Company's intangible assets are as follows:

(in thousands) December 31, 2022 December 31, 2021

18 unchanged sentences

Total intangible assets, net (2)

(1) As described in Note 26, we are in the process of completing the purchase price allocation associated with the Fosler Construction and VODA acquisitions and as a result, the increase in intangible assets associated with these acquisitions are subject to change.

$ 60,293 $ 43,795

(1) As described in Note 26, we are in the process of completing the purchase price allocation associated with the Fossil Power and Optimus Industries acquisitions and as a result the intangible assets associated with these acquisitions are subject to change.

(2) The Company finalized the purchase price allocation for the Babcock & Wilcox Solar acquisition on September 30, 2022 which resulted in several measurement period adjustments.

On November 30, 2022, the Company also finalized the purchase price allocation for the Babcock & Wilcox Renewable Service A/S acquisition with no measurement period adjustments to their intangible assets, excluding goodwill.

The following summarizes the changes in the carrying amount of intangible assets:

3 unchanged sentences

Business acquisitions and adjustments (1)

27,412 26,583

Amortization expense ( 9,199 ) ( 5,128 )

1 unchanged sentence

Balance at end of the period (2)

(1) As described in Note 26, we are in the process of completing the purchase price allocation associated with the Fosler Construction and VODA acquisitions and as a result, the increase in amortization expense associated with these acquisitions are subject to change.

Amortization of intangible assets is included in cost of operations and SG&A in our Consolidated Statement of Operations but is not allocated to segment results.

Estimated future intangible asset amortization expense, including the preliminary amortization expense resulting from the acquisitions of Fosler Construction and VODA, during the year ended December 31, 2021 is as follows (in thousands):

$ 60,293 $ 43,795

(1) As described in Note 26, we are in the process of completing the purchase price allocation associated with the Fossil Power and Optimus Industries acquisitions and as a result, the increase in intangible assets associated with these acquisitions are subject to change.

(2) The Company finalized the purchase price allocation for the Babcock & Wilcox Solar acquisition on September 30, 2022 which resulted in several measurement period adjustments.

On November 30, 2022, the Company also finalized the purchase price allocation for the Babcock & Wilcox Renewable Service A/S with no measurement period adjustments to their intangible assets, excluding goodwill.

Amortization of intangible assets is included in Cost of operations and SG&A in the Company's Consolidated Statement of Operations but is not allocated to segment results.

Definite-lived intangible assets are assessed for impairment on an interim basis when impairment indicators exist.

See Note 8 regarding the Company's interim impairment testing process for the year ended December 31, 2022.

Estimated future intangible asset amortization expense, including the preliminary amortization expense resulting from the acquisitions of Fossil Power and Optimus, during the year ended December 31, 2022 is as follows (in thousands):

Amortization Expense (1)

Year ending December 31, 2022 6,759

Year ending December 31, 2023 5,382

Year ending December 31, 2024 5,300

Year ending December 31, 2025 4,480

Year ending December 31, 2026 3,256

Twelve months ending December 31, 2023 $ 7,959

Twelve months ending December 31, 2024 7,887

Twelve months ending December 31, 2025 7,082

Twelve months ending December 31, 2026 5,951

Twelve months ending December 31, 2027 5,308

Thereafter 24,576

(1) As described in Note 26, we are in the process of completing the purchase price allocation associated with the Fosler Construction and VODA acquisitions and as a result, the estimated future intangible asset amortization expense associated with these acquisitions are subject to change.

As of December 31, 2021 and 2020, the B&W Vølund asset group had $ 0.7 million and $ 0.5 million of identifiable intangible assets, net of accumulated amortization, respectively.

As of December 31, 2021 and 2020, the B&W SPIG asset group had $ 16.6 million and $ 21.1 million of identifiable intangible assets, net of accumulated amortization, respectively.

See Note 26 for intangible assets identified in conjunction with the acquisitions of Fosler Construction and VODA, which are subject to change pending the finalization of the purchase price allocation associated with these acquisitions.

(1) As described in Note 26, the Company is in the process of completing the purchase price allocation associated with the Fossil Power and Optimus Industries acquisitions and, as a result, the estimated future intangible asset amortization expense associated with these acquisitions are subject to change.

See Note 26 for intangible assets identified in conjunction with the acquisitions of Fossil Power and Optimus, which are subject to change pending the finalization of the purchase price allocation associated with these acquisitions.

NOTE 10 – LEASES

Certain real property assets for our Copley, Ohio location were sold on March 15, 2021, as described in Note 26.

In conjunction with the sale, we executed a leaseback agreement commencing March 16, 2021 and expiring on March 31, 2033.

Certain real property assets for the Company's Copley, Ohio location were sold on March 15, 2021.

In conjunction with the sale, the Company executed a leaseback agreement commencing March 16, 2021 which will expire on March 31, 2033.

The lease is classified as an operating lease with total future minimum payments during the initial term of the lease of approximately $ 5.0 million as of December 31, 2022.

An incremental borrowing rate of 7.71 % was used to determine the right-of-use (the "ROU") asset.

As of December 31, 2021, a $ 3.5 million ROU asset is recorded in r ight of use assets with corresponding liabilities of $ 3.8 million in other accrued liabilities and other non-current operating liabilities in our Consolidated Balance Sheets as of December 31, 2021.

Certain real property assets for our Lancaster, Ohio location were sold on August 13, 2021, as described in Note 26.

In conjunction with the sale, we executed a leaseback agreement commencing August 13, 2021 and expiring on August 31, 2041.

At December 31, 2022, a $ 3.3 million ROU asset is recorded in Right of use assets with corresponding liabilities of $ 3.5 million recorded in Other accrued liabilities and Non-current operating lease liabilities in the Company's Consolidated Balance Sheets.

Certain real property assets the Company's Lancaster, Ohio location were sold on August 13, 2021.

In conjunction with the sale, the Company executed a leaseback agreement commencing August 13, 2021 and expiring on August 31, 2041.

The lease is classified as an operating lease with total future minimum payments during the initial term of the lease of approximately $ 36.6 million as of December 31, 2021.

An incremental borrowing rate of 8.215 % was used to determine the ROU asset.

We recorded a $ 19.4 million ROU asset in right of use assets and corresponding liabilities of $ 19.5 million in other accrued liabilities and other non-current operating liabilities in our Consolidated Balance Sheets as of December 31, 2021.

In conjunction with our acquisition of Fosler Construction, as described in Note 26, w e assumed two leases classified as operating leases with total future minimum payments during the remaining term of the leases of approximately $ 1.5 million.

As of December 31, 2021, a $ 1.1 million ROU asset is recorded in right-of-use assets with corresponding liabilities of $ 1.1 million in operating lease liabilities and non-current operating lease liabilities in our Consolidated Balance Sheets.

As of December 31, 2021, there was one lease classified as a finance lease with total future minimum payments during the remaining term of the leases of approximately $ 1.5 million.

An incremental borrowing rate of 6.65 % was used to determine the ROU asset.

We recorded a $ 0.7 million ROU asset in net property, plant and equipment, and finance lease and corresponding liabilities of $ 0.7 million in other accrued liabilities and other non-current finance liabilities in our Consolidated Balance Sheets as of December 31, 2021 .

At December 31, 2022, a $ 16.6 million ROU asset is recorded in Right of use assets and corresponding liabilities of $ 17.0 million recorded in Other accrued liabilities and Non-current operating lease liabilities.

In conjunction with the acquisition of Babcock & Wilcox Solar, the Company assumed two leases classified as operating leases with total future minimum payments during the remaining term of the leases of approximately $ 0.7 million.

As of December 31, 2022, a $ 1.1 million ROU asset is recorded in Right-of-use assets with corresponding liabilities of $ 1.1 million in Operating lease liabilities and Non-current operating lease liabilities in the Company's Consolidated Balance Sheets.

During the year ended December 31, 2022, the Company sold certain real property and then entered into sale lease-back agreements with the buyers for each sale transaction.

The Company accounted for these sale-leasebacks as financing transactions with the purchasers of the assets in accordance with ASC 842 as the lease agreements were all deemed to be finance leases.

The Company concluded the lease agreements met the qualifications to be classified as finance leases due to the significance of the present value of the lease payments, using the appropriate individual discount rate to reflect the Company's incremental borrowing rates, compared to the fair value of the leased property as of the lease commencement dates.

The presence of a finance lease indicates that control of the property has not transferred to the buyer/lessors, and as such, these transactions were deemed to be failed sale-leasebacks and were accounted for as financing arrangements.

As a result of this determination, the Company is viewed as having received the proceeds from the buyer/lessors in the form of hypothetical loans with its leased property considered to be collateral.

The hypothetical loans are payable as principal and interest in the form of “lease payments” to the buyer/lessors.

As such, the property will remain on the Company's Consolidated Balance Sheets as Net property, plant, equipment and finance leases until the leases end.

The Company will depreciate the assets to zero over the shorter of their respective economic lives or lease term.

No gains or losses were recognized related to the Sale-Leasebacks under U.S.

GAAP for the fiscal year ended December 31, 2022 for the following transactions:

On October 5, 2022, the Company sold its corporate aircraft for $ 3.4 million in proceeds and then simultaneously entered into a lease agreement with the buyer of the property resulting in a sale lease-back.

The sale-leaseback is repayable over a 2 year term with payments of approximately $ 62 thousand per month through July 2024 with a final payment of $ 2.3 million in August 2024 at the expiration of the lease.

The Company concluded the lease agreement met the qualifications to be classified as a finance lease due to the significance of the present value of the lease payments, using a discount rate that reflects the Company’s incremental borrowing rate, compared to the fair value of the leased property as of the lease commencement date.

At December 31, 2022, the carrying value of the financing liability was $ 3.3 million, of which $ 0.6 million is classified as current.

The current portion is recorded in Loans payable with the remainder recorded in Long-term loans payable on the Company's Consolidated Balance Sheets.

The monthly lease payments are split between a reduction of principal and interest expense using the effective interest rate method.

On November 1, 2022, the Company sold certain real property assets at its Monterey, Mexico location for $ 1.4 million in proceeds and then simultaneously entered into a lease agreement with the buyer of the property resulting in a sale lease-back.

The sale-leaseback is repayable over a 4 year term with payments of approximately $ 0.4 million per year.

At December 31, 2022, the carrying value of the financing liability was $ 1.4 million in Long-term loans payable on the Company's Consolidated Balance Sheets.

The monthly lease payments are split between a reduction of principal and interest expense using the effective interest rate method.

On December 16, 2022, the Company sold certain real property assets at its Chanute, Kansas location for $ 8.4 million in proceeds and then simultaneously entered into a lease agreement with the buyer of the property resulting in a sale lease-back.

The sale-leaseback is repayable over a 20 year term, with two renewal options of ten years each.

Under the terms of the lease agreement, the Company's initial basic rent is of approximately $ 0.7 million per year with annual increases of 2.25 % throughout the life of the agreement.

At December 31, 2022, the carrying value of the financing liability was $ 8.7 million, which is net of debt issuance costs of $ 0.6 million and is recorded in Long-term loans payable on the Company's Consolidated Balance Sheets.

The monthly lease payments are split between a reduction of principal and interest expense using the effective interest rate method.

The remaining future cash payments related to the aggregate financing liabilities for the fiscal years ending December 31 are as follows:

Thereafter 14,149

Total minimum liability requirements 22,864

Imputed interest ( 8,954 )

Total $ 13,910

The components of lease expense included on our Consolidated Statements of Operations were as follows:

38 unchanged sentences

Operating lease assets Right-of-use assets $ 29,438 $ 30,163

Finance lease assets Net property, plant and equipment, and finance lease 28,575 28,477

Finance lease assets Net property, plant and equipment and finance leases 24,352 28,575

Total non-current lease assets $ 53,790 $ 58,738

4 unchanged sentences

Total lease liabilities $ 58,840 $ 62,449

Future minimum lease payments required, including the future minimum lease payments resulting from the September 30, 2021 acquisition of Fosler Construction, under non-cancellable leases as of December 31, 2021 were as follows:

Future minimum lease payments required under non-cancellable leases as of December 31, 2022 were as follows:

(in thousands) Operating Leases Finance Leases Total

9 unchanged sentences

NOTE 11 – ACCRUED WARRANTY EXPENSE

We may offer assurance type warranties on products and services we sell.

Changes in the carrying amount of our accrued warranty expense are as follows:

The Company may offer assurance type warranties on products and services in which it sells.

Changes in the carrying amount of the Company's accrued warranty expense are as follows:

Year ended December 31,

6 unchanged sentences

Balance at end of period $ 9,568 $ 12,925

In addition, we

record specific provisions or reductions where we expect the actual warranty costs to significantly differ from the accrued estimates.

Such changes could have a material effect on our consolidated financial condition, results of operations and cash flows.

In addition, the Company records specific provisions or reductions where it expects the actual warranty costs to significantly differ from the accrued estimates.

Such changes could have a material effect on the Company's consolidated financial condition, results of operations and cash flows.

NOTE 12 – RESTRUCTURING ACTIVITIES

The Company incurred restructuring charges in 2022, 2021 and 2020.

The charges primarily consist of severance and related costs to actions taken, including as part of the Company’s strategic, market-focused organizational and re-branding initiative.

The charges primarily consist of severance and related costs of actions taken, including as part of the Company’s strategic, market-focused organizational and re-branding initiative.

During 2021 and 2020, these charges also include actions taken to address the impact of COVID-19 on our business.

8 unchanged sentences

Cumulative costs to date $ 45,743 36,898 8,845

(1) Other amounts consist primarily of exit, relocation, COVID-19 related and other costs.

(1) Other amounts consist primarily of exit, relocation and other costs.

Year ended December 31,

13 unchanged sentences

$ 11,849 $ 6,740 $ 5,109

(1) Other amounts consist primarily of exit, relocation and other costs.

Restructuring liabilities are included in other accrued liabilities on our Consolidated Balance Sheets.

(1) Other amounts consist primarily of exit, relocation, COVID-19 related and other costs

Restructuring liabilities are included in Other accrued liabilities on the Company's Consolidated Balance Sheets.

Activity related to the restructuring liabilities is as follows:

9 unchanged sentences

NOTE 13 – PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS

We have historically provided defined benefit retirement benefits to domestic employees under the Retirement Plan for Employees of Babcock & Wilcox Commercial Operations (the “U.S.

The Company has historically provided defined benefit retirement benefits to domestic employees under the Retirement Plan for Employees of Babcock & Wilcox Commercial Operations (the “U.S.

Plan”), a noncontributory plan.

9 unchanged sentences

In 2014, benefit accruals under certain hourly Canadian pension plans were ceased with an effective date of January 1, 2015.

As part of the spin-off transaction, we split the Canadian defined benefit plans from BWXT, which was completed in 2017.

We did not present these plans as multi-employer plans because our portion was separately identifiable, and we were able to assess the assets, liabilities and periodic expense in the same manner as if it were a separate plan in each period.

We also sponsor the Diamond Power Specialty Limited Retirement Benefits Plan (the “U.K.

Plan”) through our subsidiary.

Benefit accruals under this plan ceased effective November 30, 2015.

We have accounted for the GMP equalization following the U.K.

As part of the spin-off transaction, the Company split the Canadian defined benefit plans from BWXT, which was completed in 2017.

The Company did not present these plans as multi-employer plans because its portion was separately identifiable, and the Company was able to assess the assets, liabilities and periodic expense in the same manner as if it were a separate plan in each period.

The Company also sponsors the Diamond Power Specialty Limited Retirement Benefits Plan (the “U.K.

Plan”) through its subsidiary.

Benefit accruals under this plan ceased to be effective November 30, 2015.

The Company has accounted for the GMP equalization following the U.K.

High Court ruling during the fourth quarter of 2018 by recording prior service cost in accumulated other comprehensive income that will be amortized through net periodic pension cost over 15 years, ending December 31, 2033.

We do not provide retirement benefits to certain non-resident alien employees of foreign subsidiaries.

The Company does not provide retirement benefits to certain non-resident alien employees of foreign subsidiaries.

Retirement benefits for salaried employees who accrue benefits in a defined benefit plan are based on final average compensation and years of service, while benefits for hourly paid employees are based on a flat benefit rate and years of service.

Our funding policy is to fund the plans as recommended by the respective plan actuaries and in accordance with the Employee Retirement Income Security Act of 1974, as amended, or other applicable law.

The Company's funding policy is to fund the plans as recommended by the respective plan actuaries and in accordance with the Employee Retirement Income Security Act of 1974, as amended, or other applicable law.

Funding provisions under the Pension Protection Act accelerate funding requirements to ensure full funding of benefits accrued.

We make available other benefits which include postretirement health care and life insurance benefits to certain salaried and union retirees based on their union contracts, and on a limited basis, to future retirees.

The Company makes available other benefits which include postretirement health care and life insurance benefits to certain salaried and union retirees based on their union contracts, and on a limited basis, to future retirees.

Obligations and funded status

9 unchanged sentences

Amendments — 676 — —

Actuarial (gain) loss ( 28,815 ) 108,623 ( 153 ) 478

Actuarial gain ( 249,945 ) ( 28,815 ) ( 1,353 ) ( 153 )

Foreign currency exchange rate changes ( 4,413 ) 165 ( 82 ) 3

42 unchanged sentences

(2) Service cost related to a small group of active participants is presented within Cost of operations in our Consolidated Statement of Operations and is allocated to the B&W Thermal segment.

Recognized net actuarial gain consists primarily of our reported actuarial gain and the difference between the actual return on plan assets and the expected return on plan assets.

Total net mark to market (“MTM”) adjustments for our pension and other postretirement benefit plans were (gains) losses of $( 15.5 ) million, $ 23.2 million and $( 8.8 ) million in the years ended, December 31, 2021, 2020 and 2019, respectively.

The recognized net actuarial (gain) loss was recorded in benefit plans, net in our Consolidated Statements of Operations.

Recognized net actuarial gain consists primarily of the Company's reported actuarial gain and the difference between the actual return on plan assets and the expected return on plan assets.

Total net mark to market (“MTM”) adjustments for the Company's pension and other postretirement benefit plans were (gains) losses of $( 7.7 ) million, $( 15.5 ) million and $ 23.2 million in the years ended, December 31, 2022, 2021 and 2020, respectively.

The recognized net actuarial (gain) loss was recorded in Benefit plans, net in the Company's Consolidated Statements of Operations.

Pension Benefits Other Benefits

9 unchanged sentences

The expected rate of return on plan assets is based on the long-term expected returns for the investment mix of assets currently in the portfolio.

In setting this rate, we use a building-block approach.

In setting this rate, the Company uses a building-block approach.

Historic real return trends for the various asset classes in the plan's portfolio are combined with anticipated future market conditions to estimate the real rate of return for each asset class.

1 unchanged sentence

The expected rate of return on plan assets is determined to be the weighted average of the nominal returns based on the weightings of the asset classes within the total asset portfolio.

We use an expected return on plan assets assumption of 6 % for the majority of our pension plan assets (approximately 93 % of our total pension assets at December 31, 2021).

The Company uses an expected return on plan assets assumption of 6 % for the majority of our pension plan assets (approximately 94 % of our total pension assets at December 31, 2022).

Investment goals

3 unchanged sentences

Allocations to each asset class for both domestic and foreign plans are reviewed periodically and rebalanced, if appropriate, to assure the continued relevance of the goals, objectives and strategies.

The pension trusts for both our domestic and foreign plans employ a professional investment advisor and a number of professional investment managers whose individual benchmarks are, in the aggregate, consistent with the plans' overall investment objectives.

The pension trusts for both domestic and foreign plans employ a professional investment advisor and a number of professional investment managers whose individual benchmarks are, in the aggregate, consistent with the plans' overall investment objectives.

The goals of each investment manager are (1) to meet (in the case of passive accounts) or exceed (for actively managed accounts) the benchmark selected and agreed upon by the manager and the trust and (2) to display an overall level of risk in its portfolio that is consistent with the risk associated with the agreed upon benchmark.

2 unchanged sentences

Domestic plans:

We sponsor the U.S.

The Company sponsors the U.S.

Plan, which is a domestic defined benefit plan.

4 unchanged sentences

Asset category:

Commingled and mutual funds — % 41 %

United States government securities 12 % 17 %

5 unchanged sentences

As of December 31, 2021, the target allocation was 50 % of alternative, liquid credit and direct lending funds, 20 % of fixed income securities, and 30 % of equity and other investments.

We routinely reassess the target asset allocation with a goal of better aligning the timing of expected cash flows from those assets to the anticipated timing of benefit payments.

The Company routinely reassesses the target asset allocation with a goal of better aligning the timing of expected cash flows from those assets to the anticipated timing of benefit payments.

Foreign plans:

We sponsor various plans through certain of our foreign subsidiaries.

The Company sponsors various plans through certain of its foreign subsidiaries.

These plans are the Canadian Plans and the U.K.

13 unchanged sentences

The investments that are measured at fair value using NAV per share included in the tables below are intended to permit reconciliation of the fair value hierarchy to the fair value of plan assets at the end of each period, which is presented in the first table above titled “obligations and funded status” .

The following is a summary of total investments for our plans measured at fair value:

The following is a summary of total investments of the Company's plans measured at fair value:

(in thousands) Year ended December 31, 2022 Level 1 Level 2 Level 3

16 unchanged sentences

Venture capital 236,730 — — 236,730

Hedge fund 80,711 — — 80,711

Cash and accrued items 30,130 30,130 — —

19 unchanged sentences

(1 Pension benefit payments are made from their respective plan's trust.

We made contributions to our pension and other postretirement benefit plans totaling $ 27.6 million and $ 4.0 million during the years ended December 31, 2021 and 2020.

Contributions made during the year ended December 31, 2021 includes $ 0.4 million of interest as required per the CARES Act that was signed into law on March 27, 2020.

In accordance with the American Rescue Plan Act of 2021, we elected to defer $ 20.9 million of the estimated Pension Plan contribution payments of $ 45.6 million that would have been due during 2021.

The Company made contributions to its pension and other postretirement benefit plans totaling $ 5.2 million and $ 27.6 million during the years ended December 31, 2022 and 2021.

In accordance with the American Rescue Plan Act of 2021, the Company elected to defer $ 20.9 million of the estimated Pension Plan contribution payments of $ 45.6 million that would have been due during 2021.

Contributions made during the year ended December 31, 2021 include $ 0.4 million of interest as required per the CARES Act that was signed into law on March 27, 2020.

Defined contribution plans

We provide benefits under The B&W Thrift Plan (the “Thrift Plan”).

The Company provides benefits under The B&W Thrift Plan (the “Thrift Plan”).

The Thrift Plan generally provides for matching employer contributions.

3 unchanged sentences

Amounts charged to expense for employer contributions under the Thrift Plan totaled approximately $ 3.1 million, $ 0.0 million and $ 1.0 million in the years ended December 31, 2022, 2021 and 2020, respectively.

Also, our salaried Canadian employees are provided with a defined contribution plan.

Also, the Company's salaried Canadian employees are provided with a defined contribution plan.

The amount charged to expense for employer contributions was approximately $ 0.3 million, $ 0.3 million and $ 0.3 million in the years ended December 31, 2022, 2021 and 2020, respectively.

Multi-employer plans

One of our subsidiaries in the B&W Thermal segment contributes to various multi-employer plans.

One of the Company's subsidiaries in the B&W Thermal segment contributes to various multi-employer plans.

The plans generally provide defined benefits to substantially all unionized workers in this subsidiary.

The following table summarizes our contributions to multi-employer plans for the years covered by this report:

The following table summarizes the Company's contributions to multi-employer plans for the years covered by this report:

Pension Fund EIN/PIN Pension Protection

4 unchanged sentences

2022 2021 2020 (in millions)

Boilermaker-Blacksmith National Pension Trust 48-6168020/ 001 Yellow Yellow Red Yes $ 16.6 $ 4.0 $ 7.5 No Described

Boilermaker-Blacksmith National Pension Trust 48-6168020/ 001 Yellow Yellow Yellow Yes $ 8.0 $ 16.6 $ 4.0 No Described

All other 1.0 2.2 0.9

$ 9.0 $ 18.8 $ 4.9

Our collective bargaining agreements with the Boilermaker-Blacksmith National Pension Trust (the “Boilermaker Plan”) is under a National Maintenance Agreement platform which is evergreen in terms of expiration.

The Company's collective bargaining agreements with the Boilermaker-Blacksmith National Pension Trust (the “Boilermaker Plan”) is under a National Maintenance Agreement platform which is evergreen in terms of expiration.

However, the agreement allows for termination by either party with a 90-day written notice.

Our contributions to the Boilermaker Plan constitute less than 5% of total contributions to the Boilermaker Plan.

The Company's contributions to the Boilermaker Plan constitute less than 5% of total contributions to the Boilermaker Plan.

All other contributions expense for all periods included in this report represents multiple amounts to various plans that, individually, are deemed to be insignificant.

1 unchanged sentence

8.125 % Senior Notes

On February 12, 2021, we completed a public offering of $ 125.0 million aggregate principal amount of our 8.125 % senior notes due 2026 (the “ 8.125 % Senior Notes”) for net proceeds of approximately $ 120.0 million.

In addition to the public offering, we issued $ 35.0 million of 8.125 % Senior Notes to B.

Riley Financial, Inc.

a related party, in exchange for a deemed prepayment of our existing Last Out Term Loan Tranche A-3 in a concurrent private offering.

On March 31, 2021, we entered into a sales agreement with B.

Riley Securities, Inc., a related party, in which we may sell to or through B.

During 2021, the Company completed sales of $ 151.2 million aggregate principal amount of its 8.125 % senior notes due 2026 (“ 8.125 % Senior Notes”) for net proceeds of approximately $ 146.6 million.

In addition to the completed sales, the Company issued $ 35.0 million of Senior Notes bearing a per annum interest rate of 8.125 % to B.

Riley Financial, Inc., a related party, in exchange for a deemed prepayment of its then existing Last Out Term Loan Tranche A-3.

The interest is payable quarterly, in arrears, on January 31, April 30, July 31 and October 31 of each year, commencing on April 30, 2021.

The 8.125 % Senior Notes mature on February 28, 2026.

On March 31, 2021, the Company entered into a sales agreement with B.

Riley Securities, Inc., a related party, in which it may sell to or through B.

Riley Securities, Inc., from time to time, additional 8.125 % Senior Notes up to an aggregate principal amount of $ 150.0 million.

The 8.125 % Senior Notes have the same terms as (other than date of issuance), form a single series of debt securities with and have the same CUSIP number and be fungible with, the 8.125 % Senior Notes issued February 12, 2021, as described above.

As of December 31, 2021, the Company has sold $ 26.2 million aggregate principal amount of 8.125 % Senior Notes under the sales agreement for $ 26.6 million of net proceeds.

The 8.125 % Senior Notes have the same terms as (other than date of issuance), form a single series of debt securities with, have the same CUSIP number and are fungible with the initial 8.125 % Senior Notes issuance in 2021.

During the year ended December 31, 2022, the Company sold $ 6.8 million aggregate principal of 8.125 % per annum Senior Notes under the sales agreement described above for $ 6.7 million of net proceeds.

The 8.125 % Senior Notes are senior unsecured obligations of the Company and rank equally in right of payment with all of the Company’s other existing and future senior unsecured and unsubordinated indebtedness.

The 8.125 % Senior Notes bear interest at the rate of 8.125 % per annum.

Interest on the 8.125 % Senior Notes is payable quarterly in arrears on January 31, April 30, July 31 and October 31 of each year, commencing on April 30, 2021.

The 8.125 % Senior Notes mature on February 28, 2026.

6.50 % Senior Notes .

On December 13, 2021, we completed a public offering of $ 140.0 million aggregate principal amount of our 6.50 % senior notes due 2026 (the “ 6.50 % Senior Notes”) and a subsequent exercise of $ 11.4 million aggregate principal of our 6.50 % senior notes due 2026 by the underwriters was completed on December 30, 2021.

At the completion of the offerings, we received net proceeds of approximately $ 145.8 million.

The public offering of our 6.50 % Senior Notes was conducted pursuant to an underwriting agreement dated December 8, 2021, between us and B.

During 2021, the Company completed sales of $ 151.4 million aggregate principal amount of its 6.50 % senior notes due in 2026 (the “ 6.50 % Senior Notes”) for net proceeds of approximately $ 145.8 million with an interest rate of 6.50 % per annum.

Interest on the 6.50 % Senior Notes is payable quarterly in arrears on March 31, June 30, September 30 and December 31 of each year and carry a maturity date of December 31, 2026.

The public offering of our 6.50 % Senior Notes was conducted pursuant to an underwriting agreement dated December 8, 2021, between the Company and B.

Riley Securities, Inc., an affiliate of B.

2 unchanged sentences

The 6.50 % Senior Notes are effectively subordinated in right of payment to all of the Company’s existing and future secured indebtedness and structurally subordinated to all existing and future indebtedness of the Company’s subsidiaries, including trade payables.

The 6.50 % Senior Notes bear interest at the rate of 6.50 % per annum.

Interest on the 6.50 % Senior Notes is payable quarterly in arrears on March 31, June 30, September 30 and December 31 of each year, commencing on March 31, 2022.

The 6.50 % Senior Notes will mature on December 31, 2026.

The components of the Company's senior notes at December 31, 2022 are as follows:

7 unchanged sentences

Effective with the new debt facilities the Company entered into on June 30, 2021, as described in Note 16 below, the Company has no remaining Last Out Term Loans and no further borrowings thereunder are available.

The Last Out Term Loan activity is described as follows:

Last Out Term Loan Tranche

(in thousands) A-3 A-4 A-6 Total

Balance at December 31, 2020

$ 113,330 $ 30,000 $ 40,000 $ 183,330

Payments in cash ( 40,408 ) ( 30,000 ) ( 5,000 ) ( 75,408 )

Exchange for Preferred Stock ( 72,922 ) — — ( 72,922 )

Exchange for 8.125 % Senior Notes

— — ( 35,000 ) ( 35,000 )

Balance at December 31, 2021

$ — $ — $ — $ —

NOTE 16 – REVOLVING DEBT

Debt Facilities

On June 30, 2021, we entered into a Revolving Credit Agreement (the “Revolving Credit Agreement”) with PNC Bank, National Association, as administrative agent (“PNC”) and a letter of credit agreement (the “Letter of Credit Agreement”) with PNC, pursuant to which PNC agreed to issue up to $ 110 million in letters of credit that is secured in part by cash collateral provided by an affiliate of MSD Partners, MSD PCOF Partners XLV, LLC (“MSD”), as well as a reimbursement, guaranty and security agreement with MSD, as administrative agent, and the cash collateral providers from time to time party thereto, along with certain of our subsidiaries as guarantors, pursuant to which we are obligated to reimburse MSD and any other cash collateral provider to the extent the cash collateral provided by MSD and any other cash collateral provider to secure the Letter of Credit Agreement is drawn to satisfy draws on letters of credit (the “Reimbursement Agreement” and collectively with the Revolving Credit Agreement and Letter of Credit Agreement, the “Debt Documents” and the facilities thereunder, the “Debt Facilities”).

On June 30, 2021, the Company entered into a Revolving Credit Agreement (the “Revolving Credit Agreement”) with PNC Bank, National Association ("PNC"), as administrative agent and a letter of credit agreement (the “Letter of Credit Agreement”) with PNC, pursuant to which PNC agreed to issue up to $ 110.0 million in letters of credit that is secured in part by cash collateral provided by an affiliate of MSD Partners, MSD PCOF Partners XLV, LLC (“MSD”), as well as a reimbursement, guaranty and security agreement with MSD, as administrative agent, and the cash collateral providers from time to time party thereto, along with certain of the Company's subsidiaries as guarantors, pursuant to which it is obligated to reimburse MSD and any other cash collateral provider to the extent the cash collateral provided by MSD and any other cash collateral provider to secure the Letter of Credit Agreement is drawn to satisfy draws on letters of credit (the “Reimbursement Agreement” and collectively with the Revolving Credit Agreement and Letter of Credit Agreement, the “Debt Documents” and the facilities thereunder, the “Debt Facilities”).

In December 2022, the Company deposited $ 10.0 million with PNC for Letter of Credit collateral to enable MSD to reduce their collateral requirement by $ 10.0 million.

The obligations of the Company under each of the Debt Facilities are guaranteed by certain existing and future domestic and foreign subsidiaries of the Company.

1 unchanged sentence

Riley”), a related party, has provided a guaranty of payment with regard to the Company’s obligations under the Reimbursement Agreement, as described below.

under our previous A&R Credit Agreement, dated as of May 14, 2020 (as amended, restated or otherwise modified from time to time), by and among the Company, as borrower, Bank of America, N.A., as administrative agent, the lenders and the other parties from time to time party thereto, which was repaid and commitments thereunder terminated as of June 30, 2021.

The Company expects to use the proceeds and letter of credit availability under the Debt Facilities for working capital purposes and general corporate purposes, including to backstop or replace certain letters of credit issued under our previous A&R Credit Agreement, dated as of May 14, 2020 (as amended, restated or otherwise modified from time to time), by and among the Company, as borrower, Bank of America, N.A., as administrative agent, the lenders and the other parties from time to time party thereto, which was repaid and commitments thereunder terminated as of June 30, 2021.

The Revolving Credit Agreement matures on June 30, 2025.

3 unchanged sentences

The interest rates applicable to the Reimbursement Agreement float at a rate per annum equal to either (i) a base rate plus 6.50 % or (ii) 1 or 3-month reserve-adjusted LIBOR plus 7.50 %.

Under the Letter of Credit Agreement, the Company is required to pay letter of credit fees on outstanding letters of credit equal to (i) administrative fees of 0.75 % and (ii) fronting fees of 0.25 %.

Under the Letter of Credit Agreement, the

Company is required to pay letter of credit fees on outstanding letters of credit equal to (i) administrative fees of 0.75 % and (ii) fronting fees of 0.25 %.

Under the Revolving Credit Agreement, the Company is required to pay letter of credit fees on outstanding letters of credit equal to (i) letter of credit commitment fees of 3.0 % and (ii) letter of credit fronting fees of 0.25 %.

Under each of the Revolving Credit Agreement and the Letter of Credit Agreement, we are required to pay a facility fee equal to 0.375 % per annum of the unused portion of the Revolving Credit Agreement or the Letter of Credit Agreement, respectively.

Under each of the Revolving Credit Agreement and the Letter of Credit Agreement, the Company is required to pay a facility fee equal to 0.375 % per annum of the unused portion of the Revolving Credit Agreement or the Letter of Credit Agreement, respectively.

The Company is permitted to prepay all or any portion of the loans under the Revolving Credit Agreement prior to maturity without premium or penalty.

21 unchanged sentences

Riley Guaranty is called upon by the agent or lenders under the Reimbursement Agreement.

As of December 31, 2021, a subsidiary has borrowed $ 1.5 million against a $ 2.5 million line of credit.

The interest rate on the line of credit is 5.5 % per annum and matures on January 30, 2022.

Subsequent to December 31, 2021, the subsidiary entered into a new $ 3.5 million line of credit with a maturity date of January 30, 2023.

A&R Credit Agreement

As described above, the A&R Credit Agreement commitments were terminated, all loans were repaid and all outstanding and undrawn letters of credit were collateralized on June 30, 2021.

The Company recognized a gain on debt extinguishment of $ 6.5 million in the year ended December 31, 2021, primarily representing the write-off of accrued revolver fees of $ 11.3 million offset by the unamortized deferred financing fees of $ 4.8 million related to the prior A&R Credit Agreement.

On November 7, 2022 the Company executed an amendment to its Debt Documents with MSD which modified certain financial maintenance covenants for future periods beginning with fiscal quarters ending on December 31, 2022.

The Fixed Charge Coverage Ratio was amended to 0.55 :1.0 for the fiscal quarter ending December 31, 2022, 0.65 to 1.00 for the fiscal quarter ending March 31, 2023, 0.80 to 1.00 for the fiscal quarter ending June 30, 2023, 1.15 to 1.00 for the fiscal quarter ending September 30, 2023 and 1.25 to 1.00 for the fiscal quarter ending December 31, 2023 and thereafter.

The Senior Net Leverage Ratio was amended to 2.00 to 1.00 for the fiscal quarter ending December 31, 2022, 1.75 to 1.00 for the fiscal quarter ending March 31, 2023, 1.60 to 1.00 for the fiscal quarter ending June 30, 2023, and 1.50 to 1.00 for the fiscal quarter ending September 30, 2023 and thereafter.

The amendment also establishes minimum cash flow covenants, as defined, for the fiscal quarter ending December 31, 2022 of $ 20.0 million and $ 25.0 million for the fiscal year 2023 and each fiscal year thereafter.

In addition, the Company also executed an amendment to its Debt Documents with PNC which modified the calculation of the Fixed Charge Coverage Ratio for the fiscal quarters ending December 31, 2022, March 31, 2023 and June 30, 2023.

The calculation of the Fixed Charge Coverage ratio for the fiscal quarter ending September 30, 2023 and thereafter will revert to the original calculation as stated in the original Debt Documents.

In addition, the interest rates applicable to the Reimbursement Agreement float at a rate per annum are equal to either (i) a base rate plus 9.0 % or (ii) 1 or 3-month reserve-adjusted SOFR plus 10.0 %.

Letters of Credit, Bank Guarantees and Surety Bonds

Certain of our subsidiaries primarily outside of the United States have credit arrangements with various commercial banks and other financial institutions for the issuance of letters of credit and bank guarantees in association with contracting activity.

The aggregate value of all such letters of credit and bank guarantees outside of our Letter of Credit Agreement as of December 31, 2021 was $ 52.8 million.

Certain of the Company's subsidiaries, primarily outside of the United States, have credit arrangements with various commercial banks and other financial institutions for the issuance of letters of credit and bank guarantees in association with contracting activity.

The aggregate value of all such letters of credit and bank guarantees outside of the Letter of Credit Agreement as of December 31, 2022 was $ 60.3 million.

The aggregate value of the outstanding letters of credit provided under the Letter of Credit Agreement backstopping letters of credit or bank guarantees was $ 37.8 million as of December 31, 2022.

Of the outstanding letters of credit issued under the Letter of Credit Agreement, $ 67.5 million are subject to foreign currency revaluation.

We have also posted surety bonds to support contractual obligations to customers relating to certain contracts.

We utilize bonding facilities to support such obligations, but the issuance of bonds under those facilities is typically at the surety's discretion.

These bonds generally indemnify customers should we fail to perform our obligations under the applicable contracts.

We, and certain of our subsidiaries, have jointly executed general agreements of indemnity in favor of surety underwriters relating to surety bonds those underwriters issue in support of some of our contracting activity.

The Company has also posted surety bonds to support contractual obligations to customers relating to certain contracts.

The Company utilizes bonding facilities to support such obligations, but the issuance of bonds under those facilities is typically at the surety's discretion.

These bonds generally indemnify customers should the Company fail to perform its obligations under the applicable contracts.

The Company, and certain of its subsidiaries, have jointly executed general agreements of indemnity in favor of surety underwriters relating to surety bonds those underwriters issue in support of some of its contracting activity.

As of December 31, 2022, bonds issued and outstanding under these arrangements in support of contracts totaled approximately $ 320.6 million.

The aggregate value of the letters of credit backstopping surety bonds was $ 14.1 million.

Our ability to obtain and maintain sufficient capacity under our new Debt Facilities is essential to allow us to support the issuance of letters of credit, bank guarantees and surety bonds.

Without sufficient capacity, our ability to support contract security requirements in the future will be diminished.

The Company's ability to obtain and maintain sufficient capacity under its new Debt Facilities is essential to enable it to support the issuance of letters of credit, bank guarantees and surety bonds.

Without sufficient capacity, the Company's ability to support contract security requirements in the future will be diminished.

Other Indebtedness - Loans Payable

As of December 31, 2021, our Denmark subsidiary has three unsecured interest free loans totaling $ 3.3 million under a local government loan program related to COVID-19.

The loans of $ 0.8 million, $ 1.6 million and $ 0.9 million are payable in April 2022, May 2022 and May 2023, respectively.

The loan payable in May 2023 is included in long term loans payables in our Consolidated Balance Sheets.

As of December 31, 2021, as a result of our recent acquisition of a 60 % controlling ownership stake in Fosler Construction Company Inc.

(“Fosler Construction”) as described in Note 26, Fosler Construction has two loans totaling $ 8.3 million.

Both loans have a variable interest rate with a minimum rate of 6 % and are due June 30, 2022.

Fosler Construction also has loans primarily for vehicles and equipment totaling $ 0.7 million at December 31, 2021.

The vehicle and equipment loans are included in long term loans payables in our Consolidated Balance Sheets.

As of December 31, 2022, the Company's Denmark subsidiary has an unsecured interest-free loan of $ 0.8 million under a local government loan program related to COVID-19 that is payable May 2023.

In addition, the Company had a $ 2.9 million loan payable related to financed insurance premiums payable April 2023 which is included in Current loans payable in the Company's Consolidated Balance Sheets.

B&W Solar has loans, primarily for vehicles and equipment, totaling $ 0.5 million at December 31, 2022.

In addition, as disclosed within Note 10, the Company had approximately $ 13.3 million in Long Term Loans Payable which is net of debt issuance costs of $ 0.6 million, of which $ 0.6 million is classified as current, in finance liabilities as of December 31, 2022 in connection with their Sale-Leaseback financing transactions.

These loans are included in Notes payable and Long-term loans payables in the Company's Consolidated Balance Sheets.

NOTE 17 – PREFERRED STOCK

In May 2021, we completed a public offering of our 7.75 % Series A Cumulative Perpetual Preferred Stock (the "Preferred Stock") pursuant to an underwriting agreement (the “Underwriting Agreement”) between us and B.

In May 2021, the Company completed a public offering of our 7.75 % Series A Cumulative Perpetual Preferred Stock (the "Preferred Stock") pursuant to an underwriting agreement (the “Underwriting Agreement”) between the Company and B.

Riley Securities, Inc..

At the closing, we issued to the public 4,444,700.00 shares of our Preferred Stock, at an offering price of $ 25.00 per share for net proceeds of approximately $ 106.4 million after deducting underwriting discounts, commissions but before expenses.

At the closing, the Company issued to the public 4,444,700 shares of its Preferred Stock, at an offering price of $ 25.00 per share for net proceeds of approximately $ 106.4 million after deducting underwriting discounts, commissions but before expenses.

The Preferred Stock has a par value of $ 0.01 per share and is perpetual and has no maturity date.

The Preferred Stock has a cumulative cash dividend, when and as if declared by our Board of Directors, at a rate of 7.75 % per year on the liquidation preference amount of $ 25.00 per share and payable quarterly in arrears.

The Preferred Stock ranks, as to dividend rights and rights as to the distribution of assets upon our liquidation, dissolution or winding-up:

(1) senior to all classes or series of our common stock and to all other capital stock issued by us expressly designated as ranking junior to the Preferred Stock;

(2) on parity with any future class or series of our capital stock expressly designated as ranking on parity with the Preferred Stock;

(3) junior to any future class or series of our capital stock expressly designated as ranking senior to the Preferred Stock;

and (4) junior to all our existing and future indebtedness.

The Preferred Stock has no stated maturity and is not subject to mandatory redemption or any sinking fund.

We will pay cumulative cash dividends on the Preferred Stock when, as and if declared by our Board of Directors, only out of funds legally available for payment of dividends.

Dividends on the Preferred Stock will accrue on the stated amount of $ 25.00 per share of the Preferred Stock at a rate per annum equal to 7.75 % (equivalent to $ 1.9375 per year), payable quarterly in arrears.

Dividends on the Preferred Stock declared by our Board of Directors will be payable quarterly in arrears on March 31, June 30, September 30 and December 31 of each year.

During 2021, the Company's Board of Directors approved dividends totaling $ 9.1 million..

There are no cumulative undeclared dividends of the Preferred Stock at December 31, 2021.

The Preferred Stock has a cumulative cash dividend, when and as if declared by the Company's Board of Directors, at a rate of 7.75 % per year on the liquidation preference amount of $ 25.00 per share and payable quarterly in arrears.

On June 1, 2021, the Company and B.

Riley, a related party, entered into an agreement (the “Exchange Agreement”) pursuant to which we (i) issued B.

Riley 2,916,880 shares of our Preferred Stock, representing an exchange price of $ 25.00 per share and paid $ 0.4 million in cash, and (ii) paid $ 0.9 million in cash to B.

Riley, a related party, entered into an agreement (the “Exchange Agreement”) pursuant to which the Company (i) issued B.

Riley 2,916,880 shares of its Preferred Stock, representing an exchange price of $ 25.00 per share and paid $ 0.4 million in cash, and (ii) paid $ 0.9 million in cash to B.

Riley for accrued interest due, in exchange for a deemed prepayment of $ 73.3 million of our then existing term loans with B.

Riley under the Company’s prior A&R Credit Agreement.

On July 7, 2021, we entered into a sales agreement with B.

On July 7, 2021, the Company entered into a sales agreement with B.

Riley Securities, Inc., a related party, in connection with the offer and to or through B.

2 unchanged sentences

As of December 31, 2022, the Company sold $ 7.7 million aggregate principal amount of Preferred Stock for $ 7.7 million net proceeds.

The Preferred Stock ranks, as to dividend rights and rights as to the distribution of assets upon the Company's liquidation, dissolution or winding-up:

(1) senior to all classes or series of the Company's common stock and to all other capital stock issued by the Company expressly designated as ranking junior to the Preferred Stock;

(2) on parity with any future class or series of the Company's capital stock expressly designated as ranking on parity with the Preferred Stock;

(3) junior to any future class or series of the Company's capital stock expressly designated as ranking senior to the Preferred Stock;

and (4) junior to all of the Company's existing and future indebtedness.

The Preferred Stock has no stated maturity and is not subject to mandatory redemption or any sinking fund.

The Company will pay cumulative cash dividends on the Preferred Stock when, as and if declared by its Board of Directors, only out of funds legally available for payment of dividends.

Dividends on the Preferred Stock declared by the Company's Board of Directors will be payable quarterly in arrears on March 31, June 30, September 30 and December 31 of each year.

During 2022 and 2021, the Company's Board of Directors approved and paid dividends totaling $ 14.9 million and $ 9.1 million, respectively.

There are no cumulative undeclared dividends of the Preferred Stock at December 31, 2022 and 2021.

NOTE 18 – COMMON STOCK

On February 12, 2021, we completed a public offering of our common stock pursuant to an underwriting agreement dated February 9, 2021, between us and B.

On February 12, 2021, the Company completed a public offering of its common stock pursuant to an underwriting agreement dated February 9, 2021, between the Company and B.

Riley Securities, Inc., as representative of the several underwriters.

At the closing, we issued to the public 29,487,180 shares of our common stock and received net proceeds of approximately $ 163.0 million after deducting underwriting discounts and commissions, but before expenses.

The net proceeds of the offering were used to make a prepayment toward the balance outstanding under our U.S.

Revolving Credit Facility and permanently reduce the commitments under our senior secured credit facilities.

On May 20, 2021, at the 2021 annual meeting of stockholders of the Company, the stockholders of the Company, upon the recommendation of the Company’s Board of Directors, approved the Babcock & Wilcox Enterprises, Inc.

At the closing, the Company issued to the public 29,487,180 shares of our common stock and received net proceeds of approximately $ 163.0 million after deducting underwriting discounts and commissions, but before expenses.

The net proceeds of the offering were used to make a prepayment toward the balance outstanding under the Company's U.S.

Revolving Credit Facility and to permanently reduce the commitments under our senior secured credit facilities.

On May 19, 2022, at the 2022 annual meeting of stockholders of the Company, the stockholders of the Company, upon the recommendation of the Company’s Board of Directors, approved an amendment to the Babcock & Wilcox Enterprises, Inc.

2021 Long-Term Incentive Plan.

The 2021 Plan became effective upon such stockholder approval.

The maximum number of shares of the Company’s common stock that may be issued or transferred pursuant to awards under the 2021 Plan equals:

(1) 1,250,000 shares, plus (2) the number of any shares subject to awards granted under the Company’s Amended and Restated 2015 Long-Term Incentive Plan (the “2015 Plan”) and outstanding as of May 20, 2021 which expire, or are terminated, surrendered, or forfeited for any reason without issuance of such shares (including for outstanding performance share awards to the extent they are earned at less than maximum).

No new awards may be granted under the 2015 Plan.

As of May 20, 2021 (immediately prior to the stockholder approval of the 2021 Plan), the total number of shares of our common stock subject to outstanding awards granted under the 2015 Plan was 2,007,152 shares.

The Plan Amendment became effective upon such stockholder approval.

The Plan Amendment increased the total number of shares of the Company’s common stock authorized for award grants under the 2021 Plan from 1,250,000 shares to 5,250,000 shares.

The 2021 Plan replaced the Company’s Amended and Restated 2015 Long-Term Incentive Plan.

In addition to the 5,250,000 shares available for award grant purposes under the 2021 Plan as described above, any shares of Company common stock underlying any outstanding award granted under the 2015 Plan that, following May 20, 2021, expires, or is terminated, surrendered, or forfeited for any reason without issuance of such shares shall also be available for the grant of new awards under the 2021 Plan.

NOTE 19 – INTEREST EXPENSE AND SUPPLEMENTAL CASH FLOW INFORMATION

Interest expense in our Consolidated Financial Statements consisted of the following components:

Interest expense in the Company's Consolidated Financial Statements consisted of the following components:

Year ended December 31,

4 unchanged sentences

Last Out Term Loans - equitized interest — — 13,450

Last Out Term Loans - paid-in-kind interest — — 5,964

Revolving Credit Facility — 1,416 13,988

5 unchanged sentences

Revolving Credit Facility - deferred financing fees and commitment fees — 5,995 14,811

Revolving Credit Facility - contingent consent fee for Amendment 16 — — 13,879

Revolving Credit Facility - deferred ticking fee for Amendment 16 — — 1,660

5 unchanged sentences

Total interest expense $ 44,983 $ 39,393 $ 59,796

The following table provides a reconciliation of cash and cash equivalents and restricted cash reporting within the Consolidated Balance Sheets and in the Consolidated Statements of Cash Flows:

The following table provides a reconciliation of cash and cash equivalents and current and long-term restricted cash reporting within the Company's Consolidated Balance Sheets and in the Consolidated Statements of Cash Flows:

(in thousands) December 31, 2022 December 31, 2021 December 31, 2020

4 unchanged sentences

Restricted foreign accounts — — 2,869

Project indemnity collateral (1)

Bank guarantee collateral 2,072 997 2,665

Letters of credit collateral (2)

Hold-back for acquisition purchase price (3)

Escrow for long-term project (4)

Restricted cash and cash equivalents 36,732 1,841 10,085

Total cash, cash equivalents and restricted cash shown in the Consolidated Statements of Cash Flows $ 113,460 $ 226,715 $ 67,423

The following cash activity is presented as a supplement to our Consolidated Statements of Cash Flows and is included in Net cash used in activities :

(1) The Company paid an additional $ 5.7 million in January , 2022 for project indemnity collateral which is reflected in Current restricted cash on the Company's Consolidated Balance Sheets.

The remainder of the letters of credit are reflected within Restricted cash and cash equivalents.

(2) The Company paid an additional $ 10.0 million in December, 2022 for letter of credit collateral which is reflected in Long-term restricted cash on the Company's Consolidated Balance Sheets.

The remainder of the letters of credit are reflected within Restricted cash and cash equivalents.

(3) The purchase price for Fossil Power Systems ("FPS") was $ 59.2 million, including a hold-back of $ 5.9 million which is included in Current restricted cash and cash equivalents and Other accrued liabilities on the Company's Condensed Consolidated Balance Shee ts.

The hold-back is being held in escrow for potential payment of up to the maximum amount twelve months from the February 1, 2022 date of acquisition if the conditions are met.

(4) On December 15, 2021, the Company entered into an agreement to place $ 11.4 million in an escrow account as security to ensure project performance.

On April 30, 2023, $ 2.5 million of the total amount held in escrow will be reclassified from Long-Term restricted cash to Current restricted cash in anticipation of the initial payment on April 20, 2024.

The remaining amount of $ 8.9 million will be reclassified from Long-term restricted cash to Current restricted cash on September 30, 2024, with a scheduled final settlement on September 30, 2025.

The following cash activity is presented as a supplement to the Company's Consolidated Statements of Cash Flows and is included in Net cash used in activities:

Year ended December 31,

2 unchanged sentences

Interest payments - 8.125 % Senior Notes due 2026

15,365 10,451 —

Interest payments - 6.50 % Senior Notes due 2026

Interest payments on our U.S.

18 unchanged sentences

The aggregate intrinsic value included in the table above represents the total pretax intrinsic value that would have been received by the option holders had all option holders exercised their options on December 31, 2022 .

The intrinsic value is calculated as the total number of option shares multiplied by the difference between the closing price of our common stock on the last trading day of the period and the exercise price of the options.

This amount changes based on the price of our common stock.

The intrinsic value is calculated as the total number of option shares multiplied by the difference between the closing price of the Company's common stock on the last trading day of the period and the exercise price of the options.

This amount changes based on the price of the Company's common stock.

Restricted stock units

7 unchanged sentences

As of December 31, 2022 , total compensation expense not yet recognized related to non-vested restricted stock units was $ 10.3 million and the weighted-average period in which the expense is expected to be recognized is 2.75 years.

Performance-based restricted stock units

Performance-based restricted stock units activity for the year ended December 31, 2021 was as follows:

Restricted stock units with Market Conditions

In July 2022, the Company granted market-based RSUs to certain members of management.

The target number of market-based RSUs granted was 960 .

The RSUs will vest if the Company's closing stock price, on the New York Stock Exchange (NYSE), is equal to or higher than the Stock Price Goal of $ 12.00 per share during the performance period, which expires on the 5th anniversary of the Grant Date.

The $ 6.70 grant date fair value per market-based RSU was determined using a Monte Carlo simulation approach.

Compensation expense for awards with market conditions is recognized over the derived service period using cost of equity as the drift rate in the simulation for estimating the dividend service period and is not reversed if the market condition is not met.

The Company used the following assumptions to determine the fair value of the restricted stock units with market conditions as of December 31, 2022:

Year ended December 31,

Risk free interest rate 2.7 %

Volatility 59.0 %

Cost of equity 17.4 %

Performance period 5 years

Derived service period 0.78 years

Restricted stock units with market conditions activity for the year ended December 31, 2022 was as follows:

(share data in thousands) Number of shares Weighted-average grant date fair value

Non-vested at beginning of period — $ —

Granted 960 6.70

Exercised ( 75 )

Non-vested at end of period — $ —

Performance-based, cash settled units

Cash-settled performance units activity for the year ended December 31, 2021 was as follows:

(share data in thousands) Number of shares Weighted-average grant date fair value

Non-vested at beginning of period 2 $ 140.30

Cancelled/forfeited ( 25 ) —

Non-vested at end of period 860 $ 6.70

As of December 31, 2022, the total unrecognized compensation charge related to these RSU’s is approximately $ 2.5 million, which is expected to be recognized in fiscal 2023.

Stock Appreciation Rights

In December 2018, we granted stock appreciation rights to certain employees (“Employee SARs”) and to a non-employee related party, BRPI Executive Consulting, LLC (“Non-employee SARs”).

The Employee SARs and Non-employee SARs both expire ten years after the grant date and primarily vest 100 % upon completion after the required years of service.

In December 2018, the Company granted stock appreciation rights to certain employees (“Employee SARs”) and to a non-employee related party, BRPI Executive Consulting, LLC (“Non-employee SARs”).

The Employee SARs and Non-employee

SARs both expire ten years after the grant date and primarily vest 100 % upon completion after the required years of service.

Upon vesting, the Employee SARs and Non-employee SARs may be exercised within 10 business days following the end of any calendar quarter during which the volume weighted average share price is greater than the share price goal.

2 unchanged sentences

The liability method was used to recognize the accrued compensation expense with cumulatively adjusted revaluations to the then current fair value at each reporting date through final settlement.

We used the following assumptions to determine the fair value of the SARs granted to employees and non-employee as of December 31, 2021 and 2020:

The Company used the following assumptions to determine the fair value of the SARs granted to employees and non-employee as of December 31, 2022 and 2021:

Year ended December 31,

3 unchanged sentences

Suboptimal exercise factor 2.0 x

In making these assumptions, we based estimated volatility on the historical returns of the Company's stock price and selected guideline companies.

We based risk-free rates on the corresponding U.S.

In making these assumptions, the Company based estimated volatility on the historical returns of the Company's stock price and selected guideline companies.

The Company based risk-free rates on the corresponding U.S.

Treasury spot rates for the expected duration at the date of grant, which we convert to a continuously compounded rate.

We relied upon a suboptimal exercise factor, representing the ratio of the base price to the stock price at the time of exercise, to account for potential early exercise prior to the expiration of the contractual term.

The Company relied upon a suboptimal exercise factor, representing the ratio of the base price to the stock price at the time of exercise, to account for potential early exercise prior to the expiration of the contractual term.

With consideration to the executive level of the SARs holders, a suboptimal exercise multiple of 2.0 x was selected.

Subject to vesting conditions, should the stock price achieve a value of 2.0 x above the base price, we assume the holders will exercise prior to the expiration of the contractual term of the SARs.

The expected term for the SARs is an output of our valuation model in estimating the time period that the SARs are expected to remain unexercised.

Our valuation model assumes the holders will exercise their SARs prior to the expiration of the contractual term of the SARs.

The expected term for the SARs is an output of the Company's valuation model in estimating the time period that the SARs are expected to remain unexercised.

The Company's valuation model assumes the holders will exercise their SARs prior to the expiration of the contractual term of the SARs.

As of December 31, 2022 , the SARS are fully vested and their total intrinsic value is $ 4.8 million.

5 unchanged sentences

Other than the United States ( 8,958 ) ( 1,341 ) 61,673

Income (loss) before income tax expense $ 29,314 $ ( 3,918 ) $ ( 124,447 )

(Loss) income before income tax expense $ ( 15,521 ) $ 29,314 $ ( 3,918 )

Significant components of the provision for income taxes are as follows:

6 unchanged sentences

164 ( 103 ) 1,084

State (3) (4)

5,629 ( 8,772 ) —

6 unchanged sentences

(3) The 2021 amount reflects a $ 8.7 million of deferred tax benefit primarily attributable to a reduction in the valuation allowance on net operating losses and temporary deductible benefits in certain states that are now expected to be recovered.

The provision for income taxes differs from the amount computed by applying the statutory federal income tax rate to income (loss) before the provision for income taxes.

(4) The 2022 amount is primarily attributable to deferred tax expense associated with nontaxable mark-to-market pension gains in certain states where temporary deductible benefits are expected to be recovered, changes in enacted statutory income tax rates, and changes in apportionment relating to project mix.

The provision for income taxes differs from the amount computed by applying the statutory federal income tax rate to income (loss) before the provision (benefit) for income taxes.

The sources and tax effects of the differences are as follows:

12 unchanged sentences

— ( 1,090 ) —

Accrual adjustments — 405 ( 995 )

Expired credits 1,691 — —

Unrecognized tax benefits 10 150 37,387

4 unchanged sentences

Other ( 58 ) ( 202 ) 704

Income tax (benefit) expense

Babcock & Wilcox Solar goodwill impairment 1,517 — —

Income tax expense (benefit)

$ 11,063 $ ( 2,224 ) $ 8,179

14 unchanged sentences

Lease liability 14,596 15,455

Capitalized R&D

Other 7,401 4,810

10 unchanged sentences

Net deferred tax liabilities $ ( 10,054 ) $ ( 1,399 )

At December 31, 2021, the Company has foreign net operating loss (NOL) carryforward DTAs of approximately $ 357.8 million available to offset future taxable income in certain foreign jurisdictions.

At December 31, 2022, the Company has foreign net operating loss ("NOL") carryforward deferred tax assets ("DTAs") of approximately $ 356.8 million available to offset future taxable income in certain foreign jurisdictions.

Of these foreign NOL carryforwards, $ 184.5 million do not expire.

12 unchanged sentences

These carryforwards will expire between 2023 and 2026.

At December 31, 2021, the Company has valuation allowances of $ 512.8 million for deferred tax assets, which we expect will not be realized, through carrybacks, reversals of existing taxable temporary differences, estimates of future taxable income or tax-planning strategies.

At December 31, 2022, the Company has valuation allowances of $ 521.1 million for deferred tax assets, which we expect will not be realized, through carry-backs, reversals of existing taxable temporary differences, estimates of future taxable income or tax-planning strategies.

Deferred tax assets are evaluated for realizability under ASC 740, considering all positive and negative evidence.

At December 31, 2021, our weighting of positive and negative evidence included an assessment of historical income by jurisdiction adjusted for nonrecurring items, as well as an evaluation of other qualitative factors such as the length and magnitude of pretax losses.

At December 31, 2022, our weighting of positive and negative evidence included an assessment of

historical income by jurisdiction adjusted for nonrecurring items, as well as an evaluation of other qualitative factors such as the length and magnitude of pretax losses.

The valuation allowances may be reversed in the future if sufficient positive evidence exists.

36 unchanged sentences

It is not expected that the amount of unrecognized tax benefits will change significantly during the next 12 months.

We recognize interest and penalties related to unrecognized tax benefits in our provision for income taxes;

interest and penalties related to unrecognized tax benefits in our provision for income taxes;

however, such amounts are not significant to any period presented.

1 unchanged sentence

We do not have any returns under examination for years prior to 2014.

The United States

Internal Revenue Service has completed examinations of the federal tax returns of our former parent, BWXT, through 2014, and all matters arising from such examinations have been resolved.

The Inflation Reduction Act ("IRA") and CHIPS and Science Act ("CHIPS Act") were signed into law in August 2022.

The IRA introduced new provisions, including a 15 percent corporate alternative minimum tax for certain large corporations that have at least an average of $1 billion adjusted financial statement income over a consecutive three-tax-year period and a new excise tax on corporate stock buybacks of public US companies.

The CHIPS Act, introduces investment tax credits and incentives in semiconductor manufacturing.

The corporate minimum tax and excise tax on stock buybacks will be effective for years beginning after December 31, 202 2.

There is no impact to our financial position at this time.

NOTE 22 – CONTINGENCIES

4 unchanged sentences

The complaint alleges damages in excess of $ 58.9 million.

On March 16, 2020 we filed a motion to dismiss, and on December 14, 2020 the court issued its order dismissing the fraud and negligent misrepresentation claims and finding that, in the event that parties’ contract is found to be valid, Plaintiffs’ claims for damages will be subject to the contractual cap on liability (defined as the $ 11.7 million purchase price subject to certain adjustments).

On January 11, 2021, we filed our answer and a counterclaim for breach of contract, seeking damages in excess of $ 2.9 million.

We intend to continue to vigorously litigate the action.

However, given the preliminary stage of the litigation, it is too early to determine if the outcome of the Glatfelter Litigation will have a material adverse impact on our consolidated financial condition, results of operations or cash flows.

SEC Investigation

As the Company previously disclosed, the U.S.

SEC ('SEC") had been conducting a formal investigation of the Company, focusing on the accounting charges and related matters involving the Company's B&W Renewable segment from 2015-2019.

On October 20,2021, the SEC informed the Company that the staff does not intend to recommend any enforcement action against the Company.

On March 16, 2020 the Company filed a motion to dismiss, and on December 14, 2020 the court issued its order dismissing the fraud and negligent misrepresentation claims and finding that, in the event that parties’ contract is found to be valid, Plaintiffs’ claims for damages will be subject to the contractual cap on liability (defined as the $ 11.7 million purchase price subject to certain adjustments).

On January 11, 2021, the Company filed its answer and a counterclaim for breach of contract, seeking damages in excess of $ 2.9 million.

The Company intends to continue to vigorously litigate the action.

However, given the stage of the litigation, it is too early to determine if the outcome of the Glatfelter Litigation will have a material adverse impact on The Company's consolidated financial condition, results of operations or cash flows.

Stockholder Derivative and Class Action Litigation

On April 14, 2020, a putative B&W stockholder (“Plaintiff”) filed a derivative and class action complaint against certain of the Company’s directors (current and former), executives and significant stockholders (“Defendants”) and the Company (as a nominal defendant).

The action was filed in the Delaware Court of Chancery and is captioned Parker v.

On April 14, 2020, a putative B&W stockholder (the “Plaintiff”) filed a derivative and class action complaint against certain of the Company’s directors (current and former), executives and significant stockholders (collectively, “the Defendants”) and the Company (as a nominal defendant).

The action was filed in the Delaware Court of Chancery (“the Court”) and is captioned Parker v.

Avril, et al., C.A.

2020-0280-PAF ("Stockholder Litigation").

2020-0280-PAF (the “Stockholder Litigation”).

Plaintiff alleges that Defendants, among other things, did not properly discharge their fiduciary duties in connection with the 2019 rights offering and related transactions.

The case is currently in discovery.

We believe that the outcome of the Stockholder Litigation will not have a material adverse impact on our consolidated financial condition, results of operations or cash flows, net of any insurance coverage.

On June 10, 2022, after pursuing private mediation, the parties to the Stockholder Litigation reached a settlement agreement in principle to resolve the Stockholder Litigation.

That settlement agreement includes (i) certain corporate governance changes that the Company is willing to implement in the future, (ii) a total payment of $ 9.5 million, and (iii) other customary terms and conditions.

All attorney’s fees, administration costs, and expenses associated with the settlement of this matter will be deducted from the total payment amount, other than the cost of notice, which will be borne by the Company.

Of the total settlement amount, the Company will pay $ 4.75 million on behalf of B.

Riley Financial, Inc.

and Vintage Capital Management, LLC pursuant to existing contractual indemnification obligations to settle Plaintiff’s direct claims asserted against these entities.

This $ 4.75 million, after the deduction of attorney’s fees and the customary settlement costs and expenses described above, will be paid to shareholders of the Company, excluding any Defendant in the Stockholder Litigation.

The remaining $ 4.75 million of the total settlement amount, after the deduction of attorney’s fees and the customary settlement costs and expenses described above, will be paid to the Company from insurance proceeds and the contribution of certain other parties to the Stockholder Litigation to settle the derivative claims asserted by Plaintiff on behalf of the Company.

The proposed settlement would resolve all claims that have been, could have been, could now be, or in the future could, can, or might be asserted in the Stockholder Litigation.

The settlement of this matter remains subject to court approval and the amount to be paid by the Company is fully accrued and reflected in Other accrued liabilities on the Company's Consolidated Balance Sheets at December 31, 2022.

The Court has scheduled a hearing on July 10, 2023 to consider final approval of the settlement.

Russian Invasion of Ukraine

We do not currently have contracts directly with Russian entities or businesses and we currently do not do business in Russia directly.

We believe the Company’s only involvement with Russia or Russian-entities, involves sales of our products in the amount of approximately $ 3.1 million by a wholly-owned Italian subsidiary of the Company to non-Russian counterparties who may resell our products to Russian entities or perform services in Russia using our products.

The economic sanctions and export-control measures and the ongoing invasion of Ukraine could impact our subsidiary’s rights and responsibilities under the contracts and could result in potential losses to the Company.

Due to the nature of our business, we are, from time to time, involved in routine litigation or subject to disputes or claims related to our business activities, including, among other things:

performance or warranty-related matters under our customer and supplier contracts and other business arrangements;

The Company does not currently have contracts directly with Russian entities or businesses and it currently does not conduct business in Russia directly.

It is believed that the Company’s only involvement with Russia or Russian entities, involves sales of its products with a trade receivable in the amount of approximately $ 3.1 million by a wholly-owned Italian subsidiary of the Company to non-Russian counterparties who may resell the Company's products to Russian entities or perform services in Russia using its products.

The Company has implemented a restricted party screening process completed by a third party to monitor compliance with trade restrictions.

The economic sanctions and export-control measures and the ongoing invasion of Ukraine could impact the Company's subsidiary’s rights and responsibilities under the contracts and could result in potential losses to the Company.

Due to the nature of B&W's business, the Company is, from time to time, involved in routine litigation or subject to disputes or claims related to its business activities, including, among other things:

performance or warranty-related matters under the Company's customer and supplier contracts and other business arrangements;

and workers' compensation, premises liability and other claims.

Based on our prior experience, we do not expect that any of these other litigation proceedings, disputes and claims will have a material adverse effect on our consolidated financial condition, results of operations or cash flows.

Based on prior experience, the Company does not expect that any of these other litigation proceedings, disputes and claims will have a material adverse effect on its consolidated financial condition, results of operations or cash flows.

NOTE 23 – COMPREHENSIVE INCOME

2 unchanged sentences

(in thousands) Currency translation

loss Net unrealized gain (loss) on derivative instruments Net unrecognized loss

loss Net unrecognized loss

related to benefit plans

3 unchanged sentences

Reclassified from AOCI to net income (loss) — ( 998 ) ( 998 )

Amounts reclassified from AOCI to advanced billings on contracts — ( 197 ) — ( 197 )

Net other comprehensive (loss) income ( 53,318 ) ( 998 ) ( 54,316 )

12 unchanged sentences

Release of currency translation adjustment with the sale of business Loss on sale of business $ — $ 4,512 $ —

Derivative financial instruments Other – net

Pension and post retirement adjustments, net of tax Benefit plans, net ( 870 ) ( 816 ) 998

12 unchanged sentences

Mutual funds 714 — 714

Corporate Stocks 4,168 4,168 —

United States Government and agency securities 2,017 2,017 —

12 unchanged sentences

We used the following methods and assumptions in estimating our fair value disclosures for our other financial instruments:

• Cash and cash equivalents and restricted cash and cash equivalents .

The carrying amounts that we have reported in the accompanying Consolidated Balance Sheets for cash and cash equivalents and restricted cash and cash equivalents approximate their fair values due to their highly liquid nature.

• Last Out Term Loans and Revolving Debt .

We base the fair values of debt instruments on quoted market prices.

Where quoted prices are not available, we base the fair values on Level 2 inputs such as the present value of future cash flows discounted at estimated borrowing rates for similar debt instruments or on estimated prices based on current yields for debt issues of similar quality and terms.

The fair value of our Last Out Term Loans and Revolving Debt approximated their carrying value at December 31, 2020.

• Cash and cash equivalents and current and long-term restricted cash and cash equivalents .

The carrying amounts that we have reported in the accompanying Consolidated Balance Sheets for cash and cash equivalents and current and long-term restricted cash and cash equivalents approximate their fair values due to their highly liquid nature.

• Revolving Debt .

The Company bases the fair values of debt instruments on quoted market prices.

Where quoted prices are not available, the Company bases the fair values on Level 2 inputs such as the present value of future cash flows discounted at estimated borrowing rates for similar debt instruments or on estimated prices based on current yields for debt issues of similar quality and terms.

The fair value of the Company's Revolving Debt approximated its carrying value at December 31, 2022.

The fair value of the warrants was established using the Black-Scholes option pricing model value approach.

• Contingent consideration:

In connection with the Fosler Construction Company acquisition, the Company agreed to pay contingent consideration based on the achievement of targeted revenue thresholds for the year ended December 31, 2022.

In connection with the Babcock & Wilcox Solar, the Company agreed to pay contingent consideration based on the achievement of targeted revenue thresholds for the year ended December 31, 2022.

The range of undiscounted amounts the Company could be required to pay under the contingent consideration arrangement is between $ 0.0 million and $ 10.0 million.

As of December 31, 2021, the fair value of the contingent earn-out liability is $ 9.2 millions and is classified as a component of other non-current liabilities in the Company's Consolidated Balance Sheets.

The fair value measurement of the contingent consideration related to the Fosler Construction Company acquisition was categorized as a Level 3 liability, as the measurement amount is based primarily on significant inputs not observable in the markets.

The Company used the Monte Carlo simulation method to calculate the value of the contingent consideration and it was determined that the value of the liability should be zero as of December 31, 2022.

As such, the Company removed $ 9.6 million from Other current liabilities in the Company's Consolidated Balance Sheets and recorded a reduction of Selling, General and Administrative expense of $ 9.6 million on the Company's Consolidated Statements of Operations.

The fair value measurement of the contingent consideration related to the Babcock & Wilcox Solar acquisition was categorized as a Level 3 liability, as the measurement amount is based primarily on significant inputs not observable in the markets.

The Company evaluates the fair value of contingent consideration and the corresponding liability each reporting period using an option pricing framework.

2 unchanged sentences

NOTE 25 – RELATED PARTY TRANSACTIONS

The Company believes it transactions with related parties were conducted on terms equivalent to those prevailing in an arm's length transaction.

The Company believes its transactions with related parties were conducted on terms equivalent to those prevailing in an arm's length transaction.

Transactions with B.

1 unchanged sentence

Riley beneficially owns 30.8 % of our outstanding common stock as of December 31, 2022.

Riley was party to the Last Out Term Loans under our prior A&R Credit Agreement, as described in Note 15.

We entered into an agreement with BRPI Executive Consulting, LLC, an affiliate of B.

Riley, on November 19, 2018 and amended the agreement on November 9, 2020 to retain the services of Mr.

Kenny Young, to serve as our Chief Executive Officer until December 31, 2023, unless terminated by either party with thirty days written notice.

Riley currently has the right to nominate one member of the Company’s board of directors pursuant to the investor rights agreement the Company entered into with B.

Riley on April 30, 2019.

The investor rights agreement also provides pre-emptive rights to B.

Riley with respect to certain future issuances of the Company’s equity securities.

The services of the Company’s Chief Executive Officer are provided by B.

Riley pursuant to a consulting agreement with BRPI Executive Consulting, LLC, an affiliate of B.

Riley, which was entered on November 19, 2018 and amended on November 9, 2020.

The agreement provides for Mr.

Kenny Young to serve as the Company’s Chief Executive Officer until December 31, 2023, unless terminated by either party with thirty days written notice.

Under this agreement, payments are $ 0.75 million per annum, paid monthly.

Subject to the achievement of certain performance objectives as determined by the Compensation Committee of the Board, a bonus or bonuses may also be earned and payable to BRPI Executive Consulting, LLC.

In June 2019, we granted a total of $ 2.0 million in cash bonuses to BRPI Executive Consulting LLC for Mr.

Young's performance and services.

Riley was a party to the Last Out Term Loans under our prior A&R Credit Agreement, as described in Note 15.

Total fees associated with B.

Riley related to the Last Out Term Loans and services of Mr.

Kenny Young, both as de scribed above, were $ 0.8 million, $ 7.4 million and $ 12.4 million for the twelve months ended December 31, 2021, 2020 and 2019, respectively .

On November 13, 2020 we entered into an agreement with B.

Kenny Young, both as described above, were $ 2.0 million, $ 0.8 million and $ 7.4 million for the twelve months ended December 31, 2022, 2021 and 2020, respectively.

On November 13, 2020 the Company entered into an agreement with B.

Riley Principal Merger Corp.

2 unchanged sentences

The shares were sold in January 2021 for which the Company recognized net proceeds of $ 4.5 million.

The public offering of our 8.125 % Senior Notes in February 2021, as described in Note 14, was conducted pursuant to an underwriting agreement dated February 10, 2021, between us and B.

The public offering of the Company's 8.125 % Senior Notes in February 2021, as described in Note 14, was conducted pursuant to an underwriting agreement dated February 10, 2021, between the Company and B.

Riley Securities, Inc., an affiliate of B.

Riley, as representative of several underwriters.

At the closing date on February 12, 2021, we paid B.

At the closing date on February 12, 2021, the Company paid B.

Riley Securities, Inc.

$ 5.2 million for underwriting fees and other transaction cost related to the 8.125 % Senior Notes offering.

The public offering of our common stock, as described in Note 18, was conducted pursuant to an underwriting agreement dated February 9, 2021, between us and B.

The public offering of our common stock, as described in Note 18, was conducted pursuant to an underwriting agreement dated February 9, 2021, between the Company and B.

Riley Securities, Inc., as representative of the several underwriters.

Also on February 12, 2021, we paid B.

Also on February 12, 2021, the Company paid B.

Riley Securities, Inc.

4 unchanged sentences

Riley Financial in the Exchange , as described in Note 14 .

On March 31, 2021, we entered into a sales agreement with B.

Riley Securities, Inc., a related party, in which we may sell, from time to time, up to an aggregated principal amount of $ 150.0 million of 8.125 % Senior N otes due 2026 to or through B.

On March 31, 2021, the Company entered into a sales agreement with B.

Riley Securities, Inc., a related party, in which it may sell, from time to time, up to an aggregated principal amount of $ 150.0 million of 8.125 % Senior N otes due 2026 to or through B.

Riley Securities, Inc., as described in Note 14 .

2 unchanged sentences

$ 0.5 million for underwriting fees and other transaction costs related to the offering.

The public offering of our 7.75 % Series A Cumulative Perpetual Preferred Stock, as described in Note 17, was conducted pursuant to an underwriting agreement dated May 4, 2021, between us and B.

The public offering of our 7.75 % Series A Cumulative Perpetual Preferred Stock, as described in Note 17, was conducted pursuant to an underwriting agreement dated May 4, 2021, between the Company and B.

Riley Securities, Inc., as representative of several underwriters.

At the closing date on May 2021, we paid B.

At the closing date on May 2021, the Company paid B.

Riley Securities, Inc.

$ 4.3 million for underwriting fees and other transaction cost related to the Preferred Stock offering.

On May 26, 2021, we completed the additional sale of 444,700 shares of our Preferred Stock, related to the grant to the underwriters, as described i n Note 17, and paid B.

On May 26, 2021, the Company completed the additional sale of 444,700 shares of our Preferred Stock, related to the grant to the underwriters, as described i n Note 17, and paid B.

Riley Securities, Inc.

$ 0.4 million for underwriting fees in conjunction with the transaction.

On June 1, 2021, we issued 2,916,880 shares of the Company’s 7.75 % Series A Cumulative Perpetual Preferred Stock and paid $ 0.4 million in cash due to B.

On June 1, 2021, the Company issued 2,916,880 shares of the Company’s 7.75 % Series A Cumulative Perpetual Preferred Stock and paid $ 0.4 million in cash due to B.

Riley, a related party, in exchange for a deemed prepayment of $ 73.3 million of our then existing Last Out Term Loans and paid $ 0.9 million in cash for accrued interest, as described in Note 17.

On June 30, 2021, we entered into new Debt Facilities, as described in Note 16 .

On June 30, 2021, the Company entered into new Debt Facilities, as described in Note 16 .

In connection with the Company’s entry into the Debt Facilities, B.

5 unchanged sentences

Riley Guaranty.

On July 7, 2021, we entered into a sales agreement with B.

Riley Securities, Inc., a related party, in which we may sell, from time to time, up to an aggregated principal amount of $ 76 million of Preferred Stock to or through B.

On July 7, 2021, the Company entered into a sales agreement with B.

Riley Securities, Inc., a related party, in which the Company may sell, from time to time, up to an aggregated principal amount of $ 76 million of Preferred Stock to or through B.

Riley Securities, Inc., as described in Note 17 .

As of December 31, 2021, we paid B.

As of December 31, 2022, the Company paid B.

Riley Securities, Inc.

$ 0.2 million for underwriting fees and other transaction costs related to the offering.

The public offering of our 6.50 % Senior Notes in December 2021, as described in Note 14, was conducted pursuant to an underwriting agreement dated December 8, 2021, between us and B.

The public offering of our 6.50 % Senior Notes in December 2021, as described in Note 14, was conducted pursuant to an underwriting agreement dated December 8, 2021, between the Company and B.

Riley Securities, Inc., an affiliate of B.

Riley, as representative of several underwriters.

At the closing date on December 13, 2021, we paid B.

At the closing date on December 13, 2021, the Company paid B.

Riley Securities, Inc.

4 unchanged sentences

Pursuant to the terms of the Indemnity Agreement, B.

Riley will indemnify the Surety for losses the Surety may incur as a result of providing a payment and performance bond in an aggregate amount not to exceed € 30.0 million in connection with our proposed performance on a specified project.

Riley will indemnify the Surety for losses the Surety may incur as a

result of providing a payment and performance bond in an aggregate amount not to exceed € 30.0 million in connection with the Company's proposed performance on a specified project.

In consideration of B.

Riley's execution of the Indemnity Agreement, we paid B.

Riley's execution of the Indemnity Agreement, the Company paid B.

Riley a fee of $ 1.7 million following the issuance of the bond by the Surety, which represents approximately 5.0 % of the bonded obligations, to be amortized over the term of the agreement.

On December 28, 2021, we received a notice that the underwriters of the 6.50 % Senior Notes had elected to exercise their overallotment option for an additional $ 11.4 million in aggregate principal amount of the Senior Notes.

At the closing date on December 30, 2021, we paid B.

On December 28, 2021, the Company received a notice that the underwriters of the 6.50 % Senior Notes had elected to exercise its overallotment option for an additional $ 11.4 million in aggregate principal amount of the Senior Notes.

At the closing date on December 30, 2021, the Company paid B.

Riley Securities, Inc.

$ 0.5 million for underwriting fees and other transaction cost related to the 6.50 % Senior Notes overallotment.

Transactions with Vintage Capital Management, LLC

On March 26, 2021, Vintage and B.

Riley completed a transaction pursuant to which B.

Riley agreed to purchase from Vintage, and Vintage agreed to sell to B.

Riley, all 10,720,785 shares of our common stock owned by Vintage.

Based on its Schedule 13D filings, Vintage beneficially owns 0 % o f our outstanding common stock as of December 31, 2021.

On July 20, 2022, BRF Investments, LLC, an affiliate of B.

Riley, a related party exercised 1,541,666.7 warrants to purchase 1,541,666 shares of the Company's common stock at a price per share of $ 0.01 pursuant to the terms of the warrant agreement between the Company and B.

Riley dated July 23, 2019.

On July 28, 2022, the Company participated in the sale process of Hamon Holdings Corporation ("Hamon") for which B.

Riley Securities, Inc., a related party to the Company, has been engaged as Hamon’s investment banker and to serve as advisor to Hamon through a Chapter 11 363 Asset Sale of Hamon’s entire United States business or potential carve-out of any of its four main subsidiaries.

The Company was the successful bidder for the assets of one of those subsidiaries, Hamon Research-Cottrell, Inc., a major provider of air pollution control technology, for approximately $ 2.9 million.

NOTE 26 – ACQUISITIONS, ASSETS HELD FOR SALE, DIVESTITURES AND DISCONTINUED OPERATIONS

Fosler Construction

On September 30, 2021, we acquired a 60 % controlling ownership stake in Illinois-based solar energy contractor Fosler Construction Company Inc.

(“Fosler Construction”).

Fosler Construction provides commercial, industrial and utility-scale solar services and owns two community solar projects in Illinois being developed under the Illinois Solar for All program.

Fosler Construction was founded in 1998 and employs approximately 120 people with a track record of successfully completing solar projects profitably with union labor and aligning its model with a growing number of renewable project incentives in the U.S.

We believe Fosler Construction is positioned to capitalize on the high-growth solar market in the U.S.

and that the acquisition aligns with B&W’s aggressive growth and expansion of our clean and renewable energy businesses.

Fosler Construction is reported as part of our B&W Renewable segment, and will operate under the name Fosler Solar, a Babcock and Wilcox company.

The total fair value of consideration for the acquisition is $ 36.0 millions, including $ 27.2 million in cash plus $ 8.8 million in estimated fair value of the contingent consideration arrangement.

Babcock & Wilcox Solar (Formerly known as Fosler Construction Company, Inc.)

On September 30, 2021, the Company acquired a 60 % controlling ownership stake in Illinois-based solar energy contractor Babcock & Wilcox Solar Energy, Inc.

(“Babcock & Wilcox Solar”).

Babcock & Wilcox Solar was formerly known as Fosler Construction, Company, Inc.

("Fosler") and on October 14, 2022, the Company changed the name of Fosler to Babcock & Wilcox Solar Energy, Inc ("Babcock & Wilcox Solar").

Babcock & Wilcox Solar provides commercial, industrial and utility-scale solar services and owns two community solar projects in Illinois that are being developed under the Illinois Solar for All program.

Babcock & Wilcox Solar was founded in 1998 with a track record of successfully completing solar projects profitably with union labor while aligning its model with a growing number of renewable project incentives in the U.S.

the Company believes Babcock & Wilcox Solar is positioned to capitalize on the high-growth solar market in the U.S.

and that the acquisition aligns with B&W’s aggressive growth and expansion of the Company's clean and renewable energy businesses.

Babcock & Wilcox Solar is reported as part of the Company's B&W Renewable segment, and operates under the name Babcock & Wilcox Solar, a Babcock & Wilcox company.

The total fair value of consideration for the acquisition was $ 36.0 million, including $ 27.2 million in cash plus $ 8.8 million in estimated fair value of the contingent consideration arrangement.

In connection with the acquisition, the Company agreed to pay contingent consideration based on the achievement of targeted revenue thresholds for the year ended December 31, 2022.

The range of undiscounted amounts the Company could be required to pay under the contingent consideration arrangement is between $ 0.0 million and $ 10.0 million.

We estimated fair values primarily using the discounted cash flow method at September 30, 2021 for the preliminary allocation of consideration to the assets acquired and liabilities assumed.

During the measurement period, we will continue to obtain information to assist in finalizing the fair value of assets acquired and liabilities assumed, which may differ materially from these preliminary estimates.

If we determine any measurement period adjustments are material, we will apply those adjustments, including any related impacts to net income, in the reporting period in which the adjustments are determined.

On November 30, 2021, we acquired 100 % ownership of VODA A/S (“VODA”) through our wholly-owned subsidiary, B&W PGG Luxembourg Finance SARL, for approximately $ 32.9 million.

VODA is a Denmark-based multi-brand aftermarket parts and services provider, focusing on energy-producing incineration plants including waste-to-energy, biomass-to-energy or other fuels, providing service, engineering services, spare parts as well as general outage support and management.

VODA has extensive experience in incineration technology, boiler and pressure parts, SRO, automation, and performance optimization.

VODA employs approximately 65 people mainly in Denmark and Sweden.

We believe VODA will solidify our platform for our renewable service business in Europe and that the acquisition aligns with B&W’s aggressive growth and expansion of our clean and renewable energy businesses.

VODA is reported as part of our B&W Renewable segment.

We plan to form B&W Renewable Services to integrate VODA and our waste-to-energy and biomass aftermarket services businesses.

The provisional measurements noted in the table below are preliminary and subject to modification in the future.

The preliminary purchase price allocation to assets acquired and liabilities assumed in the acquisitions were:

Purchase Price Allocation at September 30, 2021 Purchase Price Allocation Adjustments since September 30, 2021 (3)

Purchase Price Allocation at December 31, 2021 Purchase Price Allocation at December 31, 2021

(in thousands) Fosler Construction VODA

Cash $ — $ — $ — $ 4,737

The range of undiscounted amounts the Company could be required to pay under the contingent consideration arrangement was between $ 0.0 million and $ 10.0 million.

The Company used the Monte Carlo simulation method to calculate the value of the contingent consideration and it was determined that the value of the liability should be zero at December 31, 2022.

See Note 24 for more details.

During the first nine months of 2022, the Company recorded an increase in goodwill of $ 14.4 million resulting from the initial recognition of $ 14.1 million of accrued liabilities and $ 0.4 million of warranty accruals as preliminary measurement period adjustments, as described in Note 5.

The Company has submitted insurance claims to recover a portion of these losses as of December 31, 2022.

See Note 5 for more details.

On September 24, 2022, the Company acquired the remaining 40 % ownership stake in Babcock & Wilcox Solar for $ 12.7 million.

In addition to the transfer of the remaining ownership stake, the settlement and share transfer agreement released all parties from the aforementioned contingent consideration arrangement, as well as other claims known as of the effective date of the agreement.

The Company will make payments of $ 3.0 million, $ 5.0 million, and $ 4.7 million on January 16, 2023, June 30, 2023, and January 15, 2024, respectively, for a present value of $ 12.1 million at December 31, 2022.

The Company has recorded the payments due within one year in the Other accrued liabilities caption and the payment due during a period longer than one year within the Other non-current liabilities caption in the Company’s Consolidated Balance Sheet.

As a result of the agreement, the Company removed the remaining non-controlling interest balance of $ 20.7 million from the Consolidated Balance Sheet and recorded an increase to Capital in Excess of Par Value for the $ 8.6 million difference.

During the quarter ended September 30, 2022, the Company identified certain factors, including the acquisition of the remaining 40 % ownership stake in Babcock & Wilcox Solar., which contributed to the identification of a triggering event, requiring an interim quantitative goodwill impairment assessment and resulted in a goodwill impairment charge at Babcock & Wilcox Solar of $ 7.2 million.

See Note 8 for more details.

Babcock & Wilcox Renewable Service A/S

On November 30, 2021, the Company acquired 100 % ownership of Babcock & Wilcox Renewable Service A/S, formerly known as VODA A/S (“VODA”) through its wholly-owned subsidiary, B&W PGG Luxembourg Finance SARL, for approximately $ 32.9 million.

Babcock & Wilcox Renewable Service A/S, a Denmark- based multi-brand aftermarket parts and services provider, focusing on energy-producing incineration plants including waste-to-energy, biomass-to-energy or other fu els, providing service, engineering services, spare parts as well as general outage support and management.

Babcock & Wilcox Renewable Service A/S has extensive experience in incineration technology, boiler and pressure parts, SRO, automation, and performance optimization.

Babcock & Wilcox Renewable Service A/S is reported a s part of the Company's B&W Renewable segment and is included in the B&W Renewable Services product line.

The Company finalized the fair values during 2022 primarily using the discounted cash flow method for the assets acquired and liabilities assumed.

Fossil Power Systems

On February 1, 2022, the Company acquired 100 % ownership of Fossil Power Systems, Inc.

(“FPS”) for approximately $ 59.2 million.

The consideration paid for FPS included a hold-back of $ 5.9 million, payable twelve months from the date of the acquisition if certain conditions of the purchase agreement are met and is recorded on the Company's Consolidated Balance Sheets in Restricted cash and cash equivalents and other accrued liabilities.

FPS is a leading designer and manufacturer of hydrogen, natural gas and renewable pulp and paper combustion equipment including igniters, plant controls and safety systems based in Dartmouth, Nova Scotia, Canada and is reported as part of the Company's B&W Thermal segment.

The Company estimated fair values primarily using the discounted cash flow method at February 1, 2022 for the preliminary allocation of consideration to the assets acquired and liabilities assumed.

During the measurement period, the Company will continue to obtain information to assist in finalizing the fair value of assets acquired and liabilities assumed, which may differ materially from these preliminary estimates.

Any subsequent changes in the fair values of the assets acquired and liabilities assumed during the measurement period may result in adjustments to goodwill.

Optimus Industries

On February 28, 2022, the Company acquired 100 % ownership of Optimus Industries, LLC ("Optimus Industries") for approximately $ 19.2 million.

Optimus Industries designs and manufactures waste heat recovery products for use in power generation, petrochemical, and process industries, including package boilers, watertube and firetube waste heat boilers, economizers, superheaters, waste heat recovery equipment and units for sulfuric acid plants and is based in Tulsa, Oklahoma and Chanute, Kansas.

Optimus Industries is reported as part of the Company's B&W Thermal segment.

The Company estimated fair values primarily using the discounted cash flow method at February 28, 2022 for the preliminary allocation of consideration to the assets acquired and liabilities assumed.

Any subsequent changes in the fair values of the assets acquired and liabilities assumed during the measurement period may result in adjustments to goodwill.

Hamon Holdings Corporation Industries

On July 28, 2022, the Company acquired certain assets of Hamon Holdings Corporation ("Hamon Holdings") through a competitive sale process, in connection with B.

Riley Securities, Inc., a related party to the Company, had been engaged as Hamon Holdings’ investment banker and to serve as advisor to Hamon Holdings through a Chapter 11 363 Asset Sale of Hamon Holdings’ entire United States business or potential carve-out of any of its four main subsidiaries.

B&W was the successful bidder for the assets of one of those subsidiaries, Hamon Research-Cottrell, Inc., ("Hamon") a major provider of air pollution control technology, for approximately $ 2.9 million.

Purchase Price Allocations

The purchase price allocation to assets acquired and liabilities assumed in the acquisitions are detailed in following tables.

Specific to the Babcock & Wilcox Solar acquisition, the allocation of consideration to the net tangible and intangible assets acquired and liabilities assumed is based on estimated fair values at September 30, 2021, and was finalized at September 30, 2022.

Specific to the Babcock & Wilcox Renewable Service A/S acquisition, the allocation of consideration to the net tangible and intangible assets acquired and liabilities assumed is based on estimated fair values at November 30, 2021, and was finalized at November 30, 2022.

The following tables summarize the purchase price allocation to assets acquired and liabilities assumed:

Babcock & Wilcox Solar

(in thousands) Initial Allocation of Consideration Measurement Period Adjustments (3)

Final Allocation

Accounts receivable $ 1,904 $ 121 $ 2,025

2 unchanged sentences

Property, plant and equipment 9,527 ( 7,860 ) 1,667

Goodwill (1) (4)

43,230 19,447 62,677

Investment in subsidiary — 8,784 8,784

Other assets 17,497 ( 4,600 ) 12,897

2 unchanged sentences

Current liabilities (4)

( 5,073 ) ( 15,364 ) ( 20,437 )

Advance billings on contracts ( 1,557 ) 238 ( 1,319 )

5 unchanged sentences

(1) Goodwill is calculated as the excess of the purchase price over the net assets acquired.

With respect to the Fosler Construction acquisition, goodwill represents Fosler's ability to significantly expand EPC and O&M services among new customers across the U.S.

With respect to the Babcock & Wilcox Solar acquisition, goodwill represents Babcock & Wilcox Solar's ability to significantly expand EPC and O&M services among new customers across the U.S.

by leveraging B&W's access to capital and geographic reach.

With respect to the VODA acquisition, goodwill represents VODA's ability to significantly expand within the aftermarket parts and services industries by leveraging B&W's access to capital and existing platform within the renewable service market.

Goodwill is not expected to be deductible for U.S federal income tax purposes.

(2) The fair value of the non-controlling interest was derived based on the fair value of the 60 % controlling interest acquired by B&W.

The transaction price paid by B&W reflects a Level 2 input involving an observable transaction involving an ownership interest in Fosler Construction.

The transaction price paid by B&W reflects a Level 2 input involving an observable transaction involving an ownership interest in Babcock & Wilcox Solar.

Also, as described above, a portion of the purchase consideration relates to the contingent consideration.

(3) Our preliminary purchase price allocation changed due to additional information and further analysis.

(3) The Company's purchase price allocation changed due to additional information and further analysis.

(4) The Company's goodwill and current liabilities adjustments increased $ 14.1 million, primarily due to additional accrued liabilities recognized attributable to the Babcock & Wilcox Solar projects described in Note 5.

Babcock & Wilcox Renewable Service A/S

( in thousands)

Initial Allocation of Consideration Measurement Period Adjustments (2)

Final Allocation

Cash $ 4,737 $ — $ 4,737

Accounts receivable 5,654 — 5,654

Contracts in progress 258 — 258

Other current assets 825 — 825

Property, plant and equipment 253 — 253

17,176 ( 61 ) 17,115

Other assets 14,321 — 14,321

Right of use assets 433 — 433

Current liabilities ( 5,181 ) — ( 5,181 )

Advance billings on contracts ( 2,036 ) — ( 2,036 )

Non-current lease liabilities ( 302 ) — ( 302 )

Other non-current liabilities ( 3,264 ) — ( 3,264 )

Net acquisition cost $ 32,874 $ ( 61 ) $ 32,813

(1) Goodwill is calculated as the excess of the purchase price over the net assets acquired.

With respect to the Babcock & Wilcox Renewable Service A/S acquisition, goodwill represents Babcock & Wilcox Renewable Service A/S's ability to significantly expand within the aftermarket parts and services industries by leveraging B&W's access to capital and existing platform within the renewable service market.

Goodwill is not expected to be deductible for U.S federal income tax purposes.

(2) The Company's preliminary purchase price allocation changed due to additional information and further analysis.

Fossil Power Systems

(in thousands) Initial Allocation of Consideration Measurement Period Adjustments (2)

Updated Preliminary Allocation

Cash $ 1,869 $ — $ 1,869

Accounts receivable 2,624 — 2,624

Contracts in progress 370 — 370

Other current assets 3,228 — 3,228

Property, plant and equipment, net 178 — 178

35,392 270 35,662

Other assets 25,092 — 25,092

Right of use assets 1,115 — 1,115

Current liabilities ( 1,792 ) ( 18 ) ( 1,810 )

Advance billings on contracts ( 645 ) — ( 645 )

Non-current lease liabilities ( 989 ) — ( 989 )

Non-current liabilities ( 7,384 ) ( 106 ) ( 7,490 )

Net acquisition cost $ 59,058 $ 146 $ 59,204

(1) Goodwill is calculated as the excess of the purchase price over the net assets acquired.

With respect to the FPS acquisition, goodwill represents

FPS's ability to significantly expand services among new customers by leveraging cross-selling opportunities and recognizing general cost synergies.

(2) The Company's preliminary purchase price allocation changed due to additional information and further analysis.

Optimus Industries

(in thousands) Initial Allocation of Consideration Measurement Period Adjustments (2)

Updated Preliminary Allocation

Cash $ 5,338 $ — $ 5,338

Accounts receivable 5,165 — 5,165

Contracts in progress 2,598 — 2,598

Other current assets 2,115 — 2,115

Property, plant and equipment, net 2,441 5,178 7,619

11,081 ( 7,274 ) 3,807

Other assets 12 2,319 2,331

Right of use assets 94 11 105

Current liabilities ( 4,240 ) — ( 4,240 )

Advance billings on contracts ( 3,779 ) — ( 3,779 )

non-current lease liabilities ( 2 ) — ( 2 )

Non-current liabilities ( 1,858 ) — ( 1,858 )

Net acquisition cost $ 18,965 $ 234 $ 19,199

(1) Goodwill is calculated as the excess of the purchase price over the net assets acquired.

With respect to the Optimus Industries acquisition, goodwill represents Optimus Industries ability to significantly expand future customer relationships which are not in place today and recognize general cost synergies.

(2) The Company's preliminary purchase price allocation changed due to additional information and further analysis.

Intangible assets are included in other assets above and consists of the following:

Fosler Construction VODA

(in thousands) Estimated Acquisition Date Fair Value Weighted Average Estimated Useful Life Estimated Acquisition Date Fair Value Weighted Average Estimated Useful Life

Babcock & Wilcox Solar (1)

Babcock & Wilcox Renewable Service A/S (1)

(in thousands) Acquisition Date Fair Value Weighted Average Estimated Useful Life Acquisition Date Fair Value Weighted Average Estimated Useful Life

Customer Relationships $ 9,400 12 years $ 13,855 11 years

3 unchanged sentences

$ 12,500 $ 14,083

Fossil Power Systems (2)

Optimus Industries (2)

Estimated Acquisition Date Fair Value Weighted Average Estimated Useful Life Estimated Acquisition Date Fair Value Weighted Average Estimated Useful Life

Customer Relationships $ 20,451 9 years 2,100 10 years

Tradename 787 14 years 220 3 years

Patented Technology 578 12 years — —

Unpatented Technology 3,276 12 years — —

Total intangible assets (1)

$ 25,092 $ 2,320

(1) The Company's preliminary purchase price allocation is final as of December 31, 2022.

(2) Intangible assets were valued using the income approach, which includes significant assumptions around future revenue growth, profitability, discount rates and customer attrition.

Such assumptions are classified as level 3 inputs within the fair value hierarchy.

The Company incurred approximately $ 0.7 million and $ 0.4 million of costs related to the acquisitions of VODA and Fosler Construction, respectively, which were recorded as a component of our operating expenses in our Consolidated Statement of Operations for 2021.

Acquisitions - Subsequent Event

On February 1, 2022, we acquired 100 % ownership of Fossil Power Systems, Inc, (“FPS”) for approximately $ 59.1 million, excluding working capital adjustments.

FPS is a leading designer and manufacturer of hydrogen, natural gas and renewable pulp and paper combustion equipment including ignitors, plant controls and safety systems based in Dartmouth, Nova Scotia, Canada.

On February 28, 2022, we acquired 100 % ownership of Optimus Industries, LLC for approximately $ 19 million, excluding working capital adjustments.

Optimus designs and manufactures waste heat recovery products for use in power generation, petrochemical, and process industries , including package boilers, watertube and firetube waste heat boilers, economizers, superheaters, waste heat recovery equipment and sulfuric acid plants and is based in Tulsa, Oklahoma and Chanute, Kansas.

Optimus Industries, LLC will be reported as part of our B&W Thermal segment.

Assets Held for Sale

For the twelve-month period ended December 31, 2022, costs of $ 1.0 million were incurred related to the acquisitions of Babcock & Wilcox Solar, Babcock & Wilcox Renewable Service A/S, Fossil Power Systems, and Optimus Industries were recorded as a component of its operating expenses in the Consolidated Statements of Operations.

On June 30, 2022 the Company sold development rights related to a future solar project for $ 8.0 million.

In conjunction with the sale, the Company recognized a $ 6.2 million gain on sale and recorded an $ 7.2 million receivable within Accounts receivable – other in the Company's Consolidated Balance Sheet.

During the 6 months ended December 31, 2022, the Company received $ 2.5 million of proceeds from the sale.

Certain real property assets for the Copley, Ohio location were sold on March 15, 2021 for $ 4.0 million.

We received $ 3.3 million of net proceeds after adjustments and recognized a gain on sale of $ 1.9 million.

In conjunction with the sale, we executed a leaseback agreement commencing March 16, 2021 and expiring on March 31, 2033.

These assets were treated as assets held for sale on our Consolidated Balance Sheets as of December 31, 2020.

The Company received $ 3.3 million of net proceeds after adjustments and recognized a gain on sale of $ 1.9 million.

In conjunction with the sale, we executed a leaseback agreement commencing March 16, 2021, which expires on March 31, 2033.

Certain real property assets for the Lancaster, Ohio location were sold on August 13, 2021 for $ 18.9 million.

We received $ 15.8 million of net proceeds after adjustments and expenses and recognized a gain on sale of $ 13.9 million.

In conjunction with the sale, we executed a leaseback agreement commencing August 13, 2021 and expiring on August 31, 2041.

These assets were treated as assets held for sale on our Consolidated Balance Sheets as of December 31, 2020.

In December 2019, we determined that a small business within the B&W Thermal segment met the criteria to be classified as held for sale.

At December 31, 2020, the carrying value of the net assets planned to be sold approximated the estimated fair value less costs to sell.

Refer to Divestiture s below as this sale closed March 5, 2021.

The following table summarizes the carrying value of the assets and liabilities held for sale at December 31, 2020:

(in thousands) December 31, 2020

Accounts receivable – trade, net $ 2,103

Accounts receivable – other 86

Contracts in progress 458

Inventories 1,676

Other current assets 405

Current assets held for sale 4,728

Net property, plant and equipment 10,365

Intangible assets 759

Right-of-use-asset 32

Non-current assets held for sale 11,156

Total assets held for sale $ 15,884

Accounts payable $ 5,211

Accrued employee benefits 178

Advance billings on contracts 370

Accrued warranty expense 466

Operating lease liabilities 32

Other accrued liabilities 2,048

Current liabilities held for sale 8,305

Total liabilities held for sale $ 8,305

Effective March 5, 2021, we sold all of the issued and outstanding capital stock of Diamond Power Machine (Hubei) Co., Inc, for $ 2.8 million.

We received $ 2.0 million in gross proceeds before expenses and recorded an $ 0.8 million favorable contract asset for the amortization period from March 8, 2021 through December 31, 2023.

For the twelve months ended December 31, 2021, we recognized a $ 1.8 million pre-tax loss, inclusive of the recognition of $ 4.5 million of currency translation adjustment, on the sale of the business and after consideration of certain working capital adjustments that are in dispute.

Additional adjustments may be necessary as this is finalized.

On March 17, 2020, we fully settled the remaining escrow associated with the sale of PBRRC and received $ 4.5 million in cash.

Discontinued Operations

On April 6, 2020, we fully settled the remaining escrow associated with the sale of the MEGTEC and Universal businesses and received $ 3.5 million in cash.

The Company received $ 15.8 million of net proceeds after adjustments and expenses and recognized a gain on sale of $ 13.9 million.

In conjunction with the sale, the Company executed a leaseback agreement commencing August 13, 2021, which expires on August 31, 2041.

Effective March 5, 2021, the Company sold all of the issued and outstanding capital stock of Diamond Power Machine (Hubei) Co., Inc, for $ 2.8 million.

the Company received $ 2.0 million in gross proceeds before expenses and recorded an $ 0.8 million favorable contract asset for the amortization period from March 8, 2021 through December 31, 2023.

NOTE 27 – NEW ACCOUNTING STANDARDS

We adopted the following accounting standard during the year ended December 31, 2021:

Effective January 1, 2021 we adopted ASU 2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes.

The impact of this standard on our consolidated financial statements was immaterial.

In March 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848):

This update is an amendment to ASU 2020-04, Reference Rate Reform (Topic 848):

As of December 31, 2021, we have not yet elected any optional expedients provided in the standard.

We will apply the accounting relief as relevant contract and hedge accounting relationship modifications are made during the reference rate reform transition period.

We do not expect the standard to have a material impact on our consolidated financial statements.