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Item 7. Management’s Discussion and Analysis

2025-03-31 compared with 2024-03-15 · 219 added, 227 removed, 223 unchanged (67% of the section changed)

Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion of our financial position and results of operations should be read in conjunction with the financial statements and the notes thereto included in Consolidated Financial Statements and Supplemental Data in Item 8 within this Annual Report.

The following discussion of our financial position and results of operations should be read in conjunction with the financial statements and the notes thereto included in the Consolidated Financial Statements and Supplemental Data in Item 8 within this Annual Report.

The following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs.

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The following discussion includes a comparison of Results of Operations and Liquidity and Capital Resources for the years ended December 31, 2024 and 2023.

We have also included a comparison of the Results of Operations for the years ended December 31, 2022 and 2021 in the B&W Renewable Segment discussion below as this is the only segment impacted by the discontinued operations.

For additional comparison of the years ended December 31, 2022 and 2021, see Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 as filed on March 16, 2023.

We have also included a comparison of the Results of Operations for the years ended December 31, 2023 and 2022 for all of our segment discussions below.

Unless otherwise noted, discussion of our business and results of operations in this Annual Report on Form 10-K refers to our continuing operations.

For additional comparison of the years ended December 31, 2023 and 2022, see Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 as filed on March 15, 2024 and amended on March 26, 2024.

Our consolidated financial statements are prepared in conformity with GAAP.

Our discussion of the financial results include non-GAAP measures (e.g., foreign currency impact, EBITDA, Adjusted EBITDA) to provide additional information concerning our financial results that we believe is useful to the readers of our financial statements in the assessment of our performance and operating trends.

Our discussion of financial results include non-GAAP measures (e.g., foreign currency impact, EBITDA, Adjusted EBITDA) to provide additional information concerning our financial results that we believe is useful to the readers of our financial statements in the assessment of our performance and operating trends.

Unless otherwise noted, discussion of our business and results of operations refers to our continuing operations.

BUSINESS OVERVIEW

We are a growing, globally-focused renewable, environmental and thermal technologies provider with over 155 years of experience providing diversified energy and emissions control solutions to a broad range of industrial, electrical utility, municipal and other customers.

Our innovative products and services are organized into three market-facing segments.

Our reportable segments are as follows:

• Babcock & Wilcox Renewabl e:

Our innovative hydrogen generation technology (BrightLoop TM ) supports global climate goals including the decarbonization of industrial and utility steam and power producers.

BrightLoo p TM offers significant advantages over other hydrogen generation technologies as it generates competitively priced hydrogen from a wide range of fuels (including solid fuels such as biomass and coal) with a high rate of carbon captured resulting in low (or even negative) carbon intensity hydrogen.

We also offer best-in-class technologies for efficient and environmentally sustainable power and heat generation, including waste-to-energy, oxygen-fired biomass-to-energy (OxyBright TM ), and black liquor systems for the pulp and paper industry.

Our leading waste-to-energy technologies support a circular economy, diverting waste from landfills to use for power generation or district heating, while recovering metals and reducing emissions.

To date, we have installed approximately 500 waste-to-energy and biomass-to-energy units at more than 300 facilities in approximately 30 countries which serve a wide variety of utility, waste management, municipality and investment firm customers.

• Babcock & Wilcox Environmental :

Our full suite of best-in-class emissions control and environmental technology solutions for utility, waste-to-energy, biomass-to-energy, carbon black, and industrial steam generation applications supports environmental stewardship around the world.

Our broad experience includes systems for cooling, ash handling, particulate control, nitrogen oxide and sulfur dioxide removal, dioxin and furan control, carbon dioxide capture, mercury control as well as other acid gas and pollutant control.

Our ClimateBright TM family of products including SolveBright TM , OxyBright TM , BrightLoop TM and BrightGen TM , places us at the forefront of hydrogen production and carbon dioxide capturing technologies and development with many of the aforementioned products already commercially available and others ready for commercial deployment.

We believe these technologies position us to compete in the bioenergy with carbon capture and sequestration market.

Our portfolio of clean power production solutions continues to evolve to reach customers at all stages of their energy transition.

• Babcock & Wilcox Thermal:

Our vast installed base of steam generation equipment and related auxiliaries spans the globe and includes customers in a variety of end markets including power generation, oil and gas, petrochemical, food and beverage, metals and mining, and others.

We provide aftermarket parts, construction, maintenance, engineered upgrades and field services for our installed base as well as the installed base of other OEMs;

the substantial and stable cash flows generated from these businesses helps to fund our investments in new clean energy initiatives.

In addition to our aftermarket offerings, we also provide complete steam generation systems including package boilers, watertube and firetube waste heat boilers, and other boilers to medium and heavy industrial customers.

Our unique range of offerings, coupled with the strength of our brand, provides a competitive advantage in existing and emerging markets.

In July 2022, we acquired certain assets of Hamon Holdings through a competitive sale process, in which B.

Riley Securities, Inc., a related party, was Hamon Holdings’ investment banker and advisor through a Chapter 11 363 Asset Sale.

We were the successful bidder for certain assets of one of those subsidiaries, Hamon, a major provider of air pollution control technology, for approximately $2.9 million.

In February 2022, we acquired 100% ownership of B&W Chanute, formerly known as Optimus Industries, LLC, for approximately $19.2 million.

B&W Chanute 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.

B&W Chanute is reported as part of our B&W Thermal segment.

In February 2022, we acquired 100% ownership of FPS for approximately $59.2 million.

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.

FPS is reported as part of our B&W Thermal segment.

Our business depends significantly on the capital and operations and maintenance expenditures of global electric power generating companies, renewable and thermal powered heat generation industries, and industrial facilities with environmental compliance policy requirements.

Several factors may influence these expenditures, including:

• climate change initiatives promoting environmental policies including renewable energy options utilizing waste-to-energy or biomass to meet legislative requirements and clean energy portfolio standards in the United States, European, Middle East and Asian markets;

• development of a hydrogen-based economy;

• regulations requiring environmental improvements in various global markets;

• expectations regarding future governmental requirements to further limit or reduce greenhouse gas and other emissions in the United States, Europe and other international climate change sensitive countries;

• prices for electricity, along with the cost of production and distribution including the cost of fuels within the United States, Europe, Middle East and Asian countries;

• demand for electricity and other end products of steam-generating facilities;

• level of capacity utilization at operating power plants and other industrial uses of steam production;

• maintenance and upkeep requirements at operating power plants, including to combat the accumulated effects of usage;

• overall strength of the industrial industry;

• ability of electric power generating companies and other steam users to raise capital.

We are a globally focused renewable, environmental and thermal technologies provider with over 155 years of experience providing diversified energy and emissions control solutions to a broad range of industrial, electrical utility, municipal and other customers.

Our innovative products and services are organized into three market-facing reporting segments.

For a description of our reportable segments see Item 1, Business of this Form 10-K.

Customer demand is heavily affected by the variations in our customers' business cycles, power demand in their operating territories, and by the overall economies and energy, environmental and noise abatement needs of the countries in which they

We have manufacturing facilities in Mexico, the United States, Denmark, the United Kingdom and China.

Many aspects of our operations and properties could be affected by political developments, including the ongoing Russia-Ukraine conflict, environmental regulations and operating risks.

We have manufacturing facilities in Canada, Mexico, the United States and the United Kingdom.

Many aspects of our operations and properties could be affected by political developments, environmental regulations and operating risks.

These and other factors may have a material impact on our international and domestic operations or our business as a whole.

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Thermal segments globally.

We continue to explore other cost saving initiatives to improve cash generation and evaluate additional non-core asset sales to continue to strengthen our liquidity.

There are or will be important factors that could cause our actual results to differ materially from those indicated in these statements.

We continue to explore other cost saving initiatives to improve cash generation and evaluate additional non-core business and asset sales to continue to strengthen our liquidity.

These have been and may continue to be important factors that could cause our actual results to differ materially from those indicated in these statements.

If one or more events related to these or other risks or uncertainty materialize, or if our underlying assumptions prove to be incorrect, actual results may differ materially from what we anticipate.

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If the value of our business was to decline, or if we were to determine that we were unable to recognize an amount in connection with any proposed disposition in excess of the carrying value of any disposed asset, we may be required to recognize impairments for one or more of our assets that may adversely impact our business, financial condition and results of operations.

Market Update

Management continues to adapt to macroeconomic conditions, including the impacts from inflation, higher interest rates and foreign exchange rate volatility, geopolitical conflicts (including the ongoing conflicts in Ukraine and the Middle East) and global shipping and supply chain disruptions that continued to have an impact during 2023.

In certain instances, these situations have resulted in cost increases and delays or disruptions that have had, and could continue to have, an adverse impact on our ability to meet customers’ demands.

We continue 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 supporting our customers and their specific needs.

The duration and scope of these conditions cannot be predicted, and therefore, any anticipated negative financial impact on our operating results cannot be reasonably estimated.

Discontinued Operations

During the fourth quarter of 2024 , we committed to a plan to sell our Vølund business resulting in a significant change that would impact our business.

As of December 31, 2024 , we met all of the criteria for the assets and liabilities of this business, formerly part of our B&W Renewable segment, to be accounted for as held for sale.

For 2024 , annual revenue decreased to $34.5 million from $81.4 million in 2023 primarily as a result of several larger projects that had higher volume of work in 2023 than in 2024 .

The annual Operating loss for 2024 was $18.5 million , which is slightly higher than the Operating loss of $16.4 million for 2023 as a result of the aforementioned reduction of revenue due

to the lack of larger projects to replace the larger volume of work in 2023 .

For 2023 , annual revenue decreased from $98.5 million in 2022 as the aforementioned larger projects that were in process and had larger volume of work in 2022 than in 2023 .

This decrease in revenue is also the primary cause for the decrease in Operating Loss from $4.2 million in 2022 as well as increased expenses in the O&M contracts that have since been exited.

During the third quarter of 2023, we committed to a plan to sell our B&W Solar business resulting in a significant change that would impact our operations.

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Certain trade accounts receivable and contract assets were determined to be uncollectible, resulting in charges of $17.6 million.

For goodwill, we performed a quantitative assessment using the income approach (discounted cash flows).

The income approach uses the disposal group'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 also uses assumptions based on the disposal group's estimated revenue growth, operating margin, and working capital turnover.

As a result of this impairment test, we recognized an impairment of $56.6 million , or the entire balance of goodwill associated with B&W Solar.

During 2023, we recognized an impairment of $56.6 million, or the entire balance of goodwill associated with B&W Solar.

These charges have been included in Loss from discontinued operations, net of tax in the Consolidated Statements of Operations.

The impairment charges and additional contract losses during the year ended December 31, 2023 totaled $56.6 million and $44.1 million , respectively.

B&W Solar had accrued loss contracts totaling $7.1 million at December 31, 2023 .

Certain circumstances beyond our control have extended the period required to complete the sale within one year.

Specifically, market conditions driven by uncertainties with potential administration changes and related impacts to the solar industry.

We initiated actions necessary to respond to the change in circumstances by engaging an advisory service provider with more specialized industry qualifications.

We continue to meet the criteria to account for the B&W Solar business as held for sale and discontinued operations as of December 31, 2024

For 2024, annual revenue increased to $68.4 million from $34.7 million in 2023 as a result of three large projects being executed in Pennsylvania.

Operating loss for 2024 improved to $20.8 million from $117.9 million in 2023 as a result of 2023 including asset impairments as a result of being classified as available for sale and several loss-making contracts occurring in 2023 as well as 2024 including a $6.8 million gain due to an insurance claim settlement.

Revenue for 2023 decreased from $41.9 million in 2022 as a result of lower volume in regard to projects in New York.

Operating Loss for 2023 increased from the Operating loss in 2022 of $6.5 million as a result of the impairments and loss-making contracts occurring in 2023 as well as 2022 including a $9.6 million gain due on the change in fair value of the contingent consideration from the acquisition.

BWRS, SPIG and GMAB

In addition to the B&W Solar and Vølund businesses, discontinued operations include the following subsidiaries divested in 2024:

BWRS, SPIG, and GMAB.

These sale transactions were part of a previously announced strategy to divest certain non-core businesses to reduce our debt, improve our balance sheet and increase liquidity.

Results of operations and cash flows for these businesses and the financial position of the divested subsidiaries are reported as discontinued operations for all periods presented and the notes to the financial statements have been adjusted on a retrospective basis.

On June 28, 2024, we, through our B&W PGG Luxembourg Finance Sárl subsidiary, entered into an agreement to sell the entire issued and outstanding share capital of our Denmark-based renewable parts and services subsidiary, BWRS, to Hitachi Zosen Inova AG ("Buyer").

The sale of BWRS to the Buyer was completed the same day.

We received net cash proceeds of $83.5 million and recorded a gain on the sale of the business of $44.9 million.

The proceeds were used to reduce outstanding debt and support working capital needs.

SPIG and GMAB

On October 8, 2024, we, through our B&W PGG Luxembourg Finance Sárl subsidiary and Babcock & Wilcox A/S subsidiary, entered into an agreement to sell the entire issued and outstanding share capital of our Italy-based SPIG and Sweden-based GMAB subsidiaries, to Auctus Neptune Holding S.p.A, which closed on October 30, 2024.

We received net cash proceeds of $33.7 million and recorded an impairment of $5.8 million.

The proceeds were used to support working capital needs and reduce outstanding debt.

We recorded a gain of $14.1 million on this divestiture.

RESULTS OF OPERATIONS–YEARS ENDED DECEMBER 31, 2024 AND 2023

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B&W Renewable, B&W Environmental and B&W Thermal.

Operating income

Operating income consists primarily of our revenue minus costs and expenses, including cost of operations, SG&A and advisory fees and settlement costs.

Net (loss) income

Net (loss) income consists primarily of operating income minus other income and expenses, including interest expense, foreign exchange, expense related to our benefit plans, and provision for income taxes.

Operating income (loss)

Operating income (loss) consists primarily of our revenue minus costs and expenses, including cost of operations, SG&A and advisory fees and settlement costs.

Net loss consists primarily of operating income minus other income and expenses, including interest expense, foreign exchange, expense related to our benefit plans, and provision for income taxes.

Consolidated Results of Operations

The following discussion of our consolidated and business segment results of operations includes a discussion of adjusted EBITDA , which on a consolidated basis is a non-GAAP financial measure.

The following discussion of our consolidated and business segment results of operations includes a discussion of Adjusted EBITDA , which is a non-GAAP financial measure.

Adjusted EBITDA differs from net (loss) income, the most directly comparable measure calculated in accordance with GAAP.

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Eliminations (70) (21,391) (10,254)

$ 999,354 $ 847,918

Total Revenue $ 717,333 $ 727,315 $ 609,437

2024 vs 2023 Consolidated Results

Revenues increased by $151.4 million to $999.4 million in 2023 as compared to $847.9 million in 2022, primarily attributable to increased revenue of $79.4 million in our global renewable parts and services business, increased revenue of $30.0 million at SPIG, our Air Cooled Condenser business in Italy, and $55.0 million due to a large new construction project in 2023, partially offset by a slight decline in service projects.

Operating income increased $17.6 million from $2.3 million in 2022 to $19.9 million in 2023, primarily due to increased gross margin of $37.2 million from the higher revenues and a reduction of $7.6 million in advisory fees and settlement costs in 2023, partially offset by higher SG&A expenses of $10.0 million and $4.6 million in product development costs associated with BrightLoop TM .

Additionally, there was a loss on the sale of an asset of $8.7 million in 2022 that did not recur in 2023.

Revenues decreased by $10.0 million to $717.3 million in 2024 as compared to $727.3 million in 2023, driven by a decline in our B&W Renewable segment related to lower pulp and paper projects and lower volume on a European renewable job in 2024 .

Operating income increased $8.5 million from $16.6 million in 2023 to $25.1 million in 2024, primarily due to higher volume related to a natural gas conversion project, environmental projects as well as lower expenses, partially offset by a decrease of $11.7 million due to a large project in our U.S.

construction business that was completed in 2023 and not fully replaced in 2024 in our B&W Thermal segment.

Net loss from continuing operations decreased by $2.8 million to $73.0 million in 2024 from $75.8 million in 2023, driven by increased operating income (as discussed in the paragraph above) and offset by a loss on debt extinguishment of $7.3 million attributable to terminating the Revolving and Letter of Credit Agreements with PNC and MSD.

2023 vs 2022 Consolidated Results

Revenues increased by $117.9 million to $727.3 million in 2023 as compared to $609.4 million in 2022, primarily attributable to increased revenue of $79.4 million in our global parts and services business across all segments and $55.0 million due to a large new construction project in 2023, partially offset by a slight decline in service projects.

Operating income increased $17.8 million from $(1.2) million in 2022 to $16.6 million in 2023, primarily due to increased gross margin from higher revenues.

Net loss from continuing operations increased by $61.6 million to $75.8 million in 2023 from $14.2 million in 2022, primarily attributable to a $75.0 million swing in benefit plans cost from a $37.5 million benefit in 2022 to a $37.5 million expense in 2023, offset slightly by the increased operating income described above.

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Backlog may not be indicative of future operating results, and contracts in our backlog may be canceled, modified or otherwise altered by customers.

Backlog can vary significantly from period to period, particularly when large new-build conversions projects or operations and maintenance contracts are booked because they may be fulfilled over multiple years.

Backlog can vary significantly from period to period, particularly when large new-build conversion projects or operations and maintenance contracts are booked because they may be fulfilled over multiple years.

Because we operate globally, our backlog is also affected by changes in foreign currencies each period.

Bookings represent changes to the backlog.

Bookings include additions related to new business or increases in project scope, subtractions due to customer cancellations or reductions in project scope, changes in estimates that affect selling price and revaluation of backlog denominated in foreign currency.

We believe comparing bookings on a quarterly basis or for periods less than one year is less meaningful than for longer periods, and that shorter-term changes in bookings may not necessarily indicate a material trend.

Total bookings as of December 31, 2024 and 2023 was as follows:

Year ended December 31,

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Other/eliminations (0.3) (9.6)

Bookings $ 878.3 $ 858.4

Total bookings $ 889.6 $ 638.7

Our backlog as of December 31, 2024 and 2023 was as follows:

As of December 31,

(in millions) 2024 2023

B&W Renewable $ 53.6 $ 62.7

$ 133.5 $ 128.9

B&W Environmental 42.1 87.8

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Backlog $ 540.1 $ 368.2

(1) B&W Renewable backlog has been adjusted downward $114 million and $122 million at December 31, 2023 and 2022, respectively, to remove O&M contracts that are recognized as disposed.

Of the backlog as of December 31, 2024, we expect to recognize revenues as follows:

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Non-GAAP Financial Measures

We use non-GAAP financial measures internally to evaluate our performance and in making financial and operational decisions.

When viewed in conjunction with GAAP results and the accompanying reconciliation, we believe that the

presentation of these measures provides investors with greater transparency and a greater understanding of factors affecting our financial position and results of operations than GAAP measures alone.

We use non-GAAP financial measures internally to evaluate our performance and make financial and operational decisions.

When viewed in conjunction with GAAP results and the accompanying reconciliations, we believe that the presentation of these measures provides investors with greater transparency and a greater understanding of factors affecting our financial position and results of operations than GAAP measures alone.

The presentation of non-GAAP financial measures should not be considered in isolation or as a substitute for the related financial results prepared in accordance with GAAP.

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Adjusted EBITDA on a consolidated basis is defined as the sum of the Adjusted EBITDA for each of the segments, further adjusted for corporate allocations and research and development costs.

At a segment level, the adjusted EBITDA presented in this report is consistent with the way the our chief operating decision maker 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, legal and settlement costs, costs related to financial consulting, research and development costs, costs and operating income from contracts in disposal, and other costs that may not be directly controllable by segment management and are not allocated to the segment.

At a segment level, the Adjusted EBITDA presented in this report is consistent with the manner in which our CODM primarily reviews the results of operations and makes strategic decisions about the business.

Our CODM is the chief executive officer and on a quarterly basis reviews actuals to budgets and forecasts when making decisions.

Adjusted EBITDA is calculated as earnings before interest, tax, depreciation and amortization adjusted for items such as gains or losses arising from the sale of non-income producing assets, net pension benefits, restructuring activities, impairments, gains and losses on debt extinguishment, legal and settlement costs, costs related to financial consulting, research and development costs, and other costs that may not be directly controllable by segment management and are not allocated to the segment.

We present consolidated Adjusted EBITDA because we believe it is useful to investors to help facilitate comparisons of the ongoing, operating performance before corporate overhead and other expenses not attributable to the operating performance of our revenue generating segments.

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(in thousands) 2024 2023 2022

Net loss $ (196,971) $ (26,584)

Loss from discontinued operations, net of tax (118,338) (6,596)

$ (59,779) $ (196,971) $ (26,584)

Income (loss) from discontinued operations, net of tax

13,183 (121,177) (12,398)

Loss from continuing operations

(72,962) (75,794) (14,186)

Interest expense, net 45,332 41,486 39,211

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EBITDA (4,333) (10,190) 50,343

Impairment of goodwill and long-lived assets 3,729 — —

Benefit plans, net 31,937 37,505 (37,528)

Loss (gain) on asset sales, net 57 (2,539)

(Gain) loss on asset sales, net

(354) 134 (2,523)

Stock compensation 4,509 7,121 7,487

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Advisory fees for settlement costs and liquidity planning 1,234 1,107 1,509

Settlement and related legal (recoveries) costs (1,474) 10,734

Loss on debt extinguishment

Settlement and related legal costs (recoveries)

4,044 (1,474) 9,109

Acquisition pursuit and related costs 643 827 5,504

Product development (1)

8,228 9,023 4,100

Foreign exchange 109 2,594 1,025

Financial advisory services — — 1,424

Contract disposal 8,550 2,976

Letter of credit fees 7,036 7,702 5,204

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Adjusted EBITDA $ 68,895 $ 60,805 $ 55,567

$ 79,131 $ 67,509

(1) Adjusted EBITDA for the year ended December 31, 2022 includes a $6.2 million non-recurring gain on sale related to development rights of a renewable energy project.

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

Year ended December 31,

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B&W Renewable segment $ 15,085 $ 6,381 $ 11,768

$ 22,586 $ 21,227

B&W Environmental segment 10,794 4,133 1,641

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Corporate (18,354) (14,484) (14,550)

Research and development (4,011) (3,319)

$ 79,131 $ 67,509

(1) See above for reconciliation of Net loss to Adjusted EBITDA.

(2) Adjusted EBITDA in the Renewable segment in 2022 includes a $6.2 million non-recurring gain on sale related to development rights of a renewable energy project.

Total Adjusted EBITDA $ 68,895 $ 60,805 $ 55,567

(1) See table above for reconciliation of Net loss to Adjusted EBITDA.

Corporate costs in Adjusted EBITDA include SG&A expenses that are not allocated to the reportable segments.

These costs include, among others, certain executive, compliance, strategic, reporting and legal expenses associated with governance of the total organization and being an SEC registrant.

Corporate expenses not allocated to the reportable segments totaled $21.4 million and $16.5 million in the years ended December 31, 2023 and 2022, respectively.

The increase is primarily due to higher expenses related to audit and other consulting services and insurance.

Research and development

Our research and development activities are focused on improving our products through innovations to reduce their cost and improve competitiveness, reduce performance risk of our products to better meet our and our customers’ expectations.

Research and development expenses totaled $4.0 million and $3.3 million in the years ended December 31, 2023 and 2022, respectively.

These costs include, among others, certain executive, compliance, strategic, reporting and legal expenses associated with governance of the total organization and being an SEC registrant, and research and development activity costs.

Impairment of goodwill and long-lived assets

Impairment of long-lived assets relate to certain assets under construction due to changes in project status.

Benefit plans, net

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Service cost is low because our plan benefits are frozen except for a small number of hourly participants.

Pension benefits (includes defined benefit and other postretirement benefits plans) before MTM were $0.5 million and $29.8 million for the years ended December 31, 2023 and 2022, respectively.

Our pension costs include MTM adjustments and are primarily a result of changes in the discount rate, curtailments and settlements.

Any MTM charge or gain should not be considered to be representative of future MTM adjustments as such events are not currently predicted and are in each case subject to market conditions and actuarial assumptions as of the date of the event giving rise to the MTM adjustment.

Total MTM adjustments for our defined benefit and other postretirement benefits plans were an expense of $38.0 million and a benefit of $7.7 million for the years ended December 31, 2023 and 2022, respectively.

Refer to Note 14 to the Consolidated Financial Statements for further information regarding our pension and other postretirement plans.

Loss (gain) on asset sales, net

(Gain) loss on asset sales, net

We, at times, will sell or dispose of certain assets that are unrelated to our current or future operations.

Therefore, we believe it is useful to exclude these gains and losses from our non-GAAP financial measures in order to highlight the performance of the continuing business.

Loss (gain) on asset sales, net totaled $0.1 million and $(2.5) million in the years ended December 31, 2023 and 2022, respectively.

Stock compensation

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Therefore, we believe it is useful to exclude stock-based compensation from our non-GAAP financial measures in order to highlight the performance of the business and to be consistent with the way many investors evaluate our performance and compare our operating results to peer companies.

Expenses related to restricted stock units are recorded at the Corporate level and are recognized on a straight-line basis over a 3-year vesting period, except for market-based restricted stock units which are recognized over a derived service period.

Stock compensation was $7.1 million and $8.7 million for the years ended December 31, 2023 and 2022, respectively.

Expenses related to restricted stock units are recognized on a straight-line basis over a 3-year vesting period, except for market-based restricted stock units which are recognized over a derived service period.

Restructuring activities and business services transition costs

Restructuring activities and business services transition actions across our business units and corporate functions resulted in expense of $5.7 million and $8.5 million in the years ended December 31, 2023 and 2022 , respectively.

The restructuring charges primarily consist of severance and related costs associated with non-recurring actions taken to transform our operations with impacts on employees and facilities used in our businesses.

Restructuring activities and business services transition actions across our business units and corporate functions primarily consist of severance and related costs associated with non-recurring actions taken to transform our operations with impacts on employees and facilities used in our businesses.

Business services transition costs relate to new technology implementation, expected to provide future benefit and are included in Selling, general and administrative expenses in the Consolidated Statement of Operations.

Advisory fees for settlement costs and liquidity planning

Advisory fees decreased to $1.1 million in the year ended December 31, 2023 as compared to $1.5 million in 2022 .

The change is primarily due to decreased use of external consultants, especially in liquidity planning as that work ended in early 2023.

Settlement and related legal (recoveries) costs

Settlement costs decreased from $10.7 million in the year ended December 31, 2022 to recoveries of $(1.5) million in the year ended December 31, 2023.

See Note 21 for more detail.

Advisory fees fluctuate based on use of external consultants.

Loss on debt extinguishment

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

Settlement and related legal costs (recoveries)

For further discussion see Note 20 to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report.

Acquisition pursuit and related costs

Acquisition pursuit and related costs expenses totaled $0.8 million and $5.5 million in the year ended December 31, 2023 and 2022, respectively.

The decrease is a result of less activity in 2023, when compared to 2022.

Acquisition pursuit and related costs fluctuate based on activity.

Product development

Product development expenses totaled $9.0 million and $4.1 million in the year ended December 31, 2023 and 2022, respectively.

The increase resulted primarily from timing of specific research and increased development efforts and activities related to our BrightLoop TM commercialization efforts and to further develop our ClimateBright TM portfolio.

Our product development activities include expenses that relate to sales, marketing, and other business development expenses for our products and services still under development and not yet widely available and are primarily from the timing of specific research and increased development efforts and activities related to our BrightLoop ™ commercialization efforts and to further develop our ClimateBright ™ portfolio.

Management excludes these expenses from Adjusted EBITDA as they often may not correlate to revenue or other operations occurring in the current period.

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

dollars at current exchange rates, and we translate items in the Consolidated Statements 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 loss.

We report foreign currency transaction gains and losses in the Consolidated Statements of Operations.

Foreign exchange was a net loss of $2.5 million and $0.6 million for the years ended December 31, 2023 and 2022, respectively.

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

We record adjustments resulting from the translation of foreign currency amounts as a component of Accumulated Other Comprehensive Loss.

We report foreign currency transaction gains (losses) in income in the Consolidated Statements of Operations.

Management excludes these expenses from Adjusted EBITDA as they do not reflect the ordinary course of business and are inherently unpredictable in timing and amount.

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

Financial advisory services

We used no financial advisory services in 2023.

Financial advisory services were $1.4 million for the year ended December 31, 2022.

Contract disposal

We are in the process of exiting our only remaining fixed fee operational and maintenance ("O&M") contract in our Renewable segment.

A similar contract was exited as of December 31, 2022.

Losses related to this contract totaled $8.6 million and $3.0 million in the years ended December 31, 2023 and 2022, respectively.

We believe it is useful to exclude the impact of this contract on our operating results as well as our backlog in order to highlight the performance of the ongoing business.

Letter of credit fees

Letter of credit fees included in Cost of operations were $7.7 million and $5.2 million for the years ended December 31, 2023 and 2022, respectively.

Letter of credit fees are routinely incurred in the course of executing customer contracts.

A portion of the fees are included in the contract prices with our customers.

These amounts represent performance guarantees akin to insurance that are not passed along to our customers and are excluded from adjusted EBITDA as they do not reflect the performance of the business.

Certain letter of credit amounts represent performance guarantees akin to insurance that are not passed along to our customers and are excluded from Adjusted EBITDA as they do not reflect the performance of the business.

Letter of credit fees are not passed along to customers and included in Cost of operations.

B&W Renewable Segment Results

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2024 vs 2023 results

Revenues in the B&W Renewable segment increased $29.9 million, to $318.6 million in 2023 compared to $288.7 million in 2022, which is primarily the result of increased revenue of $29.5 million in our European Renewable parts and services business as we continue to expand globally.

Revenues in the B&W Renewable segment decreased $30.7 million, to $110.1 million in 2024 compared to $140.8 million in 2023.

This is primarily attributable to lower volume in 2024 of a certain European project compared to 2023, as well as a few pulp and paper projects that finished in 2023 that were not fully replaced in 2024.

Adjusted EBITDA in the B&W Renewable segment increased $8.7 million, to $15.1 million in 2024 compared to $6.4 million in 2023.

This is primarily attributable to the increased volume in our European Renewable parts and services business, partially offset by a $6.2 million gain on sale related to the development rights of a future renewable energy project that was sold in the prior year.

This is primarily attributable to lower SG&A expenses due to lower allocation of costs associated with a lower percentage of revenue than in 2023, partially offset by the lower volume mentioned above.

Year ended December 31,

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2023 vs 2022 results

Revenues in the B&W Renewable segment increased $144.4 million, to $288.7 million in 2022 compared to $144.3 million in 2021, which is primarily due to higher volumes of new-build projects and a full year of revenue from the B&W Renewable Services A/S acquisition that closed on November 30, 2021.

Adjusted EBITDA in the B&W Renewable segment increased $1.4 million, to $21.2 million in 2022 compared to $19.8 million in 2021, which is primarily due to the higher revenue volume from the new-build projects, partially offset by higher SG&A expenses in 2022.

Revenues in the B&W Renewable segment increased $18.1 million, to $140.8 million in 2023 compared to $122.8 million in 2022.

This is primarily attributable to increased revenue of $22.9 million related to a European Renewable project that began in 2023.

Adjusted EBITDA in the B&W Renewable segment decreased $5.4 million, to $6.4 million in 2023 compared to $11.8 million in 2022.

This is primarily attributable to a $6.2 million gain on sale related to the development rights of a future renewable energy project that was sold in 2022, partially offset by the increased revenue in 2023.

B&W Environmental Segment Results

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2024 vs 2023 results

Revenues in the B&W Environmental segment was flat in 2024 compared to 2023.

Adjusted EBITDA in the B&W Environmental segment wa s $10.8 million at December 31, 2024 compared to $4.1 million in 2023.

The increase is attributable to the growth in our industrial electrostatic precipitator business which have higher margins.

Year ended December 31,

(in thousands) 2023 2022 $ Change

Revenues $ 108,655 $ 81,822 $ 26,833

Adjusted EBITDA $ 4,133 $ 1,641 $ 2,492

2023 vs 2022 results

Revenues in the B&W Environmental segment increased $26.8 million to $108.7 million in 2023 compared to $81.8 million in 2022.

The increase is primarily driven by increased revenue of $30.0 million in SPIG, our Air Cooled Condenser business in Italy, as we continue to grow that business outside of Europe and an increase in revenue of $19.0 million in our ash handling business.

Adjusted EBITDA in the B&W Environmental segment wa s $15.3 million i n December 31, 2023 compared to $9.8 million in 2022.

The change is primarily driven by higher volume, as described above.

The increase primarily relates to the increase in revenue in our ash handling business.

Adjusted EBITDA in the B&W Environmental segment was $4.1 million at December 31, 2023 compared to $1.6 million at 2022.

The increase is primarily driven by the increased revenue described above.

B&W Thermal Segment Results

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2024 vs 2023 results

Revenues in the B&W Thermal segment decreased $1.3 million , to $497.9 million in the year ended December 31, 2024 compared to $499.2 million generated in 2023 .

The decrease is primarily driven by a $27.1 million decrease in the U.S.

construction business as a result of a large construction project finishing in 2023 that was not fully replicated in 2024, offset partially by a large natural gas project of $16.7 million starting execution in 2024 as well as larger volume of Canadian repair and maintenance work in 2024 of $9.1 million.

Adjusted EBITDA in the B&W Thermal segment decreased $3.4 million to $61.4 million in 2024 compared to $64.8 million in 2023.

The decrease is primarily due to lower revenue in the U.S.

construction business, partially offset by a large natural gas project.

Year ended December 31,

(in thousands) 2023 2022 $ Change

Revenues $ 499,216 $ 415,104 $ 84,112

Adjusted EBITDA $ 64,775 $ 56,708 $ 8,067

2023 vs 2022 results

Revenues in the B&W Thermal segment increased $84.1 million, to $499.2 million in the year ended December 31, 2023 compared to $415.1 million generated in 2022.

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Senior notes $ 25,512 $ 25,601 $ 24,962

Revolving Credit Facility 1,494 —

Credit Facility 4,892 1,494 —

30,404 27,095 24,962

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Senior notes 2,606 2,525 2,612

8,755 7,168 7,012

Components associated with interest from:

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Total interest expense $ 46,146 $ 42,571 $ 39,797

The increase in interest expense in 2023, when compared to 2022 is driven by higher utilization of the revolver as well as increased incremental fees on letters of credit.

The increase in interest expense is driven by increased borrowings in 2024 when compared to 2023.

The increase in interest expense in 2023, when compared to 2022 is driven by higher utilization of the revolver as well as increased other interest expense.

Year ended December 31,

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Effective tax rate (20) % (15) % (177) %

Our effective tax rate reflects a valuation allowance against deferred tax assets in jurisdictions other than Mexico, Canada, Brazil, Finland, Germany, Thailand, the Philippines, Indonesia, the United Kingdom, Sweden and certain United States state jurisdictions.

The change in our income tax expense in 2023 compared to 2022 is primarily attributable to a prior year increase in the valuation allowance of $5.6 million related to net operating losses and temporary deductible benefits in certain states.

The change in our income tax expense in 2024 compared to 2023 is primarily attributable to an increase in valuation allowances, a change in the Company's permanent investment assertion and an unfavorable resolution of a foreign income tax matter.

Liquidity and Capital Resources

Our primary liquidity requirements include debt service, funding dividends on preferred stock and working capital needs.

We fund our liquidity requirements primarily through cash generated from operations, external sources of financing, including our Credit Agreement with Axos Bank and senior notes, and equity offerings, including our Preferred Stock, each of which are described below and in the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report in further detail.

We have recurring operating losses primarily due to losses recognized on B&W Solar loss contracts described in Note 4 to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report as well as increased selling, general and administrative expenses and higher debt service costs.

Our net cash used in operating activities was $42.3 million and $30.6 million for the years ended December 31, 2023 and December 31, 2022.

Our assessment of our ability to fund future operations is inherently subjective, judgment-based and susceptible to change based on future events.

Currently, with existing cash on hand and available liquidity, we are projecting insufficient liquidity to fund operations through one year

following the date that this Annual Report is issued.

These conditions and events raise substantial doubt about our ability to continue as a going concern.

In response to the conditions, we are currently evaluating different strategies to obtain the required funding for future operations.

We fund our liquidity requirements primarily through cash generated from operations, external sources of financing, including our Credit Agreement, senior notes, and equity offerings, and our Preferred Stock, each of which are described below and in the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report in further detail.

In 2024, we entered into the Sales Agreement with the Agents, in connection with the offer and sale from time to time of shares of our common stock, having an aggregate offering price of up to $50.0 million, through the Agents.

As of December 31, 2024, 5.0 million shares have been sold pursuant to the Sales Agreement.

Refer to Note 16 to the Consolidated Financial Statements for additional discussion of the Sales Agreement.

The Company has a credit agreement that provides for an up to $150.0 million asset-based credit facility with an outstanding balance of $124.4 million at December 31, 2024 that is currently due in November 2025 and, accordingly, is classified as a current liability.

In addition, the Company has senior notes with an aggregate principal amount of $193 million at December 31, 2024 for which the maturity date is within twelve months following the issuance of these financial statements.

As a result of the uncertainty regarding our current demonstrated ability to repay the current debt, this condition raises substantial doubt about the Company’s ability to continue as a going concern.

In response to the conditions that raised substantial doubt and to partially address our liquidity needs, during the year ended December 31, 2024, we took the following actions, among others:

• sold our BWRS business for net proceeds of $83.5 million on June 28, 2024 (described in Note 4 to the Consolidated Financial Statements);

• sold our SPIG and GMAB businesses for net proceeds of $33.7 million on October 30, 2024 (described in Note 4 to the Consolidated Financial Statements);

• sold 5.0 million common shares pursuant to our At-The-Market Offering (described in Note 16 to the Consolidated Financial Statements) for net proceeds of $7.9 million;

• successfully recovered $14.0 million of losses related to Solar;

• applied for and was granted a waiver of the required minimum contributions to the U.S.

Plan by the PBGC, which reduced cash funding requirements in 2024 by $15.0 million and will increase contributions annually over the subsequent 5-year period (described in Note 14 to the Consolidated Financial Statements).

In response to the conditions, we are currently evaluating different strategies to obtain the required funding for future debt maturities and operations.

We have taken or plan to take all or some combination of the following actions, and continue to evaluate other actions:

• initiated the sale process of one of our non-strategic businesses;

• filed for a waiver of required minimum contributions to the U.S.

Plan, that if granted, would reduce cash funding requirements in 2024 and would increase contributions annually over the subsequent five-year period.

We cannot provide any assurances that such waiver will be granted;

• initiated the sale process of several non-core real estate assets;

• plan to sell common shares pursuant to our At-The-Market Offering;

• considering alternative measures to manage cash flow, such as suspension of the dividend on our Preferred Stock.

Based on our ability to raise funds through the actions noted above and our Cash and cash equivalents as of December 31, 2023, we have concluded that it is probable that such proceeds would provide sufficient liquidity to fund operations for the next twelve months following the date of this Annual Report.

As a result, it is probable that our plans alleviate the substantial doubt about our ability to continue as a going concern.

• actively negotiating with our current lender under the Credit Facility to extend the maturity date of the Credit Facility to at least September 30, 2026;

• actively negotiating with several holders of the Senior Notes to extend their maturity date out for five years;

• actively negotiating with parties to obtain a new junior credit arrangement to satisfy any Senior Notes that are not extended and to fund future operations;

• actively in discussions with certain parties to further divest non-core assets.

There is no assurance that we will successfully obtain the financing necessary to satisfy our current obligations when they come due.

In addition, we may take one or more of the following actions to obtain the required funding for future operations:

• Suspension of dividends on our Preferred Stock;

• Consideration of selling additional common shares.

Management believes it is taking all prudent actions to address its liquidity concerns, however, these plans have not been finalized, and are subject to market conditions that are not within the Company's control, therefore we have determined that there is substantial doubt about our ability to continue as a going concern for the twelve months following the issuance of these financial statements.

Cash and Cash Flows

The following discussion on our cash flows is inclusive of continued and discontinued operations, consistent with our presentation on the Consolidated Statement of Cash Flows in accordance with GAAP.

As of December 31, 2024, our cash and cash equivalents, and restricted cash totaled $131.1 million, and we had total debt of $473.9 million as well as $191.7 million of gross preferred stock outstanding.

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We have no plans to repatriate these funds to the U.S.

In addition, we had $0.6 million of restricted cash as of December 31, 2023 related to collateral for certain letters of credit.

Cash used in operations was $42.3 million in the year ended December 31, 2023, which is primarily attributable to the current year net loss, including discontinued operations, of $197.0 million, partially offset by $137.7 million in non-cash expense arising from goodwill impairment, adjustments to prior service pensions, depreciation and amortization and stock-based compensation expenses.

Cash used in operations was $30.6 million in the year ended December 31, 2022, which is primarily attributable to the net loss, including discontinued operations, of $26.6 million.

In addition, we had $89.3 million of restricted cash as of December 31, 2024 related to collateral for certain letters of credit as part of funding for several ongoing projects.

Cash flows used in operating activities was $118.7 million in the year ended December 31, 2024, which is primarily attributable to the current year net loss, including discontinued operations, of $59.8 million, gain on the sale of businesses of $58.9 million, and uses from operations, partially offset by $79.1 million in non-cash expense arising from adjustments to prior service pensions, depreciation and amortization, impairment on long-lived assets, amortization of deferred financing costs and debt discount, operating lease expenses and stock-based compensation expenses.

Cash flows used in operating activities was $42.3 million in the year ended December 31, 2023, which is primarily attributable to the current year net loss, including discontinued operations, of $197.0 million, partially offset by $137.7 million in non-cash expense arising from goodwill impairment, adjustments to prior service pensions, depreciation and amortization, amortization of deferred financing costs and debt discount, operating lease expenses and stock-based compensation expenses.

Cash flows provided by investing activities totaled $110.0 million in the year ended December 31, 2024, primarily due to proceeds from the sale of businesses and assets of $120.9 million, partially offset by $11.2 million of capital expenditures.

Cash flows used in investing activities totaled $7.9 million in the year ended December 31, 2023, primarily due to $9.8 million of capital expenditures, partially offset by net proceeds from transactions in available-for-sale securities of $2.0 million.

Cash flows used in investing activities totaled $68.8 million in the year ended December 31, 2022, primarily due to business acquisitions of $64.9 million and $13.2 million of capital expenditures, partially offset by proceeds from the sale of business and assets of $5.5 million and net sales and maturities of available-for-sale securities of $3.4 million.

Cash flows provided by financing activities was $8.6 million during the year ended December 31, 2023, primarily related to net borrowings of $25.9 million, partially offset by payments of preferred stock dividends of $11.1 million and payment of holdback funds related to an acquisition of $2.8 million.

Cash flows used in financing activities of $11.2 million during the year ended December 31, 2022, primarily related to repayments of debt of $16.9 million and payments of preferred stock dividends of $14.9 million, partially offset by combined borrowings on loans payable, issuance of senior notes and proceeds from sale-leaseback transactions of $27.4 million.

Cash flows provided by financing activities was $69.7 million during the year ended December 31, 2024, primarily related to net borrowings of $93.7 million, partially offset by payments of preferred stock dividends of $18.6 million and debt issuance costs of $8.5 million.

Cash flows provided by financing activities of $8.6 million during the year ended December 31, 2023, primarily related to net borrowings of $25.9 million, partially offset by payments of preferred stock dividends of $11.1 million and payment of holdback funds related to an acquisition of $2.8 million.

Debt and Credit Facilities

As described in Note 15 to our Consolidated Financial Statements included herein, at December 31, 2023, our debt facilities include the Reimbursement Agreement, Revolving Credit Agreement and Letter of Credit Agreement (collectively, the “Debt Documents” and the facilities thereunder, the “Debt Facilities”).

Our obligations under each of the Debt Facilities were guaranteed by certain of our existing and future domestic and foreign subsidiaries.

Riley, a related party, has provided a guaranty of payment with regard to our obligations under the Reimbursement Agreement.

We used the proceeds and letter of credit availability under the Debt Facilities for working capital purposes and general corporate purposes.

The Debt Facilities mature on June 30, 2025.

For the year ended December 31, 2023, we had average daily borrowings of $14.2 million, and had

a maximum daily amount outstanding of $34.9 million.

Usage under the Letter of Credit Agreement consisted of $15.9 million of financial letters of credit and $70.0 million of performance letters of credit at December 31, 2023.

As discussed in Note 25 to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report, in January 2024, we entered into a new Credit Agreement with Axos Bank.

This agreement substantially replaces the existing Reimbursement Agreement, Revolving Credit Agreement and Letter of Credit Agreement.

As described in Note 15 to our Consolidated Financial Statements included herein, we entered into a Credit Agreement in January 2024.

Riley, a related party, has provided a guaranty of payment with regard to our obligations under the Credit Agreement.

For further discussion on the new agreement, see Note 25.

Letters of Credit, Bank Guarantees and Surety Bonds

Certain of our subsidiaries, that are 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, 2023 was $39.4 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 $21.7 million as of December 31, 2023.

Of the outstanding letters of credit issued under the Letter of Credit Agreement, $54.0 million are subject to foreign currency revaluation.

We have 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 our applicable contracts.

We, and certain of our subsidiaries, have jointly executed general agreements of indemnity in favor of surety underwriters relating to surety bonds the underwriters issue in support of some of our contracting activity.

As of December 31, 2023, bonds issued and outstanding under these arrangements in support of contracts totaled approximately $141.7 million.

The aggregate value of the letters of credit backstopping surety bonds was $16.8 million.

Our ability to obtain and maintain sufficient capacity under our current 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.

Other Indebtedness - Loans Payable

As of December 31, 2023, we had loans payable of $41.6 million, net of debt issuance costs of $0.5 million, of which $6.2 million is classified as current, and $35.4 million as long-term loans payable on the Consolidated Balance Sheet.

Included in these amounts, we had approximately $12.3 million, net of debt issuance costs of $0.5 million, related to sale-leaseback financing transactions.

This agreement substantially replaces the existing Reimbursement Agreement, Revolving Credit Agreement and Letter of Credit Agreement.

We completed the transition of letters of credit outstanding under the Letter of Credit Agreement

and Reimbursement Agreement to the Credit Agreement in August 2024.

Information related to our Debt and Credit Facilities is described in Note 15 to the Consolidated Financial Statements and is incorporated herein by reference.

Off-Balance Sheet Arrangements

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CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The Consolidated Financial Statements included in Part II, Item 8 of this Annual Report are prepared in accordance with accounting principles generally accepted in the United States.

The Consolidated Financial Statements included in Part II, Item 8 of this Annual Report are prepared in accordance with GAAP.

Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses.

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These policies require our most difficult, subjective and complex judgments, often as a result of the need to make estimates of matters that are inherently uncertain.

Contracts and revenue recognition

A significant portion of our revenue is recognized over time using the cost-to-cost input method, which involves significant estimates.

This method of revenue recognition uses costs incurred-to-date relative to total estimated costs at completion to measure progress toward satisfying our performance obligations.

Incurred cost represents work performed, which corresponds with, and thereby best depicts, the transfer of control to the customer.

Contract costs include labor, material, overhead and warranty expenses.

Variable consideration in these contracts includes estimates of contract modifications, contractual bonuses and penalties, and liquidated damages.

We review contract revenue 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.

These changes in estimates can be material.

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 Consolidated Statements 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 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.

Contract modifications are routine in the performance of our 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 claims receivable 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 the amount can be reasonably estimated 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 counterparty that supports our expectations about their willingness and ability to pay for the additional cost along with a reasonable margin.

Claims receivable at December 31, 2023 and 2022 was not significant in the Consolidated Financial Statements.

Our revenue recognition policies, assumptions, changes in estimates and significant loss contracts are described in greater detail in Note 2 to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report.

Business Combinations

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Assets and liabilities classified as held for sale are reported at the lower of their carrying value or fair value less costs to sell.

Depreciation and amortization of assets ceases upon designation as held for sale.

Depreciation and amortization of assets cease upon designation as held for sale.

Discontinued operations comprise activities that were disposed of, discontinued or held for sale at the end of the period, represent a separate major line of business that can be clearly distinguished for operational and financial reporting purposes and represent a strategic business shift having a major effect on our operations and financial results according to ASC 205, Presentation of Financial Statements.

included all of the revenues and expenses for the B&W Solar business as discontinued operations in the Consolidated Statements of Operations and all assets and liabilities as held for sale in the Consolidated Balance Sheets.

Goodwill is generally recorded as a result of a business combination and represents the excess of the consideration transferred over the fair value of the assets acquired and liabilities assumed.

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

We have included all of the revenues and expenses for B&W Solar, BWRS, SPIG, GMAB and Vølund businesses as discontinued operations in the Consolidated Statements of Operations and all assets and liabilities as held for sale in the Consolidated Balance Sheets.

Contracts and revenue recognition

A significant portion of our revenue is recognized over time using the cost-to-cost input method, which involves significant estimates.

This method of revenue recognition uses costs incurred-to-date relative to total estimated costs at completion to measure progress toward satisfying our performance obligations.

Incurred cost represents work performed, which corresponds with, and thereby best depicts, the transfer of control to the customer.

Contract costs include labor, material, overhead and warranty expenses.

Variable consideration in these contracts includes estimates of contract modifications, contractual bonuses and penalties, and liquidated damages.

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.

These changes in estimates can be material.

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 in Costs of operations in the Consolidated Statements of Operations and an accrual for the estimated loss on the uncompleted contract is recorded in Other accrued liabilities in the Consolidated Balance Sheets.

In addition, when we determine that an incomplete 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 as a reduction of the estimated selling price in the period the change in estimate occurs.

These amounts are included in Other accrued liabilities in the Consolidated Balance Sheets.

Contract modifications are routine in the performance of our 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 additional work or changes in the scope of work to the extent of costs incurred when we believe we have an enforceable right to the modification or claim, the amount can be reasonably estimated 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 the relevant history with the counterparty that supports expectations about their willingness and ability to pay for the additional cost along with a reasonable margin.

Claims receivable at December 31, 2024 and 2023 were not significant in the 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.

We perform impairment testing of goodwill annually on October 1 or if we determine that impairment indicators are present.

In assessing goodwill for impairment, we follow 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 amount, including goodwill.

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Warranty expenses

We record estimated expense in Cost of operations in the Consolidated Statements of Operations to satisfy contractual warranty requirements when we recognize the associated revenues on the related contracts.

We record an estimated expense in Cost of operations in the 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 recognized when the contract becomes a loss contract.

In addition, we record specific adjustments when we expect the actual warranty costs to significantly differ from the initial estimates.

Factors that impact our estimate of warranty costs include prior history of warranty claims and our estimate of future costs of materials and labor.

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

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

See Note 12 to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report for further discussion.

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.

See Note 21 to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report for a discussion of this litigation.

As disclosed, we have accrued estimates of the probable losses associated with these matters;

however, these matters are typically resolved over long periods of time and are often difficult to estimate due to the possibility of multiple actions by third parties.

Therefore, it is possible that future earnings could be affected by changes in our estimates related to these matters.

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

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

Included in our significant assumptions, we determine the 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.

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 or losses into earnings as a component of net periodic benefit cost (MTM pension adjustment).

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

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.

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.

These rates are then adjusted for anticipated future inflation to determine estimated nominal rates of return for each asset class.

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.

As of December 2015, we have ceased all of our various plans but continue to accrue benefits for those employees still eligible prior to the cessation of these plans.

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.

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

We assess the need for valuation allowances on a quarterly basis.

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As of December 31, 2024, we have a valuation allowance on our deferred tax assets in substantially all jurisdictions, as we do not believe it is more likely than not that the deferred tax assets will be realized.

For those tax positions where it is more likely than not that a tax benefit will be realized, we have recorded the 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 realized, no tax benefit has been recognized in the Consolidated Financial Statements.

We record interest and penalties (net of any applicable tax benefit) related to income taxes as a component of provision for income taxes in the Consolidated Statements of Operations.

For those tax positions where it is more likely than not that a tax benefit will be sustained, we have recorded the 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 the 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 in the Consolidated Statements of Operations.

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.

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.

We currently are involved in significant litigation, as discussed in Note 20 to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report.

As disclosed, we have accrued estimates of the probable losses associated with these matters;

however, these matters are typically resolved over long periods of time and are often difficult to estimate due to the factors included in Note 2 to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report.

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

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What changed 10-K

Item 7. Management’s Discussion and Analysis