Babcock & Wilcox Enterprises, Inc. (NYSE:BW) Q1 2024 Earnings Call Transcript

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Some of the newer ones will be fine. Some of the older ones out there will have — require some upgrades or enhancements or in a few cases, it might require an extensive upgrade or enhancements to those particular sites, all of which opens up opportunities for us. But — and again, none of those are surprises. So several of those sites and plants are in our pipeline, and we’ve been in discussions on various technologies and solutions and working through those particular areas. Again, I think these rules just help reinforce the investment grade that these plants have to undergo and that helps eliminate or help support some of the PUC and local EPA approvals that are required on some of these permits. So that’s how we view it.

Aaron Spychalla: All right, thanks. Thank you for the color over there. And then just on the targeted cost savings, so $20 million of the $30 million so far. Can you just talk about kind of the line of sight and for the rest of this year and just remind us where we should expect to see the rest going forward. Is that on the OpEx line and the COGS side or some combination?

Kenny Young: No. It will be more in the — I mean there will be a little bit coming out of CoGS, but it will be more on the OpEx side for us to recognize that total reduction on that piece of it. That will come over the course of the year. Some of that is as we continue to shift, if you will, some of the focus on the selective higher-margin projects, we’re going to be able to reduce some of the overhead, both within certain operations also in the manufacturing side of operations. So those help as well too on the overall shift. Some of that’s coming in, in the form of improved IT productivity and operations, financial productivity and operations in the company as we continue to make improvements in and around those particular areas.

But we feel that we’re on track with our target of 30% this year. And if we can do better, we’ll obviously do better, but we wanted to put out a status. I think at $20 million versus that target is a pretty good milestone at this point, and we’ll continue to implement that over the course of the year.

Aaron Spychalla: Understood. And then if I could just sneak one more in for Lou. On the free cash flow side of things, should that — do you expect that to kind of follow a similar path as kind of EBITDA throughout the year? Just maybe talk about some of the moving pieces there.

Lou Salamone: It should follow the EBITDA path throughout the year, Aaron. And we’d increased the free cash flow through the first — to the second, third and fourth quarter. Fourth quarter is traditionally a really good cash flow period. So that should go right along with the EBITDA rejected EBITDA targeted EBITDA.

Aaron Spychalla: All right. Thanks for taking the questions. I’ll turn it over.

Kenny Young: Great. Thanks, everyone. Sharyn, I’ll turn it over to you or want to close out.

Sharyn Brooks: Thank you, everyone, for joining us today. That concludes our conference call. A replay will be available for a limited time on our website later today.

Operator: That will conclude today’s conference call. Thank you all for your participation. You may now disconnect your lines.

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