Hello, everyone, and welcome to the Babcock & Wilcox Enterprises fourth quarter and full year 2021 earnings conference call. My name is Victoria, and I will be coordinating your call today. If you'd like to ask a question during the presentation, you may do so by pressing star one on your telephone keypad. If you wish to withdraw your question, please press star two. When preparing to ask your question, please ensure that your line is unmuted locally. I'll now pass over to your host, Megan Wilson, Chief Strategy Officer, to begin. Please go ahead.
Thank you, Victoria, and good morning, everyone. Welcome to Babcock & Wilcox Enterprises fourth quarter and full year 2021 earnings conference call. I'm Megan Wilson, Chief Strategy Officer and Senior Vice President of Corporate Development at B&W. Joining me this morning are Kenny Young, B&W's Chairman and Chief Executive Officer, and Lou Salamone, Chief Financial Officer, to discuss our fourth quarter and full year results. During this call, certain statements we make will be forward-looking. These statements are subject to risks and uncertainties, including those set forth in our safe harbor provision for forward-looking statements that can be found at the end of our earnings press release and in our annual report on Form 10-K that is on file with the SEC and provide further detail about the risks related to our business. Additionally, except as required by law, we undertake no obligation to update any forward-looking statement.
We also provide non-GAAP information regarding certain of our historical and targeted results to supplement the results provided in accordance with GAAP. This information should not be considered superior to or as a substitute for the comparable GAAP measures. A reconciliation of historical non-GAAP measures can be found in our fourth quarter and full year earnings release published this morning and in our company overview presentation filed on Form 8-K this morning and posted on the investor relations section of our website at babcock.com. With that, I will turn the call over to Kenny.
Thanks, Megan. Thanks, Victoria, and good morning, everyone, and thanks for joining our call. Well, wow, what a year. 2021 was a year of unprecedented growth and accomplishments for B&W, especially compared to 2020. Revenues were up about 28%. Our net income swung from a loss of -$10 million to net income of about $32 million. Our Adjusted EBITDA increased by about 260%, excluding non-recurring loss recovery in 2020. We also achieved our ambitious target of Adjusted EBITDA of $70 million for the year. Annual bookings and ending backlog were both up about 20% with our highest level of annual bookings since 2017. Our quarter-over-quarter results for the fourth quarter were actually just as significant. Revenues were up about 28%.
Net income was up a remarkable 504%. Adjusted EBITDA was up about 77%, and bookings were up 61%. In 2021, we did what we said we would do. We focused on execution. We booked four renewable waste to energy new build projects in 2021, and actually a fifth we just announced last month. We closed several strategic acquisitions and continued investing in building our ClimateBright decarbonization platform, including driving forward on commercial demonstration projects for our innovative BrightLoop hydrogen production technology. Our extraordinary fourth quarter bookings of $269 million included awards of two additional renewable new build projects, including contracts for $58 million and $24 million to supply advanced waste to energy technology for power plants in Europe.
With the addition of an $11 million booking for biomass boiler upgrade in the beginning of 2022, we have booked five sizable renewable energy projects since September. Our recent acquisitions over the last six months have strategically expanded our clean and renewable energy businesses. We're excited about the substantial opportunities we see for solar installation and construction services in the United States through our BW Fosler Solar business, which is reflected through our growing pipeline. We are also exploring opportunities to combine solar with B&W's long-term or long duration energy storage solutions and look forward to continuing our efforts to drive these newer technology.
Through our November acquisition of VODA, a flexible, scalable, renewable aftermarket parts and services business based in Denmark, we launched our B&W Renewable Services platform to further expand our renewable operation and maintenance for parts and service business in Europe and focused on renewable waste to energy and biomass to energy technologies. In February of this year, we acquired FPS, a leading designer and manufacturer of hydrogen, natural gas, and renewable pulp and paper combustion equipment and technologies based in Nova Scotia, Canada. FPS igniters and control system capabilities are ideally suited to clean energy applications such as firing hydrogen, which complements B&W's hydrogen generation and combustion technologies. We see significant potential growth in those markets, not only in North America, but around the world.
In February, we also completed a small bolt-on acquisition of Optimus Industries in Tulsa, Oklahoma, which designs and manufactures waste heat recovery products, including package boilers, water tube and fire tube waste heat boilers, economizers and superheaters and units for sulfuric acid plants. We expect the addition of U.S. packaged boiler manufacturing capabilities to increase our U.S. market access and create additional opportunities for the combined business moving forward. We are continuing to explore additional acquisition and investment opportunities in both, you know, emerging technologies and mature markets, and aggressively pursuing opportunities to further increase shareholder value. Our results, bookings, and strategic actions in 2021 have positioned us for an even stronger 2022.
Looking forward, as we previously mentioned, we increased our 2022 target to a range of $110 million-$120 million in Adjusted EBITDA, and our overall pipeline is now more than $7.5 million of identified project opportunities through 2024, which again, does not include parts and services. Additionally, we anticipate growth in our parts and service business as the year progresses due to higher demand by our installed base as a direct result of higher natural gas prices. Our robust and growing pipeline, recent contract wins, and strategic acquisitions give us confidence in our ability to achieve a significant year-over-year growth in 2022, and we anticipate that full year 2022 will realize the potential and continued momentum of our ongoing growth strategies.
As always, our EBITDA will ramp between Q1 being the lowest and Q4 being the highest as normal based on our historical trends. Most importantly, we believe that 2022 will be a milestone year for our ClimateBright decarbonization platform as interest in our technologies is rapidly expanding, particularly for our breakthrough BrightLoop technology to produce hydrogen and/or steam or syngas from a variety of fuels or feedstocks while isolating CO2 for sequestration or utilization without, and the good news, without any additional parasitic load or loss of efficiency on the plant. In November 2021, we signed an exclusive global license agreement with Ohio State Innovation Foundation for a unique particle that is used within our BrightLoop platform for decarbonization and the production of hydrogen and/or steam or syngas, which complements B&W's existing chemical looping technology portfolio.
This technology was jointly researched and developed by B&W in collaboration with The Ohio State University, and its use to produce hydrogen from syngas has been successfully demonstrated. We have proven how fully scalable and adaptable this technology is for both large and small installations, and we are excited about its transformational potential. Excited, in fact, that we are now moving forward with a number of potential commercial scale demonstration projects, including detailed design and engineering, site selection, permitting, and financing, all with a goal of having equipment on the ground for at least one plant by the end of 2022 and producing hydrogen by the end of 2023. Our robust pipeline of energy transition, carbon capture, and hydrogen production opportunities is accelerating as our customers seek solutions to address some of the world's most urgent climate objectives.
We are continuing working on over 20 potential ClimateBright carbon capture and hydrogen projects to really determine the size and scale and best carbon capture solution based on customer-specific needs and anticipate booking additional ClimateBright projects in the coming months. I'll now turn the call over to Lou to discuss the key points of our financial performance in the fourth quarter of 2021, as well as our full year results. Lou?
Thanks, Kenny. First, I'll review our full year 2021 results, and then I'll turn to our fourth quarter 2021 results. For further detail, I call your attention to the fact that we filed our Form 10-K with the SEC, and you can refer to it for further details beyond what we discuss here in this call. Consolidated revenues for 2021 were $723.4 million, a 28% improvement compared to 2020. The improvement was primarily due to a higher level of activity in our thermal and environmental segments, expanded geographic presence, and improved strategies to mitigate the continued impact of COVID-19, as well as the acquisitions of Fosler and VODA in our renewables segment. Net income in 2021 was $31.5 million, compared to a net loss of $10.3 million in 2020.
GAAP operating income in 2021 was $20.8 million, compared to an operating loss of $1.7 million in 2020. This increase was primarily due to the earlier referenced increase in revenue. We also note that operating income in the prior year included a $26 million settlement from an insurer, which is a one-time item. We achieved our 2021 Adjusted EBITDA target of more than $70 million, with an Adjusted EBITDA reaching $70.6 million as compared to $19.7 million in 2020, and the $19.7 million excludes the non-recurring $26 million settlement, which I mentioned a few moments ago. Total bookings in 2021 were $779 million, a 21% increase compared to full year bookings in 2020. This is the highest level of annual bookings since 2017.
Backlog at December 31, 2021 was $639 million, and that's a 19% increase compared to the prior year-end. Let me now turn to our fourth quarter results. Fourth quarter consolidated revenues were $192 million, a 28% improvement compared to the fourth quarter of 2020. This is primarily due to a higher level of activity in our project business within all three segments, including, as Kenny mentioned, four large waste-to-energy projects in the renewables segment, and a fifth we just signed, an increased construction volume in the thermal segment, as well as the acquisitions of Fosler and VODA. Net income in the fourth quarter of 2021 was $30.2 million. This is more than six times the net income of $5 million in the fourth quarter of 2020.
Our GAAP operating income in the fourth quarter of 2021 was $9.7 million, more than four times the operating income of $2.2 million in the fourth quarter of 2020. This increase was primarily due to the earlier referenced revenue increase as well as favorable project execution. Adjusted EBITDA was $27.9 million in the quarter, compared to $15.8 million in the 2020 quarter. Bookings in the fourth quarter of 2021 were $269 million. This is a 61% increase compared to fourth quarter bookings in 2020. I'll now turn to cash flow, balance sheet, and liquidity. Cash flow from operations in the fourth quarter of 2021 was a use of $3.4 million.
We ended the quarter with total debt of $340 million, and cash and cash equivalents and restricted cash of $226 million, for a net debt of approximately $114 million. This is inclusive of the net proceeds under our 6.5% senior notes offering, which was executed in December and after cash paid for the acquisition of Fosler and VODA. Net leverage at December 31 was 1.61x the last 12 months Adjusted EBITDA. Net interest expense for the quarter was $8.7 million as compared to $9.8 million in the prior year quarter. The decrease is primarily driven by the reduction in interest rate based on our last-out term loans and the rates secured on our senior notes issued during the public common stock and senior notes offering in 2021.
As Kenny stated, our strong results for the fourth quarter were propelled by continued execution of our growth strategy and drove us to achieve our Adjusted EBITDA target of more than $70 million for the full year 2021. We booked four sizable renewable waste-to-energy products at new build projects in 2021, contributing again, as I said, to the highest level of annual bookings since 2017. We closed several strategic acquisitions in the past six months and anticipate those acquisitions will further propel our growth in coming years. We expect 2022's quarterly profile to follow our normal cyclical performance of increasing profitability from the first through the fourth quarter.
Again, as Kenny stated, we're reiterating our 2022 target of $110 million-$120 million of Adjusted EBITDA, and this is supported by a robust pipeline of more than $7.5 billion of opportunities through 2024 and a $639 million backlog at the end of 2021, a 19% improvement over the prior year and the accelerating momentum of our strategic actions. I'll now turn it back over to Kenny.
Lou, thanks for that. Well, in closing, you know, we have made tremendous strides over the past three years, and we are extremely proud of the milestone year we achieved at Babcock & Wilcox in 2021. Our employees around the world have stepped up to meet the global demand, and we want to recognize the tremendous achievements of each and every one of them. We are growing and expanding and adding new talent across our three segments. We've achieved significant year-over-year growth in revenue, net income and EBITDA. We are executing on what we promised by booking five renewable waste-to-energy new build projects and closing several strategic acquisitions, all accomplished just since September. We continue to build our ClimateBright decarbonization platform and progress on a pursuit of 20+ potential ClimateBright projects and driving forward on BrightLoop carbon capture and hydrogen commercial demonstration projects.
The technology reviews we are seeing from our customers regarding our BrightLoop platform is giving us even greater confidence in the long-term demand of this emerging technology. Looking forward to 2022, we are confident about the year, the year-over-year growth we expect to achieve for the coming year with a targeted Adjusted EBITDA of $110 million-$120 million. The strategic actions and growth strategies we have been working on for several years are materializing, which is proven by our recent significant bookings, substantially increased backlog, and more than $7.5 billion in three-year pipeline. As B&W continues to deploy our innovative environmental and renewable offerings, including our waste to energy and ClimateBright decarbonization technologies, we are confident that our capabilities will continue to demonstrate B&W's role as a leader and an innovator that advances the world's energy transition solutions.
As always, we continue to drive our results towards increased shareholder value. With that, I'll turn the call back over to Victoria, moderator who can help take any questions. Victoria?
Thank you. We'll now move on to the Q and A portion of the call. If you'd like to ask a question, please press star followed by one on your telephone keypad. If you wish to withdraw your question, please press star two. When preparing to ask a question, please ensure that your line is unmuted locally. Our first question comes from Zane Karimi from D.A. Davidson. Please go ahead. Your line is open.
Hey, good morning, and thank you for taking my question.
Yeah, good morning.
First here, I know it's early, but there does seem to be a significant uptake in the interest pertaining to the waste-to-energy solutions business, especially in Europe. Can you talk a little bit more about the opportunities in hand as well as what you're seeing elsewhere? Seems like this could be one solid solution to energy concerns throughout the region.
Sure. Well, waste energy has been a strong suit of the company for many, many years. It has always, you know, been strong in Europe. Much stronger than in fact here in the United States from a uptake in or use of waste to create energy. The demand you're seeing, you know, is really reflected, you know, strongly both of the marketplace and what we see in the marketplace worldwide. We also announced a project in Southeast Asia as well. We're seeing opportunities emerge, actually, in the United States as well, but also through Europe and through more Southeast Asia.
The good news for us is, you know, as we've recapitalized our company many times over the past couple of years to move us into a very strong position. It has strengthened our abilities to take on more projects and our customers and partners and some of the groups that we work with jointly on these opportunities are seeing more and more waste energy demand to be created or built in Europe. The other side of that is we are also seeing an increased demand on some of the older waste energy plants and technologies that are out there to upgrade or convert or enhance or augment those plants and facilities as well.
It's one of the reasons we invested in the parts and services business in Northern Europe, was to be in a much better position to take advantage of those emerging market opportunities. As we continue to look worldwide, obviously, we do see the need to reduce greenhouse gases, in particular from methane reduction from landfills. To us, it's still a very strong part of the global change to reduce greenhouse gases. You know, as we've often talked about the fact that, you know, even here in the U.S., you know, there's methane from landfills, which would equate to the same greenhouse gas effect of roughly 77 million automobiles. It still is a significant issue related to, you know, a global environmental aspect and reducing greenhouse gases overall.
We're starting to see opportunities emerge in the U.S. There, there's still some other areas that need to improve to make it a much more economical, attractive solution here. Meanwhile, Europe is still a growing market for us, and we are, you know, continue to work on a number of opportunities over there and anticipate, you know, making further announcements this year, obviously on additional bookings in our waste to energy technology from Europe and potentially in other parts of the world as well.
Thank you for that color. Could you talk a little bit more about your exposure to hydrocarbon companies? You know, both traditional oil and gas within the industrial segment? Like, how big are they for you? As this push in commodity prices moves higher, how could that potentially benefit you guys, if at all?
Well, you know, as we often talk about and did on the calls before too, you know, we do have a strong parts and services business within our thermal segment that you know relies on various fossil fuel both in the industrial and the utility sector for that. The main increase or driver for us is on natural gas. When natural gas prices go up, you know, other forms of fuel is used to create energy. And that bodes well for us from a parts and services perspective. It's always interesting because it's two-fold.
On one hand, when the natural gas prices increase significantly, then there's more power output from other forms of fossil fuels, and those plants operate to their fullest capacity for much longer periods of time. As they operate for longer periods of time, there's clearly more wear and tear that occurs and, you know, eventually that leads to greater parts and services that you know come through our thermal operation. You know, with worldwide right now as we obviously continue to watch and observe what's happening with all of the different geopolitical aspects that occur in these days, and as well as, you know, potentially increases in natural gas and other energy forms. Some of those have very positive impacts for us in and around that.
We also see shifts of, you know, especially in Europe right now, where natural gas is becoming a premium, you know, you just see kind of a natural inclination for a lot of the utility and the energy providers to go back and look at alternate forms. We think also long term that helps drive further initiatives around hydrogen production, you know, and the use of hydrogen as a replacement from a fuel source in the long run. We're equally excited about the impacts that could lead to our hydrogen production capabilities. As we mentioned on this call, we're looking to move forward with one or two commercial demonstrations yet this year.
It's these impacts impact us in various ways from that standpoint, but we don't see them as a negative. Actually, it opens up opportunities for us. We're excited about that. Lou, you have anything you wanna add to that?
No.
Go ahead, Zane.
No, no. All you. I'm sorry.
No, that's okay. Go ahead. You can.
Okay. Well, thank you for that color. Last one for me before I jump into queue, but how should we think about the sequence of the year to build toward 2022 guidance, particularly among the segments?
Well, I think, you know, as we talked about and have talked about in the past, you know, as we continue to evolve and execute against our strategy, you know, and over the next couple of years, you will see that transition of revenues going towards two-thirds environmental and renewable. Our pipeline and obviously our recent announcements support that, you know, and we'll see that increase, you know, over that period of time. You know, as we also talked about on the call today, our ramp in EBITDA towards our target of $110 million-$120 million will be just like this year. It'll be Q1 will be the lowest, Q4 will be the highest.
It's just we're, you know, a lot of cyclical trends to our business, especially in the parts and services side. Just normal course for us, and we'll see that again this year. At the same time, we also know the bookings that we anticipate and projects that we're heavily involved in and actively working to pursue to close. Those announcements, whether they be, you know, Q1, Q2, Q3, but we have that timing layered into our targets, and fully see and anticipate, you know, reaching those milestones. It'll be. It'll occur just like it normally does. Q1 being low, Q4 being high.
Okay. Thank you for that. Again, congratulations on the big year.
Thanks, Zane. I appreciate that. Thank you.
Perfect. Thank you, Zane, for your question. Our next question comes from Alex Rygiel from B. Riley. Please go ahead. Your line is open.
Thank you. Good morning, gentlemen, and a fantastic year here and quarter. Kenny, the tough question first. Can you address the situation over in Eastern Europe and how it may shift customers' views on both thermal and clean energy projects?
Sure. You know, obviously it's a everyday moving situation that's occurring, and we watch it very closely in that regard. You know, the biggest impact in short order obviously is natural gas prices and the access to natural gas in Europe. You know, for us, it's too early to determine whether or not that will lead to an increased you know exponentially moving growth on waste energy, meaning you know will more and more countries adopt a different platform for energy consumption or energy production. It's a little too early to see that. We do see growth in our waste energy environment, but I wouldn't say it's reflected or impacted by what's happening in Ukraine at the moment.
We are seeing, obviously in talking to many customers about the shift in their future, and obviously they're trying to figure out long term if they need to look at, you know, different alternative energy sources to create energy in the long run. We're having those conversations with them at this point in time, but it's still too early to see any real impact that will hit us. I, you know, would hate to predict obviously anything at this point in time, and it's a very delicate situation in the geopolitical aspect in Ukraine. You know, we're seeing a lot of focus and a lot of requests to discuss, you know, different alternative energy sources, including hydrogen and other biofuels in Europe.
Some of that is, you know, as a result of what's happening right now in Europe, and some of that's just normal course in a direction that started, you know, years ago, that continues to grow. I'd probably leave it at that right now, Alex.
That is helpful. Your liquidity position is still pretty strong. Directionally, where are your M&A efforts sort of targeting at this time, both end markets as well as geographically?
Yeah, we still look globally. We're very active in both, you know, ownership M&A companies that we would acquire, you know, in total or even with leaving some minority ownership with the original founders. You know, we're equally looking at small investments in emerging technologies that could complement or help propel our hydrogen production and other, you know, decarbonization technologies globally. We see, you know, the need to keep investing and expanding and we're getting a lot of momentum, especially around the potential for biomass to hydrogen production, you know, as a alternative source of energy in particular around our BrightLoop platform.
That's coming from you know a lot of different vertical industries as well as in the utility sector as well. We'll continue to look at investments in those areas in particular around some of these emerging aspects. Those could be you know in Europe within the U.S. you know and elsewhere in the world. We're you know excited about some of those opportunities and where they can help B&W grow you know more and more. You know of course we'll still keep an eye on and look and evaluate opportunities to acquire cash flows especially where there's high synergies you know where those make sense. I think it's just prudent that we evaluate and you know those kind of opportunities as well too.
there's, you know, strength of what we're looking at from an M&A standpoint, and it's a lot towards the emerging technologies and where those may lead.
Thank you very much.
Thanks, Alex.
Perfect. Thank you, Alex, for your question. As a reminder, if you would like to ask a question, please press star followed by one on your telephone keypad. Our next question comes from Rob Brown from Lake Street Capital Markets. Please go ahead. Your line is open.
Good morning, Kenny Young. Just let me go back to the FPS acquisition and you had some hydrogen technology there. Maybe if you could just expand on how that helps your hydrogen strategy and what FPS kind of brings you in terms of business.
Yeah. One of the unique characteristics around FPS technology, in particular the hydrogen scanners, you know, is when you burn or consume hydrogen, from a combustion standpoint, the flame is not often visible. You need some strong, very strong scanner technology as it relates to that sensitivity. You know, one of the things that we really liked about FPS. Well, it's twofold really around it. The one, you know, B&W has been as part of its parts and services, utilizing FPS technology for many years. It was an easy extension as it relates to some of our parts and services business today.
They are one of the few companies in the world that has a strong platform around the scanning technology on for hydrogen igniters as well. It was, you know, combining that, we felt that obtaining that technology, which would be required as hydrogen becomes more and more prevalent in the marketplace, was a significant advantage for us, and one that we felt that we could incorporate on a global basis. FPS had been more focused on, you know, the North America market was predominantly where they played.
We are anxious and obviously working hard to bring the product portfolio up to an international standard, and we'll be doing that, and one which we think we can grow on an international basis through our global parts and services organization. We think that technology was important from, you know, the hydrogen combustion standpoint.
Okay, great. This may be a little bit more on the new business pipeline. You had a number of projects hit recently. How do you sort of see that playing out through the year and maybe in the next couple of years? Is that large pipeline kind of front-end weighted, or should it be ratable, or how do you think about the pipeline conversion at this point?
Well, you know, excited that the pipeline continues to build, you know, in projects, again, renewable projects, in particular here in the U.S., as well as in Europe, overall. You know, anticipate that we'll see some announcements of bookings, you know, in the Q1, Q2 timeframe, probably more Q2 at this stage. But, you know, we anticipate that in other projects throughout the year that we're working on now. Obviously, when you're working on some of these larger projects out there, those take time to work through the engineering aspects, the contract negotiation aspects, just normal, typical, you know, nature of getting these projects accomplished and through our out to a booking standpoint so that we can start to execute on those projects.
There are a number of active projects that we're heavily involved in right now, again, both in the U.S. and Europe and Southeast Asia, as well as the Middle East. You know, as these continue to develop, obviously we'll push to get those announced as quickly as we can once they're ready to go. There's some, you know, very exciting opportunities that we see out there that, you know, that we fully intend to book and get announced this year. It's, you know, I would say you would start to see more of that, you know, happen in the Q2, Q3, and then Q4 timeframes, around our bookings, which is just very typical for us.
There are a number that we're working on right now, and it's just reflective in the fact that our pipeline continues to grow. I think we've increased it from $6.5 billion-$7.5 billion, just to give some color on that. Okay, great. Thank you. I'll turn it over. Thanks, Rob.
Perfect. Thank you. Our final question comes as a follow-up from Zane Karimi from D.A. Davidson. Please go ahead.
Yeah. Thank you for taking the follow-up. Real quick, what does the pipeline look like in solar, and is that business constrained by supply disruptions like others have seen? What sort of growth can we be expecting this year in the business?
Solar continues to build the pipeline for solar opportunities and we're actively engaged in a number of opportunities right now. I would say, you know, one of the nice things about the business that we acquired is that they are capable of delivering, you know, smaller community solar projects, you know, that are down in the five, 10, 20 MW range, but, you know, equally capable of delivering larger projects that, you know, would be in the 100+ MW range for solar output.
Obviously, that's restricted for us right now in the United States, in that regard, but we are working on a number of projects right now. Obviously the, you know, the bringing in the panels from an overall standpoint is, you know, varies. Depends on the customer and capabilities and which ones have access to those panels and those technologies right now. But we do see a number of smaller projects where, you know, any supply chain constraint wouldn't be necessarily an issue, as part of that overall portfolio. Some of the larger projects, you know, would be phased in probably over a longer-term period in balancing that.
you know, we're seeing both those opportunities increase our pipeline right now and again anticipate booking, you know, and a few of those projects this year.
Thank you for the comments.
Perfect. Thank you for your question, Zane. At this time, there are no further questions, and I would like to pass back over to Megan for any final remarks.
Thank you for joining us. That concludes our conference call. A replay will be available for a limited time on our website later today.
Thank you, everybody, for joining today's call. You may now disconnect your lines.