Babcock & Wilcox Sees Demand Drop for Retrofits, but Eyes Growth in Renewables

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Researched by Industrial Info Resources (Sugar Land, Texas)--Babcock & Wilcox Enterprises Incorporated (NYSE:BW) (B&W) (Charlotte, North Carolina) is expecting stronger business over the next year, despite recent dips in volumes and profits in its major segments. B&W executives point to consistent growth in the renewable and industrial businesses, including potential major acquisitions in 2018. Industrial Info is tracking $5.17 billion in active projects involving B&W, including major retrofits at coal-fired power plants and a string of waste-to-energy facilities.

The company's backlog stands at $2.02 billion, about 13% lower than it was at this point last year, with more than half of the total attributed to renewable-energy projects. Bookings for first-quarter 2017 stood at $317 million, about 21% lower than the same period last year.

B&W cited lower activity in retrofits and other environmental work as the principal reason for the 32% decline in its Power Segment revenues, although the drop-off had been expected. Two major retrofit projects involving B&W are under way and are set to be completed later this year: Tennessee Valley Authority's (TVA) (Knoxville, Tennessee) $1 billion in retrofits at the Gallatin Power Station in Gallatin, Tennessee, and Colorado Springs Utilities' (Colorado Springs, Colorado) $122.5 million in retrofits at the Ray D. Nixon Power Station in Fountain, Colorado.

The TVA project, which kicked off in early 2013, involves the addition of B&W's selective catalytic reduction (SCR) and activated carbon injection systems, as well as two tangential-fired dry bottom boilers and two dry flue gas desulfurization scrubbers from Alstom S.A. (Paris, France). The Colorado project will add B&W's Spray Dry Absorber onto its Dry Bottom Front-Fired Boiler. Both projects seek to reduce sulfur dioxide, nitrogen oxide, mercury and other emissions to comply with federal and state regulations. For more information, see Industrial Info's project reports on the TVA and Colorado retrofits.

"In Power, we continue to see strength in U.S. service and retrofit opportunities related to coal-ash projects, and our aftermarket parts and services business, driven by book-and-bill type work, has a solid pipeline of opportunities," said Jim Ferland, the chairman and chief executive officer of B&W, in a quarterly earnings conference call.

United Parcel Service Incorporated (NYSE:UPS) (Atlanta, Georgia) has enlisted B&W for its $275 million Mountain West Regional Distribution Hub in Salt Lake City, Utah. The 832,000-square-foot building, which is designed to process 69,000 packages per hour, will feature a delivery vehicle center and fueling center. It is expected to be completed late in 2018. For more information, see Industrial Info's project report.

B&W also is at work on several waste-to-energy projects in the U.K. that are under construction: Viridor Waste Management Limited's (Somerset, England) $259 million Oxwellmains plant in Dunbar, Scotland, which is expected to generate 30 megawatts (MW) from 1,250 tonnes per day of municipal solid waste, and $199.4 million Recycling and Renewable Energy Centre in Glasgow, Scotland, which will generate 7 MW from the disposal of 200,000 tonnes per year of industrial and commercial waste; and ACS Group's (Madrid, Spain) $233.1 million Javelin Park plant in Gloucester, England, which is expected to generate 14.5 MW from 190,000 tonnes per year of municipal solid waste and refuse-derived fuel. For more information, including current schedules, see Industrial Info's project reports on the Dunbar, Glasgow and Gloucester plants.

Ferland said: "In regards to the European renewable market, we are working to finalize new partnership models that will allow us to meet our customer's expectations, while better focusing B&W on our core technology and improving our project-specific risk profile. We continue to expect to re-enter this market in the latter half of the year."

B&W reported a net loss of $7 million in first-quarter 2017, compared with net income of $10.5 million in the same period last year. Revenues stood at $391.1 million, a 3.22% decrease.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.