AKRON, Ohio - Babcock & Wilcox Enterprises, Inc. (NYSE: BW), an Ohio-based energy and environmental services provider, has announced the sale of its subsidiary businesses SPIG S.p.A. and Babcock & Wilcox Vølund AB to AUCTUS Capital Partners AG. The transaction, valued at approximately $40 million, is expected to conclude by the end of October, subject to standard adjustments and closing conditions.
The divestiture is part of B&W's strategy to reduce its long-term debt and optimize its capital structure. "This sale aligns with our previously-announced strategy to divest certain non-core businesses and assets to reduce our debt, improve our balance sheet and increase liquidity," stated Kenneth Young, B&W Chairman and CEO. The company anticipates that this move will enhance its financial flexibility and allow it to focus more on its core technologies and growth in the energy sector.
Kenneth Young also highlighted the company's commitment to advancing its Thermal, Renewable, and Environmental technologies globally. B&W is investing in new technologies such as BrightLoop™ and ClimateBright™ and is initiating multiple commercial projects. The company is also addressing the growing demand for coal-to-natural-gas conversions in the U.S., which supports emissions reduction while maintaining reliable baseload energy generation.
B&W, headquartered in Akron, Ohio, is recognized for providing products and services in the power and industrial markets worldwide. The company is actively involved in supporting the global need for reliable, accessible, and affordable energy with environmentally conscious and technology-driven solutions.
The sale of the Italy-based SPIG and Sweden-based Babcock & Wilcox Vølund AB, formerly known as Götaverken Miljö AB, is a strategic move by B&W to streamline its operations and enhance its focus on its core business areas. The company cautions that statements regarding the sale contain forward-looking information and are subject to various risks and uncertainties, as detailed in their SEC filings.
This news is based on a press release statement from Babcock & Wilcox Enterprises, Inc.
In other recent news, Babcock & Wilcox Enterprises, Inc. has seen significant developments. The company reported first-quarter results for 2024, with total revenue decreasing to $84.1 million, but its environmental business segment saw a 23% increase in revenue. In addition, Babcock & Wilcox has secured several sizable contracts, including an $8 million contract for a cooling system in a UK renewable energy facility and a $25 million contract for upgrades and maintenance at a US thermal power plant.
The company also announced the termination of a consulting agreement with BRPI Executive Consulting, LLC, and initiated a new agreement directly engaging their CEO Kenny Young. This change ensures Young's continued leadership as CEO through December 31, 2028. Babcock & Wilcox also declared a dividend for its preferred stockholders, set at $0.4843750 per share, demonstrating a commitment to return value to shareholders.
Furthermore, Babcock & Wilcox has entered into a registration rights agreement with B. Riley Securities, Inc., which could potentially enhance liquidity options for B. Riley's holdings in the company. These are among the recent developments for the company.
InvestingPro Insights
Babcock & Wilcox's recent divestiture aligns with its strategy to reduce debt and improve its financial position, as highlighted by InvestingPro data. The company's market cap stands at $224.04 million, reflecting its current valuation after recent strategic moves.
InvestingPro Tips indicate that B&W "operates with a significant debt burden" and "may have trouble making interest payments on debt," which underscores the importance of the $40 million sale in addressing these financial challenges. The company's focus on debt reduction is crucial, given that it's "quickly burning through cash" according to another InvestingPro Tip.
Despite these challenges, there are positive signals. An InvestingPro Tip suggests that "net income is expected to grow this year," which could be partly attributed to the company's strategic realignment and focus on core technologies. Additionally, B&W has shown a "strong return over the last month," with InvestingPro data revealing an impressive 116.96% price total return over the past month.
The company's revenue for the last twelve months as of Q2 2024 was $907.78 million, with a gross profit margin of 23.35%. However, the operating income margin stands at -1.37%, indicating ongoing operational challenges that B&W is addressing through its restructuring efforts.
Investors considering B&W should note that while the company is making strategic moves to improve its financial health, it "does not pay a dividend to shareholders" as per an InvestingPro Tip. This aligns with the company's current focus on debt reduction and reinvestment in core technologies.
For a more comprehensive analysis, InvestingPro offers 15 additional tips on Babcock & Wilcox, providing deeper insights into the company's financial health and market position.
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