Babcock (NYSE:BW) management said demand tied to baseload power generation and emerging AI data center power needs helped drive improved operating results in the fourth quarter and full year 2025, while also lifting its outlook for 2026 adjusted EBITDA.
Management highlights: baseload demand, coal utilization, and higher targets
Chairman and CEO Kenny Young said the company has “seen significant growth due to higher demand in electrical generation,” and that momentum, combined with recent announcements, led Babcock & Wilcox Enterprises to increase its 2026 adjusted EBITDA target range to $80 million to $100 million.
Base Electron AI data center project moves to full approval
A central focus of the call was the company’s project with Base Electron, which Young described as an “exciting step forward into the AI data center space.” The agreement, backed by Applied Digital, is valued at $2.4 billion and is intended to deliver 1.2 GW of electricity “directly connected to the grid in support of AI factory campuses,” according to management.
Young said Babcock will pair steam turbines with previously designed and engineered 300 MW boilers, which he said can eliminate months of initial development work and “help accelerate a standard delivery schedule by up to a year.” He added that site visits are underway and the boiler manufacturing process has started, while Siemens Energy has started turbine fabrication. Work is scheduled to commence at the site later in 2026, with “most of the construction, including civil and mechanical, scheduled for 2027 and 2028.”
Management said just over $430 million of the contract is fixed price (specifically boilers and steam turbines), with remaining work covered under a cost-plus approach. Young said Applied Digital is backstopping the contract with a guarantee of “full and timely performance” of Base Electron’s obligations.
During Q&A, Young explained that the project previously had a limited notice to proceed, announced at $1.4 billion, and that the move to a full notice to proceed reflected final scope and contract terms and conditions, which can vary in large projects.
Pipeline and additional data center discussions
Young said Base Electron has indicated interest in purchasing another 1.2 GW of power from B&W, potentially at a different location. He also said B&W has added $3 billion to $5 billion in additional AI data center opportunities to its portfolio and that it is in “real-time discussions” with additional data center customers. He said a few of those opportunities are “actively underway” and the company hopes to provide further announcements and details “in the coming weeks,” while cautioning that it did not want to negotiate contracts publicly.
Young said even after converting the $2.4 billion Base Electron project from pipeline to backlog, the company’s pipeline stands at over $12 billion. On the call, he characterized many data center discussions as being in the 1–2 GW range, with some in the 500 MW range, and said project scope can vary from more turnkey structures to arrangements where B&W provides boilers and steam turbines under a different EPC structure.
In response to questions about capacity, Young said B&W is working with Siemens and other turbine companies to establish increased steam turbine manufacturing capacity and is also working with manufacturing partners across regions, including the U.S., Central Asia, and Southeast Asia, for boiler pressure parts. He also described efforts with the Boilermaker Union to prepare labor availability and noted that using previously designed boilers reduces engineering constraints.
Backlog growth, quarterly performance, and debt reduction
Young said continuing operations backlog rose to $2.8 billion, a 470% increase compared to the end of 2024. He also said the company’s pipeline grew by roughly 20% in 2025 despite converting the data center project into backlog.
For the fourth quarter, Young said revenue, operating income, and adjusted EBITDA “significantly outperformed company and consensus expectations.” He said adjusted EBITDA was 53% higher versus the fourth quarter of 2024, and operating income was up 373% year over year.
CFO Cameron Frymyer reviewed full-year 2025 results and said consolidated revenue was $587.7 million, up modestly from $581 million in 2024. He said core parts and services revenue increased 17%, outperforming expectations due to higher coal generation usage and growing baseload demand in North America, and that continued growth is expected through 2026.
- Operating income (2025): $20.7 million vs. an operating loss of $6.3 million in 2024
- Loss from continuing operations (2025): $32.8 million vs. $104.3 million in 2024
- Loss per share from continuing operations (2025): $0.45 vs. $1.30 in 2024
- Adjusted EBITDA from continuing operations (2025): $43.7 million vs. $21.2 million in 2024
On the balance sheet, Frymyer said total debt at December 31, 2025 was $321.1 million, including unamortized fees and gains tied to a bond swap. Cash, cash equivalents, and restricted cash totaled $201.4 million, resulting in net debt of $119.7 million at year-end 2025—an improvement of $217.3 million compared with net debt of $337 million at the end of 2024. Young added that the company paid off remaining outstanding bonds due February 2026 and expects to pay off the remaining December 2026 bonds “in a timely fashion,” which Frymyer reiterated would occur “this year.”
Coal-to-gas update and BrightLoop progress
In Q&A, Young said a coal-to-gas project is on schedule, with “bulk” of the work finishing in 2026 and continuing into 2027. He also said the company is in discussions on other conversion projects, while noting that utilities are extending coal generation in some cases due to higher natural gas prices and policy developments, which is also driving increased upgrades and parts replacement activity.
Separately, Young said the company’s BrightLoop chemical looping efforts continue at its Massillon and Wyoming projects. He described chemical looping as a way to convert solid and gas fuels into hydrogen or steam generation while capturing CO2 that can be used for enhanced oil or methane recovery and other uses. Young said the commercial demonstration of BrightLoop at Massillon remains an important milestone.
About Babcock (NYSE:BW)
Babcock & Wilcox Enterprises, Inc (NYSE: BW) is a specialized provider of energy and environmental technologies and services serving power generation and heavy industrial markets. The company designs, manufactures and maintains critical components and systems that support the safe and efficient operation of both fossil-fuel and renewable power facilities. Its core offerings include industrial and utility boilers, environmental control systems for emissions reduction, and aftermarket support services ranging from inspection and maintenance to spare parts management.
In addition to its boiler and emissions control portfolio, Babcock & Wilcox Enterprises delivers lifecycle solutions aimed at enhancing plant performance and compliance.
