Babcock & Wilcox Enterprises, Inc.: Form 10-Q for the period ended Sep 30, 2025

The following discussion of our financial position and results of operations should be read in conjunction with the financial statements and the notes thereto included in the Condensed Consolidated Financial Statements in Item 1 of this Quarterly Report. The following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements as a result of many factors, including those described in more detail under "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2024 and Quarterly Reports on Form 10-Q, as such risk factors may be amended, supplemented or superseded from time to time by other reports we file with the SEC. See also "Cautionary Statement Concerning Forward-Looking

Information" herein. Unless otherwise noted, discussion of our business and results of operations refers to our continuing operations.

BUSINESS OVERVIEW

We are a globally-focused renewable, environmental and thermal technologies provider with over 155 years of experience providing diversified energy and emissions control solutions to a broad range of industrial, electrical utility, municipal and other customers. Our innovative products and services are organized into three market-facing segments. Our reportable segments are as follows:

• Babcock & Wilcox Thermal: Our vast installed base of steam generation equipment includes aftermarket parts, construction, maintenance and field services for plants in the power generation, oil and gas and industrial sectors. We have an extensive global base of installed equipment for utilities and general industrial applications including refining, petrochemical, food processing, metals and others. We provide aftermarket parts, construction, maintenance, engineered upgrades and field services for our installed base as well as the installed base of other original equipment manufacturers; the substantial and stable cash flows generated from these businesses help to fund our investments in new clean energy initiatives. In addition to our aftermarket offerings, we also provide complete steam generation systems including package boilers, watertube and firetube waste heat boilers, and other boilers to medium and heavy industrial customers. Our unique range of offerings, coupled with the strength of our brand, provides a competitive advantage in existing and emerging markets.
• Babcock & Wilcox Renewable: Our innovative BrightLoop™ hydrogen generation technology supports global climate goals including the decarbonization of industrial and utility steam and power producers. BrightLoop™ offers significant advantages over other hydrogen generation technologies as it generates competitively priced hydrogen from a wide range of fuels, including solid fuels such as biomass and coal, with a high rate of carbon captured resulting in low, or even negative, carbon-intensity hydrogen. We also offer best-in-class technologies for efficient and environmentally sustainable power and heat generation, oxygen-fired biomass-to-energy (OxyBright™), and black liquor systems for the pulp and paper industry. Our leading waste-to-energy technologies support a circular economy, diverting waste from landfills to use for power generation and replacing fossil fuels, while recovering recyclable metals and reducing emissions.
• Babcock & Wilcox Environmental: We provide a full suite of emissions control and environmental technology solutions for utility, waste-to-energy, biomass-to-energy, carbon black, and industrial steam generation applications around the world. Our broad experience includes systems for ash handling, particulate control, nitrogen oxides and sulfur dioxides removal, chemical looping for carbon control and mercury control. Our ClimateBright™ products including SolveBright™, OxyBright™, BrightLoop™ and BrightGen™ place us at the forefront of hydrogen production and decarbonization technologies and development with many of these products already commercially available and others ready for commercial deployment. We believe these technologies position us to compete in the bioenergy sector within the carbon capture and sequestration (BECCS) market. Our portfolio of clean power production solutions continues to evolve to reach customers at all stages of their energy transition.

Market Update

Management continues to adapt to macroeconomic conditions, including the impacts from inflation, higher interest rates and foreign exchange rate volatility, current and potential tariff actions and geopolitical conflicts. In certain instances, these situations have resulted in cost increases and delays or disruptions that have had, and could continue to have, an adverse impact on our ability to meet customers' demands. We continue to actively monitor the impact of these market conditions on current and future periods and actively manage costs and our liquidity position to provide additional flexibility while still supporting our customers and their specific needs. The duration and scope of these conditions cannot be predicted, and therefore, any anticipated negative financial impact on our operating results cannot be reasonably estimated.

Discontinued Operations

Diamond Power

On June 4, 2025 we entered into a Purchase Agreement to sell our Diamond Power business for a base purchase price of $177 million, subject to certain offsets and adjustments. We closed the sale of our Diamond Power business on July 31, 2025 and recorded a gain of $53.2 million. For more information on this sale, see Note 3 to the Condensed Consolidated Financial Statements.

The revenue and operating results presented for Diamond Power for the three and nine months ended September 30, 2025 represent the financial results for January through July 2025 operations.

Vølund

During the fourth quarter of 2024, we committed to a plan to sell our Vølund business, resulting in a significant change that would impact our business. The Purchase Agreements provide for a base purchase price equal to $15.0 million plus $0.1 million (400,000 Danish krone). We sold our Vølund business on April 29, 2025, described further in Note 3 to the Condensed Consolidated Financial Statements. We recorded a net loss of $36.9 million which included a write off of CTA of $52.6 million. As we wind down certain contracts, we will incur additional expenses to settle the sale of the business.

The revenue and operating results for the three and nine months ended September 30, 2025 represent the financial results for January through April 2025 operations as well as the net loss on the sale primarily from the write off of CTA. As we wind down certain contracts, we will incur additional expenses to settle the sale of the business.

B&W Solar

We continue to meet all of the criteria for the assets and liabilities of this business, formerly part of our B&W Renewable segment, to be accounted for as held for sale. In addition, we also determined that the operations of the B&W Solar business qualified as a discontinued operation, primarily based upon its significance to our current and historic operating losses.

For the three months ended September 30, 2025, revenue decreased to $2.1 million from $27.1 million in the three months ended September 30, 2024 as a result of significantly less work year over year as we completed remaining projects. Operating (loss) income for the three months ended September 30, 2025 decreased to $(4.9) million from $5.7 million in the three months ended September 30, 2024, due to lower revenue described above as well as additional costs needed to complete the remaining projects.

For the nine months ended September 30, 2025, revenue decreased to $12.1 million from $61.0 million in the nine months ended September 30, 2024 as a result of significantly less work year over year as we completed remaining projects. Operating (loss) income for the nine months ended September 30, 2025 decreased to $(27.1) million from $5.4 million in the nine months ended September 30, 2024, primarily as a result of lower revenue as well as additional costs needed to complete the remaining projects.

BWRS, SPIG and GMAB

In addition to the B&W Solar and Vølund businesses, discontinued operations include the following subsidiaries divested in 2024: BWRS, SPIG, and GMAB. These sale transactions were part of a previously announced strategy to divest certain non-core businesses to reduce our debt, improve our balance sheet and increase liquidity. Results of operations and cash flows for these businesses and the financial position of the divested subsidiaries are reported as discontinued operations for all periods presented and the notes to the financial statements have been adjusted on a retrospective basis.

RESULTS OF OPERATIONS

Condensed Consolidated Results of Operations

The following discussion is of our consolidated results of operations below.

(in thousands)

Three Months Ended September 30, 2025 and 2024

Revenues decreased by $3.6 million to $149.0 million in the three months ended September 30, 2025 compared to $152.6 million in the three months ended September 30, 2024. The decrease is primarily driven by lower large project volume in B&W Environmental of $20.6 million, due to larger projects being completed last year and the timing of booking replacement projects starting later 2025, partially offset by higher parts volume of $7.1 million and higher volume related to natural gas conversion projects of $7.5 million. This improvement is primarily due to the increasing need for electricity from fossil fuels driven by the demand from artificial intelligence, data centers and expanding economies.

Costs of operations decreased by $4.6 million to $111.9 million in the three months ended September 30, 2025 compared to $116.5 million in the three months ended September 30, 2024. The decrease is primarily driven by the lower revenue as described above as well as the product mix of lower project volume, higher parts volume which has higher gross margin that contributed to the improvement, and lower costs needed to complete certain projects.

SG&A expenses decreased by $3.6 million to $29.8 million in the three months ended September 30, 2025 compared to $33.3 million in the three months ended September 30, 2024. The decrease is primarily driven by the reduction in Corporate overhead costs.

Research and development costs decreased by $0.9 million to $0.3 million in the three months ended September 30, 2025 compared to $1.2 million in the three months ended September 30, 2024. The decrease is primarily driven by the increased commercialization of our BrightLoop™ technology.

Loss on asset disposals, net increased in the three months ended September 30, 2025 compared to the three months ended September 30, 2024 due to small disposals in 2025.

Operating income increased by $4.9 million to $6.5 million in the three months ended September 30, 2025 compared to $1.6 million in the three months ended September 30, 2024. The increase is a result of the reduced costs previously noted.

Loss from continuing operations decreased by $5.6 million to $2.3 million in the three months ended September 30, 2025 compared to a loss of $7.9 million in the three months ended September 30, 2024, primarily driven by the improvement in the operating income results noted above. We benefited from an interest expense reduction and a gain on debt extinguishment offset by an increase to tax expense.

Nine Months Ended September 30, 2025 and 2024

Revenues increased by $4.0 million to $448.9 million in the nine months ended September 30, 2025 compared to $444.9 million in the nine months ended September 30, 2024. The increase is primarily driven by larger parts volume of $33.6 million and higher volume related to natural gas conversion projects of $16.7 million, partially offset by lower large project volume in B&W Environmental in 2025 of $42.1 million.

Costs of operations decreased by $7.7 million to $337.9 million in the nine months ended September 30, 2025 compared to $345.6 million in the nine months ended September 30, 2024. The decrease is primarily driven by the mix of the business as parts sales grew more which have higher gross margin, larger project revenue decreased and lower costs were needed to finish larger projects.

SG&A expenses decreased by $5.7 million to $92.8 million in the nine months ended September 30, 2025 compared to $98.5 million in the nine months ended September 30, 2024. The decrease is primarily driven by the legal settlement of $6.5 million in 2024, offset by increased expenses in employee benefits in the current year.

Research and development costs decreased by $1.2 million to $1.6 million in the nine months ended September 30, 2025 compared to $2.8 million in the nine months ended September 30, 2024. The decrease is primarily driven by the increased commercialization of our BrightLoop™ technology.

Impairment of long-lived assets increased in the nine months ended September 30, 2025 compared to a nominal amount in the nine months ended September 30, 2024. The increase is driven by the reduction in our real estate footprint.

Loss on asset disposals increased in the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 due to small disposals in 2025.

Operating income increased by $16.8 million to $14.9 million in the nine months ended September 30, 2025 compared to an operating loss of $1.9 million in the nine months ended September 30, 2024, primarily due to the revenue increase as described above and an increase in gross profit due to the improvement in cost of operations in product mix.

Loss from continuing operations decreased by $21.2 million to $22.4 million compared to a loss of $43.6 million in the nine months ended September 30, 2024, primarily due to the revenue increase as described above and an increase in gross profit due to the improvement in cost of operations in product mix. We benefited from an interest expense reduction and a gain on debt extinguishment compared to a loss in 2024.

Other Expenses Impacting Operating Results

Interest Expense

(in thousands)

Interest expense for the three and nine months ended September 30, 2025 is lower compared to the three and nine months ended September 30, 2024 due to the debt refinancing transactions that occurred in 2025 that results in lower base principal and will result in accretion of the gain over the life of the debt. See Note 13 in the Condensed Consolidated Financial Statements for further details.

Income Taxes

(in thousands, except for percentages)

Deferred tax assets are evaluated each period to determine whether realization is more likely than not. Valuation allowances are established when management determines it is more likely than not that some portion, or all, of the deferred tax assets will not be realized. Valuation allowances may be removed in the future if sufficient positive evidence exists to outweigh the negative evidence under the framework of ASC 740, Income Taxes ("ASC 740").

Our effective tax rate for the first nine months of 2025 is not reflective of the U.S. statutory rate primarily due to certain foreign entities having a tax rate higher than the U.S. statutory rate, valuation allowances against certain net deferred tax assets and unfavorable discrete items. In certain jurisdictions where we anticipate a loss for the year or incur a loss for the year-to-date period for which a tax benefit cannot be realized in accordance with ASC 740, we exclude the loss in that jurisdiction from the overall computation of the estimated annual effective tax rate.

Bookings and Backlog

Bookings and backlog are our measures of remaining performance obligations under our sales contracts. We believe these metrics provide investors, lenders and other users of our financial statements with a leading indicator of future revenues. It is possible that our methodology for determining bookings and backlog may not be comparable to methods used by other companies.

We generally include expected revenue from contracts in our backlog when we receive written confirmation from our customers authorizing the performance of work and committing the customers to payment for work performed. Backlog may not be indicative of future operating results, and contracts in our backlog may be canceled, modified or otherwise altered by customers. Backlog can vary significantly from period to period, particularly when large new-build conversion projects or operations and maintenance contracts are booked because they may be fulfilled over multiple years. Because we operate globally, our backlog is also affected by changes in foreign currencies each period.

Bookings represent changes to the backlog. Bookings include additions related to booking new business or increases in project scope, subtractions due to customer cancellations or reductions in scope, changes in estimates that affect selling price and revaluation of backlog denominated in foreign currency. We believe comparing bookings on a quarterly basis or for periods less than one year is less meaningful than for longer periods, and that shorter-term changes in bookings may not necessarily indicate a material trend.

Backlog as of September 30, 2025 and 2024 was as follows:

Of the backlog at September 30, 2025, we expect to recognize revenues as follows:

Non-GAAP Financial Measures

We use non-GAAP financial measures internally to evaluate our performance and make financial and operational decisions. When viewed in conjunction with GAAP results and the accompanying reconciliations, we believe that the presentation of these measures provides investors with greater transparency and a greater understanding of factors affecting our financial position and results of operations than GAAP measures alone. The presentation of non-GAAP financial measures should not be considered in isolation or as a substitute for the related financial results prepared in accordance with GAAP.

The following discussion of our business segment results of operations includes a discussion of EBITDA and Adjusted EBITDA. EBITDA focuses on the earnings generated from core business operations, without considering the effects of financing, accounting decisions or tax. Adjusted EBITDA differs from the most directly comparable measure calculated in accordance with GAAP. A reconciliation of net loss, the most directly comparable GAAP measure, to Adjusted EBITDA is included below. Management believes that this financial measure is useful to investors because it excludes certain expenses, allowing investors to more easily compare our financial performance period to period. When viewed in conjunction with GAAP results and the accompanying reconciliation in Note 5 to the Condensed Consolidated Financial Statements, we believe the presentation of Adjusted EBITDA provides investors with greater transparency and a greater understanding of factors affecting our financial position and results of operations than GAAP measures alone.

Adjusted EBITDA on a consolidated basis is defined as the sum of the Adjusted EBITDA for each of the segments, further adjusted for corporate allocations and research and development costs. At a segment level, the Adjusted EBITDA metrics presented in this report are consistent with the manner in which our CODM primarily reviews the results of operations and makes strategic decisions about the business. Our CODM reviews actuals to budgets and forecasts on a quarterly basis and when making decisions. Adjusted EBITDA is calculated as earnings before interest, tax, depreciation and amortization adjusted for items such as gains or losses arising from the sale of non-income producing assets, net pension benefits, restructuring activities, impairments, gains and losses on debt extinguishment, legal and settlement costs, costs related to financial consulting, and other costs that may not be directly controllable by segment management and are not allocated to the segment. We present consolidated Adjusted EBITDA because we believe it is useful to investors to help facilitate comparisons of the ongoing, operating performance before corporate overhead and other expenses not attributable to the operating performance of our revenue generating segments. Additionally, the Company redefined its definition of Adjusted EBITDA to eliminate the effects of certain items including interest on letters of credit included in Cost of operations and product development costs. Prior period results have been revised to conform with the revised definition and present separate reconciling items in our reconciliation.

(in thousands)

48

(in thousands)

Corporate

Corporate costs in Adjusted EBITDA include SG&A expenses that are not allocated to the reportable segments. These costs include, among others, certain executive, compliance, strategic, reporting and legal expenses associated with governance of the total organization and being an SEC registrant, and research and development activity costs.

Impairment of long-lived assets

Impairment of long-lived assets refers to when the carrying amount of an asset exceeds the fair value or recoverable amount.

Benefit plans, net

We recognize benefits from our defined benefit and other postretirement benefit plans based on actuarial calculations primarily because our expected return on assets is greater than our service cost. Service cost is low because our plan benefits are frozen except for a small number of hourly participants.

Our pension costs include MTM adjustments and are primarily a result of changes in the discount rate, curtailments and settlements. Any MTM charge or gain should not be considered to be representative of future MTM adjustments as such events are not currently predicted and are in each case subject to market conditions and actuarial assumptions as of the date of the event giving rise to the MTM adjustment.

Refer to Note 12 to the Condensed Consolidated Financial Statements for further information regarding our pension and other postretirement plans.

Loss on asset disposals, net

We, at times, will sell or dispose of certain assets that are unrelated to our current or future operations. Therefore, we believe it is useful to exclude these gains and losses from our non-GAAP financial measures in order to highlight the performance of the continuing business.

Stock compensation

The grant date fair value of stock compensation varies based on the derived stock price at the time of grant, valuation methodologies, subjective assumptions, and reward types. This may make the impact of this form of compensation on our current financial results difficult to compare to previous and future periods. Therefore, we believe it is useful to exclude stock-based compensation from our non-GAAP financial measures in order to highlight the performance of the business and to be consistent with the way many investors evaluate our performance and compare our operating results to peer companies.

Restructuring activities

Restructuring activities and business services transition actions across our business units and corporate functions primarily consist of severance and related costs associated with non-recurring actions taken to transform our operations with impacts on employees and facilities used in our businesses. Business services transition costs relate to new technology implementation, expected to provide future benefit and are included in Cost of operations and SG&A expenses in the Condensed Consolidated Statement of Operations.

Settlements and related legal costs (recoveries)

Settlements and related legal costs relate to expenses associated with resolving legal disputes, whether through negotiated settlements or court judgments.

Gain (loss) on debt extinguishment

Losses on debt extinguishment were due to the write-off of deferred financing fees and certain other exit costs associated with our extinguishment of the Debt Facilities.

Foreign exchange

We translate assets and liabilities of our foreign operations into U.S. dollars at current exchange rates, and we translate items in our Condensed Consolidated Statement of Operations at average exchange rates for the periods presented. We record adjustments resulting from the translation of foreign currency amounts as a component of Accumulated Other Comprehensive Loss. We report foreign currency transaction gains (losses) in income in the Condensed Consolidated Statements of Operations. Management excludes these expenses from Adjusted EBITDA as they do not reflect the ordinary course of business and are inherently unpredictable in timing and amount.

Foreign exchange gains and losses are primarily related to unhedged intercompany loans denominated in European currencies to fund foreign operations.

Financial advisory services

Financial advisory services relate to business planning and other professional services.

RESULTS BY SEGMENT

(in thousands)

50

B&W Thermal Segment Results

(in thousands)

Three Months Ended September 30, 2025 and 2024

Revenues in the B&W Thermal segment increased 8%, or $8.9 million, to $118.3 million in the three months ended September 30, 2025 from $109.4 million in the three months ended September 30, 2024. The increase is primarily due to higher volume of natural gas conversions of $7.5 million and higher parts volume of $2.7 million, partially offset by lower Construction volumes of $5.2 million.

Adjusted EBITDA in the B&W Thermal segment increased $1.8 million to $15.2 million in the three months ended September 30, 2025 from $13.4 million in the three months ended September 30, 2024. This is primarily driven by the increase in revenue as described above.

Nine Months Ended September 30, 2025 and 2024

Revenues in the B&W Thermal segment increased 11%, or $33.5 million, to $345.8 million in the nine months ended September 30, 2025 from $312.3 million nine months ended September 30, 2024, driven primarily by the increase in boiler related parts of $27.3 million due to higher volume of natural gas conversions of $16.7 million partially offset by lower Construction volume of $3.8 million.

Adjusted EBITDA in the B&W Thermal segment increased $8.4 million to $40.2 million in the nine months ended September 30, 2025 from $31.9 million in the nine months ended September 30, 2024. The increase in EBITDA is primarily driven by the increased revenue as described above.

B&W Renewable Segment Results

(in thousands)

Three Months Ended September 30, 2025 and 2024

Revenues in the B&W Renewable segment increased 59%, or $5.7 million, to $15.2 million in the three months ended September 30, 2025 from $9.5 million in the three months ended September 30, 2024. This is primarily attributable to the increase in our pulp and paper business of $4.7 million.

Adjusted EBITDA in the B&W Renewable segment increased $1.0 million, to $0.7 million in the three months ended September 30, 2025 from $(0.3) million the three months ended September 30, 2024 driven by the increase in revenue as described above.

Nine Months Ended September 30, 2025 and 2024

Revenues in the B&W Renewable segment increased 21%, or $8.4 million, to $48.4 million in the nine months ended September 30, 2025 from $40.1 million in the nine months ended September 30, 2024. This is primarily attributable to the increase in our pulp and paper business of $5.5 million.

Adjusted EBITDA in the B&W Renewable segment increased $1.8 million, to $1.4 million in the nine months ended September 30, 2025 from $(0.4) million in the nine months ended September 30, 2024. This is primarily attributable to the increase in revenue as described above.

B&W Environmental Segment Results

(in thousands)

Three Months Ended September 30, 2025 and 2024

Revenues in the B&W Environmental segment decreased 54%, or $18.2 million, to $15.5 million in the three months ended September 30, 2025 from $33.7 million in the three months ended September 30, 2024. This is primarily attributable to lower volume of projects in our flue gas treatment business of $13.7 million as projects that were completed in 2024 were not fully replaced in 2025 primarily due to timing of the replacement projects that have started later in 2025.

Adjusted EBITDA in the B&W Environmental segment increased $2.3 million, to $2.8 million in the three months ended September 30, 2025 from $0.6 million in the three months ended September 30, 2024. This is primarily due to lower SG&A as well as margin improvements on ASH projects of $2.6 million partially offset by the revenue decrease as described above.

Nine Months Ended September 30, 2025 and 2024

Revenues in the B&W Environmental segment decreased 41%, or $38.0 million, to $54.6 million in the nine months ended September 30, 2025 from $92.6 million in the nine months ended September 30, 2024. The decrease is primarily due to projects closing out in 2024 that were not fully replaced in 2025 as the replacement projects have started later in 2025.

Adjusted EBITDA in the B&W Environmental segment increased $4.0 million, to $6.9 million in the nine months ended September 30, 2025 from $2.9 million in the nine months ended September 30, 2024. The increase is primarily due to cost reductions offset partially by the lower revenue as described above.

Corporate Results

(in thousands)

Three Months Ended September 30, 2025 and 2024

Adjusted EBITDA in Corporate decreased $0.3 million, to $(6.0) million in the three months ended September 30, 2025 from $(5.7) million in the three months ended September 30, 2024. This is related to an increase in employee benefits.

Nine Months Ended September 30, 2025 and 2024

Adjusted EBITDA in Corporate increased $1.0 million, to $(14.6) million in the nine months ended September 30, 2025 from $(15.6) million in the nine months ended September 30, 2024. This is primarily related to a decrease in audit and consulting fees.

Liquidity and Capital Resources

Liquidity

Our primary liquidity requirements include debt service, funding of dividends on preferred stock and working capital needs. We fund our liquidity requirements primarily through cash generated from operations, external sources of financing, including our Credit Agreement, senior notes, and equity offerings, and our Preferred Stock, each of which are described in the Notes to Condensed Consolidated Financial Statements included in Part I, Item I of this Quarterly Report in further detail.

Our assessment of our ability to fund future operations is inherently subjective, judgment-based and susceptible to change based on future events. In prior periods, we incurred operating losses, primarily due to losses recognized on our Vølund and B&W Solar business as well as higher debt service costs and recurring cash deficits from operating activities. While these conditions and events raise substantial doubt about our ability to continue as a going concern, we believe it is probable that our alternative measures contemplated alleviate the substantial doubt about our ability to continue as a going concern.

In response to the conditions, we have implemented several strategies to obtain the required funding for future operations and are considering other alternative measures to improve cash flow, including suspension of the dividend on our Preferred Stock and delaying development of new products, which together would reduce our annual cash spending. The following actions were completed through the issuance date of this Quarterly Report:

• sold non-core businesses for $187.5 million in net proceeds in 2025 (described in Note 3 to the Condensed Consolidated Financial Statements);
• sold 15.0 million and 5.0 million common shares for net proceeds of $32.5 million and $7.9 million as of September 30, 2025 and December 31, 2024, respectively, pursuant to our At-The-Market offering (described in Note 14 to the Condensed Consolidated Financial Statements);
• completed privately negotiated exchanges with two institutional investors of noteholders that resulted in $84.0 million aggregate principal amount of the Company's 8.125% Senior Notes and $47.8 million aggregate principal amount of the Company's 6.50% Senior Notes being exchanged for $100.7 million aggregate principal amount of newly-issued 8.75% Senior Notes (described in Note 13 to the Condensed Consolidated Financial Statements);
• completed a cash tender offer for $8.3 million of our 8.125% Senior Notes and 6.5% Senior Notes for a gain of $1.7 million (described in Note 13 to the Condensed Consolidated Financial Statements);
• exchanged $5.0 million of our 8.125% Senior Notes and $10.0 million of our 6.50% Senior Notes for $15.0 million of our 8.75% Senior Notes (described in Note 13 to the Condensed Consolidated Financial Statements);
• completed the redemption of $70.0 million of 8.125% Senior Notes (described in Note 21 to the Condensed Consolidated Financial Statements);
• repaid the outstanding balance on the revolving credit portion of the Credit Facility, leaving $81.1 million of borrowing power under the facility (described in Note 13 to the Condensed Consolidated Financial Statements);
• signed the Ninth Amendment to the Credit Agreement to extend the maturity date of the Credit Facility to November 30, 2026 (described in Note 13 to the Condensed Consolidated Financial Statements); and
• are actively in discussions with certain parties to further divest non-core assets. We cannot provide any assurances that such transaction will close or that proceeds will not be more or less than we anticipate.

Based on our ability to raise funds through the actions noted above and our Cash and cash equivalents as of September 30, 2025, we have concluded it is probable that such actions would provide sufficient liquidity to fund operations for the next twelve months following the date of this Quarterly Reports.

Cash and Cash Flows

At September 30, 2025, our cash and cash equivalents, and restricted cash totaled $201.1 million, and we had total debt of $416.4 million as well as $191.7 million of gross preferred stock outstanding. Our foreign business locations held $12.7 million of our total cash and cash equivalents and restricted cash as of September 30, 2025. In general, our foreign cash balances are not available to fund our U.S. operations unless the funds are repatriated or used to repay intercompany loans made from the U.S. to foreign entities, which could expose us to taxes we have not made a provision for in our results of operations. We have no plans to repatriate these funds to the U.S. In addition, we had $68.9 million of restricted cash as of September 30, 2025 related to collateral for certain letters of credit as part of funding for several ongoing projects.

Cash flows used in operating activities was $65.9 million in the nine months ended September 30, 2025, which is primarily attributable to the year-to-date net loss of $45.4 million and non-cash adjustments arising from gain on sale of business of $17.3 million, partially offset by the impairment of long-lived assets of $9.9 million. Cash flows used in operating activities also included movements in certain operating assets and liabilities such as accounts receivable trade, net of $6.3 million, contracts in progress of $11.9 million, partially offset by advanced billings on contracts of $16.6 million which are primarily impacted by timing differences related to progress made on ongoing projects, billings, and collections, and may fluctuate significantly period to period. Operating cash flow decreases from pension liabilities, accrued postretirement benefits and employee benefits of $6.8 million is a result of contributions made to the plan. Operating cash flow increases from accrued and other current liabilities of $12.8 million is the result of timing of payments to vendors offset by the decrease in accounts payable of $33.2 million.

Cash flows used in operating activities was $96.2 million in the nine months ended September 30, 2024, which was attributable to the year-to-date net income of $3.2 million offset primarily by the BWRS non-cash gain of $40.1 million. Non-cash expenses including the loss on the debt extinguishment of $6.8 million, depreciation and amortization of long-lived assets of $13.7 million, deferred taxes of $6.5 million and operating lease expenses of $5.2 million were primarily offset by movements in certain operating assets and liabilities such as accounts receivable - trade, net of $14.2 million, contracts in progress of $30.4 million, advanced billings on contracts of $20.7 million, and accrued and other current liabilities of $5.8 million due to the same factors described above for 2025.

Cash flows provided by investing activities was $172.4 million in the nine months ended September 30, 2025, primarily due to proceeds from the sale of our Vølund and Diamond Power businesses of $187.5 million, partially offset by purchases of fixed assets relating to BrightLoop™ projects. Cash flows provided by investing activities were $78.0 million in the nine months ended September 30, 2024, primarily related to the $87.6 million proceeds from the sale of BWRS, offset by purchases of fixed assets relating to BrightLoop™ projects.

Cash flows used in financing activities was $37.4 million in the nine months ended September 30, 2025, primarily related to the net repayments on the Axos Credit Agreement of $51.4 million and payments of preferred stock dividends of $11.1 million, partially offset by proceeds of $32.5 million pursuant to our At-The-Market offering as described in Note 14 to the Condensed Consolidated Financial Statements. Cash flows provided by financing activities was $70.8 million in the nine months ended September 30, 2024 and was primarily related to the net borrowings on the Axos Credit Agreement of $93.7 million, partially offset by preferred stock dividend payments of $14.9 million.

Debt and Credit Facilities

As described in Note 13 to the Condensed Consolidated Financial Statements included in Item 1 of this Quarterly Report, we entered into a Credit Agreement in January 2024. B. Riley, a related party, has provided a guaranty of payment with regard to our obligations under the Credit Agreement, which is no longer in place as Axos has suspended the current need for the guarantee. This agreement substantially replaced the Reimbursement Agreement, Revolving Credit Agreement and Letter of Credit Agreement. We completed the transition of letters of credit outstanding under the Letter of Credit Agreement and Reimbursement Agreement to the Credit Agreement in August 2024. Information related to our Debt and Credit Facilities is described in Note 13 to the Condensed Consolidated Financial Statements and is incorporated herein by reference.

Taxes

On July 4, 2025, the One Big Beautiful Bill (the "OBBB") Act was enacted in the United States. This legislation increases federal support for oil and gas production while reducing support for renewable energy and infrastructure development. Notably, the OBBBA accelerates the phaseout of certain clean energy tax credits established under the Inflation Reduction Act (the “IRA”), including the clean electricity production and investment credits for solar and wind projects. These credits will no longer apply to projects that begin construction more than 12 months after the enactment date, or that are placed in service after December 31, 2027. Certain provisions of the OBBBA remain subject to further regulatory interpretation and implementation that are expected to be finalized during the remainder of 2025. The OBBBA, along with other evolving trade and immigration policies, may have both positive and negative effects on our business. Potential impacts include, but are not limited to, shifts in the timing and scope of customer projects, fluctuations in demand for our services, and changes in capital and labor costs, including availability.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

For a summary of the critical accounting policies and estimates that we use in the preparation of our unaudited Condensed Consolidated Financial Statements, see "Critical Accounting Policies and Estimates" in our Annual Report on Form 10-K for the year ended December 31, 2024. There have been no significant changes to our policies during the nine months ended September 30, 2025 from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024.

Our exposure to market risks has not changed materially from those disclosed under "Quantitative and Qualitative Disclosures About Market Risk" in our Annual Report on Form 10-K for the year ended December 31, 2024.

Disclosure Controls and Procedures

As of the end of the period covered by this report, our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) adopted by the Securities and Exchange Commission under the Exchange Act.

Based on this evaluation and because of the previously-reported material weaknesses in internal control over financial reporting, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of September 30, 2025.

Notwithstanding the conclusion by our Chief Executive Officer and Chief Financial Officer that our disclosure controls and procedures as of September 30, 2025 were not effective, our management, including our Chief Executive Officer and Chief Financial Officer, has concluded that the Condensed Consolidated Financial Statements as of and for the three and nine months ended September 30, 2025 and 2024 present fairly, in all material respects, our financial position, results of operations and cash flows in conformity with GAAP.

Remediation Plan and Status

As of September 30, 2025, the material weaknesses previously disclosed have not yet been remediated. In response to the material weaknesses in our internal control over financial reporting, management has initiated remediation efforts, which includes:

• continuing to hire qualified accounting professionals;
• developing and providing additional training to the accounting and financial reporting team;
• developing an internal audit team;
• designing and implementing additional and/or enhanced controls in the areas of account reconciliations, contract accounting, financial statement analysis and complex and/or non-routine transactions;
• enhancing controls over IT user access and segregation of duties; and,
• developing and implementing a monitoring program to evaluate and assess whether controls are present and functioning appropriately.

We will continue to work toward full remediation of the material weaknesses to improve our internal control over financial reporting. The material weaknesses will not be considered remediated until the new and redesigned controls operate for a sufficient period of time and management has concluded, through testing, that these controls are designed and operating effectively. Accordingly, we will continue to monitor and evaluate the effectiveness of our internal control over financial reporting in the areas affected by the material weaknesses.

Changes in Internal Control Over Financial Reporting

There were no changes in internal control over financial reporting (as defined by Rule 13a-15(f) and 15d-15(f) under the Exchange Act during the quarter ended September 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations in Effectiveness of Controls

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures, or our internal controls, will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of simple error or mistake or fraud. Additionally, controls can be circumvented by individuals or groups of persons or by an unauthorized override of the controls. Accordingly, because of the inherent limitations in our control system, misstatements in our public reports due to error or fraud may occur and not be detected.

We are subject to various risks and uncertainties in the course of our business. The discussion of such risks and uncertainties may be found under "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2024. Other than the additional risk factor set forth below, there have been no material changes to the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2024.

There can be no assurance that our efforts to improve our financial position will be successful or that we will be able to obtain additional capital or refinance any of our debt in the future on commercially reasonable terms or at all.

In January 2024, we entered into a Credit Agreement, as described in Note 15 to the Consolidated Financial Statements included in Part II, Item 8 of our Annual Report for fiscal year 2024 filed with the SEC on March 31, 2024, which has been amended from time to time. The Ninth Amendment provides that the maturity date of the Credit Agreement remains January 18, 2027, provided that by November 30, 2026, the 6.50% Senior Notes have not been repaid, defeased, or otherwise satisfied in full or refinanced, or the maturity date has not otherwise been extended to a date on or after July 18, 2027, then November 30, 2026.

In May 2025, we completed privately negotiated exchange transactions related to our 6.50% Senior Notes and 8.125% Senior Notes (together, the "2026 Notes") in which we issued 8.75% Senior Notes as consideration of the cancellation of approximately $48 million aggregate principal amount of the 6.50% Senior Notes and approximately $84 million aggregate principal amount of the 8.125% Senior Notes for approximately $101 million aggregate principal amount of newly-issued 8.75% Senior Notes. In August 2025, we completed a cash tender offer for the remaining 2026 Notes that we have outstanding with $5.6 million of the 8.125% Senior Notes and $2.7 million of the 6.50% Senior Notes validly tendered and not validly withdrawn, as well as a privately negotiated exchange transaction related to the 2026 Notes in which we issued the 8.75% Senior Notes as consideration of the cancellation of approximately $5 million aggregate principal amount of the 8.125% Senior Notes and approximately $10 million aggregate principal amount of the 6.50% Senior Notes. In October 2025, we completed the redemption of $70 million of the 8.125% Senior Notes.

Although we have amended the terms of and refinanced our debt in the past, there can be no assurance that our efforts to improve our financial position will be successful or that we will be able to obtain additional capital or refinance any of our debt in the future on commercially reasonable terms or at all. If we are unable to do so on commercially reasonable terms or at all, it may materially and adversely affect our reputation, liquidity, business, financial condition or results of operations, we may breach our obligations under such debt and it may be necessary for us to reorganize, including through bankruptcy proceedings.

Growth of the data center market is difficult to project and may not be sustained, and we may not be successful in achieving our growth, revenue, or profitability objectives in the future related to it.

The increasing use and development of artificial intelligence has created significant demand for power generation; however, the growth and development of this rapidly evolving industry is difficult to project. Our expectations regarding this market may not prove to be accurate or the market may not be sustainable. Our operating results may fluctuate moving forward as we develop this business. Our expectations around growth for this market may also place significant demands on our management team and require significant capital investment as well as other resources. We may not be able to address these challenges in a cost-effective manner or at all, which could have an impact on our future objectives for growth, revenue, or profitability as well as our financial results and operations.