SCHEDULE 13D: Galloway Capital Partners Discloses 4.31% Stake in Babcock & Wilcox, Citing Undervaluation and Urging Strategic Action

Galloway Capital Partners, LLC has disclosed a 4.31% beneficial ownership stake in Babcock & Wilcox Enterprises, Inc., asserting the company's shares are deeply undervalued and advocating for strategic initiatives to enhance shareholder value.

Summary

• Galloway Capital Partners, LLC and its affiliates have acquired 4,240,000 shares of Babcock & Wilcox Enterprises, Inc. common stock.
• This stake represents 4.31% of the company's outstanding shares, based on 98,404,024 shares outstanding as of May 5, 2025.
• The shares were acquired through open market purchases from April 2025 through May 2025 at an approximate average price of $0.616 per share.
• Galloway Capital believes B&W's share price is deeply undervalued and trading at a significant discount to its intrinsic value.
• The firm intends to engage with B&W's Board and management to discuss the company's performance, operations, management, governance (including potential Board changes), capital allocation, and strategy.
• Galloway Capital may acquire additional shares, retain, or sell its current holdings based on ongoing evaluation of B&W's business and market conditions.

Sentiment

Score: 7

Explanation: The sentiment is positive from the activist investor's perspective, as they see significant undervaluation and upside potential in Babcock & Wilcox. While they are critical of the current share price and management's actions to address it, their investment and stated intent to engage suggest a belief in the company's underlying assets and future prospects. The filing highlights strong operational metrics and future growth drivers.

Positives

• The company's 2024 bookings surged 39% year-over-year to $889.6 million.
• Backlog reached a record $540.1 million, up 47% from 2023, providing a solid runway for revenue conversion in 2025-2026.
• There is robust demand for B&W's Thermal and Environmental solutions.
• B&W's proprietary BrightLoop hydrogen and carbon capture platform is progressing toward commercialization, with a demo plant on track for 2026.
• Management has targeted ~$1 billion in BrightLoop bookings by 2028, which is seen as a potentially transformative growth engine.
• Adjusted EBITDA (excluding BrightLoop) rose 13% year-over-year in 2024.
• Q1 2025 results showed continued margin expansion.
• The Net Debt to EBITDA is considered very manageable at approximately 3x.
• B&W is well-positioned to benefit from the global surge in AI-driven data centers due to the unprecedented demand for power infrastructure.
• Its Thermal segment, specializing in steam generation and natural gas conversions, aligns with the grid-scale energy solutions now required by hyperscalers.

Negatives

• Galloway Capital believes B&W's share price is deeply undervalued and trading at a significant discount to its intrinsic value.
• Management needs to take steps to increase value for shareholders.
• The balance sheet remains 'somewhat leveraged' despite the manageable Net Debt to EBITDA.

Future Outlook

Galloway Capital Partners believes Babcock & Wilcox's share price is deeply undervalued and expects management to take steps to increase shareholder value. The firm highlights the company's strong 2024 bookings and record backlog as indicators of future revenue conversion in 2025-2026. Additionally, the BrightLoop hydrogen and carbon capture platform is on track for a demo plant in 2026, with a target of ~$1 billion in bookings by 2028, positioning it as a potential transformative growth engine. The company is also seen as a stealth beneficiary of the growing demand for power infrastructure driven by AI data centers.

Management Comments

• "Galloway Capital Partners, LLC and its affiliates (Galloway) have been shareholders of Babcock & Wilcox Enterprises, Inc. (B&W or the Company) for almost one year and own 4.31% of the outstanding shares."
• "Based on our analysis, we believe B&Ws share price is deeply undervalued relative to its upside potential."
• "Our experienced team seeks to work with management and the Board to enhance and unlock shareholder value."
• "Management has targeted ~$1 billion in BrightLoop bookings by 2028 a fraction of the global hydrogen market, but potentially a transformative growth engine."
• "While the balance sheet remains somewhat leveraged, we believe that the Net Debt to EBITDA is very manageable at approximately 3x."
• "The Reporting Persons believe the Company's share price is undervalued and trading at a significant discount to its intrinsic value and management needs to take steps to increase value for the shareholders."

Industry Context

The global surge in AI-driven data centers is creating unprecedented demand for power infrastructure. Babcock & Wilcox's Thermal segment, specializing in steam generation and natural gas conversions, aligns directly with the grid-scale energy solutions required by hyperscalers. As utilities upgrade infrastructure to support data center growth, B&W's deep engineering expertise and record backlog position it as a potential beneficiary of this rapidly expanding trend.

Comparison to Industry Standards

• The document does not provide specific comparable companies, projects, or results for direct industry standard assessment.
• However, Galloway Capital Partners explicitly states their belief that B&W's share price is 'deeply undervalued relative to its upside potential' and 'trading at a significant discount to its intrinsic value,' implying a negative comparison to their internal valuation benchmarks and potentially to peers, though no specific peers are named.

Management Changes

Corporate Governance

Stakeholder Impact

• Shareholders: Potential for increased shareholder value if Galloway Capital's initiatives are successful; increased scrutiny on management and governance.
• Management/Board: Increased pressure to address undervaluation and engage with a significant activist shareholder; potential for strategic shifts or changes in leadership.
• Employees: Potential for strategic shifts that could indirectly impact operations, though no direct mention of employee impact.
• Customers/Suppliers: No direct impact mentioned, but strategic changes could indirectly affect business relationships.

Next Steps

• Galloway Capital Partners intends to review its investment in Babcock & Wilcox on a continuing basis.
• The firm may from time to time acquire additional securities or retain/sell existing shares in various market transactions.
• Galloway Capital Partners intends to engage the Board and management of Babcock & Wilcox to discuss the company's performance, operations, management, governance (including potential changes to the Board), conflicted party transactions, capital allocation policies, and strategy.
• Galloway Capital Partners may consider, explore, and/or develop plans and/or make proposals regarding these matters.

Key Dates

Recommendation

Keywords

Babcock & Wilcox Enterprises, B&W, Galloway Capital Partners, Schedule 13D, Activist Investor, Shareholder Value, Undervaluation, Thermal Solutions, Environmental Solutions, BrightLoop, Hydrogen, Carbon Capture, EBITDA, Bookings, Backlog, AI Data Centers, Power Infrastructure, Corporate Governance