Babcock & Wilcox Enterprises Smokes the Competition in Q4 2025, Sets Sights on $100 Million 2026 Adjusted EBITDA Target
Babcock & Wilcox Enterprises has made a bold move into the electric generation space, with significant growth and expansion plans that will propel the company to new heights. As reported in their Q4 2025 conference call transcript, Babcock & Wilcox saw substantial growth due to increased demand for electrical generation.
The company's core business, excluding data centers, has continued to grow, with elevated demand from the increased operation of baseload generation in North America and beyond. Existing coal plants in the U.S. have been operating at less than 50%, with untapped capacity being used to support the increased power demand. As natural gas prices climb, the cost of coal operations has become more attractive, leading to greater use of parts and services, as well as upgrades and enhancements.
Babcock & Wilcox's parts and services revenues grew by over 17% in 2025, with growth continuing into 2026. The company is poised to play a pivotal role in supporting AI data center expansion and increased baseload generation needs in the years ahead. In fact, their recent announcement of a full notice or full approval to proceed on their project with Base Electron is an exciting step forward into the AI data center space.
The agreement with Base Electron, backed by Applied Digital, is valued at $2.4 billion and is intended to deliver 1.2 gigawatts of electricity that will be directly connected to the grid in support of AI factory campuses. Combining steam turbines with their previously designed and engineered 300-megawatt boilers enables them to eliminate months of initial development work, accelerating a standard delivery schedule by up to a year.
"Our recent announcement of a full notice or full approval to proceed on our project with Base Electron is an exciting step forward into the AI data center space," said Kenny Young, Chairman and Chief Executive Officer. "Combining steam turbines with our previously designed and engineered 300-megawatt boilers enables us to eliminate months of initial development work that is required with typical new boiler projects."
Babcock & Wilcox has increased their 2026 adjusted EBITDA target range to between $80 million and $100 million, a testament to the company's growing momentum. As energy needs continue to expand from consumers, industries, and data centers that utilize grid power, Babcock & Wilcox is well-positioned to meet this demand.
The company has already started the boiler manufacturing process for the project with Base Electron, with Siemens Energy having begun fabrication of the turbines. Work on the site will commence later this year, with most of the construction, including civil and mechanical, scheduled for 2027 and 2028. Babcock & Wilcox is also working closely with the Boilermaker Union to ready the labor force needed at peak periods throughout this project.
As reported in the Q4 2025 conference call transcript, just over $430 million of this contract is fixed price, specifically the boilers and the steam turbines. While the remaining work is covered under a cost-plus approach. Applied Digital is backstopping the contract with a guarantee of full and timely performance of all of Base Electron's obligations.
