BWX Technologies Inc

Previous wording

For a summary of the critical accounting policies and estimates that we use in the preparation of our unaudited condensed consolidated financial statements, see Item 7 of our 2023 10-K. There have been no material changes to our critical accounting policies and estimates during the six months ended June 30, 2024.

Current wording

For a summary of the critical accounting policies and estimates that we use in the preparation of our unaudited condensed consolidated financial statements, see Item 7 of our 2023 10-K. There have been no material changes to our critical accounting policies and estimates during the nine months ended September 30, 2024.

Previous wording

As we progress on our contracts and the underlying performance obligations, we refine our estimates of variable consideration and total estimated costs at completion, which impact the overall profitability on our contracts and performance obligations. Changes in these estimates result in the recognition of cumulative catch-up adjustments that impact our revenues and/or costs of contracts. The aggregate impact of changes in estimates decreased our revenues and operating income as follows:

Current wording

As we progress on our contracts and the underlying performance obligations, we refine our estimates of variable consideration and total estimated costs at completion, which impact the overall profitability on our contracts and performance obligations. Changes in these estimates result in the recognition of cumulative catch-up adjustments that impact our revenues and/or costs of contracts. The aggregate impact of changes in estimates increased our revenues and operating income as follows:

Previous wording

(1)During the three and six months ended June 30, 2024 and 2023, no adjustment to any one contract had a material impact on our consolidated financial statements.

Current wording

(1)During the three and nine months ended September 30, 2024, no adjustments to any one contract had a material impact on our consolidated financial statements. During the three and nine months ended September 30, 2023, our Government Operations segment results were favorably impacted by contract adjustments related to a nuclear operations contract. These adjustments resulted in an increase in revenue of $20.4 million and $20.0 million and decreases in cost of operations of $2.5 million, for the three and nine months ended September 30, 2023 respectively.

Previous wording

Results of Operations – Three and Six Months Ended June 30, 2024 vs. Three and Six Months Ended June 30, 2023

Current wording

Results of Operations – Three and Nine Months Ended September 30, 2024 vs. Three and Nine Months Ended September 30, 2023

Previous wording

Consolidated revenues increased 11.3%, or $69.0 million, to $681.5 million in the three months ended June 30, 2024 compared to $612.4 million for the corresponding period of 2023 due to increases in our Government Operations and Commercial Operations segments of $48.9 million and $20.6 million, respectively.

Current wording

Consolidated revenues increased 13.9%, or $82.0 million, to $672.0 million in the three months ended September 30, 2024 compared to $590.0 million for the corresponding period of 2023, due to increases in our Government Operations and Commercial Operations segments of $82.2 million and $0.8 million, respectively.

Previous wording

Consolidated operating income increased $17.3 million to $191.8 million in the six months ended June 30, 2024 compared to $174.5 million for the corresponding period of 2023. Operating income in our Government Operations and Commercial Operations segments increased $5.4 million and $12.7 million, respectively. These increases were partially offset by an increase in Unallocated Corporate expenses of $0.9 million when compared to the corresponding period in the prior year.

Current wording

Consolidated operating income increased $11.2 million to $96.6 million in the three months ended September 30, 2024 compared to $85.4 million for the corresponding period of 2023. Operating income in our Government Operations segment increased $16.0 million which was partially offset by lower operating income in our Commercial Operations segment of $2.4 million when compared to the corresponding period in the prior year. We also experienced an increase in Unallocated Corporate expenses of $2.4 million when compared to the corresponding period in the prior year.

Previous wording

Consolidated revenues increased 8.9%, or $104.6 million, to $1,285.4 million in the six months ended June 30, 2024 compared to $1,180.8 million for the corresponding period of 2023, due to increases in our Government Operations and Commercial Operations segments of $76.1 million and $28.7 million, respectively.

Current wording

Consolidated revenues increased 10.5%, or $186.6 million, to $1,957.4 million in the nine months ended September 30, 2024 compared to $1,770.8 million for the corresponding period of 2023, due to increases in our Government Operations and Commercial Operations segments of $158.3 million and $29.4 million, respectively.

Previous wording

Consolidated operating income increased $12.1 million to $98.8 million in the three months ended June 30, 2024 compared to $86.7 million for the corresponding period of 2023. Operating income in our Government Operations and Commercial Operations segments increased $10.3 million and $5.6 million, respectively. These increases were partially offset by an increase in Unallocated Corporate expenses of $3.8 million when compared to the corresponding period in the prior year.

Current wording

Consolidated operating income increased $28.5 million to $288.3 million in the nine months ended September 30, 2024 compared to $259.9 million for the corresponding period of 2023. Operating income in our Government Operations and Commercial Operations segments increased $21.4 million and $10.3 million, respectively. These increases were partially offset by an increase in Unallocated Corporate expenses of $3.3 million when compared to the corresponding period in the prior year.

Previous wording

Revenues increased $48.9 million, or 9.9%, to $540.8 million in the three months ended June 30, 2024 compared to $492.0 million for the corresponding period of 2023. The increase was primarily driven by higher volume in the manufacture of nuclear components for U.S. Government programs when compared to the corresponding period in the prior year. Continued growth in design and engineering work executed by our advanced technologies business, particularly in the defense market, resulted in an additional increase in revenues of $15.2 million.

Current wording

Revenues increased $82.2 million, or 17.2%, to $560.1 million in the three months ended September 30, 2024 compared to $477.9 million for the corresponding period of 2023. The increase was primarily driven by higher volume in the manufacture of nuclear components for U.S. Government programs of $47.2 million as well as an increase in revenues caused by the timing of long-lead material procurements of $32.0 million, when compared to the corresponding period in the prior year. Continued growth in design and engineering work executed by our advanced technologies business, particularly in the defense market, resulted in an additional increase in revenues of $20.7 million. These increases were partially offset by a decrease in revenues associated with our downblending operations.

Previous wording

Operating income increased $5.4 million to $178.2 million in the six months ended June 30, 2024 compared to $172.8 million for the corresponding period of 2023, primarily driven by the operating income impact of the changes in revenues noted above. This was partially offset by investments in new digital and transformation related initiatives that caused an increase in selling, general and administrative expenses when compared to the corresponding period of the prior year.

Current wording

Operating income increased $16.0 million to $101.6 million in the three months ended September 30, 2024 compared to $85.6 million for the corresponding period of 2023, primarily driven by the operating income impact of the changes in revenues noted above.

Previous wording

Revenues increased $76.1 million, or 8.0%, to $1,028.0 million in the six months ended June 30, 2024 compared to $951.9 million for the corresponding period of 2023. The increase was primarily driven by higher volume in the manufacture of nuclear components for U.S. Government programs, partially offset by the timing of long-lead material procurements when compared to the corresponding period in the prior year. Continued growth in design and engineering work executed by our advanced technologies business, particularly in the defense market, resulted in additional revenues of $38.3 million.

Current wording

Revenues increased $158.3 million, or 11.1%, to $1,588.0 million in the nine months ended September 30, 2024 compared to $1,429.7 million for the corresponding period of 2023. The increase was primarily driven by higher volume in the manufacture of nuclear components for U.S. Government programs of $101.4 million when compared to the corresponding period in the prior year. Continued growth in design and engineering work executed by our advanced technologies business, particularly in the defense market, resulted in additional revenues of $59.0 million. These increases were partially offset by a decrease in revenues associated with our downblending operations.

Previous wording

Operating income increased $10.3 million to $92.5 million in the three months ended June 30, 2024 compared to $82.2 million for the corresponding period of 2023, primarily driven by the operating income impact of the changes in revenues noted above. This was partially offset by investments in new digital and transformation related initiatives that caused an increase in selling, general and administrative expenses when compared to the corresponding period of the prior year.

Current wording

Operating income increased $21.4 million to $279.8 million in the nine months ended September 30, 2024 compared to $258.4 million for the corresponding period of 2023, primarily driven by the operating income impact of the changes in revenues noted above. This was partially offset by a decrease associated with our downblending operations and by investments in new digital and transformation related initiatives that caused an increase in selling, general and administrative expenses when compared to the corresponding period of the prior year.

Previous wording

Revenues increased 17.0%, or $20.6 million, to $141.5 million in the three months ended June 30, 2024 compared to $120.9 million for the corresponding period of 2023. The increase was primarily related to higher revenues for in-plant inspection, maintenance and modification services and higher activity in our nuclear components business totaling $8.4 million and $4.4 million, respectively. We also experienced higher volume in our fuel handling, fuel fabrication and medical radioisotope businesses when compared to the same period in the prior year.

Current wording

Revenues increased 0.7%, or $0.8 million, to $113.1 million in the three months ended September 30, 2024 compared to $112.4 million for the corresponding period of 2023. The increase was primarily related to higher revenues in our nuclear components, medical radioisotopes, fuel handling and fuel fabrication businesses, partially offset by lower revenues in our on-site refurbishment work when compared to the same period in the prior year.

Previous wording

Operating income increased $5.6 million to $16.6 million in the three months ended June 30, 2024 compared to $11.0 million for the corresponding period of 2023. The increase was primarily due to the increase in revenues noted above as well as a shift in our product mix.

Current wording

Operating income increased $10.3 million to $31.9 million in the nine months ended September 30, 2024 compared to $21.6 million for the corresponding period of 2023. The increase was primarily due to the increase in revenues noted above as well as a favorable shift in our product mix. The increase was partially offset by a $1.1 million increase in expenses associated with due diligence and restructuring-related activities when compared to the corresponding period of the prior year.

Previous wording

Unallocated corporate expenses increased $3.8 million and $0.9 million in the three and six months ended June 30, 2024, respectively, when compared to the corresponding periods of 2023. During the third quarter of 2023, we undertook several initiatives to transform our current information technology infrastructure and to improve the effectiveness of our digital framework. These initiatives are expected to continue into 2026 and accounted for increases in expense of $3.4 million and $4.1 million for the three and six months ended June 30, 2024, respectively. These increases were partially offset by decreases in healthcare costs when compared to the corresponding periods in the prior year.

Current wording

Unallocated corporate expenses increased $2.4 million and $3.3 million in the three and nine months ended September 30, 2024, respectively, when compared to the corresponding periods of 2023. During the third quarter of 2023, we undertook several initiatives to transform our current information technology infrastructure and to improve the effectiveness of our digital framework. These initiatives are expected to continue into 2026 and accounted for increases in expense of $2.0 million and $6.1 million for the three and nine months ended September 30, 2024, respectively. We also experienced an increase in legal and consulting costs associated with due diligence activities of $2.2 million and $2.1 million for the three and nine months ended September 30, 2024, respectively. These increases were partially offset by decreases in healthcare costs when compared to the corresponding periods in the prior year.

Previous wording

Our effective tax rate for the three months ended June 30, 2024 was 20.3% as compared to 24.7% for the three months ended June 30, 2023. Our effective tax rate for the six months ended June 30, 2024 was 21.3% as compared to 24.1% for the six months ended June 30, 2023. The effective tax rates for the three and six months ended June 30, 2024 approximated the U.S. corporate federal income tax rate of 21% due to the revaluation of our Canadian net deferred tax liabilities which was required by the temporary reduction of the Canadian federal tax rate for qualifying nuclear manufacturers for tax years beginning on or after January 1, 2024. The effective tax rates for the three and six months ended June 30, 2023 were higher than the U.S. corporate income tax rate of 21% primarily due to state income taxes within the U.S. and the unfavorable rate differential associated with our foreign earnings.

Current wording

Our effective tax rate for the three months ended September 30, 2024 was 23.2% as compared to 22.8% for the three months ended September 30, 2023. Our effective tax rate for the nine months ended September 30, 2024 was 22.0% as compared to 23.7% for the nine months ended September 30, 2023. The effective tax rates for the three and nine months ended September 30, 2024 and September 30, 2023 were higher than the U.S. corporate income tax rate of 21%, primarily due to state income taxes within the U.S. and the unfavorable rate differential associated with our foreign earnings.

Previous wording

As of June 30, 2024, our ending backlog was $3,534.2 million, which included $379.4 million of unfunded backlog related to U.S. Government contracts. We expect to recognize approximately 68% of the revenue associated with our backlog by the end of 2025, with the remainder to be recognized thereafter.

Current wording

As of September 30, 2024, our ending backlog was $3,380.7 million, which included $366.4 million of unfunded backlog related to U.S. Government contracts. We expect to recognize approximately 48% of the revenue associated with our backlog by the end of 2025, with the remainder to be recognized thereafter.

Previous wording

As of June 30, 2024, borrowings under the Term Loan totaled $240.6 million, borrowings and letters of credit issued under the Revolving Credit Facility totaled $180.0 million and $1.7 million, respectively, and we had $568.3 million available under the Revolving Credit Facility for borrowings and to meet letter of credit requirements. As of June 30, 2024, the weighted-average interest rate on outstanding borrowings under the Credit Facility was 6.69%.

Current wording

As of September 30, 2024, borrowings under the Term Loan totaled $239.1 million, borrowings and letters of credit issued under the Revolving Credit Facility totaled $200.0 million and $1.4 million, respectively, and we had $548.6 million available under the Revolving Credit Facility for borrowings and to meet letter of credit requirements. As of September 30, 2024, the weighted-average interest rate on outstanding borrowings under the Credit Facility was 6.31%.

Previous wording

We have posted surety bonds to support regulatory and contractual obligations for certain decommissioning responsibilities, projects and legal matters. We utilize bonding facilities to support such obligations, but the issuance of bonds under those facilities is typically at the surety's discretion, and the bonding facilities generally permit the surety, in its sole discretion, to terminate the facility or demand collateral. Although there can be no assurance that we will maintain our surety bonding capacity, we believe our current capacity is adequate to support our existing requirements for the next 12 months. In addition, these bonds generally indemnify the beneficiaries should we fail to perform our obligations under the applicable agreements. We, and certain of our subsidiaries, have jointly executed general agreements of indemnity in favor of surety underwriters relating to surety bonds those underwriters issue. As of June 30, 2024, bonds issued and outstanding under these arrangements totaled approximately $100.8 million.

Current wording

We have posted surety bonds to support regulatory and contractual obligations for certain decommissioning responsibilities, projects and legal matters. We utilize bonding facilities to support such obligations, but the issuance of bonds under those facilities is typically at the surety's discretion, and the bonding facilities generally permit the surety, in its sole discretion, to terminate the facility or demand collateral. Although there can be no assurance that we will maintain our surety bonding capacity, we believe our current capacity is adequate to support our existing requirements for the next 12 months. In addition, these bonds generally indemnify the beneficiaries should we fail to perform our obligations under the applicable agreements. We, and certain of our subsidiaries, have jointly executed general agreements of indemnity in favor of surety underwriters relating to surety bonds those underwriters issue. As of September 30, 2024, bonds issued and outstanding under these arrangements totaled approximately $101.1 million.

Previous wording

Similarly, we have provided letters of credit to governmental agencies and contractual counterparties to support regulatory and contractual obligations for certain decommissioning responsibilities, projects and legal matters. We utilize our Revolving Credit Facility and a bilateral letter of credit facility to support such obligations, but the issuance of letters of credit under our bilateral letter of credit facility is at the issuer’s discretion, and our bilateral letter of credit facility generally permits the issuer, in its sole discretion, to demand collateral if the issuer does not otherwise have the benefit of the collateral under our Credit Facility. Although there can be no assurance that we will maintain our bilateral letter of credit facility capacity, we believe our current capacity, together with capacity under our Revolving Credit Facility, is adequate to support our existing requirements for the next 12 months. As of June 30, 2024, letters of credit issued and outstanding under our bilateral letter of credit facility totaled approximately $35.4 million, and such letters of credit are secured by the collateral under our Credit Facility.

Current wording

Similarly, we have provided letters of credit to governmental agencies and contractual counterparties to support regulatory and contractual obligations for certain decommissioning responsibilities, projects and legal matters. We utilize our Revolving Credit Facility and a bilateral letter of credit facility to support such obligations, but the issuance of letters of credit under our bilateral letter of credit facility is at the issuer’s discretion, and our bilateral letter of credit facility generally permits the issuer, in its sole discretion, to demand collateral if the issuer does not otherwise have the benefit of the collateral under our Credit Facility. Although there can be no assurance that we will maintain our bilateral letter of credit facility capacity, we believe our current capacity, together with capacity under our Revolving Credit Facility, is adequate to support our existing requirements for the next 12 months. As of September 30, 2024, letters of credit issued and outstanding under our bilateral letter of credit facility totaled approximately $35.6 million, and such letters of credit are secured by the collateral under our Credit Facility.

Previous wording

As of June 30, 2024, we had underfunded defined benefit pension and postretirement benefit plans with obligations totaling approximately $98.7 million. These long-term liabilities are expected to require use of our resources to satisfy future funding obligations. Based largely on statutory funding requirements, we expect to make contributions of approximately $2.6 million for the remainder of 2024 related to our pension and postretirement plans. We may also make additional contributions based on a variety of factors including, but not limited to, tax planning, evaluation of funded status and risk mitigation strategies.

Current wording

As of September 30, 2024, we had underfunded defined benefit pension and postretirement benefit plans with obligations totaling approximately $96.2 million. These long-term liabilities are expected to require use of our resources to satisfy future funding obligations. Based largely on statutory funding requirements, we expect to make contributions of approximately $1.4 million for the remainder of 2024 related to our pension and postretirement plans. We may also make additional contributions based on a variety of factors including, but not limited to, tax planning, evaluation of funded status and risk mitigation strategies.

Previous wording

Our working capital increased by $58.5 million to $501.3 million at June 30, 2024 from $442.8 million at December 31, 2023, primarily attributable to changes in contracts in progress due to the timing of project cash flows which was partially offset by the timing of vendor payments.

Current wording

Our working capital increased by $102.7 million to $545.5 million at September 30, 2024 from $442.8 million at December 31, 2023, primarily attributable to changes in contracts in progress and retainages due to the timing of project cash flows which was partially offset by the timing of vendor payments.

Previous wording

Our net cash provided by operating activities increased by $31.3 million to $98.9 million in the six months ended June 30, 2024, compared to cash provided by operating activities of $67.6 million in the six months ended June 30, 2023. The increase in cash provided by operating activities was primarily attributable to an increase in net income.

Current wording

Our net cash provided by operating activities decreased by $10.4 million to $131.5 million in the nine months ended September 30, 2024, compared to cash provided by operating activities of $141.9 million in the nine months ended September 30, 2023. The decrease in cash provided by operating activities was primarily attributable to the timing of project cash flows which was partially offset by the timing of vendor payments and an increase in net income.

Previous wording

Our net cash used in investing activities decreased by $5.3 million to $60.6 million in the six months ended June 30, 2024, compared to cash used in investing activities $65.9 million in the six months ended June 30, 2023 as a result of a decrease in purchases of property, plant and equipment.

Current wording

Our net cash used in investing activities decreased by $4.1 million to $100.9 million in the nine months ended September 30, 2024, compared to cash used in investing activities $105.0 million in the nine months ended September 30, 2023. No single item contributed significantly to this change.

Previous wording

Our net cash used in financing activities increased by $61.7 million to $65.0 million in the six months ended June 30, 2024, compared to cash used in financing activities of $3.3 million in the six months ended June 30, 2023. The increase in cash used in financing activities was primarily attributable to a reduction in net borrowings of long-term debt of $45.0 million as well as an increase in repurchases of common stock of $20.0 million when compared to the corresponding period of the prior year.

Current wording

Our net cash used in financing activities increased by $47.7 million to $69.9 million in the nine months ended September 30, 2024, compared to cash used in financing activities of $22.2 million in the nine months ended September 30, 2023. The increase in cash used in financing activities was primarily attributable to a reduction in net borrowings of long-term debt of $30.0 million as well as an increase in repurchases of common stock of $20.0 million when compared to the corresponding period of the prior year.

Previous wording

At June 30, 2024, we had restricted cash and cash equivalents totaling $6.3 million, $3.3 million of which was held for future decommissioning of facilities (which is included in other assets on our condensed consolidated balance sheets) and $2.9 million of which was held to meet reinsurance reserve requirements of our captive insurer.

Current wording

At September 30, 2024, we had restricted cash and cash equivalents totaling $6.4 million, $3.5 million of which was held for future decommissioning of facilities (which is included in Other Assets on our condensed consolidated balance sheets) and $3.0 million of which was held to meet reinsurance reserve requirements of our captive insurer.

Previous wording

At June 30, 2024, we had long-term investments with a fair value of $10.2 million. Our investment portfolio consists primarily of corporate bonds and mutual funds. Our debt securities are carried at fair value and are either classified as trading, with unrealized gains and losses reported in earnings, or as available-for-sale, with unrealized gains and losses, net of tax, being reported as a component of other comprehensive income. Our equity securities are carried at fair value with the unrealized gains and losses reported in earnings.

Current wording

At September 30, 2024, we had long-term investments with a fair value of $10.7 million. Our investment portfolio consists primarily of corporate bonds and mutual funds. Our debt securities are carried at fair value and are either classified as trading, with unrealized gains and losses reported in earnings, or as available-for-sale, with unrealized gains and losses, net of tax, being reported as a component of other comprehensive income. Our equity securities are carried at fair value with the unrealized gains and losses reported in earnings.

Previous wording

Our cash requirements have not changed materially from those disclosed in Item 7 of our 2023 10-K. We believe we have sufficient cash and cash equivalents and borrowing capacity, along with cash generated from operations and continued access to capital markets, to satisfy our cash requirements for the next 12 months and beyond.

Current wording

We believe we have sufficient cash and cash equivalents and borrowing capacity, along with cash generated from operations and continued access to capital markets, to satisfy our cash requirements for the next 12 months and beyond.