BWX Technologies, Inc.

Previous wording

We have based our forward-looking statements on information currently available to us and our current expectations, estimates and projections about our Company, industries and business environment. We caution that these statements are not guarantees of future performance and you should not rely unduly on them as they involve risks, uncertainties and assumptions that we cannot predict. In addition, we have based many of these forward-looking statements on assumptions about future events that may prove to be inaccurate. While our management considers these statements and assumptions to be reasonable, they are inherently subject to numerous factors, including potentially the risk factors described in Item 1A of our 2023 10-K, most of which are difficult to predict and many of which are beyond our control. Accordingly, our actual results may differ materially from the future performance that we have expressed or forecast in our forward-looking statements.

Current wording

We have based our forward-looking statements on information currently available to us and our current expectations, estimates and projections about our Company, industries and business environment. We caution that these statements are not guarantees of future performance and you should not rely unduly on them as they involve risks, uncertainties and assumptions that we cannot predict. In addition, we have based many of these forward-looking statements on assumptions about future events that may prove to be inaccurate. While our management considers these statements and assumptions to be reasonable, they are inherently subject to numerous factors, including potentially the risk factors described in Item 1A of our 2024 10-K, most of which are difficult to predict and many of which are beyond our control. As a contractor to the U.S. Government, such risks include, without limitation, budget uncertainty, the risk of future budget cuts, the impact of continuing resolution funding mechanisms and the debt ceiling, the potential for government shutdowns and changing funding and acquisition priorities. Accordingly, our actual results may differ materially from the future performance that we have expressed or forecast in our forward-looking statements.

Previous wording

The revenues of our Government Operations segment are largely a function of defense spending by the U.S. Government. Through this segment, we engineer, design and manufacture precision naval nuclear components, reactors and nuclear fuel for the U.S. Department of Energy ("DOE")/National Nuclear Safety Administration's Naval Nuclear Propulsion Program. In addition, we supply proprietary and sole-source valves, manifolds and fittings to global naval and commercial shipping customers. As a supplier of major nuclear components for certain U.S. Government programs, this segment is a significant participant in the defense industry.

Current wording

The revenues of our Government Operations segment are largely a function of defense spending by the U.S. Government. Through this segment, we engineer, design and manufacture precision naval nuclear components, reactors and nuclear fuel for the U.S. Department of Energy ("DOE")/National Nuclear Safety Administration's Naval Nuclear Propulsion Program. In addition, this segment downblends Cold War-era government stockpiles of high-enriched uranium, develop and manufacture advanced materials and products for commercial, military and space applications and supply proprietary and sole-source valves, manifolds and fittings to global naval and commercial shipping customers. As a supplier of major nuclear components for certain U.S. Government programs, this segment is a significant participant in the defense industry.

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 nine months ended September 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 2024 10-K. There have been no material changes to our critical accounting policies and estimates during the three months ended March 31, 2025.

Previous wording

We generally recognize estimated contract revenue and resulting income over time based on the measurement of the extent of progress toward completion using total costs incurred as a percentage of the total estimated project costs for individual performance obligations. We review contract price and cost estimates periodically as the work progresses and reflect adjustments proportionate to the percentage-of-completion in income in the period when those estimates are revised. If a current estimate of total contract costs indicates a loss on a contract, the projected loss is recognized in full when determined.

Current wording

We generally recognize contract revenue and resulting income over time based on the measurement of the extent of progress toward completion using total costs incurred as a percentage of the total estimated project costs for individual performance obligations. We review contract price and cost estimates periodically as the work progresses and reflect adjustments proportionate to the percentage-of-completion in income in the period when those estimates are revised. If a current estimate of total contract costs indicates a loss on a contract, the projected loss is recognized in full when determined.

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 increased 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 decreased our revenues and operating income as follows:

Previous 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.

Current wording

(1)During the three months ended March 31, 2025 and 2024, no adjustments to any one contract had a material impact on our consolidated financial statements.

Previous wording

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

Current wording

Results of Operations – Three Months Ended March 31, 2025 vs. Three Months Ended March 31, 2024

Previous 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.

Current wording

Consolidated revenues increased 13.0%, or $78.3 million, to $682.3 million in the three months ended March 31, 2025 compared to $604.0 million for the corresponding period of 2024, due to increases in our Government Operations and Commercial Operations segments of $68.2 million and $11.3 million, respectively.

Previous 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.

Current wording

Consolidated operating income increased $3.7 million to $96.6 million in the three months ended March 31, 2025 compared to $93.0 million for the corresponding period of 2024. Operating income in our Government Operations segment increased $12.1 million which was partially offset by a decrease in operating income in our Commercial Operations segment of $2.1 million and an increase in Unallocated Corporate expenses of $6.3 million when compared to the corresponding period in the prior year.

Previous 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.

Current wording

Revenues increased $68.2 million, or 14.0%, to $555.3 million in the three months ended March 31, 2025 compared to $487.1 million for the corresponding period of 2024. The increase was primarily driven by the timing of long-lead material procurements of $62.5 million and the acquisition of A.O.T. during the quarter ended March 31, 2025 which increased revenues by $6.3 million. These increases were partially offset by a decrease in revenues associated with our advanced technologies business.

Previous 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.

Current wording

Operating income increased $12.1 million to $97.7 million in the three months ended March 31, 2025 compared to $85.7 million for the corresponding period of 2024, primarily driven by the operating income impact of the changes in revenues noted above.

Previous 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.

Current wording

Revenues increased 9.6%, or $11.3 million, to $128.3 million in the three months ended March 31, 2025 compared to $117.0 million for the corresponding period of 2024. The increase was primarily related to higher revenues in nuclear components manufacturing of $26.3 million which was partially offset by a $16.2 million decrease in revenues related to on-site inspection, maintenance and refurbishment work when compared to the corresponding period in the prior year.

Previous wording

Operating income decreased $2.4 million to $6.7 million in the three months ended September 30, 2024 compared to $9.1 million for the corresponding period of 2023. The decrease was primarily related to a $2.2 million increase in expenses associated with due diligence and restructuring-related activities as well as higher expenses in our components business when compared to the corresponding period of the prior year. These decreases were partially offset by a favorable shift in our product mix when compared to the same period in the prior year.

Current wording

Operating income decreased $2.1 million to $6.5 million in the three months ended March 31, 2025 compared to $8.6 million for the corresponding period of 2024. The decrease was primarily related to an unfavorable shift in our product mix as well as a $2.6 million increase in expenses associated with merger and acquisition and restructuring-related activities when compared to the corresponding period of the prior year.

Previous 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.

Current wording

Our effective tax rate for the three months ended March 31, 2025 was 17.7% as compared to 22.5% for the three months ended March 31, 2024. The effective tax rate for the three months ended March 31, 2025 was lower than the U.S. corporate income tax rate of 21% primarily due to excess tax benefits associated with equity compensation partially offset by the unfavorable foreign rate differential. The effective tax rate for the three months ended March 31, 2024 was 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 and lower levels of excess tax benefits associated with equity compensation.

Previous wording

Our backlog is equal to our remaining performance obligations under contracts that meet the criteria in FASB Topic Revenue from Contracts with Customers, as discussed in Note 2 to our condensed consolidated financial statements included in this Report. It is possible that our methodology for determining backlog may not be comparable to methods used by other companies.

Current wording

Our backlog is equal to our remaining performance obligations under contracts that meet the criteria in Financial Accounting Standards Board Topic Revenue from Contracts with Customers, as discussed in Note 3 to our condensed consolidated financial statements included in this Report. It is possible that our methodology for determining backlog may not be comparable to methods used by other companies.

Previous 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.

Current wording

As of March 31, 2025, our ending backlog was $4,878.7 million, which included $396.3 million of unfunded backlog related to U.S. Government contracts. We expect to recognize approximately 61% of the revenue associated with our backlog by the end of 2026, with the remainder to be recognized thereafter.

Previous wording

The Credit Facility requires interest payments on outstanding loans on a periodic basis until maturity. We are required to make quarterly amortization payments on the Term Loan in an amount equal to (i) 0.625% of the initial aggregate principal amount of the Term Loan on the last business day of each quarter beginning the quarter ended March 31, 2023 and ending the quarter ending December 31, 2024 and (ii) 1.25% of the initial aggregate principal amount of the Term Loan on the last business day of each quarter ending after December 31, 2024, with the balance of the Term Loan due at maturity. We may prepay all loans under the Credit Facility at any time without premium or penalty (other than customary Term SOFR breakage costs), subject to notice requirements.

Current wording

The Credit Facility requires interest payments on outstanding loans on a periodic basis until maturity. We are required to make quarterly amortization payments on the Term Loan in an amount equal to 1.25% of the initial aggregate principal amount of the Term Loan on the last business day of each quarter, with the balance of the Term Loan due at maturity. We may prepay all loans under the Credit Facility at any time without premium or penalty (other than customary Term SOFR breakage costs), subject to notice requirements.

Previous 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%.

Current wording

As of March 31, 2025, borrowings under the Term Loan totaled $234.4, borrowings and letters of credit issued under the Revolving Credit Facility totaled $170.0 million and $1.4 million, respectively, and we had $578.6 million available under the Revolving Credit Facility for borrowings and to meet letter of credit requirements. As of March 31, 2025, the weighted-average interest rate on outstanding borrowings under the Credit Facility was 5.67%.

Previous wording

We may redeem the Senior Notes due 2029, in whole or in part, at any time at a redemption price equal to (i) 102.063% of the principal amount to be redeemed if the redemption occurs during the 12-month period beginning on April 15, 2024, (ii) 101.031% of the principal amount to be redeemed if the redemption occurs during the 12-month period beginning on April 15, 2025 and (iii) 100.0% of the principal amount to be redeemed if the redemption occurs on or after April 15, 2026, in each case plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

Current wording

We may redeem the Senior Notes due 2029, in whole or in part, at any time at a redemption price equal to (i) 101.031% of the principal amount to be redeemed if the redemption occurs during the 12-month period beginning on April 15, 2025 and (ii) 100.0% of the principal amount to be redeemed if the redemption occurs on or after April 15, 2026, in each case plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

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 September 30, 2024, bonds issued and outstanding under these arrangements totaled approximately $101.1 million.

Current wording

We have posted surety bonds to support regulatory and contractual obligations for certain decommissioning responsibilities, projects and legal matters. We utilize surety bond facilities to support such obligations, but the issuance of surety bonds under those facilities is typically at the surety's discretion, and the surety bond 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 bond capacity, we believe our current capacity is adequate to support our existing requirements for the next 12 months. In addition, these surety 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 March 31, 2025, surety bonds issued and outstanding under these arrangements totaled approximately $304.5 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 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.

Current wording

Similarly, we have provided letters of credit and bank guarantees 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 and bank guarantees 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 March 31, 2025, letters of credit and bank guarantees issued and outstanding under our bilateral letter of credit facility totaled approximately $28.0 million, and such letters of credit and bank guarantees are secured by the collateral under our Credit Facility.

Previous 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.

Current wording

As of March 31, 2025, we had underfunded defined benefit pension and postretirement benefit plans with obligations totaling approximately $99.0 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 $8.8 million for the remainder of 2025 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 $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.

Current wording

Our working capital increased by $36.0 million to $491.8 million at March 31, 2025 from $455.8 million at December 31, 2024, primarily due to net changes in contracts in progress and advance billings on contracts due to the timing of project cash flows and a decrease in current liabilities associated with the payment of accrued incentives.

Previous 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.

Current wording

Our net cash provided by operating activities increased by $17.6 million to $50.7 million in the three months ended March 31, 2025, compared to cash provided by operating activities of $33.0 million in the three months ended March 31, 2024. The increase in cash provided by operating activities was primarily attributable to the timing of project cash flows.

Previous 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.

Current wording

Our net cash provided by financing activities increased by $116.9 million to $84.8 million in the three months ended March 31, 2025, compared to cash used in financing activities of $32.2 million in the three months ended March 31, 2024. The increase in cash used in financing activities was primarily due to an increase in net borrowings of long-term debt of $123.4 million which was partially offset by a $10.0 million increase in repurchases of common stock when compared to the corresponding period of the prior year.

Previous 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.

Current wording

At March 31, 2025, we had restricted cash and cash equivalents totaling $6.5 million, $3.7 million of which was held for future decommissioning of facilities (which is included in Other Assets on our condensed consolidated balance sheets) and $2.8 million of which was held to meet reinsurance reserve requirements of our captive insurer.

Previous 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.

Current wording

At March 31, 2025, we had long-term investments with a fair value of $8.5 million and our investment portfolio consisted entirely of mutual funds. These equity securities are carried at fair value with the unrealized gains and losses reported in earnings.