Press Release

BWX Technologies Announces First Quarter 2017 Results

Company Release - 5/1/2017 4:30 PM ET

- EPS Growth of 17% and 22% Over Prior Year Period GAAP and Adjusted EPS, Respectively
- Consolidated Revenue Growth of 17% Over Prior Year Period
- Increases Quarterly Dividend by 22% to $0.11 per Share
-Reaffirms 2017 EPS Guidance of $1.85 to $1.95

LYNCHBURG, Va.--(BUSINESS WIRE)-- BWX Technologies, Inc. (NYSE: BWXT) ("BWXT" or the "Company") today reported first quarter 2017 revenues of $428.2 million, 17% growth compared to $364.8 million in the first quarter of 2016. Earnings per share (EPS) for the first quarter of 2017 were $0.55 compared to GAAP EPS of $0.47 and adjusted (non-GAAP) EPS of $0.45 in the first quarter of 2016. A reconciliation of non-GAAP results is detailed in Exhibit 1.

"BWXT began the new year with a strong quarter, successfully executing on our strategy while continuing to deliver on our commitments to both customers and shareholders," said Mr. John A. Fees, Executive Chairman. “Our Nuclear Operations business continues to produce excellent results, generating record first quarter operating income of $73 million. In addition, we are already seeing a positive effect from the BWXT Nuclear Energy Canada Inc. acquisition in serving the Canadian commercial nuclear market. The newly combined Nuclear Power business produced nearly $78 million in revenues in the first quarter while achieving an 18% operating profit margin. As we continue into 2017, we remain committed to our overall strategy of maintaining operational excellence and continuing to position ourselves to further grow the business.”

First Quarter 2017 Results of Operations

The Company’s consolidated GAAP operating income for the first quarter of 2017 increased to $83.2 million compared to GAAP operating income of $42.6 million in the first quarter of 2016. Adjusted (non-GAAP) operating income for the first quarter of 2017 was also $83.2 million, an increase of more than 14% compared to adjusted (non-GAAP) operating income of $72.6 million in the first quarter of 2016. The increase in GAAP operating income compared to the prior year period was largely due to a $30.0 million charge related to the mPower framework agreement, which was recorded in the first quarter of 2016. Operating income also increased due to results from our Nuclear Operations Group (NOG) and Nuclear Power Group (NPG) segments.

The NOG segment represents our former Nuclear Operations segment. NOG revenues increased approximately 10% to a first quarter record $325.1 million compared to $295.3 million in the same quarter of 2016 due to increased activity in component manufacturing as well as our naval nuclear fuel and downblending operations. NOG operating income was $73.2 million in the first quarter of 2017, almost 13% higher than the $64.9 million in the prior year period.

The NPG segment reporting comprises our legacy Canadian nuclear operations and the recently acquired BWXT Nuclear Energy Canada Inc. (BWXT NEC) business. Revenues from NPG more than doubled to $77.7 million in the first quarter of 2017 compared to $36.2 million in the prior year period, primarily due to the acquisition of BWXT NEC. NPG’s operating income was $13.8 million in the first quarter of 2017, ahead of the prior year’s period operating income of $7.0 million, also due to the net impact of the BWXT NEC acquisition and increased activity of BWXT Canada.

The Nuclear Services Group (NSG) segment reporting comprises our previous Technical Services segment and our U.S. nuclear service business. The latter includes our portfolio of work in advanced reactors for space and terrestrial power applications. NSG segment revenues were $27.9 million in the first quarter of 2017 compared to $34.0 million in the same quarter of 2016 primarily due to the quarterly timing of maintenance outages in the commercial U.S. nuclear utility market. NSG segment revenues were also slightly impacted by decline in specialty engineering work related to new nuclear plant designs, both of which were partially offset by higher activity at our Naval Reactor decommissioning/decontamination and NASA support services projects. NSG’s operating income decreased to $0.7 million in the first quarter of 2017 from $5.8 million in the prior year period due to the aforementioned quarterly outage timing in 2017, as well as our transition off of a joint venture project in Idaho in the second quarter of 2016.

"BWXT accomplished several key strategic initiatives in 2016 and entered 2017 in a position of strength," said Mr. Rex D. Geveden, President and Chief Executive Officer. "Our Nuclear Operations business continues to maintain a strong backlog, and BWXT remains a trusted provider for the Navy as it considers expanding its submarine and aircraft carrier fleet. Our newly formed Nuclear Power segment is positioned for long-term growth as it supports ongoing outage work and refurbishment activities in our traditional Canadian nuclear market and grows into the CANDU fuel, equipment and services market via the acquisition of BWXT NEC. We continue to invest in a robust pipeline of opportunities in the Nuclear Services segment, and we believe we will be able to increase profitability in that business over the next few years. Lastly, we remain committed to our balanced capital allocation approach and continue to evaluate opportunities for acquired growth and strategic investments."

Liquidity and Debt

The Company utilized cash from operating activities of $54.8 million in the first quarter of 2017, inclusive of a $30 million settlement payment to Bechtel pursuant to the Generation mPower LLC Framework Agreement, compared with net cash utilized from operating activities of $12.8 million in the first quarter of 2016. At the end of the first quarter, the Company’s cash and short-term investments position, net of restricted cash, was $108.3 million.

As of March 31, 2017, outstanding balances under our credit facility included $525.9 million in term loans, $50 million in borrowings under the revolving line of credit, and letters of credit issued under the facility totaling $125.1 million. As a result, the Company has $224.9 million of remaining availability under our credit facility, excluding an additional $250 million accordion provision.

Share Repurchases

We received an additional 846,568 shares in the first quarter of 2017 in connection with the completion of our previously authorized $200 million Accelerated Share Repurchase (ASR). We have an additional $193 million of share repurchase authorization remaining as of March 31, 2017.

Quarterly Dividend

On April 28, 2017, our Board of Directors declared a quarterly cash dividend of $0.11 per common share. The dividend will be payable on June 6, 2017, to shareholders of record on May 16, 2017.

Outlook

The Company reaffirms its guidance that adjusted earnings per share for the full year 2017 are expected to be between $1.85 and $1.95. Adjusted earnings per share exclude any mark-to-market adjustments for pension and post-retirement benefits recognized during 2017. Beyond 2017, we continue to anticipate an EPS CAGR in the low double digits over the next 3-5 years based upon our robust organic growth strategy and remaining balance sheet capacity. Segment guidance provided for 2017 remains unchanged.

 

Conference Call to Discuss First Quarter 2017 Results

Date:

Tuesday, May 2, 2017, at 9:00 a.m. EST

Live Webcast:

Investor Relations section of website at www.bwxt.com

 

Forward-Looking Statements

BWXT cautions that this release contains forward-looking statements, including, without limitation, statements relating to backlog, to the extent they may be viewed as an indicator of future revenues, anticipated benefits of the acquisition of GE-Hitachi Nuclear Energy Canada Inc., management’s plans and expectations for our business segments, including potential growth opportunities, as well as our outlook and guidance for 2017. These forward-looking statements are based on management’s current expectations and involve a number of risks and uncertainties, including, among other things, our ability to execute contracts in backlog; the lack of, or adverse changes in, Federal appropriations to government programs in which we participate; the demand for and competitiveness of nuclear power; capital priorities of power generating utilities; adverse changes in the industries in which we operate and delays, changes or termination of contracts in backlog. If one or more of these risks or other risks materialize, actual results may vary materially from those expressed. For a more complete discussion of these and other risk factors, see BWXT’s filings with the Securities and Exchange Commission, including our annual report on Form 10-K for the year ended December 31, 2016 and subsequent quarterly reports on Form 10-Q. BWXT cautions not to place undue reliance on these forward-looking statements, which speak only as of the date of this release, and undertakes no obligation to update or revise any forward-looking statement, except to the extent required by applicable law.

About BWXT

Headquartered in Lynchburg, Va., BWX Technologies, Inc. (NYSE:BWXT) is a leading supplier of nuclear components and fuel to the U.S. government; provides technical and management services to support the U.S. government in the operation of complex facilities and environmental remediation activities; and supplies precision manufactured components, services and fuel for the commercial nuclear power industry. With approximately 6,100 employees, BWXT has nine major operating sites in the U.S. and Canada. In addition, BWXT joint ventures provide management and operations at a dozen U.S. Department of Energy and two NASA facilities. Follow us on Twitter @BWXTech and learn more at www.bwxt.com.

EXHIBIT 1

   

BWX TECHNOLOGIES, INC.

RECONCILIATION OF NON-GAAP OPERATING INCOME AND EARNINGS PER SHARE(1)(2)(3)

 
Three Months Ended March 31, 2017
GAAP  

Performance
Guarantees
Release

 

mPower
Deconsolidation

 

Framework
Agreement

 

Impairment
(Gains) /
Charges

    Non-GAAP
 
Operating Income $ 83.2 $ $ $ $ $ 83.2
Other Income (Expense) (2.8 ) (0.4 ) (3.2 )
Provision for Income Taxes (24.6 )       0.0   (24.6 )
Net Income 55.8         (0.4 ) 55.4  
Net Income Attributable to Noncontrolling Interest (0.1 )         (0.1 )
Net Income Attributable to BWXT $ 55.7   $   $   $   $ (0.4 ) $ 55.3  
 
Diluted Shares Outstanding 100.7 100.7
Diluted Earnings per Common Share $ 0.55 $ $ $ $ 0.00 $ 0.55
 
Effective Tax Rate 30.6 % 30.7 %
 
Three Months Ended March 31, 2016
GAAP

Performance
Guarantees
Release

mPower
Deconsolidation

Framework
Agreement

Impairment
(Gains) /
Charges

  Non-GAAP
 
Operating Income $ 42.6 $ $ $ 30.0 $ $ 72.6
Other Income (Expense) 22.5 (9.3 ) (13.6 ) (0.5 ) (0.8 )
Provision for Income Taxes (15.4 ) 3.4     (11.1 ) (0.8 ) (23.9 )
Net Income 49.7   (5.9 ) (13.6 ) 18.9   (1.3 ) 47.9  
Net Income Attributable to Noncontrolling Interest (0.1 )         (0.1 )
Net Income Attributable to BWXT $ 49.6   $ (5.9 ) $ (13.6 ) $ 18.9   $ (1.3 ) $ 47.8  
 
Diluted Shares Outstanding 105.9 105.9
Diluted Earnings per Common Share $ 0.47 $ (0.06 ) $ (0.13 ) $ 0.18 $ (0.01 ) $ 0.45
 
Effective Tax Rate 23.6 % 33.3 %
 

(1)

May not foot due to rounding.
 
(2) BWXT is providing non-GAAP information regarding certain of its historical results and guidance on future earnings per share to supplement the results provided in accordance with GAAP and it should not be considered superior to, or as a substitute for, the comparable GAAP measures. BWXT believes the non-GAAP measures provide meaningful insight and transparency into the Company’s operational performance and provides these measures to investors to help facilitate comparisons of operating results with prior periods and to assist them in understanding BWXT's ongoing operations.
 
(3) BWXT has not included a reconciliation of provided non-GAAP guidance to the comparable GAAP measures due to the difficulty and unreliability of estimating any mark-to-market adjustments for pension and post-retirement benefits, which are determined at the end of the year.
 
       

BWX TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

 

ASSETS

 

March 31,
2017

December 31,
2016

(Unaudited)

(In thousands)

Current Assets:
Cash and cash equivalents $ 95,924 $ 125,641
Restricted cash and cash equivalents 5,881 6,130
Investments 12,411 14,517
Accounts receivable – trade, net 187,980 135,950
Accounts receivable – other 29,019 25,221
Contracts in progress 382,243 356,793
Other current assets 30,051   29,319
Total Current Assets 743,509   693,571
Property, Plant and Equipment 931,953 922,641
Less accumulated depreciation 635,405   622,955
Net Property, Plant and Equipment 296,548   299,686
Investments 10,436   9,013
Goodwill 211,405   210,788
Deferred Income Taxes 182,551   194,464
Investments in Unconsolidated Affiliates 42,503   42,854
Intangible Assets 113,311   114,748
Other Assets 17,663   14,691
TOTAL $ 1,617,926   $ 1,579,815
 
       

BWX TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 
March 31,
2017
December 31,
2016
(Unaudited)

(In thousands, except share

and per share amounts)

Current Liabilities:
Current maturities of long-term debt $ 27,458 $ 27,370
Accounts payable 80,390 99,983
Accrued employee benefits 52,697 81,793
Accrued liabilities – other 42,612 72,105
Advance billings on contracts 167,372 147,148
Accrued warranty expense 11,908   11,477  
Total Current Liabilities 382,437   439,876  
Long-Term Debt 542,997   497,724  
Accumulated Postretirement Benefit Obligation 18,953   19,059  
Environmental Liabilities 83,232   81,711  
Pension Liability 350,270   357,049  
Other Liabilities 33,818   33,986  
Commitments and Contingencies
Stockholders' Equity:
Common stock, par value $0.01 per share, authorized 325,000,000 shares; issued 124,834,741 and 124,149,609 shares at March 31, 2017 and December 31, 2016, respectively 1,248 1,241
Preferred stock, par value $0.01 per share, authorized 75,000,000 shares; No shares issued
Capital in excess of par value 75,123 22,018
Retained earnings 931,778 885,117
Treasury stock at cost, 25,814,767 and 24,858,809 shares at March 31, 2017 and December 31, 2016, respectively (807,269 ) (762,169 )
Accumulated other comprehensive income 5,026   3,811  
Stockholders' Equity – BWX Technologies, Inc. 205,906 150,018
Noncontrolling interest 313   392  
Total Stockholders' Equity 206,219   150,410  
TOTAL $ 1,617,926   $ 1,579,815  
 
   

BWX TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 
Three Months Ended March 31,
2017     2016
(Unaudited)

(In thousands, except share

and per share amounts)

Revenues $ 428,229 $ 364,826
Costs and Expenses:
Cost of operations 296,230 248,810
Research and development costs 1,519 1,731
Selling, general and administrative expenses 51,150 45,209
mPower framework agreement   30,000  
Total Costs and Expenses 348,899   325,750  
Equity in Income of Investees 3,875   3,533  
Operating Income 83,205   42,609  
Other Income (Expense):
Interest income 137 138
Interest expense (3,517 ) (1,694 )
Other – net 553   24,071  
Total Other Income (Expense) (2,827 ) 22,515  
Income before Provision for Income Taxes 80,378 65,124
Provision for Income Taxes 24,592   15,390  
Net Income $ 55,786   $ 49,734  
Net Income Attributable to Noncontrolling Interest (67 ) (103 )
Net Income Attributable to BWX Technologies, Inc. $ 55,719   $ 49,631  
Earnings per Common Share:
Basic:
Net Income Attributable to BWX Technologies, Inc. $ 0.56   $ 0.48  
Diluted:
Net Income Attributable to BWX Technologies, Inc. $ 0.55   $ 0.47  
Shares used in the computation of earnings per share:
Basic 99,444,910   104,364,141  
Diluted 100,690,968   105,867,948  
 
   

BWX TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 
Three Months Ended March 31,
2017     2016
(Unaudited)

(In thousands)

CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 55,786 $ 49,734
Non-cash items included in net income from continuing operations:
Depreciation and amortization 13,976 11,905
Income of investees, net of dividends 1,779 (413 )
Gain on deconsolidation of Generation mPower LLC (13,571 )
Recognition of losses for pension and postretirement plans 446 406
Stock-based compensation expense 3,412 2,469
Changes in assets and liabilities:
Accounts receivable (41,153 ) (3,263 )
Accounts payable (14,003 ) 1,120
Contracts in progress and advance billings on contracts (4,890 ) (48,390 )
Income taxes (2,607 ) (4,613 )
Accrued and other current liabilities (29,810 ) 30,481
Pension liability, accrued postretirement benefit obligation and employee benefits (38,891 ) (27,255 )
Other, net 1,200   (11,413 )
NET CASH USED IN OPERATING ACTIVITIES (54,755 ) (12,803 )
CASH FLOWS FROM INVESTING ACTIVITIES:
Decrease in restricted cash and cash equivalents 249 107
Purchases of property, plant and equipment (13,713 ) (10,082 )
Purchases of securities (3,503 ) (3,743 )
Sales and maturities of securities 3,317 3,535
Investments, net of return of capital, in equity method investees (1,701 ) (3,825 )
Other 691    
NET CASH USED IN INVESTING ACTIVITIES (14,660 ) (14,008 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under the Credit Agreement 73,600
Repayments under Credit Agreement (30,476 ) (3,750 )
Repurchase of common shares (50,033 )
Dividends paid to common shareholders (8,985 ) (9,514 )
Exercise of stock options 9,665 6,988
Cash paid for shares withheld to satisfy employee taxes (4,973 ) (4,622 )
Other (146 ) (143 )
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 38,685   (61,074 )
EFFECTS OF EXCHANGE RATE CHANGES ON CASH 1,013   847  
TOTAL DECREASE IN CASH AND CASH EQUIVALENTS (29,717 ) (87,038 )
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 125,641   154,729  
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 95,924   $ 67,691  
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 3,330 $ 1,404
Income taxes (net of refunds) $ 27,082 $ 21,406
SCHEDULE OF NON-CASH INVESTING ACTIVITY:
Accrued capital expenditures included in accounts payable $ 3,016 $ 2,762
 
   

BWX TECHNOLOGIES, INC.

BUSINESS SEGMENT INFORMATION

 

Three Months Ended March 31,
2017     2016
(Unaudited)

(In thousands)

REVENUES:

Nuclear Operations Group $ 325,081 $ 295,255
Nuclear Services Group 27,854 33,994
Nuclear Power Group 77,674 36,199
Adjustments and Eliminations (2,380 ) (622 )
TOTAL $ 428,229   $ 364,826  
 

SEGMENT INCOME:

Nuclear Operations Group $ 73,248 $ 64,942
Nuclear Services Group 662 5,803
Nuclear Power Group 13,798 6,954
Other (1,612 ) (1,890 )
SUBTOTAL 86,096   75,809  
Unallocated Corporate (2,891 ) (3,200 )
mPower Framework Agreement   (30,000 )
TOTAL $ 83,205   $ 42,609  
 

DEPRECIATION AND AMORTIZATION:

Nuclear Operations Group $ 7,631 $ 8,336
Nuclear Services Group 938 935
Nuclear Power Group 3,388 648
Other
Corporate 2,019   1,986  
TOTAL $ 13,976   $ 11,905  
 

CAPITAL EXPENDITURES:

Nuclear Operations Group $ 11,751 $ 7,641
Nuclear Services Group 207 6
Nuclear Power Group 1,040 1,448
Other
Corporate 715   987  
TOTAL $ 13,713   $ 10,082  
 
   

BWX TECHNOLOGIES, INC.

BUSINESS SEGMENT INFORMATION

 
Three Months Ended March 31,
2017     2016
(Unaudited)

(In thousands)

BACKLOG:

Nuclear Operations Group $ 3,405,096 $ 2,097,883
Nuclear Services Group 35,612 46,372
Nuclear Power Group 478,357   318,604
TOTAL $ 3,919,065   $ 2,462,859
 

BOOKINGS:

Nuclear Operations Group $ 244,765 $ 80,948
Nuclear Services Group 37,050 49,617
Nuclear Power Group 82,698   46,831
TOTAL $ 364,513   $ 177,396
 
       

BWX TECHNOLOGIES, INC.

BUSINESS SEGMENT INFORMATION

 
Three Months Ended Twelve Months Ended
3/31/2016     6/30/2016     9/30/2016     12/31/2016 12/31/2016     12/31/2015
(Unaudited)

(In thousands)

REVENUES:

Nuclear Operations Group $ 295,255 $ 325,660 $ 316,899 $ 331,458 $ 1,269,272 $ 1,179,896
Nuclear Services Group 33,994 32,224 28,759 33,044 128,021 121,247
Nuclear Power Group 36,199 47,946 36,123 41,304 161,572 121,061
Adjustments and Eliminations (622 ) (3,448 ) (2,276 ) (1,946 ) (8,292 ) (6,675 )
TOTAL $ 364,826   $ 402,382   $ 379,505   $ 403,860   $ 1,550,573   $ 1,415,529  
 

SEGMENT INCOME:

Nuclear Operations Group $ 64,942 $ 64,407 $ 62,537 $ 76,617 $ 268,503 $ 257,400
Nuclear Services Group 5,803 4,405 652 1,311 12,171 7,955
Nuclear Power Group 6,954 26,674 5,031 4,149 42,808 11,803
Other (1,890 ) (1,271 ) (1,907 ) (1,330 ) (6,398 ) (13,949 )
SUBTOTAL 75,809   94,215   66,313   80,747   317,084   263,209  
Unallocated Corporate (3,200 ) (5,757 ) (3,940 ) (13,456 ) (26,353 ) (25,747 )
mPower Framework Agreement (30,000 ) (30,000 )
Income Related to Litigation Proceeds 65,728
Special Charges for Restructuring Activities (16,608 )
Cost to Spin-off Power Generation Business (25,987 )
Mark to Market Adjustment       (21,468 ) (21,468 ) (54,654 )
TOTAL $ 42,609   $ 88,458   $ 62,373   $ 45,823   $ 239,263   $ 205,941  
 

DEPRECIATION AND AMORTIZATION:

Nuclear Operations Group $ 8,336 $ 9,122 $ 8,610 $ 8,296 $ 34,364 $ 38,836
Nuclear Services Group 935 939 940 940 3,754 3,485
Nuclear Power Group 648 704 791 1,316 3,459 3,081
Other 550
Corporate 1,986   1,999   2,080   2,912   8,977   11,211  
TOTAL $ 11,905   $ 12,764   $ 12,421   $ 13,464   $ 50,554   $ 57,163  
 

CAPITAL EXPENDITURES:

Nuclear Operations Group $ 7,641 $ 5,720 $ 10,459 $ 19,726 $ 43,546 $ 35,658
Nuclear Services Group 6 19 181 322 528 3,853
Nuclear Power Group 1,448 1,617 37 3,102 2,629
Other
Corporate 987   1,041   1,746   1,684   5,458   14,701  
TOTAL $ 10,082   $ 8,397   $ 12,386   $ 21,769   $ 52,634   $ 56,841  
 
       

BWX TECHNOLOGIES, INC.

BUSINESS SEGMENT INFORMATION

 
Three Months Ended Twelve Months Ended
3/31/2016     6/30/2016     9/30/2016     12/31/2016 12/31/2016     12/31/2015
(Unaudited)

(In thousands)

BACKLOG:

Nuclear Operations Group $ 2,097,883 $ 3,247,817 $ 2,982,735 $ 3,485,216 $ 3,485,216 $ 2,311,113
Nuclear Services Group 46,372 39,723 33,722 24,258 24,258 31,440
Nuclear Power Group 318,604   385,186   371,376   473,306   473,306   307,735
TOTAL $ 2,462,859   $ 3,672,726   $ 3,387,833   $ 3,982,780   $ 3,982,780   $ 2,650,288
 

BOOKINGS:

Nuclear Operations Group $ 80,948 $ 1,475,546 $ 51,794 $ 833,879 $ 2,442,167 $ 710,878
Nuclear Services Group 49,617 22,568 20,779 21,859 114,823 116,838
Nuclear Power Group 46,831   114,137   22,039   10,655   193,662   197,080
TOTAL $ 177,396   $ 1,612,251   $ 94,612   $ 866,393   $ 2,750,652   $ 1,024,796

BWX Technologies, Inc.
Investor Contact:
Alan Nethery, 980-365-4300
Vice President, Investor Relations
Investors@bwxt.com
or
Media Contact:
Jud Simmons, 434-522-6462
Communications Director
hjsimmons@bwxt.com

Source: BWX Technologies, Inc.

Contacts

INVESTOR RELATIONS CONTACT

Mark Kratz
Director of Investor Relations
1.980.365.4300
investors@bwxt.com

TRANSFER AGENT CONTACT

Computershare Trust Company, N.A.
P.O. Box 43078
Providence, RI 02940-3078
1.800.446.2617