Press Release

BWX Technologies Reports Robust First Quarter 2018 Results with Strong Revenue Growth

Company Release - 5/4/2018 4:30 PM ET
  • 1Q18 GAAP EPS of $0.66, up 20%; 1Q18 non-GAAP EPS of $0.67, up 22%
  • Strong revenue growth of 7% with expanding segment margins
  • Consolidated backlog remains healthy at $3.6 billion
  • Reiterated 2018 guidance: EPS of $2.45 to 2.55; revenue of $1.75 to 1.85 billion

LYNCHBURG, Va.--(BUSINESS WIRE)-- BWX Technologies, Inc. (NYSE: BWXT) (“BWXT” or the “Company”) reported first quarter 2018 revenue of $457 million, a 6.8% increase compared to $428 million in the first quarter of 2017. GAAP net income for the first quarter 2018 was $66.4 million, or $0.66 per diluted share, compared to GAAP net income of $55.7 million, or $0.55 per diluted share, in the prior-year quarter. Non-GAAP net income for the first quarter 2018 was $67.6 million, or $0.67 per diluted share, compared to non-GAAP net income of $55.3 million, or $0.55 per diluted share, in the first quarter of 2017. Year-over-year earnings per share improvements were driven primarily by strong operational performance and the benefit of lower expense due to tax reform. A reconciliation of non-GAAP results is detailed in Exhibit 1.

“Our first quarter performance provides a strong start to the year,” said Rex D. Geveden, President and Chief Executive Officer. “The company continues to perform exceptionally well with EPS growth of 22 percent on top of strong revenue gains. We saw continued strength in all three segments of the business with an especially strong showing from the Nuclear Power Group.

“A few weeks ago we announced a definitive agreement to acquire Sotera Health’s Nordion medical isotope business. This was an opportunistic addition that is aligned with the strategic initiative to commercialize our breakthrough medical isotope manufacturing technology, creating the first new major business line for the company in over 25 years.”

First Quarter 2018 Segment Results
Nuclear Operations Group (NOG) segment revenue was $317 million for the first quarter of 2018, a 2.6% decrease from the prior-year period due to timing of contract activities. NOG operating income was $67.7 million in the first quarter of 2018, about flat compared with the prior-year period. Year-over-year segment operating margin expanded 50 basis points to 21.4%.

Nuclear Power Group (NPG) segment revenue was a record $113 million for the first quarter of 2018, a 45.2% increase from the prior-year period due to material timing on a China steam generator project and increased field service activity. NPG operating income was robust at $21.8 million in the first quarter of 2018, a 68% increase from the prior-year period. Year-over-year segment operating margin expanded 260 basis points to 19.3%.

Nuclear Services Group (NSG) segment operating income was $1.2 million for the first quarter of 2018, up $0.8 million versus the prior-year period.

Liquidity and Debt
The Company utilized cash in operating activities of $18.6 million in the first quarter of 2018 compared with net cash utilized in operating activities of $54.7 million, inclusive of a $30 million settlement payment, in the first quarter of 2017. At the end of the first quarter, the Company’s cash and short-term investments position, net of restricted cash, was $144.4 million.

As of March 31, 2018, outstanding balances under our credit facility included $502.8 million in term loans, no revolving line of credit borrowings, and $73.8 million in letters of credit. As a result, the Company had $326.2 million in remaining availability under its credit facility, excluding an additional $250 million accordion provision.

Quarterly Dividend
On May 4, 2018, our Board of Directors declared a quarterly cash dividend of $0.16 per common share. The dividend will be payable on June 6, 2018, to shareholders of record on May 18, 2018.

2018 Outlook
BWXT reiterated guidance for 2018:

  • EPS in a range of $2.45 to $2.55 (excluding mark-to-market of pension and post-retirement benefits)
  • Revenue in a range of $1.75 to $1.85 billion
  • NOG revenue in a range of $1.3 to $1.4 billion and operating margin in the high teens with upside potential
  • NPG revenue in a range of $300 to $350 million and operating margin of approximately 12%
  • NSG operating income of approximately $20 million
  • Research and development costs of approximately $15 million
  • Corporate unallocated costs of approximately $20 million
  • Other income primarily related to pension and other post-employment benefit plans in a range of $30 to $35 million
  • Effective non-GAAP tax rate in a range of 22% to 25%
  • Capital expenditures of approximately $150 million, primarily to support growth in Navy business
  • Depreciation and amortization of approximately $60 million

Long-term Outlook
BWXT reiterated long-term guidance that beyond 2017, and excluding the benefit of tax reform, it anticipates an EPS Compound Annual Growth Rate (CAGR) in the low-double digits over a three to five year period based on a robust organic growth strategy and balance sheet capacity.

Conference Call to Discuss First Quarter 2018 Results

Date: Monday, May 7, 2018, at 9:00 a.m. EDT
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; the anticipated benefits of our proposed acquisition of Nordion’s medical isotope business; timing of future revenues from the acquisition of Nordion’s medical isotope business and new medical isotope business; our plans and expectations for the NOG, NPG and NSG segments; and our outlook and guidance for 2018 and beyond. 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, 2017 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 more than 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)

(In millions, except per share amounts)

 
    Three Months Ended March 31, 2018
             
GAAP

Acquisition
Related Costs

Impairment
(Gains) /
Charges

Non-GAAP
 
Operating Income $ 79.9 $ 1.6 $ $ 81.4
Other Income (Expense) 5.1 5.1
Provision for Income Taxes   (18.6 )   (0.4 )       (19.0 )
Net Income   66.4     1.2         67.6  
Net Income Attributable to Noncontrolling Interest                
Net Income Attributable to BWXT $ 66.4   $ 1.2   $   $ 67.6  
 
Diluted Shares Outstanding 100.5 100.5
Diluted Earnings per Common Share $ 0.66 $ 0.01 $ $ 0.67
 
Effective Tax Rate 21.9 %   21.9 %
 
 
Three Months Ended March 31, 2017
 
GAAP  

Impairment
(Gains) /
Charges

Non-GAAP
 
Operating Income $ 76.3 $ $ $ 76.3
Other Income (Expense) 4.1 (0.4 ) 3.7
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 %
 

(1)

 

Tables 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,
2018

   

December 31,
2017

(Unaudited)
(In thousands)

Current Assets:
Cash and cash equivalents $ 143,335 $ 203,404
Restricted cash and cash equivalents 5,362 7,105
Investments 1,034 2,934
Accounts receivable – trade, net 174,150 189,217
Accounts receivable – other 8,058 19,365
Contracts in progress 337,375 420,628
Other current assets   33,536   30,437
Total Current Assets   702,850   873,090
Property, Plant and Equipment 1,023,856 1,013,141
Less accumulated depreciation   673,954   664,512
Net Property, Plant and Equipment   349,902   348,629
Investments   8,909   9,301
Goodwill   216,999   218,331
Deferred Income Taxes   84,727   86,740
Investments in Unconsolidated Affiliates   47,043   43,266
Intangible Assets   106,718   110,405
Other Assets   22,391   22,577
TOTAL $ 1,539,539 $ 1,712,339
 
 

BWX TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

LIABILITIES AND STOCKHOLDERS’ EQUITY

 
   

March 31,
2018

   

December 31,
2017

(Unaudited)
(In thousands, except share
and per share amounts)

Current Liabilities:
Current maturities of long-term debt $ 27,693 $ 27,870
Accounts payable 99,224 93,421
Accrued employee benefits 57,637 82,477
Accrued liabilities – other 51,662 64,738
Advance billings on contracts 77,140 246,192
Accrued warranty expense   13,699     13,428  
Total Current Liabilities   327,055     528,126  
Long-Term Debt   471,367     481,059  
Accumulated Postretirement Benefit Obligation   20,959     21,368  
Environmental Liabilities   80,682     79,786  
Pension Liability   274,801     296,444  
Other Liabilities   19,425     19,799  
Commitments and Contingencies

Stockholders’ Equity:

Common stock, par value $0.01 per share, authorized 325,000,000 shares; issued 125,722,034 and 125,381,591 shares at March 31, 2018 and December 31, 2017, respectively 1,257 1,254
Preferred stock, par value $0.01 per share, authorized 75,000,000 shares; No shares issued
Capital in excess of par value 107,108 98,843
Retained earnings 1,053,090 990,652
Treasury stock at cost, 26,056,339 and 25,964,088 shares at March 31, 2018 and December 31, 2017, respectively (820,749 ) (814,809 )
Accumulated other comprehensive income   4,435     9,454  

Stockholders’ Equity – BWX Technologies, Inc.

345,141 285,394
Noncontrolling interest   109     363  

Total Stockholders’ Equity

  345,250     285,757  
TOTAL $ 1,539,539   $ 1,712,339  
 
 

BWX TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 
    Three Months Ended March 31,
2018     2017

(Unaudited)
(In thousands, except share
and per share amounts)

Revenues $ 457,463 $ 428,229
Costs and Expenses:
Cost of operations 327,364 303,216
Research and development costs 3,607 1,519
Gains on asset disposals and impairments, net (8 )
Selling, general and administrative expenses   53,762     51,097  
Total Costs and Expenses   384,725     355,832  
Equity in Income of Investees   7,150     3,875  
Operating Income   79,888     76,272  
Other Income (Expense):
Interest income 778 137
Interest expense (3,560 ) (3,517 )
Other – net   7,910     7,486  
Total Other Income (Expense)   5,128     4,106  
Income before Provision for Income Taxes 85,016 80,378
Provision for Income Taxes   18,603     24,592  
Net Income $ 66,413   $ 55,786  
Net (Income) Loss Attributable to Noncontrolling Interest   28     (67 )
Net Income Attributable to BWX Technologies, Inc. $ 66,441   $ 55,719  
Earnings per Common Share:
Basic:
Net Income Attributable to BWX Technologies, Inc. $ 0.67   $ 0.56  
Diluted:
Net Income Attributable to BWX Technologies, Inc. $ 0.66   $ 0.55  
Shares used in the computation of earnings per share:
Basic   99,526,187     99,444,910  
Diluted   100,512,287     100,690,968  
 
 

BWX TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 
    Three Months Ended March 31,
2018     2017

(Unaudited)
(In thousands)

CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 66,413 $ 55,786
Non-cash items included in net income from continuing operations:
Depreciation and amortization 14,061 13,976
Income of investees, net of dividends (2,299 ) 1,779
Gains on asset disposals and impairments, net (8 )
Recognition of losses for pension and postretirement plans 505 446
Stock-based compensation expense

4,461

3,412
Changes in assets and liabilities:
Accounts receivable 16,943 (41,153 )
Accounts payable 10,528 (14,003 )
Contracts in progress and advance billings on contracts (74,153 ) (4,890 )
Income taxes (5,502 ) (2,607 )
Accrued and other current liabilities 364 (29,810 )
Pension liability, accrued postretirement benefit obligation and employee benefits (48,929 ) (38,891 )
Other, net  

(989

)   1,279  
NET CASH USED IN OPERATING ACTIVITIES   (18,605 )   (54,676 )
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment (17,634 ) (13,713 )
Purchases of securities (1,033 ) (3,503 )
Sales and maturities of securities 2,948 3,317
Investments, net of return of capital, in equity method investees (1,701 )
Proceeds from asset disposals 8
Other, net       691  
NET CASH USED IN INVESTING ACTIVITIES   (15,711 )   (14,909 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under the Credit Agreement 73,600
Repayments under Credit Agreement (6,951 ) (30,476 )
Dividends paid to common shareholders (15,947 ) (8,985 )
Exercise of stock options 2,525 9,665
Cash paid for shares withheld to satisfy employee taxes (4,657 ) (4,973 )
Other   (226 )   (146 )
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES   (25,256 )   38,685  
EFFECTS OF EXCHANGE RATE CHANGES ON CASH   (2,236 )   1,013  
TOTAL DECREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AND CASH EQUIVALENTS   (61,808 )   (29,887 )
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD   213,144     134,600  
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 151,336   $ 104,713  
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 3,463 $ 3,330
Income taxes (net of refunds) $ 24,370 $ 27,082
SCHEDULE OF NON-CASH INVESTING ACTIVITY:
Accrued capital expenditures included in accounts payable $ 4,735 $ 3,016
 
 

BWX TECHNOLOGIES, INC.

BUSINESS SEGMENT INFORMATION

 
    Three Months Ended March 31,
2018     2017

(Unaudited)
(In thousands)

REVENUES:

Nuclear Operations Group $ 316,631 $ 325,081
Nuclear Services Group 30,033 27,854
Nuclear Power Group 112,816 77,674
Adjustments and Eliminations   (2,017 )   (2,380 )
TOTAL $ 457,463   $ 428,229  
 

SEGMENT INCOME:

Nuclear Operations Group $ 67,657 $ 67,749
Nuclear Services Group 1,177 402
Nuclear Power Group 21,764 12,956
Other   (4,043 )   (1,612 )
SUBTOTAL   86,555     79,495  
Unallocated Corporate   (6,667 )   (3,223 )
TOTAL $ 79,888   $ 76,272  
 

DEPRECIATION AND AMORTIZATION:

Nuclear Operations Group $ 7,778 $ 7,631
Nuclear Services Group 913 938
Nuclear Power Group 3,595 3,388
Other
Corporate   1,775     2,019  
TOTAL $ 14,061   $ 13,976  
 

CAPITAL EXPENDITURES:

Nuclear Operations Group $ 13,809 $ 11,751
Nuclear Services Group 235 207
Nuclear Power Group 959 1,040
Other 512
Corporate   2,119     715  
TOTAL $ 17,634   $ 13,713  
 
 

BWX TECHNOLOGIES, INC.

BUSINESS SEGMENT INFORMATION

 
    Three Months Ended March 31,
2018     2017

(Unaudited)
(In thousands)

BACKLOG:

Nuclear Operations Group $ 3,002,488 $ 3,405,096
Nuclear Services Group 27,841 35,612
Nuclear Power Group   550,097   478,357
TOTAL $ 3,580,426 $ 3,919,065
 

BOOKINGS:

Nuclear Operations Group $ 60,076 $ 244,765
Nuclear Services Group 27,751 37,050
Nuclear Power Group   36,908   82,698
TOTAL $ 124,735 $ 364,513

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