UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________________________________________________________________
FORM 8-K
______________________________________________________________________________
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 7, 2022
(Exact name of registrant as specified in its charter)
_____________________________________________________________________________
| (State or other jurisdiction | (Commission | (IRS Employer | |||||||||||||||||||||
| of incorporation) | File Number) | Identification No.) | |||||||||||||||||||||
| (Address of principal executive offices) | (Zip Code) | ||||||||||||||||||||||
Registrant’s telephone number, including area code: (980 ) 365-4300
____________________________________________________________________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |||||
Securities registered pursuant to Section 12(b) of the Act: | ||||||||
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
| Emerging growth company | |||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On November 7, 2022, we issued a press release announcing our financial results for the third quarter ended September 30, 2022. A copy of the press release is attached as Exhibit 99.1, and the information contained in Exhibit 99.1 is incorporated by reference.
The information furnished pursuant to this Item 2.02, including Exhibit 99.1, shall not be deemed to be "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, (the "Exchange Act"), or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
| 99.1 | ||||||||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | |||||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| BWX TECHNOLOGIES, INC. | |||||||||||
| By: | /s/ Kevin J. Gorman | ||||||||||
| Kevin J. Gorman | |||||||||||
| Corporate Controller and Interim Chief Accounting Officer | |||||||||||
November 7, 2022
BWX Technologies Reports Third Quarter 2022 Results
•3Q22 revenue of $523.7 million
•3Q22 net income of $61.8 million, adjusted EBITDA(1) of $100.1 million
•3Q22 diluted GAAP EPS of $0.67, non-GAAP(1) EPS of $0.69
•3Q22 net cash provided by operating activities of $65.0 million, free cash flow(1) of $25.4 million
•Narrows 2022 guidance and anticipates strong revenue and EBITDA(1) growth in 2023
•Technetium 99-m generator application accepted by FDA with priority review classification
Lynchburg, VA – November 7, 2022 - BWX Technologies, Inc. (NYSE: BWXT) ("BWXT", "we", "us" or the "Company") reported third quarter 2022 GAAP net income attributable to BWXT of $61.6 million, or diluted earnings per share (EPS) of $0.67, on revenue of $523.7 million. Third quarter 2022 non-GAAP(1) net income attributable to BWXT was $63.0 million, or $0.69 diluted EPS. Third quarter 2022 adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA)(1) was $100.1 million. A reconciliation of non-GAAP results are detailed in Exhibit 1.
“BWXT delivered third quarter results that were in line with our expectations that we framed in the second quarter earnings call," said Rex D. Geveden, president and chief executive officer. “Strong performance from Commercial Operations combined with cost control initiatives offset headwinds in the Government Operations segment attributable to lower than projected production volumes due to hiring challenges in a tough macro labor market impacting many industries. We are continuing to address attrition and transitory labor shortages by implementing a set of comprehensive actions including aggressive recruiting, enhanced training and retention measures.”
Geveden continued, “In the past couple of months, BWXT has made exciting progress in two important nuclear growth end-markets: nuclear medicine and commercial nuclear power. In September, we submitted our Tc-99m generator application to the FDA and last week we were notified by the FDA that our application has been accepted with a priority review classification. Also in September, BWXT Medical completed the first trial batch of Actinium-225 for Bayer’s evaluation in therapeutic clinical trials. In August, BWXT's clean-energy business was awarded a contract from GE-Hitachi to begin engineering for its BWRX-300 small modular reactor (SMR) pressure vessel that will enable us to begin manufacturing and procurement preparations. This award firmly supports the global interest in clean-energy SMR technology, and BWXT is well suited to provide design and efficient manufacturing solutions for complex nuclear components to GE-Hitachi as well as other SMR solutions.”
“Given current labor dynamics, we are narrowing 2022 earnings guidance by bringing down the top-end of the range. However, with the company’s new wins, recent growth initiative progress, and positive secular tailwinds in BWXT’s nuclear end-markets, we anticipate strong operational growth in 2023 and accelerating growth over the medium-term,” said Geveden.
(1) A reconciliation of non-GAAP results, including adjusted EBITDA, are detailed in Exhibit 1. Additional information can be found in the materials on the BWXT investor relations website at www.bwxt.com/investors.
Financial Results Summary
| Three Months Ended September 30, | ||||||||||||||||||||||||||
| 2022 | 2021 | $ Change | % Change | |||||||||||||||||||||||
| (Unaudited) (In millions, except per share amounts) | ||||||||||||||||||||||||||
| Revenues | ||||||||||||||||||||||||||
| Government Operations | $ | 422.5 | $ | 417.1 | $ | 5.4 | 1% | |||||||||||||||||||
| Commercial Operations | $ | 101.8 | $ | 83.4 | $ | 18.4 | 22% | |||||||||||||||||||
| Consolidated | $ | 523.7 | $ | 498.7 | $ | 25.0 | 5% | |||||||||||||||||||
| Operating Income | ||||||||||||||||||||||||||
| Government Operations | $ | 77.7 | $ | 87.5 | $ | (9.8) | (11)% | |||||||||||||||||||
| Commercial Operations | $ | 6.8 | $ | 4.9 | $ | 1.9 | 39% | |||||||||||||||||||
| Unallocated Corporate (Expense) Income | $ | (4.7) | $ | (5.0) | $ | 0.3 | NM | |||||||||||||||||||
| Consolidated | $ | 79.9 | $ | 87.5 | $ | (7.6) | (9)% | |||||||||||||||||||
Consolidated non-GAAP(1) | $ | 81.5 | $ | 88.2 | $ | (6.7) | (8)% | |||||||||||||||||||
| EPS (Diluted) | ||||||||||||||||||||||||||
| GAAP | $ | 0.67 | $ | 0.63 | $ | 0.04 | 6% | |||||||||||||||||||
Non-GAAP(1) | $ | 0.69 | $ | 0.76 | $ | (0.07) | (9)% | |||||||||||||||||||
| Net Income | ||||||||||||||||||||||||||
| GAAP | $ | 61.8 | $ | 60.2 | $ | 1.7 | 3% | |||||||||||||||||||
Non-GAAP(1) | $ | 63.2 | $ | 72.2 | $ | (9.0) | (12)% | |||||||||||||||||||
Adjusted EBITDA(1) | ||||||||||||||||||||||||||
| Government Operations | $ | 90.4 | $ | 98.6 | $ | (8.3) | (8)% | |||||||||||||||||||
| Commercial Operations | $ | 11.5 | $ | 10.2 | $ | 1.2 | 12% | |||||||||||||||||||
| Corporate | $ | (1.7) | $ | (3.1) | $ | 1.5 | NM | |||||||||||||||||||
| Consolidated | $ | 100.1 | $ | 105.7 | $ | (5.6) | (5)% | |||||||||||||||||||
| Cash Flows | ||||||||||||||||||||||||||
| Net Cash Provided By Operating Activities | $ | 65.0 | $ | 67.3 | $ | (2.3) | (3)% | |||||||||||||||||||
| Purchases of Property, Plant and Equipment | $ | 39.6 | $ | 66.5 | $ | (26.8) | (40)% | |||||||||||||||||||
Free Cash Flow(1) | $ | 25.4 | $ | 0.8 | $ | 24.6 | NM | |||||||||||||||||||
| Repurchases of Common Stock | $ | — | $ | 165.8 | $ | (165.8) | NM | |||||||||||||||||||
| Dividends Paid to Common Shareholders | $ | 20.1 | $ | 20.0 | $ | 0.2 | 1% | |||||||||||||||||||
NM = Not Meaningful
Revenues
Third quarter revenue increased in both operating segments. The Government Operations increase was driven by higher naval production and microreactors volume, partially offset by lower long-lead material production. The Commercial Operations increase was driven by higher field services, higher fuel handling and an increase in medical sales.
Operating Income and Adjusted EBITDA(1)
Third quarter total operating income decreased driven by lower operating income in Government Operations that was partially offset by higher operating income in Commercial Operations. The Government Operations decrease was driven by decreased labor efficiencies that resulted in fewer favorable contract adjustments, lower recoverable CAS pension income, and higher depreciation and acquisition amortization, partially offset by higher income in technical service joint ventures. The Commercial Operations increase was driven by higher revenue, a more favorable business mix and segment cost controls.
(1) A reconciliation of non-GAAP results are detailed in Exhibit 1. Additional information can be found in the materials on the BWXT investor relations website at www.bwxt.com/investors.
Third quarter total adjusted EBITDA(1) decreased for the reasons noted above as lower Government Operations adjusted EBITDA(1) was partially offset by higher Commercial Operations adjusted EBITDA(1).
EPS
The third quarter GAAP EPS increase was driven primarily by the absence of cost associated with an early bond redemption that occurred in the third quarter 2021 and lower share count, partially offset by lower FAS/CAS pension income, higher interest expense and a higher effective tax rate. The third quarter non-GAAP EPS decrease was driven by lower operating and FAS/CAS pension income, higher interest expense, and a higher effective tax rate, which was partially offset by a lower share count.
Cash Flows
Decreased operating cash flow was driven by higher cash taxes, partially offset by more favorable changes in working capital. Lower capital expenditures were driven by less spend on two major growth capital campaigns, for U.S. naval nuclear reactors and medical radioisotopes, that are nearing completion.
Dividend
BWXT paid $20.1 million dollars, or $0.22 per common share, to shareholders in the third quarter 2022. On November 1, 2022, the BWXT Board of Directors declared a quarterly cash dividend of $0.22 per common share payable on December 13, 2022, to shareholders of record on November 21, 2022.
2022 Guidance
| (In millions, except per share amounts) | As of August 8, 2022 | As of November 7, 2022 | ||||||||||||||||||
| Year Ended | Year Ended | Year Ended | ||||||||||||||||||
| December 31, 2021 | December 31, 2022 | December 31, 2022 | ||||||||||||||||||
| Revenues | $2,124 | up 6.5% - 8.0% | up 6.5% - 7.0% | |||||||||||||||||
Adjusted EBITDA(1) | $418 | up 5.0% - 6.5% | up ~5.0% | |||||||||||||||||
Non-GAAP(1) Earnings Per Share | $3.06 | $3.08 - $3.23 | $3.10 - $3.15 | |||||||||||||||||
| Net Cash Provided by Operating Activities | $386 | $260 - $290 | $260 - $290 | |||||||||||||||||
| Capital Expenditures | $311 | $195 - $210 | < $200 | |||||||||||||||||
2022 Segment Outlook
| (In millions) | As of August 8, 2022 | As of November 7, 2022 | ||||||||||||||||||||||||
| Revenue | Adjusted EBITDA(1) | Revenue | Adjusted EBITDA(1) | |||||||||||||||||||||||
| Government Operations | up 6.0% - 7.5% | $400 - $405 | up ~6.0% | ~$395 | ||||||||||||||||||||||
| Commercial Operations | up 7.5% - 8.5% | $48 - $50 | up ~8.5% | ~$50 | ||||||||||||||||||||||
Additional information can be found in the 2022 third quarter earnings call presentation on the BWXT investor relations website at www.bwxt.com/investors. The Company does not provide GAAP guidance because it is unable to reliably forecast most of the items that are excluded from GAAP to calculate non-GAAP results. These items could cause GAAP results to differ materially from non-GAAP results.
Conference Call to Discuss Third Quarter 2022 Results
Date: Monday, November 7, 2022, at 5:00 p.m. EST
Live Webcast: Investor Relations section of website at www.bwxt.com
Full Earnings Release Available on BWXT Website
A full version of this earnings release is available on our Investor Relations website at http://investors.bwxt.com/3Q2022-release
(1) A reconciliation of non-GAAP results are detailed in Exhibit 1. Additional information can be found in the materials on the BWXT investor relations website at www.bwxt.com/investors.
BWXT may use its website (www.bwxt.com) as a channel of distribution of material Company information. Financial and other important information regarding BWXT is routinely accessible through and posted on our website. In addition, you may elect to automatically receive e-mail alerts and other information about BWXT by enrolling through the “Email Alerts” section of our website at http://investors.bwxt.com.
Non-GAAP Measures
BWXT uses and makes reference to adjusted EBITDA, free cash flow and free cash flow conversion, which are not recognized measures under GAAP. BWXT is providing these non-GAAP measures 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. Definitions for the non-GAAP measures are provided below and reconciliations are detailed in Exhibit 1, except that reconciliations of forward-looking GAAP measures are not provided because the company is unable to reliably forecast most of the items that are excluded from GAAP to calculate non-GAAP results. Other companies may define these measures differently or may utilize different non-GAAP measures, thus impacting comparability.
Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) is calculated using non-GAAP net income, plus provision for income taxes, less other – net, less interest income, plus interest expense, plus depreciation and amortization.
Free Cash Flow (FCF) is calculated using net income to derive net cash provided by (used in) operating activities less purchases of property, plant and equipment.
Free Cash Flow conversion is free cash flow divided by net income.
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; our plans and expectations for each of our reportable segments, including the expectations, timing and revenue of our strategic initiatives, such as medical radioisotopes, SMR components and recent acquisitions; disruptions to our supply chain and/or operations, changes in government regulations and other factors, including any such impacts of, or actions in response to the COVID-19 health crisis; and our expectations and guidance for 2022 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 products and services; capital priorities of power generating utilities and other customers; the timing of technology development, regulatory approval and automation of production; the receipt and/or timing of government approvals; the impact of COVID-19 on our business and our employees, contractors, suppliers, customers and other partners and their business activities; the potential recurrence of subsequent waves or strains of COVID-19 or similar diseases; labor market challenges, including employee retention and recruitment; 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, 2021 and subsequent Form 10-Q filings. 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.
(1) A reconciliation of non-GAAP results are detailed in Exhibit 1. Additional information can be found in the materials on the BWXT investor relations website at www.bwxt.com/investors.
About BWXT
At BWX Technologies, Inc. (NYSE: BWXT), we are People Strong, Innovation Driven. Headquartered in Lynchburg, Va. BWXT is a Fortune 1000 and Defense News Top 100 manufacturing and engineering innovator that provides safe and effective nuclear solutions for global security, clean energy, environmental remediation, nuclear medicine and space exploration. With approximately 6,700 employees, BWXT has 14 major operating sites in the U.S., Canada and the U.K. In addition, BWXT joint ventures provide management and operations at more than a dozen U.S. Department of Energy and NASA facilities. Follow us on Twitter at @BWXT and learn more at www.bwxt.com
| Investor Contact: | Media Contact: | |||||||||||||
| Mark Kratz | Jud Simmons | |||||||||||||
| Vice President, Investor Relations | Director, Media and Public Relations | |||||||||||||
| 980-365-4300 | Investors@bwxt.com | 434-522-6462 | hjsimmons@bwxt.com | |||||||||||
(1) A reconciliation of non-GAAP results are detailed in Exhibit 1. Additional information can be found in the materials on the BWXT investor relations website at www.bwxt.com/investors.
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 September 30, 2022 | |||||||||||||||||||||||||||||
| GAAP | Restructuring Costs | Acquisition Related Costs | Non-GAAP | ||||||||||||||||||||||||||
| Operating Income | $ | 79.9 | $ | 1.2 | $ | 0.5 | $ | 81.5 | |||||||||||||||||||||
| Other Income (Expense) | 2.1 | — | — | 2.1 | |||||||||||||||||||||||||
| Provision for Income Taxes | (20.2) | (0.2) | (0.1) | (20.5) | |||||||||||||||||||||||||
| Net Income | 61.8 | 1.0 | 0.4 | 63.2 | |||||||||||||||||||||||||
Net Income Attributable to Noncontrolling Interest | (0.2) | — | — | (0.2) | |||||||||||||||||||||||||
Net Income Attributable to BWXT | $ | 61.6 | $ | 1.0 | $ | 0.4 | $ | 63.0 | |||||||||||||||||||||
| Diluted Shares Outstanding | 91.7 | 91.7 | |||||||||||||||||||||||||||
Diluted Earnings per Common Share | $ | 0.67 | $ | 0.01 | $ | 0.00 | $ | 0.69 | |||||||||||||||||||||
| Effective Tax Rate | 24.6% | 24.5% | |||||||||||||||||||||||||||
| Government Operations Operating Income | $ | 77.7 | $ | — | $ | 0.5 | $ | 78.2 | |||||||||||||||||||||
| Commercial Operations Operating Income | $ | 6.8 | $ | — | $ | — | $ | 6.8 | |||||||||||||||||||||
| Unallocated Corporate Operating Income | $ | (4.7) | $ | 1.2 | $ | — | $ | (3.5) | |||||||||||||||||||||
| Three Months Ended September 30, 2021 | |||||||||||||||||||||||||||||
| GAAP | Restructuring Costs | Cost associated with early bond redemption | Non-GAAP | ||||||||||||||||||||||||||
| Operating Income | $ | 87.5 | $ | 0.8 | $ | — | $ | 88.2 | |||||||||||||||||||||
| Other Income (Expense) | (9.7) | — | 15.0 | 5.3 | |||||||||||||||||||||||||
| Provision for Income Taxes | (17.6) | (0.2) | (3.5) | (21.3) | |||||||||||||||||||||||||
| Net Income | 60.2 | 0.6 | 11.5 | 72.2 | |||||||||||||||||||||||||
Net Income Attributable to Noncontrolling Interest | (0.2) | — | — | (0.2) | |||||||||||||||||||||||||
Net Income Attributable to BWXT | $ | 59.9 | $ | 0.6 | $ | 11.5 | $ | 72.0 | |||||||||||||||||||||
| Diluted Shares Outstanding | 94.5 | 94.5 | |||||||||||||||||||||||||||
Diluted Earnings per Common Share | $ | 0.63 | $ | 0.01 | $ | 0.12 | $ | 0.76 | |||||||||||||||||||||
| Effective Tax Rate | 22.6% | 22.8% | |||||||||||||||||||||||||||
| Government Operations Operating Income | $ | 87.5 | $ | 0.2 | $ | — | $ | 87.7 | |||||||||||||||||||||
| Commercial Operations Operating Income | $ | 4.9 | $ | 0.3 | $ | — | $ | 5.2 | |||||||||||||||||||||
| Unallocated Corporate Operating Income | $ | (5.0) | $ | 0.3 | $ | — | $ | (4.7) | |||||||||||||||||||||
EXHIBIT 1 (continued)
RECONCILIATION OF CONSOLIDATED ADJUSTED EBITDA(1)(2)(3)
(In millions)
| Three Months Ended September 30, 2022 | |||||||||||||||||||||||||||||
| GAAP | Restructuring Costs | Acquisition Related Costs | Non-GAAP | ||||||||||||||||||||||||||
| Net Income | $ | 61.8 | $ | 1.0 | $ | 0.4 | $ | 63.2 | |||||||||||||||||||||
| Provision for Income Taxes | 20.2 | 0.2 | 0.1 | 20.5 | |||||||||||||||||||||||||
| Other – net | (11.5) | — | — | (11.5) | |||||||||||||||||||||||||
| Interest Income | (0.3) | — | — | (0.3) | |||||||||||||||||||||||||
| Interest Expense | 9.6 | — | — | 9.6 | |||||||||||||||||||||||||
| Depreciation & Amortization | 18.6 | — | — | 18.6 | |||||||||||||||||||||||||
| Adjusted EBITDA | $ | 98.5 | $ | 1.2 | $ | 0.5 | $ | 100.1 | |||||||||||||||||||||
| Three Months Ended September 30, 2021 | |||||||||||||||||||||||||||||
| GAAP | Restructuring Costs | Costs associated with early bond redemption | Non-GAAP | ||||||||||||||||||||||||||
| Net Income | $ | 60.2 | $ | 0.6 | $ | 11.5 | $ | 72.2 | |||||||||||||||||||||
| Provision for Income Taxes | 17.6 | 0.2 | 3.5 | 21.3 | |||||||||||||||||||||||||
| Other – net | (1.6) | — | (10.8) | (12.4) | |||||||||||||||||||||||||
| Interest Income | (0.2) | — | — | (0.2) | |||||||||||||||||||||||||
| Interest Expense | 11.5 | — | (4.2) | 7.3 | |||||||||||||||||||||||||
| Depreciation & Amortization | 17.5 | — | — | 17.5 | |||||||||||||||||||||||||
| Adjusted EBITDA | $ | 105.0 | $ | 0.8 | $ | — | $ | 105.7 | |||||||||||||||||||||
RECONCILIATION OF REPORTING SEGMENT ADJUSTED EBITDA(1)(2)(3)
(In millions)
| Three Months Ended September 30, 2022 | |||||||||||||||||||||||||||||
| Operating Income (GAAP) | Non-GAAP Adjustments(4) | Depreciation & Amortization | Adjusted EBITDA | ||||||||||||||||||||||||||
| Government Operations | $ | 77.7 | $ | 0.5 | $ | 12.1 | $ | 90.4 | |||||||||||||||||||||
| Commercial Operations | $ | 6.8 | $ | — | $ | 4.6 | $ | 11.5 | |||||||||||||||||||||
| Three Months Ended September 30, 2021 | |||||||||||||||||||||||||||||
| Operating Income (GAAP) | Non-GAAP Adjustments(4) | Depreciation & Amortization | Adjusted EBITDA | ||||||||||||||||||||||||||
| Government Operations | $ | 87.5 | $ | 0.2 | $ | 10.9 | $ | 98.6 | |||||||||||||||||||||
| Commercial Operations | $ | 4.9 | $ | 0.3 | $ | 5.0 | $ | 10.2 | |||||||||||||||||||||
EXHIBIT 1 (continued)
RECONCILIATION OF CONSOLIDATED FREE CASH FLOW(1)(2)(3)
(In millions)
| Three Months Ended September 30, 2022 | ||||||||
| Net Cash Provided By Operating Activities | $ | 65.0 | ||||||
| Purchases of Property, Plant and Equipment | (39.6) | |||||||
| Free Cash Flow | $ | 25.4 | ||||||
| Three Months Ended September 30, 2021 | ||||||||
| Net Cash Provided By Operating Activities | $ | 67.3 | ||||||
| Purchases of Property, Plant and Equipment | (66.5) | |||||||
| Free Cash Flow | $ | 0.8 | ||||||
| (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 of estimating any mark-to-market adjustments for pension and post-retirement benefits, which are determined at the end of the year. | ||||||||||||||||||||||||||||||||||||||||||||||
| (4) | For Non-GAAP adjustment details, see reconciliation of non-GAAP operating income and earnings per share. | ||||||||||||||||||||||||||||||||||||||||||||||
BWX TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||
| (Unaudited) (In thousands, except share and per share amounts) | ||||||||||||||||||||||||||
| Revenues | $ | 523,711 | $ | 498,727 | $ | 1,608,657 | $ | 1,532,099 | ||||||||||||||||||
| Costs and Expenses: | ||||||||||||||||||||||||||
| Cost of operations | 399,281 | 361,530 | 1,217,108 | 1,130,153 | ||||||||||||||||||||||
| Research and development costs | 1,426 | 2,870 | 6,990 | 9,491 | ||||||||||||||||||||||
| Losses (gains) on asset disposals and impairments, net | (251) | (981) | (222) | (1,018) | ||||||||||||||||||||||
| Selling, general and administrative expenses | 58,160 | 58,458 | 172,974 | 176,037 | ||||||||||||||||||||||
| Total Costs and Expenses | 458,616 | 421,877 | 1,396,850 | 1,314,663 | ||||||||||||||||||||||
| Equity in Income of Investees | 14,783 | 10,618 | 34,881 | 26,197 | ||||||||||||||||||||||
| Operating Income | 79,878 | 87,468 | 246,688 | 243,633 | ||||||||||||||||||||||
| Other Income (Expense): | ||||||||||||||||||||||||||
| Interest income | 273 | 160 | 463 | 369 | ||||||||||||||||||||||
| Interest expense | (9,625) | (11,483) | (24,983) | (28,725) | ||||||||||||||||||||||
| Other – net | 11,496 | 1,624 | 35,401 | 33,316 | ||||||||||||||||||||||
| Total Other Income (Expense) | 2,144 | (9,699) | 10,881 | 4,960 | ||||||||||||||||||||||
Income before Provision for Income Taxes | 82,022 | 77,769 | 257,569 | 248,593 | ||||||||||||||||||||||
| Provision for Income Taxes | 20,185 | 17,611 | 61,977 | 59,211 | ||||||||||||||||||||||
| Net Income | $ | 61,837 | $ | 60,158 | $ | 195,592 | $ | 189,382 | ||||||||||||||||||
| Net Income Attributable to Noncontrolling Interest | (234) | (244) | (366) | (372) | ||||||||||||||||||||||
| Net Income Attributable to BWX Technologies, Inc. | $ | 61,603 | $ | 59,914 | $ | 195,226 | $ | 189,010 | ||||||||||||||||||
| Earnings per Common Share: | ||||||||||||||||||||||||||
| Basic: | ||||||||||||||||||||||||||
| Net Income Attributable to BWX Technologies, Inc. | $ | 0.67 | $ | 0.64 | $ | 2.13 | $ | 1.99 | ||||||||||||||||||
| Diluted: | ||||||||||||||||||||||||||
| Net Income Attributable to BWX Technologies, Inc. | $ | 0.67 | $ | 0.63 | $ | 2.13 | $ | 1.99 | ||||||||||||||||||
| Shares used in the computation of earnings per share: | ||||||||||||||||||||||||||
| Basic | 91,407,599 | 94,277,253 | 91,455,350 | 94,978,638 | ||||||||||||||||||||||
| Diluted | 91,655,536 | 94,483,975 | 91,665,383 | 95,190,676 | ||||||||||||||||||||||
BWX TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
| Nine Months Ended September 30, | ||||||||||||||
| 2022 | 2021 | |||||||||||||
| (Unaudited) (In thousands) | ||||||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||||
| Net Income | $ | 195,592 | $ | 189,382 | ||||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||
| Depreciation and amortization | 54,808 | 50,476 | ||||||||||||
| Income of investees, net of dividends | (10,733) | (12,375) | ||||||||||||
| Recognition of losses for pension and postretirement plans | 2,441 | 2,189 | ||||||||||||
| Stock-based compensation expense | 12,047 | 14,861 | ||||||||||||
| Premium for early redemption of senior notes | — | 10,752 | ||||||||||||
| Recognition of debt issuance costs from former debt instruments | — | 4,212 | ||||||||||||
| Other, net | 1,966 | 1,039 | ||||||||||||
| Changes in assets and liabilities, net of effects from acquisitions: | ||||||||||||||
| Accounts receivable | 10,518 | 99,604 | ||||||||||||
| Accounts payable | (17,996) | (20,787) | ||||||||||||
| Retainages | (24,684) | (14,780) | ||||||||||||
| Contracts in progress and advance billings on contracts | (42,824) | (71,020) | ||||||||||||
| Income taxes | (4,019) | 15,723 | ||||||||||||
| Accrued and other current liabilities | (8,487) | 1,922 | ||||||||||||
| Pension liabilities, accrued postretirement benefit obligations and employee benefits | (34,994) | (53,430) | ||||||||||||
| Other, net | 3,400 | 7,810 | ||||||||||||
| NET CASH PROVIDED BY OPERATING ACTIVITIES | 137,035 | 225,578 | ||||||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||||
| Purchases of property, plant and equipment | (134,591) | (236,656) | ||||||||||||
| Acquisition of business, net of cash acquired | (47,328) | — | ||||||||||||
| Purchases of securities | (2,700) | (3,560) | ||||||||||||
| Sales and maturities of securities | 2,667 | 3,417 | ||||||||||||
| Investments, net of return of capital, in equity method investees | (11,450) | — | ||||||||||||
| Other, net | 324 | 2,718 | ||||||||||||
| NET CASH USED IN INVESTING ACTIVITIES | (193,078) | (234,081) | ||||||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||||
| Borrowings of long-term debt | 373,700 | 1,215,800 | ||||||||||||
| Repayments of long-term debt | (223,700) | (825,800) | ||||||||||||
| Premium for early redemption of senior notes | — | (10,752) | ||||||||||||
| Payment of debt issuance costs | — | (4,838) | ||||||||||||
| Repayment of bank overdraft | — | (88,694) | ||||||||||||
| Repurchases of common stock | (20,000) | (185,778) | ||||||||||||
| Dividends paid to common shareholders | (60,894) | (60,277) | ||||||||||||
| Exercises of stock options | 57 | 2,011 | ||||||||||||
| Cash paid for shares withheld to satisfy employee taxes | (6,588) | (5,031) | ||||||||||||
| Settlements of forward contracts, net | 13,917 | (1,167) | ||||||||||||
| Other | (204) | (115) | ||||||||||||
| NET CASH PROVIDED BY FINANCING ACTIVITIES | 76,288 | 35,359 | ||||||||||||
| EFFECTS OF EXCHANGE RATE CHANGES ON CASH | (3,093) | 155 | ||||||||||||
| TOTAL INCREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AND CASH EQUIVALENTS | 17,152 | 27,011 | ||||||||||||
| CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 39,775 | 48,298 | ||||||||||||
| CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 56,927 | $ | 75,309 | ||||||||||
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ||||||||||||||
| Cash paid during the period for: | ||||||||||||||
| Interest | $ | 26,809 | $ | 32,209 | ||||||||||
| Income taxes (net of refunds) | $ | 67,555 | $ | 43,236 | ||||||||||
| SCHEDULE OF NON-CASH INVESTING ACTIVITY: | ||||||||||||||
| Accrued capital expenditures included in accounts payable | $ | 7,427 | $ | 25,106 | ||||||||||
BWX TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
| September 30, 2022 | December 31, 2021 | |||||||||||||
| (Unaudited) (In thousands) | ||||||||||||||
| Current Assets: | ||||||||||||||
| Cash and cash equivalents | $ | 51,400 | $ | 33,891 | ||||||||||
| Restricted cash and cash equivalents | 2,908 | 2,896 | ||||||||||||
| Investments | 3,820 | 3,811 | ||||||||||||
| Accounts receivable – trade, net | 72,404 | 70,663 | ||||||||||||
| Accounts receivable – other | 34,145 | 16,651 | ||||||||||||
| Retainages | 76,193 | 51,507 | ||||||||||||
| Contracts in progress | 545,517 | 546,595 | ||||||||||||
| Other current assets | 63,317 | 47,718 | ||||||||||||
| Total Current Assets | 849,704 | 773,732 | ||||||||||||
| Property, Plant and Equipment, Net | 1,083,436 | 1,045,640 | ||||||||||||
| Investments | 7,769 | 9,558 | ||||||||||||
| Goodwill | 289,962 | 285,502 | ||||||||||||
| Deferred Income Taxes | 20,458 | 21,394 | ||||||||||||
| Investments in Unconsolidated Affiliates | 107,430 | 85,284 | ||||||||||||
| Intangible Assets | 192,898 | 185,551 | ||||||||||||
| Other Assets | 120,401 | 94,719 | ||||||||||||
| TOTAL | $ | 2,672,058 | $ | 2,501,380 | ||||||||||
BWX TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
| September 30, 2022 | December 31, 2021 | |||||||||||||
| (Unaudited) (In thousands, except share and per share amounts) | ||||||||||||||
| Current Liabilities: | ||||||||||||||
| Accounts payable | $ | 146,543 | $ | 189,842 | ||||||||||
| Accrued employee benefits | 75,114 | 71,835 | ||||||||||||
| Accrued liabilities – other | 80,749 | 80,998 | ||||||||||||
| Advance billings on contracts | 98,545 | 111,619 | ||||||||||||
| Accrued warranty expense | 5,846 | 5,321 | ||||||||||||
| Total Current Liabilities | 406,797 | 459,615 | ||||||||||||
| Long-Term Debt | 1,340,722 | 1,189,304 | ||||||||||||
| Accumulated Postretirement Benefit Obligation | 21,553 | 24,333 | ||||||||||||
| Environmental Liabilities | 94,414 | 92,642 | ||||||||||||
| Pension Liability | 48,018 | 59,388 | ||||||||||||
| Other Liabilities | 47,618 | 38,863 | ||||||||||||
| Commitments and Contingencies | ||||||||||||||
| Stockholders' Equity: | ||||||||||||||
| Common stock, par value $0.01 per share, authorized 325,000,000 shares; issued 127,638,048 and 127,311,985 shares at September 30, 2022 and December 31, 2021, respectively | 1,276 | 1,273 | ||||||||||||
| Preferred stock, par value $0.01 per share, authorized 75,000,000 shares; No shares issued | — | — | ||||||||||||
| Capital in excess of par value | 186,790 | 174,288 | ||||||||||||
| Retained earnings | 1,910,197 | 1,775,751 | ||||||||||||
| Treasury stock at cost, 36,420,960 and 35,915,747 shares at September 30, 2022 and December 31, 2021, respectively | (1,353,269) | (1,326,280) | ||||||||||||
| Accumulated other comprehensive income (loss) | (32,280) | 12,143 | ||||||||||||
| Stockholders' Equity – BWX Technologies, Inc. | 712,714 | 637,175 | ||||||||||||
| Noncontrolling interest | 222 | 60 | ||||||||||||
| Total Stockholders' Equity | 712,936 | 637,235 | ||||||||||||
| TOTAL | $ | 2,672,058 | $ | 2,501,380 | ||||||||||
BWX TECHNOLOGIES, INC.
BUSINESS SEGMENT INFORMATION
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||
| (Unaudited) (In thousands) | ||||||||||||||||||||||||||
| REVENUES: | ||||||||||||||||||||||||||
| Government Operations | $ | 422,521 | $ | 417,139 | $ | 1,290,835 | $ | 1,245,911 | ||||||||||||||||||
| Commercial Operations | 101,794 | 83,382 | 320,266 | 292,622 | ||||||||||||||||||||||
| Eliminations | (604) | (1,794) | (2,444) | (6,434) | ||||||||||||||||||||||
| TOTAL | $ | 523,711 | $ | 498,727 | $ | 1,608,657 | $ | 1,532,099 | ||||||||||||||||||
| SEGMENT INCOME: | ||||||||||||||||||||||||||
| Government Operations | $ | 77,735 | $ | 87,542 | $ | 233,749 | $ | 238,658 | ||||||||||||||||||
| Commercial Operations | 6,847 | 4,925 | 23,673 | 16,859 | ||||||||||||||||||||||
| SUBTOTAL | 84,582 | 92,467 | 257,422 | 255,517 | ||||||||||||||||||||||
| Unallocated Corporate | (4,704) | (4,999) | (10,734) | (11,884) | ||||||||||||||||||||||
| TOTAL | $ | 79,878 | $ | 87,468 | $ | 246,688 | $ | 243,633 | ||||||||||||||||||
| DEPRECIATION AND AMORTIZATION: | ||||||||||||||||||||||||||
| Government Operations | $ | 12,137 | $ | 10,928 | $ | 35,258 | $ | 30,433 | ||||||||||||||||||
| Commercial Operations | 4,603 | 4,985 | 14,465 | 14,939 | ||||||||||||||||||||||
| Corporate | 1,852 | 1,571 | 5,085 | 5,104 | ||||||||||||||||||||||
| TOTAL | $ | 18,592 | $ | 17,484 | $ | 54,808 | $ | 50,476 | ||||||||||||||||||
| CAPITAL EXPENDITURES: | ||||||||||||||||||||||||||
| Government Operations | $ | 19,126 | $ | 34,155 | $ | 66,195 | $ | 110,173 | ||||||||||||||||||
| Commercial Operations | 17,815 | 30,546 | 63,559 | 118,441 | ||||||||||||||||||||||
| Corporate | 2,704 | 1,785 | 4,837 | 8,042 | ||||||||||||||||||||||
| TOTAL | $ | 39,645 | $ | 66,486 | $ | 134,591 | $ | 236,656 | ||||||||||||||||||
| BACKLOG: | ||||||||||||||||||||||||||
| Government Operations | $ | 3,686,469 | $ | 3,813,289 | $ | 3,686,469 | $ | 3,813,289 | ||||||||||||||||||
| Commercial Operations | 632,416 | 687,806 | 632,416 | 687,806 | ||||||||||||||||||||||
| TOTAL | $ | 4,318,885 | $ | 4,501,095 | $ | 4,318,885 | $ | 4,501,095 | ||||||||||||||||||
| BOOKINGS: | ||||||||||||||||||||||||||
| Government Operations | $ | 119,086 | $ | 53,989 | $ | 398,232 | $ | 1,373,286 | ||||||||||||||||||
| Commercial Operations | 2,790 | 96,780 | 308,750 | 254,081 | ||||||||||||||||||||||
| TOTAL | $ | 121,876 | $ | 150,769 | $ | 706,982 | $ | 1,627,367 | ||||||||||||||||||