nuclear solutions for global security, clean energy, environmental remediation, nuclear medicine, and space exploration Commitment to innovation, operational Fourth-Quarter 2024 Earnings Call Presentation on ensuring the highest ESG standards Reported February 24, 2025 Our Purpose: We employ nuclear technology to solve some of the world's most important problems Our Mission: We provide safe and effective excellence, a strong safety record, and a focus Forward-Looking Statements Disclaimer Our Purpose: We em ...

Financial Data and Key Metrics Changes - The company reported record revenue of $746 million for Q4 2024, a 3% organic growth driven by commercial operations, despite a modest decline in government operations [31] - Adjusted EBITDA for Q4 was $130 million, down from $148 million year-over-year, primarily due to lower government operations and timing of corporate expenses [31] - Adjusted earnings per share decreased to $0.92 from $1.01 last year, influenced by operational factors and higher corporate expenses [32] - Free cash flow for Q4 was $224 million, contributing to a full-year total of $255 million, which is a 20% increase year-over-year [36] Business Line Data and Key Metrics Changes - Government operations revenue for Q4 was $295 million, with adjusted EBITDA of $117 million, resulting in a margin of 19.6%, down from the previous year [39] - Annual revenue for government operations increased by 8%, while adjusted EBITDA grew by 3%, maintaining a margin of 20.2% [40] - Commercial operations revenue surged to $152 million, a 23% year-over-year increase, with adjusted EBITDA rising to $23.7 million, up 11% [42] Market Data and Key Metrics Changes - The company ended 2024 with a backlog of $4.8 billion, a 21% increase year-over-year, reflecting strong demand in national security, clean energy, and medical markets [8] - Commercial power revenue grew by over 10%, driven by steam generator deliveries and services related to the Bruce Power life extension project [24] - Medical revenue grew by 23% in 2024, with expectations for similar growth in 2025 [29] Company Strategy and Development Direction - The company is focused on a strategic investment plan called the "BWXT Battle Plan," which includes sustaining core operations, investing strategically, and expanding into adjacent markets [9] - Recent acquisitions, including A.O.T. and Kinectrics, are aimed at enhancing capabilities and expanding service offerings in both government and commercial sectors [13][16] - The company is undergoing a digital transformation initiative to improve operational efficiency and decision-making processes [18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the unprecedented demand for nuclear technologies, positioning the company for continued success in 2025 and beyond [7] - The company anticipates mid-single-digit growth in government operations and significantly higher revenue in commercial operations, driven by the Kinectrics acquisition [43][45] - Management highlighted the importance of maintaining competitive margins while navigating challenges such as tariff risks, particularly in the medical business [62][66] Other Important Information - The company expects a slight decline in corporate EBITDA expenses in 2025, with a projected tax rate of approximately 22% [35] - Capital expenditures for 2024 were 5.7% of sales, with expectations to remain in the range of 5% to 6% in 2025 [38] Q&A Session Summary Question: Update on medical profitability for 2024 and future EBITDA margins - Management indicated that medical profitability improved in 2024, with expectations for similar growth in 2025 [55][57] Question: Capacity to service potential SMR orders from U.S. customers - Management confirmed that existing facilities in Canada would be able to service these orders without immediate need for U.S. expansion [60] Question: Impact of tariff risks on commercial and medical sides - Management expressed concern about potential pricing pressure in the medical business due to tariffs but noted that the commercial power business is less affected [62][66] Question: Expansion into hexafluoride conversion - Management stated that while they have internal capabilities for conversion, any expansion would likely be organic rather than through acquisition [74] Question: Contribution of Kinectrics acquisition to EBITDA - Management estimated Kinectrics would contribute slightly over $40 million in EBITDA in 2025, with a neutral impact on overall margins in the first year [116][120] Question: Status of the DRACO program - Management clarified that additional testing is being conducted, which will lead to schedule implications but is considered beneficial for the contract [124] Question: New Navy contract and its impact on margins - Management indicated that while the new contract is positive, it will take time to see significant margin improvements due to existing agreements [130]

Company Performance - BWX Technologies (BWXT) reported quarterly earnings of $0.92 per share, exceeding the Zacks Consensus Estimate of $0.82 per share, but down from $1.01 per share a year ago [1] - The earnings surprise for this quarter was 12.20%, following a previous quarter where the company also surpassed expectations with earnings of $0.83 per share against an estimate of $0.77 per share [2] - The company achieved revenues of $746.27 million for the quarter, surpassing the Zacks Consensus Estimate by 1.12% and showing an increase from $725.52 million year-over-year [3] Future Outlook - The future performance of BWX shares will largely depend on management's commentary during the earnings call and the sustainability of the stock's price movement based on recent earnings and future expectations [4] - Current consensus EPS estimate for the upcoming quarter is $0.74 on revenues of $659.96 million, while for the current fiscal year, the estimate is $3.42 on revenues of $2.96 billion [8] Industry Context - BWX operates within the Zacks Electronics - Miscellaneous Components industry, which is currently ranked in the bottom 32% of over 250 Zacks industries, indicating potential challenges ahead [9] - The company has a Zacks Rank of 2 (Buy), suggesting it is expected to outperform the market in the near future based on favorable estimate revisions [7]

Revenue and Income - The company expects to recognize approximately 48% of the revenue associated with its backlog by the end of 2025[212]. - For the year ended December 31, 2024, the company reported revenues of $24.728 million and operating income of $24.813 million[219]. - Consolidated revenues increased by 8.3%, or $207.3 million, to $2,703.7 million in 2024 compared to $2,496.3 million in 2023, driven by increases in Government Operations and Commercial Operations segments[238]. - Government Operations revenues rose by 7.5%, or $151.7 million, to $2,183.0 million in 2024, primarily due to higher volume in nuclear components manufacturing for U.S. Government programs[241]. - Commercial Operations revenues increased by 12.4%, or $57.6 million, to $524.0 million in 2024, mainly related to higher revenues in nuclear components and medical radioisotopes[244]. - The company recognized cumulative catch-up adjustments that increased revenues by $37.9 million and operating income by $36.8 million for the year ended December 31, 2024[389]. - Total revenues for the year ended December 31, 2024, were $5,864.6 million, a 9.9% increase from $5,334.8 million in 2023[396]. Operating Expenses and Income - Total costs and expenses for 2024 were $2,378,978, up from $2,164,057 in 2023, reflecting a 9.9% increase[301]. - Total operating income decreased by $2.5 million to $380.6 million in 2024, despite increases in operating income from Government and Commercial Operations segments[239]. - Unallocated Corporate expenses increased by $14.9 million to $44.1 million in 2024, largely due to IT infrastructure transformation initiatives and increased legal and consulting costs[246]. - Research and development costs for 2024 were $7,478, a decrease from $7,613 in 2023[301]. - The company incurred total interest of $65.7 million in 2024, with $26.3 million capitalized, reflecting a decrease from $73.6 million total interest in 2023[333]. Net Income and Earnings Per Share - Net income attributable to BWX Technologies, Inc. for 2024 was $281,941, representing a 14.7% increase compared to $245,849 in 2023[301]. - The company’s basic earnings per share for 2024 was $3.08, up from $2.68 in 2023[301]. - Net income for 2024 reached $282,298,000, an increase of 14.6% compared to $246,321,000 in 2023[304]. - Net income for the year ended December 31, 2024, was $282.3 million, an increase of 14.6% from $246.3 million in 2023[316]. Taxation - Provision for income taxes decreased by $8.7 million to $66.4 million in 2024, with an effective tax rate of 19.0%, down from 23.4% in 2023[248]. - The effective tax rate decreased to 19.0% in 2024 from 23.4% in 2023[401]. Cash Flow and Liquidity - The company's liquidity position improved by approximately $148.6 million to $797.7 million at December 31, 2024, attributed to better operating cash flows[252]. - The company reported a net cash provided by operating activities increased by $44.7 million to $408.4 million for the year ended December 31, 2024, compared to $363.7 million for the previous year[273]. - The company reported a net cash used in financing activities of $252.8 million for the year ended December 31, 2024, an increase of $83.4 million from $169.4 million in the previous year[275]. - The total decrease in cash and cash equivalents for the year was $1.0 million, contrasting with an increase of $40.6 million in 2023[316]. Debt and Financing - As of December 31, 2024, borrowings under the Term Loan totaled $237.5 million, with $723.6 million available under the Revolving Credit Facility[259]. - The company issued $400 million aggregate principal amount of 4.125% senior notes due 2028, maturing on June 30, 2028, with interest payable semi-annually[262][263]. - The company also issued $400 million aggregate principal amount of 4.125% senior notes due 2029, maturing on April 15, 2029, with interest payable semi-annually[266][267]. - The company's long-term debt as of December 31, 2024, is $1,042.97 million, down from $1,203.42 million in 2023[406]. - Maturities of long-term debt include $12.5 million in 2025, $12.5 million in 2026, $237.5 million in 2027, and $400 million in both 2028 and 2029[406]. Assets and Liabilities - Total current assets increased to $929,997,000 in 2024, up from $817,801,000 in 2023, representing a growth of 13.7%[307]. - Current liabilities increased to $474,201,000 in 2024, compared to $375,046,000 in 2023, indicating a rise of 26.4%[310]. - Long-term debt decreased to $1,042,970,000 in 2024 from $1,203,422,000 in 2023, a reduction of 13.3%[310]. - The company has contractual obligations totaling $1,062.5 million in long-term debt principal, with $12.5 million due within one year[278]. Acquisitions and Investments - The company completed the acquisition of A.O.T. for approximately $105.5 million on January 3, 2025, and plans to acquire Kinectrics for approximately CAD 782.7 million, expected to close in mid-2025[282]. - The company completed the acquisition of Aerojet Ordnance Tennessee, Inc. for approximately $105.5 million on January 3, 2025[378]. - The company announced an agreement to acquire Kinectrics Holdings, Inc. for approximately CAD 782.7 million, equivalent to about $525.0 million, targeted to close in mid-2025[379]. Inventory and Assets Management - The company’s inventories rose to $40.3 million in 2024 from $27.4 million in 2023, indicating an increase in raw materials and supplies[342]. - The company's total property, plant, and equipment (net) increased to $1.28 billion in 2024 from $1.23 billion in 2023, reflecting a growth in investments[344]. - Depreciation expense for property, plant, and equipment was $72.9 million in 2024, up from $65.6 million in 2023[343]. Other Financial Metrics - The company has a remaining share repurchase authorization of $377.6 million as of December 31, 2024[281]. - The company declared dividends of $0.96 per share in 2024, compared to $0.92 per share in 2023, reflecting a 4.3% increase[313]. - The company paid $88.3 million in dividends to common stockholders during the year ended December 31, 2024[280].

Financial Performance - Fourth quarter 2024 revenue was $746.3 million, a 3% increase from $725.5 million in Q4 2023, with net income of $71.1 million[4]. - Full year 2024 revenue reached $2.7 billion, an 8% increase from $2.5 billion in 2023, with adjusted EBITDA of $498.7 million[4]. - The company reported a diluted non-GAAP EPS of $0.92 for Q4 2024, down 9% from $1.01 in Q4 2023, and a full year non-GAAP EPS of $3.33, up 10% from $3.02 in 2023[4][10]. - Operating cash flow for full year 2024 was $408.4 million, a 12% increase from $363.7 million in 2023[4][11]. - BWXT's net income attributable to the company for Q4 2024 was $84.7 million, compared to $92.9 million in Q4 2023, a decrease of about 8.8%[28]. - The diluted earnings per share (EPS) for Q4 2024 was $0.92, up from $1.01 in Q4 2023, indicating a decline of about 8.9%[29]. - For the full year 2024, BWXT achieved a Non-GAAP operating income of $412.8 million, compared to $380.6 million in 2023, representing an increase of approximately 8.4%[30]. - Net income for the year ended December 31, 2024, was $282,298,000, up 14.6% from $246,321,000 in 2023[44]. - Basic earnings per share for 2024 were $3.08, up from $2.68 in 2023, representing a 14.9% increase[42]. Operational Highlights - Government Operations revenue for Q4 2024 was $595.0 million, a 1% decrease from $601.6 million in Q4 2023, while Commercial Operations revenue increased by 23% to $152.3 million[5]. - The company experienced a 25% decrease in Q4 2024 GAAP operating income to $92.3 million, compared to $123.2 million in Q4 2023[9]. - BWXT reported a Non-GAAP operating income of $107.9 million for Q4 2024, compared to $127.3 million in Q4 2023, reflecting a decrease of approximately 15.5% year-over-year[28]. - Government operations generated an operating income of $374.7 million, while commercial operations contributed $37.5 million[31]. - Total revenues for the year ended December 31, 2024, were $2,703,654,000, up 8.3% from $2,496,309,000 in 2023[50]. - Segment income for Government Operations decreased to $98,059,000 in Q4 2024 from $116,282,000 in Q4 2023[50]. Strategic Initiatives - BWXT's strategic growth efforts are focused on enhancing its portfolio in national security, clean energy, and medical end-markets[3]. - The company plans to continue its market expansion efforts and explore acquisition opportunities to enhance its competitive position in the nuclear solutions sector[25]. - The company closed the acquisition of A.O.T on January 3, 2025, and announced an agreement to acquire Kinectrics, Inc. on January 7, 2025[4]. - BWXT anticipates potential disruptions in supply chains and operations due to external factors, including government budget uncertainties and labor market challenges[25]. Cash Flow and Investments - BWXT paid $22.0 million in dividends in Q4 2024, and a total of $88.3 million for the full year 2024[12]. - The company reported a free cash flow conversion rate of 106.5% for 2024, indicating strong cash generation relative to net income[21]. - Free cash flow for the year was $254.8 million, compared to $212.4 million in the previous year[38]. - Cash provided by operating activities for the year was $408,428,000, an increase from $363,701,000 in 2023[44]. - The company repurchased $20,000,000 in common stock during the year[44]. Backlog and Bookings - BWXT's total revenue backlog remains strong, with expectations for continued growth in strategic initiatives such as medical radioisotopes and small modular reactor (SMR) components[25]. - The total backlog increased to $4,842,460,000 in Q4 2024, compared to $3,997,647,000 in Q4 2023, representing a 21.2% growth[50]. - Government Operations backlog rose to $3,912,580,000 in Q4 2024 from $3,216,673,000 in Q4 2023, a 21.6% increase[50]. - Total bookings for Q4 2024 were $2,208,666,000, significantly up from $742,318,000 in Q4 2023[50]. - Yearly bookings for 2024 reached $3,549,096,000, compared to $2,349,647,000 in 2023, marking a 50.9% increase[50]. Tax and Financial Metrics - The effective tax rate for Q4 2024 was 18.9%, compared to 22.5% in Q4 2023, showing a reduction in tax burden[29]. - The effective tax rate for the year was 23.4%[31]. - Long-term debt decreased to $1,042,970,000 in 2024 from $1,203,422,000 in 2023, a reduction of 13.3%[48]. - Total current assets increased to $929,997,000 in 2024, compared to $817,801,000 in 2023, reflecting a 13.7% growth[46]. - Total stockholders' equity increased to $1,080,404,000 in 2024 from $933,301,000 in 2023, a growth of 15.8%[48]. Research and Development - Research and development costs for the year were $7,478,000, slightly down from $7,613,000 in 2023[42]. - Capital expenditures for Q4 2024 totaled $52,520,000, slightly up from $50,788,000 in Q4 2023[50].

Core Viewpoint - BWX Technologies, Inc. (BWXT) is expected to report its fourth-quarter 2024 results on February 24, with earnings estimated at 82 cents per share, reflecting an 18.8% decline year-over-year, while revenues are projected to increase by 1.7% to $738 million [1][2]. Group 1: Earnings and Revenue Estimates - The Zacks Consensus Estimate for BWXT's fourth-quarter earnings is 82 cents per share, indicating an 18.8% decline from the same quarter last year, with no change in estimates over the past 60 days [2]. - Revenue estimates for the fourth quarter are pegged at $738 million, suggesting a 1.7% increase compared to the previous year [2]. - BWXT has consistently beaten the Zacks Consensus Estimate in the last four quarters, with an average surprise of 9.1% [2]. Group 2: Factors Influencing Performance - The fourth-quarter performance is likely to benefit from strong demand in global security, clean energy, and medical markets, particularly in nuclear power [3]. - BWXT's strong position in the nuclear technology sector, especially with government contracts for defense and naval applications, is expected to drive growth [4]. - Ongoing defense-related projects, such as Pele and DRACO, are anticipated to contribute positively to the company's growth in the fourth quarter [4]. - The naval nuclear propulsion business, along with growth in microreactors and technical services, is expected to enhance fourth-quarter performance [5]. - Strength in the diagnostics portfolio and expansion in cancer therapeutics, including a partnership with North Star for radium-226 processing, may further boost sales [6]. Group 3: Challenges and Headwinds - The shutdown of the Navy Fuel processing facility and the U-metal construction project due to flooding and power outages for three weeks may offset some positive factors [7]. - Macroeconomic challenges and geopolitical tensions are also expected to negatively impact BWXT's fourth-quarter performance [7]. Group 4: Earnings Prediction Model - The current model does not predict a definitive earnings beat for BWX Technologies, as it has a Zacks Rank of 2 but an Earnings ESP of 0.00% [8].

Group 1 - The focus is on small to mid-cap companies with disruptive technology, emphasizing competitive analysis and research on founders and their previous endeavors [1] - The investment strategy involves a two-year time frame, with a tendency to hold investments for longer periods [1] - The analyst has a family history of investing, learning from past market downturns, and emphasizes the importance of choosing winners and cutting losses early [1] Group 2 - The current investment focus is on the electrification of various sectors, indicating a trend towards sustainable and innovative technologies [1] - The analyst has a background in accounting and company valuation, enhancing the credibility of the research and analysis conducted [1] - The analyst's experience includes trading through significant market events such as the dot-com bubble and the credit crisis, providing a robust understanding of market dynamics [1]

AI Infrastructure and Investment - President Donald Trump unveiled a joint venture called "Stargate" with OpenAI, Oracle Corp, and Softbank to create AI infrastructure, including data centers in the United States, with an initial investment of $100 billion, potentially reaching $500 billion in the next four years [1] - Microsoft plans to invest $80 billion in 2025 into AI-enabled data centers to train AI models and deploy AI and cloud-based applications [3] - Bloomberg Intelligence estimates generative AI spending will increase from $67 billion in 2023 to $1.3 trillion by 2032, with UBS predicting a 33.5% year-over-year increase in capital expenditure on AI applications by four U.S. technology giants in 2025 [5] Nuclear Energy and Data Centers - The energy-hungry AI space has made nuclear energy one of the hottest industries on Wall Street, with companies like Microsoft, Alphabet, Meta, and Amazon collaborating with nuclear energy producers to meet the massive electricity demand for data centers [2][4] - Rystad Energy predicts that the combined expansion of traditional and AI-driven data centers, along with chip foundries, will increase U.S. electric power demand by 177 TWh from 2023 to 2030, reaching a total of 307 TWh [6] - The U.S. Department of Energy reported that data center energy usage will "double or triple by 2028," after doubling over the past decade [6] Nuclear Energy Stocks - Constellation Energy Corp (CEG) is a leading U.S. energy company focusing on clean energy, particularly nuclear energy, with a $5.1 billion capital expenditure plan through 2025 to acquire nuclear fuel and increase inventory levels [8] - BWX Technologies Inc (BWXT) manufactures and sells nuclear components, with expected revenue and earnings growth rates of 9.9% and 5.9%, respectively, for the current year [11][12] - Dominion Energy Inc (D) is realigning its portfolio to focus on regulated assets, aiming for net-zero carbon and methane emissions by 2050, with expected revenue and earnings growth rates of 9.5% and 22.7%, respectively, for the current year [15][17] - Talen Energy Corp (TLN) is an independent power producer operating nuclear, fossil, solar, and coal power plants, with an expected revenue growth rate of 18.6% for the current year [18][19] - PG&E Corp (PCG) generates electricity using nuclear, hydroelectric, fossil fuel-fired, fuel cell, and photovoltaic sources, with expected revenue and earnings growth rates of 5.5% and 9.4%, respectively, for the current year [21][23] Strategic Partnerships and Agreements - Microsoft entered into a 20-year agreement with Constellation Energy to revive the Three Mile Island nuclear plant in Pennsylvania, with a $1.6 billion investment to provide carbon-free electricity for Microsoft's data centers [9] - Dominion Energy signed an MOU with Amazon to explore innovative development structures for enhancing potential Small Modular Reactor (SMR) nuclear development in Virginia [16] - Amazon has partnered with Talen Energy in Pennsylvania to power its data centers with nuclear energy [18]

Core Viewpoint - BWX Technologies (BWXT) has been upgraded to a Zacks Rank 2 (Buy) due to an upward trend in earnings estimates, which is a significant factor influencing stock prices [1][2]. Earnings Estimates and Stock Price Movement - The Zacks rating system is based on changes in a company's earnings picture, which is crucial for predicting near-term stock price movements [2][3]. - Institutional investors rely on earnings estimates to determine the fair value of stocks, leading to significant price movements when estimates are revised [3]. Business Improvement Indicators - The increase in earnings estimates for BWX indicates an improvement in the company's underlying business, which is expected to positively influence its stock price [4]. - For the fiscal year ending December 2024, BWX is projected to earn $3.23 per share, reflecting a 7% increase from the previous year, with a 1.5% rise in the Zacks Consensus Estimate over the past three months [7]. Zacks Rank System Overview - The Zacks Rank system categorizes stocks into five groups based on earnings estimates, with a strong historical performance, particularly for Zacks Rank 1 stocks, which have averaged a +25% annual return since 1988 [6]. - The system maintains a balanced distribution of ratings, ensuring that only the top 20% of stocks receive a 'Strong Buy' or 'Buy' rating, indicating superior earnings estimate revisions [8][9].

Nuclear Energy Theme - The nuclear energy theme is viewed as a clean and cheap energy source driven by decarbonization and climate change, particularly in the context of air conditioning (AC) and electric vehicles (EVs) [1] - The nuclear energy theme is considered the best option among energy sources due to its alignment with decarbonization goals and climate change mitigation [1] Analyst's Experience and Perspective - The analyst has over 30 years of experience analyzing diverse industries including airlines, oil, retail, mining, fintech, and ecommerce, as well as macro, monetary, and political drivers [1] - The analyst has lived through multiple crises such as the Tequila Crisis, Asian Financial Crisis, Dotcom Bubble, 9/11, the Great Recession, and the COVID-19 pandemic, which provides a broad base of experience applicable across multiple disciplines [1] - The analyst has also engaged in entrepreneurial ventures in export, factoring, and printing, further enriching their understanding of business models and innovation [1]