BWX Technologies(BWXT) - 2025 Q2 - Quarterly Report

PART I – FINANCIAL INFORMATION This section presents BWX Technologies' unaudited condensed consolidated financial statements for Q2 and H1 2025, detailing financial performance, asset growth from acquisitions, and significant investing cash outflows Item 1. Condensed Consolidated Financial Statements This section presents BWX Technologies' unaudited condensed consolidated financial statements for Q2 and H1 2025, including income, balance sheet, and cash flow statements, along with accompanying notes Condensed Consolidated Statements of Income This section details the company's revenues, operating income, and net income for the three and six months ended June 30, 2025 and 2024, showing year-over-year growth Consolidated Income Statement Highlights (Unaudited, In thousands, except per share amounts) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenues (in thousands) | $764,039 | $681,465 | $1,446,297 | $1,285,431 | | Operating Income (in thousands) | $102,424 | $98,806 | $199,054 | $191,767 | | Net Income Attributable to BWXT (in thousands) | $78,388 | $72,972 | $153,850 | $141,440 | | Diluted EPS | $0.85 | $0.79 | $1.68 | $1.54 | - Revenues for the second quarter of 2025 increased by 12.1% year-over-year to $764.0 million, while net income grew by 7.4% to $78.4 million[9] - For the first six months of 2025, revenues increased by 12.5% year-over-year to $1.45 billion, and net income grew by 8.8% to $153.9 million[9] Condensed Consolidated Balance Sheets This section presents the company's financial position, including assets, liabilities, and equity, as of June 30, 2025, and December 31, 2024, highlighting asset growth from acquisitions Consolidated Balance Sheet Highlights (Unaudited, In thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Current Assets (in thousands) | $996,885 | $929,997 | | Property, Plant and Equipment, Net (in thousands) | $1,537,771 | $1,278,161 | | Goodwill (in thousands) | $512,602 | $287,362 | | TOTAL ASSETS (in thousands) | $3,699,072 | $2,869,924 | | Total Current Liabilities (in thousands) | $590,186 | $474,201 | | Long-Term Debt (in thousands) | $1,519,728 | $1,042,970 | | Total Stockholders' Equity (in thousands) | $1,183,906 | $1,080,404 | | TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (in thousands) | $3,699,072 | $2,869,924 | - Total assets increased significantly to $3.70 billion at June 30, 2025, from $2.87 billion at December 31, 2024, primarily due to increases in Goodwill, Intangible Assets, and Property, Plant and Equipment resulting from recent acquisitions[14] - Long-term debt increased to $1.52 billion from $1.04 billion, reflecting borrowings to finance acquisitions[16] Condensed Consolidated Statements of Cash Flows This section outlines the company's cash inflows and outflows from operating, investing, and financing activities for the first six months of 2025 and 2024, emphasizing acquisition-driven cash usage Consolidated Cash Flow Highlights (Unaudited, In thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities (in thousands) | $209,693 | $98,920 | | Net Cash Used in Investing Activities (in thousands) | ($629,480) | ($60,624) | | Net Cash Provided by (Used in) Financing Activities (in thousands) | $385,826 | ($65,004) | | Total Decrease in Cash (in thousands) | ($36,436) | ($27,016) | | Cash at End of Period (in thousands) | $44,135 | $54,599 | - Cash from operations more than doubled to $209.7 million for the first six months of 2025 compared to the same period in 2024, driven by favorable changes in working capital[20] - Investing activities used $629.5 million, a significant increase from $60.6 million in the prior year, primarily due to $538.2 million spent on acquisitions[20] - Financing activities provided $385.8 million, mainly from net borrowings of long-term debt to fund acquisitions, a reversal from the $65.0 million used in the prior year period[20] Notes to Condensed Consolidated Financial Statements These notes detail accounting policies, provide disaggregated revenue and segment performance data, and offer further information on debt and significant 2025 acquisitions - On January 3, 2025, the company acquired Aerojet Ordnance Tennessee, Inc. (A.O.T.) for approximately $103.3 million, enhancing its capabilities in advanced materials for the Government Operations segment[46] - On May 20, 2025, the company acquired Kinectrics Inc. for CAD $782.7 million ($441.4 million U.S. dollar equivalent, net of assumed liabilities), expanding its lifecycle management services and isotope production for the Commercial Operations segment[48][49] - Remaining performance obligations (backlog) stood at $6.015 billion as of June 30, 2025, with approximately 53% expected to be recognized as revenue by the end of 2026[58] Segment Revenues and Operating Income (Six Months Ended June 30) | Metric | 2025 (in thousands) | 2024 (in thousands) | | :--- | :--- | :--- | | Government Operations Revenue | $1,144,246 | $1,027,967 | | Government Operations Operating Income | $207,163 | $178,206 | | Commercial Operations Revenue | $304,449 | $258,529 | | Commercial Operations Operating Income | $13,342 | $25,219 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial performance, highlighting revenue and operating income growth driven by Government Operations, the impact of recent acquisitions, increased backlog, and sufficient liquidity Results of Operations Consolidated revenues and operating income grew in Q2 and H1 2025, primarily driven by Government Operations, while Commercial Operations' income declined despite revenue growth due to product mix and M&A costs Segment Performance Summary (Q2 2025 vs Q2 2024) | Segment | Q2 2025 Revenue (in thousands) | Q2 2024 Revenue (in thousands) | Q2 2025 Operating Income (in thousands) | Q2 2024 Operating Income (in thousands) | | :--- | :--- | :--- | :--- | :--- | | Government Operations | $588,959 | $540,846 | $109,417 | $92,520 | | Commercial Operations | $176,139 | $141,491 | $6,877 | $16,628 | - Government Operations revenue in Q2 2025 increased by 8.9% YoY, driven by uranium processing and downblending operations, including contributions from the A.O.T. acquisition[103] - Commercial Operations revenue in Q2 2025 increased by 24.5% YoY, primarily due to the Kinectrics acquisition, but operating income fell from $16.6 million to $6.9 million due to unfavorable product mix and M&A expenses[108][109] Backlog Total company backlog increased to $6.0 billion at June 30, 2025, with growth in both Government and Commercial Operations, and 53% expected to be recognized by end of 2026 Backlog by Segment (in approximate millions) | Segment | June 30, 2025 (in millions) | December 31, 2024 (in millions) | | :--- | :--- | :--- | | Government Operations | $4,436 | $3,913 | | Commercial Operations | $1,580 | $930 | | Total Backlog | $6,016 | $4,843 | - The backlog at June 30, 2025, includes $651.4 million of unfunded backlog related to U.S. Government contracts[121] - Approximately $1.4 billion in unexercised options, expected to be awarded in 2026 subject to Congressional appropriations, are excluded from the backlog[123] Liquidity and Capital Resources The company maintains adequate liquidity through its Credit Facility and Senior Notes, with increased cash from operations and significant cash used in investing activities due to acquisitions - As of June 30, 2025, total debt included $231.3 million under the Term Loan, $505.0 million in borrowings under the Revolving Credit Facility, and $800 million in Senior Notes[131][134][138] - Net cash from operating activities increased to $209.7 million in H1 2025 from $98.9 million in H1 2024, primarily due to the timing of project cash flows[146] - Net cash used in investing activities increased to $629.5 million in H1 2025, driven by the acquisitions of A.O.T. ($103.3 million) and Kinectrics ($434.4 million)[147] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company reports no material changes to its market risk exposures since the 2024 Annual Report on Form 10-K - There have been no material changes to the company's market risk exposures since the 2024 10-K report[152] Item 4. Controls and Procedures Management concluded disclosure controls were effective as of June 30, 2025, with Kinectrics integration into internal controls ongoing into 2026 - The CEO and CFO concluded that the company's disclosure controls and procedures are effective as of June 30, 2025[153] - The company is in the process of integrating Kinectrics, acquired during the quarter, into its internal control over financial reporting. This integration is expected to continue into 2026[154] PART II – OTHER INFORMATION This section provides other information not covered in the financial statements, including legal proceedings, risk factors, equity sales, and exhibits Item 1. Legal Proceedings The company reports no material legal proceedings for the period, referencing Note 5 for contingencies - The company reports no material legal proceedings for the period, referencing Note 5 which states there were no material contingencies[61][157] Item 1A. Risk Factors The company reports no material changes to its risk factors since the 2024 Annual Report on Form 10-K - There have been no material changes to the risk factors previously disclosed in the 2024 10-K[158] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased 92 shares for tax withholding in Q2 2025, with $347.6 million remaining under the authorized share repurchase program Share Repurchases (Q2 2025) | Period | Total Shares Purchased | Average Price Paid | Shares Purchased as Part of Public Program | Approx. Dollar Value Remaining for Purchase (in millions) | | :--- | :--- | :--- | :--- | :--- | | April 2025 | 37 | $103.55 | — | $347.6 | | May 2025 | 55 | $110.82 | — | $347.6 | | June 2025 | — | $— | — | $347.6 | | Total | 92 | $107.90 | — | $347.6 | - The Board of Directors authorized a $500 million share repurchase program on April 30, 2021, with no expiration date[161] Item 5. Other Information No directors or officers adopted or terminated Rule 10b5-1 trading arrangements during Q2 2025 - No directors or officers of the company adopted or terminated any Rule 10b5-1 trading arrangements during the three months ended June 30, 2025[162] Item 6. Exhibits This section lists exhibits filed with the Form 10-Q, including corporate governance documents, credit agreement amendments, and CEO/CFO certifications - Exhibits filed include certifications by the CEO and CFO (Exhibits 31.1, 31.2, 32.1, 32.2) and an amendment to the credit agreement (Exhibit 10.2)[164]