BWX Technologies(US:BWXT)2023-08-02 16:00PART I – FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements Presents BWX Technologies' unaudited condensed consolidated financial statements for Q2 and H1 2023, including balance sheets, income, and cash flows Condensed Consolidated Balance Sheets The balance sheet details changes in assets, liabilities, and equity, showing growth in total assets and stockholders' equity Balance Sheet Summary (in thousands) | Account | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Total Current Assets | $839,201 | $771,619 | | Total Assets | $2,740,574 | $2,618,939 | | Total Current Liabilities | $348,061 | $367,860 | | Long-Term Debt | $1,330,523 | $1,282,624 | | Total Liabilities | $1,899,046 | $1,870,584 | | Total Stockholders' Equity | $841,528 | $748,355 | Condensed Consolidated Statements of Income This section highlights revenue growth for both Q2 and H1 2023, alongside a decrease in net income for both periods Income Statement Highlights (in thousands, except per share data) | Metric | Q2 2023 | Q2 2022 | H1 2023 | H1 2022 | | :--- | :--- | :--- | :--- | :--- | | Revenues | $612,445 | $554,208 | $1,180,805 | $1,084,946 | | Operating Income | $86,666 | $95,237 | $174,508 | $166,810 | | Net Income Attributable to BWXT | $58,597 | $74,613 | $119,689 | $133,623 | | Diluted EPS | $0.64 | $0.82 | $1.30 | $1.46 | Condensed Consolidated Statements of Cash Flows This section details cash flow activities, showing a slight decrease in operating cash and a significant decrease in investing cash used Cash Flow Summary - Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $67,589 | $72,038 | | Net Cash used in Investing Activities | $(65,914) | $(164,751) | | Net Cash (used in) from Financing Activities | $(3,282) | $125,046 | | Total (Decrease) Increase in Cash | $(1,411) | $33,310 | Notes to Condensed Consolidated Financial Statements These notes provide detailed explanations of accounting policies, segment operations, revenue recognition, and other financial instrument details - The company operates in two reportable segments: Government Operations, which manufactures naval nuclear reactors and provides services to the U.S. Government, and Commercial Operations, which fabricates commercial nuclear components and provides medical radioisotopes5970 - On April 11, 2022, the company acquired Dynamic Controls Limited and Cunico Corporation for approximately $49.9 million, which are reported as part of the Government Operations segment98 - As of June 30, 2023, the company's remaining performance obligations (backlog) were $4.115 billion, with approximately 58% expected to be recognized as revenue by the end of 2024122 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial performance for Q2 and H1 2023, covering consolidated revenues, operating income, segment performance, backlog, and liquidity Consolidated Results Summary (in thousands) | Metric | Q2 2023 | Q2 2022 | H1 2023 | H1 2022 | | :--- | :--- | :--- | :--- | :--- | | Revenues | $612,445 | $554,208 | $1,180,805 | $1,084,946 | | Total Operating Income | $86,666 | $95,237 | $174,508 | $166,810 | - Q2 2023 consolidated revenues increased 10.5% YoY, while H1 2023 revenues increased 8.8% YoY147136 - Q2 2023 consolidated operating income decreased by $8.6 million YoY, while H1 2023 operating income increased by $7.7 million YoY135148 Results of Operations This section details segment-level financial performance, highlighting revenue and operating income trends for Government and Commercial Operations Government Operations Performance (in thousands) | Metric | Q2 2023 | Q2 2022 | H1 2023 | H1 2022 | | :--- | :--- | :--- | :--- | :--- | | Revenues | $491,967 | $436,537 | $951,853 | $868,314 | | Operating Income | $82,208 | $83,783 | $172,768 | $156,014 | Commercial Operations Performance (in thousands) | Metric | Q2 2023 | Q2 2022 | H1 2023 | H1 2022 | | :--- | :--- | :--- | :--- | :--- | | Revenues | $120,920 | $118,522 | $229,844 | $218,472 | | Operating Income | $11,017 | $12,864 | $12,530 | $16,826 | - Unallocated corporate expenses increased by $5.1 million in Q2 and $4.8 million in H1 2023 compared to the prior year, mainly due to higher healthcare and compensation costs158 Backlog This section details the company's total backlog and its distribution by segment, including expected revenue recognition Backlog by Segment (in millions) | Segment | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Government Operations | $3,406 | $3,515 | | Commercial Operations | $709 | $629 | | Total Backlog | $4,115 | $4,144 | - The backlog is subject to the U.S. Government's budgetary and appropriations cycle, and projects may be cancelled or modified170 Liquidity and Capital Resources This section outlines the company's financial position, debt structure, and cash flow activities, confirming sufficient liquidity - As of June 30, 2023, the company had $246.9 million outstanding on its Term Loan and $300.0 million in borrowings under its Revolving Credit Facility, with $448.3 million of availability191 - Net cash provided by operating activities decreased by $4.4 million to $67.6 million in H1 2023, primarily due to the timing of project cash flows and income tax payments209 - Net cash used in investing activities decreased by $98.8 million in H1 2023, mainly because of the $47.3 million acquisition of Dynamic and Cunico in the prior year and lower capital expenditures210 Item 3. Quantitative and Qualitative Disclosures About Market Risk The company states that its exposures to market risks have not materially changed from those disclosed in its Annual Report on Form 10-K for the year ended December 31, 2022 - There have been no material changes to the company's market risk exposures since the 2022 10-K filing215 Item 4. Controls and Procedures Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of June 30, 2023 - The CEO and CFO concluded that the company's disclosure controls and procedures are effective as of June 30, 2023217 - No material changes were made to the internal control over financial reporting during the three months ended June 30, 2023217 PART II – OTHER INFORMATION Item 1. Legal Proceedings This section refers to Note 5 of the condensed consolidated financial statements for information regarding ongoing investigations and litigation, which states there were no material contingencies during the period - For information on legal proceedings, the report refers to Note 5 of the financial statements220 - Note 5 indicates there were no material contingencies during the period covered by the Form 10-Q109 Item 1A. Risk Factors The company states that there have been no material changes to its risk factors from those disclosed in its Annual Report on Form 10-K for the year ended December 31, 2022 - There have been no material changes to the risk factors disclosed in the 2022 10-K225 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details Q2 2023 share repurchases for tax withholding and remaining availability under the authorized repurchase program Share Repurchases - Q2 2023 | Period | Total Shares Purchased | Average Price Paid | Value Remaining Under Program (millions) | | :--- | :--- | :--- | :--- | | May 1 - May 31, 2023 | 717 | $64.81 | $397.6 | | Total Q2 2023 | 717 | $64.81 | $397.6 | - The Board of Directors authorized a $500 million share repurchase program on April 30, 2021, with no expiration date206 Item 5. Other Information On August 2, 2023, the Board of Directors amended and restated the company's Bylaws, addressing universal proxy rules and other governance matters - The company's Bylaws were amended and restated on August 2, 2023, to address universal proxy rules and other governance matters227 Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including the amended and restated bylaws, certifications by the CEO and CFO as required by the Sarbanes-Oxley Act, and XBRL data files - Filed exhibits include the Amended and Restated Bylaws (Exhibit 3.3), CEO and CFO certifications (Exhibits 31.1, 31.2, 32.1, 32.2), and XBRL interactive data files229