BWX Technologies(BWXT) - 2024 Q1 - Quarterly Report

PART I – FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements This section presents the unaudited condensed consolidated financial statements for BWX Technologies, Inc. for the three months ended March 31, 2024, and 2023, including the Statements of Income, Comprehensive Income, Balance Sheets, Stockholders' Equity, and Cash Flows, along with accompanying notes Condensed Consolidated Statements of Income The company reported increased revenues and net income for the first quarter of 2024 compared to the same period in 2023, with revenues growing to $604.0 million and net income attributable to the company rising to $68.5 million, or $0.75 per diluted share Condensed Consolidated Statements of Income (Unaudited) | Indicator | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | | :--- | :--- | :--- | | Revenues | $603,966 | $568,360 | | Cost of operations | $455,357 | $431,130 | | Operating Income | $92,961 | $87,842 | | Income before Provision for Income Taxes | $88,377 | $79,674 | | Net Income Attributable to BWX Technologies, Inc. | $68,468 | $61,092 | | Diluted Earnings per Common Share | $0.75 | $0.67 | Condensed Consolidated Statements of Comprehensive Income Total comprehensive income attributable to the company was $57.4 million for Q1 2024, a decrease from $64.0 million in Q1 2023, primarily driven by a negative currency translation adjustment in the current period Condensed Consolidated Statements of Comprehensive Income (Unaudited) | Indicator | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | | :--- | :--- | :--- | | Net Income | $68,534 | $60,993 | | Other Comprehensive Income (Loss) | $(11,056) | $2,896 | | Total Comprehensive Income | $57,478 | $63,889 | | Comprehensive Income Attributable to BWX Technologies, Inc. | $57,412 | $63,988 | Condensed Consolidated Balance Sheets As of March 31, 2024, total assets increased slightly to $2.79 billion from $2.75 billion at year-end 2023, with total stockholders' equity also rising to $946.1 million from $933.3 million Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | March 31, 2024 (in thousands) | December 31, 2023 (in thousands) | | :--- | :--- | :--- | | Total Current Assets | $864,663 | $817,801 | | Property, Plant and Equipment, Net | $1,231,473 | $1,228,520 | | Total Assets | $2,788,010 | $2,747,065 | | Total Current Liabilities | $386,825 | $375,046 | | Long-Term Debt | $1,220,809 | $1,203,422 | | Total Liabilities | $1,841,944 | $1,813,764 | | Total Stockholders' Equity | $946,066 | $933,301 | Condensed Consolidated Statements of Cash Flows Net cash provided by operating activities significantly improved to $33.0 million in Q1 2024 from a $13.0 million usage in Q1 2023, while investing and financing activities used $30.3 million and $32.2 million respectively, resulting in a $29.6 million decrease in total cash Condensed Consolidated Statements of Cash Flows (Unaudited) | Cash Flow Activity | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | | :--- | :--- | :--- | | Net Cash Provided By (Used In) Operating Activities | $33,026 | $(13,024) | | Net Cash Used In Investing Activities | $(30,323) | $(29,780) | | Net Cash (Used In) Provided By Financing Activities | $(32,156) | $49,336 | | Total (Decrease) Increase in Cash | $(29,624) | $6,539 | Notes to Condensed Consolidated Financial Statements The notes provide detailed information on the company's accounting policies, revenue recognition, and segment reporting, highlighting its two reportable segments: Government Operations and Commercial Operations - The company's operations are divided into two reportable segments: Government Operations (manufacturing naval nuclear reactors and providing services to the U.S. government) and Commercial Operations (fabricating commercial nuclear components and manufacturing medical radioisotopes)[98] - At March 31, 2024, the company's remaining performance obligations (backlog) were $3.64 billion, with approximately 80% of this revenue expected to be recognized by the end of 2025[57] Segment Revenues and Operating Income (Q1 2024 vs Q1 2023) | Segment | Q1 2024 Revenue (in thousands) | Q1 2023 Revenue (in thousands) | Q1 2024 Operating Income (in thousands) | Q1 2023 Operating Income (in thousands) | | :--- | :--- | :--- | :--- | :--- | | Government Operations | $487,121 | $459,886 | $85,686 | $90,560 | | Commercial Operations | $117,038 | $108,924 | $8,591 | $1,513 | | Total | $603,966 | $568,360 | $94,277 | $92,073 | - The effective tax rate for Q1 2024 was 22.5%, compared to 23.4% for Q1 2023, primarily higher than the U.S. statutory rate of 21% due to state income taxes and foreign earnings[82] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the financial results for Q1 2024, highlighting a 6.3% increase in consolidated revenues, a $5.1 million increase in operating income, a $3.6 billion backlog, and the company's strong liquidity and debt compliance Results of Operations Consolidated revenues for Q1 2024 increased by 6.3% to $604.0 million, driven by growth in both Government and Commercial Operations, despite a decrease in Government Operations operating income due to product mix and higher SG&A Consolidated Results of Operations (Q1 2024 vs Q1 2023) | Indicator | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | Change ($) | | :--- | :--- | :--- | :--- | | Total Revenues | $603,966 | $568,360 | $35,606 | | Total Operating Income | $92,961 | $87,842 | $5,119 | - Government Operations revenue increased by $27.2 million, primarily from advanced technologies business ($23.8 million) and higher volume in nuclear components manufacturing[117] - Commercial Operations revenue increased by $8.1 million, mainly due to higher revenues for in-plant inspection, maintenance, and refurbishment services ($9.3 million) and increased volume in medical radioisotopes and fuel businesses[135] - Commercial Operations operating income increased significantly by $7.1 million, attributed to higher revenues, a favorable product mix, and a $2.2 million decrease in restructuring costs[120] Backlog As of March 31, 2024, the company's total backlog was approximately $3.64 billion, a decrease from $4.0 billion at the end of 2023, with Government Operations accounting for $2.9 billion and Commercial Operations holding $727 million Backlog by Segment (in millions) | Segment | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Government Operations | $2,909 | $3,217 | | Commercial Operations | $727 | $781 | | Total Backlog | $3,636 | $3,998 | - The backlog at March 31, 2024, included $416.6 million of unfunded backlog related to U.S. Government contracts[167] Liquidity and Capital Resources The company maintains a strong liquidity position with a Credit Facility including a $750 million revolving credit facility and a $250 million term loan, and management believes existing cash and borrowing capacity are sufficient to meet future requirements - The company has a Credit Facility maturing in October 2027, which includes a $750M Revolving Credit Facility and a $250M Term Loan[168] - As of March 31, 2024, borrowings under the Term Loan were $242.2 million, and borrowings under the Revolving Credit Facility were $195.0 million, with $553.3 million available[145] - The company was in compliance with all financial covenants as of March 31, 2024, including a maximum total net leverage ratio of 4.00 to 1.00 and a minimum interest coverage ratio of 3.00 to 1.00[144] - Net cash from operating activities increased by $46.1 million to $33.0 million in Q1 2024, primarily due to the timing of project cash flows[181] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk exposure is from foreign currency exchange rate changes, which it mitigates using FX forward contracts for hedging purposes, with no material changes to these exposures from the prior year - The company uses FX forward contracts to reduce the impact of changes in foreign exchange rates on its operating results, particularly for long-term contracts[126] - As of March 31, 2024, the total notional value of outstanding FX forward contracts was $460.2 million, with maturities extending to December 2025, primarily hedging Canadian dollars and Euros[127] - Market risk exposures have not changed materially from those disclosed in the company's 2023 10-K[197] Item 4. Controls and Procedures Based on management's evaluation, including the CEO and CFO, the company's disclosure controls and procedures were effective as of March 31, 2024, with no material changes in internal control over financial reporting during the quarter - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures are effective as of March 31, 2024[158] - There were no material changes in the company's internal control over financial reporting during the first quarter of 2024[158] PART II – OTHER INFORMATION Item 1. Legal Proceedings This section refers to Note 4 of the condensed consolidated financial statements for information regarding ongoing investigations and litigation, which indicates no material contingencies during the reporting period - For information on legal proceedings, the report refers to Note 4 of the financial statements[201] - Note 4 states there were no material contingencies during the period covered by this Form 10-Q[58] 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, 2023 - There have been no material changes to the company's risk factors from those disclosed in the 2023 10-K[187] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds During Q1 2024, the company repurchased 326,885 shares at an average price of $82.31 per share, as part of a $500 million share repurchase program with approximately $377.6 million remaining Share Repurchases (Q1 2024) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | Jan 2024 | 183,472 | $78.85 | | Feb 2024 | 143,413 | $86.74 | | Mar 2024 | 0 | $— | | Total | 326,885 | $82.31 | - The Board of Directors authorized a share repurchase program of up to $500 million on April 30, 2021, with no expiration date[189] Item 5. Other Information The company reports that no director or officer adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the first quarter of 2024 - During the three months ended March 31, 2024, no director or officer of the Company adopted or terminated a 'Rule 10b5-1 trading arrangement' or 'non-Rule 10b5-1 trading arrangement'[203] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including corporate governance documents, employee stock grants, CEO and CFO certifications, and Interactive Data Files (XBRL) - The report includes CEO and CFO certifications pursuant to Rule 13a-14(a)/15d-14(a) and Section 1350[191] - Exhibits include forms of stock option and restricted stock unit grants for employees[191]