BWX Technologies(BWXT) - 2021 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported earnings of $0.62 per share on revenue exceeding $0.5 billion, indicating a year-to-date earnings performance in line with expectations despite a comparative decline [5][30] - Second quarter revenue was $505 million, approximately even with the previous year, with strong increases in the Nuclear Power Group offset by declines in Nuclear Operations and Nuclear Services [29] - Year-to-date consolidated revenue was down 1%, and earnings per share decreased by 10% compared to a robust first half in 2020 [31] Business Line Data and Key Metrics Changes - The Nuclear Operations Group generated $381 million in revenue, down about 7% year-over-year, primarily due to lower long lead material production [32] - The Nuclear Power Group saw a 50% increase in second quarter revenue to $102 million, driven by higher field service activity and a strong rebound in BWXT Medical, which was up nearly 60% [35] - The Nuclear Services Group reported $5.8 million in operating income for the second quarter, showing improvement from the previous year, with expectations for strong second half results [38] Market Data and Key Metrics Changes - The medical business in Canada returned to pre-pandemic levels with 60% topline growth in the second quarter, expected to continue through 2021 [10] - The company anticipates significant income growth in the Nuclear Services segment with new awards expected later this year [13] Company Strategy and Development Direction - The company is focused on achieving key milestones to position itself for continued growth, including advancements in nuclear microreactor development and partnerships with NASA and the Department of Energy [15][18] - BWXT plans to participate in the commercial nuclear market by supporting advanced reactor development through supply chain involvement and proprietary technology investments [23][25] - The company is optimistic about the future of nuclear energy, particularly in light of government support for nuclear energy research and development [20][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in a strong second half of 2021, driven by increased production volume and favorable contract adjustments [41][68] - The company is monitoring government budget developments and is encouraged by bipartisan support for naval nuclear fleet recapitalization [20][22] - Management highlighted the importance of maintaining flexibility in the balance sheet to capitalize on future growth opportunities [43][46] Other Important Information - The company reiterated its 2021 guidance while making minor updates based on year-to-date actuals, including anticipated higher development and commercialization expenses related to the Tech 99 generator product line [39] - BWXT plans to host an Investor Day on November 16th to provide further insights into growth initiatives and strategies [48] Q&A Session Summary Question: Discussion on Moly-Technetium and FDA submission process - Management detailed the steps necessary to complete the radio farm line and the process for FDA submission, including the installation of sterilization technology and running cold chemistry tests [49][50] Question: Timeline for FDA review - The company is requesting a priority review from the FDA, with a typical timeline of nine months for approval [55] Question: Cost competitiveness of small modular reactors - Management acknowledged the current high costs of small modular reactors and emphasized the need to reduce costs to compete with other energy sources [57][58] Question: Hiring situation and labor market constraints - Management confirmed ongoing hiring efforts and expressed confidence in attracting quality applicants due to the company's strong visibility into its backlog [60][61] Question: Long lead items for Virginia class submarines - Management indicated that they are not currently planning for an additional Virginia class submarine but are prepared to accommodate it if needed [77][78] Question: Nuclear thermal propulsion program with NASA - Management provided updates on the development of nuclear thermal propulsion systems and expressed optimism about future demonstration missions [79][80]