BWX Technologies, Inc. Q2 FY2025 earnings call

Chase Jacobson welcomed Mike Fitzgerald, CFO. Second quarter financial results exceeded expectations driven by strong execution in Government Operations. Closed acquisition of Kinectrics in May, broadening life of plant services capabilities. Demand across global security, clean energy and medical end markets accelerating. Backlog grew to $6 billion. Government Operations revenue up 9%, adjusted EBITDA up 23% due to strong execution. Special Materials had strong performance. Technical Services operating income up over 20%. Commercial Operations reported revenue growth 24%, with Medical having double-digit growth and commercial power affected by timing of projects.

Government Operations revenue was up 9% and adjusted EBITDA up 23%. Technical Services operating income was up over 20% compared to the average quarterly rate over the last year. Commercial Operations reported revenue growth was 24%, with organic revenue down 3%. Medical in Commercial Operations had double-digit revenue growth, while commercial power saw a modest decline due to timing of outage and maintenance projects. Backlog in Commercial Operations grew to $1.6 billion including about $240 million from the Kinectrics acquisition.

Raising guidance for revenue, adjusted EBITDA and earnings per share. Now anticipate revenue of approximately $3.1 billion, adjusted EBITDA guidance to $565 million to $575 million, adjusted EPS guidance to $3.65 to $3.75 per share, and free cash flow guidance to $275 million to $285 million.

Q: Scott Deuschle asked about a $29 million favorable contract adjustment on nuclear operations.

A: Michael T. Fitzgerald said it relates to a Special Materials contract, part of which was assumed in original guide but more favorable than anticipated.

Q: Jeffrey Leon Campbell asked about Kevin McCoy's role.

A: Rex D. Geveden explained Kevin is seconded to DoD for nuclear shipbuilding while remaining an BWXT employee.

Q: Robert James Labick asked about irradiating deuterium and lutetium.

A: Rex D. Geveden said it's in partnership with Laurentis Energy Partners, a royalty opportunity.

Q: Joshua Tyler Korn asked about Navy contracts duration.

A: Rex D. Geveden said contracts have performance period up to 8 years.

Q: Peter John Skibitski asked about motivation for Navy contracts.

A: Rex D. Geveden said related to Navy's shipbuilding plan and supply chain concerns.

Q: Andre Madrid asked about microreactor and TRISO fuel.

A: Rex D. Geveden discussed Pele progress, DRACO and NASA's role, and TRISO fuel opportunities.

Q: Jan-Frans Engelbrecht asked about reconciliation bill impact.

A: Rex D. Geveden said reconciliation bill provided funding for various programs.

Q: Michael Frank Ciarmoli asked about second half guidance.

A: Michael T. Fitzgerald and Rex D. Geveden explained earlier timing of certain factors affecting second half.

Q: Ron Epstein asked about backlog growth and critical minerals.

A: Michael T. Fitzgerald said majority of backlog growth is organic; Rex D. Geveden said critical minerals not a major issue for BWXT