BWX Technologies, Inc. Q3 FY2025 earnings call

• Segment Results: Discussed Government and Commercial Operations performance, including specific projects and acquisitions.
• Market Outlook: Unprecedented demand in nuclear solutions for global security, clean energy, and medical end markets; strong backlog and financial strength.
• Acquisitions: Kinectrics and other acquisitions outperforming, creating value.
• Operational Excellence: Focus on process improvements, AI, advanced manufacturing to drive productivity and margin.

Government Operations: Revenue up 10%, adjusted EBITDA up 1%. Naval Propulsion focused on delivery commitments and leveraging AI/manufacturing. Technical Services on growth with strategic petroleum reserve and Canadian Nuclear Laboratories transition. Microreactors/advanced nuclear tech: manufacturing Pele core, Army Janus program, collaboration with Kairos Power. Special Materials: $1.5B defense fuels contract and $1.6B high-purity depleted uranium contract. Commercial Operations: Reported revenue grew 122%, organic revenue 38% y/y. Driven by Kinectrics acquisition, commercial nuclear power, and medical isotopes. BWXT Medical grew double digits, Kinectrics expanded isotope separator units. Commercial Power has strong demand, backlog in CANDU components, partnerships with Rolls-Royce.

2025: Anticipates adjusted EBITDA ~$570M, adjusted EPS $3.75-$3.80. 2026: Expect strong financial performance, low double-digit to low teens adjusted EBITDA growth, high single-digit to low double-digit EPS growth. Government Operations revenue mid-teens growth, Commercial Operations robust revenue with low double-digit organic growth.

• Government Shutdown: Impact on technical services business, potential risk if extended.
• Timing of Commercial Orders: Delays in commercial nuclear orders could affect outlook.
• Defense Spending: Potential impact on government contracts.

Q: Booked revenue on new contracts? Sequential sales guidance?

A: Modest contribution from new contracts, seasonality in material procurements affecting fourth quarter.

Q: Janus program approach?

A: Intend to compete, find right teammates, not typically own/operate reactors.

Q: Kinectrics acquisition takeaways?

A: Kinectrics outperforming, growth in transmission, distribution, offshore wind, and nuclear medicine.

Q: Revenue cadence of large contracts? Margin impact?

A: Contracts distributed over time, lower margins initially, improve over time.

Q: Project Pele update?

A: Delivery in 2027, evolving requirements, assembling reactor core.

Q: DUECE and HEU production funding?

A: Initial funding for licensing, not production of material.

Q: Ytterbium output and EMIS units?

A: 500 grams of ytterbium-176, no essential difference between EMIS units.

Q: Rolls-Royce steam generator content?

A: In $50M-$100M range, evaluating localization in Europe.

Q: 2026 free cash flow?

A: Flat to slightly up due to investments and milestone timing.

Q: Risk to 2026 outlook?

A: Operational performance, commercial order timing, government shutdown.

Q: Commercial growth acceleration?

A: Expect order acceleration, Westinghouse and SMR announcements.

Q: Navy subs and AUKUS?

A: AUKUS moving forward, shipyards turning corner, South Korea opportunity.

Q: DRACO program status?

A: Now NASA Sentry program, lower revenue, focus on lunar power.

Q: M&A appetite?

A: Picky about acquisitions, interested in strategic fits.

Q: Rare earth processing?

A: Not strategic interest, focus on special nuclear materials.