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BWX Technologies Reports Third Quarter 2018 Results

November 6, 2018

LYNCHBURG, Va.--(BUSINESS WIRE)--Nov 6, 2018--BWX Technologies, Inc. (NYSE: BWXT) (“BWXT,” “we,” “us” or the “Company”) reported third quarter 2018 revenue of $426 million, a 1.5% increase compared to $419 million in the third quarter of 2017. GAAP net income for the third quarter 2018 was $77.9 million, or $0.78 per diluted share, compared to net income of $46.6 million, or $0.46 per diluted share, in the prior-year quarter. Non-GAAP net income for the third quarter 2018 was $40.1 million, or $0.40 per diluted share. A reconciliation of non-GAAP results is detailed in Exhibit 1.

“We continue to exhibit top-line strength while building backlog,” said Rex D. Geveden, president and chief executive officer. “Third quarter results were negatively impacted by a reserve on missile tubes and increased interest expense; however, our long-term outlook remains unchanged. We have updated our 2018 guidance and continue to reiterate our low double-digit EPS CAGR based on our superior competitive positioning, robust organic growth opportunities, and balance sheet capacity.”

“We made substantial progress during the quarter on the missile tube welding issue. The problem is fully characterized, and the required remediations are understood. Accordingly, we have taken a charge in the third quarter to account for those items. Excluding this charge, third quarter NOG margins would have been 21.7%, or about 120 basis points higher than the third quarter of 2017.”

Third Quarter 2018 Segment Results Nuclear Operations Group (NOG) segment revenue was $319 million for the third quarter of 2018, a 1.6% decrease from the prior-year period driven primarily by lower missile tube revenue partially offset by an increase in naval nuclear fuel and downblending services. NOG operating income was $45.6 million in the third quarter of 2018, down 31% compared with the prior-year period primarily driven by a $26.7 million charge for re-work related to missile tubes. Third quarter 2018 segment operating margin was 14.3%.

Nuclear Power Group (NPG) segment revenue was $79.2 million for the third quarter of 2018, a 15.4% increase from the prior-year period driven by an increase in field services, fuel manufacturing and the medical radioisotope acquisition. NPG operating income was $9.1 million in the third quarter of 2018, a 7.6% increase from the prior-year period. Third quarter 2018 segment operating margin was 11.4%.

Nuclear Services Group (NSG) segment operating income was $6.5 million for the third quarter of 2018 compared with $0.8 million for third quarter of 2017, primarily driven by an increase in operational performance, lower costs and new contract starts.

Liquidity and Debt The Company utilized cash in operating activities of $25.8 million in the third quarter of 2018, inclusive of $118.1 million of voluntary pension contributions, compared with cash generated from operating activities of $80.7 million in the prior-year period. At the end of the third quarter 2018, the Company’s cash and short-term investments position, net of restricted cash, was $68.9 million.

As of September 30, 2018, the Company had gross debt of $781.2 million and $67.7 million in letters of credit issued under the Company’s revolving credit facility. Gross debt included $400.0 million in senior notes, $291.2 million in term loans and $90.0 million in borrowings under the Company’s revolving credit facility. As a result, the Company had $342.3 million in remaining availability under its revolving credit facility.

Capital Deployment The Company returned $79 million to shareholders during the third quarter 2018, including $63 million in share repurchases and $16 million in dividends. On November 6, 2018, our Board of Directors declared a quarterly cash dividend of $0.16 per common share. The dividend will be payable on December 13, 2018, to shareholders of record on November 20, 2018. The Board of Directors also approved a $250 million share repurchase authorization, resulting in a total available share repurchase authorization of $337 million.

2018 Guidance BWXT revised its guidance for 2018:

Total Company revenue is now expected to be approximately $1.8 billion Non-GAAP EPS is now expected to be in a range of $2.23 to $2.27 (excluding mark-to-market of pension and post-retirement benefits) NOG revenue is now expected to be approximately $1.3 billion with operating margin in the high teens inclusive of CAS pension reimbursements and missile tube reserves NPG revenue is now expected to be approximately $370 million with operating margin of approximately 14% Non-GAAP effective tax rate is now expected in a range of 22% to 23%

BWXT reiterated the following guidance for 2018:

NSG operating income of approximately $20 million Research and development costs of approximately $15 million Corporate unallocated costs of approximately $20 million Other income primarily related to pension and other post-employment benefits of $30 to $35 million Capital expenditures of approximately $150 million, primarily to support growth in Navy business Depreciation and amortization of approximately $60 million

Long-term Guidance BWXT reiterated long-term guidance that, beyond 2017, and excluding the benefit of tax reform, the Company anticipates an EPS Compound Annual Growth Rate (CAGR) in the low-double digits over a three to five year period based on a robust organic growth strategy and balance sheet capacity.

Conference Call to Discuss Third Quarter 2018 Results

Forward-Looking Statements BWXT cautions that this release contains forward-looking statements, including, without limitation, statements relating to backlog, to the extent they may be viewed as an indicator of future revenues; the anticipated benefits of our acquisition of Nordion’s medical isotope business; timing of future revenues from the acquisition of Nordion’s medical isotope business and new medical radioisotope business; the timing and impact of the missile tube welding issue; our plans and expectations for the NOG, NPG and NSG segments; and our 2018 guidance and long-term guidance. These forward-looking statements are based on management’s current expectations and involve a number of risks and uncertainties, including, among other things, our ability to execute contracts in backlog; the lack of, or adverse changes in, Federal appropriations to government programs in which we participate; the demand for and competitiveness of nuclear power; capital priorities of power generating utilities; adverse changes in the industries in which we operate and delays, changes or termination of contracts in backlog. If one or more of these risks or other risks materialize, actual results may vary materially from those expressed. For a more complete discussion of these and other risk factors, see BWXT’s filings with the Securities and Exchange Commission, including our annual report on Form 10-K for the year ended December 31, 2017 and subsequent quarterly reports on Form 10-Q. BWXT cautions not to place undue reliance on these forward-looking statements, which speak only as of the date of this release, and undertakes no obligation to update or revise any forward-looking statement, except to the extent required by applicable law.

About BWXT Headquartered in Lynchburg, Va., BWX Technologies, Inc. (NYSE:BWXT) is a leading supplier of nuclear components and fuel to the U.S. government; provides technical and management services to support the U.S. government in the operation of complex facilities and environmental remediation activities; and supplies precision manufactured components, services and fuel for the commercial nuclear power industry. With approximately 6,250 employees, BWXT has eleven major operating sites in the U.S. and Canada. In addition, BWXT joint ventures provide management and operations at more than a dozen U.S. Department of Energy and two NASA facilities. Follow us on Twitter @BWXTech and learn more at www.bwxt.com.

EXHIBIT 1

EXHIBIT 1 (continued)

View source version on businesswire.com:https://www.businesswire.com/news/home/20181106005975/en/

CONTACT: BWX Technologies, Inc.

Investor Contact:

Alan Nethery, 980-365-4300

Vice President and Chief Investor Relations Officer

Investors@bwxt.com

or

Media Contact:

Jud Simmons, 434-522-6462

Director, Media and Public Relations

hjsimmons@bwxt.com

KEYWORD: UNITED STATES NORTH AMERICA VIRGINIA

INDUSTRY KEYWORD: ENERGY MANUFACTURING OTHER MANUFACTURING NUCLEAR

SOURCE: BWX Technologies, Inc.

Copyright Business Wire 2018.

PUB: 11/06/2018 04:30 PM/DISC: 11/06/2018 04:30 PM

http://www.businesswire.com/news/home/20181106005975/en

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