BWX Technologies Reports Solid Second Quarter 2018 Results with Strong Revenue Growth
Aug. 06, 2018
LYNCHBURG, Va.--(BUSINESS WIRE)--Aug 6, 2018--BWX Technologies, Inc. (NYSE: BWXT) ("BWXT" or the "Company") reported second quarter 2018 revenue of $439 million, a 7.1% increase compared to $410 million in the second quarter of 2017. GAAP net income for the second quarter 2018 was $60.7 million, or $0.60 per diluted share, compared to GAAP net income of $61.3 million, or $0.61 per diluted share, in the prior-year quarter. Non-GAAP net income for the second quarter 2018 was $58.0 million, or $0.58 per diluted share, compared to non-GAAP net income of $56.2 million, or $0.56 per diluted share, in the second quarter of 2017. A reconciliation of non-GAAP results is detailed in Exhibit 1.
"We are extremely pleased with our second quarter results, especially the robust top-line growth and the overall strong first half performance," said Rex D. Geveden, president and chief executive officer. "We continue to exhibit our capacity for growth while maintaining best-in-class margins and superior competitive positioning. We are maintaining earnings guidance as improving operating performance is being offset by increasing interest expense resulting from capital restructuring and integration costs related to the early close of Nordion.”
"We completed the acquisition of the Nordion medical radioisotope business on July 30, 2018. Closing this acquisition earlier than anticipated de-risks the industrialization phase for our technetium-99m product line and gives us immediate access to a growing and dynamic market.”
Second Quarter 2018 Segment Results
Nuclear Operations Group (NOG) segment revenue was $332 million for the second quarter of 2018, a 6.2% increase from the prior-year period driven by higher missile tube volume and more fuel activity. NOG operating income was $67.0 million in the second quarter of 2018, down 3.2% compared with the prior-year period. Second quarter 2018 segment operating margin was 20.2%.
Nuclear Power Group (NPG) segment revenue was $75.7 million for the second quarter of 2018, a 39% increase from the prior-year period driven by increased field service and refurbishment activity. NPG operating income was $7.8 million in the second quarter of 2018, a 37% increase from the prior-year period. Second quarter 2018 segment operating margin was 10.3%.
Nuclear Services Group (NSG) segment operating income was $3.5 million for the second quarter of 2018 compared with $15.4 million for second quarter of 2017, primarily driven by a $7.9 million gain from a favorable legal settlement in the prior-year period.
Liquidity and Debt
The Company generated cash from operating activities of $35.9 million in the second quarter of 2018 compared with net cash generated from operating activities of $118.8 million in the prior-year period. At the end of the second quarter 2018, the Company’s cash and short-term investments position, net of restricted cash, was $319.4 million.
As of June 30, 2018, the company had gross debt of $691.1 million, which included $400 million in senior notes and $291.1 million in term loans. There was no revolving line of credit borrowings and $71.5 million in letters of credit issued under the Company's revolving credit facility. As a result, the Company had $428.5 million in remaining availability under its revolving credit facility.
On August 3, 2018, our Board of Directors declared a quarterly cash dividend of $0.16 per common share. The dividend will be payable on September 7, 2018, to shareholders of record on August 20, 2018.
BWXT reiterated guidance for 2018:EPS in a range of $2.45 to $2.55 (excluding mark-to-market of pension and post-retirement benefits) Revenue in a range of $1.75 to $1.85 billion NOG revenue in a range of $1.3 to $1.4 billion and operating margin in the high teens with upside potential NPG revenue in a range of $300 to $350 million and operating margin of approximately 12% 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 benefit plans of $30 to $35 million Effective non-GAAP tax rate in a range of 22% to 25% Capital expenditures of approximately $150 million, primarily to support growth in Navy business Depreciation and amortization of approximately $60 million
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 Second Quarter 2018 Results
Date: Tuesday, August 7, 2018, at 9:00 a.m. EDT
Live Webcast: Investor Relations section of website at www.bwxt.com
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 isotope business; our plans and expectations for the NOG, NPG and NSG segments; and our outlook and guidance for 2018 and beyond. 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.
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.
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