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BWX Technologies Reports Record Third Quarter 2019 Results; Increases Full-Year 2019 Non-GAAP EPS Guidance

04 November 2019

BWX Technologies Reports Record Third Quarter 2019 Results; Increases Full-Year 2019 Non-GAAP EPS Guidance

  • 3Q19 GAAP EPS of $0.78 vs. 3Q18 GAAP EPS of $0.78
  • 3Q19 non-GAAP EPS increase of 98% to a record $0.79 vs. 3Q18 non-GAAP EPS of $0.40
  • 3Q19 record revenue up 19% vs. 3Q18 with growth across all three segments
  • Increases full-year 2019 non-GAAP EPS guidance to ~$2.55
  • Reiterates 3-5 year, low-double-digit non-GAAP EPS CAGR from 2017 results 

LYNCHBURG, Va.-(BUSINESS WIRE)-BWX Technologies, Inc. (NYSE: BWXT) ("BWXT", "we", "us" or the "Company") reported third quarter 2019 revenue of $506 million, a new quarterly record for the Company and an 18.9% increase compared with $426 million in the third quarter of 2018. GAAP net income for the third quarter 2019 was $74.8 million, or $0.78 per diluted share, compared with GAAP net income of $77.9 million, or $0.78 per diluted share, in the prior-year period. Non-GAAP net income for the third quarter 2019 was $75.3 million, or $0.79 per diluted share, compared with non-GAAP net income of $40.1 million, or $0.40 per diluted share, in the prior-year period. A reconciliation of non-GAAP results is detailed in Exhibit 1. 

"Third quarter results were highlighted by sustained growth in the Nuclear Operations Group as we focused on executing against our backlog and continuing to prepare for future expansion," said Rex D. Geveden, president and chief executive officer. "All three segments delivered solid operating performance in the quarter resulting in record consolidated revenues and non-GAAP earnings per share.

"In addition, the Nuclear Operations Group segment recognized several favorable contract adjustments in the third quarter, most of which were originally planned for the fourth quarter. The Company's revised non-GAAP EPS guidance is primarily supported by expected increases to non-operating income and a lower tax rate."

Segment Results

Nuclear Operations Group (NOG) segment produced another record with $394.5 million of revenue for the third quarter 2019, a 23.5% increase from the prior-year period, driven primarily by higher volume, favorable EAC changes, long-lead material purchases and the absence of missile tube charges. NOG operating income was robust at $93.7 million in the third quarter 2019, more than double the operating income from the prior-year period driven by higher volume, positive contract adjustments and the absence of missile tube charges. Third quarter 2019 segment operating margins were 23.7%, up 940 basis points compared with the prior-year period.

Nuclear Power Group (NPG) segment revenue was $84.4 million for the third quarter 2019, a 6.6% increase from the prior-year period, primarily due to increases in refurbishment component work and medical radioisotopes, partially offset by lower field service activity. NPG GAAP and non-GAAP operating income was $9.0 million and $9.3 million respectively in the third quarter 2019, down 1% and up 2% respectively compared with the prior-year period, driven primarily from higher volume of component work, partially offset by lower field service activity. Third quarter segment GAAP and non-GAAP operating margins were 10.6% and 11.0% respectively, down 80 and 40 basis points compared with the prior-year period.

Nuclear Services Group (NSG) segment operating income was $5.5 million for the third quarter of 2019, compared with $6.5 million in the prior-year period. Improved operating performance was more than offset by higher bid and proposal activity and contract completions.

Liquidity and Debt

The Company generated net cash from operating activities of $43.9 million in the third quarter of 2019 compared with $25.8 million of net cash utilized in operating activities in the prior-year period. At the end of the third quarter 2019, the Company’s cash and short-term investments position, net of restricted cash, was $17.3 million.

As of September 30, 2019, the Company had gross debt of $872.5 million and $64.0 million in letters of credit issued under the Company's revolving credit facility. Gross debt included $400.0 million in senior notes, $272.5 million in term loans and $200.0 million in borrowings under the Company’s revolving credit facility. The Company had $236.0 million in remaining availability under its revolving credit facility.

Capital Deployment

The Company returned $16.2 million in dividends to shareholders during the third quarter 2019, bringing the total to $69.2 million of cash returned year-to-date including $20.0 million in share repurchases and $49.2 million in dividends. As of September 30, 2019, total remaining share repurchase authorization remained at $165.3 million.

On November 1, 2019, our Board of Directors declared a quarterly cash dividend of $0.17 per common share. The dividend will be payable on December 13, 2019, to shareholders of record on November 20, 2019.

2019 Guidance

BWXT updated the following guidance for 2019:

  • Increased non-GAAP EPS to ~$2.55 (excludes pension and post-retirement benefits mark-to-market)
  • Increased other income primarily related to pension and other post-employment benefits to ~$24 million
  • Decreased the non-GAAP effective tax rate to ~23%
  • Decreased capital expenditures to ~$210 million

BWXT reiterated the following guidance for 2019:

  • Consolidated revenue growth vs. 2018 of ~6%
    • NOG revenue growth vs. 2018 of ~6%
    • NPG revenue ~flat vs. 2018
  • Operating income and margin
    • NOG operating margin in the “high teens” with upside potential from CAS pension reimbursement
    • NPG operating margin of ~14%
    • NSG operating income of ~$20 million
    • Corporate unallocated expenses of less than $20 million
    • Other segment operating expense primarily for R&D of ~1% of revenue

Long-term Guidance

BWXT reiterated long-term guidance that, excluding the benefit of tax reform, the Company anticipates a non-GAAP EPS compound annual growth rate (CAGR) in the low-double digits over a three-to-five year period from 2017 based on a robust organic growth strategy and balance sheet capacity.

The Company does not provide GAAP guidance because it is unable to reliably forecast most of the items that are excluded from GAAP to calculate non-GAAP results. These items could cause GAAP results to differ materially from non-GAAP results. See reconciliation of non-GAAP results in Exhibit 1 for additional information.

Conference Call to Discuss Third Quarter 2019 Results

Date: Tuesday, November 5, 2019, at 8:30 a.m. EST

Live Webcast: Investor Relations section of website at www.bwxt.com

Full Earnings Release Available on BWXT Website

A full version of this earnings release is available on our Investor Relations website at http://www.snl.com/interactive/newlookandfeel/4082835/Q319EarningsRelease.pdf.

BWXT may use its website (www.bwxt.com) as a channel of distribution of material Company information. Financial and other important information regarding BWXT is routinely accessible through and posted on our website. In addition, you may elect to automatically receive e-mail alerts and other information about BWXT by enrolling through the “Email Alerts” section of our website at http://investors.bwxt.com.

Forward-Looking Statements

BWXT cautions that this release contains forward-looking statements, including, without limitation, statements relating to backlog and Columbia-class production, to the extent they may be viewed as an indicator of future revenues; our plans and expectations for the NOG, NPG and NSG segments and future growth; and our 2019 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, 2018 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 6,400 employees, BWXT has 11 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 NASA facilities. Follow us on Twitter at @BWXTech and learn more at www.bwxt.com.

(1)

 

Tables may not foot due to rounding.

     

(2)

 

BWXT is providing non-GAAP information regarding certain of its historical results and guidance on future earnings per share to supplement the results provided in accordance with GAAP and it should not be considered superior to, or as a substitute for, the comparable GAAP measures. BWXT believes the non-GAAP measures provide meaningful insight and transparency into the Company’s operational performance and provides these measures to investors to help facilitate comparisons of operating results with prior periods and to assist them in understanding BWXT's ongoing operations.

     

(3)

 

BWXT has not included a reconciliation of provided non-GAAP guidance to the comparable GAAP measures due to the difficulty of estimating any mark-to-market adjustments for pension and post-retirement benefits, which are determined at the end of the year.

Contacts

Investor Contact:
Mark Kratz
Director, Investor Relations
980-365-4300
Investors@bwxt.com

Media Contact:
Jud Simmons
Director, Media and Public Relations
434-522-6462
hjsimmons@bwxt.com

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Press Contacts:

BWX Technologies, Inc.

Jud Simmons 
+1 434.522.3800
hjsimmons@bwxt.com

BWXT Canada Ltd.  

Natalie Cutler 
+1 519.620.5288 
nacutler@bwxt.com 

BWXT Nuclear Energy Canada Inc.

Natalie Cutler
+1 519.620.5288  
nacutler@bwxt.com 

Nuclear Fuel Services, Inc.

Laura Bailey 
+1 423.743.9141
lebailey@nuclearfuelservices.com