BWX Technologies Announces Third Quarter 2017 Results

- EPS of $0.46, up 17.9% compared to $0.39 in Third Quarter of 2016
- Revising 2017 EPS Guidance to $2.01 - $2.07
- Consolidated Backlog of $3.5B
- BWXT JVs Awarded More Than $5.7B in Contracts for NSG
- Declares Quarterly Cash Dividend of $0.11 per Share

LYNCHBURG, Va.--()--BWX Technologies, Inc. (NYSE: BWXT) ("BWXT" or the "Company") today reported third quarter 2017 revenues of $419 million, a 10.5% increase from $380 million in the third quarter of 2016. Earnings per share (EPS) for the third quarter were $0.46 compared to $0.39 in 2016, a 17.9% increase from the prior year period.

"BWXT has continued to build upon momentum from the first half of the year, with third quarter revenues and operating income both increasing by double digits over the prior period," said Executive Chairman, Mr. John A. Fees. "Our Nuclear Operations business grew its revenue while also increasing operating margins 242 basis points. The Nuclear Power business generated revenues of $68.6 million in the third quarter of 2017 - an almost 90% increase over the third quarter of 2016 - primarily driven by last year's successful acquisition of BWXT NEC. Our Nuclear Services segment was awarded more than $1.0 billion of contracts during the third quarter and is leading a joint venture that was awarded a contract from the U.S. Department of Energy in October which could be worth up to $4.7 billion over 10 years if all options are exercised and we withstand the protest. We remain diligent in executing on our operational initiatives and are excited about the growth prospects within our markets."

Third Quarter 2017 Results of Operations

The Company's consolidated operating income is up 18.1% versus the prior year quarter to $73.7 million and up 28.8% year-to-date from the prior period. The Company also expanded consolidated operating margin by 113 basis points to 17.6% from the third quarter in 2016.

Nuclear Operations Group (NOG) had a record third quarter. Segment revenues reached $324.5 million for the third quarter of 2017, a 2.4% increase from the prior year period. NOG's revenue, through the first three quarters of 2017, was up 2.6% compared to the first nine months of 2016. NOG operating income was $71.9 million in the third quarter of 2017, almost 15.0% higher than the $62.5 million in the prior year period.

The Nuclear Power Group (NPG) segment had record revenues in the third quarter. Revenues increased to $68.6 million in the third quarter of 2017 compared to $36.1 million in the prior year period, benefiting from our acquisition of BWXT Nuclear Energy Canada Inc. (BWXT NEC). NPG's operating income was $9.3 million in the third quarter of 2017 and produced a healthy 13.6% operating margin in the quarter and a year-to-date margin of 14.8%.

The Nuclear Services Group (NSG) segment delivered $27.5 million in revenues. Year-to-date, the segment's revenue has increased 5.4% to $100.1 million compared to the same period in 2016. Operating income increased to $1.0 million in the third quarter of 2017.

"Our growing backlog year-over-year is a leading indicator of future growth in our business," said Mr. Rex D. Geveden, President and Chief Executive Officer. "NPG grew backlog $156.3 million to $527.7 million - a 42.1% increase from the third quarter of 2016 - and consolidated backlog increased 4.4% to $3.5 billion compared to the third quarter of 2016. As we continue to focus on operational excellence, we anticipate continued strong cash flow from operations, maintaining our balanced capital allocation approach by providing capital for organic growth, returning capital through dividends and opportunistic share repurchases, and retaining capacity for attractive M&A opportunities."

Liquidity and Debt

The Company generated cash from operating activities of $80.7 million in the third quarter of 2017 compared to $19.5 million in the third quarter of 2016. At the end of the third quarter, the Company's cash and short-term investments position, net of restricted cash, was $206.4 million.

As of September 30, 2017, outstanding balances under our credit facility included $521.7 million in term loans, $0 in borrowings under the revolving line of credit, and letters of credit issued under the facility totaled $78.7 million. As a result, the Company has $321.3 million of remaining availability under its credit facility, excluding an additional $250 million accordion provision. We have $193 million of share repurchase authorization remaining as of September 30, 2017.

Quarterly Dividend

On November 3, 2017, our Board of Directors declared a quarterly cash dividend of $0.11 per common share. The dividend will be payable on December 13, 2017, to shareholders of record on November 20, 2017.

Outlook

The Company narrowed its guidance for the full year 2017 and now expects adjusted earnings to be between $2.01 and $2.07 per share (previously $1.97 to $2.07). Adjusted earnings per share exclude any mark-to-market adjustments for pension and post-retirement benefits recognized during 2017 and other items listed in the non-GAAP reconciliation tables in Exhibit 1. The Company also expects NPG segment revenue for 2017 to increase to between $275 million and $290 million.

All other guidance for 2017 remains unchanged. In the 3-5 year range after 2017 (i.e. 2020-2022), the Company anticipates an adjusted EPS CAGR in the low double digits based upon our robust organic growth strategy and remaining balance sheet capacity.

Conference Call to Discuss Third Quarter 2017 Results
Date: Tuesday, November 7, 2017, at 9:00 a.m. EST
Live Webcast: Investor Relations section of website at www.bwxt.com

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, management's plans and expectations for our business segments, including potential growth opportunities, as well as our outlook and guidance for (i) adjusted earnings per share, NPG segment revenue, capital expenditures and R&D expenses for 2017 and (ii) adjusted earnings per share beyond 2017. 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, 2016 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 over 6,100 employees, BWXT has nine 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

 

BWX TECHNOLOGIES, INC.
RECONCILIATION OF NON-GAAP OPERATING INCOME AND EARNINGS PER SHARE(1)(2)(3)
(In millions, except per share amounts)

 
    Nine Months Ended September 30, 2017
             
GAAP Performance

Guarantees

Release

mPower

Deconsolidation

Framework

Agreement

&

Litigation

Impairment

(Gains) /

Charges

  Non-GAAP
 
Operating Income $ 249.2 $ $ $ (7.9 ) $ $ 241.3
Other Income (Expense) (9.8 ) (0.4 ) (10.2 )
Provision for Income Taxes (75.6 )     2.8   0.0     (72.7 )
Net Income 163.9       (5.1 ) (0.4 )   158.4  
Net Income Attributable to Noncontrolling Interest (0.4 )           (0.4 )
Net Income Attributable to BWXT $ 163.5   $   $   $ (5.1 ) $ (0.4 )   $ 158.1  
 
Diluted Shares Outstanding 100.4 100.4
Diluted Earnings per Common Share $ 1.63 $ $ $ (0.05 ) $ 0.00 $ 1.57
 
Effective Tax Rate 31.6 %   31.5 %
 
 
Nine Months Ended September 30, 2016
   
GAAP Performance

Guarantees

Release

mPower

Deconsolidation

Framework

Agreement

&

Litigation

Impairment

(Gains) /

Charges

  Non-GAAP
 
Operating Income $ 193.4 $ $ $ 13.9 $ $ 207.4
Other Income (Expense) 20.3 (9.3 ) (13.6 ) (1.5 ) (4.0 )
Provision for Income Taxes (64.3 ) 3.4     (5.6 ) (0.6 )   (67.1 )
Net Income 149.4   (5.9 ) (13.6 ) 8.3   (2.1 )   136.2  
Net Income Attributable to Noncontrolling Interest (0.4 )           (0.4 )
Net Income Attributable to BWXT $ 149.1   $ (5.9 ) $ (13.6 ) $ 8.3   $ (2.1 )   $ 135.8  
 
Diluted Shares Outstanding 104.9 104.9
Diluted Earnings per Common Share $ 1.42 $ (0.06 ) $ (0.13 ) $ 0.08 $ (0.02 ) $ 1.29
 
Effective Tax Rate 30.1 %   33.0 %
 

(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.
 
 
 
 
 
 

BWX TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS

 
     

September 30,

2017

   

December 31,

2016

(Unaudited)

(In thousands)

Current Assets:
Cash and cash equivalents $ 203,140 $ 125,641
Restricted cash and cash equivalents 7,096 6,130
Investments 3,234 14,517
Accounts receivable – trade, net 160,740 135,950
Accounts receivable – other 14,105 25,221
Contracts in progress 413,604 356,793
Other current assets 28,957   29,319
Total Current Assets 830,876   693,571
Property, Plant and Equipment 974,633 922,641
Less accumulated depreciation 661,674   622,955
Net Property, Plant and Equipment 312,959   299,686
Investments 8,917   9,013
Goodwill 217,453   210,788
Deferred Income Taxes 176,299   194,464
Investments in Unconsolidated Affiliates 39,980   42,854
Intangible Assets 113,437   114,748
Other Assets 23,591   14,691
TOTAL $ 1,723,512   $ 1,579,815
 
 
 
 
 
 

BWX TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY

 
     

September 30,

2017

   

December 31,

2016

(Unaudited)

(In thousands, except share

and per share amounts)

Current Liabilities:
Current maturities of long-term debt $ 27,954 $ 27,370
Accounts payable 89,057 99,983
Accrued employee benefits 76,126 81,793
Accrued liabilities – other 55,841 72,105
Advance billings on contracts 198,176 147,148
Accrued warranty expense 12,713   11,477  
Total Current Liabilities 459,867   439,876  
Long-Term Debt 489,128   497,724  
Accumulated Postretirement Benefit Obligation 19,284   19,059  
Environmental Liabilities 86,958   81,711  
Pension Liability 325,666   357,049  
Other Liabilities 34,368   33,986  
Commitments and Contingencies
Stockholders' Equity:
Common stock, par value $0.01 per share, authorized 325,000,000 shares; issued 125,310,668 and 124,149,609 shares at September 30, 2017 and December 31, 2016, respectively 1,253 1,241
Preferred stock, par value $0.01 per share, authorized 75,000,000 shares; No shares issued
Capital in excess of par value 92,403 22,018
Retained earnings 1,017,544 885,117
Treasury stock at cost, 25,954,358 and 24,858,809 shares at September 30, 2017 and December 31, 2016, respectively (814,149 ) (762,169 )
Accumulated other comprehensive income 10,849   3,811  
Stockholders' Equity – BWX Technologies, Inc. 307,900 150,018
Noncontrolling interest 341   392  
Total Stockholders' Equity 308,241   150,410  
TOTAL $ 1,723,512   $ 1,579,815  
 
 
 
 
 
 

BWX TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 
     

Three Months Ended

September 30,

   

Nine Months Ended

September 30,

2017     2016 2017     2016
(Unaudited)

(In thousands, except share

and per share amounts)

Revenues $ 419,360 $ 379,505 $ 1,257,600 $ 1,146,713
Costs and Expenses:
Cost of operations 295,316 271,174 862,928 785,060
Research and development costs 2,597 1,746 5,268 5,043
Gains on asset disposals and impairments, net (2 ) (5 ) (33 ) (55 )
Selling, general and administrative expenses 51,398 49,225 151,036 146,474
mPower framework agreement       30,000  
Total Costs and Expenses 349,309   322,140   1,019,199   966,522  
Equity in Income of Investees 3,630   5,008   10,832   13,249  
Operating Income 73,681   62,373   249,233   193,440  
Other Income (Expense):
Interest income 402 128 750 533
Interest expense (3,837 ) (2,049 ) (11,260 ) (5,326 )
Other – net 348   228   731   25,119  
Total Other Income (Expense) (3,087 ) (1,693 ) (9,779 ) 20,326  
Income before Provision for Income Taxes 70,594 60,680 239,454 213,766
Provision for Income Taxes 23,901   19,473   75,556   64,328  
Net Income $ 46,693   $ 41,207   $ 163,898   $ 149,438  
Net Income Attributable to Noncontrolling Interest (140 ) (145 ) (364 ) (373 )
Net Income Attributable to BWX Technologies, Inc. $ 46,553   $ 41,062   $ 163,534   $ 149,065  
Earnings per Common Share:
Basic:
Net Income Attributable to BWX Technologies, Inc. $ 0.47   $ 0.40   $ 1.65   $ 1.44  
Diluted:
Net Income Attributable to BWX Technologies, Inc. $ 0.46   $ 0.39   $ 1.63   $ 1.42  
Shares used in the computation of earnings per share:
Basic 99,328,677   102,735,989   99,313,264   103,542,578  
Diluted 100,260,255   103,985,995   100,367,383   104,941,720  
 
 
 
 
 
 

BWX TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 
     

Nine Months Ended

September 30,

2017     2016
(Unaudited)

(In thousands)

CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 163,898 $ 149,438
Non-cash items included in net income from continuing operations:
Depreciation and amortization 42,135 37,090
Income of investees, net of dividends 731 (6,083 )
Gains on asset disposals and impairments, net (33 ) (55 )
Gain on deconsolidation of Generation mPower LLC (13,571 )
Recognition of losses for pension and postretirement plans 1,320 1,222
Stock-based compensation expense 9,879 8,373
Changes in assets and liabilities:
Accounts receivable (17,748 ) (4,379 )
Accounts payable (10,978 ) 2,635
Contracts in progress and advance billings on contracts (2,963 ) (72,918 )
Income taxes 39,088 16,217
Accrued and other current liabilities (33,736 ) 15,876
Pension liability, accrued postretirement benefit obligation and employee benefits (47,109 ) (37,532 )
Other, net 200   (3,839 )
NET CASH PROVIDED BY OPERATING ACTIVITIES 144,684   92,474  
CASH FLOWS FROM INVESTING ACTIVITIES:
Decrease (increase) in restricted cash and cash equivalents (966 ) 9,553
Purchases of property, plant and equipment (49,361 ) (30,865 )
Purchases of securities (3,237 ) (17,599 )
Sales and maturities of securities 12,406 7,895
Investments, net of return of capital, in equity method investees 2,142 (9,165 )
Proceeds from asset disposals 142 55
Other, net (24 )  
NET CASH USED IN INVESTING ACTIVITIES (38,898 ) (40,126 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under the Credit Agreement 73,600 241,300
Repayments under Credit Agreement (94,320 ) (91,150 )
Payment of debt issuance costs (663 )
Repurchase of common shares (292,997 )
Dividends paid to common shareholders (31,072 ) (28,421 )
Exercise of stock options 16,019 18,775
Cash paid for shares withheld to satisfy employee taxes (7,389 ) (9,042 )
Other (415 ) (382 )
NET CASH USED IN FINANCING ACTIVITIES (43,577 ) (162,580 )
EFFECTS OF EXCHANGE RATE CHANGES ON CASH 15,290   729  
TOTAL INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 77,499   (109,503 )
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 125,641   154,729  
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 203,140   $ 45,226  
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 10,762 $ 4,367
Income taxes (net of refunds) $ 36,425 $ 48,779
SCHEDULE OF NON-CASH INVESTING ACTIVITY:
Accrued capital expenditures included in accounts payable $ 7,680 $ 5,628
 
 
 
 
 
 

BWX TECHNOLOGIES, INC.
BUSINESS SEGMENT INFORMATION

 
     

Three Months Ended

September 30,

   

Nine Months Ended

September 30,

2017     2016 2017     2016
(Unaudited)

(In thousands)

REVENUES:

Nuclear Operations Group $ 324,545 $ 316,899 $ 962,492 $ 937,814
Nuclear Services Group 27,507 28,759 100,146 94,977
Nuclear Power Group 68,621 36,123 200,864 120,268
Adjustments and Eliminations (1,313 ) (2,276 ) (5,902 ) (6,346 )
TOTAL $ 419,360   $ 379,505   $ 1,257,600   $ 1,146,713  
 

SEGMENT INCOME:

Nuclear Operations Group $ 71,902 $ 62,537 $ 219,944 $ 191,886
Nuclear Services Group 1,033 652 17,354 10,860
Nuclear Power Group 9,305 5,031 29,644 38,659
Other (2,255 ) (1,907 ) (4,937 ) (5,068 )
SUBTOTAL 79,985   66,313   262,005   236,337  
Unallocated Corporate (6,304 ) (3,940 ) (12,772 ) (12,897 )
mPower Framework Agreement       (30,000 )
TOTAL $ 73,681   $ 62,373   $ 249,233   $ 193,440  
 

DEPRECIATION AND AMORTIZATION:

Nuclear Operations Group $ 7,706 $ 8,610 $ 23,261 $ 26,068
Nuclear Services Group 914 940 2,788 2,814
Nuclear Power Group 3,436 791 10,243 2,143
Other
Corporate 1,880   2,080   5,843   6,065  
TOTAL $ 13,936   $ 12,421   $ 42,135   $ 37,090  
 

CAPITAL EXPENDITURES:

Nuclear Operations Group $ 18,851 $ 10,459 $ 43,090 $ 23,820
Nuclear Services Group 178 181 489 206
Nuclear Power Group 1,047 3,235 3,065
Other
Corporate 538   1,746   2,547   3,774  
TOTAL $ 20,614   $ 12,386   $ 49,361   $ 30,865  
 
 
 
 
 
 

BWX TECHNOLOGIES, INC.
BUSINESS SEGMENT INFORMATION

 
     

Three Months Ended

September 30,

   

Nine Months Ended

September 30,

2017     2016 2017     2016
(Unaudited)

(In thousands)

BACKLOG:

Nuclear Operations Group $ 2,970,088 $ 2,982,735 $ 2,970,088 $ 2,982,735
Nuclear Services Group 37,520 33,722 37,520 33,722
Nuclear Power Group 527,708   371,376   527,708   371,376
TOTAL $ 3,535,316   $ 3,387,833   $ 3,535,316   $ 3,387,833
 

BOOKINGS:

Nuclear Operations Group $ 32,272 $ 51,794 $ 446,771 $ 1,608,288
Nuclear Services Group 43,004 20,779 108,295 92,964
Nuclear Power Group 115,718   22,039   255,070   183,007
TOTAL $ 190,994   $ 94,612   $ 810,136   $ 1,884,259
 
 
 
 
 

Contacts

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
Media and Public Relations Director
hjsimmons@bwxt.com

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Contacts

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
Media and Public Relations Director
hjsimmons@bwxt.com