BWX Technologies, Inc. - FORM 8-K - EX-99.1 - May 3, 2021

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BWX Technologies Reports First Quarter 2021 Results and Commences New Multi-Year Guidance Framework
•Generates 1Q21 earnings of $0.73 per share on consolidated revenue of $528 million
•Reports robust backlog of nearly $5.2 billion driven by Naval Reactors bookings and other wins
•Reiterates 2021 guidance: non-GAAP earnings range of $3.05 to $3.20 per share
•Initiates new $500 million share repurchase authorization
•Commences new multi-year guidance framework for growth, free cash flow and capital allocation
Lynchburg, VA - May 3, 2021 - BWX Technologies, Inc. (NYSE: BWXT) ("BWXT", "we", "us" or the "Company") reported first quarter 2021 revenue of $528 million, a 2.6% decrease compared with $542 million in the first quarter 2020. Net income for the first quarter 2021 was $69.7 million, or $0.73 per diluted share, compared with GAAP net income of $75.5 million, or $0.79 per diluted share and non-GAAP net income of $75.6 million, or $0.79 per diluted share, in the prior-year period. A reconciliation of non-GAAP results is detailed in Exhibit 1.
“Solid first quarter results were complemented by the achievement of several important milestones including new wins in microreactor programs, new agreements and progress in medical isotopes, and completion and booking of the multi-year pricing agreement with Naval Reactors," said Rex D. Geveden, president and chief executive officer. "Not only do these milestones boost backlog to near-record levels, but they also strategically position the company to execute and continue to grow.”
“We also commenced a new multi-year guidance framework in our presentation materials, which we see as the first step towards a more comprehensive business outlook at an investor day later this year. Our focus over the medium-term will be to drive smart, long-term growth across the company, efficiently convert profits into cash, and return more than 50% of free cash flow to investors,” said Geveden.
Segment Results
Nuclear Operations Group (NOG) segment revenue was $402 million for the first quarter 2021, a 5.1% decrease from the prior-year period, driven by higher production volume which was more than offset by lower long-lead material production. NOG operating income was $74.4 million in the first quarter 2021, an 18% decrease compared with the prior-year period driven by the less long-lead material production and fewer favorable contract adjustments that were driven in part by the negative impacts from COVID absences early in the year, resulting in first quarter 2021 segment operating margin of 18.5%.
Nuclear Power Group (NPG) segment revenue was $107 million for the first quarter 2021, a 22% increase from the prior-year period primarily due to higher field service, parts manufacturing and fuel handling activity, partially offset by lower component manufacturing volume. NPG operating income was $10.3 million for the first quarter 2021, a 22% and 20% respective GAAP and non-GAAP increase from the prior-year period driven primarily from higher volume. First quarter 2021 segment operating margin was 9.6%.



Nuclear Services Group (NSG) segment operating income was $5.7 million for the first quarter 2021, down slightly compared with $6.4 million of operating income for the first quarter 2020 driven by the sale of the U.S. commercial nuclear services business in 2020, which was partially offset by better contract performance.
Cash and Capital Returned to Shareholders
The Company generated $98.4 million of cash from operating activities in the first quarter 2021, compared with $6.4 million of cash utilized in operating activities in the first quarter 2020 driven primarily from the receipt of a single $88.7 million cash payment on January 4, 2021, that historically was received before the end of the prior fiscal year. As of March 31, 2021, the Company’s cash balance, net of restricted cash, was $57.7 million.
On April 30, 2021, the BWXT Board of Directors approved a new share repurchase authorization for $500 million with no expiration date and declared a quarterly cash dividend of $0.21 per common share. The dividend will be payable on June 9, 2021, to shareholders of record on May 19, 2021.
During the first quarter 2021, the Company returned $40.3 million of cash to shareholders, including $20.0 million in share repurchases and $20.3 million in dividends.
2021 Guidance
BWXT reiterated all components of 2021 guidance:
•Non-GAAP EPS range of $3.05 – $3.20 (excludes pension and post-retirement benefits mark-to-market)
•Consolidated revenue growth of low-single digits vs. 2020 results
•NOG revenue up slightly
•NPG revenue growth of ~6%
•Non-GAAP operating income and margin
•NOG operating margin of “high teens” with upside from CAS pension reimbursement
•NPG operating margin of ~13%
•NSG operating income range of $25-30 million
•Capital expenditures of ~$250 million
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 First Quarter 2021 Results
Date: Tuesday, May 4, 2021, at 9:00 a.m. EDT
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://investors.bwxt.com/q12021-release

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, to the extent they may be viewed as an indicator of future revenues; our plans and expectations for the NOG, NPG and NSG segments including the expectations, timing and revenue of our strategic initiatives, such as medical radioisotopes; disruptions to our supply chain and/or operations, changes in government regulations and other factors, including any such impacts of, or actions in response to the COVID-19 health crisis; and our expectations for 2021 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 products and services; capital priorities of power generating utilities; the impact of COVID-19 on our employees, contractors, suppliers, customers and other partners and their business activities; the extent to which the length and severity of the COVID-19 health crisis exceeds our current expectations; the potential recurrence of subsequent waves or strains of COVID-19 or similar diseases; 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, 2020 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
At BWX Technologies, Inc. (NYSE: BWXT), we are People Strong, Innovation Driven. Headquartered in Lynchburg, Va., BWXT provides safe and effective nuclear solutions for global security, clean energy, environmental remediation, nuclear medicine and space exploration. With approximately 6,700 employees, BWXT has 12 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

Investor Contact:Media Contact:
Mark KratzJud Simmons
Vice President, Investor RelationsDirector, Media and Public Relations
980-365-4300Investors@bwxt.com434-522-6462hjsimmons@bwxt.com



EXHIBIT 1

BWX TECHNOLOGIES, INC.
RECONCILIATION OF NON-GAAP OPERATING INCOME AND EARNINGS PER SHARE(1)(2)(3)
Three Months Ended March 31, 2020
 GAAPRestructuring CostsNon-GAAP
   
Operating Income$98.3 $0.2 $98.4 
Other Income (Expense)0.2 — 0.2 
Provision for Income Taxes(22.8)(0.0)(22.9)
Net Income75.6 0.1 75.7 
Net Income Attributable to Noncontrolling Interest
(0.1)— (0.1)
Net Income Attributable to BWXT
$75.5 $0.1 $75.6 
 
Diluted Shares Outstanding95.8 95.8 
Diluted Earnings per Common Share
$0.79 $0.00 $0.79 
   
Effective Tax Rate23.2%23.2%
NPG Operating Income$8.5 $0.2 $8.6 
(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
March 31,
2021		December 31,
2020
(Unaudited)
(In thousands)
Current Assets:
Cash and cash equivalents$57,677 $42,610 
Restricted cash and cash equivalents3,071 3,070 
Investments3,827 3,707 
Accounts receivable – trade, net57,999 153,368 
Accounts receivable – other17,572 22,239 
Retainages81,820 55,172 
Contracts in progress497,827 449,176 
Other current assets39,446 44,256 
Total Current Assets759,239 773,598 
Property, Plant and Equipment, Net884,000 816,471 
Investments9,612 9,356 
Goodwill285,992 283,708 
Deferred Income Taxes47,861 49,415 
Investments in Unconsolidated Affiliates74,216 71,806 
Intangible Assets193,015 192,751 
Other Assets97,979 96,398 
TOTAL$2,351,914 $2,293,503 



BWX TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
March 31,
2021		December 31,
2020
(Unaudited)
(In thousands, except share
and per share amounts)
Current Liabilities:
Bank overdraft$— $88,694 
Accounts payable146,958 184,392 
Accrued employee benefits59,843 89,740 
Accrued liabilities – other91,100 78,028 
Advance billings on contracts99,218 83,581 
Accrued warranty expense6,858 5,292 
Total Current Liabilities403,977 529,727 
Long-Term Debt1,018,265 862,731 
Accumulated Postretirement Benefit Obligation25,506 25,689 
Environmental Liabilities85,889 84,153 
Pension Liability133,423 144,859 
Other Liabilities28,548 28,576 
Commitments and Contingencies
Stockholders' Equity:
Common stock, par value $0.01 per share, authorized 325,000,000 shares; issued 127,262,146 and 127,009,536 shares at March 31, 2021 and December 31, 2020, respectively1,273 1,270 
Preferred stock, par value $0.01 per share, authorized 75,000,000 shares; No shares issued— — 
Capital in excess of par value159,295 153,800 
Retained earnings1,599,526 1,549,950 
Treasury stock at cost, 32,120,991 and 31,698,747 shares at March 31, 2021 and December 31, 2020, respectively(1,120,146)(1,095,452)
Accumulated other comprehensive income (loss)16,290 8,198 
Stockholders' Equity – BWX Technologies, Inc.656,238 617,766 
Noncontrolling interest68 2 
Total Stockholders' Equity656,306 617,768 
TOTAL$2,351,914 $2,293,503 


BWX TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended March 31,
20212020
(Unaudited)
(In thousands, except share and per share amounts)
Revenues$528,273 $542,208 
Costs and Expenses:
Cost of operations392,806 392,443 
Research and development costs3,116 4,603 
Losses (gains) on asset disposals and impairments, net(8)— 
Selling, general and administrative expenses58,261 52,958 
Total Costs and Expenses454,175 450,004 
Equity in Income of Investees8,316 6,063 
Operating Income82,414 98,267 
Other Income (Expense):
Interest income132 231 
Interest expense(7,039)(7,967)
Other – net16,386 7,917 
Total Other Income (Expense)9,479 181 
Income before Provision for Income Taxes
91,893 98,448 
Provision for Income Taxes22,078 22,828 
Net Income$69,815 $75,620 
Net Income Attributable to Noncontrolling Interest
(66)(121)
Net Income Attributable to BWX Technologies, Inc.$69,749 $75,499 
Earnings per Common Share:
Basic:
Net Income Attributable to BWX Technologies, Inc.
$0.73 $0.79 
Diluted:
Net Income Attributable to BWX Technologies, Inc.
$0.73 $0.79 
Shares used in the computation of earnings per share:
Basic95,303,728 95,412,351 
Diluted95,558,863 95,756,372 


BWX TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended March 31,
20212020
(Unaudited) (In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income$69,815 $75,620 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization15,897 15,614 
Income of investees, net of dividends(2,414)(1,929)
Recognition of losses for pension and postretirement plans737 777 
Stock-based compensation expense3,981 3,102 
Other, net1,168 283 
Changes in assets and liabilities, net of effects from acquisitions:
Accounts receivable96,449 (2,092)
Accounts payable(12,623)(21,158)
Retainages(26,475)(15,760)
Contracts in progress and advance billings on contracts(29,541)(35,941)
Income taxes17,134 20,332 
Accrued and other current liabilities1,751 (8,073)
Pension liabilities, accrued postretirement benefit obligations and employee benefits(42,584)(36,761)
Other, net5,119 (461)
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES98,414 (6,447)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment(101,932)(64,768)
Acquisition of business— (16,174)
Purchases of securities(1,384)(1,511)
Sales and maturities of securities1,252 3,680 
Other, net32 — 
NET CASH USED IN INVESTING ACTIVITIES(102,032)(78,773)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings of long-term debt205,800 214,000 
Repayments of long-term debt(50,800)(97,607)
Payment of debt issuance costs— (1,340)
Repayment of bank overdraft(88,694)— 
Repurchases of common shares(20,007)(20,000)
Dividends paid to common shareholders(20,322)(18,596)
Exercises of stock options1,672 1,254 
Cash paid for shares withheld to satisfy employee taxes(4,687)(4,998)
Other, net(3,680)5,068 
NET CASH PROVIDED BY FINANCING ACTIVITIES19,282 77,781 
EFFECTS OF EXCHANGE RATE CHANGES ON CASH(542)(1,419)
TOTAL INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AND CASH EQUIVALENTS15,122 (8,858)
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD48,298 92,400 
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AND CASH EQUIVALENTS AT END OF PERIOD$63,420 $83,542 
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest$11,438 $14,668 
Income taxes (net of refunds)$4,386 $1,327 
SCHEDULE OF NON-CASH INVESTING ACTIVITY:
Accrued capital expenditures included in accounts payable$25,849 $15,433 


BWX TECHNOLOGIES, INC.
BUSINESS SEGMENT INFORMATION
Three Months Ended March 31,
20212020
(Unaudited)
(In thousands)
REVENUES:
Nuclear Operations Group$402,068 $423,775 
Nuclear Power Group107,398 87,917 
Nuclear Services Group25,483 36,765 
Eliminations(6,676)(6,249)
TOTAL$528,273 $542,208 
 
SEGMENT INCOME:
Nuclear Operations Group$74,360 $90,359 
Nuclear Power Group10,318 8,470 
Nuclear Services Group5,747 6,400 
Other(5,886)(5,359)
SUBTOTAL84,539 99,870 
Unallocated Corporate(2,125)(1,603)
TOTAL$82,414 $98,267 
 
DEPRECIATION AND AMORTIZATION:
Nuclear Operations Group$8,688 $8,409 
Nuclear Power Group4,890 4,470 
Nuclear Services Group242 957 
Other268 27 
Corporate1,809 1,751 
TOTAL$15,897 $15,614 
 
CAPITAL EXPENDITURES:
Nuclear Operations Group$45,764 $41,882 
Nuclear Power Group53,531 20,195 
Nuclear Services Group181 664 
Other— — 
Corporate2,456 2,027 
TOTAL$101,932 $64,768 



BWX TECHNOLOGIES, INC.
BUSINESS SEGMENT INFORMATION
Three Months Ended March 31,
20212020
(Unaudited)
(In thousands)
BACKLOG:
Nuclear Operations Group$4,447,579 $4,282,440 
Nuclear Power Group697,169 778,394 
Nuclear Services Group48,038 50,108 
TOTAL$5,192,786 $5,110,942 
BOOKINGS:
Nuclear Operations Group$1,189,581 $190,772 
Nuclear Power Group78,685 8,868 
Nuclear Services Group46,965 37,477 
TOTAL$1,315,231 $237,117 

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