Exhibit 99.1
Investor and Analyst Day
June 17, 2015
Welcome
M. Alan Nethery
Vice President
Investor Relations and Corporate Procurement
Cautionary Statements
Forward-looking statements. The Babcock & Wilcox Company, to be renamed BWXT Technologies, Inc. (“BWXT”), cautions that this presentation contains forward-looking statements, including, without limitation, statements relating to the timing of and expected benefits associated with the planned spin-off of Babcock & Wilcox Enterprises, Inc. (“New B&W”) into an independent public company; backlog and bookings to the extent they may be viewed as an indicator of future revenues; management’s expectations regarding the industries in which we operate; our guidance and forecasts for 2015; the potential sizes of the markets in which we operate; and our projected operating margin improvements, savings and restructuring costs. These forward-looking statements are based on management’s current expectations and involve a number of risks and uncertainties, including, among other things, the proposed spin-off not being completed as anticipated or at all; delays or other difficulties in completing the spin-off, including the inability to satisfy the conditions for its completion; disruptions experienced with customers and suppliers; adverse changes in the industries in which we operate and delays, changes or termination of contracts in backlog or subject to bookings. 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 SEC, including our annual report on Form 10-K for the year ended December 31, 2014 and subsequent quarterly report on Form 10-Q. See also New B&W’s filings with the SEC, including the information statement included as an exhibit to New B&W’s registration statement on Form 10. BWXT and New B&W caution not to place undue reliance on these forward-looking statements, which speak only as of June 17, 2015, the date of this presentation, and undertake no obligation to update or revise any forward-looking statement, except to the extent required by applicable law.
Pro-forma financial information. The pro forma financial data in this presentation reflects transactions related to the spin-off and is subject to assumptions and adjustments described in this presentation. New B&W’s management believes these assumptions and adjustments are reasonable under the circumstances and given the information available at this time. The pro forma financial data does not purport to represent what BWXT’s financial position and results of operations actually would have been had the spin-off occurred on the dates indicated, or to project BWXT’s financial performance for any future period following the spin-off.
Non-GAAP financial information. This presentation includes non-GAAP financial measures. These measures include Adjusted Operating Income, Adjusted Earnings per Share and EBITDA. Reconciliations to the most directly comparable GAAP measures are included at the end of this presentation. These measures should be considered in addition to results prepared in accordance with GAAP, but are not a substitute for GAAP results.
© 2015 BWX Technologies, Inc. All rights reserved. 3
Agenda
Welcome
9:30 – 9:40 M. Alan Nethery (VP, Investor Relations and Corporate Procurement)
Opening Remarks, Strategy and Introductions
9:40 – 10:00 John A. Fees (Executive Chairman)
Company Overview
10:00 – 10:10
P. Sandy Baker (Chief Executive Officer)
Nuclear Operations
10:10 – 10:40
Joseph G. (Joe) Henry (President and Chief Operating Officer, Nuclear Operations Group)
Technical Services, Nuclear Energy, Other Operations
10:40 – 11:10
William A. (Bill) Fox III (President, Technical Services Group and Nuclear Energy)
Financial Review
11:10 – 11:30
David S. Black (SVP, Chief Financial Officer)
11:30 – 12:00 Q&A
© 2015 BWX Technologies, Inc. All rights reserved. 4
Opening Remarks, Strategy and Management Introductions
John A. Fees
Executive Chairman
Power Generation Spin-off Overview
Transaction Overview
The Babcock & Wilcox Company (B&W) is spinning-off the company’s Power Generation business
Tax-free spin-off to B&W shareholders
Post-transaction, shareholders will own 100% of two independent, publicly traded companies:
BWX Technologies, Inc. (“BWXT” concurrent with the spin-off will be renamed from “The Babcock & Wilcox Company”)
Babcock & Wilcox Enterprises, Inc. (currently Power Generation Group)
Nuclear Operations Group Technical Services Group Nuclear Energy
Power Generation
(BWXT NOG) (BWXT TSG) (BWXT NE)
© 2015 BWX Technologies, Inc. All rights reserved. 6
BWXT Key Investment Highlights
Premier US Government and energy market provider
Critical platform for defense and energy applications
Leading supplier of nuclear design, equipment, components, fuel and specialty technical services to the
U.S. government
Leading supplier of precision-manufactured components and services across the nuclear power industry
Attractive operational and cash flow profile
Dependable, stable business with strong, recurring & visible free cash flows
Strong backlog with multiple years of long-cycle production programs & procurements
Continued operational improvements to achieve margin expansion
Sustainable competitive advantages
Strong, established position with significant barriers to entry, including technical capability, product quality, and upfront capital investment
70+ years at the forefront of cutting-edge innovation in nuclear engineering; accumulating extensive technical IP with substantial patents
Focused growth strategy with actionable opportunities
Multiple levers to improve profitability and drive growth, organically and strategically
Organic growth opportunities identified and leveraged strong position in existing markets
Focused approach to acquisitions
Strong financial position supports strategic priorities and shareholder value creation
Disciplined capital allocation to achieve growth and return of capital priorities
Optimal leverage provides flexibility to pursue strategic objectives
Sustainable dividend policy in line with peers
Proven and experienced management team
Seasoned management team with deep understanding of industry; executives average 24 years of
industry experience
Proven track record of operational performance
© 2015 BWX Technologies, Inc. All rights reserved. 7
BWXT Strategic Priorities
Run the Business
Continue as sole manufacturer of naval nuclear reactors for submarines and aircraft carriers
Strengthen key customer and partner relationships
Maintain strong execution of the business
Draw upon management team’s experience to deliver industry- leading products and solutions
Sustain strong backlog at attractive margins and cash flow generation
Maintain Financial Strength
Focus on financial efficiency and capacity to take advantage of market opportunities
Continue history of strong cash generation
Optimize balance sheet with appropriate leverage to enable growth opportunities and/or share repurchases
Maintain a balanced capital allocation framework
Organic/M&A
Dividends
Share Repurchases
Create Shareholder Value
Continue to deliver on base business
Optimize capital deployment to maximize shareholder value
Pursue organic growth in our areas of expertise
Accelerate growth through acquisitions that provide platforms for additional organic growth
Use our financial strength to simultaneously implement numerous available opportunities including return of capital to shareholders
© 2015 BWX Technologies, Inc. All rights reserved. 8
BWXT Experience with Creating Shareholder Value
NOG Segment Growth Story
Revenue ($M)
2007: Acquired MMC for $72M (Marine Mechanical Corporation)
2008: Acquired NFS for $165M (Nuclear Fuel Services)
6,000
5,000
4,000
3,000
2,000
1,000
0
1993-4: Acquired contracts, equipment and work in progress (United Nuclear Corporation)
1995: Acquired contracts, work in progress and secured a 10-year non-compete (PCC)
1996: Sold NOG tubing business unit (Specialty Metals)
1998: Assumed contracts and work scope (Precision Defense Corporation)
11.2%
11.3%
15.5%
15.3%
20.5%
Margin (%)
1,250
1,379
2,150
3,242
4,530
1994 - 1998 1999 - 2002 2003 - 2006 2007 - 2010 2011 - 2014
24
20
16
12
8 |
|
4 |
|
0
Revenue ($M)
Margin (%)
Nuclear Propulsion Industrial Base Consolidation # of Suppliers Decreased
17 key suppliers prior to 1993
BWXT is the sole manufacturer of naval nuclear reactors for submarines and aircraft carriers
Only 2 key suppliers today
© 2015 BWX Technologies, Inc. All rights reserved. 9
BWXT Positioning
2014 EBITDA Margin (%)
25%
22.5%
21.4%
20.9%
20%
17.9% 17.5%
15.6% 15.3% Median: 15.4%
15% 14.2%
13.5% 13.5% 13.4%
10%
5%
0%
Rockwell Harris BWX Curtiss- Esterline Orbital Northrop General Huntington Lockheed Moog
Collins Technologies Wright ATK Grumman Dynamics Ingalls Martin
2014
Revenue
5,151 4,959 1,451 2,243 2,012 5,146 23,979 30,852 6,957 45,600 2,636
($M)
Naval Propulsion / Government Services
Aerospace & Defense
Source: Capital IQ
© 2015 BWX Technologies, Inc. All rights reserved. 10
BWXT Business Segments
Nuclear Operations Group (BWXT NOG)
Design NOG) and manufacture critical components and nuclear fuel for U.S. Naval
Fleet
Deliver advanced technologies for application in the nuclear industry
Technical Services Group (BWXT TSG)
Manage and operate government-owned and related facilities supporting defense programs, nuclear non-proliferation and advanced technology development
Decommissioning, decontamination and clean up of legacy radiological and hazardous waste
Nuclear Energy (BWXT NE)
Design and fabricate components and systems for commercial nuclear power industry
Provide related maintenance services to keep plants running safely and efficiently
Engaging on new and next generation commercial nuclear power technologies
© 2015 BWX Technologies, Inc. All rights reserved. 11
BWXT Leadership / Management
Presenters
John A. Fees
Executive Chairman
P. Sandy Baker
Chief Executive Officer
Joseph G. (Joe) Henry
President &
Chief Operating Officer, Nuclear Operations Group
William A. (Bill) Fox III
President,
Technical Services Group and Nuclear Energy
David S. Black
Senior Vice President and Chief Financial Officer
Executives also in Attendance
James D. Canafax
Senior Vice President, General Counsel and Chief Compliance Officer
Jason S. Kerr
Vice President,
Chief Accounting Officer
M. Alan Nethery
Vice President,
Investor Relations and Corporate Procurement
Richard Rademacher
Vice President,
Corporate Development and Assistant Treasurer
© 2015 BWX Technologies, Inc. All rights reserved. 12
Company Overview
P. Sandy Baker
Chief Executive Officer
Company Metrics
Company Overview
BWXT owns and operates six major manufacturing facilities
~5,100 employees worldwide
~1,400 Joint Venture employees
~4,000 employees hold security clearances from NRC, DOE and DOD
Skill sets include scientists, engineers, technicians and administrators
NRC licenses for our nuclear fuel facilities in Lynchburg, VA and Erwin, TN
4 of our manufacturing facilities are ASME N-Stamp certified
Locations
Key Operations
Lynchburg, VA
Barberton, OH
Euclid, OH
Mt. Vernon, IN
Erwin, TN
Cambridge, Ontario
Key Offices
Lynchburg, VA
Charlotte, NC
Oak Ridge, TN
Chattanooga, TN
Aiken, SC
Washington, DC
Deep River, Ontario
Cambridge, Ontario
Cumbria, UK
Joint Ventures
West Valley, NY
Niskayuna, NY
Dravosburg, PA
Piketon, OH
Lexington, KY
Paducah, KY
Idaho Falls, ID
Carlsbad, NM
Los Alamos, NM
Las Vegas, NV
Livermore, CA
Aiken, SC
BWXT Operations BWXT Key Offices Joint Ventures
© 2015 BWX Technologies, Inc. All rights reserved. 14
Our End-Markets
Leading technology innovator and specialty manufacturer of nuclear components
Defense Manufacturing
Products
Virginia-Class submarine program
Ohio-Class replacement submarine program
Ford-Class carrier program
Refueling
Fuel processing and fabrication
Government Services
Nuclear material handling, storage and security
Nuclear laboratories
Weapons complex
Decontamination and decommissioning
Commercial Nuclear Energy
Field services
Plant modifications
Component manufacturing and installation
Fuel design, enrichment and fabrication
B&W mPower™
Nuclear systems and plant design for advanced reactors
Attributes
Long-term contract duration
Well-defined and disciplined approach to capital expenditures
Stable customer
Stable cash flows
Long-term contract duration
Limited working capital
Well-defined capital expenditures
Stable customer
Stable cash flows
Positioned for upside to
business cycle
Focused on high value-add
portions of addressable
market
Largest Nuclear clean room in
North America
2014 Revenue
2014 Revenue = $1,221M
(1)
2014 Revenue = $85M
2014 Revenue = $155M
Notes:
1) Business primarily contributes equity income to BWXT
© 2015 BWX Technologies, Inc. All rights reserved. 15
BWXT Now & Beyond
Global landscape favors BWXT products/services
State of Business
Nuclear Operations Group Technical Services Group Nuclear Energy
Continued delivery of Virginia- Active bids Chalk River (CNL), Right-sizing for existing markets
Class submarines and Ford-Class Kansas City Plant (DOE) and
Upcycle for Canadian domestic
carriers SACOM (NASA)
nuclear fleet
Development and delivery of Ohio- Improving operational performance
Increased opportunities in targeted
Class replacement submarines
Adjacent market growth international markets
Successful entry into adjacent opportunities
market: Missile tubes
Our Vision for the Future
Expand our leadership position in profitable markets with the application of nuclear energy for national security and power
generation
Seek to organically and acquisitively expand into new, adjacent markets that align with our core competencies
Continue to drive operational excellence through safe and secure, innovative and quality processes
Focus on maximizing shareholder value through trusted customer relationships and a balanced capital allocation
approach
© 2015 BWX Technologies, Inc. All rights reserved. 16
Operational Initiatives
Operational Strategy
A continuous improvement culture
supported by a systematic, data-driven
approach to achieving business benefits
Driving down cost
Generating higher margins
Increasing competitiveness
Financial Benefits
Increases shareholder returns
Operating income contribution
Benefits flow to customers
Improved decisions drive continuous
improvement culture throughout the
organization
© 2015 BWX Technologies, Inc. All rights reserved. 17
Growth Strategy
BWXT will focus on the continuous execution and improvement of its predictable, long-term business, achieving EPS growth through:
Organic Growth
Organic growth leveraging our customer relationships within existing markets
Critical Components
Government Management & Operations
Commercial Nuclear
Improved operational performance
Focused Approach to M&A
Shared core competencies
Platforms that enable additional acquisitions
Strong incumbent management teams
MAINTAIN THE BASE BUSINESS AND ACQUIRE FOR GROWTH
© 2015 BWX Technologies, Inc. All rights reserved. 18
Nuclear Operations
Joe Henry
President & Chief Operating Officer, Nuclear Operations Group
Nuclear Operations Group (NOG)
Overview
Key End-Products
Highly complex, regulated and high-
consequence manufacturing
Sole manufacturer of naval nuclear
reactors for submarines and aircraft
carriers
Provides nuclear products and services to
the US Government
Downblend highly enriched uranium (HEU)
for government/commercial use
Owns/Operates the only two NRC-licensed
commercial facilities in the U.S. authorized
to handle/process HEU
Focused on quality and continuous
improvement
© 2015 BWX Technologies, Inc. All rights reserved. 20
Nuclear Operations Group (NOG)
NFS NOG-E NOG-L NOG-B NOG-MTV
Facility
Location Erwin, TN Euclid, OH Lynchburg, VA Barberton, OH Mount Vernon, IN
Employees 700 280 2,100 650 175
(Approx)
Manufacturing
Capacity 271,000 285,000 930,000 800,000 580,000
(Approx Sq Ft.)
Fuel Material Electro- Naval Heavy Heavy
Products Mechanical Reactors Components Components
Components
© 2015 BWX Technologies, Inc. All rights reserved. 21
Nuclear Operations Group (NOG) Products Overview
Euclid operations-manufactures
electromechanical components
NFS operations-manufactures the
fuel material used in the reactor core
Lynchburg operations-manufactures
the reactor core components
Barberton/Mt. Vernon operations-
manufactures the heavy components
© 2015 BWX Technologies, Inc. All rights reserved. 22
Nuclear Operations Group (NOG)
Nuclear Fuel Services NOG-E
Erwin, TN Euclid, OH
Control Rod Drive
Fuel
Mechanisms
NOG-M NOG-L Reactor NOG-B
Mt. Vernon, IN Lynchburg, VA Vessels & Barberton, OH
Components
Vessels, Steam Generators &
Steam Generators & Pressurizers
Pressurizers All Reactor Fully Fueled
Components Reactors
© 2015 BWX Technologies, Inc. All rights reserved. 23
US Navy Long-term Procurement
Year 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40
Aircraft Carrier Construction
CVN-78 Gerald R. Ford
CVN-79 John F. Kennedy
CVN-80 Enterprise
(1) |
|
CVN-81 (Unnamed)
Plan CVN-82 (Unnamed)
CVN-83 (Unnamed)
Aircraft Carrier Refueling and Complex Overhaul (RCOH)
Program CVN-72 Abraham Lincoln
CVN-73 George Washington
Carrier CVN-74 John C. Stennis
CVN-75 Harry S. Truman
CVN-76 Ronald Reagan
Aircraft CVN-77 George H.W. Bush
CVN-78 Gerald R. Ford
CVN Designators Planning Construction & Execution
Nimitz Class: CVN 68—CVN 77
Ford Class: CVN 78—CVN 83+
(1) |
| Year 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 |
Submarine Type
SSN (Virginia Class) 2 2 2 2 2 2 1 2 2 1 2 1 1 1 1 1 1 1 1 1 1 2 2 2 2 1
Submarine Program SSBN (Ohio—Replacement Class) 1 1 1 1 1 1 1 1 1 1 1 1
Source: Huntington Ingalls, Office of the Chief of Naval Operations (Annual Long-Range Plan for Construction of Naval Vessels—as at March 2015)
Notes:
1) Illustrative build schedule that may not directly align with BWXT
© 2015 BWX Technologies, Inc. All rights reserved. 24
NFS HEU Downblending Capabilities
HEU NUCLEAR FUEL SERVICES, INC. LEU
HEU
U-Metals Commercial
U-Compounds Fuel
HEU
U-Oxides Government
U-Compounds Stockpile
Reactor Fuel
3 |
| — 5 metric tons of HEU per year |
© 2015 BWX Technologies, Inc. All rights reserved. 25
Nuclear Operations Group (NOG) Technologies
Primary Services
Nuclear Materials Engineering Provides nuclear material related analytical
services to nuclear utility and government customers. Includes a hot cell facility
capable of handling high-activity material such as spent nuclear fuel and neutron
Site
and gamma sources
Non-Destructive Evaluation Designs and builds state-of-the-art, high-precision
inspection systems as an integral part of process and quality control
Metallurgical Group Specializes in nuclear fuel-related material research and
development work for government customers
Hot Cell
Radioisotope & Analytical Chemistry Laboratory Analyzes high activity
samples as well as environmental samples from various DOE sites and commercial
customers
Black Programs Operates a 1,800 sq ft Sensitive Compartmented Information
Facility (SCIF) where Top Secret projects are performed
NDT
(Non-Destructive
Testing)
© 2015 BWX Technologies, Inc. All rights reserved. 26
Future Growth on a Strong, Stable Foundation
Organic Growth
Potential opportunity of up to 332 tubes split
between Virginia-Class and Ohio Replacement
Class (~$1.5B program)
Ohio Replacement Class Reactor Plant
Research test reactors & targets
Acquisitive- Leverage Core Competencies
High-Consequence/Precision Manufacturing
Commercial and Government
Critical Defense Platforms
Nuclear Support Manufacturing
© 2015 BWX Technologies, Inc. All rights reserved. 27
NOG Financials
Business Status Update
Strong operating income history
Past 3 years @ 20% operating margin
CAGR of 16.7% since 2008
Healthy backlog w/ predictable margins
Low/moderate forecast risk
Strong customer focus
Unyielding quality expectations –
everything must be known & assessed
Heavy oversight complete transparency
to books, business, & conduct of ops by
government customer
Healthy backlog entering 2015
NOG Operating Profit
$M Margin
320 40%
270
240 226 238 30%
169 194
160 126 20%
107
80 10%
0 0%
2008 2009 2010 2011 2012 2013 2014
Operating Income ROS
Bookings and Backlog
4,000
2,995 2,984
2,778
3,000
2,369
(1) |
|
1,620
2,000
881 1,081 (1)
546
1,000
0
2011 2012 2013 2014
Bookings Backlog
Notes:
1) Due to events associated with the government shutdown and delayed budget approvals, awards anticipated in the fourth quarter of 2013 were delayed until the first quarter of 2014
© 2015 BWX Technologies, Inc. All rights reserved. 28
2015 Priorities and Outlook
Maintain excellent safety record
Run the Business Continue focus on quality and schedule
Exceed planned volume at all sites
Maximize production at all sites
Maintain Financial Increase backlog
Strength Currently negotiating a $3B+ FY16-18
contract
Maintain margins in high teens
Readiness for Ohio Replacement
Submarines
Create Shareholder 12 new ships
Value Expand missile tube production
Pursue acquisitions that reflect our core
competencies and expand our footprint in
high-consequence manufacturing
© 2015 BWX Technologies, Inc. All rights reserved. 29
Technical Services
Bill Fox
President, Technical Services Group and Nuclear Energy
TSG Overview
Targeted Customers
DOE National Nuclear Security Administration (NNSA)
DOE Environmental Management (EM) DOE Office of Science DOE Office of Nuclear Energy (NE) NASA
Department of Defense
International Agencies
Key Services
Manage and operate government-owned nuclear weapons enterprise and related facilities
National laboratory management
Facility management supporting defense programs, nuclear non-proliferation and advanced technology development
Decontamination, decommissioning and clean up of legacy radiological and hazardous waste
Environmental remediation Waste management Nuclear operations
Project execution, management and services
© 2015 BWX Technologies, Inc. All rights reserved. 31
TSG’s Unique Operational Attributes
Long-term Recurring Operating Income Stream
Average contract period of performance is five-year base plus option years
Business Model Strong Free Cash Flow
Operating model leverages U.S. government letter of credit (for M&O sites)
Working capital minimized (due to short invoice turnaround)
Very favorable cash flow after initial investment is recovered
Established Market Leader in the Department of Energy
Ability to leverage excellent performance and outstanding technical/management assets to expand into international/other federal customer markets
Market Driven By National Security Imperative
Commitment made by the DoD/National Nuclear Security Administration to modernize ($5B)
Unique Combination Manufacturing/Technology Development/Services Provider
Strong owner/operator perspective and approach to business
Enables BWXT TSG to differentiate from classic Engineering, Procurement,
& Construction and defense industry competitors
© 2015 BWX Technologies, Inc. All rights reserved. 32
Mandated TSG Projects/Assignments
National Nuclear Security Agency (NNSA)
M&O nuclear weapons enterprise
Laboratory Management
Key sites (partners) with approx. Gov’t Fiscal Year 2015 budget:
Los Alamos National Laboratory (Bechtel, Univ. of Calif., AECOM/URS)—$1.95B
Lawrence Livermore National Laboratory (Bechtel, Univ. of Calif., AECOM/URS)—$1.36B
Nevada National Security Site (Northrop Grumman, AECOM, CH2M)—$429M
Nuclear Energy (NE)
Key sites (partners) with approx. Gov’t Fiscal Year 2015 budget:
Idaho National Laboratory (Battelle, AECOM/URS)—$898M
Environmental Management (EM)
Key sites (partners) with approx. Gov’t Fiscal Year 2015 budget:
DUF6 Conversion Project (AECOM/URS)—$90M
Advanced Mixed Waste Treatment Project (AECOM/URS, EnergySolutions)—$114M
Portsmouth Gaseous Diffusion Plant (Fluor)—$367M
West Valley Demonstration Project (CH2M, ECC)—$61M
Waste Isolation Pilot Plant (AECOM/URS)—$260M
Savannah River Liquid Waste Disposition Program (AECOM/URS, Bechtel, CH2M)—$592M
Paducah Environmental Remediation Project (LATA, Stoller)—$57M
Naval Reactors Enterprise D&D [BWSR] (BAPL/KAPL/KSO/NRF) (CB&I)—$44M
Office of Science
Key sites (partners) with approx. Gov’t Fiscal Year 2015 budget:
Oak Ridge National Laboratory (Univ. of Tennessee Battelle)—$1.4B
© 2015 BWX Technologies, Inc. All rights reserved. 33
TSG Footprint
BWXT
Technical
Services Group
Portsmouth D&D
DUF6 Conversion Project
Idaho National Lab
Advanced Mixed Waste Treatment Project Chalk River
Naval Reactor Facility D&D
NR D&D-KAPL/KSO
West Valley
Lawrence Livermore Demonstration Project
National Lab NR D&D-BAPL
Nevada National BWXT Technical
Security Site Paducah EM Services Group
DUF6 Conversion BWXT Technical
Los Alamos Project Services Group
National Lab
BWXT Technical
Savannah River Site Services Group
Waste Isolation Liquid Waste Disposition (LWD)
Pilot Plant
Oak Ridge National
Laboratory
Melton Valley TRU WPC
DUF6 Conversion Isotek (U233)
Project
© 2015 BWX Technologies, Inc. All rights reserved. 34
Near-term Opportunities
Key TSG Business Priorities
Proposal submitted for 5-year extension at Portsmouth
Chalk River proposal submittal
Kansas City Plant proposal submitted
Savannah River Remediation (SRR) expected 2-year extension
BW Conversion Services (BWCS) expected 6 months to 1-year
extension
Idaho Treatment Group (ITG) is negotiating 1-year extension
Synergy Achieving Consolidated Operations & Maintenance (SACOM)
Bid Submitted
Transuranic Waste Processing Center (TWPC) Bid Submitted
Evaluating Decontamination & Decommissioning (D&D) of NFS BLEU
Facility
© 2015 BWX Technologies, Inc. All rights reserved. 35
Nuclear Energy
Bill Fox
President,
Technical Services Group and Nuclear Energy
NE Business Overview
NE Overview
Designs and fabricates components / systems
Highly complex manufacturing and component
design capability
Only large commercial nuclear manufacturer in
North America
Supplied more steam generators than any
competitor worldwide and largest clean room in
North America
Provides maintenance services to keep
nuclear plants running safely and efficiently
Complex inspection / repair services employing
remotely operated robotic tooling solutions
Dominant nuclear services provider in Canada
Proven steam generator inspection / repair
services with the lowest dose / schedule in
industry
Advanced reactor systems design and
program/project management
Key Locations
Cambridge,
Ontario
Lynchburg, VA
Charlotte, NC
Chattanooga, TN
© 2015 BWX Technologies, Inc. All rights reserved. 37
NE Products and Services
Specialty Nuclear Engineering & Services
Nuclear Steam Supply System Design and Manufacturing
Generation IV Advanced Nuclear Reactors TerraPower, X-Energy, StarCore
Component Design, Engineering, and Licensing Services
Irradiated Materials Laboratory and Testing Services
Specialty Thermal Hydraulic Scale Testing and Simulations for Advanced Engineering
Modeling and Development
Nuclear Fuel Design and Manufacturing Development
SMR development, including reactor design, licensing, balance of plant layout and design
Specialty Nuclear Field Services
Steam Generator Inspection and Repair Services
Remote Eddy Current Non-destructive Inspection
Steam Generator Tube Plugging
Secondary Side Remote Water Lance Cleaning of Tube Bundles
Component Life-cycle Engineering Services
Balance of Plant Heat Exchanger Inspection and Repair Services
Remote Eddy Current Non-destructive Inspection and Robotic Examination Services
Component Life-cycle Engineering Services
© 2015 BWX Technologies, Inc. All rights reserved. 38
Geographic Coverage
Strong North American business with international presence
© 2015 BWX Technologies, Inc. All rights reserved. 39
Steam Generator Services Market Analysis
U.S. Market Analysis
Developed a significant technological advantage with advanced tooling resulting from significant Capital / R&D investment
over the past 5 years
Captured 25% market share of Steam Generator Services
Has 15% market share of Balance of Plant Eddy Current Testing Services
Market growth potential through additional contract wins increasing market share to just under 40%
Solid contract backlog through 2020 resulting in net return on capital investment
Market Dynamics
Stable, predictable services market
Plant aging drives increased inspections and repair opportunities
Outsourcing by Customers to reduce fixed costs
New nuclear plant project development is creating opportunities in next generation design support
Large growth potential in Canada due to life extension projects
Planned spending of $20B between 2015 2030 on replacement components and services
Significant new-build projects in Asia
Opportunities for technology transfer and support
Niche service opportunities
© 2015 BWX Technologies, Inc. All rights reserved. 40
TSG & NE Financials
Business Status Update
Nuclear Energy
2012–2014 market decline driven by
completion of life extensions, reduced capital
and O&M spend, and new build investment
(Fukushima, gas prices, etc.)
Focus on cost reduction initiatives,
restructuring, optimizing businesses and
execution
Growth areas are plant aging services and third
party R&D investments into the next generation
reactor designs
Healthy backlog entering 2015 of $265M and
targeting margins of 10% by end of 2016
Technical Services Group
Rebuilding after Y-12/Pantex by improving performance on current contracts and adding new work
Focus on execution of existing contracts and strengthening partner/customer relationships
Increase depth and breadth of future bidding opportunities
Refocus organization for growth by building bench strength and increasing projects capability
TSG & NE Revenue (1)
$M
500 441
434
388
400
300 240
200
100
0
2011 2012 2013 2014
Revenue
TSG & NE Bookings and Backlog
$M 396
400
283
300 268
200 147
100 335 306 244 351
0
2011 2012 2013 2014
Bookings Backlog
Notes:
1) Excludes intercompany eliminations
© 2015 BWX Technologies, Inc. All rights reserved. 41
Financial Review
David S. Black
Senior Vice President and Chief Financial Officer
Select Financial Information (Unaudited)
Select Financial Information ($M)
2012
2013
2014
Revenue
1,523
1,547
1,451
GAAP Operating Income
172
307
19
Pension & OPEB MTM (Gain) / Loss
23
(131)
141
GCI & Other Restructuring Charges
-
21
43
Litigation
— 16
Adjusted Operating Income 195 197 219
GAAP Earnings per Share $1.01 $1.78 $0.36
Adjusted Earnings per Share(1) $1.15 $1.33 $1.36
Notes:
1) Refer to appendix for reconciliation of adjusted earnings per share
© 2015 BWX Technologies, Inc. All rights reserved. 43
Revenue Summary
Segment ($M) 2012 % 2013 % 2014 %
Nuclear Operations 1,098 72% 1,168 76% 1,221 84%
Nuclear Energy 326 21% 284 18% 155 11%
Technical Services 108 7% 104 7% 85 6%
(Primarily equity income)
Eliminations & Other (1) (9)—(9) (1%) (10) (1%)
Total Revenue 1,523 1,547 1,451
Notes:
1) Eliminations & Other includes mPower
© 2015 BWX Technologies, Inc. All rights reserved. 44
Backlog
Segment ($M) 2012 % 2013 % 2014 %
Nuclear Operations 2,984 91% 2,369(1) 94% 2,778 91%
Nuclear Energy 278 9% 142 6% 265 9%
Other (2) 4—7—3 -
Total Backlog 3,266 2,518 3,046
(1) |
|
Notes:
1) Decline in 2013 backlog attributed to delay in receiving the normal Q4 2013 order in Q1 2014
2) Other includes mPower and Technical Services
© 2015 BWX Technologies, Inc. All rights reserved. 45
Adjusted Operating Income
Segment ($M) 2012 2013 2014
Nuclear Operations 226 238 270
Nuclear Energy 51 9 (23)(1)
Technical Services 60 58 35
Other (2) (142) (108) (63)
Total Adjusted Operating Income 195 197 219
Notes:
1) 2014 includes expenses treated as non-GAAP and adjusted for in “Other”
2) Other includes mPower, unallocated Corporate, and non-GAAP adjustments.
© 2015 BWX Technologies, Inc. All rights reserved. 46
Balanced Capital Allocation
Disciplined, Return-Driven Capital Allocation
Organic growth
Dividends
Share repurchases
Focused M&A
Maintain leverage at appropriate level to have allocation flexibility
BWXT Return of Capital Plan
Initial dividend of $0.24 per share / year
$250M share repurchase authorization confirmed for BWXT through 2/25/16
© 2015 BWX Technologies, Inc. All rights reserved. 47
Pro Forma Capitalization
Pro Forma Capitalization (Provisional(1)) ($M) 6/30/2015
Total Cash 80
Revolver Draw 105
Term Loan 293
Current Portion 15
Long-term Portion 278
Total Debt 398
Total Equity 325
Total Capitalization 723
2014 EBITDA 304
Total Debt / 2014 EBITDA 1.3x
Commentary
Strong balance sheet at transaction close
Standalone credit facility through 2020
$400M revolver
$300M term loan
$200M delayed draw option through 12/31/15
Strong liquidity position of ~$520M(2)
$80M cash position sufficient for operations
~$240M revolver availability
$200M delayed draw option through 12/31/15
Pro forma leverage of 1.3x
Strong balance sheet and available liquidity provide
flexibility and optionality
Notes:
1) Potential capitalization structure subject to final distribution of cash
2) Net of outstanding letters of credit
© 2015 BWX Technologies, Inc. All rights reserved. 48
Business Outlook
Adjusted Operating Margin (1)
%
20
15.5– 16.5
15.1
15
12.8
10
5 |
|
0
2013 2014 2015E
2015E Adjusted
$1.30 - $1.40 / Share
EPS (1)
2015 Guidance
Nuclear Operations revenues consistent with levels achieved
in the last two years and expected operating margin in the
high teens
Technical Services operating income in the range of $15 to
$20 million, mostly from equity income
Nuclear Energy revenues in the $150 to $175 million range
with operating margins in low single-digits
Corporate unallocated spend reduced to $15 to $20 million
annually post-spin
Adjusted tax rate for 2015 is expected to be in the range of
34% to 36%
Organic capital expenditures in the range of $45 to $55 million
Beyond 2015
We anticipate a high single to low double-digit EPS CAGR
over 3-5 years while maintaining leverage below 2X (2)
Notes:
1) Adjusted Operating Margin and EPS excludes restructuring charges and year-end, mark-to-market adjustment for pension and postretirement benefit plans
2) Leverage could temporarily be above 2X after strategic transactions
© 2015 BWX Technologies, Inc. All rights reserved. 49
Key Investment Highlights
BWXT Key Investment Highlights
Premier US Government and energy market provider
Critical platform for defense and energy applications
Leading supplier of nuclear design, equipment, components, fuel and specialty technical services to the U.S. government Leading supplier of precision-manufactured components and services across the nuclear power industry
Attractive operational and cash flow profile
Sustainable competitive advantages
Focused growth strategy with actionable opportunities
Strong financial position supports strategic priorities and shareholder value creation
Proven and experienced management team
Dependable, stable business with strong, recurring & visible free cash flows
Strong backlog with multiple years of long-cycle production programs & procurements Continued operational improvements to achieve margin expansion
Strong, established position with significant barriers to entry, including technical capability, product quality, and upfront capital investment 70+ years at the forefront of cutting-edge innovation in nuclear engineering; accumulating extensive technical IP with substantial patents
Multiple levers to improve profitability and drive growth, organically and strategically Organic growth opportunities identified and leveraged strong position in existing markets Focused approach to acquisitions
Disciplined capital allocation to achieve growth and return of capital priorities Optimal leverage provides flexibility to pursue strategic objectives Sustainable dividend policy in line with peers
Seasoned management team with deep understanding of industry; executives average 24 years of industry experience Proven track record of operational performance
© 2015 BWX Technologies, Inc. All rights reserved. 51
Q&A
© 2015 BWX Technologies, Inc. All rights reserved. 52
Appendix
Team Page
John A. Fees
Executive Chairman
Mr. Fees was Chief Executive Officer (CEO) of McDermott International, Inc., a leading engineering and construction company with a focus on energy, from October 2008 until July 2010, at which time he retired from the company with 31 years of service Mr. Fees held various leadership roles at MDR during his career, including CEO of The Babcock & Wilcox subsidiary; Chief Operating Officer of BWX Technologies (BWXT); President & General Manager of BWXT Services; and President and General Manager of Diamond Power International While CEO of MDR, Mr. Fees led the company and Board through the process of the spin-off of The Babcock and Wilcox Company (the Company), establishing two independent public companies
P. Sandy Baker
Chief Executive Officer
As President and CEO, Mr. Baker oversees BWXT’s combined three-million square feet of manufacturing and engineering operations that provide precision components and fuel for the U.S. Navy’s nuclear fleet
He also is responsible for the management and operations of nuclear production facilities for DOE and NNSA, as well as environmental management operations, such as the decommissioning and decontamination activities being performed at various sites throughout the U.S.
Mr. Baker also directs BWXT’s commercial nuclear operations in North America, which includes multiple manufacturing sites that are ASME N-Stamp certified
David S. Black
Senior Vice President and Chief Financial Officer
Prior to being elected to his current role in 2015, Mr. Black served as Vice President, Chief Accounting Officer, and Controller for the Company beginning in July 2010 Joined a subsidiary of the Company in 1991 as General Accounting Manager for the Nuclear Environmental Services Division Other positions held within the Company or its predecessors include: Financial Services Manager for the ASD Service Center Division; Controller for B&W Federal Services, Inc.; Controller for BWXT Services Inc.; and Vice President and Controller for the previous BWXT entity
© 2015 BWX Technologies, Inc. All rights reserved. 54
Team Page (cont’d)
James D. Canafax
Senior Vice President, General Counsel and Chief Compliance Officer
Mr. Canafax has served as Senior Vice President and General Counsel of the Company since 2010 and as Chief Compliance Officer since 2013
In this role, Mr. Canafax leads a team that provides legal counsel for all of the Company’s operations as well as supports the Company’s corporate governance and compliance activities
Previously, Mr. Canafax served as Assistant General Counsel—Transactions and Compliance at McDermott International, Inc. from 2007 to 2010
William A. (Bill) Fox III
President, Technical Services Group and Nuclear Energy
William A. (Bill) Fox III leads the federal services and commercial nuclear service business segments of the Company, including Technical Services Group and Nuclear Energy U.S. He also serves as the Chief Executive Officer of Generation mPower LLC
(GmP)
Mr. Fox has 37 years of nuclear industry experience in all areas of project execution and services
Prior to joining the Company, he served as the Senior Vice President and Project Director for Chicago Bridge & Iron (CB&I, formerly Shaw), where he was responsible for the complete engineering, procurement, construction and start-up of the AP1000 nuclear units being built at the VC Summer plant in Jenkinsville, South Carolina, a position he held for almost six years
Joseph G. Henry
President & Chief Operating Officer, Nuclear Operations Group
Joseph G. (Joe) Henry brings more than 20 years of extensive management experience in engineering and nuclear operations to this role. Responsibilities include overseeing the Company’s five nuclear manufacturing sites which provide components for the Navy’s Nuclear Propulsion Program Previously, Mr. Henry served as the Chief Operating Officer for the Company’s Nuclear Operations Group. Prior to this, he served as President of Nuclear Fuel Services, a subsidiary of the Company, and as Chief of Nuclear Safety Operations during the Company’s involvement in the management and operating contract for the Y-12 National Security Complex in Oak Ridge, Tennessee He retired from the Navy as a 2-star Admiral. While on active duty, he commanded 2 nuclear submarines as well as Submarine Group 10, which includes all East Coast-based Ballistic missile submarines
© 2015 BWX Technologies, Inc. All rights reserved. 55
Team Page (cont’d)
Jason S. Kerr
Vice President, Chief Accounting Officer
Prior to being elected to this position in 2015, he served as Corporate Controller for the Company with responsibility for external financial reporting and transactional shared service accounting Mr. Kerr is a certified public accountant with significant experience serving multi-national corporations, primarily in the manufacturing industry Previously served 11 years in public accounting, most recently as Senior Manager with Deloitte & Touche LLP
M. Alan Nethery
Vice President, Investor Relations and Corporate Procurement
Prior to being appointed to this position in 2015, he served as Director, Materials Management for the Company’s Nuclear
Operations Group
Mr. Nethery has held a number of positions of increasing responsibility in various functional areas since joining the Company in 1993 including Operations, Engineering, Finance, Project Management, Procurement and Information Technology, and served as Deputy General Manager of the Pantex Plant
As Director of Operational Excellence during the Company’s successful spin-off from McDermott International, Inc. in 2010, Mr. Nethery was responsible for the strategic leadership and global oversight of the Company’s Information Technology, Process Improvement, and Central Supply Management functions
Richard Rademacher
Vice President, Corporate Development and Assistant Treasurer
Prior to being appointed to his current role in 2015, Mr. Rademacher served as Director, Mergers & Acquisitions for the Company Joined the Company in 1995 as a Business Analyst in the Nuclear Operations Group (Naval Nuclear Fuel Division). Other positions held within the Company or its predecessors include: Division Planner for NOG; Director, Government Relations; Transition Manager at the Pantex Plant; Manager, Legacy Programs; and Director, Strategic Planning.
Previously, Mr. Rademacher served as a Legislative Aide to a United States Senator
© 2015 BWX Technologies, Inc. All rights reserved. 56
Business Segment Information - Revenue
Twelve Months Ended
December 31,
2012 2013 2014
REVENUES:
Nuclear Operations 1,098,031 1,167,683 1,220,952
Technical Services 107,851 104,254 84,834
Nuclear Energy 325,655 283,857 154,721
Other 326 1,523 278
Adjustments and Eliminations (8,998) (10,654) (10,175)
TOTAL 1,522,865 1,546,663 1,450,610
© 2015 BWX Technologies, Inc. All rights reserved. 57
Business Segment Information – Operating Income (Unaudited)
Twelve Months Ended
December 31,
2012 2013 2014
SEGMENT INCOME:
Nuclear Operations 226,269 237,855 270,536
Technical Services 59,655 58,234 35,203
Nuclear Energy 50,649 8,641 (23,211)
Other (113,528) (81,304) (68,946)
SUBTOTAL 223,045 223,426 213,582
Corporate (27,856) (25,893) (32,315)
Special Charges for Restructuring Activities - (21,256) (20,908)
Mark to Market Adjustment (23,495) 130,633 (141,060)
GAAP OPERATING INCOME 171,694 306,910 19,299
Mark to Market Adjustment 23,495 (130,633) 141,060
GCI & Other Restructuring Charges - 21,256 42,230
Litigation - 16,075
ADJUSTED OPERATING INCOME 195,189 197,533 218,664
© 2015 BWX Technologies, Inc. All rights reserved. 58
Business Segment Information – Margin / Capital Expenditures
Twelve Months Ended
December 31,
2012 2013 2014
OPERATING MARGIN:
Nuclear Operations 20.6% 20.4% 22.2%
Technical Services 55.3% 55.9% 41.5%
Nuclear Energy(1) 15.6% 3.0% (4.6%)
ADJUSTED OPERATING MARGIN 12.8% 12.8% 15.1%
GAAP OPERATING MARGIN 11.3% 19.8% 1.3%
(1) |
| Nuclear Energy’s 2014 operating margin adjusted for $16M Litigation charge (non-GAAP) |
CAPITAL EXPENDITURES:
Nuclear Operations 44,810 31,572 34,777
Technical Services— 98 66
Nuclear Energy 5,881 5,506 14,358
Other 2,554 2,854 1,983
Corporate 8,798 9,640 9,396
TOTAL 62,043 49,670 60,580
© 2015 BWX Technologies, Inc. All rights reserved. 59
Reconciliation of Adjusted (Non-GAAP) Earnings per Share(1) (Unaudited)
Earnings per Share ($) 2012 2013 2014
GAAP Earnings per Share $1.01 $1.78 $0.36
Pension & OPEB MTM (Gain) / Loss 0.13 (0.74) 0.82
Impairment (Gains) / Charges 0.23 0.17 (0.13)
One-Time Tax (Benefit) / Charges (0.22)—(0.05)
GCI & Other Restructuring Charges—0.12 0.25
Litigation — 0.11
Adjusted Earnings per Share(1) $1.15 $1.33 $1.36
Notes:
1) BWXT is providing non-GAAP information regarding certain of its historical results and guidance on future earnings per share to supplement the results provided in accordance with GAAP and it should not be
considered superior to, or as a substitute for, the comparable GAAP measures. BWXT believes the non-GAAP measures provide meaningful insight into the Company’s operational performance and provides these
measures to investors to help facilitate comparisons of operating results with prior periods and to assist them in understanding BWXT’s ongoing operations.
© 2015 BWX Technologies, Inc. All rights reserved. 60
Reconciliation of EBITDA (Unaudited)
($M) 2014
GAAP Net Income 39
Pension & OPEB MTM (Gain) / Loss 89
Impairment (Gains) / Charges (14)
One-Time Tax (Benefit) / Charges (6)
GCI & Other Restructuring Charges 28
Litigation 12
Non-GAAP Net Income 148
Interest (Income) / Expense 7
Taxes 72
Depreciation / Amortization 77
Adjusted EBITDA 304
© 2015 BWX Technologies, Inc. All rights reserved. 61
Revenue and Backlog Recognition
Revenue Recognition
We generally recognize revenue and cost on a percentage-
of-completion method
For contracts as to which we are unable to estimate the final
profitability, we recognize equal amounts of revenue and
cost until the final results can be estimated more precisely
In such cases, the gross profit will generally be recognized
when the project is ~70% complete
FOAK contract designation must be made at the beginning of
the contract
Our policy is to account for fixed-price contracts under the
completed contract method if we believe that we are unable
to reasonably forecast cost to complete at start-up
We have a conservative and
disciplined approach to revenue and
backlog recognition
Backlog Recognition
Backlog is generally recognized upon receipt of a written
document from the customer
The contract must require financial consideration for cost
authorized and incurred in the event of order cancellation
The customer should manifest a firm commitment to proceed
If a contract is based upon a letter of intent (or a document
other than a signed contract or signed PO), the document
must financially commit the customer on the same basis as a
signed contract
Contracts shall be entered into backlog in the accounting
period in which the customer signs the contract or letter of
intent
If cancellation without financial consideration is permitted, the
contract is not included in the backlog
Backlog valuation shall be the best estimate of time-of-
performance valuation
All factors which enter into the initial determination of expected
revenue from a contract shall be evaluated throughout the life
of the contract
We do not include the value of our unconsolidated joint
venture contracts in backlog
© 2015 BWX Technologies, Inc. All rights reserved. 62
For more information, contact:
M. Alan Nethery
Vice President, Investor Relations investors@bwxt.com (980) 365-4300