BWXT - Earnings call transcript Q2 2022

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Operator

Ladies and gentlemen, welcome to BWX Technologies Second Quarter 2022 Earnings Conference Call. At this time all participants are in a listen-only mode.

Following the company’s prepared remarks we will conduct a question-and-answer session and instructions will be given at that time. I would now like to turn the call over to our host, Mark Kratz, BWXT’s Vice President of Investor Relations. Please go ahead.

Mark Kratz

Amber. you, Thank welcome and second XXXX quarter Good to call. earnings evening BWXT’s

will and Rex CFO. Robb we Investors quarter section are on me BWXT is CEO; presentation On the that earnings Geveden, call of and Joining the President President and available second Vice LeMasters, today’s website. the reference Senior

company’s discuss Harbor that and the constitute also those described filings. provision including materials uncertainties, in SEC in statements. investor These will We Safe forward-looking certain matters the found the risks statements involve and

We a can which Investors measures found will the website. financial reconciled are turn over measures, the to BWXT call frequently discuss separate non-GAAP to I to GAAP like would section on also in of the that now presentation be Rex.

Rex Geveden

to second reported evening per up up today Thank share. were Revenue adjusted was were and everyone. quarter net results. XX% you, robust income and up XX% XX%, EBITDA good we XXXX earnings Earlier and Mark,

update radio and June, announced Medical that commercial we medical for desirable batches achieved quick from that those. production These the successfully package. an In all Operations important me We underlying that operational also the irradiated ability agreement driven team with Bayer have nuclear narrow product Commercial operating for our reactors a product high to signing which combination submittal. so BWXT low cash reduces and timing performance fronts, by a performance, flow, earnings lines with simultaneously the registration characteristics batches delivered milestones up The entire in quarter supply supporting ongoing good highly FDA the originally job those has do and you in continue last uncertainty that efficiencies supply In The on collected for strong segment, industry FDA component Indiana. matches for activities completed has this a patient qualifications new cancer to is offer and third year quarter. on for Bayer some of services the to micro line, guidance targeted that team Furthermore, second several business. alpha-emitting Tech-XX already to significant commercial the commendable results first demonstrate outcomes. the increased both In the team operational leads noting we’ve delivered earnings in the Strong Since while positive sites competitive XXXX. business operations our improve portfolio begin the call quality. medicine. of at and isotope in we now the building to for results developing Ohio the purity and strategically is a of let outlook advanced spite level manufacturing material year the continues The other for finalizing trials. build Actinium-XXX, of us to product supply of favorable worth a along impressive products business later field these offering data were were that with clinical of naval we batch in an site expect production for planned to XX%. we was It therapies and this and standards

services manufacturing and stake participants pharmaceutical manufacturing. value other and and between companies, and leading the in manufacturing. to as growing competitive The smartly global position base we’ve Over chain heavily a important invested Tech-XX product the expanded out with years generator market partners and unique line, have business developed have relationships radiation is radiation a global in leader nuclear BWXT the two in Medical last scale finished positioned we the we medicine

leadership President two BWXT corresponding and CEO. will external past years, this daunting commercialized its exciting and at BWXT from dedicating in the to of the transitions technical is resources in a progress a challenges. necessary entry commercial having few of a ramp and some and the our not pipeline Cirtain, Technology of as some as the the market. well the ago production, as to out where that build Jonathan new best for business business talent He As years are market unit, medicine nuclear phase accelerate operational BWXT’s taking Medical’s making oversee overseen phase, the products executive most Jonathan tackling Medical recruiting leadership to Dr. changes, business BWXT’s is we development. of a historical Officer company’s to Tech-XX Chief and new ramp Corporate

other the Bruce clean We incremental month a Nuclear In step are the valued at past contract headquarters We growth. for for in term in Medical’s demand stakeholders that business, for announced XXXX, all the major into and we up visibility and for near prepared Power also the some able future. team the be of Commercial the capabilities services next management medical in leadership hope particularly replacements energy are stages the in Power’s added couple million we world-class team of have for see BWXT built our customers this meet built scheduled seeing over volume investors, reactors, we a over five and that component long business. Canada, will providing we year. of the $XXX years, at to host have Ontario, when you is of Last

and Valley interest bid optimistic forward-leaning both reactor operations, of do announced module can-do BWRX-XXX In gain in the customers the to Authority, in generation globally. Beyond Power for BWXT Project about whom at Office, we $XXX In that grid-ready Generation have are existing full-scale and excited line in Capabilities of fabrication work plans incremental that making to the build traction in small modular for we ramping the Tennessee the team first Ontario contract of cautiously market, sites. completion the competitively GE for June, build reactor and valued business. named the and Pele. small the in million advanced prototype capital The slated utility announced to XXXX. exciting pipeline a Hitachi’s for like DoD new a North this players of at America we awarded program, are is wake will the micro government States reactors build remain Strategic power investments United we we continues aggressively up The was of in microreactor

stage anticipated NASA to are space partnering be design be the system XX is long-held a surface, a BWXT we the lunar vision we solutions. could core franchise buildup space-based for of the this long-term low-rate and terrestrial franchise, Martin government end develop that trajectory fulfill on teams to DoE capabilities awarded If on proposal needs to for specialized multiple the power would the also continue DARPA pursue been these federal June, supporting year kilowatt as conditions that BWXT In core to a naval demonstrations propulsion. space the strength microreactor would a to It you half of the our around in space for Lockheed capabilities land put national of course, vision Beyond replicating orders, applications, a aspiration significant conditions signal with to initial with month our us to federal perspective and preparing power the agencies enter of and has to for nuclear effort. naval nuclear into three for a application. national translates toward class be conjunction and challenging security and domains. contract demand in of mission of production our the which with submit preliminary continue decade. And of across nuclear and is to well the security certain a on Such XX propulsion the microreactor, of U.S. a unique tackle awarded our back of supportive strategically see positioned pleased special sites. their space and we terrestrial sea, this a based operating update demonstration government at remain from space to budget

of experienced bottlenecks. address investments for put intercompany of in as as we including as action have with issues the coupled A choke well of intense where points, challenge has movement prime and key demand. to we our increasing manufacturing The a out facing example the last production tough Northern around an shortages to More make tubes These set generators, nuclear U.S. to aggressive of place service to including to the is set that we many recruiting of alleviate to supply components. plants macro Government environment. are face issues these conditions, environment plans focused wage in personnel mentioned of chain with attributed workforce building including up I difficulties some civilian and of impressive experienced years the pressures, factors, lead of United nuclear Segment. labor She production Navy inefficiencies operations notably XX positions, general executive industries, shipyards. production around experienced COVID. earlier, and most Smooth been this has capacity steam Navy and year a hiring, some leadership appointment peers States our recently, pressure, challenges As connected in over naval proven quarter we a disruptions similar These in variety the of within recent of other in Sharon are defense missile BWXT’s a our team

Restoration as over thesis on nuclear a of and that more and turn with and broadly. for positions similar advantage bicameral across environment. spending legislative for NNSA. remains the business Project both the summary, funded key for the differentiated and the operations the House the coming Both the it With space outperform have Environmental strong major budgets highly government Site diversity government Management term inflection That macro and our and defense a The points validate the over to clean that Robb. challenges content commercial Pele well and On a in positioned support and space over increased front, serves in confidence company Those for let do term energy to in short increase long are years. programs, medicine. proposed President’s is ship we choppy above shipbuilding BWXT In reaching and we investments for distinctive horizons. bipartisan growth long nuclear across firm naval me growth and Senate that, security nuclear and request work programs for portfolio, outlook the our DoE national the the building, see actions in

Robb LeMasters

everyone. Thanks, Rex, and evening good

slide results Let’s start with four total presentation. earnings of on the company

$XXX Second revenue to XX% driven nicely grew both by quarter growth in by million, segments. operating

below share quarter exchange EBITDA which as partially count, performance down in campaigns lower to share including more the per $XXX pension by the year-over-year, the strong driven to robust, was margins revenues driven and expense, some also Navy which income. working by up strong we net foreign was operational million, recoverable modest in year-over-year interest lower flow items, businesses. quarter, and two significantly some wind up both cash segments tax second was line in in Free and by XX% losses. Operating the and was offset CAS adjusted rate million capital despite benefit up an were increase XX% income Second flow major higher some Earnings income of and given and continue the improvements. pension improved $XX capital Medical cash lower

business due now uranium a slide quarter up adjustments. operations second government offset In X% move to six. reactors driven naval slide to on million, in will quarter, These partially five timing I was have volume missile detailed were long-lead on higher tube lower material by second $XXX to results contract EPS segment revenue the revenue and the and processing. We by bridge of increases in

in aided sites service mentioned. up higher revenue growth to business seasonality operations, by contract handling strong operations of nuclear expected the Commercial at of $XX.X was the fewer Second to positive million, EBITDA commercial technical In processing Northern driven uranium we which and lower quarter commercial fuel adjustments, XX% higher the revenue. recoverable pension outages. by Rex The and Medical also performance by that particularly income Government partially contract as BWXT power offset was services, year-over-year CAS power year-over-year was due XX% adjusted was in and some up

Second a quarter to $XX.X Commercial significantly to driven adjusted of when favorable by up compared and last million, business second a Operations mix quarter combination higher the revenue EBITDA more year. was of

on guidance slide to seven. now Turning

of the to combination the to to of the earlier in Project a to X% growth Commercial release outage component now scope, nuclear is by guidance as anticipate [inaudible] to prior have now X% This X.X% we X.X%, of increased of and more non-GAAP EPS today, are given growth Government to mix X%. We consolidated manufacturing year guidance growth relatively as of in a revenue medical operations revenue EBITDA X.X% Operations, adjusted We detailed contract. see in volume and addition X% the expect we a In revision as this narrowing X.X% we prior versus guidance. EBITDA Operations, driven our is versus increased X%. and the segment of as lower-margin coupled increasing of X.X% EBITDA range revenue isotopes. grow X% modest range a to Pele we primarily well result service, acquisition. X% Pele commercial DCO’s we In Consolidated factors. As a gain to expected revenue Project step-up with press higher win and

$XXX to which EBITDA of demand, to some increased and is be our now the field challenges We contract BWXT and that million. EBITDA given to $XXX in management component operational efficient expected operations Commercial showing guidance, $XX also cost a operations $XX into be have fewer million to nuclear expect favorable strong adjustments government the service million we heightened Medical across volume manufacturing, now million, by business segment. incorporated

some on good $XX estimate cost also progress and $XX million corporate while results This in from about capturing the continue lowering the prior re-segmentation. versus rationalizing synergies managing unallocated about million. modest to We corporate make to of guidance costs,

result changes, our a tightening EPS As of we are range non-GAAP $X.XX. to these

$X.XX the guidance we per outcome to earnings and to the anticipate share, revised likely Our is $X.XX year. midpoint now is for the still most continue

normalized continue the couple that next to on only more with will of return show modest mentioned to we initiatives. believe turbocharge our the a of years a last capital I capital level call, growth expenditure, to As strategic

investments at that scale of see We couple be years. spread across millions a each tens continue such of of to a will

facilities in to a year the Project midpoint. the will next our this range second upgrade win of half causing million guidance $XXX about increase and Pele, the year $XXX strategic into million us this to at $XX.X of year, program million the for we With to of for CapEx or increase

up Investor guidance As for incremental at I million color. now spend we some than aggressively XXXX $XX remarks I would incorporates CapEx capital had presented to for our that to our highly and my provide mentioned up Day, our time, stand forecast that last we customer. investment of that of about half add and initial the the less guidance, effort in as government wanted Finishing quarterly ambitious Pele projected so

quarter. As that third quarter into and first strong shift, quarter shift implying of in a our by similar up respectively, mentioned, beyond in I Rex be anticipated modest to and QX both outperformance, lining some the quarter originally change QX EPS were second results we driven see included simply third XXXX, out a items earnings in and Therefore, to certain seasonality.

contract. anticipate to project and Pele service business the continue quarter new service fourth projects field returns, We and a power commercial as we strong up demand government on ramp the in

updated slightly non-operating By the incorporates we incremental various guidance EPS. and that some results large, statement. with better bridge have XXXX, our for the are the components to components modest changes eight income anticipating of We in headwinds on the operational of slide

to I non-operational Let environment that market performance. me we little think and mentioned interest bit we macro thread last flag and the continue given interest continue wanted about the income environment. to to monitor pension rate see I as we impacts rate the non-cash items start capital XXXX. call, expectations a higher from Namely, of on the

outstanding balance. that million, continue impact next $X.XX we our interest headwind. an XX% As rate of year anticipated rising our XXXX think environment million had on current about debt point rate $XXX our debt expense rates of every of interest surely will full expense see to EPS point, about rate XXX our we which the floating in floating or upward about as you increase for we have affecting tax basis. This is rate With interest $X basis on higher interest and about debt, adjusted a is at after recall, expected the year about

lead believe expense XX-K, rates for included the earnings provide asset in by of noncash current to P&L, presentation other the We impacts also impacted in pension line be and for that today’s we to discount conditions these Beyond non-service may income our market negatively quick see us our slide in interest reported sensitivities and appendix in negative reference. We the a in income pension have potential respects. FAS two returns.

derived benefit periodic in line increase P&L, in line is decline basis rate prevailing XXX of point which the of for interest income other P&L. closely in the net additional discount the rate, curve, $X other a cost, First, anticipate every the we the approximately resulting from the million in

are and year that through results. we in the different pension from a the market and each adjust mark or we most P&L those entries little Second, at of end negative non-GAAP the defense to peers positive the

of guide, assets in As pension standard macro decrease the muddled made decline be line of estimates of a but in wanted we balances income estimate XXX you liability P&L the Final process, with income a million. lower $X our as will by asset basis these other part that markets. future benefit a net to causing initial year-end periodic pension amid give and point about

earnings would in at from and over rates, higher a decrease that the chalk pension other half end impact snap headwind assets. coming with a we about to June, line the other interest of from we about million estimate if So income, the coming just of noncash XX% half $XX

slightly estimates. June annuitizations using and after contributions we in our status side, Should these to projection assets cash a are ourselves no basis, find and constructive during a of through circumstances, the estimate of material On contributions years we the foreseeable with pension conscious calculated for the flip GAAP that of management the overfunded funded these fully, on pension conditions end not of done the we solid year, future. if prevail the

end in give through pension for for back to these potential guidance So material reductions interest call while income too it conditions themselves EBITDA And XXXX, year early that, should for the of closing being masked remarks. some growth noncash we specific over underlying is with operational anticipate sustain Rex and the turn the still by to the year. market year I’ll of the another

Rex Geveden

see you, to the for that our we thank on to new up Thank employees want together I missions Robb. rising ahead. take

does company We are that the a strong back challenge. from not away

us purpose nuclear most technologies the on by all is remarkable pressures end we and and inspired participating our performance fully interest we out demonstrates a underlying using increased outrun macro digits, growth benefit strong and positions take to every year found world’s in that Day pension Investor challenging high important vectors expect corporate vision inflect. single some and to grow the which year to In to in conditions. rate the despite and problems and This offset at that of muted depreciation to pension to headwind, operating expense, the before FAS/CAS we potential decreases will by seek income again drive pension we we ways next lay markets headwinds Our our XXXX interest continue economic be day. somewhat of headwinds EBITDA multifaceted

company to defense we targets the deliver and and now taking given term on and facilities shareholders. commercial workforce questions. We look We for laid forward our uniquely and bright this talented primed to future harness qualified are financial attain capabilities, have intend its your our to to multiple attractive markets. We to out an medium exposure

Operator

[Operator you. Thank Instructions].

now comes CJS your Securities. first Labick Bob Bob, Our with line question open. is from

Bob Labick

it at run next how will Good we it afternoon and in you! start revenue win on fantastic obviously will couple investment a you the and you P&L Project of obviously, to or it and Will congratulations timing, It’s Will opportunity. running the big a be should neutral? Can a congratulations also, Pele. a could a through run - loss quarter. the of that the and you be on Wanted kind this it us you give P&L? of an years? accretive? nice how over sense think know Great, about Is thank for be

Rex Geveden

peanut Robb to Bob. month think is Yes, Good call a and running contract I’ll that’s have over, about and so some to let’s with to will it start sort Pele you. $XXX it, XX buttering over evening it of maybe add a that. million period,

up a rate fixed achieve a it so Now won’t ramp we average sort cost the of it speaking. to to run a of so it’s have is that fee on contract. while generally segment, and end as the modest of and front dilutive No, for plus in margins think fixed pretty it fee, it,

a but course proposition side, reactor give So of so lot cost foundational and that’s micro on here, course it’s not for to that the is business. of attractive us, laying of lift an going there’s us for no margin risk the pieces it

So of that? probably we add that’s it. quite contract. terms that anything Robb, And like to to about the

Robb LeMasters

good, will No, a be I margin Rex it it that’s think contract alright. talked that about bit us. for lower little

we really get that that up set to is and that’s trying and So as we’re can. hire, to business, vigorously want we quick after ramp as hire as we’re in to what really – we

Bob Labick

expect recent Okay, it approval still be [ph] FDA? after How, great, to to for be the submit, you does do and or just do then believe minus of done. the one more plus on this little end isotopes if the Maybe the now all, And you one do submission quick by able me. you batches impact months transition. Would a at are nine color the for leadership September And should you to thanks! submit?

Rex Geveden

leadership by that end to probably Yes the the we give And I take. the yes, as certainly Bob, or or view of business. Yeah. so submit it positive month this around change, expect for FDA package

and script, the involved equipment. became it was Jonathan’s business Advanced the CTO, for Technologies technology CTO, hatched other that He that even the the as sort qualification generator such Advanced the for originally for Tech-XX the Lutetium business with campaign ran capture in developments. vanguard a project, that involved the time. Moly Technologies, of registration been campaign business it’s been also the As long and deeply all this neutron XXX on and I in and mentioned before batch was of for he And technology

and retaining down, Martin the and bright instincts is his by back So the business way consulting knows commercial in a forward; developing commercial back But particularly commercial there very the business person and for role. who's in we're got He U.K. very also. into and developing returning very transitioning channels a is the to terms Martin And his he home energetic, market strong in good strong up business. to

be But end it at he'll leadership So lift. Jonathan's be of good the be it a It's right stable and hand good that side, commercial quite transition. developing give the very to some will going business. it's and business for

Bob Labick

very Thank much. super. Okay, you

Operator

you. Thank

Ambit Our your with from Global. next Skibitski question is now open. comes Pete, line Pete

Peter Skibitski

Good maybe new guys! bit of that's talk and more Ohio nice of more are Yeah, and adding labor kind quarter. you terms maybe Indiana needs maybe and of something, kind more machinery, you a Hey! know about can pieces contributing still Rex, issues. be how little gap] of [audio much in hired evening in you there, or to to

issues? I maybe was you year similar last think So had it

Rex Geveden

similar Yes, Pete.

scale at me kind to you for XXX those know total X,XXX through That's been ramp have you program, things XXX. that historical and rates of have on – this know then do, our now. bit X,XXX typical we're been the entire enterprise, around year to business think That's trying in the picture our we're U.K. And the not the XXX net now, about mainly going you of than days. demands We're on mid our facing. maybe to kind the labor of to given hire headwind us So kind across hiring for of America we this that's think these are but people all and people let a all single could that on so and net Navy by running and kind in about about little to digits the the and North facing, that people, XXX lose, to and this about the other that what's the for out that to positive right numbers, and attrition the hire that's sort rate high and what across don't if of in paint let's higher I we you program of X,XXX typical you. have say need year, peers and we the attrition get of of Pele we're and we

be about more in specific Ohio to happening Now know what's you Indiana. and

– some are with well past program. well cost continue like missile that, we or We tubes experience we did struggles But the have do that. repairs some to the with we're to anything Nothing in that we some program program resulted creep ramp in some program last to a negative estimated new and the and up. year they've and EAC That adjustment. re-baselined brought in new that leadership, costs

that discussions program with some Now, we an more about we're adjustment on some broadly. our customer have equitable claims against that having number, and

are some multifaceted the but problem, trying of to gotten with efficiency a having it log us is so another being producing plants with of the build to to we maybe but we've to had here with. and what in the future, these some quarter producing that that's overcome, it create challenges out did a And while know has in we're and sight products. line for to of able dealing in do while throw we fire that kind we're we're deal – to So hole you that's

for to up become know Some proficient challenges train long to frankly labor so the for this work. of – them and you is to just of it causes churn. how because have to It it some you people is causes you been we’ve

components, top we're but getting the some a in particularly of underestimated on thing, we've these first of it. Sometimes complexity the kind of of

– are that's capable this We course leadership in head-on, have I team are and problem But summary. corrections we're good problems are so that a making. feel in very those attacking and the the about what they very place

Peter Skibitski

about Okay, I guys tie just we're you at were I it And – this continue color. appreciate point? the to that XXXX? to going on done is into thought the up missile tubes,

Rex Geveden

it. Yes, we're in up of the phases ramping

eight they go of are with and it's into That the The have the missile bleed but more box those, tubes tubes. know think the end up go the with is I that this done have, and year, parts it of components hundreds it will continue. and bulk that by to to and of box you we We those 'XX. deliver missile the ship work will some of tubes these on

Peter Skibitski

Okay. business? Last you and on that how about one for performed can there outlook me, this dynamic controls, talk the integration just for

Rex Geveden

about led it, make I'll a then ask kind a comment. will. I that Pete. Robb of of acquisition comments activity. business couple neat Yes, to LeMasters It's I'll Robb

a with of the fleets. from speak course quite that and that consequence the You components. this seawater know and it's fleet most we cold and fleet. nuclear case the I Navy that our the their In see potential U.K. think has, in know the like has in core so and part. have so case, business Australia like valves business. also doesn't making combination supporting specialized form you business U.S. naval that BWXT of historically, Navy those some are for that components the it's business nuclear would naval the It components embarking as of same Australia, of know and you capabilities the on sense particular governments that that potential there having components, exposure In the to seawater synergies it’s it high of are to available we growth and kind recapitalizing fleet upside

shaping So up nicely. it's

I think to synergies growth bit we anticipated along than maybe frankly then take opportunities cost business, we and it, bought some too. when the way little the better trajectory a

want So to… Robb, do you

Robb LeMasters

being I that's add integrated it's Yes, right. that nicely. would yes, quite

it's U.K. core there's it then sized an be the people California proving digestible swarming with in nice taking an and to in into know, from steps. you really trying several different turns bring operation a operation Long really Beach We're in to company fold bite acquisition. that the and As and business, our to

over both People years. to they've in the they've a to really core company The has it us. with bringing and have the So brand people. similar great got look great markets really relationship seem out business and a good our frankly turned very surprised product to

our become around We thirdly, channel. entree business on U.K. being growth and find then there. into an last operations. think to in U.S. critical mix the that three us the products and with see we international We to another just trying We around our for partnerships relevant all and to start components they that. call, market. core our same if the U.K. of Navy that those more And can So just integrated more drivers being to as expand the supporting have the drive we really international helps outlined It a

we're are really So all those avenues about that so here excited and acquisition. three growth

Peter Skibitski

I and it Thanks guys. appreciate

Rex Geveden

Pete. Thanks

Operator

you. Thank

Our next is Arment question Peter, from line Peter open. Baird. with your now comes

Peter Arment

view long initially Good any had evening, wanted Rex and some Robb. sounds sounds FDA Hey more there as you that getting batches you're challenges needed, Anything Rex, circle in on reference It tent? the it like just like now. you to that process. but I submission back like the the poles you

out? timeline Just your of level confidence currently laid on submission you the that this

Rex Geveden

to say, with the our which after they filing and will this you review Appropriately incomplete submit ways starts in submittal. is is FDA, package hard month then it's would stop date the priority stop the we and data – do. the data you If as more that is clock and are a granted, seen problems priority. some or process. I variable approval a a information, request if filing said six we've the FDA view there your you FDA request bit that then date package would needs Peter. on would The some little they the I clock. await the then shortly here that clock know Historically that Yes. we we is a – get

in reason and it some fussed always process bit... forth we've and little a the that's back So be there that can up quite

Peter Arment

And then revenues? up I 'XX? approval, just us 'XX, once get pretty expecting of are can you think you do about lot just – a ultimately quickly to of to producing materially it half on thinking back but in ramp turn how

Rex Geveden

feel a pharmacy with good ability networks. as commercial I mean this an production place product, and you know Yes, think perspective, in contracts been a ready think are we of go I to the it operation the commercial the I as I our radio operational so turn to on depends for and from about all has this, dress rehearsal have soon into it –

the You the projects the variable the which on of agreements, so supply when on of of become our know in it course those available the – but nature and to there they timeline be is, specifics is depends discussions we're approval. going on, when agreements supply and effective, the

Peter Arment

a just And just clarification. Robb, Okay. then

interest $XX what Is pension just the You clarify. wanted cost combined in was side combined to the mentioned was I and number? the potentially million? that the higher ‘XX for headwind

Robb LeMasters

think There's so it. really you’d that's expense interest the talk true below on people debt, just just to and about rates to really we impact Yes, tried there's line our interest about. the if two

about where increase You have gone, rates know million seeing we're $XX there. a given

If income, component rates, about one item pay so the year really over in it interest second any and which taking those you then And assuming to that million. the course balance $XX we component item debt debt, the don't are and you higher of asset down just out is interest a and each think will, item. next it, that's an an running other million components rate $XX and if two has using

expense if total, two items items or being want think – in then income. really, to you and three interest those other about So

Peter Arment

I appreciate Thanks it. Robb.

Operator

Thank you.

Strauss open. now with next David, question is Our from comes your Barclays. David line

Rex Geveden

Hi David!

Robb LeMasters

Hi David!

David Strauss

So the adjustments were EAC Hey! what in your net quarter, EACs?

Robb LeMasters

as and of of number which we queue to we about that flat then in it composed tubes and about offsets the actually talk other being had down $XX it's about be it, about up. will So – missile million was make

David Strauss

that's about got try – mean this floating paying Okay, are debt And how I at given to take point down potential thinking XX% away and leverage that or thanks. you the volatility? this got that terming it, and out you've Robb,

Robb LeMasters

completely Yes, facility. are still enlarge we flexibility. needed open Those have markets that or if refinance that ever to we even

the cash as really two, starts or talked know pretty get about, out robust to flow here we’ve look we next free the as year shortly. over You

kind teeth so grid of sort, need there. lipid We just any pay and debt. to very looking to and we'll So our down sort large-scale we're do don't tuck-ins of strategic M&A see of of deals do lot a

bring think of million-ish number over that operating of more be And dollars. so years, the hundred that of about kind next $XXX we're you're hoping the of a you the to million cash out CapEx level, flow and to maintenance going down to sort look and couple couple as we at of generating a

So the and we'll to able down move be leverage back Xx. our debt pay below

certainly deal do on -- of anything market. in to So We that. we're sort to bond looking go rush any in not aren't the with

we bank we always the flexibility have wanted the do So to if something side. on

So additional we'll see review capacity. whether and that any we need

David Strauss

then and last one Okay, for the me.

$XX the $XXX sales timeframe, you Investor In to at terms put showed in $XX to had of loss the to up EBITDA positive. still next of ranges today those we of kind where years? you're the two over in terms million how things slide during the ‘XX $XX million ‘XX Day going medical that projecting going Are of things and are business, the in million, kind million running

Robb LeMasters

Yes, I think right. that's

Medical we're endpoints BWXT I therapeutics, to and still couple as total we see the as are therapeutic. you going that of right? Tech-XX be included ramping Nordion know, get story of that the which the clearly to a Actually here this reasonable was business, sort months a lost of think our very the those we've ultimately but year, ramping. to, So

quite what we’re might takes, along seeing. that puts there ultimately so but picture still slight with different, those And and be nicely lines up

David Strauss

much. very thanks Alright

Operator

you. Thank

is Ciarmoli Our with open. question next now Truist. Michael from your comes Michael line

Michael Ciarmoli

chain taking about naval, Good the wonder production to business, could that seeing. inefficiencies choke we any or We Thanks naval kind lead create mentioned the further the related you about as Rex, here? talk to the for of questions. hearing guys. Hey! on keep you castings, in progress anything manufacturing if supply core just or the that know steam you’re might tied and other maybe else forgings points some generators, inefficiencies evening and you just I you’re seeing

Rex Geveden

of Hey Michael! haven’t that. seen we No, much

Our and for that material with concern chains that special stable. other the are long-lead are alloys, we that forgings those the business has been supply ourselves and we fine, alloys business course need of

So really elements. chain. show in for the seen part around been and much the supply other It’s we not the of haven’t that up most labor

Michael Ciarmoli

you you we you just mentioned. with dealing fair the cost assuming what about think expect or of be new that in growth just for to on current these I’m contracting looking margins able happening. structure maybe some bring And contract and your you’ll as on know a structure inflation contain that should okay. Do the you’re hires kind of pressure employees? wage there’s Okay, you amount all

Rex Geveden

your basis the materials force how labor that the on applies backlog things know Michael, the both year two to and baseline, other labor the talked contract hopefully the benefits you the discussion, ways, in three it. higher configuration you’re in and the sole edge materials negative Well, a from into seeing is – you in way cuts two about lay get adjustment raw know of top you into application The and we sword also of that you it to which those form any that of can so this with downside agreements and for negotiating on profit and and that. a bring cost you so new it’s pricing a or us as capture boundaries get like pricing – we escalation all it

long that teens got business. we’ve reasonable and hasn’t walking We the we’re So under there. we’ve still it paths this to believe tight margins right deliver think our now. it We high can in changed we into view term the got margins rope get control and about

Michael Ciarmoli

Got it.

Just last additional any on thoughts Orcus submarine? latest one, update or [ph] the

Rex Geveden

You know not much.

looking the on on one. in We’re outside that

that on we and it. would it. eight to from support here, BWXT’s from announcement in about do perspective, those with but like We’re or months that probably we’re I room certainly we’ll the the see an would negotiations, remain makers say and we seven effort not decision excited what

Michael Ciarmoli

guys. a lot Thanks it. Got

Rex Geveden

Michael. Thanks

Operator

you. Thank

Tate question open. now line Our next comes Tate your Group. Sullivan Maxim with is from

Tate Sullivan

that Thank quarter over you, government I’m XX% meaningful What River margin operations rate run from to just at a in Savannah was and and on evening. River increase was portion good XQ ‘XX? full to Savannah follow-up quarter a to of starting XX%.

Rex Geveden

speaking, business in Generally all good, in contribute that. that a there, site in the modest I of Services to improved business. probably did that component has performance margins our Tate, is Savannah was Technical been would Yes that although say and River

for had a the we also primary pulled believe. in the the third we and that I second to be there was elements, quarter. originally long contributing materials able that That quarter lead deliver would We those forecasted are factor

Robb LeMasters

Yes.

We’re core the also seeing strength Navy business. in

up us. You contract, have parts good as there and that’s businesses so up businesses the and metal, the of we’re HEU there, building talked well see so Those of the we a for are so do in nicely fuel ramp quite couple and other business. that about a business purification well. We’ve on doing

So that’s helping.

Tate Sullivan

prototype book that previous during can on the testing the mean supplying that. the imagine Okay, follow-up for detail Pele that on could thanks of period? And thank release is before with I last revenue period you for TRISO to three that. contract years, in fuel in delivery up amount? press or the testing I the and $XXX from XXXX, a Project you million per your period

Rex Geveden

than for exercised announced reactor. that to It’s been fuel the I yet piece. that contract few million. itself the that separate another a is base phase ago fuel years a There’s TRISO bit a the for hasn’t that We manufacture option $XX Tate, So which believe was contract, of that. bigger

And so as of on of Pele the top that millions reactor. of tens think

is were of competitively you In headed a being into tested but thought I push us, that have two revenues, it’s Laboratory. TRISO And which or Idaho fact, BWXT the true, for also. there to reactor those engineering and engineering is for would to, deliver National the news but the also smaller you fuel little sustaining bit point a while be together mid-XXXs at awarded was demonstrated sustaining contract above. modest was item It

Tate Sullivan

you. Okay, thank

Rex Geveden

Tate. Thanks

Operator

questions There no [Operator Instructions]. queue. you. in are Thank further

over or closing Mark queue, questions are remarks. to I there for back pass no in As any additional Kratz conference will the further

Mark Kratz

you Thank everyone joining today. for us

XXX-XXX-XXXX investors@bwxt.com. you e-mail If by you have us phone or at through questions, further by reach can

Operator

today’s Second concludes for Technologies That BWX Call. Conference you. your participation. Quarter XXXX Thank Thank you Earnings

your disconnect now may You lines.

BWX (BWXT) 9 Aug 222022 Q2 Earnings call transcript