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BWX Technologies Reports Second Quarter 2019 Results With Solid Revenue and EPS Growth

LYNCHBURG, Va.--(BUSINESS WIRE)--

  • 2Q19 EPS growth to $0.62 vs. 2Q18 GAAP EPS of $0.60 and 2Q18 non-GAAP EPS of $0.58
  • 2Q19 revenue up 7% vs. 2Q18; Continued robust backlog of $4.5 billion
  • Declares quarterly cash dividend of $0.17 payable in 3Q19
  • Reiterates 2019 revenue and non-GAAP EPS guidance; updates underlying components
  • Reiterates 3-5 year, low-double-digit non-GAAP EPS CAGR from 2017 results

BWX Technologies, Inc. (BWXT) ("BWXT", "we", "us" or the "Company") reported second quarter 2019 revenue of $471 million, a 7.4% increase compared with $439 million in the second quarter of 2018. GAAP net income for the second quarter 2019 was $58.9 million, or $0.62 per diluted share, compared with GAAP net income of $60.7, or $0.60 per diluted share, in the prior-year period. Non-GAAP net income for the second quarter 2019 was $59.1 million, or $0.62 per diluted share, compared with non-GAAP net income of $58.0 million, or $0.58 per diluted share, in the prior-year period. A reconciliation of non-GAAP results is detailed in Exhibit 1.

"Our strong second quarter results demonstrate the resiliency of our business," said Rex D. Geveden, president and chief executive officer. "The Nuclear Operations Group drove superb results as we enter into an increasing Columbia-class production cadence and the Nuclear Power Group delivered another solid bottom-line quarter through focused execution.”

Segment Results

Nuclear Operations Group (NOG) segment revenue achieved another record high with $358.4 million for the second quarter of 2019, a 7.9% increase from the prior-year period, driven primarily by leveraging an increase in production volume and the acceleration of long-lead material purchases. NOG operating income was $75.2 million in the second quarter of 2019, a 12% increase compared with the prior-year period primarily driven by higher volume and the absence of missile tube charges. Second quarter 2019 segment operating margins were 21.0%, up 80 basis points compared to the prior-year period.

Nuclear Power Group (NPG) segment revenue was $86.6 million for the second quarter of 2019, a 14.5% increase from the prior-year period primarily due to increases in refurbishment component work and the medical radioisotope acquisition, partially offset by lower field service activity. NPG operating income was $14.9 million in the second quarter of 2019, nearly double the operating income from the prior-year period driven primarily from higher volume of component work, including contract improvements, and the medical radioisotope acquisition, partially offset by lower field service activity. Second quarter segment operating margins were robust at 17.2%, up 690 basis points compared to the prior-year period.

Nuclear Services Group (NSG) segment GAAP and non-GAAP operating income was $1.5 million and $1.8 million respectively for the second quarter of 2019, compared with $3.5 million in the prior-year period. Improved site performance was more than offset by higher bid and proposal activity and contract completions.

Liquidity and Debt

The Company generated cash from operating activities of $64.8 million in the second quarter of 2019 compared with $35.9 million in the prior-year period. At the end of the second quarter 2019, the Company’s cash and short-term investments position, net of restricted cash, was $38.1 million.

As of June 30, 2019, the Company had gross debt of $879.2 million and $65.9 million in letters of credit issued under the Company's revolving credit facility. Gross debt included $400.0 million in senior notes, $279.2 million in term loans and $200.0 million in borrowings under the Company’s revolving credit facility. The Company had $234.1 million in remaining availability under its revolving credit facility.

Capital Deployment

The Company returned $16.2 million in dividends to shareholders during the second quarter 2019, bringing the total to $53.0 million of cash returned to shareholders year-to-date including $20.0 million in share repurchases and $33.0 million in dividends. As of June 30, 2019, the total remaining share repurchase authorization remained at $165.3 million.

On July 30, 2019, our Board of Directors declared a quarterly cash dividend of $0.17 per common share. The dividend will be payable on September 6, 2019, to shareholders of record on August 16, 2019.

2019 Guidance

BWXT updated the following guidance for 2019:

  • Increased NPG operating margin to ~14%
  • Decreased NSG operating income to ~$20 million
  • Decreased corporate unallocated expenses to less than $20 million

BWXT reiterated the following guidance for 2019:

  • Non-GAAP EPS of ~$2.50 (excludes pension and post-retirement benefits mark-to-market)
  • Consolidated revenue growth vs. 2018 of ~6%
    • NOG revenue growth vs. 2018 of ~6%
    • NPG revenue ~flat vs. 2018
  • Operating income and margin
    • NOG operating margin in the “high teens” with upside potential from CAS pension reimbursement
    • Other segment operating expense primarily for R&D of ~1% of revenue
  • Other income primarily related to pension and other post-employment benefits of ~$22 million
  • Non-GAAP effective tax rate in a range of 23% to 24%
  • Capital expenditures of ~$225 million

Long-term Guidance

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

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

Conference Call to Discuss Second Quarter 2019 Results

Date:

Tuesday, August 6, 2019, at 8:30 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 https://www.snl.com/interactive/newlookandfeel/4082835/2Q2019.pdf

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

Forward-Looking Statements

BWXT cautions that this release contains forward-looking statements, including, without limitation, statements relating to backlog and Columbia-class production, to the extent they may be viewed as an indicator of future revenues; our plans and expectations for the NOG, NPG and NSG segments; and our 2019 guidance and long-term guidance. These forward-looking statements are based on management’s current expectations and involve a number of risks and uncertainties, including, among other things, our ability to execute contracts in backlog; the lack of, or adverse changes in, Federal appropriations to government programs in which we participate; the demand for and competitiveness of nuclear power; capital priorities of power generating utilities; adverse changes in the industries in which we operate and delays, changes or termination of contracts in backlog. If one or more of these risks or other risks materialize, actual results may vary materially from those expressed. For a more complete discussion of these and other risk factors, see BWXT’s filings with the Securities and Exchange Commission, including our annual report on Form 10-K for the year ended December 31, 2018 and subsequent quarterly reports on Form 10-Q. BWXT cautions not to place undue reliance on these forward-looking statements, which speak only as of the date of this release, and undertakes no obligation to update or revise any forward-looking statement, except to the extent required by applicable law.

About BWXT

Headquartered in Lynchburg, Va., BWX Technologies, Inc. (BWXT) is a leading supplier of nuclear components and fuel to the U.S. government; provides technical and management services to support the U.S. government in the operation of complex facilities and environmental remediation activities; and supplies precision manufactured components, services and fuel for the commercial nuclear power industry. With approximately 6,350 employees, BWXT has 11 major operating sites in the U.S. and Canada. In addition, BWXT joint ventures provide management and operations at more than a dozen U.S. Department of Energy and NASA facilities. Follow us on Twitter at @BWXTech and learn more at www.bwxt.com.

EXHIBIT 1

 

BWX TECHNOLOGIES, INC.
RECONCILIATION OF NON-GAAP OPERATING INCOME AND EARNINGS PER SHARE(1)(2)(3)

 

Three Months Ended June 30, 2019

 

 

 

GAAP

 

Restructuring
Costs

 

 

 

 

Non-GAAP

 

 

 

 

 

 

 

 

 

 

Operating Income

$

80.5

 

 

$

0.3

 

 

 

 

 

$

80.9

 

Other Income (Expense)

(2.8

)

 

 

 

 

 

 

(2.8

)

Provision for Income Taxes

(18.7

)

 

(0.1

)

 

 

 

 

(18.8

)

Net Income

59.0

 

 

0.3

 

 

 

 

 

59.3

 

Net Income Attributable to Noncontrolling Interest

(0.1

)

 

 

 

 

 

 

(0.1

)

Net Income Attributable to BWXT

$

58.9

 

 

$

0.3

 

 

 

 

 

$

59.1

 

 

 

 

 

 

 

 

 

 

Diluted Shares Outstanding

95.7

 

 

 

 

 

 

 

95.7

 

Diluted Earnings per Common Share

$

0.62

 

 

$

0.00

 

 

 

 

 

$

0.62

 

 

 

 

 

 

 

 

 

 

Effective Tax Rate

 

24.1%

 

 

 

 

 

 

 

 

24.1%

 

 

Three Months Ended June 30, 2018

 

 

 

GAAP

 

Recognition of
Debt Issuance
Costs from Former
Credit Facility

 

Gain on
Forward
Contracts

 

 

Non-GAAP

 

 

 

 

 

 

 

 

 

 

Operating Income

$

71.5

 

 

$

 

 

$

 

 

 

$

71.5

 

Other Income (Expense)

7.7

 

 

2.4

 

 

(6.0

)

 

 

4.1

 

Provision for Income Taxes

(18.5

)

 

(0.6

)

 

1.5

 

 

 

(17.6

)

Net Income

60.7

 

 

1.8

 

 

(4.5

)

 

 

58.1

 

Net Income Attributable to Noncontrolling Interest

(0.1

)

 

 

 

 

 

 

(0.1

)

Net Income Attributable to BWXT

$

60.7

 

 

$

1.8

 

 

$

(4.5

)

 

 

$

58.0

 

 

 

 

 

 

 

 

 

 

Diluted Shares Outstanding

100.6

 

 

 

 

 

 

 

100.6

 

Diluted Earnings per Common Share

$

0.60

 

 

$

0.02

 

 

$

(0.04

)

 

 

$

0.58

 

 

 

 

 

 

 

 

 

 

Effective Tax Rate

 

23.3%

 

 

 

 

 

 

 

 

23.2%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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