Financial Highlights
$2,496
$2,233
$2,124
($ in millions, except per share amounts)
2021
2022
2023
Revenue
$2,124
$2,233
$2,496
Net Income
GAAP
Non-GAAP*
EPS
GAAP
Non-GAAP*
$306
$290
$239
$288
$246
$278
2021
2022
2023
Revenue
$ in millions
$3.24
$3.06
$2.60
$3.13
$2.68
$3.02
$3.13
$3.06
$3.02
Adjusted EBITDA*
$418
$439
$472
Cash Returned to Shareholders
Dividends
Share Repurchases
$80
$226
$81
$20
$85
—
* Non-GAAP figures exclude any mark-to-market adjustment for pension and postretirement benefits recognized and other
one-time items. A reconciliation of non-GAAP to comparable GAAP figures can be found at the end of this annual report.
2021
2022
2023
Non-GAAP EPS*
$418
$439
$472
TOTAL SHAREHOLDER RETURN INCREASE IN 2023
32.1% 1-year increase
from 2022
CORPORATE PURPOSE
We employ nuclear technology to solve some of
the world’s most important problems.TM
2021
2022
2023
Adjusted EBITDA*
$ in millions
$0.23
$0.22
$0.21
2021
2022
2023
Quarterly Dividend Per Share
Company Overview
GOVERNMENT OPERATIONS
GLOBAL SECURITY
SPECIAL MATERIALS
| Naval nuclear propulsion components
for the U.S., U.K. and international navies
| Uranium and other national security
materials handling and processing
| Advanced manufacturing capabilities
| Production of naval and coated fuels
(including TRISO)
| Uranium downblending, conversion
and purification
SPACE AND DEFENSE MICROREACTORS
TECHNICAL SERVICES
| Power and propulsion applications
| Nuclear environmental management
in all domains
| Design, prototype and production
| Management & operations
| U.S. Department of Energy and
other government sites
COMMERCIAL OPERATIONS
CLEAN ENERGY
| Component manufacturing
| Fuel and fuel handling
| Projects and field services
NUCLEAR MEDICINE
| Manufacturing and processing
radioisotopes
| Diagnostic and therapeutic
radiopharmaceutical products
for nuclear medicine
BWX Tech nolog i es, Inc . 2023 A NNUAL REPORT 1
Dear
Shareholders
For 2023, we reported record full-year
revenues of $2.5 billion and achieved
multiple key objectives, including
increasing our total workforce by
about 10%. We improved operational
performance across the enterprise and
captured $2.3 billion in new contracts.
GLOBAL SECURITY AND DEFENSE
In March, leaders of Australia, the United Kingdom and the United States
revealed details of the trilateral security agreement, known as AUKUS. Per
the agreement, the U.S. will sell three to five Virginia-class submarines to
Australia in addition to supporting the development of a new submarine class
called the SSN-AUKUS. BWXT will supply the nuclear power units for the
Virginia-class submarines and provide content for the SSN-AUKUS. This is
new future growth for the company, as the U.S. Navy remains committed to
its robust 30-year shipbuilding plan.
We announced a $300 million award in October for manufacturing naval
nuclear fuel through mid-2025, and we expect to finalize negotiations
and receive our next award for the reactor equipment and components in
2024. We are also expanding our business in special nuclear materials.
In April, we secured a $428 million contract with the National Nuclear
Security Administration (NNSA) for Phase II of the uranium conversion and
purification services at our Erwin, Tenn. plant — one of our two Category I
licensed facilities. Further, we secured another NNSA contract to recycle
scrap material from the Y-12 National Security Complex into high assay,
low-enriched uranium (HALEU) feedstock material that can be used for fuel to
demonstrate advanced reactors and help decarbonize the U.S. power grid.
Within our Technical Services Group, BWXT delivered competitive proposals
for multiple major new contracts with the U.S. Department of Energy in
environmental management and site operations and was recently awarded
the $45 billion Hanford Integrated Tank Disposition Contract.
“It is our people who have
the noble mission of using
nuclear technology to solve
some of the world’s most
important problems.
”
2 BWX Tec hnologies, Inc. 202 3 A N NUAL R EPORT
SPACE AND EMERGING
TECHNOLOGIES
During the third quarter, BWXT was selected to
provide the fuel and reactor for a nuclear space
rocket called DRACO (Demonstration Rocket for
Agile Cislunar Operations). Under the first portion
of our $200 million award, BWXT will design
and manufacture the reactor’s components and
complex fuel in our Lynchburg, Virginia facility
and will deliver the fully fueled system
for spacecraft integration.
In September, we announced a two-phase, two-
year contract with the Wyoming Energy Authority
to assess the viability of deploying small-scale
nuclear reactors at mining sites in the state.
We also announced a relationship with Crowley
to explore using a microreactor on a barge
for backup and emergency power to address
defense and disaster needs with a zero-carbon
emission energy solution.
CLEAN ENERGY
The demand for nuclear power in Canada
continues to grow. Following our announcement
of an engineering contract to design the pressure
vessel for GE Hitachi Nuclear Energy’s BWRX-
300 small modular reactor (SMR), Ontario Power
Generation (OPG) announced its intention to build
three additional SMRs for a total of four reactors
at its Darlington site.
Additionally, in support of the Ontario
government’s plans to double the scale of the
power grid by 2050 and use nuclear to satisfy
a large portion of the demand, Bruce Power is
evaluating the potential to add 4.8 gigawatts to
its nuclear generation fleet with new large-scale
power reactors at the Bruce Power Nuclear
Generating Station. In early 2024, OPG also
committed to life extension projects for existing
plants at its Pickering site.
NUCLEAR MEDICINE
Our nuclear medicine business delivered
strong revenue growth of about 25% this year,
reaching profitability in the second quarter. We
are providing this fast-growing market with novel
nuclear materials and technologies that are used
in interventional oncology. We announced an
agreement with Fusion Pharmaceuticals to supply
generators that will produce actinium-225, a
medical isotope used to treat cancer, currently
in clinical trials. We are also making strides in
our diagnostics and contract drug manufacturing
business with a robust product suite, including
strontium and germanium, among others.
FUTURE GROWTH
Long-term secular trends such as
decarbonization of the electrical grid, increasing
global security risk and a growing appetite for
novel nuclear solutions in medicine and other
fields are underpinning future nuclear market
growth that will likely be measured in decades.
Against that backdrop, BWXT faces the market
in multiple value chain positions ranging from
component and fuel supply to design and
development; multiple power ranges from
microreactors (a few megawatts) to large grid-
scale reactors (gigawatt class); multiple domains
— naval, terrestrial and space; and multiple
technology offerings ranging from medical
radioisotopes to advanced coated nuclear fuels
to high-temperature gas reactors. Further, we are
a mature nuclear company with incomparable
licenses, scale and experiential qualifications, all
of which lead us to strong competitive positions
in this rich opportunity set. This means we can
grow, and we should.
That said, growth has its own challenges, so
we are committed to maintaining a focus on
execution given its obvious importance in any
business generally, but especially in the nuclear
context. The heart of our business is handling
and processing nuclear materials, manufacturing
critical nuclear systems and components, and
providing services around these capabilities. We
do all of the foregoing with an intense focus on
safety, operational excellence and continuous
improvement in all aspects of our business.
It is our expectation to improve bottom-line
performance as we execute these important
nuclear programs and grow our business.
I’ll close by thanking the nearly 8,000 employees
of BWXT. Our capabilities and successes and
stories belong to them. And it is our people
who have the noble mission of using nuclear
technology to solve some of the world’s most
important problems.
REX D. GEVEDEN
PRESIDENT AND CHIEF EXECUTIVE OFFICER
BWX Tech nologi es, In c. 2023 A NNUAL REPORT 3
Corporate Information
BOARD OF DIRECTORS
Jan A. Bertsch (4)
Independent Board Chair
Rex D. Geveden
President, CEO and Director
Gerhard F. Burbach (2)*
Director
James M. Jaska (1) (3)*
Director
Kenneth J. Krieg (2)
Director
Leland D. Melvin (2)
Director
Robert L. Nardelli (1) (3)
Director
Barbara A. Niland (1)* (3)
Director
Nicole W. Piasecki
Director
John M. Richardson (1) (2)
Director
(1) Audit and Finance Committee (2) Compensation Committee (3) Governance Committee (4) Ex officio member of each Committee * Committee Chair
OFFICERS
Rex D. Geveden
President and
Chief Executive Officer
Omar F. Meguid
Senior Vice President
and Chief Digital Officer
Kevin M. McCoy
President
Government Operations
Heatherly H. Dukes
President
Technical Services Group
Robb A. LeMasters
Senior Vice President
and Chief Financial Officer
Suzanne C. Sterner
Senior Vice President and
Chief Corporate Affairs Officer
John R. MacQuarrie
President
Commercial Operations
Robert L. Duffy
Senior Vice President
and Chief Administrative Officer
Ronald O. Whitford, Jr.
Senior Vice President,
General Counsel,
Chief Compliance Officer and
Corporate Secretary
Jonathan W. Cirtain, Ph.D.
Senior Vice President
and Chief Development Officer
and President and CEO
BWXT Medical Ltd.
Joseph K. Miller
President
BWXT Advanced Technologies LLC,
Cunico Corporation,
Dynamic Controls Ltd.
4 BWX Tec hnologies, Inc. 202 3 A N NUAL R EPORT
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2023.
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
.
Commission File Number 001-34658
BWX TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
80-0558025
(I.R.S. Employer Identification No.)
800 Main Street, 4th Floor
Lynchburg, Virginia
(Address of principal executive offices)
24504
(Zip Code)
Registrant's Telephone Number, Including Area Code: (980) 365-4300
Securities Registered Pursuant to Section 12(b) of the Act:
Title of each class
Common Stock, $0.01 par value
Trading Symbol(s)
BWXT
Name of each exchange on which registered
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of
Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such
files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an
emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company"
in Rule 12b-2 of the Exchange Act.
☒
Large accelerated filer
☐
Non-accelerated filer
Emerging growth company ☐
Accelerated filer
Smaller reporting company
☐
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new
or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal
control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or
issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the
filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received
by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The aggregate market value of the registrant's common stock held by nonaffiliates of the registrant on the last business day of the registrant's most
recently completed second fiscal quarter (based on the closing sales price on the New York Stock Exchange on June 30, 2023) was approximately $6.5 billion.
The number of shares of the registrant's common stock outstanding at February 23, 2024 was 91,309,389.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's definitive proxy statement for the 2024 Annual Meeting of Stockholders to be held on May 3, 2024 are incorporated by
reference into Part III of this Form 10-K.
(This page has been left blank intentionally.)
BWX TECHNOLOGIES, INC.
INDEX – FORM 10-K
PART I
PAGE
Item 1.
Business
General
Business Segments
Contracts
Backlog
Competition
Joint Ventures
Customers
Raw Materials and Suppliers
Human Capital Management
Patents and Technology Licenses
Research and Development Activities
Hazard Risks and Insurance
Governmental Regulations and Environmental Matters
Cautionary Statement Concerning Forward-Looking Statements
Available Information
Risk Factors
Unresolved Staff Comments
Cybersecurity
Properties
Legal Proceedings
Mine Safety Disclosures
PART II
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
[Reserved]
Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 1A.
Item 1B.
Item 1C.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
Item 7.
General
Critical Accounting Estimates
Results of Operations
Years Ended December 31, 2023, 2022 and 2021
Effects of Inflation and Changing Prices
Liquidity and Capital Resources
Item 7A.
Item 8.
Quantitative and Qualitative Disclosures about Market Risk
Financial Statements and Supplementary Data
Report of Independent Registered Public Accounting Firm
Consolidated Statements of Income
Years Ended December 31, 2023, 2022 and 2021
Consolidated Statements of Comprehensive Income
Years Ended December 31, 2023, 2022 and 2021
i
1
1
1
3
4
5
5
6
6
7
8
8
9
11
13
13
14
26
26
28
28
28
29
30
30
31
32
35
37
37
41
43
45
46
Consolidated Balance Sheets
December 31, 2023 and 2022
Consolidated Statements of Stockholders' Equity
Years Ended December 31, 2023, 2022 and 2021
Consolidated Statements of Cash Flows
Years Ended December 31, 2023, 2022 and 2021
Notes to Consolidated Financial Statements
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures
Disclosure Controls and Procedures
Management’s Report on Internal Control Over Financial Reporting
Changes in Internal Control Over Financial Reporting
Report of Independent Registered Public Accounting Firm
Other Information
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
PART III
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accounting Fees and Services
PART IV
Exhibits, Financial Statement Schedules
Form 10-K Summary
Item 9.
Item 9A.
Item 9B.
Item 9C.
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
Item 15.
Item 16.
Signatures
PAGE
47
49
50
51
89
89
89
89
90
91
91
92
92
92
92
92
93
96
97
ii
Statements we make in this Annual Report on Form 10-K ("Report"), which express a belief, expectation or intention, as well as
those that are not historical fact, are forward-looking statements within the meaning of the Private Securities Litigation Reform
Act of 1995. These forward-looking statements are subject to various risks, uncertainties and assumptions, including those to
which we refer under the heading "Cautionary Statement Concerning Forward-Looking Statements" in Item 1 and throughout
Item 1A of this Report. In this Report, unless the context otherwise indicates, "we," "us" and "our" mean BWX Technologies,
Inc. ("BWXT" or the "Company") and its consolidated subsidiaries.
Item 1.
BUSINESS
General
PART I
BWX Technologies, Inc. is a specialty manufacturer of nuclear components, a developer of nuclear technologies and a
service provider with an operating history of more than 100 years. Our core businesses focus on the design, engineering and
manufacture of precision naval nuclear components, reactors and nuclear fuel for the U.S. Government. We also provide special
nuclear materials processing, environmental site restoration services, products and services to customers in the nuclear power
industry, critical medical radioisotopes and radiopharmaceuticals and other advanced nuclear technologies. While we provide a
wide range of products and services, our business segments are heavily focused on major projects. At any given time, a
relatively small number of projects can represent a significant part of our operations.
Business Segments
We operate in two reportable segments: Government Operations and Commercial Operations. For financial information
regarding each of our segments and financial information regarding geographic areas, see Note 15 and Note 3 to our
consolidated financial statements included in this Report. For further details regarding each segment's facilities, see Item 2 of
this Report. In general, we operate in capital-intensive industries and rely on large contracts for a substantial amount of our
revenues. We are currently exploring growth strategies across our segments through strategic investments and acquisitions to
expand and complement our existing businesses. We would expect to fund these opportunities with cash generated from
operations or by raising additional capital through debt, equity or some combination thereof.
Government Operations
Through this segment, we engineer, design and manufacture precision naval nuclear components, reactors and nuclear
fuel for the U.S. Department of Energy ("DOE")/National Nuclear Security Administration's ("NNSA") Naval Nuclear
Propulsion Program. In addition, we supply proprietary and sole-source valves, manifolds and fittings to global naval and
commercial shipping customers.
Our Government Operations segment specializes in the design and manufacture of close-tolerance and high-quality
equipment for nuclear applications. In addition, we are a leading manufacturer of critical nuclear components, fuels and
assemblies for government and limited other uses. We have supplied nuclear components for DOE programs since the 1950s
and are the largest domestic supplier of research reactor fuel elements for colleges, universities and national laboratories. We
also downblend Cold War-era government stockpiles of high-enriched uranium. In addition, we have over 100 years of
experience in supplying components for defense applications.
We work closely with the DOE-supported nuclear non-proliferation program. Currently, this program is assisting in the
development of a high-density, low-enriched uranium fuel required for high-enriched uranium test reactor conversions. We
have also been a leader in the receipt, storage, characterization, dissolution, recovery and purification of a variety of uranium-
bearing materials. All phases of uranium downblending and uranium recovery are performed at our Lynchburg, Virginia and
Erwin, Tennessee sites.
The demand for nuclear components by the U.S. Government determines a substantial portion of this segment's backlog.
We expect that orders for nuclear components will continue to be a significant part of backlog for the foreseeable future. In
March 2023, the U.S. Navy issued its 30-year shipbuilding plan containing three alternative procurement profiles based upon
varied funding assumptions. All three indicate growth in the total number of ships and a sustained, or increased, procurement
profile for nuclear-powered submarines and aircraft carriers. We plan to make additional capital expenditures and investments
in personnel to meet the current demand requirements, and we expect to continue making such expenditures and investments in
the future.
1
This segment also provides various services to the U.S. Government by managing and operating high-consequence
operations at U.S. nuclear weapons sites, national laboratories and manufacturing complexes. The revenues and equity in
income of investees under these types of contracts are largely a function of spending by the U.S. Government and the
performance scores we and our consortium partners earn in managing and operating these sites. With our specialized
capabilities of full life-cycle management of special materials, facilities and technologies, we believe that we are well-
positioned to continue participating in the ongoing cleanup, operation and management of critical government-owned nuclear
sites, laboratories and manufacturing complexes maintained by the DOE, NASA and other federal agencies.
The Government Operations segment is also a leader in the development of advanced nuclear reactors for a variety of
power and propulsion applications in the space and terrestrial domains. U.S. Government customers for these applications
include NASA, the U.S. Department of Defense ("DoD") and the DOE. We offer complete advanced nuclear fuel and reactor
design and engineering, licensing and manufacturing services for these programs.
Commercial Operations
Through this segment, we design and manufacture commercial nuclear steam generators, heat exchangers, pressure
vessels, reactor components and other auxiliary equipment, including containers for the storage of spent nuclear fuel and other
high-level nuclear waste. We have supplied the nuclear industry with more than 1,300 large, heavy components worldwide and
are the only commercial heavy nuclear component manufacturer in North America. This segment is also a leading supplier of
nuclear fuel, fuel handling systems, tooling delivery systems, nuclear-grade materials and precisely machined components, and
related services for CANDU nuclear power plants. This segment also provides a variety of engineering and in-plant services
and is a significant supplier to nuclear power utilities undergoing major refurbishment and plant life extension projects. Our in-
depth knowledge comes from over 50 years of experience in the design, manufacturing, commissioning and service of nuclear
power generation equipment.
Our Commercial Operations segment specializes in performing full-scope, prototype design work coupled with
manufacturing integration. This segment's capabilities include:
•
•
•
•
•
•
•
•
•
steam generation and separation equipment design and development;
thermal-hydraulic design of reactor plant components;
in-plant inspection, maintenance and modification services;
nuclear component modification and replacement;
commercial nuclear fuel manufacturing and design;
nuclear fuel handling system design, manufacturing, delivery, installation and commissioning;
containers for the storage of spent nuclear fuel and other high-level waste;
structural and thermal-hydraulic design and vibration analysis for heat exchangers;
structural component design for precision manufacturing;
• materials expertise in high-strength, low-alloy steels and nickel-based materials;
• material procurement of tubing, forgings and weld wire; and
• metallographic and chemical analysis.
This segment also manufactures and supplies products for diagnostic imaging and radiotherapeutic treatments and is a
partner for contract development and manufacturing services for life science and pharmaceutical companies. Among its
offerings is the manufacture of medical radioisotopes, radiopharmaceuticals and medical devices, as well as partnerships with
life science and pharmaceutical companies developing new drugs.
Our Commercial Operations segment's overall activity primarily depends on the demand and competitiveness of nuclear
energy and the demand for critical medical radioisotopes and radiopharmaceuticals. A significant portion of our Commercial
Operations segment's operations depends on the timing of maintenance outages and the cyclical nature of capital expenditures
and major refurbishments for nuclear utility customers, principally in the Canadian market, which could cause variability in our
financial results.
2
Acquisitions
Acquisition of Dynamic Controls Limited and Citadel Capital Corporation
On April 11, 2022, our subsidiary BWXT Government Group, Inc. acquired all of the outstanding stock of U.K.-based
Dynamic Controls Limited ("Dynamic") and U.S.-based Citadel Capital Corporation, along with its wholly-owned subsidiary,
Cunico Corporation ("Cunico"). Dynamic and Cunico are suppliers of highly-engineered, proprietary valves, manifolds and
fittings for global naval nuclear and diesel-electric submarines, surface warfare ships and commercial shipping vessels. These
companies are reported as part of our Government Operations segment.
See Note 2 to our consolidated financial statements included in this Report for additional information on acquisitions.
Contracts
We execute our contracts through a variety of methods, including fixed-price incentive fee, cost-plus, cost-reimbursable,
firm fixed-price or some combination of these methods. We generally recognize our contract revenues and related costs on an
over time basis. Accordingly, we review contract price and cost estimates regularly as the work progresses and reflect
adjustments in profit proportionate to the percentage of completion in the period when we revise those estimates. To the extent
that these adjustments result in a reduction or an elimination of previously reported profits with respect to a project, we would
recognize a charge against current earnings, which could be material.
We have contracts that extend beyond one year. Most of our long-term contracts have provisions for progress payments.
We attempt to cover anticipated increases in labor, material and service costs of our long-term contracts either through an
estimate of such changes, which is reflected in the original price, or through risk-sharing mechanisms, such as escalation or
price adjustments for items including labor and material prices.
In the event of a contract deferral or cancellation, we generally would be entitled to recover costs incurred, settlement
expenses and profit on work completed prior to deferral or cancellation. Significant or numerous contract deferrals or
cancellations could adversely affect our business, financial condition, results of operations and cash flows.
Government Operations
The majority of the revenue generated by this segment is from long-term contracts with the DOE/NNSA's Naval Nuclear
Propulsion Program. Unless otherwise specified in a contract, allowable and allocable costs are billed to contracts with the U.S.
Government in accordance with the Federal Acquisition Regulation (the "FAR") and the related U.S. Government Cost
Accounting Standards ("CAS"). Examples of costs that may be incurred by us and not billable to the U.S. Government in
accordance with the requirements of the FAR and CAS regulations include, but are not limited to, unallowable employee
compensation and benefit costs, lobbying costs, interest, certain legal costs and charitable donations.
Most of our contracts in this segment are fixed-price incentive fee contracts that provide for reimbursement of allowable
costs incurred plus a fee and generally require that we use our best efforts to accomplish the scope of the work within some
specified time and stated dollar limitation. Fees can be established in terms of dollar value or percentage of costs. Award and
incentive fees are determined and earned based on customer evaluation of our performance against negotiated criteria, primarily
related to cost, and are intended to provide motivation for excellence in contract performance. Incentive fees that are based on
cost provide for an initially negotiated fee to be adjusted later, typically using a formula to measure performance against the
associated criteria, based on the relationship of total allowable costs to total target costs. Award and incentive fees represent
variable consideration that we include in revenue when there is sufficient evidence to determine that the variable consideration
is not constrained.
Certain of our U.S. Government contracts span one or more base years and multiple option years. The U.S. Government
generally has the right not to exercise option periods and may not exercise an option period for various reasons including, but
not limited to, annual funding determinations. In addition, contracts between the U.S. Government and its prime contractors
usually contain standard provisions for termination at the convenience of the U.S. Government or the prime contractor. As a
U.S. Government contractor, we are subject to federal regulations under which our right to receive future awards of new federal
contracts would be unilaterally suspended or barred if we were convicted of a crime or indicted based on allegations of a
violation of specific federal statutes. In addition, some of our contracts with the U.S. Government require us to provide advance
notice in connection with any contemplated sale or shut down of the relevant facility. In each of those situations, the U.S.
Government has an exclusive right to negotiate a mutually acceptable purchase of the facility.
3
Our Government Operations segment also enters into contracts that include the management and operation of nuclear
production facilities, environmental management sites and the management of spent nuclear fuel and transuranic waste for the
U.S. Government, primarily the DOE. These activities are primarily accomplished through our participation in joint ventures
with other contractors as further discussed under the caption "Joint Ventures" below. The contracts for the management and
operation of U.S. Government facilities are awarded through a complex and protracted procurement process. These contracts
are generally structured as five-year contracts with options for up to five additional years, which are exercisable by the
customer, or include provisions whereby the contract durations can be extended as a result of the achievement of certain
performance metrics. These are generally cost-reimbursable contracts that include an award fee that is primarily based on
annual performance, with periodic provisional fee payments and annual true-up payments. Depending on the type of contract,
the contractor may be required to supply working capital, which is reimbursed by the U.S. Government through regular
invoicing.
This segment also serves customers of our advanced technology platforms primarily through contracts that are awarded
following a competitive bid process, primarily in the early design and development phases of the underlying program. Most of
our contracts in this area are cost-plus which reduces our overall risk as the underlying projects increase in scale.
Commercial Operations
Contracts in this segment are usually awarded through a competitive bid process. Factors that customers may consider
include price, plant or equipment availability, technical capabilities of equipment and personnel, efficiency, safety record and
reputation. Certain of these contracts are fixed-price contracts in which the specified scope of work is agreed to for a pre-
determined price that is generally not subject to adjustment, regardless of costs incurred by the contractor, unless changes in
scope are authorized by the customer. Fixed-price contracts entail more risk to us because they require us to predetermine both
the quantities of work to be performed and the costs associated with executing the work. Remaining contracts are primarily
time-and-materials contracts, under which the customer pays a fixed hourly rate for direct labor and generally reimburses us for
the cost of materials. Our profit may vary under time-and-materials contracts if actual labor-hour rates vary significantly from
the negotiated rates. Additionally, because time-and-materials contracts can provide little or no fee for managing material costs,
the content mix can have an impact on profitability.
Our arrangements with customers may require us to provide letters of credit, bid and performance bonds or guarantees to
secure bids or performance under contracts, which may involve significant amounts for contract security.
Backlog
Backlog represents the dollar amount of revenue we expect to recognize in the future from contracts awarded and in
progress. Not all of our expected revenue from a contract award is recorded in backlog for a variety of reasons, including that
some projects are awarded and completed within the same reporting period.
Our backlog is equal to our remaining performance obligations under contracts that meet the criteria in Financial
Accounting Standards Board ("FASB") Topic Revenue from Contracts with Customers, as discussed in Note 3 to our
consolidated financial statements included in this Report. It is possible that our methodology for determining backlog may not
be comparable to methods used by other companies.
We are subject to the budgetary and appropriations cycle of the U.S. Government as it relates to our Government
Operations segment. Backlog may not be indicative of future operating results, and projects in our backlog may be cancelled,
modified or otherwise altered by customers.
Our backlog at December 31, 2023 and 2022 was as follows:
Government Operations
Commercial Operations
Total Backlog
December 31,
2023
December 31,
2022
$
$
3,217
781
3,998
(In approximate millions)
80 % $
20 %
100 % $
3,515
629
4,144
85 %
15 %
100 %
We do not include the value of our unconsolidated joint venture contracts in backlog. These unconsolidated joint ventures
are included in our Government Operations segment. See Note 4 to our consolidated financial statements included in this
Report for financial information on our equity method investments.
4
At December 31, 2023, our ending backlog was $3,997.6 million, which included $414.7 million of unfunded backlog
related to U.S. Government contracts. We expect to recognize approximately 51% of the revenue associated with our backlog
by the end of 2024, with the remainder to be recognized thereafter.
Major new awards from the U.S. Government are typically received following Congressional approval of appropriations
for the U.S. Government's next fiscal year, which starts October 1, and may not be awarded to us before the end of the calendar
year. Due to the fact that most contracts awarded by the U.S. Government are subject to these annual funding approvals, the
total values of the underlying programs are significantly larger.
The value of unexercised options excluded from backlog as of December 31, 2023 was approximately $100 million
which are expected to be awarded in 2024, subject to annual Congressional appropriations.
Competition
The competitive environments in which each segment operates are described below.
Government Operations
We have specialized technical capabilities that have allowed us to be a valued supplier of nuclear components and fuel
for the U.S. Government's naval nuclear fleet since the 1950s. Because of the technical and regulatory standards required to
meet U.S. Government contracting requirements for nuclear components and fuel and the barriers to entry present in this type
of environment, competition is limited. The primary bases of limited competition are price, high capital investment, technical
capabilities, high regulatory licensing costs and quality of products and services. In addition, significant portions of the designs,
processing and final product are classified by the U.S. Government, requiring applicable personnel to obtain and maintain U.S.
Government security clearances.
This segment also engages in the management and operation of U.S. Government facilities and the delivery of
environmental remediation services (decontamination and decommissioning) associated with U.S. Government-owned nuclear
facilities. Many of our government contracts in this area are bid as a joint venture with one or more companies, in which we
have a majority or a minority position. The performance of our joint venture partners can impact our reputation and our future
competitive position with respect to that particular project and customer. Our primary competitors in the delivery of goods and
services to the U.S. Government and the operation of U.S. Government facilities include, but are not limited to, Bechtel
National, Inc., Amentum, Fluor Corporation, Jacobs Engineering Group, Inc., Northrop Grumman Corporation, Huntington
Ingalls Industries, Inc., Honeywell International, Inc., Leidos, Inc., Westinghouse Electric Corporation and AtkinsRéalis. The
primary bases of competition for this segment are experience, past performance, availability of key personnel and technical
capabilities.
Commercial Operations
Our Commercial Operations segment supplies heavy nuclear components, specialized engineering and maintenance
services, nuclear fuel, fuel handling systems and tooling delivery systems for CANDU reactors. This segment competes with a
number of companies specializing in nuclear capabilities including, but not limited to, Framatome, Cameco Corporation,
Doosan Heavy Industries & Construction Co., Ltd., E.S. Fox Limited, AECON Group Inc., Bechtel National, Inc.,
Westinghouse Electric Corporation and AtkinsRéalis. The primary bases of competition for this segment are price, technical
capabilities, quality, timeliness of performance, breadth of products and services and willingness to accept project risks.
This segment also manufactures medical radioisotopes, radiopharmaceuticals and medical devices, and partners with life
science and pharmaceutical companies developing new drugs. This segment competes with a number of nuclear medicine
companies which include, but are not limited to, Curium Pharma, Lantheus Holdings, Inc. and Jubilant DraxImage Inc. The
primary bases of competition in this area are quality, distribution capabilities, price and reliability.
Joint Ventures
We share in the ownership of a variety of entities with third parties, primarily through corporations, limited liability
companies and partnerships, which we refer to as "joint ventures." Through these joint venture arrangements, our Government
Operations segment primarily manages and operates nuclear facilities and associated plant infrastructure, constructs large
capital facilities, provides safeguards and security for inventory and assets, supports and conducts research and development for
advanced energy technology and manages environmental programs for the DOE, the NNSA and NASA. We generally account
5
for our investments in joint ventures under the equity method of accounting. Certain of our Government Operations segment
unconsolidated joint ventures are described below.
• Los Alamos Legacy Cleanup Contract. Newport News Nuclear BWXT – Los Alamos, LLC, a limited liability
company formed by Stoller Newport News Nuclear, Inc., a subsidiary of Huntington Ingalls Industries, Inc.'s
Technical Solutions division, and BWXT Technical Services Group, Inc. ("BWXT TSG"), was awarded a contract to
perform environmental monitoring and remediation, waste management and disposition, and decontamination and
decommissioning at the Los Alamos National Laboratory site and surrounding private and government-owned lands.
• Lawrence Livermore National Laboratory. Lawrence Livermore National Security, LLC, a limited liability
company formed by the University of California, Bechtel National, Inc., Amentum and BWXT Government Group,
Inc., manages and operates Lawrence Livermore National Laboratory located in Livermore, California. The laboratory
serves as a national resource in science and engineering, focused on national security, energy, the environment and
bioscience, with special responsibility for nuclear devices.
• Savannah River Integrated Mission Completion Contract. Savannah River Mission Completion LLC, a limited
liability company formed by BWXT TSG, Amentum and Fluor Federal Services, Inc. was awarded a contract to
receive, store, treat and dispose of radioactive liquid waste for the DOE at the Savannah River Site located in Aiken,
South Carolina.
• Portsmouth Gaseous Diffusion Plant D&D. Fluor-BWXT Portsmouth LLC is a limited liability company formed by
Fluor Federal Services, Inc. and BWXT TSG to provide nuclear operations, decontamination and decommissioning
services at the Portsmouth Gaseous Diffusion Plant in Portsmouth, Ohio. A follow-on contract was awarded by the
DOE to a competitor in 2023 and transition is expected to occur during 2024.
• West Valley Demonstration Project Phase I Decommissioning and Facility Disposition. CH2M Hill-BWXT West
Valley, LLC is a limited liability company formed by CH2M Hill Constructors, Inc., BWXT TSG and Environmental
Chemical Corporation. Services provided include project management and support services, site operations,
maintenance, utilities, high-level waste canister relocation, facility disposition, waste tank farm management, U.S.
Nuclear Regulatory Commission ("NRC") licensed disposal area management, waste management and nuclear
materials disposition, and safeguards and security.
• Synergy Achieving Consolidated Operations & Maintenance (SACOM). Syncom Space Services, LLC is a limited
liability company formed by PAE Applied Technologies, LLC (acquired by Amentum in 2022) and BWXT Nuclear
Operations Group, Inc. to provide facility operations and maintenance services for institutional and technical facilities,
and perform test and manufacturing support services at two NASA facilities – the Stennis Space Center in Hancock
County, Mississippi and the Michoud Assembly Facility in New Orleans, Louisiana.
• Paducah Gaseous Diffusion Plant Deactivation and Remediation Project. Four Rivers Nuclear Partnership, LLC is
a limited liability company formed by CH2M Hill Constructors, Inc., BWXT TSG and Fluor Federal Services, Inc. to
provide nuclear operations, deactivation and remediation services at the Paducah Gaseous Diffusion Plant in Paducah,
Kentucky.
Customers
We provide our products and services to a diverse customer base, including the U.S. Government, utilities and other
customers in the nuclear power and radiopharmaceutical industries. Our largest and primary customer of our Government
Operations segment is the U.S. Government. During the years ended December 31, 2023, 2022 and 2021, the U.S. Government
represented approximately 75%, 76% and 76% of our total consolidated revenues, respectively. No individual non-U.S.
Government customer accounted for more than 10% of our consolidated revenues in the years ended December 31, 2023, 2022
or 2021.
Raw Materials and Suppliers
Our operations use raw materials, such as carbon and alloy steels in various forms and components and accessories for
assembly, which are available from numerous sources. We generally purchase these raw materials and components as needed
for individual contracts. Although shortages of some raw materials have existed occasionally, no serious shortage exists at the
present time.
Our Government Operations and Commercial Operations segments rely on a limited number of suppliers, including
single-source suppliers, for certain materials used in our products; however, we believe the suppliers of these materials are
6
reliable. Additionally, we and the U.S. Government expend significant effort to monitor and maintain the supplier base for our
Government Operations segment.
Human Capital Management
People Strong, Innovation Driven
Our employees are responsible for providing safe and effective nuclear solutions for global security, clean energy,
environmental restoration, nuclear medicine and space exploration. We encourage innovation to develop new technologies,
improve our products and open new markets.
Our goal is to be the employer of choice within our industry and the communities in which we operate. We focus on
maintaining a solid pipeline of talent throughout our organization and developing the capabilities and skills in our workforce
needed for the future of our business. We strive to maintain a highly-skilled and diverse workforce where employees are
recruited, compensated, retained and promoted based on their performance and contribution to the Company.
Employees
At December 31, 2023, we employed approximately 7,800 persons worldwide, predominantly in the U.S. (6,200
employees) and Canada (1,600 employees). Many of our operations are subject to union contracts, which we negotiate
periodically. At December 31, 2023, approximately 2,000 of our employees were members of labor unions. We consider our
relationships with our employees to be satisfactory.
Employee Compensation and Benefits
Our compensation plans are designed to reward our employees for achieving and exceeding objectives that create long-
term value for shareholders. The success and growth of our business is attributable to our ability to attract, develop, engage and
retain talented and high-performing employees at all levels in our Company. Our compensation programs are further designed
to ensure we remain competitive relative to the markets in which we operate; provide meaningful value to employees and those
they care for; incentivize the short- and long-term success of BWXT and its stakeholders through programs with consistent
performance measures throughout the organization; and recognize employees who make outstanding contributions to the
organization.
Providing comprehensive, competitive, and affordable retirement, healthcare, income protection and other benefits is also
central to our attraction and retention strategy. We offer health benefits which include various medical/pharmacy plan options,
health savings accounts for those in high deductible health plans, and flexible spending accounts for both health care and
dependent care are also available to employees, where applicable. Our income protection plans provide coverage for employees
in the event of an unexpected illness or injury. We also offer retirement, investment, and tax savings/deferral opportunities to
our employees.
Employee Development
The professional development of our employees is critical to our success. We offer online and in-person professional
development and training, as well as mentoring programs, to enhance the knowledge, skills and advancement opportunities for
our employees. To further our employee development goals, we partner with a number of educational institutions for
accredited, vocational and technical upskilling programs. We provide tuition reimbursement to employees pursuing job-related,
career enhancing courses and provide full tuition grants for the completion of undergraduate and graduate degree programs
through an accredited university partner. For employees identified with high potential for promotion to leadership roles, we
routinely offer leadership development programs focused on preparing future leaders for their next career steps.
We established the BWXT Technical Fellow program which honors and celebrates some of our most talented employees
for their contributions to driving innovation and inspiring creativity. Our Technical Fellows offer a breadth of knowledge and
diversity of technical expertise that can be focused on developing creative solutions to numerous challenges we face in our
industry.
Diversity, Equity and Inclusion
We value the diversity of our employees and are committed to providing an engaging and inclusive atmosphere for all
that promotes productivity and encourages creativity and innovation. We maintain a Diversity and Inclusion ("D&I")
7
Committee comprised of a rotating group of employees representing various job functions, levels and backgrounds. The D&I
Committee works to identify and implement changes to promote awareness and foster a culture of diversity and inclusion
throughout the workforce. In addition, we participate in numerous conferences and career fairs each year that focus on
diversity, including those hosted by the National Society of Black Engineers and the Society of Women Engineers.
Health and Safety
The safety of our employees is critical to our success as a specialty manufacturer of nuclear fuel, nuclear components,
nuclear medicine products and an operator of high-consequence nuclear and national security facilities for the U.S.
Government. As such, we are committed to maintaining the highest safety, security, ethical and environmental standards. We
maintain comprehensive safety programs focused on identifying risks and eliminating hazards that could lead to personnel
injuries or environmental impacts. We provide our employees upfront and ongoing training to ensure that environmental, health
and safety policies and procedures are effectively communicated and implemented.
We operate NRC Category 1 and Canadian Nuclear Safety Commission ("CNSC") licensed facilities and have instilled as
a core value a culture that prioritizes safety with a vision of zero injuries and incidents at all of our work locations. In pursuit of
an injury-free workplace, we constantly monitor and assess all injuries and "near misses" for any lessons we can learn and
leverage to reduce the risk inherent in occupational activities. In addition to providing regular safety training to our employees,
we routinely conduct safety culture surveys to identify employee concerns. We use this information to further improve our
safety culture and programs in an effort to prevent future occupational and environmental incidents.
Ethics and Integrity
We believe that maintaining a work environment that recognizes effort and teamwork, values mutual respect and open
communication, and demonstrates care and concern for our employees' well-being is essential to retaining an engaged and
productive workforce. Our Code of Business Conduct ("Code") establishes the principles and standards that we expect our
employees to follow. Each officer, director and employee is required to use good ethical judgment when conducting business;
be respectful of colleagues, business partners, customers and others in their interactions; and comply with applicable laws,
rules, and regulations. The Code describes what is appropriate behavior and guides ethical business decisions that maintain a
commitment to integrity. In furtherance of this objective, we provide regular training on the Code for our employees to identify
and prevent misconduct, and the Code requires that employees report situations that violate our policies and/or negatively
impact our work environment. In addition, we maintain the BWXT Ethics Helpline to allow employees to report any concerns
relating to ethics or other concerns confidentially and, if they choose, anonymously. We investigate and take prompt action to
correct conduct that is inconsistent with our Code and other policies.
Patents and Technology Licenses
We currently hold a large number of U.S. and foreign patents and have patent applications pending in certain
technologies, including nuclear reactor systems, components and fuel, advanced and additive manufacturing, space nuclear
propulsion, and radioisotope production. We acquire patents and technology licenses and grant licenses to others when we
consider it advantageous for us to do so. Although in the aggregate our patents and technology licenses are important to us, we
do not regard any single patent or license or group of related patents or licenses as critical or essential to our business as a
whole. In general, we depend on our technological capabilities and the application of know-how, rather than patents and
technology licenses, in the conduct of our various businesses.
Research and Development Activities
Our research and development activities are related to the development and improvement of new and existing products
and equipment, as well as conceptual and engineering evaluation for translation into practical applications. These activities
include the development of isotope production, medical radiochemical and radiopharmaceutical production and a variety of
advanced technologies in the areas of additive and autonomous manufacturing, space nuclear power and propulsion, and high-
temperature gas-cooled reactors, among others. These projects are sponsored and funded through internal research and
development and by a number of commercial and government customers.
We charge the costs of research and development unrelated to specific contracts as incurred. Excluding customer-
sponsored research and development, the majority of our activities in this area for the years ended December 31, 2023, 2022
and 2021 related to the development of technologies in the area of medical and industrial radioisotopes, radiopharmaceuticals,
additive and autonomous manufacturing and advanced reactors. Contractual arrangements for customer-sponsored research and
development can vary and include contracts, cost-sharing arrangements, cooperative agreements and grants.
8
See Note 1 to our consolidated financial statements included in this Report for further information on research and
development.
Hazard Risks and Insurance
Our operations present risks of injury to or death of people, loss of or damage to property and damage to the environment.
We have created loss control systems and processes to assist us in the identification and treatment of the hazard risks presented
by our operations, and we endeavor to make sure these systems are effective.
As loss control measures will not always be successful, we seek to establish various means of funding losses and
transferring financial liability related to incidents or occurrences. We primarily seek to do this through contractual protections,
including waivers of consequential damages, indemnities, caps on liability, liquidated damages provisions and access to the
insurance of other parties. We also procure insurance, operate our own captive insurance company and establish funded and/or
unfunded reserves. However, none of these methods will eliminate all risks.
Depending on competitive conditions, the nature of the work, industry custom and other factors, we may not be
successful in obtaining adequate contractual protection from our customers and other parties against losses and liabilities arising
out of or related to the performance of our work. The scope of the protection may be limited, may be subject to conditions and
may not be supported by adequate insurance or other means of risk financing. In addition, we may have difficulty enforcing our
contractual rights with others following a material loss.
Similarly, insurance for certain potential losses or liabilities may not be available or may only be available at a cost or on
terms we consider not to be economical. Insurers frequently react to market losses by ceasing to write or severely limiting
coverage for certain exposures. Risks that we have frequently found difficult to cost-effectively insure against include, but are
not limited to, property losses from wind, flood and earthquake events, nuclear hazards, war, pollution liability (including per-
and polyfluoroalkyl substances), liabilities related to occupational health exposures (including asbestos), professional liability,
errors and omissions coverage, the failure, misuse or unavailability of our information and/or operational technology systems,
the failure of security measures designed to protect our information technology systems from security breaches and liability
related to risk of loss of our work in progress. In cases where we purchase insurance, we are subject to the creditworthiness of
the relevant insurer(s), the available limits of the coverage, our retention under the relevant policy, exclusions in the policy and
gaps in coverage.
Our operations in designing, engineering, manufacturing, constructing and servicing nuclear power equipment and
components for our commercial nuclear utility customers subject us to various risks, including, without limitation, damage to
our customers' property and third-party claims for personal injury, environmental liability, death and property damage. To
protect against liability for damage to a customer's property, we endeavor to obtain waivers of liability and subrogation from the
customer and its insurer. We also attempt to cap our overall liability in our contracts. To protect against liability from claims
brought by third parties in the U.S., we seek to be insured under the utility customer's nuclear liability policies and have the
benefit of the indemnity and limitation of any applicable liability provision of the Price-Anderson Act. The Price-Anderson Act
limits the public liability of U.S. manufacturers and operators of licensed nuclear facilities and other parties who may be liable
in respect of, and indemnifies them against, all claims in excess of a statutory amount. This amount is determined by the sum of
commercially available liability insurance plus certain retrospective premium assessments payable by operators of commercial
nuclear reactors. For those sites where we provide environmental remediation services, we seek the same protection from our
customers as we do for our other nuclear activities. The Price-Anderson Act, as amended, includes a sunset provision and
requires renewal each time that it expires. Contracts that were entered into during a period of time that the Price-Anderson Act
was in full force and effect continue to receive the benefit of the Price-Anderson Act's nuclear indemnity. The Price-Anderson
Act is set to expire on December 31, 2025. We also provide nuclear fabrication and other services to the nuclear power industry
in Canada. Canada's Nuclear Liability and Compensation Act ("NLCA") generally conforms to international conventions and is
conceptually similar to the Price-Anderson Act in the U.S. Accordingly, indemnification protections and the possibility of
exclusions under Canada's NLCA are similar to those under the Price-Anderson Act in the U.S.
Our Commercial Operations segment supplies commercial nuclear equipment and services to certain customers in
countries other than the U.S. and Canada that are party to international treaties and in countries that are not signatory to
international treaties but have their own nuclear liability laws that, in general, have regulations in place whereby nuclear
operators are solely liable for nuclear damage claims, which would exclude nuclear suppliers from any such exposure. BWXT
does retain some level of risk in the event of future changes to the legal landscape in these countries regarding international
third-party nuclear liability.
9
In 2008, the U.S. ratified the Convention on Supplementary Compensation for Nuclear Damage ("CSC") with the
International Atomic Energy Agency. The CSC is an international treaty developed to create a global legal framework for
allocating responsibility and assuring prompt and equitable compensation in the unlikely event of certain nuclear incidents. The
ratification by the U.S. authorizes the Secretary of Energy to issue regulations establishing a retrospective risk pooling program
whereby, in the event that the U.S. must make a contribution to the CSC international fund, U.S. nuclear suppliers, including
BWXT, would pay the full cost of this contribution by the U.S.
Although we do not own or operate any nuclear reactors, we have some coverage under commercially available nuclear
liability and property insurance for our facilities that are currently licensed to possess special nuclear materials. Substantially all
of our Government Operations segment contracts involving nuclear materials are covered by and subject to the nuclear
indemnity provisions of either the Price-Anderson Act or Public Law 85-804, which, among other things, authorizes the DOE
to indemnify certain contractors when such acts would facilitate national defense. However, to the extent the value of the
nuclear materials in our care, custody or control exceeds the commercially available limits of our insurance, we potentially have
underinsured risk of loss for such nuclear material.
Our Government Operations segment participates in the management and operation of various U.S. Government
facilities. This participation is customarily accomplished through the participation in joint ventures with other contractors for
any given facility. These activities involve, among other things, handling nuclear devices and their components. Insurable
liabilities arising from these sites are rarely protected by our or our partners' corporate insurance programs. Instead, we rely on
government contractual agreements and insurance purchased specifically for a site. The U.S. Government has historically
fulfilled its contractual agreement to reimburse its contractors for covered claims, and we expect it to continue this process
during our participation in the management and operation of these facilities. However, in most of these situations in which the
U.S. Government is contractually obligated to pay, the payment obligation is subject to the availability of authorized
government funds. The reimbursement obligation of the U.S. Government is also conditional, and provisions of the relevant
contract or applicable law may preclude reimbursement.
Our wholly owned captive insurance subsidiary provides primary workers' compensation, employer's liability,
commercial general liability, automotive liability and property insurance to support our operations. Liabilities include
provisions for estimated losses incurred but not reported (“IBNR”), as well as estimated provisions for known claims. IBNR
reserve estimates are primarily based upon historical loss experience, industry data and other actuarial assumptions. Reserve
estimates are adjusted in future periods as actual losses differ from experience. Through our insurance subsidiary, we also have
reinsurance coverage with third parties for certain losses above a per occurrence and/or aggregate retention. Receivables for
reinsurance coverage are recognized when realization is deemed probable. We may also have business reasons in the future to
have our insurance subsidiary accept other risks that we cannot or do not wish to transfer to outside insurance companies. These
risks may be considerable in any given year or cumulatively. Our insurance subsidiary does not provide insurance to unrelated
parties. Claims as a result of our operations could adversely impact the ability of our insurance subsidiary to respond to all
claims presented.
Additionally, upon the February 22, 2006 effectiveness of the settlement relating to the Chapter 11 proceedings involving
several of our former subsidiaries, most of our subsidiaries contributed substantial insurance rights to the asbestos personal
injury trust, including rights to (1) certain pre-1979 primary and excess insurance coverages and (2) certain of our 1979-1986
excess insurance coverage. These insurance rights provided coverage for, among other things, asbestos and other personal
injury claims, subject to the terms and conditions of the policies. The contribution of these insurance rights was made in
exchange for the agreement on the part of the representatives of the asbestos claimants, including the representative of future
claimants, to the entry of a permanent injunction, pursuant to Section 524(g) of the U.S. Bankruptcy Code, to channel to the
asbestos trust all asbestos-related general liability claims against our subsidiaries and former subsidiaries arising out of,
resulting from or attributable to their operations, and the implementation of related releases and indemnification provisions
protecting those subsidiaries and their affiliates from future liability for such claims. Although we are not aware of any
significant, unresolved claims against our subsidiaries and former subsidiaries that are not subject to the channeling injunction
and that relate to the periods during which such excess insurance coverage related, with the contribution of these insurance
rights to the asbestos personal injury trust, it is possible that we could have underinsured or uninsured exposure for non-
derivative asbestos claims or other personal injury or other claims that would have been insured under these coverages had the
insurance rights not been contributed to the asbestos personal injury trust. On June 30, 2015, we completed the spin-off of our
former Power Generation business (the "spin-off") into an independent, publicly traded company named Babcock & Wilcox
Enterprises, Inc. ("BWE"). In conjunction with the spin-off, claims and liabilities associated with the asbestos personal injury,
property damage and indirect property damage claims mentioned above have been expressly assumed by BWE pursuant to the
master separation agreement between us and BWE.
10
Governmental Regulations and Environmental Matters
Governmental Regulations
Many aspects of our operations and properties are affected by political developments and are subject to both domestic
and foreign governmental regulations, including those relating to:
•
possessing and processing special nuclear materials;
• workplace health and safety;
•
•
•
•
constructing and equipping electric power facilities;
currency conversions and repatriation;
taxation of earnings; and
protecting the environment.
We are required by various governmental and quasi-governmental agencies to obtain certain permits, licenses and
certificates with respect to our operations. The kinds of permits, licenses and certificates required in our operations depend upon
a number of factors.
We cannot determine the extent to which new legislation, new regulations or changes in existing laws or regulations may
affect our future operations.
Environmental
Our operations and properties are subject to a wide variety of increasingly complex and stringent federal, foreign, state
and local environmental laws and regulations, including those governing discharges into the air and water, the handling and
disposal of solid and hazardous wastes, the remediation of soil and groundwater contaminated by hazardous substances and the
health and safety of employees. Sanctions for non-compliance may include revocation of permits, corrective action orders,
administrative or civil penalties and criminal prosecution. Some environmental laws provide for strict, joint and several liability
for remediation of spills and other releases of hazardous substances, as well as damage to natural resources. In addition,
companies may be subject to claims alleging personal injury or property damage as a result of alleged exposure to hazardous
substances. Such laws and regulations may also expose us to liability for the conduct of or conditions caused by others or for
our acts that were in compliance with all applicable laws at the time such acts were performed.
These laws and regulations include the Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended ("CERCLA"), the Clean Air Act, the Clean Water Act, the Resource Conservation and Recovery Act and
similar laws that provide for responses to, and liability for, releases of hazardous substances into the environment. These laws
and regulations also include similar foreign, state or local counterparts to these federal laws, which regulate air emissions, water
discharges, hazardous substances and waste and require public disclosure related to the use of various hazardous substances.
Our operations are also governed by laws and regulations relating to workplace safety and worker health, including the U.S.
Occupational Safety and Health Act and regulations promulgated thereunder.
We are currently in the process of investigating and remediating some of our current and former operating sites. Although
we have recorded reserves in connection with certain of these environmental matters, due to the uncertainties associated with
environmental remediation, there can be no assurance that the actual costs resulting from these remediation matters will not
exceed the recorded reserves.
Our compliance with federal, foreign, state and local environmental control and protection regulations resulted in pre-tax
expense of approximately $20.0 million, $20.0 million and $17.5 million in the years ended December 31, 2023, 2022 and
2021, respectively. In addition, compliance with existing environmental regulations necessitated capital expenditures of $0.7
million, $1.6 million and $3.1 million in the years ended December 31, 2023, 2022 and 2021, respectively. We expect to spend
another $2.2 million on such capital expenditures over the next five years. We cannot predict all of the environmental
requirements or circumstances that will exist in the future, but we anticipate that environmental control and protection standards
will become increasingly stringent and costly. Based on our experience to date, we do not currently anticipate any material
adverse effect on our business or consolidated financial condition as a result of future compliance with existing environmental
laws and regulations. However, future events, such as changes in existing laws and regulations or their interpretation, more
vigorous enforcement policies of regulatory agencies or stricter or different interpretations of existing laws and regulations, may
11
require additional expenditures by us, which may be material. Accordingly, we can provide no assurance that we will not incur
significant environmental compliance costs in the future.
We have been identified as a potentially responsible party at various cleanup sites under CERCLA. CERCLA and other
environmental laws can impose liability for the entire cost of cleanup on any of the potentially responsible parties, regardless of
fault or the lawfulness of the original conduct. Generally, however, where there are multiple responsible parties, a final
allocation of costs is made based on the amount and type of wastes disposed of by each party and the number of financially
viable parties, although this may not be the case with respect to any particular site. We have not been determined to be a major
contributor of wastes to any of these sites. On the basis of the relative contribution of waste to each site by potentially
responsible parties, as well as the financial solvency of other potentially responsible parties, we expect our share of the ultimate
liability for the various sites will not have a material adverse effect on our consolidated financial condition, results of operations
or cash flows in any given year.
Environmental remediation projects have been and continue to be undertaken at certain of our current and former
facilities. In 2002, Congress directed the U.S. Army Corps of Engineers ("Army Corps") to clean up radioactive waste at the
Shallow Land Disposal Area located in Parks Township, Armstrong County, Pennsylvania (the "SLDA"), consistent with the
Memorandum of Understanding between the Nuclear Regulatory Commission and the United States Army Corps of Engineers
for Coordination on Cleanup and Decommissioning of the Formerly Utilized Sites Remedial Action Program Sites with NRC-
Licensed Facilities, dated July 5, 2001 (the "MOU"). From 1961 to 1970, the SLDA was operated by the Nuclear Materials and
Equipment Corporation ("NUMEC") pursuant to Atomic Energy Commission ("AEC") License SNM-145. The AEC was the
predecessor to the NRC. The SLDA was used for the disposal of waste from NUMEC's nuclear fuels fabrication facility in
Apollo, Pennsylvania. Both radioactive and non-radioactive waste was disposed in a series of trenches at the SLDA. NUMEC, a
former subsidiary of Atlantic Richfield Company ("ARCO"), was acquired by BWXT in November 1971. Shortly after the
Army Corps' contractor commenced cleanup operations in 2011, the Army Corps ceased excavation activities because the
contractor deviated from accepted field procedures, and the excavated material was found to be complex and beyond the Army
Corps' characterization and management procedures. The MOU was modified in late 2014 to add the DOE and the NNSA as
parties to deal with "special nuclear materials." In December 2014, the Army Corps issued a Proposed Record of Decision
Amendment, which reflects a revised cost estimate of $350 million, in addition to the $62 million expended through September
2014, to implement the selected remedy. In October 2018, the Army Corps confirmed award of the previously protested
remediation contract as amended to the original contractor. In March 2019, the Army Corps issued a notice-to-proceed to this
contractor. The federal legislation directing the Army Corps to clean up the SLDA also directs the Army Corps to seek to
recover response costs from appropriate responsible parties in accordance with CERCLA. In connection with BWXT's
acquisition of NUMEC from ARCO in November 1971, ARCO assumed and agreed to indemnify and hold harmless BWXT
with respect to claims and liabilities arising as a result of transactions or operations of NUMEC prior to the acquisition date.
Although this ARCO indemnity would cover claims by the Army Corps to seek recovery from BWXT for SLDA cleanup costs,
no assurance can be given that this indemnity will be available or sufficient in the event such claims are asserted. For additional
discussion of environmental matters, see Note 10 to our consolidated financial statements included in this Report.
We perform significant amounts of work for the U.S. Government under both prime contracts and subcontracts and
operate certain facilities that are licensed to possess and process special nuclear materials. As a result of these activities, we are
subject to continuing reviews by governmental agencies, including the U.S. Environmental Protection Agency and the NRC.
We are also involved in manufacturing activities at licensed facilities in Canada that are subject to continuing reviews by
governmental agencies in Canada, including the CNSC.
The NRC's decommissioning regulations require our Government Operations segment to provide financial assurance that
it will be able to pay the expected cost of decommissioning its two licensed facilities at the end of their service lives. We
provided financial assurance totaling $68.1 million and $68.1 million during the years ended December 31, 2023 and 2022,
respectively, with surety bonds for the ultimate decommissioning of these licensed facilities. These facilities have provisions in
their government contracts pursuant to which substantially all of our decommissioning costs and financial assurance obligations
are covered by the DOE, including the costs to complete the decommissioning projects underway at the facility in Erwin,
Tennessee. The surety bonds noted above are to cover decommissioning required pursuant to work not subject to this DOE
obligation.
In Canada, the CNSC's decommissioning regulations require our Commercial Operations segment to provide financial
assurance that it will be able to pay the expected cost of decommissioning its CNSC-licensed facilities at the end of their service
lives. We provided financial assurance totaling $44.3 million and $43.3 million during the years ended December 31, 2023 and
2022, respectively, with letters of credit and surety bonds for the ultimate decommissioning of these licensed facilities.
12
At December 31, 2023 and 2022, we had total environmental accruals, including asset retirement obligations, of $101.1
million and $101.8 million, respectively. Of our total environmental accruals at December 31, 2023 and 2022, $10.6 million
and $10.8 million, respectively, were included in current liabilities. Inherent in the estimates of these accruals are our
expectations regarding the levels of contamination, decommissioning costs and recoverability from other parties, which may
vary significantly as decommissioning activities progress. Accordingly, changes in estimates could result in material
adjustments to our operating results, and the ultimate loss may differ materially from the amounts we have provided for in our
consolidated financial statements.
Cautionary Statement Concerning Forward-Looking Statements
From time to time, our management or persons acting on our behalf make forward-looking statements to inform existing
and potential security holders about our Company. Statements and assumptions regarding expectations and projections of
specific projects, our future backlog, revenues, income, capital spending, strategic investments, acquisitions or divestitures,
return of capital activities or margin improvement initiatives are examples of forward-looking statements. Forward-looking
statements are generally accompanied by words such as "estimate," "project," "predict," "believe," "expect," "anticipate,"
"plan," "seek," "goal," "could," "intend," "may," "should" or other words that convey the uncertainty of future events or
outcomes. In addition, sometimes we will specifically describe a statement as being a forward-looking statement and refer to
this cautionary statement.
Statements in this Report, including those that express a belief, expectation or intention, as well as those that are not
statements of historical fact, are forward-looking statements. These forward-looking statements appear in Item 1, Item 3, Item 7
and in the notes to our consolidated financial statements in Item 8 of this Report and elsewhere in this Report.
We have based our forward-looking statements on information currently available to us and our current expectations,
estimates and projections about our industries, business environment and our Company. We caution that these statements are
not guarantees of future performance, and you should not rely unduly on them as they involve risks, uncertainties and
assumptions that we cannot predict. In addition, we have based many of these forward-looking statements on assumptions about
future events that may prove to be inaccurate. While our management considers these statements and assumptions to be
reasonable, they are inherently subject to numerous factors, including potentially the risk factors described in the section labeled
Item 1A of this Report, most of which are difficult to predict and many of which are beyond our control. Accordingly, our
actual results may differ materially from the future performance that we have expressed or forecast in our forward-looking
statements.
We have discussed many of these factors in more detail elsewhere in this Report. These factors are not necessarily all the
factors that could affect us. Unpredictable or unanticipated factors we have not discussed in this Report could also have material
adverse effects on actual results of matters that are the subject of our forward-looking statements. We do not intend to update or
review any forward-looking statement or our description of important factors, whether as a result of new information, future
events or otherwise, except as required by applicable laws.
Available Information
Our website address is www.bwxt.com. We make available through the Investors section of this website under "SEC
Filings," free of charge, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, our
proxy statement, statements of beneficial ownership of securities on Forms 3, 4 and 5 and amendments to those reports as soon
as reasonably practicable after we electronically file those materials with, or furnish those materials to, the Securities and
Exchange Commission (the "SEC"). The SEC maintains a website at www.sec.gov that contains reports, proxy and information
statements, and other information regarding issuers that file electronically with the SEC. We have also posted on our website
our: Corporate Governance Principles; Code of Business Conduct; Code of Ethics for our Chief Executive Officer and Senior
Financial Officers; Board of Directors Conflicts of Interest Policies and Procedures; Amended and Restated Bylaws; and
charters for the Audit and Finance, Governance and Compensation Committees of our Board of Directors.
13
Item 1A. RISK FACTORS
Industry Risks
We rely on U.S. Government contracts for a substantial percentage of our revenue, and some of those contracts are
subject to continued appropriations by Congress and may be terminated or delayed if future funding is not made available.
In addition, the U.S. Government may not renew or may seek to modify or terminate our existing contracts.
For the year ended December 31, 2023, U.S. Government contracts comprised approximately 75% of our total
consolidated revenues. Government contracts are subject to various uncertainties, restrictions and regulations, including
oversight audits, which could result in withholding or delaying payments to us, and termination or modification at the U.S.
Government's convenience. In addition, some of our large, multi-year contracts with the U.S. Government are subject to annual
funding determinations and the continuing availability of Congressional appropriations. Although multi-year operations may be
planned in connection with major procurements, Congress generally appropriates funds on a fiscal-year basis even though a
program may continue for several years. Consequently, programs often are only partially funded initially, and additional funds
are committed only as Congress makes further appropriations.
In addition, our Government Operations segment depends on U.S. Government funding, particularly funding levels at the
DOE. Significant reductions in the level of funding (for example, the annual budget of the DOE) or specifically mandated
levels for individual programs that are important to our business could have an unfavorable impact on us. Any reduction in the
level of U.S. Government funding, particularly at the DOE, may result in, among other things, a reduction in the number and
scope of projects put out for bid by the U.S. Government or the curtailment of existing U.S. Government programs, either of
which may result in a reduction in the number of contract award opportunities available to us, a reduction of activities at DOE
sites and an increase in costs, including the costs of obtaining contract awards.
We anticipate the federal budget will continue to be subject to debate and compromise shaped by, among other things,
heightened political tensions, the global security environment, inflationary pressures and macroeconomic conditions. This may
result in shifting funding priorities, which could have material adverse impacts on defense spending broadly and our programs.
The U.S. Government typically can terminate or modify any of its contracts with us either for its convenience or if we
default by failing to perform under the terms of the applicable contract. A termination arising out of our default could expose us
to liability and have an adverse effect on our ability to compete for future contracts and orders. If any of our contracts reflected
in backlog are terminated by the U.S. Government, our backlog would be reduced by the expected value of the remaining work
under such contracts. In addition, on those contracts for which we are teamed with others and are not the prime contractor, the
U.S. Government could terminate a prime contract under which we are a subcontractor, irrespective of the quality of our
products and services as a subcontractor. Furthermore, certain of our U.S. Government contracts span one or more base years
and multiple option years. The U.S. Government generally has the right not to exercise option periods and may not exercise an
option period for various reasons.
We also have several significant contracts with the U.S. Government that are subject to periodic renewal and rebidding
through a competitive process. If the U.S. Government fails to renew these contracts or modifies key terms, our results of
operations and cash flows would be adversely affected.
As a result of these and other factors, reductions in the level of funding for individual programs that are important to our
business, the termination of one or more of our significant government contracts, our suspension from government contract
work, the failure of the U.S. Government to renew our existing contracts or the disallowance of the payment of our contract
costs could have a material adverse effect on our financial condition, results of operations and cash flows.
Federal debt ceiling limitations, reductions in government spending, or impacts to federal appropriations that fund
many of our contracts (such as those impacts arising from a continuing resolution or government shutdown), could
adversely impact government spending for the products and services we provide.
Federal government spending reductions could adversely impact U.S. Government programs for which we provide
products or services. While we believe many of our programs are well-aligned with national defense and other strategic
priorities, government spending on these programs can be subject to negative publicity, political factors and public scrutiny.
The risk of future budget delays or reductions is uncertain, and it is possible that spending cuts may be applied to U.S.
Government programs across the board, regardless of how programs align with those priorities. There are many variables in
how budget reductions could be implemented that will determine its specific impact; however, reductions in federal government
spending could adversely impact programs in which we provide products or services. In addition, these cuts could adversely
14
affect the viability of the suppliers and subcontractors under our programs. We may also be required to temporarily maintain
operations of our joint ventures if the U.S. Government can no longer meet its debt obligations.
From time to time, the U.S. Government operates under a continuing resolution to continue funding the U.S.
Government. Under such a continuing resolution, funding at amounts consistent with appropriated levels for the prior fiscal
year are typically available, subject to certain restrictions, but new contract and program starts are not authorized. In the event
of a continuing resolution, we expect our key programs will continue to be supported and funded under the continuing
resolution. However, during periods covered by continuing resolutions, we may experience delays in new awards of our
products and services, and those delays could have a material adverse effect on our financial condition, results of operations and
cash flows. If Congress is not able to enact appropriations bills or extend the continuing resolution, the U.S. Government would
enter a whole or partial shutdown. Additionally, there is a risk that no continuing resolution would be entered into in certain
circumstances, which would also cause a whole or partial government shutdown. The impact of any government shutdown is
uncertain. However, if a government shutdown were to occur and were to continue for an extended period, our employees could
be at risk of furlough and we could be at risk of program cancellations, schedule delays, production halts and other disruptions
and nonpayment, which could have a material adverse effect on our financial condition, results of operations and cash flows.
Demand for our products and services is vulnerable to economic downturns, the competitiveness of alternative energy
sources and industry conditions. In addition, unfavorable economic conditions may lead customers to delay, curtail or
cancel proposed or existing projects, which may decrease the overall demand for our products and services and adversely
affect our results of operations.
Demand for our products and services has been, and we expect that demand will continue to be, subject to significant
fluctuations due to a variety of factors beyond our control, including economic and industry conditions. These factors include,
but are not limited to, inflation, geopolitical issues, the availability and cost of credit, the demand for and competitiveness of
nuclear power with other energy sources, the cyclical nature of the power generation industry, low business and consumer
confidence, high unemployment, energy conservation measures and decisions of utilities that operate nuclear power plants.
Our customers may find it more difficult to raise capital in the future due to limitations on the availability of credit,
increases in interest rates and other factors affecting the federal, municipal and corporate credit markets. Additionally, our
customers may demand more favorable pricing terms and find it increasingly difficult to timely pay invoices for our products
and services, which would impact our future cash flows and liquidity. Inflation or significant changes in interest rates could
reduce the demand for our products and services. Any inability to timely collect our invoices may lead to an increase in our
accounts receivables and potentially to increased write-offs of uncollectable invoices. If the economy weakens, or customer
spending declines, then our backlog, revenues, net income and overall financial condition could deteriorate. As a result, we may
find it more difficult to raise capital in the future due to limitations on the availability of credit, increases in interest rates,
changes in regulatory requirements, new investor requirements, such as stakeholder expectations regarding environmental,
social and governance matters, and other factors affecting our access to the capital markets.
Our future business prospects in Canada are dependent upon the continued operation of Canadian nuclear plants and
refurbishment of the majority of the plants in Ontario to extend their operating lives. Unfavorable economic conditions,
competition from other forms of power generation, increased competition for refurbishment contracts, changes in government
policy or operational or project execution issues may lead nuclear plant operators in Canada to cease operations or delay, curtail
or cancel proposed or existing life-extension projects, which may decrease the overall demand for our products and services in
Canada and adversely affect our financial condition, results of operations and cash flows.
We are subject to risks associated with contractual pricing in our industries, including the risk that, if our actual costs
exceed the costs we estimate on our fixed-price contracts, our profitability will decline and we may suffer losses.
We are engaged in a number of highly competitive industries and we have priced a number of our contracts on a fixed-
price basis. Our actual costs on certain contracts have, and on other contracts could, exceed our projections, which has resulted,
and may in the future also result in reduced profit or loss. We attempt to cover the increased costs of anticipated changes in
labor, material and service costs of long-term contracts, either through estimates of cost increases, which are reflected in the
original contract price, or through price escalation clauses. Despite these attempts, the cost and gross profit we realize on a
fixed-price contract have and could vary materially from the estimated amounts because of supplier, contractor and
subcontractor performance, execution issues, changes in job conditions, variations in labor and equipment productivity,
inflation and increases in the cost of labor and raw materials, particularly steel, over the term of the contract.
15
These variations and the risks generally inherent in our industries may result in actual revenues or costs being different
from those we originally estimated and may result in reduced profitability or losses on projects. Some of these risks include:
•
•
•
•
difficulties encountered on our large-scale projects related to the procurement of materials or due to schedule
disruptions, equipment performance failures, unforeseen site conditions, rejection clauses in customer contracts or
other factors that may result in additional costs to us, reductions in revenue, claims or disputes;
our inability to obtain compensation for additional work we perform or expenses we incur as a result of our customers
providing deficient design, engineering information, equipment or materials;
requirements to pay liquidated damages upon our failure to meet schedule or performance requirements of our
contracts; and
difficulties in engaging third-party subcontractors, equipment manufacturers or materials suppliers or failures by third-
party subcontractors, equipment manufacturers or materials suppliers to perform could result in project delays and
cause us to incur additional costs.
Operational Risks
Our business could be negatively impacted by security threats, including physical and cybersecurity threats, and other
disruptions.
We face various security threats, including cyber threats, threats to the physical security of our facilities and infrastructure
(including those that we manage and operate for our customers), and threats from terrorist acts, as well as the potential for
business disruptions associated with these threats. Further, security breaches within our supply chain or unauthorized
disclosures of confidential information could also adversely affect our business and reputation. Although we utilize a
combination of tailored and industry standard security measures and technology to monitor and mitigate these threats, we
cannot guarantee that these measures and technology will be sufficient to prevent security threats from materializing.
We have been, and will likely continue to be, subject to cyber-based attacks and other attempts to threaten our
information technology systems, including attempts to gain unauthorized access to our proprietary and sensitive information
and attacks from computer hackers, viruses, malicious code, internal threats and other security problems. As a U.S. Government
contractor, we may be prone to a greater number of these threats than companies in other industries. These threats range from
attacks common to most industries to more advanced and persistent threats from highly-organized adversaries targeting us
because we are a U.S. Government contractor. We are required to maintain minimum security standards for handling
information under our government contracts and failure to do so could result in termination of those contracts. From time to
time, we experience system interruptions and delays; however, prior cyber-based attacks directed at us have not had a material
adverse impact on our results of operations. Due to the evolving nature of these security threats, the impact of any future
incident cannot be predicted. If we are unable to protect our proprietary and sensitive information, our customers could question
the adequacy of our threat mitigation and detection processes and procedures, which could negatively impact our reputation and
present and future business.
The costs related to cyber or other security threats or disruptions may not be fully insured or indemnified by other means.
Occurrence of any of these events could adversely affect our internal operations, the services we provide to customers, the value
of our investment in research and development efforts and other intellectual property, our future financial results, our reputation
or our stock price.
In addition, we maintain, replace and/or upgrade current financial, human resources and other information technology
systems. These activities subject us to inherent costs and risks associated with replacing and updating these systems, including
potential disruption of our internal control structure, substantial capital expenditures, demands on management time and other
risks of delays or difficulties in transitioning to new systems or of integrating new systems into our current systems. Our
systems implementations and upgrades may not result in productivity improvements at the levels anticipated, or at all. In
addition, the implementation of new technology systems may cause disruptions in our business operations. Such disruptions and
any other information technology system disruptions, and our ability to mitigate these disruptions, if not anticipated and
appropriately mitigated, could have a material adverse effect on our business.
Actual or threatened public health epidemics, pandemics or outbreaks, such as COVID-19, could have a material
adverse effect on our business and results of operations.
Actual or threatened public health epidemics, pandemics or outbreaks, such as the global outbreak of COVID-19, could
have a material adverse effect on our business and results of operations. Any public health epidemic, pandemic or outbreak
16
poses the risk that we or our employees, contractors, suppliers, customers and other partners may be prevented from conducting
business activities for an indefinite period of time, including due to shutdowns that may be requested or mandated by
governmental authorities. Our business could be materially adversely impacted by employee illness, quarantines, government
actions, facility closures, other actions to contain the impact of such diseases and/or potential responses to such actions by our
customers, suppliers, contractors and employees. If our operations or the operations of our customers or our suppliers are
restricted, we may be unable to perform fully on our contracts and our costs may increase as a result of a public health
epidemic, pandemic or outbreak. These cost increases may result in unfavorable changes in estimates which may not be fully
recoverable or adequately covered by insurance or through government assistance programs.
A public health epidemic, pandemic or outbreak and mitigation measures may also have an adverse impact on global
economic conditions, which could have an adverse effect on our business. The extent to which such an epidemic, pandemic or
outbreak impacts our business will depend on future developments that are highly uncertain and cannot be predicted, including
new information that may emerge concerning the severity of a public health epidemic, pandemic or outbreak and the actions to
contain its impact.
We rely on intellectual property law and confidentiality agreements to protect our intellectual property. We also rely
on intellectual property we license from third parties. Failure to protect our intellectual property rights, alleged infringement
of third-party intellectual property rights or our inability to obtain or renew licenses to use intellectual property of third
parties, could adversely affect our business.
Our success depends, in part, on our ability to protect our proprietary information and other intellectual property. Our
intellectual property could be stolen, challenged, invalidated, circumvented or rendered unenforceable. In addition, effective
intellectual property protection may be limited or unavailable in certain jurisdictions where we operate.
Our failure to protect our intellectual property rights may result in the loss of valuable technologies or adversely affect
our competitive business position. We rely significantly on proprietary technology, information, processes and know-how that
are not subject to patent or copyright protection. We seek to protect this information through trade secret or confidentiality
agreements with our employees, consultants, subcontractors or other parties, as well as through other security measures. These
agreements and security measures may be inadequate to deter or prevent misappropriation of our confidential information. In
the event of an infringement of our intellectual property rights, a breach of a confidentiality agreement or divulgence of
proprietary information, we may not have adequate legal remedies to protect our intellectual property. In addition, third parties
may allege that we have infringed their intellectual property rights, which could result in litigation. Litigation to protect, defend
or determine the scope of intellectual property rights, even if ultimately successful, could be costly and could divert
management's attention away from other aspects of our business. In addition, our trade secrets may otherwise become known or
be independently developed by competitors.
In some instances, we have augmented our technology base by licensing the proprietary intellectual property of third
parties. In the future, we may not be able to obtain necessary licenses on commercially reasonable terms, which could have a
material adverse effect on our operations.
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Our operations are subject to disruption caused by severe weather, environmental and natural disasters and other
natural and manmade events that could adversely affect our manufacturing facilities or the infrastructure necessary to
support them. Our ability to operate or operate profitably could be significantly impacted, which could have a material
adverse effect on our business, financial condition and results of operations.
We operate a number of large manufacturing facilities in the U.S. and Canada, including NRC Category 1 and CNSC-
licensed nuclear manufacturing and fuel facilities. While we take steps to mitigate the impact of severe weather, environmental
and natural disasters, the frequency and severity of which may be impacted by climate change and other natural and manmade
events, such events could result in severe disruption to our business operations at these facilities. Similar events impacting the
facilities of our customers, suppliers and other subcontractors could also impact our business or disrupt our operations. If
insurance or other risk mitigating mechanisms are insufficient for us to recover our costs and resume operations in a timely
fashion, it could have a material adverse effect on our business, financial condition and results of operations.
Additionally, increased concern regarding the environment and global climate change may result in state, federal or
international requirements such as the imposition of stricter limits on greenhouse gas emissions, carbon pricing mechanisms,
increasing global chemical restrictions and bans, water and waste requirements and compliance and disclosure requirements. If
environmental or climate-change laws or regulations are adopted or changed, they could necessitate the need for substantial
capital and other expenditures and have further negative impacts on our financial condition, results of operations and cash
flows. Increasing sustainability disclosure requirements may result in increased costs or reputational risks and could limit our
ability to manufacture certain of our products.
Our operations are subject to operating risks, which could expose us to potentially significant professional liability,
product liability, warranty and other claims. Our insurance coverage may be inadequate to cover all of our significant risks,
or our insurers may deny coverage of material losses we incur, which could adversely affect our profitability and overall
financial condition.
We operate large manufacturing facilities and perform services in large commercial power plants where accidents or
system failures can have significant consequences. Risks inherent in our operations include:
•
•
•
•
•
accidents resulting in injury or the loss of life or property;
environmental or toxic tort claims, including delayed manifestation claims for personal injury or loss of life;
pollution or other environmental mishaps;
natural disasters;
adverse weather conditions;
• mechanical or design failures;
•
•
•
property losses;
business interruption due to political action in foreign countries or other reasons; and
labor stoppages.
Any accident or failure at a site where we have provided products or services could result in significant professional
liability, product liability, warranty and other claims against us, regardless of whether our products or services caused the
incident. We have been, and in the future we may be, named as defendants in lawsuits asserting large claims as a result of
litigation arising from events such as those listed above.
We endeavor to identify and obtain, in established markets, insurance agreements to cover significant risks and liabilities.
Insurance against some of the risks inherent in our operations is either unavailable or available only at rates or on terms that we
consider uneconomical. Also, catastrophic events customarily result in decreased coverage limits, more limited coverage,
additional exclusions in coverage, increased premium costs and increased deductibles and self-insured retentions. Risks that we
have frequently found difficult to cost-effectively insure against include, but are not limited to, business interruption, property
losses from wind, flood and earthquake events, nuclear hazards, war, pollution liability, liabilities related to occupational health
exposures (including asbestos), professional liability/errors and omissions coverage, the failure, misuse or unavailability of our
information systems, the failure of security measures designed to protect our information systems from security breaches, and
liability related to risk of loss of our work in progress and customer-owned materials in our care, custody and control.
Depending on competitive conditions and other factors, we endeavor to obtain contractual protection against certain uninsured
risks from our customers. When obtained, such contractual indemnification protection may not be as broad as we desire or may
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not be supported by adequate insurance maintained by the customer. Such insurance or contractual indemnity protection may
not be sufficient or effective under all circumstances or against all hazards to which we may be subject. A successful claim for
which we are not insured or for which we are underinsured could have a material adverse effect on us. Additionally, disputes
with insurance carriers over coverage may affect the timing of cash flows and, if litigation with the carrier becomes necessary,
an outcome unfavorable to us may have a material adverse effect on our results of operations.
We are also involved in management and operating activities for the U.S. Government. These activities involve, among
other things, handling nuclear devices and their components for the U.S. Government. Most insurable liabilities arising from
these sites are not protected in our corporate insurance program. Instead, we rely on government contractual agreements,
including a U.S. Government-provided nuclear indemnity (see the below discussion regarding the Price-Anderson Act), some
insurance purchased specifically for the sites and certain specialized self-insurance programs funded by the U.S. Government.
The U.S. Government has historically fulfilled its contractual agreement to reimburse for insurable claims, and we expect it to
continue this process. However, it should be noted that, in most situations, the U.S. Government is contractually obligated to
pay subject to the availability of authorized government funds. The reimbursement obligation of the U.S. Government is also
conditional, and provisions of the relevant contract or applicable law may preclude reimbursement.
We have a captive insurance company subsidiary that provides us with various insurance coverages. Claims, as a result of
our operations, could adversely impact the ability of our captive insurance company subsidiary to respond to all claims
presented.
Although we have product liability insurance coverage, with policy limits that we believe are customary for the medical
radioisotope industry, such coverage may not be adequate, requiring that we pay judgments or settlement amounts in excess of
policy limits. We may not be able to maintain insurance coverage at adequate levels. Any product liability claims could be
costly to defend, time-consuming and result in adverse judgments, which could result in a material adverse effect on our
business, reputation and results of operations.
Additionally, upon the February 22, 2006 effectiveness of the settlement relating to the Chapter 11 proceedings involving
several of our former subsidiaries, most of our subsidiaries contributed substantial insurance rights providing coverage for,
among other things, asbestos and other personal injury claims, to an asbestos personal injury trust. With the contribution of
these insurance rights to the asbestos personal injury trust, we may have underinsured or uninsured exposure for non-derivative
asbestos claims or other personal injury or other claims that would have been insured under these coverages had the insurance
rights not been contributed to the asbestos personal injury trust. In conjunction with the spin-off, claims and liabilities
associated with the asbestos personal injury, property damage and indirect property damage claims mentioned above have been
expressly assumed by BWE pursuant to the master separation agreement between us and BWE.
The loss of, or the inability to attract and retain, qualified personnel could have a material adverse effect on our
business.
Our business depends upon the recruitment and continued service of our highly skilled, educated and trained employees.
Our ability to attract, motivate, compensate, and retain highly qualified and diverse employees is necessary to support our
customers and achieve business objectives. Competition for skilled and diverse employees in our industry can be intense, and
any uncertainty surrounding future employment opportunities, facility locations, organizational and reporting structures,
acquisitions and divestitures, and related concerns may impair our ability to attract and retain qualified employees. In addition,
certain parts of our business, including in the Government Operations segment, involve designs, processing and final products
that are classified by the U.S. Government and require applicable personnel to obtain and maintain U.S. Government security
clearances. These additional employee qualifications often limit the pool of available candidates and extend the time necessary
to recruit and qualify new employees. The loss of the services of qualified employees and any inability to recruit effective
replacements or to otherwise attract, motivate, train or retain highly qualified and diverse employees could have a material
adverse effect on our business, financial condition and results of operations.
We also have established leadership development and succession planning programs throughout our business. Any
significant leadership change and accompanying senior management transition involves inherent risk, and any failure to ensure
a smooth transition could hinder our strategic planning, execution and future performance. While we strive to mitigate the
negative impact associated with changes to our senior management team, such changes may cause uncertainty among investors,
employees, customers, creditors, and others concerning our future direction and performance. If we fail to effectively manage
any leadership changes, including organizational and strategic changes, such failure could have a material adverse effect on our
ability to successfully attract, motivate and retain highly qualified employees, as well as our business, financial condition and
results of operations.
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Negotiations with labor unions and possible work stoppages and other labor problems could divert management's
attention and disrupt operations. In addition, new collective bargaining agreements or amendments to agreements could
increase our labor costs and operating expenses.
A significant number of our employees are members of labor unions. If we are unable to negotiate acceptable new
contracts with our unions from time to time, we could experience strikes or other work stoppages by the affected employees. If
any such strikes or other work stoppages were to occur, we could experience a significant disruption of operations. In addition,
negotiations with unions could divert management attention. New union contracts or the organization of nonunion employees
could result in increased operating costs, as a result of higher wages or benefit expenses, for both union and nonunion
employees.
We rely on a limited number of suppliers, including single-source suppliers, which could, under certain
circumstances, adversely affect our revenues and operating results.
We rely on a limited number of suppliers, including several single-source suppliers, for materials used in our products in
both our Government Operations and Commercial Operations segments. If the supply of a single-sourced or limited-sourced
material is delayed or ceases, we may not be able to produce the related product in a timely manner or in sufficient quantities, if
at all, which could adversely affect our revenues and operating results. In addition, a single-source or limited-source supplier of
a key component could potentially exert significant bargaining power over price, quality, warranty claims or other terms
relating to these materials, which could have a material adverse effect on our financial condition, results of operations and cash
flows.
Maintaining adequate bonding and letter of credit capacity is necessary for us to successfully bid on and win various
contracts.
In line with industry practice, we are often required to post standby letters of credit and surety bonds to support
contractual obligations to customers as well as other obligations. These letters of credit and bonds generally indemnify
customers should we fail to perform our obligations under the applicable contracts. If a letter of credit or bond is required for a
particular project and we are unable to obtain it due to insufficient capacity or other reasons, we will not be able to pursue that
project. We utilize bonding facilities, but, as is typically the case, the issuance of bonds under each of those facilities is at the
surety's sole discretion. In addition, we have capacity limits under our credit facility for letters of credit. Moreover, due to
events that affect the insurance and bonding and credit markets generally, bonding and letters of credit may be more difficult to
obtain in the future or may only be available at significant additional cost. There can be no assurance that letters of credit or
bonds will continue to be available to us on reasonable terms. Our inability to obtain adequate letters of credit and bonding and,
as a result, to bid on new work could have a material adverse effect on our business, financial condition and results of
operations. As of December 31, 2023, we had $38.4 million in letters of credit and $114.6 million in surety bonds outstanding.
Our business strategy includes acquisitions and strategic investments to support our growth, which can create certain
risks and uncertainties.
We intend to pursue growth through the acquisition of, or strategic investments in, businesses or assets that we believe
will enable us to strengthen our existing business and expand into adjacent industries. We may be unable to execute this growth
strategy if we cannot identify suitable businesses or assets, reach agreement on potential strategic transactions on acceptable
terms or for other reasons.
Acquisitions may be funded by the issuance of additional equity or debt financing, which may not be available on
attractive terms. Our ability to secure such financing will depend in part on prevailing capital market conditions, as well as
conditions in our business and operating results. Moreover, to the extent an acquisition transaction financed by non-equity
consideration results in goodwill, it will reduce our tangible net worth, which might have an adverse effect on potential credit
and bonding capacity.
Additionally, an acquisition may bring us into businesses we have not previously conducted and expose us to additional
business risks that are different than those we have historically experienced.
20
Our business strategy also includes development and commercialization of new technologies to support our growth,
which requires significant investment and involves various risks and uncertainties. These new technologies may not achieve
desired commercial or financial results.
Our future growth will depend on our ability to continue to innovate by developing and commercializing new product and
service offerings. Investments in new technologies involve varying degrees of uncertainties and risk. Commercial success
depends on many factors, including the levels of innovation, the development costs and the availability of capital resources to
fund those costs, the levels of competition from others developing similar or other competing technologies, our ability to obtain
or maintain government permits or certifications, the effectiveness of production, distribution and marketing efforts, market
demand, market growth or shrinkage, market acceptance and the costs to customers to deploy and provide support for the new
technologies. We may not achieve significant revenue from new product and service investments for a number of years, if at all.
Additionally, there can be no assurance that the current technologies that our business relies upon will remain competitive, or
that competing technologies will not disrupt our business. Moreover, new products and services may not be profitable, and,
even if they are profitable, our operating margins from new products and services may not be as high as the margins we have
experienced historically. Lastly, new technologies may not be patentable and, as a result, we may face increased competition.
Among our opportunities involving new technologies, we are developing new medical radioisotope technology. The costs
to develop and commercialize this technology require a substantial amount of investment over a period of years, and
commercialization of this technology also requires authorizations from government agencies, including the U.S. Food and Drug
Administration ("FDA"), Health Canada and the CNSC. There can be no assurance that we will be successful in addressing all
of the technological challenges to developing and commercializing this technology or in obtaining the required authorizations
from the FDA, Health Canada or the CNSC. In addition, commercialization of the medical radioisotope technology could
subject us to product liability claims. The potential also exists for competitors to emerge with alternative technologies. We can
provide no assurance that those competitors will not develop and commercialize similar or superior technologies sooner than
we can or at a significant cost or price advantage.
We conduct a portion of our operations through joint venture entities, over which we may have limited ability to
influence.
We currently have equity interests in several joint ventures and may enter into additional joint venture arrangements in
the future. Our influence over some of these entities may be limited. Even in those joint ventures over which we do exercise
significant influence, we are often required to consider the interests of our joint venture partners in connection with major
decisions concerning the operations of the joint ventures. In any case, differences in views among the joint venture participants
may result in delayed decisions or disputes. We also cannot control the actions of our joint venture partners. We sometimes
have joint and several liabilities with our joint venture partners under the applicable contracts for joint venture projects and we
cannot be certain that our partners will be able to satisfy any potential liability that could arise. These factors could potentially
harm the business and operations of a joint venture and, in turn, our business and operations.
Operating through joint ventures in which we are minority holders results in us having limited control over many
decisions made with respect to projects and internal controls relating to projects. These joint ventures may not be subject to the
same requirements regarding internal controls and internal control over financial reporting that we follow. As a result, internal
control problems may arise with respect to the joint ventures that could adversely affect our ability to respond to requests or
contractual obligations to customers or to meet the internal control requirements to which we are otherwise subject.
In addition, our arrangements involving joint ventures may restrict us from gaining access to the cash flows or assets of
these entities. In some cases, our joint ventures have governmentally imposed restrictions on their abilities to transfer funds to
us.
If our co-venturers fail to perform their contractual obligations on a project or if we fail to coordinate effectively with
our co-venturers, we could be exposed to legal liability, loss of reputation and reduced profit on the project.
We often perform projects jointly with third parties. For example, we enter into contractual arrangements to bid for and
perform jointly on large projects. Success on these joint projects depends in part on whether our co-venturers fulfill their
contractual obligations satisfactorily. If any one or more of these third parties fail to perform their contractual obligations
satisfactorily, we may be required to make additional investments and provide added services in order to compensate for that
failure. If we are unable to adequately address any such performance issues, then our customer may exercise its right to
terminate a joint project, exposing us to legal liability, loss of reputation and reduced profit.
21
Under these arrangements, participating parties may disagree on business decisions and strategies. These disagreements
could result in delays, additional costs and risks of litigation. Our inability to successfully maintain existing relationships or
enter into new agreements could have a material adverse effect on our results of operations.
Accounting and Financial Reporting Risks
We recognize a large portion of our revenue on an over time basis which could result in volatility in our results of
operations.
We generally recognize revenues and profits under our long-term contracts on an over time basis. Accordingly, we
review contract price and cost estimates regularly as the work progresses and reflect adjustments proportionate to our progress
made towards completion in income in the period when we revise those estimates. To the extent these adjustments result in a
reduction or an elimination of previously reported profits with respect to a project, we would recognize a charge against current
earnings, which could be material. Our current estimates of our contract costs and the profitability of our long-term projects,
although reasonably reliable when made, could change as a result of the uncertainties associated with these types of contracts,
and if adjustments to overall contract costs are significant, the reductions or reversals of previously recorded revenue and
profits could be material in future periods.
Our backlog is subject to unexpected adjustments and cancellations and may not be a reliable indicator of future
revenues or earnings.
There can be no assurance that the revenues projected in our backlog will be realized or, if realized, will result in profits.
Because of project cancellations or changes in project scope and schedule, we cannot predict with certainty when or if backlog
will be performed. In addition, even where a project proceeds as scheduled, it is possible that contracted parties may default and
fail to pay amounts owed to us or poor project performance could increase the cost associated with a project. Delays,
suspensions, cancellations, payment defaults, scope changes and poor project execution could materially reduce or eliminate the
revenues and profits that we actually realize from projects in backlog.
Reductions in our backlog due to cancellation or modification by a customer or for other reasons may adversely affect,
potentially to a material extent, the revenues and earnings we actually receive from contracts included in our backlog. Many of
the contracts in our backlog provide for cancellation fees in the event customers cancel projects. These cancellation fees usually
provide for reimbursement of our out-of-pocket costs, revenues for work performed prior to cancellation and a varying
percentage of the profits we would have realized had the contract been completed. However, we typically have no contractual
right upon cancellation to the total revenues reflected in our backlog. Projects may remain in our backlog for extended periods
of time. If we experience significant project terminations, suspensions or scope adjustments to contracts reflected in our
backlog, our financial condition, results of operations and cash flows may be adversely impacted.
Pension and medical expenses associated with our retirement benefit plans may fluctuate significantly depending on
changes in actuarial assumptions, future market performance of plan assets, future trends in health care costs and
legislative or other regulatory actions.
A substantial portion of our current and retired employee population is covered by pension and postretirement benefit
plans, the costs and funding requirements of which depend on our various assumptions, including estimates of rates of return on
benefit-related assets, discount rates for future payment obligations, rates of future cost growth, mortality assumptions and
trends for future costs. Variances from these estimates could have a material adverse effect on us. In addition, our policy to
recognize these variances annually through mark to market accounting could result in volatility in our results of operations,
which could be material. Service accruals for salaried participants ceased as of December 31, 2015. As of December 31, 2023,
we had underfunded defined benefit pension and postretirement benefit plans with obligations totaling approximately $105.4
million. A substantial portion of our postretirement benefit plan costs are recoverable on our U.S. Government contracts. See
Note 7 to our consolidated financial statements included in this Report for additional information regarding our pension and
postretirement benefit plan obligations.
Legal, Regulatory and Compliance Risks
We are involved in a number of legal proceedings. We cannot predict the outcome of litigation and other
contingencies with certainty.
Our business may be adversely affected by the outcome of legal proceedings, investigations, disputes and other
contingencies that cannot be predicted with certainty. As required by GAAP, we estimate loss contingencies and establish
reserves based on our assessment of contingencies where liability is deemed probable and reasonably estimable in light of the
22
facts and circumstances known to us at a particular point in time. Subsequent developments in legal proceedings may affect our
assessment and estimates of the loss contingency recorded as a liability or as a reserve against assets in our financial statements.
For a description of current legal proceedings, see Note 10 to our consolidated financial statements included in this Report.
If we fail to comply with government procurement laws and regulations, we could lose business and be liable for
various penalties or sanctions.
We must comply with laws and regulations relating to the formation, administration, and performance of U.S.
Government contracts. These laws and regulations include the FAR, Defense Federal Acquisition Regulations, the Truth in
Negotiations Act, CAS, and laws, regulations, and orders restricting the use and dissemination of classified information under
the U.S. export control laws and the export of certain products and technical information. Certain government contracts provide
audit rights by government agencies, including with respect to performance, costs, internal controls and compliance with
applicable laws and regulations. In complying with these laws and regulations, we may incur significant costs, and non-
compliance may result in the imposition of fines and penalties, including contractual damages. If we fail to comply with
existing or future laws and regulations or if a government audit, review, or investigation uncovers improper or illegal activities,
we may be subject to civil penalties, criminal penalties, or administrative sanctions, including suspension or debarment from
contracting with the U.S. Government. Changes in environmental and climate change laws or regulations, including laws
relating to greenhouse gas emissions, could lead to new or additional investment in facilities and could increase environmental
compliance expenditures, including increased energy, raw material and other costs. For example, changes to the FAR
requirements for federal contractors proposed in November 2022 would require companies to make annual greenhouse gas
emissions and other disclosures in order to be deemed a responsible bidder on future government contracts. Such additional
requirements could result in additional expense and, if we are unable to comply with such regulatory changes, could have a
material adverse effect on our business, financial condition and results of operations. Further, our reputation could suffer harm
if allegations of impropriety were made or found against us, which could adversely affect our operating performance and may
result in additional expenses and possible loss of revenue.
Employee, agent or partner misconduct or our overall failure to comply with laws, regulations or government
contracts could weaken our ability to win contracts, lead to the suspension of our operations and result in reduced revenues
and profits.
Misconduct, fraud, or other improper activities by one or more of our employees, agents or partners, as well as our failure
to comply with applicable laws and regulations, could have a significant negative impact on our business and reputation. Such
misconduct could include the failure to comply with government procurement regulations, regulations regarding the protection
of classified and other information, regulations regarding the pricing of labor and other costs in government contracts,
regulations on lobbying or similar activities, regulations pertaining to the internal controls over financial reporting and various
other applicable laws or regulations. For example, we regularly provide services that may be highly sensitive or that are related
to critical national security matters. If a security breach were to occur, our ability to procure future government contracts could
be severely limited. The precautions we take to prevent and detect these activities may not be effective, and we could face
unknown risks or losses.
We are routinely audited and reviewed by the U.S. Government and its agencies. These agencies review our performance
under our contracts, our cost structure and our compliance with applicable laws, regulations and standards, as well as the
adequacy of, and our compliance with, our internal control systems and policies. Systems that are subject to review include our
purchasing systems, billing systems, property management and control systems, cost estimating systems, compensation systems
and management information systems. Any costs found to be improperly allocated to a specific contract will not be reimbursed
or must be refunded if already reimbursed. If an audit or review uncovers improper or illegal activities, we could be subject to
civil and criminal penalties and administrative sanctions, including termination of contracts, forfeiture of profits, suspension of
payments, fines, loss of security clearance and suspension or debarment from contracting with the U.S. Government. In
addition, we could suffer serious reputational harm if allegations of impropriety were made against us.
Our nuclear operations subject us to various environmental, regulatory, financial and other risks.
Our operations in designing, engineering, manufacturing, supplying, constructing and maintaining nuclear fuel and
nuclear power equipment and components subject us to various risks, including:
•
potential liabilities relating to harmful effects on the environment and human health resulting from nuclear operations
and the storage, handling and disposal of radioactive materials;
23
•
•
•
unplanned expenditures relating to maintenance, operation, security, defects, upgrades and repairs required by the
NRC, the CNSC and other government agencies;
limitations on the amounts and types of insurance commercially available to cover losses that might arise in connection
with nuclear operations; and
potential liabilities arising out of a nuclear, radiological or criticality incident, whether or not it is within our control.
Our nuclear operations are subject to various safety-related requirements imposed by the U.S. Government, the DOE, the
NRC and the CNSC. In the event of non-compliance, these agencies might increase regulatory oversight, impose fines or shut
down our operations, depending upon the assessment of the severity of the situation. Revised security and safety requirements
promulgated by these agencies could necessitate substantial capital and other expenditures. In addition, we must comply with
and are affected by laws and regulations relating to the award, administration and performance of U.S. Government contracts.
U.S. Government contract laws and regulations affect how we do business with our customers and, in some instances, impose
added costs on our business. A violation of specific laws and regulations could result in the imposition of fines and penalties or
the termination of our contracts or debarment from bidding on contracts.
Environmental, social and governance matters and any related reporting obligations may impact our business.
U.S. and international regulators, investors and other stakeholders are increasingly focused on environmental, social and
governance matters. For example, new domestic and international laws and regulations relating to environmental, social and
governance matters, including environmental sustainability and climate change, human capital management and cybersecurity,
are under consideration or being adopted, which may include specific, target-driven disclosure requirements or obligations. Our
response will require increased costs to comply, the implementation of new reporting processes, entailing additional compliance
risk, a skilled workforce and other incremental investments.
Limitations or modifications to indemnification regulations of the U.S. or foreign countries could adversely affect our
business.
The Price-Anderson Act partially indemnifies the nuclear industry against liability arising from nuclear incidents in the
U.S., while ensuring compensation for the general public. The Price-Anderson Act comprehensively regulates the manufacture,
use and storage of radioactive materials, while promoting the nuclear industry by offering broad indemnification to commercial
nuclear power plant operators and DOE contractors. Because we provide nuclear fabrication and other services to the DOE
relating to its nuclear devices, facilities and other programs and the nuclear power industry in the ongoing maintenance and
modifications of its nuclear power plants, including the manufacture of equipment and other components for use in such nuclear
power plants, we expect, in the event of a nuclear incident or precautionary evacuation (as such terms are defined in the Atomic
Energy Act), to be entitled to the indemnification protections under the Price-Anderson Act against liability arising from
nuclear incidents occurring in the U.S. (with an available indemnification amount of approximately $16.5 billion) and in foreign
countries (with an available indemnification amount of $0.5 billion). The statutory authority for indemnification under the
Price-Anderson Act has been extended by Congress four times, most recently through December 2025 by the Energy Policy
Act of 2005 (Public Law 109-58). The further extension of the NRC and DOE indemnification authority beyond 2025 is a
matter presently being considered in the U.S. Congress. The Price-Anderson Act extensions have historically been for twenty
years. The failure of an extension would not impact the existing government nuclear indemnifications already provided under
our current DOE contracts and NRC licenses. However, a failure to extend the indemnification authority would impact future
DOE contract awards and NRC licenses. In such an event, such contracts and licenses would not contain automatic government
indemnification. In certain instances, alternate indemnification authority exists but it must be specifically requested and
separately approved and may not always be applicable (e.g., indemnification under Public Law 85-804 is available for contracts
having a defense interest and certain DOE contracts may not be for supplies or services that satisfy this requirement). Because
nuclear liability risks are uninsurable or under-insurable, the absence of government indemnification would require us to choose
between (i) accepting future DOE work and entering future NRC licenses (or providing fuel, components or services under
NRC licensees lacking indemnification) without government indemnification and accepting the associated significant risk, or
(ii) declining such future work.
We also provide nuclear fabrication and other services to the nuclear power industry in Canada and other countries.
Canada's NLCA generally conforms to international conventions and is conceptually similar to the Price-Anderson Act in the
U.S. Accordingly, indemnification protections and the possibility of exclusions under Canada's NLCA are similar to those
under the Price-Anderson Act in the U.S.
The Price-Anderson Act and Canada's NLCA indemnification provisions may not apply to all liabilities that we might
incur while performing services as a contractor for the DOE and the nuclear power industry. If an incident, damages or
24
evacuation is not covered under the indemnification provisions of the Price-Anderson Act or Canada's NLCA, we could be held
liable for damages, in some cases regardless of fault, which could have an adverse effect on our financial condition and results
of operations. In connection with the international transportation of toxic, hazardous and radioactive materials, it is possible for
a claim to be asserted that may not fall within the indemnification provided by the Price-Anderson Act or Canada's NLCA. If
such indemnification authority is not applicable in the future, our business could be adversely affected if the owners and
operators of nuclear power plants fail to retain our services in the absence of commercially adequate insurance and
indemnification.
Moreover, because we manufacture nuclear components for the U.S. Government's defense program, we may be entitled
to some of the indemnification protections afforded by Public Law 85-804 for certain of our nuclear operations risks. Public
Law 85-804 authorizes certain agencies of the U.S. Government, such as the DOE and the DoD, to indemnify their contractors
against unusually hazardous or nuclear risks when such action would facilitate the national defense. However, because the
indemnification protections afforded by Public Law 85-804 are granted on a discretionary basis, situations could arise where the
U.S. Government elects not to offer such protections. In such situations, our business could be adversely affected by either our
inability to obtain commercially adequate insurance or indemnification or our refusal to pursue such operations in the absence
of such protections.
Our operations involve the handling, transportation and disposal of radioactive and hazardous materials, and
environmental laws and regulations and civil liability for contamination of the environment or related personal injuries may
result in increases in our operating costs and capital expenditures and decreases in our earnings and cash flows.
Our operations involve the handling, transportation and disposal of radioactive and hazardous materials, including
nuclear devices and their components. Failure to properly handle these materials could pose a health risk to humans or wildlife
and could cause personal injury and property damage (including environmental contamination). If an accident were to occur, its
severity could be significantly affected by the volume of the materials and the speed of corrective action taken by us and others,
including emergency response personnel, as well as other factors beyond our control, such as weather and wind conditions.
Actions taken in response to an accident could result in significant costs.
Governmental requirements relating to the protection of the environment, including solid waste management, air quality,
water quality, the decontamination and decommissioning of nuclear manufacturing and processing facilities and cleanup of
contaminated sites, have had a substantial impact on our operations. These requirements are complex and subject to frequent
change. In some cases, they can impose liability for the entire cost of cleanup on any responsible party without regard to
negligence or fault and impose liability on us for the conduct of others or conditions others have caused, or for our acts that
complied with all applicable requirements when we performed them. Our compliance with amended, new or more stringent
requirements, stricter interpretations of existing requirements or the future discovery of contamination may require us to make
material expenditures or subject us to liabilities that we currently do not anticipate. Such expenditures and liabilities may
adversely affect our business, financial condition, results of operations and cash flows. In addition, some of our operations and
the operations of predecessor owners of some of our properties have exposed us to civil claims by third parties for liability
resulting from alleged contamination of the environment or personal injuries caused by releases of hazardous substances into
the environment. See the heading "Governmental Regulations and Environmental Matters" in Item 1 of this Report.
In our contracts, we seek to protect ourselves from liability associated with accidents, but there can be no assurance that
such contractual limitations on liability will be effective in all cases or that our or our customers' insurance will cover all the
liabilities we have assumed under those contracts. The costs of defending against a claim arising out of a nuclear incident or
precautionary evacuation, and any damages awarded as a result of such a claim, could adversely affect our financial condition
and results of operations.
We maintain insurance coverage as part of our overall risk management strategy and due to requirements to maintain
specific coverage in our financing agreements and in many of our contracts. These policies do not protect us against all
liabilities associated with accidents or for unrelated claims. In addition, comparable insurance may not continue to be available
to us in the future at acceptable prices, or at all.
Our business requires us to obtain, and to comply with, federal, state and local government permits and approvals.
Our business is required to obtain, and to comply with, federal, state and local government permits and approvals. Any of
these permits or approvals may be subject to denial, revocation or modification under various circumstances. Failure to obtain
or comply with the conditions of permits or approvals may adversely affect our operations by temporarily suspending our
25
activities or curtailing our work and may subject us to penalties and other sanctions. Although existing licenses are routinely
renewed by various regulators, renewal could be denied or jeopardized by various factors, including:
•
•
•
•
•
failure to provide adequate financial assurance for decommissioning or closure;
failure to comply with environmental and safety laws and regulations or permit conditions;
local community, political or other opposition;
executive action; and
legislative action.
We are also subject to regulatory oversight by the FDA and Health Canada for our medical isotope business. The
commercialization of our medical radioisotope technology will require the review and approval of these and other government
agencies. Any delay or denial of such approvals could have a material adverse effect on our medical isotope business.
In addition, if new legislation or regulations are enacted or implemented, or if existing laws or regulations are amended or
are interpreted or enforced differently, we may be required to obtain additional operating permits or approvals. Our inability to
obtain, and to comply with, the permits and approvals required for our business could have a material adverse effect on us.
Item 1B.
UNRESOLVED STAFF COMMENTS
None.
Item 1C. CYBERSECURITY
We seek to provide a secure working environment by establishing and maintaining effective security measures to protect
the Company’s employees, properties, technology, and our customers’ assets from potential threats, including cybersecurity
threats. Accordingly, we have implemented numerous controls, technologies and processes and have integrated operational
measures into our overall risk management system to assess, identify, and manage material risks from internal and external
cybersecurity threats.
The Governance Committee of our Board of Directors oversees the Company’s guidelines, policies, and processes to
assess and manage the Company’s exposure to risks, which include cybersecurity risks. The Committee meets periodically with
management to review and discuss major financial risk exposures, including from cybersecurity threats, and the steps
management has taken to monitor and control those exposures. As necessary, our Cybersecurity Incident Management Team
(“CIMT”) (described below) reports significant cybersecurity threats and incidents to the Governance Committee. The
Governance Committee is also periodically briefed by management, including our Chief Digital Officer (“CDO”), with respect
to our cybersecurity posture to facilitate its role in overseeing the Company’s overall cybersecurity program.
As a general matter, our CDO is responsible for defining our entire cybersecurity posture. The CDO has oversight in
planning the strategy, programs, policies, and procedures to protect the organization’s digital assets, information, and
infrastructure. Our IT Director, Cyber Security serves as the CIMT’s Incident Manager and is the member of management
primarily responsible for assessing, identifying, mitigating, and managing cybersecurity risks; supervising IT security design,
development, implementation, and testing; and running the day-to-day operations of our cybersecurity team. Our CDO holds a
bachelor’s degree in electronics and telecommunications engineering and has more than 35 years of information technology and
cybersecurity experience in various leadership and executive roles. In addition, our IT Director, Cyber Security holds a
bachelor’s degree in computer information systems and the Certified Information Systems Security Professional (CISSP) and
Information Systems Security Architecture Professional (ISSAP) certifications, as well as over 30 years of experience as an
information technology professional with the most recent 15 years specializing in cybersecurity.
The CIMT is responsible for coordinating the containment, response, investigation, reporting, and recovery related to a
cybersecurity incident, and is an internally led management team made up of leaders from our Communications, Human
Resources, IT and Cybersecurity, Legal and Compliance, Risk Management and other departments, including our IT Director,
Cyber Security. Team members possess a broad scope of expertise, including cybersecurity, information technology, legal,
compliance, risk management, insurance and crisis communications. The CIMT operates under the co-leadership of the General
Counsel and CDO, who are responsible for oversight and composition of the CIMT, determining whether an incident warrants
activating external service providers, providing updates to the Chief Executive Officer and Senior Management Team, keeping
26
our Governance Committee as well as our Board of Directors informed as appropriate, and ultimately establishing and
executing our enterprise-wide incident response strategy.
Training and preparation are essential to the overall success of the CIMT to help ensure team members develop and
maintain the operational, technical, and managerial skillsets necessary to support the effective function of the CIMT. Our CIMT
members undergo training and preparation for cybersecurity incidents like participating in regular cybersecurity incident
response tabletop exercises and reviewing lessons learned. Our general cybersecurity team receives extensive on-the-job
training with respect to cybersecurity operations, maintenance, analysis, detection, investigation, mitigation, and protection. In
addition, company-wide cybersecurity and insider threat training is mandated for our employees.
We have processes and controls that oversee, identify, and manage cybersecurity risks with respect to our external service
providers, including cybersecurity service providers. For example, we review and seek to negotiate terms and conditions in our
legal agreements to provide for the adequate protection of confidential information and the Company’s networks and systems
and compliance with any applicable cybersecurity requirements, including with respect to any information exchanged. We also
review the security controls of hosted solutions in an effort to ensure protection is commensurate with our security
requirements. We periodically revalidate those cybersecurity control reviews commensurate with the risk identified. Further, we
utilize an external security assessment service to produce security ratings that include detailed descriptions of deficiencies
affecting the rating. We seek to respond accordingly to those deficiencies to the extent practicable. Lastly, as appropriate and
when feasible, we may visit our service providers’ facilities to observe security practices and physical security controls.
Despite taking extensive precautions, cybersecurity incidents are still possible. In general, when our cybersecurity team
detects a cybersecurity threat by way of an alert within our cyber defense systems, employee notice, or otherwise, our IT
Director, Cyber Security, along with other relevant personnel, is promptly apprised of the situation, and actively takes steps to
prevent, mitigate, or remediate that threat. If a cybersecurity threat appears to progress into a possible cybersecurity incident,
our IT Director, Cyber Security serves as the CIMT’s incident manager and the CDO or designee notifies the Chief Risk
Officer of a need to activate the CIMT as appropriate, informs and updates the CIMT, and may consult other internal and
external resources with the required technical, application, organizational, and business knowledge to provide effective advice
to the CIMT.
The CIMT responds to potential cybersecurity incidents raised to its attention by making an assessment of the event to
determine if a cybersecurity incident has, in fact, occurred, identifying any assets impacted by the incident, determining any
information stored and processed by assets identified as compromised, assessing the nature and level of damage that has
occurred (accessed, exfiltrated, released to the public, etc.), and revising the assessment throughout the incident response
process when additional details are identified.
As a U.S. Government contractor, we may be prone to a greater number of those threats than companies in other
industries. We believe we are well positioned to meet the requirements of the Cybersecurity Maturity Model Certification
("CMMC") program and are preparing for certification once the requirements are effective. As of the date of this Report, risks
from cybersecurity threats, including as a result of previous cybersecurity incidents, have not materially affected us, including
our business strategy, results of operations, or financial condition. However, there can be no guarantee that cybersecurity threats
and incidents will not materially affect us in the future. See Item 1A of this Report for more information on our cybersecurity
risks.
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Item 2.
PROPERTIES
The following table provides the segment name, location and general use of each of our principal properties at
December 31, 2023 that we own or lease:
Business Segment and Location
Government Operations
Lynchburg, Virginia
Barberton, Ohio
Euclid, Ohio
Mount Vernon, Indiana
Erwin, Tennessee
Lynchburg, Virginia
Commercial Operations
Cambridge, Ontario, Canada
Peterborough, Ontario, Canada
Toronto, Ontario, Canada
Kanata, Ontario, Canada
Vancouver, British Columbia, Canada
Oakville, Ontario, Canada
Corporate
Lynchburg, Virginia
Washington, District of Columbia
Charlotte, North Carolina
Principal Use
Owned/Leased
(Lease Expiration)
Manufacturing facility (1) (4)
Manufacturing facility
Manufacturing facility
Manufacturing facility
Manufacturing facility (2) (4)
Administrative office
Manufacturing facility
Manufacturing facility (3) (4)
Manufacturing facility (3) (4)
Manufacturing facility (3) (4)
Manufacturing facility (3) (4)
Manufacturing facility
Administrative office
Administrative office
Administrative office
Owned
Owned
Owned
Owned
Owned
Leased (2024)
Owned
Leased (2036)
Leased (2036)
Leased (2038)
Leased (2031)
Leased (2029)
Leased (2026)
Leased (2033)
Leased (2025)
(1) Our Government Operations segment operates two facilities in Lynchburg, Virginia:
•
•
The segment's primary manufacturing plant which resides on 497 acres and has approximately 1 million square
feet under roof. This facility is the nation's largest commercial high-enriched uranium processing facility and is
also the largest commercial International Atomic Energy Agency certified facility in the U.S.
A center for manufacturing and research and development, referred to as the BWXT Innovation Campus. This
site is adjacent to facility noted above.
(2) Nuclear Fuel Services, Inc. ("NFS") operates this facility, which manufactures fuel for naval nuclear reactors and
downblends Cold War-era government stockpiles of high-enriched uranium. NFS is the sole provider of nuclear fuel for
the U.S. Navy.
(3) These facilities are licensed by the CNSC in order to allow us to fabricate natural uranium fuel and produce medical
radioisotopes.
(4) This site is subject to review by either the NRC or the CNSC for licensee performance. The performance reviews
determine the safe and secure conduct of operations of the facility.
We consider each of our significant properties to be suitable and adequate for its intended use. For further details
regarding our properties, see Item 1 of this Report.
Item 3.
LEGAL PROCEEDINGS
The information set forth under the heading "Investigations and Litigation" in Note 10 to our consolidated financial
statements included in Item 8 of this Report is incorporated by reference into this Item 3.
Item 4.
MINE SAFETY DISCLOSURES
None.
28
PART II
Item 5.
MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
Our common stock is traded on the New York Stock Exchange under the symbol BWXT. As of February 23, 2024, there
were approximately 1,298 holders of record of our common stock.
Since November 2012, we have periodically announced that our Board of Directors has authorized share repurchase
programs. The following table provides information on our purchases of equity securities during the quarter ended
December 31, 2023. Any shares purchased that were not part of a publicly announced plan or program are related to
repurchases of common stock pursuant to the provisions of employee benefit plans that permit the repurchase of shares to
satisfy statutory tax withholding obligations.
Issuer Purchases of Equity Securities
Period
October 1, 2023 – October 31, 2023
November 1, 2023 – November 30, 2023
December 1, 2023 – December 31, 2023
Total
Total number
of shares
purchased (1)
Average price
paid per share
76.00
78.10
—
76.05
1,092 $
26
—
1,118 $
Total number of shares
purchased as part of
publicly announced
plans or programs
Approximate dollar value of
shares that may yet be
purchased under the plans
or programs (in millions) (2)
397.6
397.6
397.6
— $
— $
— $
—
(1) Includes 1,092, 26 and 0 shares repurchased during October, November and December, respectively, pursuant to the
provisions of employee benefit plans that permit the repurchase of shares to satisfy statutory tax withholding
obligations.
(2) On April 30, 2021, our Board of Directors authorized us to repurchase an indeterminate number of shares of our
common stock at an aggregate market value of up to $500 million with no expiration date.
29
The following graph provides a comparison of our cumulative total shareholder return over five years to the return of the
S&P 500 Composite Index ("S&P 500") and the return of the S&P Aerospace and Defense Select Index ("S&P A&D Select").
The following graph shall not be deemed to be "soliciting material" or "filed" with the SEC or be subject to Regulation 14A or
14C (other than as provided in Item 201 of Regulation S-K) or to the liabilities of Section 18 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), nor shall such information be incorporated by reference into any future filing under
the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that BWXT specifically incorporates it by
reference into such filing.
This graph assumes the investment of $100 on December 31, 2018 and the reinvestment of dividends thereafter.
Item 6.
[RESERVED]
30
Item 7.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Statements we make in the following discussion, which express a belief, expectation or intention, as well as those that are not
historical fact, are forward-looking statements that are subject to risks, uncertainties and assumptions. Our actual results,
performance or achievements, or industry results, could differ materially from those we express in the following discussion as a
result of a variety of factors, including the risks and uncertainties we have referred to under the heading "Cautionary Statement
Concerning Forward-Looking Statements" in Item 1 and throughout Item 1A of this Report.
General
We are a leading supplier of nuclear components and fuel to the U.S. Government; provide technical, management and
site services to support governments in the operation of complex facilities and environmental remediation activities; supply
precision manufactured components, nuclear fuel and services for the commercial nuclear power industry; supply critical
medical radioisotopes and radiopharmaceuticals; and develop nuclear technologies for a variety of applications, including
medical radioisotopes, advanced nuclear power sources and advanced nuclear reactors. In general, we operate in capital-
intensive industries and rely on large contracts for a substantial amount of our revenues. We operate in two reportable
segments: Government Operations and Commercial Operations. We are currently exploring growth strategies across our
segments through strategic investments and acquisitions to expand and complement our existing businesses. We would expect
to fund these opportunities with cash generated from operations or by raising additional capital through debt, equity or some
combination thereof.
Outlook
We expect to recognize approximately 51% of the revenue associated with our backlog by the end of 2024, with the
remainder to be recognized thereafter.
Government Operations
The revenues of our Government Operations segment are largely a function of national security spending by the U.S.
Government. As a supplier of major nuclear components for certain U.S. Government programs, we are a significant participant
in the defense industry and have not been negatively impacted by federal budget reductions to date. We believe many of our
programs are well-aligned with national defense and other strategic priorities as we supply high-end equipment for submarines
and aircraft carriers for the U.S. Navy and participate in the continuing cleanup, operation and management of critical
government-owned nuclear sites, laboratories and manufacturing complexes maintained by the DOE, NASA and other federal
agencies. However, it is possible that reductions in federal government spending could have an adverse impact on the operating
results and cash flows of this segment in the future.
A portion of this segment's operations is also conducted through joint ventures, which typically earn fees, and we account
for them following the equity method of accounting. See Note 4 to our consolidated financial statements included in this Report
for financial information on our equity method investments. This segment also specializes in the development of advanced
technologies. The nature, timing and duration of any related contracts are dependent on the demand and funding availability for
such technologies.
Commercial Operations
The revenues in this segment primarily depend on the demand and competitiveness of nuclear energy. The activity of this
segment depends on the timing of maintenance and refueling outages, the cyclical nature of capital expenditures and major
refurbishment and plant life extension projects, as well as the demand for nuclear fuel and fuel handling equipment primarily in
the Canadian market, which could cause variability in our financial results.
Our Commercial Operations segment's offerings also include medical radioisotope products, radiopharmaceuticals and
medical devices for use in diagnostic imaging and radiotherapeutic treatments. The medical isotope business will be the
platform from which we plan to launch our Molybdenum-99 product line and a number of future radioisotope-based imaging,
diagnostic and therapeutic products.
31
Critical Accounting Estimates
Our financial statements and accompanying notes are prepared in accordance with accounting principles generally
accepted in the United States ("GAAP"). Preparing financial statements requires management to make estimates and
assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. These estimates and assumptions are
affected by management's application of accounting policies. We believe the following are our most critical accounting policies
that we apply in the preparation of our financial statements. These policies require our most difficult, subjective and complex
judgments, often as a result of the need to make estimates of matters that are inherently uncertain, and the impact of these
policies have had or are reasonably likely to have a material impact on our financial condition or results of operations.
See Note 1 to our consolidated financial statements included in this Report for further discussion of significant
accounting policies.
Contracts and Revenue Recognition
We generally recognize estimated contract revenue and resulting income over time based on the measurement of the
extent of progress toward completion using total costs incurred as a percentage of the total estimated project costs for individual
performance obligations. We review contract price and cost estimates periodically as the work progresses and reflect
adjustments proportionate to the percentage-of-completion in income in the period when those estimates are revised. If a current
estimate of total contract costs indicates a loss on a contract, the projected loss is recognized in full when determined. It is
possible that current estimates could materially change for various reasons, including, but not limited to, fluctuations in
forecasted labor productivity or raw material prices. We routinely review estimates related to our contracts, and revisions to
profitability are reflected in the quarterly and annual earnings we report. The aggregate impact of changes in estimates
increased our revenue and operating income as follows:
Revenues
Operating Income (1)
Year Ended December 31,
2023
2022
2021
(In thousands)
$
$
24,728 $
24,813 $
26,629 $
24,405 $
30,719
26,540
(1) During the year ended December 31, 2023, our Government Operations segment results were favorably impacted by
contract adjustments related to a nuclear operations contract which resulted in an increase in operating income of $22.5
million. Our Government Operations segment also recognized favorable adjustments totaling $27.9 million as a result
of the successful negotiation of change orders related to cost growth that was driven by out-of-scope changes associated
with the manufacture of non-nuclear components.
During the year ended December 31, 2022, our Government Operations segment results were negatively affected by
contract adjustments for cost growth related to the manufacture of non-nuclear components which resulted in a decrease
in operating income of $11.3 million.
During the year ended December 31, 2021, no adjustment to any one contract had a material impact on our consolidated
financial statements.
Although we continually strive to improve our ability to estimate our contract costs and profitability, adjustments to
overall contract costs due to unforeseen events could be significant in future periods. We recognize contract change orders or
changes in scope of work in contract revenues, to the extent of costs incurred, when we believe collection is probable and can
be reasonably estimated. We recognize income from claims when formally agreed with the customer. We regularly assess the
collectability of contract revenues and receivables from customers.
Pension Plans and Postretirement Benefits
We utilize actuarial and other assumptions in calculating the cost and benefit obligations of our pension and
postretirement benefits. The assumptions utilized in the determination of our cost and obligations include assumptions
regarding discount rates, expected returns on plan assets, mortality and health care cost trends. The assumptions utilized
represent our best estimates based on historical experience and other factors.
We calculate the majority of our pension costs under both financial accounting standards ("FAS") in accordance with
GAAP and CAS in accordance with the FAR. We have prepared our consolidated financial statements and segment reporting
disclosures utilizing pension costs calculated under FAS. Pension costs calculated under CAS are utilized as the basis for
recovery of pension costs on our U.S. Government contracts. For the years ended December 31, 2023, 2022 and 2021, our CAS
32
pension costs attributed to U.S. Government contracts totaled $13.6 million, $11.7 million and $29.0 million, respectively. The
amount of recoverable CAS pension costs recognized as revenue on an annual basis may differ from the amounts noted above.
See further discussion of our accounting for contracts and revenue recognition above and in Note 1 to our consolidated financial
statements included in this Report.
Actual experience that differs from these assumptions or future changes in assumptions will affect our recognized benefit
obligations and related costs. We immediately recognize net actuarial gains and losses in earnings in the fourth quarter as a
component of net periodic benefit cost. Net actuarial gains and losses occur when actual experience differs from any of the
various assumptions used to value our pension and postretirement benefit plans or when assumptions, which are revisited
annually through our update of our actuarial valuations, change due to current market conditions or underlying demographic
changes. The primary factors contributing to net actuarial gains and losses are changes in the discount rate used to value the
obligations as of the measurement date each year and the difference between the actual return on plan assets and the expected
return on plan assets. The effect of changes in the discount rate and expected rate of return on plan assets assumptions in
combination with the actual return on plan assets can result in significant changes in our estimated pension and postretirement
benefit cost and our consolidated financial condition.
The following sensitivity analysis shows the impact of a 25 basis point change in the assumed discount rate and return on
plan assets on our FAS pension benefit plan obligations and expense for the year ended December 31, 2023:
Discount Rate:
Effect on ongoing net periodic benefit cost (1)
Effect on projected benefit obligation
Return on Plan Assets:
Effect on ongoing net periodic benefit cost
(1) Excludes effect of annual mark to market adjustment.
Goodwill and Intangible Assets
.25% Increase
.25% Decrease
(In millions)
$
$
$
0.6 $
(24.0) $
(0.6)
25.1
(2.1) $
2.1
Each year, we evaluate goodwill at each reporting unit to assess recoverability, and impairments, if any, are recognized in
earnings. We perform a qualitative analysis when we believe that there is sufficient excess fair value over carrying value based
on our most recent quantitative assessment, adjusted for relevant facts and circumstances that could affect fair value.
Deterioration in macroeconomic, industry and market conditions, cost factors, overall financial performance, share price decline
or entity and reporting unit specific events could cause us to believe a qualitative test is no longer appropriate.
When we determine that it is appropriate to test goodwill for impairment utilizing a quantitative test, we compare the fair
value of a reporting unit to its carrying amount, including goodwill. We utilize both the income and market valuation
approaches to provide inputs into the estimate of the fair value of our reporting units, which would be considered by market
participants.
Under the income valuation approach, we employ a discounted cash flow model to estimate the fair value of each
reporting unit. This model requires the use of significant estimates and assumptions regarding future revenues, costs, margins,
capital expenditures, changes in working capital, terminal year growth rate and cost of capital. Our cash flow models are based
on our forecasted results for the applicable reporting units. Actual results could differ materially from our projections. Some
assumptions, such as future revenues, costs and changes in working capital are company driven and could be affected by a loss
of one or more significant contracts or customers, failure to control costs on certain contracts, a decline in U.S. Government
funding or a decline in demand based on changing economic or regulatory conditions. Changes in external market conditions
may affect certain other assumptions, such as the cost of capital. Market conditions can be volatile and are outside of our
control.
Under the market valuation approach, we employ the guideline publicly traded company method, which indicates the fair
value of the equity of each reporting unit by comparing it to publicly traded companies in similar lines of business. After
identifying and selecting guideline companies, we analyze their business and financial profiles for relative similarity. Factors
such as size, growth, risk and profitability are analyzed and compared to each of our reporting units. Assumptions include the
selection of our peer companies and use of market multiples, which could increase or decrease based on the profitability of our
competitors and performance of their stock, which is often dependent on the performance of the stock market and general
economy as a whole.
33
Adverse changes in the assumptions utilized in our impairment test could cause a reduction or elimination of excess fair
value over carrying value, resulting in potential recognition of impairment. If the carrying value of a reporting unit exceeds its
fair value, an impairment charge is recorded to goodwill in the amount by which the carrying value exceeds fair value.
We completed our annual review of goodwill for each of our reporting units for the year ended December 31, 2023,
which indicated that we had no impairment of goodwill. The fair value of our reporting units was substantially in excess of
carrying value.
Each year, we evaluate indefinite-lived intangible assets to assess recoverability, and impairments, if any, are recognized
in earnings. We perform a qualitative assessment when testing indefinite-lived intangible assets for impairment to determine
whether events or circumstances that could affect the significant inputs used in determining fair value have occurred that
indicate that it is more likely than not that the indefinite-lived intangible asset is impaired. Deterioration in macroeconomic,
industry and market conditions, cost factors or overall financial performance could cause us to believe a qualitative test is no
longer appropriate. When quantitative assessments are performed, we primarily utilize income-based valuation approaches.
Under the income-based valuation approach, we employ a relief from royalty method of valuation. This method requires
significant assumptions, including assumed royalty rate, future revenues and cost of capital. Assumptions related to operating
performance, such as future revenues, could be affected by loss of a customer contract, a decline in U.S. Government funding
or a decline in demand based on changing economic or regulatory conditions. Changes in external market conditions may affect
certain other assumptions, such as the cost of capital. Market conditions can be volatile and are outside of our control.
Adverse changes in these assumptions utilized within our indefinite-lived intangible asset impairment test could cause a
reduction or elimination of excess fair value over carrying value, resulting in potential recognition of impairment.
We have completed our annual review of our indefinite-lived intangible assets for the year ended December 31, 2023,
which indicated that we had no impairment. The fair value of our indefinite-lived intangible assets was substantially in excess
of carrying value.
Asset Retirement Obligations and Environmental Cleanup Costs
We accrue for future decommissioning of our nuclear facilities that will permit the release of these facilities to
unrestricted use at the end of each facility's service life, which is a requirement of our licenses from the NRC and the CNSC. In
estimating fair value, we use present value of cash flows expected to be incurred in settling our obligations. To the extent
possible, we perform a marketplace assessment of the cost and timing of performing the retirement activities. We apply a credit-
adjusted risk-free interest rate to our expected cash flows in our determination of fair value. Actual costs incurred to
decommission our facilities may differ from the accreted liability. For environmental liabilities associated with assets that we
no longer operate, we have accrued amounts based on the estimated costs of cleanup activities, net of the anticipated effect of
any applicable cost-sharing arrangements. We adjust the estimated costs as further information develops or circumstances
change. Given the long-lived nature of these facilities, we are required to estimate retirement costs that will be incurred in the
future, which may extend up to 40 years at the time the asset retirement obligation is established. Due to the significance of the
remaining useful life of these facilities, the timing of retirement and future costs for material components of the asset retirement
obligations, such as labor and waste disposal fees, could differ from our estimates. An exception to this accounting treatment
relates to the work we perform for two facilities for which the U.S. Government is obligated to pay substantially all the
decommissioning costs.
34
Results of Operations – Years Ended December 31, 2023, 2022 and 2021
Selected financial highlights are presented in the table below:
Year Ended December 31,
2023
2022
2021
(In thousands)
REVENUES:
Government Operations
Commercial Operations
Eliminations
OPERATING INCOME:
Government Operations
Commercial Operations
Unallocated Corporate
Total Operating Income
466,344
$ 2,031,337 $ 1,808,483 $ 1,725,097
407,082
(8,105)
$ 2,496,309 $ 2,232,834 $ 2,124,074
(3,007)
(1,372)
427,358
$
$
$
374,682 $
37,532
412,214 $
(29,155)
383,059 $
336,501 $
27,418
363,919 $
(15,348)
348,571 $
329,549
35,243
364,792
(18,944)
345,848
This section discusses our 2023 and 2022 results of operations and contains year-to-year comparisons between 2023 and
2022. Discussions of our 2021 results and year-to-year comparisons between 2022 and 2021 that are not included in this Report
can be found in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2022.
Consolidated Results of Operations
Year Ended December 31, 2023 vs. 2022
Consolidated revenues increased 11.8%, or $263.5 million, to $2,496.3 million in the year ended December 31, 2023
compared to $2,232.8 million in 2022, due to increases in revenues in our Government Operations and Commercial Operations
segments of $222.9 million and $39.0 million, respectively.
Consolidated operating income increased $34.5 million to $383.1 million in the year ended December 31, 2023 compared
to $348.6 million in 2022. Operating income in our Government Operations and Commercial Operations segments increased
$38.2 million and $10.1 million, respectively. These increases were partially offset by higher Unallocated Corporate expenses
of $13.8 million.
Government Operations
Revenues
Operating Income
% of Revenues
Year Ended December 31,
2023
2022
$ Change
(In thousands)
$ 2,031,337 $ 1,808,483 $
336,501 $
$
18.6%
374,682 $
18.4%
222,854
38,181
Year Ended December 31, 2023 vs. 2022
Revenues increased 12.3%, or $222.9 million, to $2,031.3 million in the year ended December 31, 2023 compared to
$1,808.5 million in 2022. The increase was driven by higher volume in the manufacture of nuclear components for U.S.
Government programs, resulting in an increase of $100.0 million when compared to the prior year. Continued growth in design
and engineering work executed by our advanced technologies business, particularly in the defense market, resulted in additional
revenues of $61.6 million. We also experienced higher revenues associated with our uranium processing and downblending
operations of $58.6 million.
Operating income increased $38.2 million to $374.7 million in the year ended December 31, 2023 compared to $336.5
million in 2022. The increase was due to the operating income impact of the changes in revenues noted above.
35
Commercial Operations
Revenues
Operating Income
% of Revenues
Year Ended December 31,
2023
2022
$ Change
(In thousands)
$
$
466,344 $
37,532 $
8.0%
427,358 $
27,418 $
6.4%
38,986
10,114
Year Ended December 31, 2023 vs. 2022
Revenues increased 9.1%, or $39.0 million, to $466.3 million in the year ended December 31, 2023 compared to $427.4
million in 2022. The increase was primarily related to higher levels of in-plant inspection, maintenance, modification and
refurbishment services of $24.1 million and an increase in revenues in our medical radioisotopes business of $14.6 million. We
also experienced higher volume in our nuclear components manufacturing and fuel handling businesses. These increases were
partially offset by decreased revenues in our fuel fabrication business.
Operating income increased $10.1 million to $37.5 million in the year ended December 31, 2023 compared to $27.4
million in 2022. The increase was primarily due to the operating income impact of the changes in revenues noted above in
addition to lower restructuring-related expenses when compared to the prior year. These increases were partially offset by the
operating margin impact caused by a shift in our project and product line mix. In particular, our field services business
experienced a considerable increase in volume associated with large scale, long-term construction projects in support of major
refurbishment and plant life extension projects in Canada.
Unallocated Corporate
Unallocated Corporate expenses increased $13.8 million to $29.2 million in the year ended December 31, 2023 compared
to $15.3 million in 2022. The increase was primarily due to increases in healthcare costs totaling $8.7 million in addition to
higher compensation related expenses. During 2023, we undertook several initiatives to transform our current information
technology infrastructure which resulted in an increase in expense of $2.1 million. These increases were partially offset by a
decrease in legal and consulting costs associated with due diligence activities when compared to the prior year.
Other Income (Expense)
During the year ended December 31, 2023, other income (expense) decreased $27.5 million to a loss of $61.7 million
compared to a loss of $34.2 million in 2022. Included in other income (expense) are components of net periodic benefit cost,
which include mark to market adjustments due to our immediate recognition of net actuarial gains (losses) for our pension and
postretirement benefit plans which changed to a loss of $20.9 million during the year ended December 31, 2023 compared to a
gain of $4.0 million for the year ended December 31, 2022. This was caused by a decrease in pension income of $40.6 million
which was partially offset by a decrease in losses related to mark to market adjustments totaling $15.8 million. In addition, we
experienced an increase in interest expense of $10.6 million in 2023 when compared to the prior year due primarily to an
increase in the weighted-average interest rate on outstanding borrowings under our Credit Facility, as defined below.
Provision for Income Taxes
Income before Provision for Income Taxes
Provision for Income Taxes
Effective Tax Rate
Year Ended December 31,
2023
2022
$ Change
(In thousands)
$
$
321,400 $
75,079 $
23.4%
314,377 $
75,757 $
24.1%
7,023
(678)
For the year ended December 31, 2023, our provision for income taxes decreased $0.7 million to $75.1 million, while
income before provision for income taxes increased $7.0 million to $321.4 million when compared to the prior year. Our
effective tax rate was 23.4% for the year ended December 31, 2023 compared to 24.1% for the year ended December 31, 2022.
Our effective tax rates for the years ended December 31, 2023 and 2022 were higher than the U.S. corporate income tax rate of
21% primarily due to state income taxes within the U.S. and the unfavorable rate differential associated with our Canadian
earnings.
36
See Note 5 to our consolidated financial statements included in this Report for further information on income taxes.
Effects of Inflation and Changing Prices
Our financial statements are prepared in accordance with GAAP, using historical U.S. dollar accounting ("historical
cost"). Statements based on historical cost, however, do not adequately reflect the cumulative effect of increasing costs and
changes in the purchasing power of the U.S. dollar, especially during times of significant and continued inflation.
In order to minimize the negative impact of inflation on our operations, we attempt to cover the increased cost of
anticipated changes in labor, material and service costs, either through an estimate of those changes, which we reflect in the
original price, or through price escalation clauses in our contracts. However, there can be no assurance we will be able to cover
all changes in cost using this strategy.
Liquidity and Capital Resources
Our overall liquidity position, which we generally define as our unrestricted cash and cash equivalents plus amounts
available for borrowings under our credit facility, increased by approximately $116.3 million to $649.1 million at December 31,
2023 compared to $532.7 million at December 31, 2022, primarily attributable to improvements in operating cash flows which
were used, in part, to repay borrowings under our Revolving Credit Facility, as defined below. We experienced net cash
generated from operations in each of the years ended December 31, 2023, 2022 and 2021. Typically, the fourth quarter has been
the period of highest cash flows from operating activities because of the timing of payments received from the U.S.
Government on accounts receivable retainages and cash dividends received from our joint ventures.
Credit Facility
On October 12, 2022, we entered into an Amended and Restated Credit Agreement (the "Credit Facility") with Wells
Fargo Bank, National Association, as administrative agent, and the other lenders party thereto, which amended and restated our
then existing secured credit facility (the "Former Credit Facility"), which consisted of a $750 million senior secured revolving
credit facility. The Credit Facility consists of a $750 million senior secured revolving credit facility (the "Revolving Credit
Facility") and a $250 million senior secured term A loan (the "Term Loan"). The Revolving Credit Facility and the Term Loan
are scheduled to mature on October 12, 2027. All proceeds from the Term Loan were used to repay outstanding indebtedness
under the Former Credit Facility. The proceeds of loans under the Credit Facility are available for working capital needs,
permitted acquisitions and other general corporate purposes.
The Credit Facility allows for additional parties to become lenders and, subject to certain conditions, for the increase of
the commitments under the Credit Facility, subject to an aggregate maximum for all additional commitments of (1) the greater
of (a) $400 million and (b) 100% of EBITDA, as defined in the Credit Facility, for the last four full fiscal quarters, plus (2) all
voluntary prepayments of the Term Loan, plus (3) additional amounts provided the Company is in compliance with a pro forma
first lien leverage ratio test of less than or equal to 2.50 to 1.00.
The Company's obligations under the Credit Facility are guaranteed, subject to certain exceptions, by substantially all of
the Company's present and future wholly owned domestic restricted subsidiaries. The Credit Facility is secured by first-priority
liens on certain assets owned by the Company and its subsidiary guarantors (other than its subsidiaries comprising a portion of
its Government Operations segment).
The Credit Facility requires interest payments on outstanding loans on a periodic basis until maturity. We are required to
make quarterly amortization payments on the Term Loan in an amount equal to (i) 0.625% of the initial aggregate principal
amount of the Term Loan on the last business day of each quarter beginning the quarter ending March 31, 2023 and ending the
quarter ending December 31, 2024 and (ii) 1.25% of the initial aggregate principal amount of the Term Loan on the last
business day of each quarter ending after December 31, 2024, with the balance of the Term Loan due at maturity. We may
prepay all loans under the Credit Facility at any time without premium or penalty (other than customary Term SOFR breakage
costs), subject to notice requirements.
The Credit Facility includes financial covenants that are evaluated on a quarterly basis, based on the rolling four-quarter
period that ends on the last day of each fiscal quarter. The maximum permitted leverage ratio is 4.00 to 1.00, which may be
increased to 4.50 to 1.00 for up to four consecutive fiscal quarters after a material acquisition. The minimum consolidated
interest coverage ratio is 3.00 to 1.00. In addition, the Credit Facility contains various restrictive covenants, including with
respect to debt, liens, investments, mergers, acquisitions, dividends, equity repurchases and asset sales. As of December 31,
2023, we were in compliance with all covenants set forth in the Credit Facility.
37
Outstanding loans under the Credit Facility bear interest at our option at either (1) the Term SOFR plus a credit spread
adjustment of 0.10% plus a margin ranging from 1.0% to 1.75% per year or (2) the base rate plus a margin ranging from 0.0%
to 0.75% per year. We are charged a commitment fee on the unused portion of the Revolving Credit Facility, and that fee
ranges from 0.15% to 0.225% per year. Additionally, we are charged a letter of credit fee of between 1.0% and 1.75% per year
with respect to the amount of each financial letter of credit issued under the Revolving Credit Facility, and a letter of credit fee
of between 0.75% and 1.05% per year with respect to the amount of each performance letter of credit issued under the
Revolving Credit Facility. The applicable margin for loans, the commitment fee and the letter of credit fees set forth above will
vary quarterly based on our consolidated total net leverage ratio. Based on the total net leverage ratio applicable at
December 31, 2023, the margin for Term SOFR and base rate loans was 1.50% and 0.50%, respectively, the letter of credit fee
for financial letters of credit and performance letters of credit was 1.50% and 0.90%, respectively, and the commitment fee for
the unused portion of the Revolving Credit Facility was 0.20%.
As of December 31, 2023, borrowings under our Term Loan totaled $243.8 million, borrowings and letters of credit
issued under the Revolving Credit Facility totaled $175.0 million and $1.7 million, respectively, and we had $573.3 million
available under the Revolving Credit Facility for borrowings and to meet letter of credit requirements. As of December 31,
2023, the weighted-average interest rate on outstanding borrowings under our Credit Facility was 6.96%.
The Credit Facility generally includes customary events of default for a secured credit facility. Under the Credit Facility,
(1) if an event of default relating to bankruptcy or other insolvency events occur with respect to the Company, all related
obligations will immediately become due and payable; (2) if any other event of default exists, the lenders will be permitted to
accelerate the maturity of the related obligations outstanding; and (3) if any event of default exists, the lenders will be permitted
to terminate their commitments thereunder and exercise other rights and remedies, including the commencement of foreclosure
or other actions against the collateral.
If any default occurs under the Credit Facility, or if we are unable to make any of the representations and warranties in the
Credit Facility, we will be unable to borrow funds or have letters of credit issued under the Credit Facility.
Senior Notes due 2026
We issued $400 million aggregate principal amount of 5.375% senior notes due 2026 (the "Senior Notes due 2026")
pursuant to an indenture dated May 24, 2018, among the Company, certain of our subsidiaries, as guarantors, and U.S. Bank
National Association, as trustee. On July 15, 2021, using cash on hand and borrowings under the Former Credit Facility, we
redeemed the Senior Notes due 2026 at a redemption price equal to 102.688% of the principal amount, resulting in an early
redemption premium of $10.8 million and the write-off of deferred debt issuance costs totaling $4.2 million. These charges
were recorded in our consolidated statement of income during the year ended December 31, 2021 as components of Other – net
and Interest expense, respectively.
Senior Notes due 2028
We issued $400 million aggregate principal amount of 4.125% senior notes due 2028 (the "Senior Notes due 2028")
pursuant to an indenture dated June 12, 2020 (the "2020 Indenture"), among the Company, certain of our subsidiaries, as
guarantors, and U.S. Bank Trust Company, National Association (formerly known as U.S. Bank National Association) ("U.S.
Bank"), as trustee. The Senior Notes due 2028 are guaranteed by each of the Company's present and future direct and indirect
wholly owned domestic subsidiaries that is a guarantor under the Credit Facility.
Interest on the Senior Notes due 2028 is payable semi-annually in cash in arrears on June 30 and December 30 of each
year at a rate of 4.125% per annum. The Senior Notes due 2028 will mature on June 30, 2028.
We may redeem the Senior Notes due 2028, in whole or in part, at any time on or after June 30, 2023 at a redemption
price equal to (i) 102.063% of the principal amount to be redeemed if the redemption occurs during the 12-month period
beginning on June 30, 2023, (ii) 101.031% of the principal amount to be redeemed if the redemption occurs during the 12-
month period beginning on June 30, 2024 and (iii) 100.0% of the principal amount to be redeemed if the redemption occurs on
or after June 30, 2025, in each case plus accrued and unpaid interest, if any, to, but excluding, the redemption date.
The 2020 Indenture contains customary events of default, including, among other things, payment default, failure to
comply with covenants or agreements contained in the 2020 Indenture or the Senior Notes due 2028 and certain provisions
related to bankruptcy events. The 2020 Indenture also contains customary negative covenants. As of December 31, 2023, we
were in compliance with all covenants set forth in the 2020 Indenture and the Senior Notes due 2028.
38
Senior Notes due 2029
We issued $400 million aggregate principal amount of 4.125% senior notes due 2029 (the "Senior Notes due 2029")
pursuant to an indenture dated April 13, 2021 (the "2021 Indenture"), among the Company, certain of our subsidiaries, as
guarantors, and U.S. Bank, as trustee. The Senior Notes due 2029 are guaranteed by each of the Company's present and future
direct and indirect wholly owned domestic subsidiaries that is a guarantor under the Credit Facility.
Interest on the Senior Notes due 2029 is payable semi-annually in cash in arrears on April 15 and October 15 of each year
at a rate of 4.125% per annum. The Senior Notes due 2029 will mature on April 15, 2029.
We may redeem the Senior Notes due 2029, in whole or in part, at any time on or after April 15, 2024 at a redemption
price equal to (i) 102.063% of the principal amount to be redeemed if the redemption occurs during the 12-month period
beginning on April 15, 2024, (ii) 101.031% of the principal amount to be redeemed if the redemption occurs during the 12-
month period beginning on April 15, 2025 and (iii) 100.0% of the principal amount to be redeemed if the redemption occurs on
or after April 15, 2026, in each case plus accrued and unpaid interest, if any, to, but excluding, the redemption date. At any time
prior to April 15, 2024, we may also redeem up to 40.0% of the Senior Notes due 2029 with net cash proceeds of certain equity
offerings at a redemption price equal to 104.125% of the principal amount of the Senior Notes due 2029 to be redeemed, plus
accrued and unpaid interest, if any, to, but excluding, the redemption date. In addition, at any time prior to April 15, 2024, we
may redeem the Senior Notes due 2029, in whole or in part, at a redemption price equal to 100.0% of the principal amount of
the Senior Notes due 2029 to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date plus
an applicable "make-whole" premium.
The 2021 Indenture contains customary events of default, including, among other things, payment default, failure to
comply with covenants or agreements contained in the 2021 Indenture or the Senior Notes due 2029 and certain provisions
related to bankruptcy events. The 2021 Indenture also contains customary negative covenants. As of December 31, 2023, we
were in compliance with all covenants set forth in the 2021 Indenture and the Senior Notes due 2029.
Other Arrangements
We have posted surety bonds to support regulatory and contractual obligations for certain decommissioning
responsibilities, projects and legal matters. We utilize bonding facilities to support such obligations, but the issuance of bonds
under those facilities is typically at the surety's discretion, and the bonding facilities generally permit the surety, in its sole
discretion, to terminate the facility or demand collateral. Although there can be no assurance that we will maintain our surety
bonding capacity, we believe our current capacity is adequate to support our existing requirements for the next 12 months. In
addition, these bonds generally indemnify the beneficiaries should we fail to perform our obligations under the applicable
agreements. We, and certain of our subsidiaries, have jointly executed general agreements of indemnity in favor of surety
underwriters relating to surety bonds those underwriters issue. As of December 31, 2023, bonds issued and outstanding under
these arrangements totaled approximately $114.6 million.
Similarly, we have provided letters of credit to governmental agencies and contractual counterparties to support
regulatory and contractual obligations for certain decommissioning responsibilities, projects and legal matters. We utilize our
Revolving Credit Facility and a bilateral letter of credit facility to support such obligations, but the issuance of letters of credit
under our bilateral letter of credit facility is at the issuer’s discretion, and our bilateral letter of credit facility generally permits
the issuer, in its sole discretion, to demand collateral if the issuer does not otherwise have the benefit of the collateral under our
Credit Facility. Although there can be no assurance that we will maintain our bilateral letter of credit capacity, we believe our
current capacity, together with capacity under our Revolving Credit Facility, is adequate to support our existing requirements
for the next 12 months. As of December 31, 2023, letters of credit issued and outstanding under our bilateral letter of credit
facility totaled approximately $36.7 million, and such letters of credit are secured by the collateral under our Credit Facility.
39
Other
Cash, Cash Equivalents, Restricted Cash and Investments
In the aggregate, our cash and cash equivalents, restricted cash and cash equivalents and investments increased by $38.2
million to $91.1 million at December 31, 2023 from $52.9 million at December 31, 2022, primarily due to the items discussed
below. Our domestic and foreign cash and cash equivalents, restricted cash and cash equivalents and investments as of
December 31, 2023 and 2022 were as follows:
Domestic
Foreign
Total
December 31,
2023
2022
(In thousands)
$
$
71,177 $
19,934
91,111 $
38,455
14,436
52,891
Our working capital increased by $39.0 million to $442.8 million at December 31, 2023 from $403.8 million at
December 31, 2022, primarily attributable to increases in cash and cash equivalents resulting from improved billing and
collection cycles as well as the receipt of progress payments which were partially offset by the timing of accounts payable.
Our net cash provided by operating activities increased by $119.0 million to $363.7 million in the year ended
December 31, 2023, compared to $244.7 million in the year ended December 31, 2022. The increase in cash provided by
operating activities was primarily attributable to the timing of project cash flows.
Our net cash used in investing activities decreased by $100.6 million to $155.6 million in the year ended December 31,
2023, compared to $256.2 million in the year ended December 31, 2022. The decrease in cash used in investing activities was
primarily attributable to a decrease in purchases of property, plant and equipment of $47.0 million and the $46.7 million
acquisition of Dynamic and Cunico in the prior year. In addition, we experienced an $11.5 million decrease in investments in
equity method investees.
Our net cash used in financing activities increased by $183.3 million to $169.4 million in the year ended December 31,
2023, compared to cash provided by financing activities of $14.0 million in the year ended December 31, 2022. The increase in
cash used in financing activities was primarily attributable to a reduction in net borrowings of long-term debt of $181.3 million
which was partially offset by a reduction in repurchases of common stock of $20.0 million.
At December 31, 2023, we had long-term investments with a fair value of $9.5 million. Our investment portfolio consists
primarily of corporate bonds and mutual funds.
Cash Requirements
We believe we have sufficient cash and cash equivalents and borrowing capacity, along with cash generated from
operations and continued access to debt markets, to satisfy our cash requirements for the next 12 months and beyond.
Our cash requirements as of December 31, 2023 include the following contractual obligations:
Total
Less than
1 Year
1-3
Years
3-5
Years
After
5 Years
(In thousands)
Long-term debt principal
Interest payments
Lease payments
$ 1,218,750 $
249,452 $
$
28,094 $
$
6,250 $
59,433 $
4,131 $
25,000 $
105,567 $
6,654 $
787,500 $
76,202 $
3,736 $
400,000
8,250
13,573
Our contingent commitments under letters of credit and surety bonds currently outstanding expire as follows:
Total
Less than
1 Year
$ 153,054
$ 144,231
1-3
Years
(In thousands)
$ 8,823
3-5
Years
$ —
Thereafter
$ —
40
Other cash requirements include, among other things, capital expenditures, payment of dividends, repurchases of
common stock, capital contributions for joint ventures and contributions to our pension and other postretirement benefit plans.
Since 2017, we have made considerable investments in property, plant and equipment to support the growth of our
Government Operations and Commercial Operations segments. Significant projects included the expansion of Government
Operations facilities to support increased demand from the U.S. Government and the commercialization of our medical
radioisotope technology in our Commercial Operations segment. We expect these heightened spending levels to decline as these
capital expansion projects are largely complete.
During the year ended December 31, 2023, we paid $85.0 million in dividends to holders of our common stock. The
declaration and payment of future dividends will be at the discretion of our Board of Directors and will depend upon many
factors, including our financial condition, earnings, capital requirements of our business, legal and regulatory requirements and
other factors that our Board of Directors may deem relevant.
In April 2021, our Board of Directors authorized us to repurchase an indeterminate number of shares of our common
stock up to an aggregate market value of $500 million. As of December 31, 2023, the total remaining share repurchase
authorization was $397.6 million. See Item 5 of this Report for additional share repurchase information.
We expect cash requirements totaling approximately $4.4 million and $1.2 million for contributions to our pension plans
and other postretirement benefit plans, respectively, in 2024.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our exposure to market risk from changes in interest rates relates primarily to our debt instruments. Our borrowings
include both fixed and variable interest rate debt. At December 31, 2023, we had (i) $418.8 million in outstanding borrowings
and $573.3 million available under the Credit Facility, (ii) an aggregate principal amount of $400.0 million of Senior Notes due
2028 and (iii) an aggregate principal amount of $400.0 million of Senior Notes due 2029. See the heading "Liquidity and
Capital Resources" in Item 7 of this Report for additional information on our debt instruments.
We also have exposure from changes in interest rates related to our cash equivalents and our investment portfolio, which
consists primarily of corporate bonds and mutual funds. We are averse to principal loss and seek to ensure the safety and
preservation of our invested funds by limiting default risk, market risk and reinvestment risk.
We have operations in foreign locations, and, as a result, our financial results could be significantly affected by factors
such as changes in foreign currency exchange ("FX") rates or weak economic conditions in those foreign markets. In order to
manage the operational risks associated with FX rate fluctuations, we attempt to hedge those risks with FX derivative
instruments. Historically, we have hedged those risks with FX forward contracts. At December 31, 2023, the fair values of our
outstanding derivative instruments were not significant. We do not enter into speculative derivative positions.
Interest Rate Sensitivity
The following tables provide information about our financial instruments that are sensitive to changes in interest rates.
The tables present principal cash flows and related weighted-average interest rates by expected maturity dates.
At December 31, 2023:
Years Ending December 31,
Fair Value at
December 31,
2024
2025
2026
2027
2028
Thereafter
Total
2023
Principal Amount by Expected Maturity
(In thousands)
Investments
Average Interest Rate
—
—
—
—
Note Receivable
$
396
$ 7,022
Average Interest Rate
6.80 %
6.80 %
Fixed Interest Rate Debt
Average Interest Rate
—
—
—
—
— $ 1,479
9.57 %
—
—
—
—
—
—
—
—
—
—
—
—
—
$ 7,002
$
8,481 $
9,496
—
—
—
$
7,418 $
7,300
$ 400,000
$ 400,000
$ 800,000 $
734,667
4.13 %
4.13 %
—
—
—
—
$ 418,750 $
424,751
Variable Interest Rate Debt
$ 6,250
$ 12,500
$ 12,500 $ 387,500
Average Interest Rate
6.24 %
4.98%
4.73%
4.75%
41
At December 31, 2022:
Years Ending December 31,
Fair Value at
December 31,
2023
2024
2025
2026
2027
Thereafter
Total
2022
Investments
Average Interest Rate
Fixed Interest Rate Debt
Average Interest Rate
$
3,801
0.76%
—
—
—
—
—
—
—
—
—
—
— $
1,479 $
6,455 $ 11,735 $
11,901
—
—
—
10.45%
0.25%
— $ 800,000 $ 800,000 $
710,000
—
4.13%
Variable Interest Rate Debt
$
6,250 $
6,250 $ 12,500 $ 12,500 $ 462,500
— $ 500,000 $
509,263
Average Interest Rate
6.40%
5.26%
4.68%
4.66%
4.70%
—
Exchange Rate Sensitivity
The following table provides information about our FX forward contracts outstanding at December 31, 2023 and presents
such information in U.S. dollar equivalents. The table presents notional amounts and related weighted-average FX rates by
expected (contractual) maturity dates and constitutes a forward-looking statement. These notional amounts generally are used to
calculate the contractual payments to be exchanged under the contract. The average contractual FX rates are expressed using
market convention, which is dependent on the currencies being bought and sold under the forward contract.
Forward Contracts to Purchase Foreign Currencies in U.S. Dollars (in thousands)
Foreign Currency
Canadian dollar
U.S. dollar (selling Canadian dollar)
Euro (selling Canadian dollar)
Foreign Currency
Canadian dollar
Year Ending
December 31, 2024
Fair Value at
December 31, 2023
Average Contractual
Exchange Rate
$
$
$
4,854 $
427,729 $
6,541 $
120
(10,159)
21
1.3540
1.3550
1.4636
Year Ending
Fair Value at
Average Contractual
December 31, 2025
December 31, 2023
Exchange Rate
$
3,828 $
86
1.3480
42
Item 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and the Board of Directors of BWX Technologies, Inc.:
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of BWX Technologies, Inc. and subsidiaries (the "Company")
as of December 31, 2023 and 2022, the related consolidated statements of income, comprehensive income, stockholders' equity,
and cash flows for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to
as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial
position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the
three years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United
States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the Company's internal control over financial reporting as of December 31, 2023, based on criteria established in
Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission and our report dated February 27, 2024, expressed an unqualified opinion on the Company's internal control over
financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on
the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to
error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included
evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that
was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that
are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The
communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and
we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the
accounts or disclosures to which it relates.
Revenue Recognition – Estimating Costs at Completion – Refer to Note 1 and Note 3 to the Financial Statements.
Critical Audit Matter Description
The Company generally recognizes contract revenues and related costs over time for individual performance obligations based
on a cost-to-cost method in accordance with Financial Accounting Standards Board Topic Revenue from Contracts with
Customers. The Company recognizes estimated contract revenue and resulting income based on the measurement of the extent
of progress toward completion as a percentage of the total project. The Company reviews contract price and cost estimates
periodically as the work progresses and reflect adjustments proportionate to the percentage-of-completion in income in the
period when those estimates are revised. The accounting for these contracts involves judgment, particularly as it relates to the
process of estimating total costs to complete the performance obligation.
Given the significance of revenue and the level of judgment involved in estimating total costs to complete the performance
obligations used to recognize revenue for long-term contracts, auditing such estimates involved especially subjective judgment.
43
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to revenues recognized over time, including management’s estimates of total contract costs to
complete its performance obligations, included the following, among others:
• We tested the effectiveness of controls over revenue recognized over time, including those over cost estimates at
completion for performance obligations.
• Unless otherwise tested separately below, we tested recorded revenue using analytical procedures.
• We analyzed cumulative adjustments recorded during the year and separately tested those with characteristics of audit
interest due to their size to determine that the adjustments were the result of changes in facts and circumstances and
recorded in the appropriate period.
• We analyzed contracts with customers recognized over time to identify whether there are contracts with characteristics of
audit interest. For a contract determined to exhibit characteristics of audit interest, we performed the following testing:
◦ Read the contract to understand the contract terms and the accounting treatment in accordance with generally
accepted accounting principles.
◦ Compared the transaction price to the consideration expected to be received based on current rights and
obligations under the contract, including modifications that were agreed upon with the customer.
◦ Tested the mathematical accuracy of management’s calculation of the profit margin and the revenue recognized
based on the costs incurred during the year, consistent with the cost-plus fixed fee nature of the contract.
/S/ DELOITTE & TOUCHE LLP
Charlotte, North Carolina
February 27, 2024
We have served as the Company's auditor since 2009.
44
BWX TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF INCOME
Revenues
Costs and Expenses:
Cost of operations
Research and development costs
Losses (gains) on asset disposals and impairments, net
Selling, general and administrative expenses
Total Costs and Expenses
Equity in Income of Investees
Operating Income
Other Income (Expense):
Interest income
Interest expense
Other – net
Total Other Income (Expense)
Income before Provision for Income Taxes
Provision for Income Taxes
Net Income
Net Income Attributable to Noncontrolling Interest
Net Income Attributable to BWX Technologies, Inc.
Earnings per Common Share:
Basic:
Net Income Attributable to BWX Technologies, Inc.
Diluted:
Net Income Attributable to BWX Technologies, Inc.
Shares used in the computation of earnings per share (Note 17):
Basic
Diluted
See accompanying notes to consolidated financial statements.
Year Ended December 31,
2023
2022
2021
(In thousands, except share and per share amounts)
$ 2,496,309 $ 2,232,834 $ 2,124,074
1,875,716
1,680,899
1,573,797
7,613
1,034
9,535
5,520
11,059
(3,532)
279,694
234,282
230,400
2,164,057
1,930,236
1,811,724
50,807
383,059
45,973
348,571
33,498
345,848
2,359
(47,036)
(16,982)
(61,659)
321,400
75,079
758
416
(36,410)
(35,758)
1,458
(34,194)
314,377
75,757
85,207
49,865
395,713
89,425
246,321 $
238,620 $
306,288
(472)
(429)
(417)
245,849 $
238,191 $
305,871
2.68 $
2.60 $
3.24
2.68 $
2.60 $
3.24
$
$
$
$
91,619,156
91,447,088
94,278,894
91,874,537
91,702,111
94,518,422
45
BWX TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Net Income
Other Comprehensive Income (Loss):
Currency translation adjustments
Derivative financial instruments:
Year Ended December 31,
2023
2022
2021
(In thousands)
$
246,321 $
238,620 $
306,288
12,876
(34,834)
6,173
Unrealized gains (losses) arising during the period, net of tax (provision)
benefit of $(247), $(89) and $170, respectively
Reclassification adjustment for (gains) losses included in net income, net of
tax provision (benefit) of $91, $(181) and $(103), respectively
717
(264)
267
532
(500)
302
Benefit obligations:
Unrecognized losses arising during the period, net of tax benefit of $530,
$802 and $1,301, respectively
Recognition of benefit plan costs, net of tax benefit of $(609), $(657) and
$(624), respectively
Investments:
Unrealized gains (losses) arising during the period, net of tax (provision)
benefit of $(27), $28 and $(24), respectively
Other Comprehensive Income (Loss)
Total Comprehensive Income
(1,631)
(2,559)
(4,415)
2,669
2,626
2,295
100
14,467
260,788
(105)
(34,073)
90
3,945
204,547
310,233
Comprehensive Income Attributable to Noncontrolling Interest
(472)
(429)
(417)
Comprehensive Income Attributable to BWX Technologies, Inc.
$
260,316 $
204,118 $
309,816
See accompanying notes to consolidated financial statements.
46
BWX TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
Current Assets:
Cash and cash equivalents
Restricted cash and cash equivalents
Investments
Accounts receivable – trade, net
Accounts receivable – other
Retainages
Contracts in progress
Other current assets
Total Current Assets
Property, Plant and Equipment, Net
Investments
Goodwill
Deferred Income Taxes
Investments in Unconsolidated Affiliates
Intangible Assets
Other Assets
TOTAL
See accompanying notes to consolidated financial statements.
December 31,
2023
2022
(In thousands)
$
75,766 $
35,244
2,858
—
70,180
16,339
55,181
533,155
64,322
817,801
2,928
3,804
60,782
26,894
48,566
538,365
55,036
771,619
1,228,520
1,134,897
9,496
297,020
16,332
88,608
185,510
103,778
8,097
293,165
20,585
100,198
193,612
96,766
$ 2,747,065 $ 2,618,939
47
BWX TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current maturities of long-term debt
Accounts payable
Accrued employee benefits
Accrued liabilities – other
Advance billings on contracts
Total Current Liabilities
Long-Term Debt
Accumulated Postretirement Benefit Obligation
Environmental Liabilities
Pension Liability
Other Liabilities
Commitments and Contingencies (Note 10)
Stockholders' Equity:
Common stock, par value $0.01 per share, authorized 325,000,000 shares; issued 128,065,521
and 127,671,756 shares at December 31, 2023 and 2022, respectively
Preferred stock, par value $0.01 per share, authorized 75,000,000 shares; no shares issued
Capital in excess of par value
Retained earnings
Treasury stock at cost, 36,537,695 and 36,417,480 shares at December 31, 2023 and 2022,
respectively
Accumulated other comprehensive income (loss)
Stockholders' Equity – BWX Technologies, Inc.
Noncontrolling interest
Total Stockholders' Equity
TOTAL
See accompanying notes to consolidated financial statements.
December 31,
2023
2022
(In thousands, except share
and per share amounts)
$
6,250 $
6,250
126,651
64,544
70,210
107,391
375,046
127,112
61,079
84,693
88,726
367,860
1,203,422
1,282,624
18,466
90,575
82,786
43,469
18,157
90,989
57,832
53,122
1,281
—
1,277
—
206,478
189,263
2,093,917
1,932,970
(1,360,862)
(1,353,270)
(7,463)
(21,930)
933,351
748,310
(50)
45
933,301
748,355
$ 2,747,065 $ 2,618,939
48
BWX TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Common Stock
Shares
Par
Value
Capital In
Excess of
Par Value
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Treasury
Stock
Stockholders'
Equity
Noncontrolling
Interest
Total
Stockholders'
Equity
(In thousands, except share and per share amounts)
Balance December 31, 2020
127,009,536
$ 1,270
$ 153,800
$ 1,549,950
$
8,198
$ (1,095,452) $
617,766
$
2
$
617,768
Net income
Dividends declared ($0.84 per share)
Currency translation adjustments
Derivative financial instruments
Defined benefit obligations
Available-for-sale investments
Exercises of stock options
Shares placed in treasury
Stock-based compensation charges
Distributions to noncontrolling interests
—
—
—
—
—
—
76,682
—
225,767
—
—
—
—
—
—
—
—
—
3
—
—
—
—
—
—
—
1,878
—
18,610
—
305,871
(80,070)
—
—
—
—
—
—
—
—
—
—
6,173
(198)
(2,120)
90
—
—
—
—
—
—
—
—
—
—
—
305,871
(80,070)
6,173
(198)
(2,120)
90
1,878
(230,828)
(230,828)
—
—
18,613
—
Balance December 31, 2021
127,311,985
$ 1,273
$ 174,288
$ 1,775,751
$
12,143
$ (1,326,280) $
637,175
$
Recently adopted accounting standards
Net income
Dividends declared ($0.88 per share)
Currency translation adjustments
Derivative financial instruments
Defined benefit obligations
Available-for-sale investments
Exercises of stock options
Shares placed in treasury
Stock-based compensation charges
Distributions to noncontrolling interests
—
—
—
—
—
—
—
35,878
—
323,893
—
—
—
—
—
—
—
—
—
—
4
—
—
—
—
—
—
—
—
852
—
14,123
—
—
238,191
(80,972)
—
—
—
—
—
—
—
—
—
—
—
(34,834)
799
67
(105)
—
—
—
—
—
—
—
—
—
—
—
—
(26,990)
—
—
—
238,191
(80,972)
(34,834)
799
67
(105)
852
(26,990)
14,127
—
Balance December 31, 2022
127,671,756
$ 1,277
$ 189,263
$ 1,932,970
$
(21,930) $ (1,353,270) $
748,310
$
Recently adopted accounting standards
Net income
Dividends declared ($0.92 per share)
Currency translation adjustments
Derivative financial instruments
Defined benefit obligations
Available-for-sale investments
Exercises of stock options
Shares placed in treasury
Stock-based compensation charges
Distributions to noncontrolling interests
—
—
—
—
—
—
—
56,005
—
337,760
—
—
—
—
—
—
—
—
2
—
2
—
—
—
—
—
—
—
—
1,321
—
15,894
—
—
245,849
(84,902)
—
—
—
—
—
—
—
—
—
—
—
12,876
453
1,038
100
—
—
—
—
—
—
—
—
—
—
—
—
(7,592)
—
—
—
245,849
(84,902)
12,876
453
1,038
100
1,323
(7,592)
15,896
—
417
—
—
—
—
—
—
—
—
(359)
60
—
429
—
—
—
—
—
—
—
—
(444)
45
—
472
—
—
—
—
—
—
—
—
(567)
306,288
(80,070)
6,173
(198)
(2,120)
90
1,878
(230,828)
18,613
(359)
$
637,235
—
238,620
(80,972)
(34,834)
799
67
(105)
852
(26,990)
14,127
(444)
$
748,355
—
246,321
(84,902)
12,876
453
1,038
100
1,323
(7,592)
15,896
(567)
Balance December 31, 2023
128,065,521
$ 1,281
$ 206,478
$ 2,093,917
$
(7,463) $ (1,360,862) $
933,351
$
(50) $
933,301
See accompanying notes to consolidated financial statements.
49
BWX TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
Income of investees, net of dividends
Provision for deferred taxes
Recognition of (gains) losses for pension and postretirement plans
Stock-based compensation expense
Premium for early redemption of senior notes
Recognition of debt issuance costs from former debt instruments
Other, net
Changes in assets and liabilities, net of effects from acquisitions:
Accounts receivable
Accounts payable
Retainages
Contracts in progress and advance billings on contracts
Income taxes
Accrued and other current liabilities
Pension liabilities, accrued postretirement benefit obligations and employee benefits
Other, net
NET CASH PROVIDED BY OPERATING ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment
Acquisition of businesses
Purchases of securities
Sales and maturities of securities
Investments, net of return of capital, in equity method investees
Other, net
NET CASH USED IN INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings of long-term debt
Repayments of long-term debt
Premium for early redemption of senior notes
Payment of debt issuance costs
Borrowings and repayments of bank overdraft
Repurchases of common stock
Dividends paid to common shareholders
Cash paid for shares withheld to satisfy employee taxes
Settlements of forward contracts, net
Other, net
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES
EFFECTS OF EXCHANGE RATE CHANGES ON CASH
TOTAL INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS AND RESTRICTED
CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AND CASH EQUIVALENTS AT
END OF PERIOD
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest
Income taxes (net of refunds)
SCHEDULE OF NON-CASH INVESTING ACTIVITY:
Accrued capital expenditures included in accounts payable
See accompanying notes to consolidated financial statements.
50
Year Ended December 31,
2022
2021
2023
(In thousands)
$
246,321 $
238,620 $
306,288
78,566
11,130
(5,128)
34,087
15,896
—
—
(496)
462
(9,025)
(6,615)
28,868
(4,786)
(9,754)
(6,964)
(8,861)
363,701
(151,286)
—
(2,343)
5,996
—
(8,009)
(155,642)
353,100
(434,350)
—
—
—
—
(84,974)
(7,592)
3,689
756
(169,371)
1,937
40,625
40,990
73,842
(3,461)
5,515
49,868
14,127
—
46
7,649
15,167
(40,495)
4,189
(38,615)
(764)
(18,948)
(68,535)
6,499
244,704
(198,312)
(47,328)
(3,803)
3,813
(11,450)
844
69,080
(13,023)
40,091
(36,647)
18,613
10,752
4,212
1,401
84,006
28,795
3,875
(67,137)
4,116
(1,991)
(69,424)
3,019
386,026
(311,052)
—
(4,739)
5,553
—
5,585
(256,236)
(304,653)
978,200
(878,200)
—
(2,405)
—
(20,000)
(81,074)
(6,588)
24,013
6
13,952
(1,205)
1,215
39,775
1,324,300
(999,300)
(10,752)
(4,838)
(88,694)
(225,786)
(79,668)
(5,042)
(2,030)
1,674
(90,136)
240
(8,523)
48,298
$
$
$
$
81,615 $
40,990 $
39,775
63,216 $
84,478 $
51,343 $
71,755 $
50,840
44,949
7,105 $
9,588 $
27,495
BWX TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2023
NOTE 1 – BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
We have presented the consolidated financial statements of BWX Technologies, Inc. ("BWXT") in U.S. dollars in
accordance with accounting principles generally accepted in the United States ("GAAP").
We use the equity method to account for investments in entities that we do not control, but over which we have the ability
to exercise significant influence. We generally refer to these entities as "joint ventures." We have eliminated all intercompany
transactions and accounts. We classify assets and liabilities related to long-term contracts as current using the duration of the
related contract or program as our operating cycle, which is generally longer than one year. We have reclassified certain
amounts previously reported to conform to the presentation at December 31, 2023 and for the year ended December 31, 2023.
We present the notes to our consolidated financial statements on the basis of continuing operations, unless otherwise stated.
Unless the context otherwise indicates, "we," "us" and "our" mean BWXT and its consolidated subsidiaries.
Reportable Segments
We operate in two reportable segments: Government Operations and Commercial Operations. Our reportable segments
are further described as follows:
• Our Government Operations segment manufactures naval nuclear reactors, including the related nuclear fuel, for the
U.S. Naval Nuclear Propulsion Program for use in submarines and aircraft carriers. Through this segment, we also
fabricate fuel-bearing precision components that range in weight from a few grams to hundreds of tons, manufacture
electro-mechanical equipment, perform design, manufacturing, inspection, assembly and testing activities and
downblend Cold War-era government stockpiles of high-enriched uranium. In addition, we supply proprietary and
sole-source valves, manifolds and fittings to global naval and commercial shipping customers. In-house capabilities
also include wet chemistry uranium processing, advanced heat treatment to optimize component material properties
and a controlled, clean-room environment with the capacity to assemble railcar-size components. This segment also
provides various other services, primarily through joint ventures, to the U.S. Government including nuclear materials
management and operation, environmental management and administrative and operating services for various U.S.
Government-owned facilities. These services are provided to the U.S. Department of Energy ("DOE"), including the
National Nuclear Security Administration, the Office of Nuclear Energy, the Office of Science and the Office of
Environmental Management, the Department of Defense and NASA. In addition, this segment also develops
technology for advanced nuclear reactors for a variety of power and propulsion applications in the space and terrestrial
domains and offers complete advanced nuclear fuel and reactor design and engineering, licensing and manufacturing
services for these programs.
• Our Commercial Operations segment fabricates commercial nuclear steam generators, nuclear fuel, fuel handling
systems, pressure vessels, reactor components, heat exchangers, tooling delivery systems and other auxiliary
equipment, including containers for the storage of spent nuclear fuel and other high-level waste and supplies nuclear-
grade materials and precisely machined components for nuclear utility customers. We have supplied the nuclear
industry with more than 1,300 large, heavy components worldwide, and we are the only commercial heavy nuclear
component manufacturer in North America. This segment also provides specialized engineering services that include
structural component design, 3-D thermal-hydraulic engineering analysis, weld and robotic process development,
electrical and controls engineering and metallurgy and materials engineering. In addition, this segment offers in-plant
inspection, maintenance and modification services for nuclear steam generators, heat exchangers, reactors, fuel
handling systems and balance of plant equipment, as well as specialized non-destructive examination and tooling/
repair solutions. This segment also manufactures medical radioisotopes, radiopharmaceuticals and medical devices,
and partners with life science and pharmaceutical companies developing new drugs.
See Note 15 and Note 3 for financial information about our segments.
Recently Adopted Accounting Standards
There were no accounting standards adopted during the year ended December 31, 2023 that had a significant impact on
our financial position, results of operations, cash flows or disclosures.
51
Use of Estimates
We use estimates and assumptions to prepare our financial statements in conformity with GAAP. Some of our more
significant estimates include estimates of costs to complete long-term contracts and the associated revenues, estimates of the
fair value of acquired intangible and other assets, estimates we make in selecting assumptions related to the valuations of our
pension and postretirement benefit plans, including the selection of our discount rates, mortality and expected rates of return on
our pension plan assets and estimates we make in evaluating our asset retirement obligations. These estimates and assumptions
affect the amounts we report in our financial statements and accompanying notes. Our actual results could differ from these
estimates. Variances could result in a material effect on our financial condition and results of operations in future periods.
Contracts and Revenue Recognition
We generally recognize contract revenues and related costs over time for individual performance obligations based on a
cost-to-cost method in accordance with the Financial Accounting Standards Board ("FASB") Topic Revenue from Contracts
with Customers. We recognize estimated contract revenue and resulting income based on the measurement of the extent of
progress toward completion as a percentage of the total project. Certain costs may be excluded from the cost-to-cost method of
measuring progress, such as significant costs for uninstalled materials, if such costs do not depict our performance in
transferring control of goods or services to the customer. We review contract price and cost estimates periodically as the work
progresses and reflect adjustments proportionate to the percentage-of-completion in income in the period when those estimates
are revised. Certain of our contracts recognize revenue at a point in time, and revenue on these contracts is recognized when
control transfers to the customer. The majority of our revenue that is recognized at a point in time is related to parts and certain
medical radioisotopes and radiopharmaceuticals in our Commercial Operations segment. For all contracts, if a current estimate
of total contract cost indicates a loss on a contract, the projected loss is recognized in full when determined.
See Note 3 for a further discussion of revenue recognition.
Stock-Based Compensation
We expense stock-based compensation in accordance with FASB Topic Compensation – Stock Compensation. Under this
topic, the fair value of equity-classified awards, such as restricted stock, performance shares and stock options, is determined on
the date of grant and is not remeasured. The fair value of liability-classified awards, such as cash-settled stock appreciation
rights, restricted stock units and performance units, is determined on the date of grant and is remeasured at the end of each
reporting period through the date of settlement. Grant date fair values for restricted stock, restricted stock units, performance
shares and performance units are determined using the closing price of our common stock on the date of grant.
Under the provisions of this FASB topic, we recognize expense for all share-based awards granted on a straight-line basis
over the requisite service periods of the awards, which is generally equivalent to the vesting term. This topic requires
compensation expense to be recognized such that compensation expense is recorded only for those awards expected to vest. As
a result, we periodically review the number of actual forfeitures and record any adjustments deemed necessary each reporting
period. We also recognize excess tax benefits in our provision for income taxes. These excess tax benefits result from tax
deductions in excess of the cumulative compensation expense recognized for options exercised and other equity-classified
awards.
See Note 9 for a further discussion of stock-based compensation.
Grant Accounting
We recognize amounts related to grants as a reduction of expense in the period in which the related costs for which the
grants are intended to compensate are recognized and we are reasonably assured to receive payment.
Research and Development
Our research and development activities are related to the development and improvement of new and existing products
and equipment, as well as conceptual and engineering evaluation for translation into practical applications. Research and
development costs are expensed as incurred, unless these costs relate to customer-sponsored activities where we are reimbursed
in accordance with the terms of the underlying contracts. Amounts expensed as incurred for company-funded research and
development projects are included in Research and development costs. Costs related to contracts with customers for customer-
sponsored research and development projects are included as a contract cost in Cost of operations whereby we recognize
revenue, consistent with our revenue recognition policies. Additionally, we may enter into cost-sharing arrangements with our
52
customers to enhance our internal development capabilities and offset a portion of the costs incurred related to these
development efforts.
Research and development activities totaled $53.0 million, $45.4 million and $31.4 million in the years ended
December 31, 2023, 2022 and 2021, respectively. This includes amounts paid for by our customers of $45.4 million, $35.9
million and $20.3 million in the years ended December 31, 2023, 2022 and 2021, respectively.
Capitalization of Interest Cost
We capitalize interest in accordance with FASB Topic Interest. We incurred total interest of $73.6 million, $53.9 million
and $51.1 million in the years ended December 31, 2023, 2022 and 2021, respectively, of which we capitalized $26.6 million,
$17.5 million and $15.3 million in the years ended December 31, 2023, 2022 and 2021, respectively.
Income Taxes
Income tax expense for federal, foreign, state and local income taxes is calculated on pre-tax income based on current tax
law and includes the cumulative effect of any changes in tax rates from those used previously in determining deferred tax assets
and liabilities. We record a valuation allowance to reduce our deferred tax assets to the amount that is more likely than not to be
realized. We assess deferred taxes and the adequacy of the valuation allowance on a quarterly basis. In the ordinary course of
business, there is inherent uncertainty in quantifying our income tax positions. We assess our income tax positions and record
tax benefits for all years subject to examination based upon management's evaluation of the facts, circumstances and
information available at the reporting date. For those tax positions where it is more likely than not that a tax benefit will be
sustained, we have recorded the largest amount of tax benefit with a greater than 50% likelihood of being realized upon ultimate
settlement with a taxing authority that has full knowledge of all relevant information. For those income tax positions where it is
not more likely than not that a tax benefit will be sustained, no tax benefit has been recognized in the financial statements. We
record interest and penalties (net of any applicable tax benefit) related to income taxes as a component of Provision for Income
Taxes on our consolidated statements of income.
We would be subject to withholding taxes if we were to distribute earnings from certain foreign subsidiaries, and
unrecognized deferred income tax liabilities, including withholding taxes, would be payable upon distribution of these earnings.
We consider the earnings of our non-U.S. subsidiaries to be permanently reinvested.
Earnings Per Share
We have computed earnings per common share on the basis of the weighted-average number of common shares, and,
where dilutive, common share equivalents, outstanding during the indicated periods. We periodically issue a number of forms
of stock-based compensation, including incentive and non-qualified stock options, restricted stock, restricted stock units,
performance shares and performance units, subject to satisfaction of specific performance goals. We include the shares
applicable to these plans in our computation of diluted earnings per share when related performance criteria have been met.
Cash and Cash Equivalents and Restricted Cash and Cash Equivalents
Our cash equivalents are highly liquid investments with maturities of three months or less when we purchase them.
We record cash and cash equivalents as restricted when we are unable to freely use such cash and cash equivalents for our
general operating purposes. At December 31, 2023, we had restricted cash and cash equivalents totaling $5.9 million, $3.0
million of which was held for future decommissioning of facilities (which is included in Other Assets on our consolidated
balance sheets) and $2.9 million of which was held to meet reinsurance reserve requirements of our captive insurer.
53
The following table provides a reconciliation of cash and cash equivalents and restricted cash and cash equivalents on our
consolidated balance sheets to the totals presented on our consolidated statements of cash flows:
Cash and cash equivalents
Restricted cash and cash equivalents
Restricted cash and cash equivalents included in Other Assets
Total cash and cash equivalents and restricted cash and cash equivalents as presented on our
$
December 31,
2023
2022
(In thousands)
75,766 $
2,858
2,991
35,244
2,928
2,818
consolidated statements of cash flows
$
81,615 $
40,990
Investments
Our investment portfolio consists primarily of corporate bonds and mutual funds. Our debt securities are carried at fair
value and are either classified as trading, with unrealized gains and losses reported in earnings, or as available-for-sale, with the
unrealized gains and losses, net of tax, reported as a component of Accumulated other comprehensive income (loss). Our equity
securities are carried at fair value with the unrealized gains and losses reported in earnings. We classify investments available
for current operations in the consolidated balance sheets as current assets, while we classify investments held for long-term
purposes as noncurrent assets. We adjust the amortized cost of debt securities for amortization of premiums and accretion of
discounts to maturity, and such adjustments are included in Interest income. We include realized gains and losses on our
investments in Other – net. The cost of securities sold is based on the specific identification method. We include interest on
investments in Interest income.
Inventories
We carry our inventory at the lower of cost or net realizable value using either the weighted-average or first-in, first-out
methods. At December 31, 2023 and 2022, Other current assets included inventories totaling $27.4 million and $22.9 million,
respectively, consisting entirely of raw materials and supplies.
Property, Plant and Equipment
We carry our property, plant and equipment at depreciated cost, less any impairment provisions. We depreciate our
property, plant and equipment using the straight-line method over estimated economic useful lives of eight to 40 years for
buildings and three to 14 years for machinery and equipment. Our depreciation expense was $65.6 million, $61.3 million and
$58.1 million for the years ended December 31, 2023, 2022 and 2021, respectively. We expense the costs of maintenance,
repairs and renewals that do not materially prolong the useful life of an asset as we incur them.
Property, plant and equipment is stated at cost and is set forth below:
December 31,
2023
2022
(In thousands)
Land
Buildings
Machinery and equipment
Property under construction
Less: Accumulated depreciation
Property, Plant and Equipment, Net
Goodwill
$
10,627 $
381,081
1,108,504
571,758
2,071,970
843,450
9,844
365,955
1,026,024
515,494
1,917,317
782,420
$ 1,228,520 $ 1,134,897
Goodwill represents the excess of the cost of our acquired businesses over the fair value of the net assets acquired. We
perform testing of goodwill for impairment annually or more frequently whenever events or circumstances indicate the carrying
value of goodwill may be impaired. During the year ended December 31, 2023, we changed our annual goodwill impairment
test date from September 30 to November 15. This is a change in method of applying an accounting principle which we believe
54
is a preferable alternative as the new date of assessment is more closely aligned with the approval of our fourth quarter forecast
and includes the most recent financial information available.
We may elect to perform a qualitative test when we believe that there is sufficient excess fair value over carrying value
based on our most recent quantitative assessment, adjusted for relevant events and circumstances that could affect fair value
during the current year. If we conclude based on this assessment that it is more likely than not that the reporting unit is not
impaired, we do not perform a quantitative impairment test. In all other circumstances, we compare the fair value of a reporting
unit to its carrying amount, including goodwill. If the fair value of the reporting unit exceeds its carrying value, no impairment
charge is recorded. If the carrying amount of a reporting unit exceeds its fair value, an impairment charge is recorded to
goodwill in the amount by which carrying value exceeds fair value.
The following summarizes the changes in the carrying amount of Goodwill:
Balance at December 31, 2021
Acquisition (Note 2)
Translation
Balance at December 31, 2022
Purchase price adjustment
Translation
Balance at December 31, 2023
Government
Operations
Commercial
Operations
(In thousands)
Total
$
$
$
155,939 $
16,609
(461)
172,087 $
588
578
173,253 $
129,563 $
—
(8,485)
121,078 $
—
2,689
123,767 $
285,502
16,609
(8,946)
293,165
588
3,267
297,020
Investments in Unconsolidated Affiliates
We use the equity method of accounting for affiliates in which we are able to exert significant influence. Currently, all of
our material investments in affiliates that are not consolidated are recorded using the equity method. Affiliates in which we are
unable to exert significant influence are carried at fair value.
Intangible Assets
Intangible assets are recognized at fair value when acquired. Intangible assets with definite lives are amortized to Costs
and Expenses using the straight-line method over their estimated useful lives and tested for impairment when events or changes
in circumstances indicate that their carrying amounts may not be recoverable. Intangible assets with indefinite lives are not
amortized and are subject to annual impairment testing. We may elect to perform a qualitative assessment when testing
indefinite-lived intangible assets for impairment to determine whether events or circumstances affecting significant inputs
related to the most recent quantitative evaluation have occurred, indicating that it is more likely than not that the indefinite-lived
intangible asset is impaired. Otherwise, we test indefinite-lived intangible assets for impairment by quantitatively determining
the fair value of the indefinite-lived intangible asset and comparing the fair value of the intangible asset to its carrying amount.
If the carrying amount of the intangible asset exceeds its fair value, we recognize impairment for the amount of the difference.
55
Our Intangible Assets were as follows:
Amortized intangible assets:
Gross cost:
Technical support agreement
Customer relationships
Unpatented technology
CNSC class 1B nuclear facility license
Acquired backlog
Patented technology
All other
Total
Accumulated amortization:
Technical support agreement
Customer relationships
Unpatented technology
CNSC class 1B nuclear facility license
Acquired backlog
Patented technology
All other
Total
Net amortized intangible assets
Unamortized intangible assets:
NRC category 1 license
December 31,
2023
2022
2021
(In thousands)
$
$
$
$
$
$
66,562 $
57,103
40,540
25,670
13,882
755
831
205,343 $
(15,676) $
(23,649)
(10,345)
(6,023)
(7,116)
(483)
(371)
(63,663) $
141,680 $
65,069 $
56,176
39,609
25,094
13,537
738
812
201,035 $
(12,495) $
(20,590)
(7,966)
(5,052)
(4,474)
(405)
(271)
(51,253) $
149,782 $
69,781
40,247
38,073
26,911
7,595
792
871
184,270
(10,366)
(18,176)
(6,398)
(4,521)
(2,531)
(363)
(194)
(42,549)
141,721
43,830 $
43,830 $
43,830
The following summarizes the changes in the carrying amount of Intangible Assets:
Balance at beginning of period
Acquisitions (Note 2)
Amortization expense
Translation
Balance at end of period
Year Ended December 31,
2023
2022
2021
(In thousands)
$
$
193,612 $
—
(11,396)
3,294
185,510 $
185,551 $
28,500
(10,901)
(9,538)
193,612 $
192,751
—
(9,329)
2,129
185,551
Estimated amortization expense for the next five fiscal years is as follows (amounts in thousands):
Year Ended December 31,
2024
2025
2026
2027
2028
Leases
Amount
11,579
11,579
10,371
8,750
7,986
$
$
$
$
$
We lease certain manufacturing facilities, office space and equipment under operating leases with terms of one to 20
years. Certain of the leases include options to renew for periods of one to 10 years. We include lease options in our
56
determination of the right-of-use asset and lease liability if it is reasonably certain that we will exercise one or more of the
options. Leases with initial terms of 12 months or less are excluded from our right-of-use assets and lease liabilities. Our right-
of-use assets are included in Other Assets on our consolidated balance sheets. Our current lease liabilities are included in
Accrued liabilities – other, and our noncurrent lease liabilities are included in Other Liabilities on our consolidated balance
sheets. We use discount rates based on our incremental borrowing rate as most of our leases do not provide an implicit rate that
can be readily determined.
During the year ended December 31, 2023, we recognized lease expense of $7.9 million, which included $1.5 million
related to the amortization of favorable lease agreements, and paid cash of $6.3 million for our operating leases. During the
years ended December 31, 2022 and 2021, we recognized lease expense of $8.6 million and $8.4 million, respectively. At
December 31, 2023, our weighted-average remaining lease term was 14.04 years, and for the purpose of measuring the present
value of our lease liabilities, the weighted-average discount rate was 5.04%. The maturities of our lease liabilities at
December 31, 2023 were as follows (amounts in thousands):
2024
2025
2026
2027
2028
Thereafter
Total lease payments
Less: Interest
Present value of lease liabilities (1)
$
$
$
$
$
$
$
$
$
4,131
3,796
2,858
1,989
1,747
13,573
28,094
(7,860)
20,234
(1) Includes current lease liabilities of $4.0 million.
At December 31, 2023, our right-of-use assets totaled $46.5 million. The difference between our right-of-use assets and
lease liabilities primarily resulted from favorable lease agreements related to acquisitions.
Warranty Expense
We accrue estimated warranty expense, included in Cost of operations on our consolidated statements of income, to
satisfy contractual warranty requirements when we recognize the associated revenue on the related contracts. In addition, we
record specific provisions or reductions where we expect the actual warranty costs to significantly differ from the accrued
estimates. Such changes could have a material effect on our consolidated financial condition, results of operations and cash
flows. Included in Accrued liabilities – other on our consolidated balance sheets were accrued warranty expenses totaling $6.4
million and $6.6 million at December 31, 2023 and 2022, respectively.
Deferred Debt Issuance Costs
We have included deferred debt issuance costs in the consolidated balance sheets as a direct deduction from the carrying
amount of our debt liability. We amortize deferred debt issuance costs as interest expense over the life of the related debt. The
following summarizes the changes in the carrying amount of these assets:
Balance at beginning of period
Additions
Interest expense
Balance at end of period
Pension Plans and Postretirement Benefits
Year Ended December 31,
2023
2022
2021
(In thousands)
$
$
11,126 $
—
(2,048)
9,078 $
10,696 $
2,405
(1,975)
11,126 $
12,269
4,838
(6,411)
10,696
We sponsor various defined benefit pension and postretirement benefit plans covering certain employees of our U.S. and
Canadian subsidiaries. We utilize actuarial valuations to calculate the cost and benefit obligations of our pension and
postretirement benefits. The actuarial valuations utilize significant assumptions in the determination of our benefit cost and
57
obligations, including assumptions regarding discount rates, expected rate of return on plan assets, mortality and health care
cost trends. We determine our discount rate based on a yield curve comprising rates of return on high-quality, fixed-income
investments currently available and expected to be available during the period to maturity of our pension and postretirement
benefit plan obligations. The expected rate of return on plan assets assumption is based on capital market assumptions of the
long-term expected returns for the investment mix of assets currently in the portfolio. The expected rate of return on plan assets
is determined to be the weighted-average of the nominal returns based on the weightings of the classes within the total asset
portfolio. Expected health care cost trends represent expected annual rates of change in the cost of health care benefits and are
estimated based on analysis of health care cost inflation.
The components of benefit cost related to service cost, interest cost, expected return on plan assets and prior service cost
amortization are recorded on a quarterly basis based on actuarial assumptions. In the fourth quarter of each year, or as interim
remeasurements are required, we immediately recognize net actuarial gains and losses in earnings as a component of net
periodic benefit cost. Recognized net actuarial gains and losses consist primarily of our reported actuarial gains and losses and
the difference between the actual return on plan assets and the expected return on plan assets.
We recognize the funded status of each plan as either an asset or a liability in the consolidated balance sheets. The funded
status is the difference between the fair value of plan assets and the present value of its benefit obligation, determined on a plan-
by-plan basis. Our pension plan assets can include assets that are difficult to value. See Note 7 for detailed information
regarding our plan assets.
Asset Retirement Obligations and Environmental Cleanup Costs
We accrue for future decommissioning of our nuclear facilities that will permit the release of these facilities to
unrestricted use at the end of each facility's service life, which is a requirement of our licenses from the U.S. Nuclear
Regulatory Commission ("NRC") and the Canadian Nuclear Safety Commission ("CNSC"). In accordance with the FASB
Topic Asset Retirement and Environmental Obligations, we record the fair value of a liability for an asset retirement obligation
in the period in which it is incurred. When we initially record such a liability, we capitalize a cost by increasing the carrying
amount of the related long-lived asset. When we acquire a business that has an asset retirement obligation, the asset retirement
obligation is recognized at fair value without a corresponding increase to the related long-lived asset. Over time, the liability is
accreted to its present value each period and the capitalized cost is depreciated over the useful life of the related asset. Upon
settlement of a liability, we will settle the obligation for its recorded amount or incur a gain or loss. This topic applies to
environmental liabilities associated with assets that we currently operate and are obligated to remove from service. For
environmental liabilities associated with assets that we no longer operate, we have accrued amounts based on the estimated
costs of cleanup activities for which we are responsible, net of any cost-sharing arrangements. We adjust the estimated costs as
further information develops or circumstances change. Given the long-lived nature of these facilities, we are required to
estimate retirement costs that will be incurred in the future, which may extend up to 40 years at the time the asset retirement
obligation is established. Due to the significance of the remaining useful life of these facilities, the timing of retirement and
future costs for material components of the asset retirement obligations, such as labor and waste disposal fees, could differ from
our estimates. An exception to this accounting treatment relates to the work we perform for two facilities for which the U.S.
Government is obligated to pay substantially all of the decommissioning costs.
58
Substantially all of our asset retirement obligations relate to the remediation of our nuclear analytical laboratory at our
facility in Lynchburg, Virginia and the Nuclear Fuel Services, Inc. ("NFS") facility in Erwin, Tennessee in our Government
Operations segment as well as certain facilities in our Commercial Operations segment. The following summarizes the changes
in the carrying amount of these liabilities:
Balance at beginning of period
Costs incurred
Additions/adjustments
Accretion
Translation
Balance at end of period (1)
Year Ended December 31,
2023
2022
2021
(In thousands)
$
$
82,512 $
(3,471)
(6,512)
6,939
73
79,541 $
84,132 $
(1,223)
(4,289)
5,158
(1,266)
82,512 $
78,110
(215)
—
5,996
241
84,132
(1) Includes current asset retirement obligations of $2.3 million, $4.7 million and $4.7 million at December 31, 2023, 2022
and 2021, respectively.
Self-Insurance
We have a wholly owned insurance subsidiary that provides employer's liability, general and automotive liability and
primary workers' compensation insurance and, from time to time, builder's risk insurance (within certain limits) to our
companies. We may also, in the future, have this insurance subsidiary accept other risks that we cannot or do not wish to
transfer to outside insurance companies. Included in Other Liabilities on our consolidated balance sheets were reserves for self-
insurance totaling $4.1 million and $4.2 million at December 31, 2023 and 2022, respectively.
Loss Contingencies
We accrue liabilities for loss contingencies when it is probable that a liability has been incurred and the amount of loss is
reasonably estimable. We provide disclosure when there is a reasonable possibility that the ultimate loss will exceed the
recorded provision or if such probable loss is not reasonably estimable. Due to the nature of our business, we are, from time to
time, involved in investigations, litigation, disputes or claims related to our business activities, as discussed in Note 10. Our
losses are typically resolved over long periods of time and are often difficult to assess and estimate due to, among other reasons,
the possibility of multiple actions by third parties; the attribution of damages, if any, among multiple defendants; plaintiffs, in
most cases involving personal injury claims, do not specify the amount of damages claimed; the discovery process may take
multiple years to complete; during the litigation process, it is common to have multiple complex unresolved procedural and
substantive issues; the potential availability of insurance and indemnity coverages; the wide-ranging outcomes reached in
similar cases, including the variety of damages awarded; the likelihood of settlements for de minimis amounts prior to trial; the
likelihood of success at trial; and the likelihood of success on appeal. Consequently, it is possible future earnings could be
affected by changes in our assessments of the probability that a loss has been incurred in a material pending litigation against us
and/or changes in our estimates related to such matters.
Accumulated Other Comprehensive Income (Loss)
The components of Accumulated other comprehensive income (loss) included in Stockholders' Equity are as follows:
Currency translation adjustments
Net unrealized gain on derivative financial instruments
Unrecognized prior service cost on benefit obligations
Net unrealized gain on available-for-sale investments
Accumulated other comprehensive income (loss)
59
December 31,
2023
2022
(In thousands)
8,669 $
558
(16,917)
227
(7,463) $
(4,207)
105
(17,955)
127
(21,930)
$
$
The amounts reclassified out of Accumulated other comprehensive income (loss) by component and the affected
consolidated statements of income line items are as follows:
Year Ended December 31,
2023
2022
2021
(In thousands)
Line Item Presented
$
$
$
$
$
(72) $
427
355
(91)
264 $
(3,278) $
609
(2,669) $
(2,405) $
(370) $
(343)
(713)
181
(532) $
(3,283) $
657
(2,626) $
(3,158) $
307 Revenues
(712) Cost of operations
(405) Total before tax
103 Provision for Income Taxes
(302) Net Income
(2,919) Other – net
624 Provision for Income Taxes
(2,295) Net Income
(2,597)
Accumulated Other Comprehensive Income
(Loss) Component Recognized
Realized (loss) gain on derivative
financial instruments
Amortization of prior service cost on
benefit obligations
Total reclassification for the period
Foreign Currency Translation
We translate assets and liabilities of our foreign operations into U.S. dollars at current exchange rates, and we translate
income statement items at average exchange rates for the periods presented. We record adjustments resulting from the
translation of foreign currency financial statements as a component of Accumulated other comprehensive income (loss). We
report foreign currency transaction gains and losses in income. We have included in Other – net translation gains (losses) of
$1.8 million, $(1.4) million and $1.8 million for the years ended December 31, 2023, 2022 and 2021, respectively.
Derivative Financial Instruments
Our operations give rise to exposure to market risks from changes in foreign currency exchange ("FX") rates. We use
derivative financial instruments, primarily FX forward contracts, to reduce the impact of changes in FX rates on our operating
results. We use these instruments to hedge our exposure associated with revenues or costs on our long-term contracts and other
transactions that are denominated in currencies other than our operating entities' functional currencies. We do not hold or issue
derivative financial instruments for trading or other speculative purposes.
We enter into derivative financial instruments primarily as hedges of certain firm purchase and sale commitments and
loans between subsidiaries denominated in foreign currencies. We record these contracts at fair value on our consolidated
balance sheets. Based on the hedge designation at inception of the contract, the related gains and losses on these contracts are
deferred in stockholders' equity as a component of Accumulated other comprehensive income (loss) until the hedged item is
recognized in earnings. The gain or loss on a derivative instrument not designated as a hedging instrument is immediately
recognized in earnings. Gains and losses on derivative financial instruments that require immediate recognition are included as
a component of Other – net on our consolidated statements of income and are recorded in the statements of cash flows based on
the nature and use of the instruments.
We have designated the majority of our FX forward contracts that qualify for hedge accounting as cash flow hedges. The
hedged risk is the risk of changes in functional-currency-equivalent cash flows attributable to changes in FX spot rates of
forecasted transactions primarily related to long-term contracts. We exclude from our assessment of effectiveness the portion of
the fair value of the FX forward contracts attributable to the difference between FX spot rates and FX forward rates. At
December 31, 2023, we had deferred approximately $0.6 million of net gains on these derivative financial instruments.
Assuming market conditions continue, we expect to recognize the majority of this amount in the next 12 months. For the years
ended December 31, 2023, 2022 and 2021, we recognized (gains) losses of $5.1 million, $(27.1) million and $(0.1) million,
respectively, in Other – net on our consolidated statements of income associated with FX forward contracts not designated as
hedging instruments.
At December 31, 2023, our derivative financial instruments consisted of FX forward contracts with a total notional value
of $443.0 million with maturities extending to December 2025. These instruments consisted primarily of FX forward contracts
to purchase or sell Canadian dollars and Euros. We are exposed to credit-related losses in the event of non-performance by
counterparties to derivative financial instruments. We attempt to mitigate this risk by using major financial institutions with
60
high credit ratings. Our counterparties to derivative financial instruments have the benefit of the same collateral arrangements
and covenants as described under our Credit Facility.
New Accounting Standards
In November 2023, the FASB issued updates to FASB Topic Segment Reporting to improve disclosures about a public
company's reportable segments and address requests from investors to provide additional, more detailed information about a
reportable segment’s expenses on an interim and annual basis and provide in interim periods all disclosures currently only
required on an annual basis. Additionally, it requires a public entity to disclose the title and position of the Company’s Chief
Operating Decision Maker. These updates do not change how a public entity identifies its operating segments, aggregates them,
or applies the quantitative thresholds to determine its reportable segments. The new standard is effective for interim and annual
periods beginning after December 15, 2024, with early adoption permitted. We are currently evaluating the impact of the
adoption of this standard and expect that it will only require changes to our disclosures with no impact on our results of
operations, financial position or cash flows.
In December 2023, the FASB issued updates to FASB Topic Income Taxes to provide, on an annual basis, disaggregated
disclosures with respect to the reconciliation of our effective tax rate, as well as a disaggregation of income taxes paid, net of
refunds received. The new standard is effective on a prospective basis for annual periods beginning after December 15, 2024,
with early adoption permitted. We are currently evaluating the impact of the adoption of this standard and expect that it will
only require changes to our disclosures with no impact on our results of operations, financial position or cash flows.
NOTE 2 – ACQUISITIONS AND DIVESTITURES
Acquisition of Dynamic Controls Limited and Citadel Capital Corporation
On April 11, 2022, our subsidiary BWXT Government Group, Inc. acquired all of the outstanding stock of U.K.-based
Dynamic Controls Limited ("Dynamic") and U.S.-based Citadel Capital Corporation, along with its wholly-owned subsidiary,
Cunico Corporation ("Cunico"), for approximately $49.9 million. Our final purchase price allocation resulted in the recognition
of $28.5 million of Intangible Assets, $7.2 million of inventory and $17.2 million of Goodwill. In addition, we recognized
right-of-use assets and lease liabilities of $7.2 million. Dynamic and Cunico are suppliers of highly-engineered, proprietary
valves, manifolds and fittings for global naval nuclear and diesel-electric submarines, surface warfare ships and commercial
shipping vessels. These companies are reported as part of our Government Operations segment.
The intangible assets included above consist of the following (dollar amounts in thousands):
Customer relationships
Backlog
Unpatented technology
NOTE 3 – REVENUE RECOGNITION
Contracts and Revenue Recognition
Government Operations
Amount
Amortization
Period
$
$
$
17,700
6,600
4,200
21 years
5 years
8 years
Our Government Operations segment recognizes revenue over time for the manufacturing of naval nuclear reactor
components and fuel, the downblending of high-enriched uranium and for the development of advanced nuclear reactors for
power and propulsion applications. Certain of our contracts contain two or more different types of components, each of which
we identify as a separate performance obligation. We recognize revenue using a cost-to-cost method to measure progress as
control is continually transferred to the customer as we incur costs on the performance obligations. We determine the stand-
alone selling price of our performance obligations based on the expected cost plus margin approach. We allocate revenue to the
individual performance obligations within contracts with multiple performance obligations based on the stand-alone selling
price of the individual performance obligations.
Our fixed-price incentive fee contracts include incentives that we concluded to be variable consideration. The amount of
the variable consideration to which we are entitled is dependent on our actual costs incurred on the performance obligation
compared to the target costs for that performance obligation and subject to incentive price revisions included within the
contracts. We include these incentive fees in revenue when there is sufficient evidence to determine that the variable
61
consideration is not constrained. The remaining contracts typically have immaterial amounts of variable consideration and have
a single performance obligation. Our estimates of variable consideration and total estimated costs at completion are determined
through a detailed process based on historical performance and our expertise using the most likely method. Variations from
estimated contract performance could result in a material effect on our financial condition and results of operations in future
periods.
Our Government Operations segment's contracts primarily allow for billings as costs are incurred, subject to certain
retainages on our fixed-price incentive fee contracts that require milestones to be reached for the remaining consideration to be
paid. Our fuel and downblending contracts allow billing when we achieve certain milestones related to our progress.
Commercial Operations
Our Commercial Operations segment recognizes revenue over time using a cost-to-cost method for the manufacturing of
large components, non-standard parts, fuel bundles and service contracts as control continually transfers to the customers. For
standard parts, revenue is recognized at the point in time control transfers to the customer, which is consistent with the transfer
of ownership. For medical radioisotopes, we recognize revenue either at the point in time control transfers to the customer or
over time using a unit of output method. This segment generates revenue primarily from firm-fixed-price contracts that do not
contain variable consideration as well as time-and-materials based contracts. Certain of these contracts contain assurance
warranties and/or provisions for liquidated damages, which are expected to have an immaterial impact to the contracts based on
our historical experience. We are entitled to payment on the majority of our Commercial Operations segment contracts when we
achieve certain milestones related to our progress.
Disaggregated Revenues
We allocate geographic revenues based on the location of the customers' operations. Revenues by geographic area and
customer type were as follows:
Year Ended December 31, 2023
Year Ended December 31, 2022
Year Ended December 31, 2021
Government
Operations
Commercial
Operations
Total
Government
Operations
Commercial
Operations
Total
Government
Operations
Commercial
Operations
Total
(In thousands)
United States:
Government
$ 1,884,671 $
— $ 1,884,671 $ 1,703,005 $
— $ 1,703,005 $ 1,624,078 $
— $ 1,624,078
Non-Government
123,604
57,654
181,258
91,653
31,120
122,773
90,421
44,102
134,523
$ 2,008,275 $
57,654 $ 2,065,929 $ 1,794,658 $
31,120 $ 1,825,778 $ 1,714,499 $
44,102 $ 1,758,601
Canada:
Government
Non-Government
Other:
$
$
245 $
— $
245 $
79 $
— $
79 $
— $
— $
—
778
389,234
390,012
3,134
373,705
376,839
3,417
345,412
348,829
1,023 $
389,234 $
390,257 $
3,213 $
373,705 $
376,918 $
3,417 $
345,412 $
348,829
Government
$
10,016 $
— $
10,016 $
1,356 $
— $
1,356 $
— $
— $
—
Non-Government
12,023
19,456
31,479
9,256
22,533
31,789
7,181
17,568
24,749
$
22,039 $
19,456 $
41,495 $
10,612 $
22,533 $
33,145 $
7,181 $
17,568 $
24,749
Segment Revenues
$ 2,031,337 $
466,344
2,497,681 $ 1,808,483 $
427,358
2,235,841 $ 1,725,097 $
407,082
2,132,179
Eliminations
Revenues
(1,372)
$ 2,496,309
(3,007)
$ 2,232,834
(8,105)
$ 2,124,074
62
Revenues by timing of transfer of goods or services were as follows:
Year Ended December 31, 2023
Year Ended December 31, 2022
Year Ended December 31, 2021
Government
Operations
Commercial
Operations
Total
Government
Operations
Commercial
Operations
Total
Government
Operations
Commercial
Operations
Total
(In thousands)
Over time
Point-in-time
$ 2,012,949 $
392,060 $ 2,405,009 $ 1,798,388 $
370,198 $ 2,168,586 $ 1,724,961 $
355,477 $ 2,080,438
18,388
74,284
92,672
10,095
57,160
67,255
136
51,605
51,741
Segment Revenues
$ 2,031,337 $
466,344
2,497,681 $ 1,808,483 $
427,358
2,235,841 $ 1,725,097 $
407,082
2,132,179
Eliminations
Revenues
(1,372)
$ 2,496,309
(3,007)
$ 2,232,834
(8,105)
$ 2,124,074
Revenues by contract type were as follows:
Year Ended December 31, 2023
Year Ended December 31, 2022
Year Ended December 31, 2021
Government
Operations
Commercial
Operations
Total
Government
Operations
Commercial
Operations
Total
Government
Operations
Commercial
Operations
Total
(In thousands)
Fixed-Price Incentive Fee
$ 1,218,516 $
11,119 $ 1,229,635 $ 1,226,265 $
9,728 $ 1,235,993 $ 1,244,916 $
9,279 $ 1,254,195
Firm-Fixed-Price
469,138
312,236
781,374
334,076
300,129
634,205
307,652
307,200
614,852
Cost-Plus Fee
337,598
—
337,598
244,063
—
244,063
165,519
—
165,519
Time-and-Materials
6,085
142,989
149,074
4,079
117,501
121,580
7,010
90,603
97,613
Segment Revenues
$ 2,031,337 $
466,344
2,497,681 $ 1,808,483 $
427,358
2,235,841 $ 1,725,097 $
407,082
2,132,179
Eliminations
Revenues
(1,372)
$ 2,496,309
(3,007)
$ 2,232,834
(8,105)
$ 2,124,074
Performance Obligations
As we progress on our contracts and the underlying performance obligations for which we recognize revenue over time,
we refine our estimates of variable consideration and total estimated costs at completion, which impact the overall profitability
on our contracts and performance obligations. Changes in these estimates result in the recognition of cumulative catch-up
adjustments that impact our revenues and/or costs of contracts. The aggregate impact of changes in estimates increased our
revenue and operating income as follows:
Revenues
Operating Income (1)
Year Ended December 31,
2023
2022
2021
(In thousands)
$
$
24,728 $
24,813 $
26,629 $
24,405 $
30,719
26,540
(1) During the year ended December 31, 2023, our Government Operations segment results were favorably impacted by
contract adjustments related to a nuclear operations contract which resulted in an increase in operating income of $22.5
million. Our Government Operations segment also recognized favorable adjustments totaling $27.9 million as a result
of the successful negotiation of change orders related to cost growth that was driven by out-of-scope changes associated
with the manufacture of non-nuclear components.
During the year ended December 31, 2022, our Government Operations segment results were negatively affected by
contract adjustments for cost growth related to the manufacture of non-nuclear components which resulted in a decrease
in operating income of $11.3 million.
During the year ended December 31, 2021, no adjustment to any one contract had a material impact on our consolidated
financial statements.
63
Contract Assets and Liabilities
We include revenues and related costs incurred, plus accumulated contract costs that exceed amounts invoiced to
customers under the terms of the contracts, in Contracts in progress. Costs specific to certain contracts for which we recognize
revenue at a point in time are also included in Contracts in progress. We include in Advance billings on contracts billings that
exceed accumulated contract costs and revenues and costs recognized over time. In accordance with contract terms, certain
amounts that are withheld by our customers and are classified within Retainages. Certain of these amounts require conditions
other than the passage of time to be achieved, with the remaining amounts only requiring the passage of time. Most long-term
contracts contain provisions for progress payments. Our unbilled receivables do not contain an allowance for credit losses as we
expect to invoice customers and collect all amounts for unbilled receivables. Changes in Contracts in progress and Advance
billings on contracts are primarily driven by differences in the timing of revenue recognition and billings to our customers.
During the year ended December 31, 2023, our unbilled receivables decreased $1.4 million primarily as a result of decreases in
cost in excess of billings on our fixed-price incentive fee contracts and the timing of milestone billings on certain firm-fixed-
price contracts within our Government Operations segment, partially offset by increases due to the timing of milestone billings
on firm-fixed-price contracts within our Commercial Operations segments. During the year ended December 31, 2023, our
Advance billings on contracts increased $18.7 million primarily as a result of revenue recognized in excess of billings on
certain firm-fixed-price contracts within our Government Operations segment. Our fixed-price incentive fee contracts for our
Government Operations segment include provisions that result in an increase in retainages on contracts during the first and third
quarters of the year, with larger payments made during the second and fourth quarters. Retainages also vary as a result of timing
differences between incurring costs and achieving milestones that allow us to recover these amounts.
Included in Contracts in progress:
Unbilled receivables
Retainages
Advance billings on contracts
December 31,
2023
December 31,
2022
(In thousands)
$
$
$
519,931 $
55,181 $
107,391 $
521,291
48,566
88,726
During the years ended December 31, 2023 and 2022, we recognized $70.8 million and $91.9 million of revenue that was
in Advance billings on contracts at the beginning of each year, respectively.
Remaining Performance Obligations
Remaining performance obligations represent the dollar amount of revenue we expect to recognize in the future from
performance obligations on contracts previously awarded and in progress. Our backlog is equal to our remaining performance
obligations under contracts that meet the criteria in FASB Topic Revenue from Contracts with Customers. At December 31,
2023, our ending backlog was $3,997.6 million, which included $414.7 million of unfunded backlog related to U.S.
Government contracts. We expect to recognize approximately 51% of the revenue associated with our backlog by the end of
2024, with the remainder to be recognized thereafter.
NOTE 4 – EQUITY METHOD INVESTMENTS
We have investments in entities that we account for using the equity method. Our share of the undistributed earnings of
our equity method investees were $31.1 million and $41.3 million at December 31, 2023 and 2022, respectively. These amounts
are included in Investments in Unconsolidated Affiliates on our consolidated balance sheets.
64
The following tables summarize combined balance sheet and income statement information for investments accounted for
under the equity method:
Current assets
Noncurrent assets
Total Assets
Total Liabilities
Owners' equity
Total Liabilities and Owners' Equity
Revenues
Gross profit
Net income
December 31,
2023
2022
(In thousands)
$
$
$
$
555,364 $
1,933
557,297 $
307,562 $
249,735
557,297 $
566,076
445
566,521
292,081
274,440
566,521
Year Ended December 31,
2023
2022
2021
(In thousands)
$ 5,334,822 $ 4,580,032 $ 4,254,635
159,935
$
156,994
$
176,592 $
173,339 $
185,345 $
181,981 $
Reimbursable costs recorded in revenues by the unconsolidated joint ventures in our Government Operations segment
totaled $5,126.6 million, $4,453.7 million and $4,102.9 million for the years ended December 31, 2023, 2022 and 2021,
respectively.
Income taxes for the investees are the responsibility of the respective owners. Accordingly, no provision for income taxes
has been recorded by the investees.
Reconciliations of net income per combined income statement information of our investees to equity in income of
investees per our consolidated statements of income are as follows:
Equity income based on stated ownership percentages
GAAP and other adjustments
Equity in income of investees
Our transactions with unconsolidated affiliates were as follows:
Sales to
Dividends received
Capital contributions, net of returns
Year Ended December 31,
2023
2022
2021
(In thousands)
50,595 $
46,784 $
212
50,807 $
(811)
45,973 $
31,870
1,628
33,498
Year Ended December 31,
2023
2022
2021
(In thousands)
18,530 $
61,937 $
— $
19,857 $
42,512 $
11,450 $
11,838
20,475
—
$
$
$
$
$
At December 31, 2023 and 2022, Accounts receivable – other included amounts due from unconsolidated affiliates of
$1.1 million and $1.5 million, respectively.
NOTE 5 – INCOME TAXES
We are subject to federal income tax in the U.S., Canada and the U.K., as well as income tax within multiple U.S. state
jurisdictions. We provide for income taxes based on the enacted tax laws and rates in the jurisdictions in which we conduct our
operations. These jurisdictions may have regimes of taxation that vary with respect to nominal rates and with respect to the
basis on which these rates are applied. This variation, along with the changes in our mix of income within these jurisdictions,
can contribute to shifts in our effective tax rate from period to period.
65
We are currently under audit by various state and international authorities, and we do not have any returns under
examination for years prior to 2017.
We apply the provisions of FASB Topic Income Taxes regarding the treatment of uncertain tax positions. As of
December 31, 2023 and 2022, we had no uncertain tax positions.
Beginning in 2024, certain jurisdictions will implement the Organization for Economic Cooperation and Development's
(OECD) Pillar Two rules regarding a 15% global minimum tax. Considering our current global footprint, we do not anticipate
that these new rules will materially impact our provision for income taxes.
Deferred income taxes reflect the net tax effects of temporary differences between the financial and tax bases of assets
and liabilities. Significant components of deferred tax assets and liabilities as of December 31, 2023 and 2022 were as follows:
Deferred tax assets:
Pension liability
Accrued warranty expense
Capitalized Section 174 expenditures
Accrued vacation pay
Accrued liabilities for self-insurance (including postretirement health care benefits)
Accrued liabilities for executive and employee incentive compensation
Environmental and products liabilities
Lease liabilities
Investments in joint ventures and affiliated companies
Long-term contracts
Accrued payroll taxes
U.S. federal tax credits and loss carryforward
U.S. state tax credits and loss carryforward
Foreign tax credit and loss carryforward
Other
Gross deferred tax assets
Valuation allowance for deferred tax assets
Total deferred tax assets
Deferred tax liabilities:
Property, plant and equipment
Right-of-use lease assets
Accrued liabilities for self-insurance (including postretirement health care benefits)
Intangibles
Total deferred tax liabilities
Net deferred tax assets (liabilities)
The components of Income before Provision for Income Taxes were as follows:
December 31,
2023
2022
(In thousands)
$
17,439 $
1,641
23,800
3,103
—
13,784
20,576
4,860
224
13,363
—
7,055
7,935
22,869
2,018
138,667
(17,421)
121,246
85,661
11,550
341
21,976
119,528
$
1,718 $
11,931
1,694
11,145
3,246
17
12,475
20,983
5,298
1,494
14,442
2,504
7,113
4,731
20,209
2,719
120,001
(13,022)
106,979
75,334
12,246
—
22,404
109,984
(3,005)
U.S.
Other than U.S.
Income before Provision for Income Taxes
Year Ended December 31,
2023
2022
2021
(In thousands)
$
$
282,459 $
38,941
321,400 $
281,677 $
32,700
314,377 $
343,091
52,622
395,713
66
The components of Provision for Income Taxes were as follows:
Current:
U.S. – federal
U.S. – state and local
Other than U.S.
Total current
Deferred:
U.S. – federal
U.S. – state and local
Other than U.S.
Total deferred
Provision for Income Taxes
Year Ended December 31,
2023
2022
2021
(In thousands)
$
$
69,254 $
4,255
6,698
80,207
(8,968)
(376)
4,216
(5,128)
75,079 $
54,683 $
5,360
10,199
70,242
5,755
(34)
(206)
5,515
75,757 $
31,535
1,030
16,769
49,334
40,463
3,473
(3,845)
40,091
89,425
The following is a reconciliation of our income tax provision from the U.S. statutory federal tax rate to our consolidated
effective tax rate:
U.S. federal statutory tax rate
State and local income taxes
Foreign rate differential
Excess tax deductions on equity compensation
Other
Effective tax rate
Year Ended December 31,
2023
2022
2021
21.0 %
1.2 %
0.5 %
(0.3) %
1.0 %
23.4 %
21.0 %
1.7 %
0.5 %
(0.1) %
1.0 %
24.1 %
21.0 %
1.1 %
0.6 %
(0.1) %
— %
22.6 %
At December 31, 2023, we had a valuation allowance of $17.4 million for deferred tax assets, which we expect cannot be
realized through carrybacks, future reversals of existing taxable temporary differences and our estimate of future taxable
income. We believe that our remaining deferred tax assets are more likely than not realizable through carrybacks, future
reversals of existing taxable temporary differences, our estimate of future taxable income and potential tax planning. Any
changes to our estimated valuation allowance could be material to our consolidated financial statements.
The following is an analysis of our valuation allowance for deferred tax assets:
Year Ended December 31, 2023
Year Ended December 31, 2022
Year Ended December 31, 2021
Beginning
Balance
Charges To
Costs and
Expenses
Charged To
Other
Accounts
(In thousands)
Ending
Balance
$
$
$
(13,022)
(13,218)
(12,892)
(4,399)
196
(326)
— $
— $
— $
(17,421)
(13,022)
(13,218)
We have domestic federal and foreign capital losses of $9.5 million available to offset future capital gains. The domestic
federal capital losses begin to expire in 2024, while the foreign capital losses have an indefinite carryforward period. We are
carrying a full valuation allowance of $9.5 million against the deferred tax asset related to these domestic federal and foreign
capital loss carryforwards.
In addition, we have state credits and state net operating losses of $10.0 million ($7.9 million net of federal tax benefit)
available to offset future taxable income in various states. These state net operating loss carryforwards begin to expire in 2024.
We are carrying a valuation allowance of $10.0 million ($7.9 million net of federal tax benefit) against the deferred tax asset
related to the state credits and state loss carryforwards.
67
We would be subject to withholding taxes if we were to distribute earnings from certain foreign subsidiaries. As of
December 31, 2023, the undistributed earnings of these subsidiaries were approximately $292.3 million, and our unrecognized
deferred income tax liabilities of approximately $14.6 million would be payable upon the distribution of these earnings. All of
our foreign earnings are considered indefinitely reinvested.
NOTE 6 – LONG-TERM DEBT
Our Long-Term Debt consists of the following:
Debt Instruments:
Senior Notes
Credit Facility
Less: Amounts due within one year
Long-Term Debt, gross
Less: Deferred debt issuance costs
Long-Term Debt
December 31,
2023
2022
(In thousands)
$
800,000 $
418,750
6,250
1,212,500
9,078
800,000
500,000
6,250
1,293,750
11,126
$ 1,203,422 $ 1,282,624
Maturities of Long-Term Debt subsequent to December 31, 2023 were as follows: 2024 – $6.3 million; 2025 – $12.5
million; 2026 – $12.5 million; 2027 – $387.5 million; 2028 – $400.0 million; and thereafter – $400.0 million.
Credit Facility
On October 12, 2022, we entered into an Amended and Restated Credit Agreement (the "Credit Facility") with Wells
Fargo Bank, National Association, as administrative agent, and the other lenders party thereto, which amended and restated our
then existing secured credit facility (the "Former Credit Facility"), which consisted of a $750 million senior secured revolving
credit facility. The Credit Facility consists of a $750 million senior secured revolving credit facility (the "Revolving Credit
Facility") and a $250 million senior secured term A loan (the "Term Loan"). The Revolving Credit Facility and the Term Loan
are scheduled to mature on October 12, 2027. All proceeds from the Term Loan were used to repay outstanding indebtedness
under the Former Credit Facility. The proceeds of loans under the Credit Facility are available for working capital needs,
permitted acquisitions and other general corporate purposes.
The Credit Facility allows for additional parties to become lenders and, subject to certain conditions, for the increase of
the commitments under the Credit Facility, subject to an aggregate maximum for all additional commitments of (1) the greater
of (a) $400 million and (b) 100% of EBITDA, as defined in the Credit Facility, for the last four full fiscal quarters, plus (2) all
voluntary prepayments of the Term Loan, plus (3) additional amounts provided the Company is in compliance with a pro forma
first lien leverage ratio test of less than or equal to 2.50 to 1.00.
The Company's obligations under the Credit Facility are guaranteed, subject to certain exceptions, by substantially all of
the Company's present and future wholly owned domestic restricted subsidiaries. The Credit Facility is secured by first-priority
liens on certain assets owned by the Company and its subsidiary guarantors (other than its subsidiaries comprising a portion of
its Government Operations segment).
The Credit Facility requires interest payments on outstanding loans on a periodic basis until maturity. We are required to
make quarterly amortization payments on the Term Loan in an amount equal to (i) 0.625% of the initial aggregate principal
amount of the Term Loan on the last business day of each quarter beginning the quarter ending March 31, 2023 and ending the
quarter ending December 31, 2024 and (ii) 1.25% of the initial aggregate principal amount of the Term Loan on the last
business day of each quarter ending after December 31, 2024, with the balance of the Term Loan due at maturity. We may
prepay all loans under the Credit Facility at any time without premium or penalty (other than customary Term SOFR breakage
costs), subject to notice requirements.
The Credit Facility includes financial covenants that are evaluated on a quarterly basis, based on the rolling four-quarter
period that ends on the last day of each fiscal quarter. The maximum permitted leverage ratio is 4.00 to 1.00, which may be
increased to 4.50 to 1.00 for up to four consecutive fiscal quarters after a material acquisition. The minimum consolidated
interest coverage ratio is 3.00 to 1.00. In addition, the Credit Facility contains various restrictive covenants, including with
68
respect to debt, liens, investments, mergers, acquisitions, dividends, equity repurchases and asset sales. As of December 31,
2023, we were in compliance with all covenants set forth in the Credit Facility.
Outstanding loans under the Credit Facility bear interest at our option at either (1) the Term SOFR plus a credit spread
adjustment of 0.10% plus a margin ranging from 1.0% to 1.75% per year or (2) the base rate plus a margin ranging from 0.0%
to 0.75% per year. We are charged a commitment fee on the unused portion of the Revolving Credit Facility, and that fee
ranges from 0.15% to 0.225% per year. Additionally, we are charged a letter of credit fee of between 1.0% and 1.75% per year
with respect to the amount of each financial letter of credit issued under the Revolving Credit Facility, and a letter of credit fee
of between 0.75% and 1.05% per year with respect to the amount of each performance letter of credit issued under the
Revolving Credit Facility. The applicable margin for loans, the commitment fee and the letter of credit fees set forth above will
vary quarterly based on our consolidated total net leverage ratio. Based on the total net leverage ratio applicable at
December 31, 2023, the margin for Term SOFR and base rate loans was 1.50% and 0.50%, respectively, the letter of credit fee
for financial letters of credit and performance letters of credit was 1.50% and 0.90%, respectively, and the commitment fee for
the unused portion of the Revolving Credit Facility was 0.20%.
As of December 31, 2023, borrowings under our Term Loan totaled $243.8 million, borrowings and letters of credit
issued under the Revolving Credit Facility totaled $175.0 million and $1.7 million, respectively, and we had $573.3 million
available under the Revolving Credit Facility for borrowings and to meet letter of credit requirements. As of December 31,
2023, the weighted-average interest rate on outstanding borrowings under our Credit Facility was 6.96%.
The Credit Facility generally includes customary events of default for a secured credit facility. Under the Credit Facility,
(1) if an event of default relating to bankruptcy or other insolvency events occur with respect to the Company, all related
obligations will immediately become due and payable; (2) if any other event of default exists, the lenders will be permitted to
accelerate the maturity of the related obligations outstanding; and (3) if any event of default exists, the lenders will be permitted
to terminate their commitments thereunder and exercise other rights and remedies, including the commencement of foreclosure
or other actions against the collateral.
If any default occurs under the Credit Facility, or if we are unable to make any of the representations and warranties in the
Credit Facility, we will be unable to borrow funds or have letters of credit issued under the Credit Facility.
Senior Notes due 2026
We issued $400 million aggregate principal amount of 5.375% senior notes due 2026 (the "Senior Notes due 2026")
pursuant to an indenture dated May 24, 2018, among the Company, certain of our subsidiaries, as guarantors, and U.S. Bank
National Association, as trustee. On July 15, 2021, using cash on hand and borrowings under the Former Credit Facility, we
redeemed the Senior Notes due 2026 at a redemption price equal to 102.688% of the principal amount, resulting in an early
redemption premium of $10.8 million and the write-off of deferred debt issuance costs totaling $4.2 million. These charges
were recorded in our consolidated statement of income during the year ended December 31, 2021 as components of Other – net
and Interest expense, respectively.
Senior Notes due 2028
We issued $400 million aggregate principal amount of 4.125% senior notes due 2028 (the "Senior Notes due 2028")
pursuant to an indenture dated June 12, 2020 (the "2020 Indenture"), among the Company, certain of our subsidiaries, as
guarantors, and U.S. Bank Trust Company, National Association (formerly known as U.S. Bank National Association) ("U.S.
Bank"), as trustee. The Senior Notes due 2028 are guaranteed by each of the Company's present and future direct and indirect
wholly owned domestic subsidiaries that is a guarantor under the Credit Facility.
Interest on the Senior Notes due 2028 is payable semi-annually in cash in arrears on June 30 and December 30 of each
year at a rate of 4.125% per annum. The Senior Notes due 2028 will mature on June 30, 2028.
We may redeem the Senior Notes due 2028, in whole or in part, at any time on or after June 30, 2023 at a redemption
price equal to (i) 102.063% of the principal amount to be redeemed if the redemption occurs during the 12-month period
beginning on June 30, 2023, (ii) 101.031% of the principal amount to be redeemed if the redemption occurs during the 12-
month period beginning on June 30, 2024 and (iii) 100.0% of the principal amount to be redeemed if the redemption occurs on
or after June 30, 2025, in each case plus accrued and unpaid interest, if any, to, but excluding, the redemption date.
The 2020 Indenture contains customary events of default, including, among other things, payment default, failure to
comply with covenants or agreements contained in the 2020 Indenture or the Senior Notes due 2028 and certain provisions
69
related to bankruptcy events. The 2020 Indenture also contains customary negative covenants. As of December 31, 2023, we
were in compliance with all covenants set forth in the 2020 Indenture and the Senior Notes due 2028.
Senior Notes due 2029
We issued $400 million aggregate principal amount of 4.125% senior notes due 2029 (the "Senior Notes due 2029")
pursuant to an indenture dated April 13, 2021 (the "2021 Indenture"), among the Company, certain of our subsidiaries, as
guarantors, and U.S. Bank, as trustee. The Senior Notes due 2029 are guaranteed by each of the Company's present and future
direct and indirect wholly owned domestic subsidiaries that is a guarantor under the Credit Facility.
Interest on the Senior Notes due 2029 is payable semi-annually in cash in arrears on April 15 and October 15 of each year
at a rate of 4.125% per annum. The Senior Notes due 2029 will mature on April 15, 2029.
We may redeem the Senior Notes due 2029, in whole or in part, at any time on or after April 15, 2024 at a redemption
price equal to (i) 102.063% of the principal amount to be redeemed if the redemption occurs during the 12-month period
beginning on April 15, 2024, (ii) 101.031% of the principal amount to be redeemed if the redemption occurs during the 12-
month period beginning on April 15, 2025 and (iii) 100.0% of the principal amount to be redeemed if the redemption occurs on
or after April 15, 2026, in each case plus accrued and unpaid interest, if any, to, but excluding, the redemption date. At any time
prior to April 15, 2024, we may also redeem up to 40.0% of the Senior Notes due 2029 with net cash proceeds of certain equity
offerings at a redemption price equal to 104.125% of the principal amount of the Senior Notes due 2029 to be redeemed, plus
accrued and unpaid interest, if any, to, but excluding, the redemption date. In addition, at any time prior to April 15, 2024, we
may redeem the Senior Notes due 2029, in whole or in part, at a redemption price equal to 100.0% of the principal amount of
the Senior Notes due 2029 to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date plus
an applicable "make-whole" premium.
The 2021 Indenture contains customary events of default, including, among other things, payment default, failure to
comply with covenants or agreements contained in the 2021 Indenture or the Senior Notes due 2029 and certain provisions
related to bankruptcy events. The 2021 Indenture also contains customary negative covenants. As of December 31, 2023, we
were in compliance with all covenants set forth in the 2021 Indenture and the Senior Notes due 2029.
Other Arrangements
We have posted surety bonds to support regulatory and contractual obligations for certain decommissioning
responsibilities, projects and legal matters. We utilize bonding facilities to support such obligations, but the issuance of bonds
under those facilities is typically at the surety's discretion, and the bonding facilities generally permit the surety, in its sole
discretion, to terminate the facility or demand collateral. Although there can be no assurance that we will maintain our surety
bonding capacity, we believe our current capacity is adequate to support our existing requirements for the next 12 months. In
addition, these bonds generally indemnify the beneficiaries should we fail to perform our obligations under the applicable
agreements. We, and certain of our subsidiaries, have jointly executed general agreements of indemnity in favor of surety
underwriters relating to surety bonds those underwriters issue. As of December 31, 2023, bonds issued and outstanding under
these arrangements totaled approximately $114.6 million.
Similarly, we have provided letters of credit to governmental agencies and contractual counterparties to support
regulatory and contractual obligations for certain decommissioning responsibilities, projects and legal matters. We utilize our
Revolving Credit Facility and a bilateral letter of credit facility to support such obligations, but the issuance of letters of credit
under our bilateral letter of credit facility is at the issuer's discretion, and our bilateral letter of credit facility generally permits
the issuer, in its sole discretion, to demand collateral if the issuer does not otherwise have the benefit of the collateral under our
Credit Facility. Although there can be no assurance that we will maintain our bilateral letter of credit capacity, we believe our
current capacity, together with capacity under our Revolving Credit Facility, is adequate to support our existing requirements
for the next 12 months. As of December 31, 2023, letters of credit issued and outstanding under our bilateral letter of credit
facility totaled approximately $36.7 million, and such letters of credit are secured by the collateral under our Credit Facility.
70
NOTE 7 – PENSION PLANS AND POSTRETIREMENT BENEFITS
We have historically provided defined benefit retirement benefits, primarily through noncontributory pension plans, for
most of our regular employees. Certain of our subsidiaries have made other benefits available to certain groups of employees,
including postretirement health care and life insurance benefits. For salaried employees, all major U.S. and Canadian defined
benefit retirement plans have been closed to new entrants, and benefit accruals have ceased. For hourly employees, certain
defined benefit retirement plans have been closed to new entrants.
Our funding policy is to fund the plans as recommended by the respective plan actuaries and in accordance with the
Employee Retirement Income Security Act of 1974, as amended, or other applicable law. Assuming we continue as a
government contractor, our contractual arrangements with the U.S. Government provide for the recovery of contributions to our
pension and other postretirement benefit plans covering employees working primarily in our Government Operations segment.
71
Obligations and Funded Status
Change in benefit obligation:
Benefit obligation at beginning of period
Service cost
Interest cost
Plan participants' contributions
Amendments
Settlements
Actuarial loss (gain)
Foreign currency exchange rate changes
Benefits paid
Benefit obligation at end of period
Change in plan assets:
Fair value of plan assets at beginning of period
Actual return on plan assets
Plan participants' contributions
Company contributions
Settlements
Foreign currency exchange rate changes
Benefits paid
Fair value of plan assets at the end of period
Funded status
Amounts recognized in the balance sheet consist of:
Prepaid postretirement benefit obligation
Prepaid pension
Accrued employee benefits
Accumulated postretirement benefit obligation
Pension liability
Accrued benefit liability, net
Amount recognized in accumulated comprehensive
income (before taxes):
Prior service cost (credit)
Supplemental information:
Plans with accumulated benefit obligation in excess of
plan assets:
Projected benefit obligation
Accumulated benefit obligation
Fair value of plan assets
Plans with plan assets in excess of accumulated benefit
obligation:
Projected benefit obligation
Accumulated benefit obligation
Fair value of plan assets
Pension Benefits
Year Ended December 31,
Other Benefits
Year Ended December 31,
2023
2022
2023
2022
(In thousands)
$
926,978 $ 1,308,266 $
7,515
47,638
137
2,161
—
30,568
738
(61,366)
954,369 $
11,116
30,924
224
3,100
(48,777)
(307,946)
(6,564)
(63,365)
926,978 $
875,691 $ 1,256,799 $
59,354
(263,881)
137
4,390
—
736
(61,366)
878,942
(75,427) $
224
14,172
(61,416)
(6,842)
(63,365)
875,691
(51,287) $
43,050 $
338
2,139
218
—
—
159
292
(2,880)
43,316 $
45,616 $
3,769
218
870
—
—
(3,020)
47,453
4,137 $
— $
— $
10,146
(2,787)
—
9,542
(2,997)
—
(82,786)
(75,427) $
(57,832)
(51,287) $
23,915 $
—
(1,312)
(18,466)
—
4,137 $
59,301
650
1,387
346
261
—
(14,747)
(921)
(3,227)
43,050
53,512
(6,003)
346
1,032
—
—
(3,271)
45,616
2,566
22,232
—
(1,509)
(18,157)
—
2,566
19,287 $
20,363 $
2,711 $
2,750
933,588 $
906,593 $
847,755 $
877,431
873,185 $
816,693 $
N/A
17,747 $
— $
20,781 $
20,781 $
31,187 $
49,547
49,547 $
58,999 $
N/A
25,569 $
47,453 $
N/A
17,795
—
N/A
25,255
45,616
$
$
$
$
$
$
$
$
$
$
$
$
72
We record the service cost component of net periodic benefit cost within Operating income on our consolidated
statements of income. For the years ended December 31, 2023, 2022 and 2021, these amounts were $7.9 million, $11.8 million
and $12.4 million, respectively. All other components of net periodic benefit cost are included in Other – net on our
consolidated statements of income. For the years ended December 31, 2023, 2022 and 2021, these amounts were $20.9 million,
$(4.0) million and $(92.9) million, respectively. Components of net periodic benefit cost included in net income are as follows:
Pension Benefits
Year Ended December 31,
Other Benefits
Year Ended December 31,
2023
2022
2021
2023
2022
2021
(In thousands)
$
7,515 $
47,638
(60,437)
3,238
11,116 $
30,924
(83,254)
3,257
11,667 $
27,170
(81,778)
3,097
338 $
650 $
2,139
(2,536)
40
1,387
(2,974)
26
760
1,197
(2,891)
(178)
Components of net periodic benefit
cost:
Service cost
Interest cost
Expected return on plan assets
Amortization of prior service cost
Recognized net actuarial loss
(gain)
Net periodic benefit cost (income)
$
31,755
29,709 $
52,202
14,245 $
(34,690)
(74,534) $
(946)
(965) $
(5,616)
(6,527) $
(4,876)
(5,988)
Net periodic benefit cost related to our pension plans is calculated in accordance with GAAP. In addition, we calculate
pension costs in accordance with U.S. cost accounting standards ("CAS") for purposes of cost recovery on our U.S.
Government contracts to the extent applicable. See further discussion of CAS pension costs under the heading "Critical
Accounting Estimates" in Item 7 of this Annual Report on Form 10-K.
Recognized net actuarial losses (gains) consist primarily of our reported actuarial losses (gains), settlements, and the
differences between the actual returns on plan assets and the expected returns on plan assets. The benefit obligation of our
pension plans as of December 31, 2023 and 2022 increased (decreased) by $33.2 million and $(295.1) million, respectively, due
to changes in the discount rate.
In November 2022, we completed the wind-up of our foreign salaried pension benefit plan and settled approximately
$48.8 million in benefit obligations. As a result, we recognized pension settlement-related charges of $12.6 million during the
year ended December 31, 2022.
Additional Information
Pension Benefits
Year Ended December 31,
Other Benefits
Year Ended December 31,
2023
2022
2023
2022
(In thousands)
Decrease in accumulated other comprehensive income due
to actuarial losses – before taxes
$
(2,161) $
(3,100) $
— $
(261)
In the current fiscal year, we have recognized expense in other comprehensive income as a component of net periodic
benefit cost of approximately $3.2 million and $0.0 million for our pension benefits and other benefits, respectively.
73
Assumptions
Weighted-average assumptions used to determine net
periodic benefit obligations at December 31:
Discount rate
5.07 %
5.42 %
4.92 %
5.32 %
Pension Benefits
Other Benefits
2023
2022
2023
2022
Pension Benefits
Other Benefits
2023
2022
2021
2023
2022
2021
Weighted-average assumptions
used to determine net periodic
benefit cost for the years ended
December 31:
Discount rate to determine interest
cost
Expected return on plan assets
5.26 %
7.13 %
2.42 %
7.10 %
1.96 %
6.80 %
5.23 %
5.67 %
2.42 %
5.67 %
1.87 %
5.66 %
The expected return on plan assets rate assumptions are based on the long-term expected returns for the investment mix
of assets in the portfolio. In setting these rates, we use a building-block approach. Historical real return trends for the various
asset classes in the plan's portfolio are combined with anticipated future market conditions to estimate the real rate of return for
each asset class. These rates are then adjusted for anticipated future inflation to estimate nominal rates of return for each asset
class. The expected rate of return on plan assets is then determined to be the weighted-average nominal return based on the
weightings of the asset classes within the total asset portfolio.
Our existing other benefit plans are unfunded, with the exception of the NFS postretirement benefit plans. These plans
provide health benefits to certain salaried and hourly employees, as well as retired employees, of NFS. All of the assets for
these postretirement benefit plans are contributed into a Voluntary Employees' Beneficiary Association trust.
Assumed health care cost trend rates at December 31:
Health care cost trend rate assumed for next year
Rates to which the cost trend rate is assumed to decline (ultimate trend rate)
Year that the rate reaches ultimate trend rate
2023
2022
7.50 %
4.50 %
2037
7.25 %
4.50 %
2034
Investment Goals
General
The overall investment strategy of the pension trusts is to achieve long-term growth of principal, while avoiding
excessive risk and to minimize the probability of loss of principal over the long term. The specific investment goals that have
been set for the pension trusts, in the aggregate, are (1) to ensure that plan liabilities are met when due and (2) to achieve an
investment return on trust assets consistent with a reasonable level of risk.
Allocations to each asset class for both domestic and foreign plans are reviewed periodically and rebalanced, if
appropriate, to assure the continued relevance of the goals, objectives and strategies. The pension trusts for both our domestic
and foreign plans employ a professional investment advisor and a number of professional investment managers whose
individual benchmarks are, in the aggregate, consistent with the plan's overall investment objectives.
The goals of each investment manager are (1) to meet (in the case of passive accounts) or exceed (for actively managed
accounts) the benchmark selected and agreed upon by the manager and the pension trust and (2) to display an overall level of
risk in its portfolio that is consistent with the risk associated with the agreed upon benchmark.
The investment performance of total portfolios, as well as asset class components, is periodically measured against
commonly accepted benchmarks, including the individual investment manager benchmarks. In evaluating investment manager
performance, consideration is also given to personnel, strategy, research capabilities, organizational and business matters,
adherence to discipline and other qualitative factors that may impact the ability to achieve desired investment results.
74
Domestic Plans
We sponsor the following domestic defined benefit pension plans:
• BWXT Retirement Plan;
• Nuclear Fuel Services, Inc. Retirement Plan for Salaried Employees; and
• Nuclear Fuel Services, Inc. Retirement Plan for Hourly Employees.
The assets of the domestic pension plans are commingled for investment purposes and held by the trustee in the BWXT
Master Trust (the "Master Trust"). For the years ended December 31, 2023 and 2022, the investment returns on domestic plan
assets of the Master Trust (net of deductions for management fees) were approximately 7% and (22)%, respectively.
The following is a summary of the asset allocations for the Master Trust at December 31, 2023 and 2022 by asset
category:
Asset Category:
U.S. Government Securities
Commingled and Mutual Funds
Real Estate
Diversified Credit
Fixed Income (excluding U.S. Government Securities)
Partnerships with Security Holdings
Other
Total
The target allocation for 2024 for the domestic plans, by asset class, is as follows:
Asset Class:
Fixed Income
Equities
Other
Foreign Plan
December 31,
2023
2022
34 %
25 %
15 %
13 %
6 %
2 %
5 %
100 %
36 %
25 %
16 %
13 %
5 %
3 %
2 %
100 %
57 %
33 %
10 %
We sponsor the BWXT Canada Ltd. Bargaining Unit Employees' Pension Plan. The following is a summary of the asset
allocations of this plan at December 31, 2023 and 2022 by asset category:
Asset Category:
Fixed Income
Commingled and Mutual Funds
Cash and Other
Total
The target allocation for 2024 for the Canadian plan, by asset class, is as follows:
Asset Class:
Fixed Income
Equities
December 31,
2023
2022
61 %
35 %
4 %
100 %
51 %
29 %
20 %
100 %
65 %
35 %
75
Fair Value
See Note 14 for a detailed description of fair value measurements and the hierarchy established for valuation inputs. The
following is a summary of total assets for our plans measured at fair value at December 31, 2023:
12/31/2023
Level 1
Level 2
Level 3
Unclassified
(In thousands)
Pension and Other Benefits:
U.S. Government Securities
Commingled and Mutual Funds
Real Estate
Diversified Credit
Fixed Income
Partnerships with Security Holdings
Cash, Cash Equivalents and Accrued
Items (1)
Total Assets
$
288,495 $
231,801
123,250
113,271
108,646
19,752
41,180
$
926,395 $
288,495 $
46,504
—
—
36,741
—
—
371,740 $
— $
—
—
—
—
—
—
— $
— $
—
—
—
—
—
—
— $
—
185,297
123,250
113,271
71,905
19,752
41,180
554,655
(1) Includes items that are not required to be categorized in the fair value hierarchy in order to permit reconciliation of the
fair value hierarchy to the fair value of plan assets presented in the Obligations and Funded Status table.
The following is a summary of total assets for our plans measured at fair value at December 31, 2022:
12/31/2022
Level 1
Level 2
Level 3
Unclassified
(In thousands)
Pension and Other Benefits:
U.S. Government Securities
Commingled and Mutual Funds
Fixed Income
Diversified Credit
Real Estate
Partnerships with Security Holdings
Cash, Cash Equivalents and Accrued
Items (1)
Total Assets
$
305,995 $
230,674
95,967
108,363
132,867
25,259
22,182
$
921,307 $
305,995 $
42,180
35,563
—
—
—
—
383,738 $
— $
—
—
—
—
—
—
— $
— $
—
—
—
—
—
—
— $
—
188,494
60,404
108,363
132,867
25,259
22,182
537,569
(1) Includes items that are not required to be categorized in the fair value hierarchy in order to permit reconciliation of the
fair value hierarchy to the fair value of plan assets presented in the Obligations and Funded Status table.
76
The following is a summary of the changes in the Plans' Level 3 instruments for the year ended December 31, 2022. The
Plan did not have any Level 3 instruments during the year ended December 31, 2023.
Year Ended
December 31,
2022
Balance at beginning of period
Purchases
Dispositions
Realized gain (loss)
Change in unrealized gain (loss)
Translation
Balance at end of period
Cash Flows
(In thousands)
$
46,817
—
(35,822)
(6,988)
(652)
(3,355)
—
$
Expected employer contributions to trusts of defined
benefit plans:
2024
Expected benefit payments:
2024
2025
2026
2027
2028
2029-2033
Domestic Plans
Foreign Plans
Pension
Benefits
Other
Benefits
Pension
Benefits
Other
Benefits
(In thousands)
$
$
$
$
$
$
$
526 $
— $
1,008
N/A
64,254 $
65,457 $
66,333 $
67,009 $
67,288 $
332,253 $
2,542 $
2,570 $
2,497 $
2,458 $
2,398 $
11,209 $
917 $
1,076 $
1,216 $
1,373 $
1,471 $
8,648 $
595
640
700
737
772
3,875
Defined Contribution Plans
We also provide benefits under the BWXT Thrift Plan (the "Thrift Plan"). The Thrift Plan generally provides for
matching employer contributions of 50% of the first 6% of compensation, as defined in the Thrift Plan, contributed by
participants, and fully vest and are nonforfeitable after three years of service or upon retirement, death, lay-off or approved
disability. These matching employer contributions are made in cash and invested at the employees' discretion. We also provide
service-based cash contributions under the Thrift Plan to employees not accruing benefits under our defined benefit plans. Our
Canadian plan also includes a defined contribution component whereby we make cash, service-based contributions. Amounts
charged to expense for employer contributions under our defined contribution plans totaled approximately $41.5 million, $37.6
million and $37.5 million in the years ended December 31, 2023, 2022 and 2021, respectively.
NOTE 8 – CAPITAL STOCK
On November 6, 2018, our Board of Directors authorized an additional share repurchase of up to an aggregate market
value of $250 million during a three-year period from November 6, 2018 to November 6, 2021. This authorization became fully
utilized in September 2021. On April 30, 2021, our Board of Directors authorized us to repurchase an indeterminate number of
shares of our common stock at an aggregate market value of up to $500 million with no expiration date.
In the year ended December 31, 2023, we did not repurchase any shares of our common stock from public market
transactions. In the year ended December 31, 2022, we repurchased 374,568 shares of our common stock from public market
transactions for $20.0 million. In the year ended December 31, 2021, we repurchased 4,134,767 shares of our common stock
from public market transactions for $225.8 million. As of December 31, 2023, we had approximately $397.6 million available
to us for share repurchase under the $500 million authorization described above.
77
NOTE 9 – STOCK-BASED COMPENSATION
BWX Technologies, Inc. 2020 Omnibus Incentive Plan
In May 2020, our stockholders approved the 2020 Omnibus Incentive Plan (the "2020 Plan") which succeeded the 2010
Long-Term Incentive Plan of BWX Technologies, Inc. (the "2010 Plan"). Members of the Board of Directors, executive
officers, key employees and consultants are eligible to participate in the 2020 Plan. The Compensation Committee of the Board
of Directors selects the participants for the 2020 Plan. The 2020 Plan provides for cash awards and equity-based compensation
in the form of stock options, restricted stock, restricted stock units, performance shares and performance units, subject to
satisfaction of specific performance goals. Shares subject to awards under either the 2020 Plan or the 2010 Plan that are
cancelled, forfeited, terminated or expire unexercised, shall immediately become available for the granting of awards under the
2020 Plan. As of the effective date of the 2020 Plan, shares available for grant under the 2010 Plan are available for grant under
the 2020 Plan. In addition, our stockholders approved an additional 1,450,000 shares of common stock for issuance through the
2020 Plan. Options to purchase shares are granted at not less than 100% of the fair market value closing price on the date of
grant, become exercisable at such time or times as determined when granted and expire not more than ten years after the date of
grant.
At December 31, 2023, we had a total of 3,242,465 shares of our common stock available for future awards. In the event
of a change in control of the Company, the terms of the awards under the 2020 Plan contain provisions that may cause
restrictions to lapse and accelerate the vesting of awards.
2010 Long-Term Incentive Plan of BWX Technologies, Inc.
Members of the Board of Directors, executive officers, key employees and consultants were eligible to participate in the
2010 Plan prior to it being succeeded by the 2020 Plan. The Compensation Committee of the Board of Directors selected the
participants for the 2010 Plan. The 2010 Plan provided for a number of forms of stock-based compensation, including incentive
and non-qualified stock options, restricted stock, restricted stock units, performance shares and performance units, subject to
satisfaction of specific performance goals. Shares subject to award under the 2010 Plan that are cancelled, forfeited, terminated
or expire unexercised, shall immediately become available for the granting of awards under the 2020 Plan. As part of the
approval of the 2010 Plan, 10,000,000 shares of common stock were initially authorized for issuance, with an additional
2,300,000 authorized for issuance in 2014. Options to purchase shares are granted at not less than 100% of the fair market value
closing price on the date of grant, become exercisable at such time or times as determined when granted and expire not more
than ten years after the date of grant.
Long-Term Incentive Plan of BWXT Technical Services Group, Inc.
In June 2012, we established the 2012 Long-Term Incentive Plan of BWXT Technical Services Group, Inc., a cash-
settled plan for employees of certain subsidiaries and unconsolidated affiliates as selected by the plan committee. The cash-
settled plan provides for a number of forms of stock-based compensation, including stock appreciation rights, restricted stock
units and performance units, subject to satisfaction of specific performance goals. Stock appreciation rights are granted at not
less than 100% of the fair market value closing price of a share of BWXT common stock on the date of grant, become
exercisable at such time or times as determined when granted and expire not more than ten years after the date of grant. Stock
appreciation rights are cash-settled for the excess of the market price of BWXT common stock on the exercise date minus the
exercise price. Restricted stock units and performance units are cash-settled upon vesting as determined when granted. We will
not issue any shares of BWXT common stock under this plan, as all awards are cash-settled.
In the event of a change in control of the Company, the terms of the awards under the cash-settled plan contain provisions
that may cause restrictions to lapse and accelerate the vesting of awards.
Stock-based compensation expense for all of our plans recognized for the years ended December 31, 2023, 2022 and
2021 totaled $16.2 million, $14.6 million and $18.3 million, respectively, with associated tax benefit totaling $2.6 million, $2.3
million and $3.0 million, respectively.
As of December 31, 2023, unrecognized estimated compensation expense related to nonvested awards was $17.7 million,
which is expected to be recognized over a weighted-average period of 1.8 years.
78
Stock Options
The following table summarizes activity for our stock options for the year ended December 31, 2023 (share data in
thousands):
Outstanding at beginning of period
Granted
Exercised
Cancelled/expired/forfeited
Outstanding at end of period
Exercisable at end of period
Number
of
Shares
Weighted-
Average
Exercise
Price
Weighted-
Average
Remaining
Contractual
Term
(In Years)
Aggregate
Intrinsic
Value
(In millions)
90 $
150 $
(56) $
(1) $
183 $
34 $
23.62
61.73
23.62
16.46
54.73
23.62
7.7 $
1.2 $
4.0
1.8
The aggregate intrinsic value included in the table above represents the total pre-tax intrinsic value that would have been
received by the option holders had all option holders exercised their options on December 31, 2023. The intrinsic value is
calculated as the total number of option shares multiplied by the difference between the closing price of our common stock on
the last trading day of the period and the exercise price of the options. This amount changes based on the price of our common
stock.
During the years ended December 31, 2023, 2022 and 2021, the total intrinsic value of stock options exercised was $2.8
million, $1.2 million and $2.7 million, respectively. The actual tax benefits realized related to the stock options exercised during
the year ended December 31, 2023 totaled $0.7 million.
Restricted Stock Units
Nonvested restricted stock units as of December 31, 2023 and changes during the year ended December 31, 2023 were as
follows (share data in thousands):
Nonvested at beginning of period
Granted
Vested
Cancelled/forfeited
Nonvested at end of period
Number
of
Shares
Weighted-
Average
Grant Date
Fair Value
242 $
119 $
(131) $
(7) $
223 $
50.79
63.59
54.33
54.10
55.47
The actual tax benefits realized related to the restricted stock units vested during the year ended December 31, 2023
totaled $1.5 million.
79
Performance Shares
Nonvested performance shares as of December 31, 2023 and changes during the year ended December 31, 2023 were as
follows (share data in thousands):
Nonvested at beginning of period
Adjustment to assumed vesting percentage
Granted
Vested
Cancelled/forfeited
Nonvested at end of period
Number
of
Shares
Weighted-
Average
Grant Date
Fair Value
510 $
56 $
168 $
(191) $
(23) $
520 $
53.01
49.24
65.40
56.75
53.63
55.26
The actual number of shares in which each participant vests is contingent upon achievement of a mix of certain targets
(depending on the grant year), including return on invested capital; earnings before interest, taxes, depreciation and
amortization; total shareholder return and diluted earnings per share, over a three-year performance period. The number of
shares in which participants can vest ranges from zero to 200% of the initial performance shares granted, to be determined upon
completion of the three-year performance period. The nonvested shares at the end of the period in the table above assumes
weighted-average vesting of 118%.
The actual tax benefits realized related to the performance shares vested during the year ended December 31, 2023 totaled
$1.9 million.
Cash-Settled Stock Appreciation Rights
As of December 31, 2023, we had 9,890 exercisable stock appreciation rights valued at $23.62 per unit with an aggregate
intrinsic value of $0.5 million and a weighted average remaining contractual term of 1.2 years.
Cash-Settled Restricted Stock Units
As of December 31, 2023, we had 1,249 nonvested units valued at $76.63 per share. The fair value is based on our
closing stock price as of December 31, 2023 and is re-determined at the end of each reporting period for purposes of
remeasuring compensation expense associated with these cash-settled awards.
Cash-Settled Performance Units
The actual number of units in which each participant vests is dependent upon achievement of certain return on invested
capital and diluted earnings per share targets over a three-year performance period. The number of units in which participants
can vest ranges from zero to 200% of the initial performance units granted, to be determined upon completion of the three-year
performance period.
As of December 31, 2023, we had 4,400 nonvested units valued at $76.63 per share with an assumed weighted-average
vesting of 128%. The fair value is based on our closing stock price as of December 31, 2023 and is re-determined at the end of
each reporting period for purposes of remeasuring compensation expense associated with these cash-settled awards.
NOTE 10 – COMMITMENTS AND CONTINGENCIES
Investigations and Litigation
Due to the nature of our business, we are, from time to time, involved in investigations, litigation, disputes or claims
related to our business activities, including, among other things:
•
performance- or warranty-related matters under our customer and supplier contracts and other business arrangements;
and
• workers' compensation, employment, premises liability and other claims.
80
Based upon our prior experience, we do not expect that any of these investigations, litigation proceedings, disputes and
claims will have a material adverse effect on our consolidated financial condition, results of operations or cash flows.
Environmental Matters
We have been identified as a potentially responsible party at various cleanup sites under the Comprehensive
Environmental Response, Compensation, and Liability Act, as amended ("CERCLA") and other environmental laws. These
laws can impose liability for the entire cost of cleanup on any of the potentially responsible parties, regardless of fault or the
lawfulness of the original conduct. Generally, however, where there are multiple responsible parties, a final allocation of costs
is made based on the amount and type of wastes disposed of by each party and the number of financially viable parties,
although this may not be the case with respect to any particular site. We have not been determined to be a major contributor of
wastes to any of these sites. On the basis of the relative contribution of waste to each site by potentially responsible parties, as
well as the financial solvency of other potentially responsible parties, we expect our share of the ultimate liability for the
various sites will not have a material adverse effect on our consolidated financial condition, results of operations or cash flows
in any given year.
We perform significant amounts of work for the U.S. Government under both prime contracts and subcontracts and
operate certain facilities that are licensed to possess and process special nuclear materials. As a result of these activities, we are
subject to continuing reviews by governmental agencies, including the U.S. Environmental Protection Agency and the NRC.
We are also involved in manufacturing activities at licensed facilities in Canada that are subject to continuing reviews by
governmental agencies in Canada, including the CNSC.
The NRC's decommissioning regulations require our Government Operations segment to provide financial assurance that
it will be able to pay the expected cost of decommissioning its two licensed facilities at the end of their service lives. We
provided financial assurance totaling $68.1 million and $68.1 million during the years ended December 31, 2023 and 2022,
respectively, with surety bonds for the ultimate decommissioning of these licensed facilities. These facilities have provisions in
their government contracts pursuant to which substantially all of our decommissioning costs and financial assurance obligations
are covered by the DOE, including the costs to complete the decommissioning projects underway at the facility in Erwin,
Tennessee. The surety bonds noted above are to cover decommissioning required pursuant to work not subject to this DOE
obligation.
In Canada, the CNSC's decommissioning regulations require our Commercial Operations segment to provide financial
assurance that it will be able to pay the expected cost of decommissioning its CNSC-licensed facilities at the end of their service
lives. We provided financial assurance totaling $44.3 million and $43.3 million during the years ended December 31, 2023 and
2022, respectively, with letters of credit and surety bonds for the ultimate decommissioning of these licensed facilities.
Our compliance with federal, foreign, state and local environmental control and protection regulations resulted in pre-tax
charges of approximately $20.0 million, $20.0 million and $17.5 million in the years ended December 31, 2023, 2022 and 2021,
respectively. In addition, compliance with existing environmental regulations necessitated capital expenditures of $0.7 million,
$1.6 million and $3.1 million in the years ended December 31, 2023, 2022 and 2021, respectively. At December 31, 2023 and
2022, we had total environmental accruals (including asset retirement obligations) of $101.1 million and $101.8 million,
respectively. Of our total environmental accruals at December 31, 2023 and 2022, $10.6 million and $10.8 million,
respectively, were included in current liabilities. Inherent in the estimates of these accruals are our expectations regarding the
levels of contamination, decommissioning costs and recoverability from other parties, which may vary significantly as
decommissioning activities progress. Accordingly, changes in estimates could result in material adjustments to our operating
results, and the ultimate loss may differ materially from the amounts that we have provided for in our consolidated financial
statements.
NOTE 11 – RISKS AND UNCERTAINTIES
Revenue Recognized Over Time
As of December 31, 2023, in accordance with the method of recognizing revenue over time, we have provided for our
estimated costs to complete all of our ongoing contracts. However, it is possible that current estimates could change due to
unforeseen events, which could result in adjustments to overall contract costs. The risk on fixed-price contracts is that revenue
from the customer does not cover increases in our costs. It is possible that current estimates could materially change for various
reasons, including, but not limited to, fluctuations in forecasted labor productivity or steel and other raw material prices.
Increases in costs on our fixed-price contracts could have a material adverse impact on our consolidated financial condition,
81
results of operations and cash flows. Alternatively, reductions in overall contract costs at completion could materially improve
our consolidated financial condition, results of operations and cash flows.
Insurance
Upon the February 22, 2006 effectiveness of the settlement relating to the Chapter 11 proceedings involving several of
our former subsidiaries, most of our subsidiaries contributed substantial insurance rights to the asbestos personal injury trust,
including rights to (1) certain pre-1979 primary and excess insurance coverages and (2) certain of our 1979-1986 excess
insurance coverage. These insurance rights provided coverage for, among other things, asbestos and other personal injury
claims, subject to the terms and conditions of the policies. The contribution of these insurance rights was made in exchange for
the agreement on the part of the representatives of the asbestos claimants, including the representative of future claimants, to the
entry of a permanent injunction, pursuant to Section 524(g) of the U.S. Bankruptcy Code, to channel to the asbestos trust all
asbestos-related general liability claims against our subsidiaries and former subsidiaries arising out of, resulting from or
attributable to their operations, and the implementation of related releases and indemnification provisions protecting those
subsidiaries and their affiliates from future liability for such claims. Although we are not aware of any significant, unresolved
claims against our subsidiaries and former subsidiaries that are not subject to the channeling injunction and that relate to the
periods during which such excess insurance coverage related, with the contribution of these insurance rights to the asbestos
personal injury trust, it is possible that we could have underinsured or uninsured exposure for non-derivative asbestos claims or
other personal injury or other claims that would have been insured under these coverages had the insurance rights not been
contributed to the asbestos personal injury trust. On June 30, 2015, we completed the spin-off of our former Power Generation
business (the "spin-off") into an independent, publicly traded company named Babcock & Wilcox Enterprises, Inc. ("BWE"). In
conjunction with the spin-off, claims and liabilities associated with the asbestos personal injury, property damage and indirect
property damage claims mentioned above have been expressly assumed by BWE pursuant to the master separation agreement
between us and BWE.
NOTE 12 – FINANCIAL INSTRUMENTS WITH CONCENTRATIONS OF CREDIT RISK
The primary customer of our Government Operations segment is the U.S. Government, including some of its contractors.
Our Commercial Operations segment's major customers are large utilities. These concentrations of customers may impact our
overall exposure to credit risk, either positively or negatively, in that our customers may be similarly affected by changes in
economic or other conditions. In the years ended December 31, 2023, 2022 and 2021, U.S. Government contracts accounted for
approximately 75%, 76% and 76% of our total consolidated revenues, respectively. Accounts receivable due directly or
indirectly from the U.S. Government represented 63% and 68% of net receivables at December 31, 2023 and 2022,
respectively. In the years ended December 31, 2023, 2022 and 2021, revenues from large utility customers accounted for
approximately 14%, 14% and 14% of our total consolidated revenues, respectively. Accounts receivable due directly from large
utility customers represented 21% and 15% of net receivables at December 31, 2023 and 2022, respectively. See Note 15 for
additional information about our major customers.
We believe that our provision for possible losses on uncollectable accounts receivable is adequate for our credit loss
exposure. At December 31, 2023 and 2022, the allowances for possible losses that we deducted from Accounts receivable –
trade, net on our consolidated balance sheets were $0.3 million and $0.2 million, respectively.
NOTE 13 – INVESTMENTS
The following is a summary of our investments at December 31, 2023:
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Estimated
Fair
Value
(In thousands)
Equity securities
Mutual funds
Available-for-sale securities
Corporate bonds
Total
7,002 $
711 $
— $
7,713
1,479
8,481 $
304
1,015 $
—
— $
1,783
9,496
$
$
82
The following is a summary of our investments at December 31, 2022:
Equity securities
Mutual funds
Available-for-sale securities
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Estimated
Fair
Value
(In thousands)
$
6,352 $
— $
(11) $
6,341
U.S. Government and agency securities
Corporate bonds
Asset-backed securities and collateralized mortgage
obligations
Total
3,247
2,033
10
236
(4)
(4)
3,253
2,265
103
11,735 $
$
—
246 $
(61)
(80) $
42
11,901
NOTE 14 – FAIR VALUE MEASUREMENTS
FASB Topic Fair Value Measurements and Disclosures defines fair value as the price that would be received to sell an
asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date.
This topic also sets forth the disclosure requirements regarding fair value and establishes a hierarchy for valuation inputs that
emphasizes the use of observable inputs when measuring fair value. A financial instrument's categorization within the fair value
hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The fair value hierarchy
established by this topic is as follows:
• Level 1 – inputs are based upon quoted prices for identical instruments traded in active markets.
• Level 2 – inputs are based upon quoted prices for similar instruments in active markets, quoted prices for similar or
identical instruments in inactive markets and model-based valuation techniques for which all significant assumptions
are observable in the market or can be corroborated by observable market data for substantially the full term of the
assets and liabilities.
• Level 3 – inputs are generally unobservable and typically reflect management's estimates of assumptions that market
participants would use in pricing the asset or liability. The fair values are therefore determined using model-based
techniques that include option pricing models, discounted cash flow models and similar valuation techniques.
In accordance with FASB Topic Fair Value Measurements, certain investments that were measured at net asset value per
share (or its equivalent) ("NAV") have not been classified in the fair value hierarchy. These investments are measured on the
fair value of the underlying investments but may not be redeemable at that fair value. Certain of these investments are subject to
customary redemption notice periods of up to 90 days. When appropriate, we adjust these net asset values for contributions and
distributions, if any, made during the period beginning on the latest NAV valuation date and ending on our measurement date.
We also consider available market data, relevant index returns, preliminary estimates from our investees and other data obtained
through research and consultation with third-party advisors in determining the fair value of these investments.
The following sections describe the valuation methodologies we use to measure the fair values of our investments,
derivatives and nonrecurring fair value measurements.
Investments
Investments primarily include corporate bonds and mutual funds.
In general, and where applicable, we principally use a composite of observable prices and quoted prices in active markets
for identical assets or liabilities to determine fair value. This pricing methodology applies to our Level 1 and Level 2
investments.
83
Fair Value Measurements
The following is a summary of our investments measured at fair value at December 31, 2023:
12/31/2023
Level 1
Level 2
Level 3
Unclassified
(In thousands)
Equity securities
Mutual funds
Available-for-sale securities
Corporate bonds
Total
$
$
7,713 $
— $
7,713 $
— $
1,783
9,496 $
1,783
1,783 $
—
7,713 $
—
— $
—
—
—
The following is a summary of our investments measured at fair value at December 31, 2022:
Equity securities
Mutual funds
Available-for-sale securities
U.S. Government and agency securities
Corporate bonds
Asset-backed securities and
collateralized mortgage obligations
Total
Derivatives
12/31/2022
Level 1
Level 2
Level 3
Unclassified
(In thousands)
$
6,341 $
— $
6,341 $
— $
3,253
2,265
3,253
1,714
—
551
42
11,901 $
$
—
4,967 $
42
6,934 $
—
—
—
— $
—
—
—
—
—
Level 2 derivative assets and liabilities currently consist of FX forward contracts. Where applicable, the value of these
derivative assets and liabilities is computed by discounting the projected future cash flow amounts to present value using
market-based observable inputs, including FX forward and spot rates, interest rates and counterparty performance risk
adjustments. At December 31, 2023 and 2022, we had FX forward contracts outstanding to purchase or sell foreign currencies,
primarily Canadian dollars and Euros, with a total fair value of $(9.9) million and $1.2 million, respectively.
Other Financial Instruments
We used the following methods and assumptions in estimating our fair value disclosures for our other financial
instruments:
Cash and cash equivalents and restricted cash and cash equivalents. The carrying amounts that we have reported in the
accompanying consolidated balance sheets for Cash and cash equivalents and Restricted cash and cash equivalents approximate
their fair values due to their highly liquid nature.
Long-term and short-term debt. We base the fair values of debt instruments, including our Senior Notes, on quoted
market prices. Where quoted prices are not available, we base the fair values on the present value of future cash flows
discounted at estimated borrowing rates for similar debt instruments or on estimated prices based on current yields for debt
issues of similar quality and terms. At December 31, 2023 and 2022, the fair value of our Senior Notes due 2028 was $367.7
million and $358.0 million, respectively. At December 31, 2023 and 2022, the fair value of our Senior Notes due 2029 was
$367.0 million and $352.0 million, respectively. The fair value of our remaining debt instruments approximated their carrying
values at December 31, 2023 and 2022.
Note receivable. Included in Other Assets is a note receivable related to a third-party loan. We base the fair value of
this level 2 note receivable instrument on the present value of future cash flows discounted at market interest rates for financial
instruments with similar quality and terms. At December 31, 2023, the carrying value of our note receivable was $7.4 million
and approximated its fair value.
84
NOTE 15 – SEGMENT REPORTING
As described in Note 1, our operations are assessed based on two reportable segments. The operations of our segments
are managed separately, and each segment has unique technology, services and customer classes. We account for intersegment
sales at prices that we generally establish by reference to similar transactions with unaffiliated customers. Reportable segments
are measured based on operating income exclusive of general corporate expenses and gains (losses) on sales of corporate assets.
1. Information about our Segments:
REVENUES:
Government Operations
Commercial Operations
Eliminations
OPERATING INCOME:
Government Operations
Commercial Operations
Unallocated Corporate (1)
Total Operating Income (2)
Other Income (Expense)
Income before Provision for Income Taxes
Year Ended December 31,
2023
2022
2021
(In thousands)
466,344
$ 2,031,337 $ 1,808,483 $ 1,725,097
407,082
(8,105)
$ 2,496,309 $ 2,232,834 $ 2,124,074
(1,372)
(3,007)
427,358
$
$
$
$
374,682 $
37,532
412,214 $
(29,155)
383,059 $
(61,659)
321,400 $
336,501 $
27,418
363,919 $
(15,348)
348,571 $
(34,194)
314,377 $
329,549
35,243
364,792
(18,944)
345,848
49,865
395,713
(1) Unallocated Corporate includes general corporate overhead not allocated to segments.
(2) The following amounts are included in Operating Income:
Losses (Gains) on Asset Disposals and Impairments, Net:
Government Operations
Commercial Operations
Unallocated Corporate
Equity in Income of Investees:
Government Operations
Commercial Operations
$
$
$
$
1,043 $
(9)
—
1,034 $
(250) $
6,233
(463)
5,520 $
50,807 $
—
50,807 $
45,973 $
—
45,973 $
(8)
(2,548)
(976)
(3,532)
33,498
—
33,498
85
Year Ended December 31,
2023
2022
2021
(In thousands)
$
$
$
$
91,699 $
53,358
145,057
6,229
151,286 $
103,093 $
88,853
191,946
6,366
198,312 $
53,388 $
17,745
71,133
7,433
78,566 $
47,982 $
18,805
66,787
7,055
73,842 $
147,051
153,571
300,622
10,430
311,052
42,485
19,884
62,369
6,711
69,080
December 31,
2023
2022
2021
(In thousands)
$ 1,515,264 $ 1,498,472 $ 1,430,863
976,382
2,407,245
94,135
$ 2,747,065 $ 2,618,939 $ 2,501,380
1,077,628
2,592,892
154,173
1,005,545
2,504,017
114,922
$
$
88,608 $
—
88,608 $
100,198 $
—
100,198 $
85,284
—
85,284
Year Ended December 31,
2023
2022
2021
(In thousands)
$ 1,610,183 $ 1,494,810 $ 1,481,416
198,420
45,261
1,725,097
276,690
144,464
2,031,337
233,197
80,476
1,808,483
231,944
234,400
466,344
246,444
160,638
407,082
(8,105)
$ 2,496,309 $ 2,232,834 $ 2,124,074
221,458
205,900
427,358
(3,007)
(1,372)
CAPITAL EXPENDITURES:
Government Operations
Commercial Operations
Segment Capital Expenditures
Corporate Capital Expenditures
Total Capital Expenditures
DEPRECIATION AND AMORTIZATION:
Government Operations
Commercial Operations
Segment Depreciation and Amortization
Corporate Depreciation and Amortization
Total Depreciation and Amortization
SEGMENT ASSETS:
Government Operations
Commercial Operations
Segment Assets
Corporate Assets
Total Assets
INVESTMENT IN UNCONSOLIDATED AFFILIATES:
Government Operations
Commercial Operations
Total Investment in Unconsolidated Affiliates
2. Information about our Product and Service Lines:
REVENUES:
Government Operations:
Nuclear Components and Fuel
Uranium Processing and Nuclear Services
Advanced Reactor Design and Engineering
Commercial Operations:
Nuclear Manufacturing
Nuclear Services and Engineering
Eliminations
86
3. Information about our Consolidated Operations in Different Geographic Areas:
December 31,
2023
2022
2021
(In thousands)
NET PROPERTY, PLANT AND EQUIPMENT:
United States
Canada
United Kingdom
$
784,062 $
442,755
1,703
698,772
346,868
—
$ 1,228,520 $ 1,134,897 $ 1,045,640
743,767 $
389,490
1,640
See Note 3 for revenues by geographic area for each of our segments.
4. Information about our Major Customers:
In the years ended December 31, 2023, 2022 and 2021, sales to the U.S. Government accounted for approximately 93%,
94% and 95% of our Government Operations segment revenues, respectively. In the years ended December 31, 2023, 2022 and
2021, sales to large utility customers accounted for approximately 77%, 74% and 75% of our Commercial Operations segment
revenues, respectively.
NOTE 16 – QUARTERLY FINANCIAL DATA (UNAUDITED)
The following tables set forth selected unaudited quarterly financial information for the years ended December 31, 2023
and 2022:
Year Ended December 31, 2023
Quarter Ended
March 31,
2023
June 30,
2023
September 30,
2023
December 31,
2023
(In thousands, except per share amounts)
$
$
$
$
568,360 $
87,842 $
13,645 $
61,092 $
612,445 $
86,666 $
12,568 $
58,597 $
589,989 $
85,358 $
12,649 $
60,273 $
725,515
123,193
11,945
65,887
Revenues
Operating income (1)
Equity in income of investees
Net Income Attributable to BWX Technologies, Inc.
Earnings per common share:
Basic:
Net Income Attributable to BWX Technologies, Inc. $
0.67 $
0.64 $
0.66 $
0.72
Diluted:
Net Income Attributable to BWX Technologies, Inc. $
0.67 $
0.64 $
0.66 $
0.72
(1) Includes equity in income of investees.
87
Year Ended December 31, 2022
Quarter Ended
March 31,
2022
June 30,
2022
September 30,
2022
December 31,
2022
(In thousands, except per share amounts)
$
$
$
$
530,738 $
71,573 $
8,779 $
59,010 $
554,208 $
95,237 $
11,319 $
74,613 $
523,711 $
79,878 $
14,783 $
61,603 $
624,177
101,883
11,092
42,965
Revenues
Operating income (1)
Equity in income of investees
Net Income Attributable to BWX Technologies, Inc.
Earnings per common share:
Basic:
Net Income Attributable to BWX Technologies, Inc. $
0.64 $
0.82 $
0.67 $
0.47
Diluted:
Net Income Attributable to BWX Technologies, Inc. $
0.64 $
0.82 $
0.67 $
0.47
(1) Includes equity in income of investees.
In the quarter ended December 31, 2023, we recognized favorable contract adjustments totaling $27.9 million as a result
of the successful negotiation of change orders related to cost growth that was driven by out-of-scope changes associated with
the manufacture of non-nuclear components. In the quarter ended September 30, 2023, we recognized $22.5 million of
favorable contract adjustments related to a nuclear operations contract. In the quarter ended June 30, 2022, we recognized an
unfavorable contract adjustment of $11.3 million related to the manufacture of non-nuclear components.
We immediately recognize actuarial gains (losses) for our pension and postretirement benefit plans in earnings as a
component of net periodic benefit cost. Recorded in the quarters ended December 31, 2023 and 2022, the effects of these
adjustments on pre-tax income were $(30.8) million and $(46.6) million, respectively.
NOTE 17 – EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted earnings per share:
Year Ended December 31,
2023
2022
2021
(In thousands, except shares and
per share amounts)
Basic:
Net Income Attributable to BWX Technologies, Inc.
Weighted-average common shares
Basic earnings per common share
Diluted:
Net Income Attributable to BWX Technologies, Inc.
Weighted-average common shares (basic)
Effect of dilutive securities:
Stock options, restricted stock units and performance shares (1)
Adjusted weighted-average common shares
Diluted earnings per common share
245,849 $
$
91,619,156
$
2.68 $
238,191 $
91,447,088
2.60 $
305,871
94,278,894
3.24
245,849 $
$
91,619,156
238,191 $
305,871
94,278,894
91,447,088
255,023
91,702,111
255,381
91,874,537
$
2.68 $
239,528
94,518,422
3.24
2.60 $
(1) At December 31, 2023, 2022 and 2021, we excluded 6,089, 10,419 and 0 shares, respectively, from our diluted share
calculation as their effect would have been antidilutive.
88
Item 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
Item 9A. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
As of the end of the period covered by this Report, we carried out an evaluation, under the supervision and with the
participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the
design and operation of our disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e)
adopted by the SEC under the Securities Exchange Act of 1934, as amended (the "Exchange Act")). Our disclosure controls and
procedures were developed through a process in which our management applied its judgment in assessing the costs and benefits
of such controls and procedures, which, by their nature, can provide only reasonable assurance regarding the control objectives.
It should be noted that the design of any system of disclosure controls and procedures is based in part upon various assumptions
about the likelihood of future events, and we cannot assure that any design will succeed in achieving its stated goals under all
potential future conditions, regardless of how remote. Based on the evaluation referred to above, our Chief Executive Officer
and Chief Financial Officer concluded that our disclosure controls and procedures are effective as of December 31, 2023 to
provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the
Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the
SEC and such information is accumulated and communicated to management, including its principal executives and principal
financial officers or persons performing similar functions, as appropriate to allow timely decisions regarding required
disclosure.
Management's Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as that
term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) and for our assessment of the effectiveness of
internal control over financial reporting.
Our internal control over financial reporting includes policies and procedures that (1) pertain to the maintenance of
records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (2) provide
reasonable assurance that transactions are recorded as necessary to permit preparation of our consolidated financial statements
in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in
accordance with authorizations of our management and Board of Directors; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on
the consolidated financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Our management, including our Chief Executive Officer and Chief Financial Officer, has conducted an assessment of the
effectiveness of our internal control over financial reporting as of December 31, 2023, based on the framework established in
Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission. This assessment included an evaluation of the design of our internal control over financial reporting and testing of
the operational effectiveness of those controls. Based on our assessment under the criteria described above, management has
concluded that our internal control over financial reporting was effective as of December 31, 2023. Deloitte & Touche LLP has
issued an attestation report on our internal control over financial reporting as of December 31, 2023, and their report is included
in this Item 9A.
Changes in Internal Control Over Financial Reporting
There has been no change in our internal control over financial reporting during the quarter ended December 31, 2023
that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
89
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and the Board of Directors of BWX Technologies, Inc.:
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of BWX Technologies, Inc. and subsidiaries (the “Company”) as
of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all
material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in
Internal Control — Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the consolidated financial statements as of and for the year ended December 31, 2023, of the Company and our
report dated February 27, 2024, expressed an unqualified opinion on those financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report
on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control
over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be
independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all
material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk
that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the
assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit
provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/S/ DELOITTE & TOUCHE LLP
Charlotte, North Carolina
February 27, 2024
90
Item 9B. OTHER INFORMATION
Rule 10b5-1 Trading Arrangements
During the year ended December 31, 2023, no director or officer of the Company adopted or terminated a "Rule 10b5-1
trading arrangement" or "non-Rule 10b5-1 trading arrangement," as each term is defined in Item 408(a) of Regulation S-K.
Item 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
None.
91
PART III
Item 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information required by this item with respect to directors and executive officers is incorporated by reference to the
material appearing under the headings "Election of Directors" and "Named Executive Profiles" in the Proxy Statement for our
2024 Annual Meeting of Stockholders. The information required by this item with respect to our Code of Business Conduct and
delinquent Section 16(a) reports, if any, is incorporated by reference to the material appearing under the headings "Code of
Business Conduct" and "Delinquent Section 16(a) Reports" (if applicable) in the Proxy Statement for our 2024 Annual Meeting
of Stockholders. The information required by this item with respect to the audit committee financial experts is incorporated by
reference to the material under the heading "Corporate Governance – Board Meetings and Committees" in the Proxy Statement
for our 2024 Annual Meeting of Stockholders.
Item 11.
EXECUTIVE COMPENSATION
The information required by this item is incorporated by reference to the material appearing under the headings
"Compensation Discussion and Analysis," "Compensation of Directors," "Compensation of Executive Officers,"
"Compensation Committee Interlocks and Insider Participation" section under the heading "Corporate Governance – Board
Meetings and Committees," and "Compensation Committee Report" in the Proxy Statement for our 2024 Annual Meeting of
Stockholders.
Item 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
The information required by this item is incorporated by reference to the material appearing under the headings "Equity
Compensation Plan Information" and "Security Ownership of Certain Beneficial Owners" in the Proxy Statement for our 2024
Annual Meeting of Stockholders.
Item 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Information required by this item is incorporated by reference to the material appearing under the headings "Corporate
Governance – Director Independence" and "Certain Relationships and Related Transactions" in the Proxy Statement for our
2024 Annual Meeting of Stockholders.
Item 14.
PRINCIPAL ACCOUNTING FEES AND SERVICES
Our independent registered public accounting firm is Deloitte & Touche LLP, Charlotte, NC, PCAOB ID: 34.
The information required by this item is incorporated by reference to the material appearing under the heading
"Ratification of Appointment of Independent Registered Public Accounting Firm for Year Ending December 31, 2024" in the
Proxy Statement for our 2024 Annual Meeting of Stockholders.
92
PART IV
Item 15.
EXHIBITS, FINANCIAL STATEMENT SCHEDULES
The following documents are filed as part of this Report or incorporated by reference:
1. CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets as of December 31, 2023 and 2022
Consolidated Statements of Income for the Years Ended December 31, 2023, 2022 and 2021
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2023, 2022 and 2021
Consolidated Statements of Stockholders' Equity for the Years Ended December 31, 2023, 2022 and 2021
Consolidated Statements of Cash Flows for the Years Ended December 31, 2023, 2022 and 2021
Notes to Consolidated Financial Statements for the Years Ended December 31, 2023, 2022 and 2021
2. CONSOLIDATED FINANCIAL STATEMENT SCHEDULES
All schedules for which provision is made of the applicable regulations of the SEC have been omitted because they
are not required under the relevant instructions or because the required information is included in the financial statements or the
related footnotes contained in this Report.
3. EXHIBITS
Exhibit
Number
Description
3.1
3.2
4.1
4.2
4.3
4.4
4.5
10.1
10.2
10.3
Restated Certificate of Incorporation of the Company, dated May 14, 2019 (incorporated by reference to Exhibit
3.2 to the Company's Current Report on Form 8-K filed with the SEC on May 17, 2019 (File No. 1-34658)).
Amended and Restated Bylaws, effective August 2, 2023 (incorporated by reference to Exhibit 3.3 to the
Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2023 (File No. 1-34658)).
Description of the Company's Securities Registered under Section 12 of the Securities Exchange Act of 1934
(incorporated by reference to Exhibit 4.4 to the Company's Annual Report on Form 10-K filed with the SEC on
February 24, 2020 (File No. 1-34658)).
Indenture, dated June 12, 2020, among BWX Technologies, Inc., each of the guarantors party thereto and U.S.
Bank Trust Company, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Company's
Current Report on Form 8-K filed with the SEC on June 12, 2020 (File No. 1-34658)).
Form of 4.125% Senior Notes due 2028 (included in Exhibit 4.1) (incorporated by reference to Exhibit 4.2 to the
Company's Current Report on Form 8-K filed with the SEC on June 12, 2020 (File No. 1-34658)).
Indenture, dated April 13, 2021, among BWX Technologies, Inc., each of the guarantors party thereto and U.S.
Bank Trust Company, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Company's
Current Report on Form 8-K filed with the SEC on April 13, 2021 (File No. 1-34658)).
Form of 4.125% Senior Notes due 2029 (included in Exhibit 4.1) (incorporated by reference to Exhibit 4.2 to the
Company's Current Report on Form 8-K filed with the SEC on April 13, 2021 (File No. 1-34658)).
Amended and Restated Credit Agreement, dated as of October 12, 2022, among BWX Technologies, Inc. as
borrower, Wells Fargo Bank, National Association, as administrative agent and the other lenders party thereto
(incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SEC on
October 12, 2022 (File No. 1-34658)).
Tax Sharing Agreement dated as of June 7, 2010 between J. Ray Holdings, Inc. and Babcock & Wilcox Holdings,
Inc. (incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 2010 (File No. 1-34658)).
Tax Sharing Agreement, dated as of June 8, 2015, by and between the Company and Babcock & Wilcox
Enterprises, Inc. (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for
the quarter ended June 30, 2015 (File No. 1-34658)).
93
Exhibit
Number
10.4
10.5*
10.6*
10.7*
10.8*
10.9*
10.10*
10.11*
10.12*
10.13*
10.14*
10.15*
10.16*
10.17*
10.18*
10.19*
10.20*
10.21
Description
Cooperative Agreement, dated as of April 12, 2013, between Babcock & Wilcox mPower, Inc. and the United
States Department of Energy (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form
8-K dated April 15, 2013 (File No. 1-34658)).
BWX Technologies, Inc. Executive Incentive Compensation Plan as amended and restated July 1, 2015
(incorporated by reference to Exhibit 10.10 to the Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 2015 (File No. 1-34658)).
Supplemental Executive Retirement Plan of BWX Technologies, Inc. as amended and restated July 1, 2015
(incorporated by reference to Exhibit 10.12 to the Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 2015 (File No. 1-34658)).
Form of Change In Control Agreement between the Company and selected officers (other than Mr. Geveden)
(incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SEC on
July 6, 2015 (File No. 1-34658)).
Form of Amendment to Change in Control Agreement, dated July 1, 2016, between the Company and certain
officers (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 2016 (File No. 1-34658)).
Form of Change in Control Agreement between the Company and Mr. Geveden dated October 26, 2015
(incorporated by reference to Exhibit 10.7 to the Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 2015 (File No. 1-34658)).
BWX Technologies, Inc. Executive Severance Plan amended and restated July 1, 2015 (incorporated by reference
to Exhibit 10.11 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 (File No.
1-34658)).
2010 Long-Term Incentive Plan of the Company as amended and restated July 1, 2015 (incorporated by reference
to Exhibit 10.9 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 (File No.
1-34658)).
BWX Technologies, Inc. 2020 Omnibus Incentive plan (incorporated by reference to Appendix B to the
Company's Proxy Statement, dated March 17, 2020 (File No. 1-34658)).
Form of Restricted Stock Unit Grant Agreement for Non-Employee Directors (incorporated by reference to
Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2020 (File No.
1-34658)).
Form of 2020 Restricted Stock Unit Grant Agreement for Employees (incorporated by reference to Exhibit 10.3 to
the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 (File No. 1-34658)).
Form of 2020 Performance Restricted Stock Unit Grant Agreement for Employees (incorporated by reference to
Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 (File No.
1-34658)).
Form of 2021 Performance Restricted Stock Unit Grant Agreement for Employees (incorporated by reference to
Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2021 (File No.
1-34658)).
Form of 2021 Restricted Stock Unit Grant Agreement for Employees (incorporated by reference to Exhibit 10.2 to
the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2021 (File No. 1-34658)).
Form of 2022 Performance Restricted Stock Unit Grant Agreement for Employees (incorporated by reference to
Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2022 (File No.
1-34658)).
Form of 2022 Restricted Stock Unit Grant Agreement for Employees (incorporated by reference to Exhibit 10.2 to
the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2022 (File No. 1-34658)).
Form of Director and Officer Indemnification Agreement entered into between the Company and each of its
directors and selected officers effective July 1, 2015 (incorporated by reference to Exhibit 10.15 to the Company's
Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 (File No. 1-34658)).
Joinder Agreement, dated as of May 24, 2019, between BWXT Advanced Technologies LLC and Wells Fargo
Bank, N.A., as Administrative Agent (incorporated by reference to Exhibit 10.1 to the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30, 2019 (File No. 1-34658)).
94
Exhibit
Number
10.22
10.23
10.24
10.25
10.26*
10.27*
10.28*
10.29*
10.30*
10.31*
Description
Joinder Agreement, dated as of February 13, 2020, between Laker Energy Products Ltd. and Wells Fargo Bank,
N.A., as Administrative Agent (incorporated by reference to Exhibit 10.3 to the Company's Quarterly Report on
Form 10-Q for the quarter ended June 30, 2020 (File No. 1-34658)).
Joinder Agreement, dated as of July 9, 2020, between BWXT Mt. Athos, LLC and Wells Fargo Bank, N.A., as
Administrative Agent (incorporated by reference to Exhibit 10.4 to the Company's Quarterly Report on Form 10-
Q for the quarter ended June 30, 2020 (File No. 1-34658)).
Supplemental Indenture No. 2, dated as of May 25, 2022, between Citadel Capital Corporation, Cunico
Corporation and U.S. Bank Trust Company, National Association, as Trustee under the indenture, dated as of June
12, 2020 (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 2022 (File No. 1-34658)).
Supplemental Indenture No. 2, dated as of May 25, 2022, between Citadel Capital Corporation, Cunico
Corporation and U.S. Bank Trust Company, National Association, as Trustee under the indenture, dated as of
April 13, 2021 (incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for
the quarter ended June 30, 2022 (File No. 1-34658)).
Transition Agreement, dated November 4, 2021, between David S. Black and the Company (incorporated by
reference to Exhibit 10.29 to the Company's Annual Report on Form 10-K for the year ended December 31, 2021
(File No. 1-34658)).
Non-Competition and Non-Solicitation Agreement, dated July 15, 2022, between Joel W. Duling and the
Company (incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 2022 (File No. 1-34658)).
Transition Agreement, dated August 19, 2022, between Richard W. Loving and the Company (incorporated by
reference to Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30,
2022 (File No. 1-34658)).
Transition Agreement, dated December 29, 2022, between Thomas E. McCabe and the Company (incorporated by
reference to Exhibit 10.30 to the Company's Annual Report on Form 10-K for the year ended December 31, 2022
(File No. 1-34658)).
Form of 2023 Stock Option Grant Agreement for Employees (incorporated by reference to Exhibit 10.1 to the
Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2023 (File No. 1-34658)).
Form of 2023 Performance Restricted Stock Units Grant Agreement for Employees (incorporated by reference to
Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2023 (File No.
1-34658)).
10.32*
Form of 2023 Restricted Stock Units Grant Agreement for Employees (incorporated by reference to Exhibit 10.3
to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2023 (File No. 1-34658)).
10.33*
First Amendment to the Supplemental Executive Retirement Plan
10.34*
BWXT Excess Retirement Savings Plan (As Amended and Restated Effective January 1, 2024)
21.1
23.1
31.1
31.2
32.1
32.2
97.1
Subsidiaries of the Registrant.
Consent of Deloitte & Touche LLP.
Rule 13a-14(a)/15d-14(a) certification of Chief Executive Officer.
Rule 13a-14(a)/15d-14(a) certification of Chief Financial Officer.
Section 1350 certification of Chief Executive Officer.
Section 1350 certification of Chief Financial Officer.
BWX Technologies, Inc. Clawback Policy
101.INS
Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its
XBRL tags are embedded within the Inline XBRL document.
101.SCH Inline XBRL Taxonomy Extension Schema Document
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document
95
Exhibit
Number
Description
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document
104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
* Management contract or compensatory plan or arrangement.
Item 16.
FORM 10-K SUMMARY
None.
96
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this
Report to be signed on its behalf by the undersigned, thereunto duly authorized.
February 27, 2024
BWX TECHNOLOGIES, INC.
/s/ Rex D. Geveden
By: Rex D. Geveden
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following
persons on behalf of the registrant and in the capacities indicated and on the date indicated.
Signature
Title
/s/ Rex D. Geveden
Rex D. Geveden
/s/ Robb A. LeMasters
Robb A. LeMasters
/s/ Mike T. Fitzgerald
Mike T. Fitzgerald
/s/ Jan A. Bertsch
Jan A. Bertsch
/s/ Gerhard F. Burbach
Gerhard F. Burbach
/s/ James M. Jaska
James M. Jaska
/s/ Kenneth J. Krieg
Kenneth J. Krieg
/s/ Leland D. Melvin
Leland D. Melvin
/s/ Robert L. Nardelli
Robert L. Nardelli
/s/ Barbara A. Niland
Barbara A. Niland
/s/ Nicole W. Piasecki
Nicole W. Piasecki
/s/ John M. Richardson
John M. Richardson
February 27, 2024
President, Chief Executive Officer and Director
(Principal Executive Officer)
Senior Vice President and Chief Financial Officer
(Principal Financial Officer and Duly Authorized Representative)
Vice President, Finance and Chief Accounting Officer
(Principal Accounting Officer and Duly Authorized Representative)
Independent Board Chair
Director
Director
Director
Director
Director
Director
Director
Director
97
BWX TECHNOLOGIES, INC.
SIGNIFICANT SUBSIDIARIES OF THE REGISTRANT
YEAR ENDED DECEMBER 31, 2023
NAME OF COMPANY
BWXT Advanced Technologies LLC
BWXT Canada Holdings Corp.
BWXT Canada Ltd.
BWXT Commercial Group, Inc.
BWXT Foreign Holdings, LLC
BWXT Government Group, Inc.
BWXT Investment Company
BWXT Medical Ltd.
BWXT Nuclear Energy Canada Inc.
BWXT Nuclear Energy, Inc.
BWXT Nuclear Operations Group, Inc.
BWXT Technical Services Group, Inc.
NFS Holdings, Inc.
NOG-Erwin Holdings, Inc.
Nuclear Fuel Services, Inc.
JURISDICTION
OF
ORGANIZATION
Delaware
Canada
Canada
Delaware
Canada
Delaware
Delaware
Canada
Canada
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
EXHIBIT 21.1
PERCENTAGE
OF OWNERSHIP
INTEREST
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
The subsidiaries omitted from the foregoing list, considered in the aggregate as a single subsidiary, do not constitute a
significant subsidiary.
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in Registration Statement Nos. 333-168687, 333-195889 and 333-238045 on
Form S-8 of our reports dated February 27, 2024, relating to the financial statements of BWX Technologies, Inc. and
subsidiaries, and the effectiveness of BWX Technologies, Inc. and subsidiaries’ internal control over financial reporting
appearing in this Annual Report on Form 10-K of BWX Technologies, Inc. for the year ended December 31, 2023.
EXHIBIT 23.1
/S/ DELOITTE & TOUCHE LLP
Charlotte, North Carolina
February 27, 2024
I, Rex D. Geveden, certify that:
CERTIFICATIONS
EXHIBIT 31.1
1.
I have reviewed this annual report on Form 10-K of BWX Technologies, Inc. for the year ended December 31, 2023;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present
in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the
periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.
b.
c.
d.
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period
in which this report is being prepared;
designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report
our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation; and
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred
during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control
over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or
persons performing the equivalent functions):
a.
b.
all significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process,
summarize and report financial information; and
any fraud, whether or not material, that involves management or other employees who have a significant role
in the registrant’s internal control over financial reporting.
February 27, 2024
/s/ Rex D. Geveden
Rex D. Geveden
President and Chief Executive Officer
EXHIBIT 31.2
I, Robb A. LeMasters, certify that:
1.
I have reviewed this annual report on Form 10-K of BWX Technologies, Inc. for the year ended December 31, 2023;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present
in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the
periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.
b.
c.
d.
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period
in which this report is being prepared;
designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report
our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation; and
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred
during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control
over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or
persons performing the equivalent functions):
a.
b.
all significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process,
summarize and report financial information; and
any fraud, whether or not material, that involves management or other employees who have a significant role
in the registrant’s internal control over financial reporting.
February 27, 2024
/s/ Robb A. LeMasters
Robb A. LeMasters
Senior Vice President and Chief Financial Officer
BWX TECHNOLOGIES, INC.
Certification Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)
EXHIBIT 32.1
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section 1350, Chapter 63 of Title
18, United States Code), I, Rex D. Geveden, President and Chief Executive Officer of BWX Technologies, Inc., a Delaware
corporation (the “Company”), hereby certify, to my knowledge, that:
(1) the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 (the “Report”) fully complies with
the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) information contained in the Report fairly presents, in all material respects, the financial condition and results of
operations of the Company.
Dated: February 27, 2024
/s/ Rex D. Geveden
Rex D. Geveden
President and Chief Executive Officer
BWX TECHNOLOGIES, INC.
Certification Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)
EXHIBIT 32.2
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section 1350, Chapter 63 of Title
18, United States Code), I, Robb A. LeMasters, Senior Vice President and Chief Financial Officer of BWX Technologies, Inc.,
a Delaware corporation (the “Company”), hereby certify, to my knowledge, that:
(1) the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 (the “Report”) fully complies with
the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) information contained in the Report fairly presents, in all material respects, the financial condition and results of
operations of the Company.
Dated: February 27, 2024
/s/ Robb A. LeMasters
Robb A. LeMasters
Senior Vice President and Chief Financial Officer
(This page has been left blank intentionally.)
BWX TECHNOLOGIES, INC.
RECONCILIATION OF NON-GAAP OPERATING INCOME AND EARNINGS PER SHARE(1)(2)
(In millions, except per share amounts)
Year Ended December 31, 2023
Pension &
OPEB MTM
(Gain) / Loss
Restructuring
&
Transformation
Costs
GAAP
Acquisition-
related Costs
Non-GAAP
Operating Income
Other Income (Expense)
Income before Provision for Income Taxes
Provision for Income Taxes
Net Income
Net Income Attributable to Noncontrolling
Interest
Net Income Attributable to BWXT
Diluted Shares Outstanding
Diluted Earnings per Common Share
Effective Tax Rate
Government Operations Operating Income
Commercial Operations Operating Income
Unallocated Corporate Operating Income
$
$
$
$
$
$
383.1 $
(61.7)
321.4
(75.1)
246.3
(0.5)
245.8 $
91.9
2.68 $
23.4%
374.7 $
37.5 $
(29.2) $
— $
30.8
30.8
(7.1)
23.7
—
23.7 $
9.6 $
—
9.6
(1.7)
7.8
—
7.8 $
0.7
—
0.7
(0.2)
0.5
—
0.5
0.26 $
0.09 $
0.01
— $
— $
— $
1.1 $
4.6 $
3.9 $
0.3
0.1
0.3
RECONCILIATION OF CONSOLIDATED ADJUSTED EBITDA(1)(2)
(In millions)
Year Ended December 31, 2023
GAAP
Pension &
OPEB MTM
(Gain) / Loss
Restructuring &
Transformation
Costs
Acquisition-
related Costs
$
$
246.3 $
75.1
17.0
47.0
(2.4)
78.6
461.6 $
23.7 $
7.1
(30.8)
—
—
—
— $
7.8 $
1.7
—
—
—
—
9.6 $
0.5
0.2
—
—
—
—
0.7
Net Income
Provision for Income Taxes
Other – net
Interest Expense
Interest Income
Depreciation & Amortization
Adjusted EBITDA
$
$
$
$
$
$
393.3
(30.9)
362.4
(84.1)
278.4
(0.5)
277.9
91.9
3.02
23.2%
376.1
42.2
(25.0)
Non-GAAP
$
$
278.4
84.1
(13.8)
47.0
(2.4)
78.6
471.9
(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.
BWX TECHNOLOGIES, INC.
RECONCILIATION OF NON-GAAP OPERATING INCOME AND EARNINGS PER SHARE(1)(2)
(In millions, except per share amounts)
Year Ended December 31, 2022
GAAP
Pension &
OPEB MTM
(Gain) / Loss
Restructuring
Costs
Acquisition-
related Costs
Loss on Asset
Disposal
Non-GAAP
Operating Income
Other Income (Expense)
Income before Provision for Income Taxes
Provision for Income Taxes
Net Income
Net Income Attributable to Noncontrolling
Interest
Net Income Attributable to BWXT
Diluted Shares Outstanding
Diluted Earnings per Common Share
Effective Tax Rate
Government Operations Operating Income
Commercial Operations Operating Income
Unallocated Corporate Operating Income
$
$
$
$
$
$
348.6 $
(34.2)
314.4
(75.8)
238.6
(0.4)
238.2 $
91.7
2.60 $
24.1%
336.5 $
27.4 $
(15.3) $
— $
46.6
46.6
(10.9)
35.7
—
35.7 $
8.2 $
0.0
8.2
(1.9)
6.3
—
6.3 $
2.6 $
—
2.6
(0.4)
2.2
—
2.2 $
6.2 $
—
6.2
(1.6)
4.7
—
4.7 $
0.39 $
0.07 $
0.02 $
0.05 $
— $
— $
— $
1.2 $
1.5 $
5.4 $
0.8 $
— $
1.8 $
— $
6.2 $
— $
365.6
12.4
378.0
(90.5)
287.5
(0.4)
287.1
91.7
3.13
23.9%
338.6
35.1
(8.1)
RECONCILIATION OF CONSOLIDATED ADJUSTED EBITDA(1)(2)
(In millions)
Year Ended December 31, 2022
Net Income
Provision for Income Taxes
Other – net
Interest Expense
Interest Income
Depreciation & Amortization
Adjusted EBITDA
GAAP
Pension &
OPEB MTM
(Gain) / Loss
Restructuring
Costs
Acquisition-
related Costs
Loss on Asset
Disposal
Non-GAAP
$
$
238.6 $
75.8
(1.5)
36.4
(0.8)
73.8
422.4 $
35.7 $
10.9
(46.6)
—
—
—
— $
6.3 $
1.9
—
0.0
—
—
8.2 $
2.2 $
0.4
—
—
—
—
2.6 $
4.7 $
1.6
—
—
—
—
6.2 $
287.5
90.5
(48.0)
36.4
(0.8)
73.8
439.4
(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.
BWX TECHNOLOGIES, INC.
RECONCILIATION OF NON-GAAP OPERATING INCOME AND EARNINGS PER SHARE(1)(2)
(In millions, except per share amounts)
Year Ended December 31, 2021
GAAP
Pension &
OPEB MTM
(Gain) / Loss
Restructuring
and Other Costs
Costs
Associated With
Early Bond
Redemption
Non-GAAP
Operating Income
Other Income (Expense)
Income before Provision for Income Taxes
Provision for Income Taxes
Net Income
Net Income Attributable to Noncontrolling
Interest
Net Income Attributable to BWXT
Diluted Shares Outstanding
Diluted Earnings per Common Share
Effective Tax Rate
Government Operations Operating Income
Commercial Operations Operating Income
Unallocated Corporate Operating Income
$
$
$
$
$
$
345.8 $
49.9
395.7
(89.4)
306.3
(0.4)
305.9 $
94.5
3.24 $
22.6%
329.5 $
35.2 $
(18.9) $
— $
(39.6)
(39.6)
9.1
(30.5)
—
(30.5) $
3.1 $
—
3.1
(0.8)
2.4
—
2.4 $
—
15.0
15.0
(3.5)
11.5
—
11.5
(0.32) $
0.03 $
0.12
— $
— $
— $
0.2 $
0.9 $
2.1 $
—
—
—
RECONCILIATION OF CONSOLIDATED ADJUSTED EBITDA(1)(2)
(In millions)
Year Ended December 31, 2021
GAAP
Pension &
OPEB MTM
(Gain) / Loss
Restructuring
and Other Costs
Costs
Associated With
Early Bond
Redemption
$
$
306.3 $
89.4
(85.2)
35.8
(0.4)
69.1
414.9 $
(30.5) $
(9.1)
39.6
—
—
—
— $
2.4 $
0.8
—
—
—
—
3.1 $
11.5
3.5
(10.8)
(4.2)
—
—
—
Net Income
Provision for Income Taxes
Other – net
Interest Expense
Interest Income
Depreciation & Amortization
Adjusted EBITDA
$
$
$
$
$
$
349.0
25.3
374.3
(84.6)
289.6
(0.4)
289.2
94.5
3.06
22.6%
329.7
36.2
(16.9)
Non-GAAP
$
$
289.6
84.6
(56.4)
31.5
(0.4)
69.1
418.1
(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.
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Shareholder Information
INDEPENDENT AUDITORS
Deloitte & Touche LLP
650 South Tryon Street
Suite 1800
Charlotte, North Carolina USA 28202
+1.704.887.1500
TRANSFER AGENT
Computershare Trust Company, N.A.
250 Royall Street
Canton, Massachusetts USA 02021
Toll-Free: +1.800.446.2617 or
outside the USA: +1.781.575.2723
www.computershare.com
ANNUAL MEETING
The Annual Meeting of Stockholders of
BWX Technologies, Inc. will be held virtually
on Friday, May 3, 2024, 9:30 a.m. EDT.
www.bwxt.com/investors
HEADQUARTERS
BWX Technologies, Inc.
800 Main Street
Lynchburg, Virginia USA 24504
Phone: +1.434.522.3800
Fax: +1.434.522.6909
www.bwxt.com
EMPLOYEES
~7,800
INVESTOR INFORMATION
Copies of the Annual Report and Form 10-K
filed with the U.S. Securities and Exchange
Commission and other investor information
may be obtained by request in writing to
Investor Relations or by visiting our website
at www.bwxt.com.
INVESTOR RELATIONS
BWX Technologies, Inc.
800 Main Street
Lynchburg, Virginia USA 24504
Attention: Investor Relations
investors@bwxt.com
+1.980.365.4300
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Forward-Looking Statements
BWXT cautions that this release contains forward-looking statements, including, without limitation, statements relating to bookings and
backlog, to the extent they may be viewed as an indicator of future revenues; our plans and expectations for each of our reportable segments,
including growth opportunities and the expectations, timing and revenue of our strategic initiatives, such as medical radioisotopes, small
modular reactor components and recent acquisitions; disruptions to our supply chain and/or operations, changes in government regulations
and other factors; and our expectations and guidance for 2024 and beyond. These forward-looking statements are based on management’s
current expectations and involve a number of risks and uncertainties, including, among other things, our ability to execute contracts in
backlog; federal budget uncertainty, the risk of future budget cuts, the impact of continuing resolution funding mechanisms and the debt
ceiling, the potential for government shutdowns and changing funding and acquisition priorities; the demand for and competitiveness of
nuclear products and services; capital priorities of power generating utilities and other customers; the timing of technology development,
regulatory approvals and automation of production; the receipt and/or timing of government approvals; the potential recurrence of subsequent
waves or strains of COVID-19 or similar diseases; labor market challenges, including employee retention and recruitment; 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,
2023. 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.
©2024 BWX Technologies, Inc. All rights reserved.
BWX Technologies, Inc.
800 Main Street
Lynchburg, VA USA 24504
+1.434.522.3800
www.bwxt.com