06-05-2025
BWX Technologies Inc (BWXT) Q1 2025 Earnings Call Highlights: Strong Revenue Growth and ...
Revenue: $682 million, up 13% year-over-year.
Adjusted EBITDA: $130 million, up 13% year-over-year.
Adjusted Earnings Per Share (EPS): $0.91, up 20% from $0.76 last year.
Government Operations Revenue Growth: 14% increase.
Government Operations Adjusted EBITDA Margin: 21.1%.
Commercial Operations Revenue: $128 million, up 10% year-over-year.
Commercial Operations Adjusted EBITDA Margin: 10.9%, down 100 basis points.
Free Cash Flow: $17 million for the quarter.
Capital Expenditures: $33 million or 4.9% of sales.
Backlog: $1.3 billion in commercial operations, up 78% year-over-year.
Adjusted Effective Tax Rate: 18.3% for the quarter.
Warning! GuruFocus has detected 3 Warning Signs with BWXT.
Release Date: May 05, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
BWX Technologies Inc (NYSE:BWXT) reported double-digit year-over-year growth in revenue, adjusted EBITDA, and adjusted earnings per share for the first quarter of 2025.
The company achieved a robust bookings performance, with a commercial operations backlog of $1.3 billion, up 78% year-over-year.
BWXT secured significant contracts, including the management and operations contract for the Department of Energy's Strategic Petroleum Reserve and a sole-source contract for domestic uranium enrichment.
The company is expanding its nuclear services portfolio through the pending acquisition of Connectrix and increasing capacity at its Cambridge manufacturing plant.
BWXT's medical segment experienced double-digit revenue and adjusted EBITDA growth, driven by its pet diagnostic product lines, and remains on track for over 20% full-year revenue growth.
BWXT faced negative EACs (Estimate at Completion) of about $11 million, impacting both government and commercial operations.
The company experienced heightened inflation for specialized raw materials in its Candu fuel business line, affecting margins in the first half of the year.
There is uncertainty around the ANPI program, with unclear funding and potential outcomes, despite BWXT being selected as an eligible supplier.
The zirconium cost impact due to geopolitical factors and tariffs poses a challenge, although BWXT has mechanisms to manage this risk.
The timeline for FDA approval of BWXT's moly product remains uncertain, with potential delays into early 2026, affecting the company's entry into contracted sales.
Q: Robb, it looks like there were some negative EACs this quarter of about $11 million based on what's in the 10-Q. Were those EACs all at government operations? Can you share in more detail what the offsets were that allowed the segment to deliver strong margins despite that headwind? A: Robb LeMasters, CFO: No, it wasn't all in government operations. It's about half and half between the commercial and the government business. The commercial operations were impacted by zirconium costs in the fuel business, which we will start to recover in the second half and into 2026. The government operations had various smaller impacts with no significant positive offsets.
Q: Rex, in terms of the recent funds appropriated to support the shipbuilding industry, do you see BWXT as in line to get any of that funding? A: Rex Geveden, CEO: Not much for us in the continuing resolution. However, the reconciliation bill is interesting with potential funding for domestic defense enrichment and DoD nuclear reactors, which could be beneficial for us.
Q: Rex, can you elaborate on the reconciliation package and its potential impact on BWXT, particularly regarding NASA and shipbuilding? A: Rex Geveden, CEO: The reconciliation bill includes funding for accelerating defense enrichment and DoD reactors, which is promising for us. The shipbuilding office setup is positive, emphasizing nuclear shipbuilding. Regarding NASA, there's interest in nuclear thermal propulsion, which aligns with our capabilities.
Q: Robb, regarding the raw material issue at commercial operations, will the second quarter still be your highest margin quarter despite the impact? A: Robb LeMasters, CFO: The second quarter will not have the typical high margins due to the zirconium issue and other mix items. However, we expect margins to pick up in the second half with a better schedule of projects.
Q: Rex, you mentioned perfecting the process on moly. Can you provide an update on the timeline for approval and contracting for 2026? A: Rex Geveden, CEO: We hope for approval in 2025, but it could extend into early 2026. We didn't forecast sales for 2025, but we might enter the spot market. We're addressing technical items from the FDA application and are nearing the finish line.
Q: Can you discuss the enrichment contract and the LEU market for US reactor owners? A: Rex Geveden, CEO: We're in the conceptual stage for a pilot plant with NNSA. The LEU market requires unobligated materials, and the program could evolve with commercial sources or NNSA building the capability. It's too early to determine the exact path.
Q: Robb, is there any reason to think free cash flow seasonality this year is markedly different than previous years? A: Robb LeMasters, CFO: No, we expect a typical pattern with CapEx building over the year and the fourth quarter being the most significant for free cash flow.
Q: Rex, regarding the ANPI program, what are the expected revenues and cadence? A: Rex Geveden, CEO: The ANPI program is uncertain with eight participants, including us. We're negotiating OTAs, but funding and potential are unclear. We're eligible and hope to secure business.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
