BWX Technologies, Inc. 2026 Q2 Earnings Call

Please go ahead. Thank you, operator.

Good evening. Welcome to today's call. Joining me are Russ Jevnin, President and CEO, and Mike Fitzgerald, Senior Vice President and CFO. On today's call, we'll reference the second quarter 2026 earnings presentation that is available on the investor section of the BWXT website. We will also discuss certain matters that constitute forward-looking statements. These statements involve risks and uncertainties, including those described in the safe harbor provision found in the investor materials in the company's SEC filings. We will frequently discuss non-GAAP financial measures, which are reconciled to GAAP measures in the appendix of the earnings presentation that can be found on the investor section of the BWXT website. I would now like to turn the call over to Russ.

Thank you, Chase. Good evening to all of you. We delivered another strong quarter characterized by excellent execution across the company and continued momentum in commercial nuclear. Revenue increased 18%, including 9% organic growth. Adjusted EBITDA grew 7%, and adjusted earnings per share increased 5%. Demand for nuclear solution continues to build across the national security and global commercial power markets. We are benefiting from that demand today and believe the industry is in the early stages of a multi-decade super cycle of growth. BWXT faces the market from a position of strength, with exposure across the nuclear value chain. Our naval propulsion, technical services, special materials, and commercial nuclear aftermarket businesses provide a highly predictable base of revenue and earnings.

Combined with more than 75 years of nuclear experience, specialized qualifications, established infrastructure, and approximately 11,000 employees, these capabilities create a competitive position that is exceptionally difficult to replicate. Still, we are taking disciplined actions to further strengthen our market position and capture the opportunities ahead. We announced the sale of our medical business to Nordic Capital at a valuation of up to $800 million. The transaction results in the sale of just over 80% of BWXT's medical and Kinectrics stable isotope enrichment businesses. BWXT will retain a minority equity interest and continue to provide certain specialty manufacturing services following the close. Notably, the transaction does not include our Isogen joint venture with Framatome, which provides irradiation services through Bruce Power.

While we remain optimistic about the long-term nuclear medicine market, this transaction enables BWXT to sharpen its focus on our core nuclear national security and commercial nuclear power businesses while placing the medical business with an owner dedicated to accelerating its growth. We believe this creates compelling value for both organizations. We also completed the acquisition of Precision Components Group in early July. While the majority of PCG's current revenue and backlog is tied to the U.S. Naval Nuclear Propulsion Program, it also has a history of serving the commercial nuclear power market, including components for AP1000s, thereby establishing an important commercial nuclear manufacturing platform for BWXT in the U.S. Customer feedback on the acquired capabilities has been very positive. PCG also creates opportunities to bring outsourced work in-house to capture supply chain profits, alleviate capacity constraints, and generate near-term synergies.

Beyond PCG, we are evaluating the next phase of our U.S. commercial manufacturing expansion. In addition to Mount Vernon, Indiana, which we discussed before, because our closing timeline with PCG accelerated, we now have attractive potential East Coast locations that could leverage PCG's real estate and workforce and accelerate our time to market. Importantly, whichever side we choose will have the deep water port access necessary to serve the global nuclear power market with large components such as steam generators and Reactor Pressure Vessels, complementing PCG's capabilities for medium-sized components and enhancing our merchant supplier role. In May, we were awarded a $21 million award from the DOE to support our domestic manufacturing capacity expansion, we expect to reach a final investment decision in the coming months.

Supporting this strategy is a growing pipeline of heavy nuclear equipment proposals with multiple SMR and large reactor OEMs across a spectrum of technologies. In the United States, we are encouraged by the administration's continued efforts to accelerate nuclear deployment, streamline licensing, support project developers, and strengthen the domestic industrial base. In recent months, the DOE's Energy Dominance Financing Office announced a $17.5 billion loan commitment supporting long lead nuclear equipment procurement for AP1000 projects, an initiative that aligns well with our capabilities. We also see momentum across multiple government-backed SMR programs. International demand is equally compelling. Canada recently released its nuclear strategy, contemplating up to 10 new large nuclear reactors over the coming decades, in addition to the SMR deployments and CANDU life extension programs already underway, which BWXT is actively supporting.

Across Europe, energy security continues to drive demand for new nuclear power, creating opportunities across countries including Poland, Bulgaria, the United Kingdom, Sweden, and other markets. Taken together, these developments reinforce our confidence in sustained global nuclear growth. BWXT is investing now to extend our market position and capitalize on this expanding opportunity set. Turning now to our results and market outlook. We ended the quarter with backlog of $8.4 billion, an increase of 40% year-over-year. Although backlog was modestly lower than last quarter, the timing of large multi-year contract awards can result in normal sequential backlog fluctuations. On a trailing 12-month basis, our book-to-bill is a robust 1.7 times, demonstrating the strength of customer demand. In segments, government operations delivered another strong quarter with strong margins attributable to outstanding operational execution and productivity improvements. In May, the Navy released its updated 30-year shipbuilding plan.

The plan calls for a sustained production of 2 Virginia-class submarines and 1 Columbia-class submarine annually. Importantly, the plan also accelerates Ford-class aircraft carriers to a 4-year procurement cadence. Over time, this should improve manufacturing volume stability and efficiency compared with the 5-year ordering cadence under which we have been operating. The plan also introduces a nuclear power battleship. While this program will require further design work and congressional authorization, we are actively engaged with our customer and stand ready to support the mission as requirements develop. Our technical services business continues to earn strong performance ratings while supporting 14 major programs for the DOE and NNSA in the U.S. and the Canadian National Labs. Within special materials, our two largest growth programs, Defense Fuels Enrichment and High Purity Depleted Uranium, are progressing well.

Our enrichment program is moving quickly, we remain closely engaged with the NNSA on this strategically important capability. At our centrifuge manufacturing development facility, we are on schedule to deliver an operational prototype centrifuge this year. In Jonesborough, Tennessee, engineering design and site prep for our new HPDU plants are moving along nicely as we prepare to initiate construction. This program should contribute meaningfully to government operations revenue growth in the second half of the year. These new factories will incorporate advanced automation, digital manufacturing, and AI-enabled capabilities that will serve as a blueprint for the continued modernization of our entire manufacturing footprint. Advanced Nuclear also had an active quarter. In June, Antares Mark-0 reactor became the first advanced reactor to achieve criticality under the administration's reforming nuclear reactor testing executive order, utilizing TRISO fuel and HALEU supplied by BWXT.

This milestone demonstrates our leadership in advanced nuclear fuels and highlights growing customer demand for our capabilities. As advanced reactor deployments accelerate, including through the potential Janus program, we continue to evaluate a commercial TRISO investment in Wyoming through our collaboration with Kairos. We executed multiple agreements related to our mPower technology as well. These align with our strategy of serving as a merchant supplier of large critical components for SMRs, while creating additional value from our legacy design efforts through licensing agreements. We signed an exclusive land-based licensing agreement with Applied Atomics, wherein they will lead and fund the completion of the design and licensing process. Under the agreement, BWXT will be contracted to provide support during that process and retains exclusive manufacturing rights, royalty rights, and the intellectual property.

We also announced a feasibility study with Core Power to evaluate the use of mPower technology for floating nuclear power platforms serving offshore energy markets, where we are seeing demand from multiple parties. The study will inform potential engineering scope, regulatory engagement, commercial structure, and next steps. These arrangements followed extended discussions and a deliberate evaluation of potential partners and applications. We believe Applied Atomics and Core Power are well suited to advance mPower in their respective markets and unlock value from the technology. Turning now to Commercial Operations, which delivered another strong quarter. Organic revenue increased 33%. Total revenue grew more than 70%, and adjusted EBITDA more than doubled. Performance was driven by exceptional growth in commercial nuclear power and nuclear medicine, with additional contribution from Kinectrics. As I discussed, demand for commercial nuclear equipment and services remains exceptionally strong.

We continue pursuing opportunities with multiple reactor vendors around the world. Although award timing can be difficult to predict, our customer discussions are advancing, and we believe there's a credible opportunity to secure at least one new build nuclear equipment order before the year-end. As demand builds, we are investing in our facilities, workforce, and capabilities. These investments will moderate near-term margin expansion, but they are essential to establishing the industrial scale required to lead this market and support our customers over the long term. With that, I will now turn the call over to Mike.