Earnings fell at BWX Technologies, Lynchburg, Va., in the second quarter, and the nuclear services company does not expect a quick resolution to a challenge of a $45-billion joint venture contract to manage the Department of Energy’s Hanford Site in Washington state.
“At this point, do not expect a contractor transition at the site until early 2024,” on the Hanford Integrated Tanks business, CEO Rex Geveden said during a quarterly earnings call Thursday evening after U.S. stock markets closed.
A joint venture led by BWXT won the 10-year, $45-billion contract in April, but an Atkins Nuclear-led group challenged the contract in the U.S. Court of Federal Claims, where the judge blocked the award at least in the short term.
Currently, “the contract decision is back in the hands of the DOE and there are a variety of options it can take in deciding the best path forward,” Geveden said.
Earnings attributed to BWXT were down, which the company attributed in part to the cost of and training new hires, according to Thursday’s press release and financial presentation.
Net earnings for the second quarter were $58.7 million or $0.64 a share, down from $74.7 million or $ 0.82 a share, in the year-ago quarter. Quarterly revenue was $612.4 million, up year-over-year from $554.2 million.
Quarterly operating income for the government contracting segment, which includes the DOE Office of Environmental Management, the National Nuclear Security Administration and naval reactor work, was $82.2 million, down from $83.8 million a year ago. Segment revenue was $492 million, up from $436.5 million in the year-ago period.
“Our second quarter 2023 results were ahead of expectations,” thanks in part to the commercial nuclear power business, Geveden said in the release. The company brought on lots of new employees in the first half of the year, he added.
“As expected, this contributed to a sequential margin decline in our government operations business, but positions us well for the future growth opportunities.” BWXT attrition is getting back to more traditional levels in the mid-single-digits, the CEO added.
BWXT is seeing many potential manufacturing opportunities in the fledgling small modular reactor market among electric power generators in the United States and Canada, Geveden said. There is also growing government interest in “microreactors” for everything from remote and off-grid military operations to space propulsion for NASA, BWXT said in the earnings presentation. BWXT’s Project Pele with DOE and the Department of Defense is an example of one such microreactor, Geveden said.
BWXT has a large presence in the DOE weapons complex, including being lead partner on the 10-year, $21-billion Savannah River Mission Completion contract at the Savannah River Site in South Carolina.
