The COVID-19 health crisis is so far having only a marginal impact on BWX Technologies, including delay of certain Energy Department contract awards, President and CEO Rex Geveden said Tuesday, .
A potential 10-year deal for management of radioactive waste at the DOE Hanford Site in Washington state probably won’t be issued until late summer, Geveden said during a conference call on BWXT’s first-quarter earnings.
The request for proposals for the contract to manage 56 million gallons of radioactive and chemical waste stored in 177 underground tanks at Hanford was issued in February 2019. One year ago, DOE aimed to issue the award by August 2019. In March, the Energy Department acknowledged the COVID-19 pandemic was slowing its procurement efforts, citing issues such as elimination of nonessential business travel and limits to the number of people who can attend meetings.
Even before the pandemic resulted in cancellation of myriad events, however, industry officials said two bid protests filed in January over Hanford contract awards had made DOE doubly cautious before issuing the next award.
The current $7.8 billion tank waste business, held by Amentum-led Washington River Protection Solutions, began in October 2008 and is set to run through this September. BWX Technologies has said it is part of a team seeking the contract.
The current health crisis has triggered a stock market dive and caused millions of people to file unemployment claims in the United States over the past couple of months.
Like Jacobs, another government contractor that reported earnings this week, BWXT executives currently expect a partial recovery of its businesses from the financial fallout from the pandemic starting around July. Neither company discussed specifics on the timeline — although there are increasing signs around the industry that nuclear cleanup sites will start increasing their staffing levels within weeks. Virtually all such sites have minimal staffing inside the fence these days, with most contractor employees either working remotely or receiving paid leave.
It is too early to say how the reduced operations forced by the pandemic at Department of Energy sites where BWXT works will affect milestones under its contracts and future fee awards, Geveden said.
The COVID-19 financial impact is blunted largely by the Lynchburg, Va.-based company’s “essential” role in energy, military, and medical sectors, Geveden told the Wall Street analysts. As an example, he noted that BWXT manufactures reactors and other nuclear components for U.S. Navy submarines and aircraft carriers. The company’s manufacturing facilities remain open, he said.
The situation has also prompted some electric utilities in Canada to delay nuclear reactor maintenance or refurbishment. “They don’t want 300 people crawling around the face of a reactor,” Geveden said. Nuclear plant refueling outages commonly involve employment of hundreds of temporary workers on-site.
Some of BWXT’s nuclear plant refueling and refurbishment projects are delayed as a result, the CEO said.
On the upside, CH2M HILL BWXT West Valley recently received a $243 million, 39-month contract extension from DOE for cleanup at the West Valley Demonstration Project in New York. BWX Technologies is a minority partner on several other projects overseen by the DOE Office of Environmental Management, such as management of the Waste Isolation Pilot Plant in New Mexico, legacy cleanup of the Los Alamos National Laboratory in New Mexico, and remediation of the Paducah Site in Kentucky and the Portsmouth Site in Ohio.
“We remain acutely focused on protecting employee health and safety,” Geveden said. The company is using more remote work, temperature screenings, face masks, and staggered shifts, he said.
BWX Technologies brought in $542 million in first-quarter 2020 revenue, 30% more than the $416 million generated during the first three months of 2019.
Net income for the period ended March 31 amounted to $75.5 million, $0.79 per diluted share, a significant year-over-year jump from $49 million, $0.51 per diluted share.
Despite adverse impacts from the COVID-19 pandemic on Nuclear Power Group customers, BWXT is sticking with its 2020 earnings guidance of $2.80 per share, Geveden said.
The Nuclear Services Group, which houses BWXT’s contracts for the Energy Department’s nuclear complex, recorded revenue of $37 million. That rose from $29 million in the first quarter of 2019. The group’s quarterly operating income rose dramatically to $6.4 million in 2020 from $1.6 million in 2019, thanks to the increased volume in U.S. commercial nuclear service work.
BWXT’s Nuclear Operations Group brought in $424 million of revenue for the first quarter, a 39% increase from $305 million in the prior-year period. The group’s operating income was $90.4 million, 57% more than the $57.6 million a year ago, thanks in part to higher production volume of components for the Navy’s Columbia-class submarine.
Revenue in the Nuclear Power Group was $88 million, up slightly from $84 million a year earlier. The group’s operating income was $8.5 million, a 33% dip from $12.6 million following conclusion of a design and component manufacturing contract for a steam generator project in China.
