BWX Technologies, trumpeting strong third-quarters earnings results Tuesday, said it is not under contract to build any more common missile compartment tubes for U.S. naval submarines, beyond those already contracted for production by 2021.
After announcing in 2018 it had botched welds on 12 of the tubes, which were destined for both Columbia- and Virginia-class subs, BWX Technologies no longer expects to make any money on its missile tube contracts with submarine prime General Dynamics Electric Boat. Under its third and latest missile tube subcontract, worth $75 million, BWX Technologies owes General Dynamics 26 tubes by 2021.
“The missile tube repair campaign is trending positively, with about 60% of the missile tube welds in repair or complete,” BWXT CEO Rex Geveden said during the company’s quarterly earnings call with financial analysts. “We still expect to wrap up the majority of the repairs by the end of the year and complete the remainder of the missile tube backlog in 2021.”
General Dynamics received a roughly $270 million Navy contract modification in April to procure 42 more common missile compartment tubes. However, BWX Technologies — which confirmed that it bid with the prime in 2018 for more tube work — apparently did not capture any of that business yet. Prior to the welding mistakes, which Geveden has attributed to the difficulty of the work, BWX Technologies expected to capture more than half of the available tube business.
“We do not have any additional work beyond the backlog mentioned in today’s call,” a BWX Technologies spokesperson wrote in an email on Tuesday.
Aside from the tube business, it was a banner quarter for BWXT’s Nuclear Operations Group, which for more than half a century has enjoyed a virtual monopoly in producing heavy components for naval nuclear reactors.
The largest of BWX Technologies’ three reportable segments, Nuclear Operations locked down price agreements for about $4 billion worth of naval reactors work, including providing components for reactors, in 2019, Geveden said Tuesday. The segment surged to an operating income of more than $93.5 million from less than half that in the 2018 quarter, when the company booked charges for fixing the missile tubes.
The Nuclear Operations Group’s quarterly revenue rose to around $394.5 million from roughly $319 million a year ago.
Overall, the company set a record for quarterly revenue: $506 million for the three-month period ended Sept.30, up just under 20% from $426 million a year ago.
Net earnings company-wide came in at $74.8 million, or $0.78 per diluted share, compared with $77.9 million, or $0.78 per diluted share, in the 2018 third quarter.
NNSA Ops In Sight
On this week’s earnings call, Geveden told investors he thinks DOE could issue a draft solicitation in late 2020 for management and operation of the Savannah River Site. Fluor-led Savannah River Nuclear Solutions is running SRS under a 14-month extension through September 2020. The Energy Department also can exercise two more one-year options that could keep SRNS on the job through September 2022. The site includes the NNSA’s tritium extraction operations.
In addition, BWX Technologies plans to compete in the next 24 months for business at the Pantex in Texas and the Y-12 National Security Site in Oak Ridge, Tenn., both currently operated under one contract held by Consolidated Nuclear Security, Geveden said. The CNS contract, which started in March 2014, would be worth $22 billion over 10 years if all options are exercised.
