Earnings fell at BWX Technologies, Lynchburg, Va., in the second quarter, but the nuclear services company sees support with the U.S. Navy’s long-term shipbuilding plan, the AUKUS trilateral security agreement between the U.S., U.K. and Australia paying dividends in the future.
The company is currently negotiating the next two-year pricing agreement for nuclear naval reactors that power U.S. Navy aircraft carriers and submarines, BWX Technologies (BWXT) said in its second quarter 2023 earnings filing on Aug. 3.
“Beyond our core naval propulsion business, we are seeing the precipitation of demand for advanced nuclear reactors by various government agencies looking for innovative clean power and propulsion solutions in space and other domains,” BWXT Chief Executive Rex Geveden said Thursday on the company’s second-quarter earnings call. “These systems can improve the security posture of the U.S., especially in emergency or war-fighting scenarios.”
BWXT also recently secured a contract with the Defense Advanced Research Projects Agency (DARPA) Demonstration Rocket for Agile Cislunar Operations, or DRACO, that seeks to develop nuclear propulsion for space vehicles. .
Overall, BWXT earnings 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.
