Earnings rose at BWX Technologies, Lynchburg, Va., in the first quarter, and the company sees fair winds ahead, driven by U.S. Navy and allied nuclear ship propulsion requirements.
Net earnings for the first quarter ended March 31 were $61 million or $0.67 per share up from $59.1 million, or $0.64 a share, in the year-ago quarter.
Quarterly revenue was $568.4 million, up year-over-year from $530.7 million, the company said in a Monday press release.
The U.S. Navy’s recently released 30-year shipbuilding plan outlines a great deal of potential work for BWX Technologies (BWXT), which is the sole manufacturer of nuclear reactors that power the Virginia- and Columbia-class ballistic missile submarines and U.S. aircraft carriers.
BWXT Chief Executive Rex Gevenden said the shipbuilding plan and the recently announced three-party AUKUS nuclear-powered submarine pact between the U.S., U.K. and Australia represents a “strong naval spending backdrop,” for the company.
“This strong naval spending backdrop serves as a good tailwind for our Naval propulsion franchise at BWXT, but also lifts the business prospects of the two acquisitions we made almost one year ago to the day,” Gevenden said during a Monday call with Wall Street analysts. “Dynamic Controls and Cunico are both important suppliers of precision parts to the U.S. and U.K. navies.”
Aside from building nuclear naval reactors, BWXT until 2014 held contracts to manage both the National Nuclear Security Administration’s (NNSA) uranium production hub in Oak Ridge, Tenn., and the Pantex Plant in Panhandle Texas. Consolidated Nuclear Security now holds a joint contract for both sites, but NNSA is splitting them into separate management deals, for which BWXT is likely to throw its hat in the ring.
Quarterly operating income for the Government Operations segment was $90.6 million, up from $72.2 million a year ago. Segment revenue was $459.9 million up from $431.8 million in the year-ago period.
“We’re also seeing a growing interest in advanced reactors for commercial applications across a number of markets,” Gevenden said. “This exciting opportunity for government investments to enable nuclear commercial markets is reminiscent of the naval reactors programs of the 1950s that kick-started the commercial nuclear industry as we know it today. BWXT has a clearly established leadership position in naval nuclear applications.”
The Navy plans to build more Virginia-class subs for itself in the 2030s to backfill the ones that will be sold to Australia as part of AUKUS. The service is currently building about two subs per year, which with the ramp-up in Columbia-class production and another Ford-class carrier on the way presents a lot of concurrent work for BWXT to build the reactors to power those ships, Gevenden admitted.
“Knock on wood, we’ve been able to stay off the critical path relative to shipyard need dates,” he said. “But we certainly have to put our shoulder into it every day to stay off that critical path.”
