While it has fixed the bad welds that plagued the program last decade, BWX Technologies, Lynchburg, Va., is still having trouble manufacturing common missile compartment tubes for Columbia-, Virginia– and Dreadnought-class submarines, the company’s CEO said this week.
“[W]e continue to have some struggles with the missile tubes program,” Rex Geveden, BWX Technologies’ (BWXT) chief executive, said Monday in the company’s second quarter earnings call with investors. “[W]e did experience some cost creep in that program last year and we brought in some new leadership, and they’ve re-baselined the program and estimated some new costs to ramp that program up.”
Geveden did not quantify the effects of missile tube missteps on the company’s second quarter financial performance, though the company’s latest earnings press release said that even with the “lower missile tube revenue due to contract adjustments,” quarterly revenue in the flagship government operations segment still rose 8% year over year to $437 million.
BWXT makes Common Missile Compartment tubes at its factory in Mount Vernon, Ind. The tubes are designed to fit the U.S. Virginia-class attack submarines and Columbia-class ballistic missile submarines, plus the United Kingdom’s planned Dreadnought-class ballistic missile submarines.
Each country’s ballistic missile submarines are nuclear powered and carry Lockheed Martin-made Trident II missiles tipped with W76 and W88 nuclear warheads on the U.S. boats and Trident-Holbrook warheads, a W76 derivative, on the U.K. boats.
In 2018, the Navy acknowledged that BWXT incorrectly welded a dozen missile tubes that the company was building as a subcontractor to Columbia-class prime General Dynamics Electric Boat.
The mistake chewed the prime’s margin to construct and launch the first Columbia boat to about two months, the Navy said in November. The first Columbia is supposed to go on patrol in 2031 or so. The U.S. Navy plans to replace its current fleet of 14 Ohio-class ballistic missile submarines with 12 Columbia boats.
Meanwhile, while it did not generate much chatter Monday during a quarterly earnings call focused on strong numbers, BWX Technologies is in the running for billions more in government contracts across the Department of Energy nuclear weapons complex over the next year.
BWXT is seeking to “grow in government nuclear markets,” the company wrote in its second quarter earnings presentation.
This includes contract the National Nuclear Security Administration’s Pantex Plant in Texas, BWXT said in the materials. The semiautonomous Department of Energy nuclear weapons agency plans in the next several years to split management of Pantex and the Y-12 National Security Complex in Oak Ridge, Tenn., across separate contracts instead of the current combined management and operations contract held by Consolidated Nuclear Security, a Bechtel National-led joint venture.
On the earnings front, net income for the quarter ended June 30 rose to $74.6 million, or $0.82 per diluted share, from $59.3 million, or $0.62 per diluted share in the year-ago quarter, BWXT said in a Monday press release.
Quarterly revenue was $554 million, up 10% over the $505 million taken in during the second quarter 2021.
The Lynchburg, Va., naval nuclear reactor supplier and Department of Energy contractor attributed the second-quarter result to business performance and good timing — some anticipated third quarter revenue rolled in during the second quarter, the company said.
Government Operations segment operating income was $83.8 million during the quarter, up from $72.9 million in the year-ago quarter. Government Operations revenue was $437 million, up from $405 million the prior year.
The Commercial Operations operating income was $12.9 million, a big jump from the $5.6 million recorded a year ago. The segment’s revenue during the recent quarter was $119 million, up from $102 million a year ago.
“BWXT delivered a strong second quarter despite a few operational challenges,” Geveden said in the release, pointing to some supply chain difficulties and labor shortages in the company’s flagship naval reactor business. The company now reports results of that business in the Government Operations segment.
“Impressive operational performance in commercial power, nuclear medicine and uranium processing offset some challenges for naval component production at certain facilities within Government Operations,” Geveden said.
The BWXT CEO also touted the $300-million Project Pele micro-reactor prototype contract with the Department of Defense. The micro-reactor will be demonstrated at DoE’s Idaho National Laboratory. It will be a transportable micro-reactor that can be used for off-grid and remote military applications, according to BWXT.
