BWX Technologies, Inc. Q4 FY2024 earnings call

• BWXT achieved record financial performance in 2024 with record revenue, adjusted EBITDA, adjusted earnings per share, and free cash flow.
• Invested strategically organically and inorganically across business lines, including expanding the BWXT Innovation Campus, investing in naval nuclear propulsion plants, acquiring A.O.T. and Kinectrics, and undergoing digital transformation.
• In government operations, despite challenges, delivered revenue and adjusted EBITDA growth, drove progress in microreactor and special materials programs, and secured long-term contracts.
• In commercial operations, had double-digit revenue and adjusted EBITDA growth in 2024, with growth in commercial power and medical end markets, and ongoing expansions and acquisitions to address demand.

Government operations: Fourth quarter revenue was $295 million, adjusted EBITDA was $117 million, with an adjusted EBITDA margin of 19.6%. Annually, government operations revenue was up 8% and adjusted EBITDA was up 3%, yielding an adjusted EBITDA margin of 20.2%. Commercial operations: Fourth quarter revenue was $152 million, up 23% year-over-year with double-digit growth in commercial power and medical. Adjusted EBITDA in the segment was $23.7 million, up 11% as good execution and improving medical profitability was offset by mix with less outage work in the quarter and growth investment.

• Revenue expected to be approximately $3 billion in 2025. Government operations expect mid-single digit growth with low single-digit organic growth plus contribution from A.O.T. acquisition. Commercial operations expect significantly higher revenue with mid-teens organic growth plus contribution from Kinectrics acquisition.
• Adjusted EBITDA guidance $550 million to $570 million, inclusive of organic growth and contributions from A.O.T. and Kinectrics.
• Non-GAAP EPS guidance $3.40 to $3.55, with expectations considering various factors including acquisitions and nonoperating items.

• Tariff risk, particularly concerning medical business which exports products into the U.S.
• Regulatory environment changes and potential impact of government budget adjustments on business priorities and program timelines.
• Uncertainty in D.C. leading to potential delays in new business pursuits.

Q: Scott Deuschle asked about medical profitability in 2024 and incremental EBITDA margins in medical, and tariff risk.

A: Robb LeMasters said medical margins were at or slightly above overall segment margins and tariff risk was concerning for medical, with commercial power business less affected but monitored.

Q: Thomas Meric asked about expansion into hexafluoride and Kinectrics win rate.

A: Rex Geveden said hexafluoride conversion would be organic, and Kinectrics acquisition provides complementary capabilities for a vertically integrated offering.

Q: Bob Labick asked about moly contract, microreactors, etc.

A: Rex Geveden provided updates on moly contract approval timeline, and Robb LeMasters discussed microreactors as the next growth driver.

Q: Peter Skibitski asked about BANR and Pele timelines.

A: Rex Geveden said Pele and BANR continue with scope increases over the next couple of years.

Q: Michael Ciarmoli asked about Kinectrics EBITDA and DRACO.

A: Robb LeMasters discussed Kinectrics EBITDA impact and Rex Geveden said DRACO has new scope with schedule implications but is business for BWXT.

Q: David Straus asked about Navy contract and tax benefit.

A: Rex Geveden and Robb LeMasters provided updates on Navy contract and tax benefit from tax planning changes.

Q: Andre Madrid asked about regulatory environment and CR impact.

A: Rex Geveden and Robb LeMasters said they are in good positions but concerned about regulatory changes and potential delays.

Q: Peter Arment asked about commercial operations overlap.

A: Robb LeMasters and Rex Geveden discussed the overlap and positive outlook for commercial operations' business mix.