BWX Technologies [BWXT], trumpeting strong third-quarters results Tuesday, remained non-committal about building more common missile compartment tubes for U.S. naval submarines, beyond those the company is already under contract to make by 2021.
After announcing in 2018 that 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 [GD] 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 has not yet captured any of that 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.
Before 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.
Aside from the tube business, it was a banner quarter for BWX Technologies Nuclear Operations Group, which for more than half a century has enjoyed a virtual monopoly 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 in 2019, Geveden said Tuesday. The segment surged to an operating income of more than $93.5 million from less than half of that in the 2018 quarter, when the company booked charges for fixing the missile tubes.
Nuclear Operations Group’s revenue, meanwhile, rose to around $394.5 million from $319 million or so a year ago.
Overall, the company had almost $75 million, or 78 cents a share, in profit for the 2019 third quarter. That is slightly lower than the roughly $78 million in profit the company booked a year ago. Third-quarter revenue rose to around $505 million from some $425 million a year ago.