BWX Technologies [BWXT] said Monday it capped 2018 with better than 50 percent earnings growth after clinching more nuclear naval, environmental cleanup, and uranium downblending work from the Department of Energy.
Company-wide net earnings came in at over $225 million in 2018, up more than 50 percent from just under $150 million in 2017. Management reported $2.27 in earnings per share in 2018, up from $1.49 year-over-year. Total company revenue in 2018 was about $1.8 billion, rising than 6.5 percent from around $1.7 billion in 2016.
On a Monday conference call, Rex Geveden, BWX Technologies’ chief executive officer, said the company had an “exceptionally strong finish” to 2018: a year in which the Nuclear Operations Group ramped up procurement of long-lead components for naval reactors that will power the Navy’s future ballistic-missile submarines.
Revenue at the Nuclear Operations Group, which handles nuclear naval business and uranium downblending contracts with the National Nuclear Security Administration (NNSA), came in at $1.3 billion for the year, up a little more than 3.5 percent from $1.27 billion in 2017. Segment operating income was about $270 million, up about 1 percent from more than $265 million in 2017.
The Nuclear Operations Group hit a bump in the second quarter of 2018, when a bad welding job on 12 ballistic missile tubes for the Navy’s new Columbia-class submarines forced the company to forgo any profit from its 2017 Block II Common Missile Compartment tube assembly subcontract from Columbia prime General Dynamics [GD] Electric Boat.
BWX Technologies’ deal was worth about $75 million and calls for the company to produce 26 tubes by 2021. By volume, those are about half the tubes General Dynamics has ordered so far. Repairs to the botched tubes are only about 15 percent complete, David Black, BWX Technologies’ chief financial officer, said on Monday’s call.
General Dynamics Electric Boat plans to award another round of Columbia missile tube contracts in the first quarter of 2019, which ends in about a month. Watering down the company’s previous statements that it still wanted to compete for that business, Black said BWX Technologies would have to evaluate what terms it could get for another round of tube work, then decide whether to participate.
The tube contract “has not been especially kind to us,” Black said. Columbia is slated to go into service in 2031.
Meanwhile, Nuclear Services Group revenue was just over $120 million for 2018, down a bit more than 10 percent from around $135 million in 2017. The segment handles BWX Technologies’ site management contracts with the Department of Energy, including at active nuclear weapons sites managed by the NNSA and Cold War nuclear-weapons cleanup for the Office of Environmental Management. Segment operating profit was about $20 million, down about 7.5 percent from around $22 million in 2017.