Despite consistency in the core naval reactors business and good performance from its nuclear-site management contracts with the Department of Energy, COVID-19 dragged down revenue and earnings at BWXT Technologies [BWXT], Lynchburg, Virginia, in the third quarter.
BWXT posted net income of about $60 million, or 63 cents a share in the third quarter that ended Sept. 30, down some 18% from more than $73 million, or $76 cents a share, in the year-ago quarter. Quarterly revenue fell 4% to just under $500 million from nearly $520 million a year ago. Most of the revenue that seeped out was from the commercial power business, the second-largest by revenue of the company’s three core operating groups.
BWXT reported earnings only days after DoE announced that a BWXT-led team had won a big liquid waste cleanup contract at the Savannah River Site. The Integrated Mission Completion Contract is potentially worth $21 billion over 15 years. BWXT is also in the hunt for big DoE contracts at the Hanford Site in Washington state, and at the National Nuclear Security Administration’s nuclear weapon production sites, the Pantex Plant in Texas and the Y-12 National Security Complex in Tennessee.
Meanwhile, like many other federal contractors, the company has also instituted a mandatory COVID-19 vaccination policy for all U.S. employees, CEO Rex Geveden said Monday on an earnings call with investors.
On the earnings front, the company’s flagship nuclear operations group, which builds reactor components and fabricates uranium fuel for naval surface ships and submarines, posted third-quarter operating income of about $78 million, up about 15% year-over-year from roughly $68 million on revenue of more than $386.5 million: just about flat compared with the year-ago quarter.
While the volume of nuclear components manufactured and fuel fabricated was about flat in 2021, Nuclear Operations had some “favorable contract adjustments” in the most recent quarter, according to the company’s most recent 10-Q filing with the Securities & Exchange Commission. For the nine months, segment revenue was down 4% to just over $1 billion, mostly due to long-lead procurements, the company wrote.
Geveden also said BWXT was “encouraged” by the trilateral AUKUS partnership announced in September, under which the “the U.S. will share nuclear propulsion technology with Australia,” with the assistance of the United Kingdom.
At the Nuclear Services group, which quarterbacks management of Department of Energy defense-nuclear sites, third-quarter operating income rose about 25% to $10 million, thanks in part to higher fee income from management contracts. Segment revenue rose about 5% to just under $36 million from about $34 million the year before, the company wrote.
At the Nuclear Power group, which handles the company’s commercial power business, third-quarter operating income fell off a cliff, dropping 70% to around $9 million from nearly $30 million the year before, mostly owing to lower wage subsidies in the company’s Canadian business, which included more COVID-19 subsidies from Canada’s federal government a year ago. Segment revenue dropped more than 20% to about $83 million from around $108 million a year ago, also due in part to COVID-19, the company said in its 10-Q.