Insulated from the worst of the COVID-19 pandemic by its big government contracts and a bread-and-butter nuclear-Navy business that never shuts down, BWX Technologies [BWXT] posted a modest uptick in both profit and revenue for the second quarter of 2020.
Overall, the company’s quarterly net income rose $5 million to about $64 million, or 67 cents a share, from about $59 million, or 62 cents a share, a year ago.
“The core Navy franchise continued to beat our internal expectations through a combination of work volume increases and contract performance improvements driven by operational excellence,” Rex Geveden, chief executive officer of BWX Technologies, wrote in a press release accompanying the latest quarterly earnings report.
The company was scheduled to host an earnings call with investors Tuesday morning at 9 a.m. Eastern time. BWXT planned to stream the call on its website.
Quarterly operating incoming in BWXT’s Nuclear Operations Group, the flagship unit that includes the Navy business, rose around $10 million year-over-year to more than $85 million. Segment revenue rose more than $50 million year-over-year to about $410 million. The segment cleared some $1.5 billion in backlog in the first six months of 2020, leaving it with just under $4 billion still in the pipe. That does not include about $1 billion worth of unexercised options on an unspecified federal contract. BWXT expects the government to pick up the options.
The Nuclear Operations Group makes reactor components for naval warships and submarines, and fuel for the reactors that power those vessels. The segment also purifies uranium that the Tennessee Valley Authority uses to produce tritium for U.S. nuclear weapons maintained by the Department of Energy’s National Nuclear Security Administration (NNSA). The segment was also making common missile tube compartments for future Ohio– and Virginia-class submarines, but exited the business after botching welds on some tubes meant for future Columbia boats. The company ate the cost of the repairs, which totaled some $40 million.
Unlike in the defense unit, the ongoing COVID-19 pandemic whacked the Nuclear Power Group this quarter. The segment includes the company’s commercial nuclear-power and medical-isotope businesses. The unit’s second-quarter operating income plummeted almost $14 million to about $1 million. Segment revenue there dropped about $20 million to some $68 million. Backlog increased to more than $770 million from $730 million in the first half.
In a press release accompanying the latest earnings report, Rex Geveden, BWXT’s chief executive officer, said the group “is well positioned for recovery through the remainder of the year.”
In the Nuclear Services Group, which includes management of DoE defense-nuclear sites, operating income for the quarter was more than doubled to just over $4 million, as quarterly revenue ticked up more than $3 million to around $33 million. Backlog remained at $43 million, after the half, but the figure does not include BWXT’s share of the joint venture companies that run DoE defense-nuclear sites under federal contracts.
Late last week, the NNSA announced it would continue to manage two major nuclear-weapons production sites under a single contract. On Sept. 30, 2021, the agency will kick the Bechtel National-led incumbent out of the Pantex weapons assembly plant in Amarillo, Texas, and the Y-12 National Security Complex in Oak Ridge, which produces uranium-fueled secondary stages for nuclear weapons.
BWXT used to manage both sites under separate contracts and has already indicated a willingness to compete for the new contract. The NNSA said the follow-on will be worth up to $28 billion over 10 years, including five years of firm funding. The agency expects to release the draft solicitation in August.