BWX Technologies(BWXT) - 2023 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported 2023 revenue of $2.5 billion, a 12$1.01, an 8% increase from $0.93 last year, while full year adjusted EPS was$3.02, down from $3.13 in 2022 [9][100] - Free cash flow for the year was$212 million, significantly up from 2022, driven by strong working capital management [28][106] Business Line Data and Key Metrics Changes - Government Operations revenue in Q4 was up 16% to $602 million, with adjusted EBITDA of$131 million, a 13% increase from last year [10] - Commercial Operations revenue also grew by 16%, driven by nearly 40% growth in medical, with adjusted EBITDA increasing to $21.3 million from$13.6 million last year [29][100] - The medical segment achieved a positive EBITDA position, marking a significant turnaround [8][25] Market Data and Key Metrics Changes - The company continues to see strong demand in the small modular reactor (SMR) market and is well-positioned as a merchant supplier [6] - The global nuclear energy market is gaining momentum, with over 20 countries committing to tripling nuclear energy by 2050 [102] - The company is experiencing healthy demand for diagnostic isotopes and expects similar growth in 2024, complemented by increasing sales of therapeutic isotopes [25][102] Company Strategy and Development Direction - The company is focused on operational excellence initiatives, including improvements in operational equipment effectiveness and supply chain management [5] - There is a commitment to driving predictable earnings and free cash flow conversion with a balanced capital allocation approach [12] - The company signed a net zero nuclear industry pledge, indicating a long-term commitment to nuclear energy [24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued growth in 2024, driven by strong demand trends across global security, clean energy, and medical end markets [12][124] - The company expects mid-single-digit revenue growth in 2024, with government operations growth in the low to mid-single digits [128] - Management highlighted the importance of talent acquisition and management as foundational components of the operating strategy [120] Other Important Information - The company was awarded a $300 million contract for naval nuclear fuel manufacturing through mid-2025 [4] - Capital expenditures for the full year were$150 million, consistent with maintenance requirements and select growth investments [127] Q&A Session Summary Question: What isotopes are driving growth in BWX Medical? - Management noted strong growth across the portfolio, particularly in actinium and lutetium, with no forecast for tech-99 in 2024 [15][25] Question: How is the Hanford Tank project treated in guidance? - Management indicated that the Hanford project is included in guidance but is not expected to have a meaningful impact [16][113] Question: What is the current status of the tech-99 FDA approval process? - Management confirmed that there are no changes in the approval timeline and still expects commercialization in 2024 [69][70] Question: What is driving the momentum in government operations? - Management highlighted the ramp-up of the DRACO space microreactor program and growth in non-naval projects as key drivers [79][81] Question: Are there any risks related to the budget environment? - Management stated that while some government programs could be affected by continuing resolutions, the overall business is well insulated from such risks [82][96]