BWX (BWXT) 4 Nov 24 2024 Q3 Earnings call transcript

In a recent earnings call, BWXT Technologies, a leading provider of nuclear solutions, reported strong third quarter results with 14% organic revenue growth, leading to 19% adjusted EBITDA growth and 24% adjusted earnings per share growth. The company's robust performance has prompted a raise in 2024 adjusted earnings per share guidance to about $3.20, the high end of the previous guidance range.

Government Operations and Special Materials Portfolio

BWXT's Government Operations had a strong quarter, with 17% revenue growth and 18% adjusted EBITDA growth, driven largely by outperformance in naval propulsion and Technical Services. The company's special materials portfolio, anchored by its Navy fuel business, has seen significant growth with the acquisition of A.O.T., a strategic addition that will strengthen BWXT's capabilities in depleted uranium and other specialty finished metals. This acquisition is expected to contribute about $40 million in revenue and solid mid-teens EBITDA margins in 2024.

Commercial Operations and Nuclear Power

In Commercial Operations, revenue grew modestly, driven by robust medical and commercial nuclear components growth. The demand for nuclear power is on the rise, with notable investments from major companies like Microsoft, Amazon, and Google, signaling a growing interest in nuclear power for clean baseload energy. BWXT's expertise in large-scale nuclear reactors and its ability to supply SMRs make it a key player in this emerging market.

Outlook for 2025

Looking ahead, BWXT expects another record year in 2025, with continued growth in Government Operations and accelerating growth in Commercial Operations. The company's preliminary outlook for 2025 includes mid- to high single-digit revenue, EBITDA, and earnings per share growth, with at least 10% free cash flow growth compared to 2024. This growth is expected to be driven by the expansion of its special materials portfolio and the acquisition of A.O.T., as well as the growing demand for nuclear power and BWXT's expertise in large-scale nuclear reactors and SMRs.

Investment in Nuclear Medicine and Microreactors

BWXT's focus on innovation and operational excellence is evident in its investments in nuclear medicine and microreactors. The company's tech-99 development program and its strategy for lutetium production are expected to contribute to growth in these areas. Additionally, the company's work on microreactors, particularly in the defense and energy sectors, positions it well for future growth opportunities.

Challenges and Opportunities

Despite facing challenges such as Hurricane Helene and supply chain issues, BWXT remains optimistic about its future. The company's strategic acquisitions, operational excellence, and focus on innovation have positioned it well for growth in the defense, clean energy, and nuclear medicine markets. With a strong financial position and a clear vision for the future, BWXT Technologies is poised for continued success.