UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 _________________________________________________________________________________________________________________________________ 

FORM 10-Q

 _________________________________________________________________________________________________________________________________ 

(Mark One)
☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2019.

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     .

Commission File No. 001-34658

BWX TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)

__________________________________________________________________________________________________________________________________

Delaware			80-0558025
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)
800 Main Street, 4th Floor
	Lynchburg,	Virginia	24504
(Address of principal executive offices)			(Zip Code)

Registrant's telephone number, including area code: (980) 365-4300

_________________________________________________________________________________________________________________________________

Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	BWXT	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

The number of shares of the registrant's common stock outstanding at October 31, 2019 was 95,250,333.

BWX TECHNOLOGIES, INC.

INDEX – FORM 10-Q

		PAGE
PART I – FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements	2
	Condensed Consolidated Balance Sheets
	September 30, 2019 and December 31, 2018 (Unaudited)	2
	Condensed Consolidated Statements of Income
	Three and Nine Months Ended September 30, 2019 and 2018 (Unaudited)	4
	Condensed Consolidated Statements of Comprehensive Income
	Three and Nine Months Ended September 30, 2019 and 2018 (Unaudited)	5
	Condensed Consolidated Statements of Stockholders' Equity
	Three Months Ended March 31, June 30 and September 30, 2019 and 2018 (Unaudited)	6
	Condensed Consolidated Statements of Cash Flows
	Nine Months Ended September 30, 2019 and 2018 (Unaudited)	8
	Notes to Condensed Consolidated Financial Statements	9
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31
Item 4.	Controls and Procedures	31
PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	33
Item 1A.	Risk Factors	33
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33
Item 5.	Other Information	33
Item 6.	Exhibits	34
Signatures		35

1

PART I

FINANCIAL INFORMATION

Item 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

BWX TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

ASSETS

	September 30, 2019		December 31, 2018
	(Unaudited) (In thousands)
Current Assets:
Cash and cash equivalents	$	13,641	$	29,871
Restricted cash and cash equivalents	3,524		3,834
Investments	3,618		3,597
Accounts receivable – trade, net	71,484		71,574
Accounts receivable – other	18,872		13,374
Retainages	70,294		57,885
Contracts in progress	399,002		318,454
Other current assets	41,015		43,859
Total Current Assets	621,450		542,448
Property, Plant and Equipment	1,233,151		1,132,392
Less accumulated depreciation	719,151		693,153
Net Property, Plant and Equipment	514,000		439,239
Investments	9,333		7,382
Goodwill	277,078		274,082
Deferred Income Taxes	60,901		63,908
Investments in Unconsolidated Affiliates	70,963		63,746
Intangible Assets	191,318		228,676
Other Assets	81,377		35,615
TOTAL	$	1,826,420	$	1,655,096

See accompanying notes to condensed consolidated financial statements.

2

BWX TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

LIABILITIES AND STOCKHOLDERS' EQUITY

	September 30, 2019			December 31, 2018
	(Unaudited) (In thousands, except share and per share amounts)
Current Liabilities:
Current maturities of long-term debt	$	14,535		$	14,227
Accounts payable	122,277			114,751
Accrued employee benefits	70,450			77,386
Accrued liabilities – other	48,892			62,163
Advance billings on contracts	66,526			98,477
Accrued warranty expense	11,060			10,344
Total Current Liabilities	333,740			377,348
Long-Term Debt	849,589			753,617
Accumulated Postretirement Benefit Obligation	19,082			19,236
Environmental Liabilities	90,421			86,372
Pension Liability	162,403			173,469
Other Liabilities	16,652			9,353
Commitments and Contingencies (Note 5)
Stockholders' Equity:
Common stock, par value $0.01 per share, authorized 325,000,000 shares; issued 126,508,355 and 125,871,866 shares at September 30, 2019 and December 31, 2018, respectively	1,265			1,259
Preferred stock, par value $0.01 per share, authorized 75,000,000 shares; No shares issued	—			—
Capital in excess of par value	128,876			115,725
Retained earnings	1,299,279			1,166,762
Treasury stock at cost, 31,258,239 and 30,625,074 shares at September 30, 2019 and December 31, 2018, respectively	(1,067,622		)	(1,037,795		)
Accumulated other comprehensive income	(7,322		)	(10,289		)
Stockholders' Equity – BWX Technologies, Inc.	354,476			235,662
Noncontrolling interest	57			39
Total Stockholders' Equity	354,533			235,701
TOTAL	$	1,826,420		$	1,655,096

See accompanying notes to condensed consolidated financial statements.

3

BWX TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
	(Unaudited) (In thousands, except share and per share amounts)
Revenues	$	506,000		$	425,507		$	1,393,685		$	1,321,891
Costs and Expenses:
Cost of operations	357,732			326,314			999,390			971,887
Research and development costs	5,125			3,959			15,631			11,673
Losses (gains) on asset disposals and impairments, net	(6		)	243			145			(2		)
Selling, general and administrative expenses	52,561			53,919			158,296			159,199
Total Costs and Expenses	415,412			384,435			1,173,462			1,142,757
Equity in Income of Investees	7,874			9,323			22,418			22,698
Operating Income	98,462			50,395			242,641			201,832
Other Income (Expense):
Interest income	232			1,121			784			2,340
Interest expense	(8,858		)	(7,925		)	(27,103		)	(19,354		)
Other – net	4,670			40,968			18,795			63,984
Total Other Income (Expense)	(3,956		)	34,164			(7,524		)	46,970
Income before Provision for Income Taxes	94,506			84,559			235,117			248,802
Provision for Income Taxes	19,508			6,482			52,009			43,578
Net Income	$	74,998		$	78,077		$	183,108		$	205,224
Net Income Attributable to Noncontrolling Interest	(188		)	(158		)	(442		)	(201		)
Net Income Attributable to BWX Technologies, Inc.	$	74,810		$	77,919		$	182,666		$	205,023
Earnings per Common Share:
Basic:
Net Income Attributable to BWX Technologies, Inc.	$	0.78		$	0.78		$	1.92		$	2.06
Diluted:
Net Income Attributable to BWX Technologies, Inc.	$	0.78		$	0.78		$	1.91		$	2.04
Shares used in the computation of earnings per share (Note 9):
Basic	95,420,626			99,421,031			95,344,349			99,542,933
Diluted	95,811,198			100,420,766			95,769,919			100,501,597

See accompanying notes to condensed consolidated financial statements.

4

BWX TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF

COMPREHENSIVE INCOME

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
	(Unaudited) (In thousands)
Net Income	$	74,998		$	78,077		$	183,108		$	205,224
Other Comprehensive Income (Loss):
Currency translation adjustments	(2,535		)	2,008			2,703			(4,725		)
Derivative financial instruments:
Unrealized (losses) gains arising during the period, net of tax benefit (provision) of $79, $24, $469 and $(5), respectively	(248		)	(39		)	(1,323		)	7
Reclassification adjustment for gains included in net income, net of tax provision of $26, $7, $5 and $16, respectively	(72		)	(26		)	(10		)	(41		)
Amortization of benefit plan costs, net of tax benefit of $(130), $(78), $(421) and $(286), respectively	519			360			1,523			1,145
Investments:
Unrealized losses arising during the period, net of tax benefit (provision) of $0, $270, $(10) and $270, respectively	(54		)	(388		)	(3		)	(432		)
Reclassification adjustment for losses included in net income, net of tax provision of $0, $25, $0 and $25, respectively	—			379			—			379
Other Comprehensive Income (Loss)	(2,390		)	2,294			2,890			(3,667		)
Total Comprehensive Income	72,608			80,371			185,998			201,557
Comprehensive Income Attributable to Noncontrolling Interest	(188		)	(158		)	(442		)	(201		)
Comprehensive Income Attributable to BWX Technologies, Inc.	$	72,420		$	80,213		$	185,556		$	201,356

See accompanying notes to condensed consolidated financial statements.

5

BWX TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

	Common Stock			Capital In Excess of Par Value					Accumulated Other Comprehensive Income (Loss)												Total Stockholders' Equity
	Shares	Par Value				Retained Earnings						Treasury Stock			Stockholders' Equity			Noncontrolling Interest
		(In thousands, except share and per share amounts)
Balance December 31, 2018	125,871,866	$	1,259	$	115,725	$	1,166,762		$	(10,289	)	$	(1,037,795	)	$	235,662		$	39		$	235,701
Recently adopted accounting standards	—	—		—		(1,219		)	77			—			(1,142		)	—			(1,142		)
Net income	—	—		—		48,978			—			—			48,978			132			49,110
Dividends declared ($0.17 per share)	—	—		—		(16,323		)	—			—			(16,323		)	—			(16,323		)
Currency translation adjustments	—	—		—		—			943			—			943			—			943
Derivative financial instruments	—	—		—		—			(582		)	—			(582		)	—			(582		)
Defined benefit obligations	—	—		—		—			511			—			511			—			511
Available-for-sale investments	—	—		—		—			24			—			24			—			24
Exercises of stock options	58,655	1		1,275		—			—			—			1,276			—			1,276
Shares placed in treasury	—	—		—		—			—			(29,027		)	(29,027		)	—			(29,027		)
Stock-based compensation charges	449,275	4		2,525		—			—			—			2,529			—			2,529
Distributions to noncontrolling interests	—	—		—		—			—			—			—			(146		)	(146		)
Balance March 31, 2019 (unaudited)	126,379,796	$	1,264	$	119,525	$	1,198,198		$	(9,316	)	$	(1,066,822	)	$	242,849		$	25		$	242,874
Net income	—	—		—		58,878			—			—			58,878			122			59,000
Dividends declared ($0.17 per share)	—	—		—		(16,301		)	—			—			(16,301		)	—			(16,301		)
Currency translation adjustments	—	—		—		—			4,295			—			4,295			—			4,295
Derivative financial instruments	—	—		—		—			(431		)	—			(431		)	—			(431		)
Defined benefit obligations	—	—		—		—			493			—			493			—			493
Available-for-sale investments	—	—		—		—			27			—			27			—			27
Exercises of stock options	32,023	—		757		—			—			—			757			—			757
Shares placed in treasury	—	—		—		—			—			(260		)	(260		)	—			(260		)
Stock-based compensation charges	4,927	—		3,823		—			—			—			3,823			—			3,823
Distributions to noncontrolling interests	—	—		—		—			—			—			—			(128		)	(128		)
Balance June 30, 2019 (unaudited)	126,416,746	$	1,264	$	124,105	$	1,240,775		$	(4,932	)	$	(1,067,082	)	$	294,130		$	19		$	294,149
Net income	—	—		—		74,810			—			—			74,810			188			74,998
Dividends declared ($0.17 per share)	—	—		—		(16,306		)	—			—			(16,306		)	—			(16,306		)
Currency translation adjustments	—	—		—		—			(2,535		)	—			(2,535		)	—			(2,535		)
Derivative financial instruments	—	—		—		—			(320		)	—			(320		)	—			(320		)
Defined benefit obligations	—	—		—		—			519			—			519			—			519
Available-for-sale investments	—	—		—		—			(54		)	—			(54		)	—			(54		)
Exercises of stock options	86,888	1		1,984		—			—			—			1,985			—			1,985
Shares placed in treasury	—	—		—		—			—			(540		)	(540		)	—			(540		)
Stock-based compensation charges	4,721	—		2,787		—			—			—			2,787			—			2,787
Distributions to noncontrolling interests	—	—		—		—			—			—			—			(150		)	(150		)
Balance September 30, 2019 (unaudited)	126,508,355	$	1,265	$	128,876	$	1,299,279		$	(7,322	)	$	(1,067,622	)	$	354,476		$	57		$	354,533

6

	Common Stock			Capital In Excess of Par Value					Accumulated Other Comprehensive Income (Loss)												Total Stockholders' Equity
	Shares	Par Value				Retained Earnings						Treasury Stock			Stockholders' Equity			Noncontrolling Interest
		(In thousands, except share and per share amounts)
Balance December 31, 2017	125,381,591	$	1,254	$	98,843	$	990,652		$	9,454		$	(814,809	)	$	285,394		$	363		$	285,757
Recently adopted accounting standards	—	—		—		13,311			(3,385		)	—			9,926			—			9,926
Net income	—	—		—		66,441			—			—			66,441			(28		)	66,413
Dividends declared ($0.16 per share)	—	—		—		(16,174		)	—			—			(16,174		)	—			(16,174		)
Currency translation adjustments	—	—		—		—			(3,124		)	—			(3,124		)	—			(3,124		)
Derivative financial instruments	—	—		—		—			94