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 June 30, 2021.

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 July 29, 2021 was 95,176,522.

BWX TECHNOLOGIES, INC.

INDEX – FORM 10-Q

		PAGE
PART I – FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements	2
	Condensed Consolidated Balance Sheets
	June 30, 2021 and December 31, 2020 (Unaudited)	2
	Condensed Consolidated Statements of Income
	Three and Six Months Ended June 30, 2021 and 2020 (Unaudited)	4
	Condensed Consolidated Statements of Comprehensive Income
	Three and Six Months Ended June 30, 2021 and 2020 (Unaudited)	5
	Condensed Consolidated Statements of Stockholders' Equity
	Three Months Ended March 31 and June 30, 2021 and 2020 (Unaudited)	6
	Condensed Consolidated Statements of Cash Flows
	Six Months Ended June 30, 2021 and 2020 (Unaudited)	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30
Item 4.	Controls and Procedures	30
PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	32
Item 1A.	Risk Factors	32
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32
Item 6.	Exhibits	33
Signatures		34

1

PART I

FINANCIAL INFORMATION

Item 1.    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

BWX TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

ASSETS

	June 30, 2021		December 31, 2020
	(Unaudited) (In thousands)
Current Assets:
Cash and cash equivalents	$	190,752	$	42,610
Restricted cash and cash equivalents	3,071		3,070
Investments	3,300		3,707
Accounts receivable – trade, net	61,107		153,368
Accounts receivable – other	37,741		22,239
Retainages	50,982		55,172
Contracts in progress	530,904		449,176
Other current assets	44,795		44,256
Total Current Assets	922,652		773,598
Property, Plant and Equipment, Net	942,128		816,471
Investments	10,064		9,356
Goodwill	287,935		283,708
Deferred Income Taxes	31,710		49,415
Investments in Unconsolidated Affiliates	78,135		71,806
Intangible Assets	192,902		192,751
Other Assets	100,876		96,398
TOTAL	$	2,566,402	$	2,293,503

See accompanying notes to condensed consolidated financial statements.

2

BWX TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

LIABILITIES AND STOCKHOLDERS' EQUITY

	June 30, 2021		December 31, 2020
	(Unaudited) (In thousands, except share and per share amounts)
Current Liabilities:
Current portion of long-term debt	$	400,000	$	—
Bank overdraft	—		88,694
Accounts payable	143,878		184,392
Accrued employee benefits	70,322		89,740
Accrued liabilities – other	76,564		78,028
Advance billings on contracts	105,242		83,581
Accrued warranty expense	5,637		5,292
Total Current Liabilities	801,643		529,727
Long-Term Debt	784,111		862,731
Accumulated Postretirement Benefit Obligation	25,245		25,689
Environmental Liabilities	92,032		84,153
Pension Liability	122,084		144,859
Other Liabilities	32,200		28,576
Commitments and Contingencies (Note 6)
Stockholders' Equity:
Common stock, par value $0.01 per share, authorized 325,000,000 shares; issued 127,287,679 and 127,009,536 shares at June 30, 2021 and December 31, 2020, respectively	1,273		1,270
Preferred stock, par value $0.01 per share, authorized 75,000,000 shares; No shares issued	—		—
Capital in excess of par value	164,926		153,800
Retained earnings	1,638,709		1,549,950
Treasury stock at cost, 32,121,418 and 31,698,747 shares at June 30, 2021 and December 31, 2020, respectively	(1,120,204)		(1,095,452)
Accumulated other comprehensive income (loss)	24,293		8,198
Stockholders' Equity – BWX Technologies, Inc.	708,997		617,766
Noncontrolling interest	90		2
Total Stockholders' Equity	709,087		617,768
TOTAL	$	2,566,402	$	2,293,503

See accompanying notes to condensed consolidated financial statements.

3

BWX TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	(Unaudited) (In thousands, except share and per share amounts)
Revenues	$	505,099	$	504,520	$	1,033,372	$	1,046,728
Costs and Expenses:
Cost of operations	375,817		367,534		768,623		759,977
Research and development costs	3,505		4,029		6,621		8,632
Losses (gains) on asset disposals and impairments, net	(29)		299		(37)		299
Selling, general and administrative expenses	59,318		55,137		117,579		108,095
Total Costs and Expenses	438,611		426,999		892,786		877,003
Equity in Income of Investees	7,263		4,913		15,579		10,976
Operating Income	73,751		82,434		156,165		180,701
Other Income (Expense):
Interest income	77		61		209		292
Interest expense	(10,203)		(7,865)		(17,242)		(15,832)
Other – net	15,306		9,450		31,692		17,367
Total Other Income (Expense)	5,180		1,646		14,659		1,827
Income before Provision for Income Taxes	78,931		84,080		170,824		182,528
Provision for Income Taxes	19,522		19,684		41,600		42,512
Net Income	$	59,409	$	64,396	$	129,224	$	140,016
Net Income Attributable to Noncontrolling Interest	(62)		(138)		(128)		(259)
Net Income Attributable to BWX Technologies, Inc.	$	59,347	$	64,258	$	129,096	$	139,757
Earnings per Common Share:
Basic:
Net Income Attributable to BWX Technologies, Inc.	$	0.62	$	0.67	$	1.35	$	1.46
Diluted:
Net Income Attributable to BWX Technologies, Inc.	$	0.62	$	0.67	$	1.35	$	1.46
Shares used in the computation of earnings per share (Note 10):
Basic	95,354,932		95,457,629		95,329,330		95,434,990
Diluted	95,529,189		95,633,571		95,544,026		95,694,972

See accompanying notes to condensed consolidated financial statements.

4

BWX TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF

COMPREHENSIVE INCOME

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	(Unaudited) (In thousands)
Net Income	$	59,409	$	64,396	$	129,224	$	140,016
Other Comprehensive Income (Loss):
Currency translation adjustments	7,220		856		15,221		(11,084)
Derivative financial instruments:
Unrealized gains (losses) arising during the period, net of tax (provision) benefit of $(15), $141, $124 and $32, respectively	40		(404)		(372)		(91)
Reclassification adjustment for losses (gains) included in net income, net of tax (benefit) provision of $(55), $32, $1 and $(106), respectively	163		(89)		(3)		331
Amortization of benefit plan costs, net of tax benefit of $(158), $(167), $(315) and $(334), respectively	580		609		1,160		1,219
Unrealized gains (losses) on investments arising during the period, net of tax benefit (provision) of $84, $0, $60 and $(2), respectively	—		154		89		(446)
Other Comprehensive Income (Loss)	8,003		1,126		16,095		(10,071)
Total Comprehensive Income	67,412		65,522		145,319		129,945
Comprehensive Income Attributable to Noncontrolling Interest	(62)		(138)		(128)		(259)
Comprehensive Income Attributable to BWX Technologies, Inc.	$	67,350	$	65,384	$	145,191	$	129,686

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, 2020	127,009,536	$	1,270	$	153,800	$	1,549,950	$	8,198	$	(1,095,452)	$	617,766	$	2	$	617,768
Net income	—	—		—		69,749		—		—		69,749		66		69,815
Dividends declared ($0.21 per share)	—	—		—		(20,173)		—		—		(20,173)		—		(20,173)
Currency translation adjustments	—	—		—		—		8,001		—		8,001		—		8,001
Derivative financial instruments	—	—		—		—		(578)		—		(578)		—		(578)
Defined benefit obligations	—	—		—		—		580		—		580		—		580
Available-for-sale investments	—	—		—		—		89		—		89		—		89
Exercises of stock options	61,260	—		1,517		—		—		—		1,517		—		1,517
Shares placed in treasury	—	—		—		—		—		(24,694)		(24,694)		—		(24,694)
Stock-based compensation charges	191,350	3		3,978		—		—		—		3,981		—		3,981
Distributions to noncontrolling interests	—	—		—		—		—		—		—		—		—
Balance March 31, 2021 (unaudited)	127,262,146	$	1,273	$	159,295	$	1,599,526	$	16,290	$	(1,120,146)	$	656,238	$	68	$	656,306
Net income	—	—		—		59,347		—		—		59,347		62		59,409
Dividends declared ($0.21 per share)	—	—		—		(20,164)		—		—		(20,164)		—		(20,164)
Currency translation adjustments	—	—		—		—		7,220		—		7,220		—		7,220
Derivative financial instruments	—	—		—		—		203		—		203		—		203
Defined benefit obligations	—	—		—		—		580		—		580		—		580
Available-for-sale investments	—	—		—		—		—		—		—		—		—
Exercises of stock options	13,936	—		339		—		—		—		339		—		339
Shares placed in treasury	—	—		—		—		—		(58)		(58)		—		(58)
Stock-based compensation charges	11,597	—		5,292		—		—		—		5,292		—		5,292
Distributions to noncontrolling interests	—	—		—		—		—		—		—		(40)		(40)
Balance June 30, 2021 (unaudited)	127,287,679	$	1,273	$	164,926	$	1,638,709	$	24,293	$	(1,120,204)	$	708,997	$	90	$	709,087
Balance December 31, 2019	126,579,285	$	1,266	$	134,069	$	1,344,383	$	(7,448)	$	(1,068,164)	$	404,106	$	6	$	404,112
Net income	—	—		—		75,499		—		—		75,499		121		75,620
Dividends declared ($0.19 per share)	—	—		—		(18,254)		—		—		(18,254)		—		(18,254)
Currency translation adjustments	—	—		—		—		(11,940)		—		(11,940)		—		(11,940)
Derivative financial instruments	—	—		—		—		733		—		733		—		733
Defined benefit obligations	—	—		—		—		610		—		610		—		610
Available-for-sale investments	—	—		—		—		(600)		—		(600)		—		(600)
Exercises of stock options	56,431	1		1,331		—		—		—		1,332		—		1,332
Shares placed in treasury	—	—		—		—		—		(25,076)		(25,076)		—		(25,076)
Stock-based compensation charges	252,943	2		3,100		—		—		—		3,102		—		3,102
Distributions to noncontrolling interests	—	—		—		—		—		—		—		(127)		(127)
Balance March 31, 2020 (unaudited)	126,888,659	$	1,269	$	138,500	$	1,401,628	$	(18,645)	$	(1,093,240)	$	429,512	$	—	$	429,512
Net income	—	—		—		64,258		—		—		64,258		138		64,396
Dividends declared ($0.19 per share)	—	—		—		(18,244)		—		—		(18,244)		—		(18,244)
Currency translation adjustments	—	—		—		—		856		—		856		—		856
Derivative financial instruments	—	—		—		—		(493)		—		(493)		—		(493)
Defined benefit obligations	—	—		—		—		609		—		609		—		609
Available-for-sale investments	—	—		—		—		154		—		154		—		154
Exercises of stock options	22,556	—		537		—		—		—		537		—		537
Shares placed in treasury	—	—		—		—		—		(47)		(47)		—		(47)
Stock-based compensation charges	38,667	—		4,375		—		—		—		4,375		—		4,375
Distributions to noncontrolling interests	—	—		—		—		—		—		—		(123)		(123)
Balance June 30, 2020 (unaudited)	126,949,882	$	1,269	$	143,412	$	1,447,642	$	(17,519)	$	(1,093,287)	$	481,517	$	15	$	481,532

See accompanying notes to condensed consolidated financial statements.

6

BWX TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	Six Months Ended June 30,
	2021		2020
	(Unaudited) (In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income	$	129,224	$	140,016
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	32,992		30,565
Income of investees, net of dividends	(5,874)		(927)
Recognition of losses for pension and postretirement plans	1,475		1,553
Stock-based compensation expense	9,273		7,477
Other, net	1,548		2,025
Changes in assets and liabilities, net of effects from acquisitions:
Accounts receivable	93,503		(2,433)
Accounts payable	(16,875)		(6,641)
Retainages	4,308		(76)
Contracts in progress and advance billings on contracts	(53,649)		(27,560)
Income taxes	876		39,098
Accrued and other current liabilities	411		2,612
Pension liabilities, accrued postretirement benefit obligations and employee benefits	(44,746)		(32,996)
Other, net	5,857		2,917
NET CASH PROVIDED BY OPERATING ACTIVITIES	158,323		155,630
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment	(170,170)		(115,477)
Acquisition of business	—		(16,174)
Purchases of securities	(2,378)		(2,159)
Sales and maturities of securities	2,764		4,305
Investments, net of return of capital, in equity method investees	—		88
Other, net	182		—
NET CASH USED IN INVESTING ACTIVITIES	(169,602)		(129,417)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings of long-term debt	625,800		643,000
Repayments of long-term debt	(300,800)		(628,176)
Payment of debt issuance costs	(4,838)		(6,310)
Repayment of bank overdraft	(88,694)		—
Repurchases of common shares	(20,007)		(20,000)
Dividends paid to common shareholders	(40,326)		(36,764)
Exercises of stock options	2,011		1,790
Cash paid for shares withheld to satisfy employee taxes	(4,745)		(5,044)
Other, net	(8,979)		1,137
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES	159,422		(50,367)
EFFECTS OF EXCHANGE RATE CHANGES ON CASH	64		(690)
TOTAL INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AND CASH EQUIVALENTS	148,207		(24,844)
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	48,298		92,400
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	196,505	$	67,556
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest	$	20,270	$	17,923
Income taxes (net of refunds)	$	40,661	$	3,274
SCHEDULE OF NON-CASH INVESTING ACTIVITY:
Accrued capital expenditures included in accounts payable	$	26,328	$	17,235

See accompanying notes to condensed consolidated financial statements.

7

BWX TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2021

(UNAUDITED)

NOTE 1 – BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

We have presented the condensed consolidated financial statements of BWX Technologies, Inc. ("BWXT" or the "Company") in U.S. dollars in accordance with the interim reporting requirements of Form 10-Q, Rule 10-01 of Regulation S-X and accounting principles generally accepted in the United States ("GAAP"). Certain financial information and disclosures normally included in our financial statements prepared annually in accordance with GAAP have been condensed or omitted. Readers of these financial statements should, therefore, refer to the consolidated financial statements and notes in our annual report on Form 10-K for the year ended December 31, 2020 (our "2020 10-K"). We have included all adjustments, in the opinion of management, consisting only of normal recurring adjustments, necessary for a fair presentation.

We use the equity method to account for investments in entities that we do not control, but over which we have the ability to exercise significant influence. We generally refer to these entities as "joint ventures." We have eliminated all intercompany transactions and accounts. We present the notes to our condensed consolidated financial statements on the basis of continuing operations, unless otherwise stated.

Unless the context otherwise indicates, "we," "us" and "our" mean BWXT and its consolidated subsidiaries.

Reportable Segments

We operate in three reportable segments: Nuclear Operations Group, Nuclear Power Group and Nuclear Services Group. Our reportable segments are further described as follows:

•Our Nuclear Operations Group segment manufactures naval nuclear reactors for the U.S. Naval Nuclear Propulsion Program for use in submarines and aircraft carriers. Through this segment, we own and operate manufacturing facilities located in Lynchburg, Virginia; Barberton, Ohio; Mount Vernon, Indiana; Euclid, Ohio; and Erwin, Tennessee. The Lynchburg operations fabricate fuel-bearing precision components that range in weight from a few grams to hundreds of tons. In-house capabilities also include wet chemistry uranium processing, advanced heat treatment to optimize component material properties and a controlled, clean-room environment with the capacity to assemble railcar-size components. The Barberton and Mount Vernon locations specialize in the design and manufacture of heavy components inclusive of fabrication activities for submarine missile launch tubes. The Euclid facility fabricates electro-mechanical equipment and performs design, manufacturing, inspection, assembly and testing activities. Fuel for the naval nuclear reactors is provided by Nuclear Fuel Services, Inc. ("NFS"), one of our wholly owned subsidiaries. Located in Erwin, NFS also downblends Cold War-era government stockpiles of high-enriched uranium.

•