BWX Technologies Reports Q3 Revenue Growth, Raises 2026 Cash Flow Guidance

BWX Technologies (NYSE: BWXT ) reported third-quarter financial results on Monday. The transcript from the company's third-quarter earnings call has been provided below. This transcript is brought to you APIs. For real-time access to our entire catalog, please visit for a consultation.

View the webcast at Summary BWX Technologies reported a 10% revenue growth and a 19% adjusted EBITDA growth in Q3 2026, with strong performance across both Government and Commercial Operations. The company secured significant new contracts, including a $189 million annual fuel contract and projects for advanced nuclear reactors like the JANUS program for the U.S. Army and a partnership with Prodigy Clean Energy in Canada. Future outlook includes high single-digit to low double-digit growth in adjusted EBITDA and adjusted earnings per share for 2027, driven by expansions in core businesses and operational efficiencies.

The company increased its 2026 free cash flow guidance to a range of $350 million to $360 million and plans capital expenditures of approximately 6% of revenue in both 2026 and 2027. Management emphasized a strategic focus on operational excellence, disciplined capital allocation, and converting demand into firm orders, supported by a strong balance sheet and ongoing investments in growth opportunities. Full Transcript OPERATOR (Moderator) Ladies and gentlemen, welcome to BWX Technologies' third quarter 2026 earnings conference call. At this time, all participants are in a listen-only mode.

Following the Company's prepared remarks, we will conduct a question and answer session and instructions will be given at that time. I would like to turn the call over to our host, Chase Jacobson, BWXT's Vice President of Investor Relations. Please go ahead. Chase Jacobson (Vice President of Investor Relations) Thank you.

Good evening and welcome to today's call. Joining me are Rex Geveden, President and CEO, and Mike Fitzgerald, Senior Vice President and CFO. On today's call, we will reference the third quarter 2026 earnings presentation that is available on the Investors section of the BWX Technologies website. We will also discuss certain matters that constitute forward-looking statements.

These statements involve risks and uncertainties including those described in the safe harbor provision found in the investor materials and in the Company's SEC filings. We will frequently discuss non-GAAP financial measures, which are reconciled to GAAP measures in the appendix of the earnings presentation that can be found on the Investors section of the BWXT website. I would now like to turn the call over to Rex. Rex Geveden (Chief Executive Officer) Thank you, Chase, and good evening to all of you.

Just over a month ago at Investor Day, we outlined our path to $5.5 billion to $6 billion of revenue and $1.1 billion to $1.2 billion of adjusted EBITDA by 2030, supported by our predictable core, significant incremental organic growth opportunities, focus on operational excellence, and disciplined capital allocation. Our third quarter results reinforced that guidance with 10% revenue growth and 19% adjusted EBITDA growth, including double-digit growth in both operating segments. Our businesses continue to execute well.

We are converting opportunities into meaningful new awards, and we are expanding the industrial capabilities needed to support the next phase of nuclear growth. The demand environment remains exceptionally strong. The need to address economic, national, and energy security challenges globally is driving increased investment by our customers in nuclear, national security, and commercial power markets. Our national security customers are investing to reconstitute strategic deterrence capabilities that diminished after the Cold War and to radically improve energy resilience.

Our commercial customers are investing in sustaining and growing their nuclear power generation fleets. Funding is coming from public and private sources and there is solid bipartisan political support. What differentiates BWXT is our ability to translate that demand into executable programs and sustained financial growth. Our technical capabilities, industrial scale, and position in the nuclear value chain enable us to deliver integrated solutions for our customers and capture opportunities across these markets.

Turning to our segment results and outlook, Government Operations delivered a strong quarter with good operating performance across business lines, driving adjusted EBITDA margin of 22.6%, reflecting the continued benefit of improved efficiency, operational discipline, and higher manufacturing volume in Naval Propulsion. We booked our annual fuel contract for $189 million and are actively negotiating the next multi-year pricing agreement in Special Materials. Our defense fuels enrichment and high-purity depleted uranium programs continue to ramp, driving the majority of Government Operations revenue growth in the quarter.

For defense fuels, we are designing an HEU enrichment facility in Erwin, Tennessee, and industrializing centrifuge technology at our Oak Ridge facility. We remain on track to test a prototype centrifuge by the end of this year. On HPDU, as part of our $1.6 billion contract to produce 300 metric tons of high-purity depleted uranium annually, we initiated construction of a new large-scale facility in Jonesborough, Tennessee, that will drive meaningful revenue growth in the fourth quarter and through 2027. Our Technical Services teams once again boosted earnings in the quarter with outperformance on key programs including Hanford and Savannah River, among others.

From a business development standpoint, we were selected to provide a conceptual design for a lithium processing facility at the Y-12 National Security Complex in support of strategic deterrence. We expect the down selection for the next phase of this program in the first half of 2027. Further, our Technical Services team is rapidly adopting AI to drive site performance and generate operating efficiencies. This further differentiates TSG as we develop new growth opportunities in that business to augment our base of predictable core earnings.

Moving to Advanced Nuclear, it was a busy quarter for operations and business development. We completed the core barrel assembly for Project PELE, and just three weeks ago we hosted Energy Secretary Chris Wright at the BWXT Innovation Campus to see our progress firsthand before we deliver the reactor to Idaho National Laboratory next year. We also secured new wins for the BWXT advanced nuclear reactor called BANR. We were selected for the U.S.

Army's JANUS program that aims to install more than 20 microreactors of various sizes across five military bases. We are working through the first phase of the contract including final site selection at Fort Campbell, initiating Nuclear Regulatory processes, and TRISO fuel production. In parallel, we are working with our partners to fully define the program's cost, execution approach, and operating plan. In addition, BANR was selected by Prodigy Clean Energy for its transportable nuclear power plant project in Belledune, New Brunswick, Canada, our first international microreactor win.

This is an excellent example of cross-segment collaboration as it brought together capabilities from our Advanced Nuclear teams from Lynchburg and Commercial Power and Connectrix teams from Ontario, which will supply chain development and licensing services to Prodigy, highlighting the benefits of our broad capabilities across the nuclear value chain. And lastly, we entered into a multi-year agreement to supply an initial allocation of 1 metric ton of TRISO fuel to Antares, our first large-scale commercial customer.

This fuel will be manufactured in Lynchburg on the same TRISO production line used for Project PELE, the Antares Mark Zero Criticality Demonstration Reactor, and others. We will also manufacture TRISO for the JANUS program on that line. These awards are tangible proof of BWXT's leading position in the advanced nuclear market, as we uniquely combine microreactor technology, TRISO fuel manufacturing, and life cycle services into a differentiated integrated offering.

Turning now to Commercial Operations, organic revenue increased 15% and total revenue grew 25%, driven by double-digit growth in Commercial Power, Connectrix, and Medical, along with contribution from the PCG acquisition. During the quarter, we completed the expansion of our Cambridge facility and began utilizing new sections of the plant. The expansion increases our heavy component manufacturing capacity by about 50% and will improve operating efficiency and throughput as we execute on our deep backlog associated with CANDU life extensions and SMR projects and other new awards.

In the United States, we are finalizing design details for a new commercial manufacturing facility for large steam generators and reactor pressure vessels. The expansion will complement our existing operations and amplify our role as a super-merchant supplier of critical, highly engineered nuclear components. We intend to make a final investment decision by the end of the year. In Europe, we are also seeing high interest in nuclear power, particularly in markets where energy security is a national priority.

I recently met with government officials and business leaders in Poland, where there is a strong appetite for nuclear power to address their energy security and decarbonization goals. Specific to BWXT, there's a meaningful opportunity to deploy microreactors there and participate in the SMR supply chain. Any decision to invest in manufacturing capacity in Poland would be backed by firm orders and appropriate government partnerships. Commercial nuclear demand is precipitating rapidly on a global scale now, and we continue to expect to convert that demand into firm orders in 2027 and in the years to come as the trickle becomes a flood.

With that, I will turn the call over to Mike. Mike Fitzgerald (SVP & Chief Financial Officer) Thanks, Rex, and good evening, everyone. I'll begin with total company financial highlights on slide 4 of the earnings presentation. Third quarter revenue was $953 million, up 10% year over year, including 7% organic growth.

Strong Commercial Operations performance was complemented by steady growth in Government Operations. Adjusted EBITDA increased 19% to $180 million, driven by double-digit growth in both operating segments, partially offset by higher corporate expense as we continue to invest for the future. Adjusted earnings per share increased 26% to $1.26, driven largely by higher operating income, as non-operating benefits from lower interest expense and a lower tax rate were partially offset by lower other income. Third quarter free cash flow was $151 million, reflecting strong earnings, favorable advanced billings, and disciplined working capital management.

Given our year-to-date performance, we raised the low end of our 2026 free cash flow growth guidance, resulting in a revised range of $350 million to $360 million. We continue to expect capital expenditures of approximately 6% of revenue in both 2026 and 2027. These investments are focused on expanding our manufacturing capacity, scaling its fuel capabilities, and supporting programs where we see significant long-term demand.

Our improving credit profile, including Fitch's inaugural investment-grade rating and Moody's positive outlook revision, reinforces the strength of our financial position and provides flexibility as we execute on our disciplined capital allocation strategy. As we discussed at Investor Day, our top capital allocation priority is investing in attractive organic growth opportunities, maintaining the capacity to pursue disciplined acquisitions, and returning capital to shareholders when appropriate. We continue to view balance sheet flexibility as an important competitive advantage as BWX Technologies executes on its next phase of growth.

Moving to the segment results on slide 6, Government Operations revenue increased 4% driven by growth in Special Materials and Advanced Nuclear, partially offset by modestly lower Naval Propulsion revenue from reduced materials procurement compared with a strong prior year. Quarter adjusted EBITDA was $144 million, representing a margin of 22.6% and up 22% from last year, supported by strong operational performance, productivity improvements, and higher Technical Services equity income.

As we look ahead, we remain focused on sustaining productivity improvements in our established businesses while scaling Special Material programs, supporting our expectation for adjusted EBITDA growth broadly in line with revenue in 2027. Turning to Commercial Operations, revenue increased 25%, including 15% organic growth driven by increases in Commercial Power, Kinetics and Medical, plus the contribution from the PCG acquisition which closed in early July. Growth in Commercial Power and Kinetrix reflected the continued strength of our Canadian components manufacturing and services businesses as well as increased engineering services revenue in the United States.

Adjusted EBITDA in the segment grew 17% to $41 million. Adjusted EBITDA margin in the quarter was 13.2% as higher volume and good execution more than offset mix and continued investments to scale the business for future growth. Turning to our consolidated guidance for the remainder of 2026 and our preliminary outlook for 2027, in 2026, the assumptions in our operating guidance are unchanged. We anticipate adjusted EBITDA of approximately $667 million and adjusted earnings per share to be $4.72 to $4.77, both at the midpoint of the previous guidance ranges.

Looking ahead to 2027, our preliminary outlook reinforces the financial trajectory outlined at Investor Day. We expect high single-digit to low double-digit growth in adjusted EBITDA and adjusted earnings per share. Importantly, we expect this growth to be driven by continued expansion in our core businesses, increased contributions from Special Materials, and ongoing improvements in operational execution and productivity. 2026 has been an exceptionally strong year and we have a solid foundation for continued earnings growth in 2027 primarily supported by our existing businesses and programs.

With additional opportunities as new programs and commercial awards progress within Government Operations, we expect high single-digit to low double-digit revenue and adjusted EBITDA growth. Special Materials will remain a significant growth driver, complemented by increased Naval Propulsion and Advanced Nuclear activity. We expect continued productivity improvements and operational execution to help offset the margin mix effects associated with scaling new programs. In Commercial Operations, we expect high single-digit organic revenue growth and low single-digit total revenue growth due to the planned Medical divestiture which is on track to close later this year.

Organic revenue growth will be supported by our components manufacturing and services businesses. We also expect Commercial Operations adjusted EBITDA margins to improve by 50 to 100 basis points reflecting higher volume, continued operational improvements and better absorption of growth investments, resulting in high single-digit adjusted EBITDA growth. From a cash perspective, we expect another year of solid generation in 2027 with free cash flow anticipated to be flat to slightly higher compared to 2026.

While earnings growth should support increased operating cash flow, we expect continued investments in working capital and capital expenditures to support the significant growth opportunities across our business. We remain focused on disciplined cash conversion and capital deployment as we execute our long-term growth strategy. Importantly, our preliminary 2027 outlook remains consistent with the longer-term financial framework presented at Investor Day and reinforces our confidence in achieving our 2030 targets. Overall, we had a solid quarter.

Our focus on operational excellence, converting our bid pipeline into firm awards and driving profitable growth, combined with our strong balance sheet and disciplined capital allocation strategy, positions us well to deliver another strong year in 2027. With that, I'll turn it back to Rex for closing remarks. Rex Geveden (Chief Executive Officer) Thanks, Mike. To date, 2026 has been an excellent year for BWXT and I'm excited about what lies ahead.

As we close, I will leave you with three thoughts. First, our core businesses continue to deliver strong, predictable performance, providing the foundation for our long-term growth. Second, the opportunities we discussed at Investor Day are blossoming. We are securing new contracts, executing on strategically important programs, and investing in the industrial capacity needed to grow the business.

And third, our focus remains on execution. We recognize the significant opportunities ahead of us and know that long-term value creation depends on converting those opportunities into profitable growth and strong cash generation. BWXT is exceptionally well positioned to do that, and our performance this quarter underscores our confidence in the 2030 financial targets we established at Investor Day. With that, we look forward to your questions.

OPERATOR (Moderator) To ask a question, simply press star one on your telephone keypad. We do ask that you please limit questions to one and one follow-up. Your first question comes from the line of Matt Akers with BNP Security. I'm sorry, BNP Paribas.

Your line is open. Matt Akers (Analyst) Hey guys, good afternoon. Thanks for the question. I wonder if you could talk a little bit more on the Government Operations margins.

It was a really good quarter, and I know you called out the equity income. I think even excluding that it was pretty good. So if you could just kind of talk through the big drivers there.