Revenue at the BWX Technologies business focused on the Energy Department’s Cold War cleanup program rose more than 15 percent last year as part of a generally strong 2016, the company reported Monday.
The Lynchburg, Va., company derives the preponderance of its revenue from its sole-source nuclear propulsion work for the U.S. Navy and reports revenue from its legacy cleanup contracts with DOE within the Technical Services segment. In that BWXT branch, revenue rose to more than $97 million for the year. Segment operating income, however, slipped roughly 9 percent to about $16.5 million.
In the third quarter of 2016, BWXT’s contract to process depleted uranium hexafluoride from Cold War uranium enrichment in Ohio and Kentucky expired, and the company turned the project over to the Atkins-led Mid-America Conversion Services joint venture.
“We continue to invest in a robust pipeline of opportunities in order to return the segment to historical levels of profitability over the next few years,” BWXT CEO Rex Geveden said Tuesday on a conference call with investor analysts.
Nuclear Environmental Services such as the company’s DOE cleanup work accounted for nearly 90 percent of the Technical Services group’s revenue in 2016. Nuclear Environmental Services revenue rose more than 10 percent year over year to over $85 million in 2016, according to BWXT’s latest 10-K filing with the U.S. Securities and Exchange Commission. Since 2014, Nuclear Environmental Services revenue is up more than 20 percent, the filing says.
Overall, BWXT reported net income of more than $180 million in 2016, or $1.76 a share, up about 30 percent from 2015. Revenue rose roughly 9.5 percent year over year to just over $1.5 billion.
Soon after BWXT wrapped up its 2016 fiscal year, Geveden became the company’s president and chief executive. He replaced Peyton “Sandy” Baker, who remains with the company in an advisory position until May and has signed a two-year noncompete clause.
New Opportunities
On the quarterly conference call, Geveden said BWXT is bullish on its core Navy market, telling investor analysts that “this is the beginning of a significant growth cycle for us” that will require “significant investments.”
Geveden spoke mostly about expectations that the Navy would build more nuclear submarines in the next several years, but also discussed opportunities for the Technical Services Group to invest in “certain technologies and markets that will augment our existing capabilities and produce new growth in areas such as nuclear materials processing and critical national defense components supply.”
Geveden also said he likes BWXT’s chances to haul in more cleanup work across DOE’s weapons complex in 2017.
Among the opportunities is 10 years’ worth of liquid-waste management work at the Savannah River Site, which including options could be worth $4 billion to $6 billion. BWXT is a partner in the current SRS liquid cleanup incumbent, Savannah River Remediation. That deal, worth $4 billion or so, runs out on June 30. DOE could announce an award in early April, based on the follow-on deal’s 90-day transition period.