2020 Second Quarter Earnings Call Presentation Reported August 3, - PowerPoint PPT Presentation

2020 Second Quarter Earnings Call Presentation Reported August 3, 2020

Forward-Looking Statements Disclaimer BWX Technologies, Inc. (“BWXT”) cautions that statements in this presentation that are forward -looking and provide other than historical information involve risks and uncertainties that may impact actual results and any future performance suggested in the forward-looking statements. The forward-looking statements in this presentation include, but are not limited to, statements relating to our 2020 strategic priorities, including U.S. Navy procurement, medical radioisotope industrialization and organic growth opportunities; bookings and backlog, to the extent they may be viewed as an indicator of future revenues; the expected U.S. Navy long-term procurement schedules and forecasts; estimated pension costs; the expected Canadian nuclear power forecast for services, refurbishment timelines and opportunities; disruptions to our supply chain and/or production, changes in government regulations and other factors, including any such impacts of, or actions in response to the COVID-19 health crisis; our outlook, priorities, growth opportunities in our businesses and guidance for 2020 and beyond. These forward-looking statements are based on current management expectations and involve a number of risks and uncertainties, including, among other things, the availability of federal appropriations to government programs in which we participate; our ability to win new project awards; capital spending of power generating utilities; the extent to which the COVID-19 health crisis impacts our businesses; the impact of COVID-19 on our employees, contractors, suppliers, customers and other partners and their business activities; the extent to which the length and severity of the COVID-19 health crisis exceeds our current expectations; the potential recurrence or subsequent waves of COVID-19 or similar diseases; adverse changes in the industries in which we operate; termination, delays and other difficulties executing on contracts in backlog and adverse changes in the demand for or competitiveness of nuclear products and services. If one or more of these or other risks materialize, actual results may vary materially from those expressed. For a more complete discussion of these and other risks, please see BWXT’s filings with the Securities and Exchange Commission, including our most recent annual report on Form 10-K and subsequent quarterly reports on Form 10-Q. BWXT cautions not to place undue reliance on these forward-looking statements, which speak only as of the date of this presentation, and undertakes no obligation to update or revise any forward-looking statement, except to the extent required by applicable law. 2

2Q20 highlights and progress against 2020 strategic priorities 2020 strategic priorities 2Q highlights Progress Continue Navy o Invested $66M in NOG capital YTD o Strong results; 2Q revenue up 7% capitalization while and EPS of $0.71 (1) up 15% o Accelerated material purchases and increased 1 simultaneously ramping manufacturing volume to full-year Columbia o All 12 sites remain open and fully o Increased NOG 2020 revenue growth guidance production cadence operational o Radiochemistry hot cell construction complete o COVID-19 protocols remain effective, Increase medical isotope minimizing business interruption o Continued schedule progress; still anticipate capital investments and mid-year 2022 production readiness 2 progress on Mo-99 o Awarded $13B contract from DOE for commercialization o Invested $44M in NPG capital YTD, primarily for Hanford Tank Closure milestones medical isotopes o Divested non-core, U.S. commercial nuclear services business (NSG) o Awarded $13B Hanford Tank Closure Contract Seek new opportunities in nuclear services and o Awarded $26M TRISO capacity expansion 3 o Issued $400M senior notes due government microreactor contact 2028… no debt due until 2025 development o Accelerated DOE pipeline for upcoming bids 1) Non-GAAP figures exclude any mark-to-market adjustment for pension and postretirement benefits recognized and other one-time items. A reconciliation of GAAP to adjusted, non-GAAP items can be found in the appendix of this presentation or on the investor relations website at www.bwxt.com/investors. 3

2Q20 and 1H20 company results ($million, except per share amounts) 1,047 o 2Q and 1H revenue up 7% and 18% 888 respectively, driven by increases in Nuclear Revenue +18% 505 Operations Group (NOG) and Nuclear Services 471 +7% Group (NSG) 2Q19 2Q20 1H19 1H20 o 2Q non-GAAP EPS up 15% primarily from 0.62 0.67 1.13 1.46 GAAP higher volume, lower costs, higher other 1.50 income, lower interest and lower taxes. Non- 1.13 +33% GAAP (1) 0.71 EPS 0.62 o 1H non-GAAP EPS up 33% driven by $0.28 of +15% operational improvement, $0.04 of lower operating costs, and $0.05 of higher pension 2Q19 2Q20 1H19 1H20 income and lower interest expense 81 82 144 181 GAAP Op. Income and 17.1% 16.3% 16.2% 17.3% 2 Q operating margin ~flat… 1H non -GAAP 185 o Non- 145 margin margin expansion of 140 bps on higher NOG 86 GAAP (1) 81 margin and NSG operating income, partially 17.7% 16.3% 17.2% offset by lower NPG margins due to business 17.1% mix and COVID-19 impacts 2Q19 2Q20 1H19 1H20 1) Non-GAAP figures exclude any mark-to-market adjustment for pension and postretirement benefits recognized and other one-time items. A reconciliation of GAAP to adjusted, non-GAAP items can be found in the appendix of this presentation or on the investor relations website at www.bwxt.com/investors. 4

1H19 to 1H20 non-GAAP EPS (1) bridge ($ per diluted share) 1.50 0.05 0.04 Lower R&D expense Higher pension income 0.28 1.13 Lower corporate expense Lower interest expense NOG volume, margins NPG volume, margins/mix NSG income 1H19 Operating segments Other operating costs Pension / Interest 1H20 1) Non-GAAP figures exclude any mark-to-market adjustment for pension and postretirement benefits recognized and other one-time items. A reconciliation of GAAP to adjusted, non-GAAP items can be found in the appendix of this presentation or on the investor relations website at www.bwxt.com/investors. 5

2Q20 segment results Segment Revenue Op. Income / Margin Summary ($million) 410 o Revenue up 14% on accelerated timing of 86.0 75.2 358 procurement of long-lead material and higher +14% downblending and naval nuclear fuel production NOG volume 21.0% 21.0% o Operating income up 14% primarily from higher revenue 2Q19 2Q20 2Q19 2Q20 o Revenue down 22% from lower component 87 1.1 GAAP 14.9 manufacturing and medical isotope volume, partially 68 1.6% offset by the Laker Energy acquisition Non- NPG GAAP (1) 2.4 (22%) o Operating income and margin down on lower 17.2% 3.5% revenue due in part to COVID-19 and an unfavorable shift in product mix, including the absence of the 2Q19 2Q20 2Q19 2Q20 China steam generator project 1.5 4.1 GAAP o Operating income up primarily from lower costs 5.1 NSG associated with business development activities Non- 1.8 GAAP (1) 2Q19 2Q20 1) Non-GAAP figures exclude any mark-to-market adjustment for pension and postretirement benefits recognized and other one-time items. A reconciliation of GAAP 6 to adjusted, non-GAAP items can be found in the appendix of this presentation or on the investor relations website at www.bwxt.com/investors.

1H20 segment results Segment Revenue Op. Income / Margin Summary 176 834 ($million) o Revenue up 26% on accelerated timing of 133 663 procurement of long-lead material and higher +26% Columbia production and naval nuclear fuel volume 21.1% NOG 20.0% o Operating income up 33% primarily from higher revenue and favorable contract adjustments 1H19 1H20 1H19 1H20 171 o Revenue down 9% from lower component 156 9.6 27.5 GAAP manufacturing and fewer recurring service outages 6.1% and medical radioisotope volume due to COVID-19. (9%) NPG Non- 11.0 GAAP (1) o Operating income and margin down from lower 16.1% revenue and an unfavorable shift in product mix, 7.1% including the absence of the China steam generator 1H19 1H20 1H19 1H20 project 3.1 10.5 GAAP 11.5 o Operating income up primarily from increased Non- NSG income in U.S. commercial nuclear service outage GAAP (1) 3.4 work and lower costs associated with business development activities 1H19 1H20 1) Non-GAAP figures exclude any mark-to-market adjustment for pension and postretirement benefits recognized and other one-time items. A reconciliation of GAAP 7 to adjusted, non-GAAP items can be found in the appendix of this presentation or on the investor relations website at www.bwxt.com/investors.