BWXT (BWXT) Q4 2025 Earnings Call Transcript

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Date

Monday, February 23, 2026 at 5:00 p.m. ET

Call participants

• President and Chief Executive Officer — Rex Geveden
• Senior Vice President and Chief Financial Officer — Michael Fitzgerald
• Vice President, Investor Relations — Chase Jacobson

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Takeaways

• Revenue growth -- Total revenue rose 19% year over year to $886 million for the quarter, with full-year revenue up 18% to new company records.
• Adjusted EBITDA -- Reached $148 million for the quarter, up 13% year over year, and $645 million to $660 million is projected for 2026, representing low to mid-teens growth.
• Adjusted earnings per share -- Increased 17% in the quarter to $1.08, driven by operating performance and a $0.05 contribution from non-operating items.
• Backlog -- Total backlog increased 15% year over year to $7.3 billion, reflecting both government and commercial demand, with commercial operations backlog at $1.7 billion, up 85% year over year and 16% sequentially.
• Free cash flow -- Delivered $57 million in the quarter and $295 million for the year, up 16% from last year.
• Capital expenditures -- Totaled $185 million or 5.8% of sales for 2025, with 2026 CapEx expected at about 6% of sales.
• Convertible debt offering -- Completed a $1.25 billion convertible debt transaction with a 0% coupon and cap call, raising the conversion price to over $396 and used to repay existing debt at improved terms.
• Liquidity -- Ended the year with $1.7 billion in liquidity after refinancing and the convertible debt raise.
• Government operations segment -- Quarterly revenue declined 1%, and adjusted EBITDA declined 5%, attributed to lower microreactor volumes and timing on long-lead materials in naval propulsion; adjusted EBITDA margin was 18.8% for the quarter versus 20.4% full year.
• Commercial operations segment -- Revenue increased 95% (including 31% organic growth), segment adjusted EBITDA reached $44 million (up 87%), and margin improved to 14.9%.
• BWXT Medical -- Surpassed $100 million annual revenue with approximately 20% growth, including double-digit diagnostic isotope growth, a significant actinium sales increase, and steady TheraSphere gains.
• Major contract and award wins -- Secured two long-term naval propulsion pricing agreements, booked initial contracts for U.S. defense uranium enrichment and high-purity depleted uranium production, and landed the owner’s engineer role for Bulgaria’s Kozloduy AP1000 project.
• Microreactor and advanced fuels progress -- Completed first core TRISO fuel delivery for Project Pele, with production also underway for the ANTARES reactor.
• Strategic expansion -- Fully integrated Kinectrics and AOT acquisitions, completed key facility openings—including the Innovation Campus and Digital Center—and advanced U.S. uranium enrichment capability with the new centrifuge development facility.
• 2026 guidance -- Revenue outlook at approximately $3.75 billion (high teens growth), Commercial Operations growth at 25%, non-GAAP EPS between $4.55 and $4.70 (mid to high teens increase), and free cash flow guidance of $305 million to $320 million (low to mid-teens growth).
• Revenue timing -- About 55% of full-year 2026 EBITDA is anticipated in the second half, reflecting project ramp and segment mix.
• Tax rate -- Adjusted effective tax rate for the quarter was 19.5%; full year averaged 20.4%, with an estimate of about 22% for 2026 due to increased international earnings contribution.

Summary

BWX Technologies (NYSE:BWXT) reported record annual performance supported by double-digit growth metrics and significant expansion in both core government and accelerating commercial operations. The company's advances in U.S. defense nuclear fuel infrastructure, execution of major new contracts—including in uranium enrichment and international power plant projects—and substantial capital deployment directly impacted its current backlog and future earnings visibility. Management highlighted key strategic facility investments, completed acquisitions, and operational technology upgrades as essential to sustaining rising demand and participating in new nuclear build cycles across multiple end markets.

• Rex Geveden described market positioning by stating, "We sit at the intersection of the national security and commercial nuclear power markets, in a market-leading position with unmatched scale, experiential qualifications, and regulatory credentials."
• BWX Technologies completed the delivery of two Ford-class carrier steam generators from Mount Vernon and indicated potential for new U.S. commercial capacity at the site, leveraging shared infrastructure.
• Technical Services launched its first major international management contract with Canadian Nuclear Laboratories and positioned for future domestic Department of Energy contract opportunities.
• The company executed its first significant AP1000 contract in Europe and is actively bidding for additional component packages in both North America and Europe.
• "In the first quarter, while we expect solid year over year organic revenue growth, EBITDA is likely to be flat to slightly higher in both segments due to seasonality, short-term impacts of mix, and ramping of new programs," according to Michael Fitzgerald.
• BWXT Medical's Tech-99 product has not yet received FDA submission, and "I will say that we did not contemplate Tech-99 revenue in 2026 in our guidance that we just published. And so it is not in our numbers. It would be an upside for us if it did occur," per Geveden, making it a potential upside if approved.
• End-market project demand remains robust, with near-term growth driven by high-purity depleted uranium, CANDU refurbishments, and strong contribution from Kinectrics-acquired businesses.
• Management stated that mix-related margin pressure in Government Operations is temporary and a rebound is expected in 2027 as program maturity and pricing agreements take effect.
• The current USMCA trade agreement shields the company from new tariffs affecting U.S.-Canada medical and nuclear products, a condition that management stated remains favorable.
• The company cited limited update on the Canadian Competition Bureau review of the Kinectrics acquisition, saying, "It has been pretty quiet on our front."

Industry glossary

• CANDU: Canadian Deuterium Uranium reactor—a pressurized heavy water nuclear reactor technology primarily deployed in Canada and select international markets.
• AP1000: A Generation III+ pressurized water nuclear reactor design developed by Westinghouse Electric Company, noted for modular construction and advanced safety.
• SMR: Small Modular Reactor—nuclear reactors designed for modular construction, with lower power output per unit and potential for incremental and distributed deployment.
• TRISO fuel: Tri-structural isotropic particle fuel, an advanced nuclear fuel type used in high-temperature gas reactors and some microreactors for enhanced safety and fission product containment.
• Tech-99: A reference to a BWX Technologies radiopharmaceutical product under development, related to medical isotope technologies.
• HPDU: High Purity Depleted Uranium—a special material with defense and nuclear industry applications; referenced as a growth contract driver for the company.
• JANUS program: A U.S. government microreactor initiative, positioned as a follow-on to Project Pele, focused on advanced defense-related nuclear technology.

Full Conference Call Transcript

Rex Geveden: Thank you, Chase, and good evening to all of you. We closed out a record 2025 with another strong quarter of results that were ahead of our expectations. For the full year, revenue grew 18%, adjusted EBITDA grew 15%, earnings per share grew 20% and free cash flow grew 16%, all exceeding the initial guidance we provided at the start of the year. These results reflect our ability to scale successfully in a context of robust demand in all of our nuclear end markets. We ended the year with backlog of $7,300,000,000, up 15% year over year with meaningful growth in both segments.

In Government, we secured new pricing agreements for naval propulsion equipment and fuel and booked initial scopes on major awards to build out a U.S. defense uranium enrichment capability and to expand production of high purity depleted uranium. In Commercial, backlog was boosted by CANDU life extensions, multiple SMR projects, and our first engineering contract on an AP1000.

Beyond financial performance, 2025 was a year of exceptional strategic success. We completed the acquisitions of AOT and Kinectrics, enabling key wins such as the $1,600,000,000 high purity depleted uranium contract and the owner's engineer role for Bulgaria's Kozloduy AP1000 project. Building on the significant capital we invested in our business earlier in the decade, we continue to invest in our facilities to support our customers and build capacity for future demand. In 2025, we held the grand opening for the BWX Technologies, Inc. Innovation Campus, the home of our advanced nuclear and microreactor businesses, and continued the expansion project at our large nuclear component plant in Cambridge.

We recently completed construction of the centrifuge manufacturing development facility and are designing a new high purity depleted uranium manufacturing facility, both to support the NNSA. And earlier this month, we opened the BWX Technologies, Inc. Digital Center in Melbourne, Florida, which is our hub for digital transformation and AI initiatives across the organization.

Turning to segment results and market outlook. Government Operations revenue was down 1% and adjusted EBITDA was down 5% in the quarter, slightly ahead of our expectations. In Naval Propulsion, with two new pricing agreements in place, our teams are focused on long-lead materials, operational excellence, and delivery. During the quarter, we shipped two large steam generators for CVN 81 Ford-class aircraft carrier from our Mount Vernon, Indiana facility, highlighting our rhythm delivery for Naval Reactors. The Mount Vernon facility sits on the Ohio River and has a 1,000 metric ton crane capacity suitable for lifting the largest nuclear reactor components onto barges directly from the side. Accordingly, we are considering expansion there to supply the U.S. commercial nuclear market.

In Technical Services, a team led by BWX Technologies, Inc., including Kinectrics, assumed the management and operations contract for the Canadian Nuclear Laboratories, our first international TSG project. We are tracking several other contract opportunities within the DOE complex as well as in new domains. In fact, BWX Technologies, Inc. was an awardee on the Defense Agency's $151,000,000,000 SHIELD contract or Golden Dome, which positions us to compete for infrastructure support and engineering and manufacturing technology development on this strategically important national security program.

In Microreactor and Advanced Nuclear Fuels, we delivered the first core of TRISO fuel for Project Pele to Idaho National Lab in November. We are also manufacturing TRISO for ANTARES, which aims to achieve reactor criticality by July 4. In line with the administration's nuclear executive orders, while others are planning to produce and manufacture advanced nuclear fuel, we are delivering today. Further, in space domain, we continue to develop the technology required for nuclear thermal propulsion with NASA and are seeing specific opportunities around fission surface power.

Lastly, in Special Materials, our team stood up the centrifuge manufacturing development facility in just seven months for the Defense Fuels Program with NNSA, reestablishing a domestic uranium enrichment capability for national security purposes. We are also preparing for construction of a new facility in Jonesboro, Tennessee for high purity depleted uranium production. These programs support our robust revenue growth outlook in 2026 and our highest strategic priority for the future of our Special Materials portfolio.

Turning now to Commercial Operations. We reported impressive organic revenue growth of 31% in the quarter and total revenue growth of 95%, strong growth in commercial nuclear power and medical, and sales from Kinectrics. Backlog ended 2025 at $1,700,000,000, up 85% compared to last year, and up 16% sequentially, driven by equipment for CANDU refurbishments in Canada and other international markets and design awards for SMR components to various reactor OEMs. This backlog growth, coupled with robust market demand, supports our expectations for low-double-digit organic revenue growth in the segment in 2026.

BWXT Medical reached a milestone of slightly more than $100,000,000 of annual revenue, up about 20% from last year, with double-digit growth in diagnostic isotopes, a meaningful increase in actinium sales, and steady growth in TheraSphere. We expect similar growth in 2026 as these factors continue to drive the business. We continue to make measured investments in our medical portfolio as we work through the industrialization of our Tech-99 product, explore new modalities for producing actinium-225, and around other therapeutic isotopes such as lead-212.

Turning now to commercial nuclear power. Demand is strong and our opportunity set is expanded. Commercial nuclear power book-to-bill was over two in the quarter, orders for CANDU aftermarket services and components in Canada, Europe, and Asia, a new long-term CANDU fuel contract, and design and component manufacturing contracts with several SMR technology providers, underscoring our role as a super-merchant supplier for critical nuclear technologies. Additionally, in December, a consortium of BWXT Laurentis Energy Partners and its subsidiary Canadian Nuclear Partners was selected to provide owner's engineer services for two proposed AP1000 nuclear reactors at the Kozloduy site in Bulgaria.

This is BWX Technologies, Inc.'s first meaningful AP1000 award, leveraging our large nuclear project experience and Kinectrics' depth in licensing, regulatory support, and engineering. We are actively bidding component packages for multiple AP1000 projects and expect additional awards this year. I will now turn the call over to Michael Fitzgerald for the financial results.

Michael Fitzgerald: Thanks, Rex, and good evening, everyone. I will begin with total company financial highlights on Slide 4 of the earnings presentation. Fourth quarter revenue was $886,000,000, up 19% year over year, as strong growth in Commercial Operations was partially offset by a modest and expected decline in Government Operations. Organic revenue was up 4%. Adjusted EBITDA was $148,000,000, up 13% year over year, attributable to robust double-digit growth in Commercial Operations and lower corporate expense, which were partially offset by lower Government Operations. Adjusted earnings per share were $1.08, up 17% due to strong operating performance and a higher contribution from non-operating items of approximately $0.05.

Our adjusted effective tax rate in the quarter was 19.5%, which was below our full year tax rate of 20.4% due to timing of R&D tax credits. In 2026, we expect our tax rate to be slightly higher at approximately 22% as growth in our commercial power and Kinectrics businesses will result in a greater percentage of international earnings.

Fourth quarter free cash flow was $57,000,000 and full year free cash flow was $295,000,000, up 16% compared to last year inclusive of 17% operating cash flow growth. Capital expenditures in 2025 were $185,000,000, 5.8% of sales. In 2026, we expect CapEx to be about 6% of sales as we continue to invest in the business to meet our commitments with our government customers and to support the growing demand in our commercial markets.

During the quarter, we also completed a $1,250,000,000 convertible debt offering with a 0% coupon. In connection with the offering, we entered into a cap call transaction which essentially increased the conversion price to over $396. Funds from the transaction were used to repay balances on our credit facility and term loan, which we in turn renegotiated with more favorable terms and increased capacity. This was a highly opportunistic transaction for BWX Technologies, Inc. We reduced our cost of debt, lowered our interest expense, enhanced our financial flexibility, and increased our liquidity, which stood at $1,700,000,000 at the end of the year.

Moving to the segment results on Slide 6. In Government Operations, fourth quarter revenue was down 1% as expected, with growth in Special Materials and contribution from AOT being offset by lower microreactor volumes and long-lead material procurement for naval propulsion equipment, the latter of which was a benefit to our results in the first three quarters of the year. Adjusted EBITDA in the segment was $111,000,000, resulting in an adjusted EBITDA margin of 18.8%. Our quarterly adjusted EBITDA margin was slightly lower than the full year result of 20.4% due to mix, as newer projects in the segment began to ramp.

Turning to Commercial Operations. Revenue was up a robust 95%, driven by 31% organic growth with strong growth in both commercial power and medical and contribution from Kinectrics. This reflects both accelerating organic momentum and the strategic expansion of our commercial capabilities. Adjusted EBITDA in the segment was $44,000,000, up 87% from last year. Adjusted EBITDA margin was 14.9%, a notable improvement from last quarter. In 2026, we expect the Commercial Operations segment adjusted EBITDA margin to increase by roughly 100 basis points, as higher revenue and more normalized mix is partially offset by continued growth investment as we scale the business for the future.

Beyond 2026, we expect growth investment to be less of a margin headwind as continued investments are offset by additional revenue growth.

Turning to our 2026 guidance on Slides 10 and 11 of the earnings presentation. From an operational standpoint, our guidance is largely in line with the preliminary outlook we provided in November. We expect revenue of approximately $3,750,000,000, up high teens compared to 2025. In Government Operations, we expect approximately low to mid-teens growth with over half coming from the Defense Fuels and HPDU contracts. In Commercial Operations, we expect approximately 25% growth, driven by low-double-digit growth in commercial power, high-teens medical growth, and a full year of contribution from Kinectrics. For adjusted EBITDA, we are guiding $645,000,000 to $660,000,000, up low to mid-teens compared to 2025.

In Government Operations, we expect margin to be slightly lower given the significant revenue contribution from new programs, which begins at a lower initial profit recognition and expands over time as execution milestones are met and contract risk is reduced. In Commercial Operations, we expect margin to trend back toward historical levels as I previously discussed.

Regarding the cadence of operating earnings, we anticipate our results will be slightly more back-half weighted than usual, with about 55% of full year EBITDA anticipated in the second half. This will largely be reflected in first quarter results, with a return to more normal seasonality in second quarter. In the first quarter, while we expect solid year-over-year organic revenue growth, EBITDA is likely to be flat to slightly higher in both segments due to seasonality, short-term impacts of mix, and ramping of new programs. In Government Operations, this will likely translate to first quarter EBITDA being roughly flat year over year, yielding a margin that is slightly below the full year guidance rate.

And in Commercial Operations, margins are expected to start the year well below our full year guidance before improving sequentially each quarter throughout the remainder of the year, reflecting program timing and mix. These assumptions lead to non-GAAP earnings per share guidance of $4.55 to $4.70, up mid to high teens, driven largely by growth in both segments, with a modest contribution from non-operational items as lower interest expense is partially offset by a slightly higher tax rate and share count, and lower pension and other income.

From a quarterly perspective, while we anticipate earnings per share to follow a similar pattern to our operating earnings, with first quarter EPS relatively flat compared to last year, we are highly confident in delivering our full year earnings growth outlook. Finally, we expect free cash flow of $305,000,000 to $320,000,000 inclusive of low to mid-teens operating cash flow growth, in line with our adjusted EBITDA growth outlook. Importantly, this level of cash generation supports both continued reinvestment and long-term shareholder value creation. Overall, we see 2026 as another year of meaningful operational growth for BWX Technologies, Inc. We have strengthened our balance sheet, expanded our commercial platform, and positioned the company for continued margin improvement and cash generation.

Our focus remains on disciplined execution, prudent investment, and long-term shareholder value creation. With that, I will turn it back to Rex for closing remarks.

Rex Geveden: 2025 was a monumental year for BWX Technologies, Inc. We sit at the intersection of the national security and commercial nuclear power markets, in a market-leading position with unmatched scale, experiential qualifications, and regulatory credentials. It is an exciting place to be and the outlook is bright. This position demands that we execute to drive quality earnings growth and shareholder value. Our priorities are executing against our robust backlog, process optimization, new technology adoption throughout the organization, and disciplined growth investments, both organic and inorganic. We will now open for questions.

Operator: We will now open for questions. If you have dialed in and would like to ask a question, please press 1 on your telephone keypad to raise your hand and join the queue. If you are called upon to ask your question and are listening via speakerphone on your device, pick up your handset to ensure that your phone is not on mute when asking your question. Again, press 1 to join the queue. We do request for today's session that you please limit to one question and one follow-up question only. Thank you. Our first question comes from the line of Scott Deuschle with Deutsche Bank. Your line is open.

Scott Deuschle: Hi. Good evening. Should we expect Government Operations margins to trough in 2026 on these mix headwinds? Or could there be incremental mix pressure in 2027 that we should be mindful of?

Michael Fitzgerald: Thanks, Scott. No, I do not see any real incremental pressure as we look at 2027. I think as I have mentioned in the last call and maybe over the last couple of earnings calls, we feel really good about the current pricing agreement. If you look at our core naval propulsion business, we are actually performing really well. Efficiency and utilization are up at our best sites and our largest sites. And so we see a lot of opportunity as we move through the future.

I think what you are seeing in 2026 is a little bit of this mix pressure as we discussed, half of the growth is coming from these new programs where we are making infrastructure investments, and so you are seeing a little bit of a decline there. But we would expect a rebound in 2027.

Scott Deuschle: As in, Rex, can you talk about how BWX Technologies, Inc. is using AI internally today? And then are there any business functions where you are particularly excited about the potential impact of AI over the medium term, whether that be from cost synergy opportunity or something else? Thank you.

Rex Geveden: Yes, sure, Scott. Thanks for the question. I think there is an outside story for AI with BWX Technologies, Inc., and there is an inside story. I think you obviously know the outside story, which is there is an expectation that nuclear power will power the data centers of the future and I think that is a reasonable expectation, but that is all in the windshield for us. Certainly that is not part of the current business mix. The inside story shapes up like this. Think of it in three phases. First phase was BWX Technologies, Inc. using machine learning to improve certain internal functions, particularly manufacturing processes.

We, for example, put hyperspectral sensors on complex weld processes and used a machine learning algorithm to figure out when those things were going out of spec, which saved us a ton of expensive rework. And we did it. There are other examples I can cite. So I call that phase one. Phase two is, with the release of large language models, we are figuring out ways to use those in our business to improve functional efficiencies and the like. And so in this phase of it, we are basically democratizing access to the tools, and I mean tools like Databricks and ChatGPT and the like. And then the third phase is going to be factory automation.

That is kind of our burning platform in the sense that we have got a lot of traditional plants that need to be automated and digitized. And so in the future, it is our expectation to have fully digitized quality records, automated inspection, digital twin representations of every component that we manufacture. So that is the phase that we are going into right now, and we are quite excited about that.

Scott Deuschle: That is really interesting. For phase three, do you see any limitations from the security clearances required, things like that, that would prohibit your ability to deploy those types of systems, particularly for Government Operations? Or do you think you would have the ability to use things like digital twins in some of those classified areas as well?

Rex Geveden: I would say not much, Scott. Certainly, we have to be concerned about using Wi-Fi and Bluetooth kind of systems in a classified manufacturing environment. So there are things that we will have to work around, but I think we will work around them with support from our customers.

Scott Deuschle: Okay. Thank you.

Operator: Thank you. Our next question comes from the line of Matt Akers with BNP Paribas. Your line is open.

Matt Akers: Hey, good afternoon. Thanks for taking my question. I wanted to ask, I think some of the commentary from the shipbuilders this quarter was relatively positive in terms of just some of the supply chain bottlenecks they had seen maybe starting to get a little better. Curious if you are seeing any of that flow through to you in terms of maybe more pulling demand forward or anything like that or if you are seeing anything along those lines?

Rex Geveden: Yes. We have seen that encouraging news too. I would say our reaction to it is that from the very beginning, I think we have held the view, and I believe that the Navy and the government held the view, that instead of slowing down the supply chain, what you have to do is fix the bottleneck. And so I think we are seeing that now. I think we are seeing pretty encouraging progress at the shipyards.

I think you will know, and we announced this a couple of quarters ago at least, that Admiral McCoy, who had been running our Government Operations business, was seconded into the Department of Defense to support the Navy for that specific purpose, the express purpose of improving throughput at the shipyards. And that is what the nation needs to do. That is what the Navy needs to have. So I would say we are continuing at the pace we were, delivering on our delivery schedules, and very pleased to see the shipyards turning the corner and bouncing off the bottom in terms of delivery rate.

Matt Akers: Thanks. And as a follow-up, just want to ask on capital deployment and sort of what your priorities are now, and how big could M&A be as a part of that after AOT and Kinectrics?

Michael Fitzgerald: We are really excited about some of the things that we have done to strengthen our balance sheet. We did the convertible in the fourth quarter, which really gave us a lot of flexibility, and so we feel well positioned for potential M&A as we come into 2026. I will say as we look at a number of different targets that are out there, we are highly focused on continuing to drive something within our core and also very focused on driving an increase in our overall capacity as we prepare to support our customer needs in the future. So those are the things that we are going to be looking for.

We have a number of assets that we always look at on a consistent basis. But I do think that we will continue to see M&A as a big part of our capital deployment strategy.

Matt Akers: Great. Thank you.

Operator: Next question comes from the line of Jeffrey Campbell with Seaport Research Partners. Your line is open.

Jeffrey Campbell: Congratulations on the quarter, and I will just stick with one. Rex, you mentioned your U.S. commercial facility might be built at Mount Vernon. I just wonder, are there any particular challenges in siting a commercial facility adjacent to one that is dedicated to defense purposes? Thanks.

Rex Geveden: Yes. Thanks, Jeff, for the question. Good to hear you. No. I think it is the opposite. There are some synergies between our government business there and the would-be commercial facility there. For example, you share radiography facilities. I did mention that we have a 1,000 metric ton crane capacity to stevedore components right onto the Ohio River there. So we would certainly jointly share those assets and be able to amortize the cost over those assets together. I think there are certain advantages. We would segregate those businesses for certain reasons financially. But yes, very good reasons and very good synergies putting those two things on the same site.

Operator: Thank you. Next question comes from the line of Robert James Labick with CJS Securities. Your line is open.

Will Gildea: Hi. This is Will on for Bob. As a U.S. company with obviously strong operations in Canada, what is the latest impact, if any, on the tariff situation? And in general, does the seemingly souring of U.S.-Canada relations have an impact on BWX Technologies, Inc.?

Rex Geveden: You know, knock on wood, it has not so far because we are still operating under the framework of the USMCA trade agreement, the U.S.-Mexico-Canada trade agreement that was struck in the last Trump administration. And so there are no tariffs in that framework on medical products or on nuclear components, happily. And this last announcement around 10% and then 15% tariffs across the board does not apply to the USMCA agreement. So we are still operating in that framework and that is being renegotiated right now, so we will see how all that comes out.

But I am certainly hopeful that trade relations between the U.S. and Canada and Mexico remain normal and continue to not have a negative influence on our business.

Will Gildea: Thank you. And one more. As we look over the next several years, we have some HPDU incremental growth this year, and naval growth coming in 2027. Beyond that, can you discuss the timing of SMRs, Canadian new builds, microreactors, and other long-term layers to your growth map?

Rex Geveden: I would say a variety of different time frames for all of that stuff. And we mentioned on the script that we now have business with AP1000 in Europe with that Kozloduy owner's engineer contract. We certainly have SMR contracts at hand right now. We are making the reactor pressure vessel for GE and we are doing a number of other components for different small modular reactor suppliers. I think you will see that building over the years. It is my expectation that we will have additional orders for the BWRX-300 this year. It is also my expectation that we will have orders for the AP1000 this year. We will see.

Those are not in hand yet, but I think we are starting to see the commercial side of our business build very nicely, and we have forecasted pretty aggressive organic growth there, and most of that is in hand. So I think you can see small modular reactors ramping up starting now essentially. Microreactors, of course, we have had a good program going for seven years now, but we now have the JANUS program as a follow-on program to Pele, and we are in a good competitive position for that, and we are hoping for a good outcome. And then Medical has been growing at this sort of 20% compounded clip.

So we are seeing generally very good demand in all of our markets, and we expect it to build at various timings over the years.

Operator: Thank you. Next question comes from the line of Jeffrey Grampp with Northland Securities. Your line is open.

Jeffrey Grampp: Rex, to go back on the AP1000 comments that you had in your prepared remarks, can you give us a sense for BWX Technologies, Inc.'s revenue content per project you are competing on or any generalities there just to get a sense of materiality for some of these projects for the company? Thanks.

Rex Geveden: Yes. I think we have characterized it historically for the large reactors. Think on a CANDU new build, which was not your question, but on that one, it is $500,000,000 to $1,000,000,000 perhaps, particularly in Canada with our Kinectrics contribution, maybe pushing to the high end of that. I would say on an AP1000, depending on the components that we win, steam generators and whatnot, you could think of in the hundreds of millions, maybe in the low hundreds, but that is a bit of guesswork. We do not know what content we are going to win yet. We are bidding on a lot of different things. We will just have to wait and see how that comes out.

Jeffrey Grampp: Understood. That is helpful. Thank you. And for my follow-up on some of the recent government contracts, you guys alluded to having some lower margins at the front end. I am just wondering structurally, as these ramp over time, should we expect just kind of a linear progression in margin over time as these mature? Or is it more of a stair-step function as milestones are reached? Just kind of wondering, to level set expectations as those contracts roll through the results here.

Michael Fitzgerald: Yes. I would say that the contracts are structured slightly differently. We are in the first phase of negotiating under the Defense Fuels Program. And then for HPDU, that is a longer kind of upfront negotiated program. I think in both cases, what we would typically do along with our processes is kind of evaluate the overall margin performance, and usually, as we meet various milestones and reduce risk under those programs, is when we would incrementally adjust margin.

So those programs, we feel like we have a great opportunity to perform well, but it is a little early days, and we talked a little bit about how we are doing some infrastructure buildout, and so we have some lower margin components associated with those initial costs. But we do expect that as we start to get into full ramp of processing of the materials and production that ultimately we will have an opportunity to outperform.

Jeffrey Grampp: Got it. That is helpful. Thank you.

Operator: Next question comes from the line of Jonathan Dorsheimer with William Blair. Your line is open.

Jonathan Dorsheimer: Congrats on the quarter. Rex, first question, the Pentagon just released the $29,200,000,000 spending, added a new sub. I am just wondering how that compares to your expectations. Was that ahead, in line, behind your expectations? Any surprises as you look through the budget allocation? Then I have a follow-up.

Rex Geveden: Yes. Sure, Jed. That appropriation of funding really does not influence our business. Our programs are funded through different lines and so it was a neutral for us. We are still on shipbuilding schedule at two Virginias a year, one Columbia a year, and Fords more or less on five-year intervals. So we were indifferent to that news.

Jonathan Dorsheimer: Got it. Thank you. And then maybe for both you and Mike, as you think about capital allocation on the commercial side of things, you are in the CANDUs in Canada and abroad, you have just gotten into AP1000, and you are in a variety of SMRs between GE, Rolls-Royce, and also some of the new players. With that level of visibility, how are you thinking about the business? Are you seeing growth at a steady pace but in different regions that you are able to support? Or do you see any particular technology that is advancing at a faster pace? How are you thinking about adding resources to supply those markets?

Rex Geveden: I would say when you look at our capacity in Cambridge, Jed, you can see years into the future where we start to look capacity constrained. And so we are looking for assets in particular in the U.S. We have interesting targets in the acquisition pipeline. And I mentioned explicitly on the call the thought of building a plant at Mount Vernon. So we think we need U.S. capacity first and soonest, and we put a high emphasis on that. I think the second interesting opportunity is around Europe. There is an appetite for small modular reactors there, and whether we would invest there, I think depends somewhat on localization demands. But yes, we need capacity.

We need it pretty soon because we see a lot of demand coming in the future. And we will start in the U.S. with it.

Michael Fitzgerald: The only thing I would add is that in addition to the expanding footprint, we are also investing in technologies to drive throughput within the factory. So it is not just “let’s go get as much footprint as we can,” because we are trying to drive throughput through our operational excellence initiatives, which really supports the overall workforce as well. So that is an important aspect as we look to capital deployment and where we want to spend money on additional machinery and technology.

Operator: Great. Thank you. Next question comes from the line of Michael Frank Ciarmoli with Truist Securities. Your line is open.

Sam Strasacker: Hi. Good evening, guys. On for Michael Ciarmoli. I appreciate you taking the questions. I think to start, building off the conversation around SMRs and microreactors, I was curious if you could put a little more detail on where you are with the NASA and military microreactor programs? And then also, with the growth that you are seeing in small modular reactors, how are you looking at the TRISO fuel market overall in terms of where it is at now and potential opportunities moving forward? Thanks.

Rex Geveden: Yes, sure. A few questions embedded there. On microreactors, we are in the middle of Pele. We deliver that to Idaho National Laboratory next year. We announced the delivery of the fuel for that reactor at the end of last year. So we are proceeding apace, and that reactor will start undergoing testing in the 2027–2028 time frame. Think of that as a precursor to the JANUS program, which is in procurement right now. They are soliciting offers from various technology providers, including us. We see that one as a super interesting opportunity. On the NASA side, we are still doing some work on nuclear thermal propulsion, although it is not within the context of the DRACO program.

We still have some level of effort with NASA. I think the bigger opportunity in the space market is around fission surface power. It looks like NASA intends to procure a fission reactor for a lunar base, and certainly we have the right credentials to compete for that. In terms of TRISO fuel, I think there are two interesting things going on here. One is demand on the government side that is related to programs like JANUS, where the microreactor technologies generally are calling for TRISO fuel or designed around TRISO fuel.

But I think there is also an interesting commercial play there, and we are certainly evaluating that, either sub-grid or below-grid capacity power output and certainly remote applications for high-density power. Very interesting opportunity around TRISO, and we are looking pretty hard at whether we make a large-scale investment there.

Sam Strasacker: Great. I will leave it at that. Thank you.

Operator: Thank you. If you would like to ask a question, press star then the number one on your telephone keypad. Our next question comes from the line of Jan-Frans Engelbrecht with Baird. Your line is open.

Jan-Frans Engelbrecht: Good afternoon, Rex and Mike. Congrats on a strong quarter. I just wanted to return to the AP1000 and the CANDU market. As we think about the AP1000 owner's engineer contract you won, just in terms of components, do you consider your bid on the component work to be more competitive if it is a North American project that gets announced versus something in Europe? Because we know on AP1000 in Poland, they have announced the steam generator supplier on that one. I know you did not bid on that, but as new AP1000 projects get announced, do you see a better probability on which continent it is on, or how should we think about that?

Rex Geveden: I do not think we are thinking of it that way, JF. The owner's engineer contract with Bulgaria was a unique opportunity for us to team up with a component of Ontario Power Generation. So we have their imprimatur and we have our deep engineering capability, which is augmented by Kinectrics. That was a very particular opportunity there. I think we are geographic-agnostic when it comes to component supply. We hope to be able to compete reasonably well in all these markets. But I would also say that as the market really starts to warm up and we start to see real capacity constraint, I think we will be more competitive and we will have more pricing power.

So I am optimistic about all of it.

Jan-Frans Engelbrecht: Perfect. Thanks. And then just a quick follow-up on the naval nuclear business. A lot of shipbuilding and reconciliation funding for shipbuilding, and then you just got the news from Australia. They are going to invest, I think, close to $3,000,000,000 in their own shipyard. In terms of second source opportunities, how are you thinking about long term, all this new funding that is going on? It seems that there is really a lot of attention being placed into reducing the bottlenecks. But how does that set you up beyond 2030 for long-term growth in that segment?

Rex Geveden: Maybe a little hard to say. Right now, we are building our guidance and our internal forecast around the shipbuilding plan. We do have some business on the AUKUS side related to production capacity that is giving us a bit of growth here in 2026. And of course, there is the wildcard of South Korea out there, and we would hope to be involved in, say, fuel manufacturing at least, if not reactor cores. So there are interesting possibilities out there. I would say that if you think about reconciliation and just a broader defense budget, I think you would see more opportunities around microreactors, fuel, and other such things that are not prescriptively mapped into the shipbuilding schedule.

So a bit of a TBD for us, but certainly exciting on the national security side of our business.

Jan-Frans Engelbrecht: Perfect. Thanks. Thanks for taking my questions, Rex. Appreciate it.

Rex Geveden: Thanks. Thank you.

Operator: Next question comes from the line of Andre Madrid with BTIG. Your line is open.

Ned Morgan: Hey. This is Ned Morgan on for Andre. I just want to ask and get the latest on the Canadian Competition Bureau's investigation into the Kinectrics acquisition.

Rex Geveden: It has been pretty quiet on our front. No news on that one.

Ned Morgan: Alright. Then a follow-up. Is there any update on when we could see approval of Tech-99?

Rex Geveden: Not much new there. I have said the last couple of quarters that we are in the grueling last mile of that around some issues with product quality, filtration, concentration, things that we have been working on. We do have new leadership in that Medical business in the person of Jason Van Wort, showing a lot of strong leadership in that business, and Jason has some compelling new ideas around our commercial product strategy, including Tech-99. Early days on that, but we will see how that forms up. So I find myself encouraged about that business broadly.

We have not submitted to the FDA yet, and I have, frankly, imperfect clarity around that because of these product quality issues that we are having to sort through. I will say that we did not contemplate Tech-99 revenue in 2026 in our guidance that we just published. And so it is not in our numbers. It would be an upside for us if it did occur.

Ned Morgan: Okay. Thank you very much.

Rex Geveden: Thank you.

Operator: There are no further questions at this time. I would like to turn the call back over to Chase Jacobson for closing remarks.

Chase Jacobson: Yes. Thanks, everyone, for joining us today. We look forward to speaking with many of you and seeing you at upcoming investor events or on calls. If you have any questions, please feel free to reach out to me at investors@bwxt.com. Have a great night. Thank you.

Operator: Ladies and gentlemen, that concludes today's call. Thank you all for joining in. You may now disconnect.

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