BWX Technologies Inc.
02/23/2026 | Press release | Distributed by Public on 02/23/2026 16:08
Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Statements we make in the following discussion, which express a belief, expectation or intention, as well as those that are not historical fact, are forward-looking statements that are subject to risks, uncertainties and assumptions. Our actual results, performance or achievements, or industry results, could differ materially from those we express in the following discussion as a result of a variety of factors, including the risks and uncertainties we have referred to under the heading "Cautionary Statement Concerning Forward-Looking Statements" in Item 1 and throughout Item 1A of this Report.
General
We are a leading supplier of nuclear components and fuel to the U.S. Government; provide technical, management and site services to support governments in the operation of complex facilities and environmental remediation activities; supply precision manufactured components, nuclear fuel and services for the commercial nuclear power industry; supply critical medical radioisotopes and radiopharmaceuticals; and develop nuclear technologies for a variety of applications, including medical radioisotopes, advanced nuclear power sources and advanced nuclear reactors. In general, we operate in capital-intensive industries and rely on large contracts for a substantial amount of our revenues. We operate in two reportable segments: Government Operations and Commercial Operations. We are currently exploring growth strategies across our segments through strategic investments and acquisitions to expand and complement our existing businesses. We would expect to fund these opportunities with cash generated from operations or by raising additional capital through debt, equity or some combination thereof.
Outlook
We expect to recognize approximately 40% of the revenue associated with our backlog by the end of 2026, with the remainder to be recognized thereafter.
Government Operations
The revenues of our Government Operations segment are largely a function of national security spending by the U.S. Government. As a supplier of major nuclear components for certain U.S. Government programs, we are a significant participant in the defense industry and have not been negatively impacted by federal budget reductions to date. We believe many of our programs are well-aligned with national defense and other strategic priorities as we supply high-end equipment for submarines and aircraft carriers for the U.S. Navy and participate in the continuing cleanup, operation and management of critical government-owned nuclear sites, laboratories and manufacturing complexes maintained by the DOE, NASA and other federal agencies. However, it is possible that reductions in federal government spending could have an adverse impact on the operating results and cash flows of this segment in the future.
A portion of this segment's operations is also conducted through joint ventures, which typically earn fees, and we account for them following the equity method of accounting. See Note 4 to our consolidated financial statements included in this Report for financial information on our equity method investments. This segment also specializes in the development of advanced technologies. The nature, timing and duration of any related contracts are dependent on the demand and funding availability for such technologies.
Commercial Operations
The revenues in this segment primarily depend on the demand and competitiveness of nuclear energy. The activity of this segment depends on the timing of maintenance and refueling outages, the cyclical nature of capital expenditures and major refurbishment and plant life extension projects, as well as the demand for nuclear fuel and fuel handling equipment primarily in the Canadian market, which could cause variability in our financial results.
Our Commercial Operations segment's offerings also include medical radioisotope products, radiopharmaceuticals and medical devices for use in diagnostic imaging and radiotherapeutic treatments. The medical isotope business will be the platform from which we plan to launch our Molybdenum-99 product line and a number of future radioisotope-based imaging, diagnostic and therapeutic products.
Critical Accounting Estimates
Our financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States ("GAAP"). Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. These estimates and assumptions are affected by management's application of accounting policies. We believe the following are our most critical accounting policies that we apply in the preparation of our financial statements. These policies require our most difficult, subjective and complex judgments, often as a result of the need to make estimates of matters that are inherently uncertain, and the impact of these policies have had or are reasonably likely to have a material impact on our financial condition or results of operations.
See Note 1 to our consolidated financial statements included in this Report for further discussion of significant accounting policies.
Contracts and Revenue Recognition
We generally recognize contract revenue and resulting income over time based on the measurement of the extent of progress toward completion using total costs incurred as a percentage of the total estimated project costs for individual performance obligations. We review contract price and cost estimates periodically as the work progresses and reflect adjustments proportionate to the percentage-of-completion in income in the period when those estimates are revised. If a current estimate of total contract costs indicates a loss on a contract, the projected loss is recognized in full when determined. It is possible that current estimates could materially change for various reasons, including, but not limited to, fluctuations in forecasted labor productivity or raw material prices. We routinely review estimates related to our contracts, and revisions to profitability are reflected in the quarterly and annual earnings we report. The aggregate impact of changes in estimates increased our revenue and operating income as follows:
| Year Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| (In thousands) | ||||||||||||||||||||
| Revenues | $ | 5,544 | $ | 37,908 | $ | 24,728 | ||||||||||||||
|
Operating Income (1)
|
$ | 4,318 | $ | 36,770 | $ | 24,813 | ||||||||||||||
(1)During the year ended December 31, 2025, our Government Operations segment results were favorably impacted by material contract adjustments related to a nuclear operations contract. The material adjustments resulted in an increase in revenue and operating income of $29.4 million during the year ended December 31, 2025.
During the year ended December 31, 2024, no adjustments to any one contract had a material impact on our consolidated financial statements.
During the year ended December 31, 2023, our Government Operations segment results were favorably impacted by contract adjustments related to a nuclear contract which resulted in an increase in operating income of $22.5 million. Our Government Operations segment also recognized favorable adjustments totaling $27.9 million as a result of the successful negotiation of change orders related to cost growth that was driven by out-of-scope changes associated with the manufacture of non-nuclear components.
Contracts may be modified at the request of our customer or initiated by us to amend all or part of an existing contract, including contract type. Depending on the nature of the modification, we consider whether to account for the modification as an adjustment to the existing contract or as a separate contract. Modifications to our contracts are generally accounted for as if they were part of the existing contract as these modifications are not distinct from the existing contract and accounted for as a cumulative adjustment to revenue.
Although we continually strive to improve our ability to estimate our contract costs and profitability, adjustments to overall contract costs due to unforeseen events could be significant in future periods. We recognize contract change orders or changes in scope of work in contract revenues, to the extent of costs incurred, when we believe collection is probable and can be reasonably estimated. We recognize income from claims when formally agreed with the customer. We regularly assess the collectability of contract revenues and receivables from customers.
Pension Plans and Postretirement Benefits
We utilize actuarial and other assumptions in calculating the cost and benefit obligations of our pension and postretirement benefits. The assumptions utilized in the determination of our cost and obligations include assumptions
regarding discount rates, expected returns on plan assets, mortality and health care cost trends. The assumptions utilized represent our best estimates based on historical experience and other factors.
We calculate the majority of our pension costs under both financial accounting standards ("FAS") in accordance with GAAP and CAS in accordance with the FAR. We have prepared our consolidated financial statements and segment reporting disclosures utilizing pension costs calculated under FAS. Pension costs calculated under CAS are utilized as the basis for recovery of pension costs on our U.S. Government contracts. For the years ended December 31, 2025, 2024 and 2023, our CAS pension costs attributed to U.S. Government contracts totaled $32.2 million, $20.5 million and $13.6 million, respectively. The amount of recoverable CAS pension costs recognized as revenue on an annual basis may differ from the amounts noted above. See further discussion of our accounting for contracts and revenue recognition above and in Note 1 to our consolidated financial statements included in this Report.
Actual experience that differs from these assumptions or future changes in assumptions will affect our recognized benefit obligations and related costs. We immediately recognize net actuarial gains and losses in earnings in the fourth quarter as a component of net periodic benefit cost. Net actuarial gains and losses occur when actual experience differs from any of the various assumptions used to value our pension and postretirement benefit plans or when assumptions, which are revisited annually through our update of our actuarial valuations, change due to current market conditions or underlying demographic changes. The primary factors contributing to net actuarial gains and losses are changes in the discount rate used to value the obligations as of the measurement date each year and the difference between the actual return on plan assets and the expected return on plan assets. The effect of changes in the discount rate and expected rate of return on plan assets assumptions in combination with the actual return on plan assets can result in significant changes in our estimated pension and postretirement benefit cost and our consolidated financial condition.
The following sensitivity analysis shows the impact of a 25 basis point change in the assumed discount rate and return on plan assets on our FAS pension benefit plan obligations and expense for the year ended December 31, 2025:
| .25% Increase | .25% Decrease | |||||||||||||
| (In millions) | ||||||||||||||
| Discount Rate: | ||||||||||||||
| Effect on projected benefit obligation | $ | (40.2) | $ | 42.3 | ||||||||||
| Return on Plan Assets: | ||||||||||||||
| Effect on ongoing net periodic benefit cost | $ | (9.1) | $ | 7.2 | ||||||||||
(1)Excludes effect of annual mark to market adjustment.
Goodwill and Intangible Assets
Each year, we evaluate goodwill at each reporting unit to assess recoverability, and impairments, if any, are recognized in earnings. We perform a qualitative analysis when we believe that there is sufficient excess fair value over carrying value based on our most recent quantitative assessment, adjusted for relevant facts and circumstances that could affect fair value. Deterioration in macroeconomic, industry and market conditions, cost factors, overall financial performance, share price decline or entity and reporting unit specific events could cause us to believe a qualitative test is no longer appropriate.
When we determine that it is appropriate to test goodwill for impairment utilizing a quantitative test, we compare the fair value of a reporting unit to its carrying amount, including goodwill. We utilize both the income and market valuation approaches to provide inputs into the estimate of the fair value of our reporting units, which would be considered by market participants.
Under the income valuation approach, we employ a discounted cash flow model to estimate the fair value of each reporting unit. This model requires the use of significant estimates and assumptions regarding future revenues, costs, margins, capital expenditures, changes in working capital, terminal year growth rate and cost of capital. Our cash flow models are based on our forecasted results for the applicable reporting units. Actual results could differ materially from our projections. Some assumptions, such as future revenues, costs and changes in working capital are company driven and could be affected by a loss of one or more significant contracts or customers, failure to control costs on certain contracts, a decline in U.S. Government funding or a decline in demand based on changing economic or regulatory conditions. Changes in external market conditions may affect certain other assumptions, such as the cost of capital. Market conditions can be volatile and are outside of our control.
Under the market valuation approach, we employ the guideline publicly traded company method, which indicates the fair value of the equity of each reporting unit by comparing it to publicly traded companies in similar lines of business. After identifying and selecting guideline companies, we analyze their business and financial profiles for relative similarity. Factors such as size, growth, risk and profitability are analyzed and compared to each of our reporting units. Assumptions include the selection of our peer companies and use of market multiples, which could increase or decrease based on the profitability of our competitors and performance of their stock, which is often dependent on the performance of the stock market and general economy as a whole.
Adverse changes in the assumptions utilized in our impairment test could cause a reduction or elimination of excess fair value over carrying value, resulting in potential recognition of impairment. If the carrying value of a reporting unit exceeds its fair value, an impairment charge is recorded to goodwill in the amount by which the carrying value exceeds fair value.
We completed our annual review of goodwill for each of our reporting units for the year ended December 31, 2025, which indicated that we had no impairment of goodwill. The fair value of our reporting units was substantially in excess of carrying value.
Each year, we evaluate indefinite-lived intangible assets to assess recoverability, and impairments, if any, are recognized in earnings. We perform a qualitative assessment when testing indefinite-lived intangible assets for impairment to determine whether events or circumstances that could affect the significant inputs used in determining fair value have occurred that indicate that it is more likely than not that the indefinite-lived intangible asset is impaired. Deterioration in macroeconomic, industry and market conditions, cost factors or overall financial performance could cause us to believe a qualitative test is no longer appropriate. When quantitative assessments are performed, we primarily utilize income-based valuation approaches. Under the income-based valuation approach, we employ a relief from royalty method of valuation. This method requires significant assumptions, including assumed royalty rate, future revenues and cost of capital. Assumptions related to operating performance, such as future revenues, could be affected by loss of a customer contract, a decline in U.S. Government funding or a decline in demand based on changing economic or regulatory conditions. Changes in external market conditions may affect certain other assumptions, such as the cost of capital. Market conditions can be volatile and are outside of our control.
Adverse changes in these assumptions utilized within our indefinite-lived intangible asset impairment test could cause a reduction or elimination of excess fair value over carrying value, resulting in potential recognition of impairment.
We have completed our annual review of our indefinite-lived intangible assets for the year ended December 31, 2025, which indicated that we had no impairment. The fair value of our indefinite-lived intangible assets was substantially in excess of carrying value.
Asset Retirement Obligations and Environmental Cleanup Costs
We accrue for future decommissioning of our nuclear facilities that will permit the release of these facilities to unrestricted use at the end of each facility's service life, which is a requirement of our licenses from the NRC and the CNSC. In estimating fair value, we use present value of cash flows expected to be incurred in settling our obligations. To the extent possible, we perform a marketplace assessment of the cost and timing of performing the retirement activities. We apply a credit-adjusted risk-free interest rate to our expected cash flows in our determination of fair value. Actual costs incurred to decommission our facilities may differ from the accreted liability. For environmental liabilities associated with assets that we no longer operate, we have accrued amounts based on the estimated costs of cleanup activities, net of the anticipated effect of any applicable cost-sharing arrangements. We adjust the estimated costs as further information develops or circumstances change. Given the long-lived nature of these facilities, we are required to estimate retirement costs that will be incurred in the future, which may extend up to 40 years at the time the asset retirement obligation is established. Due to the significance of the remaining useful life of these facilities, the timing of retirement and future costs for material components of the asset retirement obligations, such as labor and waste disposal fees, could differ from our estimates. An exception to this accounting treatment relates to the work we perform for two facilities for which the U.S. Government is obligated to pay substantially all the decommissioning costs.
Results of Operations - Years Ended December 31, 2025, 2024 and 2023
Selected financial highlights are presented in the table below:
| Year Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| (In thousands) | ||||||||||||||||||||
| REVENUES: | ||||||||||||||||||||
| Government Operations | $ | 2,350,090 | $ | 2,183,040 | $ | 2,031,337 | ||||||||||||||
| Commercial Operations | 853,070 | 523,972 | 466,344 | |||||||||||||||||
| Eliminations | (4,735) | (3,358) | (1,372) | |||||||||||||||||
| $ | 3,198,425 | $ | 2,703,654 | $ | 2,496,309 | |||||||||||||||
| OPERATING INCOME: | ||||||||||||||||||||
| Government Operations | $ | 394,850 | $ | 377,875 | $ | 374,682 | ||||||||||||||
| Commercial Operations | 57,728 | 46,816 | 37,532 | |||||||||||||||||
| $ | 452,578 | $ | 424,691 | $ | 412,214 | |||||||||||||||
| Unallocated Corporate | (48,119) | (44,084) | (29,155) | |||||||||||||||||
| Total Operating Income | $ | 404,459 | $ | 380,607 | $ | 383,059 | ||||||||||||||
This section discusses our 2025 and 2024 results of operations and contains year-to-year comparisons between 2025 and 2024. Discussions of our 2024 results and year-to-year comparisons between 2024 and 2023 that are not included in this Report can be found in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2024.
Consolidated Results of Operations
Year Ended December 31, 2025 vs. 2024
Consolidated revenues increased 18.3%, or $494.8 million, to $3,198.4 million in the year ended December 31, 2025 compared to $2,703.7 million in 2024, due to increases in revenues in our Government Operations and Commercial Operations segments of $167.1 million and $329.1 million, respectively.
Consolidated operating income increased $23.9 million to $404.5 million in the year ended December 31, 2025 compared to $380.6 million in 2024. Operating income in our Government Operations and Commercial Operations segments increased $16.8 million and $10.9 million, respectively. These increases were partially offset by an increase in Unallocated Corporate expenses of $4.0 million when compared to the prior year.
Government Operations
| Year Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | $ Change | ||||||||||||||||||
| (In thousands) | ||||||||||||||||||||
| Revenues | $ | 2,350,090 | $ | 2,183,040 | $ | 167,050 | ||||||||||||||
| Operating Income | $ | 394,850 | $ | 377,875 | $ | 16,975 | ||||||||||||||
| % of Revenues | 16.8% | 17.3% | ||||||||||||||||||
Year Ended December 31, 2025 vs. 2024
Revenues increased 7.7%, or $167.1 million, to $2,350.1 million in the year ended December 31, 2025 compared to $2,183.0 million in 2024. The increase was primarily driven by the timing of long-lead material procurements of $83.4 million, increases in uranium processing and downblending operations of $68.1 million and an increase in revenues of $52.2 million associated with the acquisition of A.O.T., which was completed on January 3, 2025. These increases were partially offset by a decrease in revenues associated with our advanced technologies business.
Operating income increased $17.0 million to $394.9 million in the year ended December 31, 2025 compared to $377.9 million in 2024, primarily driven by the operating income impact of the changes in revenues noted above which was partially offset by a $13.1 million increase in expenses associated with due diligence and post-acquisition integration activities as well as restructuring-related activities when compared to the prior year.
Commercial Operations
| Year Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | $ Change | ||||||||||||||||||
| (In thousands) | ||||||||||||||||||||
| Revenues | $ | 853,070 | $ | 523,972 | $ | 329,098 | ||||||||||||||
| Operating Income | $ | 57,728 | $ | 46,816 | $ | 10,912 | ||||||||||||||
| % of Revenues | 6.8% | 8.9% | ||||||||||||||||||
Year Ended December 31, 2025 vs. 2024
Revenues increased 62.8%, or $329.1 million, to $853.1 million in the year ended December 31, 2025 compared to $524.0 million in 2024. The increase was primarily related to the acquisition of Kinectrics, completed on May 20, 2025, which resulted in an increase in revenues of $231.0 million as well as an increase in revenues related to components manufacturing of $74.0 million.
Operating income increased $10.9 million to $57.7 million in the year ended December 31, 2025 compared to $46.8 million in 2024. The increase was primarily due to the increase in revenues noted above, which was partially offset by a $19.9 million increase in expenses associated with due diligence and post-acquisition integration activities as well as restructuring-related activities when compared to the prior year.
Unallocated Corporate
Unallocated Corporate expenses increased $4.0 million to $48.1 million in the year ended December 31, 2025 compared to $44.1 million in 2024. The increase was due to an increase in legal and consulting costs associated with merger and acquisition related activities of $3.9 million when compared to the corresponding period in the prior year. We also experienced a $7.1 million increase in restructuring-related expenditures. These increases were partially offset by a decrease in expenditures related to the transformation of our information technology infrastructure of $3.2 million.
Other Income (Expense)
During the year ended December 31, 2025, other income (expense) increased $25.5 million to a loss of $6.3 million compared to a loss of $31.9 million in 2024. Included in other income (expense) are components of net periodic benefit cost, which include mark to market adjustments due to our immediate recognition of net actuarial gains (losses) for our pension and postretirement benefit plans which changed to a gain of $15.2 million during the year ended December 31, 2025 compared to a gain of $0.8 million for the year ended December 31, 2024. This was caused by favorable changes in income (expense) related to mark to market adjustments totaling $17.2 million. In addition, we experienced an increase in interest expense of $4.7 million in 2025 when compared to the prior year due primarily to an increase in borrowings coupled with an increase in the weighted-average interest rate on outstanding borrowings under our Former Credit Facility, as defined below. Other income (expense) also includes the effect of foreign currency transaction gains and losses as well as gains and losses on FX forward contracts which resulted in a net increase in other income (expense) of $17.7 million when compared to the prior year.
Provision for Income Taxes
| Year Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | $ Change | ||||||||||||||||||
| (In thousands) | ||||||||||||||||||||
|
Income before Provision for Income Taxes
|
$ | 398,120 | $ | 348,720 | $ | 49,400 | ||||||||||||||
|
Provision for Income Taxes
|
$ | 68,259 | $ | 66,422 | $ | 1,837 | ||||||||||||||
|
Effective Tax Rate
|
17.1% | 19.0% | ||||||||||||||||||
For the year ended December 31, 2025, our provision for income taxes increased $1.8 million to $68.3 million, while income before provision for income taxes increased $49.4 million to $398.1 million when compared to the prior year. Our effective tax rate was 17.1% for the year ended December 31, 2025 compared to 19.0% for the year ended December 31, 2024. Our effective tax rate for the years ended December 31, 2025 and 2024 were lower than the U.S. corporate income tax rate of 21% primarily due to increased benefits from U.S. federal research and development tax credits.
See Note 5 to our consolidated financial statements included in this Report for further information on income taxes.
Effects of Inflation and Changing Prices
Our financial statements are prepared in accordance with GAAP, using historical U.S. dollar accounting ("historical cost"). Statements based on historical cost, however, do not adequately reflect the cumulative effect of increasing costs and changes in the purchasing power of the U.S. dollar, especially during times of significant and continued inflation.
In order to minimize the negative impact of inflation on our operations, we attempt to cover the increased cost of anticipated changes in labor, material and service costs, either through an estimate of those changes, which we reflect in the original price, or through price escalation clauses in our contracts. However, there can be no assurance we will be able to mitigate all increases in cost using this strategy.
Liquidity and Capital Resources
Our overall liquidity position, which we generally define as our unrestricted cash and cash equivalents plus amounts available for borrowings under our credit facility, increased by approximately $950.7 million to $1,748.4 million at December 31, 2025 compared to $797.7 million at December 31, 2024, primarily attributable to the issuance of $1.25 billion of 0% Convertible Senior Notes due 2030 (the "2030 Notes") and an increase of $250 million in available borrowings from our New Credit Facility. These were offset partially by repayments on the Term Loan and Capped Call Transaction premiums. We generated net cash from operations in each of the years ended December 31, 2025, 2024 and 2023. Typically, the fourth quarter has been the period of highest cash flows from operating activities because of the timing of payments received from the U.S. Government on accounts receivable retainages and cash dividends received from our joint ventures.
New Credit Facility
On November 10, 2025, we entered into a second Amended and Restated Credit Agreement (the "New Credit Facility") with Wells Fargo Bank, National Association, as administrative agent, and the other lenders party thereto, which amended and restated our then-existing secured credit facility (the "Former Credit Facility"), which consisted of a $750 million senior secured revolving credit facility (the "Revolving Credit Facility") and a $250 million senior secured term A loan (the "Term Loan"). The Revolving Credit Facility and the Term Loan were repaid, in their entirety, with the proceeds from the 2030 Notes as discussed below. The New Credit Facility includes a $1.25 billion senior secured revolving credit facility. The proceeds of loans under the New Credit Facility are available for working capital needs, permitted acquisitions and other general corporate purposes.
The New Credit Facility is scheduled to mature on November 10, 2030, subject to an early maturity trigger if on any date the aggregate outstanding principal amount of unsecured indebtedness due within 91 days thereof is in excess of 100% of EBITDA, as defined in the New Credit Facility, for the last four full fiscal quarters. However, this early maturity trigger will not apply if (1) the total Net Leverage Ratio is less than or equal to 2.00 to 1.00 or (2) liquidity is at least 125% of such outstanding unsecured indebtedness. The Company's obligations under the New Credit Facility are guaranteed by the same guarantors that guarantee the 2030 Notes. The New Credit Facility is secured by first-priority liens on certain assets owned by the Company and the guarantors (other than its subsidiaries comprising a portion of its Government Operations segment), provided such liens may be released if the Company obtains investment grade ratings of at least BBB- from S&P or Baa3 from Moody's and no default or event of default exists.
The New Credit Facility allows for additional parties to become lenders and, subject to certain conditions, for the increase of the commitments under the New Credit Facility, subject to an aggregate maximum for all additional commitments of (1) the greater of (a) $600 million and (b) 100% of EBITDA, as defined in the New Credit Facility, for the last four full fiscal quarters, plus (2) additional amounts provided the Company is in compliance with a pro forma first lien leverage ratio test 3.00 to 1.00 or less.
Outstanding loans under the New Credit Facility bear interest at our option at either (i) the Term SOFR rate plus a margin ranging from 1.00% to 1.75% per year or (ii) the base rate (the highest of (x) the administrative agent's prime rate, (y) the Federal Funds rate plus 0.50% and (z) the Term SOFR rate for a one-month tenor plus 1.00%) plus a margin ranging from 0.0% to 0.75% per year. In addition, the Company will be charged (1) a commitment fee of between 0.15% and 0.225% per year on the unused portion of the New Credit Facility, (2) a letter of credit fee of between 1.00% and 1.75% per year with respect to the amount of each financial letter of credit issued under the New Credit Facility, and (3) a letter of credit fee of between 0.75% and 1.05% per year with respect to the amount of each performance letter of credit or commercial letter of credit issued under the New Credit Facility. The applicable margin for loans, the commitment fee and the letter of credit fees set forth above will vary quarterly based on the Company's consolidated total net leverage ratio.
The Company may prepay all loans under the New Credit Facility at any time without premium or penalty (other than customary Term SOFR rate breakage costs), subject to notice requirements.
The New Credit Facility contains representations and warranties, affirmative and negative covenants and events of default that the Company considers customary for an agreement of this type, including covenants setting a maximum consolidated total net leverage ratio and a minimum consolidated interest coverage ratio. If any event of default relating to bankruptcy or other insolvency events occurs with respect to the Company, the lenders' commitments under the New Credit Facility will automatically terminate and all outstanding obligations under the New Credit Facility will immediately become due and payable. If any other event of default occurs, the lenders will be permitted to terminate their commitments under the New Credit Facility, accelerate all outstanding obligations under the New Credit Facility and exercise other rights and remedies, including the commencement of foreclosure or other actions against the collateral. Based on the total net leverage ratio applicable at December 31, 2025, the margin for Term SOFR and base rate loans was 1.50% and 0.50%, respectively, the letter of credit fee for financial letters of credit and performance letters of credit was 1.50% and 0.90%, respectively, and the commitment fee for the unused portion of the New Credit Facility was 0.20%.
The New Credit Facility includes financial covenants that are evaluated on a quarterly basis, based on the rolling four-quarter period that ends on the last day of each fiscal quarter. The maximum permitted leverage ratio is 4.00 to 1.00, which may be increased to 4.50 to 1.00 for up to four consecutive fiscal quarters after a material acquisition. The minimum consolidated interest coverage ratio is 3.00 to 1.00. In addition, the New Credit Facility contains various restrictive covenants, including with respect to debt, liens, investments, mergers, acquisitions, dividends, equity repurchases and asset sales. As of December 31, 2025, we were in compliance with all covenants set forth in the New Credit Facility.
As of December 31, 2025, letters of credit issued under the New Credit Facility totaled $1.4 million and we had no outstanding borrowings and had $1,248.6 million available under the New Credit Facility for borrowings and to meet letter of credit requirements.
The New Credit Facility generally includes customary events of default for a secured credit facility. Under the New Credit Facility, (1) if an event of default relating to bankruptcy or other insolvency events occur with respect to the Company, all related obligations will immediately become due and payable; (2) if any other event of default exists, the lenders will be permitted to accelerate the maturity of the related obligations outstanding; and (3) if any event of default exists, the lenders will be permitted to terminate their commitments thereunder and exercise other rights and remedies, including the commencement of foreclosure or other actions against the collateral.
If any default occurs under the New Credit Facility, or if we are unable to make any of the representations and warranties in the New Credit Facility, we will be unable to borrow funds or have letters of credit issued under the New Credit Facility.
Senior Notes due 2028
We issued $400 million aggregate principal amount of 4.125% senior notes due 2028 (the "Senior Notes due 2028") pursuant to an indenture dated June 12, 2020 (the "2020 Indenture"), among the Company, certain of our subsidiaries, as guarantors, and U.S. Bank Trust Company, National Association (formerly known as U.S. Bank National Association) ("U.S. Bank"), as trustee. The Senior Notes due 2028 are guaranteed by each of the Company's present and future direct and indirect wholly owned domestic subsidiaries that is a guarantor under the New Credit Facility.
Interest on the Senior Notes due 2028 is payable semi-annually in cash in arrears on June 30 and December 30 of each year at a rate of 4.125% per annum. The Senior Notes due 2028 will mature on June 30, 2028.
We may redeem the Senior Notes due 2028, in whole or in part, at any time at a redemption price equal to 100.0% of the principal amount to be redeemed plus accrued and unpaid interest, if any, to, but excluding, the redemption date.
The 2020 Indenture contains customary events of default, including, among other things, payment default, failure to comply with covenants or agreements contained in the 2020 Indenture or the Senior Notes due 2028 and certain provisions related to bankruptcy events. The 2020 Indenture also contains customary negative covenants. As of December 31, 2025, we were in compliance with all covenants set forth in the 2020 Indenture and the Senior Notes due 2028.
Senior Notes due 2029
We issued $400 million aggregate principal amount of 4.125% senior notes due 2029 (the "Senior Notes due 2029") pursuant to an indenture dated April 13, 2021 (the "2021 Indenture"), among the Company, certain of our subsidiaries, as
guarantors, and U.S. Bank, as trustee. The Senior Notes due 2029 are guaranteed by each of the Company's present and future direct and indirect wholly owned domestic subsidiaries that is a guarantor under the Credit Facility.
Interest on the Senior Notes due 2029 is payable semi-annually in cash in arrears on April 15 and October 15 of each year at a rate of 4.125% per annum. The Senior Notes due 2029 will mature on April 15, 2029.
We may redeem the Senior Notes due 2029, in whole or in part, at any time on or after April 15, 2025 at a redemption price equal to (i) 101.031% of the principal amount to be redeemed if the redemption occurs during the 12-month period beginning on April 15, 2025 and (ii) 100.0% of the principal amount to be redeemed if the redemption occurs on or after April 15, 2026, in each case plus accrued and unpaid interest, if any, to, but excluding, the redemption date.
The 2021 Indenture contains customary events of default, including, among other things, payment default, failure to comply with covenants or agreements contained in the 2021 Indenture or the Senior Notes due 2029 and certain provisions related to bankruptcy events. The 2021 Indenture also contains customary negative covenants. As of December 31, 2025, we were in compliance with all covenants set forth in the 2021 Indenture and the Senior Notes due 2029.
2030 Notes and Capped Call Transactions
2030 Notes
In November 2025, the Company issued $1.25 billion aggregate principal amount of 0% Convertible Senior Notes due 2030 (the "2030 Notes"), including the exercise in full of the initial purchasers' option to purchase up to an additional $150.0 million principal amount of the 2030 Notes. The 2030 Notes were issued pursuant to an Indenture, dated November 19, 2025 (the "Indenture"), among the Company, certain of our subsidiaries, as guarantors, and U.S. Bank Trust Company, National Association, as trustee. The 2030 Notes are guaranteed by each of the Company's present and future direct and indirect wholly owned domestic subsidiaries that guarantee its existing and future capital markets indebtedness.
The conversion rate for the 2030 Notes will initially be 3.8094 shares of common stock per $1,000 principal amount of the 2030 Notes, which is equivalent to an initial conversion price of approximately $262.51 per share of common stock. The conversion rate is subject to adjustment upon certain events. Upon conversion, the Company will settle conversions by paying cash up to the aggregate principal amount of the 2030 Notes to be converted and paying or delivering, as the case may be, cash, shares of common stock or a combination of cash and shares of common stock, at its election, in respect of the remainder, if any, of its conversion obligation in excess of the aggregate principal amount of the 2030 Notes being converted, based on the applicable conversion rate(s).
The 2030 Notes will mature on November 1, 2030, unless earlier converted, redeemed or repurchased. The 2030 Notes will not bear regular interest, and the principal amount of the 2030 Notes will not accrete. However, special interest and additional interest, if any, may accrue on the 2030 Notes at a combined rate per annum not exceeding 0.50% upon the occurrence of certain events as described in the Indenture.
The Company may not redeem the 2030 Notes at its option before November 6, 2028. The Company will have the option to redeem the 2030 Notes, in whole or in part (subject to the partial redemption limitation described below), at any time, and from time to time, on or after November 6, 2028 and before the 26th Scheduled Trading Day (as defined in the Indenture) immediately before the maturity date, at a cash redemption price equal to the principal amount of the 2030 Notes to be redeemed, plus accrued and unpaid special interest and additional interest, if any, to, but excluding, the redemption date, but only if certain conditions are met.
On or after August 1, 2030, until the close of business on the second Scheduled Trading Day (as defined in the Indenture) immediately before the maturity date, the 2030 Notes will be convertible at the option of the noteholders at any time.
Before August 1, 2030, noteholders will have the right to convert their 2030 Notes only under the following circumstances: (1) during any fiscal quarter commencing after the fiscal quarter ending on March 31, 2026, if the last reported sale price of the Company's common stock exceeds 130% of the conversion price for each of at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding fiscal quarter; (2) during the five consecutive business days immediately after any ten consecutive trading day period if the trading price per $1,000 principal amount of 2030 Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price per share of common stock on such trading day and the conversion rate on each Trading Day; (3) upon the occurrence of specified corporate events or distributions on the common stock as set forth in the Indenture; or (4) if the Company calls the 2030 Notes for redemption.
If the Company undergoes a Fundamental Change (as defined in the Indenture), then, subject to certain exceptions, noteholders may require the Company to repurchase their 2030 Notes in whole or in part for cash at a price equal to the principal amount of the 2030 Notes to be repurchased, plus accrued and unpaid special interest and additional interest, if any, to, but excluding, the Fundamental Change Repurchase Date (as defined in the Indenture). The definition of Fundamental Change includes, among other things, certain business combination transactions involving the Company and certain de-listing events with respect to the common stock.
Capped Call Transactions
In connection with the pricing of the 2030 Notes and the exercise by the initial purchasers of their option in full to purchase additional 2030 Notes, respectively, the Company paid $131.9 million to enter into privately negotiated capped call transactions (the "Capped Call Transactions") with affiliates of certain of the initial purchasers and certain other financial institutions (the "Option Counterparties"). The Capped Call Transactions have an expiration date of November 1, 2030 but may be redeemed earlier, subject to certain conditions.
The Capped Call Transactions cover, subject to anti-dilution adjustments substantially similar to those applicable to the 2030 Notes, the number of shares of common stock initially underlying the 2030 Notes. The Capped Call Transactions are expected generally to reduce the potential dilution to the holders of common stock upon any conversion of the 2030 Notes and/or offset any potential cash payments the Company is required to make in excess of the principal amount of converted 2030 Notes, as the case may be, with such reduction and/or offset subject to a cap. The cap price of the Capped Call Transactions will initially be $396.24 per share of common stock, which represents a premium of 100% over the last reported sale price of the common stock of $198.12 per share on November 5, 2025, and is subject to certain adjustments under the terms of the Capped Call Transactions.
The Capped Call Transactions are separate transactions (in each case entered into by the Company with the Option Counterparties), are not part of the terms of the 2030 Notes and will not change the holders' rights under the 2030 Notes. Holders will not have any rights with respect to the Capped Call Transactions. The Capped Call Transactions qualify for a scope exception from derivative accounting for instruments that are both indexed to the issuer's own stock and classified in stockholders' equity on our consolidated balance sheets.
The 2030 Notes and the Capped Call Transactions have been integrated for tax purposes. The impact of this tax treatment results in the Capped Call Transactions being deductible with the cost of the Capped Call Transactions qualifying as original issue discount for tax purposes over the term of the 2030 Notes.
Other Arrangements
We have posted surety bonds to support regulatory and contractual obligations for certain decommissioning responsibilities, projects and legal matters. We utilize surety bond facilities to support such obligations, but the issuance of surety bonds under those facilities is typically at the surety's discretion, and the surety bond facilities generally permit the surety, in its sole discretion, to terminate the facility or demand collateral. Although there can be no assurance that we will maintain our surety bond capacity, we believe our current capacity is adequate to support our existing requirements for the next 12 months. In addition, these surety bonds generally indemnify the beneficiaries should we fail to perform our obligations under the applicable agreements. We, and certain of our subsidiaries, have jointly executed general agreements of indemnity in favor of surety underwriters relating to surety bonds those underwriters issue. As of December 31, 2025, surety bonds issued and outstanding under these arrangements totaled approximately $363.0 million.
Similarly, we have provided letters of credit and bank guarantees to governmental agencies and contractual counterparties to support regulatory and contractual obligations for certain decommissioning responsibilities, projects and legal matters. We utilize our New Credit Facility and a bilateral letter of credit facility to support such obligations, but the issuance of letters of credit and bank guarantees under our bilateral letter of credit facility is at the issuer's discretion, and our bilateral letter of credit facility generally permits the issuer, in its sole discretion, to demand collateral if the issuer does not otherwise have the benefit of the collateral under our New Credit Facility. On May 14, 2025, we amended our bilateral letter of credit facility to increase the maximum aggregate amount to $75 million. Although there can be no assurance that we will maintain our bilateral letter of credit capacity, we believe our current capacity, together with capacity under our New Credit Facility, is adequate to support our existing requirements for the next 12 months. As of December 31, 2025, letters of credit and bank guarantees issued and outstanding under our bilateral letter of credit facility totaled approximately $48.7 million, and such letters of credit and bank guarantees are secured by the collateral under our New Credit Facility.
Other
Cash, Cash Equivalents, Restricted Cash and Investments
In the aggregate, our cash and cash equivalents, restricted cash and cash equivalents and investments increased by $424.3 million to $515.4 million at December 31, 2025 from $91.2 million at December 31, 2024, primarily due to the items discussed below. Our domestic and foreign cash and cash equivalents, restricted cash and cash equivalents and investments as of December 31, 2025 and 2024 were as follows:
| December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| (In thousands) | ||||||||||||||
| Domestic | $ | 501,259 | $ | 69,595 | ||||||||||
| Foreign | 14,188 | 21,585 | ||||||||||||
| Total | $ | 515,447 | $ | 91,180 | ||||||||||
Our working capital increased by $432.5 million to $888.3 million at December 31, 2025 from $455.8 million at December 31, 2024, primarily attributable to the change in cash and cash equivalents resulting from the issuance of long-term debt.
Our net cash provided by operating activities increased by $71.4 million to $479.8 million in the year ended December 31, 2025, compared to $408.4 million in the year ended December 31, 2024. The increase in cash provided by operating activities was primarily attributable to the timing of project cash flows offset partially by decreases in deferred tax liabilities and pension liabilities.
Our net cash used in investing activities increased by $587.5 million to $742.1 million in the year ended December 31, 2025, compared to $154.6 million in the year ended December 31, 2024. The increase in cash used in investing activities was primarily attributable to the acquisitions of A.O.T. and Kinectrics for $101.1 million and $434.5 million, respectively, net of cash acquired.
Our net cash provided by financing activities increased by $946.4 million to $693.6 million in the year ended December 31, 2025, compared to cash used in financing activities of $252.8 million in the year ended December 31, 2024. The increase in cash provided in financing activities was primarily attributable to the issuance of $1.25 billion of 2030 Notes offset partially by repayments on the Revolving Credit Facility and Term Loan and Capped Call Transaction premiums.
At December 31, 2025, we had long-term investments with a fair value of $8.2 million. Our investment portfolio consists primarily of corporate bonds and mutual funds.
Cash Requirements
We believe we have sufficient cash and cash equivalents and borrowing capacity, along with cash generated from operations and continued access to debt markets, to satisfy our cash requirements for the next 12 months and beyond.
Our cash requirements as of December 31, 2025 include the following contractual obligations:
| Total |
Less than 1 Year |
1-3 Years |
3-5 Years |
After 5 Years |
||||||||||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||||||||||
| Long-term debt principal | $ | 2,051,967 | $ | - | $ | 400,000 | $ | 1,650,000 | $ | 1,967 | ||||||||||||||||||||||
| Interest payments | $ | 132,000 | $ | 33,000 | $ | 66,000 | $ | 33,000 | $ | - | ||||||||||||||||||||||
| Lease payments | $ | 59,080 | $ | 9,079 | $ | 15,603 | $ | 10,503 | $ | 23,895 | ||||||||||||||||||||||
Our contingent commitments under letters of credit and surety bonds currently outstanding expire as follows:
| Total |
Less than 1 Year |
1-3 Years |
3-5 Years |
Thereafter | ||||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||||
| $ 413,006 | $ 193,721 | $ 193,506 | $ 25,779 | $ - | ||||||||||||||||||||||
Other cash requirements include, among other things, capital expenditures, payment of dividends, repurchases of common stock, capital contributions for joint ventures and contributions to our pension and other postretirement benefit plans.
Since 2017, we have made considerable investments in property, plant and equipment to support the growth of our Government Operations and Commercial Operations segments. Significant projects included the expansion of Government Operations facilities to support increased demand from the U.S. Government and the commercialization of our medical radioisotope technology and the expansion of our Cambridge, Ontario, Canada manufacturing plant for heavy commercial nuclear power equipment in our Commercial Operations segment. We expect these heightened spending levels to decline as these capital expansion projects are largely complete.
During the year ended December 31, 2025, we paid $92.5 million in dividends to holders of our common stock. The declaration and payment of future dividends will be at the discretion of our Board of Directors and will depend upon many factors, including our financial condition, earnings, capital requirements of our business, legal and regulatory requirements and other factors that our Board of Directors may deem relevant.
In April 2021, our Board of Directors authorized us to repurchase an indeterminate number of shares of our common stock up to an aggregate market value of $500 million. As of December 31, 2025, the total remaining share repurchase authorization was $347.6 million. See Item 5 of this Report for additional share repurchase information.
We expect cash requirements totaling approximately $12.7 million and $2.7 million for contributions to our pension plans and other postretirement benefit plans, respectively, in 2026.
BWX Technologies Inc. published this content on February 23, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on February 23, 2026 at 22:08 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]