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| Statement |
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| In the second quarter, we were successful, let’s say, at recovering that and then a little more |
| In Government Operations fourth quarter revenue was up 16% to $602 million, driven by growth in nearly all of our business lines |
| We reported a very strong 16% organic revenue growth in the fourth quarter, with double-digit growth in both segments |
| As I mentioned, we believe we have turned the corner and are now at a point where we will see steady increases in free cash flow growth ahead |
| Demand trends across our global security, clean energy and medical end markets remain strong and our unique capabilities and infrastructure position us well to benefit from these trends |
| This includes double-digit EBITDA growth in our government operations segment and a turn to positive EBITDA at BWXT Medical |
| As we expected, free cash flow for the year was a robust $212 million, a fact of which we are proud as we have increased focus and improved processes around working capital management |
| Our efforts here may take time to fully pay off, but we are making good progress and will continue to drive this priority through the business, underpinning our good financial performance and not always as visible, we are pleased to have achieved some important operational goals in the quarter and throughout the year |
| We achieved key operational and business development objectives and our end markets continued to gain momentum |
| The diagnostic side of the portfolio, where we have germanium-strontium is growing very strongly |
| We’ve got the workforce now as we talked about hiring 10% net workforce overall as a company really is going to allow us to grow the top line nicely in 2024 in all of our business lines in Geo, but particularly in the ones I’ve named as well as just the core shipbuilding naval propulsion business |
| Commercial Operations revenue is expected to grow in the high single to low double digits with solid growth in commercial nuclear complemented by accelerating growth in medical |
| These are highly technical programs where BWXT has a unique competitive advantage given its licensing and experiential qualifications, further strengthening our position in the nuclear industry and driving future growth |
| And TheraSphere, which is a contract manufactured product for Boston Scientific continues to kind of gallop along and compound at a 10% rate, so really, all the products across the portfolio growing quite nicely |
| Notably, we completed the missile tubes program on a strong footing despite some challenges along the way |
| In the fourth quarter, we finished better than expected delivering a positive final EAC related to that close out, in addition to a final settlement with our customer to account for the previous cost growth that was driven by out of scope changes and absorbed by BWXT over the past couple of years |
| Finally, we continue to see the benefits from our intense focus on operational excellence initiatives throughout the organization, including remarkable gains in operational equipment effectiveness and the use of digital tools and supply chain management to drive solid underlying margin performance |
| Turning to our Commercial Operations segment, growth prospects remain strong, in our commercial nuclear power group, we continue to see robust demand for our market leading manufacturing, engineering and design and field services capabilities |
| The increase was largely driven by improved profitability in medical |
| In Commercial Operations revenue was up 16%, driven by increases in commercial nuclear field services and nearly 40% medical growth |
| First, I will note that while we recognize the missile tube recovery in the fourth quarter of 2023, last year’s fourth quarter also benefited from strong EAC performance |
| We also continue to see growing demand in the SMR market, where we are well positioned as a merchant supplier, which we will talk more about at Investor Day tomorrow |
| At BWXT Medical, growth in our base diagnostic and contract drug manufacturing business remained strong in the fourth quarter and throughout last year |
| Full year revenue in that business was just over $70 million, which is a strong 25% growth compared to 2022 |
| As we have discussed previously, we continue to see healthy demand for our diagnostic isotopes and expect similar growth in 2024 that will be complemented by increasing sales of therapeutic isotopes such as actinium and lutetium, as our customers work to bring novel cancer treating therapeutic drugs to the market |
| So overall, we had a great 2023 with strong financial performance |
| To sum it up, we had another solid quarter to end a strong year and expect continued growth in 2024 |
| It was a strong finish to a record year for BWXT with all guidance metrics at or above the targets we originally set |
| This was driven by strong working capital management and some modest positive collections late in the quarter that ultimately led to a solid beat versus our initial target of about $200 million that we provided in early 2023, which was the first time we had guided free cash flow in our history |
| Free cash flow was certainly a bright spot for us in the quarter and we believe that we have now turned the corner and we’ll see an upward climb in free cash flow |
| Statement |
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| Full year 2023 adjusted EPS was $3.02, down from $3.13 in 2022 |
| The elements that contributed to the modest year-over-year margin decline were: One, outsized growth in our cost reimbursable microreactor projects and in our new special materials programs, two, we continued to experience labor inefficiencies related to the rapid growth of our workforce and three, on a relative basis, we had a modestly lower contribution from technical services income |
| Government Operations EBITDA margin was 21.8%, down slightly from 22.4% in the fourth quarter of 2022 |
| However, our consolidated adjusted EBITDA margin in the quarter was slightly lower compared to last year |
| That’s – those are cost reimbursable programs, so that’s one of the sort of drags on margin |
| The impacts of program mix and the absence of any recoveries we experienced in 2023 in the non-naval components business will lead to slightly compressed Government Operations margin on a year-over-year basis |
| We had some findings from the FDA and some issues to work down, including some equipment modifications to run some reference batches and all that sort of thing |
| This led to fourth quarter adjusted earnings per share of $1.01, up 8% compared to last year, and full year adjusted earnings per share of $3.02, down slightly from last year, as operating earnings growth was more than offset by non-operating items such as lower pension income reported in other income and higher interest expense |
| I will remind you that corporate costs in 2022 was unusually low, because of retirements, healthcare underruns and captive insurance releases |
| But to the extent that our government programs are affected by continuing resolutions or stalling out actions on appropriations |
| But our new program, right, so that has implications also, which we talk about from a top line and a margin perspective |
| Although, this was offset by the lower pension income and higher interest expense that I previously mentioned |
| That was partially offset by lower commercial nuclear component volume, mainly because of timing |
| And then I guess, Robb, just as we think about 2024 and specifically the revenue growth in government, I think the initial view may have been a little bit more conservative |
| And if just like last year, right, certain items fell out |
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