BWX Technologies, Inc.

Ladies and gentlemen, welcome to BWXT Technologies' first quarter 2021 earnings conference call. At this time, all participants are in a listen-only mode. Following the company's prepared remarks, we will conduct a question and answer session, and instructions will be given at that time. I would now like to turn the call over to our host, Mark Kratz, BWXT's Vice President of Investor Relations. Please go ahead.

Thank you, Todd. Good morning and welcome to BWXT's first quarter of 2021 earnings call. Joining me today are Rex Jevedin, President and CEO, and David Black, Senior Vice President and CFO. On today's call, we will discuss certain matters that constitute forward-looking statements. These statements involve risks and uncertainties, including those described in the safe harbor provision found in yesterday's earnings release and the company's SEC filings. We will also discuss non-GAAP financial measures, which are reconciled to GAAP measures in the quarterly materials that are available on the BWXT website. With that, Rex, I will turn the call over to you.

Thank you, Mark, and good morning, everyone. Yesterday, we reported solid first quarter results with earnings of 73 cents per share on over half a billion dollars of revenue and strong operating cash flow. Year-over-year revenue and earnings comparisons are down slightly at the consolidated level, given a tough compare to a robust first quarter last year. However, 2021 performance to date is what we expected and just as we outlined on the last earnings call. BWXT is off to a swift start in 2021 with success on several significant milestones. So let me give you an update on those matters before turning the call over to David to discuss detailed financial results and guidance. The Nuclear Operations Group was awarded a $2.2 billion contract for the 2021-2022 pricing period from the Naval Nuclear Propulsion Program. The content for this award includes components and fuel for the continued cadence of the two Virginia-class submarines per year, as well as incremental Columbia work. Although the President's budget request for 2022 has not been released, we anticipate bipartisan support for the Navy's nuclear platforms and shipbuilding accounts. We look forward to additional budget information from the new administration in the coming weeks. Apart from the pricing agreement, we are reasonably facilitated to move to a three Virginia-class submarine cadence in non-sequential years if required, similar to the schedule from the Navy's most recent 30-year shipbuilding plan, assuming some delivery day flexibility. We await an updated 30-year plan, and in a scenario where a more condensed third Virginia ordering cadence is planned, then a modest amount of incremental capital investment would be required. Outside of naval reactors, NOG was awarded $57.5 million from the Department of Energy to design and stand up a pilot process for purifying enriched uranium into a safe metal form. This is new scope for BWXT, and it leverages the unique NRC Category 1 credentials, infrastructure, security, and workforce that could result in production orders in a few years once this capability is fully demonstrated. Lastly, this segment also announced two additional awards, totaling $35 million this quarter. The first awarded by Naval Reactors is for uranium recovery from scrap, waste, and unused product to be processed and reused. The second award from the Department of Energy is for completing the second phase of a new research reactor fuel line using high assay, low enriched uranium. another nonproliferation activity that BWXT will perform. In medical, we continue to make both strategic and tangible progress with the commercialization of the Technetium 99 generator product line. In March, we announced the formation of a joint venture with Global Medical Solutions, a leading centralized radiopharmacy operator and radiopharmaceutical manufacturer and distributor. The JV intends to manufacture and distribute BWXT radioisotopes and radiopharmaceuticals in the Asia Pacific region as we look to expand our go-to-market strategy. As noted in the press release, the new entity would replicate BWXT's Tech99 generator infrastructure and operations in Asia beginning in 2023. We view this agreement as another endorsement of BWXT's unique technology, and it lays the groundwork to capture global market share of Technetium 99, which is utilized in over 40 million diagnostic imaging procedures per year. On a related note, we continue to make significant progress on technetium-99 generator commercialization in North America. In April, we completed in-cell radiochemistry equipment installation, and for all practical purposes, we consider the radiochemistry line to be complete. We are also on track to complete the last major facility modifications this month, two important milestones that draw us closer to commercialization next year. The other two major components, the radiopharmaceutical and target delivery systems, are both progressing as planned. We anticipate having a fully manufactured target delivery system this month, and we will participate in a Canadian Nuclear Regulatory Commission public hearing in June to receive the anticipated approval for modifications to the OPG reactor for our equipment. In the first quarter, the team further reduced program risk by demonstrating a full pilot production run utilizing the BWXT generator. We took the process from start to finish, producing natural MOLLE targets, irradiating them at the Missouri University Research Reactor, processing the MOLLE-99, loading it into the BWXT design generator, and eluting technetium over the course of two weeks. The elution process demonstrated 95% generator efficiency, better than the requirements and other generators on the market today. In the services business, BWXT was awarded a $690 million contract extension for environmental management and cleanup work at the Portsmouth gaseous diffusion plant, further demonstrating the company's breadth and depth in nuclear waste management and commitment to environmental remediation efforts of the Department of Energy. The services business also wrapped up two more proposal submissions, including the Y-12 Pantex Management and Operations and Oak Ridge Reservation cleanup. We now have four large DOE proposals submitted and anticipate three of those contracts to be announced sometime later this year. And lastly, we achieved significant milestones with two microreactor design awards and BWXT's advanced technologies business. Most recently, NASA awarded the company additional scope for nuclear thermal propulsion. This extends our efforts with NASA for another year as the agency's nuclear thermal propulsion initiative begins to transition from development to technology demonstration. In March, the DoD's Strategic Capabilities Office down-selected and awarded BWXT a final design phase contract for a transportable micro-reactor prototype. This leaves BWXT as one of the two possible contractors for a full-scale demonstration in the years to come. BWXT's innovative designs and uniquely licensed facilities continue to deliver innovative nuclear solutions for the evolving mission requirements of the DoD, including the reduction of its carbon emissions. Following successful completion of the final design phase, the Strategic Capabilities Office would be in a position to award a demonstration phase. And beyond a prototype demonstration, the program could lead to a nuclear reactor production program to ensure that the DOE's domestic infrastructure is more resilient to electrical grid attacks and that energy logistics for unique defense applications are more simple and robust in the future. The early successes in micro-reactors underscore the company's robust capabilities in design, engineering, and manufacturing that position us well to compete for subsequent work as these first-of-a-kind solutions are developed for meeting power generation and mission requirements of the future. And with that, I will turn the call over to Dave.