Slides
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Our Purpose: We employ nuclear technology to solve some of the world’s most important problems Our Mission: We provide safe and effective nuclear solutions for global security, clean energy, environmental remediation, nuclear medicine, and space exploration Commitment to innovation, operational excellence, a strong safety record, and a focus on ensuring the highest ESG standards BWXT to Acquire Kinectrics January 7, 2025
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Our Purpose: We employ nuclear technology to solve some of the world’s most important problems Our Mission: We provide safe and effective nuclear solutions for global security, clean energy, environmental remediation, nuclear medicine, and space exploration Commitment to innovation, operational excellence, a strong safety record, and a focus on ensuring the highest ESG standards Forward-Looking Statements Disclaimer 2 BWX Technologies, Inc. (“BWXT”) cautions that statements in this presentation that are forward-looking and provide other than historical information involve risks and uncertainties that may impact actual results and any future performance suggested in the forward-looking statements. The forward-looking statements in this presentation include, but are not limited to, statements relating to our 2024 and future strategic priorities, including U.S. Navy procurement, microreactors, advanced nuclear fuels, medical radioisotope industrialization, small modular reactor components, recent acquisitions and organic growth opportunities; statements related to backlog, to the extent they may be viewed as an indicator of future revenues; the expected U.S. Navy long-term procurement schedules and forecasts; estimated pension costs; expected future capital expenditure levels; the expected Canadian nuclear power forecast for services, refurbishment timelines and opportunities; disruptions to our supply chain and/or operations, changes in government regulations and other factors; our outlook, priorities and growth opportunities in our businesses; and guidance for 2024 and beyond. These forward-looking statements are based on current management expectations and involve a number of risks and uncertainties, including, among other things, federal budget uncertainty, the risk of future budget cuts, the impact of continuing resolution funding mechanisms and the debt ceiling, the potential for government shutdowns and changing funding and acquisition priorities; our ability to win new project awards; the receipt and/or timing of government approvals; capital spending of power generating utilities; the timing of technology development, regulatory approvals and automation of production; the potential recurrence or subsequent waves or strains of COVID-19 or similar diseases; the actions to contain the impact of such diseases and potential employee unrest; adverse changes in the industries in which we operate; labor market challenges, including employee retention and recruitment; termination, delays and other difficulties executing on contracts in backlog and adverse changes in the demand for or competitiveness of nuclear products and services. If one or more of these or other risks materialize, actual results may vary materially from those expressed. For a more complete discussion of these and other risks, please see BWXT’s filings with the Securities and Exchange Commission, including our most recent annual report on Form 10-K and subsequent quarterly reports on Form 10-Q. BWXT cautions not to place undue reliance on these forward-looking statements, which speak only as of the date of this presentation, and undertakes no obligation to update or revise any forward-looking statement, except to the extent required by applicable law.
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Our Purpose: We employ nuclear technology to solve some of the world’s most important problems Our Mission: We provide safe and effective nuclear solutions for global security, clean energy, environmental remediation, nuclear medicine, and space exploration Commitment to innovation, operational excellence, a strong safety record, and a focus on ensuring the highest ESG standards 3 BWXT to Acquire Kinectrics Mission-critical, full-lifecycle service offering for commercial nuclear customers in North America and Europe Leading producer of medical isotopes, including Lutetium-177, critical to emerging cancer treatments Multi-decade, trusted relationships with the leading customers in key sectors Talented work force with significant nuclear expertise; unique and licensed facilities for nuclear testing & analysis Leading nuclear services company Comprehensive services portfolio Broad customer base New and existing nuclear partners Expands Commercial Operations Segment and Exposure to Commercial Nuclear and Nuclear Medicine Extensive Portfolio of Nuclear Services Materials & Major Components Design & Engineering Services Inspection, Maintenance & Radio Chemistry Nuclear Materials Management Raw Material Sourcing and Enrichment Isotope Irradiation Services Transmission & Distribution Efficiency & Reliability Nuclear Equipment Solutions Nuclear Safety & Licensing Nuclear Decommissioning Technologies Nuclear Equipment Solutions
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Our Purpose: We employ nuclear technology to solve some of the world’s most important problems Our Mission: We provide safe and effective nuclear solutions for global security, clean energy, environmental remediation, nuclear medicine, and space exploration Commitment to innovation, operational excellence, a strong safety record, and a focus on ensuring the highest ESG standards 4 Combined Company Fills Out a Lifecycle Offering Fuel / Fuel Handling Systems Safety & Licensing Heavy Equipment Manufacturing Nuclear Decom- missioning Transmission Efficiency, Reliability & Safety Combined Businesses Cover Full Spectrum of Commercial Nuclear Products and Services for Existing and New Infrastructure Distribution Efficiency, Reliability & Safety Used Fuel and Waste Management Solutions Isotope Processing and Drug Manufacturing Raw Materials Sourcing and Enrichment Life Extension Engineering Life Extension Equipment Repair and Replacement Commercial Nuclear Power Offering for New & Existing Reactors (Large Scale & SMRs) Nuclear Medicine Front End Life Of Plant End of Life Reactor Output Medical IsotopesPower Isotope Irradiation Services Isotope Production Systems Life Cycle Engineering Services Inspection, Field Services & Maintenance Plant Systems Engineering Components and Equipment Design
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Our Purpose: We employ nuclear technology to solve some of the world’s most important problems Our Mission: We provide safe and effective nuclear solutions for global security, clean energy, environmental remediation, nuclear medicine, and space exploration Commitment to innovation, operational excellence, a strong safety record, and a focus on ensuring the highest ESG standards 5 Strategic Rationale Aligned With Stated M&A Goals Pro Forma Revenue by Segment(1) (1) Based on BWXT 2024 guidance provided on November 4, 2024; estimated Kinectrics 2024 revenue as of January 7, 2025 (2) Excluding purchase accounting amortization and one-time acquisition and integration costs Aligned with core competencies in core markets Accelerates innovation and time to market Drives competitiveness and customer value Significant IP and process knowledge Modestly Accretive to EPS(2) in year 1 Demonstrated sustainable organic growth + Government Operations Commercial Operations Government Operations Commercial Operations Government Operations Commercial Operations ~$3.0B ~$2.7B Enhances BWXT’s Position in Canadian Nuclear Market Expanding TAM with Broader Services Portfolio Diversifying Geographic and Customer Mix
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Our Purpose: We employ nuclear technology to solve some of the world’s most important problems Our Mission: We provide safe and effective nuclear solutions for global security, clean energy, environmental remediation, nuclear medicine, and space exploration Commitment to innovation, operational excellence, a strong safety record, and a focus on ensuring the highest ESG standards 6 Transaction Details Purchase Price o Purchase price, including estimated transaction expenses and assumption of Kinectrics net pension and debt liabilities, of approximately $525M o Expected to be nearly 14x 2024E adjusted EBITDA (1) Net leverage = (total debt – cash) / adjusted EBITDA Financing o Acquisition funded through BWXT revolver draw and the assumption of existing Kinectrics debt and net pension liabilities o Expected net leverage ratio at close of ~2.75x (1) Timing o Expected to close in the middle of 2025 Organization & Leadership o Kinectrics to operate as a business unit within Commercial Operations segment o Management team remaining with BWXT post-close to help execute on a robust pipeline of existing and joint opportunities
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Our Purpose: We employ nuclear technology to solve some of the world’s most important problems Our Mission: We provide safe and effective nuclear solutions for global security, clean energy, environmental remediation, nuclear medicine, and space exploration Commitment to innovation, operational excellence, a strong safety record, and a focus on ensuring the highest ESG standards 7 Kinectrics Medium-Term Outlook Supported by Mega-Trends Nuclear Medicine Adjusted EBITDA margins consistent with Commercial Operations Anticipate modest EPS accretion in Year 1 post-close(3) Targeting incremental FCF in Year 1 post-close(4) Kinectrics’ Adjusted EBITDA Growth Commercial Nuclear (1) International Atomic Energy Agency, BWXT Estimates (2) ©MEDraysintell Nuclear Medicine Report & Directory Edition 2022, www.medraysintell.com. (3) Excluding purchase accounting amortization and one-time acquisition and integration costs (4) Incremental FCF guidance includes one-time minor pension pre-funding agreed to with seller CANDU life-extensions / new-build; Canada and globally + Current SMR Additions Large Nuclear Additions 2050E Forecast Nuclear Generating Capacity in North America and Europe, GW(e)(1) o United Nations pledge to triple nuclear capacity o Heightened demand from non-traditional, green energy focused customers Global and Energy Security Electrification and Decarbonization Appetite for Novel Nuclear Applications Nuclear Medicine Market, ($B)(2) Poised for Robust Growth 2021E 2026E 2031E $6 $35 $14 Therapeutic CAGR 35% Diagnostic CAGR 7% Total CAGR 19% Large reactor-life extensions / new-build+ SMR new-build+ Grid reliability / aging T&D infrastructure + Radiotherapeutic drug development + Isotope production innovation + Mid-to-High Single Digit CAGR Secular Trends Significant Market Potential Medium-Term Drivers ~$40M HSD Growth 2024E 2025E Medium-Term
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Our Purpose: We employ nuclear technology to solve some of the world’s most important problems Our Mission: We provide safe and effective nuclear solutions for global security, clean energy, environmental remediation, nuclear medicine, and space exploration Commitment to innovation, operational excellence, a strong safety record, and a focus on ensuring the highest ESG standards Improves position in growing Canadian nuclear market while also expanding BWXT’s commercial presence globally Acquisition of a premium commercial nuclear asset at solid acquisition multiple, allowing modest EPS accretion (1) and comparably strong margins, and medium-term growth Magnifies market opportunity with broader product portfolio amid ecosystems’ need for reliable partners Increases BWXT’s global workforce to ~10,000 and expands facility capacity to better serve global nuclear customers Extends front end capability for BWXT’s nuclear medical isotope production strategy, particularly in growing field of Lutetium-based therapeutics Key Takeaways (1) Excluding purchase accounting amortization and one-time acquisition and integration costs Expanding the Commercial Operations segment and enhancing exposure to growing commercial nuclear and nuclear medicine markets 8
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Appendix Non-GAAP reconciliations
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Our Purpose: We employ nuclear technology to solve some of the world’s most important problems Our Mission: We provide safe and effective nuclear solutions for global security, clean energy, environmental remediation, nuclear medicine, and space exploration Commitment to innovation, operational excellence, a strong safety record, and a focus on ensuring the highest ESG standards 10 Non-GAAP definitions Non-GAAP figures exclude any mark-to-market adjustment for pension and postretirement benefits recognized and other one-time items. Other non-GAAP definitions and calculations Non-GAAP Earnings Per Share (EPS) = GAAP EPS less the non-operational tax effected per share impact of pension & OPEB mark-to-market gains or losses and other one-time items, such as restructuring, transformation, and acquisition-related costs. Adjusted EBITDA = Earnings Before Interest, Taxes, Depreciation and Amortization. Calculated using non- GAAP Net income, plus Provision for Income Taxes, less Other – net, less Interest income, plus Interest expense, plus Depreciation and amortization. FCF = Free Cash Flow. Calculated using net income to derive Net Cash Provided By (Used In) Operating Activities less Purchases of property, plant and equipment. FCF Conversion = Free Cash Flow Conversion. Free Cash Flow divided by net income
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Our Purpose: We employ nuclear technology to solve some of the world’s most important problems Our Mission: We provide safe and effective nuclear solutions for global security, clean energy, environmental remediation, nuclear medicine, and space exploration Commitment to innovation, operational excellence, a strong safety record, and a focus on ensuring the highest ESG standards 11 2023 non-GAAP reconciliations Operating Income (GAAP) Non-GAAP Adjustments Depreciation & Amortization Adjusted EBITDA Government Operations 374.7$ 1.4$ 53.4$ 429.4$ Commercial Operations 37.5$ 4.7$ 17.7$ 60.0$ Government Operations Margin 18.4% 21.1% Commercial Operations Margin 8.0% 12.9% For the Twelve Months Ended December 31, 2023 GAAP Restructuring & Transformation Costs Acquisition Related Costs Pension & OPEB MTM (Gain) / Loss Non-GAAP Operating Income 383.1$ 9.6$ 0.7$ -$ 393.3$ Other Income (Expense) (61.7) - - 30.8 (30.9) Income before Provision for Income Taxes 321.4 9.6 0.7 30.8 362.4 Provision for Income Taxes (75.1) (1.7) (0.2) (7.1) (84.1) Net Income 246.3 7.8 0.5 23.7 278.4 Net Income Attributable to Noncontrolling Interest (0.5) - - - (0.5) Net Income Attributable to BWXT 245.9$ 7.8$ 0.5 23.7 277.9$ Diluted Shares Outstanding 91.9 91.9 91.9 91.9 91.9 Diluted Earnings per Common Share 2.68$ 0.09$ 0.01$ 0.26$ 3.02$ Effective Tax Rate 23.4% 23.2% Government Operations Operating Income 374.7$ 1.1$ 0.3$ -$ 376.1$ Commercial Operations Operating Income 37.5$ 4.6$ 0.1$ -$ 42.2$ Unallocated Corporate Operating Income (29.2)$ 3.9$ 0.3$ -$ (25.0)$ For the Twelve Months Ended December 31, 2023