BWX Technologies, Inc. — Call Transcript 2025

Ladies and gentlemen, welcome to BWX Technologies' second quarter 2025 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, Chase Jacobson, BWXT's Vice President of Investor Relations. Please go ahead, sir. Thank you. Good evening and welcome to today's call. Joining me are Rex Geveden, President and CEO, and Mike Fitzgerald, Senior Vice President and CFO. On today's call, we will reference the second quarter 2025 earnings presentation that is available on the Investors section of the BWXT website. We will also discuss certain matters that constitute forward-looking statements. These statements involve risks and uncertainties, including those described in the Safe Harbor provision found in the investor materials in the company's SEC filing. We will frequently discuss non-GAAP financial measures, which are reconciled to GAAP measures in the appendix of the earnings presentation that can be found on the Investors section of the BWXT website. I would now like to turn the call over to Rex. Thank you, Chase, and good evening to all of you. First, I would like to welcome Mike Fitzgerald, our CFO, to the call. Mike has been with BWXT since 2022 and previously held the roles of Chief Accounting Officer, Head of Finance, and CFO of Government Operations. He is deeply ingrained in our business, is a trusted resource for the entire executive team, and I'm happy to have him on the call with us today. Now, turning to our results and a discussion of our markets and outlook, second quarter financial results exceeded our expectations, driven by strong execution and pacing of work in Government Operations. Our second quarter financial results featured double-digit adjusted EBITDA and earnings per share growth and robust free cash flow. We closed the acquisition of Kinectrics in May. Kinectrics brings a workforce of over 1,300 employees and significantly broadens our life-of-plant services capabilities in the nuclear power and energy infrastructure markets, enabling us to offer an even broader range of services to the market. Demand across the global security, clean energy, and medical end markets is accelerating. Backlog grew to $6 billion, up 23% quarter-over-quarter and 70% year-over-year with growth in both segments. Organic book-to-bill was 2.2 in the quarter, and the pipeline of new opportunities in government and commercial operations is expanding. Turning to segment results and market outlook, Government Operations revenue was up 9% and adjusted EBITDA up 23%, exceeding our expectations. Results were driven by strong execution, particularly within the special materials portfolio, the A.O.T. acquisition, and timing of material procurement. The naval propulsion business is focused on driving operational excellence and maintaining production pace on our franchise submarine and aircraft carrier programs. As we announced last month, we signed the next pricing agreement for naval nuclear reactor components. The agreement is valued at $2.6 billion over the next eight years, primarily related to Virginia and Columbia-class submarines and certain components for Ford-class aircraft carriers. We booked over $1 billion in orders on this contract in the second quarter, driving Government Operations backlog to $4.4 billion, up 24% sequentially, and up 55% compared to the second quarter of last year. This contract follows a $2.1 billion pricing agreement we signed in late 2024, which, combined with the administration's focus on naval shipbuilding and the submarine industrial pace, supports our longer-term forecast of a 3%-5% revenue caveat in this line of business. Special materials remains one of the most exciting growth stories at our company. We had strong performance on legacy contracts during the quarter, and our growth prospects are brightening. The experiential qualifications and unique licenses we possess are well-matched with national security missions and position us to satisfy strategic priorities for our customers. We have nearly completed the one-year engineering study for defense uranium enrichment using the [dual use] technology to satisfy naval fuel and national security needs under contract to the NNSA. Our current focus is responding to the sole source RFP issued in April for the next phase of this program, which includes design, licensing, and construction of a pilot plant. Additionally, we are working with the NNSA on long-term production of high-purity depleted uranium in quantities that exceed our business case expectations for the A.O.T. acquisition. We are also tracking several advanced nuclear fuel opportunities intended for defense and commercial application. We will keep you posted as these prospects take shape. In microreactors, we began manufacturing the reactor core for Pele, a land-based transportable microreactor. Pele has received strong support in recent government funding bills and is highly aligned with the President's National Security Executive Order titled "Deploying Advanced Nuclear Reactor Technologies" that directs the DOD to commence operations of a nuclear reactor by September 2028. As Pele progresses and the advanced fuel supply chain grows, there are multiple emerging opportunities that BWXT is well positioned to capture. In technical services, results are strong in site operational performance and in contract wins. Operating income from this business line was up over 20% compared to the average quarterly rate over the last year, and we are on track to outpace that growth for the full year. This is driven by the ramp at Pantex and Hanford, both of which began in 2024, and newer projects such as West Valley and the Strategic Petroleum Reserve, the latter of which is expected to commence in the second half of the year. From a new business perspective, Atomic Energy Canada Limited selected Nuclear Laboratory Partners of Canada, a BWXT-led joint venture which also includes Kinectrics, to manage and operate Canadian nuclear laboratories, our first international project in this line of business. The annual contract value is about CAD 1.2 billion with an initial term of six years and extensions for up to 20 years. We are in the preferred bidder period and expect to transition to a contract start date late in the third quarter. Turning to commercial operations, reported revenue growth was 24%. On an organic basis, revenue was down 3% and largely in line with our expectation as double-digit growth in medical was offset by a modest decline in commercial power due to the timing of outage and maintenance projects as we discussed last quarter. Backlog in the segment grew to $1.6 billion, including about $240 million from the Kinectrics acquisition. On an organic basis, book-to-bill in the quarter was 1.3. Importantly, this was driven by a multitude of contracts for existing nuclear power infrastructure, highlighting the strong underlying base of revenue in our portfolio and supporting our full-year outlook for mid-teens organic growth and over 50% growth, including contribution from Kinectrics. BWXT Medical delivered a solid quarter with double-digit revenue growth driven by the PET diagnostic product lines and TheraSphere. Robust demand signals for the diagnostic and therapeutic isotopes support the outlook for over 20% growth this year. In product development, the Canadian Nuclear Safety Commission approved the irradiation of U-3M-90 and Lutetium-177 using the target delivery system with Laurentis Energy Partners at the Darlington site. On PET 99, as we discussed last quarter, we've been perfecting the product attributes. Encouragingly, we have line of sight to address the final technical issues that are typical in the scale-up and industrialization phase of complex projects, and I am quite encouraged by our progress. Given the timing, I don't expect a product launch this year, but customer appetite remains strong, and this will be an important addition to our fast-growing portfolio of medical isotopes. Turning now to commercial power, where demand is accelerating rapidly. In the CANDU market, we have talked in depth about the opportunities in the ongoing life extensions and the potential for large-scale new builds. Ontario Power Generation and Bruce Power are evaluating options to expand their nuclear reactor fleets to meet increasing electricity demand in the region. While these projects are in the planning stages, BWXT and Kinectrics are trusted partners in the Canadian nuclear market and are engaging with these utilities now. For the AP1000, we are bidding on component engineering and manufacturing contracts across a global opportunity set. There continues to be good momentum in the SMR market. In July, the NRC accepted TVA's construction permit application to build the GE Hitachi BWRX-300 at Clinch River in Tennessee, with the review expected to be complete by the end of next year. This would be a giant step in the U.S. SMR market and would complement the progress in Canada at the Darlington site for which BWXT is manufacturing the reactor pressure vessel and other important components potentially. In addition to our work with GE Hitachi, we are also working with TerraPower, Rolls-Royce, and others as we anticipate multiple follow-on orders in the coming years. Our long history of manufacturing large complex nuclear components and existing and expanding capacity position us as a super emergent supplier to the SMR market. With that, I will now turn the call over to Mike. Thank you, Rex, and good evening, everyone. Very happy to be here. I've had a chance to meet with a number of you recently, and I look forward to meeting with more of you in the coming months. I'll start with some total company financial highlights on slide four of the earnings presentation. Second quarter revenue was $764 million, up 12% with growth in both segments. Excluding contributions from acquisitions, organic revenue was up 4%. Adjusted EBITDA was $146 million, up 16% year-over-year, driven by robust double-digit growth in government operations, which was partially offset by lower adjusted EBITDA in commercial operations. Corporate expense was lower compared to last year, and we continue to expect corporate adjusted EBITDA expense in 2025 to be slightly lower than the $16.8 million reported last year. Adjusted earnings per share were $1.02, up 24%, driven by strong operating performance, complemented by a lower tax rate, foreign currency gains, and higher pension income, which were partially offset by higher interest expense due to debt associated with the Kinectrics and A.O.T. acquisitions. Our adjusted effective tax rate was 20% for the quarter, which was lower than anticipated due to various tax credits, as well as higher stock compensation expense. Given the lower second quarter tax rate, we now expect our full-year tax rate to be approximately 21%. This yields a second half tax rate of approximately 22.5%, which is more in line with our expectation of our tax rate going forward. Free cash flow in the quarter was a robust $126 million, driven by good working capital management. Capital expenditures in the quarter were $33 million, or 4.3% of sales, due to timing of growth investments being more back half weighted during the year. We now expect capital expenditures to be 5.5%-6% of sales for the year, driven by investments to meet growing end market demand, including the ongoing expansion of our Cambridge Commercial Nuclear Manufacturing Facility and infrastructure investments related to defense fuels and government operations. Moving now to segment results on slide six. In government operations, second quarter revenue was up 9%, driven by growth in naval propulsion, timing of material procurements, special materials performance, and just over 2% contribution from the A.O.T. acquisition. Adjusted EBITDA was up 23% year-over-year to $133 million, yielding an adjusted EBITDA margin of 22.6%. This was driven by favorable mix, strong operating performance, and favorable contract performance in our special materials portfolio. We continue to expect government operations to generate mid-single-digit revenue growth in 2025. However, with stronger margin performance in the first half, we now anticipate adjusted EBITDA margin to be approximately 20.5% for the year. Turning to commercial operations, revenue was $176 million, up 24% year-over-year, driven by contribution from the Kinectrics acquisition and double-digit growth in medical, which was partially offset by a modest decline in commercial power, as Rex discussed. Excluding Kinectrics, organic revenue was down 3%. Specific to commercial power, while we had strong revenue growth in components work on the BWRX-300 reactor pressure vessel and Pickering steam generators, this was more than offset by the expected decline in field services due to timing of key outage and maintenance projects during the year. Adjusted EBITDA in the segment was $16 million compared to $23 million last year. This resulted in an adjusted EBITDA margin of 9.2%. While we had solid margin performance in commercial power components and fuel, this was offset by the decline in field services and growth investment to match the robust market demand. To provide some additional perspective, within commercial power, field services, one of our higher margin business lines, was just over 10% of revenue in the quarter, down from over 35% in the same period last year. This unfavorable mix accounted for over half of the year-over-year margin decline, with the remainder due to unfavorable absorption of higher SG&A, given lower revenue in the quarter. At the segment level, we now expect commercial operations revenue to grow over 50%, with mid-teens organic growth complemented by the Kinectrics acquisition. However, adjusted EBITDA margin is expected to be 13.5%-14% compared to the low end of 14%-15% previously due to growth investment and modestly higher contribution from Kinectrics. Still, our guidance implies significantly improved results in the second half of the year, with higher revenue, more favorable mix, and the absence of commodity price pressure that acutely impacted our first quarter results. Turning now to our 2025 total company guidance on slides seven and eight of the earnings presentation. We are raising our guidance for revenue, adjusted EBITDA, and earnings per share and increasing the low end of our free cash flow guidance. We now anticipate revenue of approximately $3.1 billion, with modestly better revenue assumptions across the business, as well as contributions from a slightly earlier close of the Kinectrics acquisition. Accordingly, we're raising our adjusted EBITDA guidance to $565 million-$575 million, up $10 million at the midpoint, as the stronger operational performance in government and slightly higher revenue in commercial is partially offset by mix and growth investment, as I previously discussed. These changes to our operating outlook, combined with a lower tax rate and better pension and other income, yield an increase in our adjusted EPS guidance to $3.65-$3.75 per share. This is up about $0.23 at the midpoint compared to our original guidance, with half of the increase driven by operations and half by the non-operating items I previously discussed. Lastly, we are increasing our free cash flow guidance to $275 million-$285 million, up $10 million at the low end, as higher income and benefits from tax legislation are partially offset by a slightly higher CapEx. Overall, we had a strong second quarter and are well positioned to meet our increased guidance for the year. With that, I will turn it back to Rex for closing remarks. Thanks, Mike. Over the past decade, as a standalone public company, BWXT has invested both organically and inorganically to enhance our capabilities in the nuclear market. We have built significant industrial scale, and our customers are increasingly relying on BWXT to meet their needs. We have had a strong start to the year, both financially and strategically. Our backlog is at a record level, demand across our end markets is accelerating, and our intense focus on operational excellence positions us well to continue to drive shareholder value in the years ahead. We look forward to taking your questions. Thank you. We will now begin the question-and-answer session. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again. If you are called upon to ask your question and are listening via speakerphone on your device, please pick up your handset to ensure that your phone is not on mute when asking your question. We do request for today's session that you please limit to one question and one follow-up question. Again, press star one to join the queue. Our first question comes from the line of Scott Deuschle with Deutsche Bank. Your line is open. Hey, good evening. Mike, the 10-Q flags a $29 million favorable contract adjustment, I think, on nuclear operations. Can you clarify any more what that relates to and if any of that was assumed in the original guide? Yeah, thanks, Scott. The $29 million, as you mentioned in the 10-Q, relates to one of the special materials contracts. Rex mentioned we had strong operating performance in special materials. Scott, as you know, we look at a number of different potential opportunities as it looks to those contracts. A portion of that was included in the guide, but I would say it was a little bit more favorable than we had originally anticipated. I would say a part of it we assumed in our original guidance. Okay, great. Rex, do you see any opportunity for BWXT to secure some level of content on new build AP1000s that may be built at some point in the U.S.? If so, what type of content would the company be able to compete for on those reactors? Yeah, I do, Scott. We have, in fact, we have an MOU with Westinghouse to potentially manufacture certain components for the AP1000, you know, in the U.S. market and potentially in other markets. What we would do there is what we, similar to what we do on CANDU, we're qualified for pressure components, high-pressure components like steam generators, heat exchangers. We could make that reactor pressure vessel in our Cambridge plant. There's a lot there. I think, you know, as industrial capacity starts to stretch, we might have, you know, some really interesting opportunities there. Okay. Just to clarify, could your content on that potentially be as large as CANDU, or would it be still materially smaller? Yeah, I'm not sure if I'd go that far. We'll have to see how that unfolds. For CANDU, of course, we typically get all the steam generators, most of the heat exchangers, feeders, and other such content. I'd say it's the same kind of scope of equipment, but I don't know if we would sort of run the table like we do at CANDU. Okay, thank you. Thank you. Our next question comes from the line of Jeff Campbell with Seaport. Your line is open. Good afternoon, and congratulations on the strong quarter. I thought I'd start with one kind of high-level question, and then I got a specific for the second. I thought the appointment of Kevin McCoy to the Chief Nuclear Officer was clearly important, but it's not clear to me how he will influence bottlenecks that don't historically reside at BWXT. Any high-level commentary you can provide there is certainly appreciated. Yeah, Jeff, I didn't quite catch the question. Would you be good enough to repeat it? Sure. I was saying that I noted Kevin McCoy's appointment to Chief Nuclear Officer with interest, but I wasn't really sure what his mandate will be since BWXT is usually not the point of dragging when we have difficulties getting these projects through. Just any commentary that you can provide on how he's going to influence the. I got you now, Jeff. Thank you. Right. Okay. I understand the question now. You're quite correct in the way that title is normally used. Let me just say that that's a bit of a sort of a holding place for Kevin. The reason for that is that Kevin is seconded to the Department of Defense to help with Deputy Secretary of Defense and the Secretary of the Navy with nuclear shipbuilding. He remains an executive employee of BWXT, but he's fully under contract to the Navy. That's the title that he's holding while he's occupying those positions with the Navy. In the meantime, we promoted Joe Miller up into President of Government Operations to replace Kevin. It's all part of that dynamic. Okay. Yeah, that makes a lot more sense. My other question was slide seven, the government operations margins of approximately 20.5%. That seems well above prior guidance. I just wondered if you could pinpoint some drivers of this improvement and maybe their durability. Thanks. Yeah. Gross margin for the quarter was impacted by the EAC for the special materials contract that we just mentioned. We also had some really good pacing of work, as well as some of the timing of materials that was good from an overall margin standpoint. I mean, overall, I would say we're comfortable and we're happy with some of the efficiencies and utilizations that we're seeing at the plants. We think, and we'll continue to focus on that from a margin standpoint to create some long-term sustainability there. We'll see continued strong performance for the rest of the year, and we'll give you more clarity around what we're expecting in 2026 next quarter. Okay, great. Thank you. Next question comes from the line of Robert Labick with CJS Securities. Your line is open. Good afternoon. Thanks for taking my questions, and congrats to Mike on his new role. Thank you. Sure. I wanted to start, Rex, you mentioned this in your prepared remarks, but you had the recent approval by the CNSC to irradiate yttrium and lutetium in your target delivery system. Can you talk about the opportunity there and what are the next steps and what it'll take for you to get that through, done, and produce commercial material? Sure, Bob. Yeah, we're doing that in partnership with Laurentis Energy Partners, as I said in the script. The qualification of those products is really up to our partner. They're the ones that have developed the contracts to produce that material for certain clients, so we have a bit of a passive role there. We did design and deploy that target delivery system, so it'll be a loyalty opportunity for us. Okay, great. Just switching gears a little bit for my follow-up. You have, you know, a tremendous amount of opportunities ahead of you. Talked about the DOD SMR growth, Pele build-out, et cetera. Talk about capital allocation. How do you prioritize, you know, capital into each of these? What are the big amounts of capital that you need to deploy over the next 5-10 years for any of these or other opportunities and how you allocate? Yeah, maybe I'll start and then flip it over to Mike. We've given broad guidance that 4% for maintenance CapEx surging up to perhaps 5% or 6% episodically, depending on the opportunity. We're doing the Cambridge plant build-out right now, which is obviously not maintenance CapEx, and that's sort of 1% of our sales right now. That pushes it up into that 4%-6% range. I think that's how we see it. We don't see in the windshield, Bob, any CapEx super cycles like we've been through, at least at the present moment. I think you'd see it banded in that range, 4%-6%. As to how we evaluate it, it's obviously a business case, and we've got so many high-quality business cases right now and so much competition for capital, it's actually pretty tough. That goes with the abundance of opportunities that we're facing. Maybe I'll pitch it over to Mike for any additional comments. Yeah, Rex, that's right. The only other thing I'd call out is, you know, we did raise guidance and expectations for CapEx to 5.5%-6%. Part of that is driven by some investments we're making around defense fuels related to enrichment. As Rex mentioned, you know, we see this, and I think we've said it before, we anticipate more of tens of millions of dollars in investments in some of these opportunities, but we don't see the same level of significant CapEx spend like we may have seen in the past. Super. All right. Thanks very much. Our next question comes from the line of David Strauss with Barclays. Your line is open. Hi. Good afternoon. This is Josh Korn on for David. You've gotten two Navy contracts now in quick succession. How far out are you contracted for those Navy programs? Those contracts have a performance period of up to eight years. It's typical for the delivery of a full ship set to take between six and eight years, depending on whether that's Virginia, Columbia, or Ford. Eight years from the time we signed the contract. Okay. Thanks. I wanted to ask, with Kinectrics closing a little earlier than you expected, how much did that contribute to the guidance increase? In the free cash flow guidance, what are you assuming for working capital? Thanks. Yeah. We had previously said Kinectrics about mid-year. As we mentioned, we look at a number of different scenarios. You're right. It was a few weeks ahead of what we had planned. Part of what you're seeing in the guidance raise relates to that. I would say, though, that that's a smaller portion. If you think about kind of the Kinectrics at an EPS level, it is slightly neutralized by the additional interest expense associated with funding from the acquisition. When you look at it from that standpoint, it's a smaller amount. I think where most of the raise really relates to timing and pacing of work as well as our performance in our government operations business. As it relates to working capital, from an overall working capital standpoint, and I don't know if this was specific to Kinectrics, we are anticipating kind of working capital and free cash flow generation similar to the rest of our business. Over 80% free cash flow generation specific to Kinectrics. Okay. Thanks. Next question comes from the line of Pete Skibitski with Alembic. Your line is open. Hey, good evening, guys. Nice quarter. Hey, Rex. If I could follow up, I think it was Josh's question on the two naval reactor contracts in the last, call it, six or seven months or so. I feel like historically, the Navy is kind of on a, you know, like an annual pace with you guys, but now we've got kind of a quicker pace, pretty, especially this latest one, a pretty sizable award. Can you give us a sense of what's kind of motivating the Navy? Because I don't know if this is, you know, industrial-base funding or wage growth, but I don't really think of you guys as being kind of a bottleneck on submarine construction, right? I'm just wondering if you can give us a sense of kind of what the motivation is here for these size of awards in this kind of compressed timeframe. Yeah. Hey, Pete. The way that worked out, this last pricing agreement that we announced, the $2.6 billion one, was really kind of on time. You may remember on the last one that we had a number of delays, and that related to the complexity of that negotiation. It was complex because we had gone through COVID, had a lot of labor and commodity price pressure, and it took a while to get through that. This one kind of came on time. The prior one came pretty late. The pace is still the same. We're still receiving orders to the 30-year shipbuilding plan that the Navy has. I would say what's significant about it is, you know, there are concerns about whether or not the shipyards would keep pace with the supply chain. We have offered that we believe that the Navy's approach is going to be to try to fix the problem in the shipyards and keep the supply chain running at base. This last pricing agreement kind of validates that thesis. It has two Virginia's per year. Columbia's now serial in the serial ordering, and then the next Ford when it comes. I think it was kind of important from that perspective to say that, at least for us, the supply chain is staying on schedule. Okay. Got it. Got it. So yeah, so don't expect the next one until 2026, it seems like, is what we should think. That's, that's. It depends. Sometimes it's on two-year intervals, sometimes on three. We'll see how that unfolds with our customer. Okay. Okay. And just one follow-up on me. In your prepared remarks, your comments about several advanced nuclear fuel opportunities, I feel like in the past, you guys have said that you're not really interested in commercial fuel opportunities. I just wanted to validate if that's still true, that these fuel opportunities, are they largely the government at this point? Not exactly. I'd say there's, you know, an interesting, it's smallish, but an interesting demand signal for TRISO fuel that we're responding to, and we can produce that fuel commercially. We're literally the only company that can produce TRISO at any scale. There's commercial interest, and I expect we'll get a couple of contracts in that area this year. I think the other comment was around, the other indication was around on the front-end fuel cycle for the Defense Enrichment Program that we're involved with. Depending on the scale of that thing and on how it unfolds, there could be commercial outlets for that material. I'd say a couple of opportunities there that are interesting to us. Okay. Great. Thank you. You're welcome. Our next question comes from the line of Andre Madrid with BTIG. Your line is open. Good afternoon, guys. Thanks for taking my question. Yeah, Andre. Looking at microreactor, I know a lot of moving pieces there. It looks like Pele is progressing well. You know, I guess how should we think about that end market in the near to medium term, given the progress on Pele, the loss of DRACO? Is there any contribution from JETSON still? Just trying to figure out what the moving pieces are. Yeah, I'd say, Andrea, let me take those by part. For Pele, yeah, it's progressing. We're assembling the reactor core now, as we have discussed. I was in the Pentagon just within the last month talking to a senior official about what the path ahead is for government microreactors. It looks like the procurement strategy is going to be a competitive offering to put microreactors at multiple DOD sites. This is what we had always hoped. We had hoped that Pele would become maybe a low-rate initial production program with production programs to follow. I think that could happen. Now that's certainly in the future a couple of years, but I think that's the endpoint for it. Concerning DRACO, DRACO hasn't gone away. Just to be clear about that, DARPA withdrew its participation from kind of a joint venture with NASA to develop that nuclear thermal propulsion technology. The NASA program is going ahead. In fact, the CGS appropriation marks for Pele—sorry, for DRACO, for nuclear thermal propulsion were $175 million on the House side and $110 million on the Senate side. It looks like we will have a program going forward through NASA to develop that technology. I'm actually pretty optimistic about that one. In terms of JETSON, the other program that you talked about, there's a sliver of a program there. It's a smallish thing. We have some other pieces, Fission Surface Power and other such programs. I think from what I'm hearing, NASA's ready to gear up on Fission Surface Power pretty quickly. There's a lot there, and I think we'll have a significant role in some of it. Okay. That's definitely promising. Good to hear. I guess, moving in a different direction, just talking about naval nuclear supply chain more broadly, I think one of your peers talked about the prospect of taking more work off the plates of the shipyards in order to help clear up some of those bottlenecks. Is that something that you guys would ever be interested in doing, or is it kind of been there, done that, don't really want to do that anymore? I know this is something that I think you guys have explored before, but I wasn't sure if you were maybe taking a look at it with fresh eyes. I'd say generally, it's not of high interest to us if it's not, you know, nuclear-qualified components, and that work would not be for the most part. I wouldn't put it at the top of my list. Got it. Okay. No, that makes sense. One more, if I could squeeze it in. I guess, you know, looking at the supply chain again, let's stick on that. Any further impact related to zirconium? What are you guys seeing there? Does it look like it's getting better, getting worse? It seems to have leveled out. It certainly went through a spike there, and Mike talked about it in his remarks that it impacted us in the first quarter. There was a modest, a very minor impact in the second quarter. Just as a reminder, that zirconium price variability is the reason why we don't accept that risk in our contract. That passes through to the customer. The impact was merely a timing impact related to how we do the percentage complete contract. That comes, that bounces back to us. I think first it's settled down. Second, it comes back to us in the end. Got it. Got it. I appreciate the clarification, Rex. I'll leave it there. Thanks so much. Thank you. Our next question comes from the line of Jed Dorsheimer with William Blair. Your line is open. Hey, guys. You have [Mark Schutter] on for Jed. Given all the nuclear enthusiasm and the government support, can you try to place a metric on the engagement level you're seeing now versus a quarter ago or a year ago? Maybe on the number of projects you're bidding on actively or maybe an increase of revenue opportunity. is hard to answer that one, Mark. I would say we certainly see high activity in every one of our end markets. You know, medical's been compounding at 20% per year. The government appetite seems to be stronger than ever. In fact, I've said earlier today that we kind of can't outgrow the government business. Commercial power, the opportunities are abundant. The markets are just strong everywhere, and we certainly haven't experienced a time like this. I appreciate it. I thought I'd ask. Just switching gears a bit to the TRISO fuel. I think I heard you mention that you expect some contracts by the end of the year. Can you wrap that in any kind of unit economics or maybe a capacity, or can you give us any more color on what you should be expecting there, and is that going to be any significant impact to the financials, this, or maybe even next year? Yeah, I'd say, you know, I don't want to be specific about timing, and I'd be a little bit cautious about the scale of those. They're smallish. They're certainly smaller than the Pele contract fuel contracts. I think they're interesting because we're beginning to see the precipitation of modest demand for TRISO fuel on the commercial side. It's exciting strategically. It's not big economically yet. Great. Thank you, guys. Next question comes from the line of Jan-Frans Engelbrecht with Baird. Your line is open. Good evening, Rex, Mike, and Chase. The first question, I just want to start on the reconciliation bill. There is a lot of, you know, big dollars across shipbuilding and just the support for the nuclear triad. I just wanted to get your thoughts, how you're thinking about that, and any sort of incremental orders that you expect can start to flow to BWXT where it wouldn't have existed if there was no reconciliation bill. Yeah, the reconciliation bill was good for us. There was funding in there for a second Virginia for 2026, of course. There was, if I recall it correctly, $100 million for defense enrichment, which obviously is right in our wheelhouse and what we're working on with the National Nuclear Security Administration. There was funding that was specific to advanced reactors. You can read that as Pele. There was additional funding for the Strategic Capabilities Office. When you stack all that up, I think it was all, you know, quite edifying to programs that we had in progress. Great. Thanks, Rex. And then just a quick follow-up on the BWRX-300. Just on that first reactor in Darlington, how should we think about the revenue recognition? Sort of when does that peak for the first reactor? I guess to add to that question, is there the potential for the TVA deployment to sort of leapfrog reactors two to four at Darlington? How should we think about those two locations and just the revenue cadence for reactor one on the GE Hitachi design? Yeah. What we said historically on the revenue profile for that X300 is that, first, we said the opportunity per X300 is in the range of $100 million and that the revenue profile was kind of evenly distributed over, let's call it, a four-year period. The reason for that is the reactor pressure vessel and certain other components that we couldn't manufacture tend to be long-lead items for those reactors. In fact, we received the order for the project that was formally approved by the provincial government. You can think about it that way. In terms of the timing for TVA, I don't know if it will leapfrog two, three, and four at Darlington. I mean, I hope so. I hope it goes fast. I think both of those opportunities, you think about that opportunity, it's probably four more X300s added to the additional three at Darlington. It remains an exciting opportunity for us. I would think what would happen is, maybe the first reactor at TVA falls somewhere in the middle of all that. I'm speculating. Okay. Great. Thanks. That's very helpful. I'll jump back in the queue. Congrats on a strong quarter. Thanks. Thank you. Our next question comes from the line of Mike Ciarmoli with Truist Securities. Your line is open. Hey, good evening, guys. Nice results for the super merchant supplier, Rex. Hey, can you respond on the guidance here? On the guidance here, you know, I know timing is always hard to predict, but the guidance assumes GEO revenues could actually be down second half year-over-year. I guess even looking at the EBITDA margin run rate, I know you got the positive EAC, but that second half run rate looks like it might be below 20%. You haven't done that in quite some time. Was it all just timing? Is there anything going on with the mix of some of these newer programs? Should we just think about more cost plus coming in, or what's the best you can help us with on that weaker second half? Yeah, I would say I don't think we're seeing a major shift in overall mix across the contract portfolios. What I would say is, you know, we signed the pricing agreement, you know, that we mentioned a little bit ahead of schedule. That had a number of, you know, advanced material procurements that came into the quarter that we weren't expecting that typically would be in the back half of the year. In addition to that, when you look at kind of the special materials contract performance, typically the fourth quarter is a very strong quarter for us. In a lot of cases, we're seeing, you know, strong performance at that point in the year. We've seen and we're able to get very confident in kind of our contract performance in Q2, which is where you're seeing, you know, some outsized growth in the quarter. When we look at kind of the rest of the year, I mean, I think, you know, the way that we look at it, we feel confident in, you know, where we'll land. I don't think there's anything individually to call out too much around, you know, kind of overall revenue. I would just say that, you know, we're seeing a number of things hit earlier in the year than we typically do. Maybe I'll just add a footnote to that. I was just going to add a footnote to what Mike just said, Mike. You know, the operating condition of the plants is good. We've had a focus campaign around OpEx with multiple dimensions to it, including, you know, factory throughput, lead time, cost of poor quality, price of non-performance is the name of our program. The plants in Cambridge and across Canada, the plants in our NOG complex are performing quite well. I think we just had a very strong overperformance in the first half, and it'll normalize a little bit in the second half, but we feel good about our operational performance. There's no degradation from that perspective. Okay. And then just kind of on that topic, maybe the inverse here, commercial, it sounds like you've got a good line of sight to that field services. I thought that was a good color, Mike, providing the kind of % of revenue. Presumably, you get a pickup in field services, and that drives the margin strength in commercial second half. That's right. We were down seasonally compared to normally. Q2 is a strong quarter for us, but obviously, we saw a significant decline, down to 10% revenue in that mix. We feel good about where the rest of the year will shake out. I think we're confident in what we're going to see in field services and the components margins for the next two quarters. Thanks, guys. I'll jump back in the queue. Our last question comes from the line of Ron Epstein with BAML. Your line is open. Hello? Good afternoon, guys. Maybe just a couple of quick ones. One, when you look at the growth in the backlog, it bumped up a lot. How much of that is because of the acquisition, and how much of that's organic? Yeah. The majority of that is going to be organic. If you look at, you know, ultimately, our book to bill for this quarter was 0.2. We had really about $240 million-ish of backlog associated with the acquisitions, but the majority of it was organic. Got it. All right. Great. That's super. One more. We've heard some companies talking this quarter about, you know, shortages of critical minerals. Has that been an issue for you guys? Do you see it as a potential issue, and how are you mitigating it, or is it just not an issue at all? I'll take that one, Ron. We're not seeing much pressure from that. The zirconium pricing that you saw in the first quarter was a derivative of that problem, but that seems to be settled out. We seem to be settling out now. As I said earlier, apart from that, we manage our commodity risk pretty well and aren't that sensitive to critical minerals. It's just not moving the needle for us. Yeah. The only thing I would say, I mean, we're not having an issue trying to get in the actual raw materials. From a pricing perspective, we typically, and I think we've publicly said in the past that we, you know, our arrangements will have kind of pricing locked in for, you know, roughly 70% over our raw materials purchases on our contracts. That's either due to firm vendor quotes, extended ordering periods, those types of things. That's how we're able to manage. Got it. All right. Thank you. That concludes the question and answer session. I would like to turn the call back over to Mr. Chase Jacobson for closing remarks. Thank you. Thanks, everybody, for joining today. We look forward to seeing many of you and speaking with you in the upcoming week at investor events or on the phone. If you have any questions, please feel free to reach out to me at [email protected]. Thank you. Ladies and gentlemen, that concludes today's call. Thank you all for joining, and you may now disconnect.

Speaker 11: Ladies and gentlemen, welcome to BWX Technologies' second quarter 2025 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, Chase Jacobson, BWXT's Vice President of Investor Relations. Please go ahead, sir. Ladies and gentlemen, welcome to BWX Technologies' second quarter 2025 earnings conference call. ladies and gentlemen welcome to bwx technologies' second quarter 2025 earnings conference call At this time, all participants are in a listen-only mode. 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. 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, Chase Jacobson, BWX T's Vice President of Investor Relations. i would now like to turn the call over to our host chase jacobson, bwx t's vice president of investor relations Please go ahead, sir. please go ahead sir

Speaker 8: Thank you. Good evening and welcome to today's call. Joining me are Rex Geveden, President and CEO, and Mike Fitzgerald, Senior Vice President and CFO. On today's call, we will reference the second quarter 2025 earnings presentation that is available on the Investors section of the BWXT website. We will also discuss certain matters that constitute forward-looking statements. These statements involve risks and uncertainties, including those described in the Safe Harbor provision found in the investor materials in the company's SEC filing. We will frequently discuss non-GAAP financial measures, which are reconciled to GAAP measures in the appendix of the earnings presentation that can be found on the Investors section of the BWXT website. I would now like to turn the call over to Rex. Thank you. thank you Good evening and welcome to today's call. good evening and welcome to today's call Joining me are Rex Geveden, President and CEO, and Mike Fitzgerald, Senior Vice President and CFO. joining me are rex geveden president and ceo and mike fitzgerald senior vice president and cfo On today's call, we will reference the second quarter 2025 earnings presentation that is available on the Investors section of the BWXT website. on today's call we will reference the second quarter 2025 earnings presentation that is available on the investors section of the bwxt website We will also discuss certain matters that constitute forward-looking statements. we will also discuss certain matters that constitute forward-looking statements These statements involve risks and uncertainties, including those described in the Safe Harbor provision found in the investor materials in the company's SEC filing. these statements involve risks and uncertainties including those described in the safe harbor provision found in the investor materials in the company's sec filing We will frequently discuss non-GAAP financial measures, which are reconciled to GAAP measures in the appendix of the earnings presentation that can be found on the Investors section of the BWXT website. we will frequently discuss non-gaap financial measures which are reconciled to gaap measures in the appendix of the earnings presentation that can be found on the investors section of the bwxt website I would now like to turn the call over to Rex. i would now like to turn the call over to rex

Speaker 4: Thank you, Chase, and good evening to all of you. First, I would like to welcome Mike Fitzgerald, our CFO, to the call. Mike has been with BWXT since 2022 and previously held the roles of Chief Accounting Officer, Head of Finance, and CFO of Government Operations. He is deeply ingrained in our business, is a trusted resource for the entire executive team, and I'm happy to have him on the call with us today. Now, turning to our results and a discussion of our markets and outlook, second quarter financial results exceeded our expectations, driven by strong execution and pacing of work in Government Operations. Our second quarter financial results featured double-digit adjusted EBITDA and earnings per share growth and robust free cash flow. We closed the acquisition of Kinectrics in May. Thank you, Chase, and good evening to all of you. thank you chase and good evening to all of you First, I would like to welcome Mike Fitzgerald, our CFO, to the call. first i would like to welcome mike fitzgerald our cfo to the call Mike has been with BWXT since 2022 and previously held the roles of Chief Accounting Officer, Head of Finance, and CFO of Government Operations. mike has been with bwxt since 2022 and previously held the roles of chief accounting officer head of finance and cfo of government operations He is deeply ingrained in our business, is a trusted resource for the entire executive team, and I'm happy to have him on the call with us today. he is deeply ingrained in our business is a trusted resource for the entire executive team and i'm happy to have him on the call with us today Now, turning to our results and a discussion of our markets and outlook, second quarter financial results exceeded our expectations, driven by strong execution and pacing of work in Government Operations. now turning to our results and a discussion of our markets and outlook second quarter financial results exceeded our expectations driven by strong execution and pacing of work in government operations Our second quarter financial results featured double-digit adjusted EBITDA and earnings per share growth and robust free cash flow. our second quarter financial results featured double-digit adjusted ebitda and earnings per share growth and robust free cash flow We closed the acquisition of Kinectrics in May. we closed the acquisition of kinectrics in may Kinectrics brings a workforce of over 1,300 employees and significantly broadens our life-of-plant services capabilities in the nuclear power and energy infrastructure markets, enabling us to offer an even broader range of services to the market. Demand across the global security, clean energy, and medical end markets is accelerating. Backlog grew to $6 billion, up 23% quarter-over-quarter and 70% year-over-year with growth in both segments. Organic book-to-bill was 2.2 in the quarter, and the pipeline of new opportunities in government and commercial operations is expanding. Turning to segment results and market outlook, Government Operations revenue was up 9% and adjusted EBITDA up 23%, exceeding our expectations. Results were driven by strong execution, particularly within the special materials portfolio, the A.O.T. acquisition, and timing of material procurement. Kinectrics brings a workforce of over 1,300 employees and significantly broadens our life-of-plant services capabilities in the nuclear power and energy infrastructure markets, enabling us to offer an even broader range of services to the market. kinectrics brings a workforce of over 1,300 employees and significantly broadens our life-of-plant services capabilities in the nuclear power and energy infrastructure markets enabling us to offer an even broader range of services to the market Demand across the global security, clean energy, and medical end markets is accelerating. demand across the global security clean energy and medical end markets is accelerating Backlog grew to $6 billion, up 23% quarter-over-quarter and 70% year-over-year with growth in both segments. backlog grew to $6 billion up 23% quarter-over-quarter and 70% year-over-year with growth in both segments Organic book-to-bill was 2.2 in the quarter, and the pipeline of new opportunities in government and commercial operations is expanding. organic book-to-bill was 2.2 in the quarter and the pipeline of new opportunities in government and commercial operations is expanding Turning to segment results and market outlook, Government Operations revenue was up 9% and adjusted EBITDA up 23%, exceeding our expectations. turning to segment results and market outlook government operations revenue was up 9% and adjusted ebitda up 23% exceeding our expectations Results were driven by strong execution, particularly within the special materials portfolio, the A.O.T. acquisition, and timing of material procurement. results were driven by strong execution particularly within the special materials portfolio the a.o.t acquisition and timing of material procurement The naval propulsion business is focused on driving operational excellence and maintaining production pace on our franchise submarine and aircraft carrier programs. As we announced last month, we signed the next pricing agreement for naval nuclear reactor components. The agreement is valued at $2.6 billion over the next eight years, primarily related to Virginia and Columbia-class submarines and certain components for Ford-class aircraft carriers. We booked over $1 billion in orders on this contract in the second quarter, driving Government Operations backlog to $4.4 billion, up 24% sequentially, and up 55% compared to the second quarter of last year. This contract follows a $2.1 billion pricing agreement we signed in late 2024, which, combined with the administration's focus on naval shipbuilding and the submarine industrial pace, supports our longer-term forecast of a 3%-5% revenue caveat in this line of business. The naval propulsion business is focused on driving operational excellence and maintaining production pace on our franchise submarine and aircraft carrier programs. the naval propulsion business is focused on driving operational excellence and maintaining production pace on our franchise submarine and aircraft carrier programs As we announced last month, we signed the next pricing agreement for naval nuclear reactor components. as we announced last month we signed the next pricing agreement for naval nuclear reactor components The agreement is valued at $2.6 billion over the next eight years, primarily related to Virginia and Columbia-class submarines and certain components for Ford-class aircraft carriers. the agreement is valued at $2.6 billion over the next eight years primarily related to virginia and columbia-class submarines and certain components for ford-class aircraft carriers We booked over $1 billion in orders on this contract in the second quarter, driving Government Operations backlog to $4.4 billion, up 24% sequentially, and up 55% compared to the second quarter of last year. we booked over $1 billion in orders on this contract in the second quarter driving government operations backlog to $4.4 billion up 24% sequentially and up 55% compared to the second quarter of last year This contract follows a $2.1 billion pricing agreement we signed in late 2024, which, combined with the administration's focus on naval shipbuilding and the submarine industrial pace, supports our longer-term forecast of a 3%- 5% revenue caveat in this line of business. this contract follows a $2.1 billion pricing agreement we signed in late 2024 which combined with the administration's focus on naval shipbuilding and the submarine industrial pace supports our longer-term forecast of a 3%- 5% revenue caveat in this line of business Special materials remains one of the most exciting growth stories at our company. We had strong performance on legacy contracts during the quarter, and our growth prospects are brightening. The experiential qualifications and unique licenses we possess are well-matched with national security missions and position us to satisfy strategic priorities for our customers. We have nearly completed the one-year engineering study for defense uranium enrichment using the [dual use] technology to satisfy naval fuel and national security needs under contract to the NNSA. Our current focus is responding to the sole source RFP issued in April for the next phase of this program, which includes design, licensing, and construction of a pilot plant. Additionally, we are working with the NNSA on long-term production of high-purity depleted uranium in quantities that exceed our business case expectations for the A.O.T. acquisition. Special materials remains one of the most exciting growth stories at our company. special materials remains one of the most exciting growth stories at our company We had strong performance on legacy contracts during the quarter, and our growth prospects are brightening. we had strong performance on legacy contracts during the quarter and our growth prospects are brightening The experiential qualifications and unique licenses we possess are well-matched with national security missions and position us to satisfy strategic priorities for our customers. the experiential qualifications and unique licenses we possess are well-matched with national security missions and position us to satisfy strategic priorities for our customers We have nearly completed the one-year engineering study for defense uranium enrichment using the [dual use] technology to satisfy naval fuel and national security needs under contract to the NNSA. we have nearly completed the one-year engineering study for defense uranium enrichment using the [dual use] technology to satisfy naval fuel and national security needs under contract to the nnsa Our current focus is responding to the sole source RFP issued in April for the next phase of this program, which includes design, licensing, and construction of a pilot plant. our current focus is responding to the sole source rfp issued in april for the next phase of this program which includes design licensing and construction of a pilot plant Additionally, we are working with the NNSA on long-term production of high-purity depleted uranium in quantities that exceed our business case expectations for the A.O.T. acquisition. additionally we are working with the nnsa on long-term production of high-purity depleted uranium in quantities that exceed our business case expectations for the a.o.t acquisition We are also tracking several advanced nuclear fuel opportunities intended for defense and commercial application. We will keep you posted as these prospects take shape. In microreactors, we began manufacturing the reactor core for Pele, a land-based transportable microreactor. Pele has received strong support in recent government funding bills and is highly aligned with the President's National Security Executive Order titled "Deploying Advanced Nuclear Reactor Technologies" that directs the DOD to commence operations of a nuclear reactor by September 2028. As Pele progresses and the advanced fuel supply chain grows, there are multiple emerging opportunities that BWXT is well positioned to capture. In technical services, results are strong in site operational performance and in contract wins. Operating income from this business line was up over 20% compared to the average quarterly rate over the last year, and we are on track to outpace that growth for the full year. We are also tracking several advanced nuclear fuel opportunities intended for defense and commercial application. we are also tracking several advanced nuclear fuel opportunities intended for defense and commercial application We will keep you posted as these prospects take shape. we will keep you posted as these prospects take shape In microreactors, we began manufacturing the reactor core for Pele, a land-based transportable microreactor. in microreactors we began manufacturing the reactor core for pele a land-based transportable microreactor Pele has received strong support in recent government funding bills and is highly aligned with the President's National Security Executive Order titled "Deploying Advanced Nuclear Reactor Technologies" that directs the DOD to commence operations of a nuclear reactor by September 2028. pele has received strong support in recent government funding bills and is highly aligned with the president's national security executive order titled "deploying advanced nuclear reactor technologies" that directs the dod to commence operations of a nuclear reactor by september 2028 As Pele progresses and the advanced fuel supply chain grows, there are multiple emerging opportunities that BWXT is well positioned to capture. as pele progresses and the advanced fuel supply chain grows there are multiple emerging opportunities that bwxt is well positioned to capture In technical services, results are strong in site operational performance and in contract wins. in technical services results are strong in site operational performance and in contract wins Operating income from this business line was up over 20% compared to the average quarterly rate over the last year, and we are on track to outpace that growth for the full year. operating income from this business line was up over 20% compared to the average quarterly rate over the last year and we are on track to outpace that growth for the full year This is driven by the ramp at Pantex and Hanford, both of which began in 2024, and newer projects such as West Valley and the Strategic Petroleum Reserve, the latter of which is expected to commence in the second half of the year. From a new business perspective, Atomic Energy Canada Limited selected Nuclear Laboratory Partners of Canada, a BWXT-led joint venture which also includes Kinectrics, to manage and operate Canadian nuclear laboratories, our first international project in this line of business. The annual contract value is about CAD 1.2 billion with an initial term of six years and extensions for up to 20 years. We are in the preferred bidder period and expect to transition to a contract start date late in the third quarter. Turning to commercial operations, reported revenue growth was 24%. This is driven by the ramp at Pantex and Hanford, both of which began in 2024, and newer projects such as West Valley and the Strategic Petroleum Reserve, the latter of which is expected to commence in the second half of the year. this is driven by the ramp at pantex and hanford both of which began in 2024 and newer projects such as west valley and the strategic petroleum reserve the latter of which is expected to commence in the second half of the year From a new business perspective, Atomic Energy Canada Limited selected Nuclear Laboratory Partners of Canada, a BWXT-led joint venture which also includes Kinectrics, to manage and operate Canadian nuclear laboratories, our first international project in this line of business. from a new business perspective atomic energy canada limited selected nuclear laboratory partners of canada a bwxt-led joint venture which also includes kinectrics to manage and operate canadian nuclear laboratories our first international project in this line of business The annual contract value is about CAD 1.2 billion with an initial term of six years and extensions for up to 20 years. the annual contract value is about cad 1.2 billion with an initial term of six years and extensions for up to 20 years We are in the preferred bidder period and expect to transition to a contract start date late in the third quarter. we are in the preferred bidder period and expect to transition to a contract start date late in the third quarter Turning to commercial operations, reported revenue growth was 24%. turning to commercial operations reported revenue growth was 24% On an organic basis, revenue was down 3% and largely in line with our expectation as double-digit growth in medical was offset by a modest decline in commercial power due to the timing of outage and maintenance projects as we discussed last quarter. Backlog in the segment grew to $1.6 billion, including about $240 million from the Kinectrics acquisition. On an organic basis, book-to-bill in the quarter was 1.3. Importantly, this was driven by a multitude of contracts for existing nuclear power infrastructure, highlighting the strong underlying base of revenue in our portfolio and supporting our full-year outlook for mid-teens organic growth and over 50% growth, including contribution from Kinectrics. BWXT Medical delivered a solid quarter with double-digit revenue growth driven by the PET diagnostic product lines and TheraSphere. Robust demand signals for the diagnostic and therapeutic isotopes support the outlook for over 20% growth this year. On an organic basis, revenue was down 3% and largely in line with our expectation as double-digit growth in medical was offset by a modest decline in commercial power due to the timing of outage and maintenance projects as we discussed last quarter. on an organic basis revenue was down 3% and largely in line with our expectation as double-digit growth in medical was offset by a modest decline in commercial power due to the timing of outage and maintenance projects as we discussed last quarter Backlog in the segment grew to $1.6 billion, including about $240 million from the Kinectrics acquisition. backlog in the segment grew to $1.6 billion including about $240 million from the kinectrics acquisition On an organic basis, book-to-bill in the quarter was 1.3. on an organic basis book-to-bill in the quarter was 1.3 Importantly, this was driven by a multitude of contracts for existing nuclear power infrastructure, highlighting the strong underlying base of revenue in our portfolio and supporting our full-year outlook for mid-teens organic growth and over 50% growth, including contribution from Kinectrics. importantly this was driven by a multitude of contracts for existing nuclear power infrastructure highlighting the strong underlying base of revenue in our portfolio and supporting our full-year outlook for mid-teens organic growth and over 50% growth including contribution from kinectrics BWXT Medical delivered a solid quarter with double-digit revenue growth driven by the PET diagnostic product lines and TheraSphere. bwxt medical delivered a solid quarter with double-digit revenue growth driven by the pet diagnostic product lines and therasphere Robust demand signals for the diagnostic and therapeutic isotopes support the outlook for over 20% growth this year. robust demand signals for the diagnostic and therapeutic isotopes support the outlook for over 20% growth this year In product development, the Canadian Nuclear Safety Commission approved the irradiation of U-3M-90 and Lutetium-177 using the target delivery system with Laurentis Energy Partners at the Darlington site. On PET 99, as we discussed last quarter, we've been perfecting the product attributes. Encouragingly, we have line of sight to address the final technical issues that are typical in the scale-up and industrialization phase of complex projects, and I am quite encouraged by our progress. Given the timing, I don't expect a product launch this year, but customer appetite remains strong, and this will be an important addition to our fast-growing portfolio of medical isotopes. Turning now to commercial power, where demand is accelerating rapidly. In the CANDU market, we have talked in depth about the opportunities in the ongoing life extensions and the potential for large-scale new builds. In product development, the Canadian Nuclear Safety Commission approved the irradiation of U-3M-90 and Lutetium-177 using the target delivery system with Laurentis Energy Partners at the Darlington site. in product development the canadian nuclear safety commission approved the irradiation of u-3m-90 and lutetium-177 using the target delivery system with laurentis energy partners at the darlington site On PET 99, as we discussed last quarter, we've been perfecting the product attributes. on pet 99 as we discussed last quarter we've been perfecting the product attributes Encouragingly, we have line of sight to address the final technical issues that are typical in the scale-up and industrialization phase of complex projects, and I am quite encouraged by our progress. encouragingly we have line of sight to address the final technical issues that are typical in the scale-up and industrialization phase of complex projects and i am quite encouraged by our progress Given the timing, I don't expect a product launch this year, but customer appetite remains strong, and this will be an important addition to our fast-growing portfolio of medical isotopes. given the timing i don't expect a product launch this year but customer appetite remains strong and this will be an important addition to our fast-growing portfolio of medical isotopes Turning now to commercial power, where demand is accelerating rapidly. turning now to commercial power where demand is accelerating rapidly In the CANDU market, we have talked in depth about the opportunities in the ongoing life extensions and the potential for large-scale new builds. in the candu market we have talked in depth about the opportunities in the ongoing life extensions and the potential for large-scale new builds Ontario Power Generation and Bruce Power are evaluating options to expand their nuclear reactor fleets to meet increasing electricity demand in the region. While these projects are in the planning stages, BWXT and Kinectrics are trusted partners in the Canadian nuclear market and are engaging with these utilities now. For the AP1000, we are bidding on component engineering and manufacturing contracts across a global opportunity set. There continues to be good momentum in the SMR market. In July, the NRC accepted TVA's construction permit application to build the GE Hitachi BWRX-300 at Clinch River in Tennessee, with the review expected to be complete by the end of next year. This would be a giant step in the U.S. SMR market and would complement the progress in Canada at the Darlington site for which BWXT is manufacturing the reactor pressure vessel and other important components potentially. Ontario Power Generation and Bruce Power are evaluating options to expand their nuclear reactor fleets to meet increasing electricity demand in the region. ontario power generation and bruce power are evaluating options to expand their nuclear reactor fleets to meet increasing electricity demand in the region While these projects are in the planning stages, BWXT and Kinectrics are trusted partners in the Canadian nuclear market and are engaging with these utilities now. while these projects are in the planning stages bwxt and kinectrics are trusted partners in the canadian nuclear market and are engaging with these utilities now For the AP1000, we are bidding on component engineering and manufacturing contracts across a global opportunity set. for the ap1000 we are bidding on component engineering and manufacturing contracts across a global opportunity set There continues to be good momentum in the SMR market. there continues to be good momentum in the smr market In July, the NRC accepted TVA's construction permit application to build the GE Hitachi BWRX-300 at Clinch River in Tennessee, with the review expected to be complete by the end of next year. in july the nrc accepted tva's construction permit application to build the ge hitachi bwrx-300 at clinch river in tennessee with the review expected to be complete by the end of next year This would be a giant step in the U.S. this would be a giant step in the u.s SMR market and would complement the progress in Canada at the Darlington site for which BWXT is manufacturing the reactor pressure vessel and other important components potentially. smr market and would complement the progress in canada at the darlington site for which bwxt is manufacturing the reactor pressure vessel and other important components potentially In addition to our work with GE Hitachi, we are also working with TerraPower, Rolls-Royce, and others as we anticipate multiple follow-on orders in the coming years. Our long history of manufacturing large complex nuclear components and existing and expanding capacity position us as a super emergent supplier to the SMR market. With that, I will now turn the call over to Mike. In addition to our work with GE Hitachi, we are also working with TerraPower, Rolls-Royce, and others as we anticipate multiple follow-on orders in the coming years. in addition to our work with ge hitachi we are also working with terrapower rolls-royce and others as we anticipate multiple follow-on orders in the coming years Our long history of manufacturing large complex nuclear components and existing and expanding capacity position us as a super emergent supplier to the SMR market. our long history of manufacturing large complex nuclear components and existing and expanding capacity position us as a super emergent supplier to the smr market With that, I will now turn the call over to Mike. with that i will now turn the call over to mike

Speaker 10: Thank you, Rex, and good evening, everyone. Very happy to be here. I've had a chance to meet with a number of you recently, and I look forward to meeting with more of you in the coming months. I'll start with some total company financial highlights on slide four of the earnings presentation. Second quarter revenue was $764 million, up 12% with growth in both segments. Excluding contributions from acquisitions, organic revenue was up 4%. Adjusted EBITDA was $146 million, up 16% year-over-year, driven by robust double-digit growth in government operations, which was partially offset by lower adjusted EBITDA in commercial operations. Corporate expense was lower compared to last year, and we continue to expect corporate adjusted EBITDA expense in 2025 to be slightly lower than the $16.8 million reported last year. Thank you, Rex, and good evening, everyone. thank you rex and good evening everyone Very happy to be here. very happy to be here I've had a chance to meet with a number of you recently, and I look forward to meeting with more of you in the coming months. i've had a chance to meet with a number of you recently and i look forward to meeting with more of you in the coming months I'll start with some total company financial highlights on slide four of the earnings presentation. i'll start with some total company financial highlights on slide four of the earnings presentation Second quarter revenue was $764 million, up 12% with growth in both segments. second quarter revenue was $764 million up 12% with growth in both segments Excluding contributions from acquisitions, organic revenue was up 4%. excluding contributions from acquisitions organic revenue was up 4% Adjusted EBITDA was $146 million, up 16% year-over-year, driven by robust double-digit growth in government operations, which was partially offset by lower adjusted EBITDA in commercial operations. adjusted ebitda was $146 million up 16% year-over-year driven by robust double-digit growth in government operations which was partially offset by lower adjusted ebitda in commercial operations Corporate expense was lower compared to last year, and we continue to expect corporate adjusted EBITDA expense in 2025 to be slightly lower than the $16.8 million reported last year. corporate expense was lower compared to last year and we continue to expect corporate adjusted ebitda expense in 2025 to be slightly lower than the $16.8 million reported last year Adjusted earnings per share were $1.02, up 24%, driven by strong operating performance, complemented by a lower tax rate, foreign currency gains, and higher pension income, which were partially offset by higher interest expense due to debt associated with the Kinectrics and A.O.T. acquisitions. Our adjusted effective tax rate was 20% for the quarter, which was lower than anticipated due to various tax credits, as well as higher stock compensation expense. Given the lower second quarter tax rate, we now expect our full-year tax rate to be approximately 21%. This yields a second half tax rate of approximately 22.5%, which is more in line with our expectation of our tax rate going forward. Free cash flow in the quarter was a robust $126 million, driven by good working capital management. Adjusted earnings per share were $1.02, up 24%, driven by strong operating performance, complemented by a lower tax rate, foreign currency gains, and higher pension income, which were partially offset by higher interest expense due to debt associated with the Kinectrics and A.O.T. acquisitions. adjusted earnings per share were $1.02 up 24% driven by strong operating performance complemented by a lower tax rate foreign currency gains and higher pension income which were partially offset by higher interest expense due to debt associated with the kinectrics and a.o.t acquisitions Our adjusted effective tax rate was 20% for the quarter, which was lower than anticipated due to various tax credits, as well as higher stock compensation expense. our adjusted effective tax rate was 20% for the quarter which was lower than anticipated due to various tax credits as well as higher stock compensation expense Given the lower second quarter tax rate, we now expect our full-year tax rate to be approximately 21%. given the lower second quarter tax rate we now expect our full-year tax rate to be approximately 21% This yields a second half tax rate of approximately 22.5%, which is more in line with our expectation of our tax rate going forward. this yields a second half tax rate of approximately 22.5% which is more in line with our expectation of our tax rate going forward Free cash flow in the quarter was a robust $126 million, driven by good working capital management. free cash flow in the quarter was a robust $126 million driven by good working capital management Capital expenditures in the quarter were $33 million, or 4.3% of sales, due to timing of growth investments being more back half weighted during the year. We now expect capital expenditures to be 5.5%-6% of sales for the year, driven by investments to meet growing end market demand, including the ongoing expansion of our Cambridge Commercial Nuclear Manufacturing Facility and infrastructure investments related to defense fuels and government operations. Moving now to segment results on slide six. In government operations, second quarter revenue was up 9%, driven by growth in naval propulsion, timing of material procurements, special materials performance, and just over 2% contribution from the A.O.T. acquisition. Adjusted EBITDA was up 23% year-over-year to $133 million, yielding an adjusted EBITDA margin of 22.6%. This was driven by favorable mix, strong operating performance, and favorable contract performance in our special materials portfolio. Capital expenditures in the quarter were $33 million, or 4.3% of sales, due to timing of growth investments being more back half weighted during the year. capital expenditures in the quarter were $33 million or 4.3% of sales due to timing of growth investments being more back half weighted during the year We now expect capital expenditures to be 5.5% - 6% of sales for the year, driven by investments to meet growing end market demand, including the ongoing expansion of our Cambridge Commercial Nuclear Manufacturing Facility and infrastructure investments related to defense fuels and government operations. we now expect capital expenditures to be 5.5% - 6% of sales for the year driven by investments to meet growing end market demand including the ongoing expansion of our cambridge commercial nuclear manufacturing facility and infrastructure investments related to defense fuels and government operations Moving now to segment results on slide six. moving now to segment results on slide six In government operations, second quarter revenue was up 9%, driven by growth in naval propulsion, timing of material procurements, special materials performance, and just over 2% contribution from the A.O.T. acquisition. in government operations second quarter revenue was up 9% driven by growth in naval propulsion timing of material procurements special materials performance and just over 2% contribution from the a.o.t acquisition Adjusted EBITDA was up 23% year-over-year to $133 million, yielding an adjusted EBITDA margin of 22.6%. adjusted ebitda was up 23% year-over-year to $133 million yielding an adjusted ebitda margin of 22.6% This was driven by favorable mix, strong operating performance, and favorable contract performance in our special materials portfolio. this was driven by favorable mix strong operating performance and favorable contract performance in our special materials portfolio We continue to expect government operations to generate mid-single-digit revenue growth in 2025. However, with stronger margin performance in the first half, we now anticipate adjusted EBITDA margin to be approximately 20.5% for the year. Turning to commercial operations, revenue was $176 million, up 24% year-over-year, driven by contribution from the Kinectrics acquisition and double-digit growth in medical, which was partially offset by a modest decline in commercial power, as Rex discussed. Excluding Kinectrics, organic revenue was down 3%. Specific to commercial power, while we had strong revenue growth in components work on the BWRX-300 reactor pressure vessel and Pickering steam generators, this was more than offset by the expected decline in field services due to timing of key outage and maintenance projects during the year. Adjusted EBITDA in the segment was $16 million compared to $23 million last year. We continue to expect government operations to generate mid-single-digit revenue growth in 2025. we continue to expect government operations to generate mid-single-digit revenue growth in 2025 However, with stronger margin performance in the first half, we now anticipate adjusted EBITDA margin to be approximately 20.5% for the year. however with stronger margin performance in the first half we now anticipate adjusted ebitda margin to be approximately 20.5% for the year Turning to commercial operations, revenue was $176 million, up 24% year-over-year, driven by contribution from the Kinectrics acquisition and double-digit growth in medical, which was partially offset by a modest decline in commercial power, as Rex discussed. turning to commercial operations revenue was $176 million up 24% year-over-year driven by contribution from the kinectrics acquisition and double-digit growth in medical which was partially offset by a modest decline in commercial power as rex discussed Excluding Kinectrics, organic revenue was down 3%. excluding kinectrics organic revenue was down 3% Specific to commercial power, while we had strong revenue growth in components work on the BWRX-300 reactor pressure vessel and Pickering steam generators, this was more than offset by the expected decline in field services due to timing of key outage and maintenance projects during the year. specific to commercial power while we had strong revenue growth in components work on the bwrx-300 reactor pressure vessel and pickering steam generators this was more than offset by the expected decline in field services due to timing of key outage and maintenance projects during the year Adjusted EBITDA in the segment was $16 million compared to $23 million last year. adjusted ebitda in the segment was $16 million compared to $23 million last year This resulted in an adjusted EBITDA margin of 9.2%. While we had solid margin performance in commercial power components and fuel, this was offset by the decline in field services and growth investment to match the robust market demand. To provide some additional perspective, within commercial power, field services, one of our higher margin business lines, was just over 10% of revenue in the quarter, down from over 35% in the same period last year. This unfavorable mix accounted for over half of the year-over-year margin decline, with the remainder due to unfavorable absorption of higher SG&A, given lower revenue in the quarter. At the segment level, we now expect commercial operations revenue to grow over 50%, with mid-teens organic growth complemented by the Kinectrics acquisition. This resulted in an adjusted EBITDA margin of 9.2%. this resulted in an adjusted ebitda margin of 9.2% While we had solid margin performance in commercial power components and fuel, this was offset by the decline in field services and growth investment to match the robust market demand. while we had solid margin performance in commercial power components and fuel this was offset by the decline in field services and growth investment to match the robust market demand To provide some additional perspective, within commercial power, field services, one of our higher margin business lines, was just over 10% of revenue in the quarter, down from over 35% in the same period last year. to provide some additional perspective within commercial power field services one of our higher margin business lines was just over 10% of revenue in the quarter down from over 35% in the same period last year This unfavorable mix accounted for over half of the year-over-year margin decline, with the remainder due to unfavorable absorption of higher SG&A, given lower revenue in the quarter. this unfavorable mix accounted for over half of the year-over-year margin decline with the remainder due to unfavorable absorption of higher sg&a given lower revenue in the quarter At the segment level, we now expect commercial operations revenue to grow over 50%, with mid-teens organic growth complemented by the Kinectrics acquisition. at the segment level we now expect commercial operations revenue to grow over 50% with mid-teens organic growth complemented by the kinectrics acquisition However, adjusted EBITDA margin is expected to be 13.5%-14% compared to the low end of 14%-15% previously due to growth investment and modestly higher contribution from Kinectrics. Still, our guidance implies significantly improved results in the second half of the year, with higher revenue, more favorable mix, and the absence of commodity price pressure that acutely impacted our first quarter results. Turning now to our 2025 total company guidance on slides seven and eight of the earnings presentation. We are raising our guidance for revenue, adjusted EBITDA, and earnings per share and increasing the low end of our free cash flow guidance. We now anticipate revenue of approximately $3.1 billion, with modestly better revenue assumptions across the business, as well as contributions from a slightly earlier close of the Kinectrics acquisition. However, adjusted EBITDA margin is expected to be 13.5% - 14% compared to the low end of 14% - 15% previously due to growth investment and modestly higher contribution from Kinectrics. however adjusted ebitda margin is expected to be 13.5% - 14% compared to the low end of 14% - 15% previously due to growth investment and modestly higher contribution from kinectrics Still, our guidance implies significantly improved results in the second half of the year, with higher revenue, more favorable mix, and the absence of commodity price pressure that acutely impacted our first quarter results. still our guidance implies significantly improved results in the second half of the year with higher revenue more favorable mix and the absence of commodity price pressure that acutely impacted our first quarter results Turning now to our 2025 total company guidance on slides seven and eight of the earnings presentation. turning now to our 2025 total company guidance on slides seven and eight of the earnings presentation We are raising our guidance for revenue, adjusted EBITDA, and earnings per share and increasing the low end of our free cash flow guidance. we are raising our guidance for revenue adjusted ebitda and earnings per share and increasing the low end of our free cash flow guidance We now anticipate revenue of approximately $3.1 billion, with modestly better revenue assumptions across the business, as well as contributions from a slightly earlier close of the Kinectrics acquisition. we now anticipate revenue of approximately $3.1 billion with modestly better revenue assumptions across the business as well as contributions from a slightly earlier close of the kinectrics acquisition Accordingly, we're raising our adjusted EBITDA guidance to $565 million-$575 million, up $10 million at the midpoint, as the stronger operational performance in government and slightly higher revenue in commercial is partially offset by mix and growth investment, as I previously discussed. These changes to our operating outlook, combined with a lower tax rate and better pension and other income, yield an increase in our adjusted EPS guidance to $3.65-$3.75 per share. This is up about $0.23 at the midpoint compared to our original guidance, with half of the increase driven by operations and half by the non-operating items I previously discussed. Lastly, we are increasing our free cash flow guidance to $275 million-$285 million, up $10 million at the low end, as higher income and benefits from tax legislation are partially offset by a slightly higher CapEx. Accordingly, we're raising our adjusted EBITDA guidance to $565 million- $575 million, up $10 million at the midpoint, as the stronger operational performance in government and slightly higher revenue in commercial is partially offset by mix and growth investment, as I previously discussed. accordingly we're raising our adjusted ebitda guidance to $565 million- $575 million up $10 million at the midpoint as the stronger operational performance in government and slightly higher revenue in commercial is partially offset by mix and growth investment as i previously discussed These changes to our operating outlook, combined with a lower tax rate and better pension and other income, yield an increase in our adjusted EPS guidance to $3.65 - $3.75 per share. these changes to our operating outlook combined with a lower tax rate and better pension and other income yield an increase in our adjusted eps guidance to $3.65 - $3.75 per share This is up about $0.23 at the midpoint compared to our original guidance, with half of the increase driven by operations and half by the non-operating items I previously discussed. this is up about $0.23 at the midpoint compared to our original guidance with half of the increase driven by operations and half by the non-operating items i previously discussed Lastly, we are increasing our free cash flow guidance to $275 million- $285 million, up $10 million at the low end, as higher income and benefits from tax legislation are partially offset by a slightly higher CapEx. lastly we are increasing our free cash flow guidance to $275 million- $285 million up $10 million at the low end as higher income and benefits from tax legislation are partially offset by a slightly higher capex Overall, we had a strong second quarter and are well positioned to meet our increased guidance for the year. With that, I will turn it back to Rex for closing remarks. Overall, we had a strong second quarter and are well positioned to meet our increased guidance for the year. overall we had a strong second quarter and are well positioned to meet our increased guidance for the year With that, I will turn it back to Rex for closing remarks. with that i will turn it back to rex for closing remarks

Speaker 4: Thanks, Mike. Over the past decade, as a standalone public company, BWXT has invested both organically and inorganically to enhance our capabilities in the nuclear market. We have built significant industrial scale, and our customers are increasingly relying on BWXT to meet their needs. We have had a strong start to the year, both financially and strategically. Our backlog is at a record level, demand across our end markets is accelerating, and our intense focus on operational excellence positions us well to continue to drive shareholder value in the years ahead. We look forward to taking your questions. Thanks, Mike. thanks mike Over the past decade, as a standalone public company, BWXT has invested both organically and inorganically to enhance our capabilities in the nuclear market. over the past decade as a standalone public company bwxt has invested both organically and inorganically to enhance our capabilities in the nuclear market We have built significant industrial scale, and our customers are increasingly relying on BWXT to meet their needs. we have built significant industrial scale and our customers are increasingly relying on bwxt to meet their needs We have had a strong start to the year, both financially and strategically. we have had a strong start to the year both financially and strategically Our backlog is at a record level, demand across our end markets is accelerating, and our intense focus on operational excellence positions us well to continue to drive shareholder value in the years ahead. our backlog is at a record level demand across our end markets is accelerating and our intense focus on operational excellence positions us well to continue to drive shareholder value in the years ahead We look forward to taking your questions. we look forward to taking your questions

Speaker 11: Thank you. We will now begin the question-and-answer session. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again. If you are called upon to ask your question and are listening via speakerphone on your device, please pick up your handset to ensure that your phone is not on mute when asking your question. We do request for today's session that you please limit to one question and one follow-up question. Again, press star one to join the queue. Our first question comes from the line of Scott Deuschle with Deutsche Bank. Your line is open. Thank you. thank you We will now begin the question-and-answer session. we will now begin the question-and-answer session If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. if you have dialed in and would like to ask a question please press star one on your telephone keypad to raise your hand and join the queue If you would like to withdraw your question, simply press star one again. if you would like to withdraw your question simply press star one again If you are called upon to ask your question and are listening via speakerphone on your device, please pick up your handset to ensure that your phone is not on mute when asking your question. if you are called upon to ask your question and are listening via speakerphone on your device please pick up your handset to ensure that your phone is not on mute when asking your question We do request for today's session that you please limit to one question and one follow-up question. we do request for today's session that you please limit to one question and one follow-up question Again, press star one to join the queue. again press star one to join the queue Our first question comes from the line of Scott Deuschle with Deutsche Bank. our first question comes from the line of scott deuschle with deutsche bank Your line is open. your line is open

Speaker 5: Hey, good evening. Mike, the 10-Q flags a $29 million favorable contract adjustment, I think, on nuclear operations. Can you clarify any more what that relates to and if any of that was assumed in the original guide? Hey, good evening. hey good evening Mike, the 10-Q flags a $29 million favorable contract adjustment, I think, on nuclear operations. mike the 10-q flags a $29 million favorable contract adjustment i think on nuclear operations Can you clarify any more what that relates to and if any of that was assumed in the original guide? can you clarify any more what that relates to and if any of that was assumed in the original guide

Speaker 10: Yeah, thanks, Scott. The $29 million, as you mentioned in the 10-Q, relates to one of the special materials contracts. Rex mentioned we had strong operating performance in special materials. Scott, as you know, we look at a number of different potential opportunities as it looks to those contracts. A portion of that was included in the guide, but I would say it was a little bit more favorable than we had originally anticipated. I would say a part of it we assumed in our original guidance. Yeah, thanks, Scott. yeah thanks scott The $29 million, as you mentioned in the 10-Q, relates to one of the special materials contracts. the $29 million as you mentioned in the 10-q relates to one of the special materials contracts Rex mentioned we had strong operating performance in special materials. rex mentioned we had strong operating performance in special materials Scott, as you know, we look at a number of different potential opportunities as it looks to those contracts. scott as you know we look at a number of different potential opportunities as it looks to those contracts A portion of that was included in the guide, but I would say it was a little bit more favorable than we had originally anticipated. a portion of that was included in the guide but i would say it was a little bit more favorable than we had originally anticipated I would say a part of it we assumed in our original guidance. i would say a part of it we assumed in our original guidance

Speaker 5: Okay, great. Rex, do you see any opportunity for BWXT to secure some level of content on new build AP1000s that may be built at some point in the U.S.? If so, what type of content would the company be able to compete for on those reactors? Okay, great. okay great Rex, do you see any opportunity for BWXT to secure some level of content on new build AP1000s that may be built at some point in the U.S.? rex do you see any opportunity for bwxt to secure some level of content on new build ap1000s that may be built at some point in the u.s If so, what type of content would the company be able to compete for on those reactors? if so what type of content would the company be able to compete for on those reactors

Speaker 4: Yeah, I do, Scott. We have, in fact, we have an MOU with Westinghouse to potentially manufacture certain components for the AP1000, you know, in the U.S. market and potentially in other markets. What we would do there is what we, similar to what we do on CANDU, we're qualified for pressure components, high-pressure components like steam generators, heat exchangers. We could make that reactor pressure vessel in our Cambridge plant. There's a lot there. I think, you know, as industrial capacity starts to stretch, we might have, you know, some really interesting opportunities there. Yeah, I do, Scott. yeah i do scott We have, in fact, we have an MOU with Westinghouse to potentially manufacture certain components for the AP1000, you know, in the U.S. market and potentially in other markets. we have in fact we have an mou with westinghouse to potentially manufacture certain components for the ap1000 you know in the u.s market and potentially in other markets What we would do there is what we, similar to what we do on CANDU, we're qualified for pressure components, high-pressure components like steam generators, heat exchangers. what we would do there is what we similar to what we do on candu we're qualified for pressure components high-pressure components like steam generators heat exchangers We could make that reactor pressure vessel in our Cambridge plant. we could make that reactor pressure vessel in our cambridge plant There's a lot there. there's a lot there I think, you know, as industrial capacity starts to stretch, we might have, you know, some really interesting opportunities there. i think you know as industrial capacity starts to stretch we might have you know some really interesting opportunities there

Speaker 5: Okay. Just to clarify, could your content on that potentially be as large as CANDU, or would it be still materially smaller? Okay. okay Just to clarify, could your content on that potentially be as large as CANDU, or would it be still materially smaller? just to clarify could your content on that potentially be as large as candu or would it be still materially smaller

Speaker 4: Yeah, I'm not sure if I'd go that far. We'll have to see how that unfolds. For CANDU, of course, we typically get all the steam generators, most of the heat exchangers, feeders, and other such content. I'd say it's the same kind of scope of equipment, but I don't know if we would sort of run the table like we do at CANDU. Yeah, I'm not sure if I'd go that far. yeah i'm not sure if i'd go that far We'll have to see how that unfolds. we'll have to see how that unfolds For CANDU, of course, we typically get all the steam generators, most of the heat exchangers, feeders, and other such content. for candu of course we typically get all the steam generators most of the heat exchangers feeders and other such content I'd say it's the same kind of scope of equipment, but I don't know if we would sort of run the table like we do at CANDU. i'd say it's the same kind of scope of equipment but i don't know if we would sort of run the table like we do at candu

Speaker 5: Okay, thank you. Okay, thank you. okay thank you

Speaker 4: Thank you. Thank you. thank you

Speaker 11: Our next question comes from the line of Jeff Campbell with Seaport. Your line is open. Our next question comes from the line of Jeff Campbell with Seaport. our next question comes from the line of jeff campbell with seaport Your line is open. your line is open

Speaker 9: Good afternoon, and congratulations on the strong quarter. I thought I'd start with one kind of high-level question, and then I got a specific for the second. I thought the appointment of Kevin McCoy to the Chief Nuclear Officer was clearly important, but it's not clear to me how he will influence bottlenecks that don't historically reside at BWXT. Any high-level commentary you can provide there is certainly appreciated. Good afternoon, and congratulations on the strong quarter. good afternoon and congratulations on the strong quarter I thought I'd start with one kind of high-level question, and then I got a specific for the second. i thought i'd start with one kind of high-level question and then i got a specific for the second I thought the appointment of Kevin McCoy to the Chief Nuclear Officer was clearly important, but it's not clear to me how he will influence bottlenecks that don't historically reside at BWXT. i thought the appointment of kevin mccoy to the chief nuclear officer was clearly important but it's not clear to me how he will influence bottlenecks that don't historically reside at bwxt Any high-level commentary you can provide there is certainly appreciated. any high-level commentary you can provide there is certainly appreciated

Speaker 4: Yeah, Jeff, I didn't quite catch the question. Would you be good enough to repeat it? Yeah, Jeff, I didn't quite catch the question. yeah jeff i didn't quite catch the question Would you be good enough to repeat it? would you be good enough to repeat it

Speaker 9: Sure. I was saying that I noted Kevin McCoy's appointment to Chief Nuclear Officer with interest, but I wasn't really sure what his mandate will be since BWXT is usually not the point of dragging when we have difficulties getting these projects through. Just any commentary that you can provide on how he's going to influence the. Sure. sure I was saying that I noted Kevin McCoy's appointment to Chief Nuclear Officer with interest, but I wasn't really sure what his mandate will be since BWXT is usually not the point of dragging when we have difficulties getting these projects through. i was saying that i noted kevin mccoy's appointment to chief nuclear officer with interest but i wasn't really sure what his mandate will be since bwxt is usually not the point of dragging when we have difficulties getting these projects through Just any commentary that you can provide on how he's going to influence the. just any commentary that you can provide on how he's going to influence the

Speaker 4: I got you now, Jeff. I got you now, Jeff. i got you now jeff

Speaker 9: Thank you. Thank you. thank you

Speaker 4: Right. Okay. I understand the question now. You're quite correct in the way that title is normally used. Let me just say that that's a bit of a sort of a holding place for Kevin. The reason for that is that Kevin is seconded to the Department of Defense to help with Deputy Secretary of Defense and the Secretary of the Navy with nuclear shipbuilding. He remains an executive employee of BWXT, but he's fully under contract to the Navy. That's the title that he's holding while he's occupying those positions with the Navy. In the meantime, we promoted Joe Miller up into President of Government Operations to replace Kevin. It's all part of that dynamic. Right. right Okay. okay I understand the question now. i understand the question now You're quite correct in the way that title is normally used. you're quite correct in the way that title is normally used Let me just say that that's a bit of a sort of a holding place for Kevin. let me just say that that's a bit of a sort of a holding place for kevin The reason for that is that Kevin is seconded to the Department of Defense to help with Deputy Secretary of Defense and the Secretary of the Navy with nuclear shipbuilding. the reason for that is that kevin is seconded to the department of defense to help with deputy secretary of defense and the secretary of the navy with nuclear shipbuilding He remains an executive employee of BWXT, but he's fully under contract to the Navy. he remains an executive employee of bwxt but he's fully under contract to the navy That's the title that he's holding while he's occupying those positions with the Navy. that's the title that he's holding while he's occupying those positions with the navy In the meantime, we promoted Joe Miller up into President of Government Operations to replace Kevin. in the meantime we promoted joe miller up into president of government operations to replace kevin It's all part of that dynamic. it's all part of that dynamic

Speaker 9: Okay. Yeah, that makes a lot more sense. My other question was slide seven, the government operations margins of approximately 20.5%. That seems well above prior guidance. I just wondered if you could pinpoint some drivers of this improvement and maybe their durability. Thanks. Okay. okay Yeah, that makes a lot more sense. yeah that makes a lot more sense My other question was slide seven, the government operations margins of approximately 20.5%. my other question was slide seven the government operations margins of approximately 20.5% That seems well above prior guidance. that seems well above prior guidance I just wondered if you could pinpoint some drivers of this improvement and maybe their durability. i just wondered if you could pinpoint some drivers of this improvement and maybe their durability Thanks. thanks

Speaker 10: Yeah. Gross margin for the quarter was impacted by the EAC for the special materials contract that we just mentioned. We also had some really good pacing of work, as well as some of the timing of materials that was good from an overall margin standpoint. I mean, overall, I would say we're comfortable and we're happy with some of the efficiencies and utilizations that we're seeing at the plants. We think, and we'll continue to focus on that from a margin standpoint to create some long-term sustainability there. We'll see continued strong performance for the rest of the year, and we'll give you more clarity around what we're expecting in 2026 next quarter. Yeah. yeah Gross margin for the quarter was impacted by the EAC for the special materials contract that we just mentioned. gross margin for the quarter was impacted by the eac for the special materials contract that we just mentioned We also had some really good pacing of work, as well as some of the timing of materials that was good from an overall margin standpoint. we also had some really good pacing of work as well as some of the timing of materials that was good from an overall margin standpoint I mean, overall, I would say we're comfortable and we're happy with some of the efficiencies and utilizations that we're seeing at the plants. i mean overall i would say we're comfortable and we're happy with some of the efficiencies and utilizations that we're seeing at the plants We think, and we'll continue to focus on that from a margin standpoint to create some long-term sustainability there. we think and we'll continue to focus on that from a margin standpoint to create some long-term sustainability there We'll see continued strong performance for the rest of the year, and we'll give you more clarity around what we're expecting in 2026 next quarter. we'll see continued strong performance for the rest of the year and we'll give you more clarity around what we're expecting in 2026 next quarter

Speaker 9: Okay, great. Thank you. Okay, great. okay great Thank you. thank you

Speaker 11: Next question comes from the line of Robert Labick with CJS Securities. Your line is open. Next question comes from the line of Robert Labick with CJS Securities. next question comes from the line of robert labick with cjs securities Your line is open. your line is open

Speaker 14: Good afternoon. Thanks for taking my questions, and congrats to Mike on his new role. Good afternoon. good afternoon Thanks for taking my questions, and congrats to Mike on his new role. thanks for taking my questions and congrats to mike on his new role

Speaker 10: Thank you. Thank you. thank you

Speaker 14: Sure. I wanted to start, Rex, you mentioned this in your prepared remarks, but you had the recent approval by the CNSC to irradiate yttrium and lutetium in your target delivery system. Can you talk about the opportunity there and what are the next steps and what it'll take for you to get that through, done, and produce commercial material? Sure. sure I wanted to start, Rex, you mentioned this in your prepared remarks, but you had the recent approval by the CNSC to irradiate yttrium and lutetium in your target delivery system. i wanted to start rex you mentioned this in your prepared remarks but you had the recent approval by the cnsc to irradiate yttrium and lutetium in your target delivery system Can you talk about the opportunity there and what are the next steps and what it'll take for you to get that through, done, and produce commercial material? can you talk about the opportunity there and what are the next steps and what it'll take for you to get that through done and produce commercial material

Speaker 4: Sure, Bob. Yeah, we're doing that in partnership with Laurentis Energy Partners, as I said in the script. The qualification of those products is really up to our partner. They're the ones that have developed the contracts to produce that material for certain clients, so we have a bit of a passive role there. We did design and deploy that target delivery system, so it'll be a loyalty opportunity for us. Sure, Bob. sure bob Yeah, we're doing that in partnership with Laurentis Energy Partners, as I said in the script. yeah we're doing that in partnership with laurentis energy partners as i said in the script The qualification of those products is really up to our partner. the qualification of those products is really up to our partner They're the ones that have developed the contracts to produce that material for certain clients, so we have a bit of a passive role there. they're the ones that have developed the contracts to produce that material for certain clients so we have a bit of a passive role there We did design and deploy that target delivery system, so it'll be a loyalty opportunity for us. we did design and deploy that target delivery system so it'll be a loyalty opportunity for us

Speaker 14: Okay, great. Just switching gears a little bit for my follow-up. You have, you know, a tremendous amount of opportunities ahead of you. Talked about the DOD SMR growth, Pele build-out, et cetera. Talk about capital allocation. How do you prioritize, you know, capital into each of these? What are the big amounts of capital that you need to deploy over the next 5-10 years for any of these or other opportunities and how you allocate? Okay, great. okay great Just switching gears a little bit for my follow-up. just switching gears a little bit for my follow-up You have, you know, a tremendous amount of opportunities ahead of you. you have you know a tremendous amount of opportunities ahead of you Talked about the DOD SMR growth, Pele build-out, et cetera. talked about the dod smr growth pele build-out et cetera Talk about capital allocation. talk about capital allocation How do you prioritize, you know, capital into each of these? how do you prioritize you know capital into each of these What are the big amounts of capital that you need to deploy over the next 5- 10 years for any of these or other opportunities and how you allocate? what are the big amounts of capital that you need to deploy over the next 5- 10 years for any of these or other opportunities and how you allocate

Speaker 4: Yeah, maybe I'll start and then flip it over to Mike. We've given broad guidance that 4% for maintenance CapEx surging up to perhaps 5% or 6% episodically, depending on the opportunity. We're doing the Cambridge plant build-out right now, which is obviously not maintenance CapEx, and that's sort of 1% of our sales right now. That pushes it up into that 4%-6% range. I think that's how we see it. We don't see in the windshield, Bob, any CapEx super cycles like we've been through, at least at the present moment. I think you'd see it banded in that range, 4%-6%. As to how we evaluate it, it's obviously a business case, and we've got so many high-quality business cases right now and so much competition for capital, it's actually pretty tough. That goes with the abundance of opportunities that we're facing. Yeah, maybe I'll start and then flip it over to Mike. yeah maybe i'll start and then flip it over to mike We've given broad guidance that 4% for maintenance CapEx surging up to perhaps 5% or 6% episodically, depending on the opportunity. we've given broad guidance that 4% for maintenance capex surging up to perhaps 5% or 6% episodically depending on the opportunity We're doing the Cambridge plant build-out right now, which is obviously not maintenance CapEx, and that's sort of 1% of our sales right now. we're doing the cambridge plant build-out right now which is obviously not maintenance capex and that's sort of 1% of our sales right now That pushes it up into that 4%- 6% range. that pushes it up into that 4%- 6% range I think that's how we see it. i think that's how we see it We don't see in the windshield, Bob, any CapEx super cycles like we've been through, at least at the present moment. we don't see in the windshield bob any capex super cycles like we've been through at least at the present moment I think you'd see it banded in that range, 4%- 6%. i think you'd see it banded in that range 4%- 6% As to how we evaluate it, it's obviously a business case, and we've got so many high-quality business cases right now and so much competition for capital, it's actually pretty tough. as to how we evaluate it it's obviously a business case and we've got so many high-quality business cases right now and so much competition for capital it's actually pretty tough That goes with the abundance of opportunities that we're facing. that goes with the abundance of opportunities that we're facing Maybe I'll pitch it over to Mike for any additional comments. Maybe I'll pitch it over to Mike for any additional comments. maybe i'll pitch it over to mike for any additional comments

Speaker 10: Yeah, Rex, that's right. The only other thing I'd call out is, you know, we did raise guidance and expectations for CapEx to 5.5%-6%. Part of that is driven by some investments we're making around defense fuels related to enrichment. As Rex mentioned, you know, we see this, and I think we've said it before, we anticipate more of tens of millions of dollars in investments in some of these opportunities, but we don't see the same level of significant CapEx spend like we may have seen in the past. Yeah, Rex, that's right. yeah rex that's right The only other thing I'd call out is, you know, we did raise guidance and expectations for CapEx to 5.5%- 6%. the only other thing i'd call out is you know we did raise guidance and expectations for capex to 5.5%- 6% Part of that is driven by some investments we're making around defense fuels related to enrichment. part of that is driven by some investments we're making around defense fuels related to enrichment As Rex mentioned, you know, we see this, and I think we've said it before, we anticipate more of tens of millions of dollars in investments in some of these opportunities, but we don't see the same level of significant CapEx spend like we may have seen in the past. as rex mentioned you know we see this and i think we've said it before we anticipate more of tens of millions of dollars in investments in some of these opportunities but we don't see the same level of significant capex spend like we may have seen in the past

Speaker 14: Super. All right. Thanks very much. Super. super All right. all right Thanks very much. thanks very much

Speaker 11: Our next question comes from the line of David Strauss with Barclays. Your line is open. Our next question comes from the line of David Strauss with Barclays. our next question comes from the line of david strauss with barclays Your line is open. your line is open

Speaker 3: Hi. Good afternoon. This is Josh Korn on for David. You've gotten two Navy contracts now in quick succession. How far out are you contracted for those Navy programs? Hi. hi Good afternoon. good afternoon This is Josh Korn on for David. this is josh korn on for david You've gotten two Navy contracts now in quick succession. you've gotten two navy contracts now in quick succession How far out are you contracted for those Navy programs? how far out are you contracted for those navy programs

Speaker 4: Those contracts have a performance period of up to eight years. It's typical for the delivery of a full ship set to take between six and eight years, depending on whether that's Virginia, Columbia, or Ford. Eight years from the time we signed the contract. Those contracts have a performance period of up to eight years. those contracts have a performance period of up to eight years It's typical for the delivery of a full ship set to take between six and eight years, depending on whether that's Virginia, Columbia, or Ford. it's typical for the delivery of a full ship set to take between six and eight years depending on whether that's virginia columbia or ford Eight years from the time we signed the contract. eight years from the time we signed the contract

Speaker 3: Okay. Thanks. I wanted to ask, with Kinectrics closing a little earlier than you expected, how much did that contribute to the guidance increase? In the free cash flow guidance, what are you assuming for working capital? Thanks. Okay. okay Thanks. thanks I wanted to ask, with Kinectrics closing a little earlier than you expected, how much did that contribute to the guidance increase? i wanted to ask with kinectrics closing a little earlier than you expected how much did that contribute to the guidance increase In the free cash flow guidance, what are you assuming for working capital? in the free cash flow guidance what are you assuming for working capital Thanks. thanks

Speaker 10: Yeah. We had previously said Kinectrics about mid-year. As we mentioned, we look at a number of different scenarios. You're right. It was a few weeks ahead of what we had planned. Part of what you're seeing in the guidance raise relates to that. I would say, though, that that's a smaller portion. If you think about kind of the Kinectrics at an EPS level, it is slightly neutralized by the additional interest expense associated with funding from the acquisition. When you look at it from that standpoint, it's a smaller amount. I think where most of the raise really relates to timing and pacing of work as well as our performance in our government operations business. Yeah. yeah We had previously said Kinectrics about mid-year. we had previously said kinectrics about mid-year As we mentioned, we look at a number of different scenarios. as we mentioned we look at a number of different scenarios You're right. you're right It was a few weeks ahead of what we had planned. it was a few weeks ahead of what we had planned Part of what you're seeing in the guidance raise relates to that. part of what you're seeing in the guidance raise relates to that I would say, though, that that's a smaller portion. i would say though that that's a smaller portion If you think about kind of the Kinectrics at an EPS level, it is slightly neutralized by the additional interest expense associated with funding from the acquisition. if you think about kind of the kinectrics at an eps level it is slightly neutralized by the additional interest expense associated with funding from the acquisition When you look at it from that standpoint, it's a smaller amount. when you look at it from that standpoint it's a smaller amount I think where most of the raise really relates to timing and pacing of work as well as our performance in our government operations business. i think where most of the raise really relates to timing and pacing of work as well as our performance in our government operations business As it relates to working capital, from an overall working capital standpoint, and I don't know if this was specific to Kinectrics, we are anticipating kind of working capital and free cash flow generation similar to the rest of our business. Over 80% free cash flow generation specific to Kinectrics. As it relates to working capital, from an overall working capital standpoint, and I don't know if this was specific to Kinectrics, we are anticipating kind of working capital and free cash flow generation similar to the rest of our business. as it relates to working capital from an overall working capital standpoint and i don't know if this was specific to kinectrics we are anticipating kind of working capital and free cash flow generation similar to the rest of our business Over 80% free cash flow generation specific to Kinectrics. over 80% free cash flow generation specific to kinectrics

Speaker 3: Okay. Thanks. Okay. okay Thanks. thanks

Speaker 11: Next question comes from the line of Pete Skibitski with Alembic. Your line is open. Next question comes from the line of Pete Skibitski with Alembic. next question comes from the line of pete skibitski with alembic Your line is open. your line is open

Speaker 2: Hey, good evening, guys. Nice quarter. Hey, Rex. If I could follow up, I think it was Josh's question on the two naval reactor contracts in the last, call it, six or seven months or so. I feel like historically, the Navy is kind of on a, you know, like an annual pace with you guys, but now we've got kind of a quicker pace, pretty, especially this latest one, a pretty sizable award. Can you give us a sense of what's kind of motivating the Navy? Because I don't know if this is, you know, industrial-base funding or wage growth, but I don't really think of you guys as being kind of a bottleneck on submarine construction, right? I'm just wondering if you can give us a sense of kind of what the motivation is here for these size of awards in this kind of compressed timeframe. Yeah. Hey, good evening, guys. hey good evening guys Nice quarter. nice quarter Hey, Rex. hey rex If I could follow up, I think it was Josh's question on the two naval reactor contracts in the last, call it, six or seven months or so. if i could follow up i think it was josh's question on the two naval reactor contracts in the last call it six or seven months or so I feel like historically, the Navy is kind of on a, you know, like an annual pace with you guys, but now we've got kind of a quicker pace, pretty, especially this latest one, a pretty sizable award. i feel like historically the navy is kind of on a you know like an annual pace with you guys but now we've got kind of a quicker pace pretty especially this latest one a pretty sizable award Can you give us a sense of what's kind of motivating the Navy? can you give us a sense of what's kind of motivating the navy Because I don't know if this is, you know, industrial-base funding or wage growth, but I don't really think of you guys as being kind of a bottleneck on submarine construction, right? because i don't know if this is you know industrial-base funding or wage growth but i don't really think of you guys as being kind of a bottleneck on submarine construction right I'm just wondering if you can give us a sense of kind of what the motivation is here for these size of awards in this kind of compressed timeframe. i'm just wondering if you can give us a sense of kind of what the motivation is here for these size of awards in this kind of compressed timeframe Yeah. yeah

Speaker 4: Hey, Pete. The way that worked out, this last pricing agreement that we announced, the $2.6 billion one, was really kind of on time. You may remember on the last one that we had a number of delays, and that related to the complexity of that negotiation. It was complex because we had gone through COVID, had a lot of labor and commodity price pressure, and it took a while to get through that. This one kind of came on time. The prior one came pretty late. The pace is still the same. We're still receiving orders to the 30-year shipbuilding plan that the Navy has. I would say what's significant about it is, you know, there are concerns about whether or not the shipyards would keep pace with the supply chain. Hey, Pete. hey pete The way that worked out, this last pricing agreement that we announced, the $2.6 billion one, was really kind of on time. the way that worked out this last pricing agreement that we announced the $2.6 billion one was really kind of on time You may remember on the last one that we had a number of delays, and that related to the complexity of that negotiation. you may remember on the last one that we had a number of delays and that related to the complexity of that negotiation It was complex because we had gone through COVID, had a lot of labor and commodity price pressure, and it took a while to get through that. it was complex because we had gone through covid had a lot of labor and commodity price pressure and it took a while to get through that This one kind of came on time. this one kind of came on time The prior one came pretty late. the prior one came pretty late The pace is still the same. the pace is still the same We're still receiving orders to the 30-year shipbuilding plan that the Navy has. we're still receiving orders to the 30-year shipbuilding plan that the navy has I would say what's significant about it is, you know, there are concerns about whether or not the shipyards would keep pace with the supply chain. i would say what's significant about it is you know there are concerns about whether or not the shipyards would keep pace with the supply chain We have offered that we believe that the Navy's approach is going to be to try to fix the problem in the shipyards and keep the supply chain running at base. This last pricing agreement kind of validates that thesis. It has two Virginia's per year. Columbia's now serial in the serial ordering, and then the next Ford when it comes. I think it was kind of important from that perspective to say that, at least for us, the supply chain is staying on schedule. Okay. Got it. Got it. So yeah, so don't expect the next one until 2026, it seems like, is what we should think. That's, that's. It depends. Sometimes it's on two-year intervals, sometimes on three. We'll see how that unfolds with our customer. We have offered that we believe that the Navy's approach is going to be to try to fix the problem in the shipyards and keep the supply chain running at base. we have offered that we believe that the navy's approach is going to be to try to fix the problem in the shipyards and keep the supply chain running at base This last pricing agreement kind of validates that thesis. this last pricing agreement kind of validates that thesis It has two Virginia's per year. it has two virginia's per year Columbia's now serial in the serial ordering, and then the next Ford when it comes. columbia's now serial in the serial ordering and then the next ford when it comes I think it was kind of important from that perspective to say that, at least for us, the supply chain is staying on schedule. i think it was kind of important from that perspective to say that at least for us the supply chain is staying on schedule Okay. okay Got it. got it Got it. got it So yeah, so don't expect the next one until 2026, it seems like, is what we should think. so yeah so don't expect the next one until 2026 it seems like is what we should think That's, that's. that's that's It depends. it depends Sometimes it's on two-year intervals, sometimes on three. sometimes it's on two-year intervals sometimes on three We'll see how that unfolds with our customer. we'll see how that unfolds with our customer

Speaker 2: Okay. Okay. And just one follow-up on me. Okay. okay Okay. okay And just one follow-up on me. and just one follow-up on me In your prepared remarks, your comments about several advanced nuclear fuel opportunities, I feel like in the past, you guys have said that you're not really interested in commercial fuel opportunities. I just wanted to validate if that's still true, that these fuel opportunities, are they largely the government at this point? In your prepared remarks, your comments about several advanced nuclear fuel opportunities, I feel like in the past, you guys have said that you're not really interested in commercial fuel opportunities. in your prepared remarks your comments about several advanced nuclear fuel opportunities i feel like in the past you guys have said that you're not really interested in commercial fuel opportunities I just wanted to validate if that's still true, that these fuel opportunities, are they largely the government at this point? i just wanted to validate if that's still true that these fuel opportunities are they largely the government at this point

Speaker 4: Not exactly. I'd say there's, you know, an interesting, it's smallish, but an interesting demand signal for TRISO fuel that we're responding to, and we can produce that fuel commercially. We're literally the only company that can produce TRISO at any scale. There's commercial interest, and I expect we'll get a couple of contracts in that area this year. I think the other comment was around, the other indication was around on the front-end fuel cycle for the Defense Enrichment Program that we're involved with. Not exactly. not exactly I'd say there's, you know, an interesting, it's smallish, but an interesting demand signal for TRISO fuel that we're responding to, and we can produce that fuel commercially. i'd say there's you know an interesting it's smallish but an interesting demand signal for triso fuel that we're responding to and we can produce that fuel commercially We're literally the only company that can produce TRISO at any scale. we're literally the only company that can produce triso at any scale There's commercial interest, and I expect we'll get a couple of contracts in that area this year. there's commercial interest and i expect we'll get a couple of contracts in that area this year I think the other comment was around, the other indication was around on the front-end fuel cycle for the Defense Enrichment Program that we're involved with. i think the other comment was around the other indication was around on the front-end fuel cycle for the defense enrichment program that we're involved with Depending on the scale of that thing and on how it unfolds, there could be commercial outlets for that material. I'd say a couple of opportunities there that are interesting to us. Depending on the scale of that thing and on how it unfolds, there could be commercial outlets for that material. depending on the scale of that thing and on how it unfolds there could be commercial outlets for that material I'd say a couple of opportunities there that are interesting to us. i'd say a couple of opportunities there that are interesting to us

Speaker 2: Okay. Great. Thank you. Okay. okay Great. great Thank you. thank you

Speaker 4: You're welcome. You're welcome. you're welcome

Speaker 11: Our next question comes from the line of Andre Madrid with BTIG. Your line is open. Our next question comes from the line of Andre Madrid with BTIG. our next question comes from the line of andre madrid with btig Your line is open. your line is open

Speaker 7: Good afternoon, guys. Thanks for taking my question. Good afternoon, guys. good afternoon guys Thanks for taking my question. thanks for taking my question

Speaker 4: Yeah, Andre. Yeah, Andre. yeah andre

Speaker 7: Looking at microreactor, I know a lot of moving pieces there. It looks like Pele is progressing well. You know, I guess how should we think about that end market in the near to medium term, given the progress on Pele, the loss of DRACO? Is there any contribution from JETSON still? Just trying to figure out what the moving pieces are. Looking at microreactor, I know a lot of moving pieces there. looking at microreactor i know a lot of moving pieces there It looks like Pele is progressing well. it looks like pele is progressing well You know, I guess how should we think about that end market in the near to medium term, given the progress on Pele, the loss of DRACO? you know i guess how should we think about that end market in the near to medium term given the progress on pele the loss of draco Is there any contribution from JETSON still? is there any contribution from jetson still Just trying to figure out what the moving pieces are. just trying to figure out what the moving pieces are

Speaker 4: Yeah, I'd say, Andrea, let me take those by part. For Pele, yeah, it's progressing. We're assembling the reactor core now, as we have discussed. I was in the Pentagon just within the last month talking to a senior official about what the path ahead is for government microreactors. It looks like the procurement strategy is going to be a competitive offering to put microreactors at multiple DOD sites. This is what we had always hoped. We had hoped that Pele would become maybe a low-rate initial production program with production programs to follow. I think that could happen. Now that's certainly in the future a couple of years, but I think that's the endpoint for it. Concerning DRACO, DRACO hasn't gone away. Just to be clear about that, DARPA withdrew its participation from kind of a joint venture with NASA to develop that nuclear thermal propulsion technology. Yeah, I'd say, Andrea, let me take those by part. yeah i'd say andrea let me take those by part For Pele, yeah, it's progressing. for pele yeah it's progressing We're assembling the reactor core now, as we have discussed. we're assembling the reactor core now as we have discussed I was in the Pentagon just within the last month talking to a senior official about what the path ahead is for government microreactors. i was in the pentagon just within the last month talking to a senior official about what the path ahead is for government microreactors It looks like the procurement strategy is going to be a competitive offering to put microreactors at multiple DOD sites. it looks like the procurement strategy is going to be a competitive offering to put microreactors at multiple dod sites This is what we had always hoped. this is what we had always hoped We had hoped that Pele would become maybe a low-rate initial production program with production programs to follow. we had hoped that pele would become maybe a low-rate initial production program with production programs to follow I think that could happen. i think that could happen Now that's certainly in the future a couple of years, but I think that's the endpoint for it. now that's certainly in the future a couple of years but i think that's the endpoint for it Concerning DRACO, DRACO hasn't gone away. concerning draco draco hasn't gone away Just to be clear about that, DARPA withdrew its participation from kind of a joint venture with NASA to develop that nuclear thermal propulsion technology. just to be clear about that darpa withdrew its participation from kind of a joint venture with nasa to develop that nuclear thermal propulsion technology The NASA program is going ahead. In fact, the CGS appropriation marks for Pele—sorry, for DRACO, for nuclear thermal propulsion were $175 million on the House side and $110 million on the Senate side. It looks like we will have a program going forward through NASA to develop that technology. I'm actually pretty optimistic about that one. In terms of JETSON, the other program that you talked about, there's a sliver of a program there. It's a smallish thing. We have some other pieces, Fission Surface Power and other such programs. I think from what I'm hearing, NASA's ready to gear up on Fission Surface Power pretty quickly. There's a lot there, and I think we'll have a significant role in some of it. The NASA program is going ahead. the nasa program is going ahead In fact, the CGS appropriation marks for Pele—sorry, for DRACO, for nuclear thermal propulsion were $175 million on the House side and $110 million on the Senate side. in fact the cgs appropriation marks for pele—sorry for draco for nuclear thermal propulsion were $175 million on the house side and $110 million on the senate side It looks like we will have a program going forward through NASA to develop that technology. it looks like we will have a program going forward through nasa to develop that technology I'm actually pretty optimistic about that one. i'm actually pretty optimistic about that one In terms of JETSON, the other program that you talked about, there's a sliver of a program there. in terms of jetson the other program that you talked about there's a sliver of a program there It's a smallish thing. it's a smallish thing We have some other pieces, Fission Surface Power and other such programs. we have some other pieces fission surface power and other such programs I think from what I'm hearing, NASA's ready to gear up on Fission Surface Power pretty quickly. i think from what i'm hearing nasa's ready to gear up on fission surface power pretty quickly There's a lot there, and I think we'll have a significant role in some of it. there's a lot there and i think we'll have a significant role in some of it

Speaker 7: Okay. That's definitely promising. Good to hear. I guess, moving in a different direction, just talking about naval nuclear supply chain more broadly, I think one of your peers talked about the prospect of taking more work off the plates of the shipyards in order to help clear up some of those bottlenecks. Is that something that you guys would ever be interested in doing, or is it kind of been there, done that, don't really want to do that anymore? I know this is something that I think you guys have explored before, but I wasn't sure if you were maybe taking a look at it with fresh eyes. Okay. okay That's definitely promising. that's definitely promising Good to hear. good to hear I guess, moving in a different direction, just talking about naval nuclear supply chain more broadly, I think one of your peers talked about the prospect of taking more work off the plates of the shipyards in order to help clear up some of those bottlenecks. i guess moving in a different direction just talking about naval nuclear supply chain more broadly i think one of your peers talked about the prospect of taking more work off the plates of the shipyards in order to help clear up some of those bottlenecks Is that something that you guys would ever be interested in doing, or is it kind of been there, done that, don't really want to do that anymore? is that something that you guys would ever be interested in doing or is it kind of been there done that don't really want to do that anymore I know this is something that I think you guys have explored before, but I wasn't sure if you were maybe taking a look at it with fresh eyes. i know this is something that i think you guys have explored before but i wasn't sure if you were maybe taking a look at it with fresh eyes

Speaker 4: I'd say generally, it's not of high interest to us if it's not, you know, nuclear-qualified components, and that work would not be for the most part. I wouldn't put it at the top of my list. I'd say generally, it's not of high interest to us if it's not, you know, nuclear-qualified components, and that work would not be for the most part. i'd say generally it's not of high interest to us if it's not you know nuclear-qualified components and that work would not be for the most part I wouldn't put it at the top of my list. i wouldn't put it at the top of my list

Speaker 7: Got it. Okay. No, that makes sense. One more, if I could squeeze it in. I guess, you know, looking at the supply chain again, let's stick on that. Any further impact related to zirconium? What are you guys seeing there? Does it look like it's getting better, getting worse? Got it. got it Okay. okay No, that makes sense. no that makes sense One more, if I could squeeze it in. one more if i could squeeze it in I guess, you know, looking at the supply chain again, let's stick on that. i guess you know looking at the supply chain again let's stick on that Any further impact related to zirconium? any further impact related to zirconium What are you guys seeing there? what are you guys seeing there Does it look like it's getting better, getting worse? does it look like it's getting better getting worse

Speaker 4: It seems to have leveled out. It certainly went through a spike there, and Mike talked about it in his remarks that it impacted us in the first quarter. There was a modest, a very minor impact in the second quarter. Just as a reminder, that zirconium price variability is the reason why we don't accept that risk in our contract. That passes through to the customer. The impact was merely a timing impact related to how we do the percentage complete contract. That comes, that bounces back to us. I think first it's settled down. Second, it comes back to us in the end. It seems to have leveled out. it seems to have leveled out It certainly went through a spike there, and Mike talked about it in his remarks that it impacted us in the first quarter. it certainly went through a spike there and mike talked about it in his remarks that it impacted us in the first quarter There was a modest, a very minor impact in the second quarter. there was a modest a very minor impact in the second quarter Just as a reminder, that zirconium price variability is the reason why we don't accept that risk in our contract. just as a reminder that zirconium price variability is the reason why we don't accept that risk in our contract That passes through to the customer. that passes through to the customer The impact was merely a timing impact related to how we do the percentage complete contract. the impact was merely a timing impact related to how we do the percentage complete contract That comes, that bounces back to us. that comes that bounces back to us I think first it's settled down. i think first it's settled down Second, it comes back to us in the end. second it comes back to us in the end

Speaker 7: Got it. Got it. I appreciate the clarification, Rex. I'll leave it there. Thanks so much. Got it. got it Got it. got it I appreciate the clarification, Rex. i appreciate the clarification rex I'll leave it there. i'll leave it there Thanks so much. thanks so much

Speaker 4: Thank you. Thank you. thank you

Speaker 11: Our next question comes from the line of Jed Dorsheimer with William Blair. Your line is open. Our next question comes from the line of Jed Dorsheimer with William Blair. our next question comes from the line of jed dorsheimer with william blair Your line is open. your line is open Hey, guys. You have [Mark Schutter] on for Jed. Given all the nuclear enthusiasm and the government support, can you try to place a metric on the engagement level you're seeing now versus a quarter ago or a year ago? Maybe on the number of projects you're bidding on actively or maybe an increase of revenue opportunity. Hey, guys. hey guys You have [Mark Schutter] on for Jed. you have [mark schutter] on for jed Given all the nuclear enthusiasm and the government support, can you try to place a metric on the engagement level you're seeing now versus a quarter ago or a year ago? given all the nuclear enthusiasm and the government support can you try to place a metric on the engagement level you're seeing now versus a quarter ago or a year ago Maybe on the number of projects you're bidding on actively or maybe an increase of revenue opportunity. maybe on the number of projects you're bidding on actively or maybe an increase of revenue opportunity

Speaker 4: is hard to answer that one, Mark. I would say we certainly see high activity in every one of our end markets. You know, medical's been compounding at 20% per year. The government appetite seems to be stronger than ever. In fact, I've said earlier today that we kind of can't outgrow the government business. Commercial power, the opportunities are abundant. The markets are just strong everywhere, and we certainly haven't experienced a time like this. is hard to answer that one, Mark. is hard to answer that one mark i I would say we certainly see high activity in every one of our end markets. i would say we certainly see high activity in every one of our end markets You know, medical's been compounding at 20% per year. you know medical's been compounding at 20% per year The government appetite seems to be stronger than ever. the government appetite seems to be stronger than ever In fact, I've said earlier today that we kind of can't outgrow the government business. in fact i've said earlier today that we kind of can't outgrow the government business Commercial power, the opportunities are abundant. commercial power the opportunities are abundant The markets are just strong everywhere, and we certainly haven't experienced a time like this. the markets are just strong everywhere and we certainly haven't experienced a time like this I appreciate it. I thought I'd ask. Just switching gears a bit to the TRISO fuel. I think I heard you mention that you expect some contracts by the end of the year. Can you wrap that in any kind of unit economics or maybe a capacity, or can you give us any more color on what you should be expecting there, and is that going to be any significant impact to the financials, this, or maybe even next year? I appreciate it. i appreciate it I thought I'd ask. i thought i'd ask Just switching gears a bit to the TRISO fuel. just switching gears a bit to the triso fuel I think I heard you mention that you expect some contracts by the end of the year. i think i heard you mention that you expect some contracts by the end of the year Can you wrap that in any kind of unit economics or maybe a capacity, or can you give us any more color on what you should be expecting there, and is that going to be any significant impact to the financials, this, or maybe even next year? can you wrap that in any kind of unit economics or maybe a capacity or can you give us any more color on what you should be expecting there and is that going to be any significant impact to the financials this or maybe even next year Yeah, I'd say, you know, I don't want to be specific about timing, and I'd be a little bit cautious about the scale of those. They're smallish. They're certainly smaller than the Pele contract fuel contracts. I think they're interesting because we're beginning to see the precipitation of modest demand for TRISO fuel on the commercial side. It's exciting strategically. It's not big economically yet. Yeah, I'd say, you know, I don't want to be specific about timing, and I'd be a little bit cautious about the scale of those. yeah i'd say you know i don't want to be specific about timing and i'd be a little bit cautious about the scale of those They're smallish. they're smallish They're certainly smaller than the Pele contract fuel contracts. they're certainly smaller than the pele contract fuel contracts I think they're interesting because we're beginning to see the precipitation of modest demand for TRISO fuel on the commercial side. i think they're interesting because we're beginning to see the precipitation of modest demand for triso fuel on the commercial side It's exciting strategically. it's exciting strategically It's not big economically yet. it's not big economically yet Great. Thank you, guys. Great. great Thank you, guys. thank you guys

Speaker 11: Next question comes from the line of Jan-Frans Engelbrecht with Baird. Your line is open. Next question comes from the line of Jan-Frans Engelbrecht with Baird. next question comes from the line of jan-frans engelbrecht with baird Your line is open. your line is open

Speaker 6: Good evening, Rex, Mike, and Chase. The first question, I just want to start on the reconciliation bill. There is a lot of, you know, big dollars across shipbuilding and just the support for the nuclear triad. I just wanted to get your thoughts, how you're thinking about that, and any sort of incremental orders that you expect can start to flow to BWXT where it wouldn't have existed if there was no reconciliation bill. Good evening, Rex, Mike, and Chase. good evening rex mike and chase The first question, I just want to start on the reconciliation bill. the first question i just want to start on the reconciliation bill There is a lot of, you know, big dollars across shipbuilding and just the support for the nuclear triad. there is a lot of you know big dollars across shipbuilding and just the support for the nuclear triad I just wanted to get your thoughts, how you're thinking about that, and any sort of incremental orders that you expect can start to flow to BWXT where it wouldn't have existed if there was no reconciliation bill. i just wanted to get your thoughts how you're thinking about that and any sort of incremental orders that you expect can start to flow to bwxt where it wouldn't have existed if there was no reconciliation bill

Speaker 4: Yeah, the reconciliation bill was good for us. There was funding in there for a second Virginia for 2026, of course. There was, if I recall it correctly, $100 million for defense enrichment, which obviously is right in our wheelhouse and what we're working on with the National Nuclear Security Administration. There was funding that was specific to advanced reactors. You can read that as Pele. There was additional funding for the Strategic Capabilities Office. Yeah, the reconciliation bill was good for us. yeah the reconciliation bill was good for us There was funding in there for a second Virginia for 2026, of course. there was funding in there for a second virginia for 2026 of course There was, if I recall it correctly, $100 million for defense enrichment, which obviously is right in our wheelhouse and what we're working on with the National Nuclear Security Administration. there was if i recall it correctly $100 million for defense enrichment which obviously is right in our wheelhouse and what we're working on with the national nuclear security administration There was funding that was specific to advanced reactors. there was funding that was specific to advanced reactors You can read that as Pele. you can read that as pele There was additional funding for the Strategic Capabilities Office. there was additional funding for the strategic capabilities office When you stack all that up, I think it was all, you know, quite edifying to programs that we had in progress. When you stack all that up, I think it was all, you know, quite edifying to programs that we had in progress. when you stack all that up i think it was all you know quite edifying to programs that we had in progress

Speaker 6: Great. Thanks, Rex. And then just a quick follow-up on the BWRX-300. Just on that first reactor in Darlington, how should we think about the revenue recognition? Sort of when does that peak for the first reactor? I guess to add to that question, is there the potential for the TVA deployment to sort of leapfrog reactors two to four at Darlington? How should we think about those two locations and just the revenue cadence for reactor one on the GE Hitachi design? Great. great Thanks, Rex. thanks rex And then just a quick follow-up on the BWRX-300. and then just a quick follow-up on the bwrx-300 Just on that first reactor in Darlington, how should we think about the revenue recognition? just on that first reactor in darlington how should we think about the revenue recognition Sort of when does that peak for the first reactor? sort of when does that peak for the first reactor I guess to add to that question, is there the potential for the TVA deployment to sort of leapfrog reactors two to four at Darlington? i guess to add to that question is there the potential for the tva deployment to sort of leapfrog reactors two to four at darlington How should we think about those two locations and just the revenue cadence for reactor one on the GE Hitachi design? how should we think about those two locations and just the revenue cadence for reactor one on the ge hitachi design

Speaker 4: Yeah. What we said historically on the revenue profile for that X300 is that, first, we said the opportunity per X300 is in the range of $100 million and that the revenue profile was kind of evenly distributed over, let's call it, a four-year period. Yeah. yeah What we said historically on the revenue profile for that X300 is that, first, we said the opportunity per X300 is in the range of $100 million and that the revenue profile was kind of evenly distributed over, let's call it, a four-year period. what we said historically on the revenue profile for that x300 is that first we said the opportunity per x300 is in the range of $100 million and that the revenue profile was kind of evenly distributed over let's call it a four-year period The reason for that is the reactor pressure vessel and certain other components that we couldn't manufacture tend to be long-lead items for those reactors. In fact, we received the order for the project that was formally approved by the provincial government. You can think about it that way. In terms of the timing for TVA, I don't know if it will leapfrog two, three, and four at Darlington. I mean, I hope so. I hope it goes fast. I think both of those opportunities, you think about that opportunity, it's probably four more X300s added to the additional three at Darlington. It remains an exciting opportunity for us. I would think what would happen is, maybe the first reactor at TVA falls somewhere in the middle of all that. I'm speculating. The reason for that is the reactor pressure vessel and certain other components that we couldn't manufacture tend to be long-lead items for those reactors. the reason for that is the reactor pressure vessel and certain other components that we couldn't manufacture tend to be long-lead items for those reactors In fact, we received the order for the project that was formally approved by the provincial government. in fact we received the order for the project that was formally approved by the provincial government You can think about it that way. you can think about it that way In terms of the timing for TVA, I don't know if it will leapfrog two, three, and four at Darlington. in terms of the timing for tva i don't know if it will leapfrog two three and four at darlington I mean, I hope so. i mean i hope so I hope it goes fast. i hope it goes fast I think both of those opportunities, you think about that opportunity, it's probably four more X300s added to the additional three at Darlington. i think both of those opportunities you think about that opportunity it's probably four more x300s added to the additional three at darlington It remains an exciting opportunity for us. it remains an exciting opportunity for us I would think what would happen is, maybe the first reactor at TVA falls somewhere in the middle of all that. i would think what would happen is maybe the first reactor at tva falls somewhere in the middle of all that I'm speculating. i'm speculating

Speaker 6: Okay. Great. Thanks. That's very helpful. I'll jump back in the queue. Congrats on a strong quarter. Thanks. Okay. okay Great. great Thanks. thanks That's very helpful. that's very helpful I'll jump back in the queue. i'll jump back in the queue Congrats on a strong quarter. congrats on a strong quarter Thanks. thanks

Speaker 4: Thank you. Thank you. thank you

Speaker 11: Our next question comes from the line of Mike Ciarmoli with Truist Securities. Your line is open. Our next question comes from the line of Mike Ciarmoli with Truist Securities. our next question comes from the line of mike ciarmoli with truist securities Your line is open. your line is open

Speaker 13: Hey, good evening, guys. Nice results for the super merchant supplier, Rex. Hey, can you respond on the guidance here? On the guidance here, you know, I know timing is always hard to predict, but the guidance assumes GEO revenues could actually be down second half year-over-year. I guess even looking at the EBITDA margin run rate, I know you got the positive EAC, but that second half run rate looks like it might be below 20%. You haven't done that in quite some time. Was it all just timing? Is there anything going on with the mix of some of these newer programs? Should we just think about more cost plus coming in, or what's the best you can help us with on that weaker second half? Hey, good evening, guys. hey good evening guys Nice results for the super merchant supplier, Rex. nice results for the super merchant supplier rex Hey, can you respond on the guidance here? hey can you respond on the guidance here On the guidance here, you know, I know timing is always hard to predict, but the guidance assumes GEO revenues could actually be down second half year-over-year. on the guidance here you know i know timing is always hard to predict but the guidance assumes geo revenues could actually be down second half year-over-year I guess even looking at the EBITDA margin run rate, I know you got the positive EAC, but that second half run rate looks like it might be below 20%. i guess even looking at the ebitda margin run rate i know you got the positive eac but that second half run rate looks like it might be below 20% You haven't done that in quite some time. you haven't done that in quite some time Was it all just timing? was it all just timing Is there anything going on with the mix of some of these newer programs? is there anything going on with the mix of some of these newer programs Should we just think about more cost plus coming in, or what's the best you can help us with on that weaker second half? should we just think about more cost plus coming in or what's the best you can help us with on that weaker second half

Speaker 10: Yeah, I would say I don't think we're seeing a major shift in overall mix across the contract portfolios. What I would say is, you know, we signed the pricing agreement, you know, that we mentioned a little bit ahead of schedule. That had a number of, you know, advanced material procurements that came into the quarter that we weren't expecting that typically would be in the back half of the year. In addition to that, when you look at kind of the special materials contract performance, typically the fourth quarter is a very strong quarter for us. In a lot of cases, we're seeing, you know, strong performance at that point in the year. We've seen and we're able to get very confident in kind of our contract performance in Q2, which is where you're seeing, you know, some outsized growth in the quarter. Yeah, I would say I don't think we're seeing a major shift in overall mix across the contract portfolios. yeah i would say i don't think we're seeing a major shift in overall mix across the contract portfolios What I would say is, you know, we signed the pricing agreement, you know, that we mentioned a little bit ahead of schedule. what i would say is you know we signed the pricing agreement you know that we mentioned a little bit ahead of schedule That had a number of, you know, advanced material procurements that came into the quarter that we weren't expecting that typically would be in the back half of the year. that had a number of you know advanced material procurements that came into the quarter that we weren't expecting that typically would be in the back half of the year In addition to that, when you look at kind of the special materials contract performance, typically the fourth quarter is a very strong quarter for us. in addition to that when you look at kind of the special materials contract performance typically the fourth quarter is a very strong quarter for us In a lot of cases, we're seeing, you know, strong performance at that point in the year. in a lot of cases we're seeing you know strong performance at that point in the year We've seen and we're able to get very confident in kind of our contract performance in Q2, which is where you're seeing, you know, some outsized growth in the quarter. we've seen and we're able to get very confident in kind of our contract performance in q2 which is where you're seeing you know some outsized growth in the quarter When we look at kind of the rest of the year, I mean, I think, you know, the way that we look at it, we feel confident in, you know, where we'll land. I don't think there's anything individually to call out too much around, you know, kind of overall revenue. I would just say that, you know, we're seeing a number of things hit earlier in the year than we typically do. When we look at kind of the rest of the year, I mean, I think, you know, the way that we look at it, we feel confident in, you know, where we'll land. when we look at kind of the rest of the year i mean i think you know the way that we look at it we feel confident in you know where we'll land I don't think there's anything individually to call out too much around, you know, kind of overall revenue. i don't think there's anything individually to call out too much around you know kind of overall revenue I would just say that, you know, we're seeing a number of things hit earlier in the year than we typically do. i would just say that you know we're seeing a number of things hit earlier in the year than we typically do

Speaker 4: Maybe I'll just add a footnote to that. I was just going to add a footnote to what Mike just said, Mike. You know, the operating condition of the plants is good. We've had a focus campaign around OpEx with multiple dimensions to it, including, you know, factory throughput, lead time, cost of poor quality, price of non-performance is the name of our program. The plants in Cambridge and across Canada, the plants in our NOG complex are performing quite well. I think we just had a very strong overperformance in the first half, and it'll normalize a little bit in the second half, but we feel good about our operational performance. There's no degradation from that perspective. Maybe I'll just add a footnote to that. maybe i'll just add a footnote to that I was just going to add a footnote to what Mike just said, Mike. i was just going to add a footnote to what mike just said mike You know, the operating condition of the plants is good. you know the operating condition of the plants is good We've had a focus campaign around OpEx with multiple dimensions to it, including, you know, factory throughput, lead time, cost of poor quality, price of non-performance is the name of our program. we've had a focus campaign around opex with multiple dimensions to it including you know factory throughput lead time cost of poor quality price of non-performance is the name of our program The plants in Cambridge and across Canada, the plants in our NOG complex are performing quite well. the plants in cambridge and across canada the plants in our nog complex are performing quite well I think we just had a very strong overperformance in the first half, and it'll normalize a little bit in the second half, but we feel good about our operational performance. i think we just had a very strong overperformance in the first half and it'll normalize a little bit in the second half but we feel good about our operational performance There's no degradation from that perspective. there's no degradation from that perspective

Speaker 13: Okay. And then just kind of on that topic, maybe the inverse here, commercial, it sounds like you've got a good line of sight to that field services. I thought that was a good color, Mike, providing the kind of % of revenue. Presumably, you get a pickup in field services, and that drives the margin strength in commercial second half. Okay. okay And then just kind of on that topic, maybe the inverse here, commercial, it sounds like you've got a good line of sight to that field services. and then just kind of on that topic maybe the inverse here commercial it sounds like you've got a good line of sight to that field services I thought that was a good color, Mike, providing the kind of % of revenue. i thought that was a good color mike providing the kind of % of revenue Presumably, you get a pickup in field services, and that drives the margin strength in commercial second half. presumably you get a pickup in field services and that drives the margin strength in commercial second half

Speaker 10: That's right. We were down seasonally compared to normally. Q2 is a strong quarter for us, but obviously, we saw a significant decline, down to 10% revenue in that mix. We feel good about where the rest of the year will shake out. I think we're confident in what we're going to see in field services and the components margins for the next two quarters. That's right. that's right We were down seasonally compared to normally. we were down seasonally compared to normally Q2 is a strong quarter for us, but obviously, we saw a significant decline, down to 10% revenue in that mix. q2 is a strong quarter for us but obviously we saw a significant decline down to 10% revenue in that mix We feel good about where the rest of the year will shake out. we feel good about where the rest of the year will shake out I think we're confident in what we're going to see in field services and the components margins for the next two quarters. i think we're confident in what we're going to see in field services and the components margins for the next two quarters

Speaker 13: Thanks, guys. I'll jump back in the queue. Thanks, guys. thanks guys I'll jump back in the queue. i'll jump back in the queue

Speaker 11: Our last question comes from the line of Ron Epstein with BAML. Your line is open. Our last question comes from the line of Ron Epstein with BAML. our last question comes from the line of ron epstein with baml Your line is open. your line is open

Speaker 12: Hello? Good afternoon, guys. Maybe just a couple of quick ones. One, when you look at the growth in the backlog, it bumped up a lot. How much of that is because of the acquisition, and how much of that's organic? Hello? hello Good afternoon, guys. good afternoon guys Maybe just a couple of quick ones. maybe just a couple of quick ones One, when you look at the growth in the backlog, it bumped up a lot. one when you look at the growth in the backlog it bumped up a lot How much of that is because of the acquisition, and how much of that's organic? how much of that is because of the acquisition and how much of that's organic

Speaker 10: Yeah. The majority of that is going to be organic. If you look at, you know, ultimately, our book to bill for this quarter was 0.2. We had really about $240 million-ish of backlog associated with the acquisitions, but the majority of it was organic. Yeah. yeah The majority of that is going to be organic. the majority of that is going to be organic If you look at, you know, ultimately, our book to bill for this quarter was 0.2. if you look at you know ultimately our book to bill for this quarter was 0.2 We had really about $240 million-ish of backlog associated with the acquisitions, but the majority of it was organic. we had really about $240 million-ish of backlog associated with the acquisitions but the majority of it was organic

Speaker 12: Got it. All right. Great. That's super. One more. We've heard some companies talking this quarter about, you know, shortages of critical minerals. Has that been an issue for you guys? Do you see it as a potential issue, and how are you mitigating it, or is it just not an issue at all? Got it. got it All right. all right Great. great That's super. that's super One more. one more We've heard some companies talking this quarter about, you know, shortages of critical minerals. we've heard some companies talking this quarter about you know shortages of critical minerals Has that been an issue for you guys? has that been an issue for you guys Do you see it as a potential issue, and how are you mitigating it, or is it just not an issue at all? do you see it as a potential issue and how are you mitigating it or is it just not an issue at all

Speaker 4: I'll take that one, Ron. We're not seeing much pressure from that. The zirconium pricing that you saw in the first quarter was a derivative of that problem, but that seems to be settled out. We seem to be settling out now. As I said earlier, apart from that, we manage our commodity risk pretty well and aren't that sensitive to critical minerals. It's just not moving the needle for us. I'll take that one, Ron. i'll take that one ron We're not seeing much pressure from that. we're not seeing much pressure from that The zirconium pricing that you saw in the first quarter was a derivative of that problem, but that seems to be settled out. the zirconium pricing that you saw in the first quarter was a derivative of that problem but that seems to be settled out We seem to be settling out now. we seem to be settling out now As I said earlier, apart from that, we manage our commodity risk pretty well and aren't that sensitive to critical minerals. as i said earlier apart from that we manage our commodity risk pretty well and aren't that sensitive to critical minerals It's just not moving the needle for us. it's just not moving the needle for us

Speaker 10: Yeah. The only thing I would say, I mean, we're not having an issue trying to get in the actual raw materials. From a pricing perspective, we typically, and I think we've publicly said in the past that we, you know, our arrangements will have kind of pricing locked in for, you know, roughly 70% over our raw materials purchases on our contracts. That's either due to firm vendor quotes, extended ordering periods, those types of things. That's how we're able to manage. Yeah. yeah The only thing I would say, I mean, we're not having an issue trying to get in the actual raw materials. the only thing i would say i mean we're not having an issue trying to get in the actual raw materials From a pricing perspective, we typically, and I think we've publicly said in the past that we, you know, our arrangements will have kind of pricing locked in for, you know, roughly 70% over our raw materials purchases on our contracts. from a pricing perspective we typically and i think we've publicly said in the past that we you know our arrangements will have kind of pricing locked in for you know roughly 70% over our raw materials purchases on our contracts That's either due to firm vendor quotes, extended ordering periods, those types of things. that's either due to firm vendor quotes extended ordering periods those types of things That's how we're able to manage. that's how we're able to manage

Speaker 12: Got it. All right. Thank you. Got it. got it All right. all right Thank you. thank you

Speaker 11: That concludes the question and answer session. I would like to turn the call back over to Mr. Chase Jacobson for closing remarks. That concludes the question and answer session. that concludes the question and answer session I would like to turn the call back over to Mr. Chase Jacobson for closing remarks. i would like to turn the call back over to mr chase jacobson for closing remarks

Speaker 8: Thank you. Thanks, everybody, for joining today. We look forward to seeing many of you and speaking with you in the upcoming week at investor events or on the phone. If you have any questions, please feel free to reach out to me at [email protected]. Thank you. Thank you. thank you Thanks, everybody, for joining today. thanks everybody for joining today We look forward to seeing many of you and speaking with you in the upcoming week at investor events or on the phone. we look forward to seeing many of you and speaking with you in the upcoming week at investor events or on the phone If you have any questions, please feel free to reach out to me at [email protected]. if you have any questions please feel free to reach out to me at [email protected] Thank you. thank you

Speaker 11: Ladies and gentlemen, that concludes today's call. Thank you all for joining, and you may now disconnect. Ladies and gentlemen, that concludes today's call. ladies and gentlemen that concludes today's call Thank you all for joining, and you may now disconnect. thank you all for joining and you may now disconnect